LANTRONIX INC: Entering into a Material Definitive Agreement, Termination of a Material Definitive Agreement, Creation of a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant, Financial Statements and Exhibits (Form 8-K)

Section 1.01 Entering into a Material Definitive Agreement.

At January 20, 2022, Lantronix, Inc. (the “Company”) entered into a rental agreement (the “Lease”) with Jet 55 LLC Property Owner (The Landlord”). Pursuant to the Lease, the Company will lease approximately 65,983 square feet in a building located at 12755 national road 55, Plymouth, Minnesota (the “Premises”) to house the operations of the Transition Networks businesses purchased from Communications Systems, Inc. in August 2021 and serve as a central warehouse and shipping hub for all United States– company based in Lantronix.

The Company will take possession of the Premises from the date of the Lease. Starting on May 1, 2022 (the “Rent Start Date”), the initial base rent payable under the Lease will be $46,737.96 per month (with reduction of the first three months’ rent), subject to annualized rent increases of three percent (3%) over the term of the Lease. The initial term of the Lease (the “Initial Term”) begins on the date of the Lease and ends on the last day of the 123rd full calendar month after the Lease Start Date, or July 31, 2032. The total base rent payable under the lease during the initial term is approximately $6.5 million. The Company is also required to pay as additional rent its proportionate share of the landlord’s operating expenses, including property taxes.

The Lease contains an option for the Company to extend the Lease for an extension period of 60 months at the net rent rate for the last year of the Initial Term or the net rent then in effect, as determined in accordance with the Lease, as well as a right of first offer for the Company on any space adjacent to the Premises during the Initial Term. The Company also has the right to terminate the Lease at the end of the 87th full calendar month after the Lease Start Date (the “Early Termination Date”) by giving written notice at least six months prior to the Lease Start Date. early termination and the payment of a termination indemnity. The lease obliges the company to pay the owner a $84,806 security deposit to secure the Company’s obligations under the Lease. In addition, the Lessor will reimburse the Company for its actual disbursements for certain leasehold improvements to the Premises, with compensation of up to $1,500,000 payable in three installments in accordance with the lease. The Company has entered into a standard subordination, non-disruption and covenant agreement with the owner’s lender.

The above summary of the lease is subject to and qualified in its entirety by the full text of the lease, a copy of which is filed as Exhibit 10.1 to this current report on Form 8-K and is incorporated herein by reference.

Section 1.02 Termination of a Material Definitive Agreement.

At January 20, 2022the company, Lantronix holding companyLantronix Canada,
ULC and Lantronix Technologies Canada (Taiwan) Ltd. and TNI (each, a “Borrower” and collectively, the “Borrowers”) have terminated this Mezzanine Loan and Guarantee Agreement, dated August 2, 2021with SVB Innovation Credit Fund VIII, LP (the “Lender”), under which the Lender financed a $12,000,000
term loan facility (the “mezzanine credit facility”). Advances under the mezzanine credit facility bore interest at LIBOR or prime rate, at the option of the Company, plus a margin of 9.00% with a floor of 1.00% in the case of LIBOR and a margin of 7.50% with a floor of 3.50% in the case of the prime rate. Borrowers were also required to pay other credit charges customary for credit facilities of similar size and type.

The Mezzanine Credit Facility required the Borrowers and their subsidiaries, on a consolidated basis, to comply with a maximum senior leverage ratio, a minimum fixed charge coverage ratio and a minimum liquidity test. In addition, the Mezzanine Credit Facility contained customary representations and warranties, positive and negative covenants, including covenants that limit or restrict the ability of the Borrower and its Subsidiaries to incur liens, incur indebtedness, dispose of assets, make investments, make certain limited payments, merge or consolidate and enter into certain speculative hedging agreements. The mezzanine credit facility was subject to a number of events of default, including, among others, payment defaults, breaches of debt covenants, cross-defaults to other material indebtedness, bankruptcy and insolvency defaults. and significant lapses in judgment. If an event of default had occurred (subject, in some cases, to specified grace periods), the principal, premium, if any, interest and any other monetary obligation on all then unpaid amounts of the facility mezzanine loan would have become due and payable immediately.

  2

The Company paid a total of $12,152,500 in connection with the termination to fully repay the mezzanine credit facility. There was no obligation to pay a termination fee.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under a

          Off-Balance Sheet Arrangement of a Registrant.

The information disclosed in Section 1.01 of this Current Report on Form 8-K is incorporated by reference into this Section 2.03.

Item 9.01 Financial statements and supporting documents.

(d) Exhibits



Exhibit
Number    Description
10.1        Lease dated January 20, 2022 between Lantronix, Inc. and Jet 55 Property
          Owner LLC
104       Cover Page Interactive Data File (embedded within the Inline XBRL document).




















































  3

© Edgar Online, source Previews