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Exhibit 10.23
IMPERIAL BANK
Member FDIC
SECURITY AND LOAN AGREEMENT
(ACCOUNTS RECEIVABLE)
This Agreement is entered into between IDENTIX INCORPORATED
, a Corporation
(herein called "Borrower") and IMPERIAL BANK (herein called "Bank").
1. Bank hereby commits, subject to all the terms and conditions of this
Agreement and prior to the termination of its commitment as hereinafter
provided, to make loans to Borrower from time to time in such amounts as
may be determined by Bank up to, but not exceeding in the aggregate unpaid
principal balance, the following Borrowing Base:
80.000% of Eligible Accounts
and in no event more than $5,000,000.00
2. The amount of each loan made by Bank to Borrower hereunder shall be debited
to the loan ledger account of Borrower maintained by Bank (herein called
"Loan Account") and Bank shall credit the Loan Account with all loan
repayments made by Borrower. Borrower promises to pay Bank (a) the unpaid
balance of Borrower's Loan Account on demand and (b) on or before the tenth
day of each month, interest on the average daily unpaid balance of the Loan
Account during the immediately preceding month at the rate of NO percent
(0.000%) per annum in excess of the rate of interest which Bank has
announced as its prime lending rate ("Prime Rate") which shall vary
concurrently with any change in such Prime Rate. Interest shall be computed
at the above rate on the basis of the actual number of days during which the
principal balance of the loan account is outstanding divided by 360, which
shall for interest computation purposes be considered one year. Bank at its
option may demand payment of any or all of the amount due under the Loan
Account including accrued but unpaid interest at any time. Such notice may
be given verbally or in writing and should be effective upon receipt by
Borrower. The amount of interest payable each month by Borrower shall not
be less than a minimum monthly charge of $250.00. Bank is hereby authorized
to charge Borrower's deposit account(s) with Bank for all sums due Bank under
this Agreement.
3. Requests for loans hereunder shall be in writing duly executed by Borrower in
a form satisfactory to Bank and shall contain a certification setting forth
the matters referred to in Section 1, which shall disclose that Borrower is
entitled to the amount of loan being requested.
4. As used in this Agreement, the following terms shall have the following
meanings:
A. "Accounts" means any right to payment for goods sold or leased, or to be
sold or to be leased, or for services rendered or to be rendered no
matter how evidenced, including accounts receivable, contract rights,
chattel paper, instruments, purchase orders, notes, drafts, acceptances,
general intangibles and other forms of obligations and receivables.
B. "Collateral" means any and all personal property of Borrower which is
assigned or hereafter is assigned to Bank as security or in which Bank
now has or hereafter acquires a security interest.
C. "Eligible Accounts" means all of Borrower's Accounts excluding,
however, (1) all Accounts under which payment is not received within 90
days from any invoice date, (2) all Accounts against which the account
debtor or any other person obligated to make payment thereon asserts any
defense, offset, counterclaim or other right to avoid or reduce the
liability represented by the Account and (3) any Accounts if the account
debtor or any other person liable in connection therewith is insolvent,
subject to bankruptcy or receivership proceedings or has made an
assignment for the benefit of creditors or whose credit standing is
unacceptable to Bank and Bank has so notified Borrower. Eligible Accounts
shall only include such accounts as Bank in its sole discretion shall
determine are eligible from time to time.
5. Borrower hereby assigns to Bank all Borrower's present and future Accounts,
including all proceeds due thereunder, all guaranties and security therefor,
and hereby grants to Bank a continuing security interest in all moneys in the
Collateral Account referred to in Section 6 hereof, as security for any and
all obligations of Borrower to Bank, whether now owing or hereafter incurred
and whether direct, indirect, absolute or contingent. So long as Borrower is
indebted to Bank or Bank is committed to extend credit to Borrower, Borrower
will execute and deliver to Bank such assignments, including Bank's standard
forms of Specific or General Assignment covering individual Accounts,
notices, financing statements, and other documents and papers as Bank may
require in order to affirm, effectuate or further assure the assignment to
Bank of the Collateral or to give any third party, including the account
debtors obligated on the Accounts, notice of Bank's interest in the
Collateral.
6. Until Bank exercises its rights to collect the Accounts pursuant to
paragraph 10, Borrower will collect with diligence all Borrower's Accounts,
provided that no legal action shall be maintained thereon or in connection
therewith without Bank's prior written consent. Any collection of Accounts by
Borrower, whether in the form of cash, checks, notes, or other instruments
for the payment of money (properly endorsed or assigned where required to
enable Bank to collect same), shall be in trust for Bank, and Borrower
shall keep all such collections separate and apart from all other funds and
property so as to be capable of identification as the property of Bank and
deliver said collections daily to Bank in the identical form received. The
proceeds of such collections when received by Bank may be applied by Bank
directly to the payment of Borrower's Loan Account or any other obligation
secured hereby. Any credit given by Bank upon receipt of said proceeds shall
be conditional credit subject to collection. Returned items at Bank's option
may be charged to Borrower's general account. All collections of the Accounts
shall be set forth on an itemized schedule, showing the name of the account
debtor, the amount of each payment and such other information as Bank may
request.
7. Until Bank exercises its rights to collect the Accounts pursuant to
paragraph 10, Borrower may continue its present policies with respect to
returned merchandise and adjustments. However, Borrower shall immediately
notify Bank of all cases involving returns, repossessions, and loss or damage
of or to merchandise represented by the Accounts and of any credits,
adjustments or disputes arising in connection with the goods or services
represented by the Accounts and, in any of such events, Borrower will
immediately pay to Bank from its own funds (and not from the proceeds of
Accounts or Inventory) for application to Borrower's Loan Account or any
other obligation secured hereby the amount of any credit for such returned
or repossessed merchandise and adjustments made to any of the Accounts.
8. Borrower represents and warrants to Bank: (i) If Borrower is a corporation,
that Borrower is duly organized and existing in the State of its
incorporation and the execution, delivery and performance hereof are within
Borrower's corporate powers, have been duly authorized and are not in
conflict with law or the terms of any charter, by-law or other incorporation
papers, or of any indenture, agreement or undertaking to which Borrower is a
party or by which Borrower is found or affected; (ii) Borrower is, or at the
time the collateral becomes subject to Bank's security interest will be, the
true and lawful owner of and has, or at the time the collateral becomes
subject to Bank's security interest will have, good and clear title to the
Collateral, subject only to Bank's rights therein; (iii) Each Account is, or
at the time the Account comes into existence will be, a true and correct
statement of a bona fide indebtedness incurred by the debtor named therein in
the amount of the Account for either merchandise sold or delivered (or being
held subject to Borrower's delivery instructions) to, or services rendered,
performed and accepted by, the account debtor; (iv) That there are or will be
no defenses, counterclaims, or setoffs which may be asserted against the
Accounts; and (v) any and all financial information, including information
relating to the Collateral submitted by Borrower to Bank, whether previously
or in the future, is or will be true and correct.
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9. Borrower will: (i) Furnish Bank from time to time such financial
statements and information as Bank may reasonably request and inform Bank
immediately upon the occurrence of a material adverse change therein; (ii)
Furnish Bank periodically, in such form and detail and at such times as
Bank may require, statements showing aging and reconciliation of the
Accounts and collections thereon; (iii) Permit representatives of Bank to
inspect the Borrower's books and records relating to the Collateral and
make extracts therefrom at any reasonable time and to arrange for
verification of the Accounts, under reasonable procedures, acceptable to
Bank, directly with the account debtors or otherwise at Borrower's expense;
(iv) Promptly notify Bank of any attachment or other legal process levied
against any of the Collateral and any information received by Borrower
relative to the Collateral, including the Accounts, the account debtors or
other persons obligated in connection therewith, which may in any way
affect the value of the Collateral or the rights and remedies of Bank in
respect thereto; (v) Reimburse Bank upon demand for any and all legal
costs, including reasonable attorneys' fees, and other expense incurred in
collecting any sums payable by Borrower under Borrower's Loan Account or
any other obligation secured hereby, enforcing any term or provision of
this Security Agreement or otherwise or in the checking, handling and
collection of the Collateral and the preparation and enforcement of any
agreement relating thereto; (vi) Notify Bank of each location and of each
office of Borrower at which records of Borrower relating to the Accounts
are kept; (vii) Provide, maintain and deliver to Bank policies insuring the
Collateral against loss or damage by such risks and in such amounts, forms
and companies as Bank may require and with loss payable solely to Bank,
and, in the event Bank takes possession of the Collateral, the insurance
policy or policies and any unearned or returned premium thereon shall at
the option of Bank become the sole property of Bank, such policies and the
proceeds of any other insurance covering or in any way relating to the
Collateral, whether now in existence or hereafter obtained, being hereby
assigned to Bank; and (viii) in the event the unpaid balance of Borrower's
Loan Account shall exceed the maximum amount of outstanding loans to which
Borrower is entitled under Section 1 hereof, Borrower shall immediately pay
to Bank, from its own funds and not from the proceeds of Collateral, for
credit to Borrower's Loan Account the amount of such excess.
10. Bank may at any time, without prior notice to Borrower, collect the Accounts
and may give notice of assignment to any and all account debtors, and
Borrower does hereby make, constitute and appoint Bank its irrevocable, true
and lawful attorney with power to receive, open and dispose of all mail
addressed to Borrower, to endorse the name of Borrower upon any checks or
other evidences of payment that may come into the possession of Bank upon
the Accounts to endorse the name of the undersigned upon any document or
instrument relating to the Collateral; In its name or otherwise, to demand,
▇▇▇ for, collect and give acquittances for any and all moneys due or to
become due upon the Accounts; to compromise, prosecute or defend any action,
claim or proceeding with respect thereto; and to do any and all things
necessary and proper to carry out the purpose herein contemplated.
11. Until Borrower's Loan Account and all other obligations secured hereby
shall have been repaid in full, Borrower shall not sell, dispose of or grant
a security interest in any of the Collateral other than to Bank, or execute
any financing statements covering the Collateral in favor of any secured
party or person other than Bank.
12. Should: (i) Default be made in the payment of any obligation, or breach be
made in any warranty, statement, promise, term or condition, contained
herein or hereby secured; (ii) Any statement or representation made for the
purpose of obtaining credit hereunder prove false; (iii) Bank deem the
Collateral inadequate or unsafe or in danger of misuse; (iv) Borrower become
insolvent or make an assignment for the benefit of creditors; or (v) Any
proceeding be commended by or against Borrower under any bankruptcy,
reorganization, arrangement, readjustment of debt or moratorium law or
statute; then in any such event, Bank may, at its option and without demand
first made and without notice to Borrower, do any one or more of the
following: (a) Terminate its obligation to make loans to Borrower as
provided in Section 1 hereof; (b) Declare all sums secured hereby
immediately due and payable; (c) immediately take possession of the
Collateral wherever it may be found, using all necessary force so to do, or
require Borrower to assemble the Collateral and make it available to Bank at
a place designated by Bank which is reasonably convenient to Borrower and
Bank, and Borrower waives all claims for damages due to or arising from or
connected with any such taking; (d) Proceed in the foreclosure of Bank's
security interest and sale of the Collateral in any manner permitted by
law, or provided for herein; (e) Sell, lease or otherwise dispose of the
Collateral at public or private sale, with or without having the Collateral
at the place of sale, and upon terms and in such manner as Bank may
determine, and Bank may purchase same at any such sale; (f) Retain the
Collateral in full satisfaction of the obligations secured thereby; (g)
Exercise any remedies of a secured party under the Uniform Commercial Code.
Prior to any such disposition, Bank may, at its option, cause any of the
Collateral to be repaired or reconditioned in such manner and to such extent
as Bank may deem advisable, and any sums expended therefor by Bank shall be
repaid by Borrower and secured hereby. Bank shall have the right to enforce
one or more remedies hereunder successively or concurrently, and any such
action shall not estop or prevent Bank from pursuing any further remedy
which it may have hereunder or by law. If a sufficient sum is not realized
from any such disposition of Collateral to pay all obligations secured by
this Security Agreement, Borrower hereby promises and agrees to pay Bank any
deficiency.
13. If any writ of attachment, garnishment, execution or other legal process be
issued against any property of Borrower, or if any assessment for taxes
against Borrower, other than real property, is made by the Federal or State
government or any department thereof, the obligation of Bank to make loans
to Borrower as provided in Section 1 hereof shall immediately terminate and
the unpaid balance of the Loan Account, all other obligations secured hereby
and all other sums due hereunder shall immediately become due and payable
without demand, presentment or notice.
14. Borrower authorizes Bank to destroy all invoices, delivery receipts, reports
and other types of documents and records submitted to Bank in connection
with the transactions contemplated herein at any time subsequent to four
months from the time such items are delivered to Bank.
15. Nothing herein shall in any way limit the effect of the conditions set forth
in any other security or other agreement executed by Borrower, but each and
every condition hereof shall be in addition thereto.
16. Additional Provisions: Subject to conditions and limitations contained in
the Letter Agreement dated September 27, 1996 (and accepted and agreed to
10/1/96) and Credit Terms and Conditions dated October 4, 1996. See Addendum
attached
Executed this 4th day of October, 1996
IDENTIX INCORPORATED
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(Name of Borrower)
BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ CEO
-------------------------------------
(Authorized Signature and Title)
BY: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ AVP BY:
______________________________ ____________________________________
Title (Authorized Signature and Title)
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ADDENDUM TO SECURITY AND LOAN AGREEMENT DATED OCTOBER 4, 1996
If any installment payment, interest payment, principal payment or principal
balance payment due hereunder is delinquent ten or more days, Obligor agrees to
pay Bank a late charge in the amount of 5% of the payment so due and unpaid, in
addition to the payment; but nothing in this paragraph is to be construed as any
obligation on the part of the holder of this note to accept payment of any
payment past due or less than the total unpaid principal balance after maturity.
All payments shall be applied first to any late charges owing, then to interest
and the remainder, if any, to principal.
IDENTIX INCORPORATED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________________
President and CEO
____________________________
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[Imperial Bank Logo]
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ October 4, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
Subject: Credit Terms and Conditions Borrower: Identix Incorporated
("Agreement")
Gentlemen:
To induce you to make loans to the undersigned (herein called "Borrower"), and
in consideration of any loan or loans you, in your sole discretion, may make to
Borrower, Borrower warrants and agrees as follows:
A. Borrower represents and warrants that:
1. EXISTENCE AND RIGHTS.
Company is a corporation.
Borrower is duly organized and existing and in good standing under the laws of
the State of California and is authorized and in good standing to do business
in the State of California. Borrower has powers and adequate authority, rights
and franchises to own its property and to carry on its business as now
conducted, and is duly qualified and in good standing in each State in which
the character of the properties owned by it therein or the conduct of its
business makes such qualification necessary, and Borrower has the power and
adequate authority to make and carry out this Agreement. Borrower has no
investment in any other business entity, except as stated below. The following
subsidiaries are 100% owned by Borrower: ANADAC Incorporated, and FINGERSCAN
Pty Limited.
2. AGREEMENT AUTHORIZED. The execution, delivery and performance of
this Agreement are duly authorized and do not require the consent or approval
of any governmental body or other regulatory authority; are not in
contravention of or in conflict with any law or regulation or any term or
provision of Borrower's articles of incorporation, by-laws, or Articles of
Association, as the case may be, and this Agreement is the valid, binding and
legally enforceable obligation of Borrower in accordance with its terms.
3. NO CONFLICT. The execution, delivery and performance of this
Agreement are not in contravention of or in conflict with any agreement,
indenture or undertaking to which Borrower is a party or by which it or any of
its property may be bound or affected, and do not cause any lien, charge or
other encumbrance to be created or imposed upon any such property by reason
thereof.
4. LITIGATION. There is no litigation or other proceeding pending or
threatened against or affecting Borrower, and Borrower is not in default with
respect to any order, writ, injunction, decree or demand of any court or other
governmental or regulatory authority.
5. FINANCIAL CONDITION. The balance sheet of Borrower as of 07/31/96,
and the related profit and loss statement for the 1 month ended on that date, a
copy of which has heretofore been delivered to you by Borrower, and all other
statements and data submitted in writing by Borrower to you in connection with
this request for credit are true and correct, and said balance sheet and profit
and loss statement truly present the financial condition of Borrower as of the
date thereof and the results of the operations of Borrower for the period
covered thereby, and have been prepared in accordance with generally accepted
accounting principles on a basis consistently maintained. Since such date there
have been no materially adverse changes in the financial condition or business
of Borrower. Borrower has no knowledge of any liabilities, contingent or
otherwise, at such date not reflected in said balance sheet, and Borrower has
not entered into any special commitments or substantial contracts which are not
reflected in said balance sheet, other than in the ordinary and normal course
of its business, which may have a materially adverse effect upon its financial
condition, operations or business as now conducted.
6. TITLE TO ASSETS. Borrower has good title to its assets, and the same
are not subject to any liens or encumbrances other than those permitted by
Section C.3 hereof.
7. TAX STATUS. Borrower has no liability for any delinquent state,
local or federal taxes, and if Borrower has contracted with any government
agency, Borrower has no liability for renegotiation of profits.
8. TRADEMARKS, PATENTS. Borrower, as of the date hereof, possesses all
necessary trademarks, trade names, copyrights, patents, patent rights, and
licenses to conduct its business as now operated, without any known conflict
with the valid trademarks, trade names, copyrights, patents and license rights
of others.
9. REGULATION U. The proceeds of this loan shall not be used to
purchase or carry margin stock (as defined with Regulation U of the Board of
Governors of the Federal Reserve system).
B. Borrower agrees that so long as it is indebted to you, it will, unless you
shall otherwise consent in writing:
1. RIGHTS AND FACILITIES. Maintain and preserve all rights, franchises
and other authority adequate for the conduct of its business; maintain its
properties, equipment and facilities in good order and repair; conduct its
business in an orderly manner without voluntary interruption and, if a
corporation or partnership, maintain and preserve its existence.
2. INSURANCE. Maintain public liability, property damage and workers'
compensation insurance and insurance on all its insurable property against fire
and other hazards with responsible insurance carriers to the extent usually
maintained by similar businesses.
3. TAXES AND OTHER LIABILITIES. Pay and discharge, before the same
become delinquent and before penalties accrue thereon, all taxes, assessments
and governmental charges upon or against it or any of its properties, and all
its other liabilities at any time existing, except to the extent and so long
as:
(a) The same are being contested in good faith and by appropriate proceedings
in such manners as not to cause any materially adverse effect upon its
financial condition or the loss of any right of redemption from any sale
thereunder, and
(b) it shall have set aside on its books reserves (segregated to the extent
required by generally accepted accounting practice) deemed by it adequate with
respect thereto.
4. RECORDS AND REPORTS. Maintain a standard and modern system of
accounting in accordance with generally accepted accounting principles on a
basis consistently maintained; permit your representatives to have access to,
and to examine its properties, books and records at all reasonable times; and
furnish you:
(a) As soon as available, and in any event within 25 days after the close of
each month of each fiscal year of Borrower, commencing with the month next
ending, a balance sheet, profit and loss statement and reconciliation of
Borrower's capital accounts as of the close of such period and covering
operations for the portion of Borrower's fiscal year ending on the last day of
such period, all in reasonable detail and stating in comparative form the
figures for the corresponding date and period in the previous fiscal year,
prepared in accordance with generally accepted accounting principles on a basis
consistently maintained by Borrower and certified by an appropriate officer of
Borrower, subject, however, to year-end audit adjustments;
(b) As soon as available, and in any event within 90 days after the close of
each fiscal year of Borrower, a report of audit of Company as of the close of
and for such fiscal year, all in reasonable detail and stating in comparative
form the figures as of the close of and for the previous fiscal year, with the
unqualified opinion of accountants satisfactory to you.
CUSTOMER'S COPY(S)
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(c) Within 25 days after the close of each month of each fiscal year of
Borrower, a certificate by chief financial officer or partner of Borrower,
grading the Borrower has performed and observed each and every covenant
contained in this Letter of Inducement to be performed by it and that no event
has occurred and no condition then exists which constitutes an event of default
hereunder or would constitute such an event of default upon the lapse of time
or upon the giving of notice and the lapse of time specified herein, or, if any
such event has occurred or any such condition exists, specifying the nature
thereof;
(d) Promptly after the receipt thereof by Borrower, copies of any detailed
audit reports submitted to Borrower by independent accountants in connection
with each annual or interim audit of the accounts of Borrower made by such
accountants;
(e) Promptly after the same are available, copies of all such proxy statements,
financial statements and reports as Borrower shall send to its stockholders, if
any, and copies of all reports which Borrower may file with the Securities and
Exchange Commission or any governmental authority at any time substituted
therefor; and
(f) Such other information relating to the affairs of Borrower as you
reasonably may request from time to time.
(g) Notice of Default, Promptly notify the Bank in writing of the occurrence of
any event of default hereunder or any event which upon notice and lapse of time
would be an event of default.
C. Borrower agrees that so long as it is indebted to you, it will not, without
your written consent:
1. TYPE OF BUSINESS; MANAGEMENT. Make any substantial change in the
character of its business; or make any change in its executive management.
2. OUTSIDE INDEBTEDNESS. Create, incur, assume or permit to exist any
indebtedness for borrowed moneys other than loans from you except obligations
now existing as shown in financial statement dated 07/31/96, excluding those
being refinanced by your bank; or sell or transfer, either with or without
recourse, any accounts or notes receivable or any moneys due to become due.
3. LIENS AND ENCUMBRANCES. Create, incur, or assume any mortgage,
pledge encumbrance, lien or charge of any kind (including the charge upon
property at any time purchased or acquired under conditional sale or other
title retention agreement) upon any asset now owned or hereafter acquired by
it, other than liens for taxes not delinquent and liens in your favor.
4. LOANS, INVESTMENTS, SECONDARY LIABILITIES. Make any loans or
advances, except Borrower may make loans or advances to its 100% owned
subsidiaries not exceeding $1,000,000 in the aggregate provided that said
subsidiary or subsidiaries has executed and delivered to Bank a guaranty of the
Line, in form and consent acceptable to Bank (Loans and/or advances in the form
of product of Borrower sold to its subsidiaries in the ordinary course of
business with normal trade terms will be excluded from this covenant), to any
person or other entity other than in the ordinary and normal course of its
business as now conducted or make any investment in the securities of any
person or other entity other than the United States Government; or guarantee
or otherwise become liable upon the obligation of any person or other entity,
except by endorsement of negotiable instruments for deposit or collection in
the ordinary and normal course of its business.
5. ACQUISITION OR SALE OF BUSINESS; MERGER OR CONSOLIDATION. Purchase
or otherwise acquire the assets or business of any person or other entity,
except borrower may purchase or otherwise acquire the assets or business of any
person or other entity as long as such events do not cause the Borrower to
violate any of the Bank's financial convents; or liquidate, dissolve, merge or
consolidate, or commence any proceedings therefor; or sell any assets except in
the ordinary and normal course of its business as now conducted; or sell,
lease, assign, or transfer any substantial part of its business or fixed
assets, or any property or other assets necessary for the continuance of its
business as now conducted including without limitation the selling of any
property or other asset accompanied by the leasing back of the same.
6. DIVIDENDS, STOCK PAYMENTS. If a corporation, declare or pay any
dividend (other than dividends payable in common stock of Borrower) or make any
other distribution on any of its capital stock now outstanding or hereafter
issued or purchase, redeem or retire any of such stock.
D. The occurrence of any one of the following events of default shall, at your
opinion, terminate your commitment to lend and make all sums of principal and
interest then remaining unpaid on all Borrower's indebtedness to you
immediately due and payable, all without demand, presentment or notice, all of
which are hereby expressly waived;
1. FAILURE TO PAY NOTE. Failure to pay any installment of principal or
of interest on any indebtedness of Borrower to you.
2. BREACH OF COVENANT. Failure of Borrower to perform any other term or
condition of this Agreement binding upon Borrower.
3. BREACH OF WARRANTY. Any of Borrower's representations or warranties
made herein or any statement or certificate at any time given in writing
pursuant hereto or in connection herewith shall be false or misleading in any
material respect.
4. INSOLVENCY; RECEIVER OR TRUSTEE. Borrower shall become insolvent; or
admit its inability to pay its debts as they mature; or make an assignment for
the benefit of creditors; or apply for or consent to the appointment of a
receiver or trustee for it or for a substantial part of its property or
business.
5. JUDGMENTS, ATTACHMENTS. Any money judgment, writ or warrant of
attachment, or similar process shall be entered or filed against Borrower or
any of its assets and shall remain unvacated, unbonded or unstayed for a period
of 10 days or in any event later than five days prior to the date of any
proposed sale thereunder.
6. BANKRUPTCY. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings for relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against Borrower and, if
instituted against it, shall be consented to.
E. MISCELLANEOUS PROVISIONS.
1. FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of
your Bank or any holder of Notes issued hereunder, in the exercise of any
power, right or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privilege. All rights and remedies existing under this agreement or any note
issued in connection with a loan that your Bank may make hereunder, are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
See Addendum dated October 4, 1996 attached hereto and incorporated herein by
this reference for additional terms. In the event of a conflict between this
Agreement and the Addendum, the terms in the Addendum prevail.
Identix Incorporated
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ CEO
____________________________________
(Authorized Signature and Title)
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IDENTIX INCORPORATED
Addendum to Credit Terms & Conditions
Dated October 4, 1996
Line: $5,000,000 Revolving Line of Credit containing the following
sub-limits:
a) $1,000,000 sub-limit for the issuance of Commercial and Standby
Letters of Credit with a maturity not to exceed 90 days past the
maturity of the Line,
b) $200,000 sub-limit for foreign exchange reserved for the issuance
of forward contracts up to a maximum of $2,000,000.
At no time will the sum of the sub-limits and direct borrowings under
the Line exceed the aggregate sum of $5,000,000.
Purpose: To support short term working capital requirements, issuance of
letters of credit and for hedging foreign currency exposures.
Borrowing
Base: Borrowing base to be monitored on a monthly basis and consists of
the sum of:
A) 80% of Eligible Accounts (as hereinafter defined) payable by
debtors whose principal place of business is located within
the United States of America ("Eligible Domestic Accounts")
and any Letter of Credit backed or Insured Eligible Accounts
payable by debtors whose principal place of business is located
outside the United States of America ("Eligible Foreign
Accounts").
B) 80% of Eligible Foreign Accounts listed in Table I.
Table I
-------
Ascorn Autelca, AG NIASCO
Fujitsu Sharp
Identrix AG
Eligible Accounts will include those accounts outstanding less
than 90 days from invoice date subject to certain exclusions for
non-approved foreign, contra accounts and inter company accounts.
Notwithstanding the foregoing, except for the Fujitsu, (Australia)
accounts, any account which alone exceeds 20% of the total accounts
of Borrower will be excluded from Eligible Accounts to the extent
said accounts exceed 20% of the total accounts. The concentration
limit on Fujitsu, (Australia) accounts is 30%. If 25% or more of
an account receivable is past due (greater than 90 days) the entire
account shall be excluded from Eligible Accounts. Notwithstanding
the foregoing, Eligible Accounts include all North American MORPHO
Systems, Inc. accounts until October 31, 1996, subject to review of
such accounts to Bank's satisfaction. Beginning November 1, 1996
the above stated limitations apply to North American MORPHO
Systems, Inc. accounts.
Maturity: 364 days from date of execution of loan documentation.
7
IDENTIX INCORPORATED
ADDENDUM TO CREDIT TERMS & CONDITIONS
DATED OCTOBER 4, 1996
PAGE 2 OF 3
Interest Rate: Bank's Prime Rate, per annum (floating).
Fee: 1/2% of commitment amount per annum, payable upon acceptance
of commitment.
Payments: Interest due monthly.
Principal due upon maturity.
Collateral: Secured by a perfected senior security interest in all assets
of the Borrower, excluding the assets of the Borrower's
subsidiaries and previously leased equipment.
Financial
Covenants: Covenants will be monitored on a monthly basis unless noted
otherwise and will be calculated on a consolidating basis using
only Identix Incorporated financial statements as a stand-alone:
1) Minimum Quick Ratio(1) of 1.25 to 1.00.
2) Minimum Tangible Net Worth(2) of $7,500,000 plus 50% of the
net proceeds of any stock offering.
3) Maximum Total Liabilities(3) to Tangible Net Worth(2) of
1.50 to 1.00.
4) Quarterly after-tax profitability, allowing for two
quarterly losses per fiscal year not to exceed $500,000 per
quarter and in the aggregate.
Ratio
Definitions: (1) Quick Ratio is cash plus accounts receivable divided by
current liabilities.
(2) Tangible Net Worth is the financial statement net worth of
the Borrower prepared according to generally accepted
accounting principles less intangible assets (including but
not limited to investment in subsidiaries, and in-process
technology), plus indebtedness fully subordinated to the
debt due to the Bank.
(3) Total Liabilities are all the Borrower's liabilities except
for indebtedness fully subordinated to the debt due to the
Bank.
Reporting
Requirements: 1) Monthly listing of backlog orders, aged accounts receivable
and accounts payable from invoice date with Bank borrowing
base certificate within 15 days of month end.
2) Monthly internally prepared financial statements of Identix
Incorporated as a stand-alone prepared according to
generally accepted accounting principles and Bank's
compliance certificate within 25 days of month end.
3) Quarterly internally prepared consolidating and consolidated
financial statements, including the 10-Q report within 45
days of the end of each fiscal quarter of Borrower.
4) Unqualified audited consolidating and consolidated annual
financial statements within 90 days of the end of each
fiscal year of Borrower, including the 10-K report.
8
IDENTIX INCORPORATED
ADDENDUM TO CREDIT TERMS & CONDITIONS
DATED OCTOBER 4, 1996
PAGE 3 OF 3
Reporting
Requirements:
(continued) 5) Annual Report within 120 days of days of the end of each
fiscal year of Borrower.
6) Budgets, sales projections, operating plans, or other
financial exhibits which Bank may reasonably request.
Other
Covenants: 1) Borrower, without prior written permission of the Bank, will
not:
a) Incur additional borrowed indebtedness other than
subordinated debt and domestic equipment leases.
b) Merge, liquidate a substantial portion of its assets, or
acquire other assets other than in the normal course of
business. Notwithstanding the foregoing, Borrower may
make acquisitions as long as such events do not cause
the Borrower to violate any of the Bank's financial
convents.
c) Make loans, investments or advances to outside parties
other than in the normal course of business, except
Borrower may make loans, investments or advances to its
100% owned subsidiaries not exceeding $1,000,000 in the
aggregate, provided that said subsidiary or subsidiaries
has executed and delivered to Bank a guaranty of the
Line, in form and content acceptable to Bank (Loans
and/or advances in the form of product of Borrower sold
to its subsidiaries in the ordinary course of business
with normal trade terms will be excluded from this
covenant).
d) Make distributions or dividends to shareholders.
2) Borrower to notify Bank in writing of any legal action
commenced against it which may result in damages over
$50,000.
3) Borrower to provide Bank proof of insurance covering all
tangible corporate assets and a Lender's Loss Payable Clause
with Bank as Loss Payee.
4) Annual accounts receivable audit performed by the Bank's
Asset Based Department with results satisfactory to Bank,
at Borrower's expense.
Banking
Relationship: Principal operating accounts and banking activities of Borrower
to be maintained with Bank.
Identix Incorporated
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ CEO
_______________________________________
(Authorized Signature and Title)