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EXHIBIT 10.1
     
AMENDMENT
TO
LOAN AND SECURITY AGREEMENT

THIS AMENDMENT to Loan and Security Agreement (this “Amendment”) is entered into
this __ day of September 2010 by and between Silicon Valley Bank (“Bank”) and
Lantronix, Inc., a Delaware corporation (“Borrower”) whose address is 167
Technology Drive, Irvine, California  92618.
 
RECITALS
 
A.   Bank and Borrower have entered into that certain Loan and Security
Agreement with an Effective Date of May 23, 2006 (as the same may from time to
time be amended, modified, supplemented or restated, the “Loan Agreement”).
 
B.   Bank has extended credit to Borrower for the purposes permitted in the Loan
Agreement.
 
C.   Borrower has requested that Bank amend the Loan Agreement, as herein set
forth, and Bank has agreed to the same, but only to the extent, in accordance
with the terms, subject to the conditions and in reliance upon the
representations and warranties set forth herein.
 
AGREEMENT
 
Now, Therefore, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:
 
1.   Definitions.  Capitalized terms used but not defined in this Amendment
shall have the meanings given to them in the Loan Agreement.
 
2.    Amendments to Loan Agreement.
 
2.1   Modified Availability.  Section 2.1.1(a) of the Loan Agreement that
currently reads as follows:
 
(a)   Availability.  Subject to the terms and conditions of this Agreement and
to deduction of Reserves, Bank will make Advances to Borrower up to an amount
(“Net Borrowing Availability”) not to exceed the lesser of:  (a) the Revolving
Line; or (b) the amounts available under the Borrowing Base.  Notwithstanding
the foregoing, the amount of outstanding Advances under this Agreement and that
certain Loan and Security Agreement (Exim Program) between Borrower and Bank of
approximate even date herewith shall not exceed $5,000,000 in the aggregate.
  
 
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is hereby amended in its entirety to read as follows:
  
(a)   Availability.  Subject to the terms and conditions of this Agreement and
to deduction of Reserves, Bank will make Advances to Borrower up to an amount
(“Net Borrowing Availability”) not to exceed the lesser of:  (a) the Revolving
Line; or (b) the amounts available under the Borrowing Base.  Notwithstanding
the foregoing, the amount of outstanding Advances under this Agreement and that
certain Loan and Security Agreement (Exim Program) between Borrower and Bank of
approximate even date herewith shall not exceed $4,000,000 in the aggregate.
  
2.2   Modified Term Loan.  Section 2.1.6 of the Loan Agreement is hereby amended
to read as follows:
 
2.1.6   Term Loan.
(a)   Availability.  Bank shall make one (1) term loan available to Borrower in
an amount up to the Term Loan Amount on or before September 30, 2010, subject to
the satisfaction of the terms and conditions of this Agreement.  The proceeds of
the Term Loan shall be used first to pay in full the outstanding Obligations
with respect to that certain Term Loan made in August 2008.
  
(b)   Repayment.  Borrower shall repay the Term Loan in (i) thirty-six (36)
equal installments of principal, plus (ii) monthly payments of accrued interest
(the “Term Loan Payment”).  Beginning on the first day of the month following
the month in which the Funding Date occurs, each Term Loan Payment shall be
payable on the first day of each month.  Borrower’s final Term Loan Payment, due
on the Term Loan Maturity Date, shall include all outstanding principal and
accrued and unpaid interest under the Term Loan.
2.3   Modified Interest Rate.  Section 2.3(a) of the Loan Agreement is hereby
amended in its entirety to read as follows:
 
(a)   Interest Rate.
 
(i)   Advances.  Subject to Section 2.3(b), the principal amount outstanding
under the Revolving Line shall accrue interest at a per annum rate equal to the
greater of 0.75% percentage points above the Prime Rate or 4.75%, which interest
shall be payable monthly.
 
 
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(ii)   Term Loan.  Subject to Section 2.3(b), the principal amount outstanding
under the Term Loan shall accrue interest at a per annum rate equal to the
greater of 0.75% percentage points above the Prime Rate or 4.75%, which interest
shall be payable monthly.
 
2.4   Modified Anniversary Fee.  Section 2.4(g) of the Loan Agreement is hereby
amended in its entirety to read as follows:
 
(g)   Anniversary Fee.  A fully earned, non-refundable fee of $10,000, on the
first anniversary of the September 2010 Amendment Effective Date; and if this
Agreement is terminated prior to the first anniversary of the September 2010
Amendment Effective Date, either by Borrower or Bank, Borrower shall pay such
Anniversary Fee to Bank in addition to any Termination Fee.

2.5          Modified Termination Fee. The sentence in Section 4.1 of the Loan
Agreement that currently reads as follows:
 
If such termination is at Borrower’s election or at Bank’s election due to the
occurrence and continuance of an Event of Default, Borrower shall pay to Bank,
in addition to the payment of any other expenses or fees then-owing, a
termination fee in an amount equal to 2.0% of the Maximum Revolving Line if
termination occurs on or before the first anniversary of the August 2008
Amendment Effective Date, and 1.0% of the Maximum Revolving Line if termination
occurs after the first anniversary of the August 2008 Amendment Effective Date;
provided that no termination fee shall be charged if the credit facility
hereunder is replaced with a new facility from another division of Silicon
Valley Bank.
 
is hereby amended in its entirety to read as follows:

If such termination is at Borrower’s election or at Bank’s election due to the
occurrence and continuance of an Event of Default, Borrower shall pay to Bank,
in addition to the payment of any other expenses or fees then-owing, a
termination fee in an amount equal to 2.0% of the Maximum Revolving Line if
termination occurs on or before the first anniversary of the September 2010
Amendment Effective Date, and 1.0% of the Maximum Revolving Line if termination
occurs after the first anniversary of the September 2010 Amendment Effective
Date; provided that no termination fee shall be charged if the credit facility
hereunder is replaced with a new facility from another division of Silicon
Valley Bank.
 
 
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2.6          Modified Tangible Net Worth Financial Covenant. Section 6.9(a) of
the Loan Agreement is hereby amended in its entirety to read as follows:
 
(a)   Tangible Net Worth.  A Tangible Net Worth of at least $7,000,000 (“Minimum
Tangible Net Worth”) plus (i) 50% of all consideration received after the date
hereof for equity securities and subordinated debt of the Borrower, plus (ii)
50% of the Borrower’s net income in each fiscal quarter ending after the date
hereof.  Increases in the Minimum Tangible Net Worth based on consideration
received for equity securities and subordinated debt of the Borrower shall be
effective as of the end of the month in which such consideration is received,
and shall continue effective thereafter. Increases in the Minimum Tangible Net
Worth based on net income shall be effective on the last day of the fiscal
quarter in which said net income is realized, and shall continue effective
thereafter. In no event shall the Minimum Tangible Net Worth be decreased.
 
2.7          Modified Definitions.  In Section 13.1 of the Loan Agreement, the
following definitions are hereby amended in their entirety to read as follows:
 
Availability Amount” is at any time (a) the lesser of (i) the Revolving Line or
(ii) the Borrowing Base minus (b) the amount of all outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit) minus (c) an amount
equal to the Letter of Credit Reserves, minus (d) the FX Reserve, minus (e) the
outstanding principal balance of any Advances (including any amounts used for
Cash Management Services), and minus (f) one-half of the principal balance then
outstanding of the Term Loan.
 
“Maximum Revolving Line” is $4,000,000.

“Revolving Line Maturity Date” September ___, 2012 [the date that is two years
from the date of this Amendment].

“Term Loan” is a loan made by Bank pursuant to the terms of Section 2.1.6
hereof.
 
“Term Loan Amount” is an amount equal to Two Million Dollars ($2,000,000).
 
 
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“Term Loan Maturity Date” is the earlier of the following dates: (i) September
1, 2013, (ii) the Revolving Line Maturity Date or (iii) the date this Agreement
terminates by its terms or is terminated by either party in accordance with its
terms.
 
“Term Loan Payment” is defined in Section 2.1.6(b).
 
2.8   Modified Exhibit E.  Exhibit E to the Loan Agreement is hereby amended in
its entirety to read as set forth in Exhibit E attached hereto.
 
3.           Limitation of Amendments.
 
3.1           The amendments set forth in Section 2, above, are effective for
the purposes set forth herein and shall be limited precisely as written and
shall not be deemed to (a) be a consent to any amendment, waiver or modification
of any other term or condition of any Loan Document, or (b) otherwise prejudice
any right or remedy which Bank may now have or may have in the future under or
in connection with any Loan Document.
 
3.2           This Amendment shall be construed in connection with and as part
of the Loan Documents and all terms, conditions, representations, warranties,
covenants and agreements set forth in the Loan Documents, except as herein
amended, are hereby ratified and confirmed and shall remain in full force and
effect.
 
4.           Representations and Warranties.  To induce Bank to enter into this
Amendment, Borrower hereby represents and warrants to Bank as follows:
 
4.1           Immediately after giving effect to this Amendment (a) the
representations and warranties contained in the Loan Documents are true,
accurate and complete in all material respects as of the date hereof (except to
the extent such representations and warranties relate to an earlier date, in
which case they are true and correct as of such date), and (b) no Event of
Default has occurred and is continuing;
 
4.2           Borrower has the power and authority to execute and deliver this
Amendment and to perform its obligations under the Loan Agreement, as amended by
this Amendment;
 
4.3           The organizational documents of Borrower delivered to Bank on the
Effective Date remain true, accurate and complete and have not been amended,
supplemented or restated and are and continue to be in full force and effect;
 
4.4           The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, have been duly authorized;
 
4.5           The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, do not and will not contravene (a) any law or regulation
binding on or affecting Borrower, (b) any contractual restriction with a Person
binding on Borrower, (c) any order, judgment or decree of any court or other
governmental or public body or authority, or subdivision thereof, binding on
Borrower, or (d) the organizational documents of Borrower;
 
 
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4.6           The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, do not require any order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by any governmental or public body or authority, or subdivision
thereof, binding on either Borrower, except as already has been obtained or
made; and
 
4.7           This Amendment has been duly executed and delivered by Borrower
and is the binding obligation of Borrower, enforceable against Borrower in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws of general application and equitable principles relating to or affecting
creditors’ rights.
 
5.           Counterparts.  This Amendment may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
 
6.           Effectiveness.  This Amendment shall be deemed effective upon (a)
the due execution and delivery to Bank of this Amendment by each party hereto,
(b) Borrower’s payment of an amendment fee in an amount equal to $10,000, and
(c) Bank’s receipt of the executed Amendment to Loan and Security Agreement
(Exim Program) by and between Bank and Borrower of even date herewith.  The date
that this Amendment is deemed effective is referred to herein as the “September
2010 Amendment Effective Date.”
 
[Signature page follows.]
 
 
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In Witness Whereof, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first written above.

        

BANK
BORROWER
 
Silicon Valley Bank
 
 
By: ___________________________
Name: _________________________
Title: __________________________
 
Lantronix, Inc.
 
 
By: ___________________________
Name: _________________________
Title: __________________________

 
  
 
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EXHIBIT E

COMPLIANCE CERTIFICATE
    
TO:    SILICON VALLEY BANK
FROM:     LANTRONIX, INC.
Date: _____________________

    
The undersigned authorized officer of Lantronix, Inc. (“Borrower”) certifies
that under the terms and conditions of the Loan and Security Agreement between
Borrower and Bank (the “Agreement”), (1) Borrower is in complete compliance for
the period ending _______________ with all required covenants except as noted
below, (2) there are no Events of Default, (3) all representations and
warranties in the Agreement are true and correct in all material respects on
this date except as noted below; provided, however, that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof; and
provided, further that those representations and warranties expressly referring
to a specific date shall be true, accurate and complete in all material respects
as of such date, (4) Borrower, and each of its Subsidiaries, has timely filed
all required tax returns and reports, and Borrower has timely paid all foreign,
federal, state and local taxes, assessments, deposits and contributions owed by
Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of
the Agreement, and (5) no Liens have been levied or claims made against Borrower
or any of its Subsidiaries relating to unpaid employee payroll or benefits of
which Borrower has not previously provided written notification to
Bank.  Attached are the required documents supporting the certification. The
undersigned certifies that these are prepared in accordance with generally GAAP
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.  The undersigned acknowledges that no
borrowings may be requested at any time or date of determination that Borrower
is not in compliance with any of the terms of the Agreement, and that compliance
is determined not just at the date this certificate is delivered.  Capitalized
terms used but not otherwise defined herein shall have the meanings given them
in the Agreement.
Please indicate compliance status by circling Yes/No under “Complies” column.
 
Reporting Covenant
Required
Complies
     
Monthly financial statements with
Compliance Certificate
Monthly within 30 days
Yes   No
Annual Operating Budget and Financial Projections
Within 30 days after start of Fiscal Year
Yes   No
10-Q, 10-K and 8-K
Within 5 days after filing with SEC
Yes   No
A/R & A/P Agings and Reconciliations
Monthly within 15 days
Yes   No
Transaction Report
Weekly and with each request for an Advance if Hard Credit Extensions
outstanding equal or exceed $3,000,000; otherwise, monthly within 30 days
Yes   No
 
The following Intellectual Property was registered after the Effective Date (if
no registrations, state “None”)
____________________________________________________________________________
 

Financial Covenant
Required
Actual
Complies
       
Maintain on a Monthly Basis:
     
Minimum Tangible Net Worth
$7,000,000 plus (i) 50% of new equity and sub debt plus (ii) 50% of quarterly
net income
$_______
Yes   No

  
 
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The following financial covenant analysis and information set forth in Schedule
1 attached hereto are true and accurate as of the date of this Certificate.
 
The following are the exceptions with respect to the certification above:  (If
no exceptions exist, state “No exceptions to note.”)
 

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LANTRONIX, INC.
 
 
By: ___________________________
Name: _________________________
Title: __________________________
BANK USE ONLY
 
Received by: ____________________
authorized signer
Date:      ________________________
 
Verified: ________________________
authorized signer
Date:      ________________________
 
Compliance Status:                                         Yes     No

  
 
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Schedule 1 to Compliance Certificate

Financial Covenants of Borrower

Dated:           ____________________

Tangible Net Worth (Section 6.9(a))

Required Amount:
$7,000,000 plus (i) 50% of consideration for equity securities and subordinated
debt plus (ii) 50% of Borrower’s quarterly net income

Actual:

A.
Aggregate value of total assets of Borrower and its Subsidiaries
$
     
B.
Aggregate value of goodwill of Borrower and its Subsidiaries
$
     
C.
Aggregate value of intangible assets of Borrower and its Subsidiaries
$
     
D.
Aggregate value of investments of Borrower and its Subsidiaries consisting of
minority investments in companies which investments are not publicly-traded
$
     
E.
Aggregate value of any reserves not already deducted from assets
$
     
F.
Aggregate value of liabilities of Borrower and its Subsidiaries (including all
Indebtedness)
and current portion of Subordinated Debt permitted by Bank to be paid by
Borrower (but no other Subordinated Debt)
$
     
G.
Aggregate value of Indebtedness of Borrower subordinated to Borrower’s
Indebtedness to Bank
$
     
H.
Tangible Net Worth (line A minus line B minus line C minus line D minus line E
minus line F plus line G)
$

Is line H equal to or greater than Required Amount?

  No, not in
compliance                                                                             Yes,
in compliance
  
 
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AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
(EXIM PROGRAM)

THIS AMENDMENT to Loan and Security Agreement (Exim Program) (this “Amendment”)
is entered into this __ day of September 2010 by and between Silicon Valley Bank
(“Bank”) and Lantronix, Inc., a Delaware corporation (“Borrower”) whose address
is 167 Technology Drive, Irvine, California  92618.
RECITALS
A.   Bank and Borrower have entered into that certain Loan and Security
Agreement (Exim Program) with an Effective Date of May 23, 2006 (as the same may
from time to time be amended, modified, supplemented or restated, the “Loan
Agreement”).
 
B.   Bank has extended credit to Borrower for the purposes permitted in the Loan
Agreement.
 
C.   Borrower has requested that Bank amend the Loan Agreement, as herein set
forth, and Bank has agreed to the same, but only to the extent, in accordance
with the terms, subject to the conditions and in reliance upon the
representations and warranties set forth herein.
AGREEMENT
Now, Therefore, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:
 
1.   Definitions.  Capitalized terms used but not defined in this Amendment
shall have the meanings given to them in the Loan Agreement.
 
2.    Amendments to Loan Agreement.
 
2.1   Modified Availability.  Section 2.1.1(a) of the Loan Agreement that
currently reads as follows:
 
(a)   Availability.  Subject to the terms and conditions of this Agreement and
to deduction of Reserves, Bank will make Advances to Borrower up to an amount
(“Net Borrowing Availability”) not to exceed the lesser of:  (a) the Revolving
Line; or (b) the amounts available under the Borrowing Base.  Notwithstanding
the foregoing, the amount of outstanding Advances under this Agreement and that
certain Loan and Security Agreement between Borrower and Bank of approximate
even date herewith shall not exceed $5,000,000 in the aggregate.
    
 
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is hereby amended in its entirety to read as follows:
(a)           Availability.  Subject to the terms and conditions of this
Agreement and to deduction of Reserves, Bank will make Advances to Borrower up
to an amount (“Net Borrowing Availability”) not to exceed the lesser
of:  (a) the Revolving Line; or (b) the amounts available under the Borrowing
Base.  Notwithstanding the foregoing, the amount of outstanding Advances under
this Agreement and that certain Loan and Security Agreement between Borrower and
Bank of approximate even date herewith shall not exceed $4,000,000 in the
aggregate.
  
2.2   Modified Interest Rate.  Section 2.3(a) of the Loan Agreement is hereby
amended in its entirety to read as follows:
 
(a)   Interest Rate.
 
(i)   Advances.  Subject to Section 2.3(b), the principal amount outstanding
under the Revolving Line shall accrue interest at a per annum rate equal to the
greater of 0.75% percentage points above the Prime Rate or 4.75%, which interest
shall be payable monthly.
  
2.3   Modified Anniversary Fee.  Section 2.4(g) of the Loan Agreement is hereby
amended in its entirety to read as follows:
 
(g)   Anniversary Fee.  A fully earned, non-refundable fee of $5,000, on the
first anniversary of the September 2010 Amendment Effective Date; and if this
Agreement is terminated prior to the first anniversary of the September 2010
Amendment Effective Date, either by Borrower or Bank, Borrower shall pay such
Anniversary Fee to Bank in addition to any Termination Fee.

2.4           Modified Termination Fee. The sentence in Section 4.1 of the Loan
Agreement that currently reads as follows:
If such termination is at Borrower’s election or at Bank’s election due to the
occurrence and continuance of an Event of Default, Borrower shall pay to Bank,
in addition to the payment of any other expenses or fees then-owing, a
termination fee in an amount equal to 2.0% of the Maximum Revolving Line if
termination occurs on or before the first anniversary of the August 2008
Amendment Effective Date, and 1.0% of the Maximum Revolving Line if termination
occurs after the first anniversary of the August 2008 Amendment Effective Date;
provided that no termination fee shall be charged if the credit facility
hereunder is replaced with a new facility from another division of Silicon
Valley Bank.
  
 
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is hereby amended in its entirety to read as follows:

If such termination is at Borrower’s election or at Bank’s election due to the
occurrence and continuance of an Event of Default, Borrower shall pay to Bank,
in addition to the payment of any other expenses or fees then-owing, a
termination fee in an amount equal to 2.0% of the Maximum Revolving Line if
termination occurs on or before the first anniversary of the September 2010
Amendment Effective Date, and 1.0% of the Maximum Revolving Line if termination
occurs after the first anniversary of the September 2010 Amendment Effective
Date; provided that no termination fee shall be charged if the credit facility
hereunder is replaced with a new facility from another division of Silicon
Valley Bank.
 
2.5   Modified Tangible Net Worth Financial Covenant. Section 6.9(a) of the Loan
Agreement is hereby amended in its entirety to read as follows:
 
(a)   Tangible Net Worth.  A Tangible Net Worth of at least $7,000,000 (“Minimum
Tangible Net Worth”) plus (i) 50% of all consideration received after the date
hereof for equity securities and subordinated debt of the Borrower, plus (ii)
50% of the Borrower’s net income in each fiscal quarter ending after the date
hereof.  Increases in the Minimum Tangible Net Worth based on consideration
received for equity securities and subordinated debt of the Borrower shall be
effective as of the end of the month in which such consideration is received,
and shall continue effective thereafter. Increases in the Minimum Tangible Net
Worth based on net income shall be effective on the last day of the fiscal
quarter in which said net income is realized, and shall continue effective
thereafter. In no event shall the Minimum Tangible Net Worth be decreased.
 
2.6   Modified Definition of Revolving Line Maturity Date.  The definition of
“Revolving Line Maturity Date” set forth in Section 13.1 of the Loan Agreement
is hereby amended to read as follows:
 
 
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“Revolving Line Maturity Date” September ___, 2012 [the date that is two years
from the date of this Amendment].

2.7   Modified Definition of Exim Borrower Agreement.  The definition of the
term “Exim Borrower Agreement,” set forth in Section 14.2 of the Loan Agreements
is hereby amended to mean that certain Borrower Agreement, in the form specified
by the Exim Bank, in favor of Bank and the Exim Bank being executed by Borrower
approximately concurrently herewith and any subsequent Borrower Agreement
executed by Borrower in favor of Bank and Exim Bank.
 
2.8   Modified Exhibit E.  Exhibit E to the Loan Agreement is hereby amended in
its entirety to read as set forth in Exhibit E attached hereto.
 
3.    Limitation of Amendments.
 
3.1   The amendments set forth in Section 2, above, are effective for the
purposes set forth herein and shall be limited precisely as written and shall
not be deemed to (a) be a consent to any amendment, waiver or modification of
any other term or condition of any Loan Document, or (b) otherwise prejudice any
right or remedy which Bank may now have or may have in the future under or in
connection with any Loan Document.
 
3.2   This Amendment shall be construed in connection with and as part of the
Loan Documents and all terms, conditions, representations, warranties, covenants
and agreements set forth in the Loan Documents, except as herein amended, are
hereby ratified and confirmed and shall remain in full force and effect.
 
4.   Representations and Warranties.  To induce Bank to enter into this
Amendment, Borrower hereby represents and warrants to Bank as follows:
 
4.1   Immediately after giving effect to this Amendment (a) the representations
and warranties contained in the Loan Documents are true, accurate and complete
in all material respects as of the date hereof (except to the extent such
representations and warranties relate to an earlier date, in which case they are
true and correct as of such date), and (b) no Event of Default has occurred and
is continuing;
 
4.2   Borrower has the power and authority to execute and deliver this Amendment
and to perform its obligations under the Loan Agreement, as amended by this
Amendment;
 
4.3   The organizational documents of Borrower delivered to Bank on the
Effective Date remain true, accurate and complete and have not been amended,
supplemented or restated and are and continue to be in full force and effect;
 
4.4   The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, have been duly authorized;
 
 
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4.5   The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, do not and will not contravene (a) any law or regulation
binding on or affecting Borrower, (b) any contractual restriction with a Person
binding on Borrower, (c) any order, judgment or decree of any court or other
governmental or public body or authority, or subdivision thereof, binding on
Borrower, or (d) the organizational documents of Borrower;
 
4.6   The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, do not require any order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by any governmental or public body or authority, or subdivision
thereof, binding on either Borrower, except as already has been obtained or
made; and
 
4.7   This Amendment has been duly executed and delivered by Borrower and is the
binding obligation of Borrower, enforceable against Borrower in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, liquidation, moratorium or other similar laws of
general application and equitable principles relating to or affecting creditors’
rights.
 
5.   Counterparts.  This Amendment may be executed in any number of counterparts
and all of such counterparts taken together shall be deemed to constitute one
and the same instrument.
 
6.   Effectiveness.  This Amendment shall be deemed effective upon (a) the due
execution and delivery to Bank of this Amendment by each party hereto,
(b) Borrower’s payment of an amendment fee in an amount equal to $10,000,
(c) Bank’s receipt of the executed Amendment to Loan and Security Agreement by
and between Bank and Borrower of even date herewith with respect to the non-Exim
Loan and Security Agreement by and between Bank and Borrower and (d) Borrower’s
payment of all fees required by Exim Bank. The date that this Amendment is
deemed effective is referred to herein as the “September 2010 Amendment
Effective Date.”
 
 [Signature page follows.]
 
 
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In Witness Whereof, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first written above.

BANK
BORROWER
 
Silicon Valley Bank
 
 
By: ___________________________
Name: _________________________
Title: __________________________
 
Lantronix, Inc.
 
 
By: ___________________________
Name: _________________________
Title: __________________________

 
  
 
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EXHIBIT E

COMPLIANCE CERTIFICATE
   
TO:    SILICON VALLEY BANK
FROM:     LANTRONIX, INC.
Date: _____________________

   
The undersigned authorized officer of Lantronix, Inc. (“Borrower”) certifies
that under the terms and conditions of the Loan and Security Agreement between
Borrower and Bank (the “Agreement”), (1) Borrower is in complete compliance for
the period ending _______________ with all required covenants except as noted
below, (2) there are no Events of Default, (3) all representations and
warranties in the Agreement are true and correct in all material respects on
this date except as noted below; provided, however, that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof; and
provided, further that those representations and warranties expressly referring
to a specific date shall be true, accurate and complete in all material respects
as of such date, (4) Borrower, and each of its Subsidiaries, has timely filed
all required tax returns and reports, and Borrower has timely paid all foreign,
federal, state and local taxes, assessments, deposits and contributions owed by
Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of
the Agreement, and (5) no Liens have been levied or claims made against Borrower
or any of its Subsidiaries relating to unpaid employee payroll or benefits of
which Borrower has not previously provided written notification to
Bank.  Attached are the required documents supporting the certification. The
undersigned certifies that these are prepared in accordance with generally GAAP
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.  The undersigned acknowledges that no
borrowings may be requested at any time or date of determination that Borrower
is not in compliance with any of the terms of the Agreement, and that compliance
is determined not just at the date this certificate is delivered.  Capitalized
terms used but not otherwise defined herein shall have the meanings given them
in the Agreement.
Please indicate compliance status by circling Yes/No under “Complies” column.
 
Reporting Covenant
Required
Complies
     
Monthly financial statements with
Compliance Certificate
Monthly within 30 days
Yes   No
Annual Operating Budget and Financial Projections
Within 30 days after start of Fiscal Year
Yes   No
10-Q, 10-K and 8-K
Within 5 days after filing with SEC
Yes   No
A/R & A/P Agings and Reconciliations
Monthly within 15 days
Yes   No
Transaction Report
Weekly and with each request for an Advance if Hard Credit Extensions
outstanding equal or exceed $3,000,000; otherwise, monthly within 30 days
Yes   No
 
The following Intellectual Property was registered after the Effective Date (if
no registrations, state “None”)
____________________________________________________________________________
 

Financial Covenant
Required
Actual
Complies
       
Maintain on a Monthly Basis:
     
Minimum Tangible Net Worth
$7,000,000 plus (i) 50% of new equity and sub debt plus (ii) 50% of quarterly
net income
$_______
Yes   No

  

 
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The following financial covenant analysis and information set forth in Schedule
1 attached hereto are true and accurate as of the date of this Certificate.
 
The following are the exceptions with respect to the certification above:  (If
no exceptions exist, state “No exceptions to note.”)
 

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LANTRONIX, INC.
 
 
By: ___________________________
Name: _________________________
Title: __________________________
BANK USE ONLY
 
Received by: ____________________
authorized signer
Date:      ________________________
 
Verified: ________________________
authorized signer
Date:      ________________________
 
Compliance Status:                                         Yes     No

 
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Schedule 1 to Compliance Certificate

Financial Covenants of Borrower

Dated:           ____________________

Tangible Net Worth (Section 6.9(a))

Required Amount:
$7,000,000 plus (i) 50% of consideration for equity securities and subordinated
debt plus (ii) 50% of Borrower’s quarterly net income

Actual:

A.
Aggregate value of total assets of Borrower and its Subsidiaries
$
     
B.
Aggregate value of goodwill of Borrower and its Subsidiaries
$
     
C.
Aggregate value of intangible assets of Borrower and its Subsidiaries
$
     
D.
Aggregate value of investments of Borrower and its Subsidiaries consisting of
minority investments in companies which investments are not publicly-traded
$
 
     
E.
Aggregate value of any reserves not already deducted from assets
$
     
F.
Aggregate value of liabilities of Borrower and its Subsidiaries (including all
Indebtedness) and current portion of Subordinated Debt permitted by Bank to be
paid by Borrower (but no other Subordinated Debt)
$
 
     
G.
Aggregate value of Indebtedness of Borrower subordinated to Borrower’s
Indebtedness to Bank
$
     
H.
Tangible Net Worth (line A minus line B minus line C minus line D minus line E
minus line F plus line G)
$

Is line H equal to or greater than Required Amount?

  No, not in
compliance                                                                             Yes,
in compliance
  

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