Exhibit 10.25
CREDIT AGREEMENT
THIS AGREEMENT is entered into as of May 27, 2004, by and between ITERIS, INC.,
a Delaware corporation ("Borrower'), and WELLS FARGO BANK, NATIONAL ASSOCIATION
("Bank").
RECITALS
Borrower has requested that Bank extend or continue credit to Borrower as
described below, and Bank has agreed to provide such credit to Borrower on the
terms and conditions contained herein.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Bank and Borrower hereby agree as follows;
ARTICLE I
CREDIT TERMS
SECTION 1.1
LINE OF CREDIT.
(A)
LINE OF CREDIT.
SUBJECT TO THE TERMS AND
CONDITIONS OF THIS AGREEMENT, BANK HEREBY AGREES TO MAKE ADVANCES TO BORROWER
FROM TIME TO TIME UP TO AND INCLUDING AUGUST 1, 2005, NOT TO EXCEED AT ANY TIME
THE AGGREGATE PRINCIPAL AMOUNT OF FIVE MILLION AND 00/100 DOLLARS
($5,000,000.00) ("LINE OF CREDIT"), THE PROCEEDS OF WHICH SHALL BE USED FOR
WORKING CAPITAL REQUIREMENTS.
BORROWERS OBLIGATION TO REPAY ADVANCES UNDER THE
LINE OF CREDIT SHALL BE EVIDENCED BY A PROMISSORY NOTE DATED AS OF MAY 27, 2004
("LINE OF CREDIT NOTE"), ALL TERMS OF WHICH ARE INCORPORATED HEREIN BY THIS
REFERENCE.
(B)
LIMITATION ON BORROWINGS.
OUTSTANDING
BORROWINGS UNDER THE LINE OF CREDIT, TO A MAXIMUM OF THE PRINCIPAL AMOUNT SET
FORTH ABOVE, SHALL NOT AT ANY TIME EXCEED AN AGGREGATE OF (I) EIGHTY PERCENT 80%
OF BORROWER'S ELIGIBLE ACCOUNTS RECEIVABLE (NON-GOV'T/NON-CONSULTING) (II) FORTY
PERCENT (40%) OF BORROWER'S ELIGIBLE ACCOUNTS RECEIVABLE (GOV'T/CONSULTING)
PROVIDED THAT OUTSTANDING BORROWINGS AGAINST SUCH ACCOUNTS RECEIVABLE SHALL NOT
EXCEED SEVEN HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($750,000.00), AND
(III) FIFTY PERCENT (50%) OF THE VALUE OF BORROWERS ELIGIBLE INVENTORY,
(EXCLUSIVE OF WORK IN PROCESS AND INVENTORY WHICH IS OBSOLETE, UNSALEABLE OR
DAMAGED), WITH VALUE DEFINED AS THE LOWER OF COST OR MARKET VALUE, PROVIDED
HOWEVER, THAT OUTSTANDING BORROWING AGAINST INVENTORY SHALL NOT AT ANY TIME
EXCEED AN AGGREGATE OF ONE MILLION AND 00/100 DOLLARS ($1,000,000).
ALL OF THE
FOREGOING SHALL BE DETERMINED BY BANK UPON RECEIPT AND REVIEW OF ALL COLLATERAL
REPORTS REQUIRED HEREUNDER AND SUCH OTHER DOCUMENTS AND COLLATERAL INFORMATION
AS BANK MAY FROM TIME TO TIME REQUIRE.
BORROWER ACKNOWLEDGES THAT SAID
BORROWING BASE WAS ESTABLISHED BY BANK WITH THE UNDERSTANDING THAT, AMONG OTHER
ITEMS, THE AGGREGATE OF ALL RETURNS, REBATES, DISCOUNTS, CREDITS AND ALLOWANCES
FOR THE IMMEDIATELY PRECEDING THREE (3) MONTHS AT ALL TIMES SHALL BE LESS THAN
FIVE PERCENT (5%) OF BORROWER'S GROSS SALES FOR SAID PERIOD.
IF SUCH DILUTION
OF BORROWER'S ACCOUNTS FOR THE IMMEDIATELY PRECEDING THREE (3) MONTHS AT ANY
TIME EXCEEDS FIVE PERCENT (5%) OF BORROWER'S GROSS SALES FOR SAID PERIOD, OR IF
THERE AT ANY TIME EXISTS ANY OTHER MATTERS, EVENTS, CONDITIONS OR CONTINGENCIES
WHICH BANK REASONABLY BELIEVES MAY AFFECT PAYMENT OF ANY PORTION OF BORROWER'S
ACCOUNTS, BANK, IN ITS SOLE DISCRETION, MAY REDUCE THE FOREGOING ADVANCE RATE
AGAINST ELIGIBLE ACCOUNTS RECEIVABLE TO A PERCENTAGE APPROPRIATE TO REFLECT SUCH
ADDITIONAL DILUTION AND/OR ESTABLISH ADDITIONAL RESERVES AGAINST BORROWERS
ELIGIBLE ACCOUNTS RECEIVABLE.
As used herein, "eligible accounts receivable" shall consist solely