Loan [Amendment] - Silicon Valley Bank and Identix Inc., Identix Public Sector Inc. and Legislative Demographic Services Inc.
SILICON VALLEY BANK
AMENDMENT TO LOAN DOCUMENTS
BORROWER: IDENTIX INCORPORATED
IDENTIX PUBLIC SECTOR, INC.
LEGISLATIVE DEMOGRAPHIC SERVICES, INC.
DATE: MARCH 28, 2002
THIS AMENDMENT TO LOAN DOCUMENTS is entered into between Silicon Valley
Bank ("Silicon") and the borrower named above ("Borrower").
The Parties agree to amend the Loan and Security Agreement between them,
dated September 26, 2002 (as otherwise amended, if at all, the "Loan
Agreement"), as follows, effective as of the date hereof. (Capitalized terms
used but not defined in this Amendment shall have the meanings set forth in the
Loan Agreement.)
1. MODIFIED CREDIT LIMIT. Section 1 of the Schedule to Loan and Security
Agreement is hereby amended in its entirety to read as follows:
"1. CREDIT LIMIT
(Section 1.1): An amount equal to the sum of A, B, C and
D below:
A. Non-Government Receivables Loans. An
amount not to exceed the lesser of: (i)
$7,500,000 at any one time outstanding (the
"Maximum Non-Government Receivables Credit
Limit"); or (ii) 80% (the "Percentage
Advance Rate") of the amount of Borrower's
Eligible Receivables (as defined in Section
8 above) excluding, however, Borrower's
Eligible Government Receivables (as defined
below), if any.
The foregoing Percentage Advance Rate is
typically based on the quality of the
Receivables and attendant Dilution as
follows: up to 80% Percentage Advance Rate
with Dilution less than or equal to 10%; up
to 75% Percentage Advance Rate when Dilution
is over 10% but less than or equal to 15%.
If Dilution exceeds 15%, a Reserve is
established for the dilution factor rounded
up to the nearest whole number then
multiplied by a factor of up to 70%.
As used above, "Dilution" means all
deductions from Receivables by Account
Debtors of Borrower, other than those
arising from payment thereof, and includes
without
-1-
<PAGE>
limitation deductions arising from
advertising and other allowances, credit
memos, returns, bad debts, and all other
deductions, as determined by Silicon's audit
and for such period as Silicon shall
determine. Changes in the Percentage Advance
Rate based on Dilution shall go into effect
when Silicon has determined the amount of
the Dilution and given written notice to the
Borrower of the change in the Percentage
Advance Rate. If, as a result of a decrease
in the Percentage Advance Rate, the total
Loans and other Obligations exceed the
Credit Limit, the Borrower shall pay the
excess to Silicon in accordance with the
terms of this Agreement.
LETTER OF CREDIT
SUBLIMIT
(Section 1.5): $3,000,000.
CASH MANAGEMENT
SUBLIMIT
(Section 1.6): $2,000,000.
plus
B. Government Receivables Loans. An amount
not to exceed the lesser of: (i) $7,500,000
at any one time outstanding (the "Maximum
Government Receivables Credit Limit"); or
(ii) 85% (the "Government Receivables
Percentage Advance Rate") of the amount of
Borrower's Eligible Government Receivables
(defined as Receivables owing from the
United States or any department, agency or
instrumentality thereof ("Government
Receivables") for which there has been
compliance, to Silicon's satisfaction, with
the United States Assignment of Claims Act
and which are otherwise deemed Eligible
Receivables (as defined in Section 8
above)). The term "Receivables" (as defined
in Section 8 above) includes Government
Receivables.
Provided Borrower maintains at all times a
minimum of unrestricted cash (and cash
equivalents) in accounts maintained at
Silicon in an amount of not less than
$10,000,000, the Government Receivables
Percentage Advance Rate will remain at 85%.
In the event such amount maintained in such
accounts at Silicon falls below $10,000,000,
the Government Receivables Percentage
Advance Rate will be based not only on the
quality of the Government Receivables but
also on the attendant Dilution (as defined
above) as follows: up
-2-
<PAGE>
to 85% Government Receivables Percentage
Advance Rate with Dilution less than or
equal to 5%; up to 80% Government
Receivables Percentage Advance Rate with
Dilution less than or equal to 10%; up to
75% Government Receivables Percentage
Advance Rate when Dilution is over 10% but
less than or equal to 15%. If Dilution
exceeds 15%, a Reserve is established for
the dilution factor rounded up to the
nearest whole number then multiplied by a
factor of up to 70%.
plus
C. Cash Secured Letter of Credit. $50,000.
Silicon previously issued for the account of
Borrower a Standby Letter of Credit in the
amount of $50,000 (the "Standby Letter of
Credit"), which Standby Letter of Credit is
secured by a certificate of deposit pledged
to Silicon on Silicon's standard form
documentation.
plus
D. Cash Secured Merchant Service Line.
$5,000. Silicon and Borrower previously
entered into a Merchant Services Agreement,
on Silicon's standard form documentation,
pursuant to which Borrower may utilize
amounts of up to $5,000 at any one time
outstanding for Silicon's merchant services
as provided for in the Merchant Services
Agreement (the "Merchant Service Line"). The
Merchant Service Line is secured by a
certificate of deposit pledged to Silicon on
Silicon's standard form documentation.
The term "Maximum Credit Limit" shall mean
the sum of the Maximum Non-Government
Receivables Credit Limit plus the Maximum
Government Receivables Credit Limit. As used
in this Agreement, the term "Loans" shall
include loans made pursuant to any of the
foregoing of A, B, C or D. Loans will be
made to each Borrower based on the Eligible
Receivables and Eligible Government
Receivables, as applicable, of each
Borrower, subject to the Maximum Credit
Limit and, as applicable, the Maximum
Non-Government Receivables Credit Limit and
the Maximum Government Receivables Credit
Limit set forth above for all Loans to all
Borrowers combined.
2. MODIFICATION TO CASH MANAGEMENT SUBLIMIT. Section 1.6 of the Loan
Agreement is hereby amended in its entirety to read as follows:
"1.6 CASH MANAGEMENT SERVICES AND RESERVES. Borrower may use up
to $2,000,000 of Loans available hereunder for Silicon's Cash
Management Services
-3-
<PAGE>
(as defined below), including, merchant services, business
credit card, ACH and other services identified in the cash
management services agreement related to such service (the "Cash
Management Services"). Silicon may, in its sole discretion,
reserve against Loans which would otherwise be available
hereunder such sums as Silicon shall determine in connection
with the Cash Management Services, and Silicon may charge to
Borrower's Loan account, any amounts that may become due or
owing to Silicon in connection with the Cash Management
Services. Borrower agrees to execute and deliver to Silicon all
standard form applications and agreements of Silicon in
connection with the Cash Management Services, and, without
limiting any of the terms of such applications and agreements,
Borrower will pay all standard fees and charges of Silicon in
connection with the Cash Management Services. The Cash
Management Services shall terminate on the Maturity Date."
3. MODIFIED INTEREST RATE. Section 2 of the Schedule to Loan and
Security Agreement is hereby amended in its entirety to read as follows:
"2. INTEREST.
INTEREST RATE (Section 1.2):
A rate equal to the "Prime Rate" in effect
from time to time, plus 0.50% per annum.
Interest shall be calculated on the basis of
a 360-day year for the actual number of days
elapsed. "Prime Rate" means the rate
announced from time to time by Silicon as
its "prime rate;" it is a base rate upon
which other rates charged by Silicon are
based, and it is not necessarily the best
rate available at Silicon. The interest rate
applicable to the Obligations shall change
on each date there is a change in the Prime
Rate.
MINIMUM MONTHLY
INTEREST (Section 1.2): Not Applicable."
4. ACKNOWLEDGEMENT OF RECEIPT OF LOAN FEE. Silicon hereby acknowledges
that the $75,000 Loan Fee identified in Section 3 of the Schedule to Loan and
Security Agreement has been paid by Borrower and received by Silicon.
5. MODIFIED COLLATERAL MONITORING FEE. The Collateral Monitoring Fee set
forth in Section 3 of the Schedule to Loan and Security Agreement is hereby
amended in its entirety to read as follows:
-4-
<PAGE>
"Collateral
Monitoring Fee: $500, per month, payable in arrears
(prorated for any partial month at the
beginning and at termination of this
Agreement); provided, however, so long as
the Streamline Facility Agreement dated
September 26, 2001 is in effect, no
Collateral Monitoring Fee will be charged."
6. DELETION OF UNUSED LINE FEE. The Unused Line Fee set forth in Section
3 of the Schedule to Loan and Security Agreement that currently reads as
follows:
"Unused Line Fee: Borrower shall pay Silicon an Unused Line
Fee, in addition to all interest and other
fees payable hereunder. The amount of the
Unused Line Fee shall be 0.125% per annum
multiplied by an amount equal to the Maximum
Credit Limit minus the average daily balance
of the outstanding Loans. The Unused Line
Fee shall be computed and paid monthly, in
arrears (prorated for any partial calendar
month at the beginning and at termination of
this Agreement), and shall be due on the
last calendar day of each month."
is hereby deleted.
7. MODIFIED MATURITY DATE. Section 4 of the Schedule to Loan and
Security Agreement is hereby amended in its entirety to read as follows:
"4. MATURITY DATE
(Section 6.1): March 28, 2003; provided, however, the
Maturity Date with respect to the Merchant
Service Line shall be October 4, 2002."
8. MODIFIED TANGIBLE NET WORTH FINANCIAL COVENANT. The Tangible Net
Worth Financial Covenant set forth in Section 5 of the Schedule to Loan and
Security Agreement is hereby amended in its entirety to read as follows:
"MINIMUM TANGIBLE
NET WORTH: As of the end of each month, Identix
Incorporated shall maintain, on a
consolidated basis, a Tangible Net Worth of
not less than the following: $25,000,000,
plus 50% of the total consideration received
by Borrower after February 28, 2002, in
consideration for the issuance by Borrower
of its equity securities and subordinated
debt securities, effective on the date such
consideration is received."
9. MODIFIED COVENANT REGARDING COPYRIGHT FILINGS. Subclause (3) of
Section 9 of the Schedule to Loan and Security Agreement is hereby amended in
its entirety to read as follows:
"(3) COPYRIGHT FILINGS. Identix Incorporated previously executed
and delivered to Silicon a Collateral Assignment, Patent
Mortgage and Security Agreement
-5-
<PAGE>
between Identix Incorporated and Silicon (the "Identix
Intellectual Property Agreement"). Provided Borrower maintains
at all times a minimum of unrestricted cash (and cash
equivalents) in accounts maintained at Silicon in an amount of
not less than $20,000,000 (the "Minimum Cash Deposit"), Borrower
shall not be required to: (i) cause all of its copyrights and
computer software, the licensing of which results in Receivables
or which are necessary to operate (or which are otherwise
material to) the hardware and other products manufactured and/or
sold by Borrower, to be registered with the United States
Copyright Office, (ii) complete the Exhibits to the Intellectual
Property Agreement with all of the information called for with
respect to such copyrights, software and other intellectual
property, (iii) cause the Intellectual Property Agreement to be
recorded in the United States Copyright Office and, if
applicable, the United States Patent and Trademark Office, and
(iv) provide evidence of such recordation to Silicon (items (i)
through (iv) above are hereinafter referred to as the "IP
Requirements"). In the event the amount of the Minimum Cash
Deposit falls below $20,000,000, each Borrower shall within 30
days thereafter, comply with the IP Requirements (and, to the
extent necessary, execute and deliver to Silicon an Intellectual
Property Agreement in form and substance similar to the Identix
Intellectual Property Agreement)."
10. MODIFIED COVENANT REGARDING IDENTICATOR TECHNOLOGY, BIOMETRIC
APPLICATIONS AND TECHNOLOGY, INC. AND iTRUST, INC. Sublease (10) of Section 9 of
the Schedule to Loan and Security Agreement is hereby amended in its entirety to
read as follows:
"(10) IDENTICATOR TECHNOLOGY, INC., BIOMETRIC APPLICATIONS AND
TECHNOLOGY, INC. AND iTRUST, INC. Borrower represents and
warrants that each of Identicator Technology, Inc.
("Identicator"), Biometric Applications and Technology, Inc.
("Biometric") and iTrust, Inc. ("iTrust") is a wholly owned
subsidiary of Identix Incorporated and each has little or no
assets. In addition, Borrower represents and warrants that it
intends to commence the process of dissolution of each of
Identicator and Biometric in the near future. Borrower covenants
and agrees that while this Agreement is in effect, Borrower
shall not transfer any assets or Collateral to any of
Identicator, Biometrics or, except if prior written consent of
Silicon is obtained, iTrust. Borrower further covenants and
agrees that by the earlier of (i) July 31, 2002 or (ii) the date
Borrower requests its initial Loan from Silicon under this
Agreement, Borrower shall have caused each of Identicator,
Biometrics and iTrust to have either (a) been legally dissolved
and evidence thereof provided to Silicon that is satisfactory to
Silicon in its discretion or (b) executed in favor of Silicon,
on Silicon's standard form, a Continuing Guaranty, Security
Agreement and other related documents that Silicon deems
necessary."
11. MODIFICATION REGARDING CONCENTRATION LIMIT. That certain sentence in
the definition of "Eligible Receivables" set forth in Section 8 of the Loan
Agreement that currently reads as follows:
"Receivables owing from one Account Debtor will not be deemed
Eligible Receivables to the extent they exceed 25% of the total
Receivables outstanding."
is hereby amended to read as follows:
-6-
<PAGE>
"Receivables owing from one Account Debtor will not be deemed
Eligible Receivables to the extent they exceed 25% of the total
Receivables outstanding; provided, however, Government
Receivables owing from one Account Debtor will not be deemed
Eligible Government Receivables to the extent they exceed 50% of
the total Government Receivables outstanding."
12. MODIFICATION TO STREAMLINE FACILITY AGREEMENT. Section 1 of that
certain Streamline Facility Agreement dated September 26, 2001 and executed by
and between the parties in conjunction with the Loan Agreement is hereby amended
in its entirety to read as follows:
"1. Monthly Financial Statements and Compliance Certificate;
Quarterly Borrowing Base. While this Streamline Facility
Agreement is in effect, within 20 days after the end of each
fiscal quarter, Borrower shall deliver to Silicon a Borrowing
Base Certificate signed by the Chief Executive Officer,
President, Chief Financial Officer or Controller of Borrower in
substantially the form of Exhibit A hereto, together with aged
listings of accounts receivable and accounts payable, inventory
reports, account reconciliations and transaction reports
including sales, credit memoranda and collection journals.
Notwithstanding the foregoing, Borrower shall provide Silicon
with monthly unaudited financial statements and monthly
Compliance Certificates all as required and as set forth in the
Loan Documents. Additionally, except as otherwise modified by
the terms of this Streamline Facility Agreement, Borrower shall
comply with all other reporting requirements as set forth in the
Loan Documents."
13. SUNTRUST DEPOSIT ACCOUNT CONTROL AGREEMENT. Within 45 days after the
date of this Amendment, Borrower shall cause Suntrust Bank to execute and
deliver to Silicon, on Silicon's standard form (with such changes as shall be
acceptable to Silicon in its discretion), a Deposit Account Control Agreement
with respect to all accounts maintained by Borrower at such financial
institution.
14. REPRESENTATIONS TRUE. Borrower represents and warrants to Silicon
that all representations and warranties set forth in the Loan Agreement, as
amended hereby, are true and correct.
15. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any prior
written amendments to the Loan Agreement signed by Silicon and Borrower, and the
other written documents and agreements between Silicon and Borrower set forth in
full all of the representations and agreements of the parties with respect to
the subject matter hereof and supersede all prior discussions, representations,
agreements and understandings between the parties with respect to the subject
hereof. Except as herein expressly amended, all of the terms and provisions of
the Loan Agreement, and all other documents and agreements between Silicon and
Borrower shall continue in full force and effect and the same are hereby
ratified and confirmed.
-7-
<PAGE>
BORROWER: SILICON:
IDENTIX INCORPORATED SILICON VALLEY BANK
BY /s/ Erik E. Prusch BY /s/ Chitra
-------------------------------- ----------------------------------
PRESIDENT OR VICE PRESIDENT TITLE Acct. Mgr.
BY /s/ Mark S. Molina
--------------------------------
SECRETARY OR ASS'T SECRETARY
BORROWER:
IDENTIX PUBLIC SECTOR, INC.
BY /s/ Erik E. Prusch
--------------------------------
PRESIDENT OR VICE PRESIDENT
BY /s/ Mark S. Molina
--------------------------------
SECRETARY OR ASS'T SECRETARY
BORROWER:
LEGISLATIVE DEMOGRAPHIC SERVICES, INC.
BY /s/ Erik E. Prusch
--------------------------------
PRESIDENT OR VICE PRESIDENT
BY /s/ Mark S. Molina
--------------------------------
SECRETARY OR ASS'T SECRETARY
-8-