Document:

Untitled Document

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. 

  

1

  

    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

          

       

       

    

  

2

  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;

  

    

3

  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.]

 

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:

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 

  

  

  

 

  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.

 

  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")

  

  2

 

	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

3Untitled Document

Exhibit 10.2

  

  SECOND AMENDMENT TO SECOND AMENDED AND RESTATED

  EXPORT-IMPORT BANK LOAN AND SECURITY AGREEMENT

  

  

THIS SECOND AMENDMENT TO SECOND
  AMENDED AND RESTATED EXPORT-IMPORT BANK 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 Export-Import Bank Loan
  and Security Agreement dated as of December 24, 2008 (as the same has been amended,
  modified, supplemented or restated, the "EXIM Loan Agreement").

  

B. Bank has extended credit
  to Borrower for the purposes permitted in the EXIM Loan Agreement.

  

C. Borrower is currently
  in violation of the EXIM Loan Agreement for failing to comply with the Adjusted
  Quick Ratio covenant set forth in Section 6.6 of the Domestic 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 pursuant to Section 7.1 of the EXIM Loan Agreement.

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 EXIM 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 EXIM Loan Agreement. 

2. Amendments to EXIM 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 EXIM 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
    EXIM Loan Agreement in connection with any other transaction. 

  

1

  

    2.2 Section 2.2 (Collections, Interest Rate, Lockbox). The last
    two sentences of Section 2.2(b) of the EXIM 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 EXIM 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 2.4 (Fees).
    The first sentence of Section 2.4(c) of the EXIM 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 13 (Definitions).
    The following term and its definition set forth in Section 13.1 of the EXIM
    Loan Agreement is amended in its entirety and replaced with the following:

  "Advance Rate"
    is 70% of EXIM Eligible Foreign Accounts which are covered by the EXIM working
    Capital Guarantee Program, provided, however, that with respect to any Account
    Debtor which is a distributor, the Advance Rate shall be 50%.

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.

   

  2

   

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 EXIM 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 EXIM 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 EXIM 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 EXIM 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 Second Amended and Restated Loan and Security
  Agreement, dated as of the date hereof, by each party hereto, and the satisfaction
  of the conditions precedent set forth therein and (c) payment of Bank's legal
  fees and expenses in connection with the negotiation and preparation of this
  Amendment.

  [Signature page follows.]

 

3

  

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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