Document:

scrips_s1a1-ex1016.htm

EXHIBIT 10.16

     

SERVICE AGREEMENT

 

This Service Agreement (the Agreement) is made and effective this 1st day of January 2010,

    

	
BETWEEN:

	
SCRIPSAMERICA, Inc. (the 'Customer'), a corporation organized and existing under the laws of the state of Delaware with its head office located at: 843 Persimmon Lane Langhorne PA 19047

    

	
AND:

	
MARLEX PHARMACEUTICALS Inc. (the 'Service Provider'), a corporation organized and existing under the laws of the state of Delaware with its head office located at: 50 McCullough Drive Newcastle Delaware 19720

     

BACKGROUND:

 

	
A.  

	
The Customer is of the opinion that the Service Provider has the necessary qualifications, experience and abilities to provide services in connection with the business of the Customer.

 

	
B.  

	
The Service Provider is agreeable to providing such services to the Customer, on the terms and conditions as set out in this Agreement.

 

IN CONSIDERATION OF the matters described above and of the mutual benefits and obligations set forth in this Agreement, the receipt and sufficiency of which consideration is hereby acknowledged, the parties to this Agreement agree as follows:

 

Engagement

 

	
1.  

	
The Customer hereby agrees to engage the Service Provider to provide the Customer with services consisting of packaging and distribution of goods received from Customer's Suppliers as directed by the Customer , and such other services as the Customer and the Service Provider may agree upon from time to time (the"Servics") the Service Provider hereby agrees to provide the Services to the Customer.

  

Term of Agreement

   

	
2.  

	
The term of this Agreement will begin on the date of this Agreement and will remain in full force and effect until January 1, 2020 subject to earlier termination as otherwise provided in this Agreement, with the said term being capable of extension by mutual written agreement of the parties.

  

Performance

   

	
3. 

	
Both parties agree to do everything necessary to ensure that the terms of this Agreement take effect. 

  

Compensation

    

	
4. 

	
For the Services provided by the Service Provider under this Agreement, the Customer will pay to the Service Provider compensation based on the material costs, labor and shipping charges. The parties realize that the charges will vary depending on the Purchase Order being filled and will arrive at a mutually agreed upon rate for each transaction. Compensation will be payable upon completion of the Services. The Customer is entitled to deduct from the Service Provider's compensation any applicable deductions and remittances as required by law. 

    

Return of Property

   

	
5.  

	
Upon the expiry or termination of this Agreement, the Service Provider will return to the Customer any property, documentation, records, or confidential information which is the property of the Customer.

    

  

1

  

   

Legal Expenses

 

	
6.  

	
In the event that legal action is brought to enforce or construe any term of this Agreement, the prevailing party will be entitled to recover, in addition to any other damages or award, all reasonable legal costs and fees associated with the action.

 

Notice

 

	
7.  

	
All notices, requests, demands or other communications required or permitted by the terms of this Agreement will be given in writing and either served personally, by email, by facsimile or by registered mail. The addresses for any notice to be delivered to any of the parties to this Agreement are as follows:

   

a. 843 Persimmon Lane Langhorne PA 19047

b. 50 McCullough Drive Newcastle Delaware 19720

or to such other address as to which any party may from time to time notify the other.

 

Enurement

 

	
8.  

	
This Agreement will enure to the benefit of and be binding upon the respective successors and assigns of the parties. 

    

Titles/Headings

 

	
9.

	
Headings are inserted for the convenience of the parties only and are not to be considered when interpreting this Agreement. 

   

   Gender

    

	
10.

	
Words in the singular mean and include the plural and vice versa. Words in the masculine mean and include the feminine and vice versa. 

 

Assignment

   

	
11.  

	
This Agreement is a personal one, being entered into in reliance upon and in consideration of the personal skill and qualifications of the Service Provider. The Service Provider will not voluntarily or by operation of law assign or otherwise transfer the obligations incurred pursuant to the terms of this Agreement without the prior written consent of the Customer.

 

Capacity/Independent Contractor

 

	
12.  

	
It is expressly agreed that the Service Provider is acting as an independent contractor and not as an employee in providing the Services hereunder. The Service Provider and the Customer acknowledge that this Agreement does not create a partnership or joint venture between them.

 

Modification of Agreement

 

	
13.  

	
Any amendment or modification of this Agreement or additional obligation assumed by either party in connection with this Agreement will only be binding if evidenced in writing signed by each party or an authorized representative of each party.

 

Time of the Essence

 

	
14.

	
Time will be of the essence of this Agreement and of every part hereof. No extension or variation of this Agreement will operate as a waiver of this provision. 

    

  

2

  

    

Entire Agreement

 

	
15.  

	
It is agreed that there is no representation, warranty, collateral agreement or condition affecting this Agreement except as expressed in it.

 

Severability

 

	
16.  

	
In the event that any of the provisions of this Agreement are held to be invalid or unenforceable in whole or in part, all other provisions will nevertheless continue to be valid and enforceable with the invalid or unenforceable parts severed from the remainder of this Agreement.

 

Currency

 

	
17.  

	
Unless otherwise provided for, all monetary amounts referred to herein will be paid in United States dollars.

 

Governing Law

 

	
18.  

	
It is the intention of the parties to this Agreement that this Agreement and the performance under this Agreement, and all suits and special proceedings under this Agreement, be construed in accordance with and governed, to the exclusion of the law of any other forum, by the laws of the State of Delaware, without regard to the jurisdiction in which any action or special proceeding may be instituted.

 

Termination

 

	
19.  

	
This agreement may be terminated immediately by either party either upon giving the other party twelve (12) months written notice as per paragraph 7a and 7b.

   

IN WITNESS WHEREOF the parties have duly executed this Service Agreement this First day of January 2010.

 

	
CUSTOMER

	  	
SER E PROVIDER

	  	  	  
	 	 	/s/ Sarav Patel
	Robert Schneiderman, CEO	 	Sarav Patel, CEO

 

 

 

3lantronix_8k-ex1001.htm

 

Exhibit 10.1

 

 

AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

THIS AMENDMENT to Loan and Security Agreement (this “Amendment”) is entered into this 18th day of August 2011 by and between Silicon Valley Bank (“Bank”) and Lantronix, Inc., a Delaware corporation (“Borrower”) whose address is 167 Technology Drive, Irvine, California  92618.

 

Recitals

 

A.           Bank and Borrower have entered into that certain Loan and Security Agreement with an Effective Date of May 23, 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           Limited Waiver Regarding Minimum Tangible Net Worth Defaults.  Borrower has advised Bank that Borrower has failed to comply with the Minimum Tangible Net Worth Financial Covenant set forth in Section 6.9(a) of the Loan Agreement for the compliance periods ending May 31, 2011 and June 30, 2011 (the “Existing TNW Defaults”).  Borrower hereby acknowledges the Existing TNW Defaults.  Bank and Borrower agree that the Borrower's Existing TNW Defaults are hereby waived.  It is understood by the parties hereto, however, that such waiver does not constitute a waiver of any other provision or term of the Loan Agreement or any related document, nor an agreement to waive in the future this covenant or any other provision or term of the Loan Agreement or any related document.

 

2.2           Modified Term Loan Interest Rate.  Section 2.3(a)(ii) of the Loan Agreement is hereby amended in its entirety to read as follows:

 

  

-1-

  

(ii)           Term Loan.  Subject to Section 2.3(b), the principal amount outstanding under the Term Loan shall accrue interest at a per annum rate equal to 2.50% percentage points above the Prime Rate, which interest shall be payable monthly.  Notwithstanding the foregoing, and subject to Section 2.3(b), if Borrower achieves two consecutive fiscal quarters of EBITDA greater than $1.00 (commencing with the fiscal quarter ending September 30, 2011 or any fiscal quarter ending thereafter), and only for so long as Borrower maintains EBITDA greater than $1.00 at the end of each subsequent fiscal quarter, then the principal amount outstanding under the Term Loan shall accrue interest at a per annum rate equal to 1.50% percentage points above the Prime Rate, which interest shall be payable monthly.  The foregoing decrease (or subsequent increase, if applicable) shall go into effect on the first day of the month immediately following Bank’s receipt, review and approval of Borrower’s financial statements evidencing that an adjustment is warranted.  If, based on the EBITDA as shown in Borrower’s financial statements there is to an increase in the interest rate, the interest rate increase may be put into effect by Bank as of the first day month immediately following the date on which such financial statements were due, even if the delivery of the financial statements is delayed.

 

2.3           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 the following (“Minimum Tangible Net Worth”):

 

	
Month Ending

	
Minimum TNW

	
July 31, 2011

	
$3,000,000

	
August 31, 2011

	
$3,000,000

	
September 30, 2011

	
$3,000,000

	
October 31, 2011

	
$3,000,000

	
November 30, 2011

	
$3,000,000

	
December 31, 2011

	
$3,000,000

	
January 31, 2012

	
$3,500,000

	
February 29, 2012

	
$3,500,000

	
March 31, 2012

	
$3,500,000

	
April 30, 2012 and each month ending thereafter

	
$4,500,000

 

  

-2-

  

 

plus, in each instance, (i) 50% of all consideration received after the date hereof for equity securities and subordinated debt of the Borrower, plus (ii) 50% of the Borrower’s net income in each fiscal quarter ending on or after June 30, 2012.  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.

 

2.4           Addition of EBITDA Definition.  The definition of “EBITDA” is hereby added, in alphabetical order, to Section 13.1 of the Loan Agreement and shall read as follows:

 

“EBITDA” shall mean (a) Net Income, plus (b) Interest Expense, plus (c) to the extend deducted in the calculation of Net Income, depreciation expense and amortization expense, plus (d) income tax expense.

 

2.5           Modified Exhibit E.  Exhibit E to the Loan Agreement is hereby amended in its entirety to read as set forth in Exhibit E attached hereto.

 

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.

 

  

-3-

  

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

 

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.

 

  

-4-

  

6.           Effectiveness.  This Amendment shall be deemed effective upon (a) the due execution and delivery to Bank of this Amendment by each party hereto, (b) Borrower’s payment of an amendment fee in an amount equal to $5,000, and (c) Bank’s receipt of the executed Amendment to Loan and Security Agreement (Exim Program) by and between Bank and Borrower of even date herewith.  The date that this Amendment is deemed effective is referred to herein as the “August 2011 Amendment Effective Date.”

 

[Signature page follows.]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

-5-

  

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

 

 

By:  /s/ Brian Lowry

Name:  /s/ Brian Lowry

Title:  Relationship Manager

 

	
 

Lantronix, Inc.

 

 

By:  /s/ James W. Kerrigan

Name:  James W. Kerrigan

Title:  Interim CFO

  

-6-

  

EXHIBIT E

COMPLIANCE CERTIFICATE

	
TO:     SILICON VALLEY BANK

	
Date:  _____________

	
FROM:      LANTRONIX, INC.

	  

The undersigned authorized officer of Lantronix, Inc. (“Borrower”) certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”), (1) Borrower is in complete compliance for the period ending _______________ with all required covenants except as noted below, (2) there are no Events of Default, (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank.  Attached are the required documents supporting the certification. The undersigned certifies that these are prepared in accordance with generally GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes.  The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered.  Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.

 

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

 

	  
	
Reporting Covenant

	
Required

	
Complies

	  	  	  
	
Monthly financial statements with

Compliance Certificate

	
Monthly within 30 days

	
Yes   No

	
Annual Operating Budget and Financial Projections

	
Within 30 days after start of Fiscal Year

	
Yes   No

	
10-Q, 10-K and 8-K

	
Within 5 days after filing with SEC

	
Yes   No

	
A/R & A/P Agings and Reconciliations

	
Monthly within 15 days

	
Yes   No

	
Transaction Report

	
Weekly and with each request for an Advance if Hard Credit Extensions outstanding equal or exceed $3,000,000; otherwise, monthly within 30 days

	
Yes   No

	  
	
The following Intellectual Property was registered after the Effective Date (if no registrations, state “None”)

____________________________________________________________________________

 

 

 

  

-7-

  

	
Financial Covenant

	
Required

	
Actual

	
Complies

	  	  	  	  
	
Maintain on a Monthly Basis:

	  	  	  
	
Minimum Tangible Net Worth

	
For each of the following months: 07/31/11, 08/31/11,

09/30/11, 10/31/11, 11/30/11 and

12/31/11: $3,000,000

plus (i) 50% of new equity and sub debt

 

For each of the following months:

01/31/12, 02/29/12 and

03/31/12: $3,500,000

plus (i) 50% of new equity and sub debt

 

For the ending 04/30/12 and each month ending

thereafter: $4,500,000

plus (i) 50% of new equity and sub debt plus

(ii) 50% of quarterly net income for

each quarter ending on or

after 06/30/12

 

	
$_______

	
Yes   No

	
Performance Pricing

	
Applies

	  	  	  
	
Applies only to the Term Loan and only after Borrower achieves EBITDA greater than $1.00

for two consecutive fiscal quarters (commencing with the fiscal quarter ending September 30, 2011

or any fiscal quarter ending thereafter) and only if Borrower continues   to achieve EBITDA greater than $1.00 for each subsequent fiscal quarter)

	  	
Yes   No

	
EBITDA > $1.00

	
Prime + 1.50%

 

	
Yes   No

	
EBITDA < $1.00

	
Prime + 2.50%

 

	
Yes   No

The following financial covenant analysis and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate.

 

 

  

-8-

  

 

The following are the exceptions with respect to the certification above:  (If no exceptions exist, state “No exceptions to note.”)

--- 

 

 

 

 

 

 

	
LANTRONIX, INC.

 

 

By:                                                       

Name:                                                   

Title:                                                      

 

	
BANK USE ONLY

 

Received by: _____________________

authorized signer

Date:                    _________________________

 

Verified: ________________________

authorized signer

Date:                    _________________________

 

Compliance Status:                                         Yes     No

  

-9-

  

Schedule 1 to Compliance Certificate

Financial Covenants of Borrower

Dated:           ____________________

Tangible Net Worth (Section 6.9(a))

	
Required Amount:

	
For months ending 07/31/11, 08/31/11, 09/30/11, 10/31/11, 11/30/11 and 12/31/11:  $3,000,000 plus (i) 50% of consideration for equity securities and subordinated debt;

For months ending 01/31/12, 02/29/12 and 03/31/12:  $3,500,000 plus (i) 50% of consideration for equity securities and subordinated debt;

For the month ending 04/30/12 and each month ending thereafter:  $4,500,000 plus (i) 50% of consideration for equity securities and subordinated debt plus (ii) 50% of Borrower’s quarterly net income for each quarter ending on or after 06/30/12

Actual:

	
A.

	
Aggregate value of total assets of Borrower and its Subsidiaries

	
$           

 

	
B.

	
Aggregate value of goodwill of Borrower and its Subsidiaries

	

$           

	
C.

	
Aggregate value of intangible assets of Borrower and its Subsidiaries

	

$           

	
D.

	
Aggregate value of investments of Borrower and its Subsidiaries consisting of minority investments in companies which investments are not publicly-traded

 

	

$           

 

	
E.

	
Aggregate value of any reserves not already deducted from assets

	

$           

	
F.

	
Aggregate value of liabilities of Borrower and its Subsidiaries (including all Indebtedness)

and current portion of Subordinated Debt permitted by Bank to be paid by Borrower (but no other Subordinated Debt)

	
 

 

$           

	
G.

	
Aggregate value of Indebtedness of Borrower subordinated to Borrower’s Indebtedness to Bank

	

$           

	
H.

	
Tangible Net Worth (line A minus line B minus line C minus line D minus line E minus line F plus line G)

	

$           

Is line H equal to or greater than Required Amount?

_____  No, not in compliance                                                      _____ Yes, in compliance

 

  

-10-

  

AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

(EXIM PROGRAM)

THIS AMENDMENT to Loan and Security Agreement (Exim Program) (this “Amendment”) is entered into this 18th day of August 2011 by and between Silicon Valley Bank (“Bank”) and Lantronix, Inc., a Delaware corporation (“Borrower”) whose address is 167 Technology Drive, Irvine, California  92618.

 

Recitals

 

A.           Bank and Borrower have entered into that certain Loan and Security Agreement (Exim Program) with an Effective Date of May 23, 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           Limited Waiver Regarding Minimum Tangible Net Worth Defaults.  Borrower has advised Bank that Borrower has failed to comply with the Minimum Tangible Net Worth Financial Covenant set forth in Section 6.9(a) of the Loan Agreement for the compliance periods ending May 31, 2011 and June 30, 2011 (the “Existing TNW Defaults”).  Borrower hereby acknowledges the Existing TNW Defaults.  Bank and Borrower agree that the Borrower's Existing TNW Defaults are hereby waived.  It is understood by the parties hereto, however, that such waiver does not constitute a waiver of any other provision or term of the Loan Agreement or any related document, nor an agreement to waive in the future this covenant or any other provision or term of the Loan Agreement or any related document.

 

  

-11-

  

2.2           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 the following (“Minimum Tangible Net Worth”):

 

	
Month Ending

	
Minimum TNW

	
July 31, 2011

	
$3,000,000

	
August 31, 2011

	
$3,000,000

	
September 30, 2011

	
$3,000,000

	
October 31, 2011

	
$3,000,000

	
November 30, 2011

	
$3,000,000

	
December 31, 2011

	
$3,000,000

	
January 31, 2012

	
$3,500,000

	
February 29, 2012

	
$3,500,000

	
March 31, 2012

	
$3,500,000

	
April 30, 2012 and each month ending thereafter

	
$4,500,000

 

plus, in each instance, (i) 50% of all consideration received after the date hereof for equity securities and subordinated debt of the Borrower, plus (ii) 50% of the Borrower’s net income in each fiscal quarter ending on or after June 30, 2012.  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.

 

2.3           Modified Exhibit E.  Exhibit E to the Loan Agreement is hereby amended in its entirety to read as set forth in Exhibit E attached hereto.

 

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.

 

 

  

-12-

  

 

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

 

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.

 

  

-13-

  

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, (b) Bank’s receipt of the executed Amendment to Loan and Security Agreement by and between Bank and Borrower of even date herewith with respect to the non-Exim Loan and Security Agreement by and between Bank and Borrower and (c) Borrower’s payment of all fees required by Exim Bank. The date that this Amendment is deemed effective is referred to herein as the “August 2011 Amendment Effective Date.”

 

 [Signature page follows.]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

-14-

  

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

 

 

By:  /s/ Brian Lowry

Name:  /s/ Brian Lowry

Title:  Relationship Manager

 

	
 

Lantronix, Inc.

 

 

By:  /s/ James W. Kerrigan

Name:  James W. Kerrigan

Title:  Interim CFO

 

 

 

 

 

 

 

 

 

  

-15-

  

EXHIBIT E

COMPLIANCE CERTIFICATE

	
TO:   SILICON VALLEY BANK

	
Date:  ___________

FROM:     LANTRONIX, INC.

The undersigned authorized officer of Lantronix, Inc. (“Borrower”) certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”), (1) Borrower is in complete compliance for the period ending _______________ with all required covenants except as noted below, (2) there are no Events of Default, (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank.  Attached are the required documents supporting the certification. The undersigned certifies that these are prepared in accordance with generally GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes.  The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered.  Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.

 

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

 

	  
	
Reporting Covenant

	
Required

	
Complies

	  	  	  
	
Monthly financial statements with

Compliance Certificate

	
Monthly within 30 days

	
Yes   No

	
Annual Operating Budget and Financial Projections

	
Within 30 days after start of Fiscal Year

	
Yes   No

	
10-Q, 10-K and 8-K

	
Within 5 days after filing with SEC

	
Yes   No

	
A/R & A/P Agings and Reconciliations

	
Monthly within 15 days

	
Yes   No

	
Transaction Report

	
Weekly and with each request for an Advance if Hard Credit Extensions outstanding equal or exceed $3,000,000; otherwise, monthly within 30 days

	
Yes   No

	  
	
The following Intellectual Property was registered after the Effective Date (if no registrations, state “None”)

____________________________________________________________________________

 

 

 

  

-16-

  

 

	
Financial Covenant

	
Required

	
Actual

	
Complies

	  	  	  	  
	
Maintain on a Monthly Basis:

	  	  	  
	
Minimum Tangible Net Worth

	
For each of the following months: 07/31/11, 08/31/11,

09/30/11, 10/31/11, 11/30/11 and

12/31/11: $3,000,000

plus (i) 50% of new equity and sub debt

 

For each of the following months:

01/31/12, 02/29/12 and

03/31/12: $3,500,000

plus (i) 50% of new equity and sub debt

 

For the ending 04/30/12 and each month ending

thereafter: $4,500,000

plus (i) 50% of new equity and sub debt plus

(ii) 50% of quarterly net income for

each quarter ending on or

after 06/30/12

 

	
$_______

	
Yes   No

The following financial covenant analysis and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate.

  

-17-

  

The following are the exceptions with respect to the certification above:  (If no exceptions exist, state “No exceptions to note.”)

 

 

 

	
LANTRONIX, INC.

 

 

By:                                                        

Name:                                                   

Title:                                                     

	
BANK USE ONLY

 

Received by: _____________________

authorized signer

Date:                    _________________________

 

Verified: ________________________

authorized signer

Date:                    _________________________

 

Compliance Status:                                         Yes     No

  

-18-

  

Schedule 1 to Compliance Certificate

Financial Covenants of Borrower

Dated:           ____________________

Tangible Net Worth (Section 6.9(a))

	
Required Amount:

	
For months ending 07/31/11, 08/31/11, 09/30/11, 10/31/11, 11/30/11 and 12/31/11:  $3,000,000 plus (i) 50% of consideration for equity securities and subordinated debt;

For months ending 01/31/12, 02/29/12 and 03/31/12:  $3,500,000 plus (i) 50% of consideration for equity securities and subordinated debt;

For the month ending 04/30/12 and each month ending thereafter:  $4,500,000 plus (i) 50% of consideration for equity securities and subordinated debt plus (ii) 50% of Borrower’s quarterly net income for each quarter ending on or after 06/30/12

Actual:

	
A.

	
Aggregate value of total assets of Borrower and its Subsidiaries

	

$           

	
B.

	
Aggregate value of goodwill of Borrower and its Subsidiaries

	

$           

	
C.

	
Aggregate value of intangible assets of Borrower and its Subsidiaries

	

$           

	
D.

	
Aggregate value of investments of Borrower and its Subsidiaries consisting of minority investments in companies which investments are not publicly-traded

 

	

$           

 

	
E.

	
Aggregate value of any reserves not already deducted from assets

	

$           

 

	
F.

	
Aggregate value of liabilities of Borrower and its Subsidiaries (including all Indebtedness)

and current portion of Subordinated Debt permitted by Bank to be paid by Borrower (but no other Subordinated Debt)

	
 

 

$           

	
G.

	
Aggregate value of Indebtedness of Borrower subordinated to Borrower’s Indebtedness to Bank

	

$           

	
H.

	
Tangible Net Worth (line A minus line B minus line C minus line D minus line E minus line F plus line G)

	

$           

Is line H equal to or greater than Required Amount?

	
_____  No, not in compliance

	
____ Yes, in compliance

 

 

 

 

 

 

 

 

 

 

-19-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00193-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00193-of-00352.parquet"}]]