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Exhibit 10.3
 
FIRST AMENDMENT
 
TO
 
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 
THIS FIRST AMENDMENT to Second Amended and Restated Loan and Security Agreement
(this “Amendment”) is entered into this 5th day of March, 2012, by and between
Silicon Valley Bank (“Bank”) and ACTIVE POWER, INC., a Delaware corporation
(“Borrower”), with its principal place of business at 2128 W Braker Lane BK 12,
Austin, TX 78758.
 
Recitals
 
A.           Bank and Borrower have entered into that certain Second Amended and
Restated Loan and Security Agreement dated as of August 5, 2010 (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 to
consent to a transaction with an Affiliate of Borrower.
 
D.           Bank has agreed to so amend certain provisions of the Loan
Agreement, but only to the extent, in accordance with the terms, subject to the
conditions and in reliance upon the representations and warranties set forth
below.
 
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           Section 7.7 (Transactions with Affiliates).  Section 7.7 is
amended in its entirety and replaced with the following:
 
“7.7           Transactions with Affiliates.  Enter into or permit to exist any
material transaction with any Affiliate of Borrower, except for transactions
that are in the ordinary course of Borrower’s business, upon fair and reasonable
terms that are no less favorable to Borrower than would be obtained in an arm’s
length transaction with a non-affiliated Person; provided that the foregoing
restriction shall not apply to (i) any transaction between Borrower and any of
its Subsidiaries or between any Subsidiaries that is not otherwise prohibited by
this Agreement, (ii) reasonable and customary fees paid to members of the board
of directors of Borrower and its Subsidiaries, (iii) compensation arrangements
and benefit plans for officers and other employees of Borrower and its
Subsidiaries entered into or maintained in the ordinary course of business and
(iv) transactions pursuant to the Securities Purchase Agreement.
 
 
 

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2.2           Section 13 (Definitions).  The following term and its definition
are hereby added to Section 13.1:
 
“Securities Purchase Agreement” is that certain Securities Purchase Agreement by
and among Borrower and the Purchasers party thereto dated as of March 5, 2012.
 
2.3           Bank hereby agrees that any Letters of Credit or Cash Management
Services that are currently required to be cash secured pursuant to the terms of
the Agreement may remain not cash secured until March 23, 2012, at which time
any such Letters of Credit or Cash Management Services that are required to be
cash secured pursuant to the terms of the Agreement at such time shall be
immediately cash secured.
 
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.
 
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;
 
 
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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.
 
6.           Effectiveness.  This Amendment shall be deemed effective upon the
due execution and delivery to Bank of this Amendment by each party hereto.
 
[Signature page follows.]

 
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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
 
Active Power, Inc.
          By:     By:
 
  Name:
  /s/  Priya Iyer
  Name:
/s/ John K. Penver
  Title:
 Relationship Manager
  Title:
 Chief Financial Officer
 

 
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