Exhibit 10.1

SECOND AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT

THIS SECOND AMENDMENT AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (this "Amendment") is entered into this 7th day of July, 2009, by and
between SILICON VALLEY BANK ("Bank") and SOCKET MOBILE, INC., a Delaware
corporation ("Borrower"), whose address is 39700 Eureka Drive, Newark,
California 94560.

RECITALS

A. Bank and Borrower have entered into that certain Second Amended and Restated
Loan and Security Agreement dated as of December 24, 2008 (as the same has been
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 is currently in violation of the Loan Agreement for failing to
comply with the Adjusted Quick Ratio covenant set forth in Section 6.6 of the
Loan Agreement (the "Adjusted Quick Ratio Covenant") for the months ended April
30, 2009 and May 31, 2009 and anticipates being in violation of the Adjusted
Quick Ratio Covenant as of June 30, 2009, each of which, if not waived by Bank,
would constitute an Event of Default.

D. Borrower has requested that Bank waive the Adjusted Quick Ratio Covenant for
the months ended April 30, 2009, May 31, 2009 and June 30, 2009. Although Bank
is under no obligation to do so, Bank is willing to waive the Adjusted Quick
Ratio Covenant for the months ended April 30, 2009, May 31, 2009 and June 30,
2009 and amend certain provisions of the Loan Agreement, all on the terms and
conditions set forth in this Amendment, so long as Borrower complies with the
terms, covenants and conditions set forth in this Amendment in a timely manner.

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 Waiver of Adjusted Quick Ratio Covenant. Bank hereby waives the Adjusted
> Quick Ratio Covenant for the months ended April 30, 2009, May 31, 2009 and
> June 30, 2009. Bank's agreement to waive the Adjusted Quick Ratio Covenant for
> the months ended April 30, 2009, May 31, 2009 and June 30, 2009 shall in no
> way obligate Bank to make any other modifications to the Loan Agreement or to
> waive Borrower's compliance with any other terms of the Loan Documents, and
> shall not limit or impair Bank's right to demand strict performance of all
> other terms and covenants as of any date. The waiver set forth above shall not
> be deemed or otherwise construed to constitute a waiver of any other
> provisions of the Loan Agreement in connection with any other transaction.

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> 2.2 Section 2.2.3 (Grant of Security Interest). The last two sentences of
> Section 2.2.3 of the Loan Agreement are hereby amended by deleting them in
> their entirety and replacing them with the following:
> 
> Because the Advance Rate may differ based on the type of Eligible Account, the
> Bank will from time to time, adjust the Finance Charge on Advances made at an
> Advance Rate of 50% so that the effective Finance Charge on such Advances is
> reasonably equivalent to the Finance Charge which applies to Advances based on
> an 70% Advance Rate. After an Event of Default, the Applicable Rate will
> increase an additional 5.00% per annum effective immediately upon the
> occurrence of such Event of Default.
> 
> 2.3 Section 2.2.4 (Collateral Handling Fee). The first sentence of Section
> 2.2.4 of the Loan Agreement is hereby amended by deleting it in its entirety
> and replacing it with the following:
> 
> Borrower will pay to Bank a collateral handling fee equal to 0.62% per month
> of the Financed Receivable Balance for each Financed Receivable outstanding
> based upon a 360 day year (the "Collateral Handling Fee").
> 
> 2.4 Section 6.2 (Financial Statements, Reports, Certificates). Section 6.2(g)
> is hereby added to the Loan Agreement immediately after Section 6.2(f) of the
> Loan Agreement as follows:
> 
> > > (g) Provide Bank with, as soon as available, but no later than thirty (30)
> > > days following each Reconciliation Period, distributor sell-through
> > > reports, in form acceptable to Bank.
> 
> 2.5 Section 6.6 (Financial Covenants). Section 6.6 of the Loan Agreement is
> hereby amended by deleting it in its entirety and replacing it with the
> following:
> 
> 6.6 Financial Covenants. Commencing June 1, 2009, Borrower shall maintain at
> all times:
> 
> > > (a) Minimum Cash. Unrestricted cash and Cash Equivalents at Bank of not
> > > less than One Million Dollars ($1,000,000).
> > > 
> > > (b) Minimum Revenue. Revenue of not less than the following amounts during
> > > following fiscal quarters:
> > > 
> > > Quarter Ending
> > > Minimum Revenue
> > > April 1, 2009 through June 30, 2009
> > > $4,068,000
> > > July 1, 2009 through September 30, 2009
> > > $4,500,000
> > > October 1, 2009 through December 31, 2009 and for each quarter thereafter
> > > $5,355,000
> > > 
> > >  
> > > 
> > >  

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> 2.6 Section 13 (Definitions). The following term and its definition set forth
> in Section 13.1 of the Loan Agreement is amended in its entirety and replaced
> with the following:
> 
> "Advance Rate" is 70%, net of any offsets related to each specific Account
> Debtor, provided, however, that with respect to any Account Debtor which is a
> distributor, the Advance Rate shall be 50%.
> 
> 2.7 Compliance Certificate. Exhibit B of the Loan Agreement is replaced in its
> entirety with Exhibit B attached hereto. From and after the date of this
> Amendment, all references in the Loan Agreement, to the Compliance Certificate
> shall be deemed to refer to Exhibit B.

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;

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> 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 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 (a) the due
execution and delivery to Bank of this Amendment by each party hereto, (b) the
due execution and delivery to Bank of that certain Second Amendment to
Export-Import Bank Loan and Security Agreement, dated as of the date hereof, by
each party hereto, (c) Borrower's payment of a non-refundable amendment fee in
an amount equal to Fifteen Thousand Dollars ($15,000) (inclusive of the Exim
fee), and (d) payment of Bank's legal fees and expenses in connection with the
negotiation and preparation of this Amendment.

[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:

SILICON VALLEY BANK

By: /s/ Aman Johal
Name: Aman Johal
Title: Relationship Manager

BORROWER:

SOCKET MOBILE, INC.

By: /s/ David W. Dunlap
Name: David W. Dunlap
Title: CFO

 

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EXHIBIT B

SILICON VALLEY BANK

SPECIALTY FINANCE DIVISION
Compliance Certificate

I, an authorized officer of Socket Mobile, Inc. ("Borrower") certify under the
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.

 

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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 of 1940, as amended.
Neither Borrower nor any of its Subsidiaries is a "holding company" or an
"affiliate" of a "holding company" or a "subsidiary company" of a "holding
company" as each term is defined and used in the Public Utility Holding Company
Act of 2005. 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.

Please indicate compliance status by circling Yes/No under "Complies" column.
Reporting Covenant
Required
Complies
Monthly financial statements with Compliance Certificate Monthly within 30 days
Yes No
Annual financial statement (CPA Audited) + CC FYE within 120 days
Yes No
10-Q, 10-K and 8-K Within 5 days after filing with SEC
Yes No
Borrowing Base Certificate A/R & A/P Agings Monthly within 30 days
Yes No
Distributor sell-through reports Monthly within 30 days
Yes No
The following Intellectual Property was registered after the Closing Date (if no
registrations, state "None")

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Financial Covenants
Required
Actual
Complies
Maintain at all times:    Minimum Cash at Bank
$1,000,000
$                  
Yes No
Maintain on a Quarterly Basis:    Minimum Revenue       April 1, 2009 through
June 30, 2009
$4,068,000
$                  
Yes No
      July 1, 2009 through September 30, 2009
$4,500,000
$                  
Yes No
      October 1, 2009 through December 31, 2009 and for each quarter thereafter
$5,355,000
$                  
Yes No

Performance Pricing
Applies
Adjusted Quick Ratio >1.25:1.00 No Collateral Handling Fee
Yes No
Adjusted Quick Ratio <1.25:1.00 Collateral Handling Fee of 0.62%
Yes No

 

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

Sincerely,

Socket Mobile, Inc.

____________________________________
Signature

____________________________________
Title

____________________________________
Date

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