exhibit10-1.htm


    EXHIBIT 10.1 

     

    FIFTH AMENDMENT TO AMENDED AND RESTATED LOAN
AND SECURITY AGREEMENT 

     

         This Fifth Amendment to Amended and Restated Loan and Security Agreement
(this “Amendment”) is entered into as of May 6, 2010, by and between COMERICA
BANK (“Bank”) and LYRIS, INC., LYRIS TECHNOLOGIES INC. and COMMODORE RESOURCES
(NEVADA), INC. (each a “Borrower” and collectively, “Borrowers”). 

     

    RECITALS 

     

         Borrowers and Bank are parties to that certain Amended and Restated Loan
and Security Agreement dated as of March 6, 2008, as amended from time to time,
including by that certain First Amendment to Amended and Restated Loan and
Security Agreement dated as of July 30, 2008, that certain Second Amendment to
Amended and Restated Loan and Security Agreement dated as of December 31, 2008,
that certain Third Amendment to Amended and Restated Loan and Security Agreement
dated as of June 19, 2009 and that certain Fourth Amendment to Amended and
Restated Loan and Security Agreement dated as of October 23, 2009 (collectively,
the “Agreement”). The parties desire to amend the Agreement in accordance with
the terms of this Amendment. 

     

         NOW, THEREFORE, the parties agree as
follows: 

     

         1. The following defined terms in Section 1.1 of
the Agreement hereby are added, amended or restated as follows: 

     

              “Joint Venture Cap” means an aggregate amount
equal to One Million Five Hundred Thousand Dollars ($1,500,000) minus any cash
expenditures made by Borrowers under the M&A Cap. 

     

              “Liquidity” means the sum of (i) unrestricted
cash at Bank plus (ii) unused availability under the Revolving Line.


     

              “M&A Cap” means an aggregate amount equal
to One Million Five Hundred Thousand Dollars ($1,500,000) minus any cash
expenditures made by Borrowers under the Joint Venture Cap. 

     

              “Revolving
Line” means a Credit Extension of up to Five Million Dollars ($5,000,000).


     

              “Revolving
Maturity Date” means April 30, 2012. 

     

         2. Subsection (c) of the defined term “Permitted
Indebtedness” in Section 1.1 of the Agreement hereby is amended and restated in
its entirety to read as follows: 

     

              “(c)
Indebtedness not to exceed One Million Dollars ($1,000,000) in the aggregate in
the aggregate in any fiscal year of Borrowers secured by a lien described in
clause (c) of the defined term “ Permitted Liens;” provided such Indebtedness
does not exceed the lesser of the cost or fair market value of the equipment
financed with such Indebtedness at the time of financing;” 

     

         3. Subsection (c) of the defined term “Permitted
Liens” in Section 1.1 of the Agreement hereby is amended and restated in its
entirety to read as follows: 

     

               “(c) Liens not to exceed One Million Dollars
($1,000,000) in the aggregate (i) upon or in any Equipment acquired or held by a
Borrower or any of its Subsidiaries to secure the purchase price of such
Equipment or indebtedness incurred solely for the purpose of financing the
acquisition or lease of such Equipment, or (ii) existing on such Equipment at
the time of its acquisition, provided that the Lien is confined solely to the
property so acquired and improvements thereon, and the proceeds of such
Equipment;”

     

    -1- 

     

    

    
    


         4. Subsection (i) of the defined term “Permitted
Investments” in Section 1.1 of the Agreement hereby is amended and restated in
its entirety to read as follows: 

     

              “(i)
Joint ventures or strategic alliances in the ordinary course of a Borrower’s
business consisting of the non-exclusive licensing of technology, the
development of technology or the providing of technical support, provided that
any cash Investments by Borrowers do not, in the aggregate, exceed the Joint
Venture Cap.” 

     

         5. Section 2.1(c) of the Agreement hereby is amended and restated in its
entirety to read as follows:

     

              “(c)
Intentionally Omitted.” 

     

         6. Section 2.5(b) of the Agreement hereby is amended and restated in its
entirety to read as follows: 

     

              “(b)
Unused Fee. A fee equal to
one half of one percent (0.50%) of the difference between the amount then
available under the Revolving Line pursuant to Section 2.1(b)(i) and the average
daily balance outstanding thereunder during the term hereof, paid quarterly in
arrears on an annualized basis, which shall be nonrefundable; and” 

     

         7. Section 6.7 of the Agreement hereby is amended and restated in its
entirety to read as follows: 

     

              “6.7 Financial Covenants. Borrowers shall at all times maintain the
following financial ratios and covenants: 

     

                   (a)
Liquidity. Liquidity of not less than One Million Dollars
($1,000,000). 

     

                   (b) Six Month EBITDA. Measured monthly on a trailing sixth (6)
month basis, EBITDA of not less than the following for the applicable
periods:

     

    
      	Measuring Period
      Ending	Minimum Trailing Six (6) month
      EBITDA
	4/30/10	$1,000,000
	5/31/10	$1,000,000
	6/30/10	$750,000
	7/31/10	$500,000
	8/31/10	$1.00
	9/30/10	($500,000)
	10/31/10	($750,000)
	11/30/10	($1,000,000)
	12/31/10	($1,000,000)
	1/31/11	($750,000)
	2/28/11	($500,000)
	3/31/11	$1.00


    


    - 2 - 

     

    

    
    


         Bank shall be entitled to modify the
foregoing covenant for the 2011 calendar year in Bank’s sole discretion upon
receipt of Borrowers’ 2011 board approved plan.” 

     

         8. Section 7.3 of the Agreement hereby is amended and restated in its
entirety to read as follows: 

     

              “7.3
Mergers or Acquisitions. Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with or into any other business
organization (other than mergers or consolidations of a Subsidiary into another
Subsidiary or into Borrower), or acquire, or permit any of its Subsidiaries to
acquire, all or substantially all of the capital stock or property of another
Person except where (i) cash consideration paid by Borrowers in connection with
such transactions does not in the aggregate exceed the M&A Cap, (ii) no
Event of Default has occurred, is continuing or would exist after giving effect
to such transactions, (iii) such transactions do not result in a Change in
Control, and (iv) Borrower is the surviving entity.” 

     

         9. Exhibit C to the Agreement hereby is replaced with Exhibit C attached
hereto. 

     

         10. The following defined term in Exhibit D to the
Agreement (Prime Referenced Rate Addendum) is hereby amended and restated in its
entirety to read as follows: 

     

              “Applicable
Margin” means two and one quarter percent (2.25%) per annum. 

     

         11. Exhibit E to the Agreement hereby is replaced with Exhibit E attached
hereto. 

     

         12. No course of dealing on the part of Bank or
its officers, nor any failure or delay in the exercise of any right by Bank,
shall operate as a waiver thereof, and any single or partial exercise of any
such right shall not preclude any later exercise of any such right. Bank’s
failure at any time to require strict performance by a Borrower of any provision
shall not affect any right of Bank thereafter to demand strict compliance and
performance. Any suspension or waiver of a right must be in writing signed by an
officer of Bank. 

     

         13. Unless otherwise defined, all initially
capitalized terms in this Amendment shall be as defined in the Agreement. The
Agreement, as amended hereby, shall be and remain in full force and effect in
accordance with its respective terms and hereby is ratified and confirmed in all
respects. Except as expressly set forth herein, the execution, delivery, and
performance of this Amendment shall not operate as a waiver of, or as an
amendment of, any right, power, or remedy of Bank under the Agreement, as in
effect prior to the date hereof. 

     

         14. Each Borrower represents and warrants that the
Representations and Warranties contained in the Agreement are true and correct
as of the date of this Amendment, and that no Event of Default has occurred and
is continuing.

     

         15. As a condition to the effectiveness of this
Amendment, Bank shall have received, in form and substance satisfactory to Bank,
the following: 

     

                   (a) this Amendment, duly executed by each Borrower; 

     

                   (b) a Certificate of the Secretary of each Borrower with respect to
incumbency and resolutions authorizing the execution and delivery of this
Amendment; 

     

                   (c) repayment of all amounts owing from Borrowers to Bank in connection with
the Term Loan; 

     

                   (d) evidence that Borrowers have received net cash proceeds of at least Six
Million Dollars ($6,000,000) from the sale of Borrowers’ equity securities to
investors and on terms and conditions reasonably acceptable to Bank;


     

                   (e) a facility fee in the amount of Twenty Five Thousand Dollars
($25,000);

     

    - 3 - 

     

    

    
    


                   (f) all reasonable Bank Expenses incurred through the date of this Amendment,
which may be debited from any of Borrowers’ accounts; and 

     

                   (g) such other documents, and completion of such other matters, as Bank may
reasonably deem necessary or appropriate. 

     

         16. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument. 

     

     

     

     

     

    [Balance of Page Intentionally Left Blank]

     

    - 4 - 

     

    

    
    


         IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the first date above written. 

     

    
      	LYRIS, INC.
	By:	/s/ Luis
    Rivera
	Title:	Chief Executive Officer
	  
	  
	LYRIS TECHNOLOGIES INC.
	By:	/s/ Luis
    Rivera
	Title:	Chief Executive Officer
	  
	  
	COMMODORE RESOURCES (NEVADA),
    INC.
	By:	/s/ Richard A. McDonald
	Title:	President
	  
	  
	COMERICA BANK
	By:	/s/ Philip
      Koblis
	Title:   	First Vice
President


    


     

     

     

     

    [Signature Page to Fifth Amendment to Amended and Restated Loan and
Security Agreement] 

     

    

    
    


    EXHIBIT C 

     

    COMPLIANCE CERTIFICATE 

     

    
      	TO:	
            	COMERICA BANK
	FROM:	      	LYRIS INC., for itself and on behalf of
      all Borrowers


    


         The undersigned authorized officer of LYRIS, INC., for itself and on
behalf of all Borrowers, hereby certifies that in accordance with the terms and
conditions of the Loan and Security Agreement between Borrowers and Bank (the
"Agreement"), (i) Each Borrower is in complete compliance for the period ending
_______________ with all required covenants except as noted below and (ii) all
representations and warranties of each Borrower stated in the Agreement are true
and correct as of the date hereof. Attached herewith are the required documents
supporting the above certification. The Officer further certifies that these are
prepared in accordance with Generally Accepted Accounting Principles (GAAP) and
are consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.

     

    Please indicate compliance status by circling
Yes/No under "Complies" column. 

     

    
      	Reporting Covenant	
            	Required	
            	Complies
	Monthly financial statements	      	Monthly within 30 days	      	Yes	      	No
	10K	
            	Within 90 days of fiscal year end	
            	Yes	
            	No
	10Q	
            	Within 45 days of quarter end	
            	Yes	
            	No
	Borrowing Base Cert, A/R & A/P Agings	
            	Monthly within 30 days	 	Yes	
            	No
	Compliance Cert.	
            	Monthly within 30 days	
            	Yes	
            	No
	A/R Audit	 	Semi-Annual	
            	Yes	 	No
	IP Report	
            	Quarterly within 45 days	
            	Yes	
            	No
	Total amount of Borrowers' cash and	 	Amount:  $________	
            	Yes	
            	No
	investments	
            	
            	
            	
            	
            	
            
	Total amount of Borrowers' cash
      and	
            	Amount:  $________	
            	Yes	
            	No
	investments maintained with
    Bank	
            	
            	
            	
            	
            	
            


    


    
      	Financial Covenant	 	Required	 	Actual	
            	Complies
	Minimum Liquidity	      	$1,000,000	      	$___________	      	Yes	      	No
	Minimum 6-Month
      EBITDA	
            	See attached
chart	
            	$___________	 	Yes	
            	No


    


    
      	Comments Regarding Exceptions:
      See
    Attached.	  BANK USE ONLY	
            	
            	
            	
            
	  	  	
            	
            	
            	
            	
            
	Sincerely,	  Received
      by:  	
            	      
	
            	 	 	
            	AUTHORIZED SIGNER	
            
	 	SIGNATURE	 	  Date:	
            	
            
	
            	   	
            	
            	
            	
            	
            
	 	 	 	 
    Verified:	
            	
            
	TITLE	
            	AUTHORIZED SIGNER	
            
	
            	  Date:	
            	
            
	
            	 	 	  	
            	
            	
            	
            
	DATE	  Compliance Status	Yes	      	No	
            


    


    

    
    


    Minimum Trailing 6
month EBITDA Requirements 

     

    
      	Measuring Period
      Ending	Minimum Trailing Six (6) month
      EBITDA
	4/30/10	$1,000,000
	5/31/10	$1,000,000
	6/30/10	$750,000
	7/31/10	$500,000
	8/31/10	$1.00
	9/30/10	($500,000)
	10/31/10	($750,000)
	11/30/10	($1,000,000)
	12/31/10	($1,000,000)
	1/31/11	($750,000)
	2/28/11	($500,000)
	3/31/11	$1.00


    


         Bank shall be entitled to modify the foregoing covenant for the 2011
calendar year in Bank’s sole discretion upon receipt of Borrowers’ 2011 board
approved plan.

     

    

    
    


    EXHIBIT E 

     

    BORROWING BASE
CERTIFICATE 

     

    
      	Borrower: LYRIS, INC.,
      for itself and on behalf of all Borrowers	Lender: Comerica Bank
	  	 
	Commitment Amount: $5,000,000	 


    

    
      	ACCOUNTS
      RECEIVABLE	
            	      	
            
	1.	      	Accounts Receivable Book Value as of ___	
            	
            	$___________
	2.	
            	Additions (please explain on reverse)	
            	
            	$___________
	3.	
            	TOTAL ACCOUNTS RECEIVABLE	
            	
            	$___________
	  	
            	
            	
            
	ACCOUNTS RECEIVABLE DEDUCTIONS (without
      duplication)	
            	
            	
            
	4.	
            	Amounts over 90 days due	$___________	
            	
            
	5.	
            	Balance of 25% over 90 day accounts	$___________	
            	
            
	6.	
            	Concentration Limits	$___________	
            	
            
	7.	
            	Foreign Accounts	$___________	
            	
            
	8.	
            	Governmental Accounts	$___________	
            	
            
	9.	
            	Contra Accounts	$___________	
            	 
	10.	
            	Demo Accounts	$___________	 	
            
	11.	
            	Intercompany/Employee Accounts	$___________	
            	
            
	12.	
            	Other (please explain on reverse)	$___________	
            	
            
	13.	
            	TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS	
            	
            	$___________
	14.	
            	Eligible Accounts (#3 minus #13)	 	
            	$___________
	15.	
            	LOAN VALUE OF ACCOUNTS (80% of #14)	
            	
            	$___________
	  	
            	
            	
            
	BALANCES	
            	
            	
            
	16.	
            	Maximum Loan Amount	
            	 	$5,000,000
	17.	
            	Total Funds Available [Lesser of #16 or #15]	
            	
            	$___________
	18.	
            	Present balance owing on Line of Credit	
            	
            	$___________
	19.	
            	Outstanding under Sublimits (e.g., Letters of Credit)	
            	
            	$___________
	20.	
            	RESERVE POSITION (#17 minus #18 and #19)	
            	
            	$___________


    


    The undersigned represents and warrants that
the foregoing is true, complete and correct, and that the information reflected
in this Borrowing Base Certificate complies with the representations and
warranties set forth in the Loan and Security Agreement between the undersigned
and Comerica Bank. 

     

    
LYRIS, INC., for
itself and on behalf of all Borrowers 

     

    
      	By:   	  
	
            	       Authorized
  Signer