Exhibit 10.50
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is made and
entered into as of February ___, 2003, by and between DIODES INCORPORATED, a
Delaware corporation ("Borrower"), with its principal place of business located
at 0000 Xxxx Xxxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxxxx 00000-0000, and UNION
BANK OF CALIFORNIA, N.A., a national banking association ("Bank"), with an
office located at 0000 Xxxxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx Xxxxx,
Xxxxxxxxxx 00000.
RECITALS:
A. Borrower and Bank previously entered into that certain Credit Agreement
dated as of December 1, 2000, as amended by that certain First Amendment and
Waiver dated as of August 10, 2001, that certain Second Amendment and Waiver
dated as of November 14, 2001, that certain Third Amendment and Waiver dated as
of May 1, 2002, that certain Extension Letter dated June 18, 2002 and that
certain Extension Letter dated October 16, 2002 (as so amended, the "Prior
Agreement"), pursuant to which Bank agreed to (i) make available to Borrower a
Revolving Credit Commitment providing for revolving loans by Bank to Borrower in
the aggregate principal amount at any one time outstanding not to exceed Seven
Million Five Hundred Thousand Dollars ($7,500,000), (ii) make various Term Loans
to Borrower in the respective original principal amounts set forth in Schedule
2.3 annexed thereto, and (iii) make an Acquisition Loan to Borrower in the
original principal amount of Ten Million Dollars ($10,000,000).
B. Pursuant to the terms and conditions of the Third Amendment and Waiver
referred to in Recital A hereinabove, Borrower has prepaid in full all of the
Term Loans described in Schedule 2.3 of the Prior Agreement.
C. Immediately prior to the date of this Agreement, the outstanding
principal amount of the Acquisition Loan was Six Million One Hundred Eleven
Thousand One Hundred Eleven and 22/100 Dollars ($6,111,111.22).
D. Borrower has requested that Bank agree to (i) extend the Revolving
Credit Commitment Termination Date of the Revolving Credit Commitment from March
3, 2003 to June 1, 2005, (ii) make available to Borrower a new
Nonrevolving-To-Term Loan Commitment, providing for Nonrevolving-To-Term Loans
by Bank to Borrower during the period from the date of this Agreement to but
excluding June 1, 2004 in the aggregate principal amount not to exceed Two
Million Dollars ($2,000,000), which shall convert subject to the terms hereof on
June 1, 2004 to a five (5) year fully amortizing term loan maturing on June 1,
2009, and (iii) amend the terms and conditions of the Prior Agreement in certain
respects. Bank is willing to so extend the Revolving Credit Commitment
Termination Date, so make available to Borrower such new Nonrevolving-To-Term
Loan Commitment and so amend the terms and conditions of the Prior Agreement,
subject, however, to the terms and conditions set forth hereinbelow.
AGREEMENT:
In consideration of the foregoing recitals and of the mutual covenants,
conditions and provisions hereinafter set forth, Borrower and Bank hereby agree
to amend and restate the Prior Agreement as follows, which covenants, conditions
and provisions shall amend, restate and supersede the terms and conditions of
the Prior Agreement.
SECTION 1. DEFINITIONS
As used herein, initially capitalized terms shall have the respective
meanings set forth below or set forth in the Section or subsection defining such
terms:
"Acquisition Loan Commitment" shall have the meaning assigned to that term
in Section 2.2 hereof.
"Acquisition Note" shall have the meaning assigned to that term in Section
2.2 hereof.
"Affiliate" shall mean, with respect to any Person, (a) each Person that,
directly or indirectly, owns or controls, whether beneficially or as a trustee,
guardian or other fiduciary, ten percent (10%) or more of the stock having
ordinary voting power in the election of directors of such Person, (b) each
Person that controls, is controlled by or is under common control with such
Person or any Affiliate of such Person and (c) each of such Person's officers,
directors, joint venturers, members and partners; provided, however, that in no
case shall Bank be deemed to be an Affiliate of Borrower for purposes of this
Agreement. For the purpose of this definition, "control" of a Person means the
ability, directly or indirectly, to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise.
"Alternative Dispute Resolution Agreements" and "Alternative Dispute
Resolution Agreement" shall mean, respectively, (a) the Alternative Dispute
Resolution Agreements, each on Bank's standard form therefor, duly executed by
Borrower, Guarantor and Subordinating Creditor, respectively, in favor of and
with Bank, and (b) any one of such Alternative Dispute Resolution Agreements.
"Bank Expenses" shall mean (i) all reasonable costs and expenses paid or
advanced by Bank which are required to be paid by Borrower or any of its
Subsidiaries under this Agreement or any of the other Loan Documents; (ii)
reasonable expenses incurred by Bank in auditing or examining the books and
records of Borrower or any of its Subsidiaries and the Collateral following the
occurrence and continuation of an Event of Default; (iii) taxes and insurance
premiums of every nature and kind of Borrower or any of its Subsidiaries paid by
Bank; (iv) appraisal, filing, recording, documentation, publication and search
fees paid or incurred by Bank on behalf of Borrower or any of its Subsidiaries
to correct any default or enforce any provision of this Agreement or any other
Loan Document, or, if an Event of Default has occurred and is continuing, in
gaining possession of, maintaining, handling, preserving, storing, shipping,
appraising, selling, preparing for sale and/or advertising to sell the
Collateral, whether or not a sale is consummated; (v) costs and expenses of any
suit or arbitration proceeding incurred by Bank in enforcing or defending this
Agreement or any other Loan Document, or any portion thereof, and (vi)
reasonable attorneys' fees and expenses incurred by Bank in amending,
terminating, enforcing, defending or concerning this Agreement or any other Loan
Document, or any portion thereof, whether or not suit is brought, such
attorneys' fees to include the reasonable estimate of the allocated costs and
expenses of in-house legal counsel and staff. All Bank Expenses paid or incurred
by Bank shall be considered to be, and shall become a part of the Obligations
and be secured by the Collateral, are payable upon demand, and if not
reimbursed, shall immediately thereafter bear interest, together with all other
amounts to be paid by Borrower pursuant hereto at the default rate provided for
herein or in the Notes.
"Borrower Security Agreement" shall mean that certain amended and restated
Security Agreement, on Bank's standard form therefor, duly executed by Borrower
in favor of Bank.
"Business Day" shall mean a day other than a Saturday, a Sunday or a day on
which commercial banks in the State of California are authorized or required by
law to close.
"Capital Expenditures" shall mean all payments due (whether or not paid)
during a fiscal period of Borrower and its Subsidiaries in respect of the cost
of any fixed asset or improvement, or any replacement, substitution or addition
thereto and which have a useful life of more than one (1) year, including
without limitation those arising in connection with the direct or indirect
acquisition of such assets by way of increased product or service charges or
offset items or in connection with capital leases.
"Capital Expenditures Maintenance Amount" shall mean, for each fiscal year,
an amount equal to Three Million Dollars ($3,000,000).
"Capital Lease Obligations" shall mean, for any Person, all obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.
"Cash" shall mean, when used in connection with any Person, all monetary
and non-monetary items owned by such Person that are treated as cash in
accordance with GAAP, consistently applied.
"Collateral" shall mean the security provided by Borrower and Guarantor
pursuant to Sections 3.1 and 3.2 hereof.
"Conversion Date" shall have the meaning assigned to such term in Section
2.3 hereof.
"Current Ratio" shall mean, as of the last day of any fiscal quarter,
calculated for Borrower and its Subsidiaries (other than any Foreign
Subsidiaries) on a consolidated basis, the ratio of (a) current assets as of
such date, less intercompany Indebtedness, to (b) current liabilities as of such
date, less intercompany Indebtedness, in each case as determined in accordance
with GAAP.
"Debt Service" shall mean, as of the last day of each fiscal quarter, the
sum, without duplication, of (a) the amount of all scheduled principal payments
in respect of Indebtedness of Borrower and its Subsidiaries during the four (4)
consecutive fiscal quarters ended on that date, plus (b) interest expense of
Borrower and its Subsidiaries paid or payable during the four (4) consecutive
fiscal quarters ended on such date.
"Diodes Taiwan" shall mean Diodes Taiwan Co., Ltd., a wholly-owned
Subsidiary of Borrower. -------------
"Disposition" shall mean the sale, transfer or other disposition in any
single transaction or series of related transactions of any asset, or group of
related assets, of Borrower or any of its Subsidiaries (a) which asset or assets
constitute a line of business or substantially all of the assets of Borrower or
such Subsidiary, or (b) the aggregate amount of the Net Cash Sales Proceeds of
such assets is more than Five Hundred Thousand Dollars ($500,000), other than
(i) inventory or other assets sold or otherwise disposed of in the ordinary
course of business of Borrower or such Subsidiary, (ii) equipment sold or
otherwise disposed of where substantially similar equipment in replacement
thereof has theretofore been acquired, or thereafter within ninety (90) days is
acquired, by Borrower or such Subsidiary and (iii) obsolete assets no longer
useful in the business of Borrower or any of its Subsidiaries, whose carrying
value on the books of Borrower or such Subsidiary is zero or de minimus.
"EBITDA" shall mean, for each fiscal quarter, the sum of (a) the net income
of Borrower and its Subsidiaries for the four (4) consecutive fiscal quarters
ending on such date, plus (b) any non-operating non-recurring loss reflected in
such net income for the four (4) consecutive fiscal quarters ending on such
date, minus (c) any non-operating non-recurring gain reflected in such net
income for the four (4) consecutive fiscal quarters ending on such date, plus
(d) interest expense of Borrower and its Subsidiaries for the four (4)
consecutive fiscal quarters ending on such date, plus (e) the aggregate amount
of federal and state taxes on or measured by income of Borrower and its
Subsidiaries for the four (4) consecutive fiscal quarters ending on that date
(whether or not payable during such fiscal period), minus (f) the aggregate
amount of federal and state credits against taxes on or measured by income of
Borrower and its Subsidiaries for the four (4) consecutive fiscal quarters
ending on such date (whether or not usable during that fiscal period), plus (g)
depreciation, amortization and all other non-cash expenses of Borrower and its
Subsidiaries for the four (4) consecutive fiscal quarters ending on such date,
in each case as determined in accordance with GAAP.
"Financial Statements" shall mean, with respect to any accounting period of
any Person, statements of income and cash flow of such Person for such period,
and balance sheets of such Person as of the end of such period, setting forth in
each case in comparative form figures for the corresponding period in the
preceding fiscal year or, if such period is a full fiscal year, corresponding
figures from the preceding annual audit, all prepared in reasonable detail and
in accordance with GAAP. "Financial Statements" shall include the notes and
schedules thereto.
"Fixed Charge Coverage Ratio" shall mean, as of the date of calculation,
calculated for Borrower and its Subsidiaries on a consolidated basis, the ratio
of (a) (i) EBITDA for the applicable fiscal period minus (ii) the Capital
Expenditures Maintenance Amount and minus (iii) federal and state income tax
expense during such applicable fiscal period minus (iv) the aggregate amount of
dividends declared or paid by Borrower and its Subsidiaries during such
applicable fiscal period minus (v) the aggregate amount paid by Borrower and its
Subsidiaries to their shareholders in respect of treasury stock during such
applicable fiscal period to (b) Debt Service for such applicable fiscal period.
"Foreign Subsidiaries" and "Foreign Subsidiary" shall mean, respectively,
(a) Subsidiaries of a Person organized and existing under the laws of a country
or jurisdiction other than the United States of America or any state thereof,
and (b) any one of such Subsidiaries."
"Foreign Subsidiary Indebtedness" shall mean Indebtedness of the Foreign
Subsidiaries of Borrower. -------------------------------
"GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time.
"Guarantor" shall mean FabTech, Inc., a Delaware corporation. ---------
"Guarantor Security Agreement" shall mean that certain amended and restated
Security Agreement, on Bank's standard form therefor, duly executed by Guarantor
in favor of Bank.
"Guaranty" shall mean that certain Continuing Guaranty dated as of December
1, 2000, duly executed by Guarantor in favor of and with Bank, pursuant to which
Guarantor unconditionally guaranteed the payment by Borrower of the Obligations,
provided, however, that Guarantor's liability thereunder for Obligations
representing principal shall not exceed Twenty-Six Million Two Hundred
Eighty-Eight Thousand Three Hundred Thirty-Three and 38/100 Dollars
($26,288,333.38).
"Guaranty Obligation" shall mean, as to any Person, any (a) guarantee by
such Person of Indebtedness of, or other obligation performable by, any other
Person or (b) assurance given by such Person to an obligee of any other Person
with respect to the performance of an obligation by, or the financial condition
of, such other Person, whether direct, indirect or contingent, including any
purchase or repurchase agreement covering such obligation or any collateral
security therefor, any agreement to provide funds (by means of loans, capital
contributions or otherwise) to such other Person, any agreement to support the
solvency or level of any balance sheet item of such other Person or any
"keep-well" or other arrangement of whatever nature given for the purpose of
assuring or holding harmless such obligee against loss with respect to any
obligation of such other Person; provided, however, that the term "Guaranty
Obligation" shall not include endorsements of instruments for deposit or
collection in the ordinary course of business and customary indemnities given in
connection with asset sales in the ordinary course of business.
"Indebtedness" shall mean, as to any Person (without duplication), (a)
indebtedness of such Person for borrowed money or for the deferred purchase
price of property (excluding (i) Subordinated Indebtedness and (ii) trade and
other accounts payable in the ordinary course of business in accordance with
ordinary trade terms and accrued liabilities incurred in the ordinary course of
business, including any contingent obligation of such Person for any such
indebtedness), (b) indebtedness of such Person of the nature described in clause
(a) that is non-recourse to the credit of such Person but is secured by assets
of such Person, to the extent of the fair market value of such assets as
determined in good faith by such Person, (c) Capital Lease Obligations of such
Person, (d) indebtedness of such Person arising under bankers' acceptance
facilities or under facilities for the discount of accounts receivable of such
Person, (e) any direct or contingent obligations of such Person under letters of
credit issued for the account of such Person and (f) any net obligations of such
Person under any interest rate protection agreements.
"Insolvency Proceeding" shall mean and include any proceeding commenced by
or against Borrower or any of its Subsidiaries under any provision of the
Bankruptcy Code, or under any other bankruptcy or insolvency law, including, but
not limited to, assignments for the benefit of creditors, formal or informal
moratoriums, and compositions or extensions with some or all creditors.
"Leverage Ratio" shall mean, as of the last day of any fiscal quarter,
determined for Borrower and its Subsidiaries on a consolidated basis, the ratio
of (a) all Indebtedness of Borrower and its Subsidiaries on that date to (b)
EBITDA for the four (4) consecutive fiscal quarters ended on such date.
"Lien" shall mean any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest).
"Loan Documents" shall mean and include this Agreement, the Notes, the
Guaranty, the Security Agreements, the Alternative Dispute Resolution
Agreements, the Subordination Agreement and all other documents, instruments and
agreements, and all related riders, exhibits, resolutions, authorizations,
financing statements and certificates delivered to Bank in connection with this
Agreement.
"Loans" and "Loan" shall mean, respectively, (a) the loans to be made by
Bank to Borrower pursuant to Section 2 hereof and (b) any one of such Loans.
"Net Cash Issuance Proceeds" shall mean, with respect to the issuance of
any debt security or equity security by Borrower or any of its Subsidiaries, the
Cash proceeds received by or for the account of Borrower or any of its
Subsidiaries in consideration of such issuance, net of (a) underwriting
discounts and commissions actually paid to any Person not an Affiliate of
Borrower and (b) professional fees and disbursements actually paid in connection
therewith.
"Net Cash Sales Proceeds" shall mean, with respect to any Disposition, the
sum of (a) the Cash proceeds received by or for the account of Borrower and its
Subsidiaries from such Disposition plus (b) the amount of Cash received by or
for the account of Borrower and its Subsidiaries upon the sale, collection or
other liquidation of any proceeds that are not Cash from such Disposition, in
each case net of (i) any amount required to be paid to any Person owning an
interest in the assets disposed of, (ii) any amount applied to the repayment of
Indebtedness secured by a Lien permitted under Section 7.1 hereof on the asset
disposed of, (iii) any transfer tax, income tax or other taxes payable as a
result of such Disposition, (iv) professional fees and expenses, fees due to any
governmental agency, brokers' commissions and other out-of-pocket costs of sale
actually paid to any Person that is not an Affiliate of Borrower attributable to
such Disposition, and (v) any reserves established in accordance with GAAP in
connection with such Disposition.
"Net Profit After Taxes" shall mean, for any fiscal period, the after-tax
income of Borrower and its Subsidiaries for such fiscal period, as determined in
accordance with GAAP. For the purposes of determining Borrower's compliance with
Section 6.8 hereof, 'Net Profit After Taxes' shall not include any income
adjustments required as a result of the recent GAAP pronouncement on goodwill.
"Nonrevolving-To-Term Loan Commitment" shall have the meaning assigned to
that term in Section 2.3 hereof.
"Nonrevolving-To-Term Note" shall have the meaning assigned to that term in
Section 2.3 hereof.
"Notes" and "Note" shall mean, respectively, (a) the Revolving Note, the
Acquisition Note and the Nonrevolving-To-Term Note, and (b) any of such Notes.
"Obligations" shall mean and include all loans, advances, debts,
liabilities and obligations, howsoever arising, owed by Borrower or any of its
Subsidiaries to Bank of every kind and description (whether or not evidenced by
any note or instrument and whether or not for the payment of money), direct or
indirect, absolute or contingent, due or to be come due, now existing or
hereafter arising pursuant to the terms of this Agreement, any other Loan
Document or any other agreement or instrument, including without limitation any
Indebtedness of Borrower which Bank obtains by assignment or otherwise, and all
Bank Expenses.
"Permitted Guaranty Obligations" shall mean:
(a) Guaranty Obligations existing on the date of this Agreement, and
refinancings, renewals, extensions or amendments that do not increase the amount
thereof;
(b) Guaranty Obligations under the Loan Documents; and
(c) Guaranty Obligations owed to Borrower or any of its
Subsidiaries.
"Permitted Indebtedness" shall mean:
(a) the Obligations;
(b) Indebtedness owed to Borrower or any of its Subsidiaries;
(c) trade payables and other contractual obligations to suppliers
and customers incurred in the ordinary course of business;
(d) Indebtedness of Borrower or any of its Subsidiaries incurred to finance
the purchase of equipment constituting a Capital Expenditure permitted by
Section 7.10 of this Agreement;
(e) other Indebtedness existing on the date of this Agreement and reflected
in the Financial Statement of Borrower and its Subsidiaries for the fiscal year
ended December 31, 2002, and refinancings, renewals, extensions or amendments
that do not increase the amount thereof;
(f) Indebtedness of Guarantor reflected in the Financial Statement of
Guarantor for the fiscal year ended December 31, 2002, and refinancings,
renewals, extensions or amendments that do not increase the amount thereof;
(g) lease obligations permitted under Section 7.12 of this
Agreement;
(h) the Subordinated Indebtedness;
(i) Indebtedness consisting of debt securities for which the Net Cash
Issuance Proceeds will be applied as a mandatory prepayment pursuant to Section
2.7 of this Agreement;
(j) other Indebtedness not referred to hereinabove; provided, however, that
the aggregate outstanding principal amount of such Indebtedness shall not exceed
Five Million Dollars ($5,000,000) at any time; and
(k) Foreign Subsidiary Indebtedness; provided, however, that the aggregate
outstanding principal amount of such Foreign Subsidiary Indebtedness shall not
exceed Thirty-One Million Dollars ($31,000,000) at any time.
"Permitted Liens" shall mean:
(a) Liens for taxes not yet payable or Liens for taxes being contested in
good faith and by proper proceedings diligently pursued, provided that adequate
reserves shall have been made therefor on the applicable Financial Statement,
the Lien shall have no effect on the priority of Bank's security interest in the
Collateral and a stay of enforcement of any such Lien shall be in effect;
(b) Liens in favor of Bank;
(c) Liens upon equipment granted in connection with the acquisition of such
equipment by Borrower or any of its Subsidiaries after the date hereof
(including, without limitation, pursuant to capital leases); provided, however,
that (i) the cost of such acquisition constitutes a Capital Expenditure
permitted by Section 7.10 of this Agreement, (ii) the Indebtedness incurred to
finance each such acquisition is permitted by this Agreement, and (iii) each
such Lien attaches only to the equipment acquired with the Indebtedness secured
thereby, and the proceeds and products thereof;
(d) reservations, exceptions, encroachments, easements, rights of way,
covenants, conditions, restrictions, leases and other similar title exceptions
or encumbrances affecting real property which do not in the aggregate materially
detract from the value of the real property or materially interfere with their
use in the ordinary conduct of the business of Borrower or any of its
Subsidiaries;
(e) deposits under workmen's compensation, unemployment insurance, social
security and other similar laws applicable to Borrower or any of its
Subsidiaries; and
(f) Liens relating to statutory obligations of Borrower or any of its
Subsidiaries with respect to surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of business.
"Person" shall mean any natural person, corporation, partnership, joint
venture, limited liability company, firm, association, government, governmental
agency, court or any other entity.
"Prior Agreement" shall have the meaning assigned to such term in Recital A
of this Agreement.
"Revolving Credit Commitment" shall have the meaning assigned to that term
in Section 2.1 hereof.
"Revolving Note" shall have the meaning assigned to that term in Section 2.1
hereof.
"Security Agreements" shall mean respectively, (a) the Borrower Security
Agreement and the Guarantor Security Agreement, and (b) either of such Security
Agreements.
"Stock Purchase" shall have the meaning assigned to such term in the Prior
Agreement.
"Stock Purchase Agreement" shall have the meaning assigned to such term in the
Prior Agreement.
"Subordinated Indebtedness" shall mean Guarantor's obligations to
Subordinating Creditor under the Subordinated Note, which obligations shall be
subordinated in right of payment to the obligations and liabilities of Guarantor
to Bank under the Guaranty pursuant to the terms of the Subordination Agreement.
"Subordinated Note" shall mean that certain Amended and Restated
Subordinated Promissory Note dated June 29, 2001, executed by Guarantor in favor
of Subordinating Creditor, in the original principal amount of Thirteen Million
Forty-Nine Thousand Dollars ($13,049,000), as such Subordinated Promissory Note
is in effect on the date of this Agreement.
"Subordinating Creditor" shall mean Lite-On Power Semiconductor Corp., a
Taiwan corporation. ----------------------
"Subordination Agreement" shall mean that certain Subordination Agreement
dated December 1, 2000, by and between Subordinating Creditor and Bank, and
acknowledged by Guarantor and Borrower, as amended by that certain First
Amendment dated as of August 10, 2001 and that certain Second Amendment dated as
of May 1, 2002, and as at any time further amended, supplemented or otherwise
modified or restated.
"Subsidiary" of a Person shall mean any corporation, association,
partnership, limited liability company, joint venture or other business entity,
whether foreign or domestic, of which more than fifty percent (50%) of the
voting stock or other equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by the Person, or
one or more of the Subsidiaries of the Person, or a combination thereof. Unless
the context otherwise requires, (a) references herein to a "Subsidiary" shall
refer to a Subsidiary of Borrower and (b) references to "Subsidiaries" shall not
include Guarantor to the extent that they relate to dates or periods prior to
the consummation by Borrower of the Stock Purchase.
"Tangible Net Worth" shall mean, for any fiscal period of Borrower and its
Subsidiaries, the net worth of Borrower and its Subsidiaries, decreased by
patents, trademarks, trade names, goodwill and other similar intangible assets
of Borrower and its Subsidiaries.
SECTION 2. AMOUNT AND TERMS OF CREDIT
2.1 Revolving Credit Commitment. Subject to the terms and conditions of
this Agreement, from the date of this Agreement to but excluding June 1, 2005
(the "Revolving Credit Commitment Termination Date"), provided that no Event of
Default then has occurred and is continuing, Bank will make loans (collectively,
the "Revolving Loans" and individually, a "Revolving Loan") to Borrower as
Borrower may request from time to time; provided, however, that the aggregate
principal amount of all such Revolving Loans outstanding at any one time shall
not exceed Seven Million Five Hundred Thousand Dollars ($7,500,000) (the
"Revolving Credit Commitment"). Within the limits of time and amount set forth
in this Section 2.1, Borrower may borrow, repay and reborrow Revolving Loans
under the Revolving Credit Commitment. All Revolving Loans shall be requested
before the Revolving Credit Commitment Termination Date, on which date all
unpaid principal of and accrued interest on all Revolving Loans shall be due and
payable. Borrower's obligation to repay the principal amount of all Revolving
Loans, together with accrued interest thereon, shall be evidenced by a
promissory note issued by Borrower in favor of Bank (the "Revolving Note") on
the standard form used by Bank to evidence its commercial loans. The Revolving
Note shall replace and supersede that certain replacement Revolving Note dated
as of May 1, 2002, issued by Borrower in favor of Bank pursuant to the Prior
Agreement. Bank shall enter the amount of each Revolving Loan, and any payments
thereof, in its books and records, and such entries shall be prima facie
evidence of the amount outstanding under the Revolving Credit Commitment. The
failure of Bank to make any notation in its books and records shall not
discharge Borrower of its obligation to repay in full with interest all amounts
borrowed hereunder. The proceeds of the Revolving Loans shall be disbursed for
the purposes set forth in Section 2.4(a) hereof pursuant to disbursement
instructions provided to Bank on Bank's standard form therefor.
2.2 Acquisition Loan Commitment. Pursuant to the terms and conditions of
the Prior Agreement, Bank made a term loan (the "Acquisition Loan") to Borrower
in a single disbursement in the original principal amount of Ten Million Dollars
($10,000,000). Immediately prior to the date of this Agreement, the outstanding
principal amount of the Acquisition Loan was Six Million One Hundred Eleven
Thousand One Hundred Eleven and 22/100 Dollars ($6,111,111.22) (the "Acquisition
Loan Commitment"). Borrower's obligation to repay the principal amount of the
Acquisition Loan, together with accrued interest thereon, shall be evidenced by
a promissory note (the "Acquisition Note") issued by Borrower in favor of Bank
on the standard form used by Bank to evidence its commercial loans. The
Acquisition Note shall replace and supersede that certain replacement
Acquisition Note dated as of May 1, 2002, issued by Borrower in favor of Bank
pursuant to the Prior Agreement. The Acquisition Note shall provide for payments
of principal and interest as set forth therein. On December 1, 2004 (the
"Acquisition Loan Maturity Date"), all unpaid principal of and accrued but
unpaid interest on the Acquisition Loan shall be due and payable. The proceeds
of the Acquisition Loan were disbursed for the purposes set forth in Section
2.4(b) hereof pursuant to disbursement instructions provided to Bank on Bank's
standard form therefor.
2.3 Nonrevolving-To-Term Loan Commitment. During the period from the date
of this Agreement to but excluding June 1, 2004 (the "Conversion Date"), Bank
will make loans (collectively, the "Nonrevolving-To-Term Loans" and
individually, a "Nonrevolving-To-Term Loan") to Borrower in an aggregate
principal amount not to exceed Two Million Dollars ($2,000,000) (the
"Nonrevolving-To-Term Loan Commitment"). On or before Borrower's request for a
Nonrevolving-To-Term Loan hereunder, Borrower shall provide Bank with copies of
one or more invoices reflecting the purchase price(s) for the new equipment
being purchased with the proceeds of such Nonrevolving-To-Term Loan. Borrower
acknowledges that the principal amount of each Nonrevolving-To-Term Loan shall
not exceed eighty percent (80%) of the purchase price(s) of such new equipment,
as reflected in the corresponding invoice(s). Borrower may borrow and repay, but
once repaid may not reborrow, Nonrevolving-To-Term Loans under the
Nonrevolving-To-Term Loan Commitment in accordance with the terms of the
Nonrevolving-To-Term Note (as such term is defined hereinbelow). The outstanding
principal amount of any and all Nonrevolving-To-Term Loans made by Bank to
Borrower under the Nonrevolving-To-Term Loan Commitment shall bear interest only
during the period from the date of this Agreement through and including the
Conversion Date. On the Conversion Date, so long as no Event of Default has
occurred and is then continuing, the aggregate principal amount of all
Nonrevolving-To-Term Loans then outstanding under the Nonrevolving-To-Term Loan
Commitment shall be converted to a fully amortizing five (5) year term loan,
with principal payable in sixty (60) equal consecutive monthly installments,
commencing on July 1, 2004, and with interest payable at the same time as
principal, all as more particularly set forth in the Nonrevolving-To-Term Note.
The Nonrevolving-To-Term Note shall mature on June 1, 2009, on which date all
outstanding principal and interest thereunder shall be due and payable.
Borrower's obligation to repay the Nonrevolving-To-Term Loans under the
Nonrevolving-To-Term Loan Commitment, and the five (5) year fully amortizing
term loan provided for hereinabove, together with accrued interest thereon,
shall be evidenced by a single promissory note (the "Nonrevolving-To-Term
Note"), issued by Borrower in favor of Bank on the standard form used by Bank to
evidence its commercial loans. Bank shall enter the amount of each
Nonrevolving-To-Term Loan, the amount of the five (5) year fully amortizing term
loan, and the amount of each repayment in Bank's records and such entries shall
be deemed to be the amount outstanding under the Nonrevolving-To-Term Loan
Commitment. The failure of Bank to make any notation in its books and records
shall not discharge Borrower of its obligation to repay in full with interest
all amounts borrowed hereunder. The proceeds of the Nonrevolving-To-Term Loans
and the five (5) year fully amortizing term loan shall be disbursed for the
purposes set forth in Section 2.4(c) hereof pursuant to disbursement
instructions provided to Bank on Bank's standard form therefor.
2.4 Purposes of the Loans.
(a) The proceeds of the Revolving Loans shall be used for Borrower's
domestic working capital purposes only. Without limiting the generality of the
foregoing sentence, Borrower shall not use the proceeds of any Revolving Loan
directly or indirectly to finance the overseas operations or Capital
Expenditures of Borrower or any of its Subsidiaries or to repay or prepay any
Subordinated Indebtedness.
(b) The proceeds of the Acquisition Loan were used by Borrower to
consummate the Stock Purchase in accordance with the terms and conditions of the
Stock Purchase Agreement.
(c) The proceeds of the Nonrevolving-To-Term Loans shall be used by
Borrower to purchase new equipment for Borrower and Guarantor only, and the
proceeds of the five (5) year fully amortizing term loan shall be used to repay
in full the aggregate principal amount of all Nonrevolving-To-Term Loans
outstanding on the Conversion Date.
2.5 Interest.
(a) Each Loan shall bear interest at the rate or rates provided for in the
corresponding Note and selected by Borrower.
(b) Interest on the Loans shall be computed on the basis of the actual
number of days during which the principal is outstanding thereunder divided by
360 which shall, for the purposes of computing interest, be considered one (1)
year.
(c) Interest shall be payable on the outstanding principal amount of each
Loan as set forth in the corresponding Note in accordance with Section 2.10
hereof.
2.6 Voluntary Prepayment. The principal Indebtedness evidenced by the Notes
may, at any time and from time to time, voluntarily be paid or prepaid in whole
or in part without penalty or premium in accordance with the terms of the Notes,
except that, with respect to any voluntary prepayment under this Section 2.6,
(a) the amount of any partial prepayment of a Loan shall not be less than One
Hundred Thousand Dollars ($100,000) and shall be in an integral multiple of
Fifty Thousand Dollars ($50,000) in excess thereof and (b) any payment or
prepayment of all or any part of any Base Interest Rate Loan under and as
defined in any Note on a day, other than the last day of the applicable Interest
Period under and as defined in such Note, shall be subject to the payment of a
prepayment fee as provided for in such Note. Principal sums so paid or prepaid
shall be applied to those installments scheduled to repay the outstanding
principal amount of the applicable Loan in the inverse order of maturity, but
shall not postpone the due date or change the amount of any subsequent principal
installment unless Bank shall otherwise agree in writing.
2.7 Mandatory Prepayments. The principal Indebtedness evidenced by the
Notes shall be prepaid on or before the fifth Business Day following the receipt
by Borrower or any of its Subsidiaries of (i) Net Cash Sales Proceeds from
Dispositions, by an amount equal to one hundred percent (100%) of such Net Cash
Sales Proceeds, (ii) Net Cash Issuance Proceeds from the issuance of debt
securities of Borrower or any of its Subsidiaries (other than Indebtedness
permitted by subsections (a) through (h) and subsection (j) of the definition of
Permitted Indebtedness hereinabove), by an amount equal to one hundred percent
(100%) of such Net Cash Issuance Proceeds and (iii) Net Cash Issuance Proceeds
from the issuance of equity securities of Borrower or any of its Subsidiaries
(except any issuance of equity securities to Borrower or to any of its
Subsidiaries or to employees or former employees, directors and officers of
Borrower pursuant to an exercise of stock options with respect to equity in
Borrower), by an amount equal to one hundred percent (100%) of such Net Cash
Issuance Proceeds.
2.8 Default Rate. If all or any portion of the principal amount of any Loan
made under this Agreement shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue principal amount, and to
the extent permitted by law overdue interest thereon, shall be payable on demand
at a rate per annum equal to the rate which would otherwise be applicable plus
five percent (5%), effective from the date that such amounts become overdue
until paid in full.
2.9 Fees.
(a) On or before the date of this Agreement, Borrower shall pay to Bank a
fee in connection with the extension of the Nonrevolving-To-Term Loan Commitment
in the amount of Two Thousand Five Hundred Dollars ($2,500), which fee shall be
nonrefundable. The payment of such fee shall constitute the payment in full by
Borrower of all of the Bank Expenses due to Bank for the period prior to the
date of this Agreement.
(b) On or before the date of this Agreement, Borrower shall pay to Bank a
fee in connection with the renewal of the Revolving Credit Commitment and the
documentation of this Agreement and the other Loan Documents in the amount of
Two Thousand Dollars ($2,000), which fee shall be nonrefundable.
2.10 Bank's Right to Charge Deposit Account. Borrower authorizes Bank
(irrevocably until the Obligations are paid in full and Bank's commitment to
extend the Loans hereunder is terminated) from time to time to charge against
account number 3030158082 maintained by Borrower with Bank any principal and/or
interest due or past due in respect of the Obligations under this Agreement;
provided that Bank shall not have any obligation to charge past due payments
against such deposit account.
2.11 Revolving Credit Commitment Unused Fee. On the last Business Day of
each fiscal quarter of each fiscal year, commencing March 31, 2003, and on the
Revolving Credit Commitment Termination Date, Borrower shall pay to Bank a fee
in respect of the Revolving Credit Commitment equal to the Applicable Percentage
of the average daily unutilized amount of the Revolving Credit Commitment during
such fiscal quarter or portion thereof. As used herein, the term "Applicable
Percentage" shall mean (a) three-eighths of one percent (3/8 of 1%) per annum,
if the Leverage Ratio as of the last day of such fiscal quarter was greater than
2.0 to 1.0, (b) three-tenths of one percent (3/10 of 1%) per annum, if the
Leverage Ratio as of the last day of such fiscal quarter was less than or equal
to 2.0 to 1.0 but greater than 1.5 to 1.0, (c) one-quarter of one percent (1/4
of 1%) per annum, if the Leverage Ratio as of the last day of such fiscal
quarter was less than or equal to 1.5 to 1.0 but greater than 1.0 to 1.0, (d)
one-fifth of one percent (1/5 of 1%) per annum, if the Leverage Ratio as of the
last day of such fiscal quarter was less than or equal to 1.0 to 1.0 but greater
than 0.75 to 1.0, and (e) three-twentieths of one percent (3/20 of 1%) per
annum, if the Leverage Ratio as of the last day of such fiscal quarter was less
than or equal to 0.75 to 1.0.
SECTION 3. COLLATERAL
3.1 Security Provided By Borrower. Borrower shall execute and deliver the
Borrower Security Agreement to Bank, pursuant to which Borrower shall grant to
Bank a security interest in all of Borrower's accounts, deposit accounts,
instruments, chattel paper, documents, general intangibles, inventory, equipment
and furniture, whether then owned or thereafter acquired by Borrower, all
proceeds and insurance proceeds of the foregoing, all guaranties and other
security therefor, and all of Borrower's present and future books and records
relating thereto (including computer-stored information and all software
relating thereto), and all contract rights with third parties relating to the
maintenance of any such books, records and information, as security for the
payment and performance of all obligations and liabilities of Borrower to Bank
under the Prior Agreement and all documents, instruments and agreements executed
by Borrower in connection therewith. The security interest granted to Bank
pursuant to the Borrower Security Agreement shall be a first priority security
interest, or such lesser priority as may be permitted by this Agreement. Each
classification of personal property used hereinabove shall have the meaning
given to it in the California Commercial Code. Nothing contained in this Section
3.1 or in the Borrower Security Agreement shall be deemed to grant Bank or
confirm in favor of Bank a security interest in the assets of any Subsidiary of
Borrower.
3.2 Security Provided By Guarantor. Borrower shall cause Guarantor to
execute and deliver the Guarantor Security Agreement to Bank, pursuant to which
Guarantor shall grant to Bank, as security for the payment and performance of
all Obligations of Guarantor to Bank under the Guaranty, a security interest in
all of Guarantor's accounts, deposit accounts, instruments, chattel paper,
documents, general intangibles, inventory, equipment, furniture and fixtures,
whether now owned or hereafter acquired by Guarantor, all proceeds and insurance
proceeds of the foregoing, all guaranties and other security therefor, and all
of Guarantor's present and future books and records relating thereto (including
computer-stored information and all software relating thereto), and all contract
rights with third parties relating to the maintenance of any such books, records
and information. The security interest granted to Bank pursuant to the Guarantor
Security Agreement shall be a first priority security interest, or such lesser
priority as may be permitted by this Agreement.
3.3 Power of Attorney. Until the Obligations of Borrower are paid in full
and Bank has no commitment to extend further Loans hereunder, Borrower hereby
irrevocably makes, constitutes and appoints Bank (and any officers, employees or
agents of Bank designated by Bank) as Borrower's true and lawful attorney, with
power to sign Borrower's name on any documents or instruments which Bank
believes should be executed, recorded and/or filed in order to perfect, or
continue the perfection, of Bank's security interest in the Collateral or to
liquidate or realize value from the Collateral after the occurrence of an Event
of Default.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loan. The obligation of Bank to make
its initial Loan hereunder is subject to the fulfillment, to the satisfaction of
Bank and its counsel, of each of the following conditions, to the extent that
such conditions were not satisfied under the Prior Agreement:
(a) Notes. Bank shall have received the Notes, duly executed by
Borrower to the order of Bank;
(b) Authorizations to Obtain Credit.
(i) Bank shall have received an Authorization to Obtain Credit, on Bank's
standard form therefor, duly executed by the secretary of Borrower, attesting to
the resolution of the board of directors of Borrower authorizing the execution
and delivery of this Agreement, the Notes and all other Loan Documents required
hereunder to which Borrower is a party and authorizing specific responsible
officers of Borrower to execute same;
(ii) Bank shall have received an Authorization to Obtain Credit, on Bank's
standard form therefor, duly executed by the secretary of Guarantor, attesting
to the resolution of the board of directors of Guarantor authorizing the
execution and delivery of the Guaranty and all other Loan Documents required
hereunder to which Guarantor is a party and authorizing specific responsible
officers of Guarantor to execute same; and
(iii) Bank shall have received an Authorization to Obtain Credit, on Bank's
standard form therefor, duly executed by the secretary of Subordinating
Creditor, attesting to the resolution of the board of directors of Subordinating
Creditor authorizing the execution and delivery of the Subordination Agreement
and all other Loan Documents required hereunder to which Subordinating Creditor
is a party and authorizing specific responsible officers of Subordinating
Creditor to execute same;
(c) Alternative Dispute Resolution Agreements. Bank shall have received the
Alternative Dispute Resolution Agreements;
(d) No Material Adverse Change. No material adverse change shall have
occurred in the business, operations, assets, prospects, earnings or condition
(financial or otherwise) of Borrower;
(e) Authorizations to Disburse. Bank shall have received executed
Authorizations to Disburse, each on Bank's standard form therefor, duly executed
by Borrower, directing Bank to disburse the proceeds of the Loans as provided
for herein;
(f) Collateral Documents. Bank shall have received the Borrower Security
Agreement and the Guarantor Security Agreement, together with such UCC financing
statements, fixture filings, UCC searches, tax lien and litigation searches,
insurance certificates, waivers and consents, and other similar documents as
Bank may require, and in such form as Bank may require, in order to evidence,
perfect (in the priority required hereunder) and assure Bank's security interest
in the Collateral;
(g) Subordination Agreement. Bank shall have received the Subordination
Agreement, duly executed by Subordinating Creditor;
(h) Nonrevolving-To-Term Loan Commitment and Documentation Fee. Bank shall
have received the fee in respect of the Nonrevolving-To-Term Loan Commitment and
the documentation of this Agreement and the other Loan Documents, as provided
for in Section 2.9 hereof; and
(i) Other Documents. Bank shall have received such other documents,
instruments and agreements as Bank may reasonably require in order to effect
fully the transactions contemplated by this Agreement.
4.2 Conditions Precedent to Subsequent Loans. The obligation of Bank to
make each Loan hereunder subsequent to the initial Loan is subject to the
fulfillment, at or prior to the time of the making of such Loan, of each of the
following further conditions:
(a) Representations and Warranties. The representations and warranties
contained in this Agreement shall be true, complete and accurate in all material
respects on and as of such date (except to the extent that such representations
and warranties relate solely to any earlier date); and
(b) No Event of Default. No Event of Default or event which, with the lapse
of time or notice, or both, would be an Event of Default shall have occurred and
be continuing on the date of such Loan, nor shall either result from the making
of such Loan.
SECTION 5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that:
5.1 Principal Business Activity. The principal business of Borrower is the
manufacturing and distribution of discrete semiconductor devices primarily for
manufacturers in the computer and consumer products industries.
5.2 Authority to Borrow. The execution, delivery and performance of this
Agreement, the Notes and all other Loan Documents to which Borrower is a party
are not in contravention of any of the terms of any indenture, agreement or
undertaking to which Borrower is a party or by which it or any of its property
is bound or affected.
5.3 Financial Statements. The consolidated Financial Statement of Borrower
and its Subsidiaries as at December 31, 2002, for the fiscal year of Borrower
and its Subsidiaries ended on such date, has heretofore been furnished to Bank,
and is true and complete and fairly represents the financial condition of
Borrower and its Subsidiaries for the fiscal period covered thereby. Since
December 31, 2002, there has been no material adverse change in the business,
operations, assets, prospects, earnings or condition (financial or otherwise) of
Borrower and its Subsidiaries, taken as a whole.
5.4 Adverse Change. Except for assets which may have been disposed of in
the ordinary course of business, Borrower and its Subsidiaries have good and
marketable title to all of the property reflected in the Financial Statement of
Borrower and its Subsidiaries as at December 31, 2002 and to all property
acquired by it since that date, free and clear of all Liens except those
specifically set forth therein.
5.5 No Litigation. There is no litigation or proceeding pending or
threatened against Borrower or any of its Subsidiaries, or any of their
respective properties, the results of which, if decided adversely, are likely to
have a material adverse effect on the financial condition, property or business
of Borrower or any of its Subsidiaries or result in liability in excess of the
insurance coverage of Borrower or any of its Subsidiaries.
5.6 No Event of Default. Borrower is not now in default in the payment of
any of its material obligations, and there exists no event, condition or act
which constitutes an Event of Default and no event, condition or act which with
notice, the lapse of time, or both, would constitute an Event of Default.
5.7 Organization. Each of Borrower and Guarantor is duly organized and
existing under the laws of the State of Delaware, without limitation as to its
existence, and has the power and authority to carry on the business in which it
is engaged and proposes to engage.
5.8 Power and Authority. Borrower has the corporate power and authority to
enter into this Agreement and to execute and deliver the Notes and all of the
other Loan Documents to which it is a party. Guarantor has the corporate power
and authority to execute and deliver the Guaranty and any other Loan Document to
which it is a party.
5.9 Qualification. Each of Borrower and Guarantor is duly qualified and in
good standing as a foreign corporation wherever such qualification is required,
except in those jurisdictions where the failure to so qualify would not have a
material adverse effect on the business, operations, assets, prospects, earnings
or condition (financial or otherwise) of Borrower or Guarantor.
5.10 ERISA. The defined benefit pension plans (as such term is defined in
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) of
Borrower and Guarantor, meet, as of the date hereof, the minimum funding
standards of section 302 of ERISA, and no Reportable Event (as such term is
defined in ERISA) or Prohibited Transaction (as such term is defined in ERISA)
has occurred with respect to any such plan.
5.11 Regulation U. No action has been taken or is currently planned by
Borrower, or any agent acting on its behalf, which would cause this Agreement or
any Loan to violate Regulation U or any other regulation of the Board of
Governors of the Federal Reserve System or to violate the Securities and
Exchange Act of 1934, in each case as in effect now or as the same may hereafter
be in effect. Borrower is not engaged principally, or as one of its most
important activities, in the business of extending credit for the purpose of
purchasing or carrying "margin stock" as that term is defined in Regulation U
and none of the proceeds of any Loan hereunder have been or shall be used for
the purpose, directly or indirectly, of purchasing or carrying any such margin
stock.
5.12 No Current Limitation on Repatriation of Cash Profits. On the date of
this Agreement, there is no limitation on the repatriation by Borrower of Cash
from profits generated by its foreign Subsidiaries.
SECTION 6. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as this Agreement shall be in
effect and until payment in full of all Obligations, including, without
limitation, any accrued and unpaid interest thereon, and any other amounts due
hereunder, Borrower shall perform each and all of the following covenants
applicable to it:
6.1 Payment of Obligations. Borrower shall promptly pay and discharge, and
cause each of its Subsidiaries to promptly pay and discharge, all taxes,
assessments and other governmental charges and claims levied or imposed upon it
or its property, or any part thereof; provided, however, that Borrower and its
Subsidiaries shall have the right in good faith to contest any such taxes,
assessments, charges or claims and, pending the outcome of such contest, to
delay or refuse payment thereof, provided that such reserves as may be required
by GAAP are established by them to pay and discharge any such taxes,
assessments, charges and claims.
6.2 Maintenance of Existence. Each of Borrower and its Subsidiaries shall
maintain and preserve its existence and assets and all rights, franchises and
other authority necessary for the conduct of its business and shall maintain and
preserve its property, equipment and facilities in good order, condition and
repair. Bank may, at reasonable times, visit and inspect any of the properties
of Borrower and its Subsidiaries.
6.3 Records. Each of Borrower and its Subsidiaries shall keep and maintain
full and accurate accounts and records of its operations in accordance with GAAP
and shall permit Bank to have access thereto, to make examination thereof, and
to audit same during regular business hours.
6.4 Information Furnished. Borrower shall furnish or cause to be furnished
to Bank:
(a) Quarterly Financial Statements. Within sixty (60) days after the close
of each fiscal quarter, except for the last fiscal quarter of each fiscal year,
a copy of the unaudited consolidated Financial Statements of Borrower and its
Subsidiaries, on Form 10-Q, as of the close of such fiscal quarter, prepared in
accordance with GAAP (except that such unaudited Financial Statements need not
include footnotes and other informational disclosures);
(b) Annual Financial Statements. Within one hundred twenty (120) days after
the close of each fiscal year of Borrower, a copy of the consolidated Financial
Statements of Borrower and its Subsidiaries, on Form 10-K, as of the close of
such fiscal year, prepared on an audited basis in accordance with GAAP by an
independent certified public accountant selected by Borrower and reasonably
satisfactory to Bank;
(c) Compliance Certificates. With each quarterly and annual Financial
Statement furnished to Bank pursuant to Sections 6.4(a) and 6.4(b) hereinabove,
a certificate of Borrower's chief financial officer or controller (i) setting
forth in reasonable detail the calculations required to establish that Borrower
was in compliance with its covenants set forth in Sections 6.5 through 6.8,
Section 7.8 and (in the case of the annual Financial Statement only) Section
7.10 hereof during the period covered by such Financial Statement and (ii)
stating that, except as explained in reasonable detail in such certificate, (A)
all of the representations, warranties and covenants of Borrower contained in
this Agreement and the other Loan Documents are correct and complete as at the
date of such certificate, except for those representations and warranties which
relate to a particular date and (B) no Event of Default then exists or existed
during the period covered by such Financial Statement. If such certificate
discloses that a representation or warranty is not correct or complete, that a
covenant has not been complied with, or that an Event of Default exists or
existed, such certificate shall set forth the action, if any, that Borrower has
taken or proposes to take with respect thereto;
(d) Notice Of Limitation On Repatriation Of Cash Profits. Within thirty
(30) days after obtaining knowledge of any change in law which would limit or
otherwise restrict the repatriation by Borrower of Cash from profits generated
by its foreign Subsidiaries, written notice of such change in law; and
(e) Other Information. Such other financial statements and information as
Bank may reasonably request from time to time.
6.5 Leverage Ratio. Borrower and its Subsidiaries shall maintain a Leverage
Ratio of not greater than 2.0 to 1.0 as of the last day of each fiscal quarter.
6.6 Fixed Charge Coverage Ratio. Borrower and its Subsidiaries shall
maintain a Fixed Charge Coverage Ratio of not less than 1.35 to 1.0 as of the
last day of each fiscal quarter.
6.7 Current Ratio. Borrower and its Subsidiaries (other than any Foreign
Subsidiaries) shall maintain a Current Ratio of not less than 1.15 to 1.0 as of
the last day of each fiscal quarter.
6.8 Net Profit After Taxes. Borrower and its Subsidiaries shall achieve Net
Profit After Taxes of not less than Five Hundred Thousand Dollars for each
fiscal quarter.
6.9 Insurance. Each of Borrower and Guarantor shall keep all of its
insurable property, whether real, personal or mixed, insured by good and
responsible companies selected by Borrower or Guarantor and approved by Bank
against fire and such other risks as are customarily insured against by
companies conducting similar business with respect to like properties. Each of
Borrower and Guarantor shall furnish to Bank a statement of its insurance
coverage, shall promptly furnish other or additional insurance deemed reasonably
necessary by and upon the reasonable request of Bank to the extent that such
insurance may be available and hereby assigns to Bank, as security for the
payment of its Obligations, the proceeds of any such insurance. Bank will be
named loss payee on all policies insuring the Collateral. Each of Borrower and
Guarantor will maintain adequate worker's compensation insurance and adequate
insurance against liability for damage to persons or property. Each policy shall
require ten (10) days' written notice to Bank before such policy may be altered
or cancelled.
6.10 Bank Expenses. Borrower shall pay or reimburse Bank for all Bank
Expenses as and when such Bank Expenses become due.
6.11 Brokerage Fees. Neither Borrower nor any of its Subsidiaries shall
pay, directly or indirectly, any fee, commission or compensation of any kind to
any Person for any services in connection with this Agreement.
6.12 Notice of Default. Borrower shall give prompt written notice to Bank
of any Event of Default under this Agreement and of any default under any other
Loan Document, and shall give prompt written notice to Bank of any change in
management, change in name, liquidation and of any other matter which has
resulted in, or might result in, a material adverse change in the business,
operations, assets, prospects, earnings or condition (financial or otherwise) of
Borrower or any of its Subsidiaries.
6.13 Execution of Other Documents. Borrower shall promptly, and shall cause
each of its Subsidiaries to promptly, upon demand by Bank, execute all such
additional agreements, contracts, documents and instruments in connection with
this Agreement as Bank may reasonably request in order to effect fully the
purposes hereof.
6.14 Reports Under Pension Plans. Borrower shall furnish to Bank, as soon
as possible and in any event within fifteen (15) days after Borrower knows or
has reason to know that any event or condition described in Section 5.10 hereof
has occurred, a statement of a responsible officer of Borrower describing such
event or condition and the action, if any, which Borrower proposes to take with
respect thereto.
SECTION 7. NEGATIVE COVENANTS
Borrower covenants and agrees that, so long as this Agreement shall be in
effect and until payment in full of all Obligations, including, without
limitation, any accrued and unpaid interest thereon, and any other amounts due
hereunder, Borrower shall perform each and all of the following covenants
applicable to it:
7.1 Liens. Borrower shall not create, incur, assume or permit to exist, or
permit any of its Subsidiaries to create, incur, assume or permit to exist,
directly or indirectly, any Lien on or with respect to any of its property,
whether real, personal or mixed, and whether now owned or hereafter acquired, or
upon the income or profits therefrom, except for Permitted Liens.
7.2 Dispositions. Borrower shall not make, or permit any of its
Subsidiaries to make, any Disposition of its property, whether now owned or
hereafter acquired, except (a) a Disposition by Borrower to any of its
Subsidiaries and (b) a Disposition for which the Net Cash Sales Proceeds, when
added to the aggregate Net Cash Sales Proceeds of all Dispositions made during
the term of this Agreement, do not exceed Five Hundred Thousand Dollars
($500,000).
7.3 Indebtedness. Borrower shall not create, incur or assume, or permit any
of its Subsidiaries to create, incur or assume, any Indebtedness, other than
Permitted Indebtedness.
7.4 Guaranty Obligations. Borrower shall not create, incur or assume, or
permit any of its Subsidiaries to create, incur or assume, any Guaranty
Obligations, other than Permitted Guaranty Obligations. Notwithstanding the
foregoing sentence, Borrower may execute a guaranty of the indebtedness of
Diodes Taiwan, in an amount not exceeding Five Million Dollars ($5,000,000).
7.5 Liquidation or Merger. Without the prior written consent of Bank, which
consent shall not be unreasonably withheld, Borrower shall not, and shall not
permit any of its Subsidiaries to, liquidate, dissolve or enter into any
consolidation, merger, partnership or other combination, or purchase or lease
all or the greater part of the assets or business of another Person.
7.6 Loans and Advances. Without the prior written consent of Bank, which
consent shall not be unreasonably withheld, Borrower shall not make, or permit
any of its Subsidiaries to make, any loans or advances or otherwise extend
credit to any other Person, except that Borrower may extend trade credit in the
ordinary course of business as currently conducted to any of its Subsidiaries.
7.7 Investments. Borrower shall not purchase the debt or equity of another
Person except (a) for savings accounts and certificates of deposit of Bank and
(b) direct U.S. Government obligations and commercial paper issued by
corporations with the top ratings of Xxxxx'x Investors Service, Inc. or the
Standard & Poor's Ratings Division of XxXxxx-Xxxx, Inc., provided that all such
permitted investments shall mature within one (1) year of purchase.
7.8 Payment of Dividends. Except for dividends paid by foreign Subsidiaries
of Borrower to Borrower, Borrower shall not declare or pay, or permit any of its
Subsidiaries to declare or pay, directly or indirectly, any dividends, in cash,
return of capital or any other form (other than dividends payable in its own
common stock), or authorize or make any other distribution with respect to any
of its stock now or hereafter outstanding.
7.9 Retirement of Stock. Borrower shall not redeem or retire, or permit any
of its Subsidiaries to redeem or retire, any share of its capital stock.
7.10 Capital Expenditures. Borrower and its Subsidiaries shall not in any
fiscal year make or incur any Capital Expenditure if after giving effect
thereto, the aggregate amount of all Capital Expenditures by Borrower and its
Subsidiaries in such fiscal year would exceed Sixteen Million Dollars
($16,000,000).
7.11 Transactions with Affiliates. Borrower shall not directly or
indirectly enter into or permit to exist any transaction (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with any holder of ten percent (10%) or more of any
class of equity securities of Borrower or with any Affiliate of Borrower on
terms that are less favorable to Borrower or its Affiliates, as the case may be,
than those terms which might be obtained at the time from third parties, or
otherwise not obtained through good faith negotiation on an arm's length basis.
Nothing contained in this Section 7.11 shall be deemed to prohibit or in any
manner restrict Borrower from consummating the Stock Purchase in accordance with
the terms and conditions of the Stock Purchase Agreement.
7.12 Operating Lease Obligations. Borrower and its Subsidiaries shall not
permit their lease payments, as lessees, under existing and future operating
leases to exceed Five Million Dollars ($5,000,000) in the aggregate in any one
fiscal year. Each of such operating leases shall be of equipment or real
property needed by Borrower or any of its Subsidiaries in the ordinary course of
its business.
SECTION 8. EVENTS OF DEFAULT
8.1 Events of Default. The occurrence of any one or more of the following
events, acts or occurrences shall constitute an event of default (collectively,
"Events of Default" and individually, an "Event of Default") hereunder:
(a) Failure to Make Payments When Due. Borrower shall fail to pay any
amount owing under this Agreement or under any other Loan Document (including
principal, interest, fees and Bank Expenses) when such amount is due, whether at
stated maturity, as a result of any mandatory repayment or prepayment
requirement, by acceleration, by notice of prepayment or otherwise; or
(b) Breach of Representation or Warranty. Any representation or warranty
made by Borrower or any of its Subsidiaries under this Agreement or any other
Loan Document, or in any certificate or financial or other statement heretofore
or hereafter furnished by Borrower or any of its Subsidiaries, shall prove to
have been false, incorrect or incomplete in any material respect when made,
effective or reaffirmed, as the case may be; or
(c) Violation of Covenants. Borrower or any of its Subsidiaries shall fail
or neglect to perform, keep or observe any term, provision, condition, covenant,
agreement, warranty or representation contained in this Agreement or any other
Loan Document, and such failure shall not be cured within any applicable grace
period provided for therein; or
(d) Insolvency Proceeding. Borrower or any of its Subsidiaries shall become
insolvent or shall fail generally to pay its Indebtedness as such Indebtedness
becomes due; or an Insolvency Proceeding shall be commenced by or against
Borrower or any of its Subsidiaries and, in the case of an involuntary petition
against Borrower or any of its Subsidiaries, such petition shall not be
dismissed or discharged within ninety (90) days of commencement; or
(e) Dissolution or Liquidation. Borrower or any of its Subsidiaries shall
voluntarily dissolve, liquidate or suspend its business in whole or in part; or
there shall be commenced against Borrower or any of its Subsidiaries any
proceeding for the dissolution or liquidation of Borrower or such Subsidiary and
such proceeding shall not be dismissed or discharged within sixty (60) days of
commencement; or
(f) Appointment of Receiver. Borrower or any of its Subsidiaries shall
apply for or consent to the appointment, or commence any proceeding for the
appointment, of a receiver, trustee, custodian or similar official for all or
substantially all of its property; or any proceeding for the appointment of a
receiver, trustee, custodian or similar official for all or substantially all of
the property of Borrower or any of its Subsidiaries shall be commenced against
Borrower or such Subsidiary and shall not be dismissed or discharged within
sixty (60) days of commencement; or
(g) Judgments and Attachments. Borrower or any of its Subsidiaries, or any
of their respective properties shall suffer any money judgment, writ, warrant of
attachment or similar process involving the payment of money in excess of Five
Hundred Thousand Dollars ($500,000) and such judgment, writ, warrant of
attachment or similar process shall remain undischarged in accordance with its
terms and the enforcement thereof shall be unstayed and either (i) an
enforcement proceeding shall have been commenced and be pending by any creditor
thereon or (ii) there shall have been a period of sixty (60) consecutive
calendar days during which stays of such judgment, writ, warrant of attachment
or similar process, by reason of pending appeals or otherwise, were not in
effect; or
(h) Failure to Comply. Borrower or any of its Subsidiaries shall fail to
comply with any order, non-monetary judgment, injunction, decree, writ or demand
of any court or other public authority, and such order, non-monetary judgment,
injunction, decree, writ or demand shall continue unsatisfied and in effect for
a period of thirty (30) days without being vacated, discharged, satisfied or
stayed or bonded pending appeal; or
(i) Notice Regarding Taxes. A notice of levy, notice to withhold or other
legal process for taxes (other than property taxes) shall be filed or recorded
against Borrower or any of its Subsidiaries, or against the property of Borrower
or any of its Subsidiaries, and such notice or other legal process shall not be
released, stayed, vacated, bonded or otherwise dismissed within sixty (60) days
after the date of its filing or recording; or
(j) Borrower Change of Control. Subordinating Creditor shall at any time
cease to be the owner of at least twenty percent (20%) of the issued and
outstanding common stock of Borrower; or
(k) Breach of Any Loan Document. Any Loan Document shall be breached or
become ineffective, or Borrower or any of its Subsidiaries shall disavow or
attempt to revoke or terminate any Loan Document to which it is a party; or
(l) Default Under Other Agreements. Borrower or any of its Subsidiaries
shall (i) fail under any agreement, document or instrument to pay the principal,
or any principal installment, of any present or future Indebtedness for borrowed
money of Five Hundred Thousand Dollars ($500,000) or more, or any guaranty of
present or future Indebtedness for borrowed money of Five Hundred Thousand
Dollars ($500,000) or more, when due (or within any stated grace period),
whether at the stated maturity, upon acceleration, by reason of required
prepayment or otherwise or (ii) fail to perform or observe any other term,
covenant or other provision of any agreement, document or instrument binding
upon Borrower or such Subsidiary if, as a result of such failure, any Person has
the right to accelerate the indebtedness of Borrower or such Subsidiary in an
amount in excess of Five Hundred Thousand Dollars ($500,000) or otherwise
require the payment of any amount in excess of Five Hundred Thousand Dollars
($500,000) to be paid prior to the date when such amount would otherwise become
due; or
(m) Insecurity. A material deterioration in the financial condition of
Borrower or any of its Subsidiaries shall occur which results in Bank deeming
itself, in good faith, insecure.
8.2 Remedies. Upon the occurrence of an Event of Default, unless such Event
of Default shall have been remedied or waived in writing by Bank, Bank may, at
its option, without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived, do one or more of the following at any time
or times and in any order: (a) reduce the amount of or refuse to make any Loan
under this Agreement; (b) declare any and all Obligations outstanding under this
Agreement to be immediately due and payable, notwithstanding anything contained
herein or in any Note or other Loan Document to the contrary (provided, however,
that upon the occurrence of any Event of Default described in Section 8.1(d),
(e) or (f) hereof, all Obligations shall automatically become due and payable);
and (c) enforce payment of all Obligations of Borrower under this Agreement and
the other Loan Documents. Notwithstanding anything to the contrary contained
herein, Bank shall have no obligation to make any Loan to Borrower during any
cure period provided for in Section 8.1 hereof.
SECTION 9. MISCELLANEOUS PROVISIONS
9.1 Additional Remedies. The rights, powers and remedies given to Bank
hereunder shall be cumulative and not alternative and shall be in addition to
all rights, powers and remedies given to Bank by law against Borrower or any
other Person, including but not limited to Bank's rights of setoff or banker's
lien.
9.2 Nonwaiver. Any forbearance or failure or delay by Bank in exercising
any right, power or remedy hereunder shall not be deemed a waiver thereof and
any single or partial exercise of any right, power or remedy shall not preclude
the further exercise thereof. No waiver shall be effective unless it is in
writing and signed by an officer of Bank.
9.3 Inurement. The benefits of this Agreement shall inure to the successors
and assigns of Bank and the permitted successors and assigns of Borrower.
Borrower shall not assign any of its rights or obligations under this Agreement
to any Person without Bank's prior written consent, and any assignment attempted
without Bank's prior written consent shall be void.
9.4 Applicable Law; Jurisdiction. This Agreement and all other Loan
Documents shall be governed and construed in accordance with the laws of the
State of California. Borrower and Bank hereby submit to the jurisdiction of any
court having jurisdiction in the matter in accordance with the Alternative
Dispute Resolution Agreement executed by and between Borrower and Bank.
9.5 Severability. Should any one or more provisions of this Agreement be
determined to be illegal or unenforceable, all other provisions nevertheless
shall be effective.
9.6 Integration Clause. Except for the other Loan Documents to which
Borrower is a party, this Agreement constitutes the entire agreement between
Bank and Borrower, and all prior communications, whether verbal or written,
between Borrower and Bank shall be of no further effect or evidentiary value.
9.7 Construction. The Section and subsection headings herein are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
9.8 Amendments. This Agreement may be amended only in writing signed by all
parties hereto.
9.9 Documentation. All documentation evidencing or pertaining to the
Obligations under this Agreement and the other Loan Documents shall be on Bank's
standard forms or otherwise in form and content acceptable to Bank. To the
extent that the terms or conditions of this Agreement are inconsistent with the
terms or conditions of such documentation, the terms and conditions of this
Agreement shall prevail.
9.10 Counterparts. This Agreement may be executed in as many counterparts
as may be deemed necessary or convenient, and by the different parties hereto on
separate counterparts each of which, when so executed, shall be deemed an
original but all such counterparts shall constitute but one and the same
agreement. This Agreement shall become effective upon the receipt by Bank and
Borrower of executed counterparts signed by each of them.
9.11 Setoff. Borrower hereby acknowledges and specifically grants Bank a
security interest in, banker's lien upon, and right of recoupment and setoff
respecting any and all deposit or other accounts maintained by Borrower with
Bank, whether held in a general or special account or deposited for safekeeping
or otherwise, and regardless of how such account may be titled, and any other
property of Borrower held in the possession or custody of Bank or its agents.
Borrower further acknowledges that the exercise of setoff, if any, shall
require, and only be deemed to occur upon, the affirmative action of Bank. Bank
agrees to notify Borrower promptly after any such setoff and application;
provided, however, that the failure to give such notice shall not affect the
validity of such setoff and application.
SECTION 10. NOTICES
10.1 Notices. Any notice or other communication provided for or allowed
hereunder shall be considered to have been validly given if delivered
personally, and evidenced by a receipt signed by an authorized agent or
addressee, or 72 hours after being deposited in the United States mail,
registered or certified, postage prepaid, return receipt requested, or 48 hours
after being sent by Federal Express or other courier service, or, in the case of
telecopied notice, when telecopied, receipt acknowledged, and addressed as
provided below.
If to Borrower: Diodes Incorporated
0000 Xxxx Xxxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx Xxxxx
Chief Financial Officer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to: Xxxxxxxxx & Xxxxx
0000 Xxxxxx Xxxxxxxxx, Xxxxxxxx 0, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to Bank: Union Bank of California, N.A.
Commercial Banking Group--Greater Los Angeles Division
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxx
Vice President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
10.2 Change of Address. The addresses to which notices or demands are to be
given may be changed from time to time by notice served as provided above.
THIS AGREEMENT is duly executed on behalf of the parties hereto as of the
date first above written.
"Borrower"
DIODES INCORPORATED
By: /s/ Xxxx Xxxxx
Xxxx Xxxxx
Chief Financial Officer
"Bank"
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Xxxx X. Xxxx
Xxxx X. Xxxx
Vice President
