IMPERIAL BANK CONTINUING GUARANTEE FOR $2,500,000
Published on June 12, 1997
EXHIBIT 10.8
IMPERIAL BANK
Member FDIC
CONTINUING GUARANTEE
ORIGINATING OFFICE: LENDING SERVICES
Name of Office: LENDING SERVICES
Street Address: 9920 S La Cienega Blvd
City, State, Zip Code: Inglewood, CA 90301
The undersigned (hereinafter referred to as "Guarantor") hereby requests
and authorizes IMPERIAL BANK (hereinafter referred to as the "Bank") to extend
credit to SCM MICROSYSTEMS INC, a Corporation (hereinafter referred to as
'Debtor), and in consideration of the granting of such credit by the Bank to
Debtor, Guarantor agrees as follows:
1. The words "indebtedness" and "credit" are used herein in their most
comprehensive sense and include any and all advances, debts, obligations and
liabilities, including interest thereon, of Debtor heretofore, now or hereafter
made, incurred or created, with or without notice to Guarantor, whether
voluntary or involuntary and however arising, whether due or not due, absolute
or contingent, liquidated or unliquidated, determined or undetermined, whether
assumed by Debtor's successors, heirs or assigns by operation of law or
otherwise, and whether Debtor is liable individually or jointly with others, and
whether recovery upon any such indebtedness or credit is or hereafter becomes
barred by any statute of limitations or is or hereafter becomes otherwise
unenforceable.
2. Credit may be granted from time to time at the request of Debtor and
without further authorization from or notice to Guarantor, even though Debtor's
financial condition may have deteriorated since the date hereof. If Debtor is a
corporation or a partnership, the Bank need not inquire into the power of Debtor
or the authority of its officers, directors, partners or agents acting or
purporting to act in its behalf. Each credit heretofore or hereafter granted to
Debtor shall be considered to have been granted at the special instance and
request of Guarantor and in consideration of and in reliance upon this
guarantee.
3. Guarantor hereby unconditionally guarantees and promises to pay the
Bank or its order any and all indebtedness of Debtor to the Bank and to perform
any and all obligations of Debtor under the terms of any agreement or instrument
evidencing, securing or executed in connection with any such indebtedness
("Credit Documents"). The liability of Guarantor shall not at any time exceed
the sum of the amount set forth below, plus the interest thereon in accordance
with the Credit Documents and the costs attorneys' fees and other expenses
provided for in Paragraph 15 hereof. If no amount is set forth below, the
liability of the Guarantor hereunder shall be unlimited. The Bank may permit
Debtor's indebtedness to exceed any maximum liability without impairing the
obligations of Guarantor hereunder. No payments made by or on behalf of
Guarantor to the Bank shall reduce any such maximum liability unless written
notice to that effect is received by the Bank at or prior to the time such
payment is made. If Guarantor has executed more than one guarantee of the
indebtedness of Debtor to the Bank, the guarantees shall be cumulative.
4. Either before or after revocation hereof and in such manner, upon such
terms and at such times as it considers best and with or without notice to
Guarantor. the Bank may alter, compromise, accelerate, extend or change the time
or manner for the payment of any indebtedness hereby guaranteed, increase or
reduce the rate of interest thereon, release or add any one or more guarantors
or endorsers, accept additional or substituted security therefor, or release or
subordinate any security therefor. No exercise or nonexercise by the Bank of any
right hereby given it, no dealing by the Bank with Debtor or any other person,
and no change, impairment or suspension of any right or remedy of the Bank shall
in any way affect any of the obligations of Guarantor hereunder or any security
furnished by Guarantor or give Guarantor arty recourse against the Bank.
5. In addition to all liens upon and rights of offset given to the Bank by
law against any property of Debtor of Guarantor, Guarantor hereby grants a
security interest in all property of Guarantor now or hereafter in the
possession of or on deposit with the Bank, whether held in a general or special
account or for safekeeping or otherwise. Each such security interest may be
exercised without demand upon or notice to Guarantor, shall continue in full
force unless specifically waived or released by the Bank in writing and shall
not be considered waived by any conduct of the Bank or by any failure of the
Bank to exercise any right of offset or to enforce any such security interest or
by any neglect or delay in so doing.
6. Guarantor waives and agrees not to assert or take advantage of (a) any
right to require the Bank to proceed against the Debtor or any other person,
firm or corporation or to proceed against or exhaust any security held by it at
any time or to pursue any other remedy in its power; (b) the defense of the
statute of limitations in any action hereunder or for the collection of any
indebtedness or the performance of any obligation guaranteed hereby; (c) any
defense that may arise by reason of the incapacity lack of authority, death or
disability of, or revocation hereof by, any other or others or the failure of
the Bank to file or enforce a claim against the estate (either in
administration, bankruptcy, or other proceeding) of any other or others; (d)
demand, protest and notice of any kind including, without limiting the
generality of the foregoing, notice
of the existence, creation or incurring of new or additional indebtedness or of
any action or non-action on the part of the Debtor, the Bank, any endorser,
creditor of Debtor or Guarantor under this or any other instrument, or any other
person whomsoever, in connection with any obligation or evidence of indebtedness
hereby guaranteed; (a) any defense based upon an election of remedies by the
Bank, including without limitation, an election to proceed by nonjudicial rather
than judicial foreclosure, which election destroys or otherwise impairs
subrogation rights of Guarantor or the right of Guarantor to proceed against
Debtor for reimbursement, or both, including, without limitation, the impairment
of subrogation rights arising by virtue of California Civil Code 580(b) and
580(d); (f) any defense or right based upon the fair value deficiency
protections and provisions of California Civil Code 580(a) and California Civil
Procedure Code 726; and (g) any defense or right based upon the acceptance by
the Bank or an affiliate of the Bank of a deed in lieu of foreclosure, without
extinguishing the indebtedness, even if such acceptance destroys, alters or
otherwise impairs subrogation rights of Guarantor or the right of Guarantor to
proceed against Debtor for reimbursement, or both.
7. Guarantor, by execution hereof, represents to the Bank that the
relationship between Guarantor and Debtor is such that Guarantor has access to
all relevant facts and information concerning the indebtedness and Debtor and
that the Bank can rely upon Guarantor having such access. Guarantor waives and
agrees not to assert any duty on the part of the Bank to disclose to Guarantor
any facts that the Bank may now or hereafter know about Debtor, regardless of
whether the Bank has reason to believe that any such facts materially increase
the risk beyond that which Guarantor intends to assume, or has reason to believe
that such facts are unknown to Guarantor, or has a reasonable opportunity to
communicate such facts to Guarantor. Guarantor is fully responsible for being
and keeping informed of the financial condition of Debtor and all circumstances
bearing on the risk of non-payment of the indebtedness guaranteed hereby
8. Until all indebtedness of Debtor to the Bank has been paid in full,
even though such indebtedness is in excess of the liability of Guarantor,
Guarantor shall have no right of subrogation and waives any right to enforce any
remedy which the Bank now has or may hereafter have against Debtor and any
benefit of and any right to participate in any security now or hereafter held by
the Bank.
9. Except as otherwise provided in this paragraph, all existing or future
indebtedness of Debtor to Guarantor and, if Debtor is partnership, any right to
withdraw any capital of Guarantor invested in Debtor, is hereby subordinated to
all indebtedness hereby guaranteed and, without the prior written consent of the
Bank, shall not be paid or withdrawn in whole or in part nor will Guarantor
accept any payment of or on account of any such indebtedness or as a withdrawal
of capital while this guarantee is in effect. At the Bank's request, Debtor
shall pay to the Bank all or any part of subordinated indebtedness and any
capital which Guarantor is entitled to withdraw. Each payment by Debtor to
Guarantor in violation of this paragraph shall be received in trust for the Bank
and shall be paid to the Bank immediately on account of the indebtedness of
Debtor to the Bank. No such payment shall reduce or affect in any manner
Guarantor's liability under any of the provisions of this guarantee. Guarantor
reserves the right to receive from Debtor payment of any salary for personal
services at the same monthly rate as that at which Guarantor has been paid
during the preceding twelve months, it being expressly understood that such
amount shall not be subordinated to the indebtedness guaranteed hereby.
10. Guarantor will file all claims against Debtor in any bankruptcy or
other proceeding in which the filing of claims is required by upon any
indebtedness of Debtor to Guarantor and shall concurrently assign to the Bank
all of the Guarantor's rights thereunder. If Guarantor does not file any such
claim, the Bank, as Guarantor's attorney-in-fact, is hereby authorized to do so
in Guarantor's name or, in the Bank's discretion, to assign the claim and to
cause proof of claim to be filed in the name of the Bank's nominee. In all such
cases, whether in administration, bankruptcy or otherwise, the person or persons
authorized to pay such claims shall pay to the Bank the full amount thereof and,
to the full extent necessary for the purpose, Guarantor hereby assigns to the
Bank all of the Guarantor's rights to any and all such payments or distributions
to which Guarantor would otherwise be entitled. If the amount so paid is greater
than the guaranteed indebtedness then outstanding, the Bank will pay the amount
of the excess to the person entitled thereto.
11. With or without notice to Guarantor, the Bank, in its sole discretion
and at any time and from time to time either before or after delivery of any
notice of revocation hereunder and in such manner and upon such terms as it
considers fit, may (a) apply any or all payments or recoveries from Debtor, from
Guarantor or from any other guarantor under this or any other instrument or
realized from any security, in such manner and order or priority as the Bank
elects, to any indebtedness of Debtor to the Bank, whether or not such
indebtedness is guaranteed hereby or is otherwise secured or is due at the time
of such application; and (b) refund to Debtor any payment received by the Bank
upon any indebtedness hereby guaranteed and payment of the amount refunded shall
be fully guaranteed hereby. Any recovery realized from any other guarantor under
this or any other instrument shall be first credited upon that portion of the
indebtedness of Debtor to the Bank which exceeds Guarantor's maximum liability,
if any, hereunder.
12. The amount of Guarantor's liability and all rights, powers and
remedies of the Bank hereunder and under the Credit Documents and any other
agreement now or at any time hereafter in force between the Bank and Guarantor
shall be cumulative and not alternative, and such rights, powers and remedies
shall be in addition to all rights, powers and remedies given to the Bank by
law.
13. Guarantor's obligations hereunder are independent of the obligations
of Debtor and, in the event of any default hereunder, a separate action or
actions may be brought and prosecuted against Guarantor whether action is
brought against Debtor or whether Debtor is joined in any such action or
actions. The Bank may maintain successive actions for other defaults. The Bank's
rights hereunder shall not be exhausted by its exercise of any of its rights or
remedies or by any such action or by any number of successive actions until and
unless all indebtedness and obligations hereby guaranteed have been paid and
fully performed.
14. This is a continuing guarantee and Guarantor agrees that it shall
remain in full force until and unless Guarantor delivers to the Bank written
notice that it has been revoked as to credit granted subsequent to the effective
time of revocation as herein provided. Delivery of such notice shall be
effective by personal service upon an officer of the Bank at the originating
office of the Bank designated on the first page
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hereof or by mailing such notice by certified or registered mail, return receipt
requested, postage prepaid and addressed to the Bank at the originating office
designated on the first page hereof. Regardless of how notice of revocation is
given, it shall not be effective until twelve o'clock noon Pacific Standard or
Daylight Savings Time, as the case may be, on the next succeeding Bank business
day following the day such notice is delivered, but delivery of such notice
shall not affect any of Guarantor's obligations hereunder with respect to credit
granted prior to the effective date of such revocation, nor shall it affect any
of the obligations of any other guarantor for the credit granted to Debtor
hereunder. If the originating office of the Bank designated above is not in
existence at the time notice of revocation is desired to be given, then such
notice may be given in the manner above provided by delivering the same to
IMPERIAL BANK OFFICE at 9920 South La Cienega Boulevard, Inglewood, California,
90301.
15. Guarantor agrees to pay to the Bank without demand reasonable
attorneys' fees and all costs and other expenses which the Bank expends or
incurs in collecting or compromising any indebtedness of the Debtor, in
protecting the Bank's security under the Credit Documents or in enforcing this
guarantee against Guarantor or any other guarantor of any indebtedness hereby
guaranteed whether or not suit is filed, including, without limitation,
attorney's fees, costs and other such expenses incurred in any bankruptcy
proceeding. Guarantor warrants and represents that it is fully authorized by law
to execute this guarantee.
16. This guarantee shall benefit the Bank, its successors and assigns,
including the assignees of any indebtedness hereby guaranteed, and binds
Guarantor's successors and assigns. This guarantee is assignable by the Bank
with respect to all or any portion of the indebtedness and obligations
guaranteed hereunder, and, when so assigned, Guarantor shall be liable to the
assignees under this guarantee without in any manner affecting Guarantor's
liability hereunder with respect to arty indebtedness or obligations retained by
the Bank. No delegation or assignment of this guarantee by any Guarantor shall
be of any force or effect or release Guarantor from any obligation hereunder.
17. No provision of this guarantee or right of the Bank hereunder can
be waived, nor can any Guarantor be released from his/her obligations hereunder,
except by a writing duly executed by an authorized officer of the Bank. Should
any one or more provisions of this guarantee be determined to be illegal or
unenforceable, all other provisions. nevertheless shall be governed by and
construed in accordance with the State of California, and Guarantor agrees to
submit to the jurisdiction of the Courts of California.
18. If more than one guarantor signs this guarantee, the obligation of
all such guarantors shall be joint and several. When the context and
construction so require, all words used in the singular shall be deemed to have
been used in the plural and the masculine shall include the feminine and neuter.
Any married person who signs this guarantee agrees that recourse may be had
against separate property for all obligations under this guarantee.
19. Except as provided in any other written agreement now or at any
time hereafter in force between the Bank and Guarantor, this guarantee shall
constitute the entire agreement of Guarantor with the Bank with respect to the
subject matter hereof and no understanding, promise or condition concerning the
subject matter hereof shall be binding upon the Bank unless expressed herein.
Any notice to Guarantor shall be considered to have been duly given when
delivered personally or forty-eight hours after being mailed, postage prepaid,
to the address(es) set forth below or to such other address(es) as Guarantor may
from time to time designate by giving notice in the same manner of notice to the
Bank set forth in Paragraph 14 hereof.
20. Each of the undersigned Guarantors hereby acknowledges the receipt
of a true copy of this guarantee.
21. [ ] This guarantee is secured by a deed of trust dated
N/A , 19 , to Imperial Bancorp, as Trustee.
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GUARANTEE AMOUNT $2,500,000.00
Executed by or on behalf of Guarantor(s) on January 15, 1997
Signature of Guarantor(s) Address
SCM MICROSYSTEMS GMBH
By Luitpoldstrasse 6 85276 Pfaffenhoffen
-----------------------------------
Robert Schneider, CEO
By Germany
-----------------------------------
Bernd Meier, COO/Gen. Manager
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(COMPLETE IF GUARANTOR IS A CORPORATION)
RESOLUTION AUTHORIZING CONTINUING GUARANTEE,
ENDORSEMENT AND GUARANTEE OF NOTE OR NOTES
AND HYPOTHECATION OF ASSETS
WHEREAS, SCM MICROSYSTEMS INC hereinafter referred to as "Debtor", has
requested IMPERIAL BANK, hereinafter referred to as "Bank", to grant credit to
Debtor.
WHEREAS, the corporation hereinafter named expects to derive benefit from
such financial accommodation by Bank,
1. NOW, BE IT RESOLVED, that any 2 of the following named officers
Robert Schneider the CEO
Bernd Meier the COO/General Manager
the
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the
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for and on behalf of SCM MICROSYSTEMS GMBH be and they hereby are authorized and
directed for and in the name of this corporation and as its act and deed to do
and perform any one or more of the following:
A. Execute a continuing guarantee in favor of Bank for any and
all assets of this corporation.
B. Endorse and/or guarantee a note or notes in favor of Bank
whereunder Debtor is Maker and Bank is Payee including renewals and extensions
thereof.
C. Grant to Bank a security interest in and to any and all
assets of this corporation: (1) as security for any obligation which this
corporation may incur under subparagraphs A and/or B above; or (2) as security
for indebtedness of Debtor to Bank to the extent of the value of the security
interest so granted without personal liability on the part of this corporation
to Bank.
2. RESOLVED FURTHER, that Bank may rely on the authority conferred
herein until Bank receives notice in writing that the authority contained in
this resolution has been revoked or the authority of the persons or officers
named above has been revoked.
3. RESOLVED FURTHER, that the liability of this corporation to Bank
hereunder shall not exceed the total sum of **TWO MILLION FIVE HUNDRED THOUSAND
DOLLARS AND ZERO CENTS** ($2,500,000.00).
4. RESOLVED FURTHER, that any guarantees or other documents in like
amount and terms as those stated above [heretofore executed by said officers in
the name of this corporation are hereby ratified and approved, and the secretary
or assistant secretary is authorized and directed to attach copies of such
documents to the minutes of the corporation.
I, the undersigned, William Ogdon, hereby certify that I am the duly
elected, qualified and acting secretary of the above referenced corporation,
duly organized and existing under the laws of the State of Germany; that the
Board of Directors of said corporation duly and regularly adopted the resolution
of which the foregoing is a full, true and correct copy.
I further certify that said resolution is now in full force and effect,
that it has not been revoked, suspended, or amended in any way and that the
specimen signatures appearing below are the signatures of the officers
authorized to sign for this corporation by virtue of said resolution.
I further certify that shareholder consent IS NOT required in the event of
hypothecation of all or substantially all of the assets of said corporation.
EXECUTED ON
AUTHORIZED SIGNATURES (SEAL)
Signature:___________________________________ Confirmed By:
Robert Schneider
Signature:___________________________________ _______________________________
Bernd Meier Robert Schneider (President)
Signature:___________________________________ _______________________________
William Ogdon (Secretary)
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IMPERIAL BANK
Member FDIC
CORPORATE RESOLUTION REGARDING CREDIT
OFFICE: LENDING SERVICES ADDRESS: 9920 S. La Cienega Blvd.
Inglewood, CA 90301
RESOLVED, that SCM MICROSYSTEMS INC borrow from IMPERIAL BANK, hereinafter
referred to as "Bank", from time to time, such sums of money as, in the
judgement of the officer or officers hereinafter authorized, this corporation
may require; provided that the aggregate amount of such borrowing, pursuant to
this resolution, shall not at any one time exceed the principal sum of **TWO
MILLION FIVE HUNDRED THOUSAND DOLLARS AND ZERO** **CENTS** ($2,500,000.00 ), in
addition to such amount as may be otherwise authorized;
RESOLVED FURTHER, that any 1 of the following named officers
Steven Humphreys the Chairman and President
William E. Ogdon the Controller/Secretary
the
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the
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of this corporation (the officer or officers acting in combination, authorized
to act pursuant hereto being hereinafter designated as "authorized officers"),
to execute and deliver, from time to time, renewals or extensions of such notes
or other evidences of indebtedness; (2) to grant a security interest in,
transfer, or otherwise hypothecate or deed in trust for Bank's benefit and
deliver by such Instruments In writing or otherwise as may be demanded by the
Bank, any of the property of this corporation as may be required by the Bank to
secure the payment of any notes or other indebtedness of this corporation or
third parties to the Bank, whether arising pursuant to this resolution or
otherwise; and (3) to perform all acts and execute and deliver all instruments
which the Bank may deem necessary to carry out the purposes of this resolution;
RESOLVED FURTHER, that said authorized officers be and they are hereby
authorized and empowered, and that any one of said authorized officers be and
he/she is hereby authorized and empowered (1) to discount with or sell to the
Bank conditional sales contracts, notes, acceptances, drafts, bailment
agreements, leases, receivables and evidences of indebtedness payable to this
corporation, upon such terms as may be agreed upon by them and the Bank, and to
endorse in the name of this corporation said notes, acceptances, draft, bailment
agreements, leases, receivables and evidences of indebtedness so discounted, and
to guarantee the payment of the same to the Bank, and (2) to apply for and
obtain from the Bank letters of credit and In connection therewith to execute
such agreement, applications, guarantees, indemnities and other financial
undertakings as Bank may require;
RESOLVED FURTHER, that said authorized officers are also authorized to
direct the disposition of the proceeds at any such obligation, and to accept or
direct delivery from the Bank of any property of this corporation at any time
held by the Bank;
RESOLVED FURTHER, that the authority given hereunder shall be deemed
retroactive and any and all acts authorized hereunder performed prior to the
passage of this resolution are hereby ratified and affirmed;
RESOLVED FURTHER, that this resolution will continue in full force and
effect until the Bank shall give official notice in writing from this
corporation of the revocation thereof by a resolution duly adopted by the Board
of Directors of this corporation, and that the certification of the of this
corporation as to the signatures of the above named persons shall be binding on
this corporation.
I, William E. Ogdon, Secretary of the above named corporation, duly
organized and existing under the laws of the State of Delaware, do hereby
certify that the foregoing is a full, true and correct copy of a resolution of
the Board of Directors of said corporation, duly and regularly passed and
adopted by the Board of Directors of said corporation.
I further certify that said resolution is still in full force and effect
and has not been amended or revoked, and that the specimen signatures appearing
below are the signatures of the officers authorized to sign for this corporation
by virtue of said resolution.
EXECUTED ON 1/15/97
AUTHORIZED SIGNATURES (SEAL)
Signature:___________________________________ Confirmed By:
Robert Schneider
Signature:___________________________________ _______________________________
Bernd Meier Robert Schneider (President)
Signature:___________________________________ _______________________________
William Ogdon (Secretary)
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Imperial Bank
Member FDIC January 15, 1997
226 Airport Parkway
San Jose, California
Subject: Credit Terms and Conditions ('Agreement")
Borrower: SCM Microsystems, Inc.
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 Delaware 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 to 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 authority to make and
carry out this Agreement. Borrower has no investment in any other business
entity, except as previously disclosed to Bank.
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 nor 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 hereof.
4. LITIGATION. To the best of Borrower's knowledge and belief, there is
no litigation or other proceeding pending or threatened against or affecting
injunction, decree or demand of any court or other governmental or regulatory
authority.
5. FINANCIAL CONDITION. The balance sheet of Borrower as of 11/30/96, and
the related profit and loss statement for the 11 months 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 ordinate 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 modem 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
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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.
(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,
stating that 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.
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 11/30/96, 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, liens in your favor or liens for equipment
leases.
4. LOANS, INVESTMENTS, SECONDARY LIABILITIES. Make any loans or ,advances
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 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, provided, however, that Borrower may sell assets which are obsolete or
otherwise considered surplus and which are sold in the ordinary course of
business, so long as such assets are sold for full, fair and reasonable
consideration and so long as all such sales shall not exceed $25.000 in any
fiscal year without your prior written consent.
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
option, 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 or principal
or of any interest on any indebtedness of Borrower to you within 10 days of the
due date thereof.
2. BREACH OF COVENANT. Failure of Borrower to perform any other term
or condition of this Agreement binding upon Borrower within thirty days of
written notice from you.
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 pan of its property or business.
5. JUDGMENTS, ATTACHMENTS. Any money judgment, writ or warrant of
attachment, or similar process, in excess of $50,000, 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
-7-
hereunder, are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
See Addendum dated January 15, 1997, 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.
SCM Microsystems, Inc.
By: ______________________________________
Steven Humphreys
-8-
SCM MICROSYSTEMS, INC.
ADDENDUM TO CREDIT TERMS & CONDITIONS
DATED JANUARY 15, 1997
FACILITY: A modification and increase to $2,500,000 of the
existing $1,000,000 Revolving Line of Credit
("Line of Credit"), to support short term working
capital requirements and the issuance of letters
of credit.
$250,000 sub-limit for the issuance of trade-
related Standby and Commercial Letters of Credit,
$250,000 sub-limit for foreign exchange reserved
for the issuance of forward contracts up to a
maximum $2,500,000.
Notwithstanding the foregoing, at no time shall
Bank be obligated to disburse any amount in excess
of the aggregate sum of $2,500,000 under the
Facility.
BORROWING Borrowing base to be monitored on a monthly basis
BASE: and consist of:
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
Bank-approved, 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").
Eligible Accounts will include those accounts
outstanding less than 90 days from invoice date
subject to certain exclusions for non-approved
foreign, government, contra accounts and
inter-company accounts. Concentration Limit of
20%, defined as: any account which alone exceeds
20% of the total accounts receivable will be
ineligible to the extent said accounts receivable
exceed 20% of the total accounts receivable.
Exceptions to the 20% concentration limit to be
allowed for Dell Computer, Gateway Computer,
Digital Equipment Corporation, IBM, and Packard
Bell, which will each be allowed to constitute up
to 35 % of the total accounts of Borrower. If 25%
or more of an account receivable is past due
(greater than 90 days) the entire account is
ineligible.
MATURITY: May 15, 1997.
PAYMENT: Interest due monthly.
Principal due upon maturity.
SECURITY: Perfected first priority security interest in all
corporate assets, excluding previously leased
equipment.
SUBORDINATION: Continued subordination of a minimum of $3,000,000
in inter-company indebtedness to SCM Microsystems
GmbH (formally known as SCM Schneider Microsysteme
Entwicklungs-und Vertriebs GmbH).
GUARANTOR: Continuing commercial guarantee of SCM
Microsystems GmbH (formally known as SCM Schneider
Microsysteme Entwicklungs-und Vertriebs GmbH).
PRICING:
INTEREST RATE: Bank's Prime Rate + 1.00% per annum (floating).
Rate to be reduced to Bank's Prime Rate per annum
(floating) following Bank's receipt of evidence
that Borrower has achieved two fiscal quarters of
operating and after-tax profitability in excess of
$200,000 per quarter, beginning with the quarter
ending 12/31/96.
FEES: $3,750, payable upon written acceptance of
commitment.
DEPOSITS: Borrower to maintain primary operating and
depository accounts with Bank.
-9-
FINANCIAL Beginning with the month ending 12/31/96, the
COVENANTS: following covenants will be monitored on a
monthly basis except where noted otherwise.
1) Minimum Quick Ratio(1) of 1.25 to 1.00.
2) Minimum Tangible Net Worth(2) of $1,800,000
plus 75% of any new equity.
3) Maximum Total Liabilities(2) to Tangible
Net Worth(2) of: -1.50 to 1.00.
4) Borrower to maintain quarterly profitability
on an operating and pretax basis, with the
exception of one quarterly loss per fiscal
year, not to exceed $200,000.
DEFINITIONS: 1 Quick Ratio is cash plus accounts receivable
divided by current liabilities less the
current portion of indebtedness fully
subordinated to the debt due Bank.
2 Tangible Net Worth is the financial
statement net worth of the Borrower prepared
according to generally accepted accounting
principles less intangible assets, plus
indebtedness fully subordinated to the debt
due to Bank."
3 Total Liabilities are all the Borrower's
liabilities less deferred revenue and
indebtedness fully subordinated to the debt
due to Bank.
REPORTING In addition to the reporting requirements of
REQUIREMENTS: Section B.4. of the Credit Terms and Conditions,
Borrower will, from time to time, provide Bank in
form and substance satisfactory to Bank:
1) Monthly listing of aged accounts receivable
and accounts payable from invoice date, with
a Bank borrowing base certificate within 10
days of each month end.
2) Monthly internally prepared financial
statements prepared according to generally
accepted accounting principles and Bank
compliance certificate within 25 days of
each month end.
3) Quarterly financial statements of SCM
Microsystems GmbH, within 45 days of the end
of each fiscal quarter.
4) Unqualified audit of Borrower's consolidated
and consolidating annual financial
statements within 90 days of the end of each
fiscal year.
5) Budgets, sales projections, operating plans,
or other financial exhibits which Bank may
reasonably request.
OTHER A) Borrower, without prior written permission
COVENANTS: of the Bank, will not:
1) Incur additional borrowed indebtedness other
than Bank-approved subordinated debt and
domestic equipment leases.
2) Merge, liquidate a substantial portion of
its assets, or acquire other assets other
than in the normal course of business.
3) Transfer funds to SCM Microsystems GmbH
(formally known as SCM Schneider
Microsysteme Entwicklungs-und Vertriebs
GmbH), except in the ordinary course of
business.
4) Transfer funds to SCM Microsystems GmbH
(formally known as SCM Schneider
Microsysteme Entwicklungs-und Vertriebs
GmbH), if such transfer would cause Borrower
to violate any of its financial covenants
with Bank.
5) Make loans, investments or advances to
outside parties other than in the normal
course of business.
6) Make distributions or dividends to
shareholders.
B) Borrower to notify Bank in writing of any
legal action commenced against it which may
result in damages over $100,000. Borrower
shall provide said notice to Bank
immediately upon the receipt by Borrower of
notice of the commencement of such legal
action.
C) Annual Accounts Receivable Audit, performed
by the Bank's Asset Based Department, with
results satisfactory to Bank, at Borrower's
expense, not to exceed $1,500.
CONDITIONS 1) Execution by Borrower of loan documentation
PRECEDENT satisfactory to Bank.
TO LENDING:
MISCELLANEOUS: All reasonable Bank legal fees shall be for the
account of the Borrower.
All reasonable out-of-pocket expenses incurred by
the Bank in connection with its due diligence and
closing of this transaction shall be reimbursed by
the Borrower.
-10-
SCM MICROSYSTEMS, INC.
__________________________________
(signature) Steven Humphreys
__________________________________ February 12, 1997
(title) President -----------------
-11-
IMPERIAL BANK
Member FDIC
SECURITY AND LOAN AGREEMENT
(ACCOUNTS RECEIVABLE)
This Agreement is entered Into between SCM MICROSYSTEMS INC, 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% of eligible accounts
and in no event more than $2,500,000.00
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 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 One
and no/1000ths percent (1.000%) 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
-12-
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 present policies with respect to
returned 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.
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 lo 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 document or Instrument relating to the Collateral; in its
name or otherwise, to demand, sue 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
-13-
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 the conditions and limitations
contained in the Credit Terms and Conditions dated January 15, 1997. See
Exhibit A attached.
Executed this 15th day of JANUARY, 1997
SCM MICROSYSTEMS INC.
___________________________________________
(Name of Borrower)
IMPERIAL BANK By: _______________________________________
Steven Humphreys, President
By:___________________________ By: _______________________________________
Title Wm. E. Ogdon, Controller
*If none, insert "None"
-14-
Exhibit A to Security and Loan
Agreement dtd. 1/15/97
SCM MICROSYSTEMS INC.
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 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 payment shall be applied first to any late charges owing, then to
interest and the remainder, if any, to principal.
SCM MICROSYSTEMS INC.
by: _______________________________
Steven Humphreys
IMPERIAL BANK
Member FDIC
AGREEMENT TO PROVIDE INSURANCE
(REAL OR PERSONAL PROPERTY)
TO: IMPERIAL BANK DATE: January 15, 1997
9920 S La Cienega Blvd. Borrower: SCM MICROSYSTEMS INC.
Inglewood, CA 90301
In consideration of a loan in the amount of $2,500,000.00, secured by all
tangible personal property including inventory and equipment.
I/We agree to obtain adequate insurance coverage to remain in force during
the term of the loan.
I/We also agree to advise the below named agent to add Imperial Bank as
loss payee on the new or existing insurance policy, and to furnish Bank at above
address with a copy of said policy/endorsements and any subsequent renewal
policies.
I/We understand that the policy must contain:
1. Fire and extended coverage in an amount sufficient to cover:
a) The amount of the loan, OR
b) All existing encumbrances, whichever is greater,
But not in excess of the replacement value of the improvements on
the real property.
2. Lender's "Loss Payable" Endorsement Form 438 BFU in favor of
Imperial Bank, or any other form acceptable to Bank.
INSURANCE INFORMATION
Insurance Co./Agent: Christina Marson Telephone No.: 415-393-8175
Agent's Address:
Marsh McLennan SCM MICROSYSTEMS INC.
PO Box 193880
San Francisco, CA 94119
Signature of Obligor: By:__________________________
Steven Humphreys
Signature of Obligor:______________________________
================================================================================
- -------------------------------------------------------
FOR BANK USE ONLY
INSURANCE VERIFICATION: Date:________________
Person Spoken to:______________________________________
Policy Number:_________________________________________
Effective From:__________________________ To:__________
Verified By:___________________________________________
- -------------------------------------------------------
IMPERIAL BANK
Member FDIC
ITEMIZATION OF AMOUNT FINANCED
DISBURSEMENT INSTRUCTIONS
Name(s): Date: January 15, 1997
SCM MICROSYSTEMS INC
$ paid to you directly by Cashiers Check No.
credited to deposit account No. 0017059254, when
$1,700,000.00 advances are requested.
$ 800,000.00 paid on Loan(s) No. 003
$ amounts paid to Bank for:
[Amounts paid to others on your behalf:
$ to Title Insurance Company
$ to Public Officials
$ to
$ to
$ to
$ to
$2,500,000.00 SUBTOTAL (NOTE AMOUNT)
LESS $ 0.00 Prepaid Finance Charge (Loan fee(s))
$2,500,000.00 TOTAL (AMOUNT FINANCED)
Upon consummation of this transaction, this document will also serve as
the authorization for Imperial Bank to disburse the loan proceeds as stated
above.
SCM MICROSYSTEMS INC.
By:
-------------------------- ----------------------------
Steven Humphreys Signature
-------------------------- ----------------------------
Wm E. Ogdon Signature