Document:

Exhibit 10.6

 

FIRST
AMENDMENT

TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

THIS FIRST AMENDMENT to AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (this “Amendment”) is entered into this 5th day of November, 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 Amended and Restated Loan and Security
Agreement dated as of September 11, 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 (i) eliminate the
availability of Non-Formula Advances and (ii) make certain other revisions
to the Loan Agreement as more fully set forth herein.

 

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 2.1.1 (Financing of
Accounts).  Section 2.1.1(a) is amended in its
entirety and replaced with the following:

 

“(a)                            Availability. 
Subject to the terms of this Agreement, Borrower may request that Bank
finance specific Eligible Accounts.  Bank
may, in its sole discretion in each instance, finance such Eligible Accounts by
extending credit to Borrower in an amount equal to the result of the Advance
Rate multiplied by the face amount of the Eligible Account (the “Advance”).  Bank may, in its sole discretion, change the
percentage of the Advance Rate for a particular Eligible Account on a case by
case basis.  When Bank makes an Advance,
the Eligible Account becomes a “Financed Receivable.””

 

2.2                               Section 2.1.1 (Financing of
Accounts).  Section 2.1.1(b) is amended in its
entirety and replaced with the following:

 

“(b)                           Maximum Advances. 
The aggregate face amount of all Financed Receivables outstanding at any
time may not exceed the Facility Amount.”

 

 

2.3                               Section 2.1.1 (Financing of
Accounts).  Section 2.1.1(c) is amended in its
entirety and replaced with the following:

 

“(c)                            Borrowing Procedure.  Borrower will deliver an Invoice Transmittal
for each Eligible Account it offers. 
Bank may rely on information set forth in or provided with the Invoice
Transmittal.”

 

2.4                               Section 2.2.1 (Collections).  Section 2.2.1
is amended in its entirety and replaced with the following:

 

“2.2.1              Collections. 
Collections will be credited to the Financed Receivable Balance for such
Financed Receivable, but if there is an Event of Default, Bank may apply
Collections to the Obligations in any order it chooses during the continuance
of such Event of Default.  If Bank
receives a payment for both a Financed Receivable and a non-Financed
Receivable, the funds will first be applied to the Financed Receivable, and, if
there is no Event of Default which is continuing, the excess will be remitted
to Borrower, subject to Section 2.2.7”

 

2.5                               Section 2.2.3 (Finance
Charges).  Section 2.2.3 is amended in its entirety
and replaced with the following:

 

“2.2.3              Finance Charges. 
In computing Finance Charges on the Obligations under this Agreement,
all Collections received by Bank shall be deemed applied by Bank on account of
the Obligations two (2) Business Days after receipt of the
Collections.  Borrower will pay a finance
charge (the “Finance Charge”) on the Financed Receivable Balance which is equal
to the Applicable Rate divided by 360 multiplied by the number of
days each such Financed Receivable is outstanding multiplied by the
outstanding Financed Receivable Balance. 
The Finance Charge with respect to Financed Receivables is payable when
the Advance made based on such Financed Receivable is payable in accordance
with Section 2.3 hereof.  During the
continuance of an Event of Default, the Applicable Rate will increase an
additional five percent (5.0%) per annum effective immediately upon the
occurrence of such Event of Default. In the event that the aggregate amount of
Finance Charges earned by Bank in any Reconciliation Period is less than the
Minimum Finance Charge, Borrower shall pay to Bank an additional Finance Charge
equal to (i) the Minimum Finance Charge minus (ii) the aggregate
amount of all Finance Charges earned by Bank in such Reconciliation
Period.   Such additional Finance Charge
shall be payable on the first day of the next Reconciliation Period.”

 

2.6                               Section 2.2.5 (Accounting).  Section 2.2.5
is amended in its entirety and replaced with the following

 

“2.2.5              Accounting. 
After each Reconciliation Period, Bank will provide an accounting of the
transactions for that Reconciliation Period, including the amount of all
Financed Receivables, Collections, Adjustments, Finance Charges, Collateral Handling
Fee and the Facility Fee.  If Borrower
does not object to the accounting in writing within thirty (30) days it shall
be considered accurate absent manifest error. 
All Finance Charges and other interest and fees are calculated on the
basis of a 360 day year and actual days elapsed.”

 

2.7                               Section 2.3.1 (Repayment).  Section 2.3.1
is amended in its entirety and replaced with the following

 

2

 

“2.3.1              Repayment. 
Borrower will repay each Advance on the earliest of: (a) the date
on which payment is received of the Financed Receivable with respect to which
the Advance was made, (b) the date on which the Financed Receivable is no
longer an Eligible Account, (c) the date on which any Adjustment is
asserted to the Financed Receivable (but only to the extent of the Adjustment
if the Financed Receivable remains otherwise an Eligible Account), (d) the
date on which there is a breach of any warranty or representation set forth in Section 5.3,
or a breach of any covenant in this Agreement or (e) the Maturity Date
(including any early termination). Each payment will also include all accrued
Finance Charges and Collateral Handling Fees with respect to such Advance and
all other amounts then due and payable hereunder.”

 

2.8                               Section 2.3.2 (Repayment on
Event of Default).  Section 2.3.2 is amended in its entirety
and replaced with the following

 

“2.3.2                  Repayment on Event of
Default.  So long as there is an Event of Default,
Borrower will, if Bank demands (or, upon the occurrence of an Event of Default
under Section 8.5, immediately without notice or demand from Bank) repay
all of the Advances.  The demand may, at
Bank’s option, include the Advance for each Financed Receivable then
outstanding and all accrued Finance Charges, Collateral Handling Fee, attorneys’
and professional fees, court costs and expenses, and any other Obligations.”

 

2.9                               Section 3.2 (Conditions
Precedent to all Advances).  Section 3.2(b) is
amended in its entirety and replaced with the following

 

“(b)                           Bank shall have (at its option) conducted
the confirmations and verifications as described in Section 2.1.1 (d); and”

 

2.10                        Section 13 (Definitions). 
The following terms and their respective definitions set forth in Section 13.1 are amended in their entirety and replaced
with the following:

 

“Advance” is defined in Section 2.1.1 and
includes any Advances made with respect to Financed Receivables.

 

“Applicable
Rate” is a per
annum rate equal to the greater of (a) six and one quarter percent (6.25%)
or (b) the Prime Rate plus three percent (3.00%), provided, however, for any Subject Month (as of the first calendar day
of such month), to the extent that Borrower maintained a Quick Ratio of at
least 0.50 to 1.0 at all times during the applicable Testing Month, the Applicable
Rate shall be a per annum rate equal to the greater of (a) six and
one quarter percent (6.25%) or (b) the Prime Rate plus two and one half percent (2.50%).

 

“Maturity
Date” is February 5,
2010.

 

“Quick
Ratio” is the
ratio of (i) Quick Assets to (ii) Current Liabilities.

 

2.11                        Section 13 (Definitions). 
The following terms and their respective definitions set forth in Section 13.1 are hereby deleted in their entirety: “Non-Formula Advances”, “Non-Formula Amount”,
“Supporting Letter of Credit” and “Supporting
Letter of Credit Applicants”.

 

2.12                        Exhibit B to the Agreement is hereby
replaced with Exhibit B attached hereto.

 

3

 

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;

 

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.

 

4

 

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/ Krista Hall  

  	
   

  	
  By:

  	
  /s/  Michael J. Rapisand  

  
	
  Name:

  	
  Krista Hall  

  	
  Name:

  	
  Michael J. Rapisand  

  
	
  Title:

  	
  Relationship Manager

  	
  Title:

  	
  Chief Financial Officer

  
							

 

 

EXHIBIT B

 

 

SPECIALTY FINANCE DIVISION

Compliance Certificate

 

I, an authorized officer of XPLORE TECHNOLOGIES CORPORATION OF AMERICA
(“Borrower”) certify under the Amended and Restated Loan and Security Agreement
(the “Agreement”) between Borrower and Silicon Valley Bank (“Bank”) as follows
(all capitalized terms used herein shall have the meaning set forth in the
Agreement):

 

Borrower represents and warrants for each Financed
Receivable:

 

Each Financed Receivable is an Eligible Account.

 

Borrower is the owner with legal right to sell, transfer, assign and
encumber such Financed Receivable;

 

The correct amount is on the Invoice Transmittal and is not disputed;

 

Payment is not contingent on any obligation or contract and Borrower
has fulfilled all its obligations as of the Invoice Transmittal date;

 

Each Financed Receivable is based on an actual sale and delivery of
goods and/or services rendered, is due to Borrower,  is not past due or in default, has not been
previously sold, assigned, transferred, or pledged and is free of any liens,
security interests and encumbrances other than Permitted Liens;

 

There are no defenses, offsets, counterclaims or agreements for which
the Account Debtor may claim any deduction or discount;

 

It reasonably believes no Account Debtor is insolvent or subject to any
Insolvency Proceedings;

 

It has not filed or had filed against it Insolvency Proceedings and
does not anticipate any filing;

 

Bank has the right to endorse and/ or require Borrower to endorse all
payments received on Financed Receivables and all proceeds of Collateral.

 

No representation, warranty or other statement of Borrower in any certificate
or written statement given to Bank contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statement
contained in the certificates or statement not misleading.

 

Additionally, Borrower represents and warrants as
follows:

 

Borrower and each Subsidiary is duly existing and in good standing in
its state of formation and qualified and licensed to do business in, and in
good standing in, any state in which the conduct of its business or its
ownership of property requires that it be qualified except where the failure to
do so could not reasonably be expected to cause a Material Adverse Change.  The execution, delivery and performance of
the Loan Documents have been duly authorized, and do not conflict with Borrower’s
organizational documents, nor constitute an event of default under any material
agreement by which Borrower is bound. 
Borrower is not in default under any agreement to which or by which it
is bound in which the default could reasonably be expected to cause a Material
Adverse Change.

 

Borrower has good title to the Collateral, free of Liens except
Permitted Liens.  All inventory is in all
material respects of good and marketable quality, free from material defects.

 

 

Borrower is not an “investment company”
or a company “controlled” by an “investment company” under the Investment
Company Act.  Borrower is not engaged as
one of its important activities in extending credit for margin stock (under
Regulations X, T and U of the Federal Reserve Board of Governors).  Borrower has complied in all material
respects with the Federal Fair Labor Standards Act.  Borrower has not violated any laws,
ordinances or rules, the violation of which could reasonably be expected to
cause a Material Adverse Change.  None of
Borrower’s or any Subsidiary’s properties or assets has been used by Borrower
or any Subsidiary or, to the best of Borrower’s knowledge, by previous Persons,
in disposing, producing, storing, treating, or transporting any hazardous
substance other than legally.  Borrower
and each Subsidiary has timely filed all required tax returns and paid, or made
adequate provision to pay, all material taxes, except those being contested in
good faith with adequate reserves under GAAP. 
Borrower and each Subsidiary has obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given all notices
to, all government authorities that are necessary to continue its business as
currently conducted except where the failure to obtain or make such consents,
declarations, notices or filings would not reasonably be expected to cause a
Material Adverse Change.

 

All representations and warranties in the Agreement are true and
correct in all material respects on this date, and the Borrower represents that
there is no existing Event of Default.

 

Please indicate compliance status by circling Yes/No
under “Complies” column.

 

	
  Reporting Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monthly financial statements

  	
   

  	
  Monthly within 30 days

  	
   

  	
  Yes  No

  
	
  A/R and A/P Agings

  	
   

  	
  Monthly within 20 days

  	
   

  	
  Yes  No

  
	
  Deferred Revenue Report (if applicable)

  	
   

  	
  Monthly within 20 days

  	
   

  	
  Yes  No

  
	
  Compliance Certificate

  	
   

  	
  Monthly within 30 days

  	
   

  	
  Yes  No

  
	
  10-Q, 10-K and 8-K

  	
   

  	
  Within 5 days after filing with SEC

  	
   

  	
  Yes  No

  
	
  Board approved financial projections

  	
   

  	
  Prior to FYE

  	
   

  	
  Yes  No

  

 

Quick Ratio Calculation

 

	
  A. Quick Assets

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  B  
  Current Liabilities

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  Quick Ratio (A divided by B)

  	
   

  	
   

  	
   

  	
  to 1.0

  	
   

  

 

Performance
Pricing

 

	
   

  	
   

  	
   

  	
   

  	
  Applies

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quick Ratio >
  0.50 to 1.0

  	
   

  	
  Greater of 6.25% or
  (b) Prime plus 2.50%

  	
   

  	
  Yes   No

  
	
  Quick Ratio < 0.50
  to 1.0

  	
   

  	
  Greater of 6.25% or
  (b) Prime plus 3.00%

  	
   

  	
  Yes   No

  

 

 

The following are the exceptions with respect to the certification
above:  (If no exceptions exist, state “No
exceptions to note.”)

 

 

 

 

	
  XPLORE TECHNOLOGIES CORPORATION OF AMERICA  

  	
  AGENT USE ONLY  

  
	
   

  	
   

  
	
   

  	
  Received by:  

  	
   

  
	
   

  	
   

  	
  AUTHORIZED SIGNER  

  
	
  By:  

  	
   

  	
   

  	
  Date:  

  	
   

  
	
  Name:  

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Verified:  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  AUTHORIZED SIGNER  

  
	
   

  	
   

  	
   

  	
  Date:  

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Compliance Status:     Yes  NoExhibit 10.1

 

BINDING TERM SHEET

 

This
binding term sheet is entered into as of this 30th day of
September, 2009 by and between Advanced Life Sciences Holdings, Inc., a
Delaware corporation (“ADLS”) and Abbott Laboratories, an Illinois corporation
(“Abbott”).

 

ADLS
and Abbott agree to the following binding terms:

 

1.                                       Section 6.2(a)(i)
of the License Agreement, as amended by the Amended and Restated Second
Amendment to License Agreement (“Second Amendment”), shall be deleted in its
entirety and replaced with the following:

 

“seventeen
percent (17%) on Net Sales of up to $100,000,000; sixteen percent (16%) on Net
Sales of $100,000,000.01 to $200,000,000; and fifteen percent (15%) on Net
Sales of $200,000,000.01 and above, with respect to which, but for the license
granted hereunder, the manufacture, use or sale of Product would infringe a
Valid Claim in such country, and”

 

2.                                       The $
30,000,000 milestone payment due Abbott from ALS upon United States Regulatory
Approval of Compound A pursuant to Section 6.1 of the License Agreement shall
be paid to Abbott as follows: (i) $ 20,000,000 within twenty (20) business days
of Regulatory Approval; (ii) $ 5,000,000 six (6) months after receipt of
Regulatory Approval; and (iii) $ 5,000,000 twelve (12) months after receipt of
Regulatory Approval.

 

3.                                       Mutual Release 

 

a.                                       In
consideration for the terms outlined above, ADLS for itself, and its parents,
subsidiaries, affiliates, predecessors, successors, and assigns waives,
releases, and forever discharges (i) Abbott; (ii) Abbott’s parents,
subsidiaries, affiliates, predecessors, successors,

 

 

and
assigns; and (iii) Abbott’s past, present, and future officers, directors,
partners, members, employees, agents, and servants from any and all claims,
duties, obligations, demands, actions, causes of action, debts, sums of money,
suits, contracts, agreements, promises, damages, and liabilities, of whatever
kind, nature, character, or description, whether in law or equity, whether
arising in tort, contract, equity, or otherwise, whether presently known or
unknown, and whether anticipated or unanticipated, which ADLS or its successors
and assigns ever had or now have arising out of, in connection with, or
relating in any way to the License Agreement, as amended, including all claims
ADLS has or could have asserted in the arbitration currently pending before M.
Scott Donahey captioned In the Matter of the
Arbitration Between Advanced Life Sciences Holdings, Inc. and Abbott
Laboratories, Case No. CH 03624.

 

b.                                      Abbott for
itself, and its parents, subsidiaries, affiliates, predecessors, successors,
and assigns waives, releases, and forever discharges (i) ADLS; (ii) ADLS’s
parents, subsidiaries, affiliates, predecessors, successors, and assigns; and (iii)
ADLS’s past, present, and future officers, directors, partners, members,
employees, agents, and servants from any and all claims, duties, obligations,
demands, actions, causes of action, debts, sums of money, suits, contracts,
agreements, promises, damages, and

 

2

 

liabilities,
of whatever kind, nature, character, or description, whether in law or equity,
whether arising in tort, contract, equity, or otherwise, whether presently
known or unknown, and whether anticipated or unanticipated, which Abbott or its
successors and assigns ever had or now have arising out of, in connection with,
or relating in any way to the License Agreement, as amended.

 

c.                                       The
consequences of the foregoing waiver and release provisions have been explained
by each of the Parties’ respective counsel. Each of the Parties acknowledge it
may hereafter discover facts different from, or in addition to, those which it
now knows or believed to be true with respect to the matters released herein,
and agrees that this Settlement Agreement and the release contained herein
shall be and remain effective in all respects notwithstanding such different or
additional facts or the discovery thereof.

 

4.                                       This term sheet
is binding on the parties and specifically enforceable upon execution. The
terms of this document shall be incorporated in a formal amendment to the
Agreement between ADLS and Abbott. To the extent the parties are unable to
reach agreement with respect to the language of the amendment, any disagreement
shall be resolved by M. Scott Donahey to the extent he is willing to do so.
Should Mr. Donahey be unwilling to resolve any dispute between the parties,
Abbott and ALS shall select a neutral to resolve their dispute according to the
process described in Exhibit C to the Agreement.

 

3

 

	
  Advanced
  Life Sciences Holdings, Inc.,

  	
   

  	
  Abbott
  Laboratories

  
	
  By:

  	
  /s/
  Michael T. Flavin

  	
   

  	
  By:

  	
  /s/
  Sean Murphy

  
	
  Its

  	
  Chief
  Executive Officer

  	
   

  	
  Its

  	
  Vice
  President of Business Development

  

 

4

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