Exhibit 10.1

 

Amendment

TO

LOAN AND SECURITY AGREEMENT

 

THIS AMENDMENT to Loan and Security Agreement (this “Amendment”) is entered into
this 17th day of October 2007, by and between Silicon Valley Bank (“Bank”) and
Iteris, Inc., a Delaware corporation (“Borrower”) whose address is 1700 Carnegie
Avenue, Santa Ana, California  92705.

RECITALS

                A.            Bank and Borrower have entered into that certain
Loan and Security Agreement dated as of October 16, 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 FX Reserve.  The term “FX Reserve” set forth in Section
2.1.3 of the Loan Agreement is hereby amended from “$1,000,000” to “$3,000,000”.

2.2          Modified Cash Management Services Sublimit.  The term “Cash
Management Services Sublimit” set forth in Section 2.1.4 of the Loan Agreement
is hereby amended from “$1,000,000” to “$3,000,000”.

2.3          Modified Overall Aggregate Sublimit.  The Overall Aggregate
Sublimit set forth in Section 2.1.5 of the Loan Agreement is hereby amended from
“$1,000,000” to “$3,000,000”.

 

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2.4          Modified Term Loan Reserve.  The Term Loan Reserve provision set
forth in Section 2.1.6(c) of the Loan Agreement is hereby amended in its
entirety to read as follows:

(c)           Term Loan Reserve. Notwithstanding the foregoing, in the event
Borrower’s Debt Service Coverage (as defined below) falls below 1.50 to 1.0,
then commencing  on the date that Borrower’s financial statements are provided
to Bank evidencing the same (or the date such financial statements were to have
been provided if the submission of such financial statements is delayed), an
amount equal to the currently outstanding principal amount of the Term Loan
shall be reserved against the Revolving Line which would otherwise be available
to Borrower as set forth above.

 

For purposes of the foregoing, the term “Debt Service Coverage” shall mean, as
of the end of any given month, the ratio of (i) Borrower’s Net Income plus
depreciation and amortization expenses plus taxes, in each case for the twelve
(12) month period ending at the end of such month to (b) that portion of the
long-term indebtedness of Borrower and its Subsidiaries, determined on a
consolidated basis, due within twelve (12) months after the ending of such
month.

 

2.5          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 FLOATING PER
ANNUM RATE EQUAL TO 1.0% PERCENTAGE POINTS ABOVE THE PRIME RATE, WHICH INTEREST
SHALL BE PAYABLE MONTHLY.

(ii)           Term Loan.  Subject to Section 2.3(b), the principal amount
outstanding under the Term Loan shall accrue interest at a fixed per annum rate
of 8.75%, which interest shall be payable monthly.

2.6          Modified Collateral Monitoring Fee.  Section 2.4(e) of the Loan
Agreement is hereby amended in its entirety to read as follows:

(e)           Collateral Monitoring Fee.  A monthly collateral monitoring fee of
$1,500, payable in arrears on the last day of each month (prorated for any
partial month at the beginning and upon termination of this Agreement); and

 

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2.7          Modified Termination Fee.  That section of Section 4.1 of the Loan
Agreement that currently reads as follows:

This Agreement may be terminated prior to the Revolving Line Maturity Date by
Borrower, effective three (3) Business Days after written notice of termination
is given to Bank or if Bank’s obligation to fund Credit Extensions terminates
pursuant to the terms of Section 2.1.1(c).  Notwithstanding any such
termination, Bank’s lien and security interest in the Collateral shall continue
until Borrower fully satisfies its Obligations.  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 Dollar Amount if termination occurs on or before the
first anniversary of the Effective Date, and 1.0% of the Maximum Dollar Amount
if termination occurs after the first anniversary of the Effective Date;
provided that no termination fee shall be charged if the credit facility
hereunder is replaced with a new facility from a division of Silicon Valley
Bank.  Upon payment in full of the Obligations and at such time as Bank’s
obligation to make Credit Extensions has terminated, Bank shall release its
liens and security interests in the Collateral and all rights therein shall
revert to Borrower.

 

is hereby amended in its entirety to read as follows:

 

This Agreement may be terminated prior to the Revolving Line Maturity Date by
Borrower, effective three (3) Business Days after written notice of termination
is given to Bank or if Bank’s obligation to fund Credit Extensions terminates
pursuant to the terms of Section 2.1.1(c).  Notwithstanding any such
termination, Bank’s lien and security interest in the Collateral shall continue
until Borrower fully satisfies its Obligations.  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 1.0% of the Maximum Dollar Amount; provided that no termination fee shall be
charged if the credit facility hereunder is replaced with a new facility from a
division of Silicon Valley Bank.  Upon payment in full of the Obligations and at
such time as Bank’s obligation to make Credit Extensions has terminated, Bank
shall release its liens and security interests in the Collateral and all rights
therein shall revert to Borrower.

 

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2.8          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 $7,400,000
(“Minimum Tangible Net Worth”) plus (i) 25% of all consideration received after
the date hereof for equity securities and subordinated debt of the Borrower,
plus (ii) 25% 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.

 

2.9          Section 13 (Definitions).  The following terms and their respective
definitions set forth in Section 13.1 are amended in their entirety and replaced
with the following:

“Designated Deposit Account” is Borrower’s deposit account, account number
_____________, maintained with Bank.

 

“Maximum Dollar Amount” is $10,000,000.

 

“Net Income” means, as calculated on a consolidated basis for Borrower and its
Subsidiaries for any period as at any date of determination, the net profit (or
loss), after provision for taxes, of Borrower and its Subsidiaries for such
period taken as a single accounting period.

 

“Revolving Line Maturity Date” is October 15, 2008 [the date that is 364 days
from the date of this Amendment].

 

“Term Loan Maturity Date” is May 31, 2008.

 

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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;

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

 

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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
and (b) Borrower’s payment of an amendment fee in an amount equal to $50,000
(which fee is in lieu of the $40,000 Anniversary Fee set forth in Section 2.4(g)
of the Loan Agreement).

[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

Iteris, Inc.

 

 

 

 

By:

/S/ DEREK R. BRUNELLE

By:

/S/ JAMES S. MIELE

 

 

 

 

Name: Derek R. Brunelle

Name: James S. Miele

Title: Vice President

Title: CFO

 

 

 

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