Item 1.01 Entry into a Material Definitive Agreement
On July 30, 2021, DecisionPoint
Systems, Inc., a Delaware corporation (the “Company”) entered into a Loan and Security Agreement (the “Loan Agreement”)
with MUFG Union Bank, National Association (the “Bank”). The Loan Agreement provides for a revolving line of credit of up
to $9.0 million with the Company’s obligations being secured by a security interest in substantially all of the Company’s
assets. Loans extended to the Company under the Loan Agreement are scheduled to mature on July 31, 2024 (the “Maturity Date”).
Interest and Fees
Loans under the Loan Agreement
with an outstanding balance of at least $150,000 bear interest, at the Company’s option, at a base interest rate equal to the London
Interbank Offered Rate (“LIBOR”) plus 2.50% or a base rate equal to an index offered by the Bank for interest period selected
and is payable at the on the last day of each month commencing on August 31, 2021. If the LIBOR rate is selected, the interest rate on
the loans adjusts at the end of each LIBOR rate period (1, 2, 3, 6, or 12 month term) selected by the Company. All other loan amounts
bear interest at a rate equal to an index rate determined by the Bank, which shall vary when the index rate changes. The Company has a
right to prepay variable interest rate loans, in whole or in part at any time, without penalty or premium. Amounts outstanding with a
base interest rate may be prepaid in whole or in part provided the Company has given the Bank written notice of at least five days prior
to prepayment and pays a prepayment fee. At any time prior to the maturity date, the Company may borrow, repay and reborrow amounts under
the Loan Agreement, subject to the prepayment terms, and as long as the total outstanding does not exceed $9.0 million. The Company will
pay a commitment fee of 0.25% per year, payable quarterly and in arrears, on any unused portion of the line of credit.
Covenants
Under the Loan Agreement,
the Company is subject to a variety of customary affirmative and negative covenants, including that the Company (i) achieve a net profit
of not less than $1.0 million at the end of each fiscal year, (ii) maintain a ratio of total debt to EBITDA of not greater than 3.0:1.0
measured at the end of each quarter, (iii) not realize a net loss for more than two consecutive quarters. The Loan Agreement also prohibits
the Company from, or otherwise imposes restrictions on the Company with respect to, among other things, liquidating, dissolving, entering
into any consolidation, merger, division, partnership, or other combination, selling or leasing a majority of the Company’s assets
or business or purchase or lease all or the greater part of the assets or business of another entity or person.
Events of Default
Events of default under the
Loan Agreement include, among other things, failure to pay principal, interest and fees; covenant defaults; material inaccuracy of representations
and warranties; bankruptcy events with respect to the Company; actual or asserted invalidity of any of the loan documents; or a change
of control of the Company.
The foregoing descriptions
of the Loan Agreement do not purport to be complete and are subject to, and qualified in their entirety by reference to the Loan Agreement,
the Security Agreement and the Commercial Promissory Note, copies of which are filed herewith as Exhibits 10.1, 10.2 and 10.3, respectively,
and incorporated herein by reference.