Loan Agreement [Amendment No. 2] - Imperial Bank, Identix inc. and Identicator Technology Inc.
Identix Incorporated
SECOND AMENDMENT TO
SECOND AMENDED AND RESTATED LOAN AGREEMENT
This Second Amendment to Second Amended and Restated Loan Agreement
("Second Amendment") is made and entered into as of April 21, 2000, by and among
Identix Incorporated, a Delaware corporation (herein called "Identix"),
Identicator Technology, Inc., a Delaware corporation (herein called
"Identicator"), and Imperial Bank ("Bank"). Identix and Identicator are
hereinafter individually referred to as a "Borrower" and collectively, as
"Borrowers."
Recitals
A. Borrowers and Bank entered into a certain Second Amended and Restated
Loan Agreement dated as of May 13, 1999, as amended by that certain First
Amendment to Second Amended and Restated Loan Agreement dated as of December 25,
1999 (the "First Amendment") (as the same may from time to time be modified,
amended, supplemented, restated or superseded, the "Loan Agreement"), pursuant
to which Bank agreed to extend and make revolving loans available to Borrowers
upon the terms and conditions contained therein.
B. The Revolving Commitment matured on February 23, 2000 and Borrowers
have requested and Bank has agreed to extend the Revolving Maturity Date,
subject to all of the terms and conditions set forth in this Second Amendment.
C. In addition, Borrowers have requested and Bank has agreed to modify
certain of the financial covenants contained in the Loan Agreement, subject to
all of the terms and conditions set forth in this Second Amendment.
D. The Loan Agreement, the First Amendment, this Second Amendment and the
other Loan Documents (as defined in the Loan Agreement), together with all other
documents entered into or delivered pursuant to any of the foregoing, in each
case as originally executed or as the same may from time to time be modified,
amended, supplemented, restated or superseded are hereinafter collectively
referred to as the "Loan Documents."
Agreement
Now, Therefore, in consideration of the foregoing recitals and the mutual
covenants herein set forth and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound, and to induce Bank to enter into this Second Amendment, each
Borrower and Bank hereby agree to amend the Loan Agreement as follows:
1. Definitions. Unless otherwise defined herein, all terms defined in the
Loan Agreement have the same meaning when used herein.
<PAGE>
2. Amendments to Loan Agreement. The Loan Agreement is hereby amended as
follows:
2.1 The last sentence of Section 2.A. is hereby deleted in its
entirety, and the following sentence substituted therefor:
"Borrower promises to pay to Bank the entire outstanding unpaid
principal balance (and all accrued unpaid interest thereon) of the Revolving
Loan Account on or before April 20, 2001 ("Revolving Maturity Date")."
2.2 The first paragraph of Section 10 of the Loan Agreement is hereby
deleted in its entirety and the following substituted therefor:
"All financial covenants and financial information referenced
herein shall be interpreted and prepared in accordance with GAAP as
used in the United States of America applied on a basis consistent
with previous years for the operations of Identix, excluding its
Subsidiary, ANADAC, Inc. Compliance with the financial covenants
shall be calculated and monitored on a monthly basis, except as shall
be expressly stated to the contrary. Identix affirmatively covenants
that so long as any loans, obligations or liabilities remain
outstanding or unpaid to Bank or any commitment is outstanding
hereunder, it will, on a consolidating basis using only the operations
of Identix, excluding its Subsidiary, ANADAC, Inc.:"
2.3 The first sentence of Section 10.A. of the Loan Agreement is
hereby deleted in its entirety and the following is substituted therefor:
"At all times, maintain a Minimum Tangible Net Worth in an amount
which is equal to or greater than $15,000,000."
2.4 The first sentence of Section 10.B. of the Loan Agreement is
hereby deleted in its entirety and the following is substituted therefor:
"At all times, maintain a Maximum Ratio of Total Liabilities to
Tangible Net Worth not to exceed 1.00 to 1.00."
2.5 The first sentence of Section 10.C. of the Loan Agreement is
hereby deleted in its entirety and the following is substituted therefor:
"At all times maintain a Minimum Quick Ratio of not less than
1.35 to 1.00."
2.6 Section 10.D. of the Loan Agreement is hereby deleted in its
entirety and the following is substituted therefor:
"Measured on a quarterly basis on the last day of each fiscal
quarter, have maximum Quarterly Losses of not more than $4,000,000; provided,
however, that cumulative Losses from the date hereof through the Revolving
Maturity Date shall not exceed $12,000,000 (the "Losses Cap") and, provided
further, that the Losses Cap shall be automatically increased at the rate of
fifty percent (50.0%) of all new equity obtained by the Borrowers from May 1,
2000
<PAGE>
through the Revolving Maturity Date, but shall in no event exceed $16,000,000.
As used herein, "Losses" means net income before taxes and non-cash amortization
expenses."
2.7 Section 10.I. of the Loan Agreement is hereby deleted in its
entirety and the following is substituted therefor:
"Upon Bank's request, and not less frequently than semi-annually,
deliver to Bank a duly-executed original of Bank's standard form of IP Security
Agreement, together with appropriate insertions and fully-updated schedules
sufficient for perfecting Bank's security interest in the Intellectual
Property;"
2.8 The definition of Eligible Accounts set forth in Exhibit A to the
Loan Agreement is hereby amended by (i) deleting item (2) in its entirety and
renumbering accordingly, and (ii) deleting item (7) in its entirety and
substituting therefor:
"Accounts due from an account debtor whose principal place of
business is located outside of the United States of America unless either (a)
such Accounts are insured or covered by a letter of credit in a manner and form
acceptable to Bank or (b) Bank shall have otherwise permitted in writing in its
sole and absolute discretion;"
2.9 Exhibit B to the Loan Agreement is hereby deleted in its entirety
and Exhibit B attached hereto and incorporated herein by this reference is
substituted therefor.
3. Limited Amendment. Each of the amendments set forth in this Second
Amendment shall be limited precisely as written and shall not be deemed (a) to
be an amendment or waiver of any other term or condition of the Loan Agreement
or the other Loan Documents, to prejudice any right or remedy which Bank may now
have or may have in the future under or in connection with the Loan Agreement or
the other Loan Documents or (b) to be a consent to any future amendment or
waiver.
4. Representations And Warranties. Each Borrower represents and warrants
that the representations and warranties respectively made in the Loan Documents
continue to be true and complete in all material respects as of the date hereof
after giving effect to this Second Amendment (except to the extent such
specifically relate to another date or as specifically described on Schedule 1
attached hereto and incorporated herein by this reference) and that the
execution, delivery and performance of this Second Amendment are duly
authorized, do not require the consent or approval of any governmental body or
regulatory authority and are not in contravention of or in conflict with any
material law or regulation or any term or provision of any other material
agreement entered into by any Borrower.
5. Conditions Precedent. The legal effectiveness of this Second Amendment
is subject to the satisfaction of all of the following conditions precedent:
(a) Executed Amendment. Bank shall have received this Second
Amendment duly executed and delivered by Borrowers and the same shall have
become effective.
(b) Resolutions and Other Corporate Documents. If requested by Bank,
Bank shall have received resolutions of the Board of Directors of each Borrower
authorizing
<PAGE>
such Borrower to enter into this Second Amendment and to deliver such other
corporate documents, as Bank shall reasonably request.
(c) Financial Condition. There shall have occurred no material
adverse change in the financial condition or prospects of any Borrower as shown
on the most recent financial statements submitted to Bank or disclosed to Bank,
respectively, and relied upon by Bank in entering into this Second Amendment.
(d) No Default. After giving effect to the waiver contained in this
Second Amendment, no Event of Default has occurred that remains uncured and is
continuing or will result from the consummation of the transactions contemplated
by this Second Amendment that would constitute an Event of Default as defined in
the Loan Agreement.
(e) Payment of Loan Fee. Bank shall have received from Borrowers
$25,000 as consideration for Bank's agreeing to enter into this Second
Amendment.
(f) Payment of Fees. Bank shall have received reimbursement from
Borrowers of its costs and expenses incurred (including, without limitation, its
attorneys' fees and expenses) in connection with this Second Amendment and the
transactions contemplated hereby.
(g) Other Documents. Bank shall have received such other documents,
information and items from Borrowers as it shall reasonably request to
effectuate the transactions contemplated hereby.
6. Release And Waiver.
(a) Each Borrower hereby acknowledges and agrees that: (1) it has no
claim or cause of action against Bank or any parent, subsidiary or affiliate of
Bank, or any of Bank's officers, directors, employees, attorneys or other
representatives or agents (all of which parties other than Bank being,
collectively, "Bank's Agents") in connection with the Loan Documents, the loans
thereunder or the transactions contemplated therein and herein; (2) it has no
offset or defense against any of its respective obligations, indebtedness or
contracts in favor of Bank; and (3) it recognizes that Bank has heretofore
properly performed and satisfied in a timely manner all of its obligations to
and contracts with such Borrower.
(b) Although Bank regards its conduct as proper and does not believe
any Borrower to have any claim, cause of action, offset or defense against Bank
or any of Bank's Agents in connection with the Loan Documents, the loans
thereunder or the transactions contemplated therein, Bank wishes and each
Borrower agrees to eliminate any possibility that any past conditions, acts,
omissions, events, circumstances or matters could impair or otherwise affect any
rights, interests, contracts or remedies of Bank. Therefore, each Borrower
unconditionally releases and waives (1) any and all liabilities, indebtedness
and obligations, whether known or unknown, of any kind of Bank or of any of
Bank's Agents to such Borrower, except the obligations remaining to be performed
by Bank as expressly stated in the Loan Agreement, this Second Amendment and the
other Loan Documents executed by Bank; (2) any legal, equitable or other
obligations or duties, whether known or unknown, of Bank or of any of Bank's
Agents to any Borrower (and any rights of such Borrower against Bank) besides
those expressly stated in the Loan Agreement, this Second Amendment and the
other Loan
<PAGE>
Documents; (3) any and all claims under any oral or implied agreement,
obligation or understanding with Bank or any of Bank's Agents, whether known or
unknown, which is different from or in addition to the express terms of the Loan
Agreement, this Second Amendment or any of the other Loan Documents; and (4) all
other claims, causes of action or defenses of any kind whatsoever (if any),
whether known or unknown, which any Borrower might otherwise have against Bank
or any of Bank's Agents, on account of any condition, act, omission, event,
contract, liability, obligation, indebtedness, claim, cause of action, defense,
circumstance or matter of any kind whatsoever which existed, arose or occurred
at any time prior to the execution and delivery of this Second Amendment or
which could arise concurrently with the effectiveness of this Second Amendment.
(c) Each Borrower agrees that it understands the meaning and effect
of Section 1542 of the California Civil Code, which provides:
Section 1542. Certain Claims Not Affected by General
Release. A general release does not extend to claims that
the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if
known by him must have materially affected his settlement
with the debtor.
EACH BORROWER AGREES TO ASSUME THE RISK OF ANY AND ALL UNKNOWN, UNANTICIPATED OR
MISUNDERSTOOD DEFENSES, CLAIMS, CAUSES OF ACTION, CONTRACTS, LIABILITIES,
INDEBTEDNESS AND OBLIGATIONS WHICH ARE RELEASED BY THIS FIRST AMENDMENT IN FAVOR
OF BANK AND BANK'S AGENTS, AND EACH BORROWER HEREBY WAIVES AND RELEASES ALL
RIGHTS AND BENEFITS WHICH IT MIGHT OTHERWISE HAVE UNDER THE AFOREMENTIONED
SECTION 1542 OF THE CALIFORNIA CIVIL CODE WITH REGARD TO THE RELEASE OF SUCH
UNKNOWN, UNANTICIPATED OR MISUNDERSTOOD DEFENSES, CLAIMS, CAUSES OF ACTION,
CONTRACTS, LIABILITIES, INDEBTEDNESS AND OBLIGATIONS. TO THE EXTENT (IF ANY)
WHICH ANY SUCH LAWS MAY BE APPLICABLE, EACH BORROWER WAIVES AND RELEASES (TO THE
MAXIMUM EXTENT PERMITTED BY LAW) ANY RIGHT OR DEFENSE WHICH IT MIGHT OTHERWISE
HAVE UNDER ANY OTHER LAW OF ANY APPLICABLE JURISDICTION WHICH MIGHT LIMIT OR
RESTRICT THE EFFECTIVENESS OR SCOPE OF ANY OF ITS WAIVERS OR RELEASES UNDER THIS
FIRST AMENDMENT.
7. Full Force And Effect; Entire Agreement. Except to the extent
expressly provided in this Second Amendment, the terms and conditions of the
Loan Agreement and the other Loan Documents shall remain in full force and
effect. This Second Amendment and the other Loan Documents constitute and
contain the entire agreement of the parties hereto and supersede any and all
prior agreements, negotiations, correspondence, understandings and
communications between the parties, whether written or oral, respecting the
subject matter hereof. The parties hereto further agree that the Loan Documents
comprise the entire agreement of the parties thereto and supersede any and all
prior agreements, negotiations, correspondence, understandings and other
communications between the parties thereto, whether written or oral respecting
the extension of credit by Bank to Borrowers and/or their respective affiliates.
<PAGE>
8. Counterparts; Effectiveness. This Second Amendment may be executed in
any number of counterparts, each of which when so delivered shall be deemed an
original, but all such counterparts taken together shall constitute but one and
the same instrument. Each such agreement shall become effective upon the
execution of a counterpart hereof or thereof by each of the parties hereto and
telephonic notification that such executed counterparts has been received by
each Borrower and Bank.
In Witness Whereof, each of the parties hereto has caused this Second
Amendment to be executed and delivered by its duly authorized officer as of the
date first written above.
Borrowers:
Identix Incorporated,
a Delaware corporation
By: /s/ J Bruce-Smith
-----------------------------------
Printed Name: John E. Bruce-Smith
Title: Vice President - Finance
----------------------------------
Identicator Technology, Inc.,
a Delaware corporation
By: /s/ J Bruce-Smith
-----------------------------------
Printed Name: John E. Bruce-Smith
Title: Vice President - Finance
----------------------------------
Bank:
Imperial Bank
By: /s/ V Hanna
-----------------------------------
Victor Hanna
Assistant Vice President
Schedule 1
SCHEDULE OF EXCEPTIONS
TO REPRESENTATIONS AND WARRANTIES
None.