BHF BANK LINE OF CREDIT FOR DM 1,500,000
Published on June 12, 1997
EXHIBIT 10.10
BHF BANK
Aktiengesellschaft
Munich Branch
Confidential
SCM Microsystems GmbH 12/3/96
- - Management - Munich Branch
Luitpoldstr. 6 Corporate Banking
85276 Pfaffenhofen Hm
Telephone: 089/55173-232
Fax: 089/55173/292
Re: Credit assurance
Dear Messrs. Meier and Schneider:
We are writing in reference to the telephone discussion between you, Mr. Meier
and your Mr. Lang and are pleased to be able to extend to your enterprise a
framework line of credit in the amount of
DM 1,500,000.00
(in words: one million five hundred thousand German marks)
through 9/30/97 on the basis of our Standard Contract Terms.
The line of credit may--to the extent presentable--be used as follows:
1. cash credit with current account
2. cash credit from Euro funds with terms of 1-3 months (up to 50% of
amount used)
3. guarantee credit.
For uses in the form of cash credit, we will charge interest at the rate of 8.0%
p.a. until further notice, payable at the end of the calendar month. We reserve
the right to adjust this interest rate to the changing monetary and capital
market situation.
The interest rates for Euro credit uses are based on the respective market
situation and will be agreed upon on a case by case basis. For uses arising from
the guarantee credit, we charge a 1.5% guarantee commission. Our guarantee terms
will apply.
Due to the strong link between SCM Microsystems GmbH and its U.S. subsidiary,
the consolidated situation is of particular importance to us. The basis of and
prerequisite to our willingness to extend credit is the satisfaction of the
following conditions and plans:
- - positive development in the 4th quarter (consolidated result at least
US$ 150,000.00) and thus
a maximum consolidated loss of US$ 600,000.00 in 1996, with
documentation of the existing order volume of SCM Microsystems Inc. for
December 1998 (GmbH + Inc. about DM 6 million in total);
BHF BANK Aktiengesellschaft
Munich Branch
[signature]
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BHF BANK
Aktiengesellschaft
Munich Branch
[illegible address]
Page 2 of the letter dated 12/3/96
to SCM Microsystems GmbH, Pfaffenhofen
- - positive development according to plan in 1997, i.e., clear increase in
sales and profit which permits adequate owners' equity endowment (at
least 20%);
- - conversion of convertible shareholder loans in the amount of DM
4,000,000.00 into owners' equity (capital stock and additional paid-in
capital) by no later than January 31, 1997, and achievement of a
consolidated equity ratio of at least 20% by 12/96 and maintenance
thereof in the future course of business;
- - regular information on at least a quarterly basis (quarterly report with
comparison of target/actual figures) on the SCM Microsystems GmbH and
Inc. enterprises, individually as well as consolidated, each by the 15th
of the following month;
- - near contemporaneous submission of your audited annual financial
statements, individually and consolidated;
- - submission of a liquidity plan;
- - equal treatment analogous to other banks is agreed upon; previously
posted collateral will be returned by no later than 12/15/96.
In the event that the foregoing prerequisites/conditions are not (or cannot be)
observed, we reserve the right to fundamentally reconsider our willingness to
extend credit on the basis of the changed situation or hold open the right of
extraordinary termination. In addition, the extension of credit is subject to
the proviso that additional lines of credit--currently from Deutsche Bank AG and
Stadtparksparkasse Munchen--are made available (consortial reservation
permissible) and maintained, each in the amount of DM 1,500,000.00 with at least
the same term.
Until the repayment of this credit, you shall be obligated not to furnish
collateral to other credit creditors for the same type of credits. You shall
ensure that corporations in which you hold a majority interest likewise do not
furnish collateral to other credit creditors for the same type of credits. This
obligation does not extend to the customary collateral in the industry based on
the Standard Contract Terms of the credit institutions.
If other third parties (in which you do not hold a majority interest) furnish or
have furnished collateral for the same types of credits to you, you shall inform
us in this regard as soon as become aware of the posting of security.
In the event that intended to furnish collateral to other credit creditors for
the same type of credits, you shall notify us promptly--in any case prior to
furnishing collateral--in order to also give us the opportunity to obtain
appropriate security. At our request, you shall either forego furnishing
collateral or offer us collateral of equal value.
BHF BANK Aktiengesellschaft
Munich Branch
[signature]
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