EXHIBIT 10.6.1

 

Silicon Valley Bank

 

Amendment to Loan and Security Agreement

 

Borrower:             DPAC Technologies Corp.

Dated:                    June 25, 2003

 

THIS AMENDMENT TO LOAN AND SECURITY AGREEMENT (“Amendment”) is entered into
between SILICON VALLEY BANK (“Bank”) and the borrower named above (the
“Borrower”).

 

Reference is made to the Loan and Security Agreement between them dated August
30, 2002, as amended from time to time (the “Loan Agreement”).  Capitalized
terms used but not defined in this Amendment, shall have the meanings set forth
in the Loan Agreement.

 

Borrower and Bank desire to modify the terms of the Loan Agreement and the
parties agree to do so as follows:

 

1.             New Section 2.1.4.  A new section is hereby added to the Loan
Agreement to follow immediately after Section 2.1.3, which new section shall be
entitled “2.1.4.  Term Loan Advances”, and which shall read as follows:

 

“2.1.4.    Term Loan Advances.

 

“(a)         Through February 28, 2004, Bank will make advances (individually
referred to herein as an “Term Loan Advance” and collectively as the “Term Loan
Advances”) in an aggregate amount not to exceed Four Million Dollars
($4,000,000).

(b)           Interest accrues from the date of the making of each Term Loan
Advance at the applicable interest rates as set forth in Section 2.3(a) hereof
and is payable as set forth therein beginning on the first possible interest
payment date following the making of such Term Loan Advance.  Borrower shall
repay the aggregate amount of the Term Loan Advances to Bank in forty-eight (48)
equal monthly installments of principal beginning on March 1, 2004 and
continuing on the first day of each of the succeeding forty-seven (47) months
thereafter (such final installment payment date for the Term Loan Advances is
referred to herein as the “ Term Loan Maturity Date”), with the understanding
that on the Term Loan Maturity Date all Term Loan Advances and all related
Obligations shall be repaid in full. Term Loan Advances when repaid may not be
reborrowed.

(c)           To obtain a Term Loan Advance, Borrower must notify Bank (the
notice is irrevocable) by facsimile no later than 12:00 p.m. Pacific time one
Business Day before the day on which the Term Loan Advance is to be made.  The
notice in the form of Exhibit B (Payment/Advance Form) must be signed by a
Responsible Officer or designee.  The proceeds of each Term Loan Advances shall
be used for general corporate purposes.

 

2.             Revised Section 2.3(a) and Section 2.3(b).  Subsections (a) and
(b) of Section 2.3 are hereby amended and restated to read, respectively, as
follows:

 

(a)           Interest Rate.  (i) Revolving Advances accrue interest on the
outstanding principal balance at a per annum rate equal to the Prime Rate; and
(ii) Term Loan Advances accrue interest on the outstanding principal balance at
a per annum rate equal to the Prime Rate plus the Applicable Margin (as defined
below).  After an Event of Default, Obligations accrue interest at five (5)
percentage points above the rate effective immediately before the Event of
Default. The interest rate increases or

 

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decreases when the Prime Rate changes.  Interest is computed on a 360 day year
for the actual number of days elapsed.

 

As used herein the term “Applicable Margin” shall mean and refer to one-half of
one percentage point (.50%), provided if a Term Loan Advance in the amount of
$4,000,000 is made concurrently with the execution and delivery of the Amendment
to Loan and Security Agreement dated June 25, 2003 by and between Borrower and
Bank, then the Applicable Margin shall be one-quarter of one percentage point
(.25%), provided, further, if a Term Loan Advance of $4,000,000 is not so made
but a Term Loan Advance of at least $2,000,000 is made concurrently therewith,
then the Applicable Margin shall be three-eighths of one percentage point
(.375%).

 

(b)           Payments.  Interest due on the Committed Revolving Line is payable
on the 25th day of each month.  Interest due on the Term Loan Advances is
payable on the 1st day of each month.  Bank may debit any of Borrower’s deposit
accounts for principal and interest payments owing or any amounts Borrower owes
Bank (Bank will promptly notify Borrower when it debits Borrower’s accounts and
these debits are not set-offs).  Borrower may, however, provide written notice
to Bank that it would like to switch from such a payment procedure to a written
billing notification, and Bank agrees to implement such a change within a
reasonable period of time after receipt of Borrower written request therefor. 
Payments received after 12:00 noon Pacific time are considered received at the
opening of business on the next Business Day.  When a payment is due on a day
that is not a Business Day, the payment is due the next Business Day and
additional fees or interest accrue.  ”

 

3.             Revised Section 6.7.  Section 6.7 of the Loan Agreement is hereby
amended to read as follows:

 

“6.7 Financial Covenant.

Borrower will maintain at all times and tested as of the last day of each month
a ratio of (A) Quick Assets to (B) Current Liabilities plus any other
Obligations of Borrower owing to Bank to the extent they are not otherwise
categorized as Current Liabilities of Borrower, of at least 1.50 to 1.00.”

 

4.             Revised Definitions.  It is hereby agreed that the defined term
of “Credit Extension” shall also include, without limitation, all Term Loan
Advances, and that the defined term “Obligations” shall include all indebtedness
and other obligations arising in connection with the Term Loan  Advances.

5.             New Definitions.  Section 13 of the Loan Agreement is hereby
amended by adding the defined terms of “ Term Loan Advance(s)” and “ Term Loan
Maturity Date” thereto and inserting such definitions in their appropriate
alphabetical order in such Section:

“ ‘Term Loan Advance(s)’ shall have the meaning set forth in Section 2.1.4
hereof.

 

‘Term Loan Maturity Date’ shall have the meaning set forth in Section 2.1.2A
hereof.

 

6.             Fee.  Borrower shall pay to Bank a facility fee in connection
herewith in the amount of $15,000 , which shall be in addition to interest and
to all other amounts payable under the Loan Agreement, and which shall not be
refundable, provided, however, such fee shall be eliminated entirely if a Term
Loan Advance in the amount of $4,000,000 is made concurrently herewith,
provided, further, if a Term Loan Advance of $4,000,000 is not made but a Term
Loan Advance of at least $2,000,000 is made, then no fee shall be payable but,
instead, the Borrower agrees to pay the Unused Line Fee (as defined below)
during the term of the Agreement.

 

Borrower hereby agrees to pay to Bank the Unused Line Fee for term of the Loan
Agreement, if such fee is applicable based on the above provision.  As used
herein the term “Unused Line Fee” shall be an amount equal to 0.375% per annum
multiplied by the difference between $4,000,000 and the average daily principal
balance of the Term Loan Advances outstanding during any, quarter prior to the
later to occur of the Term Loan Maturity Date or the date when any Term Loan
Advances remain outstanding (the “Final Payment Date”), which unused line fee
shall be computed and paid quarterly, in arrears, on the first day of the
following quarter, or otherwise payable on

 

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the Final Payment Date (if such date is not the first day of a quarter) on a pro
rata basis for such period then ending.

 

7.             Conditions to Effectiveness.  The following shall be conditions
precedent to the effectiveness of this Agreement:

 

7.1           Executed Counterparts; Certified Resolutions.  Borrower shall
deliver to Bank fully executed and authorized counterparts of this Amendment
together with certified corporate resolutions relating hereto that authorize the
execution and delivery of this Amendment and the incurring of the obligations
referenced herein;

 

7.2           Payment of Fee.  Borrower shall pay to Bank the fee referred to in
Section 6 above, if applicable.

8.             Representations True.  Borrower represents and warrants to Bank
that all representations and warranties in the Loan Agreement, as amended
hereby, are true and correct.

 

9.             General Provisions.  The amendments and modifications set forth
in this Agreement shall be deemed effective as of the date hereof when all
conditions to effectiveness have been satisfied, as Bank has determined.  This
Amendment, the Loan Agreement, any prior written amendments to the Loan
Agreement signed by Bank and the Borrower, and the other written documents and
agreements between Bank and the Borrower set forth in full all of the
representations and agreements of the parties with respect to the subject matter
hereof and supersede all prior discussions, representations, agreements and
under­standings between the parties with respect to the subject hereof.  Except
as herein expressly amended, all of the terms and provisions of the Loan
Agreement, and all other documents and agreements between Bank and the Borrower
shall continue in full force and effect and the same are hereby ratified and
confirmed.  This Agreement may be executed in any number of counterparts, which
when taken together shall constitute one and the same agreement.

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date first above written.

 

 

Borrower:

Bank:

 

 

 

 

DPAC TECHNOLOGIES CORP.

SILICON VALLEY BANK

 

 

 

 

 

 

 

By

 

 

By

 

 

 

 

 

 

Title

 

 

Title

 

 

 

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