Document:

Unassociated Document

Exhibit 10.52

Lease Agreement

This Lease Agreement (hereinafter referred to as "the Lease") is entered into on Sep 30, 2003, in the city of Shanghai, by and between SHANGHAI KAI HONG ELECTRONIC COMPANY, LIMITED (hereinafter referred to as "Party A") with its registered office at East of Chen Chun Road, XinQiao Town, Song Jing District, Shanghai, P.R.C. and SHANGHAI DING HONG ELECTRONIC EQUIPMENT LIMITED (hereinafter referred to as "Party B") with its registered office at No.999, Chen Chun Road, Xin Qiao Town, Song Jiang District, Shanghai, P.R.C.

Party A and Party B are collectively referred to as the “Parties” and individually as a “Party.”

WHEREAS,

1. Party B represents that it is the lawful owner of the Factory Building consisting of Buildings, A and B and more particularly identified in Section 1.1, below (hereinafter referred to collectively as "the Buildings" and individually as Building “A” or Building “B”) with full legal power to enter into this Lease Agreement,

 

2. Party A agrees to lease from Party B the following premises within the Factory Building: (a) the second floor of the Building A (set forth in Exhibit One, hereinafter referred to as "Area 1") (b) a portion of the first floor of the Building B (set forth in Exhibit Two, hereinafter referred to as "Area 2") and (c) the facilities of the Buildings (set forth in Exhibit Three, hereinafter referred to as "Area 3" and "Area 4") all in accordance with the terms and conditions of this Lease. The Parties also agree on a future possible lease of the third floor of Building A (set forth in Exhibit Four, hereinafter referred to as "Area 5"), and the second floor of Building B (set forth in Exhibit Five, hereinafter referred to as "Area 6")

1. Definitions

Unless otherwise defined in this Lease, the terms used herein shall have the following meanings:

1.1 "Factory Building" shall mean the building located on lot_375___ of Song Jiang District, Shanghai. Building A has_3__ stories and Building B has_2___ stories.

1.2 "Area 1" shall mean the second floor of the Building A [Exhibit One--2nd Floor Layout for Factory Building (Building A)].

	 
	 	 	 
	

	 

 

1.3 "Area 2" shall mean the shade area marked on Exhibit Two of the first floor of the Building B [Exhibit Two--1st Floor Layout for Factory Building (Building B)].

1.4 "Area 3" shall mean the area of the Transformer Substation which is part of the facility of the Buildings.[Exhibit Three--Layout for New Factory Transformer Substation and Multifunctional Reservoir]

1.5 "Area 4" shall mean the area of the Gas Mixture Station which is part of the facility of the Buildings. [Exhibit Three--Layout for New Factory Transformer Substation and Multifunctional Reservoir]

1.6 "Area 5" shall mean the third floor of the Building A. [Exhibit Four--3rd Floor Layout for Factory Building (Building A)].

1.7 "Area 6" shall mean the second floor of the Building B [Exhibit Five--2nd Floor Layout for Factory Building (Building B)].

1.8 "Effective Date" shall mean the date on which this Lease Agreement will take effect after the legal representatives or authorized representatives of the Parties affix their signatures and corporate seals on the Lease.

1.9 "Lease Term" shall mean the period of time on which Party A is entitled to use the Lease Areas and Party B is entitled to receive rent from Party A in accordance with the terms and conditions of the Lease Agreement.

2. Gross Area of the Lease Areas

2.1 The gross area of Area 1 is 1,948.60 square meters.

2.2 The gross area of Area 2 is 517.30 square meters.

2.3 The gross area of 3 is 344.60 square meters.

2.4 The gross area of 4 is 1,953.50 square meters.

2.5 The gross area of 5 is 2,067.30_ square meters.

2.6 The gross area of 6 is 1,020.40 square meters.

	 
	 	 	 
	

	 

 

3. Lease Term

3.1 The Parties agree that for "Area 1" and "Area 2" the Lease Term is _5___ year(s) commencing March 1, 2003.

3.2 The Parties agree that for "Area 3" and "Area 4" the Lease Term is _5_ year(s) 7 months, commencing August 1, 2002 .

3.3 The Lease Term for Area 1, Area 2, Area 3, and Area 4 shall be automatically renewed for successive __5__ year terms unless Party A gives termination notice not less than thirty (30) days before the expiration of any Lease Term. So long as Party A is engaged in business, Party A has the priority to lease any Lease Areas. Party B shall not terminate this Lease Agreement without reasonable cause and Party A's consent in writing.

In the period of renewal, the items relating to the rental set forth in Article 4 of the Lease shall be adjusted on the basis of the market prices at that time and after consultation between the Parties.

3.4 If during any term of this Lease, Party B receives from a third party a bona fide, legally binding offer to rent Area 5 and Area 6, it shall notify Party A of this fact. The notice shall specify all terms in the bona fide third party offer. Party A shall then have the right for a period of thirty (30) days after such notice to lease from Party B that portion of Area 5 and Area 6 referred to in the bona fide offer. Party B shall not lease Area 5 and Area 6 to any third party until the thirty (30) days has expired without Party A exercising its right of first refusal.

For other terms on the lease of Area 5 and Area 6, a supplementary lease agreement shall be entered into by the Parties through negotiation. Such amendments shall become a part of this Lease Agreement and shall have the same effectiveness as the Lease Agreement.

4. Rent

4.1 The Parties agree that the monthly rent for Area 1 shall be RMB _24.84 _ per square meter for a total of RMB_48,403.22 per month.

4.2 The Parties agree that the monthly rent for Area 2 shall be RMB_24.84_ per square meter for a total of RMB 12,849.73_per month.

	 
	 	 	 
	

	 

 

4.3 The Parties agree that the monthly rent for Area 3 shall be RMB24.84 per square meter for a total of RMB_8,559.86 per month.

4.4 The Parties agree that the monthly rent for Area 4 shall be RMB_4.14 per square meter for a total of RMB_8,087.49_per month.

4.5 The Parties agree that the monthly rent for Area 5 shall be RMB_23.1818_ per square meter for a total of RMB_47,920.01_per month.

4.6 The Parties agree that the monthly rent for Area 6 shall be RMB_23.18_ per square meter for a total of RMB_23,652.87_per month.

5. Method of Payment 

Party A shall pay the Rental in RMB Yuan to the RMB account as designated by Party B before the first day of every month.

6. Deposit

For the lease of Area 1, 2, 3 and 4, Party A shall pay Party B a deposit amounting to RMB_77,903.31__ within 10 days of the effective date of the Lease.

7. Termination of the Lease

If either Party terminates the Lease prior to the expiration of the Lease Term without the consent from the other Party, the former thereby shall pay damages to the latter to compensate for its actual loss. The amount of damages shall include, but not be limited to the reasonable profits, out-of- pocket costs, legal fees, accounting fees and removal or relocation fees.

8. Insurance and Repair Costs

8.1 During theLease Term, Party B shall purchase and maintain insurance coverage to cover any and all casualty damage to the Rent Areas, and shall be responsible for repairs of al structural damages to the building that are not the result of improper use by Party A. Party A shall be responsible for all repair costs arising from improper usage by Party A. If Party B cannot obtain building insurance, the Party A will be requested to obtain insurance, and Party B will reimburse Party A for all costs of such insurance coverage.

	 
	 	 	 
	

	 

 

8.2 Party B shall be entitled to inspect the Rent Areas at reasonable intervals and upon reasonable notice. Party A shall provide assistance to allow such inspections.

9. Liability for Breach of the Lease

9.1 If Party A violates Article 5 of the Lease for failing to pay the Rental, then Party A shall pay a penalty at the rate of 0.21% of the Rental for each day of delay.

9.2 If Party B breaches any of the warranties set forth in Article 11, Party B shall compensate Party A for all of its losses and damages including consequential damages.

9.3 Party A shall not:

(1)   Sub-lease the Rented Areas or exchange the use of the Rented Areas with any third party without Party B's prior, written consent.

(2)   Alter the structure of the Rented Areas or damage the Rented Areas without Party B's prior, written consent.

(3)           Change the lease purpose stipulated by the competent authorities without Party B's consent.

10. Warranties

10.1 Party B hereby warrants that if the Rent Areas are sold to any third party during the Rent Term or any period of renewal, such third party shall be required to fulfill all obligations of Party B under this Lease Agreement. In the event third party fails to fulfill such obligations, Party B shall compensate Party A for all of its losses and damages including consequential damages.

10.2 In case Party B mortgages the Rent Areas to the third party, any loss and damages, including consequential damages, suffered by Party A shall be paid by Party B.

11. Force Majeure

	 
	 	 	 
	

	 

 

11.1 Definition of Force Majeure

Force Majeure shall mean any event, which arises after the Effective Date that is beyond the control of the Parties, and is unforeseen, unavoidable and insurmountable, and which prevents total or partial performance by either Party. Such events shall include earthquakes, typhoons, flood, fire, war, acts of government or public agencies, strikes and ay other event which cannot be foreseen, prevented and controlled, including events which are recognized as Force Majeure in general international commercial practice.

11.2 Consequences of Force Majeure

a. If an event of Force Majeure occurs, the contractual obligation of a Party affected by such an event shall be suspended during the period of delay and the time for performing such obligation shall be extended, without penalty, for a period equal to such suspension.

b. The party claiming Force Majeure shall give prompt notice to the other Party in writing and shall furnish, within fifteen (15) days thereafter, sufficient proof of the occurrence and expected duration of such Force Majeure. The Party claiming Force Majeure shall also use all reasonable efforts to mitigate or eliminate the effects of the Force Majeure. 

c. If an event of Force Majeure occurs, the Parties shall immediately consult with each other in order to find an equitable solution and shall use all reasonable efforts to minimize the consequences of such Force Majeure.

12. Effective Date

The Lease shall become effective when the legal representatives or authorized representatives of both Parties affix their signatures and company seals to this Lease Agreement.

13. Language of the Lease

The Lease is made and executed in Chinese and English, both versions having equal validity.

14. Dispute Resolution

	 
	 	 	 
	

	 

 

14.1 Friendly consultations

a. In the event of any dispute, difference, controversy or claim arising out of or related to this Lease Agreement, including the breach, termination or validity of the Lease (a "Dispute"), then upon one Party giving the other Party notice in writing of the Dispute ("Notice of Dispute"), the Parties shall attempt to resolve such Dispute through friendly consultation.

b. If the Dispute has not been resolved through friendly consultations with thirty (30) days from the Notice of Dispute, the Dispute shall be resolved by arbitration in accordance with Article 14.2 of this Lease Agreement. Such arbitration may be initiated by either party.

14.2 Arbitration

The arbitration shall be conducted by Shanghai Arbitration Commission in Shanghai in accordance with its procedure and rules. The arbitration award shall be final and binding on the Parties. The costs of arbitration shall be borne by the losing Party except as may be otherwise determined by the arbitration tribunal.

14.3 Continuance of performance

Except for the matters in Dispute, the Parties shall continue to perform their respective obligations under the Lease during any friendly consultations or any arbitration pursuant to this Article 14.

14.4 Separability

The provisions of this Article 14 shall be separable from the other terms of the Lease. Neither the terminated nor the invalidity of the Lease shall affect the validity of the provisions of this Article 14.

15. Applicable law

The validity, interpretation and implementation of the Lease Agreement and the resolution of Disputes herein shall be governed by relevant PRC laws and regulations, which are officially promulgated and publicly available. 

16. Miscellaneous

	 
	 	 	 
	

	 

 

16.1 Any amendment to this Lease shall be in writing and duly signed by both Parties. Such Amendment shall constitute the part of the entire Lease.

16.2 Both Parties acknowledge that they are aware of their respective rights, obligations, and liabilities, and will perform their obligations under the Lease Agreement in accordance with the provisions of the Lease Agreement. If one Party breaches the Lease Agreement, the other Party is entitled to claim damages in accordance with the Lease Agreement.

16.3 Any notice or written communication requited or permitted by this Lease shall be made in writing in Chinese and English and sent by courier service. The date of receipt of a notice or communication shall be deemed to be seven (7) days after the letter is deposited with the courier service provided the deposit is evidenced by a confirmation receipt. All notice and communications shall be sent to the appropriate address set forth below, until the same is changed by notice given in writing to the other Party.

	
To: Party A   
	
To: Party B

	
Shanghai Kai Hong Electronic Company Limited
	
Shanghai Ding Hong Electronic Equipment Limited 

	
Address: Chen Chun Road, XinQiao Town, Song Jing District, Shanghai, P.R.C
	
Address: No.999, Chen Chun Road, Xin Qiao Town, Song Jiang District, Shanghai, P.R.C.

	
Attn.: -
	
Attn.: -

	
 
	
 

	
Party A:   
	
Party B:

	
Representative:   
	
Representative:

	
/s/: Joseph Liu
	
/s/: Xing Jian Ya

	
Date: September 30, 2003
	
Date: September 30, 2003Unassociated Document

Exhibit 10.53

TERM NOTE

	
Borrower's Name:

 

FabTech, Inc.

	
Borrower's Address:

 

777 N.W. Blue Parkway, Suite 350

Lee’s Summit, Missouri 64086-5709
	
Office:

 

30361
	
Loan Number:

	
 
	
Maturity Date:

 

August 3, 2009
	
Amount:

 

$5,000,000

	 Lee’s Summit, Missouri	$5,000,000	Dated: July 6, 2004

 

FOR VALUE RECEIVED, on August 3, 2009 (the “Maturity Date”), the undersigned ("Borrower") promises to pay to the order of Union Bank of California, N.A., a national banking association ("Bank"), as indicated below, the principal sum of Five Million Dollars ($5,000,000), or so much thereof as is disbursed, together with interest on the balance of such principal from time to time outstanding, at the per annum rate or rates and at the times set forth below. This Term Note (this "Note") is the Note generally referred to in the Covenant Agreement (as such term is defined hereinbelow) and is governed by the terms and conditions thereof. Initially capitalized terms used herein which are not otherwise defined shall have the meanings assigned to such terms in the Covenant Agreement.

1.   PAYMENTS

PRINCIPAL PAYMENTS. Borrower shall pay principal in equal consecutive monthly installments, each installment in the amount of Eighty-Three Thousand Three Hundred Thirty-Three Dollars ($83,333), commencing on August 3, 2004 and continuing on the third day of each month thereafter. On the Maturity Date, all outstanding principal hereunder shall be due and payable.

INTEREST PAYMENTS. Borrower shall pay interest on the outstanding principal amount hereof on the third day of each month, commencing August 3, 2004. Should interest not be paid when due, it shall become part of the principal and bear interest as herein provided. All computations of interest under this Note shall be made on the basis of a year of 360 days, for actual days elapsed.

(a)   Base Interest Rate. At Borrower’s option, amounts outstanding hereunder in minimum amounts of at least $100,000 shall bear interest at a rate, based on an index selected by Borrower, equal to Bank's LIBOR Rate for the Interest Period selected by Borrower plus the LIBOR Rate Margin.

	 
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The Base Interest Rate may not be changed, altered or otherwise modified until the expiration of the Interest Period selected by Borrower. The exercise of interest rate options by Borrower shall be as recorded in Bank's records, which records shall be prima facie evidence of the amount borrowed at the Base Interest Rate and the interest rate; provided, however, that failure of Bank to make any such notation in its records shall not discharge Borrower from its obligations to repay in full with interest all amounts borrowed. In no event shall any Interest Period extend beyond the Maturity Date.

To exercise this option, Borrower may, from time to time with respect to principal outstanding on which a Base Interest Rate is not accruing, and on the expiration of any Interest Period with respect to principal outstanding on which a Base Interest Rate has been accruing, select an index offered by Bank for a Base Interest Rate Loan and an Interest Period by telephoning an authorized lending officer of Bank located at the banking office identified below prior to 10:00 a.m., Pacific time, on any Business Day and advising that officer of the selected index, the Interest Period and the Origination Date selected (which Origination Date, for a Base Interest Rate Loan based on the LIBOR Rate, shall follow the date of such selection by no more than two (2) Business Days).

Bank will mail a written confirmation of the terms of the selection to Borrower promptly after the selection is made. Failure to send such confirmation shall not affect Bank's rights to collect interest at the rate selected. If, on the date of the selection, the index selected is unavailable for any reason, the selection shall be void. Bank reserves the right to fund the principal from any source of funds notwithstanding any Base Interest Rate selected by Borrower.

(b)   Variable Interest Rate. All principal outstanding hereunder which is not bearing interest at a Base Interest Rate shall bear interest at a rate per annum equal to the Reference Rate plus the Reference Rate Margin, which rate shall vary as and when the Reference Rate changes.

Borrower shall pay all amounts due under this Note in lawful money of the United States at Bank's San Fernando Valley Commercial Banking Office, or such other office as may be designated by Bank from time to time.

2.   LATE PAYMENTS. If any payment required by the terms of this Note shall remain unpaid ten days after same is due, at the option of Bank, Borrower shall pay a fee of $100 to Bank.

3.   INTEREST RATE FOLLOWING DEFAULT. In the event of default, at the option of Bank, and, to the extent permitted by law, interest shall be payable on the outstanding principal under this Note at a per annum rate equal to five percent (5%) in excess of the interest rate specified in paragraph 1.b above, calculated from the date of default until all amounts payable under this Note are paid in full.

	 
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4.   PREPAYMENT

(a)   Amounts outstanding under this Note bearing interest at a rate based on the Reference Rate may be prepaid in whole or in part at any time, without penalty or premium. Borrower may prepay amounts outstanding under this Note bearing interest at a Base Interest Rate in whole or in part provided Borrower has given Bank not less than five (5) Business Days’ prior written notice of Borrower’s intention to make such prepayment and pays to Bank the prepayment fee due as a result. The prepayment fee shall also be paid, if Bank, for any other reason, including acceleration or foreclosure, receives all or any portion of principal bearing interest at a Base Interest Rate prior to its scheduled payment date. The prepayment fee shall be an amount equal to the present
value of the product of: (i) the difference (but not less than zero) between (a) the Base Interest Rate applicable to the principal amount which is being prepaid, and (b) the return which Bank could obtain if it used the amount of such prepayment of principal to purchase at bid price regularly quoted securities issued by the United States having a maturity date most closely coinciding with the relevant Base Rate Maturity Date and such securities were held by Bank until the relevant Base Rate Maturity Date ("Yield Rate"); (ii) a fraction, the numerator of which is the number of days in the period between the date of prepayment and the relevant Base Rate Maturity Date and the denominator of which is 360; and (iii) the amount of the principal so prepaid (except in the event that principal payments are required and have been made as scheduled under the terms of the Base Interest Rate Loan being prepaid, then an amount equal to the lesser of (A) the amount prepaid or (B) 50% of the sum of (1) the amount prepaid
 and (2)
the amount of principal scheduled under the terms of the Base Interest Rate Loan being prepaid to be outstanding at the relevant Base Rate Maturity Date). Present value under this Note is determined by discounting the above product to present value using the Yield Rate as the annual discount factor.

(b)   In no event shall Bank be obligated to make any payment or refund to Borrower, nor shall Borrower be entitled to any setoff or other claim against Bank, should the return which Bank could obtain under this prepayment formula exceed the interest that Bank would have received if no prepayment had occurred. All prepayments shall include payment of accrued interest on the principal amount so prepaid and shall be applied to payment of interest before application to principal. A determination by Bank as to the prepayment fee amount, if any, shall be conclusive.

(c)   Bank shall provide Borrower a statement of the amount payable on account of prepayment. Borrower acknowledges that (i) Bank establishes a Base Interest Rate upon the understanding that it apply to the Base Interest Rate Loan for the entire Interest Period, and (ii) Bank would not lend to Borrower without Borrower’s express agreement to pay Bank the prepayment fee described above.

	 
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5.   DEFAULT AND ACCELERATION OF TIME FOR PAYMENT. Default shall include, but not be limited to, any of the following: (a) the failure of Borrower to make any payment required under this Note when due; (b) any breach, misrepresentation or other default by Borrower, any guarantor, co-maker, endorser, or any person or entity other than Borrower providing security for this Note (hereinafter individually and collectively referred to as the "Obligor") under any security agreement, guaranty or other agreement between Bank and any Obligor; (c) the insolvency of any Obligor or the failure of any Obligor generally to pay such Obligor's debts as such debts become due; (d) the commencement as to any Obligor of any voluntary or involuntary proceeding under
any laws relating to bankruptcy, insolvency, reorganization, arrangement, debt adjustment or debtor relief; (e) the assignment by any Obligor for the benefit of such Obligor's creditors of any substantial part of such Obligor’s property; (f) the appointment, or commencement of any proceeding for the appointment of a receiver, trustee, custodian or similar official for all or substantially all of any Obligor's property; (g) the commencement of any proceeding for the dissolution or liquidation of any Obligor; (h) the termination of existence or death of any Obligor; (i) the revocation of any guaranty or subordination agreement given in connection with this Note; (j) the failure of any Obligor to comply with any order, judgment, injunction, decree, writ or demand of any court or other public authority; (k) the filing or recording against any Obligor, or the property of any Obligor, of any notice of levy, notice to withhold, or other legal process for taxes other than property taxes; (l) the default by any
 Obligor personally
liable for amounts owed hereunder on any obligation concerning the borrowing of money (including, without limitation, the occurrence of any Event of Default under and as defined in the Amended and Restated Credit Agreement); (m) the issuance against any Obligor, or the property of any Obligor, of any writ of attachment, execution, or other judicial lien; or (n) the deterioration of the financial condition of any Obligor which results in Bank deeming itself, in good faith, insecure. Upon the occurrence of any such default, Bank, in its discretion, may cease to advance funds hereunder and may declare all obligations under this Note immediately due and payable; however, upon the occurrence of an event of default under subparagraph (c), (d), (e), (f) or (g) hereof, all principal and interest shall automatically become immediately due and payable.

6.   ADDITIONAL AGREEMENTS OF BORROWER. If any amounts owing under this Note are not paid when due, Borrower promises to pay all costs and expenses, including reasonable attorneys' fees, incurred by Bank in the collection or enforcement of this Note. Borrower and any endorsers of this Note, for the maximum period of time and the full extent permitted by law, (a) waive diligence, presentment, demand, notice of nonpayment, protest, notice of protest, and notice of every kind; (b) waive the right to assert the defense of any statute of limitations to any debt or obligation hereunder; and (c) consent to renewals and extensions of time for the payment of any amounts due under this Note. If this Note is signed by more than one party, the term "Borrower" includes each of the undersigned and any successors in interest
thereof; all of whose liability shall be joint and several. The receipt of any check or other item of payment by Bank, at its option, shall not be considered a payment on account until such check or other item of payment is honored when presented for payment at the drawee Bank. Bank may delay the credit of such payment based upon Bank's schedule of funds availability, and interest under this Note shall accrue until the funds are deemed collected. In any action brought under or arising out of this Note, Borrower and any Obligor, including their successors and assigns, hereby consent to the jurisdiction of any competent court within the State of California, as provided in any alternative dispute resolution agreement executed between Borrower and Bank, and consent to service of process by any means authorized by said state’s law. The term "Bank" includes, without limitation, any holder of this Note. This Note shall be construed in accordance with and governed
by the laws of the State of California. This Note hereby incorporates any alternative dispute resolution agreement previously, concurrently or hereafter executed between Borrower and Bank.

	 
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7.   CHANGE IN CIRCUMSTANCES

(a)   Inability to Determine Rates. If, on or before the first day of any Interest Period for any Base Interest Rate Loan, Bank determines that the Base Interest Rate for such Interest Period cannot be adequately and reasonably determined due to the unavailability of funds in or other circumstances affecting the London interbank market, or the certificate of deposit market, as the case may be, which determination by Bank shall be conclusive and binding upon Borrower, Bank shall immediately give notice thereof to Borrower. After the giving of any such notice and until Bank shall otherwise notify Borrower that the circumstances giving rise to such condition no longer exist, Borrower's right to request, and Bank's obligation to offer, a Base Interest Rate Loan shall be suspended. Any Base Interest
Rate Loan outstanding
at the commencement of any such suspension which affects Base Interest Rate Loans of that type, shall be converted at the end of the then current Interest Period for that loan to a Reference Rate Loan unless such suspension has then ended.

(b)   Illegality. If, after the date of this Note, the adoption of any applicable law, rule or regulation, or any change therein, or change in the interpretation or administration thereof by any governmental authority, central bank, comparable agency or other Person charged with the interpretation or administration thereof, or compliance by Bank with any request or directive (whether or not having the force of law) of any such authority (a "Change of Law") shall make it unlawful or impossible for Bank to make or maintain a Base Interest Rate Loan, Bank shall immediately notify Borrower of such Change of Law. After Borrower's receipt of such notice, Borrower's right to select, and Bank's obligation to offer, a Base Interest Rate Loan shall be terminated, and the undersigned shall (i) at the
end of the current Interest
 Period for any Base Interest Rate Loan then outstanding, convert such loan to a Reference Rate Loan, or (ii) immediately repay or convert any Base Interest Rate Loan then outstanding if Bank shall notify Borrower that Bank may not lawfully continue to fund and maintain such Base Interest Rate Loan.

(c)   Increased Costs. If, after the date of this Note, any Change of Law:

	 
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(i)   shall subject Bank to any tax, duty or other charge with respect to a Base Interest Rate Loan or its obligation to make such Base Interest Rate Loan, or shall change the basis of taxation of payments by Borrower to Bank on such Base Interest Rate Loan or in respect to such Base Interest Rate Loan under this Note (except for changes in the rate of taxation on the overall net income of Bank); or

(ii)   shall impose, modify or hold applicable any reserve, special deposit 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 Bank for any Base Interest Rate Loan (except for any reserve, special deposit or other requirement included in the determination of the Base Rate); or

(iii)   shall impose on Bank any other condition directly related to any Base Interest Rate Loan; and the effect of any of the foregoing is to increase the cost to Bank of making, renewing or maintaining a Base Interest Rate Loan beyond any adjustment made by Bank in determining the applicable interest rate for any such Base Interest Rate Loan, or to reduce the amount receivable by Bank hereunder;

then Borrower shall from time to time, upon demand by Bank, pay to Bank additional amounts sufficient to reimburse Bank for such increased costs or reduced amounts. A certificate as to the amount of such increased costs or reduced amounts, submitted to the Borrower by Bank, shall, in the absence of manifest error, be conclusive and binding on Borrower for all purposes.

(d)   Capital Adequacy. If Bank shall determine that:

(i)   any law, rule or regulation, any interpretation or application thereof by any governmental authority, central bank, comparable agency or other Person charged with the interpretation or administration thereof, any directive, request, assessment guideline or other guideline issued by such authority, bank, agency or Person (whether or not having the force of law) or any change in any of the foregoing which is adopted, issued or becomes effective after the date hereof affects the amount of capital required or expected to be maintained by Bank or any Person controlling Bank (a "Capital Adequacy Requirement"); and

(ii)   the amount of capital maintained by Bank or such Person which is attributable to or based upon this Note or the amounts outstanding hereunder must be increased as a result of such Capital Adequacy Requirement (taking into account Bank's or such Person's policies with respect to capital adequacy), Borrower shall pay to Bank or such Person, upon demand of Bank, such amounts as Bank or such Person shall determine are necessary to compensate Bank or such Person for the increased costs to Bank or such Person of such increased capital. A certificate of Bank, setting forth in reasonable detail the computation of any such increased costs, delivered by Bank to Borrower shall, in the absence of manifest error, be conclusive and binding on Borrower for all purposes.

	 
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8.   DEFINITIONS. As used herein, the following terms shall have the meanings respectively set forth below: "Amended and Restated Credit Agreement" means that certain Amended and Restated Credit Agreement dated as of February 27, 2003, by and between Diodes and Bank, as amended and as at any time and from time to time further amended, supplemented, extended, restated or renewed. "Base Interest Rate" means a rate of interest based on the LIBOR Rate. "Base Interest Rate Loan" means amounts outstanding under this Note that bear interest at a Base Interest Rate. "Base Rate Maturity Date" means the last day of the Interest Period with respect to principal outstanding under a Base Interest Rate Loan. "Business Day" means
a day on which Bank is open for business for the funding of corporate loans, and, with respect to the rate of interest based on the LIBOR Rate, on which dealings in U.S. dollar deposits outside of the United States may be carried on by Bank. "Covenant Agreement" means that certain Covenant Agreement dated as of the date of this Note, by and between Borrower and Bank, as an any time and from time to time amended, supplemented, extended, restated or renewed. "Diodes" means Diodes Incorporated, a Delaware corporation and parent company of Borrower. "Financial Statement" has the meaning assigned to such term in the Amended and Restated Credit Agreement. "Interest Period" means with respect to funds bearing interest at a rate based on the LIBOR Rate, any calendar period of one (1) month, two (2) months, three (3) months, four (4) months, five (5) months, six (6) months, nine (9) months or twelve (12) months. In determining an Interest Period, a month means a period that starts on one
 Business Day in
a month and ends on and includes the day preceding the numerically corresponding day in the next month. For any month in which there is no such numerically corresponding day, then as to that month, such day shall be deemed to be the last calendar day of such month. Any Interest Period which would otherwise end on a non-Business Day shall end on the next succeeding Business Day unless that is the first day of a month, in which event such Interest Period shall end on the next preceding Business Day. "Leverage Ratio" has the meaning assigned to such term in the Amended and Restated Credit Agreement. "LIBOR Rate" means a per annum rate of interest (rounded upward, if necessary, to the nearest 1/100 of 1%) at which dollar deposits, in immediately available funds and in lawful money of the United States would be offered to Bank, outside of the United States, for a term coinciding with the Interest Period selected by Borrower and for an amount equal to the amount of principal covered by Borrower's
interest rate selection, plus Bank’s costs, including the cost, if any, of reserve requirements. "LIBOR Rate Margin" shall mean, (i) two and three-quarters percent (2-3/4%) per annum, effective on the date on which Bank receives a consolidated Financial Statement of Diodes and its Subsidiaries (including Borrower) demonstrating that the Leverage Ratio for the fiscal period covered thereby was greater than 2.0 to 1.0, (ii) two and one-half percent (2-1/2%) per annum, effective on the date on which Bank receives a consolidated Financial Statement of Diodes and its Subsidiaries (including Borrower) demonstrating that the Leverage Ratio for the fiscal period covered thereby was less than or equal to 2.0 to 1.0 but greater than 1.5 to 1.0, (iii) two percent (2%) per annum, effective on the date on which Bank receives a consolidated Financial Statement of Diodes and its Subsidiaries (including Borrower) demonstrating that the Leverage Ratio for the fiscal period covered thereby was less than or equal to
 1.5 to
1.0 but greater than 1.0 to 1.0, (iv) one
 and three-quarters percent (1-3/4%) per annum, effective on the date on which Bank receives a consolidated Financial Statement of Diodes and its Subsidiaries (including Borrower) demonstrating that the Leverage Ratio for the fiscal period covered thereby was less than or equal to 1.0 to 1.0 but greater than 0.75 to 1.0 and (v) one and five-eighths percent (1-5/8%) per annum, effective on the date on which Bank receives a consolidated Financial Statement of Diodes and its Subsidiaries (including Borrower) demonstrating that the Leverage Ratio for the fiscal period covered thereby was less than or equal to 0.75 to 1.0; provided, however, that (x) if at any time there exists an Event of Default under the Covenant Agreement or the Amended and Restated Credit Agreement, or any event which, with notice or the lapse of time, or both, would become an Event of Default under the Covenant Agreement or the Amended and Restated Credit Agreement or (y) if Diodes fails to deliver
any quarterly or annual Financial Statement to Bank within the required time period set forth in the 

Amended and Restated Credit Agreement, then the Leverage Ratio shall be deemed to be greater than 2.0 to 1.0 until such Event of Default or unmatured Event of Default is cured or otherwise waived by Bank or such quarterly or annual Financial Statement is delivered to Bank, as the case may be; and provided further, however, that the LIBOR Rate Margin shall never be a negative number. "Origination Date" means the first day of the Interest Period. "Reference Rate" means the rate announced by Bank from time to time at its corporate headquarters as its Reference Rate. 

	 
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The Reference Rate is an index rate determined by Bank from time to time as a means of pricing certain extensions of credit and is neither directly tied to any external rate of interest or index nor necessarily the lowest rate of interest charged by Bank at any given time. "Reference Rate Margin" shall mean (a) one-half of one percent (1/2 of 1%) per annum, effective on the date on which Bank receives a consolidated Financial Statement of Diodes and its Subsidiaries (including Borrower) demonstrating that the Leverage Ratio for the fiscal period covered thereby was thereby was greater than 2.0 to 1.0, (ii) three-eighths of one percent (3/8 of 1%) per annum, effective on the date on which Bank receives a consolidated Financial Statement of Diodes and its Subsidiaries (including Borrower) demonstrating that the Leverage Ratio for the fiscal
period covered thereby was less than
or equal to 2.0 to 1.0 but greater than 1.5 to 1.0, (iii) one-quarter of one percent (1/4 of 1%) per annum, effective on the date on which Bank receives a consolidated Financial Statement of Diodes and its Subsidiaries (including Borrower) demonstrating that the Leverage Ratio for the fiscal period covered thereby was less than or equal to 1.5 to 1.0 but greater than 1.0 to 1.0 and (iv) zero percent (0%), effective on the date on which Bank receives a consolidated Financial Statement of Diodes and its Subsidiaries (including Borrower) demonstrating that the Leverage Ratio for the fiscal period covered thereby was less than or equal to 1.0 to 1.0; provided, however, that (x) if at any time there exists an Event of Default under the Covenant Agreement or the Amended and Restated Credit Agreement, or any event which, with notice or the lapse of time, or both, would become an Event of Default under the Covenant Agreement or the Amended and Restated Credit Agreement or (y)
if Diodes fails to deliver any quarterly
 or annual Financial Statement to Bank within the required time period set forth in the Amended and Restated Credit Agreement, then the Leverage Ratio shall be deemed to be greater than 2.0 to 1.0 until such Event of Default or unmatured Event of Default is cured or otherwise waived by Bank or such quarterly or annual Financial Statement is delivered to Bank, as the case may be; and provided further, however, that the Reference Rate Margin shall never be a negative number. “Subsidiary” has the meaning assigned to such term in the Amended and Restated Credit Agreement.

	 FABTECH, INC.	 	 	 
	 
By: /s/ Carol Haverkamp
	 	 	 
	          Carol Haverkamp	 	 	 
	          Chief Financial Officer/Secretary	 	 	 

 

 

	 
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