SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
Exhibit
10.59
SECOND
AMENDMENT
TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS
SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
("Second
Amendment"), dated as of August 29, 2005, is made and entered into by and
between DIODES
INCORPORATED,
a
Delaware corporation ("Borrower"), and UNION
BANK OF CALIFORNIA, N.A.,
a
national banking association ("Bank").
RECITALS:
A.
Borrower and Bank are parties to that certain Amended and Restated Credit
Agreement dated as of February 27, 2003, as amended by (i) that certain First
Amendment dated as of July 6, 2004 and (ii) that certain extension letter
dated
May 26, 2005 (as so amended, the "Agreement"), pursuant to which Bank agreed
to
extend various credit facilities to Borrower in the amounts provided for
therein.
B.
On May
27, 2005, Bank issued, for the account of Borrower, and in favor of Banque
Et
Caisse D’Epargne De L’Etat, Luxembourg, as beneficiary, that certain Irrevocable
Standby Letter of Credit, bearing no. 306S236359, in the original face amount
of
One Hundred Fifteen Thousand Five Hundred Euros (Euro 115,500) (as at any
time
amended, the “Existing Standby Letter of Credit”). The Existing Standby Letter
of Credit has a current expiry date of May 30, 2006.
C.
Borrower has requested that Bank agree to (i) increase the amount of the
Revolving Credit Commitment from Seven Million Five Hundred Thousand Dollars
($7,500,000) to Twenty Million Dollars ($20,000,000), (ii) extend the Revolving
Credit Commitment Termination Date from August 29, 2005 to August 29, 2008,
(iii) make a standby letter of credit sublimit of the Revolving Credit
Commitment available to Borrower, which shall provide for the issuance by
Bank,
for the account of Borrower, of one or more irrevocable standby letters of
credit in the aggregate face amount at any one time outstanding not to exceed
Five Million Dollars ($5,000,000), and (iv) amend the Agreement in certain
other
respects. Bank is willing to so amend the Agreement, subject, however, to
the
terms and conditions of this Second Amendment.
AGREEMENT:
In
consideration of the above recitals and of the mutual covenants and conditions
contained herein, Borrower and Bank agree as follows:
1. Defined
Terms.
Initially capitalized terms used herein which are not otherwise defined shall
have the meanings assigned thereto in the Agreement.
2. Amendments
to Section 1 of the Agreement.
1
(a)
Section 1 of the Agreement is hereby amended by adding a definition of
“Acquisition”
thereto
in the appropriate alphabetical order, which shall read in full as
follows:
“’Acquisition’
shall
mean any
transaction, or any series of related transactions, consummated after the
effective date of this Agreement, by which Borrower or any of its Subsidiaries
directly or indirectly (a) acquires any ongoing business or all or substantially
all of the assets of any Person engaged in any ongoing business, whether
through
a purchase of assets, a merger or otherwise, (b) acquires control of the
securities of a Person engaged in an ongoing business representing more than
fifty percent (50%) of the ordinary voting power for the election of directors
or other governing position if the business affairs of such Person are managed
by a board of directors or other governing body or (c) acquires control of
more
than fifty percent (50%) of the ownership interest in any Person engaged
in an
ongoing business that is not managed by a board of directors or other governing
body.”
(b)
The
definition of “Capital
Expenditures Maintenance Amount”
appearing in Section 1 of the Agreement is hereby deleted in its
entirety.
(c)
The
definition of “Current
Ratio”
appearing in Section 1 of the Agreement is hereby amended to read in full
as
follows:
“’Current
Ratio’
shall
mean, as of the last day of any fiscal quarter, calculated for Borrower and
its
Subsidiaries (other
than any
Foreign Subsidiaries) on a consolidated basis, the ratio of (a) current assets
as of such date, less intercompany Indebtedness, to (b) current liabilities
as
of such date, less intercompany Indebtedness, in each case as determined
in
accordance with GAAP. For the purpose of calculating current liabilities
hereunder, the aggregate principal amount of those Revolving Loans outstanding
under the Revolving Credit Commitment as of such date, the proceeds of which
were paid as consideration in connection with any Permitted Acquisition,
shall
not be considered to be current liabilities.”
(d)
The
definition of “Debt
Service”
appearing in Section 1 of the Agreement is hereby deleted in its
entirety.
(e)
The
definition of “Fixed
Charge Coverage Ratio”
appearing in Section 1 of the Agreement is hereby deleted in its
entirety.
(f)
The
definition of “Guarantor
Loan”
appearing in Section 1 of the Agreement is hereby amended to read in full
as
follows:
“’Guarantor
Loan’
shall
mean that certain term loan previously made by Bank to Guarantor in the original
principal amount of Five Million Dollars ($5,000,000), which is evidenced
by the
Guarantor Note and covered by the terms and conditions of that certain Covenant
Agreement dated August 29, 2005, by and between Guarantor and
Bank.”
2
(g)
The
definition of “Guarantor Note” appearing in Section 1 of the Agreement is hereby
amended to read in full as follows:
“’Guarantor
Note’
shall
mean that certain replacement term note dated August 29, 2005, issued by
Guarantor in favor of Bank in the original principal amount of Five Million
Dollars ($5,000,000), together with any and all amendments, extensions,
reissuances, renewals or replacements thereof.”
(h)
Section 1 of the Agreement is hereby further amended by adding a definition
of
“Interest
Expense”
thereto
in the appropriate alphabetical order, which shall read in full as
follows:
“’Interest
Expense’
shall
mean, as of the last day of each fiscal quarter, the interest expense of
Borrower and its Subsidiaries paid or payable during the four (4) consecutive
fiscal quarters ended on such date.”
(i)
Section 1 of the Agreement is hereby further amended by adding a definition
of
“Interest
Expense Coverage Ratio”
thereto
in the appropriate alphabetical order, which shall read in full as
follows:
“’Interest
Expense Coverage Ratio’
shall
mean, as of the date of calculation, calculated for Borrower and its
Subsidiaries on a consolidated basis, the ratio of (a)
(i)
EBITDA for the applicable fiscal period minus (ii) the Capital Expenditures
paid
or payable during such applicable fiscal period minus (iii) federal and state
income tax expense during such applicable fiscal period minus (iv) the aggregate
amount of dividends declared or paid by Borrower and its Subsidiaries during
such applicable fiscal period minus (v) the aggregate amount paid by Borrower
and its Subsidiaries to their shareholders in respect of treasury stock during
such applicable fiscal period to (b) Interest Expense for such applicable
fiscal
period.”
(j)
The
definition of “Net
Profit After Taxes”
appearing in Section 1 of the Agreement is hereby amended to read in full
as
follows:
“’Net
Profit After Taxes’
shall
mean,
for any
fiscal period, the after-tax income of Borrower and its Subsidiaries for
such
fiscal period, as determined in accordance with GAAP. For the purposes of
determining Borrower's compliance with Section 7.8 hereof, 'Net Profit After
Taxes' shall not include any income adjustments required as a result of the
recent GAAP pronouncement on goodwill.”
(k)
Section 1 of the Agreement is hereby further amended by adding a definition
of
“Net
Profit Before Taxes”
thereto
in the appropriate alphabetical order, which shall read in full as
follows:
“’Net
Profit Before Taxes’
shall
mean,
for any
fiscal period, the pre-tax income of Borrower and its Subsidiaries for such
fiscal period, as determined in accordance with GAAP. For the purposes of
determining Borrower's compliance with Section 6.8 hereof, 'Net Profit Before
Taxes' shall not include any income adjustments required as a result of the
recent GAAP pronouncement on goodwill.”
3
(l)
Section 1 of the Agreement is hereby further amended by adding a definition
of
“Permitted
Acquisition”
thereto
in the appropriate alphabetical order, which shall read in full as
follows:
"’Permitted
Acquisition’
shall
mean any Acquisition by Borrower or any of its Subsidiaries (as applicable,
the
‘acquiror’) of another Person, or the business or assets of such Person, engaged
in a line of business comparable or complementary to the Business (the
‘target’), provided that: (a) no Default or Event of Default shall exist at the
time of such Acquisition or occur after giving effect to such Acquisition;
(b)
such Acquisition shall have been approved by the board of directors or the
owners of the target; (c) the pro-forma balance sheets as of the date of
such
Acquisition (including pro-forma financial covenants) provided by Borrower
to
Bank shall have demonstrated that, after giving effect to such Acquisition,
Borrower would be and would remain in compliance with the financial covenants
set forth in Sections 6.5, 6.6, 6.7 and 6.8, inclusive, of this Agreement;
(d)
if the aggregate cash consideration paid by acquiror in connection with any
single Acquisition exceeds Ten Million Dollars ($10,000,000) or if the aggregate
cash and non-cash consideration paid by acquiror in connection with any single
Acquisition exceeds Thirty Million Dollars ($30,000,000), Borrower shall
have
delivered to Bank, no later than fifteen (15) days prior to the effective
date
of such Acquisition, a pro-forma compliance certificate of Borrower’s chief
financial officer or controller, demonstrating that after giving effect to
such
Acquisition, Borrower would be and would remain in compliance with the financial
covenants set forth in Sections 6.5, 6.6, 6.7 and 6.8, inclusive, of this
Agreement; and (e) after giving effect to such Acquisition, the Leverage
Ratio,
as determined on a pro-forma basis, shall not be greater than 2.0 to
1.0.”
(m)
Paragraph (d) contained in the definition of “Permitted
Indebtedness”
appearing in Section 1 of the Agreement is hereby amended to read in full
as
follows:
“(d)
Indebtedness
of Borrower or any of its Subsidiaries incurred to finance the purchase of
equipment constituting a Capital Expenditure;”
(l)
Paragraph (g) contained in the definition of “Permitted
Indebtedness”
appearing in Section 1 of the Agreement is hereby amended to read in full
as
follows:
“(g)
lease obligations
of
Borrower or any of its Subsidiaries;”
(n)
Section 1 of the Agreement is hereby further amended by adding a definition
of
“Second
Amendment”
thereto
in the appropriate alphabetical order, which shall read in full as
follows:
“’Second
Amendment’
shall
mean that certain Second Amendment dated as of August 29, 2005, by and between
Borrower and Bank.”
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(o)
Section 1 of the Agreement is hereby further amended by adding the definitions
of “Standby
Letter of Credit Agreements”
and
“Standby
Letter of Credit Agreement”
thereto
in the appropriate alphabetical order, which shall read in full as
follows:
“’Standby
Letter of Credit Agreements’
and
‘Standby
Letter of Credit Agreement’
shall
mean, respectively,
(a) the irrevocable standby letter of credit applications and agreements,
each
on Bank’s standard form therefor, executed by Borrower in connection with the
issuance by Bank of the Standby Letters of Credit for the account of Borrower,
and (b) any one of such Standby Letter of Credit Agreements.”
(p)
Section 1 of the Agreement is hereby further amended by adding the definition
of
“Standby
Letter of Credit Sublimit”
thereto
in the appropriate alphabetical order, which shall read in full as
follows:
“‘Standby
Letter of Credit Sublimit’
shall
have the meaning assigned to such term in Section 2.1A hereof.”
(q)
Section 1 of the Agreement is hereby further amended by adding the definitions
of “Standby
Letters of Credit”
and
“Standby
Letter of Credit”
thereto
in the appropriate alphabetical order, which shall read in full as
follows:
“’Standby
Letters of Credit’
and
‘Standby
Letter of Credit’
shall
have the meanings assigned to those terms in Section 2.1A hereof.”
3. Amendments
to Section 2 of the Agreement.
(a)
Section 2.1 of the Agreement is hereby amended by substituting the date “August
29, 2008” for the date “August 29, 2005” appearing in the second line thereof.
Accordingly, from and after the effective date of this Second Amendment,
the
Revolving Credit Commitment Termination Date shall be August 29,
2008.
(b)
Section 2.1 of the Agreement is hereby further amended by substituting the
amount “Twenty Million Dollars ($20,000,000)” for the amount “Seven Million Five
Hundred Thousand Dollars ($7,500,000)” appearing in the seventh and eighth lines
thereof.
(c)
Section 2 of the Agreement is hereby further amended by adding a new Section
2.1A thereto, which shall read in full as follows:
“2.1A
Standby Letter of Credit Sublimit.
Subject
to the terms and conditions of this Agreement, and as a sublimit of the
Revolving Credit Commitment, during the period from the effective date of
the
Second Amendment to this Agreement to but excluding the Revolving Credit
Commitment Termination Date, provided that no Event of Default then has occurred
and is continuing, and no event has occurred which, with the giving of notice
or
the lapse of time, or both, would become an Event of Default, Bank
shall issue, for the account of Borrower, one or more irrevocable standby
letters of credit (collectively, the ‘Standby Letters of Credit,’ and
individually, a ‘Standby Letter of Credit’) upon Borrower’s request. Borrower
and Bank specifically agree that the sum of (a) the aggregate amount available
to be drawn under all outstanding Standby Letters of Credit plus (b) the
aggregate amount of unpaid reimbursement obligations under drawn Standby
Letters
of Credit shall not exceed Five Million Dollars ($5,000,000) at any one time
(the ‘Standby Letter of Credit Sublimit’) and shall reduce, Dollar for Dollar,
the amount available to be borrowed under the Revolving Credit Commitment.
Each
Standby Letter of Credit shall be issued for any purpose acceptable to Bank,
in
its sole and absolute discretion. Each Standby Letter of Credit shall be
drawn
on such terms and conditions as may be acceptable to Bank and shall be governed
by the terms of (and Borrower agrees to execute) Bank's standard form Standby
Letter of Credit Agreement in connection therewith. No Standby Letter of
Credit
shall have an expiration date more than two (2) years from its date of issuance
or shall expire later than thirty (30) days after the Revolving Credit
Commitment Termination Date. Notwithstanding anything to the contrary contained
hereinabove, the Existing Standby Letter of Credit shall be treated as a
utilization of the Standby Letter of Credit Sublimit and the Revolving Credit
Commitment.”
5
(d)
Section 2.4 of the Agreement is hereby amended to read in full as
follows:
“2.4
Purposes of the Credit.
“(a)
The
proceeds of the Revolving Loans shall be used for Borrower’s domestic working
capital purposes and in connection with Permitted Acquisitions. Without limiting
the generality of the foregoing sentence, Borrower shall not use the proceeds
of
any Revolving Loan directly or indirectly to finance the overseas operations
or
Capital Expenditures of Borrower or any of its Subsidiaries or to repay or
prepay any Subordinated Indebtedness.
“(b)
Each
Standby Letter of Credit shall be issued by Bank for a purpose permitted
by
Section 2.1A hereinabove.”
(e)
Section 2.11 of the Agreement, which relates to the Revolving Credit Commitment
Unused Fee, is hereby deleted in its entirety.
4. Amendments
to Section 6 of the Agreement.
(a)
Section 6.4(a) of the Agreement is hereby amended to read in full as
follows:
“(a)
Quarterly
Financial Statements.
Within
forty-five (45) days after the close of each fiscal quarter (or such later
date,
in the event that Borrower furnishes Bank, on or before such due date, with
a
copy of the written approval of the Securities and Exchange Commission, showing
that the Securities and Exchange Commission has approved the filing thereof
on
or before such later date), except for the last fiscal quarter of each fiscal
year, a copy of the unaudited consolidated Financial Statements of Borrower
and
its Subsidiaries, on Form 10-Q, as of the close of such fiscal quarter, prepared
in accordance with GAAP (except that such unaudited Financial Statements
need
not include footnotes and other informational disclosures);”
6
(b)
Section 6.4(b) of the Agreement is hereby amended to read in full as
follows:
“(b)
Annual
Financial Statements.
Within
one hundred twenty (120) days after the close of each fiscal year of Borrower
(or such later date, in the event that Borrower furnishes Bank, on or before
such due date, with a copy of the written approval of the Securities and
Exchange Commission, showing that the Securities and Exchange Commission
has
approved the filing thereof on or before such later date), a copy of the
consolidated Financial Statements of Borrower and its Subsidiaries, on Form
10-K, as of the close of such fiscal year, prepared on an audited basis in
accordance with GAAP by an independent certified public accountant selected
by
Borrower and reasonably satisfactory to Bank;”
(c)
Section 6.4 of the Agreement is hereby further amended by deleting the word
“and” appearing at the end of subparagraph (d), relettering subparagraph (e) as
subparagraph (f), and adding a new subparagraph (e) thereto, which shall
read in
full as follows:
“(e)
Within one hundred twenty (120) days after the close of each fiscal year
of
Borrower, consolidated financial projections for Borrower and its Subsidiaries
for the following fiscal year, prepared by Borrower in form and substance
acceptable to Bank; and”
(d)
Section 6.5 of the Agreement is hereby amended to read in full as
follows:
“6.5
Leverage Ratio.
Borrower and its Subsidiaries shall maintain a Leverage Ratio of not greater
than 2.25 to 1.0 as of the last day of each fiscal quarter.”
(e)
Section 6.6 of the Agreement is hereby amended to read in full as
follows:
“6.6
Interest Expense Coverage Ratio.
Borrower and its Subsidiaries shall maintain an Interest Expense Coverage
Ratio
of not less than 2.0 to 1.0 as of the last day of each fiscal
quarter.”
(f)
Section 6.7 of the Agreement is hereby amended to read in full as
follows:
“6.7
Current
Ratio.
Borrower and its Subsidiaries (other than any Foreign Subsidiaries) shall
maintain a Current Ratio of not less than 1.0 to 1.0 as of the last day of
each
fiscal quarter.”
(g)
Section 6.8 of the Agreement is hereby amended to read in full as
follows:
“6.8
Net Profit Before Taxes.
As of
the last day of each fiscal quarter, Borrower and its Subsidiaries shall
achieve
average Net Profit Before Taxes, for the two (2) consecutive fiscal quarters
ended on such date, of not less than One Dollar ($1).”
7
5. Amendments
to Section 7 of the Agreement.
(a)
Section 7.5 of the Agreement is hereby amended to read in full as
follows:
“7.5
Liquidation or Merger.
Without
the prior written consent of Bank, which consent shall not be unreasonably
withheld, Borrower shall not, and shall not permit any of its Subsidiaries
to,
liquidate, dissolve or enter into any consolidation, merger, partnership
or
other combination, or purchase or lease all or the greater part of the assets
or
business of another Person; provided, however, that nothing contained herein
shall be deemed to prohibit or otherwise restrict Borrower or any of its
Subsidiaries from making a Permitted Acquisition.”
(b)
Section 7.7 of the Agreement is hereby amended to read in full as
follows:
“7.7
Investments.
Borrower shall not purchase the debt or equity of another Person except (a)
for
savings accounts and certificates of deposit of Bank and (b) for direct U.S.
Government obligations and commercial paper issued by corporations with the
top
ratings of Xxxxx'x Investors Service, Inc. or the Standard & Poor's Ratings
Division of XxXxxx-Xxxx, Inc., provided that all such permitted investments
shall mature within one (1) year of purchase, and (c) in connection with
Permitted Acquisitions.”
(c)
Section 7.8 of the Agreement is hereby amended to read in full as
follows:
“7.8
Payment of Dividends.
Except
for dividends paid by foreign Subsidiaries of Borrower to Borrower and the
other
shareholders of Subsidiaries, Borrower shall not declare or pay, or permit
any
of its Subsidiaries to declare or pay, directly or indirectly, during any
fiscal
year, any dividends, in cash, return of capital or any other form (other
than
dividends payable in its own common stock), or authorize or make any other
distribution with respect to any of its stock now or hereafter outstanding,
if
the aggregate amount of such dividends and distributions so declared, paid,
made
or authorized during such fiscal year shall exceed an amount equal to fifty
percent (50%) of Net Profit After Taxes for such fiscal year.”
(d)
Section 7.10 of the Agreement is hereby amended to read in full as
follows:
“7.10
[Intentionally Deleted].”
(e)
Section 7.12 of the Agreement is hereby deleted in its entirety.
6. Effectiveness
of this Second Amendment.
This
Second Amendment shall become effective as of the date hereof when, and only
when, Bank shall have received all of the following, in form and substance
satisfactory to Bank:
(a) A
counterpart of this Second Amendment, duly executed by Borrower and acknowledged
by Guarantor where indicated hereinbelow;
(b) A
replacement Revolving Note, on Bank’s standard form or otherwise in form and
substance acceptable to Bank and its counsel, duly executed by
Borrower;
8
(c) An
Authorization to Disburse, on Bank’s standard form, duly executed by Borrower,
authorizing Bank to disburse the proceeds of Revolving Loans under the
replacement Revolving Note issued pursuant to this Second Amendment as provided
for in the Agreement, as amended hereby;
(d) A
legal
fee in connection with the preparation of this Second Amendment in the sum
of
One Thousand Five Hundred Dollars ($1,500); and
(e) Such
other documents, instruments or agreements as Bank may reasonably deem
necessary.
7. Ratification.
(a) Except
as
specifically amended hereinabove, the Agreement shall remain in full force
and
effect and is hereby ratified and confirmed; and
(b) Upon
the
effectiveness of this Second Amendment, each reference in the Agreement to
"this
Agreement", "hereunder", "herein", "hereof" or words of like import referring
to
the Agreement shall mean and be a reference to the Agreement as amended by
this
Second Amendment, and each reference in the Agreement to the “Revolving Note” or
words of like import referring to the Revolving Note shall mean and be a
reference to the replacement Revolving Note issued by Borrower in favor of
Bank
pursuant to this Second Amendment.
8. Representations
and Warranties.
Borrower represents and warrants as follows:
(a) Each
of
the representations and warranties contained in Section 5 of the Agreement,
as
amended hereby, is hereby reaffirmed as of the date hereof, each as if set
forth
herein;
(b) The
execution, delivery and performance of this Second Amendment and the execution
and delivery of the replacement Revolving Note provided for herein are within
Borrower's corporate powers, have been duly authorized by all necessary
corporate action, have received all necessary approvals, if any, and do not
contravene any law or any contractual restriction binding on
Borrower;
(c) This
Second Amendment is, and the replacement Revolving Note when delivered for
value
received will be, the legal, valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their terms; and
(d) No
event
has occurred and is continuing or would result from this Second Amendment
which
constitutes an Event of Default under the Agreement, or would constitute
an
Event of Default but for the requirement that notice be given or time elapse
or
both.
9
9. Governing
Law.
This
Second Amendment shall be deemed a contract under and subject to, and shall
be
construed for all purposes and in accordance with, the laws of the State
of
California.
10. Counterparts.
This
Second Amendment may be executed in two or more counterparts, each of which
shall be deemed an original and all of which together shall constitute one
and
the same instrument.
WITNESS
the due
execution hereof as of the date first above written.
“Borrower”
DIODES
INCORPORATED
By:
/s/ Xxxx X. Xxxxx
Xxxx
Xxxxx
Chief
Financial Officer
“Bank”
UNION
BANK OF CALIFORNIA, N.A.
By:
/s/ Xxxx Xxxx
Title:
Vice President
10
Acknowledgment
of Guarantor
The
undersigned, as Guarantor pursuant to that certain Continuing Guaranty dated
as
of December 1, 2000 (the "Guaranty"), hereby consents to the foregoing Second
Amendment and acknowledges and agrees, without in any manner limiting or
qualifying its obligations under the Guaranty, that payment of the Obligations
(as such term is defined in the Guaranty) and the punctual and faithful
performance, keeping, observance and fulfillment by Borrower of all of the
agreements, conditions, covenants and obligations of Borrower contained in
the
Agreement are and continue to be unconditionally guaranteed by the undersigned
pursuant to the Guaranty.
FABTECH,
INC.
By:
/s/ XxxxXx Xxxxxxx
Title:
Secretary
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