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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