DEUTSCHE BANK LINE OF CREDIT FOR DM 1,500,000
Published on June 12, 1997
EXHIBIT 10.9
DEUTSCHE BANK
AKTIENGESELLSCHAFT
P.O. Box 21 03 62
85018 Ingolstadt
Headquarters (08 41) 3 15-0
Confidential
SCM Microsystems GmbH
- - Management -
Luitpoldstr. 6
85276 Pfaffenhofen October 23, 1996
Dear Messrs. Meier and Schneider:
We are writing in reference to the telephone discussion between you, Mr.
Schneider and your Mr. Lang, the topic of which was, among other things, the
intensification of our business relationship. In this connection, there was also
discussion of coverage of future working capital needs in the amount of about DM
4 to 5 million, which are to be covered in a sensible manner by at least three
banks. We are pleased to be able to inform you that we are available to you with
a working capital line of credit, which is increased to
DM 1,500,000.00
(in words: one million five hundred thousand German marks).
For debit drawing in connection with this line of credit, we currently charge
you an interest rate of 8% p.a. and will continue to charge you this rate until
further notice. For the increased working capital needs which you
addressed--particularly in the 4th quarter of each year--we will be glad to
disburse special low-interest cash credits to you in connection with the
aforementioned line of credit; the maturity dates and terms of said credits will
be coordinated with you on a case by case basis. In addition, we have granted a
guarantee credit in the current amount of about DM 18,000 charged against the
aforementioned line of credit.
As customary, we will extend our credit assurance by one year and set the
expiration date at 9/30/97. We will contact you to negotiate the further
handling of the line of credit in a timely manner prior to the expiration of
said expiration date.
Our willingness to extend credit is based on the following premises:
[ ] You will not furnish collateral to other banks (or you will only do so
if our credit line is secured in the same manner). In this connection,
you will ensure that the collateral at
Sparkasse Pfaffenhofen or other financial institutions, particularly
guarantees which have been issued, are released. [Footer Information]
[ ] Submission of an annually revolving 3-year plan, incl. liquidity plan
for one year each.
[ ] Submission of quarterly status figures with a comparison of target/
actual figures and a deviation analysis.
[ ] Presentation of credit assurances from neighbor banks which confirms
coverage of the entire working capital needs of at least DM 4 million
and equal treatment by the banks.
[ ] Early submission of audited annual financial statements and
consolidated balance sheets
[ ] In the event that the holding function existing to date at SCM
Microsystems GmbH/Pfaffenhofen (currently vis a vis SCM Microsystems
Inc./USA) is relinquished and transferred to SCM Microsystems Inc./USA
or another corporation, you shall ensure that the future parent
corporation submits a firm letter of comfort to us. We will send you a
draft in this regard at the appropriate time.
We assume that future profits will be reinvested and that future
withdrawal/distribution policy will be designed in such a manner that a
sufficient equity endowment (at least 20% of the balance sheet total) is
guaranteed at all times.
In addition, we are assuming a sales allocation which is in accordance with our
working capital credit line.
Our credit assurance is based in substantial part on the plan figures submitted
to us for the 1996-1998 fiscal years and, in particular, on the achievement of
positive results in the 3rd and 4th quarter of 1996. If the actual figures
substantially deviate downward or an unplanned loss occurs, we will keep open
the option of extraordinary credit termination.
Otherwise, our Standard Contract Terms shall apply.
As a sign of your agreement to this credit assurance, we ask that you return the
signed copy of this letter.
Naturally, we will be available to you at any time for questions in connection
with this credit assurance and in all other financial matters.
Our credit assurance dated July 12, 1996, lapses pursuant hereto.
Sincerely yours,
Deutsche Bank AG
Ingolstadt Branch
[signature] [signature]
Reichgeid Maier
In agreement with the content of this letter.
SCM Microsystems GmbH
Pfaffenhofen, [blank date] please sign on company stamp
DEUTSCHE BANK [logo]
AKTIENGESELLSCHAFT
Ingolstadt Branch
Corporate customer department
Ludwigstr. 24
85049 Ingolstadt
Mailing address:
SCM Microsystems GmbH P.O. Box 21 03 62
- - Management - 85018 Ingolstadt
Luitpoldstr. 6
85276 Pfaffenhofen Gunter Maier
Telephone: (0841) 315-229
Fax: (0841) 315-218
November 13, 1996
Our credit assurance dated 10/23/96
Gentlemen:
We are writing in reference to our credit assurance dated 10/23/96 and the
telephone discussion which was conducted with your Mr. Lang in the interim. As
discussed, the following items of the above-captioned credit assurance will be
specified in greater detail:
[ ] Equity endowment
In light of the fact that we were credibly assured that the shareholder loan
extended to you in the approximate amount of DM 4 million will be converted to
equity (nominal amount plus premium) by 1/31/97, we will view this as owners'
equity at this time, and therefore the 20% clause of our credit assurance is
satisfied.
[ ] Achievement of a positive result in the 3rd quarter:
According to the numerical material before us, the firm of SCM Microsystems GmbH
generated a loss of about DM 166,000 in the third quarter of 1996, although
September was already clearly in the positive result range (DM +499,000). In
light of the September result and the consolidated (GmbH [German limited
liability corporation] and Inc.) quarterly profit in the amount of US$ 154,000,
we
view the 3rd quarter as satisfying the prerequisite to our willingness to extend
credit in this regard as well. As you confirmed, the 4th quarter of 1996 will
produce a positive result, viewed from both the individual (GmbH) and the
consolidated (GmbH + Inc.) standpoint.
However, if contrary to expectations, the conversion option is not exercised by
1/31/97 and/or no positive result is achieved in the 4th quarter of 1996 and
thereafter, we will have to reconsider our willingness to extend credit.
We hope to have been of assistance to you and remain
Sincerely yours,
Deutsche Bank AG
Ingolstadt Branch
[signature]
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