Exhibit 4.4
LOAN AGREEMENT
Wachovia Bank, National Association
190 River Road
Summit, New Jersey 07901
(Hereinafter referred to as the "Bank")
I.D. Systems, Inc.
One University Plaza
Hackensack, New Jersey 07601
(Individually and collectively "Borrower")
This Loan Agreement ("Agreement") is entered into January 2, 2003, by and
between Bank and Borrower.
This Agreement applies to the loan or loans (individually and collectively, the
"Loan") evidenced by one or more promissory notes dated January 2, 2003 or other
notes subject hereto, as modified from time to time (whether one or more, the
"Note") and all Loan Documents. The terms "Loan Documents" and "Obligations," as
used in this Agreement, are defined in the Note.
Relying upon the covenants, agreements, representations and warranties contained
in this Agreement, Bank is willing to extend credit to Borrower upon the terms
and subject to the conditions set forth herein, and Bank and Borrower agree as
follows:
REPRESENTATIONS. Borrower represents that from the date of this Agreement and
until final payment in full of the Obligations: ACCURATE INFORMATION. All
information now and hereafter furnished to Bank is and will be true, correct and
complete. Any such information relating to Borrower's financial condition will
accurately reflect Borrower's financial condition as of the date(s) thereof,
(including all contingent liabilities of every type), and Borrower further
represents that its financial condition has not changed materially or adversely
since the date(s) of such documents. AUTHORIZATION; NON-CONTRAVENTION. The
execution, delivery and performance by Borrower and any guarantor, as
applicable, of this Agreement and other Loan Documents to which it is a party
are within its power, have been duly authorized as may be required and, if
necessary, by making appropriate filings with any governmental agency or unit
and are the legal, binding, valid and enforceable obligations of Borrower and
any guarantors; and do not (i) contravene, or constitute (with or without the
giving of notice or lapse of time or both) a violation of any provision of
applicable law, a violation of the organizational documents of Borrower or any
guarantor, or a default under any agreement, judgment, injunction, order, decree
or other instrument binding upon or affecting Borrower or any guarantor, (ii)
result in the creation or imposition of any lien (other than the lien(s) created
by the Loan Documents) on any of Borrower's or any guarantor's assets, or (iii)
give cause for the acceleration of any obligations of Borrower or any guarantor
to any other creditor. ASSET OWNERSHIP. Borrower has good and marketable title
to all of the properties and assets reflected on the balance sheets and
financial statements supplied Bank by Borrower, and all such properties and
assets are free and clear of mortgages, security deeds, pledges, liens, charges,
and all other encumbrances, except as otherwise disclosed to Bank by Borrower in
writing and approved by Bank ("Permitted Liens"). To Borrower's knowledge, no
default has occurred under any Permitted Liens and no claims or interests
adverse to Borrower's present rights in its properties and assets have arisen.
DISCHARGE OF LIENS AND TAXES. Borrower has duly filed, paid and/or discharged
all taxes or other claims that may become a lien on any of its property or
assets, except to the extent that such items are being appropriately contested
in good faith and an adequate reserve for the payment thereof is being
maintained. SUFFICIENCY OF CAPITAL. Borrower is not, and after consummation of
this Agreement and after giving effect to all indebtedness incurred and liens
created by Borrower in connection with the Note and any other Loan Documents,
will not be, insolvent within the meaning of 11 U.S.C. ss 101(32). COMPLIANCE
WITH LAWS. Borrower is in compliance in all respects with all federal, state and
local laws, rules and regulations applicable to its properties, operations,
business, and finances, including, without limitation, any federal or state laws
relating to liquor (including 18 U.S.C. ss 3617, et seq.) or narcotics
(including 21 U.S.C. ss 801, et seq.)
and/or any commercial crimes; all applicable federal, state and local laws and
regulations intended to protect the environment; and the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), if applicable. ORGANIZATION
AND AUTHORITY. Each corporation, partnership or limited liability company
Borrower and/or guarantor, as applicable, is duly created, validly existing and
in good standing under the laws of the state of its organization, and has all
powers, governmental licenses, authorizations, consents and approvals required
to operate its business as now conducted. Each corporation, partnership or
limited liability company Borrower and/or guarantor, as applicable, is duly
qualified, licensed and in good standing in each jurisdiction where
qualification or licensing is required by the nature of its business or the
character and location of its property, business or customers, and in which the
failure to so qualify or be licensed, as the case may be, in the aggregate,
could have a material adverse effect on the business, financial position,
results of operations, properties or prospects of Borrower or any such
guarantor. NO LITIGATION. There are no pending or threatened suits, claims or
demands against Borrower or any guarantor that have not been disclosed to Bank
by Borrower in writing, and approved by Bank. REGULATION U. None of the proceeds
of the credit extended pursuant to this Agreement shall be used directly or
indirectly for the purpose of purchasing or carrying any margin stock in
violation of any of the provisions of Regulation U of the Board of Governors of
the Federal Reserve System ("Regulation U"), or for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry
margin stock or for any other purchase which might render the Loan a "Purpose
Credit" within the meaning of Regulation U.
AFFIRMATIVE COVENANTS. Borrower agrees that from the date hereof and until final
payment in full of the Obligations, unless Bank shall otherwise consent in
writing, Borrower will: ACCESS TO BOOKS AND RECORDS. Allow Bank, or its agents,
during normal business hours, access to the books, records and such other
documents of Borrower as Bank shall reasonably require, and allow Bank, at
Borrower's expense, to inspect, audit and examine the same and to make extracts
therefrom and to make copies thereof. ACCOUNTS PAYABLE AGING. Deliver to Bank,
from time to time hereafter but not less than quarterly within 45 days of the
end of each such period, a detailed payables report including aging of payables
by total, vendor names and addresses, a reconciliation statement, and the
original date of each invoice. ACCOUNTS RECEIVABLE AGING. Deliver to Bank, from
time to time hereafter but not less than quarterly within 45 days of the end of
each such period, a detailed receivables report including totals, customer names
and addresses, a reconciliation statement, and the original date of each
invoice. BUSINESS CONTINUITY. Conduct its business in substantially the same
manner and locations as such business is now and has previously been conducted.
CERTIFICATE OF FULL COMPLIANCE FROM ACCOUNTANT. Deliver to Bank, with the
financial statements required herein, a certification by Borrower's independent
certified public accountant that Borrower is in full compliance with the Loan
Documents. COMPLIANCE WITH OTHER AGREEMENTS. Comply with all terms and
conditions contained in this Agreement, and any other Loan Documents, and swap
agreements, if applicable, as defined in the 11 U.S.C. ss 101. ESTOPPEL
CERTIFICATE. Furnish, within 15 days after request by Bank, a written statement
duly acknowledged of the amount due under the Loan and whether offsets or
defenses exist against the Obligations. INSURANCE. Maintain adequate insurance
coverage with respect to its properties and business against loss or damage of
the kinds and in the amounts customarily insured against by companies of
established reputation engaged in the same or similar businesses including,
without limitation, commercial general liability insurance, workers compensation
insurance, and business interruption insurance; all acquired in such amounts and
from such companies as Bank may reasonably require. MAINTAIN PROPERTIES.
Maintain, preserve and keep its property in good repair, working order and
condition, making all needed replacements, additions and improvements thereto,
to the extent allowed by this Agreement. NOTICE OF DEFAULT AND OTHER NOTICES.
(a) NOTICE OF DEFAULT. Furnish to Bank immediately upon becoming aware of the
existence of any condition or event which constitutes a Default (as defined in
the Loan Documents) or any event which, upon the giving of notice or lapse of
time or both, may become a Default, written notice specifying the nature and
period of existence thereof and the action which Borrower is taking or proposes
to take with respect thereto. (b) OTHER NOTICES. Promptly notify Bank in writing
of (i) any material adverse change in its financial condition or its business;
(ii) any default under any material agreement, contract or other instrument to
which it is a party or by which any of its properties are bound, or any
acceleration of the maturity of any indebtedness owing by Borrower; (iii) any
material adverse claim against or affecting Borrower or any part of its
properties; (iv) the commencement of, and any material determination in, any
litigation with any third party or any
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proceeding before any governmental agency or unit affecting Borrower; and (v) at
least 30 days prior thereto, any change in Borrower's name or address as shown
above, and/or any change in Borrower's structure. OTHER FINANCIAL INFORMATION.
Deliver promptly such other information regarding the operation, business
affairs, and financial condition of Borrower which Bank may reasonably request
PAYMENT OF DEBTS. Pay and discharge when due, and before subject to penalty or
further charge, and otherwise satisfy before maturity or delinquency, all
obligations, debts, taxes, and liabilities of whatever nature or amount, except
those which Borrower in good faith disputes. REPORTS AND PROXIES. Deliver to
Bank, promptly, a copy of all financial statements, reports, notices, and proxy
statements, sent by Borrower to stockholders, and all regular or periodic
reports required to be filed by Borrower with any governmental agency or
authority.
NEGATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing, Borrower will not: CHANGE IN FISCAL YEAR. Change its fiscal
year. CHANGE OF CONTROL. Make or suffer a change of ownership that effectively
changes control of Borrower from current ownership. ENCUMBRANCES. Create,
assume, or permit to exist any mortgage, security deed, deed of trust, pledge,
lien, charge or other encumbrance on any of its assets, whether now owned or
hereafter acquired, other than: (i) security interests required by the Loan
Documents; (ii) liens for taxes contested in good faith; (iii) liens accruing by
law for employee benefits; or (iv) Permitted Liens. DEFAULT ON OTHER CONTRACTS
OR OBLIGATIONS. Default on any material contract with or obligation when due to
a third party or default in the performance of any obligation to a third party
incurred for money borrowed. GOVERNMENT INTERVENTION. Permit the assertion or
making of any seizure, vesting or intervention by or under authority of any
governmental entity, as a result of which the management of Borrower or any
guarantor is displaced of its authority in the conduct of its respective
business or such business is curtailed or materially impaired. JUDGMENT ENTERED.
Permit the entry of any monetary judgment or the assessment against, the filing
of any tax lien against, or the issuance of any writ of garnishment or
attachment against any property of or debts due. RETIRE OR REPURCHASE CAPITAL
STOCK. Retire or otherwise acquire any of its capital stock.
ANNUAL FINANCIAL STATEMENTS. Borrower shall deliver to Bank, within 120 days
after the close of each fiscal year, audited financial statements reflecting its
operations during such fiscal year, including, without limitation, a balance
sheet, profit and loss statement and statement of cash flows, with supporting
schedules and in reasonable detail, prepared in conformity with generally
accepted accounting principles, applied on a basis consistent with that of the
preceding year. If audited statements are required, all such statements shall be
examined by an independent certified public accountant acceptable to Bank. The
opinion of such independent certified public accountant shall not be acceptable
to Bank if qualified due to any limitations in scope imposed by Borrower or any
other person or entity. Any other qualification of the opinion by the accountant
shall render the acceptability of the financial statements subject to Bank's
approval. If audited statements are required, Borrower's accountant shall
provide Bank with a written acknowledgment of the Bank's reliance upon the
statements in accordance with N.J.S. 2A:53A-25.
PERIODIC FINANCIAL STATEMENTS. Borrower shall deliver to Bank unaudited
management-prepared quarterly financial statements including, without
limitation, a balance sheet, profit and loss statement and statement of cash
flows, with supporting schedules, as soon as available and in any event within
45 days after the close of each such period; all in reasonable detail and
prepared in conformity with generally accepted accounting principles, applied on
a basis consistent with that of the preceding year. Such statements shall be
certified as to their correctness by a principal financial officer of Borrower
and in each case, if audited statements are required, subject to audit and
year-end adjustments.
FINANCIAL COVENANTS. Borrower agrees to the following provisions from the date
hereof until final payment in full of the Obligations, unless Bank shall
otherwise consent in writing, using the financial information for Borrower, its
subsidiaries, affiliates and its holding or parent company, as applicable:
DEPOSIT RELATIONSHIP. Borrower shall maintain its primary depository account
with Bank. REQUIRED HEDGE. Borrower shall hedge the Loan's floating interest
expense for the full term of the Loan by maintaining an interest rate swap, cap
or collar with Bank or other counterparty acceptable to Bank in a notional
amount equal to the then principal balance of the Loan and providing for a fixed
rate satisfactory to Bank, and containing such other items and conditions as
shall be reasonably acceptable to Bank.
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LIMITATION ON DEBT. Borrower shall not, directly or indirectly, create, incur,
assume or become liable for any additional indebtedness, whether contingent or
direct. LIQUIDITY REQUIREMENT. Borrower shall, at all times, maintain Liquid
Assets of not less than $3,000,000.00. "Liquid Assets" shall mean the sum of all
cash, time deposits and marketable securities.
CONDITIONS PRECEDENT. The obligations of Bank to make the loan and any advances
pursuant to this Agreement are subject to the following conditions precedent:
ADDITIONAL DOCUMENTS. Receipt by Bank of such additional supporting documents as
Bank or its counsel may reasonably request.
IN WITNESS WHEREOF, Borrower and Bank, on the day and year first written above,
have caused this Agreement to be executed under seal.
I.D. Systems, Inc.
By: /s/ Ned Mavrommatis (SEAL)
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Ned Mavrommatis, CFO
Wachovia Bank, National Association
By: /s/ Thomas Caputo (SEAL)
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Thomas Caputo, Senior Vice President
Tracking #: 15086SUM
CAT - Deal # 168419 Facility ID 120679
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