Exhibit 10.1
BUSINESS FINANCING MODIFICATION AGREEMENT
This Business Financing Modification Agreement is entered into as of March 20, 2017, by and between Socket Mobile, Inc. (the “Borrower”) and Western Alliance Bank, an Arizona corporation (“Lender”).
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Amongotherindebtedness whichmaybe owing by Borrower to Lender, Borrower isindebtedtoLenderpursuant to, among otherdocuments,a Business Financing Agreement, datedFebruary27, 2014, byandbetween Borrower andLender,as may beamendedfrom time to time (the “Business FinancingAgreement”). Capitalizedtermsused without definitionhereinshallhave themeanings assignedto them in the Business FinancingAgreement.
Hereinafter,all indebtedness owing by Borrower toLendershall be referred to as the“Indebtedness” and theBusiness Financing Agreementandany and all other documents executed by Borrower in favor ofLender shallbe referred to as the “ExistingDocuments.”
| 2. | DESCRIPTION OF CHANGE INTERMS. |
| A. | Modification to Business Financing Agreement: |
| (i) | Section 1.3 of the BusinessFinancing Agreement is hereby amended to read asfollows: |
1.3Due Diligence. Lender may audit Borrower’s Receivables and any and all records pertaining to the Collateral, at Lender’s sole discretion and at Borrowers expense, provided, an audit must be completed at least once every twelve months. Lender may at any time and from time to time contact Account Debtors and other persons obligated or knowledgeable in respect of Receivables to confirm the Receivable Amount of such Receivables, to determine whether Receivables constitute Eligible Receivables, and for any other purpose in connection with this Agreement. If any of the Collateral or Borrower's books or records pertaining to the Collateral are in the possession of a third party, Borrower authorizes that third party to permit Lender or its agents to have access to perform inspections or audits thereof and to respond to Lender's requests for information concerning such Collateral and records.
| (ii) | Sections 2.2(a)and2.2(d) oftheBusiness FinancingAgreementare hereby amendedtoread asfollows: |
| (a) | Domestic FacilityFee.Borrower shallpay the Domestic Facility Fee toLenderpromptly upon the execution of the Business Financing Modification AgreementdatedMarch 20, 2017and on February 27 of each year thereafter. |
(d) [Intentionally Omitted].
| (iii) | Thefollowingdefined terms in Section 12.1entitled “Definitions”are hereby amendedtoread asfollows: |
“Cash Management Sublimit” means $150,000.00.
“DomesticFacility Fee” means afeeequal to 0.50% of theDomesticCreditLimitdueupon the execution of the Business FinancingModificationAgreementdated March 20, 2017andon February 27 of each year thereafter, so long as any Advances are outstanding oravailablehereunder.
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“Maturity Date” means (i) for Advances under the Domestic Line of Credit, February 27, 2019,and(ii)forAdvancesunderthe EXIM Line of Credit, February 27, 2018, or such earlier date asLendershall have declared theObligationsimmediately due and payablepursuantto Section 7.2.
“Prime Rate” means the greater of 3.50% per year or the Prime Rate published in the Money Rates section of the Western Edition of The Wall Street Journal, or such other rate of interest publicly announced from time to time by Lender as its Prime Rate. Lender may price loans to its customers at, above, or below the Prime Rate. Any change in the Prime Rate shall take effect at the opening of business on the day specified in the public announcement of a change in the Prime Rate.
“Subfacility Maximum” means $200,000.00.
| (iv) | Thedefined term“MaintenanceFee” is hereby deleted in itsentirety. |
3. CONSISTENT CHANGES. The Existing Documents are each hereby amendedwherever necessary to reflect the changes describedabove.
4. PAYMENT OF FACILITY FEESANDDUEDILIGENCEFEE.Borrowershall payLendertheDomestic Facility Fee in the amount of $10,000.00 as amended hereof, the EXIM Facility Fee in the amount of $5,000.00,andthe Due Diligence Fee in theamount of $600.00,plusallout-of-pocket expenses.
5. NO DEFENSES OF BORROWER/GENERALRELEASE. Borroweragrees that, as of this date,ithas no defenses against the obligations to pay any amountsunderthe Indebtedness. Each of Borrower and Guarantor(each,a“ReleasingParty”) acknowledgesthat Lenderwouldnot enter into this Business Financing ModificationAgreement withoutReleasing Party’s assurance that ithasno claims againstLenderor any ofLender’sofficers, directors, employees oragents.Exceptforthe obligations arising hereafter under this Business Financing ModificationAgreement, each Releasing Party releasesLender,and each of Lender’sand entity’sofficers, directors and employees from any known or unknownclaimsthat Releasing Party nowhas againstLender of anynature,including any claims that Releasing Party, its successors, counsel, and advisors may inthe future discover theywould have nowhadif they hadknownfacts not now known tothem, whether foundedincontract,in tort orpursuantto any other theory ofliability,including but not limited to anyclaimsarising out of or related to the Agreement or the transactionscontemplatedthereby. Releasing Party waivestheprovisions ofCalifornia Civil Codesection1542, which states:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER, MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.
The provisions, waivers and releases set forth in this section are binding upon each Releasing Party and its shareholders, agents, employees, assigns and successors in interest. The provisions, waivers and releases of this section shall inure to the benefit of Lender and its agents, employees, officers, directors, assigns and successors in interest. The provisions of this section shall survive payment in full of the Obligations, full performance of all the terms of this Business Financing Modification Agreement and the Agreement, and/or Lender’s actions to exercise any remedy available under the Agreement or otherwise.
6. CONTINUING VALIDITY. Borrowerunderstandsand agrees that inmodifyingtheexisting Indebtedness, Lenderis relying upon Borrower’srepresentations, warranties,and agreements, assetforth intheExistingDocuments.Except as expresslymodified pursuantto this Business FinancingModification Agreement,the terms of theExistingDocuments remainunchangedandinfull forceandeffect.Lender’s agreement tomodifications tothe existingIndebtedness pursuant to this Business Financing ModificationAgreement in no way shall obligateLenderto make any futuremodificationsto theIndebtedness.Nothing in this Business Financing Modification Agreement shall constitute a satisfaction of the Indebtedness. It is the intention ofLender and Borrowerto retain asliableparties allmakers andendorsers of Existing Documents,unlessthe party is expressly released byLenderinwriting.Nomaker,endorser, or guarantorwillbereleasedbyvirtueof this BusinessFinancing ModificationAgreement. The terms of this paragraph applynotonly to this Business Financing ModificationAgreement, but also to any subsequent Business Financing modificationagreements.
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7. CONDITIONS.The effectiveness of this BusinessFinancingModificationAgreementisconditioned upon payment of the Domestic Facility Fee, the EXIM Facility Feeand the Due Diligence Fee.
8. NOTICE OF FINAL AGREEMENT. BY SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT: (A) THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES, (B) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND (C) THIS WRITTEN AGREEMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.
9. COUNTERSIGNATURE.This Business Financing Modification Agreementshall becomeeffectiveonly when executed byLender and Borrower.
| BORROWER: | LENDER: |
SOCKET MOBILE, INC. | WESTERN ALLIANCE BANK, |
By/s/ David W. Dunlap |
By/s/ Darin Cunningham |