Exhibit 10.1

 

EXECUTION VERSION

 

AGREEMENT

 

This Agreement dated as of July 29, 2016 (this “Agreement”), is made and entered
into by and between Iteris, Inc., a Delaware corporation (the “Company”), D.
Kyle Cerminara, an individual (the “Investor Designee”), and each of the Persons
(as defined herein) set forth on the signature page hereto, including the
Investor Designee (each, an “Investor” and collectively, the “Investors” or
“Investor Group”).

 

WHEREAS, the Investor Group is deemed to beneficially own shares of the
Company’s Common Stock, par value $0.10 per share (the “Common Stock”) totaling,
in the aggregate, 2,319,094 shares or approximately 7.2% of the Common Stock
outstanding as of the date hereof; and

 

WHEREAS, the Company and the Investor Group believe that the best interests of
the Company and its stockholders would be served at this time by, among other
things, (i) agreeing to immediately add the Investor Designee to the Company’s
Board of Directors (the “Board”); (ii) agreeing that the Investor Designee shall
stand for election to the Board at the Company’s 2016 Annual Meeting of
Stockholders (the “2016 Annual Meeting”); (iii) agreeing to add another
independent director to the Board; (iv) recomposing the Board as provided for
herein; and (v) providing for certain restrictions and obligations on the
Investors and their respective Affiliates and Associates.

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, agree as follows:

 

1.                                      Definitions.  The capitalized terms set
forth in this Agreement shall have the meanings as specified on Exhibit A
attached hereto.

 

2.                                      Constitution of the Board.  Within two
(2) Business Days following the execution of this Agreement by all parties
hereto, the Board, at a meeting duly called, will adopt a resolution, in
accordance with the Company’s Bylaws, to increase the size of the Board from
seven (7) directors to eight (8) directors, and will fill the newly created
vacancy on the Board to add the Investor Designee to the Board.  The Nominating
and Corporate Governance Committee of the Board (the “NCG Committee”) has
previously determined that the following directors will be among the directors
standing for re-election at the 2016 Annual Meeting:  Gerard M. Mooney, Joe
Bergera and Mikel H. Williams (the “Incumbent Directors”).  The NCG Committee
and the Board, at a meeting duly called, will take all necessary action (a) to
nominate a slate of director nominees, consisting of the Investor Designee, the
Incumbent Directors, two of the other current Board members to be chosen by the
NCG Committee, and the Independent Director (as defined below), if such
individual is agreed upon pursuant to the terms of this Agreement prior to the
filing of the Company’s proxy statement for the 2016 Annual Meeting (the
“Company Slate”), to serve as directors of the Company until the 2017 Annual
Meeting of Stockholders (the “2017 Annual Meeting”); (b) to reduce the size of
the Board to seven (7) directors in accordance with the Company’s Bylaws (or
subject to clause (2)(a) below to six (6) directors if the Independent Director
is not approved prior to the filing of the proxy statement for the 2016 Annual
Meeting),

 

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to be effective as of the 2016 Annual Meeting; and (c) to retain a nationally
recognized recruiting firm to assist the NCG Committee in locating a qualified
independent director with relevant industry and public company experience to
join the Company’s Board of Directors (the “Independent Director”).  The
Independent Director shall be selected by the NCG Committee subject to the
approval of a majority of the members of the Company Slate then serving on the
Board.  Within two (2) business days after the approval of the Independent
Director, the Board shall promptly thereafter adopt a resolution to increase the
size of the Board to seven (7) directors and to appoint the Independent Director
to the Board to fill the vacancy thereon.  The Investor Designee shall have the
right to attend, as an ex-officio member, the NCG Committee meetings at which
the selection of the Independent Director is discussed and approved. Upon the
appointment of the Investor Designee to the Board pursuant to this Section 2,
the Investors agree that any prior notices to designate director nominees
previously submitted by them to the Company shall be null and void and of no
further effect.

 

(a)                                 In the event that the Independent Director
shall not be selected prior to the filing of the proxy statement, the Company
shall submit a proposal to its stockholders to approve the amendment of the
Company’s bylaws to decrease the range of the size of the Board to not less than
six (6) nor more than eleven (11) directors (the “Stockholder Proposal”).  Each
member of the Investor Group and the Investor Designee shall vote all of the
shares of the Common Stock it or he owns at the 2016 Annual Meeting in support
of the Stockholder Proposal (and will not support or participate in any campaign
to gain support to vote against the Stockholder Proposal.).  If the Stockholder
Proposal is not approved, subject to the provisions of Section 2, the Investor
Group also shall not, directly or indirectly, at any time during the Effective
Period, take any action to fill the vacancy on the Board resulting from the
failure of the Stockholder Proposal to be approved;

 

(b)                                 For the period commencing on the date hereof
and continuing until the date that is 30 days before the last date on which a
stockholder of the Company may submit nominations for the Board in connection
with the 2017 Annual Meeting of Stockholders (the “Effective Period”) and
provided the members of the Investor Group and the Investor Designee are in
compliance with this Agreement, then:

 

(i)                                     The Board shall direct the Company and
its officers and agents to solicit votes for the election of each of the
nominees included in the Company Slate (including the Investor Designee and the
Independent Director, to the extent the Independent Director is located in time
to be included in the Proxy Materials for the 2016 Annual Meeting), and the
Company will use its commercially reasonable efforts to secure the election of
the individuals on the Company Slate at the 2016 Annual Meeting, including the
Investor Designee (and the Independent Director, to the extent such person is
located in time to be included in the Proxy Materials for the 2016 Annual
Meeting).

 

(ii)                                  If, during the Effective Period, the
Investor Designee is unable or unwilling to continue to serve on the Board, and
as a result, there is a vacancy created on the Board, the Board shall,
consistent with its fiduciary duties, appoint a replacement designated by the
Investor Group to fill the resulting vacancy, provided that such substitute
Investor Designee (A) qualifies as an “independent” director under the rules and
regulations of the SEC and the stock exchange on which the Common Stock is then
traded, (B) is reasonably satisfactory to the Board, and (C) otherwise satisfies
the requirements for nomination set forth in the preceding paragraphs.

 

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(iii)                               Each of the parties hereto agrees that the
Investor Designee and the Independent Director, upon appointment or election to
the Board, will serve as an integral member of the Board and be governed by the
same protections and obligations regarding confidentiality, conflicts of
interests, fiduciary duties, trading and disclosure policies and other
governance guidelines, and shall have the same rights and benefits, including
(but not limited to) with respect to insurance, indemnification, compensation,
reimbursements, and fees, as are applicable to all non-management directors of
the Company.

 

(c)                                  During the Effective Period, the Board will
(i) not waive the deadline for any shareholder under the Company’s advance
notice bylaw provisions with respect to the 2016 Annual Meeting; (ii) not expand
the size of the Board above seven (7) members (except as specifically set forth
herein), (iii) not establish or maintain an executive or similar committee
without the Investor Designee being a member of such committee, and
(iv) consider in good faith the addition of the Investor Designee and the
Independent Director to appropriate committees of the Board; provided however,
that the parties agree that the Investor Designee shall not serve as a member of
the NCG Committee.

 

(d)                                 During the Effective Period and provided the
Board and the Company otherwise are in compliance with this Agreement, each
member of the Investor Group and the Investor Designee will vote all of the
shares of the Common Stock it or he owns at the 2016 Annual Meeting in support
of all of the members on the Company Slate (and will not support or participate
in any “withhold the vote” or similar campaign, or support any other Board
nominees other than the Company Slate);

 

(e)                                  Notwithstanding the foregoing, the Investor
Designee agrees to promptly tender his resignation from the Board and any
committee of the Board on which he then sits upon the occurrence of any of the
following during the Effective Period, which remedy shall be in addition to any
other remedies available at law or equity including, but not limited to,
specific performance:

 

(i)                                     Any member of the Investor Group (or any
of its Affiliates or Associates) (1) submits a written notice to nominate a
director or directors in accordance with Section 15 of Article II of the
Company’s Bylaws other than with respect to the Investor Designee or the
Independent Director, or (2) calls a special meeting of the stockholders of the
Company; and

 

(ii)                                  the members of the Investor Group,
together with all of their respective Affiliates, cease to collectively
beneficially own at least 5% of the then outstanding Common Stock (other than as
a result of dilution caused by the issuance of Common Stock by the Company).

 

3.                                      Standstill.  During the Effective
Period, no member of the Investor Group or the Investor Designee shall, directly
or indirectly (and each member of the Investor Group shall cause its respective
Affiliates and Associates not to, directly or indirectly):

 

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(a)                                 propose any candidates for election as
directors of the Company (other than submissions to the NCG Committee for
election of the Investor Designee or the Independent Director to the Board);
provided however, that this Section shall not prohibit any members of the
Investor Group or their Affiliates and Associates from engaging in private
non-public communications with respect to such candidates with other members of
the Investor Group and their respective Affiliates and Associates (as long as
such communications do not become public);

 

(b)                                 propose any shareholder proposals or proxy
resolutions or make any proposal regarding nominees for director for approval by
the Company’s stockholders,

 

(c)                                  call or seek to have called any special
meeting of the stockholders;

 

(d)                                 conduct any proxy solicitations with respect
to the voting of Voting Securities (as defined below) against the recommendation
of the Board regarding the election of directors or solicit proxies or written
consents of stockholders, or any other person with the right to vote or power to
give or withhold consent in respect of the Voting Securities, or conduct,
encourage, participate or engage in any other type of referendum (binding or
non-binding) with respect to, or from the holders of Voting Securities or any
other person with the right to vote or power to give or withhold consent in
respect of the Voting Securities, make, or in any way participate or engage in
(other than by voting its shares of Voting Securities in a manner that does not
violate this Agreement), any “solicitation” of any proxy, consent or other
authority to vote any Voting Securities, with respect to any matter, or become a
participant in any contested solicitation with respect to the Company, including
without limitation relating to the removal or the election of directors;

 

(e)                                  form or join in a partnership, limited
partnership, syndicate or other group, including without limitation a group as
defined under Section 13(d) of the Exchange Act, with respect to the Common
Stock, or otherwise support or participate in any effort by a third party with
respect to the matters set forth in Section 3, or deposit any shares of Common
Stock in a voting trust or subject any shares of Common Stock to any voting
agreement, other than solely with other members of the Investor Group and/or
their Affiliates and Associates with respect to the shares of Common Stock now
or hereafter owned by them or pursuant to this Agreement;

 

(f)                                   without the prior approval of the Board
contained in a written resolution of the Board, (x) either directly or
indirectly for itself or its Affiliates, or in conjunction with any other person
or entity in which it is or proposes to be either a principal, partner or
financing source or is acting or proposes to act as broker or agent for
compensation, effect or seek, offer or propose (whether publicly or otherwise)
to effect, or cause or participate in, or (y) except as set forth in the next
sentence, in any way knowingly support, assist or facilitate any other person to
effect or seek, offer or propose to effect, or cause or participate in, any
(i) tender offer or exchange offer, merger, acquisition or other business
combination involving the Company or any of its subsidiaries or affiliates;
(ii) any form of business combination or acquisition or other transaction
relating to a material amount of assets or securities of the Company or any of
its subsidiaries or affiliates, except for lawful acquisitions of Common Stock
through the market or in privately negotiated acquisitions in the normal course
of business, or (iii) any form of restructuring, recapitalization or similar
transaction with respect to the Company or any of its subsidiaries or
affiliates.

 

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(g)                                  make, or cause to be made, any statement or
announcement that relates to and constitutes an ad hominem attack on, or relates
to and otherwise disparages, the Company, its officers or its directors or any
person who has served as an officer or director of the Company on or following
the date of this Agreement: (i) in any document or report filed with or
furnished to the SEC or any other governmental agency, (ii) in any press release
or other publicly available format, or (iii) to any journalist or member of the
media (including without limitation, in a television, radio, newspaper or
magazine interview).

 

Notwithstanding the foregoing or anything to the contrary herein, nothing in
this Agreement shall in any way limit (i) the Investor Designee’s ability to
fully participate and communicate freely with the Company’s other directors and
committee members; or (ii) the Investor Group’s rights as a stockholder to
freely vote its securities on any matter other than with respect to the election
of directors (as to which the Investor Group shall comply with the terms hereof
during the Effective Period).

 

4.                                      Board Policies and Procedures. The
Investors agree that they shall cause the Investor Designee, and each of the
Investor Designee and the that he shall, comply with all policies, processes,
procedures, codes, rules, standards, and guidelines applicable to members of the
Board, including, but not limited to, the Company’s Corporate Governance
Guidelines, any Code of Conduct, and policies on insider trading, hedging,
pledging, stock ownership, public disclosures and confidentiality as may be in
effect from time to time (the “Policies”).  Copies of the existing Policies are
publicly available or have been delivered to the Investor Designee prior to the
execution of this Agreement, which the Investors acknowledge and confirm have
been delivered to the Investor Designee. The Investor Group shall provide, and
shall cause the Investor Designee to provide, the Company with such information
as is reasonably requested by the Company concerning the Investor Designee, in
each case as promptly as necessary to enable the timely filing of the Company’s
proxy statement for the 2016 Annual Meeting and other periodic reports with the
SEC during the Effective Period.

 

5.                                      Modifications. This Agreement may only
be modified through a written agreement signed by the Company and the members of
the Investor Group who are signatories hereto.

 

6.                                      Due Authorization; Enforceability.  This
Agreement has been duly authorized by the Board and is a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms. Upon execution and delivery by the Investor Group, this Agreement
will be a valid and binding obligation of each of the members of the Investor
Group, enforceable against such members in accordance with its terms.

 

7.                                      Specific Performance.  Each of the
members of the Investor Group and the Company acknowledge and agree that
irreparable harm would occur in the event any of the provision of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to
specific relief hereunder, including, without limitation, an injunction or
injunctions to prevent and enjoin breach of the provisions of this agreement and
to enforce specifically the terms and provisions hereof in the Court of Chancery
or any federal court in the State of Delaware, in addition to any other remedy
to which they may be entitled at law or in equity. Any requirements for the
securing or posting of any bond with such remedy are hereby waived.

 

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8.                                      No Impairment.  Neither the Company nor
the Board shall take any action to avoid or seek to avoid the observance or
performance of any of the provisions required to be observed or performed by the
Company or the Board under this Agreement, but shall at all times in good faith
take all actions that are necessary to carry out and perform all of the
provisions and purposes and intents of this Agreement.

 

9.                                      Governing Law.  This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Delaware, without regard to any conflict of laws provisions thereof.

 

10.                               Counterparts.  This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.

 

11.                               Notices. All notices, consents, requests,
instructions, approvals and other communications provided for herein and all
legal process in regard hereto shall be in writing and shall be deemed validly
given, made or served, if (a) given by facsimile and email, when such fax and
email is transmitted to the fax number set forth below and sent to the email
address set forth below and the appropriate confirmation is received or (b) if
given by any other means, when actually received during normal business hours at
the address specified in this subsection:

 

if to the Company:

 

Iteris, Inc.

1700 Carnegie Avenue, Suite 100

Santa Ana, CA 92705

Attention: Chief Executive Officer

Facsimile: (949) 270-9401

 

With a copy to (which shall not constitute notice):

 

Morgan, Lewis & Bockius LLP

600 Anton Boulevard, Suite 1800

Costa Mesa, CA 92626

Facsimile: (714) 830-0700

Attention: Ellen S. Bancroft

 

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if to the Investor Group:

 

c/o RELM Wireless Corporation
7100 Technology Drive
West Melbourne, FL  32904

Attn:  Chairman of the Board

Facsimile: (321) 984-0168

 

and

 

c/o Fundamental Global Investors, LLC

4201 Congress Street, Suite 140

Charlotte, NC 28209

Attn:  D. Kyle Cerminara

Facsimile: (866) 358-1546

 

With a copy to (which shall not constitute notice):

 

Thompson Hine LLP

3900 Key Center

127 Public Square

Cleveland, OH 44114

Attn:  Derek D. Bork

Facsimile: (216) 566-5800

 

12.                               Severability. If at any time subsequent to the
date hereof, any provision of this Agreement shall be held by any court of
competent jurisdiction to be illegal, void or unenforceable, such provision
shall be of no force and effect, but the illegality or unenforceability of such
provision shall have no effect upon the legality or enforceability of any other
provision of this Agreement.

 

13.                               Successors and Assigns. This Agreement shall
not be assignable by any of the parties to this Agreement. This Agreement,
however, shall be binding on successors of the parties hereto.

 

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IN WITNESS WHEREOF, the following parties have executed this Agreement as of the
date first above written:

 

“COMPANY”

ITERIS, INC.

 

 

 

By:

/s/ Joe Bergera

 

 

Joe Bergera,

 

 

Chief Executive Officer

 

 

 

 

“INVESTOR DESIGNEE”

/s/ D. Kyle Cerminara

 

D. Kyle Cerminara,

 

an individual

 

 

 

 

“INVESTOR GROUP”

RELM Wireless Corporation

 

 

 

By:

/s/ David P. Storey

 

Print Name: David P. Storey

 

Title: President and Chief Executive Officer

 

 

 

 

 

Fundamental Global Investors, LLC

 

 

 

By:

/s/ D. Kyle Cerminara

 

Print Name: D. Kyle Cerminara

 

Title: CEO, Partner and Manager

 

 

 

 

 

Fundamental Global Partners, LP

 

by Fundamental Global Partners GP, LLC,

 

its General Partner

 

 

 

By:

/s/ D. Kyle Cerminara

 

Print Name: D. Kyle Cerminara

 

Title: Partner and Manager

 

 

 

 

 

Fundamental Global Partners GP, LLC

 

 

 

 

 

By:

/s/ D. Kyle Cerminara

 

Print Name: D. Kyle Cerminara

 

Title: Partner and Manager

 

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Fundamental Global Partners Master Fund, LP

 

by FG Partners GP, LLC, its general partner

 

 

 

By:

/s/ D. Kyle Cerminara

 

Print Name: D. Kyle Cerminara

 

Title: Manager

 

 

 

 

 

FG Partners GP, LLC

 

 

 

 

 

By:

/s/ D. Kyle Cerminara

 

Print Name: D. Kyle Cerminara

 

Title: Manager

 

 

 

 

 

FGI Global Asset Allocation Fund, Ltd.

 

 

 

 

 

By:

/s/ D. Kyle Cerminara

 

Print Name: D. Kyle Cerminara

 

Title: Director

 

 

 

 

 

FGI Global Asset Allocation Master Fund, LP

 

by FGI Global Asset Allocation GP, LLC,

 

its general partner

 

 

 

By:

/s/ D. Kyle Cerminara

 

Print Name: D. Kyle Cerminara

 

Title: Manager

 

 

 

 

 

Tactical Capital Investments LLC

 

 

 

 

 

By:

/s/ David P. Storey

 

Print Name: David P. Storey

 

Title: Manager

 

 

 

Ballantyne Strong, Inc.

 

 

 

By:

/s/ D. Kyle Cerminara

 

Print Name: D. Kyle Cerminara

 

Title: Chief Executive Officer

 

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CWA Asset Management Group, LLC

 

 

 

 

 

By:

/s/ D. Kyle Cerminara

 

Print Name: D. Kyle Cerminara

 

Title: Manager and Co-Chief Investment Officer

 

 

 

 

 

FGI Funds Management, LLC

 

 

 

 

 

By:

/s/ D. Kyle Cerminara

 

Print Name: D. Kyle Cerminara

 

Title: Manager

 

 

 

 

 

FGI International USVI, LLC

 

 

 

 

 

By:

/s/ D. Kyle Cerminara

 

Print Name: D. Kyle Cerminara

 

Title: Manager

 

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EXHIBIT A

 

Certain Definitions

 

The following terms shall have the meanings set forth below:

 

“Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated by the
SEC under the Exchange Act.

 

“Associate” has the meaning ascribed to such term in Rule 12b-2 of the General
Rules and Regulations of the Exchange Act.

 

“Beneficial Owner”.  A Person shall be deemed the “Beneficial Owner” of, and to
have “beneficial ownership” of, and shall be deemed to “beneficially own,” any
securities as to which such Person or any of such Person’s Affiliates or
Associates is or may be deemed to be the beneficial owner, directly or
indirectly, pursuant to Rules 13d-3 promulgated under the Exchange Act, as such
Rules are in effect on the date of this Agreement.

 

“Exchange Act” shall mean the Securities and Exchange Act of 1934, as amended;

 

“Person” or “Persons” shall mean any individual, corporation (including
not-for-profit), general or limited partnership, limited liability company,
joint venture, estate, trust, association, organization or other entity of any
kind or nature;

 

“Related Person” shall mean, as to any Person, any Affiliates or Associates of
such Person.

 

“SEC” shall mean U.S. Securities and Exchange Commission; and

 

“Voting Securities” means the Common Stock and any other securities of the
Company having the right to vote.

 

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