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.


 

















 


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.


 


2

















 


(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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