Exhibit
10.1


 


SECOND AMENDMENT
to

AMENDED AND RESTATED Loan and security agreement


 


THIS
SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Amendment”) is entered into
this 31st day of May, 2015, by and between SILICON VALLEY BANK, a California corporation (“Bank”), and ENCISION
INC., a Colorado corporation (“Borrower”).


 


Recitals


 


A.Bank and Borrower
have entered into that certain Amended and Restated Loan and Security Agreement dated as of May 10, 2012 (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 is currently
in default of Section 6.9(a) of the Loan Agreement for failing to comply with the Tangible Net Worth financial covenant for the
month ending February 28, 2015 and March 31, 2015 (the “Existing TNW Event of Default”) and anticipates that
it will also be in default of such covenant for the month ending April 30, 2015 (the “April Anticipated TNW Event of Default”).


 


D.Borrower has
requested that Bank amend the Loan Agreement to (i) extend the Revolving Line Maturity Date, (ii) revise the Tangible
Net Worth financial covenant, (iii) waive the Existing TNW Event of Default and April Anticipated TNW Event of Default, and (iv) make
certain other revisions to the Loan Agreement as more fully set forth herein.


 


E.Although Bank
is under no obligation to do so, Bank is willing to (i) extend the Revolving Line Maturity Date, (ii) revise the Tangible Net Worth
financial covenant, (iii) waive the Existing TNW Event of Default and April Anticipated TNW Event of Default, and (iv) make certain
other revisions to the Loan Agreement, all on the terms and conditions set forth in this Amendment, so long as Borrower complies
with the terms, covenants and conditions set forth in this Amendment in a timely manner.


 


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, including its preamble and recitals, shall have the meanings given to
them in the Loan Agreement.


 






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2.Amendments
to Loan Agreement.


 


2.1Section 6.9
(Financial Covenants). Section 6.9 of the Loan Agreement is hereby amended by deleting it in its entirety and replacing it
with the following:


 


6.9Financial
Covenants.


 


Maintain
at all times, to be tested as of the last day of each month, unless otherwise noted, on a consolidated basis with respect to Borrower
and its Subsidiaries:


 


(a)Tangible
Net Worth. Commencing with the month ending March 31, 2015, a Tangible Net Worth of at least Two Million Three Hundred Thousand
Dollars ($2,300,000), which amount shall be increased by the sum of (i) fifty percent (50%) of Borrower’s quarterly Net Income
(without reduction for any losses) for such quarter, plus (ii) fifty percent (50%) of the Net Proceeds received by Borrower from
any bona-fide issuances of new equity during such quarter, plus (iii) fifty percent (50%) of the Net Proceeds received by Borrower
from any Subordinated Debt incurred by Borrower during such quarter.


 


(b)Liquidity
Ratio. Commencing with the month ending May 31, 2015 and as of the last day of each month thereafter, a Liquidity Ratio of
at least 2.00 to 1.00 at all times.


 


2.2Section 12.1
(Termination Prior to Revolving Line Maturity Date). Section 12.1 of the Loan Agreement is hereby amended by deleting it in
its entirety and replacing it with the following:


 


12.1Termination
Prior to Revolving Line Maturity Date.


 


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. Notwithstanding any such termination, Bank’s lien and security interest in the Collateral
shall continue until Borrower fully satisfies its Obligations.


 


2.3Section 13
(Definitions).


 


(a)The following
terms and their respective definitions set forth in Section 13.1 of the Loan Agreement are hereby amended by deleting them
in their entirety and replacing them with the following:


 


“Inventory
Sublimit Availability Amount” means the lesser of (a) thirty-five percent (35%) of the value of Borrower’s Eligible
Inventory (valued at the lower of cost or wholesale fair market value), as determined by Bank from Borrower’s most recent
Transaction Report or (b) the lesser of (i) twenty-five percent (25%) of all outstanding Obligations under the Revolving Line or
(ii) Four Hundred Thousand Dollars ($400,000).


 






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“Quick
Assets” is, on any date, Borrower’s unrestricted cash maintained with Bank, plus Eligible Accounts, minus
Accounts payable that Borrower has not paid within sixty (60) days of the due date.


 


“Revolving
Line Maturity Date” is May 29, 2016.


 


(b)The following
term and its respective definitions are hereby added in alphabetical order to Section 13.1 of the Loan Agreement as follows:


 


“Liquidity
Ratio” is a ratio equal to (a) Quick Assets, divided by (b) the aggregate outstanding Obligations.


 


2.4Compliance
Certificate. From and after the date hereof, Exhibit B of the Loan Agreement is replaced in its entirety with Exhibit
B attached hereto and all references in the Loan Agreement to the Compliance Certificate shall be deemed to refer to Exhibit
B attached hereto.


 


3.Waiver
of the Existing TNW Event of Default and April Anticipated TNW Event of Default. Borrower acknowledges and agrees that unless
the Existing TNW Event of Default and April Anticipated TNW Event of Default are waived by Bank, the Existing TNW Event of Default
and April Anticipated TNW Event of Default would constitute an Event of Default under the Loan Documents. Bank hereby waives the
Existing TNW Event of Default and April Anticipated TNW Event of Default. Bank’s agreement to waive the Existing TNW Event
of Default and April Anticipated TNW Event of Default shall in no way obligate Bank to make any other modifications to the Loan
Agreement or to waive Borrower’s compliance with any other terms of the Loan Documents, and shall not limit or impair Bank’s
right to demand strict performance of all other terms and covenants as of any date. The waiver set forth above shall not be deemed
or otherwise construed to constitute a waiver of any other provisions of the Loan Agreement in connection with any other transaction.


 


4.Limitation
of Waiver and Amendments.


 


4.1The amendments
set forth in Section 2 and the waiver set forth in Section 3, above, are effective for the purposes set forth herein and shall
be limited precisely as written and shall not be deemed to i) be a consent to any amendment, waiver or modification of any
other term or condition of any Loan Document, or ii) 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.


 


4.2This 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.


 


4.3In addition
to those Events of Default specifically enumerated in the Loan Documents, the failure to comply with the terms of any covenant
or agreement contained herein shall constitute an Event of Default and shall entitle the Bank to exercise all rights and remedies
provided to the Bank under the terms of any of the other Loan Documents as a result of the occurrence of the same.


 






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5.Representations
and Warranties. To induce Bank to enter into this Amendment, Borrower hereby represents and warrants to Bank as follows:


 


5.1Immediately
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, except for the Existing Event of Default;


 


5.2Borrower
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;


 


5.3The 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;


 


5.4The 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;


 


5.5The 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 iii) any law or regulation binding on or affecting Borrower, iv) any
contractual restriction with a Person binding on Borrower, v) any order, judgment or decree of any court or other governmental
or public body or authority, or subdivision thereof, binding on Borrower, or vi) the organizational documents of Borrower;


 


5.6The 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 Borrower, except
as already has been obtained or made; and


 


5.7This 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.


 


6.Integration.
This Amendment and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations
or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the
subject matter of this Amendment and the Loan Documents merge into this Amendment and the Loan Documents.


 






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7.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.


 


8.Effectiveness.
This Amendment shall be deemed effective as of May 10, 2014 upon vii) the due execution and delivery to Bank of this
Amendment by each party hereto, viii)Borrower’s payment of a fully earned, non-refundable amendment fee in an amount equal
to Twenty Thousand Dollars ($20,000), and ix) payment of Bank’s legal fees and expenses in connection with the negotiation
and preparation of this Amendment.


 


 


 


 


[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.


 


BORROWER:


 


ENCISION INC.


  


	By:	/s/ Gregory J. Trudel	 
	Name:	Gregory J. Trudel	 
	Title:	President & CEO	 


 


 


BANK:


 


SILICON VALLEY BANK


  


	By:	/s/ Daniel Harrison	 
	Name:	Daniel Harrison	 
	Title:	Vice President	 


  


 


 




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








    	 



    

 




 


 


 


 


 


 






    	[Exhibit B]