Exhibit 10.6.2

 

Silicon Valley Bank

 

Amendment to Loan and Security Agreement

 

Borrower:

DPAC Technologies Corp.

 

 

Dated as of: August 30, 2004

 

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.                                      Revised Sections 2.1.1 and 2.12.
 Sections 2.1.1 and 2.1.2 of the Loan Agreement are hereby amended to read as
follows:

 

“2.1.1 Revolving Advances.

 

(a)                                  Bank will make Revolving Advances not
exceeding:  (i) the lesser of the Committed Revolving Line or the Borrowing
Base; minus (ii) the sum of (A) the amount of all outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit) and (B) all amounts
utilized for Cash Management Services.  Amounts borrowed under this Section may
be repaid and reborrowed during the term of this Agreement.  Revolving Advances
that are made subject to the terms and provisions of this clause (a-2) are also
referred to herein as the “Borrowing Base Advances.”

 

(b)                                 To obtain a Revolving Advance, Borrower must
notify Bank by facsimile or telephone by 12:00 p.m. Pacific time on the Business
Day the Revolving Advance is proposed to be made.  Borrower must promptly
confirm the notification by delivering to Bank the Payment/Advance Form, in the
form attached hereto as Exhibit B.  Bank will credit Revolving Advances to
Borrower’s deposit account.  Bank may make Revolving Advances under this
Agreement based on instructions from a Responsible Officer or his or her
designee or without instructions if any such Revolving Advances are necessary to
meet Obligations which have become due.  Bank may rely on any telephonic notice
given by a person whom Bank believes is a Responsible Officer or

 

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such Person’s designee, and Borrower hereby indemnifies Bank for any loss Bank
suffers due to any such reliance, other than that arising from the gross
negligence or willful misconduct of Bank.  Further, prior to the making of the
first Borrowing Base Advance, Borrower shall comply with the Collateral audit
and other applicable requirements set forth in Section 6.2 hereof.

 

(c)                                  The Bank’s undertaking to extend credit
accommodations under the Committed Revolving Line terminates on the Revolving
Maturity Date, when all Revolving Advances and related Obligations are
immediately due and payable.

 

2.1.2 Letters of Credit Sublimit.

 

Bank will issue or have issued letters of credit for Borrower’s account
(individually referred as a “Letter of Credit” and collectively referred to
herein as the “Letters of Credit”) not exceeding (i) the lesser of the Committed
Revolving Line or the Borrowing Base, minus (ii) the outstanding principal
balance of the Revolving Advances and minus (iii) the Cash Management Sublimit;
however, the face amount of outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit) may not exceed $500,000.  Each Letter of Credit
will have an expiry date of no later than 180 days after the Revolving Maturity
Date, but Borrower’s reimbursement obligation will be secured by cash on terms
acceptable to Bank at any time after the Revolving Maturity Date if the term of
this Agreement is not extended by Bank.  Borrower agrees to execute any further
documentation in connection with the Letters of Credit as Bank may reasonably
request. ”

 

2.                                      Revised Section 6.2(d).  Section 6.2(d)
of the Loan Agreement is hereby amended to read as follows:

 

“(d) Bank has the right to audit Borrower’s Accounts and other Collateral (with
results determined to be acceptable to Bank in accordance with the good faith
business judgment of Bank) at Borrower’s expense, but the audits will be
conducted no more often than once every 12 months unless an Event of Default has
occurred and is continuing, provided that, in any event, such an audit (with
results determined to be acceptable to Bank in accordance with the good faith
business judgment of Bank) shall be conducted upon the earlier to occur of (i)
the Borrower’s request for a Revolving Advance when first made; or (ii) the date
that is six (6) months from the date hereof; and, in any event, any such first
audit shall be promptly initiated and completed (with results satisfactory to
Bank) prior to the making of any Borrowing Base Advance.

 

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

 

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owing to Bank to the extent they are not otherwise categorized as Current
Liabilities of Borrower, of at least 1.25 to 1.00.”

 

4.                                      Revised Definitions.  It is hereby
agreed that the defined terms of “Committed Revolving Line” and “Revolving
Maturity Date” shall be deemed modified as follows:

 

“Committed Revolving Line” is an aggregate amount of advance availability
hereunder of up to $2,000,000.

 

“Revolving Maturity Date” is December 3, 2004.

 

5.                                      Fee.  Borrower shall pay to Bank a
facility fee in connection herewith in the amount of $1,875, which shall be in
addition to interest and to all other amounts payable under the Loan Agreement,
and which shall not be refundable.

 

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

 

6.1                                 Executed Counterparts.  Borrower shall
deliver to Bank fully executed and authorized counterparts of this Amendment.

 

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

 

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

 

8.                                      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.

 

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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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