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EXHIBIT 10.12
CREDIT AGREEMENT
THIS AGREEMENT is entered into as of the 1st day of November, 1995, by
and between DIODES INCORPORATED, a Delaware corporation ("Borrower"), and WELLS
FARGO BANK, NATIONAL ASSOCIATION ("Bank").
RECITAL
Borrower has requested from Bank the credit accommodation described
below, and Bank has agreed to provide said credit accommodation to Borrower on
the terms and conditions contained herein.
NOW, THEREFORE, Bank and Borrower hereby agree as follows:
ARTICLE I
THE CREDIT
SECTION 1.1. LINE OF CREDIT.
(a) Line of Credit. Subject to the terms and conditions of this
Agreement, Bank hereby agrees to make advances to Borrower from time to time up
to and including November 1, 1996, not to exceed at any time the aggregate
principal amount of TEN MILLION DOLLARS ($10,000,000.00) ("Line of Credit"),
the proceeds of which shall be used to finance Borrower's working capital
requirements. Borrower's obligation to repay advances under the Line of Credit
shall be evidenced by a promissory note substantially in the form of Exhibit
"A" attached hereto ("Line of Credit Note"), all terms of which are
incorporated herein by this reference.
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(b) Borrowing and Repayment. Borrower may from time to time
during the term of the Line of Credit borrow, partially or wholly repay its
outstanding borrowings, and reborrow, subject to all the limitations, terms and
conditions contained herein or in the Line of Credit Note; provided however,
that the total outstanding borrowings under the Line of Credit shall not at any
time exceed the maximum principal amount available thereunder, as set forth
above.
(c) Letter of Credit Subfeature. As a subfeature under the Line of
Credit, Bank agrees from time to time up to and including November 1, 1996, to
issue sight commercial letters of credit for the account of Borrower and in
favor of Borrower's various suppliers to finance the purchase of inventory
(each, a "Letter of Credit" and collectively, "Letters of Credit"); provided
however, that the form and substance of each Letter of Credit shall be subject
to approval by Bank, in its sole discretion; and provided further, that the
aggregate undrawn amount of all outstanding Letters of Credit shall not at any
time exceed FOUR MILLION FIVE HUNDRED THOUSAND DOLLARS ($4,500,000.00). Each
Letter of Credit shall be issued for a term not to exceed one hundred
eighty(180) days, as designated by Borrower; provided however, that no Letter
of Credit shall have an expiration date subsequent to November 1, 1996. The
undrawn amount of all Letters of Credit shall be reserved under the Line of
Credit and shall not be available for advances thereunder. Each Letter of
Credit shall be subject to the additional terms and conditions of the Letter of
Credit Agreement and related documents, if any, required by Bank in connection
with the issuance thereof (each, a "Letter of Credit Agreement" and
collectively, "Letter of Credit Agreements"). Each draft paid by Bank under a
Letter of Credit shall be deemed an advance under the Line of Credit and shall
be repaid by Borrower in accordance with the terms and conditions of this
Agreement applicable to such advances; provided however, that if the Line of
Credit is not available, for any reason
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whatsoever, at the time any draft is paid by Bank, or if advances are not
available under the Line of Credit at such time due to any limitation on
borrowings set forth herein, then the full amount of such draft shall be
immediately due and payable, together with interest thereon, from the date such
amount is paid by Bank to the date such amount is fully repaid by Borrower, at
the rate of interest applicable to advances under the Line of Credit. In such
event, Borrower agrees that Bank, at Bank's sole discretion, may debit
Borrower's deposit account with Bank for the amount of any such draft.
(d) Borrowing Base. Upon the occurrence of any of the following:
(i) Tangible Net Worth (as defined in Section 4.8(a) hereof)
shall at any time fall below $10,000,000.00, or
(ii) Total Liabilities (as defined in Section 4.8(b) hereof)
divided by Tangible Net Worth (as defined in Section 4.8(a) hereof) shall at
any time be greater than 1.50 to 1.00; or; (iii) Quick Ratio (as defined in
Section 4.8 (c) hereof) shall at any time fall below 0.80 to 1.00;
Borrower shall promptly upon demand by Bank execute a Security Agreement
(Rights to Payment) and UCC-1 Financing, in the form of Exhibits A-1 and A-2
respectively, whereby Borrower shall grant to Bank a first priority security
interest in the collateral described in such Security Agreement, and the
following provisions shall become operative at Bank's sole option and upon
Bank's written notice to Borrower:
"The aggregate amount of all outstanding liabilities under the Line of
Credit shall not at any time exceed a maximum of eighty percent (80%) of
Borrower's assigned eligible accounts receivable, as determined by Bank upon
receipt and review of such collateral reports and other documents as Bank may
require.
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Borrower acknowledges that the foregoing advance rate against eligible
accounts receivable was established by Bank with the understanding that, among
other items, the aggregate of all returns, rebates, discounts, credits and
allowances for the immediately preceding three (3) months at all times shall be
less than five percent (5%) of Borrower's gross sales for said period. If such
dilution of Borrower's accounts for the immediately preceding three (3) months
at any time exceeds five percent (5%) of Borrower's gross sales for said
period, or if there at any time exists any other matters, events, conditions or
contingencies which Bank reasonably believes may affect payment of any portion
of Borrower's accounts, Bank, in its sole discretion, may reduce said advance
rate to a percentage appropriate to reflect such additional dilution and/or
establish additional reserves against Borrower's eligible accounts receivable.
As used herein, "eligible accounts receivable" shall consist solely of
trade accounts which have been created in the ordinary course of Borrower's
business and upon which Borrower's right to receive payment is absolute and not
contingent upon the fulfillment of any condition whatsoever, and shall not
include:
(i) any account which is past due more than twice
Borrower's standard selling terms; except with respect to any account for which
Borrower has provided extended payment terms not to exceed one hundred eighty
(180) days, any such account which is more than thirty (30) days past due;
(ii) any account for which there exists any right of
setoff, defense or discount (except regular discounts allowed in the ordinary
course of business to promote prompt payment) or for which any defense or
counterclaim has been asserted;
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(iii) any account which represents an obligation of any
state or municipal government or of the United States government or any
political subdivision thereof (except accounts which represent obligations of
the United States government and for which Bank's forms N-138 and N-139 have
been duly executed and acknowledged;
(iv) any account which represents an obligation of an
account debtor located in a foreign country except those jurisdictions in
Canada which recognize perfection in accounts receivable by filing a UCC-1 in
California;
(v) any account which arises from the sale or lease to or
performance of services for, or represents an obligation of, an employee,
affiliate, partner, parent or subsidiary of Borrower;
(vi) that portion of any account which represents interim
or progress billings or retention rights on the part of the account debtor;
(vii) any account which represents an obligation of any
account debtor when twenty percent (20%) or more of Borrower's accounts from
such account debtor are not eligible pursuant to (i) above;
(viii) that portion of any account from an account debtor
which represents the amount by which Borrower's total accounts from said
account debtor exceeds twenty-five percent (25%) of Borrower's total accounts;
(ix) any account deemed ineligible by Bank when Bank, in
its sole discretion, deems the creditworthiness or financial condition of the
account debtor, or the industry in which the account debtor is engaged, to be
unsatisfactory."
Nothing in this Section (d) shall be deemed to impair or restrict
Bank's rights and remedies under Section 6 herein in the event of a violation
of Sections 4.8(a) or 4.8(b).
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SECTION 1.2. TERM COMMITMENT.
(a) Term Commitment. Subject to the terms and conditions of this
Agreement, Bank hereby agrees to make advances to Borrower from time to time up
to and including November 1, 1996, not to exceed the aggregate principal amount
of FOUR MILLION DOLLARS ($4,000,000.00) ("Term Commitment"), the proceeds of
which shall be used to assist with capital financing of a factory in China, and
which shall be converted on November 1, 1996, to a term loan, as described more
fully below. Borrower's obligation to repay advances under the Term Commitment
shall be evidenced by a promissory note substantially in the form of Exhibit
"B" attached hereto ("Term Commitment Note"), all terms of which are
incorporated herein by this reference. Notwithstanding any other provision of
this Agreement, the aggregate amount of all outstanding borrowings under the
Term Commitment shall not at any time exceed a maximum of FOUR MILLION DOLLARS
($4,000,000.00).
(b) Borrowing and Repayment. Borrower may from time to time
during the period in which Bank will make advances under the Term Commitment
borrow and partially or wholly repay its outstanding borrowings, provided that
amounts repaid may not be reborrowed, subject to all the limitations, terms and
conditions contained herein; provided however, that the total outstanding
borrowings under the Term Commitment shall not at any time exceed the maximum
principal amount available thereunder, as set forth above. The outstanding
principal balance of the Term Commitment shall be due and payable in full on
November 1, 2001; provided however, that so long as Borrower is in compliance
on said date with all terms and conditions contained herein and in any other
documents evidencing the Term Commitment, Bank agrees to restructure repayment
of the outstanding principal balance of the Term Commitment.
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(c) Prepayment. Borrower may prepay principal on the Term
Commitment at any time, in any amount and without penalty. All prepayments
shall be applied on the most remote principal installment(s) then unpaid.
SECTION 1.3. INTEREST/FEES.
(a) Interest. The outstanding principal balances of the
Line of Credit and Term Commitment shall bear interest at the rates of interest
set forth in the Line of Credit Note and Term Commitment Note respectively.
(b) Computation and Payment. Interest shall be computed on the
basis of a 360-day year, actual days elapsed. Interest shall be payable at the
times and place set forth in the Line of Credit Note and Term Commitment Note.
(c) Letter of Credit Fees. Borrower shall pay to Bank fees upon the
issuance or amendment of each Letter of Credit and upon the payment by Bank of
each draft under any Letter of Credit determined in accordance with Bank's
standard fees and charges in effect at the time any Letter of Credit is issued
or amended or any draft is paid. A current listing of fees in effect as of the
date of this Agreement is attached hereto as Exhibit "C".
SECTION 1.4. PAYMENT OF INTEREST/FEES. Bank shall, and Borrower
hereby authorizes Bank to, debit any demand deposit account of Borrower with
Bank for all payments of interest and fees as they become due on the Line of
Credit and Term Commitment. Should, for any reason whatsoever, the funds in
any such demand deposit account be insufficient to pay all interest and/or fees
when due, Borrower shall immediately upon demand remit to Bank the full amount
of any such deficiency.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties to Bank,
which representations and warranties shall survive the execution of this
Agreement and shall continue in full force and effect until the full and final
payment, and satisfaction and discharge, of all obligations of Borrower to Bank
subject to this Agreement.
SECTION 2.1. LEGAL STATUS. Borrower is a corporation duly
organized and existing and in good standing under the laws of the State of
Delaware, and is qualified or licensed to do business, and is in good standing
as a foreign corporation, if applicable, in all jurisdictions in which such
qualification or licensing is required or in which the failure to so qualify or
to be so licensed could have a material adverse effect on Borrower.
SECTION 2.2. AUTHORIZATION AND VALIDITY. This Agreement, the Line
of Credit Note and Term Commitment Note, and each other document, contract and
instrument required by or at any time delivered to Bank in connection with this
Agreement (with all of the foregoing referred to herein collectively as the
"Loan Documents") have been duly authorized, and upon their execution and
delivery in accordance with the provisions hereof will constitute legal, valid
and binding agreements and obligations of Borrower or the party which executes
the same, enforceable in accordance with their respective terms.
SECTION 2.3. NO VIOLATION. The execution, delivery and
performance by Borrower of each of the Loan Documents do not violate any
provision of any law or regulation, or contravene any provision of the Articles
of Incorporation or By-Laws of Borrower, or result in a breach of or constitute
a default under any contract, obligation, indenture or other instrument to
which Borrower is a party or by which Borrower may be bound.
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SECTION 2.4. LITIGATION. There are no pending, or to the best of
Borrower's knowledge threatened, actions, claims, investigations, suits or
proceedings before any governmental authority, arbitrator, court or
administrative agency which may adversely affect the financial condition or
operation of Borrower other than those disclosed by Borrower to Bank in writing
prior to the date hereof.
SECTION 2.5. CORRECTNESS OF FINANCIAL STATEMENT. The financial
statement of Borrower dated December 31, 1994, heretofore delivered by Borrower
to Bank is complete and correct and presents fairly the financial condition of
Borrower; discloses all liabilities of Borrower that are required to be
reflected or reserved against under generally accepted accounting principles,
whether liquidated or unliquidated, fixed or contingent; and has been prepared
in accordance with generally accepted accounting principles consistently
applied. Since the date of such financial statement there has been no material
adverse change in the financial condition of Borrower, nor has Borrower
mortgaged, pledged or granted a security interest in or encumbered any of its
assets or properties except as disclosed by Borrower to Bank in writing prior
to the date hereof or as permitted by this Agreement.
SECTION 2.6. INCOME TAX RETURNS. Borrower has no knowledge of any
pending assessments or adjustments of its income tax payable with respect to
any year.
SECTION 2.7. NO SUBORDINATION. There is no agreement, indenture,
contract or instrument to which Borrower is a party or by which Borrower may be
bound that requires the subordination in right of payment of any of Borrower's
obligations subject to this Agreement to any other obligation of Borrower.
SECTION 2.8. PERMITS, FRANCHISES. Borrower possesses, and will
hereafter possess, all permits, memberships, franchises, contracts and licenses
required and all trademark
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rights, trade names, trade name rights, patents, patent rights and fictitious
name rights necessary to enable it to conduct the business in which it is now
engaged without conflict with the rights of others.
SECTION 2.9. ERISA. To the best of the Borrowers knowledge, based
on Borrower s due diligence, Borrower is in compliance in all material
respects with all applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended from time to time (ERISA); Borrower has not
violated any provision of any defined employee pension benefit plan (as defined
in ERISA) maintained or contributed to by Borrower (each, a "Plan"); no
Reportable Event as defined in ERISA has occurred and is continuing with
respect to any Plan initiated by Borrower; Borrower has met its minimum funding
requirements under ERISA with respect to each Plan; and each Plan will be able
to fulfill its benefit obligations as they come due in accordance with the Plan
documents and under generally accepted accounting principles.
SECTION 2.10. OTHER OBLIGATIONS. Borrower is not in default on any
obligation for borrowed money, any purchase money obligation or any other
material lease, commitment, contract, instrument or obligation.
SECTION 2.11. ENVIRONMENTAL MATTERS. Except as disclosed by
Borrower to Bank in writing prior to the date hereof, Borrower is in compliance
in all material respects with all applicable environmental, hazardous waste,
health and safety statutes and regulations governing its operations and/or
properties, including without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (CERCLA), the Superfund
Amendments and
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Reauthorization Act of 1986 (SARA), the Federal Resource Conservation and
Recovery Act of 1976, the Federal Toxic Substances Control Act and the
California Health and Safety Code. None of the operations of Borrower is the
subject of any federal or state investigation evaluating whether any remedial
action involving a material expenditure is needed to respond to a release of
any toxic or hazardous waste or substance into the environment. Borrower has
no material contingent liability in connection with any release of any toxic or
hazardous waste or substance into the environment.
ARTICLE III
CONDITIONS
SECTION 3.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT. The
obligation of Bank to extend any credit contemplated by this Agreement is
subject to the fulfillment to Bank's satisfaction of all of the following
conditions:
(a) Approval of Bank Counsel. All legal matters incidental to the
extension of credit by Bank shall be satisfactory to counsel of Bank.
(b) Documentation. Bank shall have received, in form and substance
satisfactory to Bank, each of the following, duly executed:
(i) This Agreement, Line of Credit Note, and Term Commitment Note;
(ii) Corporate Borrowing Resolution;
(iii) Continuing Commercial Letter of Credit Agreement;
(iv) Certificate of Incumbency.
(c) Financial Condition. There shall have been no material
adverse change, as determined by Bank, in the financial condition or business
of Borrower, nor any material decline, as determined by Bank, in the market
value of any collateral required hereunder or a substantial or material portion
of the assets of Borrower.
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SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT. The
obligation of Bank to make each extension of credit requested by Borrower
hereunder shall be subject to the fulfillment to Bank's satisfaction of each of
the following conditions:
(a) Compliance. The representations and warranties contained
herein shall be true on and as of the date of the signing of this Agreement and
on the date of each extension of credit by Bank pursuant hereto, with the same
effect as though such representations and warranties had been made on and as of
each such date, and on each such date, no Event of Default as defined herein,
and no condition, event or act which with the giving of notice or the passage
of time or both would constitute such an Event of Default, shall have occurred
and be continuing or shall exist.
(b) Documentation. Bank shall have received all additional
documents which may be required in connection with such extension of credit.
ARTICLE IV
AFFIRMATIVE COVENANTS
Borrower covenants that so long as Bank remains committed to extend
credit to Borrower pursuant to the terms of this Agreement or any liabilities
(whether direct or contingent, liquidated or unliquidated) of Borrower to Bank
under any of the Loan Documents remain outstanding, and until payment in full
of all obligations of Borrower subject hereto, Borrower shall:
SECTION 4.1. PUNCTUAL PAYMENTS. Punctually pay the interest and
principal on each of the Loan Documents requiring any such payments at the
times and place and in the manner specified therein, and any fees or other
liabilities due under any of the Loan Documents at the times and place and in
the manner specified therein, and immediately upon demand by Bank, the
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amount by which the outstanding principal balance of the Line of Credit and
Term Commitment are at any time in excess of any limitation on borrowings
hereunder.
SECTION 4.2. ACCOUNTING RECORDS. Maintain adequate books and
records in accordance with generally accepted accounting principles
consistently applied, and permit any representative of Bank, at any reasonable
time, to inspect, audit and examine such books and records, to make copies of
the same, and to inspect the properties of Borrower.
SECTION 4.3. FINANCIAL STATEMENTS. Provide to Bank all of the
following, in form and detail satisfactory to Bank:
(a) not later than 90 days after and as of the end of each fiscal
year, an unqualified audited financial statement of Borrower, prepared by
certified public accountant, to include balance sheet and income statement;
(b) not later than 90 days after and as of the end of each fiscal
year a copy of Form 10-K, annual report pursuant to Section 13 or 15(d) of The
Securities Exchange Commission Act of 1934;
(c) not later than 60 days after and as of the end of each
quarter, a copy of Form 10-Q, quarterly report pursuant Section 13 or 15(d) of
The Securities Exchange Commission Act of 1934;
(d) from time to time such other information as Bank may
reasonably request.
SECTION 4.4. COMPLIANCE. Maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; conduct its business in an orderly and regular manner;
and comply with the provisions of all documents pursuant to which Borrower is
organized and/or which govern Borrower's continued existence and with the
requirements of all laws, rules, regulations and orders of any governmental
authority applicable to Borrower or its business.
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SECTION 4.5. FACILITIES. Keep all Borrower's properties useful or
necessary to Borrower's business in good repair and condition, and from time to
time make necessary repairs, renewals and replacements thereto so that
Borrower's properties shall be fully and efficiently preserved and maintained.
SECTION 4.6. TAXES AND OTHER LIABILITIES. Pay and discharge when
due any and all indebtedness, obligations, assessments and taxes, both real or
personal and including federal and state income taxes, except such as Borrower
may in good faith contest or as to which a bona fide dispute may arise,
provided provision is made to the satisfaction of Bank for eventual payment
thereof in the event that it is found that the same is an obligation of
Borrower.
SECTION 4.7. LITIGATION. Promptly give notice in writing to Bank
of any litigation pending or threatened against Borrower in excess of
$500,000.00.
SECTION 4.8. FINANCIAL CONDITION. Maintain Borrower's financial
condition as follows using generally accepted accounting principles
consistently applied and used consistently with prior practices, except to the
extent modified by the following definitions:
(a) Tangible Net Worth not less than $9,000,000.00 determined at
and as of each fiscal quarter end, with "Tangible Net Worth" defined as the
aggregate of total stockholders' equity plus subordinated debt less any
intangible assets.
(b) Total Liabilities divided by Tangible Net Worth not greater
than 2.5 to 1.0 determined at and as of each fiscal quarter end, with "Total
Liabilities" defined as the aggregate of current liabilities and non-current
liabilities less subordinated debt, and with "Tangible Net Worth" as defined
above.
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(c) Quick Ratio- Not less than 0.60 to 1.00, determined at and as of
each fiscal quarter end, with Quick Ratio defined as cash, cash equivalents and
accounts receivables divided by Current Liabilities.
(d) Profitable operations on an annual basis, determined as of each
fiscal year-end.
(e) EBITDA Coverage Ratio not less than 1.5 to 1.0 as of each
fiscal year end, with "EBITDA" defined as net profit before tax plus interest
expense (net of capitalized interest expense), depreciation expense and
amortization expense, and with "EBITDA Coverage Ratio" defined as EBITDA
divided by the aggregate of total interest expense plus the prior period
current maturity of long-term debt and the prior period current maturity of
subordinated debt.
SECTION 4.9. NOTICE TO BANK. Promptly (but in no event more than
fifteen(15) days after the occurrence of each such event or matter) give
written notice to Bank in reasonable detail of: (a) the occurrence of any
Event of Default, or any condition, event or act which with the giving of
notice or the passage of time or both would constitute such an Event of
Default; (b) any change in the name or the organizational structure of
Borrower; (c) the occurrence and nature of any Reportable Event or Prohibited
Transaction, each as defined in ERISA, or any funding deficiency with respect
to any Plan; or (d) any termination or cancellation of any insurance policy
which Borrower is required to maintain, or any uninsured or partially uninsured
loss through liability or property damage, or through fire, theft or any other
cause affecting Borrower's property in excess of an aggregate of $200,000.00.
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ARTICLE V
NEGATIVE COVENANTS
Borrower further covenants that so long as Bank remains committed to
extend credit to Borrower pursuant to the terms of this Agreement or any
liabilities (whether direct or contingent, liquidated or unliquidated) of
Borrower to Bank under any of the Loan Documents remain outstanding, and until
payment in full of all obligations of Borrower subject hereto, Borrower will
not without the prior written consent of Bank:
SECTION 5.1. USE OF FUNDS. Use any of the proceeds of the Line of
Credit and the Term Commitment except for the purposes stated in Article I.
SECTION 5.2. OTHER INDEBTEDNESS. Create, incur, assume or permit
to exist any indebtedness or liabilities resulting from borrowings, loans or
advances, whether secured or unsecured, matured or unmatured, liquidated or
unliquidated, joint or several, except the liabilities of Borrower to Bank and
any other liabilities of Borrower existing as of, and disclosed to Bank prior
to, the date hereof.
SECTION 5.3. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge
into or consolidate with any corporation or other entity; make any substantial
change in the nature of Borrower's business; acquire all or substantially all
of the assets of any corporation or other entity; nor sell, lease, transfer or
otherwise dispose of all or a substantial or material part of its assets except
in the ordinary course of business.
SECTION 5.4. GUARANTIES. Guarantee or become liable in any way as
surety, endorser (other than as endorser of negotiable instruments for deposit
or collection in the ordinary course of business), accommodation endorser or
otherwise for, nor pledge or hypothecate any assets of Borrower as security
for, any liabilities or obligations of any other person or entity.
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SECTION 5.5. LOANS, ADVANCES, INVESTMENTS. Make any loans or
advances to or investments in any person or entity, in excess of $4,500,000.00
in the aggregate.
SECTION 5.6. DIVIDENDS, DISTRIBUTIONS. Declare or pay any
dividend or distribution either in cash, stock or any other property on
Borrower's stock now or hereafter outstanding; provided however, that Borrower
may repurchase shares of any class of Borrower's stock so long as Borrower is
in compliance with all terms, covenants and conditions of this Agreement at the
time and following each such purchase.
SECTION 5.7. PLEDGE OF ASSETS. Mortgage, pledge, grant or permit
to exist a security interest in, or lien upon, any of its assets of any kind,
now owned or hereafter acquired, except any of the foregoing in favor of Bank.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1. The occurrence of any of the following shall
constitute an "Event of Default" under this Agreement:
(a) Borrower shall fail to pay when due any principal, interest,
fees or other amounts payable under any of the Loan Documents.
(b) Any financial statement or certificate furnished to Bank in
connection with this Agreement or any representation or warranty made by
Borrower hereunder shall prove to be false, incorrect or incomplete in any
material respect when furnished or made.
(c) Any default in the performance of or compliance with any
obligation, agreement or other provision contained herein (other than those
referred to in subsections (a) and (b) above), and
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with respect to any such default which by its nature can be cured, such default
shall continue for a period of twenty (20) days from its occurrence.
(d) Any default in the payment or performance of any obligation,
or any defined event of default, under the terms of any contract or instrument
(other than any of the Loan Documents) pursuant to which Borrower has incurred
any debt or other liability to any person or entity, including Bank.
(e) Any default in the payment or performance of any obligation,
or any defined event of default, under any of the Loan Documents other than
this Agreement.
(f) The filing of a notice of judgment lien against Borrower; or
the recording of any abstract of judgment against Borrower in any county in
which Borrower has an interest in real property; or the service of a notice of
levy and/or of a writ of attachment or execution, or other like process,
against the assets of Borrower; or the entry of a judgment against Borrower.
(g) Borrower shall become insolvent, or shall suffer or consent to
or apply for the appointment of a receiver, trustee, custodian or liquidator of
itself or any of its property, or shall generally fail to pay its debts as they
become due, or shall make a general assignment for the benefit of creditors;
Borrower shall file a voluntary petition in bankruptcy, or seeking
reorganization, in order to effect a plan or other arrangement with creditors
or any other relief under the Bankruptcy Reform Act, Title 11 of the United
States Code, as amended or recodified from time to time ("Bankruptcy Code"), or
under any state or federal law granting relief to debtors, whether now or
hereafter in effect; or any involuntary petition or proceeding pursuant to said
Bankruptcy Code or any other applicable state or federal law relating to
bankruptcy, reorganization or other relief for debtors is filed or commenced
against Borrower, or Borrower shall file an answer admitting the
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jurisdiction of the court and the material allegations of any involuntary
petition; or Borrower shall be adjudicated a bankrupt, or an order for relief
shall be entered by any court of competent jurisdiction under said Bankruptcy
Code or any other applicable state or federal law relating to bankruptcy,
reorganization or other relief for debtors.
(h) There shall exist or occur any event or condition which Bank
in good faith believes impairs, or is substantially likely to impair, the
prospect of payment or performance by Borrower of its obligations under any of
the Loan Documents.
(i) The dissolution or liquidation of Borrower or any of its
directors, stockholders or members, shall take action seeking to effect the
dissolution or liquidation of Borrower.
(j) Any change in ownership during the term of this Agreement of
an aggregate of twenty-five percent (25%) or more of the common stock of
Borrower.
SECTION 6.2. REMEDIES. If an Event of Default shall occur, (a)
any indebtedness of Borrower under any of the Loan Documents, any term thereof
to the contrary notwithstanding, shall at Bank's option, with respect to Event
of Default (g)without notice or, with respect to any other Event of Default
upon fifteen days prior written notice to Borrower, become immediately due and
payable without presentment, demand, protest or notice of dishonor, all of
which are hereby expressly waived by Borrower; (b) the obligation, if any, of
Bank to permit further borrowings hereunder shall immediately cease and
terminate; and (c) Bank shall have all rights, powers and remedies available
under each of the Loan Documents, or accorded by law, including without
limitation the right to resort to any or all security for any credit
accommodation from Bank subject hereto and to exercise any or all of the rights
of a beneficiary or secured party pursuant to applicable law. All rights,
powers and remedies of Bank in connection with each of the Loan Documents may
44
20
be exercised at any time by Bank and from time to time after the occurrence of
an Event of Default, are cumulative and not exclusive, and shall be in addition
to any other rights, powers or remedies provided by law or equity.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. NO WAIVER. No delay, failure or discontinuance of
Bank in exercising any right, power or remedy under any of the Loan Documents
shall affect or operate as a waiver of such right, power or remedy; nor shall
any single or partial exercise of any such right, power or remedy preclude,
waive or otherwise affect any other or further exercise thereof or the exercise
of any other right, power or remedy. Any waiver, permit, consent or approval
of any kind by Bank of any breach of or default under any of the Loan Documents
must be in writing and shall be effective only to the extent set forth in such
writing.
SECTION 7.2. NOTICES. All notices, requests and demands which any
party is required or may desire to give to any other party under any provision
of this Agreement must be in writing delivered to each party at the following
address:
BORROWER: DIODES INCORPORATED
3050 East Hillcrest Drive, Ste. #200
Westlake Village, California 91362
BANK: WELLS FARGO BANK, NATIONAL ASSOCIATION
6001 Topanga Canyon Blvd., Ste. #205
Woodland Hills, California 91367
45
21
or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit
in the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.
SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall
pay to Bank immediately upon demand the full amount of all costs and expenses,
including reasonable attorneys' fees (to include outside counsel fees and all
allocated costs of Bank's in-house counsel), incurred by Bank in connection
with (a)the enforcement of Bank's rights and/or the collection of any amounts
which become due to Bank under any of the Loan Documents, and(b) the
prosecution or defense of any action in any way related to any of the Loan
Documents, including without limitation any action for declaratory relief.
SECTION 7.4. SUCCESSORS, ASSIGNMENT. This Agreement shall be
binding on and inure to the benefit of the heirs, executors, administrators,
legal representatives, successors and assigns of the parties; provided however,
that Borrower may not assign or transfer its interest hereunder without the
prior written consent of Bank. Bank reserves the right to sell, assign,
transfer, negotiate or grant participation in all or any part of, or any
interest in, Bank's rights and benefits under each of the Loan Documents. In
connection therewith, Bank may disclose all documents and information which
Bank now has or may hereafter acquire relating to any credit extended by Bank
to Borrower, Borrower or its business, any Guarantor or the business of any
Guarantor, or any collateral required hereunder.
SECTION 7.5. ENTIRE AGREEMENT, AMENDMENT. This Agreement and each
other of the Loan Documents constitute the entire agreement between Borrower
and Bank with
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22
respect to any extension of credit by Bank subject hereto and supersede all
prior negotiations, communications, discussions and correspondence concerning
the subject matter hereof. This Agreement may be amended or modified only by a
written instrument executed by each party hereto.
SECTION 7.6. NO THIRD PARTY BENEFICIARIES. This Agreement is made
and entered into for the sole protection and benefit of the parties hereto and
their respective permitted successors and assigns, and no other person or
entity shall be a third party beneficiary of, or have any direct or indirect
cause of action or claim in connection with, this Agreement or any other of the
Loan Documents to which it is not a party.
SECTION 7.7. TIME. Time is of the essence of each and every
provision of this Agreement and each other of the Loan Documents.
SECTION 7.8. SEVERABILITY OF PROVISIONS. If any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or any
remaining provisions of this Agreement.
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SECTION 7.9. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of California, except to
the extent that Bank has greater rights or remedies under Federal law, whether
as a national bank or otherwise, in which case such choice of California law
shall not be deemed to deprive Bank of such rights and remedies as may be
available under Federal law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first written above.
DIODES INCORPORATED WELLS FARGO BANK, NATIONAL
ASSOCIATION
By: /s/ Pedro Morillas /s/ Nancy Clark
Assistant Vice President
Title: Executive Vice President
By: /s/ Joseph Liu
Title: VP Operations & CFO
48
24
EXHIBIT "A"
REVOLVING LINE OF CREDIT NOTE
$10,000,000.00 Woodland Hills, California
November 1, 1995
FOR VALUE RECEIVED, the undersigned DIODES INCORPORATED ("Borrower")
promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank")
at its office at Warner Ranch RCBO, 6001 Topanga Canyon Blvd., Suite #205,
Woodland Hills, California, or at such other place as the holder hereof may
designate, in lawful money of the United States of America and in immediately
available funds, the principal sum of Ten Million Dollars ($10,000,000.00), or
so much thereof as may be advanced and be outstanding, with interest thereon,
to be computed on each advance from the date of its disbursement (computed on
the basis of a 360-day year, actual days elapsed) either (i) at a fluctuating
rate per annum equal to Prime Rate in effect from time to time, or (ii) at a
fixed rate per annum determined by Bank to be one and one quarter percent
(1.25%) above Bank's LIBOR in effect on the first day of the applicable Fixed
Rate Term. When interest is determined in relation to the Prime Rate, each
change in the rate of interest hereunder shall become effective on the date
each Prime Rate change is announced within Bank. With respect to each LIBOR
option selected hereunder, Bank is hereby authorized to note the date,
principal amount, interest rate and Fixed Rate Term applicable thereto and any
payments made thereon on Bank's books and records (either manually or by
electronic entry) and/or on any schedule attached to this Note, which notations
shall be prima facie evidence of the accuracy of the information noted.
A. DEFINITIONS:
As used herein, the following terms shall have the meanings set forth
after each:
1. "Business Day" means any day except a Saturday, Sunday or any
other day designated as a holiday under Federal or California statute or
regulation.
2. "Fixed Rate Term" means a period commencing on a Business Day
and continuing for not less than thirty (30) days, as designated by Borrower,
during which all or a portion of the outstanding principal balance of this Note
bears interest determined in relation to Bank's LIBOR; provided however, that
no Fixed Rate Term may be selected for a principal amount less than Two Hundred
Fifty Thousand Dollars ($250,000.00); and provided further, that no Fixed Rate
Term shall extend beyond the scheduled maturity date hereof. If any Fixed Rate
Term would end on a day which is not a Business Day, then such Fixed Rate Term
shall be extended to the next succeeding Business Day.
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3. "LIBOR" means the rate per annum (rounded upward, if
necessary, to the nearest whole 1/8 of 1%) and determined pursuant to the
following formula:
LIBOR = Base LIBOR
-------------------------------
100% - LIBOR Reserve Percentage
(a) "Base LIBOR" means the rate per annum for United States dollar
deposits quoted by Bank as the Inter-Bank Market Offered Rate, with the
understanding that such rate is quoted by Bank for the purpose of calculating
effective rates of interest for loans making reference thereto, on the first
day of a Fixed Rate Term for delivery of funds on said date for a period of
time approximately equal to the number of days in such Fixed Rate Term and in
an amount approximately equal to the principal amount to which such Fixed Rate
Term applies. Borrower understands and agrees that Bank may base its quotation
of the Inter-Bank Market Offered Rate upon such offers or other market
indicators of the Inter-Bank Market as Bank in its discretion deems appropriate
including, but not limited to, the rate offered for U.S. dollar deposits on the
London Inter-Bank Market.
(b) "LIBOR Reserve Percentage" means the reserve percentage
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for "Eurocurrency Liabilities" (as defined in Regulation D of the
Federal Reserve Board, as amended), adjusted by Bank for expected changes in
such reserve percentage during the applicable Fixed Rate Term.
4. "Prime Rate" means at any time the rate of interest most
recently announced within Bank at its principal office in San Francisco as its
Prime Rate, with the understanding that the Prime Rate is one of Bank's base
rates and serves as the basis upon which effective rates of interest are
calculated for those loans making reference thereto, and is evidenced by the
recording thereof after its announcement in such internal publication or
publications as Bank may designate.
B. INTEREST:
1. Payment of Interest. Interest accrued on this Note shall be
payable on the first day of each month, commencing December 1, 1995.
2. Selection of Interest Rate Options. At any time any portion
of the outstanding principal balance of this Note bears interest determined in
relation to Bank's LIBOR, it may be continued by Borrower at the end of the
Fixed Rate Term applicable thereto so that it bears interest determined in
relation to the Prime Rate or in relation to Bank's LIBOR for a new Fixed Rate
Term designated by Borrower. At any time any portion of the outstanding
principal balance of this Note bears interest determined in relation to the
Prime Rate, Borrower may convert all or a portion thereof so that it bears
interest determined in relation to Bank's LIBOR for a Fixed Rate Term
designated by Borrower. At the time each advance is requested hereunder or
Borrower wishes to select the LIBOR option for all or a portion of the
outstanding principal balance hereof, and at the end of each Fixed Rate Term,
Borrower shall give Bank notice specifying (a) the interest rate option
selected by Borrower, (b) the principal amount subject thereto, and (c) if the
LIBOR option is
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26
selected, the length of the applicable Fixed Rate Term. Any such notice may be
given by telephone so long as, with respect to each LIBOR option selected by
Borrower, (i) Bank receives written confirmation from Borrower not later than
three (3) Business Days after such telephone notice is given, and (ii) such
notice is given to Bank prior to 10:00 a.m., California time, on the first day
of the Fixed Rate Term. For each LIBOR option requested hereunder, Bank will
quote the applicable fixed rate to Borrower at approximately 10:00 a.m.,
California time, on the first day of the Fixed Rate Term. If Borrower does not
immediately accept the rate quoted by Bank, any subsequent acceptance by
Borrower shall be subject to a redetermination by Bank of the applicable fixed
rate; provided however, that if Borrower fails to accept any such rate by 11:00
a.m., California time, on the Business Day such quotation is given, then the
quoted rate shall expire and Bank shall have no obligation to permit a LIBOR
option to be selected on such day. If no specific designation of interest is
made at the time any advance is requested hereunder or at the end of any Fixed
Rate Term, Borrower shall be deemed to have made a Prime Rate interest
selection for such advance or the principal amount to which such Fixed Rate
Term applied.
3. Additional LIBOR Provisions.
(a) If Bank at any time shall determine that for any reason
adequate and reasonable means do not exist for ascertaining Bank's LIBOR, then
Bank shall promptly give notice thereof to Borrower. If such notice is given
and until such notice has been withdrawn by Bank, than (i) no new LIBOR option
may be selected by Borrower, and (ii) any portion of the outstanding principal
balance hereof which bears interest determined in relation to Bank's LIBOR,
subsequent to the end of the Fixed Rate Term applicable thereto, shall bear
interest determined in relation to the Prime Rate.
(b) If any law, treaty, rule, regulation or determination of a
court or governmental authority or any change therein or in the interpretation
or application thereof (each, a "Change in Law") shall make it unlawful for
Bank (i) to make LIBOR options available hereunder, or (ii) to maintain
interest rates based on Bank's LIBOR, then in the former event, any obligation
of Bank to make available such unlawful LIBOR options shall immediately be
canceled, and in the latter event, any such unlawful LIBOR-based interest rates
then outstanding shall be converted, at Bank's option, so that interest on the
portion of the outstanding principal balance subject thereto is determined in
relation to the Prime Rate; provided however, that if any such Change in Law
shall permit any LIBOR-based interest rates to remain in effect until the
expiration of the Fixed Rate Term applicable thereto, then such permitted
LIBOR-based interest rates shall continue in effect until the expiration of
such Fixed Rate Term. Upon the occurrence of any of the foregoing events,
Borrower shall pay to Bank immediately upon demand such amounts as may be
necessary to compensate Bank for any fines, fees, charges, penalties or other
costs incurred or payable by Bank as a result thereof and which are
attributable to any LIBOR options made available to Borrower hereunder, and any
reasonable allocation made by Bank among its operations shall be conclusive and
binding upon Borrower.
(c) If any Change in Law or compliance by Bank with any request or
directive (whether or not having the force of law) from any central bank or
other governmental authority shall:
51
27
(i) subject Bank to any tax, duty or other charge with respect to
any LIBOR options, or change the basis of taxation of payments to Bank of
principal, interest, fees or any other amount payable hereunder (except for
changes in the rate of tax on the overall net income of Bank); or
(ii) impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances or loans by,
or any other acquisition of funds by any office of Bank; or
(iii) impose on Bank any other condition;
and the result of any of the foregoing is to increase the cost to Bank of
making, renewing or maintaining any LIBOR options hereunder and/or to reduce
any amount receivable by Bank in connection therewith, then in any such case,
Borrower shall pay to Bank immediately upon demand such amounts as may be
necessary to compensate Bank for any additional costs incurred by Bank and/or
reductions in amounts received by Bank which are attributable to such LIBOR
options. In determining which costs incurred by Bank and/or reductions in
amounts received by Bank are attributable to any LIBOR options made available
to Borrower hereunder, any reasonable allocation made by Bank among its
operations shall be conclusive and binding upon Borrower.
4. Default Interest. From and after the maturity date of this
Note, or such earlier date as all principal owing hereunder becomes due and
payable by acceleration or otherwise, the outstanding principal balance of this
Note shall bear interest until paid in full at an increased rate per annum
(computed on the basis of a 360-day year, actual days elapsed) equal to four
percent (4%) above the rate of interest from time to time applicable to this
Note.
C. BORROWING AND REPAYMENT:
1. Borrowing and Repayment. Borrower may from time to time
during the term of this Note borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions of this Note and of any document executed in connection with this
Note; provided however, that the total outstanding borrowings under this Note
shall not at any time exceed the principal amount stated above. The unpaid
principal balance of this obligation at any time shall be the total amounts
advanced hereunder by the holder hereof less the amount of principal payments
made hereon by or for any Borrower, which balance may be endorsed hereon from
time to time by the holder. The outstanding principal balance of this Note
shall be due and payable in full on November 1, 1996.
2. Advances. Advances hereunder, to the total amount of the
principal sum stated above, may be made by the holder at the oral or written
request of (a) Pedro Morillas or Joseph Liu or Carl Wertz, any one acting
alone, who are authorized to request advances and direct the disposition of any
advances until written notice of the revocation of such authority is received
by the holder at the office designated above, or (b) any person, with respect
to advances deposited to the credit of any account of any Borrower with the
holder, which advances, when so deposited, shall be conclusively presumed to
have been made to or for the benefit of each Borrower regardless of the fact
that persons other than those authorized to request advances may have authority
to draw against
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such account. The holder shall have no obligation to determine whether any
person requesting an advance is or has been authorized by any Borrower.
3. Application of Payments. Each payment made on this Note shall
be credited first, to any interest then due and second, to the outstanding
principal balance hereof. All payments credited to principal shall be applied
first, to the outstanding principal balance of this Note which bears interest
determined in relation to the Prime Rate, if any, and second, to the
outstanding principal balance of this Note which bears interest determined in
relation to Bank's LIBOR, with such payments applied to the oldest Fixed Rate
Term first.
4. Prepayment.
(a) Prime Rate. Borrower may prepay principal on any portion of
this Note which bears interest determined in relation to the Prime Rate at any
time, in any amount and without penalty.
(b) LIBOR. Borrower may prepay principal on any portion of this
Note which bears interest determined in relation to Bank's LIBOR at any time
and in the minimum amount of Fifty Thousand Dollars ($50,000.00); provided
however, that if the outstanding principal balance of such portion of this Note
is less than said amount, the minimum prepayment amount shall be the entire
outstanding principal balance thereof. In consideration of Bank providing this
prepayment option to Borrower, or if any such portion of this Note shall become
due and payable at any time prior to the last day of the Fixed Rate Term
applicable thereto by acceleration or otherwise, Borrower shall pay to Bank
immediately upon demand a fee which is the sum of the discounted monthly
differences for each month from the month of prepayment through the month in
which such Fixed Rate Term matures, calculated as follows for each such month:
(i) Determine the amount of interest which would have accrued each
month on the amount prepaid at the interest rate applicable to such amount had
it remained outstanding until the last day of the Fixed Rate Term applicable
thereto.
(ii) Subtract from the amount determined in (i) above the amount of
interest which would have accrued for the same month on the amount prepaid for
the remaining term of such Fixed Rate Term at Bank's LIBOR in effect on the
date of prepayment for new loans made for such term and in a principal amount
equal to the amount prepaid.
(iii) If the result obtained in (ii) for any month is greater than
zero, discount that difference by Bank's LIBOR used in (ii) above.
Each Borrower acknowledges that prepayment of such amount will result in Bank
incurring additional costs, expenses and/or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses and/or
liabilities. Each Borrower, therefore, agrees to pay the above-described
prepayment fee and agrees that said amount represents a reasonable estimate of
the prepayment costs, expenses and/or liabilities of Bank. If Borrower fails
to pay any prepayment fee when due, the amount of such prepayment fee shall
thereafter bear interest until paid at a rate per annum two
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29
percent (2%) above the Prime Rate in effect from time to time (computed on the
basis of a 360-day year, actual days elapsed).
D. EVENTS OF DEFAULT:
This Note is made pursuant to and is subject to the terms and
conditions of that certain Credit Agreement between Borrower and Bank dated as
of November 1, 1995, as amended from time to time. Any default in the payment
or performance of any obligation, or any defined event of default, under said
Credit Agreement shall constitute an "Event of Default" under this Note.
E. MISCELLANEOUS:
1. Remedies. Upon the occurrence of any Event of Default, the
holder of this Note, at the holder's option, may declare all sums of principal
and interest outstanding hereunder to be immediately due and payable without
presentment, demand, protest or notice of dishonor, all of which are expressly
waived by each Borrower, and the obligation, if any, of the holder to extend
any further credit hereunder shall immediately cease and terminate. Each
Borrower shall pay to the holder immediately upon demand the full amount of all
payments, advances, charges, costs and expenses, including reasonable
attorneys' fees (to include outside counsel fees and all allocated costs of the
holder's in-house counsel), incurred by the holder in connection with the
enforcement of the holder's rights and/or the collection of any amounts which
become due to the holder under this Note, and the prosecution or defense of any
action in any way related to this Note, including without limitation, any
action for declaratory relief, and including any of the foregoing incurred in
connection with any bankruptcy proceeding relating to any Borrower.
2. Obligations Joint and Several. Should more than one person or
entity sign this Note as a Borrower, the obligations of each such Borrower
shall be joint and several.
3. Governing Law. This Note shall be governed by and construed
in accordance with the laws of the State of California, except to the extent
Bank has greater rights or remedies under Federal law, whether as a national
bank or otherwise, in which case such choice of California law shall not be
deemed to deprive Bank of any such rights and remedies as may be available
under Federal law.
DIODES INCORPORATED
By: /s/ Pedro Morillas
Title: Executive Vice President
By: /s/ Joseph Liu
Title: VP Operations & CFO
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EXHIBIT "B"
TERM COMMITMENT NOTE
$4,000,000.00 Woodland Hills, California
November 1, 1995
FOR VALUE RECEIVED, the undersigned DIODES INCORPORATED ("Borrower")
promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank")
at its office at Warner Ranch RCBO, 6001 Topanga Canyon Blvd., Suite #205,
Woodland Hills, California, or at such other place as the holder hereof may
designate, in lawful money of the United States of America and in immediately
available funds, the principal sum of Four Million Dollars ($4,000,000.00), or
so much thereof as may be advanced and be outstanding, with interest thereon,
to be computed on each advance from the date of its disbursement (computed on
the basis of a 360-day year, actual days elapsed) either (i) at a fluctuating
rate per annum equal to the Prime Rate in effect from time to time, or (ii) at
a fixed rate per annum determined by Bank to be one and one quarter percent
(1.25%) above Bank's LIBOR in effect on the first day of the applicable Fixed
Rate Term. When interest is determined in relation to the Prime Rate, each
change in the rate of interest hereunder shall become effective on the date
each Prime Rate change is announced within Bank. With respect to each LIBOR
option selected hereunder, Bank is hereby authorized to note the date,
principal amount, interest rate and Fixed Rate Term applicable thereto and any
payments made thereon on Bank's books and records (either manually or by
electronic entry) and/or on any schedule attached to this Note, which notations
shall be prima facie evidence of the accuracy of the information noted.
A. DEFINITIONS:
As used herein, the following terms shall have the meanings set forth
after each:
1. "Business Day" means any day except a Saturday, Sunday or any
other day designated as a holiday under Federal or California statute or
regulation.
2. "Fixed Rate Term" means a period commencing on a Business Day
and continuing for not less than thirty (30) days, nor more than five (5)
years, as designated by Borrower, during which all or a portion of the
outstanding principal balance of this Note bears interest determined in
relation to Bank's LIBOR; provided however, that no Fixed Rate Term may be
selected for a principal amount less than Two Hundred Fifty Thousand Dollars
($250,000.00); and provided further, that no Fixed Rate Term shall extend
beyond the scheduled maturity date hereof. If any Fixed Rate Term would end on
a day which is not a Business Day, then such Fixed Rate Term shall be extended
to the next succeeding Business Day.
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3. "LIBOR" means the rate per annum (rounded upward, if
necessary, to the nearest whole 1/8 of 1%) and determined pursuant to the
following formula:
LIBOR = Base LIBOR
-------------------------------
100% - LIBOR Reserve Percentage
(a) "Base LIBOR" means the rate per annum for United States dollar
deposits quoted by Bank as the Inter-Bank Market Offered Rate, with the
understanding that such rate is quoted by Bank for the purpose of calculating
effective rates of interest for loans making reference thereto, on the first
day of a Fixed Rate Term for delivery of funds on said date for a period of
time approximately equal to the number of days in such Fixed Rate Term and in
an amount approximately equal to the principal amount to which such Fixed Rate
Term applies. Borrower understands and agrees that Bank may base its quotation
of the Inter-Bank Market Offered Rate upon such offers or other market
indicators of the Inter-Bank Market as Bank in its discretion deems appropriate
including, but not limited to, the rate offered for U.S. dollar deposits on the
London Inter-Bank Market.
(b) "LIBOR Reserve Percentage" means the reserve percentage
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for "Eurocurrency Liabilities" (as defined in Regulation D of the
Federal Reserve Board, as amended), adjusted by Bank for expected changes in
such reserve percentage during the applicable Fixed Rate Term.
4. "Prime Rate" means at any time the rate of interest most
recently announced within Bank at its principal office in San Francisco as its
Prime Rate, with the understanding that the Prime Rate is one of Bank's base
rates and serves as the basis upon which effective rates of interest are
calculated for those loans making reference thereto, and is evidenced by the
recording thereof after its announcement in such internal publication or
publications as Bank may designate.
B. INTEREST:
1. Payment of Interest. Interest accrued on this Note shall be
payable on the first day of each month, commencing December 1, 1995.
2. Selection of Interest Rate Options. At any time any portion
of the outstanding principal balance of this Note bears interest determined in
relation to Bank's LIBOR, it may be continued by Borrower at the end of the
Fixed Rate Term applicable thereto so that it bears interest determined in
relation to the Prime Rate or in relation to Bank's LIBOR for a new Fixed Rate
Term designated by Borrower. At any time any portion of the outstanding
principal balance of this Note bears interest determined in relation to the
Prime Rate, Borrower may convert all or a portion thereof so that it bears
interest determined in relation to Bank's LIBOR for a Fixed Rate Term
designated by Borrower. At the time each advance is requested hereunder or
Borrower wishes to select the LIBOR option for all or a portion of the
outstanding principal balance hereof, and at the end of each Fixed Rate Term,
Borrower shall give Bank notice specifying (a) the interest rate option
56
32
selected by Borrower, (b) the principal amount subject thereto, and (c) if the
LIBOR option is selected, the length of the applicable Fixed Rate Term. Any
such notice may be given by telephone so long as, with respect to each LIBOR
option selected by Borrower, (i) Bank receives written confirmation from
Borrower not later than three (3) Business Days after such telephone notice is
given, and (ii) such notice is given to Bank prior to 10:00 a.m., California
time, on the first day of the Fixed Rate Term. For each LIBOR option requested
hereunder, Bank will quote the applicable fixed rate to Borrower at
approximately 10:00 a.m., California time, on the first day of the Fixed Rate
Term. If Borrower does not immediately accept the rate quoted by Bank, any
subsequent acceptance by Borrower shall be subject to a redetermination by Bank
of the applicable fixed rate; provided however, that if Borrower fails to
accept any such rate by 11:00 a.m., California time, on the Business Day such
quotation is given, then the quoted rate shall expire and Bank shall have no
obligation to permit a LIBOR option to be selected on such day. If no specific
designation of interest is made at the time any advance is requested hereunder
or at the end of any Fixed Rate Term, Borrower shall be deemed to have made a
Prime Rate interest selection for such advance or the principal amount to which
such Fixed Rate Term applied.
3. Additional LIBOR Provisions.
(a) If Bank at any time shall determine that for any reason
adequate and reasonable means do not exist for ascertaining Bank's LIBOR, then
Bank shall promptly give notice thereof to Borrower. If such notice is given
and until such notice has been withdrawn by Bank, than (i) no new LIBOR option
may be selected by Borrower, and (ii) any portion of the outstanding principal
balance hereof which bears interest determined in relation to Bank's LIBOR,
subsequent to the end of the Fixed Rate Term applicable thereto, shall bear
interest determined in relation to the Prime Rate.
(b) If any law, treaty, rule, regulation or determination of a
court or governmental authority or any change therein or in the interpretation
or application thereof (each, a "Change in Law") shall make it unlawful for
Bank (i) to make LIBOR options available hereunder, or (ii) to maintain
interest rates based on Bank's LIBOR, then in the former event, any obligation
of Bank to make available such unlawful LIBOR options shall immediately be
canceled, and in the latter event, any such unlawful LIBOR-based interest rates
then outstanding shall be converted, at Bank's option, so that interest on the
portion of the outstanding principal balance subject thereto is determined in
relation to the Prime Rate; provided however, that if any such Change in Law
shall permit any LIBOR-based interest rates to remain in effect until the
expiration of the Fixed Rate Term applicable thereto, then such permitted
LIBOR-based interest rates shall continue in effect until the expiration of
such Fixed Rate Term. Upon the occurrence of any of the foregoing events,
Borrower shall pay to Bank immediately upon demand such amounts as may be
necessary to compensate Bank for any fines, fees, charges, penalties or other
costs incurred or payable by Bank as a result thereof and which are
attributable to any LIBOR options made available to Borrower hereunder, and any
reasonable allocation made by Bank among its operations shall be conclusive and
binding upon Borrower.
(c) If any Change in Law or compliance by Bank with any request or
directive (whether or not having the force of law) from any central bank or
other governmental authority shall:
57
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(i) subject Bank to any tax, duty or other charge with respect to
any LIBOR options, or change the basis of taxation of payments to Bank of
principal, interest, fees or any other amount payable hereunder (except for
changes in the rate of tax on the overall net income of Bank); or
(ii) impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances or loans by,
or any other acquisition of funds by any office of Bank; or
(iii) impose on Bank any other condition;
and the result of any of the foregoing is to increase the cost to Bank of
making, renewing or maintaining any LIBOR options hereunder and/or to reduce
any amount receivable by Bank in connection therewith, then in any such case,
Borrower shall pay to Bank immediately upon demand such amounts as may be
necessary to compensate Bank for any additional costs incurred by Bank and/or
reductions in amounts received by Bank which are attributable to such LIBOR
options. In determining which costs incurred by Bank and/or reductions in
amounts received by Bank are attributable to any LIBOR options made available
to Borrower hereunder, any reasonable allocation made by Bank among its
operations shall be conclusive and binding upon Borrower.
4. Default Interest. From and after the maturity date of this
Note, or such earlier date as all principal owing hereunder becomes due and
payable by acceleration or otherwise, the outstanding principal balance of this
Note shall bear interest until paid in full at an increased rate per annum
(computed on the basis of a 360-day year, actual days elapsed) equal to four
percent (4%) above the rate of interest from time to time applicable to this
Note.
C. BORROWING AND REPAYMENT:
1. Borrowing and Repayment. Borrower may from time to time
during the term of this Note borrow, partially or wholly repay its outstanding
borrowings, and, subject to all of the limitations, terms and conditions of
this Note and of any document executed in connection with this Note; provided
however, that amounts repaid may not be reborrowed and that total borrowings
under this Note shall not exceed the principal amount stated above. The unpaid
principal balance of this obligation at any time shall be the total amounts
advanced hereunder by the holder hereof less the amount of principal payments
made hereon by or for any Borrower, which balance may be endorsed hereon from
time to time by the holder. The outstanding principal balance of this Note
shall be due and payable in 60 equal consecutive monthly installments, each
equal to one-sixtieth (1/60) of the outstanding principal balance of this Note
on November 1, 1996, with such payments commencing on December 1, 1996 and
thereafter on the 1st day of each month up to and including November 1, 2001,
on which date all outstanding obligations under this Note shall be due and
payable in full.
2. Advances. Advances hereunder, to the total amount of the
principal sum stated above, may be made by the holder at the oral or written
request of (a) Pedro Morillas or Joseph Liu or Carl Wertz, any one acting
alone, who are authorized to request advances and direct the disposition of any
advances until written notice of the revocation of such authority is received
by the
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holder at the office designated above, or (b) any person, with respect to
advances deposited to the credit of any account of any Borrower with the
holder, which advances, when so deposited, shall be conclusively presumed to
have been made to or for the benefit of each Borrower regardless of the fact
that persons other than those authorized to request advances may have authority
to draw against such account. The holder shall have no obligation to determine
whether any person requesting an advance is or has been authorized by any
Borrower.
3. Application of Payments. Each payment made on this Note shall
be credited first, to any interest then due and second, to the outstanding
principal balance hereof. All payments credited to principal shall be applied
first, to the outstanding principal balance of this Note which bears interest
determined in relation to the Prime Rate, if any, and second, to the
outstanding principal balance of this Note which bears interest determined in
relation to Bank's LIBOR, with such payments applied to the oldest Fixed Rate
Term first.
4. Prepayment.
(a) Prime Rate. Borrower may prepay principal on any portion of
this Note which bears interest determined in relation to the Prime Rate at any
time, in any amount and without penalty.
(b) LIBOR. Borrower may prepay principal on any portion of this
Note which bears interest determined in relation to Bank's LIBOR at any time
and in the minimum amount of Fifty Thousand Dollars ($50,000.00); provided
however, that if the outstanding principal balance of such portion of this Note
is less than said amount, the minimum prepayment amount shall be the entire
outstanding principal balance thereof. In consideration of Bank providing this
prepayment option to Borrower, or if any such portion of this Note shall become
due and payable at any time prior to the last day of the Fixed Rate Term
applicable thereto by acceleration or otherwise, Borrower shall pay to Bank
immediately upon demand a fee which is the sum of the discounted monthly
differences for each month from the month of prepayment through the month in
which such Fixed Rate Term matures, calculated as follows for each such month:
(i) Determine the amount of interest which would have accrued each
month on the amount prepaid at the interest rate applicable to such amount had
it remained outstanding until the last day of the Fixed Rate Term applicable
thereto.
(ii) Subtract from the amount determined in (i) above the amount of
interest which would have accrued for the same month on the amount prepaid for
the remaining term of such Fixed Rate Term at Bank's LIBOR in effect on the
date of prepayment for new loans made for such term and in a principal amount
equal to the amount prepaid.
(iii) If the result obtained in (ii) for any month is greater than
zero, discount that difference by Bank's LIBOR used in (ii) above.
Each Borrower acknowledges that prepayment of such amount will result in Bank
incurring additional costs, expenses and/or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses and/or
liabilities. Each Borrower, therefore, agrees to pay the above-described
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prepayment fee and agrees that said amount represents a reasonable estimate of
the prepayment costs, expenses and/or liabilities of Bank. If Borrower fails
to pay any prepayment fee when due, the amount of such prepayment fee shall
thereafter bear interest until paid at a rate per annum two percent (2%) above
the Prime Rate in effect from time to time (computed on the basis of a 360-day
year, actual days elapsed).
D. EVENTS OF DEFAULT:
This Note is the Term Commitment Note made pursuant to and is subject
to the terms and conditions of that certain Credit Agreement between Borrower
and Bank dated as of November 1, 1995, as amended from time to time. Any
default in the payment or performance of any obligation, or any defined event
of default, under said Credit Agreement shall constitute an "Event of Default"
under this Note.
E. MISCELLANEOUS:
1. Remedies. Upon the occurrence of any Event of Default, the
holder of this Note, at the holder's option, may declare all sums of principal
and interest outstanding hereunder to be immediately due and payable without
presentment, demand, protest or notice of dishonor, all of which are expressly
waived by each Borrower, and the obligation, if any, of the holder to extend
any further credit hereunder shall immediately cease and terminate. Each
Borrower shall pay to the holder immediately upon demand the full amount of all
payments, advances, charges, costs and expenses, including reasonable
attorneys' fees (to include outside counsel fees and all allocated costs of the
holder's in-house counsel), incurred by the holder in connection with the
enforcement of the holder's rights and/or the collection of any amounts which
become due to the holder under this Note, and the prosecution or defense of any
action in any way related to this Note, including without limitation, any
action for declaratory relief, and including any of the foregoing incurred in
connection with any bankruptcy proceeding relating to any Borrower.
2. Governing Law. This Note shall be governed by and construed
in accordance with the laws of the State of California, except to the extent
Bank has greater rights or remedies under Federal law, whether as a national
bank or otherwise, in which case such choice of California law shall not be
deemed to deprive Bank of any such rights and remedies as may be available
under Federal law.
DIODES INCORPORATED
By: /s/ Pedro Morillas
Title: Executive Vice President
By: /s/ Joseph Liu
Title: VP Operations & CFO
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