Exhibit 10.1


 


TWELFTH
AMENDMENT

TO

LOAN AND SECURITY AGREEMENT


 


THIS TWELFTH AMENDMENT to Loan and Security Agreement (this “Amendment”)
is entered into as of this 29th day of May, 2009, by and between SILICON VALLEY
BANK (“Bank”) and XPLORE TECHNOLOGIES CORPORATION OF AMERICA, a Delaware
corporation (“Borrower”) whose address is 14000 Summit Drive, Suite 900,
Austin, Texas 78728.


 


RECITALS


 


A.            Bank
and Borrower have entered into that certain Loan and Security Agreement dated
as of September 15, 2005, as amended by that certain First Amendment to
Loan and Security Agreement by and between Bank and Borrower dated as of November 28,
2005, that certain Letter amending Loan and Security Agreement by and between
Bank and Borrower dated as of March 30, 2006, that certain Second
Amendment to Loan and Security Agreement by and between Bank and Borrower dated
as of May 15, 2006, that certain Third Amendment to Loan and Security
Agreement by and between Bank and Borrower dated as of February 28, 2007,
that certain Fourth Amendment to Loan and Security Agreement by and between
Bank and Borrower dated as of March 28, 2008, that certain Fifth Amendment
to Loan and Security Agreement by and between Bank and Borrower dated as of May 27,
2008, that certain Sixth Amendment to Loan and Security Agreement by and
between Bank and Borrower dated as of August 6, 2008, that certain Seventh
Amendment to Loan and Security Agreement by and between Bank and Borrower dated
as of August 29, 2008, that certain Eighth Amendment to Loan and Security
Agreement by and between Bank and Borrower dated as of September 30, 2008,
that certain Ninth Amendment to Loan and Security Agreement by and between Bank
and Borrower dated as of March 30, 2009, that certain Tenth Amendment to
Loan and Security Agreement by and between Bank and Borrower dated as of April 10,
2009 and that certain Eleventh Amendment to Loan and Security Agreement between
Bank and Borrower dated as of April 24, 2009 (as the same may from time to
time be further 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 extend the maturity date
and make certain other changes.


 


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 5.2 (Insurance) The following is hereby added to the end of Section 5.2
of the Loan Agreement:


 


“Not later than June 30, 2009 and all times
thereafter, Borrower shall obtain and maintain foreign credit insurance
acceptable to Bank with respect to all foreign Accounts.”


 

















 


2.2          Section 8 (Definitions).  The following
defined terms in Section 8 of the Loan Agreement are either added or
amended and restated in their entirety to read as follows:


 


“Deferred Revenue”
is all amounts received or invoiced in advance of performance under contracts
and not yet recognized as revenue.


 


“Formula Loans”
means any Loans made with regards to the Borrowing Base.


 


“Non-Formula Amount” means an amount equal to the lesser of (i) $1,500,000
and (ii) the face amount of the Supporting Letter of Credit.


 


“Non-Formula Loans” means Loans in excess of the Borrowing Base up to
the Non-Formula Amount made without regard to the Borrowing Base.


 


“Prime Rate” is
Bank’s most recently announced “prime rate,” even if it is not Bank’s lowest
rate.


 


“Supporting Letter of
Credit” means that certain irrevocable standby letter of credit
issued by the Bank of America on May 29, 2009, or a letter of credit
issued by another bank rated A2 or better by Moody’s Investors Service, Inc.,
for account of the Supporting Letter of Credit Applicants and naming Bank as
beneficiary, in the face amount of $1,000,000 (as amended, supplemented,
modified or extended from time to time).


 


“Supporting Letter of
Credit Applicants” means, collectively, Philip Sassower and Susan
Sassower, individuals, as applicants under the Supporting Letter of Credit.


 


2.3          Schedule Section 1 (CREDIT LIMIT (Section 1.1)). 
The first three paragraphs and the definitions of Section 1 of the
Schedule to the Loan Agreement (up until the definition of “Letter of Credit
Sublimit”) are hereby amended and restated to read as follows:


 


“An amount not to exceed (a) the lesser of (i) $5,000,000
or (ii) the
amount available under the Borrowing Base
plus the Non-Formula Amount, minus (b) the amount of all
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit), minus (c) any amounts used under the Cash Management Services
Sublimit, and minus (d) the outstanding principal balance of any Loans.”


 


“Borrowing Base”
is (a) 80% of Eligible Domestic Accounts plus (b) 80% of Eligible
Foreign Accounts (not to exceed 35% of all Eligible Accounts) all as determined
by Bank from Borrower’s most recent Transaction Report; provided, however, that
Bank may decrease the foregoing amounts or percentages in its good faith
business judgment based on events, conditions, contingencies, or risks which,
as determined by Bank, may adversely affect Collateral.”


 


“Eligible Accounts”
means Eligible Domestic Accounts and Eligible Foreign Accounts


 


“Eligible Domestic Accounts”
means Accounts which (i) arise in the ordinary course of Borrower’s
business, (ii) that meet all Borrower’s representations and warranties in Section 4.1,
(iii) that are billed and payable inside of the United States and (d) with
respect to which, the Account Debtor has its principal place of business in the
United States or Canada.  Bank reserves
the right upon prior written notice to Borrower at any time after May 29,
2009 to adjust any of the criteria set forth below and to establish new
criteria in its good faith business judgment. 
Unless Bank otherwise agrees in writing using its good faith business
judgment, Eligible Domestic Accounts shall not include:


 


(a)           Accounts that the
Account Debtor has not paid within 90 days of invoice date regardless of
invoice payment period terms;


 


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(b)           Accounts owing from an Account Debtor, 50% or more of
whose Accounts have not been paid within 90 days of invoice date;


 


(c)           Accounts owing from an
Account Debtor which does not have its principal place of business in the
United States or Canada;


 


(d)           Accounts billed and/or
payable outside of the United States;


 


(e)           Accounts owing from an
Account Debtor to the extent that Borrower is indebted or obligated to the
Account Debtor (as creditor, lessor, supplier or otherwise - sometimes called “contra”
accounts, accounts payable, customer deposits or credit accounts), with the
exception of customary credits, adjustments and/or discounts given to an
Account Debtor by Borrower in the ordinary course of its business;


 


(f)            Accounts for which the
Account Debtor is Borrower’s Affiliate, officer, employee, or agent;


 


(g)           Accounts with credit
balances over 90 days from invoice date;


 


(h)           Accounts owing from an
Account Debtor, including Affiliates, whose total obligations to Borrower
exceed 25% of all Accounts, for the amounts that exceed that percentage, unless
Bank approves in writing;


 


(i)            Accounts owing from an
Account Debtor which is a United States government entity or any department,
agency, or instrumentality thereof unless Borrower has assigned its payment
rights to Bank and the assignment has been acknowledged under the Federal
Assignment of Claims Act of 1940, as amended;


 


(j)            Accounts for
demonstration or promotional equipment, or in which goods are consigned, or
sold on a “sale guaranteed”, “sale or return”, “sale on approval”, or other
terms if Account Debtor’s payment may be conditional;


 


(k)           Accounts owing from an
Account Debtor that has not been invoiced or where goods or services have not
yet been rendered to the Account Debtor (sometimes called memo billings or pre-billings);


 


(l)            Accounts subject to
contractual arrangements between Borrower and an Account Debtor where payments
shall be scheduled or due according to completion or fulfillment requirements
where the Account Debtor has a right of offset for damages suffered as a result
of Borrower’s failure to perform in accordance with the contract (sometimes
called contracts accounts receivable, progress billings, milestone billings, or
fulfillment contracts);


 


(m)          Accounts owing from an
Account Debtor the amount of which may be subject to withholding based on the
Account Debtor’s satisfaction of Borrower’s complete performance (but only to
the extent of the amount withheld; sometimes called retainage billings);


 


(n)           Accounts subject to
trust provisions, subrogation rights of a bonding company, or a statutory
trust;


 


(o)           Accounts owing from an
Account Debtor that has been invoiced for goods that have not been shipped to
the Account Debtor unless Bank, Borrower, and the Account Debtor have entered
into an agreement acceptable to Bank in its sole discretion wherein the Account
Debtor acknowledges that (i) it has title to and has ownership of the
goods wherever located, (ii) a bona fide sale of the goods has occurred,
and (iii) it owes payment for such goods in accordance with invoices from
Borrower (sometimes called “bill and hold” accounts);


 


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(p)           Accounts owing from an
Account Debtor with respect to which Borrower has received Deferred Revenue
(but only to the extent of such Deferred Revenue);


 


(q)           Accounts for which the
Account Debtor has not been invoiced;


 


(r)            Accounts that
represent non-trade receivables or that are derived by means other than in the
ordinary course of Borrower’s business;


 


(s)           Accounts for which
Borrower has permitted Account Debtor’s payment to extend beyond 90 days;


 


(t)            Accounts subject to
chargebacks or others payment deductions taken by an Account Debtor (but only
to the extent the chargeback is determined invalid and subsequently collected
by Borrower);


 


(u)           Accounts in which the
Account Debtor disputes liability or makes any claim (but only up to the
disputed or claimed amount), or if the Account Debtor is subject to an
Insolvency Proceeding, or becomes insolvent, or goes out of business; and


 


(v)           Accounts for which Bank
in its good faith business judgment determines collection to be doubtful..


 


“Eligible Foreign Accounts”
means Accounts which (i) arise in the ordinary course of Borrower’s
business, (ii) that meet all Borrower’s representations and warranties in Section 4.1,
(iii) that are billed and payable outside of the United States, (d) with
respect to which, the Account Debtor has its principal place of business
outside of the United States or Canada and (e) and that are (i) covered
in full by credit insurance satisfactory to Bank, less any deductible, (ii) supported
by letter(s) of credit acceptable to Bank, (iii) supported by a
guaranty from the Export-Import Bank of the United States, or (iv) that
Bank otherwise approves of in writing. 
Bank reserves the right upon prior written notice to Borrower at any
time after May 29, 2009 to adjust any of the criteria set forth below and
to establish new criteria in its good faith business judgment.  Unless Bank otherwise agrees in writing using
its good faith business judgment, Eligible Foreign Accounts shall not include:


 


(a)           Accounts that the
Account Debtor has not paid within 90 days of invoice date regardless of
invoice payment period terms;


 


(b)           Accounts owing from an Account Debtor, 25% or more of
whose Accounts have not been paid within ninety (90) days of invoice date;


 


(c)           Accounts owing from an
Account Debtor to the extent that Borrower is indebted or obligated to the
Account Debtor (as creditor, lessor, supplier or otherwise - sometimes called “contra”
accounts, accounts payable, customer deposits or credit accounts), with the
exception of customary credits, adjustments and/or discounts given to an
Account Debtor by Borrower in the ordinary course of its business;


 


(d)           Accounts for which the
Account Debtor is Borrower’s Affiliate, officer, employee, or agent;


 


(e)           Accounts with credit
balances over 90 days from invoice date;


 


(f)            Accounts owing from an
Account Debtor, including Affiliates, whose total obligations to Borrower exceed
25% of all Accounts, for the amounts that exceed that percentage, unless Bank
approves in writing;


 


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(g)           Accounts owing from an
Account Debtor which is a United States government entity or any department,
agency, or instrumentality thereof unless Borrower has assigned its payment
rights to Bank and the assignment has been acknowledged under the Federal
Assignment of Claims Act of 1940, as amended;


 


(h)           Accounts for
demonstration or promotional equipment, or in which goods are consigned, or
sold on a “sale guaranteed”, “sale or return”, “sale on approval”, or other
terms if Account Debtor’s payment may be conditional;


 


(i)            Accounts owing from an
Account Debtor that has not been invoiced or where goods or services have not
yet been rendered to the Account Debtor (sometimes called memo billings or
pre-billings);


 


(j)            Accounts subject to
contractual arrangements between Borrower and an Account Debtor where payments
shall be scheduled or due according to completion or fulfillment requirements
where the Account Debtor has a right of offset for damages suffered as a result
of Borrower’s failure to perform in accordance with the contract (sometimes
called contracts accounts receivable, progress billings, milestone billings, or
fulfillment contracts);


 


(k)           Accounts owing from an
Account Debtor the amount of which may be subject to withholding based on the
Account Debtor’s satisfaction of Borrower’s complete performance (but only to
the extent of the amount withheld; sometimes called retainage billings);


 


(l)            Accounts subject to
trust provisions, subrogation rights of a bonding company, or a statutory
trust;


 


(m)          Accounts owing from an
Account Debtor that has been invoiced for goods that have not been shipped to
the Account Debtor unless Bank, Borrower, and the Account Debtor have entered
into an agreement acceptable to Bank in its sole discretion wherein the Account
Debtor acknowledges that (i) it has title to and has ownership of the
goods wherever located, (ii) a bona fide sale of the goods has occurred,
and (iii) it owes payment for such goods in accordance with invoices from
Borrower (sometimes called “bill and hold” accounts);


 


(n)           Accounts owing from an
Account Debtor with respect to which Borrower has received Deferred Revenue (but
only to the extent of such Deferred Revenue);


 


(o)           Accounts for which the
Account Debtor has not been invoiced;


 


(p)           Accounts that represent
non-trade receivables or that are derived by means other than in the ordinary
course of Borrower’s business;


 


(q)           Accounts for which
Borrower has permitted Account Debtor’s payment to extend beyond 90 days;


 


(r)            Accounts subject to
chargebacks or others payment deductions taken by an Account Debtor (but only
to the extent the chargeback is determined invalid and subsequently collected
by Borrower);


 


(s)           Accounts in which the
Account Debtor disputes liability or makes any claim (but only up to the
disputed or claimed amount), or if the Account Debtor is subject to an
Insolvency Proceeding, or becomes insolvent, or goes out of business; and


 


(t)            Accounts for which
Bank in its good faith business judgment determines collection to be doubtful.


 


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2.4          Schedule Section 2 (INTEREST
RATE (Section 1.2)).  Section 2
of the Schedule is amended and restated in its entirety to read as follows:


 


“(a)         Interest Rates.


 


(i)            Formula Loans. 
Subject to paragraph (b) below, the principal amount of Formula
Loans outstanding shall accrue interest at a floating per annum rate equal to
the greater of (i) 6.25% or (ii) 2.25% above the Prime Rate.


 


(ii)           Non-Formula Loans. 
Subject to paragraph (b) below, the principal amount of Non-Formula
Loans outstanding shall accrue interest at a floating per annum rate equal to
the greater of (i) 6.25% or (ii) the Prime Rate.


 


(b)           Default Rate. 
Immediately upon the occurrence and during the continuance of an Event
of Default, Obligations shall bear interest at a rate per annum which is 5.00%
above the rate that is otherwise applicable thereto (the “Default Rate”)
unless Bank otherwise elects from time to time in its sole discretion to impose
a smaller increase.  Fees and expenses
which are required to be paid by Borrower pursuant to the Loan Documents
(including, without limitation, Bank Expenses) but are not paid when due shall
bear interest until paid at a rate equal to the highest rate applicable to the
Obligations.  Payment or acceptance of
the increased interest rate provided in this Section (b) is not a
permitted alternative to timely payment and shall not constitute a waiver of
any Event of Default or otherwise prejudice or limit any rights or remedies of
Bank.”


 


2.5          Schedule Section 5 (FINANCIAL
COVENANTS (Section 5.1)).  Section 5
of the Schedule to the Loan Agreement is hereby amended and restated to read as
follows:


 


“Minimum Tangible Net Worth.  Borrower shall at all times maintain a
Tangible Net Worth of at least One Million Five Hundred Seventy Five Thousand
Dollars ($1,575,000) increasing
quarterly by fifty percent (50%) of Net Income and fifty percent (50%)
of issuances of equity or Subordinated Debt after May 29, 2009.


 


For purposes of the
foregoing financial covenant, the following terms shall have the following
meaning


 


“Net Income”
means, as calculated on a consolidated basis for Borrower and its Subsidiaries
for any period as at any date of determination, the net profit (or loss), after
provision for taxes, of Borrower and its subsidiaries for such period taken as
a single accounting period, as determined in accordance with GAAP.


 


“Tangible Net Worth”
is, on any date, the consolidated total assets of Borrower and its subsidiaries
minus (a) General Intangibles, minus (b) Total
Liabilities, plus (c) Subordinated Debt.


 


“Total Liabilities”
is on any day, obligations that should, under GAAP, be classified as
liabilities on Borrower’s consolidated balance sheet, including all
Indebtedness.”


 


2.6          Schedule Section 9 (MATURITY
DATE (Section 6.1)). 
The Maturity Date in Section 9 of the Schedule to the Loan
Agreement is amended in its entirety and replaced with the following:


 


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“June 30, 2009”


 


3.             Supporting Letter of Credit. 
Bank and Borrower hereby agree that Bank shall not be entitled to draw
on the Supporting Letter of Credit until the earliest of (i) the Maturity
Date, (ii) the date upon which the Formula Loans have been repaid in full
and the commitment to make any additional Loans under the Loan Agreement has
been terminated, and (iii) the occurrence and continuance of an Event of
Default. Bank and Borrower hereby further agree that Bank shall only be
entitled to draw on the Supporting Letter of Credit to the extent of any outstanding
principal amount of, interest on and fees and expenses incurred solely in
connection with the Non-Formula Loans as of the date Bank draws on the
Supporting Letter of Credit and any such amounts shall be used to repay the
outstanding Non-Formula Loans.


 


4.             Subordinated Debt. 
Bank hereby agrees that for so long as that certain Subordination
Agreement between Bank and the Supporting Letter of Credit Applicants dated as
of May 29, 2009 remains in full force and effect (a) (i) the
reimbursement of the Supporting Letter of Credit Applicants by Borrower for all
amounts drawn under the Supporting Letter of Credit and all costs and expenses
relating to the issuance and maintenance of the Supporting Letter of Credit and
(ii) the payment of all compensation by Borrower to the Supporting Letter
of Credit Applicants relating to the issuance of the Supporting Letter of
Credit shall constitute “Subordinated Debt” under the Loan Agreement, and (b) the
liens granted to the Supporting Letter of Credit Applicants in connection with
such Subordinated Debt to the Supporting Letter of Credit Applicants shall
constitute “Permitted Liens” under the Loan Agreement.


 


5.             Limitation of Amendments.


 


5.1          The amendments set forth in Section 2
and the provisions of Sections 3 and 4
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.


 


5.2          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.


 


6.             Representations and Warranties. 
To induce Bank to enter into this Amendment, Borrower hereby represents
and warrants to Bank as follows:


 


6.1          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;


 


6.2          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;


 


6.3          The organizational documents of Borrower delivered to
Bank with the Sixth Amendment to Loan and Security Agreement remain true,
accurate and complete and have not been amended, supplemented or restated and
are and continue to be in full force and effect;


 


6.4          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;


 


6.5          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 


 


7

















 


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;


 


6.6          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


 


6.7          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.


 


7.             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.


 


8.             Effectiveness. 
This Amendment shall be deemed effective upon (i) the due execution
and delivery to Bank of this Amendment by each party hereto (ii) the due
execution and delivery to Bank of a Subordination Agreement by the Supporting
Letter of Credit Applicants and (iii) the payment by Borrower of an
extension fee equal to $6,250.


 


[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

  	
   

  	
  XPLORE TECHNOLOGIES CORPORATION
  OF AMERICA

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Tom Makowski

  	
   

  	
  By:

  	
  /s/ Michael J. Rapisand

  
	
  Name: 

  	
  Tom Makowski

  	
   

  	
  Name: 

  	
  Michael J. Rapisand

  
	
  Title:

  	
  Relationship Manager

  	
   

  	
  Title:

  	
  Chief Financial Officer