US$10,000,000.00
REVOLVING AND TERM
CREDIT FACILITY
-------------------------------------------------------------------------------
CREDIT AGREEMENT
BY
AND
BETWEEN
INTERNATIONAL RECTIFIER CORPORATION
AND
THE DAI-ICHI KANGYO BANK, LTD
LOS ANGELES AGENCY
SEPTEMBER 26, 1997
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 General Terms . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.3 Accounting Terms. . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II
THE LOAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 The Revolving Line of Credit . . . . . . . . . . . . . . . . . 6
2.2 Conversion to Term Loan . . . . . . . . . . . . . . . . . . . . 7
2.3 Extension of Commitment Termination Date and Maturity Date. . . 7
2.4 Disbursements . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.5 The Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.6 Repayment of Principal. . . . . . . . . . . . . . . . . . . . . 8
2.7 Interest Rate and Payment of Interest . . . . . . . . . . . . . 8
2.8 The Commitment Fee. . . . . . . . . . . . . . . . . . . . . . . 11
2.9 Prepayments and Reduction of the Commitment . . . . . . . . . . 11
2.10 Payments to the Bank. . . . . . . . . . . . . . . . . . . . . . 12
2.11 Change in Circumstances . . . . . . . . . . . . . . . . . . . . 12
2.12 Change in Legality. . . . . . . . . . . . . . . . . . . . . . . 13
2.13 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE III
CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.1 Documents Required Prior to an Initial Disbursement . . . . . . 17
3.2 Conditions Precedent to Each Disbursement . . . . . . . . . . . 17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BORROWER. . . . . . . . . . . . . . . 18
4.1 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2 Enforceability. . . . . . . . . . . . . . . . . . . . . . . . . 18
4.3 No Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 18
4.4 Compliance with Laws and Agreements . . . . . . . . . . . . . . 18
4.5 Misleading Statements . . . . . . . . . . . . . . . . . . . . . 19
4.6 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.7 No Subordination. . . . . . . . . . . . . . . . . . . . . . . . 19
4.8 Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.9 Financial Statements. . . . . . . . . . . . . . . . . . . . . . 19
4.10 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . 19
i
4.11 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.13 Margin Stock. . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.14 Environmental Compliance. . . . . . . . . . . . . . . . . . . . 20
ARTICLE V
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.1 Preservation of Existence; Compliance with Applicable Laws. . . 20
5.2 Maintenance of Insurance. . . . . . . . . . . . . . . . . . . . 20
5.3 Maintenance of Properties . . . . . . . . . . . . . . . . . . . 20
5.4 Payment of Obligations and Taxes. . . . . . . . . . . . . . . . 20
5.5 Inspection Rights . . . . . . . . . . . . . . . . . . . . . . . 20
5.6 Reporting and Certification Requirements. . . . . . . . . . . . 21
5.7 Payment of Dividends. . . . . . . . . . . . . . . . . . . . . . 21
5.9 Additional Indebtedness . . . . . . . . . . . . . . . . . . . . 21
5.10 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.11 Liens and Encumbrances. . . . . . . . . . . . . . . . . . . . . 22
5.12 Transfer of Assets. . . . . . . . . . . . . . . . . . . . . . . 22
5.13 Change in Nature of Business. . . . . . . . . . . . . . . . . . 22
5.14 Financial Conditions. . . . . . . . . . . . . . . . . . . . . . 22
5.15 Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.16 Consolidated Operating Loss . . . . . . . . . . . . . . . . . . 23
5.17 Environmental Compliance. . . . . . . . . . . . . . . . . . . . 23
5.18 Pari Passu Treatment. . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VI
DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . 24
6.2 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VII
GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.1 Construction. . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.2 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . 26
7.3 Enforcement and Waiver by the Bank. . . . . . . . . . . . . . . 26
7.4 Expenses; Indemnity . . . . . . . . . . . . . . . . . . . . . . 26
7.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.6 Waiver and Release by the Borrower. . . . . . . . . . . . . . . 28
7.7 Choice of Law and Venue . . . . . . . . . . . . . . . . . . . . 28
7.8 Binding Effect and Assignment . . . . . . . . . . . . . . . . . 28
7.9 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . 28
7.10 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.11 Attorneys' Fees and Costs . . . . . . . . . . . . . . . . . . . 28
7.12 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ii
7.13 WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . 29
7.14 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . 29
7.15 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.16 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 29
7.17 Conditions Not Fulfilled. . . . . . . . . . . . . . . . . . . . 30
7.18 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.19 Immateriality . . . . . . . . . . . . . . . . . . . . . . . . . 30
EXHIBITS
A NAMES OF AUTHORIZED INDIVIDUALS
B FORM OF ADVANCE REQUEST
C FORM OF AMENDED AND RESTATED REVOLVING CREDIT NOTE
D FORM OF NOTICE OF INTEREST PERIOD
iii
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (the "Agreement") is entered into as of
September 26, 1997, by and between INTERNATIONAL RECTIFIER CORPORATION, a
Delaware corporation (the "Borrower"), and THE DAI-ICHI KANGYO BANK, LTD., a
financial institution organized and existing under the laws of Japan acting
by and through its duly-licensed Los Angeles Agency (the "Bank"), in reliance
upon the following:
RECITAL
The Borrower has requested that the Bank make available to the Borrower
a credit facility in the aggregate principal amount of Ten Million and No/100
U.S. Dollars (US$10,000,000.00) and the Bank is willing to do so, but only
upon the terms and conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS. For the purposes of this Agreement, the
capitalized terms in the preamble hereto shall have the meanings therein
given them and the following terms shall have the respective meanings set
forth below:
"Advance" shall mean each and every advance of sums hereunder by
the Bank to or for the account of the Borrower.
"Advance Request" shall mean the written request for an Advance
required to be provided by the Borrower to the Bank in connection with any
Advance pursuant to Section 2.4 hereof.
"Business Day" shall mean any day other than a Saturday, Sunday
or any other day on which banks are closed for business in California;
provided, however, that when used in connection with a LIBOR Advance, the
term "Business Day" shall also exclude any day on which banks are not open
for dealings in Dollar deposits in the London interbank market.
"Capital Expenditures" shall mean, for any period, the dollar
amount of gross expenditures (including obligations under capital leases)
incurred during such period for
1
fixed assets, real property, plant and equipment, and renewals, improvements
and replacements thereto, required to be included in "capital expenditures"
or comparable items in the financial statements of the Borrower in conformity
with GAAP.
"Commitment" shall mean the Bank's commitment hereunder to lend
to the Borrower sums up to an aggregate principal amount at any one time
outstanding of Ten Million and No/100 U.S. Dollars (US$10,000,000.00).
"Commitment Fee" shall mean that fee payable by the Borrower to
the Bank pursuant to Section 2.8 hereof.
"Commitment Period" shall mean the period of time from the date
hereof to the Commitment Termination Date, as that may from time-to-time be
extended pursuant to Section 2.3 hereof.
"Commitment Termination Date" shall mean September 26, 1998 or
such earlier date on which the Bank may accelerate the Borrower's payment
obligations hereunder as the result of an occurrence of an Event of Default;
provided, however, that the Bank may extend the Commitment Termination Date
pursuant to Section 2.3 hereof.
"Consolidated Operating Loss" shall mean a loss from operations
before other income and expenses, income taxes and extraordinary items as set
forth on the Borrower's consolidated statement of income.
"Debt" shall mean all liabilities of the Borrower as set forth on
its balance sheet, less Subordinated Debt.
"Effective Tangible Net Worth" shall mean the Borrower's stated
net worth plus Subordinated Debt but less all intangible assets of the
Borrower (i.e., goodwill, trademarks, patents, copyrights, organization
expense, loans and advances to employees and similar intangible items) and
excluding (i) any cumulative translation adjustments to equity for the value
of foreign assets based upon changes in foreign exchange rates and (ii) any
redemptions of employee stock options.
"Environmental Laws" shall mean any and all federal, state,
local and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees, permits, concessions, franchises, licenses, agreements and
other governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, toxics or hazardous
substances or wastes into the environment, or the clean-up or other
remediation thereof.
"Eurodollar Reserves" shall mean a fraction, the numerator of
which is one (1.00) and the denominator of which is one (1.00) minus the
aggregate of the maximum reserve percentages (including but not limited to
all special, supplemental, marginal and
2
emergency reserves), expressed as a decimal, as established from time-to-time
by the Board of Governors of the Federal Reserve System or any other
regulatory authority to which the Bank is subject for maintaining reserves
related to its "Eurocurrency liabilities" (as such term is defined in
Regulation D as promulgated by said Board of Governors), adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"Event of Default" shall mean any one or more of the events
specified in Section 6.1 hereof.
"GAAP" shall mean generally accepted accounting principles set
forth by the Accounting Principles Board, the American Institute of Certified
Public Accountants, the Financial Accounting Standards Board or otherwise as
generally recognized by the United States accounting profession to define
accepted accounting practice as of the date of determination.
"Indebtedness" shall mean, with respect to the Borrower, (i) all
indebtedness for borrowed money and for the deferred purchase price of
property or services due more than 45 days from the date of payment specified
on the invoice for such obligation with respect to which the Borrower is
primarily liable as obligor and (ii) obligations under leases which shall
have been or should be, in accordance with GAAP, reported as capital leases
with respect to which the Borrower is primarily liable.
"Index Rate" shall mean that rate established and published from
time to time by the Bank as its prime, base or reference rate. The Index Rate
is determined by the Bank at its discretion based on various factors
including its costs of funds and desired return, general economic conditions
and other factors. The Bank uses the Index Rate as a benchmark for pricing
certain types of loans. Depending upon the circumstances, such as the amount
and terms of a loan, the creditworthiness of a borrower or any guarantor, the
presence and nature of collateral and other relationships between a borrower
and the Bank, loans may be priced at, above or below the Index Rate. The
Borrower acknowledges that the use of the appellation "Index Rate" does not
constitute a representation on the part of the Bank that no loans or
forbearances are made by the Bank at a lesser rate of interest. In the event
that the Bank shall cease to establish or publish an Index Rate, whether
denominated as such or otherwise, the Index Rate shall be deemed to be the
average "prime," "base" or "reference" interest rate for each calendar month,
as of the first day of such calendar month, of the three largest (as
determined by total assets) banking institutions in the State of California
then establishing or publishing a "prime," "Base" or "reference" rate of
interest; provided, however, that in the event any such banking institution
publishes more than one such rate, the rate used with respect to such banking
institution shall be the highest among those so published by it.
"Interest Payment Date" shall mean: (i) with respect to any
Advance, the last day of each Interest Period applicable to such Advance and
the Commitment Termination
3
Date; and (ii) with respect to the Term Loan, the last day of each Interest
Period and the Maturity Date.
"Interest Period" shall mean, with respect to each Advance, the
period commencing on the date of such Advance or on the last day of each
immediately preceding Interest Period applicable to such Advance in the event
of a conversion or continuation pursuant to Section 2.7 hereof (as the case
may be) and, with respect to the Term Loan, the period commencing on the
Commitment Termination Date or on the last day of each immediately preceding
Interest Period in the event of a conversion or continuation pursuant to
Section 2.7 hereof (as the case may be), and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the
last day) in the calendar month that is one (1), two (2) or three (3) months
thereafter (or such other periods as the Borrower and the Bank may later
agree upon), all as the Borrower may specify in an Advance Request or Notice
of Interest Period (as the case may be) or, if earlier, the date of
prepayment of such Advance or the Term Loan (or any portion thereof), the
Commitment Termination Date (as to Advances) or the Maturity Date (as to the
Term Loan); provided, however, that (i) if any Interest Period would end on
a day that is not a Business Day, such Interest Period shall be extended to
the next succeeding Business Day unless such next succeeding Business Day
would fall in the next calendar month, in which case such Interest Period
shall end on the next preceding Business Day; (ii) in no event shall any
Interest Period with respect to any Advance end later than the Commitment
Termination Date or with respect to the Term Loan end later than the Maturity
Date; and (iii) interest shall accrue from and including the first day of an
Interest Period to but excluding the last day of such Interest Period.
"LIBOR Base Rate" shall mean, with respect to any Advance or to
the Term Loan and for any Interest Period, an interest rate per annum
(rounded upwards, if necessary, to the next higher 1/16th of 1.00%) equal to
seventy-five basis points (0.75%) plus the product of (i) the rate at which
Dollar deposits approximately equal in principal amount to the Advance or
the then-outstanding balance of the Term Loan for which the LIBOR Base Rate
is being determined and for a maturity comparable to the Interest Period
selected by the borrower are offered in immediately available funds to the
Bank in the London interbank market at approximately 11:00 a.m., London time,
on the day which is two (2) Business Days prior to the commencement of such
Interest Period, multiplied by (ii) the Eurodollar Reserves in effect on the
first day of such Interest Period.
"Loan" shall mean the aggregate of all Advance hereunder and all
other sums due and owing from the Borrower to the Bank pursuant to the terms
hereof.
"Loan Documents" shall mean: (i) this Agreement; (ii) the
agreements, instruments and other documents referred to in Article III
hereof; and (iii) any amendment, supplement, modification, consent or waiver
of, to or in respect of any of the foregoing.
"Material Adverse Effect" shall mean: (i) a materially adverse
effect on the business, assets, operations, prospects or financial condition
of the Borrower; (ii) a material
4
impairment of the ability of the Borrower to perform any of its material
obligations under any Loan Document; or (iii) a material impairment of the
rights of or benefits available to the Bank under any of the Loan Documents.
"Maturity Date" shall mean September 26, 2000 or such earlier
date on which the Bank may accelerate the Borrower's payment obligations
hereunder as the result of an occurrence of an Event of Default; provided,
however, that the Bank may extend the Maturity Date pursuant to Section
2.3 hereof.
"Notice of Interest Period" shall mean the written notice
required to be provided by the Borrower to the Bank in connection with the
Borrower's periodic election of Interest Periods for the Term Loan.
"Note" shall mean that certain Revolving Credit and Term Note
which the Borrower shall execute and deliver to the Bank pursuant to Section
3.1 hereof.
"Obligations" shall mean the obligations of the Borrower:
(i) To pay the principal of and interest on the Loan
in accordance with the terms hereof and to perform all of its other
obligations, covenants and agreements to or for the benefit of the
Bank, whether hereunder or otherwise, now existing or hereafter
incurred, matured or unmatured, fixed or contingent, joint or several,
including any extensions, modifications or renewals thereof or
substitutions therefor; and
(ii) To reimburse the Bank, on demand, for all of
the Bank's expenses and costs as more fully provided for herein in
connection with the preparation, amendment, modification or
enforcement of the Loan Documents, including without limitation any
proceeding brought or threatened to enforce payment of any of the
obligations referred to in clause (i) of this definition.
"Permitted Liens" shall mean (i) liens and security interests
securing indebtedness owed by the Borrower to the Bank; (ii) liens for taxes,
assessments or similar charges either not more than 45 days past due or
being contested in good faith; (iii) liens of materialmen, mechanics,
warehousemen or carriers, or other like liens, arising in the ordinary course
of business and securing obligations which are not more than 45 days past due
or being contested in good faith; (iv) purchase money liens or purchase money
security interests upon or in any property acquired or held by the Borrower in
the ordinary course of business to secure Indebtedness outstanding on the
date hereof or permitted to be incurred under Section 5.9 hereof; (v) liens
and security interests which, as of the date hereof, have been disclosed to
and approved by the Bank in writing; (vi) liens in connection with workers'
compensation, unemployment insurance and such other types of insurance;
(vii) liens resulting from zoning restrictions, easements and such other
similar restrictions on the use of real property; and (ix) liens arising from
judgments and attachments that would not constitute an Event of Default
hereunder.
5
"Subordinated Debt" shall mean such liabilities of the Borrower
that have been subordinated to those owed to the Bank, such subordination to
be effected in a manner that is acceptable to the Bank.
"Subsidiary" shall mean, with respect to the Borrower, any
entity with respect to which the Borrower directly or indirectly owns or
controls at least a majority of such entity's voting stock, membership
interests or other equity interests.
"Term" shall mean the term of this Agreement, commencing on the
date hereof and expiring on the Maturity Date; provided, however, that in the
event the Borrower fails to pay to the Bank all sums required hereunder on or
before the Maturity Date, the Borrower shall continue to be bound by the
terms of this Agreement until all such sums are paid in full but the Bank
shall be under no further obligations hereunder after such date.
"Term Loan" shall mean the term loan described in Section 2.2
hereof.
"U.S. Dollars" or "US$" shall mean the lawful currency of the
United States of America.
1.2 GENERAL TERMS. Except where the context requires otherwise, the
definitions in Section 1.1 hereof shall apply equally to both the singular
and plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms.
The words "include," "includes" and "including" shall be deemed to be
followed by the phrase "without limitation." Unless otherwise stated,
references to Sections Articles, Schedules and Exhibits made herein are to
Sections, Articles, Schedules or Exhibits, as the case may be, of this
Agreement, and references herein to any document, including but not limited
to this Agreement, shall be deemed to refer to the document as it now exists
or as it may from time-to-time be amended. References herein to a "person" or
"persons" shall be deemed to include an individual, corporation, partnership,
limited liability company, trust, unincorporated association, joint venture,
joint-stock company, government (including political subdivisions and
agencies thereof) or any other entity whatsoever.
1.3 ACCOUNTING TERMS. All references to financial statements,
assets, liabilities and similar accounting terms not specifically defined
herein shall mean such terms as used or determined in accordance with GAAP
consistently applied over the period(s) in question, and except where
otherwise specified, all financial information submitted by the Borrower
pursuant to this Agreement shall be prepared in accordance with GAAP.
ARTICLE II
THE LOAN
2.1 THE REVOLVING LINE OF CREDIT. Subject to the terms of this
Agreement, the Borrower may at any time and from time to time before the
Commitment Termination Date, and so long as no Event of Default (or event
which with the giving of notice or the passage
6
of time or both would become an Event of Default) has occurred, borrow from
the Bank pursuant hereto, and the Bank shall lend to the Borrower, such
requested Advances, each in an amount of not less than Five Hundred Thousand
and No/100 U.S. Dollars (US$500,000.00), or any integral multiple thereof,
not to exceed in the aggregate at any one time outstanding during the Term
hereof the amount of the Commitment. Subject to the terms hereof, the
Borrower may borrow, repay and reborrow sums until the Commitment Termination
Date.
2.2 CONVERSION TO TERM LOAN. On the Commitment Termination Date, all
Advances outstanding hereunder shall automatically convert to a two-year term
loan (the "Term Loan") in an amount equal to the aggregate principal amount
of such Advances outstanding on such day. The Term Loan shall bear interest
at the LIBOR Base Rate for Interest Periods to be selected by the Borrower,
and all such interest shall be due and payable, pursuant to Section 2.7
hereof. In addition, the Borrower shall repay a portion of the outstanding
principal balance of the Term Loan on the last day of each three-month
period, commencing on the day which is three months after the Commitment
Termination Date, each such quarterly repayment to be in an amount equal to
five percent (5%) of the principal balance of the Term Loan outstanding on
the Commitment Termination Date. On the Maturity Date, all outstanding
principal and accrued and unpaid interest shall be due and payable in full.
2.3 EXTENSION OF COMMITMENT TERMINATION DATE AND MATURITY DATE. The
Borrower may request that the Bank extend the Commitment Termination Date for
successive one-year periods. Each such request must be made in writing and
received by the Bank not less than 30 days or more than 90 days prior to the
then-effective Commitment Termination Date. The Bank may consent to any
request for such extension at the Bank's sole discretion. If the Bank agrees
to extend the Commitment Termination Date, the Maturity Date shall likewise
be extended for one year. Any consent by the Bank to extend the Commitment
Termination Date on one occasion shall not be deemed a consent by the Bank to
any subsequent extension request from the Borrower.
2.4 DISBURSEMENTS.
a. ADVANCES. Upon satisfaction in full of the conditions
precedent set forth in Article III hereof, the Bank shall make Advances
hereunder upon receipt by the Bank of an Advance Request pursuant to
paragraph (b) of this Section 2.4 from any one of the individuals whose
names are set forth in Exhibit "A" attached hereto, acting alone, or from
any individual authorized in writing to the Bank to so act by any one of
the individuals named in Exhibit "A" hereto. Notwithstanding anything to
the contrary herein contained, any Advance shall be conclusively presumed
to have been made to or for the benefit of the Borrower so long as the
Bank believes in good faith that the requests and directions received
by the Bank in connection therewith have been made by a person
authorized hereunder, regardless of the fact that persons other than
those authorized hereunder may have made such an Advance Request.
7
b. NOTICE OF ADVANCES. In order to request an Advance, the
Borrower shall give written notice (or telephonic notice promptly
confirmed in writing or by facsimile transmission) to the Bank in the
form of Exhibit "B" hereto (or in such other form as may from time to
time be acceptable to the Bank) not later than 7:00 a.m., Los Angeles
time, on the day which is two (2) Business Days prior to the date of the
proposed Advance. Such notice shall be irrevocable and shall in each
case refer to this Agreement and specify: (i) the date of such Advance
(which shall be a Business Day); (ii) the amount of such Advance; and
(iii) the Interest Period with respect thereto. If no Interest Period
with respect to the Advance is specified in such notice, then the Borrower
shall be deemed to have selected an Interest Period of one (1) month's
duration.
c. METHOD OF DISBURSEMENT. Each Advance shall be disbursed by the
Bank to the Borrower's account at Sanwa Bank California, ABA 000000000,
Account Number 261331033, Bnf; International Rectifier Corp.
2.5 THE NOTE. Concurrently with the execution of this Agreement, the
Borrower shall execute and deliver to the Bank the Note in the form of
Exhibit "C" hereto. All Advances and the Term Loan shall be evidenced by the
Note. The Bank shall record on the schedule annexed to the Note the date of
each Advance, the amount of each Advance and each payment of principal and
interest on the Loan; provided, however, that the Bank's failure to make any
such notation on the Note shall not excuse, limit or otherwise affect the
obligations of the Borrower hereunder, nor shall such failure affect the
recognition of payments of principal and interest on the Loan.
2.6 REPAYMENT OF PRINCIPAL. The Borrower shall repay to the Bank the
outstanding principal balance of each Advance on the last day of the
applicable Interest Period relating thereto (unless the Borrower shall
convert or continue an Advance in accordance with Section 2.7 hereof) and
shall repay the aggregate outstanding principal balance of the Term Loan in
accordance with Section 2.2 hereof.
2.7 INTEREST RATE AND PAYMENT OF INTEREST.
a. INTEREST RATE. Each Advance and the Term Loan shall bear
interest at a rate per annum equal to the LIBOR Base Rate for the Interest
Period then in effect, computed on the basis of the actual number of days
elapsed over a year of 360 days. Interest shall be due and payable on
each applicable Interest Payment Date in an amount as shall be determined
by the Bank, which determination shall be conclusive absent manifest
error. The Bank shall use reasonable efforts to advise the Borrower of
such determination three (3) Business Days prior to each applicable
Interest Payment Date, but the Bank's failure to so advise the Borrower
shall in no way impair the Bank's right to receive timely payment of all
sums due the Bank hereunder.
8
b. CONVERSIONS AND CONTINUATIONS. The Borrower shall have the right at
any time upon prior irrevocable telephonic notice (which shall be confirmed
promptly by providing the Bank with a Notice of Interest Period in the form
of Exhibit "D" hereto) to the Bank (i) before 7:00 a.m., Los Angeles time, on
the day which is two (2) Business Days prior to conversion, to convert the
Interest Period with respect to any Advance or the Term Loan to another
permissible Interest Period, and (ii) before 7:00 a.m., Los Angeles time, on
the day which is two (2) Business Days prior to continuation, to continue
any Advance or the Term Loan into a subsequent Interest Period of the same
duration, subject in each case to the following:
(i) in the case of a conversion or continuation of less than all
Advances, the aggregate principal amount of Advances so converted or
continued shall not be less than Five Hundred Thousand and No/100 U.S.
Dollars (US$500,000.00), shall be in integral multiples thereof and after such
conversion and/or continuation there shall not be outstanding Advances in the
aggregate with more than three (3) different interest rates and three (3)
different Interest Periods;
(ii) in the case of a conversion or continuation of the Term Loan,
the entire principal balance of the Term Loan from time to time outstanding
must be converted or continued into one Interest Period;
(iii) the Borrower shall pay all accrued interest on an Advance or
the Term Loan being converted or continued at the time of conversion or
continuation;
(iv) if any Advance or the Term Loan (as the case may be) is
converted at a time other than the end of the Interest Period applicable
thereto, the Borrower shall pay any increased costs associated therewith
pursuant to Section 2.13 hereof; and
(v) no Advance may be converted into or continued as an Advance
with an Interest Period ending after the Commitment Termination Date, any
Advance for which the shortest available Interest Period would extend beyond
the Commitment Termination Date shall automatically bear interest from the
end of the then-effective Interest Period to the Commitment Termination Date
at the Index Rate, and the Term Loan may not be converted or continued into
an Interest Period which extends beyond the Maturity Date.
If the Borrower shall not have given timely notice to convert or continue any
Advance or the Term Loan into a subsequent Interest Period, the Advance or
Term Loan, as the case may be, shall (unless repaid pursuant to the terms
hereof), subject to clauses (i), (ii), (iii), (iv) and (v) above,
automatically be continued into a new Interest Period of one (1) month's
duration.
9
c. INTEREST ON OVERDUE AMOUNTS; ALTERNATIVE RATE OF INTEREST.
Notwithstanding any provision of this Section 2.7 to the contrary, the
Borrower shall pay interest as follows:
(i) If the Borrower shall default in the payment of the principal
of or interest on any Advance or the Term Loan, or any fees or other amounts
becoming due hereunder, whether by scheduled maturity, notice of prepayment,
acceleration or otherwise, the Borrower shall on demand from time to time
from the Bank pay interest from and including the date of such default, to
the extent permitted by law, on such defaulted amount up to (but not
including) the date of actual payment (after as well as before judgment) at
a rate per annum (computed as provided in paragraph (a) of this Section 2.7)
equal to the Index Rate plus three percent (3.00%).
(ii) In the event, and on each occasion, that on the day which is
two (2) Business Days prior to the commencement of any Interest Period the
Bank shall have determined that U.S. Dollar deposits in the principal amount
of the Advance or the then-outstanding principal balance of the Term Loan are
not generally available to the Bank in the London interbank market, or that
reasonable means do not exist for ascertaining the LIBOR Base Rate, or that
the rate at which U.S. Dollar deposits are being offered will not adequately
and fairly reflect the cost to the Bank of making or maintaining any Advance
or the Term Loan during such Interest Period, the Bank shall, as soon as
practicable thereafter, give notice of such determination to the Borrower and
until the circumstances giving rise to such notice no longer exist, all
outstanding Advances or the outstanding principal balance of the Term Loan,
as the case may be, shall bear interest at the Index Rate. Upon the Bank's
determination that the circumstances giving rise to the foregoing notice no
longer exist, the Bank shall so notify the Borrower, and all outstanding
Advances or the outstanding principal balance of the Term Loan, as the case
may be, shall once again bear interest at the LIBOR Base Rate. Each
determination by the Bank hereunder shall be conclusive and binding absent
manifest error.
d. USURY LAW. It is the intent of the Bank and the Borrower in the
execution of this Agreement, the Note and all other Loan Documents to
contract in strict compliance with the usury laws of the State of California
(the "Usury Law"). In furtherance thereof, the Bank and the Borrower stipulate
and agree that none of the terms and provisions contained herein or in the
Note or under any other Loan Document, or in any other instrument executed in
connection herewith or therewith, shall ever be construed to create a
contract to pay for the use, forbearance or detention of money at a rate of
interest in excess of the maximum interest rate permitted to be charged by
the Bank in compliance with the Usury Law. Neither the Borrower nor any
guarantors, endorsers or other parties now or hereafter becoming liable for
payment hereunder or under the Note or any other Loan Document shall ever be
required to pay interest thereon at a rate in excess of the maximum interest
that may be lawfully charged by the Bank in compliance with the Usury Law,
and the provisions of this
10
paragraph 2.7(d) shall control over all other provisions hereof or of
the Note or any other Loan Documents, and of any other instruments now
or hereafter executed in connection herewith or therewith, which may be
in apparent conflict herewith. If the maturity of any Obligations shall
be accelerated for any reason or if the principal of the Note is paid
prior to the expiration of the respective term thereof, and as a result
thereof the interest received for the actual period of existence of the
Loan exceeds the applicable maximum lawful rate permitted to be charged
by the Bank in compliance with the Usury Law, the Bank shall refund to
the Borrower the amount of such excess or shall, at its option, credit
the amount of such excess against the principal balance of the Loan then
outstanding. In the event that the Bank shall collect monies which are
deemed to constitute interest in excess of the lawful rate which the
Bank may charge, for any reason whatsoever, such monies shall, upon such
determination and at the option of the Bank, be immediately either
returned to the Borrower or credited against the principal balance of
the Loan then outstanding.
2.8 THE COMMITMENT FEE. In addition to the payment of interest
hereunder and not in lieu thereof, the Borrower shall pay to the Bank the
Commitment Fee as follows:
a. AMOUNT. The Commitment Fee shall be computed daily at the rate
of twenty-five basis points (0.25%) per annum on the difference between
the Commitment and the aggregate principal balance of all Advances
outstanding from time-to-time on the basis of a 360-day year for the
actual number of days elapsed (including the first day but excluding the
last day) during the period for which the Commitment Fee is payable.
b. PAYMENT. The Commitment Fee shall be paid quarterly in arrears
on the last Business Day of each calendar quarter, on the Commitment
Termination Date and on demand during the continuance of any Event of
Default.
c. ASSESSMENT PERIOD. The Commitment Fee shall be assessed only
for the period commencing on the date of this Agreement and expiring on
the Commitment Termination Date.
2.9 PREPAYMENTS AND REDUCTION OF THE COMMITMENT.
a. PREPAYMENT. The Borrower shall have the right to make payments
in reduction of the outstanding balance of the Loan, in whole or in part
at any time, subject to the provisions of Section 2.13 hereof; provided,
however, that each such prepayment must be accompanied by payment of all
interest accrued thereon, and provided further that such prepayment must
be in the amount of Five Hundred Thousand and No/100 U.S. Dollars
(US$500,000.00) or integral multiples thereof, or the outstanding
balance if less. Any amount of principal so repaid prior to the
Commitment Termination Date shall become available for future Advances
subject to
11
the terms and conditions of this Agreement, but any amount of principal
repaid on or after the Commitment Termination Date shall not be
available for reborrowing.
b. REDUCTION OF THE COMMITMENT. Upon not less than five (5)
Business Days' written notice to the Bank, the Borrower may terminate
the Commitment in whole or in part; provided, however, that each partial
reduction shall be in an amount of not less than One Million and No/100
U.S. Dollars (US$1,000,000.00) or any integral multiple thereof, and
provided further that in no event may the Commitment be reduced to an
amount less than the then-outstanding principal balance of the Loan.
2.10 PAYMENTS TO THE BANK. All sums payable to the Bank hereunder shall
be paid directly to the Bank, in U.S. Dollars and immediately available
funds, by wire transfer to the account of the Bank at The Dai-Ichi Kangyo
Bank, Ltd., New York, ABA No. 000000000, for the account of The Dai-Ichi
Kangyo Bank, Ltd., Los Angeles Agency, Account No. 79740111195, Reference
International Rectifier, Attn: LAD, or to such other account as the Bank may
from time to time notify the Borrower.
2.11 CHANGE IN CIRCUMSTANCES.
a. CHANGES TO TAXES AND RESERVE REQUIREMENTS. Notwithstanding any
other provision herein to the contrary, if after the date of this
Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof (whether or
nor having the force of law) shall change the basis of taxation of
payments to the Bank of the principal of or interest on any Advance or
the Term Loan or any fees or other amounts payable hereunder (other than
changes with respect to taxes imposed on the overall net income of the
Bank by the jurisdiction in which the Bank has its principal office or
by any political subdivision or taxing authority therein), or shall
impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account
of or credit extended by, the Bank or shall impose upon the Bank or the
London interbank market for LIBOR deposits any other condition affecting
this Agreement, the Commitment or Advances made by the Bank, and the
result of any of the foregoing shall be to increase the cost to the
Bank of making or maintaining the Commitment or the Loan or to reduce
the amount of any sum received or receivable by the Bank hereunder
(whether of principal, interest or otherwise) in respect thereof by an
amount deemed by the Bank to be material, then the Borrower will pay to
the Bank upon demand such additional amount or amounts as will
compensate the Bank for such additional costs incurred or reductions
suffered.
b. CAPITAL ADEQUACY. If the Bank shall have determined that the
adoption after the date hereof of any law, rule, regulation or guideline
regarding capital adequacy, or any change in any of the foregoing or in
the interpretation or administration of any of the foregoing by any
governmental authority charged with the
12
interpretation or administration thereof, or compliance by the Bank or its
holding company with any request or directive regarding capital adequacy
(whether or not having the force of law) made or promulgated after the
date hereof by any such governmental authority, has or would have the
effect of reducing the rate of return on the Bank's capital or on the
capital of its holding company as a consequence of its obligations under
this Agreement or the Loan made by the Bank pursuant hereto to a level
below that which the Bank or its holding company could have achieved but
for such adoption, change or compliance (taking into consideration the
Bank's guidelines with respect to capital adequacy) by an amount deemed by
the Bank to be material, then from time to time the Borrower shall pay to
the Bank such additional amount or amounts as will compensate the Bank or
its holding company for any reduction suffered.
c. DELIVERY OF CERTIFICATE. A certificate of the Bank setting
forth such amount or amounts as shall be necessary to compensate the Bank
as specified in paragraphs (a) or (b) of this Section 2.11 (as the case
may be) shall be delivered to the Borrower and shall be conclusive absent
manifest error. Except as provided in paragraph (d) of this Section 2.11,
the Borrower shall pay the Bank the amount shown as due on any such
certificate delivered by the Bank within thirty (30) days after the
Borrower's receipt of the same. The Bank shall submit such a certificate
to a Borrower no more often than monthly; provided, however, that
certificates with respect to amounts due as to an identifiable Advance
or the Term Loan may also be submitted at the end of the then-effective
Interest Period applicable thereto.
d. NO WAIVER, FAILURE TO MAKE CLAIM. Failure on the part of the
Bank to demand compensation for any increased costs or reduction in
amounts received or receivable or reduction in return on capital shall
not constitute a waiver of the Bank's rights with respect to any period
to demand compensation for any increased costs or reduction in amounts
received or receivable or reduction in return on capital with respect to
such period or any other period. If the Bank shall receive as a refund
any moneys from any source that it has listed on the certificate provided
pursuant to paragraph 2.11(c) as an increased cost, to the extent that
the Borrower has previously paid such increased cost to the Bank, the
Bank shall promptly forward such refund to the Borrower without interest
and less all out-of-pocket expenses incurred by the Bank in obtaining
such refund; provided, however, that the Borrower shall promptly return
such refund (plus penalties, interest and other charges) to the Bank in
the event that the Bank is later required to repay such refund.
2.12 CHANGE IN LEGALITY. Notwithstanding anything to the contrary herein
contained, if any change in any law or regulation or in the interpretation
thereof or any new law, regulation or interpretation by any governmental
authority charged with the administration or interpretation thereof or any
judgment, order or directive of any competent court, tribunal or authority
shall make it unlawful for the Bank to make any Advance or maintain the Loan at
the LIBOR Base Rate or otherwise to give effect to its obligations as
13
contemplated hereby (an "Illegality"), then, by written notice to the
Borrower, the Bank may:
(i) declare that Advances bearing interest at the LIBOR Base
Rate will not thereafter be made by the Bank, whereupon any request by
the Borrower for an Advance shall be deemed a request for an Advance
bearing interest at the Index Rate unless and until such declaration shall
be subsequently withdrawn; and
(ii) require that all outstanding Advances or the outstanding
principal balance of the Term Loan, as the case may be, bear interest at
the Index Rate, in which event (A) all such Advances or the outstanding
principal balance of the Term Loan, as the case may be, shall
automatically bear interest at the Index Rate as of the effective date of
the notice required by this Section 2.12, (B) all payments and prepayments
of principal which would otherwise have been applied to repay the Advances
or the Term Loan bearing interest at the LIBOR Base Rate shall instead be
applied to repay the Advances or the Term Loan bearing interest at the
Index Rate, and (C) the Advances or the Term Loan bearing interest at the
Index Rate shall be prepayable only at the times such amounts would have
been prepayable had the interest rate not been changed to the Index Rate.
For purposes of this Section 2.12, a notice to the Borrower by the Bank shall
be effective, if lawful, on the last day of the then-current Interest Period
with respect thereto; provided, however, that such notice shall be effective
on the date of receipt by the Borrower if there are no outstanding Advances
to the Borrower, and provided further that, if it is not lawful for the Bank
to maintain any Advance or the Term Loan (as the case may be) bearing
interest at the LIBOR Base Rate until the end of the Interest Period
applicable thereto, the notice to the Borrower shall be effective upon
receipt by the Borrower. The Bank agrees that it will notify the Borrower as
soon as practicable if the conditions giving rise to an Illegality cease to
exist.
2.13 INDEMNITY. The Borrower shall indemnify the Bank and hold the
Bank harmless from and against any loss or expense which the Bank may sustain
or incur as a direct consequence of: (i) any payment, prepayment or
conversion, whether required by any provision of this Agreement or otherwise
made, on a date other than the last day of the applicable Interest Period;
(ii) any default in payment or prepayment of the principal amount of any
portion of the Loan or interest accrued thereon, as and when due and payable
(whether at scheduled maturity, by notice of prepayment, acceleration or
otherwise); (iii) the occurrence of any Event of Default, including any loss
sustained or incurred or to be sustained or incurred in liquidating or
employing deposits from third parties acquired to effect or maintain any
portion of the Loan bearing interest at the LIBOR Base Rate; (iv) any
failure by the Borrower to fulfill on the date of any Advance hereunder the
applicable conditions set forth in Article III hereof; or (v) any failure of
the Borrower to borrow or to convert or continue any portion of the Loan
bearing interest at the LIBOR Base Rate hereunder after irrevocable notice of
such borrowing, conversion or continuation has been
14
given pursuant to Sections 2.4 or 2.7 hereof. Such loss or expense shall be
the difference as reasonably determined by the Bank between: (i) an amount
equal to the principal amount of such portion of the Loan being paid, prepaid
or converted, or such amount as is not borrowed, converted or continued,
multiplied by a percentage per annum (computed on the basis of a 360-day year
and actual days remaining for the balance of the Interest Period applicable,
or which would have been applicable, to such portion of the Loan being paid,
prepaid or converted or not borrowed, converted or continued) equal to the
greater of (A) the LIBOR Base Rate applicable to any portion of the Loan
being paid, prepaid or converted, or such amount as is not borrowed,
converted or continued, or (B) the Bank's cost of obtaining the funds for
such portion of the Loan being paid, prepaid or converted, or such amount as
is not borrowed, converted or continued; and (ii) any lesser amount that
would be realized by the Bank in reemploying the funds received in payment,
prepayment or conversion, or as a result of the failure to borrow, convert or
continue, during the period from the date of such payment, prepayment or
conversion, or failure to borrow, convert or continue, to the end of the
Interest Period applicable to such portion of the Loan or such amount at the
interest rate that would apply to an interest period of approximately such
duration. The Bank shall provide to the Borrower a statement explaining the
amount of any such loss or expense, which statement shall, in the absence of
manifest error, be conclusive.
2.14 TAXES.
x. XXXXX-UP. Any and all payments by the Borrower
hereunder shall be made free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto, excluding
taxes imposed on the Bank's (or any transferee's or assignee's, including
a participation holder's [any such entity, a "Transferee"]) net income
and franchise taxes imposed on the Bank (or Transferee, as the case may
be) by the United States or any jurisdiction under the laws of which it
is organized or is engaged in business or any political subdivision
thereof (all such nonexcluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as
"Taxes"). If the Borrower shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder to the Bank (or any
Transferee, as the case may be) (i) the sum payable shall be increased by
the amount necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Section 2.14) the Bank (or Transferee, as the case may be) shall receive
an amount equal to the sum it would have received had no such deductions
been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant taxing
authority or other governmental authority in accordance with applicable
law.
b. STAMP TAXES. In addition, the Borrower agrees to pay
any present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies which may arise from any
payment made hereunder or from the
15
execution, delivery or registration of, or otherwise with respect to,
this Agreement or any other Loan Document (hereinafter referred to as
"Other Taxes").
c. TAX INDEMNITY. The Borrower will indemnify the Bank
(or Transferee, as the case may be) for the full amount of Taxes and
Other Taxes (including any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.14) paid by the Bank
(or Transferee, as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted by the relevant taxing authority or other governmental
authority. Such indemnification shall be made within thirty (30) days
after the date on which the Bank (or Transferee, as the case may be)
makes written demand therefor. If the Bank (or Transferee, as the case
may be) shall become aware that it is entitled to receive a refund with
respect to Taxes or Other Taxes, it shall promptly notify the Borrower
of the availability of such refund and shall, within thirty (30) days
after receipt of a request by the Borrower, apply for such refund at the
Borrower's expense. If the Bank (or Transferee, as the case may be)
receives a refund with respect to any Taxes or Other Taxes for which the
Bank (or Transferee, as the case may be) has received payment from the
Borrower under this Section 2.14, it shall promptly notify the Borrower
of such refund and shall, within thirty (30) days after receipt of a
request by the Borrower (or promptly upon receipt, if the Borrower has
requested application for such refund pursuant hereto), repay such
refund to the Borrower, net of all out-of-pocket expenses of the Bank
and without interest; provided, however, that the Borrower, upon the
request of the Bank (or Transferee, as the case may be) agrees to return
such refund (plus penalties, interest or other charges) to the Bank (or
Transferee, as the case may be) in the event that the Bank (or
Transferee, as the case may be) is required to repay such refund.
d. DELIVERY OF RECEIPT. Within thirty (30) days after the
date of any payment of Taxes or Other Taxes withheld by the Borrower
with respect to any payment to the Bank (or Transferee, as the case may
be), the Borrower will furnish to the Bank the original or a certified
copy of a receipt evidencing payment thereof.
e. TAX FORMS. The Bank agrees that it shall provide the
Borrower with such forms as are prescribed by the Internal Revenue
Service to afford the Bank an exemption from United States withholding
taxes on payments made hereunder by the Borrower (currently Form 1001 or
From 4224). If the Bank fails to provide such required form(s) to the
Borrower, the Borrower shall not be obligated to "gross up" under
paragraph (a) of this Section 2.14 until it receives such forms.
f. SURVIVAL. Without prejudice to the survival of any
other provision of this Agreement, the agreements and obligations
contained in this Section 2.14 shall survive the payment in full of the
principal of and interest on the Loan.
16
ARTICLE III
CONDITIONS PRECEDENT
The obligation of the Bank to make the Commitment or any Advance
hereunder is subject to the satisfaction of the following conditions
precedent:
3.1 DOCUMENTS REQUIRED PRIOR TO AN INITIAL DISBURSEMENT. The Borrower
shall have delivered to the Bank, prior to the initial disbursement of an
Advance hereunder, the following documents in form and substance satisfactory
to the Bank:
(i) this Agreement, duly executed by the Borrower;
(ii) the Note, duly executed by the Borrower;
(iii) an opinion of the Borrower's General Counsel, dated as
of the date hereof, in form and substance acceptable to the Bank;
(iv) a certificate of the Secretary of the Borrower, dated
as of the date hereof, certifying: (A) that attached thereto is a true,
correct and complete copy of the Certificate of Incorporation of the
Borrower; (B) that attached thereto is a true, correct and complete copy
of the Bylaws of the Borrower, as in effect on the date of such
certificate; (C) that attached thereto is a true, correct and complete
copy of the resolutions duly adopted by the Board of Directors of the
Borrower authorizing the execution, delivery and performance of this
Agreement and all other Loan Documents by the Borrower and that said
resolutions have not been amended or revoked and are in full force and
effect on the date of such certificate; and (D) as to the incumbency and
specimen signature of each officer of the Borrower executing this
Agreement or any other instrument or document to be executed and
delivered by the Borrower in connection herewith; and
(v) a certificate of good standing for the Borrower, issued
by the Secretary of State of the State of California and dated within
ten (10) days of the date hereof.
3.2 CONDITIONS PRECEDENT TO EACH DISBURSEMENT. At the time of each and
every disbursement of an Advance hereunder:
(i) no Event of Default shall have occurred and be
continuing, nor shall any event have occurred and be continuing that
with the giving of notice or the passage of time, or both, would be an
Event of Default;
(ii) no event shall have occurred which constitutes a
Material Adverse Effect;
17
(iii) all of the Loan Documents shall be and remain in full
force and effect; and
(iv) the Borrower shall have provided the Bank with an
Advance Request pursuant to Section 2.4 hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
The Borrower hereby represents and warrants to the Bank as follows:
4.1 AUTHORIZATION. The Borrower has the power and authority to
enter into and perform its obligations under this Agreement, the Note and
each and every other Loan Document, and to incur the Obligations herein and
therein provided for, and has taken all corporate actions necessary to
authorize the execution, delivery and performance of this Agreement, the Note
and each and every other Loan Document.
4.2 ENFORCEABILITY. This Agreement constitutes, and the Note when
delivered will constitute, the legal, valid and binding Obligations of the
Borrower, enforceable upon the Borrower in accordance with their respective
terms except to the extent that such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application from time to time affecting the rights of creditors
generally.
4.3 NO PROCEEDINGS. Except as has been disclosed to the Bank in
writing, there are no actions, suits or proceedings at law or in equity or by
or before any governmental authority as to which the Borrower has been served
or otherwise given notice or, to the knowledge of the Borrower, pending or
threatened against or affecting the Borrower or the businesses, assets or
rights of the Borrower as to which there is a reasonable possibility of an
adverse determination and which, if adversely determined, could, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
4.4 COMPLIANCE WITH LAWS AND AGREEMENTS. The Borrower is not in
violation of any law, or in default with respect to any judgment, writ,
injunction, decree, rule or regulation of any governmental authority, where
such violation or default could reasonably be expected to have a Material
Adverse Effect. The Borrower is not in default under any provision of any
indenture, or any other material agreement or instrument to which it is a
party or by which it or any of its respective properties or assets are or may
be bound, where such default could reasonably be expected to have a Material
Adverse Effect, and the entering into and performance by the Borrower of this
Agreement, the Note and the other Loan Documents will not (immediately or
with the expiration of any applicable cure period or the giving of notice, or
both): (i) violate any charter or bylaw provision of the Borrower, or violate
any law or result in a default under any contract, agreement or instrument to
which the Borrower is a party or by which the Borrower or its properties is
bound; or (ii) result in
18
the creation or imposition of any security interest in, or lien upon, any of
the assets of the Borrower.
4.5 MISLEADING STATEMENTS. No representation or warranty by the
Borrower contained herein or in any certificate or other document furnished
by the Borrower to the Bank pursuant hereto contains any untrue statement of
material fact or omits to state a material fact necessary to make such
representation or warranty not misleading in light of the circumstances
under which it was made.
4.6 CONSENTS. Each consent, approval or authorization of, or filing,
registration or qualification with, any entity which is required to be
obtained or effected by the Borrower in connection with the execution and
delivery of this Agreement, the Note and all other Loan Documents, or the
undertaking or performance of any Obligation hereunder or thereunder, has
been duly obtained or effected.
4.7 NO SUBORDINATION. The Obligations of the Borrower under this
Agreement, the Note and the other Loan Documents are at least pari passu with
all other unsecured indebtedness of the Borrower with respect to any of its
domestic loans.
4.8 STATUS. The Borrower is a corporation duly organized and
validly existing under the laws of the State of Delaware and is properly
licensed and is qualified to do business and in good standing in, and, where
necessary to maintain the Borrower's rights and privileges, has complied in
all material respects with the fictitious name statute of, every jurisdiction
in which the Borrower is doing business.
4.9 FINANCIAL STATEMENTS. All financial statements, financial
information and other financial data which has been submitted by the
Borrower to the Bank are and have been prepared in accordance with GAAP
consistently applied and fairly present in all material respects, as of the
date of such statements, information or data, the financial condition or, as
applicable, the other information disclosed therein. Since the most recent
submission of such financial information or data to the Bank, the Borrower
represents and warrants that no material adverse change in the Borrower's
financial condition or operations has occurred which has not been fully
disclosed to the Bank in writing.
4.10 TITLE TO ASSETS. The Borrower has good and marketable title to all
of its assets, none of which are subject to any security interest,
encumbrance, lien or claim of any third person except for Permitted Liens.
4.11 ERISA. If the Borrower has a pension, profit sharing or retirement
plan subject to ERISA, such plan has been funded in accordance with its terms
and otherwise complies with the requirements of ERISA, except as disclosed in
writing to the Bank prior to the date of this Agreement.
19
4.12 TAXES. The Borrower has filed all tax returns required to be filed
and paid all taxes shown thereon to be due, including interest and penalties,
other than such taxes which are currently payable without penalty or interest
or those which are being duly contested in good faith.
4.13 MARGIN STOCK. The proceeds of the Loan will not be used to
purchase or carry "margin stock" as that term is defined in Regulations U or
X promulgated by the Board of Governors of the Federal Reserve System.
4.14 ENVIRONMENTAL COMPLIANCE. The Borrower has implemented and
complied in all material respects with all applicable Environmental Laws.
Except as disclosed to the Bank in writing, there are no suits, proceedings,
claims or disputes pending or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or its property claiming violations of any
Environmental Laws.
ARTICLE V
COVENANTS
The Borrower covenants and agrees that during the Term the Borrower
shall, unless the Bank shall otherwise consent in writing:
5.1 PRESERVATION OF EXISTENCE: COMPLIANCE WITH APPLICABLE LAWS.
Maintain and preserve its existence and all rights and privileges now
enjoyed; not liquidate or dissolve, or merge or consolidate with or into any
other business organization, provided that Borrower may acquire any other
businesses for up to $100,000,000 in the aggregate; and conduct its business
and operations in accordance with all applicable laws, rules and regulations.
5.2 MAINTENANCE OF INSURANCE. Maintain insurance in such amounts and
covering such risks as is usually prudently carried by companies engaged in
similar businesses and owning similar properties in the same general areas in
which the Borrower operates.
5.3 MAINTENANCE OF PROPERTIES. Maintain and preserve all of its
properties in good working order and condition in accordance with the general
practice of other businesses of similar character and size, ordinary wear and
tear excepted.
5.4 PAYMENT OF OBLIGATIONS AND TAXES. Make timely payment of all
assessments and taxes and all of its liabilities and obligations unless the
same are being contested in good faith by appropriate proceedings with the
appropriate court or regulatory agency, provided that Borrower may make
payment of trade payables in accordance with its customary business practices.
5.5 INSPECTION RIGHTS. At any reasonable time and from time to time,
permit the Bank or any representative thereof to examine and make copies of
the records and visit the properties of the Borrower and discuss the business
and operations of the Borrower with any
20
designated representative thereof. If the Borrower shall maintain records
(including, but not limited to, computer-generated records or computer
programs for the generation of such records) in the possession of a third
party, the Borrower hereby agrees to notify such third party to permit the
Bank free access to such records at all reasonable times and to provide the
Bank with copies of any records which it may reasonably request, all at the
Borrower's expense, the amount of which shall be payable within 30 days
following demand.
5.6 REPORTING AND CERTIFICATION REQUIREMENTS. Deliver or cause to be
delivered to the Bank, in form and detail satisfactory to the Bank:
(i) Not later than 120 days after the end of each of the
Borrower's fiscal years, a copy of the annual audited financial report
and Securities and Exchange Commission Form 10-K of the Borrower for
such year, all certified to as having been prepared in accordance with
GAAP consistently applied by a firm of certified public accountants
acceptable to the Bank, together with the consolidating balance sheets
and income statements for the Borrower and its Subsidiaries for such year;
(ii) Not later than 60 days after the end of each fiscal quarter,
the Borrower's Securities and Exchange Commission Form 10-Q, together
with the consolidating balance sheets and income statements for the
Borrower and its Subsidiaries, each as of the end of such period;
(iii) Not later than 60 days after the end of each fiscal quarter,
a certificate of the chief financial officer of the Borrower
demonstrating compliance as of the end of such period with each financial
covenant set forth herein, all in form satisfactory to the Bank; and
(iv) Promptly upon the Bank's request, such other information
pertaining to the Borrower as the Bank may reasonably request.
5.7 PAYMENT OF DIVIDENDS. Not declare or pay any dividends to any class
of stock now or hereafter outstanding except dividends payable solely in the
Borrower's capital stock.
5.8 REDEMPTION OR REPURCHASE OF STOCK. Not redeem or repurchase any
class of the Borrower's stock now or hereafter outstanding, provided that the
Borrower may redeem or repurchase any class of the Borrower's stock in an
amount not to exceed $1,000,000 in any one fiscal year.
5.9 ADDITIONAL INDEBTEDNESS. Not create, incur or assume, after the
date hereof, directly or indirectly, any additional Indebtedness or any
commitment therefor other than (i) Indebtedness owed or to be owed to the
Bank, (ii) Indebtedness to trade creditors incurred in the ordinary course of
the Borrower's business, (iii) any Indebtedness for Capital Expenditures in
the aggregate greater than US$75,000,000 in any one fiscal year, (iv)
21
Indebtedness owed to other financial institutions under revolving lines of
credit or (v) Indebtedness of up to US$75,000,000 in connection with any
acquisitions.
5.10. LOANS. Not make any loans or advances or extend credit to any
third person, including but not limited to directors, officers, shareholders,
employees, affiliated entities and Subsidiaries of the Borrower, except for
credit extended in the ordinary course of the Borrower's business as
presently conducted, provided that the Borrower may make loans or advances or
extend credit to employees of the Borrower in an aggregate amount not to
exceed US$1,000,000 in any one fiscal year and provided further, that the
Borrower may make loans or advances or extend credit to affiliated entities
or Subsidiaries of the Borrower in an amount not to exceed US$15,000,000 in
the aggregate.
5.11. LIENS AND ENCUMBRANCES. Not create, assume or permit to exist any
security interest, encumbrance, mortgage, deed of trust or other lien
(including but not limited to a lien of attachment, judgment or execution)
affecting any of the Borrower's properties, or execute or allow to be filed
any financing statements for continuation thereof affecting any of such
properties, except for (i) Permitted Liens or as otherwise provided in this
Agreement, and (ii) purchase money security interests or capital leases of up
to US$75,000,000 for equipment, including mortgage financing for the
Borrower's Temecula, California property, in any one fiscal year.
5.12. TRANSFER OF ASSETS. Not sell, contract for sale, convey, transfer,
assign, lease or sublet after the date hereof any of its assets except in the
ordinary course of business as presently conducted by the Borrower, which
ordinary course of business includes but is not limited to sale-leasebacks of
equipment, and then only at then-prevailing market rates for such assets.
5.13. CHANGE IN NATURE OF BUSINESS. Not make any material change in the
fundamental nature of its business existing or conducted as of the date
hereof.
5.14. FINANCIAL CONDITION. Maintain at all times:
(i) A minimum consolidated Effective Tangible Net Worth of at
least US$175,000,000, plus, in each case, 50% of annual net income, the
proceeds of any equity issuance, conversion of debt into equity and any
grant of rights to subscribe for shares of the Borrower, commencing with
the fiscal year-end June 30, 1994;
(ii) A ratio of consolidated Debt to consolidated Effective
Tangible Net Worth of not more than 1 to 1 for the six-month period
ending December 31, 1997, 0.95 to 1 for the six-month period ending
June 30, 1998 and 0.90 to 1 thereafter;
22
(iii) A ratio of consolidated current assets to consolidated
current liabilities of not less than 1.75 to 1 (for the purposes hereof,
outstanding amounts under any revolving lines of credit to be included
in consolidated current liabilities); and
(iv) A ratio of the sum of net income, plus depreciation
expense, plus amortization expense, plus net interest expense, each for
the immediately preceding four fiscal quarters, to the sum of the
current portion of long-term Debt then due for the fourth immediately
preceding fiscal quarter, plus net interest expense for the immediately
preceding four fiscal quarters, of not less than 2 to 1, provided that,
for purposes of this covenant, the definition of net income pursuant to
GAAP shall be modified to exclude a one-time charge of up to
US$60,000,000 for non-cash restructuring and asset impairment charges
taken by the Borrower in its fiscal year ended June 30, 1997.
5.15 NOTICE. Give the Bank prompt written notice of any and all (i)
Events of Default; (ii) litigation, arbitration or administration proceedings
to which the Borrower or any of its Subsidiaries is a party and in which the
claim or liability exceeds $1,000,00, and (iii) other matters, other than
matters of a general economic nature (other than those matters relating
primarily to the Borrower or any of its Subsidiaries, or the industries in
which the Borrower or any of its Subsidiaries conducts its respective
business) which have resulted in, or could reasonably be expected to result
in, a Material Adverse Effect.
5.16 CONSOLIDATED OPERATING LOSS. Not incur for any two consecutive
fiscal quarters a cumulative Consolidated Operating Loss in excess of
US$10,000,000, provided that, for purposes of this covenant, the definition of
"Consolidated Operating Loss" pursuant to GAAP shall be modified to exclude a
one-time charge of up to US$80,000,000 for restructuring and asset impairment
charges taken by the Borrower in its fiscal year ended June 30, 1997, which
charges include associated inventory write-downs of up to US$5,000,000.
5.17 ENVIRONMENTAL COMPLIANCE. The Borrower and each of its Subsidiaries
shall:
(i) Implement and comply in all material respects with all
applicable Environmental Laws;
(ii) Own, use, generate, manufacture, store, handle, treat,
release or dispose of any hazardous or toxic wastes, substances or
related materials, only if such ownership or use would not result in a
Material Adverse Effect;
(iii) Give prompt written notice of any discovery of or suit,
proceeding, claim, dispute, threat, inquiry or filing respecting
hazardous or toxic wastes, substances or related materials; and
23
(iv) At all times indemnify and hold harmless the Bank from
and against any and all liability arising out of the use, generation,
manufacture, storage, handling, treatment, disposal or presence of
hazardous or toxic wastes, substances or related materials, other than
liability arising out of the Bank's gross negligence or willful
misconduct.
5.18 PARI PASSU TREATMENT. At all times maintain its Obligations
hereunder to the Bank as pari passu to any other unsecured indebtedness with
respect to any of its domestic loans.
5.19 ERISA. Allow an event or condition to occur or exist which results
in Borrower's or any of its Subsidiaries' incurring or becoming reasonably
likely in incur liability under ERISA and such liability would have a
Material Adverse Effect.
ARTICLE VI
DEFAULT
6.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an Event of Default hereunder, without
regard to any fault of or cause by the Borrower:
(i) any representative or warranty made herein or hereafter
by or on behalf of the Borrower to the Bank proves to be false or
misleading in any material respect; or
(ii) any report, financial statement, instrument or
information furnished by or on behalf of the Borrower to the Bank upon
which the Bank has relied in making the Commitment in connection with
this Agreement or any Advance proves to be false or misleading in any
material respect; or
(iii) any failure of the Borrower to pay or perform all of its
Obligations, or any portion thereof, when the same become due and payable
and, with respect to any such failure other than a failure to pay any
sum due hereunder, the passage of thirty (30) days thereafter without
cure; or
(iv) the occurrence of any default under any credit
arrangement that it may have with any provider of credit other than the
Bank, which default allows such other credit provider to accelerate its
debt or otherwise exercise its remedies, and the passage of all
applicable cure periods therefor without cure; or
(v) a petition is filed against the Borrower in an
involuntary case under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) shall be
24
appointed for the Borrower,or for any substantial part of the Borrower's
properties, or the winding-up or liquidation of the Borrower's affairs
shall be ordered, and any such petition, decree or order shall continue
unstayed and in effect for a period of thirty (30) consecutive days; or
(vi) the Borrower shall commence a voluntary case under the
federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law,
or any of them shall consent to the appointment or taking possession by
a receiver, liquidator, assignee, trustee, custodian, sequestrator (or
other similar official) of the Borrower or of any substantial part of
any of its properties, or it shall make any assignment for the benefit
of creditors, or fail generally to pay its debts as such debts become
due, or take any corporate action in furtherance of any of the
foregoing; or
(vii) any writ of execution or attachment or any judgment
lien which individually exceeds US$2,000,000 or which, in the aggregate,
exceeds US$5,000,000, shall be issued against any property of the
Borrower and shall not be discharged or bonded against or released
within 60 days after the issuance or attachment of such writ or lien; or
(viii) the Borrower shall voluntarily suspend the
transaction of business or allow to be suspended, terminated, revoked or
expired any permit, license or approval of any governmental body
materially necessary to conduct the Borrower's business as now
conducted; or
(ix) there shall occur a sale, transfer, disposition or
encumbrance (whether voluntary or involuntary), or an agreement shall be
entered into to do so with, any Person or group of Persons (as such
terms are defined pursuant to federal securities laws) with respect to
more than 20% of the issued and outstanding capital stock of the
Borrower and, as a result thereof, such Person or group of Persons has
the ability to direct or cause the direction of the management and
policies of the Borrower.
6.2 REMEDIES. Upon the occurrence of an Event of Default, the Bank may,
without notice to the Borrower, terminate forthwith the obligations of the
Bank to make any further Advances to the Borrower hereunder and, in the case
of an Event of Default other than as specified in clauses (v) or (vi) of
Section 6.1, declare all sums owed hereunder to the Bank to be forthwith due
and payable, or in the case of an Event of Default as specified in either of
said clauses (v) or (vi) all sums owed hereunder to the Bank shall
automatically become due and payable, whereupon all sums owed hereunder to
the Bank shall in either case become forthwith due and payable, both as to
principal and interest, without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived, anything contained
herein or in the Note to the contrary notwithstanding. The foregoing shall in
no way be construed to limit the Bank's rights at law or in equity or
25
otherwise to avail itself of any and all remedies to which it may have
recourse as a secured party under applicable law.
ARTICLE VII
GENERAL PROVISIONS
7.1 CONSTRUCTION. The provisions of this Agreement shall be in addition
to those of any guaranty, pledge or security agreement, note or other
evidence of liability held by the Bank, all of which shall be construed as
complementary to each other. Nothing herein contained shall prevent the Bank
from enforcing any or all other notes, guaranties, pledges or security
agreements in accordance with their respective terms. In the event that
there is a conflict between the terms of this Agreement and the terms of the
Note or any other Loan Document, there terms of this Agreement shall control.
7.2 FURTHER ASSURANCES. From time to time, the Borrower shall execute
and deliver to the Bank such additional documents and provide such additional
information as the Bank may reasonably require to carry out the terms of this
Agreement and be informed of the Borrower's status and affairs.
7.3 ENFORCEMENT AND WAIVER BY THE BANK. The Bank shall have the right at
all times to enforce the provisions of this Agreement, the Note and the other
Loan Documents in strict accordance with the terms hereof and thereof,
notwithstanding and conduct or custom on the part of the Bank in refraining
from so doing at any time or times. The failure of the Bank at any time or
times to enforce its rights under such provisions, strictly in accordance
with the same, shall not be construed as having created a custom in any way
or manner contrary to the specific provisions of this Agreement or as having
in any way or manner modified or waived the same. All rights and remedies of
the Bank are cumulative and concurrent and the exercise of one right or
remedy shall not be deemed a waiver or release of any other right or remedy.
7.4 EXPENSES; INDEMNITY.
a. EXPENSES. The Borrower agrees that it shall pay all reasonable
out-of-pocket expenses (including attorneys' fees and expenses) incurred
by the Bank in connection with (i) the preparation of this Agreement
(whether or not the transactions hereby contemplated shall be
consummated) up to the sum of $2,000, (ii) the making of the Loan and
the enforcement of the rights of the Bank in connection with this
Agreement, (iii) any action which may be instituted by any person
against the Bank with respect to this Agreement or as a result of any
transaction, action or non-action arising from this Agreement, and (iv)
the preparation of any amendments to or waivers of this Agreement. The
Borrower agrees that it shall indemnify the Bank from and hold the Bank
harmless against any and all documentary taxes, assessments or similar
charges made by any governmental authority by reason of the execution
and delivery of this Agreement.
26
b. INDEMNIFICATION. The Borrower hereby agrees to indemnify the
Bank and its directors, officers, employees and agents (each such person,
an "Indemnitee") against, and to hold each Indemnitee harmless from, any
and all losses, claims, damages, liabilities and related expenses,
including reasonable attorneys' fees and expenses, incurred by or
asserted against such Indemnitee arising out of, in any way in connection
with, or as a result of: (i) this Agreement or any of the other Loan
Documents, the performance by the parties hereto and thereto of their
respective obligations hereunder and thereunder and consummation of the
transactions contemplated hereby and thereby; or (ii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not such indemnitee is a party thereto; provided, however,
that such indemnification shall not, as to any Indemnitee, apply to any
such losses, claims, damages, liabilities or related expenses arising
from the gross negligence or willful misconduct of such Indemnitee.
c. SURVIVAL. Without in an manner compromising the survivability
of any other provision of this Agreement, the provisions of this Section
7.4 shall remain operative and in full force and effect regardless of the
expiration of the Term, the consummation of the transactions contemplated
hereby, the repayment of the Loan, the invalidity or unenforceability of
any term or provision of this Agreement, or any investigation made by or
on behalf of the Bank. All amounts due under this Section 7.4 shall be
payable upon written demand.
7.5 NOTICES. Any notices or consents required or permitted by this
Agreement shall be in writing and shall be deemed duly given if delivered in
person or by courier, or if sent by facsimile transmission or certified mail,
postage prepaid and return receipt requested, addressed as follows, unless
such address is changed by written notice hereunder:
If to the Borrower:
International Rectifier Corporation
000 Xxxxxx Xxxxxx
Xx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Treasury Department
Telecopier No.: (000) 000-0000
27
If to the Bank:
The Dai-Ichi Kangyo Bank, Ltd.
Los Angeles Agency
000 Xxxx Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxx Xxxxxxx
Vice President
Telecopier No.: (000) 000-0000
All such notices shall be deemed to be received by the party to be noticed
upon the earlier of (i) actual receipt or (ii) delivery at the specified
address.
7.6 WAIVER AND RELEASE BY THE BORROWER. To the maximum extent
permitted by applicable law, the Borrower: (i) waives notice and opportunity
to be heard, after acceleration in the manner provided in Section 6.2 hereof,
before exercise by the Bank of the remedies of self-help, setoff or of other
summary procedures permitted by any applicable law or by any agreement with
the Borrower, and except where required hereby or by any applicable law,
notice of any other action taken by the Bank; and (ii) releases the Bank and
its officers, attorneys, agents and employees from all claims for loss or
damage caused by any act or omission on the part of any of them except as a
result of their own willful misconduct or gross negligence.
7.7 CHOICE OF LAW AND VENUE. This Agreement and the other Loan
Documents have been entered into, and shall be interpreted in accordance
with, the laws of the State of California, and any dispute arising hereunder
shall be heard by a court of competent jurisdiction sitting in the County of
Los Angeles, California.
7.8 BINDING EFFECT AND ASSIGNMENT. This Agreement shall be for the
benefit of, and shall be binding upon, the respective successors and
permitted assigns of the parties hereto. The Borrower has no right to assign
any of its rights or delegate any of its obligations hereunder without the
prior written consent of the Bank, but the Bank may assign or otherwise
convey its rights and delegate its obligations hereunder without the consent
of the Borrower in amounts of US$5,000,000 or greater (i) to any Federal
Reserve Bank as collateral, (ii) to not more than one bank or one syndicate
of banks or (iii) to any assignee that is not directly or indirectly in the
semiconductor industry. The Borrower agrees that, in connection with any such
assignment or other conveyance, the Bank may deliver to any prospective
assignee all relevant information relating to the Borrower so long as such
prospective assignee agrees in writing to keep such information confidential
pursuant to Section 7.16 hereof.
7.9 ENTIRE AGREEMENT. This Agreement, and the documents executed and
delivered pursuant hereto, constitutes the entire agreement between the
parties. This Agreement may be amended only by a writing signed on behalf of
each party.
28
7.10 SEVERABILITY. If any provision of this Agreement shall be held
invalid under any applicable laws, such invalidity shall not affect any other
provision of this Agreement that can be given effect without the invalid
provision and, to this end, the provisions hereof are severable.
7.11 ATTORNEY'S FEES AND COSTS. In the event of a dispute hereunder, the
prevailing party (as determined by the court) shall be awarded, in addition
to any judgement, all attorney's fees and costs incurred by it in connection
with such dispute.
7.12 HEADINGS. The headings contained in this Agreement are for
convenience of reference only and shall not affect the construction or
interpretation hereof.
7.13 WAIVER OF JURY TRAIL. EACH OF THE PARTIES HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT WHICH IT MIGHT HAVE TO
A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT. THE BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
THE BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND THE
BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVER HAS BEEN MADE AS A MATERIAL
INDUCEMENT TO THE BANK TO MAKE THE LOAN.
7.14 RIGHT OF SETOFF. Upon the occurrence and during the continuation of
any Event of Default, the Bank is hereby authorized, in addition to any other
right or remedy that it may have by operation of law or otherwise, at any
time and from time to time and without notice to the Borrower (any such
notice being expressly waived by the Borrower), to exercise its bankers' lien
and right of setoff and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held and other indebtedness at
any time owing by the Bank to or for the credit or the account of the
Borrower against any and all of the Obligations now or hereafter existing
under this Agreement, irrespective of whether or not the Bank shall have made
any demand under this Agreement and although such Obligations may not have
matured.
7.15 SURVIVAL. All representations, warranties, agreements and covenants
made herein and in the certificates, instruments and documents delivered
pursuant hereto shall survive the making by the Bank of Advances and the
execution and delivery to the Bank of the Note and shall continue in full
force and effect until all Obligations are satisfied in full.
7.16 CONFIDENTIALITY. In accordance with its customary practices, the
Bank shall keep all information that is provided by the Borrower to the Bank
pursuant to the terms of this Agreement confidential, but the Borrower
acknowledges that the Bank may deliver copies of any financial statements and
other documents delivered to the Bank, and disclose
29
any other information disclosed to the Bank, by or on behalf of the Borrower
or any subsidiary thereof in connection with or pursuant to this Agreement,
to: (i) the Bank's directors, officers, employees, agents and professional
consultants, provided that such disclosure is made in confidence to such
persons; (ii) any federal or state regulatory authority having jurisdiction
over the Bank; and (iii) any other person to whom such delivery or disclosure
is necessary (A) to comply with any law, rule, regulation or order applicable
to the Bank, (B) to respond to any subpoena or other legal process, (C) in
connection with any litigation to which the Bank is a party, or (D) in order
to protect the Bank's investment in the Note; provided, however, that as to
any disclosure under subclauses (B) and (C) of the foregoing clause (iii) the
Bank shall notify the Borrower prior to making such disclosure and shall
cooperate with the Borrower, at the Borrower's sole cost and expense, should
the Borrower contest the right of the recipient of such disclosure to receive
or demand such information.
7.17 CONDITIONS NOT FULFILLED. If the Commitment is not drawn upon
owing to nonfulfillment of any condition precedent specified in Article III
hereof, neither party hereto shall be responsible to the other for any damage
or loss by reason thereof, except that the Borrower shall in any event be
liable to pay the fees, Taxes, Other Taxes and expenses for which it is
obligated hereunder.
7.18 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute but one and the same instrument.
7.19 IMMATERIALITY. Notwithstanding anything herein to the contrary,
any breach of representations and warranties contained in Article IV hereof
or the covenants in Sections 5.1, 5.3, 5.4, 5.11, 5.12 or 5.17 shall not be
deemed to be an Event of Default or prohibit any extension of credit
hereunder if, in the aggregate, such defaults could not reasonably be
expected to have a Material Adverse Effect.
IN WITNESS WHEREOF, each of the parties hereto has caused its duly
authorized representative to execute this Agreement on its behalf as of the
day and year first above written.
THE BANK THE BORROWER
-------- -------------
THE DAI-ICHI KANGYO BANK, LTD., INTERNATIONAL RECTIFIER
Los Angeles Agency CORPORATION, a Delaware corporation
By: /s/ Xxxxxxxxx Xxxxxxxxx By: /s/ Xxxxxxx X. XxXxx
---------------------------- -------------------------------
SR. VICE PRESIDENT &
Its JOINT GENERAL MANAGER Its VICE PRESIDENT & CFO
---------------------------- -------------------------------
30
EXHIBIT A
NAMES OF BORROWER'S AUTHORIZED INDIVIDUALS
1. _________________________
2. _________________________
3. _________________________
4. _________________________
5. _________________________
6. _________________________
EXHIBIT B
FORM OF ADVANCE REQUEST
The Dai-Ichi Kangyo Bank, Ltd.
Los Angeles Agency
000 Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxx Xxxxxxx
Vice President
Dear Sirs:
The undersigned (the "Borrower") refers to that certain Credit Agreement
dated as of September 26, 1997 (as amended, modified or supplemented, the
"Credit Agreement") by and between the Borrower and yourselves (the "Bank").
Capitalized terms used but not defined in this letter shall have the meanings
specified in the Credit Agreement. The Borrower hereby gives the Bank notice
pursuant to Section 2.4 of the Credit Agreement that it requests an Advance,
and in connection therewith sets forth below the terms on which the Advance
is requested to be made:
(i) Date of Advance _________
(ii) Principal Amount of Advance(1) _________
(iii) Interest Rate _________
(iv) Interest Period and Last Day Thereof(2) _________
Very truly yours,
THE BORROWER:
INTERNATIONAL RECTIFIER CORPORATION,
a Delaware corporation
By: EXHIBIT ONLY
---------------------------
Its NOT FOR EXECUTION
---------------------------
-----------------------
(1) Not less than US$500,000.00 and in integral multiples thereof
(2) Which shall end not later than the applicable Commitment Termination
Date
EXHIBIT C
FORM OF
REVOLVING CREDIT AND TERM NOTE
US$10,000,000.00 September 26, 1997
FOR VALUE RECEIVED, the undersigned, International Rectifier
Corporation, a Delaware corporation (the ""Borrower"), unconditionally
promises to pay to the order of The Dai-Ichi Kangyo Bank, Ltd. (the "Bank"),
in lawful money of the United States of America at its office located at 000
Xxxx Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, or to such other entity or
at such other address as the Bank may from time to time direct, the lesser of
(i) the principal sum of Ten Million and No/100 U.S. Dollars
(US$10,000,000.00) or (ii) the aggregate unpaid principal amount of
all Advances made pursuant to that certain Credit Agreement dated as of
September 26, 1997 by and between the Borrower and the Bank (the "Credit
Agreement"), and to pay interest (before, as well as after, judgment) in
arrears, from the date hereof in like money at said office on the unpaid
principal amount hereof from time to time outstanding, as more fully provided
for in the Credit Agreement.
Interest which is not paid when due shall thereafter bear interest like
as to principal.
The Bank is hereby authorized by the Borrower to endorse on the schedule
forming a part hereof appropriate notations evidencing the date and amount of
each Advance made by the Bank, the nature of such Advance and the date and
amount of each payment of principal and interest made by the Borrower with
respect thereto.
Presentment, notice of dishonor and protest are hereby waived by all
makers, sureties, guarantors and endorsers hereof. The Borrower hereby
expressly waives, to the full extent permitted by law, its rights to plead
any and all statutes of limitations as a defense to any demand hereunder.
This Note is the Revolving Credit and Term Note referred to in the
Credit Agreement. Reference is hereby made to the Credit Agreement for
provisions for the payment and prepayment hereof and for the acceleration of
the maturity hereof upon the occurrence of certain events as therein
specified. Terms defined in said Credit Agreement and not otherwise defined
herein are used herein as therein defined.
This Note is made and shall be governed and construed in accordance with
the laws of the State of California.
THE BORROWER:
INTERNATIONAL RECTIFIER CORPORATION,
a Delaware corporation
By: EXHIBIT ONLY
-------------------------------
Its NOT FOR EXECUTION
-------------------------------
BORROWINGS AND PAYMENTS OF PRINCIPAL
-------------------------------------------------------------------------------
Principal or Date of Amount of
Date of Face Amount Interest Repayment/ Repayment/ Notation
Advance of Advance Rate Prepayment Prepayment Made By
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
EXHIBIT D
FORM OF NOTICE OF INTEREST PERIOD
The Dai-Ichi Kangyo Bank, Ltd.
Los Angeles Agency Bank
000 Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxx Xxxxxxx
Vice President
Dear Sirs:
The undersigned (the "Borrower") refers to that certain Credit Agreement
dated as of September 26, 1997 (as amended, modified or supplemented, the
"Credit Agreement") by and between the Borrower and yourselves (the "Bank").
Capitalized terms used but not defined in this letter shall have the meanings
specified in the Credit Agreement. The Borrower hereby gives the Bank notice
pursuant to Section 2.7 of the Credit Agreement that it requests a
continuation or conversion with respect to the upcoming Interest Period as
follows:
(i) As to All Outstanding Advances
(1)
---------
(ii) As to Outstanding Advances in the
Principal Amount of ________________(2)
(1)
---------
(iii) As to the Term Loan
(1)
---------
Very truly yours,
THE BORROWER:
INTERNATIONAL RECTIFIER CORPORATION,
a Delaware corporation
By: EXHIBIT
-------------------------------------
Its: NOT FOR EXECUTION
-------------------------------------
-------------------
(1) Must be one (1), two (2) or three (3) months, or such other period
upon which the Bank and the Borrower may from time to time agree
(2) Not less than US$500,000.00 and in integral multiples thereof
REVOLVING CREDIT AND TERM NOTE
US$10,000,000.00 September 26, 1997
FOR VALUE RECEIVED, the undersigned, International Rectifier Corporation,
a Delaware corporation (the "Borrower"), unconditionally promises to pay to
the order of The Dai-Ichi Kangyo Bank, Ltd. (the "Bank"), in lawful money of
the United States of America at its office located at 000 Xxxx Xxxxx Xxxxxx,
Xxx Xxxxxxx, Xxxxxxxxxx 00000, or to such other entity or at such other
address as the Bank may from time to time direct, the lesser of (i) the
principal sum of Ten Million and No/100 U.S. Dollars (US$10,000,000.00) or
(ii) the aggregate unpaid principal amount of all Advances made pursuant to
that certain Credit Agreement dated as of September 26, 1997 by and between
the Borrower and the Bank (the "Credit Agreement"), and to pay interest
(before, as well as after, judgment) in arrears, from the date hereof in
like money at said office on the unpaid principal amount hereof from time to
time outstanding, as more fully provided for in the Credit Agreement.
Interest which is not paid when due shall thereafter bear interest like
as to principal.
The Bank is hereby authorized by the Borrower to endorse on the schedule
forming a part hereof appropriate notations evidencing the date and amount of
each Advance made by the Bank, the nature of such Advance and the date and
amount of each payment of principal and interest made by the Borrower with
respect thereto.
Presentment, notice of dishonor and protest are hereby waived by all
makers, sureties, guarantors and endorsers hereof. The Borrower hereby
expressly waives, to the full extent permitted by law, its rights to plead
any and all statutes of limitations as a defense to any demand hereunder.
This Note is the Revolving Credit and Term Note referred to in the Credit
Agreement. Reference is hereby made to the Credit Agreement for provisions
for the payment and prepayment hereof and for the acceleration of the
maturity hereof upon the occurrence of certain events as therein specified.
Terms defined in said Credit Agreement and not otherwise defined herein are
used herein as therein defined.
This Note is made and shall be governed and construed in accordance with
the laws of the State of California.
THE BORROWER:
INTERNATIONAL RECTIFIER CORPORATION,
a Delaware corporation
By: /s/ Xxxxxxx X. XxXxx
-------------------------------------
Its VICE PRESIDENT & CFO
-------------------------------------
BORROWINGS AND PAYMENTS OF PRINCIPAL
-------------------------------------------------------------------------------
Principal or Date of Amount of
Date of Face Amount Interest Repayment/ Repayment/ Notation
Advance of Advance Rate Prepayment Prepayment Made By
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
EXHIBIT F
PROCEEDINGS
The following are actions, suits or proceedings to the knowledge of the
Borrower pending or threatened against the Borrower, or its respective
properties, before any court, arbitrator, commission, board, agency or other
authority which, if determined adversely to the Borrower, could result in a
Material Adverse Effect. For more information, please refer to Borrower's
report on Form 10-K filed with the Securities and Exchange Commission for
fiscal year ended June 30, 1997.
- Borrower and certain of its directors and officers have been named as
defendants in three class action lawsuits filed in Federal District Court
in California. The complaints generally allege that the Borrower and the
other defendants made materially false statements or omitted to state
material facts in connection with the public offering of the Company's
common stock completed in April 1991 and the redemption and conversion
in June 1991 of the Borrower's 9% Convertible Subordinated Debentures
due 2010. The complaints also allege that the Borrower's projections for
growth in fiscal 1992 were materially misleading.
- United States Patent and Trademark Office Reexamination Proceedings of
Borrower's United States patent numbers: 4,642,666; 4,959,699; 5,008,725;
5,130,767; and 4,593,302.
- Borrower and Xxxxxxxx Laboratories, Inc. (Borrower's former pharmaceutical
subsidiary which discontinued operations in 1986) have been named among
several hundred entities as potential responsible parties under the
provisions of the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (CERCLA), in connection with the United States
Environmental Protection Agency's investigation of the disposal of
allegedly hazardous substances at a major superfund site in Monterey Park,
California.
- Borrower has been notified by the State of California Department of Toxic
Substances Control stating that the Borrower may be a potentially
responsible party for the deposit of hazardous substances at a facility in
Whittier, California.
