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EXHIBIT 10.33
SUBORDINATION AGREEMENT
To: Union Bank of California, N.A.
Commercial Banking Group
Greater Los Angeles Division
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxx
Vice President
The undersigned, Lite-On Power Semiconductor Corp., a Taiwan corporation
("Creditor"), is interested in the financial success of FabTech, Inc., a
Delaware corporation ("Guarantor"), and acknowledges that Union Bank of
California, N.A., a national banking association ("Bank"), has extended various
credit facilities to Diodes Incorporated, a Delaware corporation ("Borrower").
In connection with the extension of such credit facilities to Borrower,
Guarantor has executed and delivered to Bank, or is about to execute and deliver
to Bank, that certain Continuing Guaranty dated as of December 1, 2000, in the
principal amount of Twenty-Six Million Five Hundred Twenty-Eight Thousand Three
Hundred Thirty-Three and 38/100 Dollars ($26,528,333.38) (exclusive of accrued
interest and Bank Expenses (as such term is defined in the Credit Agreement
referred to hereinbelow) (the "Guaranty"). Creditor agrees that the financing
arrangements between Bank and Borrower, and Bank and Guarantor, are in
Borrower's, Guarantor's and Creditor's best interests and, in order to induce
Bank to continue such financing arrangements with Borrower, including the
financing arrangements evidenced by that certain Credit Agreement dated as of
December 1, 2000 (as at any time amended, supplemented or otherwise modified or
restated, the "Credit Agreement"), Creditor agrees as follows:
1. The term "Obligations" is used in this Subordination Agreement (this
"Agreement") in its broadest and most comprehensive sense and shall mean all
present and future indebtedness of Guarantor which may be, from time to time,
incurred by Guarantor, including, but not limited to, any negotiable instruments
evidencing the same, all guaranties (including the Guaranty), debts, demands,
monies, indebtedness, liabilities and obligations owed or to become owing,
including interest, principal, costs and other charges, whether incurred before,
during or after any bankruptcy, reorganization, insolvency, receivership or
similar proceeding, and all claims, rights, causes of action, judgments,
decrees, remedies or other obligations of any kind whatsoever and howsoever
arising, whether voluntary, involuntary, absolute,
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contingent, direct, indirect or by operation of law, together with all expenses
of, for and incidental to collection, including reasonable attorneys' fees.
2. The term "Creditor Obligations" shall mean all of the Obligations owing at
any time by Guarantor to Creditor under the terms of that certain Subordinated
Promissory Note dated December 1, 2000, in the principal amount of Thirteen
Million Five Hundred Forty-Nine Thousand Dollars ($13,549,000), issued by
Guarantor to Creditor, together with any amendments, modifications,
restatements, reissuances or rollovers of such Subordinated Promissory Note.
3. Except as provided in Section 5, below, the Creditor Obligations are hereby
subordinated and subject, in the manner and to the extent described below, to
any and all Obligations owed by Guarantor to Bank, including, but not limited
to, those Obligations arising pursuant to the Guaranty or any other agreement or
agreements between Bank and Guarantor, whether now or hereafter existing, and
whether matured or not (the "Bank Obligations"), so long as any of the Bank
Obligations shall remain unpaid, in whole or in part, or Bank is committed or
otherwise obligated to extend credit to Borrower.
4. So long as any of the Bank Obligations remain unpaid, in whole or in part, or
so long as Bank is committed or otherwise obligated to extend credit to
Borrower, Creditor agrees that, except to the extent that payments under the
Creditor Obligations are permitted under Section 5 below, Creditor shall not:
(a) collect, or receive payment upon, by setoff or in any other manner, all or
any portion of the Creditor Obligations now or hereafter existing; (b) sell,
assign, transfer, pledge or give a security interest in the Creditor Obligations
(except subject expressly to this Agreement); (c) declare or in any other manner
find or hold Guarantor in default under the Creditor Obligations; (d) enforce or
apply any security, now or hereafter existing for the Creditor Obligations; (e)
commence, prosecute or participate in any administrative, legal, or equitable
action against Guarantor concerning the Creditor Obligations; (f) join in any
petition for bankruptcy, assignment for the benefit of creditors, or creditors'
agreement; (g) take, maintain or enforce any lien or security, which is senior
to Bank's interest, in any property, real or personal, to secure the Creditor
Obligations; or (h) incur any obligation to, or receive any loans, advances,
dividends, payments of any kind or gifts from, Guarantor.
5. Notwithstanding the preceding Section, so long as Borrower and Guarantor have
made each and every payment of principal and interest due and owing to Bank, are
not in default under any of Borrower's or Guarantor's agreements with Bank or
Bank has waived such default, and none of the following payments would cause
such default, then Creditor shall be entitled to receive (a) regularly scheduled
payments (but not prepayments or payments resulting from acceleration) of
interest on the Creditor
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Obligations and (b) the regularly scheduled payment (but not a prepayment or a
payment resulting from acceleration) of principal in the amount of Three Million
Five Hundred Forty-Nine Thousand Dollars ($3,549,000) on the Creditor
Obligations that is due and payable on March 31, 2001. In no event shall
Creditor be entitled to receive any payments or prepayments of principal on the
Creditor Obligations (other than the regularly scheduled payment of principal
permitted in the preceding sentence) without Bank's prior written consent, which
Bank may give or withhold in its sole discretion.
6. Except as otherwise expressly agreed to herein, all of the Bank Obligations
now or hereafter existing shall be first paid by Guarantor before any payment
shall be made by Guarantor on the Creditor Obligations. This priority of payment
shall apply at all times until all of the Bank Obligations have been repaid in
full. In the event of any assignment by Guarantor for the benefit of Guarantor's
creditors, any bankruptcy proceedings instituted by or against Guarantor, the
appointment of any receiver for Guarantor or Guarantor's business or assets, or
any dissolution or other winding up of the affairs of Guarantor or of
Guarantor's business, and in all such cases, the officers of Guarantor and any
assignee, trustee in bankruptcy, receiver or other person or persons in charge,
respectively, are hereby directed to pay to Bank the full amount of the Bank
Obligations before making any payments to Creditor.
7. Creditor agrees that it shall place or cause to be placed a legend on the
face of the Subordinated Note evidencing the Creditor Obligations stating that
the payment thereof is subordinated pursuant to the terms of this Agreement, and
any amendments or modifications hereto. Prior to the date of this Agreement,
Creditor agrees to deliver the original Subordinate Note evidencing the Creditor
Obligations to Bank. Creditor agrees to xxxx all books of account in such manner
as to indicate that payment thereof is subordinated pursuant to the terms of
this Agreement. Creditor agrees to execute any recordable subordination
agreements, financing statement amendments or other documents reasonably
required by Bank to provide notice to others of this Agreement, and agrees to
the recording of any such documents as Bank may require.
8. Creditor agrees that Bank shall have absolute power and discretion, without
notice to Creditor, to deal in any manner with the Bank Obligations, including,
interest, costs and expenses payable by Guarantor to Bank, and any security
therefor including, but not limited to, release, surrender, extension, renewal,
acceleration, compromise or substitution. Creditor hereby waives the right, if
any, to require that Bank marshal, or otherwise proceed to dispose of or
foreclose upon, collateral Bank may have in any manner or order.
9. If, at any time hereafter, Bank shall, in its own judgment, determine to
discontinue the extension of credit to or on behalf of Borrower, Bank may do so,
but only in accordance with the terms of the Credit Agreement. This Agreement,
the
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obligations of Creditor owing to Bank hereunder, and Bank's rights and
privileges hereunder shall continue until payment in full of all of the
Obligations owing to Bank by Guarantor notwithstanding any action or non-action
by Bank with respect to the Obligations or with respect to any collateral
therefor or any guaranties thereof. All rights, powers and remedies hereunder
shall apply to all past, present and future Bank Obligations, including under
successive transactions, any of which may continue, renew, increase, decrease or
from time to time create new Bank Obligations and notwithstanding that from time
to time Bank Obligations theretofore existing may have been paid in full.
10. Creditor further agrees that in case Creditor should, contrary to Section 4
above, take or receive any additional security interest in, or additional lien
by way of attachment, execution or otherwise on any property, whether real or
personal, of Guarantor, or should take or join in any other measure or advantage
contrary to this Agreement, at any time prior to the payment in full of all of
the Bank Obligations, Bank shall be entitled to have the same vacated, dissolved
and set aside by such proceedings at law, or otherwise, as Bank may deem proper,
and this Agreement shall be and constitute full and sufficient grounds therefor
and shall entitle Bank to become a party to any proceedings at law, or
otherwise, initiated by Bank or by any other party, in or by which Bank may deem
it proper to protect its interests hereunder. Creditor agrees that if Creditor
violates this Agreement, Creditor shall be liable to Bank for all losses and
damages sustained by Bank by reason of such breach, including attorneys' fees
and costs incurred by Bank in any such legal action.
11. Except as otherwise expressly agreed to herein, if Creditor shall receive
any payments, security interests or other rights in any property of Guarantor in
violation of this Agreement, such payment or property shall be received by
Creditor in trust for Bank and shall forthwith be delivered and transferred to
Bank.
12. Creditor represents and warrants that Creditor has not previously
subordinated the Creditor Obligations for the benefit of any other person or
entity, and agrees that any such subordinations hereafter executed shall be
expressly made subject and subordinate to the terms of this Agreement. Creditor
further warrants that it has established with Guarantor adequate means of
obtaining, on an ongoing basis, such information as Creditor may require which
may affect the ultimate satisfaction by Guarantor of the Creditor Obligations.
Bank shall have no duty to provide any such information to Creditor.
13. This Agreement shall be binding upon the successors and assigns of Creditor,
and shall inure to the benefit of Bank's successors and assigns.
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14. This Agreement and all rights and liabilities of the parties hereto shall be
governed as to validity, interpretation, enforcement and effect by the laws of
the State of California.
15. In the event of any dispute under this Agreement, the prevailing party shall
be entitled to recover its reasonable attorneys' fees and costs, whether or not
suit is brought.
16. This Agreement shall remain in full force and effect until and unless
Creditor delivers to Bank written notice that this Agreement has been revoked as
to credit granted by Bank subsequent to the delivery of such notice, but
delivery of such notice shall not affect any of Creditor's obligations hereunder
with respect to credit granted by Bank prior to such delivery.
17. This Agreement hereby incorporates any alternative dispute resolution
agreement previously, concurrently or hereafter executed between Creditor and
Bank.
Dated: December 1, 2000
"Creditor"
LITE-ON POWER SEMICONDUCTOR CORP.
By: /s/ X.X. Xx
X.X. Xx
President
Address:
Lite-On Power Semiconductor Corp.
28-1 Wu Chin Street
Xx Xx Lung Ind. Zone Keelung
Taiwan, R.O.C.
Attention: X.X. Xx
President
with a copy to:
Xxxx Xxxxx International Law Xxxxxx
00 X-0, Xxx. 0, Xxx Xx Xxxx
Xxxxxx, Xxxxxx
Attention: Xxxxxx X.X. Xxxxx, Esquire
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ACKNOWLEDGMENT AND CONSENT OF GUARANTOR AND BORROWER
Each of the undersigned hereby waives its confidentiality rights with
respect to the foregoing Subordination Agreement, accepts and consents to such
Subordination Agreement, and agrees to be bound by all of the provisions thereof
and to recognize all priorities and other rights granted thereby to Union Bank
of California, N.A.
Dated: December 1, 2000
"Guarantor"
FABTECH, INC.
By: /s/ Xxxxxx Xxxxxxxx
Title: President
"Borrower"
DIODES INCORPORATED
By: Xxxx Xxxxx
Title: Chief Financial Officer
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