Exhibit 10.1
IMPORTANT INFORMATION REGARDING
OBTAINING AN EXTENSION OF CREDIT
To help the Federal government fight the funding of terrorism and money
laundering activities, Federal law requires all financial institutions to
obtain, verify, and record certain information that identifies each
person/entity who obtains an extension of credit from the institution.
When you obtain an extension of credit, we will ask for your name; street
address; social security number, taxpayer identification number, or alien
identification number as applicable; date of birth (individual applicants or
sole proprietors only); and other information that will allow us to identify
you. We may also ask to see your driver’s license or other identifying document.

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CREDIT AGREEMENT
(LINE OF CREDIT)
(LETTER OF CREDIT SUB-FACILITY)
     This Agreement (the “Agreement”) is made and entered into as of
November 13, 2009, by and between BANK OF THE WEST (the “Bank”) and IXYS
CORPORATION (the “Borrower”), on the terms and conditions that follow:
SECTION
1
DEFINITIONS

1.1   Certain Defined Terms: Unless elsewhere defined in this Agreement, the
following terms shall have the following meanings (such meanings to be generally
applicable to the singular and plural forms of the terms defined):

  1.1.1   “Advance”: shall mean an advance to the Borrower under the credit
facility (ies) described in Section 2.     1.1.2   “Alternate Base Rate”: shall
mean, for any day, a rate per annum equal to the greatest of (a) the Prime Rate
in effect on such day or, (b) the Federal Funds Rate in effect on such day plus
0.5% or (c) the Applicable Floating Rate on such date (or, if such date is not a
Business Day, the immediately preceding Business Day). Any change in the
Alternate Base Rate due to a change in the Prime Rate or, the Federal Funds Rate
or the Applicable Floating Rate shall be effective from and including the
effective date of such change in the Prime Rate or, the Federal Funds Rate or
the Applicable Floating Rate, respectively.     1.1.3   “Alternate Base Rate
Advance”: shall have the respective meaning as it is defined for each facility
under Section 2, hereof.     1.1.4   “Applicable Floating Rate”. shall mean, as
of any date with respect to:

  (i)   With respect to Alternate Base Rate Advances (a) the One-Month LIBOR
Rate on such day multiplied by the Statutory Reserve Rate plus (b) 1.00%, where
“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board of Governors of the Federal Reserve System with respect
to the One-Month LIBOR Rate for Eurocurrency funding (currently referred to as
“Eurocurrencies Liabilities” in Regulation D of the Board of Governors of the
Federal Reserve System), including those reserve percentages imposed pursuant to
Regulation D, adjusted automatically and as of the effective date of any change
in any reserve percentage.     (ii)   With respect to Applicable Floating Rate
Advances, the One-Month LIBOR Rate on such day multiplied by the Statutory
Reserve Rate where “Statutory Reserve Rate” means a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or

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      supplemental reserves) expressed as a decimal established by the Board of
Governors of the Federal Reserve System with respect to the One-Month LIBOR Rate
for Eurocurrency funding (currently referred to as “Eurocurrencies Liabilities”
in Regulation D of the Board of Governors of the Federal Reserve System),
including those reserve percentages imposed pursuant to Regulation D, adjusted
automatically and as of the effective date of any change in any reserve
percentage.

  1.1.5   “Applicable Floating Rate Advance”: shall have the respective meaning
as it is defined for each facility under Section 2, hereof.     1.1.6  
“Applicable Margin”: means, from time to time, the following percentages per
annum (expressed in basis points) based upon the Leverage Ratio as calculated
based on financial statements delivered to the Bank pursuant to Section 5.1(i)
and Section 5.1(ii):

                                              Applicable                    
Margin (LIBOR   Applicable                 Advances and   Margin                
Applicable   (Alternate Base   Applicable Margin             Floating Rate  
Rate   (Unused Tier   Leverage Ratio   Advances)   Advances)   Commitment Fee)  
1    
Less than 0.50 to 1.00
    250.00       150.00       25.00          
 
                          2    
Greater than or equal to 0.50 to 1.00 but less than 1.00 to 1.00
    275.00       175.00       37.50          
 
                          3    
Greater than or equal to 1.00 to 1.00 but less than 1.50 to 1.00
    300.00       200.00       50.00          
 
                          4    
Greater than or equal to 1.50 to 1.00
    325.00       225.00       62.50  

      Any increase or decrease in the Applicable Margin resulting from a change
in the Leverage Ratio shall become effective as of the date that is the earlier
of: (a) the last date by which the Borrower is otherwise required to deliver the
financial statements in accordance with Section 5.1(i) or Section 5.1(ii) for a
given period (each such date, a “calculation date”); and (b) the date that is
two Business Days after the date (prior to the related calculation date) on
which the Borrower actually delivers the financial statements in accordance with
Section 5.1(i) or Section 5.1(ii) for such period; provided that the Applicable
Margin in effect from the Closing Date to the date that is two Business Days
following receipt by the Bank of the timely delivered financial statements with
respect to the fiscal quarter ending December 31, 2009 shall be determined based
upon Tier 1; provided further that, if any financial statements required to be
delivered in accordance with Section 5.1(i) or Section 5.1(ii) for any given
period is not delivered to the Bank on or before the related calculation date,
then Tier 4 shall apply, effective on the related calculation date until two
Business Days after such financial statements are actually received by the Bank.
Notwithstanding anything in the foregoing to the contrary, in the event Borrower
or Bank determines, in good faith, that the calculation of the Leverage Ratio on
which any Applicable Margin for any particular period is inaccurate and as a
consequence thereof any Applicable Margin as determined based thereon was lower
than it would have been had the Leverage Ratio been calculated accurately,
(a) Borrower shall promptly (but in any event no later than two (2) Business
Days after Borrower discovers such inaccuracy or is otherwise notified by Bank
of such inaccuracy), deliver to Bank corrected financial statements for such
period (and if such financial statements are not accurately restated and
delivered within ten (10) days after the first discovery of such inaccuracy by
Borrower or such notice, as the case may be, then Tier 4 shall apply
retroactively for such period until such time as the corrected financial

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      statements are delivered and, from and after the delivery of such
corrected financial statements to Bank, the corrected Applicable Margin shall
apply for such period), (b) Bank shall determine and notify Borrower of the
amount of interest that would have been due in respect of any outstanding
Obligations during such period had the Applicable Margin been determined based
on an accurate Leverage Ratio (or, to the extent applicable, Tier 4 if such
corrected financial statements were not timely delivered as provided for herein)
and (c) Borrower shall promptly pay to Bank the difference, if any, between that
amount and the amount actually paid in respect of such period. The foregoing
shall in no way limit the rights of Bank to impose the default interest rate
specified in Section 8.2 or to exercise any other remedy available at law or as
provided hereunder.

  1.1.7   “Business Day”: shall mean a day, other than a Saturday or Sunday, on
which commercial banks are open for business in California.     1.1.8   “Current
Liabilities”: shall mean current liabilities as determined in accordance with
generally accepted accounting principles, including any negative cash balance on
the Borrower’s financial statement and Indebtedness for borrowed money under
lines of credit with the Bank used by the Borrower for working capital purposes.
    1.1.9   “Debt”: shall mean all liabilities of the Borrower less Subordinated
Debt, if any.     1.1.10   “Domestic Cash”: shall mean the aggregate amount of
all cash maintained by the Borrower in accounts located in the United States.  
  1.1.11   “EBITDA”: shall mean earnings before deductions for interest expense,
taxes, depreciation and amortization expense and non-cash stock compensation
expense.     1.1.12   “Effective Tangible Net Worth”: shall mean the Borrower’s
stated net worth plus Subordinated Debt but less all intangible assets of the
Borrower (i.e., goodwill, trademarks, patents, copyrights, organization expense,
and similar intangible items including, but not limited to, investments in and
all amounts due from affiliates, officers or employees).     1.1.13  
“Environmental Claims”: shall mean all claims, however asserted, by any
governmental authority or other person alleging potential liability or
responsibility for violation of any Environmental Law or for release or injury
to the environment or threat to public health, personal injury (including
sickness, disease or death), property damage, natural resources damage, or
otherwise alleging liability or responsibility for damages (punitive or
otherwise), cleanup, removal, remedial or response costs, restitution, civil or
criminal penalties, injunctive relief, or other type of relief, resulting from
or based upon (a) the presence, placement, discharge, emission or release
(including intentional and unintentional, negligent and non-negligent, sudden or
non-sudden, accidental or non-accidental placement, spills, leaks, discharges,
emissions or releases) of any Hazardous Material at, in, or from property,
whether or not owned by the Borrower, or (b) any other circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law.    
1.1.14   “Environmental Laws”: shall mean all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any governmental
authorities, in each case relating to environmental, health, safety and land use
matters; including but not limited to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (“CERCLA”), the Clean Air Act, the
Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act, the
Federal Resource Conservation and Recovery Act, the Toxic Substances Control
Act, the Emergency Planning and Community Right-to-Know Act, the California
Hazardous Waste Control Law, the California Solid Waste Management, Resource,
Recovery and Recycling Act, the California Water Code and the California Health
and Safety Code.

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  1.1.15   “Environmental Permits”: shall have the meaning provided in
Section 4.12 hereof.     1.1.16   “ERISA”: shall mean the Employee Retirement
Income Security Act of 1974, as amended from time to time, including (unless the
context otherwise requires) any rules or regulations promulgated thereunder.    
1.1.17   “Event of Default”: shall have the meaning set forth in Section 6.    
1.1.18   “Existing Letter of Credit Facility”: shall mean that certain Letter of
Credit Agreement between the Borrower and Bank, dated as of September 8, 2009,
as amended by that certain First Amendment to Letter of Credit Agreement, dated
as of September 10, 2009, pursuant to which Bank agreed to make an aggregate
amount of $3,000,000.00 in standby and commercial letters of credit available to
the Borrower.     1.1.19   “Expiration Date”: shall mean October 31, 2011, or
the date of termination of the Bank’s commitment to lend under this Agreement
pursuant to Section 7, whichever shall occur first.     1.1.20   “Federal Funds
Rate”: shall mean, for any day, the weighted average (rounded upwards, if
necessary to the next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average (rounded upwards, if necessary, to the next 1/100
of 1%) of the quotations for such day for such transactions received by the Bank
from three Federal funds brokers of recognized standing selected by it.    
1.1.21   “Guarantor”: shall mean each of IXYS USA, INC. and CLARE, INC.    
1.1.22   “Guaranty”: shall mean a continuing guaranty agreement of the
Obligations, in form and substance reasonably satisfactory to the Bank.    
1.1.23   “Hazardous Materials”: shall mean all those substances which are
regulated by, or which may form the basis of liability under, any Environmental
Law, including all substances identified under any Environmental Law as a
pollutant, contaminant, hazardous waste, hazardous constituent, special waste,
hazardous substance, hazardous material, or toxic substance, or petroleum or
petroleum derived substance or waste.     1.1.24   “Indebtedness”: shall mean,
with respect to the Borrower, (i) all indebtedness for borrowed money or for the
deferred purchase price of property or services in respect of which the Borrower
is liable, contingently or otherwise, as obligor, guarantor or otherwise, or in
respect of which the Borrower otherwise assures a creditor against loss,
(ii) obligations under leases which shall have been or should be, in accordance
with generally accepted accounting principles, reported as capital leases in
respect of which the Borrower is liable, contingently or otherwise, or in
respect of which the Borrower otherwise assures a creditor against loss, and
(iii) obligations arising under an arrangement with any person providing for the
leasing by the Borrower of real or personal property that has been or is to be
sold or transferred to such person or to whom funds have been or are to be
advanced by such person on the security or rental obligations of the Borrower.
The word “Indebtedness” also includes expenses incurred by the Bank to enforce
obligations of the Borrower under this Agreement, together with interest on such
amounts as provided in this Agreement, and all other obligations, debts, and
liabilities of the Borrower to the Bank as well as all claims by the Bank
against the Borrower that are now or hereafter existing, voluntary or
involuntary, due or not due, absolute or contingent, liquidated or unliquidated,
whether the Borrower may be liable individually or jointly with others, whether
recovery upon such Indebtedness may be or hereafter may become barred by any
statute of limitations, and whether such Indebtedness may be or hereafter may
become otherwise unenforceable.

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  1.1.25   “Letter of Credit Facility”: shall mean the credit facility described
as such in Section 2.     1.1.26   “Leverage Ratio”: shall mean, as of any date
of determination, the ratio of total liabilities (excluding any outstanding
letters of credit) of the Borrower to Effective Tangible Net Worth.     1.1.27  
“LIBOR Advance”: shall have the respective meaning as it is defined for each
facility under Section 2, hereof.     1.1.28   “LIBOR Interest Period”: shall
have the respective meaning as it is defined for each facility under Section 2,
hereof.     1.1.29   “LIBOR Rate”: shall have the respective meaning as it is
defined for each facility under Section 2, hereof.     1.1.30   “Line Account”:
shall have the meaning provided in Section 2.3 hereof.     1.1.31   “Line of
Credit”: shall mean the credit facility described as such in Section 2.    
1.1.32   “Loan Documents”: shall mean this Agreement, the Guaranties and all
other documents delivered by any Loan Party to the Bank in connection herewith.
    1.1.33   “Loan Parties”: shall mean, collectively, the Borrower and the
Guarantors.     1.1.34   “Material Adverse Change”: shall mean any of the
following: (a) a material adverse change in, or a material adverse effect upon,
the operations, business, properties or condition (financial or otherwise) of
the Borrower and its Subsidiaries, taken as a whole; (b) a material impairment
of the ability of the Borrower to perform its payment obligations under any of
the Loan Documents; or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability of any Loan Document.     1.1.35  
“Obligations”: shall mean all amounts owing by the Borrower to the Bank pursuant
to this Agreement including, but not limited to, the unpaid principal amount of
any loans or advances.     1.1.36   “One-Month LIBOR Rate”: shall mean, for any
day, the rate of interest per annum that is equal to the one month LIBOR rate
appearing on the REUTERS BBA Libor Rates Page 3750 (or on any successor or
substitute page of such page) at approximately 11:00 a.m. London time on such
day.     1.1.37   “Ordinary Course of Business”: shall mean, with respect to any
transaction involving the Borrower or any of its subsidiaries or affiliates, the
ordinary course of the Borrower’s business, as conducted by the Borrower in
accordance with past practice and undertaken by the Borrower in good faith and
not for the purpose of evading any covenant or restriction in this Agreement or
in any other document, instrument or agreement executed in connection herewith.
    1.1.38   “Permitted Liens”: shall mean: (i) liens and security interests
securing indebtedness owed by the Borrower to the Bank; (ii) liens for taxes,
assessments or similar charges not yet due; (iii) liens of materialmen,
mechanics, warehousemen, or carriers or other like liens arising in the Ordinary
Course of Business and securing obligations which are not yet delinquent;
(iv) purchase money liens or purchase money security interests upon or in any
property acquired or held by the Borrower in the Ordinary Course of Business to
secure Indebtedness outstanding on the date hereof or permitted to be incurred
herein; (v) liens and security interests which, as of the date hereof, have been
disclosed to and approved by the Bank in writing; (vi) those liens and security
interests which in the aggregate constitute an immaterial and insignificant
monetary amount with respect to the net value of

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      the Borrower’s assets; and (vii) liens and security interests securing
Indebtedness permitted by Section 5.11.   1.1.39   “Prime Rate”: shall mean an
index for a variable interest rate which is quoted, published or announced by
Bank as its prime rate and as to which loans may be made by Bank at, above or
below such rate.     1.1.40   Solvent”: shall mean, as to any Person at any
time, that: (a) the fair value of the property of such Person on a going concern
basis is greater than the amount of such Person’s liabilities (including
contingent liabilities), as such value is established and such liabilities are
evaluated for purposes of Section 101(32) of the Bankruptcy Code and, in the
alternative, for purposes of the California Uniform Fraudulent Transfer Act or
any similar state statute applicable to the Borrower or any Subsidiary thereof;
(b) the present fair salable value of the property of such Person is not less
than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured; (c) such Person is able
to realize upon its property and pay its debts and other liabilities (including
contingent liabilities) as they mature in the normal course of business;
(d) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person’s ability to pay as such debts and
liabilities mature; and (e) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person’s property would constitute unreasonably small capital.     1.1.41  
“Subordinated Debt”: shall mean such liabilities of the Borrower which have been
subordinated to those owed to the Bank in a manner acceptable to the Bank.    
1.1.42   “Subsidiary”: shall mean of a Person means a corporation, partnership,
joint venture, limited liability company or other business entity of which a
majority of the shares of securities or other interests having ordinary voting
power for the election of directors or other governing body (other than
securities or interests having such power only by reason of the happening of a
contingency) are at the time beneficially owned, or the management of which is
otherwise controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise specified, all
references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a
Subsidiary or Subsidiaries of Borrower.

1.2   Accounting Terms: All references to financial statements, assets,
liabilities, and similar accounting items not specifically defined herein shall
mean such financial statements or such items prepared or determined in
accordance with generally accepted accounting principles consistently applied
and, except where otherwise specified, all financial data submitted pursuant to
this Agreement shall be prepared in accordance with such principles.

1.3   Other Terms: Other terms not otherwise defined shall have the meanings
attributed to such terms in the Uniform Commercial Code as in effect on July 1,
2001 and from time to time thereafter.

SECTION
2
CREDIT FACILITIES

2.1   THE LINE OF CREDIT

  2.1.1   The Line of Credit: On terms and conditions as set forth herein, the
Bank agrees to make Advances to the Borrower from time to time from the date
hereof to the Expiration Date, provided the aggregate amount of such Advances
outstanding at any time does not exceed $15,000,000.00 (the “Line of Credit”).
Within the foregoing limits, the Borrower may borrow, partially or wholly
prepay, and reborrow under this Section 2.1. Proceeds of the Line of

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      Credit shall be used to assist with the general working capital needs of
the Borrower’s operations.

  2.1.2   Making Line Advances: Each Advance shall be conclusively deemed to
have been made at the request of and for the benefit of the Borrower (i) when
credited to any deposit account of the Borrower maintained with the Bank or
(ii) when paid in accordance with the Borrower’s written instructions. Subject
to the requirements of Section 4 and provided such request is made in a timely
manner as provided in Section 2.1.5 below, Advances shall be made by the Bank
under the Line of Credit.     2.1.3   Repayment: On the Expiration Date, the
Borrower hereby promises and agrees to pay to the Bank in full the aggregate
unpaid principal amount of all Advances then outstanding, together with all
accrued and unpaid interest thereon.     2.1.4   Interest on Advances: Interest
shall accrue from the date of each Advance under the Line of Credit at one of
the following rates, as quoted by the Bank and as elected by the Borrower below:

  (i)   Alternate Base Rate Advances: Alternate Base Rate Advances shall bear
interest at the Alternate Base Rate plus the Applicable Margin. Interest shall
be adjusted concurrently with any change in the Alternate Base Rate. An Advance
based upon the Alternate Base Rate is hereinafter referred to as an “Alternate
Base Rate Advance”.     (ii)   Applicable Floating Rate Advances: Alternate
Floating Rate Advances shall bear interest at the Applicable Floating Rate plus
the Applicable Margin. Interest shall be adjusted concurrently with any change
in the Applicable Floating Rate. An Advance based upon the Applicable Floating
Rate is herein referred to as an “Applicable Floating Rate Advance”.     (iii)  
LIBOR Advances: LIBOR Advances shall bear interest at the LIBOR Rate plus the
Applicable Margin. As used herein, “LIBOR Rate” means a fixed rate quoted by the
Bank for one, two, three or six month periods or for such other period of time
that the Bank may quote and offer (provided that any such period of time does
not extend beyond Expiration Date) (the “LIBOR Interest Period”) for Advances in
the minimum amount of $100,000.00. The LIBOR Rate shall be the rate determined
by the Bank’s Treasury Desk as being the arithmetic mean (rounded upwards, if
necessary, to the nearest whole multiple of one-sixteenth of one percent
(1/16%)) of the Bloomberg British Bankers Association LIBOR page as of
11:00 a.m. (London time), on that day, or, if such day is not a Business Day, on
the immediately preceding Business Day prior to the first day of such period
(adjusted for any and all assessments, surcharges and reserve requirements). An
Advance based upon the LIBOR Rate is hereinafter referred to as a “LIBOR
Advance”.         Interest on any Advance shall be computed on the basis of
360 days per year, but charged on the actual number of days elapsed.

      The Borrower hereby promises and agrees to pay interest in arrears on
Applicable Floating Rate Advances and LIBOR Advances on the last day of each
month.         If Interest is not paid as and when it is due, it shall be added
to the principal, become and be treated as a part thereof, and shall thereafter
bear like interest.

  2.1.5   Notice of Borrowing: Upon written or telephonic notice which shall be
received by the Bank at or before 2:00 p.m. (Pacific time) on a Business Day,
the Borrower may borrow under the Line of Credit Facility by requesting:

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  (i)   An Alternate Base Rate Advance may be made on the day notice is received
by the Bank, provided however, that if the Bank shall not have received notice
at or before 2:00 p.m. on the day such Advance is requested to be made, such
Alternate Base Rate Advance may, at the Bank’s option, be made on the next
Business Day.     (ii)   Applicable Floating Rate Advances. An Applicable
Floating Rate Advance may be made on the day notice is received by the Bank;
provided, however, that if the Bank shall not have received notice at or before
2:00 p.m. on the day such Advance is requested to be made, such Applicable
Floating Rate Advances may, at the Bank’s option, be made on the next Business
Day.     (iii)   A LIBOR Advance. Notice of any LIBOR Advance shall be received
by the Bank no later than two Business Days prior to the day (which shall be a
Business Day) on which the Borrower request such LIBOR Advance to be made.    
In the event the Borrower makes no election at the time of any Advance, such
Advance shall bear interest at the Applicable Floating Rate as determined for
Alternate Base Rate Advances.

  2.1.6   Notice of Election to Adjust Interest Rate: The Borrower may elect:

  (i)   That interest on an Alternate Base Rate Advance shall be adjusted to
accrue at the LIBOR Rate or the Applicable Floating Rate; provided, however,
that such notice shall be received by the Bank no later than two Business Days
prior to the day (which shall be a Business Day) on which the Borrower requests
that interest be adjusted to accrue at the Applicable Floating Rate.     (ii)  
That interest on an Applicable Floating Rate Advance shall be adjusted to accrue
at the LIBOR Rate or Alternate Base Rate; provided, however, that such notice
shall be received by the Bank no later than two Business Days prior to the day
(which shall be a Business Day) on which the Borrower requests that interest be
adjusted to accrue at the LIBOR Rate or Alternate Base Rate.     (iii)   That
interest on a LIBOR Advance shall continue to accrue at a newly quoted LIBOR
Rate or shall be adjusted to commence to accrue at the Alternate Base Rate or
Applicable Floating Rate; provided, however, that such notice shall be received
by the Bank no later than two Business Days prior to the last day of the LIBOR
Interest Period pertaining to such LIBOR Advance. If the Bank shall not have
received notice (as prescribed herein) of the Borrower’s election that interest
on any LIBOR Advance shall continue to accrue at the newly quoted LIBOR Rate,
the Borrower shall be deemed to have elected that interest thereon shall be
adjusted to accrue at the Alternate Base Rate upon the expiration of the LIBOR
Interest Period pertaining to such Advance.

      In the event the Borrower makes no election at the time of any Advance,
such Advance shall bear interest at the Applicable Floating Rate as determined
for Alternate Base Rate Advances.

  2.1.7   Prepayment: The Borrower may prepay any Advance in whole or in part,
at any time and without penalty, provided, however, that: (i) any partial
prepayment shall first be applied, at the Bank’s option, to accrued and unpaid
interest and next to the outstanding principal balance; and (ii) during any
period of time in which interest is accruing on any Advance on the basis of the
LIBOR Rate, no prepayment shall be made except on a day which is the last day of
the LIBOR Interest Period pertaining thereto. If the whole or any part of any
LIBOR Advance is prepaid by reason of acceleration or otherwise, the Borrower
shall, upon the Bank’s request, promptly pay to and indemnify the Bank for all
costs, expenses and any loss actually incurred by the Bank and any loss
(including loss of profit resulting from the re-

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      employment of funds) deemed sustained by the Bank as a consequence of such
prepayment.

      The Bank shall be entitled to fund all or any portion of its Advances in
any manner it may determine in its sole discretion, but all calculations and
transactions hereunder shall be conducted as though the Bank actually funded all
Advances through the purchase of dollar deposits bearing interest at the same
rate as U.S. Treasury securities in the amount of the relevant Advance and in
maturities corresponding to the date of such purchase to the Expiration Date
hereunder.     2.1.8   Indemnification for LIBOR Rate Costs or One-Month LIBOR
Rate Costs: During any period of time in which interest on any Advance is
accruing on the basis of the LIBOR Rate or One-Month LIBOR Rate, the Borrower
shall, upon the Bank’s request, promptly pay to and reimburse the Bank for all
costs incurred and payments made by the Bank by reason of any future assessment,
reserve, deposit or similar requirement or any surcharge, tax or fee imposed
upon the Bank or as a result of the Bank’s compliance with any directive or
requirement of any regulatory authority pertaining or relating to funds used by
the Bank in quoting and determining the LIBOR Rate or One-Month LIBOR Rate.    
2.1.9   Conversion from One-Month LIBOR Rate or LIBOR Rate: In the event that
the Bank shall at any time determine that the accrual of interest on the basis
of the LIBOR Rate or One-Month LIBOR Rate (i) is infeasible because the Bank is
unable to determine the LIBOR Rate or One-Month LIBOR Rate due to the
unavailability of U.S. dollar deposits, contracts or certificates of deposit in
an amount approximately equal to the amount of the relevant Advance and for a
period of time approximately equal to relevant Interest Period or (ii) is or has
become unlawful or infeasible by reason of the Bank’s compliance with any new
law, rule, regulation, guideline or order, or any new interpretation of any
present law, rule, regulation, guideline or order, then the Bank shall give
telephonic notice thereof (confirmed in writing) to the Borrower, in which event
any Advance bearing interest at the LIBOR Rate or the One-Month LIBOR Rate shall
thereupon immediately accrue interest at the greater of the Prime Rate or
Federal Funds Rate.     2.1.10   Commitment Fee: The Borrower agrees to pay to
the Bank a commitment fee equal to the Applicable Margin (Unused Commitment Fee)
in effect on such date computed on the basis of a 360-day year, actual days
elapsed, on the average daily unused amount of the Line of Credit which fee
shall be calculated on a quarterly basis by Bank and shall be due and payable by
Borrower in arrears on each December 31, March 31, June 30 and September 30,
beginning on December 31, 2009.

2.2    LETTER OF CREDIT SUB-FACILITY

  2.2.1   Letter of Credit Sub-Facility: From and after April 1, 2010 and so
long as the Existing Letter of Credit Facility has been terminated by such date,
the Bank agrees to issue commercial and/or standby letters of credit (each a
“Letter of Credit”) on behalf of the Borrower of up to $3,000,000.00. At no
time, however, shall the total principal amount of all Advances outstanding
under the Line of Credit, together with the total face amount of all Letters of
Credit outstanding, less any partial draws paid by the Bank, exceed the Line of
Credit.

  (i)   Upon the Bank’s request, the Borrower shall promptly pay to the Bank
issuance fees and such other fees, commissions, costs and any out-of-pocket
expenses charged or incurred by the Bank with respect to any Letter of Credit.  
  (ii)   The commitment by the Bank to issue Letters of Credit shall, unless
earlier terminated in accordance with the terms of the Agreement, automatically
terminate on the Expiration Date of the Line of Credit and no Letter of Credit
shall expire on a date which is after the Expiration Date.

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  (iii)   Each Letter of Credit shall be in form and substance satisfactory to
the Bank and in favor of beneficiaries satisfactory to the Bank, provided that
the Bank may refuse to issue a Letter of Credit due to the nature of the
transaction or its terms or in connection with any transaction where the Bank,
due to the beneficiary or the nationality or residence of the beneficiary, would
be prohibited by any applicable law, regulation or order from issuing such
Letter of Credit.     (iv)   Prior to the issuance of each Letter of Credit, but
in no event later than 10:00 a.m. (California time) on the day such Letter of
Credit is to be issued (which shall be a Business Day), the Borrower shall
deliver to the Bank a duly executed form of the Bank’s standard form of
application for issuance of a Letter of Credit with proper insertions.     (v)  
The Borrower shall, upon the Bank’s request, promptly pay to and reimburse the
Bank for all costs incurred and payments made by the Bank by reason of any
future assessment, reserve, deposit or similar requirement or any surcharge, tax
or fee imposed upon the Bank or as a result of the Bank’s compliance with any
directive or requirement of any regulatory authority pertaining or relating to
any Letter of Credit. The Borrower shall, upon the Bank’s request, promptly pay
to and reimburse the Bank for all costs incurred and payments made by the Bank
by reason of any future assessment, reserve, deposit or similar requirement or
any surcharge, tax or fee imposed upon the Bank or as a result of the Bank’s
compliance with any directive or requirement of any regulatory authority
pertaining or relating to any Letter of Credit. In addition to any fees
otherwise due hereunder, the Borrower shall pay to Bank (1) a non-refundable
Letter of Credit fee equal to the Applicable Margin (LIBOR Advances) in effect
on the payment date referenced below computed on the basis of a 360-day year,
actual days elapsed, pro-rata subject at all times, to the Bank’s standard
minimum fees in effect from time to time, of the amount of any standby Letter of
Credit, payable (A) at the time of issuance of such standby Letter of Credit and
(B) in advance on the last day of each quarter or year thereafter, as
applicable, and (2) a non-refundable Letter of Credit fee equal to the Bank’s
standard minimum fees in effect from time to time upon the issuance of any
commercial Letter of Credit.

      The Borrower shall immediately reimburse Bank in the event any Letter of
Credit is drawn on in an amount equal to the full drawn amount together with
interest thereon at the One-Month LIBOR Rate plus any Bank fees, costs and
expenses relating to such drawing. In the event that the Borrower fails to
reimburse any drawing under any Letter of Credit or the balances in the
depository account or accounts maintained by the Borrower with Bank are
insufficient to pay such drawing, without limiting the rights of Bank hereunder
or waiving any Event of Default caused thereby, Bank may, and the Borrower
hereby authorizes the Bank to create an Advance bearing interest at the rate or
rates provided in Section 8.2 hereof to pay such drawing.     2.3   Line
Account: The Bank shall maintain on its books a record of account in which the
Bank shall make entries for each Advance and such other debits and credits as
shall be appropriate in connection with the credit facilities granted hereunder
(the “Line Account”). The Bank shall provide the Borrower with a statement of
the Borrower’s Line Account, which statement shall be considered to be correct
and conclusively binding on the Borrower unless the Borrower notifies the Bank
to the contrary within 30 days after the Borrower’s receipt of any such
statement which it deems to be incorrect.     2.4   Authorization to Charge
Account(s): The Borrower hereby authorizes the Bank to charge, from time to
time, against any or all of the Borrower’s deposit accounts with the Bank any
amount so due under this Agreement, including, but not limited to, account #
184008555 maintained with the Bank. Notwithstanding this authorization, the
Borrower shall be in default for nonpayment as provided in this Agreement until
and unless the default is cured by payment, whether initiated by the Bank or by
the Borrower.

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  2.5   Payments: If any payment required to be made by the Borrower hereunder
becomes due and payable on a day other than a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and interest thereon shall
be payable at then applicable rate during such extension. All payments required
to be made hereunder shall be made to the office of the Bank designated for the
receipt of notices herein or such other office as Bank shall from time to time
designate.     2.6   Late Payment: In addition to any other rights the Bank may
have hereunder, if any payment of principal or interest or any portion thereof,
under this Agreement is not paid within 15 days of when due, a late payment
charge equal to five percent (5%) of such past due payment may be assessed and
shall be immediately payable.     2.7   Costs and Expenses: The Borrower shall
pay to Bank immediately upon demand, in addition to any other amounts due or to
become due hereunder, any and all (i) withholdings, interest equalization taxes,
stamp taxes or other taxes (except income and franchise taxes) imposed by any
domestic or foreign governmental authority and related in any manner to the One
Month LIBOR Rate or the LIBOR Rate, and (ii) future, supplemental, emergency or
other changes in the any One Month LIBOR Rate or LIBOR Rate reserve percentages,
assessment rates imposed by the Federal Deposit Insurance Corporation, or
similar requirements or costs imposed by any domestic or foreign governmental
authority or resulting from compliance by Bank with any request or directive
(whether or not having the force of law) from any central bank or other
governmental authority and related in any manner to the One Month LIBOR Rate or
LIBOR Rate to the extent they are not included in the calculation of the One
Month LIBOR Rate or LIBOR Rate. In determining which of the foregoing are
attributable to any One Month LIBOR Rate or LIBOR Rate available to Borrower
hereunder, any reasonable allocation made by Bank among its operations shall be
conclusive and binding upon Borrower.

SECTION
3
CONDITIONS PRECEDENT

  3.1   Conditions Precedent to the Initial Extension of Credit: The obligation
of the Bank to make the initial Advance or the first extension of credit, as the
case may be, to or on account of the Borrower hereunder is subject to the
conditions precedent that the Bank shall have received before the date of such
initial Advance or such first extension of credit all of the following, in form
and substance satisfactory to the Bank:

  (i)   Authority to Borrow. Evidence that the execution, delivery and
performance by the Borrower of this Agreement and any document, instrument or
agreement required hereunder have been duly authorized.     (ii)   Guarantors.
Continuing guaranties in favor of the Bank executed by the following, together
with evidence that the execution, delivery and performance by any guarantor has
been duly authorized: IXYS USA, INC. and CLARE, INC.     (iii)   Fees. Payment
of all of the Bank’s out-of-pocket expenses (including Bank’s counsel’s fees and
expenses) in connection with the preparation and negotiation of this Agreement.
    (iv)   Miscellaneous. Such other evidence as the Bank may request to
establish the consummation of the transaction contemplated hereunder and
compliance with the conditions of this Agreement.

  3.2   Conditions Precedent to All Extensions of Credit: The obligation of the
Bank to make each Advance or each other extension of credit, as the case may be,
to or on account of the Borrower

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    (including the initial Advance and the first extension of credit) shall be
subject to the further conditions precedent that, on the date of each Advance or
each extension of credit and after the making of such Advance or extension of
credit:

  (i)   Reporting Requirements. The Bank shall have received the documents set
forth in Section 5.1.     (ii)   Subsequent Approvals. The Bank shall have
received such supplemental approvals, opinions or documents as the Bank may
reasonably request.     (iii)   Representations and Warranties. The
representations contained in Section 4 and in any other document, instrument or
certificate delivered to the Bank hereunder are true, correct and complete.    
(iv)   Event of Default. No event has occurred and is continuing which
constitutes, or with the lapse of time or giving of notice or both, would
constitute an Event of Default.

The Borrower’s acceptance of the proceeds of any loan, Advance or extension of
credit or the Borrower’s execution of any document or instrument evidencing or
creating any Obligation hereunder shall be deemed to constitute the Borrower’s
representation and warranty that all of the above statements are true and
correct.
SECTION
4
REPRESENTATIONS AND WARRANTIES
        The Borrower hereby makes the following representations and warranties
to the Bank, which representations and warranties are continuing:

4.1   Status: The Borrower’s correct legal name is as stated in this Agreement
and the Borrower is a corporation duly organized and validly existing under the
laws of the state of Delaware and with its chief executive office in the state
of California and is properly licensed and is qualified to do business and is in
good standing in, and, where necessary to maintain the Borrower’s rights and
privileges, has complied with the fictitious name statute of every jurisdiction
in which the Borrower is doing business.

4.2   Authority: (a) Each of the Loan Parties is a corporation, partnership or
limited liability company duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, organization or
formation (subject to such changes after the date hereof as are permitted under
the Loan Documents); and (b) the execution, delivery and performance by the
Borrower of this Agreement, and each Loan Party of each Loan Document to which
it is a party, and any instrument, document or agreement required hereunder or
thereunder have been duly authorized and do not and will not: (i) violate any
provision of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect having application to the
Borrower or such Loan Party; (ii) result in a breach of or constitute a default
under any material indenture or loan or credit agreement or other material
agreement, lease or instrument to which the Borrower or such Loan Party is a
party or by which it or its properties may be bound or affected; or
(iii) require any consent or approval of its stockholders or violate any
provision of its articles of incorporation or by-laws; or violate any provision
of its partnership agreement, or require any consent or approval of its members
or violate any provision of its articles of organization or operating agreement,
each as the case may be applicable herein.

4.3   Governmental Approvals: No approval, consent, exemption, authorization, or
other action by, or notice to, or filing with, any Governmental Authority is
necessary or required in connection with the

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    execution and delivery by the Borrower or any Loan Party of, or the
performance by the Borrower or any Loan Party of its obligations under, any Loan
Document to which it is a party other than such as have been obtained or made
and are in full force and effect.   4.4   Legal Effect: Each Loan Document to
which any Loan Party is a party constitutes the legal, valid and binding
obligations of such person, enforceable against each such person in accordance
with its terms.   4.5   Fictitious Trade Names: There are no fictitious trade
names, fictitious trade styles, assumed business names or trade names (defined
herein as “Trade Name”) used by any Loan Party in connection with their business
operations other than Massachusetts Clare, Inc. The Borrower shall notify the
Bank not less than 30 days prior to effecting any change in the matters
described herein or prior to using any other Trade Name at any future date,
indicating the Trade Name and State(s) of its use.   4.6   Financial Statements:
All financial statements, information and other data which may have been or
which may hereafter be submitted by the Borrower to the Bank are true, accurate
and correct and have been or will be prepared in accordance with generally
accepted accounting principles consistently applied and accurately represent the
financial condition or, as applicable, the other information disclosed therein.
Since the most recent submission of such financial information or data to the
Bank, the Borrower represents and warrants that no Material Adverse Change in
the Borrower’s financial condition or operations has occurred which has not been
fully disclosed to the Bank in writing.   4.7   Litigation: Except as have been
disclosed to the Bank in writing, there are no actions, suits or proceedings
pending or, to the knowledge of the Borrower, threatened against or affecting
any Loan Party or any Loan Party’s properties before any court or administrative
agency which, if determined adversely to such Loan Party could reasonably be
expected to have a Material Adverse Change.   4.8   Title to Assets: Each Loan
Party has good and marketable title to all of its assets and the same are not
subject to any security interest, encumbrance, lien or claim of any third person
except for Permitted Liens.   4.9   ERISA: If any Loan Party has a pension,
profit sharing or retirement plan subject to ERISA, such plan has been and will
continue to be funded in accordance with its terms and otherwise complies with
and continues to comply with the requirements of ERISA.   4.10   Taxes: Each
Loan Party has filed all tax returns required to be filed and paid all taxes
shown thereon to be due, including interest and penalties, other than such taxes
which are currently payable without penalty or interest or those which are being
duly contested in good faith.   4.11   Margin Stock. The proceeds of any loan or
advance hereunder will not be used to purchase or carry margin stock as such
term is defined under Regulation U of the Board of Governors of the Federal
Reserve System.   4.12   Environmental Compliance. The operations of each Loan
Party comply, and during the term of this Agreement will at all times comply, in
all respects with all Environmental Laws; each Loan Party has obtained all
licenses, permits, authorizations and registrations required under any
Environmental Law (“Environmental Permits”) and necessary for its ordinary
course operations, all such Environmental Permits are in good standing, and each
Loan Party is in compliance with all material terms and conditions of such
Environmental Permits; each Loan Party and its present property or operations is
not subject to any outstanding written order from or agreement with any
governmental authority nor subject to any judicial or docketed administrative
proceeding, respecting any Environmental Law, Environmental Claim or Hazardous
Material; there are no Hazardous Materials or other conditions or circumstances
existing, or arising from operations prior to the date of this Agreement, with
respect to any property of any Loan Party that would reasonably be expected to
give rise to Environmental Claims; provided, however, that with respect to
property

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    leased from an unrelated third party, the foregoing representation is made
to the best knowledge of the Borrower. In addition, (i) no Loan Party has any
underground storage tanks that are not properly registered or permitted under
applicable Environmental Laws, or that are leaking or disposing of Hazardous
Materials off-site, and (ii) each Loan Party has notified all of their employees
of the existence, if any, of any health hazard arising from the conditions of
their employment and have met all notification requirements under Title III of
CERCLA and all other Environmental Laws.   4.13   Regulated Entitles: No Loan
Party is an “investment company” within the meaning of the Investment Company
Act of 1940. The Borrower is not subject to regulation under the Federal Power
Act, any state public utilities code or any other Federal or state statute or
regulation limiting its ability to incur Indebtedness.   4.14   Solvency: The
Borrower is Solvent and as of the date hereof the Borrower does not intend to,
and does not believe that it will, incur debts beyond the Borrower’s ability to
pay as such debts mature. The Borrower is not about to engage in a transaction,
after giving effect to which the Borrower’s remaining property would constitute
unreasonably small capital for the business conducted or transactions engaged by
the Borrower.

SECTION
5
COVENANTS
The Borrower covenants and agrees that, during the term of this Agreement, and
so long thereafter as the Borrower is indebted to the Bank under this Agreement
(unless the Bank shall otherwise consent in writing), the Borrower:

5.1   Reporting and Certification Requirements: Shall deliver or cause to be
delivered to the Bank in form and detail satisfactory to the Bank:

  (i)   Not later than 90 days after the end of each of the Borrower’s fiscal
years, a copy of the annual audited financial report on form 10K of the Borrower
for such year, prepared by a firm of certified public accountants acceptable to
the Bank and accompanied by an unqualified opinion of such firm.     (ii)   Not
later than 45 days after the end of each of the first three fiscal quarters of
each fiscal year, a copy of the Borrower’s financial statement on form 10Q as of
the end of such period.     (iii)   Not later than 90 days after the end of each
of the Borrower’s fiscal years, a copy of the Borrower’s internally prepared
financial projections for the next fiscal year.     (iv)   Promptly upon the
Bank’s request, such other information pertaining to the Borrower or any Loan
Party or any guarantor hereunder as the Bank may reasonably request.

      For the purposes of Section 5.1(i) and Section 5.1(ii), such financial
statements shall be deemed delivered when publicly available on the Borrower’s
website or the website of the United States Securities and Exchange Commission.

5.2   Financial Condition: Shall maintain at all times on a consolidated basis:

  (i)   (a) As at the end of the fiscal quarters ending December 31, 2009 and
March 31, 2010, a minimum Effective Tangible Net Worth of at least
$160,000,000.00; and (b) for each fiscal quarter thereafter, a minimum Effective
Tangible Net Worth of at

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      least $160,000,000.00 plus 50% of the Borrower’s positive net income
earned in each fiscal quarter ending on or after June 30, 2010. For the purposes
of this covenant, for the fiscal quarters ending December 31, 2009 and March 31,
2010, if there is a decrease in Accumulated Foreign Exchange Currency
Translation Adjustments in the Borrower’s Accumulated Other Comprehensive Income
(as such terms are used in the Borrower’s 10K or 10Q, as applicable), the amount
of such decrease in Accumulated Foreign Exchange Currency Translation
Adjustments shall be added to the Borrower’s stated net worth in the calculation
of Effective Tangible Net Worth.

  (ii)   A ratio of the sum of cash, cash equivalents and accounts receivable to
Current Liabilities of not less than 1.50 to 1 as at the end of each fiscal
quarter, beginning with the fiscal quarter ending December 31, 2009.     (iii)  
A minimum net profit after tax of at least $1.00 as at the end of each fiscal
quarter, beginning with the fiscal quarter ending June 30, 2010.     (iv)   A
ratio of EBITDA to interest expense of not less than 5.00 to 1 as at the end of
each fiscal quarter, beginning with the fiscal quarter ending December 31, 2009.
    (v)   Minimum Domestic Cash of at least $20,000,000.00 at all times.    
(vi)   Maximum aggregate net losses for the fiscal quarters ending December 31,
2009 and March 31, 2010 of no greater than $10,000,000.00.

5.3   Preservation of Existence; Compliance with Applicable Laws: (i) Shall, and
shall cause each of the other Loan Parties to, maintain and preserve its
existence and all rights and privileges now enjoyed; and (ii) conduct its
business and operations in accordance with all applicable laws, rules and
regulations.

5.4   Merge or Consolidate: Shall not, and shall not suffer or permit any of the
other Loan Parties to, liquidate or dissolve, merge or consolidate with or into
any other business organization.

5.5   Acquisitions: Shall not, and shall not suffer or permit any of its
Subsidiaries to, acquire any other business organization unless, after taking
such acquisition into effect, the Borrower shall be in pro forma compliance with
all financial covenants contained in Section 5.2.

5.6   Maintenance of Insurance: Shall, and shall cause each of its Subsidiaries
to, maintain insurance in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
in the same general areas in which the Borrower or any Subsidiary operates and
maintain such other insurance and coverages as may be required by the Bank. All
such insurance shall be in form and amount and with companies satisfactory to
the Bank.

5.7   Payment of Obligations and Taxes: Shall, and shall cause each of its
Subsidiaries to, make timely payment of all material assessments and taxes and
all of its material liabilities and obligations including, but not limited to,
trade payables, unless the same are being contested in good faith and any
obligations arising under any Indebtedness of the Borrower. For purposes hereof,
Borrower or any Subsidiary’s issuance of a check, draft or similar instrument
without delivery to the intended payee shall not constitute payment.

5.8   Depository Relationships: Shall maintain its primary business depository
relationship with Bank, including general, operating and administrative deposit
accounts, cash management services, foreign exchange, investment and ancillary
services.

5.9   Inspection Rights and Accounting Records: Shall maintain adequate books
and records in accordance with generally accepted accounting principles
consistently applied and in a manner otherwise acceptable to Bank, and, at any
reasonable time and from time to time, permit the Bank

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    or any representative thereof to examine and make copies of the records and
visit the properties of the Borrower and each other Loan Party and discuss the
business and operations of the Borrower and each other Loan Party with any
employee or representative thereof. If any Loan Party shall maintain any records
(including, but not limited to, computer generated records or computer programs
for the generation of such records) in the possession of a third party, such
Loan Party hereby agrees to notify such third party to permit the Bank free
access to such records at all reasonable times and to provide the Bank with
copies of any records which it may request, all at such Loan Party’s expense,
the amount of which shall be payable immediately upon demand.   5.10  
Redemption or Repurchase of Stock: Shall not redeem or repurchase any class of
the Borrower’s stock now or hereafter outstanding, except in an aggregate amount
of up to $10,000,000.00 during the term of this Agreement.   5.11   Additional
Indebtedness: Shall not, and shall not suffer or permit any of its Subsidiaries
to, after the date hereof, create, incur or assume, directly or indirectly, any
additional Indebtedness other than (i) Indebtedness owed or to be owed to the
Bank, (ii) capital leases, seller or vendor carry-back notes or acquired or
assumed indebtedness in an aggregate amount not to exceed $10,000,000.00 in any
fiscal year, beginning with the fiscal year ending March 31, 2010, or
(iii) cash-secured letters of credit.   5.12   Transfer Assets: Shall not, and
shall not suffer or permit any of its Subsidiaries to, after the date hereof,
sell, contract for sale, convey, transfer, assign, lease or sublet, any of its
assets except (i) in the Ordinary Course of Business and, then, only for full,
fair and reasonable consideration or (ii) in an aggregate amount not to exceed
$5,000,000.00 in any fiscal year, beginning with the fiscal year ending
March 31, 2010.   5.13   Change in Nature of Business: Shall not, and shall not
suffer or permit any of its Subsidiaries to, make any material change in the
nature of its business as existing or conducted as of the date hereof.   5.14  
Maintenance of Jurisdiction: Shall maintain, and shall cause each of the other
Loan Parties to maintain, the jurisdiction of its organization and chief
executive office, or if applicable, principal residence, as set forth herein and
not change such jurisdiction name or form of organization without 30 days prior
written notice to Bank.   5.15   Compensation of Employees: Shall compensate,
and shall cause each of its Subsidiaries to compensate, its employees for
services rendered at an hourly rate at least equal to the minimum hourly rate
prescribed by any applicable federal or state law or regulation.   5.16  
Notice: Shall give the Bank prompt written notice of any and all (i) Events of
Default; (ii) material litigation, arbitration or administrative proceedings to
which the Borrower or any other Loan Party is a party; (iii) other matters which
have resulted in, or might result in a Material Adverse Change.   5.17  
Environmental Compliance: Shall conduct, and shall cause each of its
Subsidiaries to conduct, its operations and keep and maintain all of its
property in material compliance with all Environmental Laws and, upon the
written request of the Bank, the Borrower shall submit to the Bank, at the
Borrower’s sole cost and expense, at reasonable intervals, a report providing
the status of any environmental, health or safety compliance, hazard or
liability.   5.18   Liens: Shall not, and shall not permit any of the other Loan
Parties to, directly or indirectly, make, create, incur, assume or suffer to
exist any lien upon or with respect to any part of its property, whether now
owned or hereafter acquired, other than Permitted Liens.   5.19   ERISA: Shall,
and cause each of its Subsidiaries to, if the Borrower or such Subsidiary has a
pension, profit sharing or retirement plan subject to ERISA, continue to fund
such plan in accordance with its terms and shall ensure that such plan continues
to materially comply with the requirements of ERISA.

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5.20   Further Assurances: Promptly upon the written request by Bank, the
Borrower shall, and shall cause each of the other Loan Parties to, take such
further acts (including the acknowledgement, execution, delivery, recordation,
filing and registering of documents) as may reasonably be required from time to
time to: (a) carry out more effectively the purposes of this Agreement; and
(b) better assure, convey, grant, assign, transfer, preserve, protect and
confirm to Bank the rights, remedies and privileges existing or granted or now
or hereafter intended to be granted to such Persons under this Agreement or
other document executed in connection therewith.

SECTION
6
EVENTS OF DEFAULT

        Any one or more of the following described events shall constitute an
event of default (an “Event of Default”) under this Agreement:

6.1   Non-Payment: The Borrower shall fail to pay the principal amount of any
Obligations when due or interest on the Obligations within 5 days of when due.

6.2   Specified Defaults Under This Agreement: The Borrower fails to perform or
observe any term, covenant or agreement contained in Sections 5.2(i), 5.2(ii),
5.2(iii), 5.2(iv), 5.2(vi), 5.3(i), 5.4, 5.5, 5.10 or 5.12 of this Agreement.

6.3   Specified Defaults Under This Agreement: The Borrower fails to perform or
observe any term, covenant or agreement contained in Section 5.2(v) of this
Agreement and any such failure shall continue unremedied for more than 10
Business Days after written notice from the Bank to the Borrower of the
existence and character of such Event of Default.

6.4   Performance Under This Agreement: Other than as set forth in Section 6.2
or 6.3 hereof, the Borrower or any other Loan Party shall fail in any material
respect to perform or observe any term, covenant or agreement contained in this
Agreement or in any document, instrument or agreement relating to this Agreement
or any other document or agreement executed by the Borrower or any other Loan
Party with or in favor of Bank and any such failure shall continue unremedied
for more than 30 days after written notice from the Bank to the Borrower of the
existence and character of such Event of Default.

6.5   Representations and Warranties; Financial Statements: Any representation
or warranty made by any Loan Party under or in connection with this Agreement or
any financial statement given by the Borrower or any guarantor shall prove to
have been incorrect in any material respect when made or given or when deemed to
have been made or given.

6.6   Other Agreements: If there is a default under any agreement to which the
Borrower or any other Loan Party, or any material subsidiary of the Borrower, is
a party with the Bank or with a third party or parties resulting in a right by
the Bank or by such third party or parties, whether or not exercised, to
accelerate the maturity of any material Indebtedness.

6.7   Insolvency: (a) The Borrower, measured on a consolidated basis shall
become insolvent or be unable to pay its debts as they mature, or (b) the
Borrower or any Subsidiary shall: (i) make an assignment for the benefit of
creditors or to an agent authorized to liquidate any substantial amount of its
properties and assets; (ii) file a voluntary petition in bankruptcy or seeking
reorganization or to effect a plan or other arrangement with creditors;
(iii) file an answer admitting the material allegations of an involuntary
petition relating to bankruptcy or reorganization or join in any such petition;
(iv) become or be adjudicated a bankrupt; (v) apply for or consent to the
appointment of, or consent that an order be made, appointing any receiver,
custodian or trustee, for itself or any of its properties, assets or businesses;
or (vi) in an involuntary proceeding, any receiver, custodian or trustee shall
have been appointed for all or substantial part of the Borrower’s or such other
Loan

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    Party’s properties, assets or businesses and shall not be discharged within
30 days after the date of such appointment.   6.8   Execution: Any writ of
execution or attachment or any judgment lien relating to a judgment or judgments
in an aggregate amount of $2,000,000 or more shall be issued against any
property of any Loan Party and shall not be discharged or bonded against or
released within 30 days after the issuance or attachment of such writ or lien.  
6.9   Suspension: The Borrower or any Subsidiary shall voluntarily suspend the
transaction of business or allow to be suspended, terminated, revoked or expired
any permit, license or approval of any governmental body necessary to conduct
the Borrower’s or such Subsidiary’s business as now conducted.   6.10   Material
Adverse Change: If there occurs a Material Adverse Change.   6.11   Change in
Ownership: There shall occur a sale, transfer, disposition or encumbrance
(whether voluntary or involuntary), or an agreement shall be entered into to do
so, with respect to more than 10% of the issued and outstanding capital stock of
the Borrower.   6.12   Judgments: One or more non-interlocutory judgments,
non-interlocutory orders, decrees or arbitration awards is entered against any
Loan Party involving in the aggregate a liability (to the extent not covered by
independent third-party insurance as to which the insurer does not dispute
coverage) as to any single or related series of transactions, incidents or
conditions, of $2,000,000 or more, and the same shall remain unsatisfied,
unvacated and unstayed pending appeal for a period of thirty consecutive days
after the entry thereof.   6.13   Other Judgments. Any non-monetary judgment,
order or decree is entered against the Borrower or any Subsidiary that does or
could reasonably be expected to have a Material Adverse Change, and there shall
be any period of thirty consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect.

SECTION
7
REMEDIES ON DEFAULT
Upon the occurrence of any Event of Default, the Bank may, at its sole and
absolute election, without demand and only upon such notice as may be required
by law:

7.1   Acceleration: Declare any or all of the Borrower’s indebtedness owing to
the Bank, whether under this Agreement or any other document, instrument or
agreement, immediately due and payable, whether or not otherwise due and
payable.

7.2   Cease Extending Credit: Cease making Advances or otherwise extending
credit to or for the account of the Borrower under this Agreement or under any
other agreement now existing or hereafter entered into between the Borrower and
the Bank.

7.3   Termination: Terminate this Agreement as to any future obligation of the
Bank without affecting the Borrower’s obligations to the Bank or the Bank’s
rights and remedies under this Agreement or under any other document, instrument
or agreement.

7.4   Letters of Credit: Require the Borrower to pay immediately to the Bank,
for application against drawings under any outstanding Letters of Credit, the
outstanding principal amount of any such Letters of Credit which have not
expired. Any portion of the amount so paid to the Bank which is not applied to
satisfy draws under any such Letters of Credit or any other obligations of the
Borrower to the Bank shall be repaid to the Borrower without interest.

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7.5   Non-Exclusivity of Remedies: Exercise one or more of the Bank’s rights set
forth herein or seek such other rights or pursue such other remedies as may be
provided by law, in equity or in any other agreement now existing or hereafter
entered into between the Borrower and the Bank, or otherwise.

SECTION
8
MISCELLANEOUS

8.1   Amounts Payable on Demand: If the Borrower shall fail to pay on demand any
amount so payable under this Agreement, the Bank may, at its option and without
any obligation to do so and without waiving any default occasioned by the
Borrower having so failed to pay such amount, create an Advance under this
Agreement in an amount equal to the amount so payable, which Advance shall
thereafter bear interest as provided hereunder.

8.2   Default Interest Rate: If an Event of Default, or an event which, with
notice or passage of time could become an Event of Default, has occurred or is
continuing, the Borrower shall pay to the Bank interest on any Indebtedness or
amount payable under this Agreement at a rate which is 5% in excess of the rate
or rates then in effect under this Agreement.

8.3   Right of Setoff: To the extent permitted by applicable law, Bank reserves
a right of setoff in the Borrower’s accounts with Bank (whether checking,
savings, or some other account). This includes all accounts the Borrower holds
jointly with someone else and all accounts the Borrower may open in the future.
The Borrower authorizes Bank, to the extent permitted by applicable law, to
charge or setoff all sums owing on the debt against any and all such accounts,
and, at Bank’s option, to administratively freeze all such accounts to allow
Bank to protect Bank’s charge and setoff rights provided in this paragraph.

8.4   Reliance and Further Assurances: Each warranty, representation, covenant,
obligation and agreement contained in this Agreement shall be conclusively
presumed to have been relied upon by the Bank regardless of any investigation
made or information possessed by the Bank and shall be cumulative and in
addition to any other warranties, representations, covenants and agreements
which the Borrower now or hereafter shall give, or cause to be given, to the
Bank. The Borrower agrees to execute all documents and instruments and to
perform such acts as the Bank may reasonably deem necessary to confirm and
secure to the Bank all rights and remedies conferred upon the Bank by this
agreement and all other documents related thereto.

8.5   Attorneys’ Fees: The Borrower shall pay to the Bank all costs and
expenses, including but not limited to reasonable attorneys fees, incurred by
Bank in connection with the administration, enforcement, including any
bankruptcy, at trial and on appeal or the enforcement of any judgment or any
refinancing or restructuring of this Agreement or any document, instrument or
agreement executed with respect to, evidencing or securing the indebtedness
hereunder.

8.6   Notices: All notices, payments, requests, information and demands which
either party hereto may desire, or may be required to give or make to the other
party hereto, shall be given or made to such party by hand delivery or through
deposit in the United States mail, postage prepaid, or by facsimile delivery, or
to such other address as may be specified from time to time in writing by either
party to the other.

     
To the Borrower:
  To the Bank:
 
   
IXYS CORPORATION
  BANK OF THE WEST
1590 Buckeye Drive
  San Jose Office (NBO)
Milpitas, CA 95035
  One Almaden Boulevard
Attn: Nathan Zommer
  San Jose, CA 95113

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     Chief Executive Officer or
  Attn: Dirk Price
     Uzi Sasson
  Vice President
     Chief Financial Officer
  FAX: (408) 292-4092
     FAX: (408) 715-2503
   

8.7   Waiver: Neither the failure nor delay by the Bank in exercising any right
hereunder or under any document, instrument or agreement mentioned herein shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right hereunder or under any other document, instrument or agreement mentioned
herein preclude other or further exercise thereof or the exercise of any other
right; nor shall any waiver of any right or default hereunder, or under any
other document, instrument or agreement mentioned herein, constitute a waiver of
any other right or default or constitute a waiver of any other default of the
same or any other term or provision.   8.8   Conflicting Provisions: To the
extent the provisions contained in this Agreement are inconsistent with those
contained in any other document, instrument or agreement executed pursuant
hereto, the terms and provisions contained herein shall control. Otherwise, such
provisions shall be considered cumulative.   8.9   Binding Effect; Assignment:
This Agreement shall be binding upon and inure to the benefit of the Borrower
and the Bank and their respective successors and assigns, except that the
Borrower shall not have the right to assign their rights hereunder or any
interest herein without the prior written consent of the Bank. The Bank may
sell, assign or grant participation in all or any portion of its rights and
benefits hereunder. The Borrower agrees that, in connection with any such sale,
grant or assignment, the Bank may deliver to the prospective buyer, participant
or assignee financial statements and other relevant information relating to the
Borrower and any guarantor.   8.10   Jurisdiction: This Agreement, any notes
issued hereunder, the rights of the parties hereunder, and any documents,
instruments or agreements mentioned or referred to herein shall be governed by
and construed according to the laws of the State of California without regard to
conflict of law principles, to the jurisdiction of whose courts the parties
hereby submit.   8.11   Waiver Of Jury Trial. THE BORROWER AND BANK ACKNOWLEDGE
THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL RIGHT, AND THAT IT MAY BE
WAIVED UNDER CERTAIN CIRCUMSTANCES. TO THE EXTENT PERMITTED BY LAW EACH PARTY,
AFTER CONSULTING (OR HAVING THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS
CHOICE, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION RELATED TO
THIS AGREEMENT OR ANY OTHER DOCUMENT, INSTRUMENT OR TRANSACTION BETWEEN THE
PARTIES.   8.12   Judicial Reference Provision. In the event the above Jury
Trial Waiver is unenforceable, the parties elect to proceed under this Judicial
Reference Provision. With the exception of the items specified below, any
controversy, dispute or claim between the parties relating to this Agreement or
any other document, instrument or transaction between the parties (each, a
Claim), will be resolved by a reference proceeding in California pursuant to
Sections 638 et seq. of the California Code of Civil Procedure, or their
successor sections, which shall constitute the exclusive remedy for the
resolution of any Claim, including whether the Claim is subject to reference.
Venue for the reference will be the Superior Court in the County where real
property involved in the action, if any, is located, or in a County where venue
is otherwise appropriate under law (the Court). The following matters shall not
be subject to reference: (i) nonjudicial foreclosure of any security interests
in real or personal property, (ii) exercise of self-help remedies (including
without limitation set-off), (iii) appointment of a receiver, and
(iv) temporary, provisional or ancillary remedies (including without limitation
writs of attachment, writs of possession, temporary restraining orders or
preliminary injunctions). The exercise of, or opposition to, any of the above
does not waive the right to a reference hereunder.

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    The referee shall be selected by agreement of the parties. If the parties do
not agree, upon request of any party a referee shall be selected by the
Presiding Judge of the Court. The referee shall determine all issues in
accordance with existing case law and statutory law of the State of California,
including without limitation the rules of evidence applicable to proceedings at
law. The referee is empowered to enter equitable and legal relief, and rule on
any motion which would be authorized in a court proceeding, including without
limitation motions for summary judgment or summary adjudication. The referee
shall issue a decision, and pursuant to CCP §644 the referee’s decision shall be
entered by the Court as a judgment or order in the same manner as if tried by
the Court. The final judgment or order from any decision or order entered by the
referee shall be fully appealable as provided by law. The parties reserve the
right to findings of fact, conclusions of law, a written statement of decision,
and the right to move for a new trial or a different judgment, which new trial
if granted, will be a reference hereunder. AFTER CONSULTING (OR HAVING THE
OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS CHOICE, EACH PARTY AGREES THAT ALL
CLAIMS RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND
NOT A JURY.   8.13   Counterparts: This Agreement may be executed in any number
of counterparts and all such counterparts taken together shall be deemed to
constitute one and the same instrument.   8.14   Headings: The headings herein
set forth are solely for the purpose of identification and have no legal
significance.   8.15   Entire Agreement and Amendments: This Agreement and all
documents, instruments and agreements mentioned herein constitute the entire and
complete understanding of the parties with respect to the transactions
contemplated hereunder. All previous conversations, memoranda and writings
between the parties pertaining to the transactions contemplated hereunder not
incorporated or referenced in this Agreement or in such documents, instruments
and agreements are superseded hereby. This Agreement may be amended only by an
instrument in writing signed by the Borrower and the Bank.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first hereinabove written.

     
BANK:
  BORROWER:
 
   
BANK OF THE WEST
  IXYS CORPORATION
 
   
BY: /s/ Dirk Price
  BY: /s/ Uzi Sasson
NAME: Dirk Price, Vice President
  NAME: Uzi Sasson, Chief Financial Officer and Secretary

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