Exhibit 10.1
FIRST AMENDMENT TO BUSINESS LOAN AND SECURITY AGREEMENT
     This First Amendment (“First Amendment”) dated as of April 19, 2007, for
reference purposes, is made to the BUSINESS LOAN AND SECURITY AGREEMENT (the
“Domestic Agreement”) entered into as of January 16, 2007, by and between
Mid-Peninsula Bank, part of Greater Bay Bank N.A. (“Bank”) and Iridex
Corporation (“Borrower”), combining two credit facilities provided by Bank to
Borrower, with one facility being a $6,000,000 principal amount asset-based
revolving line of credit (“Line of Credit”) and the other facility being a
$6,000,000 principal amount term loan (“Term Loan”).
Recitals
     A.     The Line of Credit under the Domestic Agreement includes a
$3,000,000 principal amount export-import revolving line of credit (“Exim
Sub-Limit Line”) guaranteed by the Export-Import Bank of the United States
(“Exim Bank”).
     B.     Based upon the financial performance of Borrower during the quarter
ended March 31, 2007, Borrower has requested a waiver of certain covenants
contained in the Domestic Agreement.
     C.     Borrower also has requested an adjustment to the Exim Sub-Limit Line
to increase the limit of the principal amount under the Exim Sub-Limit Line to
$5,000,000.
     D.     Bank is willing to provided a one-time waiver of certain covenants
of the Domestic Agreement as expressly provided in the waiver letter (“Waiver
Letter”) dated the same date as this First Amendment on the conditions and
subject to the terms of this First Amendment and an amendment to that certain
Export-Import Bank Loan and Security Agreement entered into as of January 16,
2007, by and between Bank and Borrower, similar to this First Amendment and
dated the same date as this First Amendment, and also is willing to increase the
Exim Sub-Limit Line to the principal amount of $5,000,000.
     NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration the receipt of which is hereby acknowledged and
confirmed, the parties agree as follows:
     1.     This First Amendment shall amend, modify and supersede as expressly
described below, or to the extent of any inconsistencies, the provisions of the
Domestic Agreement. Except as expressly amended hereby, all provisions of the
Domestic Agreement shall remain in full force and effect and the parties hereby
ratify the terms and conditions of the Domestic Agreement as amended herein. All
defined terms used in this First Amendment shall have the same meanings ascribed
to them in the Domestic Agreement unless otherwise expressly defined herein.
     2.     The third sentence of Section 1, RECITALS, of the Domestic Agreement
is deleted and replaced in its entirety with the following sentence: This
Agreement combines two credit facilities, namely (i) a $6,000,000 principal
amount, asset-based revolving line of credit (“Line of Credit”), including, if

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approved by the Export-Import Bank of the United States (“Exim Bank”), the
$5,000,000 principal amount export-import revolving line of credit to be
guaranteed by the Exim Bank (“Exim Sub-Limit Line”) to be provided by Lender to
Borrower under the terms and conditions of the Export-Import Bank Loan and
Security Agreement (“Exim Agreement”) between Lender and Borrower dated the same
date as this Agreement, and the Borrower Agreement (as amended, supplemented or
modified, “Borrower Agreement”), entered into by Borrower in favor of the Exim
Bank and the Lender dated the same date as this Agreement, and (ii) a $6,000,000
principal amount term loan (“Term Loan”); collectively the Line of Credit,
including the Exim Sub-Limit Line thereunder) and Term Loan are collectively
referred to as the “Credit Facilities.”
     3.     The third sentence of under Section 6.1, Grant of Security Interest,
of the Domestic Agreement is delete and replaced in its entirety with the
following sentence: Without limiting Bank’s security interest in all of
Borrower’s Deposit Accounts with Bank, Borrower shall deposit and maintain cash
in one segregated Deposit Account with Bank as identified in Section 8.5(c)(1)
below, and Bank will retain the rights of possession of such segregated Deposit
Account, together with any evidence of such segregated Deposit Account such as
certificates or passbooks, so long as any Indebtedness (except for inchoate
indemnity obligations) are outstanding, and Borrower further acknowledges that
during the continuance of any Event of Default Bank will place a “hold” on any
and all Deposit Accounts pledged by Borrower under the terms of this Domestic
Agreement as Collateral to secure the Indebtedness.
     4.     Clause (3) of paragraph (a), Additional Requirements, under
Section 8.3, Financial Statements and Reports, of the Domestic Agreement is
deleted in its entirety eliminating the requirement of Borrower to provide to
Bank a monthly affidavit of liquidity.
     5.     Clause (1) only of paragraph (c), Other Requirements, of
Section 8.5, Financial Covenants and Ratios, of the Domestic Agreement is
deleted in its entirety eliminating the requirement of Borrower to maintain a
minimum aggregate amount of Domestic Unrestricted Cash/Marketable Securities of
$3,000,000.00, and replaced in its entirety with the following clause (1) under
Section 8.5: (1) to deposit and maintain cash of not less than $3,800,000 in one
segregated Deposit Account with Bank (account number 1101120495), which minimum
amount Borrower acknowledges will be preserved in full and Borrower will not
draw upon or reduce in any manner below such minimum amount so long as any
Indebtedness (except for inchoate indemnity obligations) are outstanding.
     6.     At the end of paragraph (6) of Section 14.1, Rights and Remedies,
the following provision is hereby added: , and without limiting the foregoing,
Bank may take directly all funds in the Deposit Accounts and apply them to the
Indebtedness. If any of the Deposit Accounts are subject to an early withdrawal
penalty, that penalty shall be deducted from the Deposit Account before its
application to the Indebtedness, whether the Deposit Account is with Bank or
some other institution. Any excess funds remaining after application of the
Deposit Account proceeds to the Indebtednesswill be paid to Borrower as the
interests of Borrower may appear. Borrower agrees, to the extent permitted by
law, to pay any deficiency after application of the proceeds of the Deposit
Accounts to the Indebtedness. Bank also shall have all the rights of a secured
party under the California Uniform Commercial Code, even if any of the Deposit
Accounts are not otherwise subject to such Code concerning security interests,
and the parties to this Agreement agree that the provisions of the Code giving
rights to a secured party shall nonetheless be a part of this Agreement.
     7.     The definition of “Borrowing Base” under Section 17.6 of the
Domestic Agreement, is deleted and replaced in its entirety with the following
definition: The words “Borrowing Base” mean, as

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determined by Lender from time to time, the lesser of (1) $6,000,000.00 or
(2) 80.000% of the aggregate amount of Eligible Accounts minus a Borrowing Base
restriction amount determined by the Bank from time to time, up to a maximum of
$2,200,000 of the aggregate dollar amount of the amounts otherwise determined to
be Eligible Accounts (and for the avoidance of doubt, the parties acknowledge
and agree that, to determine the dollar amount of the Borrowing Base, first
80.000% of the aggregate amount of Eligible Accounts will be determined without
subtracting the Borrowing Base restriction amount, and then up to $2,200,000
will be subtracted from such aggregate amount of Eligible Accounts to complete
the calculation of the actual Eligible Accounts for the purpose of this clause
(2)).
     8.     Counterparts; Facsimile Signature Copies. This First Amendment may
be executed in one or more counterparts, each of which when so executed and
delivered will be deemed to be an original and all of which taken together will
constitute but one and the same instrument. Facsimile copies of the signatures
set forth below will be deemed to be original signatures for all purposes.
     IN WITNESS WHEREOF, the parties have caused their respective duly
authorized representatives to execute this First Amendment as of the date first
written above.

                  IRIDEX CORPORATION
      MID-PENINSULA BANK — PART OF GREATER BAY BANK N.A
      By:   /s/ Barry G. Caldwell       By:   /s/ Stephen G. Heitel        
Barry G. Caldwell, President & CEO        Stephen G. Heitel, President & CEO    
                 

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