CREDIT AGREEMENT
(LINE OF CREDIT)
(LETTER OF CREDIT SUB-FACILITY)
(FOREIGN EXCHANGE SUB-FACILITY)
This Agreement (the "Agreement") is made and entered into as of June 30,
2003, by and between BANK OF THE WEST (the "Bank") and MICREL, INCORPORATED
(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 "Business Day": shall mean a day, other than a Saturday or Sunday,
on which commercial banks are open for business in California.
1.1.3 "Cash Flow": shall mean the sum of net income after tax and
exclusive of extraordinary gains or losses, acquisition expenses,
capital gains or losses from sale of assets outside the ordinary
course of the Borrower's business and investment income or losses
earned outside the ordinary course of the Borrower's business plus
depreciation and amortization expense minus dividends and
distributions.
1.1.4 "Close-Out Date": shall mean the Business Day on which the Bank
closes out and liquidates an FX Transaction.
1.1.5 "Closing Value": has the meaning given to it in Section 7.5(i)
hereof.
1.1.6 "Closing Gain" and "Closing Loss" :shall mean the amount determined
in accordance with Section 7.5(ii) hereof.
1.1.7 "Credit Percentage": shall mean 15%.
1.1.8 "Debt": shall mean all liabilities of the Borrower less
Subordinated Debt, if any.
1.1.9 "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).
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1.1.10 "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.
1.1.11 "Event of Default": shall have the meaning set forth in Section 6.
1.1.12 "Expiration Date": shall mean June 30, 2005, or the date of
termination of the Bank's commitment to lend under this Agreement
pursuant to Section 7, whichever shall occur first.
1.1.13 "Foreign Currency": shall mean any legally traded currency other
than US dollars and which may be transferred by paperless wire
transfer or cash and in which the Bank regularly trades.
1.1.14 "Foreign Exchange Facility": shall mean the credit facility
described as such in Section 2.
1.1.15 "FX Risk Liability": shall mean the product of (a) the Credit
Percentage, times (b) the aggregate of the Notional Values of all
FX Transactions outstanding, net of any Offsetting Transactions.
1.1.16 "FX Limit": shall mean $2,000,000.00.
1.1.17 "FX Transaction": shall mean any transaction between the Bank and
the Borrower pursuant to which the Bank has agreed to sell to or to
purchase from the Borrower a Foreign Currency of an agreed amount
at an agreed price in US dollars or such other agreed upon Foreign
Currency, deliverable and payable on an agreed date.
1.1.18 "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.
1.1.19 "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 and (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.
1.1.20 "Letter of Credit Facility": shall mean the credit facility
described as such in Section 2.
1.1.21 "LIBOR Advance": shall have the respective meaning as it is defined
for each facility under Section 2, hereof.
1.1.22 "LIBOR Interest Period": shall have the respective meaning as it is
defined for each facility under Section 2, hereof.
1.1.23 "LIBOR Rate": shall have the respective meaning as it is defined
for each facility under Section 2, hereof.
1.1.24 "Line Account": shall have the meaning provided in Section 2.4
hereof.
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1.1.25 " Line of Credit": shall mean the credit facility described as
such in Section 2.
1.1.26 "Notional Value": shall mean the US Dollar equivalent of the price
at which the Bank agreed to purchase or sell to the Borrower a
Foreign Currency.
1.1.27 "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.
1.1.28 "Offsetting Transaction": shall mean a FX Transaction to purchase a
Foreign Currency and a FX Transaction to sell the same Foreign
Currency , each with the same Settlement Date and designated as an
Offsetting Transaction at the time of entering into the FX
Transaction.
1.1.29 "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.
1.1.30 "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; and (vi) those liens and security interests which in
the aggregate constitute an immaterial and insignificant monetary
amount with respect to the net value of the Borrower's assets.
1.1.31 "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.
1.1.32 "Settlement Date": shall mean the Business Day on which the
Borrower has agreed to (a) deliver the required amount of Foreign
Currency, or (b) pay in US dollars the agreed upon purchase price
of the Foreign Currency.
1.1.33 "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.
1.1.34 "Variable Rate Advance": shall have the respective meaning as it is
defined for each facility under Section 2, hereof.
1.1.35 "Variable Rate": shall have the respective meaning as it is defined
for each facility under Section 2, hereof.
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.
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1.3 Other Terms: Other terms not otherwise defined shall have the meanings
attributed to such terms in the California 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
$5,000,000.00 (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 Credit shall be
used to assist with the 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 3 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) Variable Rate Advances: A variable rate per annum equivalent
to the Prime Rate (the "Variable Rate"). Interest shall be
adjusted concurrently with any change in the Prime Rate. An
Advance based upon the Variable Rate is hereinafter referred
to as a "Variable Rate Advance".
(ii) LIBOR Advances: A fixed rate quoted by the Bank for 90 days
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 the Expiration Date) (the "LIBOR Interest Period") for
Advances in the minimum amount of $100,000.00. Such interest
rate shall be a percentage approximately
equivalent to 2.00% in excess of the Bank's LIBOR Rate which
is that 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 U. S. dollar London Interbank Offered Rates
for such period appearing on page 3750 (or such other page as
may replace page 3750) of the Telerate screen at or about
11:00 a.m. (London time) on the second Business Day prior to
the first days of such period (adjusted for any and all
assessments, surcharges and reserve requirements) (the "LIBOR
Rate"). An Advance based upon the LIBOR Rate is hereinafter
referred to as a "LIBOR Advance".
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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 Variable Rate Advances and LIBOR Advances on the
5th day of each month, commencing July 5, 2003. align with
real estate loan
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. (California time) on
a Business Day, the Borrower may borrow under the Line of Credit by
requesting:
(i) A Variable Rate Advance. A Variable 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 Variable Rate Advance may, at the Bank's option, be made
on the next Business Day.
(ii) 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
requests such LIBOR Advance to be made.
2.1.6 Notice of Election to Adjust Interest Rate: The Borrower may
elect:
(i) That interest on a Variable Rate Advance shall be adjusted to
accrue at the LIBOR 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.
(ii) 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 Variable 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 Variable Rate upon
the expiration of the LIBOR Interest Period pertaining to
such Advance.
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
(including loss of future interest income) actually incurred by the
Bank and any loss (including loss of profit resulting from the re-
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
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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: During any period of time in
which interest on any Advance is accruing on the basis of the 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.
2.1.9 Conversion from LIBOR Rate to Variable Rate: In the event that the
Bank shall at any time determine that the accrual of interest on
the basis of the LIBOR Rate (i) is infeasible because the Bank is
unable to determine the 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 LIBOR
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 shall
be deemed to be a Variable Rate Advance and interest shall
thereupon immediately accrue at the Variable Rate.
2.2 LETTER OF CREDIT SUB-FACILITY
2.2.1 Letter of Credit Sub-Facility: 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 $5,000,000.00. At no time,
however, shall the total principal amount of all Advances
outstanding under the Line of Credit, combined with the aggregate
FX Risk Liability 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.
For the purposes hereof, any Letters of Credit issued and
outstanding for the account of the Borrower as of the date hereof
shall be deemed to be issued hereunder.
(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 more than 90 days after the Expiration Date.
(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.
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(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.
In the event that the Borrower fails to pay 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 Borrower hereby authorizes
Bank to create an Advance bearing interest at the rate or rates provided
in Section 8.2 hereof to pay such drawing.
2.3 FOREIGN EXCHANGE SUB-FACILITY
2.3.1 Foreign Exchange Sub-Facility: The Bank agrees to enter into FX
Transactions with the Borrower, at the Borrower's request therefor
made prior to the Expiration Date, provided however, that at no
time shall the aggregate FX Risk Liability of the Borrower exceed
the FX Limit, and provided further, at no time shall the aggregate
FX Risk Liability combined with the total face amount of all
Letters of Credit outstanding, less any partial draws paid by the
Bank, together with the total principal amount of all outstanding
Advances under the Line of Credit, exceed the Line of Credit. Each
FX Transaction shall be used to hedge the Borrower's foreign
exchange exposure.
(i) Requests. Each request for a FX Transaction shall be made by
telephone to the Bank's Treasury Department ("Request"),
shall specify the Foreign Currency to be purchased or sold,
the amount of such Foreign Currency and the Settlement Date.
Each Request shall be communicated to the Bank no later than
3:00 p.m. California time on the Business Day on which the FX
Transaction is requested.
(ii) Tenor. No FX Transaction shall have a Settlement Date which
is more than 365 days after the date of entry into such FX
Transaction, and provided further, no FX Transaction shall
expire on a date which is more than 90 days after the
Expiration Date.
(iii) Availability. Bank may refuse to enter into a FX Transaction
with the Borrower where the Bank, at its sole discretion,
determines that (1) the requested Foreign Currency is
unavailable, or (2) the Bank is not then dealing in the
requested Foreign Currency, or (3) the Bank would be
prohibited by any applicable law, rule, regulation or order
from purchasing such Foreign Currency.
(iv) Payment. Payment is due on the Settlement Date of the
relevant FX Transaction. The Bank is hereby authorized by the
Borrower to charge the full settlement price of any FX
Transaction against the depository account or accounts
maintained by the Borrower with the Bank on the Settlement
Date. In the event that the Borrower fails to pay the
settlement price of any FX Transaction on the Settlement Date
or the balances in the depository account or accounts
maintained with Bank are insufficient to pay the settlement
price, without limiting the rights of Bank hereunder or
waiving any Event of Default caused thereby, Bank may , and
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Borrower hereby authorizes Bank to, create an Advance bearing
interest at the Variable Rate to pay the settlement price on
the Settlement Date.
(v) Increased Costs. Borrower shall promptly pay to and
reimburse the Bank for all costs incurred and payments made
by the Bank by reason of any assessment, reserve, deposit,
capital maintenance 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 FX
Transaction.
(vi) Impossibility of Performance. In the event that the Borrower
or the Bank cannot perform under a FX Transaction due to
force majeure or an act of State or it becomes unlawful or
impossible to perform, all in the good faith judgement of the
Borrower or the Bank, then upon notice to the other party,
the Borrower or the Bank may require the close-out and
liquidation of the affected FX Transaction in accordance with
the provisions of this Agreement.
2.4 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 by
the XXth of each month, 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.
2.5 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 the 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 5 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.
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
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.
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(ii) Fees. Payment of all of the Bank's out-of-pocket expenses in
connection with the preparation and negotiation of this
Agreement
(iii) 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 (including the initial Advance
or 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 applying for any Letter 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
In order to induce the Bank to enter into this Agreement and to make the loans
and/or issue the letters of credit contemplated hereby, The Borrower warrants,
represents and agrees that, until all Obligations are fully paid and performed:
4.1 Legal 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 California and with its chief
executive office in the state of California and is properly licensed and
is qualified to do business and in good standing in, and, where necessary
to maintain the Borrower's rights and privileges, has complied with the
fictitious name statute of every jurisdiction in which the Borrower is
doing business.
4.2 Authority and Validity: This Agreement and each other document, contract
and instrument required by or at any time delivered to the Bank in
connection with this Agreement have been duly authorized, and upon their
execution and delivery in accordance with the provisions hereof will
constitute legal valid and binding agreements and obligations of the
Borrower or the party which executes the same, enforceable in accordance
with their respective terms.
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4.3 Solvency. The Borrower is now and shall be at all times hereafter
solvent and able to pay the Borrower's debts (including trade debts) as
they mature.
4.4 Legal Effect: This Agreement constitutes, and any instrument, document or
agreement required hereunder when delivered hereunder will constitute,
legal, valid and binding obligations of the Borrower enforceable against
the Borrower in accordance with their respective terms.
4.5 Fictitious Trade Styles: There are no fictitious trade styles
used by the Borrower in connection with its business operations. 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
fictitious trade style at any future date, indicating the trade style 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 No Litigation: Except as have been disclosed to the Bank in writing
prior to or concurrently with the execution and delivery of this
Agreement, there are not presently any actions or proceedings pending by
or against the Borrower before any court or administrative agency seeking
an award of damages in an aggregate at any one time in excess of One
Million dollars ($1,000,000.00) or which, in the reasonable opinion of
the Bank or its counsel involving claims representing a foreseeable
liability in an aggregate at any one time in excess of One Million
dollars ($1,000,000.00), and Borrower has no knowledge of any pending,
threatened or imminent litigation, governmental investigations or claims,
complaints, actions or prosecutions involving the Borrower outside the
limits set forth in this sentence, except ongoing collection matters. If
any of the foregoing do arise during the term of this Agreement, the
Borrower shall notify the Bank in writing within thirty (30) days.
4.8 Title to Assets: The Borrower has and all times will have good and
marketable and indefeasible title to all of its assets (including, but
not limited to, the) and the same are not subject to any security
interest, encumbrance, lien or claim of any third person except for
Permitted Liens and the is and shall, at all times, remain of good and of
merchantable quality, free from defects.
4.9 Lien Priority. The liens and security interests of the Bank in the
collateral are and shall remain first priority, except as expressly
agreed to, in writing, by the Bank.
4.10 ERISA Warranty: The Borrower has not withdrawn from (and no termination,
partial termination or other event has occurred with respect to) any
deferred compensation plan maintained for the benefit of Borrower's
employees, and has not withdrawn from any multi- employer plan described
in Section 4001(a)(3) of ERISA.
4.11 Payment of Taxes: All assessments and taxes, whether real, personal or
otherwise, due or payable by, or imposed, levied or assessed against the
Borrower, or any of the Borrower's property, have been paid in full
before delinquency.
4.12 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.
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4.13 Environmental Matters. To the best of Borrower's knowledge, the Borrower
is now and at all times hereafter shall remain in compliance with all
federal, state and municipal laws, regulations and ordinances relating to
the handling, treatment and disposal of toxic substances, wastes and
hazardous material and shall maintain all necessary authorizations and
permits. None of the operations of the Borrower is now the subject of
any federal, state or municipal investigation evaluating whether any
remedial action is needed to respond to a release of any toxic or
hazardous waster or substance into the environment.
4.14 Warranties and Representations Cumulative. Each warranty, representation
and agreement contained in this Agreement shall be automatically deemed
repeated with each loan and/or advance and shall be true, accurate and
correct at each such time and shall be conclusively presumed to have been
relied on by the Bank regardless of any investigation made or information
possessed by the Bank. The warranties, representations and agreements
set forth herein shall be cumulative and in addition to any and all other
warranties and representations and agreements which the Borrower shall
give, or cause to be given, to the Bank, either now or hereafter.
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, the Borrower will, unless the Bank shall otherwise consent in
writing:
5.1 Reporting and Certification Requirements: Deliver or cause to be
delivered to the Bank in form and detail satisfactory to the Bank:
(i) Not later than 95 days after the end of each of the
Borrower's fiscal years, a copy of the annual audited
financial report of the Borrower for such year, prepared by a
firm of certified public accountants acceptable to Bank and
accompanied by an unqualified opinion of such firm.
(ii) Not later than 50 days after the end of each fiscal quarter,
a copy of the Borrower's financial statement as of the end of
such period.
(iii) Promptly upon the Bank's request, such other information
pertaining to the Borrower as the Bank may reasonably
request.
5.2 Financial Condition: The Borrower promises and agrees, during the term
of this Agreement and until payment in full of all of the Borrower's
Obligations, the Borrower will maintain at all times:
..
(i) A minimum Effective Tangible Net Worth of at least
$245,000.00.
(ii) A ratio of Debt to Effective Tangible Net Worth of not more
than 1.00 to 1.
(iii) Cash, cash equivalents and marketable securities of not less
than $75,000,000.00
(iv) Not incur an after-tax loss as determined in accordance with
generally accepted accounting principles consistently
applied, excluding extraordinary gains or losses, acquisition
expenses associated with any acquisitions, capital gains or
losses from the sale of assets outside the ordinary course of
the Borrower's business and investment income or losses
earned outside the ordinary course of the Borrower's
business) during any of the Borrower's fiscal years in excess
of $15,000,000.00.
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(v) A ratio of Cash Flow to the current portion of long term Debt
of not less than 1.50 to 1, measured at the end of each
fiscal quarter with Cash Flow based upon the immediately
preceding three fiscal quarters and the current quarter just
ended.
5.3 Preservation of Existence; Compliance with Applicable Laws: Maintain and
preserve its existence and all rights and privileges now enjoyed; and
conduct its business and operations in accordance with all applicable
laws, rules and regulations.
5.4 Merge or Consolidate: Not liquidate or dissolve, merge or consolidate
with or into, or acquire any other business organization, provided
however, that Borrower may make business acquisitions of up to
$5,000,000.00 in any one fiscal year.
5.5 Maintenance of Insurance: 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 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.
5.6 Payment of Obligations and Taxes: Make timely payment of all assessments
and taxes and all of its liabilities and obligations including, but not
limited to, trade payables, unless the same are being contested in good
faith by appropriate proceedings with the appropriate court or regulatory
agency. For purposes hereof, the Borrower's issuance of a check, draft
or similar instrument without delivery to the intended payee shall not
constitute payment.
5.7 Depository Relationships: Maintain its primary business depository
relationship with Bank, including general, operating and administrative
deposit accounts and cash management services.
5.8 Inspection Rights and Accounting Records: The Borrower will 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 or any representative thereof to examine and make copies
of the records and visit the properties of the Borrower and discuss the
business and operations of the Borrower with any employee or
representative thereof. If the Borrower 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, the Borrower hereby agrees to notify such third party to permit
the Bank free access to such records at all reasonable times and to
provide the Bank with copies of any records which it may request, all at
the Borrower's expense, the amount of which shall be payable immediately
upon demand.
5.9 Payment of Dividends: Not declare or pay any dividends on any class of
stock now or hereafter outstanding except dividends payable solely in the
Borrower's capital stock.
5.10 Liens and Encumbrances: Not create, assume or permit to exist any
security interest, encumbrance, mortgage, deed of trust, or other lien
(including, but not limited to, a lien of attachment, judgment or
execution) affecting any of the Borrower's properties, or execute or
allow to be filed any financing statement or continuation thereof
affecting any of such properties, except for Permitted Liens or as
otherwise provided in this Agreement, and except liens and security
interests associated with Indebtedness of up to $5,000,000.00 in any one
fiscal year.
5.11 Transfer Assets: Not, after the date hereof, sell, contract for sale,
convey, transfer, assign, lease or sublet, any of its assets (including)
except in the Ordinary Course of Business and, then, only for full, fair
and reasonable consideration.
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5.12 Change in Nature of Business: Not make any material change in its
financial structure or the nature of its business as existing or
conducted as of the date hereof.
5.13 Maintenance of Jurisdiction: Borrower shall 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.
5.14 Compensation of Employees: 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.
5.15 Notice: Give the Bank prompt written notice of any and all (i) Events of
Default; (ii) except as otherwise identified in accordance with Section
4.7 above, litigation, arbitration or administrative proceedings to which
the Borrower is a party and in which the claim or liability exceeds
$1,000,000.00; (iii) other matters which have resulted in, or might
result in a material adverse change in the financial condition or
business operations of the Borrower.
5.16 Environmental Compliance: The Borrower shall conduct its operations and
keep and maintain all of its property in 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.
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: Any 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 Performance Under This Agreement: The Borrowers 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 Borrowers with or in favor of Bank and any such failure shall
continue unremedied for more than 30 days after the occurrence thereof.
6.3 Representations and Warranties; Financial Statements: Any representation
or warranty made by the Borrower 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.
6.4 Other Agreements: If there is a default under any agreement to which
Borrower is a party with 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 Indebtedness.
6.5 Insolvency: The Borrower or any guarantor shall: (i) become insolvent
or be unable to pay its debts as they mature; (ii) make an assignment for
the benefit of creditors or to an agent authorized to liquidate any
substantial amount of its properties and assets; (iii) file a voluntary
petition in bankruptcy or seeking reorganization or to effect a plan or
other arrangement with creditors; (iv) file an answer admitting the
material allegations of an involuntary petition relating to bankruptcy or
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reorganization or join in any such petition; (v) become or be adjudicated
a bankrupt; (vi) 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 (vii) in an
involuntary proceeding, any receiver, custodian or trustee shall have
been appointed for all or substantial part of the Borrower's or
guarantor's properties, assets or businesses and shall not be discharged
within 30 days after the date of such appointment.
6.6 Execution: Any writ of execution or attachment or any judgment lien
shall be issued against any property of the Borrower and shall not be
discharged or bonded against or released within 30 days after the
issuance or attachment of such writ or lien.
6.7 Suspension: The Borrower shall voluntarily suspend the transaction of
business or allow to be suspended, terminated, revoked or expired any
permit, license or approval of any governmental body necessary to conduct
the Borrower's business as now conducted.
6.8 Material Adverse Change: If there occurs a material adverse change in
the Borrower's business or financial condition, or if there is a material
impairment of the prospect of repayment of any portion of the Obligations
or there is a material impairment of the value or priority of the Bank's
security interest in the Collateral, or if a Borrower who is a natural
person shall die.
6.9 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.
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.
7.5 Close-Out and Liquidation: Close-out and liquidate each outstanding FX
Transaction so that each FX Transaction is canceled in accordance with
the following:
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(i) Closing Value. The Bank shall calculate value of such
canceled FX Transaction by converting (1) in the case of a FX
Transaction whose Settlement Date is the same as or later
than the Close-Out Date, the amount of Foreign Currency into
US dollars at a rate of exchange at which the Bank can buy or
sell US dollars with or against the Foreign Currency for
delivery on the Settlement Date of the relevant FX
Transaction; or (2) in the case of a FX Transaction whose
Settlement Date precedes the Close-Out Date, the amount of
the Foreign Currency adjusted by adding interest with respect
thereto at the Variable Rate from the Settlement Date to the
Close-Out Date, into US Dollars at a rate of exchange at
which the Bank can buy or sell US dollars with or against the
Foreign Currency for delivery on the Close-Out Date.
(ii) Closing Gain or Loss. (1) For a FX Transaction for which the
Bank agreed to purchase a Foreign Currency, the amount by
which the Closing Value exceeds the Notional Value shall be a
Closing Loss and the amount by which the Closing Value is
less than the Notional Value shall be a Closing Gain; and (2)
For a FX Transaction for which the Bank agreed to sell a
Foreign Currency, the amount by which the Closing Value
exceeds the Notional Value shall be a Closing Gain and the
amount by which the Closing Value is less than the Notional
Value shall be a Closing Loss.
(iii) Net Present Value. The Closing Gain or Closing Loss for each
Settlement Date falling after the Close-out Date will be
discounted by the Bank to it net present value.
(iv) Payment. To the extent that the net amount of the aggregate
Closing Gains exceeds the Closing Losses, such amount shall
be payable by the Bank to the Borrower. To the extent that
the aggregate net amount of the Closing Losses exceeds the
Closing Gains, such amount shall be payable by the Borrower
to the Bank.
7.6 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 3%
in excess of the rate or rates then in effect under this Agreement.
8.3 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
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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. 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.
8.4 Attorneys' Fees: 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, 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.
8.5 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:
MICREL, INCORPORATED
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
C.F.O
FAX: (▇▇▇) ▇▇▇ ▇▇▇▇
To the Bank:
BANK OF THE WEST
Silicon Valley Regional ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇
Assistant Vice President
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
8.6 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.
8.7 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.
8.8 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 its 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.
8.9 Jurisdiction: This Agreement, any notes issued hereunder, the rights of
the parties hereunder to and concerning the Collateral, 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.
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8.10 Waiver of Jury Trial: THE BORROWER AND THE BANK EACH WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE BORROWER AND THE BANK
EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY
PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS.
8.11 Telephone Recording: The Borrower agrees that the Bank may
electronically record all telephone conversations between the Borrower
and the Bank with respect to any FX Transaction and that any such
recording may be submitted in evidence in any arbitration or other legal
proceeding. Such recording shall be deemed to be conclusive evidence as
to the terms of any FX Transaction in the event of a dispute.
8.12 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.
8.13 Headings: The headings herein set forth are solely for the purpose of
identification and have no legal significance.
8.14 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:
BANK OF THE WEST
BY: /s/ ▇▇▇▇ ▇▇▇
-------------------------------------
NAME: ▇▇▇▇ ▇▇▇, Assistant Vice President
BORROWER:
MICREL, INCORPORATED
BY:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
NAME: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President & CEO
BY:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
NAME: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CFO