Exhibit 10.1

 

Loan No. 0411094-9001

Loan No. 0411094-9002

 

MODIFICATION AGREEMENT

 

THIS MODIFICATION AGREEMENT is entered into at Irvine, California, as of
September 30, 2010, between Iteris, Inc., a Delaware corporation, with an
address of 1700 Carnegie Avenue, Suite 100, Santa Ana, California 92705
(“Borrower”), and California Bank & Trust, a California banking corporation,
with an address of 19200 Von Karman Avenue, Suite 140, Irvine, California 92612
(“Bank”).

 

WHEREAS, pursuant to that certain Amended and Restated Loan and Security
Agreement, dated February 4, 2009, between Borrower and Bank (as previously
amended, modified or supplemented, the “Loan and Security Agreement”), Bank
agreed to extend credit and make certain financial accommodations to Borrower,
subject to the terms and conditions set forth in the Loan Documents, including
without limitation (i) a revolving line of credit which matures on October 1,
2010, respecting which Bank agreed to lend to Borrower, upon Borrower’s request,
a revolving loan and advances thereunder (collectively, the “Revolving Loan”) in
the aggregate principal amount of up to Twelve and No/100 Million Dollars
($12,000,000.00) (the “Revolving Loan Amount”) and (ii) a non-revolving-to-term
loan that matures on May 1, 2013 (the “Term Loan” and, collectively, with the
Revolving Loan, the “Loans”) in the aggregate principal amount of Seven Million,
Two Hundred Ninety-Three Thousand, Four Hundred Twenty-Seven and 87/100 Dollars
($7,293,427.87) (the “Term Loan Amount”);

 

WHEREAS, (i) the Revolving Loan is evidenced by that certain Amended and
Restated Revolving Note, dated February 4, 2009 (as previously amended, modified
or supplemented, the “Revolving Note”), by Borrower in favor of Bank in the face
amount of the Revolving Loan Amount and (ii) the Term Loan is evidenced by that
certain Note, dated February 4, 2009 (as previously amended, modified or
supplemented, the “Term Note” and, collectively, with the Revolving Note, the
“Notes”), by Borrower in favor of Bank in the amount of the Term Loan Amount;

 

WHEREAS, pursuant to the Loan and Security Agreement, Borrower granted Bank a
first-priority security interest in and lien on the personal property described
therein (the “Personalty”);

 

WHEREAS, the Loan and Security Agreement, the Notes and all other documents and
instruments executed in connection with or relating to the Loans are referred to
herein, collectively, as the “Loan Documents”; and the Personalty and all other
collateral granted to Bank to secure the Loans is referred to herein,
collectively, as the “Collateral”;

 

WHEREAS, Borrower has requested and Bank has agreed to make certain amendments
to the Loans and the Loan Documents in accordance with the terms and conditions
set forth herein; and

 

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Borrower and Bank mutually agree as follows:

 

1.                                      MODIFICATION

 

1.1                                Recitals and Representations Accurate. The
above recitals are hereby made a part of this Agreement, and Borrower
acknowledges and agrees that each of the recitals is true, correct and complete.

 

1.2                                Ratification. All of the terms, covenants,
provisions, representations, warranties and conditions of the Loan Documents, as
amended or modified hereby, are ratified, acknowledged, confirmed and continued
in full force and effect as if fully restated herein.

 

1.3                                Collateral. Borrower confirms and ratifies
its continuing mortgage, pledge, assignment and grant of security interest in
and lien on the Collateral to and in favor of Bank as set forth in the Loan
Documents.

 

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1.4                                Principal Balance. Borrower acknowledges,
agrees and confirms that, as of the date hereof, the current outstanding
principal balance under the Revolving Loan is zero and current outstanding
principal balance under the Term Loan is $4,378,352.92.

 

1.5                                Amendments to Loan and Security Agreement.
The Loan and Security Agreement is hereby amended as follows:

 

(a)                                 Section 1.1(a) (Revolving Loan) is hereby
amended to extend the expiration date of Bank’s obligation to make advances
under the Revolving Loan and evidenced by the Revolving Note from October 1,
2010 to October 1, 2012.

 

(b)                                Section 2.2(j) is hereby deleted in its
entirety and replaced with the following:

 

(j)                                     “Permitted Investments” shall mean, so
long as no Event of Default shall have occurred and be continuing at the time of
any such investments or immediately after any such investments as a result
thereof, (i) investments in subsidiaries that are secured guarantors in an
aggregate amount not to exceed $500,000 in any fiscal year; (ii) repurchases of
stock of Borrower of up to $100,000 per fiscal year from departing employees,
officers or directors; (iii) purchases of shares of Borrower’s common stock
pursuant to any stock repurchase program approved by the Board of Directors of
Borrower to repurchase in the market any of its stock, which repurchased stock
shall have an aggregate purchase price of no more than $1,500,000 in any fiscal
year during the current term of the Revolving Loan (not including any extension
or renewal periods following the current term) and no more than a total of
$3,000,000 during the period from October 1, 2010, to October 1, 2012; provided,
that no proceeds from the Revolving Loan shall be used for any such repurchases
and, provided, further, that Bank may elect, in its sole discretion, to extend
the period of such permitted repurchases for any renewal or extension periods of
the Revolving Loan on terms acceptable to Bank, in its sole discretion; (iv)
investments (including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers
arising in the ordinary course of Borrower’s business; (v) investments existing
on the date hereof as disclosed on Schedule P1 attached hereto; and (vi)(A)
marketable direct obligations issued or unconditionally guaranteed by the United
States of America or any agency or any state thereof maturing within one (1)
year from the date of acquisition thereof, (B) commercial paper maturing no more
than one year from the date of creation thereof and currently having rating of
at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s
Investors Service, (C) Bank’s certificates of deposit maturing no more than one
year from the date of investment therein, and (D) a money market account with
Bank, provided, that, in each of the cases set forth in this clause (vi), Bank
is granted a perfected first-priority security interest by Borrower therein.

 

(c)                                 Section 6 of the Loan and Security Agreement
regarding the Stand-By Letters of Credit Subline is hereby amended as follows:

 

(i)                                    The last sentence of the first paragraph
under Section 6 shall be deleted in its entirety and replaced with the
following:

 

The Stand-By Letter of Credit Subline may be used by Borrower to obtain Stand-By
Letters of Credit issued by Bank for the account of Borrower having an
expiration date of no later than October 1, 2012.

 

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(ii)                                  The reference in Section 6(d) to October
1, 2010, which is the last date on which a Stand-By Letter of Credit issued by
Bank under the Stand-By Letter of Credit Subline may be outstanding, is amended
to October 1, 2012.

 

1.6                                Amendment to Revolving Note. The Maturity
Date set forth in the first paragraph on page 1 of the Revolving Note is hereby
amended from October 1, 2010 to October 1, 2012.

 

1.7                                Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be an original but all of which
shall constitute but one agreement.

 

All other terms and conditions as stated in the Loan and Security Agreement and
as stated in all other Loan Documents shall remain unchanged.

 

Capitalized terms used but not otherwise defined herein shall have the
respective meanings ascribed to them in the Loan and Security Agreement.

 

Executed and effective as of the date first written hereinabove

 

 

Borrower:

 

 

 

Iteris, Inc.,

 

a Delaware corporation

 

 

 

 

 

By:

/s/ James S. Miele

 

 

James S. Miele, Chief Financial Officer

 

 

 

 

 

 

 

By:

/s/ Abbas Mohaddes

 

 

Abbas Mohaddes, Chief Executive Officer

 

Accepted:

 

California Bank & Trust,
a California banking corporation

 

 

By:

/s/ Sergio Alfonso

 

 

 

Sergio Alfonso, Vice President

 

 

 

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