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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 2, 2000
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C-Cube Semiconductor Inc.
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(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 000- 28695 77-0192108
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
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1778 McCarthy Blvd., Milpitas, CA 95035
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (408) 490-8000
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
(b) On May 2, 2000, C-Cube Microsystems Inc., a Delaware corporation
("C-Cube") entered into a Promissory Note, a Pledge Agreement and a Parent
Guaranty (the "Financing Agreements") with C-Cube Semiconductor Inc., a Delaware
corporation ("Semi") and C-Cube Semiconductor II Inc., a Delaware corporation
and a subsidiary of Semi ("Semi II"). The Promissory Note has been executed by
Semi II in favor of C-Cube and is guaranteed by Semi pursuant to the Parent
Guaranty which is secured by the pledge of the stock of Semi II owned by Semi.
The amount of the debt under the Promissory Note will be determined by the
amount of the tax liability arising in connection with the distribution of the
stock of Semi by C-Cube less available cash reserves set aside for such tax
liability. This tax liability will be calculated using the volume-weighted
average trading price of Semi Common Stock on May 3, 2000, which will be the
first day Semi trades on the Nasdaq National Market. If the calculation had been
made using the closing price of Semi Common Stock trading on a when-issued basis
on May 2, 2000, or $24.31 per share, the amount of the debt under the Promissory
Note would have been approximately $200 million. Copies of the Financing
Agreements are attached hereto as Exhibits 2.1, 2.2 and 2.3 and incorporated
herein by reference.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
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99.1 Promissory Note dated May 2, 2000.
99.2 Pledge Agreement between C-Cube Microsystems Inc. and C-Cube
Semiconductor Inc. dated May 2, 2000.
99.3 Parent Guaranty between C-Cube Microsystems Inc. and C-Cube
Semiconductor Inc. dated May 2, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: May 3, 2000 C-CUBE SEMICONDUCTOR INC.
Name /s/ UMESH PADVAL
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Title President and
Chief Executive Officer
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INDEX TO EXHIBITS
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Exhibit
Number Description of Document
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99.1 Promissory Note dated May 2, 2000.
99.2 Pledge Agreement between C-Cube Microsystems Inc. and C-Cube
Semiconductor Inc. dated May 2, 2000.
99.3 Parent Guaranty between C-Cube Microsystems Inc. and C-Cube
Semiconductor Inc. dated May 2, 2000.
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Exhibit 99.1
C-CUBE SEMICONDUCTOR II INC.
PROMISSORY NOTE
Palo Alto, California May 2, 2000
12:15 p.m.
FOR VALUE RECEIVED C-Cube Semiconductor II Inc., a Delaware corporation
("Company") promises to pay to C-Cube Microsystems Inc. ("Holder"), or its
registered assigns, a principal sum equal to the Adjusted Principal Amount, or
such lesser amount as shall equal the outstanding principal amount hereof,
together with interest from the date of this Note on the unpaid principal
balance at a rate equal to fifteen percent (15.00%) per annum, computed on the
basis of the actual number of days elapsed and a year of 365 days. All unpaid
principal, together with any then unpaid and accrued interest and other amounts
payable hereunder, shall be due and payable on the earlier of (i) June 29, 2000
(the "Due Date"), or (ii) when, upon or after the occurrence of an Event of
Default (as defined below), such amounts are declared due and payable by Holder
or made automatically due and payable in accordance with the terms hereof.
The following is a statement of the rights of Holder and the conditions
to which this Note is subject, and to which Holder, by the acceptance of this
Note, agrees:
1. DEFINITIONS. As used in this Note, the following capitalized terms
have the following meanings:
"Adjusted Principal Amount" has the meaning given in the Waiver
Agreement, dated as of the date hereof, between C-Cube Microsystems Inc. and
Harmonic Inc.
"Asset Sale" means any sale, transfer or other disposition (including
by way of merger, consolidation or sale-leaseback transaction) in one
transaction or a series of related transactions by the Company or any of its
subsidiaries to any Person other than the Company or any of its subsidiaries of
(i) all or any of the capital stock of any subsidiary, (ii) all or substantially
all of the property and assets of a division or line of business of the Company
or any of its subsidiaries or (iii) any other property and assets of the Company
or any of its subsidiaries outside the ordinary course of business of the
Company or such subsidiary.
"Company" includes the corporation initially executing this Note and
any Person which shall succeed to or assume the obligations of Company under
this Note.
"Event of Default" has the meaning given in Section 4 hereof.
"Financial Statements" shall mean, with respect to any accounting
period for any Person, statements of operations, retained earnings and cash flow
of such Person for such period, and balance sheets of such Person as of the end
of such period, setting forth in each case in comparative
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form figures for the corresponding period in the preceding fiscal year if such
period is less than a full fiscal year or, if such period is a full fiscal year,
corresponding figures from the preceding fiscal year, all prepared in reasonable
detail and in accordance with GAAP. Unless otherwise indicated, each reference
to Financial Statements of any Person shall be deemed to refer to Financial
Statements prepared on a consolidated basis.
"GAAP" shall mean generally accepted accounting principles as in effect
in the United States of America from time to time.
"Governmental Authority" shall mean any nation, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of government, including any
tribunal or arbitrator(s) of competent jurisdiction.
"Holder" shall mean the Person specified in the introductory paragraph
of this Note or any Person who shall at the time be the registered holder of
this Note.
"Indebtedness" shall mean and include the aggregate amount of, without
duplication (i) all obligations for borrowed money, (ii) all obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii) all
obligations to pay the deferred purchase price of property or services (other
than accounts payable incurred in the ordinary course of business determined in
accordance with GAAP), (iv) all obligations with respect to capital leases, (v)
all obligations created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person, (vi) all
reimbursement and other payment obligations, contingent or otherwise, in respect
of letters of credit and similar surety instruments, and (vii) all guaranty
obligations with respect to the types of Indebtedness listed in clauses (i)
through (vi) above.
"Lien" shall mean any lien, mortgage, pledge, security interest, charge
or encumbrance of any kind (including any conditional sale or other title
retention agreement or any lease in the nature thereof) and any agreement to
give or refrain from giving any of the foregoing.
"Net Cash Proceeds" shall mean (a) with respect to any Asset Sale by
any Person, cash or cash equivalents received (including by way of sale or
discounting of a note, installment receivable or other receivable, but excluding
any other consideration received in the form of assumption by the acquiror of
Indebtedness or other obligations relating to such properties or assets)
therefrom by such Person, net of (i) all legal, title and recording tax
expenses, commissions and other fees and expenses incurred and all federal,
state, foreign and local taxes required to be accrued as a liability as a
consequence of such Asset Sale, and (ii) appropriate amounts to be provided by
such Person as a reserve in accordance with generally accepted accounting
principals against any liabilities associated with such assets and retained by
such Person after such Asset Sale, including, without limitation, liabilities
under any indemnification obligations and severance and other employee
termination costs associated with such Asset Sale; and (b) with respect to a
debt or equity financing, the proceeds of such financing in the form of cash or
cash equivalents, net of attorney's fees, accountant's fees and brokerage,
consultation, underwriting, bank and other fees and expenses actually incurred
in connection with such financing and, with respect to debt financing, net of
any proceeds required by
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the terms of such financing to be held in an escrow account for the payment of
interest and to secure amounts due with respect to such debt financing.
"Obligations" shall mean and include all loans, advances, debts,
liabilities and obligations, howsoever arising, owed by Company to Holder of
every kind and description (whether or not evidenced by any note or instrument
and whether or not for the payment of money), now existing or hereafter arising
under or pursuant to the terms of this Note and the other Transaction Documents,
including, all interest, fees, charges, expenses, attorneys' fees and costs and
accountants' fees and costs chargeable to and payable by Company hereunder and
thereunder, in each case, whether direct or indirect, absolute or contingent,
due or to become due, and whether or not arising after the commencement of a
proceeding under Title 11 of the United States Code (11 U. S. C. Section 101 et
seq.), as amended from time to time (including post-petition interest) and
whether or not allowed or allowable as a claim in any such proceeding.
"Parent Guaranty" shall mean the Parent Guaranty, dated as of the date
hereof, executed by C-Cube Semiconductor Inc. in favor of Lender.
"Person" shall mean and include an individual, a partnership, a
corporation (including a business trust), a joint stock company, a limited
liability company, an unincorporated association, a joint venture or other
entity or a governmental authority.
"Stock Pledge Agreement" shall mean the Stock Pledge Agreement, dated
as of the date hereof, executed by C-Cube Semiconductor Inc. in favor of Lender.
"Transaction Documents" shall mean this Note, the Parent Guaranty and
the Stock Pledge Agreement.
2. REPAYMENTS AND PAYMENTS OF PRINCIPAL AND INTEREST ON NOTES.
2.1 Interest. Interest is payable in cash on the earlier of
the last business day of each calendar quarter and the Due Date.
2.2 Optional Prepayments of Note. The Company may, at its
option, prepay all or, from time to time, part of the Note, at the principal
amount so prepaid without penalty or premium, together with interest on the
principal amount so prepaid accrued to the date fixed for such prepayment.
2.3 Notice of Prepayment to Holders. Not less than five (5)
nor more than ten (10) days prior to the date fixed for each optional
prepayment, the Company shall give notice thereof to the registered Holder,
specifying the date fixed for prepayment and the aggregate principal amount to
be prepaid on such date. Such notice shall also contain instructions for the
delivery of the Note by the Holder to the Company. Such notice shall be
irrevocable.
2.4 Mandatory Prepayments of Note. The Company shall prepay
all or, from time to time, part of the Note, at the principal amount so prepaid
without penalty or premium, together with
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interest on the principal amount so prepaid accrued to the date fixed for such
prepayment within two business days of the consummation by the Company or C-Cube
Semiconductor Inc. ("Parent") of (i) a debt or equity financing transaction with
gross proceeds to the Company or Parent of at least One Hundred Million Dollars
($100,000,000) or (ii) an Asset Sale (other than an Asset Sale governed by the
provisions of Section 3.4) having net proceeds in excess of Twenty-Five Million
Dollars ($25,000,000). The amount of any such mandatory prepayment shall be
equal to the Net Cash Proceeds of such debt or equity financing transaction or
Asset Sale.
3. CERTAIN COVENANTS. While any amount of principal or interest is
outstanding under the Note:
3.1 Information Rights: Notices. Company shall furnish to
Holder the following:
(a) Quarterly Financial Statements. Within forty-five
(45) days after the last day of each quarter, a copy of the Financial Statements
of Company for such quarter and for the fiscal year to date, certified by the
chief financial officer or controller of Company to present fairly the financial
condition, results of operations and other information presented therein and to
have been prepared in accordance with GAAP consistently applied, subject to
normal year end adjustments and except that no footnotes need be included with
such Financial Statements;
(b) Annual Financial Statements. Within ninety (90)
days after the close of each fiscal year of Company, (i) copies of the audited
Financial Statements of Company for such year, audited by nationally recognized
independent certified public accountants, (ii) copies of the unqualified
opinions and management letters delivered by such accountants in connection with
such Financial Statements, and (iii) a report containing a description of
projected business prospects (including capital expenditures) and management's
discussion and analysis of financial condition and results of operation of
Company and its Subsidiaries;
(c) SEC Reports. As soon as possible and in no event
later than five (5) Business Days after they are sent, made available or filed,
copies of all registration statements and reports filed by Company with the
Securities and Exchange Commission and all reports, proxy statements and
financial statements sent or made available by Company to its shareholders
generally; and
(d) Notice of Defaults. Promptly upon the occurrence
thereof, written notice of the occurrence of any Event of Default hereunder.
3.2 Inspection Rights. Holder and its representatives shall
have the right, at any time during normal business hours, upon reasonable prior
notice, to visit and inspect the properties of Company and its corporate,
financial and operating records, and make abstracts therefrom, and to discuss
Company's affairs, finances and accounts with its directors, officers and
independent public accountants.
3.3 Limitation on Sale and Leaseback Transactions. The Company
may not enter into any direct or indirect arrangement pursuant to which its
property is sold or transferred by the
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Company and is thereafter leased back from the purchaser thereof by the Company
without the prior written consent of Holder.
3.4 Company May Consolidate, etc., Only on Certain Terms.
(a) The Company shall not consolidate with or merge
into any other Person or, directly or indirectly, convey, transfer, sell, lease
or otherwise dispose of all or substantially all of its properties and assets to
any Person, and the Company shall not permit any Person to consolidate with or
merge into the Company or convey, transfer, sell, lease or otherwise dispose of
all or substantially all of its properties and assets to the Company, unless:
(b) in case the Company shall consolidate with or
merge into another Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the Person formed by such
consolidation or into which the Company is merged or the Person which acquires
by conveyance or transfer, or which leases, the properties and assets of the
Company substantially as an entirety shall be a corporation, partnership or
trust, shall be organized and validly existing under the laws of the United
States of America, any State thereof or the District of Columbia and shall
expressly assume, by an instrument, executed and delivered to the Holder, in
form satisfactory to the Holder, the due and punctual payment of the principal
of and accrued interest on this Note and the performance or observance of every
covenant of this Note on the part of the Company to be performed or observed;
and
(c) immediately after giving effect to such
transaction, no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have happened and be
continuing.
3.5 Limitation on Restricted Payments and Restrictions of
Distributions from Subsidiaries. The Company will not permit any of its
subsidiaries to, directly or indirectly, (i) declare or pay any dividend or make
any distribution on or with respect to its capital stock (other than dividends
or distributions payable solely in shares of its capital stock or in options,
warrants or other rights to acquired shares of such capital stock) held by
Persons other than the Company or any of its subsidiaries, (ii) purchase,
redeem, retire or otherwise acquire for value any shares of capital stock of (A)
the Company or a subsidiary (including options, warrants or other rights to
acquire such shares of capital stock) held by any Person or (B) a subsidiary
(including options, warrants or other rights to acquire such shares of capital
stock) held by any affiliate of the Company (other than a wholly owned
subsidiary) or any holder (or any affiliate of such holder) of 5% or more of the
capital stock of the Company, (iii) make any voluntary or optional principal
payment, or voluntary or optional redemption, repurchase, defeasance, or other
acquisition or retirement for value, of Indebtedness of the Company that is
subordinated in right of payment to the Note or (iv) make any investment (other
than investments in cash equivalents) in any Person (such payments or any other
actions described in clauses (i) through (iv) above being collectively
"Restricted Payments") without the prior written consent of the Holder.
3.6 Limitation on Transactions with Affiliates. The Company
will not, and will not permit any of its subsidiaries to, directly or
indirectly, enter into, renew or extend any transaction
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(including, without limitation, the purchase, sale, lease or exchange of
property or assets, or the rendering of any service) with any affiliate of the
Company or any subsidiary, except upon fair and reasonable terms no less
favorable to the Company or such subsidiary than could be obtained, at the time
of such transaction or, if such transaction is pursuant to a written agreement,
at the time of the execution of the agreement providing therefor, in a
comparable arm's length transaction with a Person that is not such an affiliate.
3.7 Limitation on Asset Sales. The Company will not, and will
not permit any subsidiary to, consummate any Asset Sale without the prior
written consent of the Holder, unless the net proceeds of such Asset Sale are
used to prepay this Note in accordance with Section 2.4.
3.8 Liens. The Company shall not directly or indirectly
create, incur, assume or permit to exist any Lien on or with respect to any
asset, or any income or profits therefrom whether now owned or hereafter
acquired, except:
(a) (i) Liens for taxes, assessments or charges of any
Governmental Authority for claims that are not material and are not yet due or
are being contested in good faith by appropriate proceedings and that have the
effect of preventing forfeiture or sale of the assets to which such Liens
attach, and, in each case, with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with GAAP; (ii)
statutory Liens of landlords and Liens of carriers, warehousemen, mechanics,
materialmen, bankers and other Liens imposed by law and created in the ordinary
course of business for amounts that are not material and that are not overdue by
more than 30 days or that are being contested in good faith by appropriate
proceedings that have the effect of preventing forfeiture or sale of the assets
to which such Liens attach, and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with GAAP; (iii) Liens
incurred and deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social security
benefits or to secure the performance (including by way of surety bonds or
appeal bonds) of tenders, bids, leases, contracts, statutory obligations or
similar obligations or arising as a result of progress payments under contracts,
in each case in the ordinary course of business and not relating to the
repayment of debt; (iv) easements, rights-of-way, covenants, consents,
reservations, encroachments, variations and other restrictions, charges or
encumbrances (whether or not recorded) that do not materially interfere with the
ordinary conduct of business, materially detract from the value of the asset to
which they attach or materially impair the use thereof; (v) building
restrictions, zoning laws and other statutes, laws, rules, regulations,
ordinances and restrictions; and (vi) leases or subleases granted in the
ordinary course of business to others not materially interfering with the
business of, and consistent with past practices of, the Company, provided that
clauses (i), (ii) and (iii) shall not apply to (A) Liens in favor of any
Governmental Authority for damages, losses, costs and expenses that are incurred
at any time as a result of the existence of hazardous materials upon, about or
beneath any real property of the Company, or (B) Liens imposed under ERISA;
(b) any attachment or judgment Lien not constituting an Event
of Default;
(c) Liens upon any equipment acquired or held by the Company
to secure the purchase price of such equipment or indebtedness incurred solely
for the purpose of financing the
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acquisition of such equipment, so long as (i) such Lien extends only to the
equipment financed, and any accessions, replacements, substitutions and proceeds
(including insurance proceeds) thereof or thereto and (ii) such Lien attaches
within 120 days of the date of acquisition of such equipment; and
(d) other Liens incidental to the conduct of the business or
the ownership of the assets of the Company that (i) were not incurred in
connection with borrowed money, (ii) do not in the aggregate materially detract
from the value of the assets subject thereto or materially impair the use
thereof in the operation of such business and (iii) do not secure obligations
aggregating in excess of $250,000.
4. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an "Event of Default" under this Note and the other Transaction
Documents:
4.1 Failure to Pay. Company shall fail to pay (i) when due any
principal payment on the due date hereunder or (ii) any interest or other
payment required under the terms of this Note or any other Transaction Document
on the date due; or
4.2 Breaches of Certain Covenants. Company shall fail to
observe or perform any covenant, obligation, condition or agreement set forth in
Section 3 of this Note; or
4.3 Breaches of Other Covenants. Company shall fail to observe
or perform any other covenant, obligation, condition or agreement contained in
this Note or the other Transaction Documents (other than those specified in
Sections 4.1 and 4.2) and such failure shall continue for fifteen (15) days; or
4.4 Representations and Warranties. Any representation,
warranty, certificate, or other statement (financial or otherwise) made or
furnished by or on behalf of Company to Holder in writing in connection with
this Note or any of the other Transaction Documents, or as an inducement to
Holder to enter into this Note and the other Transaction Documents, shall be
false, incorrect, incomplete or misleading in any material respect when made or
furnished; or
4.5 Other Payment Obligations. Company shall (i) fail to make
any payment when due under the terms of any bond, debenture, note or other
evidence of Indebtedness to be paid by such Person (excluding this Note and the
other Transaction Documents but including any other evidence of Indebtedness of
Company or any of its Subsidiaries to Holder) and such failure shall continue
beyond any period of grace provided with respect thereto, or (ii) default in the
observance or performance of any other agreement, term or condition contained in
any such bond, debenture, note or other evidence of Indebtedness, and the effect
of such failure or default is to cause, or permit the holder or holders thereof
to cause, Indebtedness in an aggregate amount of One Million Dollars
($1,000,000) or more to become due prior to its stated date of maturity; or
4.6 Voluntary Bankruptcy or Insolvency Proceedings. Company
shall (i) apply for or consent to the appointment of a receiver, trustee,
liquidator or custodian of itself or of all or a substantial part of its
property, (ii) be unable, or admit in writing its inability, to pay its debts
generally as they mature, (iii) make a general assignment for the benefit of its
or any of its creditors,
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(iv) be dissolved or liquidated, (v) become insolvent (as such term may be
defined or interpreted under any applicable statute), (vi) commence a voluntary
case or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or consent to any such relief or to the
appointment of or taking possession of its property by any official in an
involuntary case or other proceeding commenced against it, or (vii) take any
action for the purpose of effecting any of the foregoing; or
4.7 Involuntary Bankruptcy or Insolvency Proceedings.
Proceedings for the appointment of a receiver, trustee, liquidator or custodian
of Company or of all or a substantial part of the property thereof, or an
involuntary case or other proceedings seeking liquidation, reorganization or
other relief with respect to Company or the debts thereof under any bankruptcy,
insolvency or other similar law now or hereafter in effect shall be commenced
and an order for relief entered or such proceeding shall not be dismissed or
discharged within thirty (30) days of commencement; or
4.8 Judgments. A final judgment or order for the payment of
money in excess of One Million Dollars ($1,000,000) (exclusive of amounts
covered by insurance issued by an insurer not an Affiliate of Company) shall be
rendered against Company and the same shall remain undischarged for a period of
thirty (30) days during which execution shall not be effectively stayed, or any
judgment, writ, assessment, warrant of attachment, or execution or similar
process shall be issued or levied against a substantial part of the property of
Company and such judgment, writ, or similar process shall not be released,
stayed, vacated or otherwise dismissed within thirty (30) days after issue or
levy; or
4.9 Transaction Documents. Any Event of Default (as defined in
any other Transaction Document) shall occur under any other Transaction Document
or any Transaction Document or any material term thereof shall cease to be, or
be asserted by Company not to be, a legal, valid and binding obligation of
Company enforceable in accordance with its terms.
5. RIGHTS OF HOLDER UPON DEFAULT. Upon the occurrence or existence of
any Event of Default (other than an Event of Default, referred to in Sections
4.6 and 4.7) and at any time thereafter during the continuance of such Event of
Default, Holder may, by written notice to Company, declare all outstanding
Obligations payable by Company hereunder to be immediately due and payable
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived, anything contained herein or in the other
Transaction Documents to the contrary notwithstanding. Upon the occurrence or
existence of any Event of Default described in Sections 4.6 and 4.7, immediately
and without notice, all outstanding Obligations payable by Company hereunder
shall automatically become immediately due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived, anything contained herein or in the other Transaction
Documents to the contrary notwithstanding. In addition to the foregoing
remedies, upon the occurrence or existence of any Event of Default, Holder may
exercise any other right power or remedy granted to it by the Transaction
Documents or otherwise permitted to it by law, either by suit in equity or by
action at law, or both.
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6. SUCCESSORS AND ASSIGNS. Subject to the restrictions on transfer
described in Section 8 below, the rights and obligations of Company and Holder
of this Note shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
7. WAIVER AND AMENDMENT. Any provision of this Note may be amended,
waived or modified upon the written consent of Company and Holder.
8. ASSIGNMENT BY COMPANY. Neither this Note nor any of the rights,
interests or obligations hereunder may be assigned, by operation of law or
otherwise, in whole or in part, by Company without the prior written consent of
Holder except in connection with an assignment in whole to a successor
corporation to Company, provided that such successor corporation acquires all or
substantially all of Company's property and assets and Holder's rights hereunder
are not impaired.
9. NOTICES. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail, postage
prepaid, or by recognized overnight courier or personal delivery at the
respective addresses of the parties as set forth in the Tax Sharing Agreement or
on the register maintained by Company. Any party hereto may by notice so given
change its address for future notice hereunder. Notice shall conclusively be
deemed to have been given when received.
10. PAYMENT. Payment shall be made in lawful tender of the United
States.
DEFAULT RATE; WAIVER; USURY LAWS. In the event that any payment of
principal or interest provided for herein is not paid by Company when due
(including the entire unpaid balance of this Note in the event such amount is
made immediately due and payable pursuant to the terms hereof), then Company
shall pay interest on the such amounts not paid when due at a rate per annum
equal to the rate otherwise applicable hereunder plus two percent (2%). During
any period in which an Event of Default has occurred and is continuing, Company
shall pay interest on the unpaid principal balance hereof at a rate per annum
equal to the rate otherwise applicable hereunder plus five percent (5%). The
Company covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, plead, or in any manner whatsoever claim to take the
benefit or advantage of, any stay or extension law or any usury law or other law
which would prohibit or forgive the Company or the Parent (in respect of the
related Parent Guaranty) from paying all or any portion of the principal of or
interest on the Note as contemplated herein, whenever enacted, now or at any
time hereafter in force, or which may materially affect the covenants in or the
performance of this Note in a manner inconsistent with the provisions of this
Note and (to the extent that it may lawfully do so) the Company hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the Holder,
but will suffer and permit the execution of every such power as though no such
law had been enacted.
11. EXPENSES; WAIVERS. If action is instituted to collect this Note,
Company promises to pay all costs and expenses, including, without limitation,
reasonable attorneys' fees and costs, incurred in connection with such action.
Company hereby waives notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor and all other notices or demands
relative to this instrument.
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12. GOVERNING LAW. This Note and all actions arising out of or in
connection with this Note shall be governed by and construed in accordance with
the laws of the State of California, without regard to the conflicts of law
provisions of the State of California, or of any other state.
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IN WITNESS WHEREOF, Company has caused this Guaranty to be executed as
of the date first written above.
C-CUBE SEMICONDUCTOR INC.
a Delaware corporation
By: /s/ UMESH PADVAL
----------------------------------------
Title: President and
Chief Executive Officer
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<PAGE> 1
Exhibit 99.2
PLEDGE AGREEMENT
PLEDGE AGREEMENT dated as of May 2, 2000 at 12:15 p.m., (the
"Agreement") between C-CUBE SEMICONDUCTOR INC, a Delaware corporation (the
"Pledgor") and C-CUBE MICROSYSTEMS INC., a Delaware Corporation ("C-Cube"), All
capitalized terms used herein, unless otherwise specifically defined in this
Agreement, shall have the meanings ascribed to them in the Note (as hereinafter
defined) and Guaranty (as hereinafter defined).
W I T N E S S E T H:
WHEREAS, C-Cube has agreed to make a loan to C-Cube Semiconductor II
Inc. (the "Borrower"), which will be evidenced by a Promissory Note dated May 2,
2000 at 12:15 p.m. in a principal amount of $ 150,000,000.00 (as amended from
time to time, the "Note");
WHEREAS, pursuant to a Parent Guaranty dated May 2, 2000 at 12:15 p.m.
(as amended from time to time, the "Guaranty") by the Pledgor in favor of
C-Cube, the Pledgor has agreed to guaranty the obligations of the Borrower under
the Note;
WHEREAS, the Pledgor is the record and beneficial owner of the shares
of capital stock or other equity interests listed in Schedule I hereto;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS. The following shall have (unless otherwise
provided elsewhere in this Agreement) the following respective meanings (such
meanings being equally applicable to both the singular and plural form of the
terms defined):
"Collateral Documents" means this Agreement, financing statements and
all other documents executed or delivered from time to time in connection
therewith or otherwise to secure the Pledgor's obligations under the Loan
Documents, in each case as amended from time to time.
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind (including any conditional sale or other title retention
agreement or any lease in the nature thereof) and any agreement to give or
refrain from giving any of the foregoing.
"Loan Documents" means, collectively, this Agreement, the Note, the
Guaranty, the Collateral Documents and any other agreement, instrument or other
writing executed or delivered by any Grantor in connection herewith, and all
amendments, exhibits and schedules to any of the foregoing.
"Person" means an individual, a corporation, a partnership, a limited
liability company, a trust, an unincorporated organization or any other entity
or organization, including a governmental authority.
<PAGE> 2
"Pledged Collateral" has the meaning assigned to such term in Section 2
hereof.
"Pledged Entity" means an issuer of Pledged Interests.
"Pledged Interests" means those shares of capital stock and other
equity interests listed on Schedule I hereto (as modified from time to time by
the delivery of one or more Pledge Amendments).
"Secured Obligations" has the meaning assigned to such term in Section
3 hereof.
SECTION 2. PLEDGE. The Pledgor hereby pledges to C-Cube and grants to
C-Cube a security interest in, all of the following (collectively, the "Pledged
Collateral"):
(a) the Pledged Interests and any certificates representing
the Pledged Interests, and all dividends, distributions, 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 Interests; and
(b) any additional shares of capital stock or other equity
interests of a Pledged Entity, or any other Subsidiary of the Pledgor,
from time to time acquired by the Pledgor in any manner (which shares
or equity interests shall be deemed to be part of the Pledged
Interests), and any certificates representing such additional shares or
equity interests, and all dividends, distributions, 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 Pledged Interests.
SECTION 3. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Pledged Collateral is security for, the prompt payment in full when due, whether
at stated maturity, by acceleration or otherwise, and performance of all
Obligations of the Pledgor of any kind under or in connection with the Note and
the Guaranty and all obligations of the Pledgor now or hereafter existing under
this Agreement including, without limitation, all fees, costs and expenses
whether in connection with collection actions hereunder or otherwise
(collectively, the "Secured Obligations").
SECTION 4. DELIVERY OF PLEDGED COLLATERAL. All certificates or other
instruments evidencing the Pledged Collateral shall be delivered to and held by
or on behalf of C-Cube, pursuant hereto and all such certificates or instruments
shall be accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance reasonably satisfactory to C-Cube.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants to C-Cube:
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(a) Pledgor is, and at the time of delivery of the Pledged
Interests to C-Cube will be, the sole holder of record and the sole
beneficial owner of such Pledged Collateral pledged by Pledgor free and
clear of any Lien thereon or affecting the title thereto;
(b) All of the Pledged Interests have been duly authorized,
validly issued and are fully paid and non-assessable;
(c) Pledgor has all requisite, power, authority and legal
right to pledge, assign, transfer, deliver, deposit and set over the
Pledged Collateral pledged by Pledgor to C-Cube, as provided herein;
(d) None of the Pledged Interests has been created, issued or
transferred in violation of the securities registration, securities
disclosure or similar laws of any jurisdiction to which such issuance
or transfer may be subject;
(e) All of the Pledged Interests are presently owned by the
Pledgor, and with respect to certificated Pledged Interests, are
presently represented by the certificates listed on Schedule I hereto.
As of the date hereof, there are no existing options, warrants, calls
or commitments of any character whatsoever relating to the Pledged
Interests or with respect to any other capital stock of a Pledged
Entity;
(f) No consent, approval, authorization or other order or
other action by, and no notice to or filing with, any governmental
authority or any other Person is required (i) for the pledge by Pledgor
of the Pledged Collateral pursuant to this Agreement or for the
execution, delivery or performance of this Agreement by Pledgor, or
(ii) for the exercise by C-Cube of the voting or other rights provided
for in this Agreement or the remedies in respect of the Pledged
Collateral pursuant to this Agreement, except as may be required in
connection with such disposition by applicable laws;
(g) The pledge, assignment and delivery of the Pledged
Collateral pursuant to this Agreement creates a valid first priority
Lien on and a first priority perfected security interest in favor of
C-Cube in the Pledged Collateral and the proceeds thereof, securing the
payment of the Secured Obligations, subject to no other Lien or adverse
claim;
(h) This Agreement has been duly authorized, executed and
delivered by Pledgor and constitutes a legal, valid and binding
obligation of the Pledgor enforceable against Pledgor in accordance
with its terms, subject to the effects of applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting
creditors' rights generally and equitable principles of general
applicability;
(i) Except as specified on Schedule I hereto, the Pledged
Interests constitute 100% of the issued and outstanding shares of
capital stock or other equity interests of each Pledged Entity.
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The representations and warranties set forth in this Section 5 shall
survive the execution and delivery of this Agreement.
SECTION 6. COVENANTS. The Pledgor covenants and agrees that until the
full and complete satisfaction of the Secured Obligations (the "Termination
Date"):
(a) Pledgor will not sell, assign, transfer, pledge, or
otherwise encumber any of its rights in or to the Pledged Collateral,
or grant a Lien in the Pledged Collateral except in favor of C-Cube;
(b) Pledgor will, at its expense, promptly execute,
acknowledge and deliver all such instruments and take all such actions
as C-Cube from time to time may reasonably request in order to ensure
to C-Cube the benefits of the Liens in and to the Pledged Collateral
intended to be created by this Agreement, including the filing of any
necessary Uniform Commercial Code financing statements, which may be
filed by C-Cube with or (to the extent permitted by law) without the
signature of Pledgor, and will cooperate with C-Cube, at Pledgor's
expense, in obtaining all necessary approvals and making all necessary
filings under federal, state, local or foreign law in connection with
such Liens or any sale or transfer of the Pledged Collateral;
(c) Pledgor has and will defend the title to the Pledged
Collateral and the Liens of C-Cube, the Pledged Collateral against the
claim of any Person and will maintain and preserve such Liens; and
(d) Pledgor will, upon obtaining ownership of any additional
capital stock of, or equity interest in, a Pledged Entity or capital
stock or other equity interest in any other Subsidiary, promptly (and
in any event within three (3) Business Days) deliver to C-Cube, duly
executed by Pledgor, in substantially the form of Schedule II hereto (a
"Pledge Amendment") in respect of any such additional capital stock or
equity interest, pursuant to which Pledgor shall pledge to C-Cube all
of such additional capital stock or ownership interest. Pledgor hereby
authorizes C-Cube to attach each Pledge Amendment to this Agreement and
agrees that all Pledged Interests listed on any Pledge Amendment
delivered to C-Cube shall for all purposes hereunder be considered
Pledged Collateral; provided, however, that it is understood and agreed
the security interest in the Pledged Collateral described in Section 2
hereof shall in no way be limited or impaired by the failure of the
Pledgor to execute and deliver any Pledge Amendment.
SECTION 7. Pledgor'S Rights. As long as no Event of Default shall have
occurred and be continuing:
(a) The Pledgor shall have the right, from time to time, to
vote and give consents with respect to the Pledged Collateral, or any
part thereof, for all purposes not inconsistent with the provisions of
this Agreement, the Note, or the Guaranty; provided, however, that no
vote shall be cast, and no consent shall be given or action taken,
which
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would have the effect of impairing the position or interest of C-Cube
in respect of the Pledged Collateral or which would authorize, effect
or consent to:
(i) the dissolution or liquidation, in whole or in
part, of a Pledged Entity;
(ii) the consolidation or merger of a Pledged Entity
with any other Person;
(iii) the sale, disposition or encumbrance of all or
substantially all of the assets of a Pledged Entity;
(iv) any change in the authorized number of shares,
ownership interests, the stated capital or the authorized
share capital of a Pledged Entity or the issuance of any
additional shares of its capital stock or any other ownership
or equity interest therein except to the extent the same are
pledged pursuant to Section 6 hereof; or
(v) the alteration of the voting rights with respect
to the capital stock or ownership interest of a Pledged
Entity; and
(b) (i) The Pledgor shall be entitled, from time to time, to
receive and retain for its own use all cash dividends, interest and
other distributions paid in respect of the Pledged Interests to the
extent not in violation of the Note other than any and all: (A)
dividends, interest and other distributions paid or payable other than
in cash in respect of any Pledged Collateral, and any cash or other
property received, receivable or otherwise distributed in exchange for,
any Pledged Collateral; and (B) dividends and other distributions paid
or payable in cash in respect of any Pledged Interests in connection
with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in capital of a
Pledged Entity paid, payable or otherwise distributed, in respect of
principal of, or in redemption of, or in exchange for, any Pledged
Collateral; provided, however, that until actually paid all rights to
such distributions shall remain subject to the Lien created by this
Agreement; and
(ii) all dividends and interest (other than such cash
dividends, interest and other distributions as are permitted to be
received and retained by the Pledgor in accordance with clause (i)
above) and all other distributions in respect of any of the Pledged
Interests or Pledged Indebtedness, whenever paid or made, shall be
delivered to C-Cube to hold as Pledged Collateral and shall, if
received by Pledgor, be received in trust for the benefit of C-Cube, be
segregated from the other property or funds of Pledgor, and be
forthwith delivered to C-Cube as Pledged Collateral in the same form as
so received (with any necessary indorsement).
SECTION 8. DEFAULTS AND REMEDIES; PROXY.
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(a) Upon the occurrence and during the continuation of an
Event of Default (as defined in the Guaranty), in addition to all of
the rights (and without limiting any such right) of a secured party
under applicable law, including, without limitation, under the
California Commercial Code, C-Cube (personally or through an agent) is
hereby authorized and empowered to transfer and register in its name or
in the name of its nominee the whole or any part of the Pledged
Collateral, to exchange certificates or instruments representing or
evidencing Pledged Collateral for certificates or instruments of
smaller or larger denominations, to exercise the voting and all other
rights as a holder with respect thereto, to collect and receive all
cash dividends, interest, principal and other distributions made
thereon, to sell in one or more sales after ten (10) days' notice of
the time and place of any public sale or of the time at which a private
sale is to take place (which notice the Pledgor agrees is commercially
reasonable) the whole or any part of the Pledged Collateral and to
otherwise act with respect to the Pledged Collateral as though C-Cube
was the outright owner thereof. Any sale shall be made at a public or
private sale at C-Cube's place of business, or at any place to be named
in the notice of sale, either for cash or upon credit or for future
delivery at such price as C-Cube may deem fair, and C-Cube may be the
purchaser of the whole or any part of the Pledged Collateral so sold
and hold the same thereafter in its own right free from any claim of
the Pledgor or any right of redemption. Each sale shall be made to the
highest bidder, but C-Cube reserves the right to reject any and all
bids at such sale which, in its discretion, it shall deem inadequate.
Demands of performance, except as otherwise herein specifically
provided for, notices of sale, advertisements and the presence of
property at sale are hereby waived and any sale hereunder may be
conducted by an auctioneer or any officer or agent of C-Cube. THE
PLEDGOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS C-CUBE AS THE PROXY
AND ATTORNEY-IN-FACT OF PLEDGOR WITH RESPECT TO THE PLEDGED COLLATERAL,
INCLUDING THE RIGHT TO VOTE THE PLEDGED INTERESTS, WITH FULL POWER OF
SUBSTITUTION TO DO SO. THE APPOINTMENT OF C-CUBE AS PROXY AND
ATTORNEY-IN-FACT IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE
UNTIL THE TERMINATION DATE. IN ADDITION TO THE RIGHT TO VOTE THE
PLEDGED INTERESTS, THE APPOINTMENT OF C-CUBE AS PROXY AND
ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO EXERCISE ALL OTHER RIGHTS,
POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF THE PLEDGED
INTERESTS WOULD BE ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN
CONSENTS OF SHAREHOLDERS, MEMBERS OR PARTNERS, AS THE CASE MAY BE,
CALLING SPECIAL MEETINGS OF SHAREHOLDERS, MEMBERS OR PARTNERS, AS
APPLICABLE, AND VOTING AT SUCH MEETINGS). SUCH PROXY SHALL BE
EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION
(INCLUDING ANY TRANSFER OF ANY PLEDGED INTERESTS ON THE RECORD BOOKS OF
THE ISSUER THEREOF) BY ANY PERSON (INCLUDING THE ISSUER OF THE PLEDGED
INTERESTS OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE AND
DURING THE CONTINUATION OF
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AN EVENT OF DEFAULT. NOTWITHSTANDING THE FOREGOING, C-CUBE SHALL NOT
HAVE ANY DUTY TO EXERCISE ANY SUCH RIGHT OR TO PRESERVE THE SAME AND
SHALL NOT BE LIABLE FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING
SO.
(b) If, at the original time or times appointed for the sale
of the whole or any part of the Pledged Collateral, the highest bid, if
there be but one sale, shall be inadequate to discharge in full all the
Secured Obligations, or if the Pledged Collateral be offered for sale
in lots, if at any of such sales, the highest bid for the lot offered
for sale would indicate to C-Cube, in its discretion, that the proceeds
of the sales of the whole of the Pledged Collateral would be unlikely
to be sufficient to discharge all the Secured Obligations, C-Cube may,
on one or more occasions and in its discretion, postpone any of said
sales by public announcement at the time of sale or the time of
previous postponement of sale, and no other notice of such postponement
or postponements of sale need be given, any other notice being hereby
waived; provided, however, that any sale or sales made after such
postponement shall be after ten (10) days' notice to the Borrower or
the applicable Pledgor.
(c) If, at any time when C-Cube shall determine to exercise
its right to sell the whole or any part of the Pledged Collateral
hereunder, such Pledged Collateral or the part thereof to be sold shall
not, for any reason whatsoever, be effectively registered under the
Act, C-Cube may, in its discretion (subject only to applicable
requirements of law), sell such Pledged Collateral or part thereof by
private sale in such manner and under such circumstances as C-Cube may
deem necessary or advisable, but subject to the other requirements of
this Section 8, and shall not be required to effect such registration
or to cause the same to be effected. Without limiting the generality of
the foregoing, in any such event, C-Cube in its discretion (x) may, in
accordance with applicable securities laws, proceed to make such
private sale notwithstanding that a registration statement for the
purpose of registering such Pledged Collateral or part thereof could be
or shall have been filed under said Act (or similar statute), (y) may
approach and negotiate with a single possible purchaser to effect such
sale, and (z) may restrict such sale to a purchaser who is an
accredited investor under the Act and who will represent and agree that
such purchaser is purchasing for its own account, for investment and
not with a view to the distribution or sale of such Pledged Collateral
or any part thereof. In addition to a private sale as provided above in
this Section 8, if any of the Pledged Collateral shall not be freely
distributable to the public without registration under the Act (or
similar statute) at the time of any proposed sale pursuant to this
Section 8, then C-Cube shall not be required to effect such
registration or cause the same to be effected but, in its discretion
(subject only to applicable requirements of law), may require that any
sale hereunder (including a sale at auction) be conducted subject to
restrictions:
(i) as to the financial sophistication and ability of
any Person permitted to bid or purchase at any such sale;
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(ii) as to the content of legends to be placed upon
any certificates representing the Pledged Collateral sold in
such sale, including restrictions on future transfer thereof;
(iii) as to the representations required to be made
by each Person bidding or purchasing at such sale relating to
that Person's access to financial information about Pledgor
and such Person's intentions as to the holding of the Pledged
Collateral so sold for investment for its own account and not
with a view to the distribution thereof; and
(iv) as to such other matters as C-Cube may, in its
discretion, deem necessary or appropriate in order that such
sale (notwithstanding any failure so to register) may be
effected in compliance with the Bankruptcy Code and other laws
affecting the enforcement of creditors' rights and the Act and
all applicable state securities laws.
(d) The Pledgor recognizes that C-Cube may be unable to effect
a public sale of any or all the Pledged Collateral and may be compelled
to resort to one or more private sales thereof in accordance with
clause (c) above. The Pledgor also acknowledges that any such private
sale may result in prices and other terms less favorable to the seller
than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall not be deemed to
have been made in a commercially unreasonable manner solely by virtue
of such sale being private. C-Cube shall be under no obligation to
delay a sale of any of the Pledged Collateral for the period of time
necessary to permit the Pledged Entity to register such securities for
public sale under the Act, or under applicable state securities laws,
even if the applicable Pledgor and the Pledged Entity would agree to do
so.
(e) The Pledgor agrees to the maximum extent permitted by
applicable law that following the occurrence and during the continuance
of an Event of Default it will not at any time plead, claim or take the
benefit of any appraisal, valuation, stay, extension, moratorium or
redemption law now or hereafter in force in order to prevent or delay
the enforcement of this Agreement, or the absolute sale of the whole or
any part of the Pledged Collateral or the possession thereof by any
purchaser at any sale hereunder, and the Pledgor waives the benefit of
all such laws to the extent it lawfully may do so. The Pledgor agrees
that it will not interfere with any right, power and remedy of C-Cube
provided for in this Agreement or now or hereafter existing at law or
in equity or by statute or otherwise, or the exercise or beginning of
the exercise by C-Cube of any one or more of such rights, powers or
remedies. No failure or delay on the part of C-Cube to exercise any
such right, power or remedy and no notice or demand which may be given
to or made upon the applicable Pledgor by C-Cube with respect to any
such remedies shall operate as a waiver thereof, or limit or impair
C-Cube's right to take any action or to
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exercise any power or remedy hereunder, without notice or demand, or
prejudice its rights as against the Pledgor in any respect.
(f) The Pledgor further agrees that a breach of any of the
covenants contained in this Section 8 will cause irreparable injury to
C-Cube, that C-Cube shall have no adequate remedy at law in respect of
such breach and, as a consequence, agrees that each and every covenant
contained in this Section 8 shall be specifically enforceable against
the Pledgor, and the Pledgor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants
except for a defense that the Secured Obligations are not then due and
payable in accordance with the agreements and instruments governing and
evidencing such obligations.
SECTION 9. WAIVER. No delay on C-Cube's part in exercising any power of
sale, Lien, option or other right hereunder, and no notice or demand which may
be given to or made upon the Pledgor by C-Cube with respect to any power of
sale, Lien, option or other right hereunder, shall constitute a waiver thereof,
or limit or impair C-Cube's right to take any action or to exercise any power of
sale, Lien, option, or any other right hereunder, without notice or demand, or
prejudice C-Cube's rights as against the Pledgor in any respect.
SECTION 10. ASSIGNMENT. C-Cube may assign, indorse or transfer any
instrument evidencing all or any part of the Secured Obligations as provided in,
and in accordance with, the Note and/or the Guaranty, and the holder of such
instrument shall be entitled to the benefits of this Agreement.
SECTION 11. TERMINATION. Immediately following the payment in full of
the Secured Obligations, C-Cube shall deliver to the Pledgor the Pledged
Collateral pledged by the Pledgor at the time subject to this Agreement and all
instruments of assignment executed in connection therewith, free and clear of
the Liens hereof and, except as otherwise provided herein, all of the Pledgor's
obligations hereunder shall at such time terminate.
SECTION 12. LIEN ABSOLUTE. All rights of C-Cube hereunder, and all
obligations of the Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of the Note, the
Guaranty, or any other agreement or instrument governing or evidencing
any Secured Obligations;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any part of the Secured Obligations, or
any other amendment or waiver of or any consent to any departure from
the Note, the Guaranty or any other agreement or instrument governing
or evidencing any Secured Obligations;
(c) any exchange, release or non-perfection of any other
Collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;
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(d) the insolvency of the Pledgor; or
(e) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Pledgor other than payment
in full of the Secured Obligations.
SECTION 13. WAIVER OF DEFENSES. (a) The Pledgor acknowledges that the
obligations undertaken herein involve the granting of security for obligations
of Persons other than that of the Pledgor and, in full recognition of that fact,
consents and agrees that C-Cube may, at any time and from time to time, in
accordance with the terms of the Loan Documents, without notice or demand, and
without affecting the enforceability or continuing effectiveness hereof: (i)
supplement, modify, amend, extend, renew, accelerate or otherwise change the
time for payment or the terms of the Secured Obligations or any part thereof,
including any increase or decrease of the rate(s) of interest thereon; (ii)
supplement, modify, amend or waive, or enter into or give any agreement,
approval or consent with respect to, the Secured Obligations or any part
thereof, or any of the Loan Documents to which the Pledgor is not a party or any
additional security or guaranties, or any condition, covenant, default, remedy,
right, representation or term thereof or thereunder; (iii) accept new or
additional instruments, documents or agreements in exchange for or relative to
any of the Loan Documents or the Secured Obligations or any part thereof; (iv)
accept partial payments on the Secured Obligations; (v) receive and hold
additional security or guaranties for the Secured Obligations or any part
thereof; (vi) release, reconvey, terminate, waive, abandon, fail to perfect,
subordinate, exchange, substitute, transfer and/or enforce any security or
guaranties, and apply any security and direct the order or manner of sale
thereof as C-Cube in its sole and absolute discretion may determine; (vii)
release any Person from any personal liability with respect to the Secured
Obligations or any part thereof; (viii) settle, release on terms satisfactory to
C-Cube or by operation of applicable laws or otherwise liquidate or enforce any
Secured Obligations and any security or guaranty therefor in any manner, consent
to the transfer of any security and bid and purchase at any sale; and/or (ix)
consent to the merger, or consent to any change or any other restructuring or
termination of the corporate existence of the Borrower or any other Person, and
correspondingly restructure the Secured Obligations, and any such merger,
change, restructuring or termination shall not affect the liability of the
Pledgor or the continuing effectiveness hereof, or the enforceability hereof
with respect to all or any part of the Secured Obligations.
(b) Upon the occurrence and during the continuance of any
Event of Default, C-Cube may enforce this Agreement independently as to
the Pledgor and independently of any other remedy or security C-Cube at
any time may have or hold in connection with the Secured Obligations.
The Pledgor expressly waives any right to require C-Cube to marshal
assets in favor of the Borrower, or upon or against any security or
remedy, before proceeding to enforce this Agreement, in such order as
it shall determine in its sole and absolute discretion. C-Cube may file
a separate action or actions against the Borrower without respect to
whether action is brought or prosecuted with respect to any security or
against any other Person, or whether any other Person is joined in any
such action or actions. The Pledgor agrees that C-Cube and the
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Borrower and any Affiliates of the Borrower may deal with each other in
connection with the Secured Obligations or otherwise, or alter any
contracts or agreements now or hereafter existing between any of them,
in any manner whatsoever, all without in any way altering or affecting
the security of this Agreement. C-Cube's rights hereunder shall be
reinstated and revived, and the enforceability of this Agreement shall
continue, with respect to any amount at any time paid on account of the
Secured Obligations which thereafter shall be required to be restored
or returned by C-Cube upon the bankruptcy, insolvency or reorganization
of the Borrower or any other Person, or otherwise, all as though such
amount had not been paid. The rights of C-Cube created or granted
herein and the enforceability of this Agreement with respect to the
Pledgor at all times shall remain effective to guaranty the full amount
of all the Secured Obligations even though the Secured Obligations, or
any part thereof, or any security or guaranty therefor, may be or
hereafter may become invalid or otherwise unenforceable as against the
Borrower or any surety and whether or not the Borrower or other surety
shall have any personal liability with respect thereto. The Pledgor
expressly waives any and all defenses now or hereafter arising or
asserted by reason of (i) any disability or other defense of the
Borrower with respect to the Secured Obligations, (ii) the
unenforceability or invalidity of any security or guaranty for the
Secured Obligations or the lack of perfection or continuing perfection
or failure of priority of any security for the Secured Obligations,
(iii) the cessation for any cause whatsoever of the liability of the
Borrower (other than by reason of the full payment and performance of
all Secured Obligations), (iv) any failure of C-Cube to marshal assets
in favor of the Borrower or any other Person, (v) any act or omission
of C-Cube or others that directly or indirectly results in or aids the
discharge or release of the Borrower or other surety or the Secured
Obligations or any guaranty therefor by operation of law or otherwise,
(vi) any applicable law which provides that the obligation of a surety
or guarantor must neither be larger in amount nor in other respects
more burdensome than that of the principal or which reduces a surety's
or guarantor's obligation in proportion to the principal obligation,
(vii) any failure of C-Cube to file or enforce a claim in any
bankruptcy or other proceeding with respect to any Person, (viii) the
election by C-Cube, in any bankruptcy proceeding of any Person, of the
application or non-application of Section 1111(b)(2) of the United
States Bankruptcy Code, (ix) any extension of credit or the grant of
any Lien under Section 364 of the United States Bankruptcy Code, (x)
any use of cash collateral under Section 363 of the United States
Bankruptcy Code, (xi) any agreement or stipulation with respect to the
provision of adequate protection in any bankruptcy proceeding of any
Person, (xii) the avoidance of any Lien in favor of C-Cube for any
reason, (xiii) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, liquidation or dissolution proceeding commenced
by or against any Person, including any discharge of, or bar or stay
against collecting, all or any of the Secured Obligations (or any
interest thereon) in or as a result of any such proceeding, or (xiv)
any action taken by C-Cube that is authorized by this Section or any
other provision of any Loan Document. The Pledgor expressly waives all
setoffs and counterclaims and all presentment, demands for payment or
performance, notices of nonpayment or nonperformance, protests, notices
of protest, notices of dishonor and all other notices or demands of any
kind or nature whatsoever with respect to the Secured Obligations
(except notices expressly required by the Loan Documents), and all
notices of acceptance of this Agreement or of the existence, creation
or incurrence of new or additional Secured Obligations.
11
<PAGE> 12
SECTION 14. REINSTATEMENT. This Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against the Pledgor or any Pledged Entity for liquidation or reorganization,
should the Pledgor or any Pledged Entity become insolvent or make an assignment
for the benefit of creditors or should a receiver or trustee be appointed for
all or any significant part of the Pledgor's or a Pledged Entity's assets, and
shall continue to be effective or be reinstated, as the case may be, if at any
time payment and performance of the Secured Obligations, or any part thereof,
is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Secured Obligations,
whether as a "voidable preference", "fraudulent conveyance", or otherwise, all
as though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Secured Obligations shall be reinstated and deemed reduced only by such amount
paid and not so rescinded, reduced, restored or returned.
SECTION 15. MISCELLANEOUS.
(a) C-Cube may execute any of its duties hereunder by or
through agents or employees and shall be entitled to advice of counsel
concerning all matters pertaining to its duties hereunder.
(b) The Pledgor agrees to promptly reimburse C-Cube for actual
out-of-pocket expenses, including, without limitation, reasonable counsel fees,
incurred by C-Cube in connection with the enforcement of this Agreement.
(c) None of C-Cube or any of its respective officers,
directors, employees, agents or counsel shall be liable for any action lawfully
taken or omitted to be taken by it or them hereunder or in connection herewith,
except for its or their own gross negligence or willful misconduct.
(d) THIS AGREEMENT SHALL BE BINDING UPON THE PLEDGOR AND ITS
SUCCESSORS AND ASSIGNS (INCLUDING A DEBTOR-IN-POSSESSION ON BEHALF OF THE
PLEDGOR), AND SHALL INURE TO THE BENEFIT OF, AND BE ENFORCEABLE BY, C-CUBE AND
ITS SUCCESSORS AND ASSIGNS, AND NONE OF THE TERMS OR PROVISIONS OF THIS
AGREEMENT MAY BE WAIVED, ALTERED, MODIFIED OR AMENDED EXCEPT IN WRITING DULY
SIGNED FOR AND ON BEHALF OF C-CUBE AND PLEDGOR.
SECTION 16. SEVERABILITY. If for any reason any provision or provisions
hereof are determined to be invalid and contrary to any existing or future law,
such invalidity shall not impair the operation of or effect those portions of
this Agreement which are valid.
SECTION 17. NOTICES. Except as otherwise provided herein, whenever it
is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other party, or whenever any of
12
<PAGE> 13
the parties desires to give or serve upon any other a communication with respect
to this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and either shall be
delivered in accordance with the terms of the Guaranty.
SECTION 18. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
ANY OF THE LOAN DOCUMENTS, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT
STATE.
SECTION 19. WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTY HERETO OR ANY OF THEM WITH
RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
SECTION 20. SECTION TITLES. The Section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
SECTION 21. ADVICE OF COUNSEL. Each of the parties represents to each
other party hereto that it has discussed this Agreement and, specifically, the
provisions of Section 18 and Section 19, with its counsel.
SECTION 22. BENEFIT OF C-CUBE. All Liens granted or contemplated hereby
shall be for the benefit of C-Cube, and all proceeds or payments realized from
Collateral in accordance herewith shall be applied to the Obligations in
accordance with the terms of the Note.
[signature page follows]
13
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
C-CUBE SEMICONDUCTOR INC., AS PLEDGOR
By: /s/ UMESH PADVAL
--------------------------------------
Name: Umesh Padval
Title: President and
Chief Executive Officer
C-CUBE MICROSYSTEMS INC.
By: /s/ ALEXANDRE BALKANSKI
--------------------------------------
Name: Alexandre Balkanski
Title: President and
Chief Executive Officer
14
<PAGE> 15
SCHEDULE I
PLEDGED INTERESTS
<TABLE>
<CAPTION>
NUMBER
OF SHARES AND %
CERTIFICATE OF EQUITY
PLEDGED ENTITY EQUITY INTEREST CLASS OF STOCK NUMBER(S) INTEREST
-------------- --------------- -------------- --------- -------------------
<S> <C> <C> <C> <C>
C-Cube Semiconductor II Inc. N/A Common CS-1, CS-2 1,000,000
over 99% equity interest
</TABLE>
<PAGE> 16
SCHEDULE II
PLEDGE AMENDMENT
This Pledge Amendment, dated _____________ ___, _____ is delivered pursuant to
Section 6(d) of the Pledge Agreement referred to below. All defined terms herein
shall have the meanings ascribed thereto or incorporated by reference in the
Pledge Agreement. The undersigned hereby certifies that the representations and
warranties in Section 5 of the Pledge Agreement are and continue to be true and
correct as to the Pledged Collateral pledged prior to this Pledge Amendment and
as to Pledged Collateral pledged pursuant to this Pledge Amendment. The
undersigned further agrees that this Pledge Amendment may be attached to that
certain Pledge Agreement, dated as of May 2, 2000 at 12:15 p.m. (as the same may
be amended, supplemented or otherwise modified from time to time, the "Pledge
Agreement"), among the undersigned, as a Pledgor, and C-CUBE MICROSYSTEMS INC.
("C-Cube"), and that the Pledged Interests listed on Schedule A to this Pledge
Amendment shall be and become a part of the Pledged Collateral referred to in
said Pledge Agreement and shall secure all Secured Obligations referred to in
said Pledge Agreement. The undersigned acknowledges that any shares not included
in the Pledged Collateral at the discretion of C-Cube may not otherwise be
pledged by Pledgor to any other Person or otherwise used as security for any
obligations other than the Secured Obligations.
C-CUBE SEMICONDUCTOR INC.
By:
--------------------------------------
Name:
Title:
<PAGE> 17
SCHEDULE A
PLEDGED INTERESTS
<TABLE>
<CAPTION>
NUMBER
CERTIFICATE OF SHARES AND % OF
PLEDGED ENTITY EQUITY INTEREST CLASS OF STOCK NUMBER(S) EQUITY INTEREST
-------------- --------------- -------------- --------- ---------------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 1
Exhibit 99.3
PARENT GUARANTY
THIS PARENT GUARANTY, dated as of May 2, 2000 at 12:15 p.m. (this
"Guaranty"), is executed by C-Cube Semiconductor Inc., a Delaware corporation
("Parent"), in favor of C-Cube Microsystems Inc., a Delaware corporation
("Lender").
RECITALS
A. Pursuant to a Promissory Note, dated as of May 2, 2000 at 12:15
p.m. (the "Note"), executed in favor of Lender by C-Cube Semiconductor II Inc.,
a Delaware corporation, of which Parent is the majority stockholder
("Borrower"), Lender has agreed to extend credit to Borrower upon the terms and
subject to the conditions set forth therein.
B. Lender's obligation to extend the credit to Borrower under the Note
is subject, among other conditions, to receipt by Lender of this Guaranty, duly
executed by Parent.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Parent hereby agrees with Lender as follows:
1. Definitions and Interpretation. When used in this Guaranty, the
following terms shall have the following respective meanings:
"Bankruptcy Code" shall mean Title 11 of the United States Code (11
U.S.C. Section 101 et seq.) or any replacement or supplemental federal
statutes dealing with the bankruptcy of debtors.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, assets, operations, prospects or financial or other
condition of Parent; or (b) the rights and remedies of Lender under
this Guaranty, the Note, the other Transaction Documents or any related
document, instrument or agreement.
"Obligations" shall mean and include all loans, advances, debts,
liabilities and obligations, howsoever arising, owed by Borrower to
Lender of every kind and description (whether or not evidenced by any
note or instrument and whether or not for the payment of money), direct
or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising (or which would become due or arise but for the
operation of any provision or doctrine with respect to the Bankruptcy
Code and whether or not an allowed claim) pursuant to the terms of the
Note or any of the other Transaction Documents, including without
limitation all interest, fees, charges, expenses, attorneys' fees and
accountants' fees chargeable to Borrower or payable by Borrower
thereunder. "Obligations" shall also include all "Obligations" as
defined in the Note.
<PAGE> 2
Unless otherwise defined herein, all other capitalized terms used herein and
defined in the Note shall have the respective meanings given to those terms in
the Note. The rules of construction set forth in the Note shall, to the extent
not inconsistent with the terms of this Guaranty, apply to this Guaranty and are
hereby incorporated by reference. Parent acknowledges receipt of copies of the
Note and the other Transaction Documents.
2. Continuing Guaranty. Parent unconditionally guarantees and promises
to pay to Lender at Lender's office located at the address set forth in
Paragraph 8(a) hereof, on demand after the occurrence and during the continuance
of an Event of Default, in lawful money of the United States, any and all
Obligations, and to perform on demand after the occurrence and during the
continuance of an Event of Default any and all Obligations. Parent's undertaking
to guarantee shall not apply to any Obligations created after actual receipt by
Lender of written notice of Parent's revocation as to future transactions;
provided, however, that (i) it shall continue to be applicable to any
Obligations created thereafter which result because payments of Obligations as
to past transactions are rescinded or otherwise required to be surrendered by
Lender after receipt; and, (ii) it shall continue to be applicable to any
Obligations created thereafter which are created pursuant to any binding
commitments of Lender. The liability of Parent hereunder is independent of the
Obligations, and a separate action or actions may be brought and prosecuted
against Parent irrespective of whether action is brought against Borrower or any
other guarantor of the Obligations or whether Borrower or any other guarantor of
the Obligations is joined in any such action or actions. This Guaranty is a
guaranty of payment and not of collection.
3. Representations and Warranties. Parent represents and warrants to
Lender that (a) Parent is a corporation duly organized, validly, existing and in
good standing under the laws of its state of incorporation and is duly qualified
and in good standing in each jurisdiction where the nature of its business or
properties requires such qualification, except where the failure to qualify
could not reasonably be expected to have a Material Adverse Effect; (b) the
execution, delivery and performance by Parent of this Guaranty are within the
power of Parent and have been duly authorized by all necessary actions on the
part of Parent; (c) this Guaranty has been duly executed and delivered by Parent
and constitutes a legal, valid and binding obligation of Parent, enforceable
against it in accordance with its terms, except as limited by bankruptcy,
insolvency or other laws of general application relating to or affecting the
enforcement of creditors' rights generally; (d) the execution, delivery and
performance of this Guaranty do not (i) violate any laws, rules or regulations
applicable to Parent, (ii) contravene any material contractual obligation of
Parent, or (iii) result in the creation or imposition of any Lien upon any
property, asset or revenue of Parent; (e) no consent, approval, order or
authorization of, or registration, declaration or filing with, any governmental
authority or other person or entity (including, without limitation, the
shareholders of any Parent) is required in connection with the execution,
delivery and performance of this Guaranty, except such consents, approvals,
orders, authorizations, registrations, declarations and filings that are so
required and which have been obtained and are in full force and effect; (f)
Parent has paid all taxes and other charges imposed by any governmental
authority due and payable by Parent other than those which are being challenged
in good faith by appropriate proceedings and for which adequate reserves have
been established; (g) Parent is not in violation of any law, rule or regulation
or contractual obligation other than those the consequences of which could not
reasonably be expected to have a Material
-2-
<PAGE> 3
Adverse Effect; (h) Parent is neither an investment company (as defined in the
Investment Company Act of 1940) nor controlled by an investment company; (i) no
litigation, investigation or proceeding of any governmental authority is pending
or, to the knowledge of Parent, threatened against Parent which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect; and
(j) the Pro-Forma Financial Statements of Parent for the fiscal year ended
December 31, 1999, were prepared in accordance with generally accepted
accounting principles and present fairly the financial condition of Parent as at
such date and the results of operations and changes in financial position for
such period.
4. Covenants. Parent hereby agrees (a) to deliver to Lender (i) notice
of any Event of Default or of any other event or condition which could
reasonably be expected to have a Material Adverse Effect, and (ii) such other
information regarding business, operations or financial or other condition of
Parent as Lender may reasonably request; (b) to the extent failure to do so
could have a Material Adverse Effect, to pay all taxes and other charges imposed
by any government authority upon Parent or its property as and when they become
due; (c) to the extent failure to do so could reasonably be expected to have a
Material Adverse Effect, to comply with all laws, rules and regulations and
contractual obligations; and (d) to maintain its corporate existence and all
rights, privileges and franchises necessary for the conduct of its business.
5. Authorized Actions. Parent authorizes Lender, in its discretion,
without notice to Parent, irrespective of any change in the financial condition
of Borrower, Parent or any other guarantor of the Obligations since the date
hereof, and without affecting or impairing in any way the liability of Parent
hereunder, from time to time to (a) create new Obligations, and, either before
or after receipt of notice of revocation, renew, compromise, extend, accelerate
or otherwise change the time for payment or performance of, or otherwise change
the terms of the Obligations or any part thereof, including increase or decrease
of the rate of interest thereon; (b) take and hold security for the payment or
performance of the Obligations and exchange, enforce, waive or release any such
security; (c) apply such security and direct the order or manner of sale
thereof; (d) purchase such security at public or private sale; (e) otherwise
exercise any right or remedy it may have against Borrower, Parent, any other
guarantor of the Obligations or any security, including, without limitation, the
right to foreclose upon any such security by judicial or nonjudicial sale; (f)
settle, compromise with, release or substitute any one or more makers, endorsers
or guarantors of the Obligations; and (g) assign the Obligations, this Guaranty,
or the other Transaction Documents in whole or in part.
6. Waivers. Parent waives (a) any right to require Lender to (i)
proceed against Borrower or any other guarantor of the Obligations, (ii) proceed
against or exhaust any security received from Borrower or any other guarantor of
the Obligations, or (iii) pursue any other remedy in Lender's power whatsoever;
(b) any defense arising by reason of the application by Borrower of the proceeds
of any borrowing; (c) any defense resulting from the absence, impairment or loss
of any right of reimbursement, subrogation, contribution or other right or
remedy of Parent against Borrower, any other guarantor of the Obligations or any
security, whether resulting from an election by Lender to foreclose upon
security by nonjudicial sale, or otherwise; (d) any setoff or counterclaim of
Borrower or any defense which results from any disability or other defense of
Borrower or the
-3-
<PAGE> 4
cessation or stay of enforcement from any cause whatsoever of the liability of
Borrower (including, without limitation, the lack of validity or enforceability
of any Transaction Document); (e) any right to exoneration of sureties which
would otherwise be applicable; (f) so long as any Obligations remain
outstanding, any right of subrogation or reimbursement and, if there are any
other guarantors of the Obligations, any right of contribution, and right to
enforce any remedy which Lender now has or may hereafter have against Borrower,
and any benefit of, and any right to participate in, any security now or
hereafter received by Lender; (g) all presentments, demands for performance,
notices of non-performance, notices delivered under the Note or any Transaction
Document, protests, notice of dishonor, and notices of acceptance of this
Guaranty and of the existence, creation or incurring of new or additional
Obligations and notices of any public or private foreclosure sale; (h) the
benefit of any statute of limitations to the extent permitted by law; (i) any
appraisement, valuation, stay, extension, moratorium redemption or similar law
or similar rights for marshalling; and (j) any right to be informed by Lender of
the financial condition of Borrower or any other guarantor of the Obligations or
any change therein or any other circumstances bearing upon the risk of
nonpayment or nonperformance of the Obligations. Parent has the ability and
assumes the responsibility for keeping informed of the financial condition of
Borrower and any other guarantors of the Obligations and of other circumstances
affecting such nonpayment and nonperformance risks.
7. Subordination of Debt to Parent. Parent hereby subordinates any
indebtedness of Borrower to Parent to the Obligations. Parent agrees that Lender
shall be entitled to receive payment of all Obligations before Parent receives
payment of any indebtedness of Borrower to Parent. Any payments on such
indebtedness of Borrower to Parent, if Lender so requests, shall be collected,
enforced and received by Parent as trustee for Lender and be paid over to Lender
on account of the Obligations, but without reducing or affecting in any manner
the liability of Parent under the other provisions of this Guaranty. Lender is
authorized and empowered (but without any obligation to so do), in its
discretion, (a) in the name of Parent, to collect and enforce, and to submit
claims in respect of, indebtedness of Borrower to Parent and to apply any
amounts received thereon to the Obligations, and (b) to require Parent (i) to
collect and enforce, and to submit claims in respect of, indebtedness of
Borrower to Parent, and (ii) to pay any amounts received on such indebtedness to
Lender for application to the Obligations.
8. Miscellaneous.
(a) Notices. Except as otherwise provided herein, all notices,
requests, demands, consents, instructions or other communications to or
upon Lender or Parent under this Guaranty shall be by telecopy or in
writing and telecopied, mailed, telexed or delivered to each party at
telecopier number or its address set forth below. All such notices and
communications: when sent by federal express or other overnight
service, shall be effective on the Business Day following the deposit
with such service; when mailed, first class postage prepaid and
addressed as aforesaid in the mails, shall be effective upon receipt;
when telexed, shall be effective upon receipt of answerback; when
delivered by hand, shall be effective upon delivery; and when
telecopied, shall be effective upon confirmation of receipt.
Lender: HARMONIC INC.
-4-
<PAGE> 5
549 Baltic Way
Sunnyvale, California 94089
Tel: 408-542-2500
Fax: 408-542-2516
Borrower: C-CUBE SEMICONDUCTOR II INC.
1778 McCarthy Blvd.
Milpitas, California
Tel: (408) 590-8000
Fax: _________________
(b) Nonwaiver. No failure or delay on Lender's part in
exercising any right hereunder shall operate as a waiver thereof or of
any other right nor shall any single or partial exercise of any such
right preclude any other further exercise thereof or of any other
right.
(c) Amendments and Waivers. This Guaranty may not be amended
or modified, nor may any of its terms be waived, except by written
instruments signed by Parent and Lender. Each waiver or consent under
any provision hereof shall be effective only in the specific instances
for the purpose for which given.
(d) Assignments. This Guaranty shall be binding upon and inure
to the benefit of Lender and Parent and their respective successors and
assigns; provided, however, that Parent and Lender may sell, assign and
delegate their respective rights and obligations hereunder only as
permitted by the Loan Agreement.
(e) Cumulative Rights, etc. The rights, powers and remedies of
Lender under this Guaranty shall be in addition to all rights, powers
and remedies given to Lender by virtue of any applicable law, rule or
regulation of any Governmental Authority, the Loan Agreement, any other
Operative Document or any other agreement, all of which rights, powers,
and remedies shall be cumulative and may be exercised successively or
concurrently without impairing Lender's rights hereunder.
(f) Partial Invalidity. If at any time any provision of this
Guaranty is or becomes illegal, invalid or unenforceable in any respect
under the law or any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions of this Guaranty nor the
legality, validity or enforceability of such provision under the law of
any other jurisdiction shall in any way be affected or impaired
thereby.
-5-
<PAGE> 6
(g) Governing Law. This Guaranty shall be governed by and
construed in accordance with the laws of the State of California
without reference to conflicts of law rules.
(h) Jury Trial. EACH OF PARENT AND LENDER, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
GUARANTY.
<PAGE> 7
IN WITNESS WHEREOF, Parent has caused this Guaranty to be executed as
of the day and year first above written.
C-CUBE SEMICONDUCTOR INC.
By: /s/ UMESH PADVAL
--------------------------------
Name: Umesh Padval
Title: President and Chief
Executive Officer
-2-
