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EXHIBIT 10.32
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement") is made and entered into as of
December 1, 2000, by and between DIODES INCORPORATED, a Delaware corporation
("Borrower"), with its principal place of business located at 0000 Xxxx
Xxxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxxxx 00000-0000, and UNION BANK OF
CALIFORNIA, N.A., a national banking association ("Bank"), with an office
located at 0000 Xxxxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx Xxxxx, Xxxxxxxxxx
00000.
RECITALS:
A. Borrower and Bank previously entered into that certain Business Loan
Agreement dated as of June 30, 2000 (the "Prior Agreement"), pursuant to which
Bank agreed to (i) make available to Borrower a revolving line of credit,
providing for revolving loans by Bank to Borrower in the aggregate principal
amount at any one time outstanding not to exceed Nine Million Dollars
($9,000,000), (ii) make various term loans to Borrower in the respective
original principal amounts set forth in Schedule 2.3 annexed hereto, and (iii)
make available to Borrower a non-revolving line of credit, providing for
non-revolving loans by Bank to Borrower in the aggregate principal amount not to
exceed Ten Million Dollars ($10,000,000).
B. Pursuant to the Prior Agreement, Borrower was permitted to advance
the proceeds of the non-revolving loans made by Bank to Borrower under the
non-revolving line of credit described in clause (iii) of Recital A to Shanghai
Kaihong Electronics, Co., Ltd., a joint venture organized and existing under the
laws of The People's Republic of China ("SKE"). Borrower holds a ninety-five
percent (95%) joint venture interest in SKE.
C. Pursuant to the terms and conditions of that certain Stock Purchase
Agreement dated as of November 28, 2000 (as in effect on the date hereof, and
including all schedules and exhibits thereto, the "Stock Purchase Agreement"),
by and among Borrower, as buyer, Lite-On Power Semiconductor Corp., a Taiwan
corporation, as seller ("Seller"), and, with respect only to certain provisions
of the Stock Purchase Agreement, FabTech, Inc., a Delaware corporation
("FabTech"), Seller has agreed to sell to Borrower, and Borrower has agreed to
purchase from Seller, at the Closing (as such term is defined in the Stock
Purchase Agreement), all of the issued and outstanding shares of the capital
stock of FabTech, consisting of 4,000,000 shares of Series A Convertible
Preferred Stock and 1,000 shares of common stock, all as more particularly
described in the Stock Purchase Agreement (the "Stock Purchase").
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After giving effect to the Stock Purchase, FabTech shall be a wholly-owned
subsidiary of Borrower.
D. Borrower has requested that Bank agree to (i) continue to make
available to Borrower the revolving line of credit described in clause (i) of
Recital A hereof, up to Four Million Dollars ($4,000,000) of the proceeds of
which shall be used by Borrower to finance the Stock Purchase and the remaining
proceeds of which shall be used by Borrower for its general working capital
purposes, (ii) continue to make available to Borrower the term loans described
in clause (ii) of Recital A hereof, (iii) make a new acquisition term loan to
Borrower in the principal sum of Ten Million Dollars ($10,000,000), the proceeds
of which shall be used by Borrower to consummate the Stock Purchase, which new
acquisition term loan shall replace the non-revolving line of credit described
in clause (iii) of Recital A hereof, and (iv) amend the terms and conditions of
the Prior Agreement in certain respects. Bank is willing to continue to make
available to Borrower such revolving line of credit, to continue to make
available to Borrower such term loans, to make such new acquisition term loan to
Borrower and to so amend the terms and conditions of the Prior Agreement,
subject, however, to the terms and conditions set forth hereinbelow.
AGREEMENT:
In consideration of the foregoing recitals and of the mutual covenants,
conditions and provisions hereinafter set forth, Borrower and Bank hereby agree
to amend and restate the Prior Agreement as follows, which covenants, conditions
and provisions shall amend, restate and supersede the terms and conditions of
the Prior Agreement.
SECTION 1. DEFINITIONS
As used herein, initially capitalized terms shall have the respective
meanings set forth below or set forth in the Section or subsection defining such
terms:
"ACQUISITION LOAN COMMITMENT" shall have the meaning assigned to that term in
Section 2.2 hereof.
"ACQUISITION NOTE" shall have the meaning assigned to that term in Section 2.2
hereof.
"AFFILIATE" shall mean, with respect to any Person, (a) each Person that,
directly or indirectly, owns or controls, whether beneficially or as a trustee,
guardian or other fiduciary, ten percent (10%) or more of the stock having
ordinary voting power in the election of directors of such Person, (b) each
Person that controls, is controlled by or is
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under common control with such Person or any Affiliate of such Person and (c)
each of such Person's officers, directors, joint venturers, members and
partners; provided, however, that in no case shall Bank be deemed to be an
Affiliate of Borrower for purposes of this Agreement. For the purpose of this
definition, "control" of a Person means the ability, directly or indirectly, to
direct or cause the direction of its management or policies, whether through the
ownership of voting securities, by contract or otherwise.
"ALTERNATIVE DISPUTE RESOLUTION AGREEMENTS" and "ALTERNATIVE DISPUTE RESOLUTION
Agreement" shall mean, respectively, (a) the Alternative Dispute Resolution
Agreements, each on Bank's standard form therefor, duly executed by Borrower,
Guarantor and Subordinating Creditor, respectively, in favor of and with Bank,
and (b) any one of such Alternative Dispute Resolution Agreements.
"BANK EXPENSES" shall mean (a) with respect to the costs and expenses paid or
advanced by Bank on the account of Borrower prior to the date of this Agreement,
the sum of Thirty Thousand Dollars ($30,000) only, and (b) from and after the
date of this Agreement: (i) all reasonable costs and expenses paid or advanced
by Bank which are required to be paid by Borrower or any of its Subsidiaries
under this Agreement or any of the other Loan Documents; (ii) reasonable
expenses incurred by Bank in auditing or examining the books and records of
Borrower or any of its Subsidiaries and the Collateral following the occurrence
and continuation of an Event of Default; (iii) taxes and insurance premiums of
every nature and kind of Borrower or any of its Subsidiaries paid by Bank; (iv)
appraisal, filing, recording, documentation, publication and search fees paid or
incurred by Bank on behalf of Borrower or any of its Subsidiaries to correct any
default or enforce any provision of this Agreement or any other Loan Document,
or, if an Event of Default has occurred and is continuing, in gaining possession
of, maintaining, handling, preserving, storing, shipping, appraising, selling,
preparing for sale and/or advertising to sell the Collateral, whether or not a
sale is consummated; (v) costs and expenses of any suit or arbitration
proceeding incurred by Bank in enforcing or defending this Agreement or any
other Loan Document, or any portion thereof, and (vi) reasonable attorneys' fees
and expenses incurred by Bank in amending, terminating, enforcing, defending or
concerning this Agreement or any other Loan Document, or any portion thereof,
whether or not suit is brought, such attorneys' fees to include the reasonable
estimate of the allocated costs and expenses of in-house legal counsel and
staff. All Bank Expenses paid or incurred by Bank shall be considered to be, and
shall become a part of the Obligations and be secured by the Collateral, are
payable upon demand, and if not reimbursed, shall immediately thereafter bear
interest, together with all other amounts to be paid by Borrower pursuant hereto
at the default rate provided for herein or in the Notes.
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"BORROWER SECURITY AGREEMENT" shall mean that certain Security Agreement dated
July 19, 1996, duly executed by Borrower in favor of Bank pursuant to the terms
and conditions of the Prior Agreement.
"BUSINESS DAY" shall mean a day other than a Saturday, a Sunday or a day on
which commercial banks in the State of California are authorized or required by
law to close.
"CAPITAL EXPENDITURES" shall mean all payments due (whether or not paid) during
a fiscal period of Borrower and its Subsidiaries in respect of the cost of any
fixed asset or improvement, or any replacement, substitution or addition thereto
and which have a useful life of more than one (1) year, including without
limitation those arising in connection with the direct or indirect acquisition
of such assets by way of increased product or service charges or offset items or
in connection with capital leases.
"CAPITAL LEASE OBLIGATIONS" shall mean, for any Person, all obligations of such
Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.
"CASH" shall mean, when used in connection with any Person, all monetary and
non-monetary items owned by such Person that are treated as cash in accordance
with GAAP, consistently applied.
"COLLATERAL" shall mean the security provided by Borrower and Guarantor pursuant
to Sections 3.1 and 3.2 hereof.
"DEBT SERVICE", as of any date of calculation, shall mean the sum, without
duplication, of (a) the amount of all scheduled principal payments in respect of
Indebtedness of Borrower and its Subsidiaries during the four (4) consecutive
fiscal quarters ended on that date, plus (b) interest expense of Borrower and
its Subsidiaries paid or payable during such fiscal period plus (c) the
aggregate amount of dividends declared or paid by Borrower and its Subsidiaries
during such fiscal period plus (d) the aggregate amount paid by Borrower and its
Subsidiaries to their shareholders in respect of treasury stock during such
fiscal period.
"DISPOSITION" shall mean the sale, transfer or other disposition in any single
transaction or series of related transactions of any asset, or group of related
assets, of Borrower or any of its Subsidiaries (a) which asset or assets
constitute a line of business or substantially all of the assets of Borrower or
such Subsidiary, or (b) the aggregate amount of the Net Cash Sales Proceeds of
such assets is more than Five
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Hundred Thousand Dollars ($500,000), other than (i) inventory or other assets
sold or otherwise disposed of in the ordinary course of business of Borrower or
such Subsidiary, (ii) equipment sold or otherwise disposed of where
substantially similar equipment in replacement thereof has theretofore been
acquired, or thereafter within ninety (90) days is acquired, by Borrower or such
Subsidiary and (iii) obsolete assets no longer useful in the business of
Borrower or any of its Subsidiaries, whose carrying value on the books of
Borrower or such Subsidiary is zero or de minimus.
"EBITDA" shall mean, with respect to any fiscal period of Borrower and its
Subsidiaries, the sum of (a) the net income of Borrower and its Subsidiaries for
such fiscal period, plus (b) any non-operating non-recurring loss reflected in
such net income, minus (c) any non-operating non-recurring gain reflected in
such net income, plus (d) interest expense of Borrower and its Subsidiaries for
such fiscal period, plus (e) the aggregate amount of federal and state taxes on
or measured by income of Borrower and its Subsidiaries for that fiscal period
(whether or not payable during such fiscal period), minus (f) the aggregate
amount of federal and state credits against taxes on or measured by income of
Borrower and its Subsidiaries for that fiscal period (whether or not usable
during that fiscal period), plus (g) depreciation, amortization and all other
non-cash expenses of Borrower and its Subsidiaries for that fiscal period, in
each case as determined in accordance with GAAP.
"EXCESS CASH FLOW" shall mean, for any fiscal period, the difference of (a) the
EBITDA of Borrower and its Subsidiaries for such fiscal period less (b) the sum
of (i) interest paid during such fiscal period plus (ii) taxes paid in cash by
Borrower and its Subsidiaries during such fiscal period plus (iii) the current
portion of the long-term Indebtedness of Borrower and its Subsidiaries paid
during such fiscal period plus (iv) non-financed Capital Expenditures of
Borrower and its Subsidiaries paid during such fiscal period, in each case as
determined in accordance with GAAP.
"FABTECH" shall have the meaning assigned to that term in Recital C of this
Agreement.
"FINANCIAL STATEMENTS" shall mean, with respect to any accounting period of any
Person, statements of income 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 form figures for the corresponding period in the
preceding fiscal year or, if such period is a full fiscal year, corresponding
figures from the preceding annual audit, all prepared in reasonable detail and
in accordance with GAAP. "Financial Statements" shall include the notes and
schedules thereto.
"FIXED CHARGE COVERAGE RATIO" shall mean, as of the last day of any fiscal
quarter, calculated for Borrower and its Subsidiaries (other than SKE, in the
case of Section 6.7
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hereof only) on a consolidated basis, the ratio of (a) EBITDA for the fiscal
period consisting of the four (4) consecutive fiscal quarters ended on that date
less non-financed Capital Expenditures during such fiscal period less federal
and state income tax expense during such fiscal period to (b) Debt Service for
such fiscal period.
"GAAP" shall mean generally accepted accounting principles in the United States
of America in effect from time to time.
"GUARANTOR" shall mean FabTech.
"GUARANTOR SECURITY AGREEMENT" shall mean that certain Security Agreement, on
Bank's standard form therefor, duly executed by Guarantor in favor of Bank.
"GUARANTY" shall mean that certain Continuing Guaranty, on Bank's standard form
therefor, duly executed by Guarantor in favor of and with Bank, pursuant to
which Guarantor shall unconditionally guarantee the payment by Borrower of the
Obligations, provided, however, that Guarantor's liability thereunder for
Obligations representing principal shall not exceed Twenty-Six Million Two
Hundred Eighty-Eight Thousand Three Hundred Thirty-Three and 38/100 Dollars
($26,288,333.38).
"GUARANTY OBLIGATION" shall mean , as to any Person, any (a) guarantee by such
Person of Indebtedness of, or other obligation performable by, any other Person
or (b) assurance given by such Person to an obligee of any other Person with
respect to the performance of an obligation by, or the financial condition of,
such other Person, whether direct, indirect or contingent, including any
purchase or repurchase agreement covering such obligation or any collateral
security therefor, any agreement to provide funds (by means of loans, capital
contributions or otherwise) to such other Person, any agreement to support the
solvency or level of any balance sheet item of such other Person or any
"keep-well" or other arrangement of whatever nature given for the purpose of
assuring or holding harmless such obligee against loss with respect to any
obligation of such other Person; provided, however, that the term "Guaranty
Obligation" shall not include endorsements of instruments for deposit or
collection in the ordinary course of business and customary indemnities given in
connection with asset sales in the ordinary course of business.
"INDEBTEDNESS" shall mean, as to any Person (without duplication), (a)
indebtedness of such Person for borrowed money or for the deferred purchase
price of property (excluding (i) Subordinated Indebtedness and (ii) trade and
other accounts payable in the ordinary course of business in accordance with
ordinary trade terms and accrued liabilities incurred in the ordinary course of
business, including any contingent obligation of such Person for any such
indebtedness), (b) indebtedness of such Person of the nature described in clause
(a) that is non-recourse to the credit of such Person
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but is secured by assets of such Person, to the extent of the fair market value
of such assets as determined in good faith by such Person, (c) Capital Lease
Obligations of such Person, (d) indebtedness of such Person arising under
bankers' acceptance facilities or under facilities for the discount of accounts
receivable of such Person, (e) any direct or contingent obligations of such
Person under letters of credit issued for the account of such Person and (f) any
net obligations of such Person under any interest rate protection agreements.
"INSOLVENCY PROCEEDING" shall mean and include any proceeding commenced by or
against Borrower or any of its Subsidiaries under any provision of the
Bankruptcy Code, or under any other bankruptcy or insolvency law, including, but
not limited to, assignments for the benefit of creditors, formal or informal
moratoriums, and compositions or extensions with some or all creditors.
"LEVERAGE RATIO" shall mean, as of the last day of any fiscal quarter,
determined for Borrower and its Subsidiaries on a consolidated basis, the ratio
of (a) all Indebtedness of Borrower and its Subsidiaries on that date to (b)
EBITDA for the fiscal period consisting of the four (4) consecutive fiscal
quarters ended on that date.
"LIEN" shall mean any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest).
"LOAN DOCUMENTS" shall mean and include this Agreement, the Notes, the Guaranty,
the Security Agreements, the Alternative Dispute Resolution Agreements, the
Subordination Agreement and all other documents, instruments and agreements, and
all related riders, exhibits, resolutions, authorizations, financing statements
and certificates delivered to Bank in connection with this Agreement.
"LOANS" and "LOAN" shall mean, respectively, (a) the loans to be made by Bank to
Borrower pursuant to Section 2 hereof and (b) any one of such Loans.
"NET CASH ISSUANCE PROCEEDS" shall mean, with respect to the issuance of any
debt security or equity security by Borrower or any of its Subsidiaries, the
Cash proceeds received by or for the account of Borrower or any of its
Subsidiaries in consideration of such issuance, net of (a) underwriting
discounts and commissions actually paid to any Person not an Affiliate of
Borrower and (b) professional fees and disbursements actually paid in connection
therewith.
"NET CASH SALES PROCEEDS" shall mean, with respect to any Disposition, the sum
of (a) the Cash proceeds received by or for the account of Borrower and its
Subsidiaries from
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such Disposition plus (b) the amount of Cash received by or for the account of
Borrower and its Subsidiaries upon the sale, collection or other liquidation of
any proceeds that are not Cash from such Disposition, in each case net of (i)
any amount required to be paid to any Person owning an interest in the assets
disposed of, (ii) any amount applied to the repayment of Indebtedness secured by
a Lien permitted under Section 7.1 hereof on the asset disposed of, (iii) any
transfer tax, income tax or other taxes payable as a result of such Disposition,
(iv) professional fees and expenses, fees due to any governmental agency,
brokers' commissions and other out-of-pocket costs of sale actually paid to any
Person that is not an Affiliate of Borrower attributable to such Disposition,
and (v) any reserves established in accordance with GAAP in connection with such
Disposition.
"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.
"NOTES" and "NOTE" shall mean, respectively, (a) the Revolving Note, the
Acquisition Note and the Term Notes, and (b) any of such Notes.
"OBLIGATIONS" shall mean and include all loans, advances, debts, liabilities and
obligations, howsoever arising, owed by Borrower or any of its Subsidiaries to
Bank 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 be come due, now existing or hereafter arising
pursuant to the terms of this Agreement, any other Loan Document or any other
agreement or instrument, including without limitation any Indebtedness of
Borrower which Bank obtains by assignment or otherwise, and all Bank Expenses.
"PERMITTED GUARANTY OBLIGATIONS" shall mean:
(a) Guaranty Obligations existing on the date of this Agreement, and
refinancings, renewals, extensions or amendments that do not increase the amount
thereof;
(b) Guaranty Obligations under the Loan Documents; and
(c) Guaranty Obligations owed to Borrower or any of its Subsidiaries.
"PERMITTED INDEBTEDNESS" shall mean:
(a) the Obligations;
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(b) Indebtedness owed to Borrower or any of its Subsidiaries;
(c) trade payables and other contractual obligations to suppliers and
customers incurred in the ordinary course of business;
(d) Indebtedness of Borrower or any of its Subsidiaries incurred to
finance the purchase of equipment constituting a Capital Expenditure permitted
by Section 7.10 of this Agreement;
(e) other Indebtedness existing on the date of this Agreement and
reflected in the Financial Statement of Borrower and its Subsidiaries for the
nine (9) month fiscal period ended September 30, 2000 (including, without
limitation, Indebtedness of SKE existing on the date of this Agreement and
disclosed in Schedule 7.3 annexed hereto), and refinancings, renewals,
extensions or amendments that do not increase the amount thereof;
(f) Indebtedness of Guarantor reflected in the Financial Statement of
Guarantor for the ten (10) month fiscal period ended October 31, 2000, and
refinancings, renewals, extensions or amendments that do not increase the amount
thereof;
(g) lease obligations permitted under Section 7.12 of this Agreement;
(h) the Subordinated Indebtedness;
(i) Indebtedness consisting of debt securities for which the Net Cash
Issuance Proceeds will be applied as a mandatory prepayment pursuant to Section
2.7(a) of this Agreement; and
(j) other Indebtedness not referred to hereinabove; provided,
however, that the aggregate outstanding principal amount of such Indebtedness
shall not exceed Five Million Dollars ($5,000,000) at any time.
"PERMITTED LIENS" shall mean:
(a) Liens for taxes not yet payable or Liens for taxes being contested
in good faith and by proper proceedings diligently pursued, provided that
adequate reserves shall have been made therefor on the applicable Financial
Statement, the Lien shall have no effect on the priority of Bank's security
interest in the Collateral and a stay of enforcement of any such Lien shall be
in effect;
(b) Liens in favor of Bank;
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(c) Liens upon equipment granted in connection with the acquisition of
such equipment by Borrower or any of its Subsidiaries after the date hereof
(including, without limitation, pursuant to capital leases); provided, however,
that (i) the cost of such acquisition constitutes a Capital Expenditure
permitted by Section 7.10 of this Agreement, (ii) the Indebtedness incurred to
finance each such acquisition is permitted by this Agreement, and (iii) each
such Lien attaches only to the equipment acquired with the Indebtedness secured
thereby, and the proceeds and products thereof;
(d) a security interest in all or substantially all of its assets
granted by Guarantor in favor of Citibank, N.A. prior to the date of this
Agreement; provided, however, that such security interest shall be terminated as
provided for in Section 4.2 of this Agreement;
(e) reservations, exceptions, encroachments, easements, rights of way,
covenants, conditions, restrictions, leases and other similar title exceptions
or encumbrances affecting real property which do not in the aggregate materially
detract from the value of the real property or materially interfere with their
use in the ordinary conduct of the business of Borrower or any of its
Subsidiaries;
(f) deposits under workmen's compensation, unemployment insurance,
social security and other similar laws applicable to Borrower or any of its
Subsidiaries; and
(g) Liens relating to statutory obligations of Borrower or any of its
Subsidiaries with respect to surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of business.
"PERSON" shall mean any natural person, corporation, partnership, joint venture,
limited liability company, firm, association, government, governmental agency,
court or any other entity.
"PRIOR AGREEMENT" shall have the meaning assigned to such term in Recital A of
this Agreement.
"REVOLVING CREDIT COMMITMENT" shall have the meaning assigned to that term in
Section 2.1 hereof.
"REVOLVING NOTE" shall have the meaning assigned to that term in Section 2.1
hereof.
"SECURITY AGREEMENTS" shall mean respectively, (a) the Borrower Security
Agreement and the Guarantor Security Agreement, and (b) either of such Security
Agreements.
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"SELLER" shall have the meaning assigned to such term in Recital C of this
Agreement.
"SKE" shall have the meaning assigned to such term in Recital B of this
Agreement.
"STOCK PURCHASE" shall have the meaning assigned to such term in Recital C of
this Agreement.
"STOCK PURCHASE AGREEMENT" shall have the meaning assigned to such term in
Recital C of this Agreement.
"SUBORDINATED INDEBTEDNESS" shall mean Guarantor's obligations to Subordinating
Creditor under the Subordinated Note, which obligations shall be subordinated in
right of payment to the obligations and liabilities of Guarantor to Bank under
the Guaranty pursuant to the terms of the Subordination Agreement.
"SUBORDINATED NOTE" shall mean that certain Subordinated Promissory Note dated
December 1, 2000, executed by Guarantor in favor of Subordinating Creditor, in
the original principal amount of Thirteen Million Five Hundred Forty-Nine
Thousand Dollars ($13,549,000), as such Subordinated Promissory Note is in
effect on the date of this Agreement.
"SUBORDINATING CREDITOR" shall mean Seller.
"SUBORDINATION AGREEMENT" shall mean that certain Subordination Agreement, on
Bank's standard form therefor or otherwise in form and substance acceptable to
Bank, duly executed by Subordinating Creditor in favor of Bank.
"SUBSIDIARY" of a Person shall mean any corporation, association, partnership,
limited liability company, joint venture or other business entity, whether
foreign or domestic, of which more than fifty percent (50%) of the voting stock
or other equity interests (in the case of Persons other than corporations), is
owned or controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof. Unless the context
otherwise requires, (a) references herein to a "Subsidiary" shall refer to a
Subsidiary of Borrower and (b) references to "Subsidiaries" shall not include
Guarantor to the extent that they relate to dates or periods prior to the
consummation by Borrower of the Stock Purchase. SKE shall be deemed to be a
Subsidiary of Borrower.
"TANGIBLE NET WORTH" shall mean, for any fiscal period of Borrower and its
Subsidiaries, the net worth of Borrower and its Subsidiaries, decreased by
patents, trademarks, trade names, goodwill and other similar intangible assets
of Borrower and its Subsidiaries.
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"TERM NOTES" and "TERM NOTE" shall have the meanings assigned to such terms in
Section 2.3 hereof.
SECTION 2. AMOUNT AND TERMS OF CREDIT
2.1 REVOLVING CREDIT COMMITMENT. Subject to the terms and conditions of
this Agreement, from the date of this Agreement to but excluding July 1, 2002
(the "Revolving Credit Commitment Termination Date"), provided that no Event of
Default then has occurred and is continuing, Bank will make loans (collectively,
the "Revolving Loans" and individually, a "Revolving Loan") to Borrower as
Borrower may request from time to time; provided, however, that the aggregate
principal amount of all such Revolving Loans outstanding at any one time shall
not exceed Nine Million Dollars ($9,000,000) (the "Revolving Credit
Commitment"). Within the limits of time and amount set forth in this Section
2.1, Borrower may borrow, repay and reborrow Revolving Loans under the Revolving
Credit Commitment. All Revolving Loans shall be requested before the Revolving
Credit Commitment Termination Date, on which date all unpaid principal of and
accrued interest on all Revolving Loans shall be due and payable. Borrower's
obligation to repay the principal amount of all Revolving Loans, together with
accrued interest thereon, shall be evidenced by a promissory note issued by
Borrower in favor of Bank (the "Revolving Note") on the standard form used by
Bank to evidence its commercial loans. The Revolving Note shall replace and
supersede that certain Promissory Note (Base Rate) dated June 10, 2000, issued
by Borrower in favor of Bank pursuant to the Prior Agreement. Bank shall enter
the amount of each Revolving Loan, and any payments thereof, in its books and
records, and such entries shall be prima facie evidence of the amount
outstanding under the Revolving Credit Commitment. The failure of Bank to make
any notation in its books and records shall not discharge Borrower of its
obligation to repay in full with interest all amounts borrowed hereunder. The
proceeds of the Revolving Loans shall be disbursed for the purposes set forth in
Section 2.4(a) hereof pursuant to disbursement instructions provided to Bank on
Bank's standard form therefor.
2.2 ACQUISITION LOAN COMMITMENT. Subject to the terms and conditions of this
Agreement, during the period from the date of this Agreement to but excluding
December 29, 2000, provided that no Event of Default then has occurred and is
continuing, Bank will make a term loan (the "Acquisition Loan") to Borrower in a
single disbursement as Borrower may request in the principal amount of Ten
Million Dollars ($10,000,000) (the "Acquisition Loan Commitment"). Borrower's
obligation to repay the principal amount of the Acquisition Loan, together with
accrued interest thereon, shall be evidenced by a promissory note issued by
Borrower in favor of Bank (the "Acquisition Note") on the standard form used by
Bank to evidence its
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commercial loans. The Acquisition Note shall replace and supersede that certain
Promissory Note (Base Rate) dated June 12, 2000, issued by Borrower in favor of
Bank pursuant to the Prior Agreement. The Acquisition Note shall provide for
payments of principal and interest as set forth therein. On the Business Day
that is exactly four (4) years after the date of the Acquisition Loan (the
"Acquisition Loan Maturity Date"), all unpaid principal of and accrued but
unpaid interest on the Acquisition Loan shall be due and payable. The proceeds
of the Acquisition Loan shall be disbursed for the purposes set forth in Section
2.4(b) hereof pursuant to disbursement instructions provided to Bank on Bank's
standard form therefor.
2.3 TERM LOANS. Pursuant to the terms and conditions of the Prior Agreement,
Bank made various term loans (collectively, the "Term Loans" and individually, a
"Term Loan") to Borrower in the respective original principal amounts set forth
in Schedule 2.3 annexed hereto. The respective outstanding principal amounts and
maturity dates of the Term Loans on the date of this Agreement are also set
forth in Schedule 2.3 annexed hereto. From and after the date of this Agreement,
Borrower's obligation to repay the principal amount of the Term Loans, together
with accrued interest thereon, shall be evidenced by those certain promissory
notes, each on Bank's standard form therefor, issued by Borrower in favor of
Bank (collectively, the "Term Notes" and individually, a "Term Note"). The Term
Notes shall replace and supersede the promissory notes issued by Borrower in
favor of Bank pursuant to the Prior Agreement. The Term Notes shall provide for
payments of principal and interest, and mature on the dates, set forth therein.
The proceeds of the Term Loans were disbursed for the purposes provided for in
the Prior Agreement. Borrower shall provide Bank with new disbursement
instructions with respect to the Term Notes, each on Bank's standard form
therefor.
2.4 PURPOSES OF THE LOANS.
(a) No more than Four Million Dollars ($4,000,000) of the proceeds of
the Revolving Loans shall be used by Borrower to consummate the Stock Purchase,
and the remaining proceeds of the Revolving Loans shall be used for Borrower's
general working capital purposes only.
(b) The proceeds of the Acquisition Loan shall be used by Borrower to
consummate the Stock Purchase.
(c) The proceeds of the Term Loans were used by Borrower for the
purposes provided for in the Prior Agreement.
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2.5 INTEREST.
(a) Each Loan shall bear interest at the rate or rates provided for
in the corresponding Note and selected by Borrower.
(b) Interest on the Loans shall be computed on the basis of the
actual number of days during which the principal is outstanding thereunder
divided by 360 which shall, for the purposes of computing interest, be
considered one (1) year.
(c) Interest shall be payable on the outstanding principal amount of
each Loan as set forth in the corresponding Note in accordance with Section 2.10
hereof.
2.6 VOLUNTARY PREPAYMENT. The principal Indebtedness evidenced by the Notes
may, at any time and from time to time, voluntarily be paid or prepaid in whole
or in part without penalty or premium in accordance with the terms of the Notes,
except that, with respect to any voluntary prepayment under this Section 2.6,
(a) the amount of any partial prepayment of a Loan shall not be less than One
Hundred Thousand Dollars ($100,000) and shall be in an integral multiple of
Fifty Thousand Dollars ($50,000) in excess thereof and (b) any payment or
prepayment of all or any part of any Base Interest Rate Loan under and as
defined in any Note on a day, other than the last day of the applicable Interest
Period under and as defined in such Note, shall be subject to the payment of a
prepayment fee as provided for in such Note. Principal sums so paid or prepaid
shall be applied to those installments scheduled to repay the outstanding
principal amount of the applicable Loan in the inverse order of maturity, but
shall not postpone the due date or change the amount of any subsequent principal
installment unless Bank shall otherwise agree in writing.
2.7 MANDATORY PREPAYMENTS.
(a) The principal Indebtedness evidenced by the Notes shall be
prepaid on or before the fifth Business Day following the receipt by Borrower or
any of its Subsidiaries of (i) Net Cash Sales Proceeds from Dispositions, by an
amount equal to one hundred percent (100%) of such Net Cash Sales Proceeds, (ii)
Net Cash Issuance Proceeds from the issuance of debt securities of Borrower or
any of its Subsidiaries (other than Indebtedness permitted by subsections (a)
through (h) and subsection (j) of the definition of Permitted Indebtedness
hereinabove), by an amount equal to one hundred percent (100%) of such Net Cash
Issuance Proceeds and (iii) Net Cash Issuance Proceeds from the issuance of
equity securities of Borrower or any of its Subsidiaries (except any issuance of
equity securities to Borrower or to any of its Subsidiaries or to employees or
former employees, directors and officers of Borrower pursuant to an exercise of
stock options with respect to equity in Borrower), by an amount equal to one
hundred percent (100%) of such Net Cash Issuance Proceeds.
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(b) On or before the date that is one hundred twenty (120) days after
the close of each fiscal year of Borrower, commencing with the fiscal year
ending December 31, 2001, Borrower shall prepay the principal Indebtedness
evidenced by the Acquisition Note by an amount equal to fifty percent (50%) of
Excess Cash Flow for such fiscal year. Principal sums so prepaid shall be
applied to those installments scheduled to repay the outstanding principal
amount of the Acquisition Loan in the inverse order of maturity, but shall not
postpone the due date or change the amount of any subsequent principal
installment unless Bank shall otherwise agree in writing.
2.8 DEFAULT RATE. If all or any portion of the principal amount of any Loan
made under this Agreement shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue principal amount, and to
the extent permitted by law overdue interest thereon, shall be payable on demand
at a rate per annum equal to the rate which would otherwise be applicable plus
five percent (5%), effective from the date that such amounts become overdue
until paid in full.
2.9 ACQUISITION LOAN COMMITMENT AND DOCUMENTATION FEE. On or before the date
of this Agreement, Borrower shall pay to Bank a fee in connection with the
Acquisition Loan Commitment and the documentation of this Agreement and the
other Loan Documents in the amount of Thirty Thousand Dollars ($30,000). The
payment of such fee shall constitute the payment in full by Borrower of all of
the Bank Expenses due to Bank for the period prior to the date of this
Agreement.
2.10 BANK'S RIGHT TO CHARGE DEPOSIT ACCOUNT. Borrower authorizes Bank
(irrevocably until the Obligations are paid in full and Bank's commitment to
extend the Loans hereunder is terminated) from time to time to charge against
account number 3030152777 maintained by Borrower with Bank any principal and/or
interest due or past due in respect of the Obligations under this Agreement;
provided that Bank shall not have any obligation to charge past due payments
against such deposit account.
SECTION 3. COLLATERAL
3.1 SECURITY PROVIDED BY BORROWER. Pursuant to the terms and conditions of
the Prior Agreement, Borrower executed and delivered the Borrower Security
Agreement to Bank, pursuant to which Borrower granted to Bank a security
interest in all of Borrower's accounts, deposit accounts, instruments, chattel
paper, documents, general intangibles, inventory, equipment and furniture,
whether then owned or thereafter acquired by Borrower, all proceeds and
insurance proceeds of the foregoing, all guaranties and other security therefor,
and all of Borrower's present and future books and records relating thereto
(including computer-stored information and all software
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relating thereto), and all contract rights with third parties relating to the
maintenance of any such books, records and information, as security for the
payment and performance of all obligations and liabilities of Borrower to Bank
under the Prior Agreement and all documents, instruments and agreements executed
by Borrower in connection therewith. Borrower hereby confirms its grant of such
security interest to Bank pursuant to the Borrower Security Agreement and agrees
that the Borrower Security Agreement shall remain in full force and effect. The
security interest granted to Bank pursuant to the Borrower Security Agreement
shall be a first priority security interest, or such lesser priority as may be
permitted by this Agreement. Each classification of personal property used
hereinabove shall have the meaning given to it in the California Commercial
Code. Nothing contained in this Section 3.1 or in the Borrower Security
Agreement shall be deemed to grant Bank or confirm in favor of Bank a security
interest in the assets of any Subsidiary of Borrower.
3.2 SECURITY PROVIDED BY GUARANTOR. Borrower shall cause Guarantor to
execute and deliver the Guarantor Security Agreement to Bank, pursuant to which
Guarantor shall grant to Bank, as security for the payment and performance of
all Obligations of Guarantor to Bank under the Guaranty, a security interest in
all of Guarantor's accounts, deposit accounts, instruments, chattel paper,
documents, general intangibles, inventory, equipment, furniture and fixtures,
whether now owned or hereafter acquired by Guarantor, all proceeds and insurance
proceeds of the foregoing, all guaranties and other security therefor, and all
of Guarantor's present and future books and records relating thereto (including
computer-stored information and all software relating thereto), and all contract
rights with third parties relating to the maintenance of any such books, records
and information. The security interest granted to Bank pursuant to the Guarantor
Security Agreement shall be a first priority security interest, or such lesser
priority as may be permitted by this Agreement.
3.3 POWER OF ATTORNEY. Until the Obligations of Borrower are paid in full
and Bank has no commitment to extend further Loans hereunder, Borrower hereby
irrevocably makes, constitutes and appoints Bank (and any officers, employees or
agents of Bank designated by Bank) as Borrower's true and lawful attorney, with
power to sign Borrower's name on any documents or instruments which Bank
believes should be executed, recorded and/or filed in order to perfect, or
continue the perfection, of Bank's security interest in the Collateral or to
liquidate or realize value from the Collateral after the occurrence of an Event
of Default.
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SECTION 4. CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT TO INITIAL LOAN. The obligation of Bank to make its
initial Loan hereunder is subject to the fulfillment, to the satisfaction of
Bank and its counsel, of each of the following conditions:
(a) NOTES. Bank shall have received the Notes, duly executed by
Borrower to the order of Bank;
(b) AUTHORIZATIONS TO OBTAIN CREDIT.
(i) Bank shall have received an Authorization to Obtain
Credit, on Bank's standard form therefor, duly executed by the secretary of
Borrower, attesting to the resolution of the board of directors of Borrower
authorizing the execution and delivery of this Agreement, the Notes and all
other Loan Documents required hereunder to which Borrower is a party and
authorizing specific responsible officers of Borrower to execute same;
(ii) Bank shall have received an Authorization to Obtain
Credit, on Bank's standard form therefor, duly executed by the secretary of
Guarantor, attesting to the resolution of the board of directors of Guarantor
authorizing the execution and delivery of the Guaranty and all other Loan
Documents required hereunder to which Guarantor is a party and authorizing
specific responsible officers of Guarantor to execute same; and
(iii) Bank shall have received an Authorization to Obtain
Credit, on Bank's standard form therefor, duly executed by the secretary of
Subordinating Creditor, attesting to the resolution of the board of directors of
Subordinating Creditor authorizing the execution and delivery of the
Subordination Agreement and all other Loan Documents required hereunder to which
Subordinating Creditor is a party and authorizing specific responsible officers
of Subordinating Creditor to execute same;
(c) ALTERNATIVE DISPUTE RESOLUTION AGREEMENTS. Bank shall have
received the Alternative Dispute Resolution Agreements;
(d) NO MATERIAL ADVERSE CHANGE. No material adverse change shall have
occurred in the business, operations, assets, prospects, earnings or condition
(financial or otherwise) of Borrower;
(e) AUTHORIZATIONS TO DISBURSE. Bank shall have received executed
Authorizations to Disburse, each on Bank's standard form therefor, duly executed
by Borrower, directing Bank to disburse the proceeds of the Loans as provided
for herein;
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(f) GUARANTY. Bank shall have received the Guaranty, duly executed by
Guarantor;
(g) COLLATERAL DOCUMENTS. Bank shall have received the Guarantor
Security Agreement, together with such UCC financing statements, fixture
filings, UCC searches, tax lien and litigation searches, insurance certificates,
waivers and consents, and other similar documents as Bank may require, and in
such form as Bank may require, in order to evidence, perfect (in the priority
required hereunder) and assure Bank's security interest in the Collateral;
(h) SUBORDINATION AGREEMENT. Bank shall have received the
Subordination Agreement, duly executed by Subordinating Creditor. The
Subordination Agreement shall provide, among other things, that so long as (i)
Borrower and Guarantor have made each and every payment of principal and
interest due and owing to Bank, (ii) no Event of Default has occurred and is
then continuing and (iii) none of such payments would result in an Event of
Default, then Subordinating Creditor shall be entitled to receive (A) regularly
scheduled payments (but not prepayments or payments resulting from acceleration)
of interest on the Subordinated Indebtedness 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 Subordinated Indebtedness that is due and payable on
March 31, 2001. The Subordination Agreement shall further provide that, so long
as any of the obligations and liabilities of Guarantor to Bank under the
Guaranty remain unpaid, Subordinating Creditor shall in no event be entitled to
receive any payments or prepayments of principal on the Subordinated
Indebtedness (other than as provided for hereinabove) without Bank's prior
written consent, which Bank may give or withhold in its sole discretion;
(i) SUBORDINATED NOTE. Bank shall have received the original
Subordinated Note, legended as provided for in the Subordination Agreement;
(j) ACQUISITION LOAN COMMITMENT AND DOCUMENTATION FEE. Bank shall
have received the fee in respect of the Acquisition Loan Commitment and the
documentation of this Agreement and the other Loan Documents, as provided for in
Section 2.9 hereof;
(k) STOCK PURCHASE AGREEMENT. Bank shall have received a copy of the
duly executed Stock Purchase Agreement, and same shall be in substantially the
form of the draft of the Stock Purchase Agreement dated November 27, 2000
provided to Bank prior to the date of this Agreement;
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(l) INITIAL PURCHASE PRICE. Bank shall have determined that the
Initial Purchase Price (as such term is defined in the Stock Purchase Agreement)
to be paid by Borrower in connection with the Stock Purchase will not exceed
Twenty-Five Million Dollars ($25,000,000); and
(m) OTHER DOCUMENTS. Bank shall have received such other documents,
instruments and agreements as Bank may reasonably require in order to effect
fully the transactions contemplated by this Agreement.
4.2 CONDITION SUBSEQUENT. The obligation of Bank to extend credit to
Borrower hereunder is subject to Bank's receipt, within thirty (30) days after
the date of this Agreement, of a UCC-2 termination statement, executed by
Citibank, N.A., whereby Citibank, N.A. shall terminate its security interest in
those assets of Guarantor in which Citibank, N.A. has a security interest on the
date of this Agreement.
4.3 CONDITIONS PRECEDENT TO SUBSEQUENT LOANS. The obligation of Bank to make
each Loan hereunder subsequent to the initial Loan is subject to the
fulfillment, at or prior to the time of the making of such Loan, of each of the
following further conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in this Agreement shall be true, complete and accurate in
all material respects on and as of such date (except to the extent that such
representations and warranties relate solely to any earlier date); and
(b) NO EVENT OF DEFAULT. No Event of Default or event which, with the
lapse of time or notice, or both, would be an Event of Default shall have
occurred and be continuing on the date of such Loan, nor shall either result
from the making of such Loan.
SECTION 5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that:
5.1 PRINCIPAL BUSINESS ACTIVITY. The principal business of Borrower is the
manufacturing and distribution of discrete semiconductor devices primarily for
manufacturers in the automotive, computer and telecommunications industries.
5.2 AUTHORITY TO BORROW. The execution, delivery and performance of this
Agreement, the Notes and all other Loan Documents to which Borrower is a party
are
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not in contravention of any of the terms of any indenture, agreement or
undertaking to which Borrower is a party or by which it or any of its property
is bound or affected.
5.3 FINANCIAL STATEMENTS.
(a) The consolidated Financial Statement of Borrower and its
Subsidiaries as at September 30, 2000, for the nine (9) month fiscal period of
Borrower and its Subsidiaries ended on such date, has heretofore been furnished
to Bank, and is true and complete and fairly represents the financial condition
of Borrower and its Subsidiaries for the fiscal period covered thereby. Since
September 30, 2000, there has been no material adverse change in the business,
operations, assets, prospects, earnings or condition (financial or otherwise) of
Borrower and its Subsidiaries, taken as a whole.
(b) The Financial Statement of Guarantor as at October 31, 2000, for
the ten (10) month fiscal period of Guarantor ended on such date, has heretofore
been furnished to Bank, and is true and complete and fairly represents the
financial condition of Guarantor for the fiscal period covered thereby. Since
October 31, 2000, there has been no material adverse change in the business,
operations, assets, prospects, earnings or condition (financial or otherwise) of
Guarantor.
5.4 ADVERSE CHANGE. Except for assets which may have been disposed of in the
ordinary course of business, Borrower and its Subsidiaries have good and
marketable title to all of the property reflected in the Financial Statement of
Borrower and its Subsidiaries as at September 30, 2000 and to all property
acquired by it since that date, free and clear of all Liens except those
specifically set forth therein.
5.5 NO LITIGATION. There is no litigation or proceeding pending or
threatened against Borrower or any of its Subsidiaries, or any of their
respective properties, the results of which, if decided adversely, are likely to
have a material adverse effect on the financial condition, property or business
of Borrower or any of its Subsidiaries or result in liability in excess of the
insurance coverage of Borrower or any of its Subsidiaries.
5.6 NO EVENT OF DEFAULT. Borrower is not now in default in the payment of
any of its material obligations, and there exists no event, condition or act
which constitutes an Event of Default and no event, condition or act which with
notice, the lapse of time, or both, would constitute an Event of Default.
5.7 ORGANIZATION. Each of Borrower and Guarantor is duly organized and
existing under the laws of the State of Delaware, without limitation as to its
existence, and has the power and authority to carry on the business in which it
is engaged and proposes to engage.
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5.8 POWER AND AUTHORITY. Borrower has the corporate power and authority to
enter into this Agreement and to execute and deliver the Notes and all of the
other Loan Documents to which it is a party. Guarantor has the corporate power
and authority to execute and deliver the Guaranty and any other Loan Document to
which it is a party.
5.9 QUALIFICATION. Each of Borrower and Guarantor is duly qualified and in
good standing as a foreign corporation wherever such qualification is required,
except in those jurisdictions where the failure to so qualify would not have a
material adverse effect on the business, operations, assets, prospects, earnings
or condition (financial or otherwise) of Borrower or Guarantor.
5.10 ERISA. The defined benefit pension plans (as such term is defined in
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) of
Borrower and Guarantor, meet, as of the date hereof, the minimum funding
standards of section 302 of ERISA, and no Reportable Event (as such term is
defined in ERISA) or Prohibited Transaction (as such term is defined in ERISA)
has occurred with respect to any such plan.
5.11 REGULATION U. No action has been taken or is currently planned by
Borrower, or any agent acting on its behalf, which would cause this Agreement or
any Loan to violate Regulation U or any other regulation of the Board of
Governors of the Federal Reserve System or to violate the Securities and
Exchange Act of 1934, in each case as in effect now or as the same may hereafter
be in effect. Borrower is not engaged principally, or as one of its most
important activities, in the business of extending credit for the purpose of
purchasing or carrying "margin stock" as that term is defined in Regulation U
and none of the proceeds of any Loan hereunder have been or shall be used for
the purpose, directly or indirectly, of purchasing or carrying any such margin
stock.
5.12 NO CURRENT LIMITATION ON REPATRIATION OF CASH PROFITS. On the date of
this Agreement, there is no limitation on the repatriation by Borrower of Cash
from profits generated by its foreign Subsidiaries.
SECTION 6. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as this Agreement shall be in
effect and until payment in full of all Obligations, including, without
limitation, any accrued and unpaid interest thereon, and any other amounts due
hereunder, Borrower shall perform each and all of the following covenants
applicable to it:
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6.1 PAYMENT OF OBLIGATIONS. Borrower shall promptly pay and discharge, and
cause each of its Subsidiaries to promptly pay and discharge, all taxes,
assessments and other governmental charges and claims levied or imposed upon it
or its property, or any part thereof; provided, however, that Borrower and its
Subsidiaries shall have the right in good faith to contest any such taxes,
assessments, charges or claims and, pending the outcome of such contest, to
delay or refuse payment thereof, provided that such reserves as may be required
by GAAP are established by them to pay and discharge any such taxes,
assessments, charges and claims.
6.2 MAINTENANCE OF EXISTENCE. Each of Borrower and its Subsidiaries shall
maintain and preserve its existence and assets and all rights, franchises and
other authority necessary for the conduct of its business and shall maintain and
preserve its property, equipment and facilities in good order, condition and
repair. Bank may, at reasonable times, visit and inspect any of the properties
of Borrower and its Subsidiaries.
6.3 RECORDS. Each of Borrower and its Subsidiaries shall keep and maintain
full and accurate accounts and records of its operations in accordance with GAAP
and shall permit Bank to have access thereto, to make examination thereof, and
to audit same during regular business hours.
6.4 INFORMATION FURNISHED. Borrower shall furnish or cause to be furnished
to Bank:
(a) QUARTERLY FINANCIAL STATEMENTS. Within sixty (60) days after the
close of each fiscal quarter, 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);
(b) ANNUAL FINANCIAL STATEMENTS. Within one hundred twenty (120) days
after the close of each fiscal year of Borrower, 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) COMPLIANCE CERTIFICATES. With each quarterly and annual Financial
Statement furnished to Bank pursuant to Sections 6.4(a) and 6.4(b), a
certificate of Borrower's chief financial officer or controller (i) setting
forth in reasonable detail the calculations required to establish that Borrower
was in compliance with its covenants
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set forth in Sections 6.5 through 6.8 and Section 7.8 hereof during the period
covered by such Financial Statement and (ii) stating that, except as explained
in reasonable detail in such certificate, (A) all of the representations,
warranties and covenants of Borrower contained in this Agreement and the other
Loan Documents are correct and complete as at the date of such certificate,
except for those representations and warranties which relate to a particular
date and (B) no Event of Default then exists or existed during the period
covered by such Financial Statement. If such certificate discloses that a
representation or warranty is not correct or complete, that a covenant has not
been complied with, or that an Event of Default exists or existed, such
certificate shall set forth the action, if any, that Borrower has taken or
proposes to take with respect thereto;
(d) NOTICE OF LIMITATION ON REPATRIATION OF CASH PROFITS. Within
thirty (30) days after obtaining knowledge of any change in law which would
limit or otherwise restrict the repatriation by Borrower of Cash from profits
generated by its foreign Subsidiaries, written notice of such change in law; and
(e) OTHER INFORMATION. Such other financial statements and
information as Bank may reasonably request from time to time.
6.5 LEVERAGE RATIO. Borrower and its Subsidiaries shall maintain a Leverage
Ratio of not greater than (a) 2.0 to 1.0 as of the last day of the fiscal
quarter ending December 31, 2000 and (b) 1.75 to 1.0 as of the last day of each
fiscal quarter ending thereafter.
6.6 FIXED CHARGE COVERAGE RATIO. Borrower and its Subsidiaries shall
maintain a Fixed Charge Coverage Ratio of not less than (a) 1.25 to 1.0 as of
the last day of the fiscal quarter ending December 31, 2000, and (b) 1.75 to 1.0
as of the last day of each fiscal quarter ending thereafter.
6.7 FIXED CHARGE COVERAGE RATIO (EXCLUDING SKE). Borrower and its
Subsidiaries (excluding SKE) shall maintain a Fixed Charge Coverage Ratio of not
less than 1.0 to 1.0 as of the last day of each fiscal quarter.
6.8 NET PROFIT AFTER TAXES. Borrower and its Subsidiaries shall achieve Net
Profit After Taxes of not less than Five Hundred Thousand Dollars for each
fiscal quarter.
6.9 INSURANCE. Each of Borrower and Guarantor shall keep all of its
insurable property, whether real, personal or mixed, insured by good and
responsible companies selected by Borrower or Guarantor and approved by Bank
against fire and such other risks as are customarily insured against by
companies conducting similar business with
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respect to like properties. Each of Borrower and Guarantor shall furnish to Bank
a statement of its insurance coverage, shall promptly furnish other or
additional insurance deemed reasonably necessary by and upon the reasonable
request of Bank to the extent that such insurance may be available and hereby
assigns to Bank, as security for the payment of its Obligations, the proceeds of
any such insurance. Bank will be named loss payee on all policies insuring the
Collateral. Each of Borrower and Guarantor will maintain adequate worker's
compensation insurance and adequate insurance against liability for damage to
persons or property. Each policy shall require ten (10) days' written notice to
Bank before such policy may be altered or cancelled.
6.10 BANK EXPENSES. Borrower shall pay or reimburse Bank for all Bank
Expenses as and when such Bank Expenses become due.
6.11 BROKERAGE FEES. Neither Borrower nor any of its Subsidiaries shall pay,
directly or indirectly, any fee, commission or compensation of any kind to any
Person for any services in connection with this Agreement.
6.12 NOTICE OF DEFAULT. Borrower shall give prompt written notice to Bank of
any Event of Default under this Agreement and of any default under any other
Loan Document, and shall give prompt written notice to Bank of any change in
management, change in name, liquidation and of any other matter which has
resulted in, or might result in, a material adverse change in the business,
operations, assets, prospects, earnings or condition (financial or otherwise) of
Borrower or any of its Subsidiaries.
6.13 EXECUTION OF OTHER DOCUMENTS. Borrower shall promptly, and shall cause
each of its Subsidiaries to promptly, upon demand by Bank, execute all such
additional agreements, contracts, documents and instruments in connection with
this Agreement as Bank may reasonably request in order to effect fully the
purposes hereof.
6.14 REPORTS UNDER PENSION PLANS. Borrower shall furnish to Bank, as soon as
possible and in any event within fifteen (15) days after Borrower knows or has
reason to know that any event or condition described in Section 5.10 hereof has
occurred, a statement of a responsible officer of Borrower describing such event
or condition and the action, if any, which Borrower proposes to take with
respect thereto.
SECTION 7. NEGATIVE COVENANTS
Borrower covenants and agrees that, so long as this Agreement shall be in
effect and until payment in full of all Obligations, including, without
limitation, any accrued
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and unpaid interest thereon, and any other amounts due hereunder, Borrower shall
perform each and all of the following covenants applicable to it:
7.1 LIENS. Borrower shall not create, incur, assume or permit to exist, or
permit any of its Subsidiaries to create, incur, assume or permit to exist,
directly or indirectly, any Lien on or with respect to any of its property,
whether real, personal or mixed, and whether now owned or hereafter acquired, or
upon the income or profits therefrom, except for Permitted Liens.
7.2 DISPOSITIONS. Borrower shall not make, or permit any of its Subsidiaries
to make, any Disposition of its property, whether now owned or hereafter
acquired, except (a) a Disposition by Borrower to any of its Subsidiaries and
(b) a Disposition for which the Net Cash Sales Proceeds, when added to the
aggregate Net Cash Sales Proceeds of all Dispositions made during the term of
this Agreement, do not exceed Five Hundred Thousand Dollars ($500,000).
7.3 INDEBTEDNESS. Borrower shall not create, incur or assume, or permit any
of its Subsidiaries to create, incur or assume, any Indebtedness, other than
Permitted Indebtedness.
7.4 GUARANTY OBLIGATIONS. Borrower shall not create, incur or assume, or
permit any of its Subsidiaries to create, incur or assume, any Guaranty
Obligations, other than Permitted Guaranty Obligations.
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, except that
Borrower may consummate the Stock Purchase in accordance with the terms and
conditions of the Stock Purchase Agreement.
7.6 LOANS AND ADVANCES. Without the prior written consent of Bank, which
consent shall not be unreasonably withheld, Borrower shall not make, or permit
any of its Subsidiaries to make, any loans or advances or otherwise extend
credit to any other Person, except that Borrower may extend trade credit in the
ordinary course of business as currently conducted to any of its Subsidiaries.
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, (b)
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
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Division of XxXxxx-Xxxx, Inc., provided that all such permitted investments
shall mature within one (1) year of purchase and (c) that Borrower may
consummate the Stock Purchase in accordance with the terms and conditions of the
Stock Purchase Agreement.
7.8 PAYMENT OF DIVIDENDS. Except for dividends paid by foreign Subsidiaries
of Borrower to Borrower, Borrower shall not declare or pay, or permit any of its
Subsidiaries to declare or pay, directly or indirectly, 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.
7.9 RETIREMENT OF STOCK. Borrower shall not redeem or retire, or permit any
of its Subsidiaries to redeem or retire, any share of its capital stock.
7.10 CAPITAL EXPENDITURES. Borrower and its Subsidiaries shall not in any
fiscal year make or incur any Capital Expenditure if after giving effect
thereto, the aggregate amount of all Capital Expenditures by Borrower and its
Subsidiaries in such fiscal year would exceed (a) Twenty Million Dollars
($20,000,000) for the fiscal year ending December 31, 2000 or (b) Eighteen
Million Five Hundred Thousand Dollars ($18,500,000) for any fiscal year
thereafter.
7.11 TRANSACTIONS WITH AFFILIATES. Borrower shall not directly or indirectly
enter into or permit to exist any transaction (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with any holder of ten percent (10%) or more of any class of equity
securities of Borrower or with any Affiliate of Borrower on terms that are less
favorable to Borrower or its Affiliates, as the case may be, than those terms
which might be obtained at the time from third parties, or otherwise not
obtained through good faith negotiation on an arm's length basis. Nothing
contained in this Section 7.11 shall be deemed to prohibit or in any manner
restrict Borrower from consummating the Stock Purchase in accordance with the
terms and conditions of the Stock Purchase Agreement.
7.12 OPERATING LEASE OBLIGATIONS. Borrower and its Subsidiaries shall not
permit their lease payments, as lessees, under existing and future operating
leases to exceed Three Million Dollars ($3,000,000) in the aggregate in any one
fiscal year. Each of such operating leases shall be of equipment or real
property needed by Borrower or any of its Subsidiaries in the ordinary course of
its business.
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SECTION 8. EVENTS OF DEFAULT
8.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following
events, acts or occurrences shall constitute an event of default (collectively,
"Events of Default" and individually, an "Event of Default") hereunder:
(a) FAILURE TO MAKE PAYMENTS WHEN DUE. Borrower shall fail to pay any
amount owing under this Agreement or under any other Loan Document (including
principal, interest, fees and Bank Expenses) when such amount is due, whether at
stated maturity, as a result of any mandatory repayment or prepayment
requirement, by acceleration, by notice of prepayment or otherwise; or
(b) BREACH OF REPRESENTATION OR WARRANTY. Any representation or
warranty made by Borrower or any of its Subsidiaries under this Agreement or any
other Loan Document, or in any certificate or financial or other statement
heretofore or hereafter furnished by Borrower or any of its Subsidiaries, shall
prove to have been false, incorrect or incomplete in any material respect when
made, effective or reaffirmed, as the case may be; or
(c) VIOLATION OF COVENANTS. Borrower or any of its Subsidiaries shall
fail or neglect to perform, keep or observe any term, provision, condition,
covenant, agreement, warranty or representation contained in this Agreement or
any other Loan Document, and such failure shall not be cured within any
applicable grace period provided for therein; or
(d) INSOLVENCY PROCEEDING. Borrower or any of its Subsidiaries shall
become insolvent or shall fail generally to pay its Indebtedness as such
Indebtedness becomes due; or an Insolvency Proceeding shall be commenced by or
against Borrower or any of its Subsidiaries and, in the case of an involuntary
petition against Borrower or any of its Subsidiaries, such petition shall not be
dismissed or discharged within ninety (90) days of commencement; or
(e) DISSOLUTION OR LIQUIDATION. Borrower or any of its Subsidiaries
shall voluntarily dissolve, liquidate or suspend its business in whole or in
part; or there shall be commenced against Borrower or any of its Subsidiaries
any proceeding for the dissolution or liquidation of Borrower or such Subsidiary
and such proceeding shall not be dismissed or discharged within sixty (60) days
of commencement; or
(f) APPOINTMENT OF RECEIVER. Borrower or any of its Subsidiaries
shall apply for or consent to the appointment, or commence any proceeding for
the appointment, of a receiver, trustee, custodian or similar official for all
or substantially all of its property; or any proceeding for the appointment of a
receiver, trustee,
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custodian or similar official for all or substantially all of the property of
Borrower or any of its Subsidiaries shall be commenced against Borrower or such
Subsidiary and shall not be dismissed or discharged within sixty (60) days of
commencement; or
(g) JUDGMENTS AND ATTACHMENTS. Borrower or any of its Subsidiaries,
or any of their respective properties shall suffer any money judgment, writ,
warrant of attachment or similar process involving the payment of money in
excess of Five Hundred Thousand Dollars ($500,000) and such judgment, writ,
warrant of attachment or similar process shall remain undischarged in accordance
with its terms and the enforcement thereof shall be unstayed and either (i) an
enforcement proceeding shall have been commenced and be pending by any creditor
thereon or (ii) there shall have been a period of sixty (60) consecutive
calendar days during which stays of such judgment, writ, warrant of attachment
or similar process, by reason of pending appeals or otherwise, were not in
effect; or
(h) FAILURE TO COMPLY. Borrower or any of its Subsidiaries shall fail
to comply with any order, non-monetary judgment, injunction, decree, writ or
demand of any court or other public authority, and such order, non-monetary
judgment, injunction, decree, writ or demand shall continue unsatisfied and in
effect for a period of thirty (30) days without being vacated, discharged,
satisfied or stayed or bonded pending appeal; or
(i) NOTICE REGARDING TAXES. A notice of levy, notice to withhold or
other legal process for taxes (other than property taxes) shall be filed or
recorded against Borrower or any of its Subsidiaries, or against the property of
Borrower or any of its Subsidiaries, and such notice or other legal process
shall not be released, stayed, vacated, bonded or otherwise dismissed within
sixty (60) days after the date of its filing or recording; or
(j) BORROWER CHANGE OF CONTROL. Subordinating Creditor shall at any
time cease to be the owner of at least twenty percent (20%) of the issued and
outstanding common stock of Borrower; or
(k) BREACH OF ANY LOAN DOCUMENT. Any Loan Document shall be breached
or become ineffective, or Borrower or any of its Subsidiaries shall disavow or
attempt to revoke or terminate any Loan Document to which it is a party; or
(l) DEFAULT UNDER OTHER AGREEMENTS. Borrower or any of its
Subsidiaries shall (i) fail under any agreement, document or instrument to pay
the principal, or any principal installment, of any present or future
Indebtedness for borrowed money of Five Hundred Thousand Dollars ($500,000) or
more, or any guaranty of present or future Indebtedness for borrowed money of
Five Hundred Thousand Dollars
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($500,000) or more, when due (or within any stated grace period), whether at the
stated maturity, upon acceleration, by reason of required prepayment or
otherwise or (ii) fail to perform or observe any other term, covenant or other
provision of any agreement, document or instrument binding upon Borrower or such
Subsidiary if, as a result of such failure, any Person has the right to
accelerate the indebtedness of Borrower or such Subsidiary in an amount in
excess of Five Hundred Thousand Dollars ($500,000) or otherwise require the
payment of any amount in excess of Five Hundred Thousand Dollars ($500,000) to
be paid prior to the date when such amount would otherwise become due; or
(m) INSECURITY. A material deterioration in the financial condition
of Borrower or any of its Subsidiaries shall occur which results in Bank deeming
itself, in good faith, insecure.
8.2 REMEDIES. Upon the occurrence of an Event of Default, unless such Event
of Default shall have been remedied or waived in writing by Bank, Bank may, at
its option, without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived, do one or more of the following at any time
or times and in any order: (a) reduce the amount of or refuse to make any Loan
under this Agreement; (b) declare any and all Obligations outstanding under this
Agreement to be immediately due and payable, notwithstanding anything contained
herein or in any Note or other Loan Document to the contrary (provided, however,
that upon the occurrence of any Event of Default described in Section 8.1(d),
(e) or (f) hereof, all Obligations shall automatically become due and payable);
and (c) enforce payment of all Obligations of Borrower under this Agreement and
the other Loan Documents. Notwithstanding anything to the contrary contained
herein, Bank shall have no obligation to make any Loan to Borrower during any
cure period provided for in Section 8.1 hereof.
SECTION 9. MISCELLANEOUS PROVISIONS
9.1 ADDITIONAL REMEDIES. The rights, powers and remedies given to Bank
hereunder shall be cumulative and not alternative and shall be in addition to
all rights, powers and remedies given to Bank by law against Borrower or any
other Person, including but not limited to Bank's rights of setoff or banker's
lien.
9.2 NONWAIVER. Any forbearance or failure or delay by Bank in exercising any
right, power or remedy hereunder shall not be deemed a waiver thereof and any
single or partial exercise of any right, power or remedy shall not preclude the
further exercise thereof. No waiver shall be effective unless it is in writing
and signed by an officer of Bank.
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9.3 INUREMENT. The benefits of this Agreement shall inure to the successors
and assigns of Bank and the permitted successors and assigns of Borrower.
Borrower shall not assign any of its rights or obligations under this Agreement
to any Person without Bank's prior written consent, and any assignment attempted
without Bank's prior written consent shall be void.
9.4 APPLICABLE LAW; JURISDICTION. This Agreement and all other Loan
Documents shall be governed and construed in accordance with the laws of the
State of California. Borrower and Bank hereby submit to the jurisdiction of any
court having jurisdiction in the matter in accordance with the Alternative
Dispute Resolution Agreement executed by and between Borrower and Bank.
9.5 SEVERABILITY. Should any one or more provisions of this Agreement be
determined to be illegal or unenforceable, all other provisions nevertheless
shall be effective.
9.6 INTEGRATION CLAUSE. Except for the other Loan Documents to which
Borrower is a party, this Agreement constitutes the entire agreement between
Bank and Borrower, and all prior communications, whether verbal or written,
between Borrower and Bank shall be of no further effect or evidentiary value.
9.7 CONSTRUCTION. The Section and subsection headings herein are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
9.8 AMENDMENTS. This Agreement may be amended only in writing signed by all
parties hereto.
9.9 DOCUMENTATION. All documentation evidencing or pertaining to the
Obligations under this Agreement and the other Loan Documents shall be on Bank's
standard forms or otherwise in form and content acceptable to Bank. To the
extent that the terms or conditions of this Agreement are inconsistent with the
terms or conditions of such documentation, the terms and conditions of this
Agreement shall prevail.
9.10 COUNTERPARTS. This Agreement may be executed in as many counterparts as
may be deemed necessary or convenient, and by the different parties hereto on
separate counterparts each of which, when so executed, shall be deemed an
original but all such counterparts shall constitute but one and the same
agreement. This Agreement shall become effective upon the receipt by Bank and
Borrower of executed counterparts signed by each of them.
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9.11 SETOFF. Borrower hereby acknowledges and specifically grants Bank a
security interest in, banker's lien upon, and right of recoupment and setoff
respecting any and all deposit or other accounts maintained by Borrower with
Bank, whether held in a general or special account or deposited for safekeeping
or otherwise, and regardless of how such account may be titled, and any other
property of Borrower held in the possession or custody of Bank or its agents.
Borrower further acknowledges that the exercise of setoff, if any, shall
require, and only be deemed to occur upon, the affirmative action of Bank. Bank
agrees to notify Borrower promptly after any such setoff and application;
provided, however, that the failure to give such notice shall not affect the
validity of such setoff and application.
SECTION 10. NOTICES
10.1 NOTICES. Any notice or other communication provided for or allowed
hereunder shall be considered to have been validly given if delivered
personally, and evidenced by a receipt signed by an authorized agent or
addressee, or 72 hours after being deposited in the United States mail,
registered or certified, postage prepaid, return receipt requested, or 48 hours
after being sent by Federal Express or other courier service, or, in the case of
telecopied notice, when telecopied, receipt acknowledged, and addressed as
provided below.
If to Borrower: Diodes Incorporated
0000 Xxxx Xxxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx Xxxxx
Chief Financial Officer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to: Xxxxxxxxx & Xxxxx
0000 Xxxxxx Xxxxxxxxx, Xxxxxxxx 0, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to Bank: Union Bank of California, N.A.
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Commercial Banking Group--Greater Los Angeles Division
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxx
Vice President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
10.2 CHANGE OF ADDRESS. The addresses to which notices or demands are to be
given may be changed from time to time by notice served as provided above.
THIS AGREEMENT is duly executed on behalf of the parties hereto as of the
date first above written.
"Borrower"
DIODES INCORPORATED
By: /s/ Xxxx Xxxxx
Title: Chief Financial Officer
"Bank"
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Xxxx Xxxx
Title: Vice President
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