Exhibit
10.1
BUSINESS
FINANCING AGREEMENT
Borrower: Socket
Mobile, Inc. 39700
Eureka Drive Newark,
CA 94560 | |
Lender: BRIDGE
BANK, National Association 55
Almaden Boulevard, Suite 100 San
Jose, CA 95113 |
This
BUSINESS FINANCING AGREEMENT, dated as of February 27, 2014, is made and entered into between BRIDGE BANK, NATIONAL ASSOCIATION
(“Lender”) and Socket Mobile, Inc, a Delaware corporation (“Borrower”) on
the following terms and conditions:
| 1.1 | Advances.
Subject to the terms and conditions of this Agreement, from the date on which this Agreement
becomes effective until the Maturity Date, Lender will make Advances to Borrower not
exceeding the Credit Limit (subject at all times to the Domestic Credit Limit and the
EXIM Credit Limit) or the Borrowing Base (subject at all times to the Domestic Borrowing
Base and EXIM Borrowing Base), whichever is less; provided that in no event shall Lender
be obligated to make any Advance that results in an Overadvance or while any Overadvance
is outstanding. Amounts borrowed under this Section may be repaid and reborrowed during
the term of this Agreement. It shall be a condition to each Advance that (a) an Advance
Request acceptable to Lender has been received by Lender, (b) all of the representations
and warranties set forth in Section 3 are true and correct on the date of such Advance
as though made at and as of each such date, and (c) no Default has occurred and
is continuing, or would result from such Advance. |
| 1.2 | Advance
Requests. Borrower may request that Lender make an Advance by delivering to Lender
an Advance Request therefor and Lender shall be entitled to rely on all the information
provided by Borrower to Lender on or with the Advance Request. The Lender may honor Advance
Requests, instructions or repayments given by the Borrower (if an individual) or by any
Authorized Person. |
| 1.3 | Due
Diligence. Lender may audit Borrower’s Receivables and Inventory and any and
all records pertaining to the Collateral, at Lender’s sole discretion and at Borrowers
expense, provided, an audit must be completed prior to the initial Advance and at least
once every six months thereafter. 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. |
1.4 Collections.
(a)
Lender shall have the exclusive right to receive all Collections on all Receivables. Borrower shall (i) immediately notify,
transfer and deliver to Lender all Collections Borrower receives for deposit into the Collection Account, (ii) deliver to Lender
a detailed cash receipts journal on Friday of each week until the Lockbox is operational, and (iii) immediately enter into a collection
services agreement acceptable to Lender (the “Lockbox Agreement”) pursuant to which all Collections received in the
Lockbox shall be deposited into the Collection Account. Borrower shall use the Lockbox address as the remit to and payment address
for all of Borrower’s Collections from Account Debtors, and Borrower shall instruct all Account Debtors to make payments
either directly to the Lockbox for deposit by Lender directly to the Collection Account, or instruct them to deliver such payments
to Lender by wire transfer, ACH, or other means as Lender may direct for deposit to the Lockbox or Collection Account. It will
be considered an immediate Event of Default if this does not occur or the Lockbox is not operational within 60 days of the date
of this Agreement.
(b)
At Lender’s option, Lender may either (i) transfer all Collections deposited into the Collection Account to Borrower’s
Account, or (ii) apply the Collections deposited into the Collection Account to the outstanding Account Balance, in either case,
within three business days of the date received; provided that upon the occurrence and during the continuance of any Default,
Lender may apply all Collections to the Obligations in such order and manner as Lender may determine. Lender has no duty to do
any act other than to apply such amounts as required above. If an item of Collections is not honored or Lender does not receive
good funds for any reason, any amount previously transferred to Borrower’s Account or applied to the Account Balance shall
be reversed as of the date transferred or applied, as applicable, and, if applied to the Account Balance, the Finance Charge will
accrue as if the Collections had not been so applied. Lender shall have, with respect to any goods related to the Receivables,
all the rights and remedies of an unpaid seller under the UCC and other applicable law, including the rights of replevin, claim
and delivery, reclamation and stoppage in transit.
| 1.5 | Receivables
Activity Report. Within 30 days after the end of each Month End, Lender shall send
to Borrower a report covering the transactions for the prior billing period, including
the amount of all Advances, Collections, Adjustments, Finance Charges, and other fees
and charges. The accounting shall be deemed correct and conclusive unless Borrower makes
written objection to Lender within 30 days after the Lender sends the accounting to Borrower. |
| 1.6 | Adjustments.
In the event any Adjustment or dispute is asserted by any Account Debtor, Borrower shall
promptly advise Lender and shall, subject to the Lender’s approval, resolve such
disputes and advise Lender of any Adjustments; provided that in no case will the
aggregate Adjustments made with respect to any Receivable exceed 2% of its original Receivable
Amount unless Borrower has obtained the prior written consent of Lender. So long as any
Obligations are outstanding, Lender shall have the right, at any time, to take possession
of any rejected, returned, or recovered personal property. If such possession is not
taken by Lender, Borrower is to resell it for Lender’s account at Borrower’s
expense with the proceeds made payable to Lender. While Borrower retains possession of
any returned goods, Borrower shall segregate said goods and mark them as property of
Lender. |
| 1.7 | Recourse;
Maturity. Advances and the other Obligations shall be with full recourse against
Borrower. On the Maturity Date, the Borrower will pay all then outstanding Advances and
other Obligations to the Lender or such earlier date as shall be herein provided. |
| 1.8 | Intentionally
Omitted. |
| 1.9 | Intentionally
Omitted. |
| 1.10 | Foreign
Exchange Facility. Subject to and upon the terms and conditions of this Agreement
and any other agreement that Borrower may enter into with Lender in connection with foreign
exchange transactions (“FX Contracts”) and subject to the availability under
the Domestic Credit Limit and the Domestic Borrowing Base, Borrower may request Lender
to enter into FX Contracts with Borrower, which shall be due no later than the Maturity
Date unless cash secured on terms satisfactory to Lender. Borrower shall endeavor to
conduct all its United States foreign currency exchange business through Lender. Borrower
shall pay any standard issuance and other fees that Lender notifies Borrower will be
charged for issuing and processing FX Contracts for Borrower. The FX Amount shall at
all times be equal to or less than $100,000. The “FX Amount” shall equal
the amount determined by multiplying (i) the aggregate amount, in United States Dollars,
of FX Contracts between Borrower and Lender outstanding as of any date of determination
by (ii) the applicable Foreign Exchange Reserve Percentage as of such date. The “Foreign
Exchange Reserve Percentage” shall be a percentage as determined by Lender, in
its sole discretion from time to time. If at any time the Domestic Line of Credit is
terminated or otherwise ceases to exist, Borrower shall immediately secure in cash all
obligations under the Foreign Exchange Facility on terms acceptable to Lender. |
| 1.11 | Overadvances.
Upon any occurrence of an Overadvance, Borrower shall immediately pay down the Advances
such that, after giving effect to such payments, no Overadvance exists. |
| 2. | Fees
and Finance Charges. |
| 2.1 | Finance
Charges. Lender may, but is not required to, deduct the amount of accrued Finance
Charge from Collections received by Lender. The accrued and unpaid Finance Charge shall
be due and payable within 10 calendar days after each Month End during the term hereof. |
| (a) | Domestic
Facility Fee. Borrower shall pay the Domestic Facility Fee to Lender promptly upon
the execution of this Agreement and annually thereafter. |
| (b) | EXIM
Facility Fee. Borrower shall pay the EXIM Facility Fee to Lender promptly upon the
execution of this Agreement and annually thereafter. |
| (c) | EXIM
Application Fee. Borrower shall pay the EXIM Application Fee to Lender promptly upon
the execution of this Agreement and annually thereafter. |
| (d) | Maintenance
Fee. The accrued and unpaid Maintenance Fee shall be due and payable within 10 calendar
days after each Month End during the term hereof. |
| (e) | FX
Forward Contract Fees. Borrower shall pay to Lender fees in connection with the FX
Forward Contracts as determined in accordance with Lender’s standard fees and charges
then in effect for such activity. |
| (f) | Due
Diligence Fee. Borrower shall pay the Due Diligence Fee to Lender promptly upon the
execution of this Agreement and annually thereafter. |
| 3. | Representations
and Warranties. Borrower
represents and warrants: |
| 3.1 | No
representation, warranty or other statement of Borrower in any certificate or written
statement given to Lender 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. |
| 3.2 | Borrower
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. |
| 3.3 | The
execution, delivery and performance of this Agreement has been duly authorized, and does
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. |
| 3.4 | Borrower
has good title to the Collateral and all inventory is in all material respects of good
and marketable quality, free from material defects. |
| 3.5 | Borrower’s
name, form of organization, chief executive office, and the place where the records concerning
all Receivables and Collateral are kept is set forth at the beginning of this Agreement,
Borrower is located at its address for notices set forth in this Agreement. |
| 3.6 | If
Borrower owns, holds or has any interest in, any copyrights (whether registered, or unregistered),
patents or trademarks, and licenses of any of the foregoing, such interest has been specifically
disclosed and identified to Lender in writing. |
| 4. | Miscellaneous
Provisions. Borrower
will: |
| 4.1 | Maintain
its corporate existence and good standing in its jurisdictions of incorporation and maintain
its qualification in each jurisdiction necessary to Borrower's business or operations
and not merge or consolidate with or into any other business organization, or acquire
all or substantially all of the capital stock or property of a third party, unless (i)
any such acquired entity becomes a “borrower” under this Agreement and (ii)
Lender has previously consented to the applicable transaction in writing. |
| 4.2 | Give
Lender at least 30 days prior written notice of changes to its name, organization, chief
executive office or location of records. |
| 4.3 | Pay
all its taxes including gross payroll, withholding and sales taxes when due and will
deliver satisfactory evidence of payment to Lender if requested. |
| (a) | insurance
satisfactory to Lender as to amount, nature and carrier covering property damage (including
loss of use and occupancy) to any of the Borrower's properties, business interruption
insurance, public liability insurance including coverage for contractual liability, product
liability and workers' compensation, and any other insurance which is usual for the Borrower's
business. Each such policy shall provide for at least thirty (30) days prior notice to
Lender of any cancellation thereof. |
| (b) | all
risk property damage insurance policies (including without limitation windstorm coverage,
and hurricane coverage as applicable) covering the tangible property comprising the collateral.
Each insurance policy must be in an amount acceptable to Lender. The insurance must be
issued by an insurance company acceptable to Lender and must include a lender's loss
payable endorsement in favor of Lender in a form acceptable to Lender. |
Upon
the request of Lender, Borrower shall deliver to Lender a copy of each insurance policy, or, if permitted by Lender, a certificate
of insurance listing all insurance in force.
| 4.5 | Immediately
transfer and deliver to Lender all Collections Borrower receives. |
| 4.6 | Not
create, incur, assume, or be liable for any indebtedness, other than Permitted Indebtedness. |
| 4.7 | Immediately
notify Lender if Borrower hereafter obtains any interest in any copyrights, patents,
trademarks or licenses that are significant in value or are material to the conduct of
its business. |
| 4.8 | Provide
the following financial information and statements in form and content acceptable to
Lender, and such additional information as requested by Lender from time to time. Lender
has the right to require Borrower to deliver financial information and statements to
Lender more frequently than otherwise provided below, and to use such additional information
and statements to measure any applicable financial covenants in this Agreement. |
| (a) | Within
120 days of the fiscal year end, the annual financial statements of Borrower, certified
and dated by an authorized financial officer. These financial statements must be audited
(with an opinion satisfactory to the Lender) by a Certified Public Accountant acceptable
to Lender. The statements shall be prepared on a consolidated basis. |
| (b) | No
later than 30 days after the end of each month (including the last period in each fiscal
year), monthly financial statements of Borrower, certified and dated by an authorized
financial officer. The statements shall be prepared on a consolidated basis. |
| (c) | Promptly,
upon sending or receipt, copies of any management letters and correspondence relating
to management letters, sent or received by Borrower to or from Borrower's auditor. If
no management letter is prepared, Borrower shall, upon Lender's request, obtain a letter
from such auditor stating that no deficiencies were noted that would otherwise be addressed
in a management letter. |
| (d) | Copies
of the Form 10-K Annual Report, Form 10-Q Quarterly Report and Form 8-K Current Report
for Borrower concurrent with the date of filing with the Securities and Exchange Commission. |
| (e) | Financial
projections covering a time period acceptable to Lender and specifying the assumptions
used in creating the projections. Annual projections shall in any case be provided to
Lender within 30 days of each fiscal year end. |
| (f) | Within
30 days of the end of each month, a compliance certificate of Borrower, signed
by an authorized financial officer and setting forth (i) the information and computations
(in sufficient detail) to establish compliance with all financial covenants at the end
of the period covered by the financial statements then being furnished and (ii) whether
there existed as of the date of such financial statements and whether there exists as
of the date of the certificate, any default under this Agreement and, if any such default
exists, specifying the nature thereof and the action Borrower is taking and proposes
to take with respect thereto. |
| (g) | Within
10 days of the 15th and last day of each calendar month, (i) a domestic borrowing
base certificate, in form and substance satisfactory to Lender and in substantially the
form attached hereto as Exhibit B, setting forth Domestic Eligible Receivables and Receivable
Amounts thereof as of the last day of the preceding reporting period, and (ii) an EXIM
borrowing base certificate, in form and substance satisfactory to Lender and in substantially
the form attached hereto as Exhibit C, setting forth EXIM Eligible Receivables and Receivable
Amounts thereof, as of the last day of the preceding reporting period. |
| (h) | Within
10 days of the 15th and last day of each calendar month, a detailed aging
of Borrower’s receivables by invoice or a summary aging by account debtor, separating
domestic receivables and EXIM receivables, together with payable aging, inventory analysis,
deferred revenue report, and such other matters as Lender may request. |
| (i) | Within
10 days after the end of each calendar month, distributor sell-through reports, in form
and substance acceptable to Lender. |
| (j) | Annually
within 5 days of filing, Borrower’s corporate tax returns prepared by a Certified
Public Accountant acceptable to Lender. |
| (k) | Promptly
upon Lender's request, such other books, records, statements, lists of property and accounts,
budgets, forecasts or reports as to Borrower and as to each guarantor of Borrower's obligations
to Lender as Lender may request. |
| 4.9 | Maintain
its depository, operating, and primary investment accounts with Lender and, in the case
of any investment accounts not maintained with Lender, grant to Lender a first priority
perfected security interest in and “control” (within the meaning of Section
9104 of the California Uniform Commercial Code) of such investment account pursuant to
documentation acceptable to Lender. |
| 4.10 | Provide
to Lender promptly upon the execution hereof, the following documents which shall be
in form satisfactory to Lender: (i) EXIM Documents; (ii) account control agreements
with respect to any depository, operating or investment accounts held at another financial
institution other than Lender, and (iii) a subordination agreement in favor of Lender
by each of the following creditors of Borrower: Kevin Mills, Thomas O. Miller, Leon Malmed,
Charles C. Emery, Jr., Charlie Bass, The Bass Trust, Lee Baillif, Rogers Family Trust
U/A DTD 01/21/1981, and Brian G. Swift TTEE & Suzanne B. Swift TTEE UTD 3/31/91 FBO
Brian & Suzanne Swift Liv TR #2. |
| 4.11 | Promptly
provide to Lender such additional information and documents regarding the finances, properties,
business or books and records of Borrower or any guarantor or any other obligor as Lender
may request. |
| 4.12 | Maintain
Borrower's financial condition as follows using generally accepted accounting principles
consistently applied and used consistently with prior practices (except to the extent
modified by the definitions herein): |
| (a) | Asset
Coverage Ratio not at any time less than 2.0 to 1.0, to be evaluated at the end of each
month. |
| 5. | Security
Interest. To secure
the prompt payment and performance to Lender of all of the Obligations, Borrower hereby
grants to Lender a continuing security interest in the Collateral. Borrower is not authorized
to sell, assign, transfer or otherwise convey any Collateral without Lender’s prior
written consent, except for the sale of finished inventory in the Borrower’s usual
course of business. Borrower agrees to sign any instruments and documents requested by
Lender to evidence, perfect, or protect the interests of Lender in the Collateral. Borrower
agrees to deliver to Lender the originals of all instruments, chattel paper and documents
evidencing or related to Receivables and Collateral. Borrower shall not grant or permit
any lien or security in the Collateral or any interest therein other than Permitted Liens. |
| 6. | Power
of Attorney. Borrower
irrevocably appoints Lender and its successors and as true and lawful attorney in fact,
and authorizes Lender (a) to, whether or not there has been an Event of Default, (i)
demand, collect, receive, sue, and give releases to any Account Debtor for the monies
due or which may become due upon or with respect to the Receivables and to compromise,
prosecute, or defend any action, claim, case or proceeding relating to the Receivables,
including the filing of a claim or the voting of such claims in any bankruptcy case,
all in Lender’s name or Borrower’s name, as Lender may choose; (ii) prepare,
file and sign Borrower’s name on any notice, claim, assignment, demand, draft,
or notice of or satisfaction of lien or mechanics’ lien or similar document; (iii)
notify all Account Debtors with respect to the Receivables to pay Lender directly; (iv)
receive and open all mail addressed to Borrower for the purpose of collecting the Receivables;
(v) endorse Borrower’s name on any checks or other forms of payment on the Receivables;
(vi) execute on behalf of Borrower any and all instruments, documents, financing statements
and the like to perfect Lender’s interests in the Receivables and Collateral; (vii)
debit any Borrower’s deposit accounts maintained with Lender for any and all Obligations
due under this Agreement; and (viii) do all acts and things necessary or expedient, in
furtherance of any such purposes, and (b) to, upon the occurrence and during the continuance
of an Event of Default, sell, assign, transfer, pledge, compromise, or discharge the
whole or any part of the Receivables. Upon the occurrence and continuation of an Event
of Default, all of the power of attorney rights granted by Borrower to Lender hereunder
shall be applicable with respect to all Receivables and all Collateral. |
| 7.1 | Events
of Default. The occurrence of any one or more of the following shall constitute an
Event of Default hereunder. |
| (a) | Failure
to Pay. Borrower fails to make a payment when due under this Agreement. |
| (b) | Lien
Priority. Lender fails to have an enforceable first lien (except for any prior
liens to which Lender has consented in writing) on or security interest in the Collateral. |
| (c) | False
Information. Borrower (or any guarantor) has given Lender any materially false
or misleading information or representations or has failed to disclose any material fact
relating to the subject matter of this Agreement. |
| (d) | Death.
Borrower or any guarantor dies or becomes legally incompetent, or if Borrower is a partnership,
any general partner dies or becomes legally incompetent. |
| (e) | Bankruptcy.
Borrower (or any guarantor) files a bankruptcy petition, a bankruptcy petition is filed
against Borrower (or any guarantor) or Borrower (or any guarantor) makes a general assignment
for the benefit of creditors. |
| (f) | Receivers.
A receiver or similar official is appointed for a substantial portion of Borrower’s
(or any guarantor’s) business, or the business is terminated. |
| (g) | Judgments.
Any judgments or arbitration awards are entered against Borrower (or any guarantor),
or Borrower (or any guarantor) enters into any settlement agreements with respect to
any litigation or arbitration and the aggregate amount of all such judgments, awards,
and agreements exceeds $50,000. |
| (h) | Material
Adverse Change. A material adverse change occurs, or is reasonably likely to
occur, in Borrower’s (or any guarantor’s) business condition (financial or
otherwise), operations, properties or prospects, or ability to repay the credit. |
| (i) | Cross-default.
Any default occurs under any agreement in connection with any credit Borrower (or any
guarantor) or any of Borrower’s Affiliates has obtained from anyone else or which
Borrower (or any guarantor) or any of Borrower’s Affiliates has guaranteed (other
than trade amounts payable incurred in the ordinary course of business and not more than
60 days past due). |
| (j) | Default
under Related Documents. Any default occurs under any guaranty, subordination
agreement, security agreement, deed of trust, mortgage, or other document required by
or delivered in connection with this Agreement or any such document is no longer in effect. |
| (k) | Other
Agreements. Borrower (or any guarantor) or any of Borrower’s Affiliates
fails to meet the conditions of, or fails to perform any obligation under any other agreement
Borrower (or any guarantor) or any of Borrower’s Affiliates has with Lender or
any Affiliate of Lender. |
| (l) | Change
of Control. The holders of the capital ownership of the Borrower as of the date
hereof cease to own and control, directly and indirectly, at least 90% of the capital
ownership of the Borrower. |
| (m) | Other
Breach Under Agreement. Borrower fails to meet the conditions of, or fails to
perform any obligation under, any term of this Agreement not specifically referred to
above. |
| 7.2 | Remedies.
Upon the occurrence of an Event of Default, (1) without implying any obligation
to do so, Lender may cease making Advances or extending any other financial accommodations
to Borrower; (2) all or a portion of the Obligations shall be, at the option of
and upon demand by Lender, or with respect to an Event of Default described in Section
7.1(e), automatically and without notice or demand,
due and payable in full; and (3) Lender shall have and may exercise all the rights
and remedies under this Agreement and under applicable law, including the rights and
remedies of a secured party under the California Uniform Commercial Code, all the power
of attorney rights described in Section 6 with respect
to all Collateral, and the right to collect, dispose of, sell, lease, use, and realize
upon all Receivables and all Collateral in any commercial reasonable manner. |
| 8. | Accrual
of Interest, FEES.
All interest and finance
charges hereunder calculated at an annual rate shall be based on a year of 360 days,
which results in a higher effective rate of interest than if a year of 365 or 366 days
were used. Lender may charge interest, finance charges and fees based upon the projected
amounts thereof as of the due dates therefor, and adjust subsequent charges to account
for the actual accrued amounts. If any amount due under Section 2.2,
amounts due under Section 9, and any other Obligations not otherwise bearing interest
hereunder is not paid when due, such amount shall bear interest at a per annum rate equal
to the Finance Charge Percentage until the earlier of (i) payment in good funds
or (ii) entry of a trial judgment thereof, at which time the principal amount of
any money judgment remaining unsatisfied shall accrue interest at the highest rate allowed
by applicable law. |
| 9. | Fees,
Costs and Expenses; Indemnification.
The Borrower will pay to Lender upon demand all fees, costs and expenses (including EXIM
Bank Expenses, fees of attorneys and professionals and their costs and expenses) that
Lender incurs or may from time to time impose in connection with any of the following:
(a) preparing, negotiating, administering, and enforcing this Agreement or any other
agreement executed in connection herewith, including any amendments, waivers or consents
in connection with any of the foregoing, (b) any litigation or dispute (whether
instituted by Lender, Borrower or any other person) in any way relating to the Receivables,
the Collateral, this Agreement or any other agreement executed in connection herewith
or therewith, (c) enforcing any rights against Borrower or any guarantor, or any
Account Debtor, (d) protecting or enforcing its interest in the Receivables or the
Collateral, (e) collecting the Receivables and the Obligations, or (f) the
representation of Lender in connection with any bankruptcy case or insolvency proceeding
involving Borrower, any Receivable, the Collateral, any Account Debtor, or any guarantor.
Borrower shall indemnify and hold Lender harmless from and against any and all claims,
actions, damages, costs, expenses, and liabilities of any nature whatsoever arising in
connection with any of the foregoing. |
| 10. | Integration,
Severability Waiver, Choice of Law, FORUM AND VENUE. |
| 10.1 | This
Agreement and any related security or other agreements required by this Agreement, collectively:
(a) represent the sum of the understandings and agreements between Lender and Borrower
concerning this credit; (b) replace any prior oral or written agreements between
Lender and Borrower concerning this credit; and (c) are intended by Lender and Borrower
as the final, complete and exclusive statement of the terms agreed to by them. In the
event of any conflict between this Agreement and any other agreements required by this
Agreement, this Agreement will prevail. If any provision of this Agreement is deemed
invalid by reason of law, this Agreement will be construed as not containing such provision
and the remainder of the Agreement shall remain in full force and effect. Lender retains
all of its rights, even if it makes an Advance after a default. If Lender waives a default,
it may enforce a later default. Any consent or waiver under, or amendment of, this Agreement
must be in writing, and no such consent, waiver, or amendment shall imply any obligation
by Lender to make any subsequent consent, waiver, or amendment. |
| 10.2 | THIS
AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF CALIFORNIA. THE PARTIES HERETO AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING
IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER RELATED DOCUMENTS SHALL BE TRIED AND LITIGATED
ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF SANTA CLARA, CALIFORNIA,
OR, AT THE SOLE OPTION OF LENDER, IN ANY OTHER COURT IN WHICH LENDER SHALL INITIATE LEGAL
OR EQUITABLE PROCEEDINGS AND WHICH HAS JURISDICTION OVER THE SUBJECT MATTER AND PARTIES
IN CONTROVERSY. EACH PARTY HERETO WAIVES ANY RIGHT TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE
WITH THIS SECTION AND STIPULATES THAT THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY
OF SANTA CLARA, CALIFORNIA SHALL HAVE IN PERSONAM JURISDICTION AND VENUE OVER EACH SUCH
PARTY FOR THE PURPOSE OF LITIGATING ANY SUCH DISPUTE, CONTROVERSY, OR PROCEEDING ARISING
OUT OF OR RELATED TO THIS AGREEMENT, OR ANY OTHER RELATED DOCUMENTS. SERVICE OF PROCESS
SUFFICIENT FOR PERSONAL JURISDICTION IN ANY ACTION AGAINST THE BORROWER MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ITS ADDRESS SPECIFIED FOR
NOTICES PURSUANT TO SECTION 11. |
| 11. | Notices;
Telephonic and Telefax Authorizations.
All notices shall be
given to Lender and Borrower at the addresses or faxes set forth on the signature page
of this agreement and shall be deemed to have been delivered and received: (a) if
mailed, three (3) calendar days after deposited in the United States mail, first class,
postage pre-paid, (b) one (1) calendar day after deposit with an overnight mail
or messenger service; or (c) on the same date of confirmed transmission if sent
by hand delivery, telecopy, telefax or telex. Lender may honor telephone or telefax instructions
for Advances or repayments given, or purported to be given, by any one of the Authorized
Persons. Borrower will indemnify and hold Lender harmless from all liability, loss, and
costs in connection with any act resulting from telephone or telefax instructions Lender
reasonably believes are made by any Authorized Person. This paragraph will survive this
Agreement's termination, and will benefit Lender and its officers, employees, and agents. |
| 12. | Definitions
and Construction. |
| 12.1 | Definitions.
In this Agreement: |
“Account
Balance” means at any time the aggregate of the Advances outstanding as reflected on the records maintained by Lender,
together with any past due Finance Charges thereon.
“Account
Debtor” has the meaning in the California Uniform Commercial Code and includes any person liable on any Receivable,
including without limitation, any guarantor of any Receivable and any issuer of a letter of credit or banker’s acceptance
assuring payment thereof.
“Adjustments”
means all discounts, allowances, disputes, offsets, defenses, rights of recoupment, rights of return, warranty claims, or short
payments, asserted by or on behalf of any Account Debtor with respect to any Receivable.
“Advance”
means an advance made by Lender to Borrower under this Agreement.
“Advance
Rate” means (i) up to 70% in the case of Domestic Eligible Receivables, (ii) up to 70% in the case of EXIM Eligible
Receivables, or in each case, such greater or lesser percentage as Lender may from time to time establish in its sole discretion
upon notice to Borrower.
“Advance
Request” means a writing in form and substance satisfactory to Lender and signed by an Authorized Person requesting
an Advance.
“Agreement”
means this Business Financing Agreement.
"Affiliate"
means, as to any person or entity, any other person or entity directly or indirectly controlling or controlled by, or under direct
or indirect common control with, such person or entity.
“Asset
Coverage Ratio” means all unrestricted cash maintained with Lender, plus Eligible Receivables (as determined by
the most recent Borrowing Base), divided by the total amount of the Obligations.
“Authorized
Person” means Borrower (if an individual) or any one of the individuals authorized to sign on behalf of the Borrower,
and any other individual designated by any one of such authorized signers.
“Borrower
Agreement” is the Export-Import Bank of the United States Working Capital Guarantee Program Borrower Agreement executed
by Borrower in favor of EXIM Bank and Lender.
“Borrower’s
Account” means Borrower’s general operating account maintained with Lender, into which Advances will be deposited
unless otherwise instructed by Borrower in writing.
"Borrowing
Base" means at any time the sum of (i) the Domestic Borrowing Base plus (ii) the EXIM Borrowing Base.
“Collateral”
means all of Borrower’s rights and interest in any and all personal property, whether now existing or hereafter acquired
or created and wherever located, and all products and proceeds thereof and accessions thereto, including but not limited to the
following (collectively, the “Collateral”): (a) all accounts (including health care insurance receivables), chattel
paper (including tangible and electronic chattel paper), inventory (including all goods held for sale or lease or to be furnished
under a contract for service, and including returns and repossessions), equipment (including all accessions and additions thereto),
instruments (including promissory notes), investment property (including securities and securities entitlements), documents (including
negotiable documents), deposit accounts, letter of credit rights, money, any commercial tort claim of Borrower which is now or
hereafter identified by Borrower or Lender, general intangibles (including payment intangibles and software), goods (including
fixtures) and all of Borrower’s books and records with respect to any of the foregoing, and the computers and equipment
containing said books and records; and (b) any and all cash proceeds and/or noncash proceeds thereof, including without limitation,
insurance proceeds, and all supporting obligations and the security therefore or for any right to payment.
“Collection
Account” means the deposit account maintained with Lender which, pursuant to the Lockbox Agreement, all Collections
received in the Lockbox are to be deposited, and as to which Borrower has no right to withdrawal funds.
“Collections”
means all payments from or on behalf of an Account Debtor with respect to Receivables.
“Compliance
Certificate” means a certificate in the form attached as Exhibit A to this Agreement by an Authorized Person
that, among other things, the representations and warranties set forth in this Agreement are true and correct as of the date such
certificate is delivered.
“Credit
Limit” means the sum of Domestic Credit Limit plus the EXIM Credit Limit, which is intended to be the maximum amount
of Advances at any time outstanding.
“Default”
means any Event of Default or any event that with notice, lapse of time or otherwise would constitute an Event of Default.
"Domestic
Borrowing Base" means at any time (i) the Domestic Eligible Receivable Amount multiplied by the applicable Advance
Rate, minus (ii) such reserves as Lender may deem proper and necessary from time to time.
“Domestic
Credit Limit” means $1,500,000, which is intended to be the maximum amount of Advances at any time outstanding with
respect to Domestic Eligible Receivables.
“Domestic
Eligible Receivable” means a Receivable that satisfies all of the following:
| (a) | The
Receivable has been created by Borrower in the ordinary course of Borrower’s business
and without any obligation on the part of Borrower to render any further performance. |
| (b) | There
are no conditions which must be satisfied before Borrower is entitled to receive payment
of the Receivable, and the Receivable does not arise from COD sales, consignments or
guaranteed sales. |
| (c) | The
Account Debtor upon the Receivable does not claim any defense to payment of the Receivable,
whether well founded or otherwise. |
| (d) | The
Receivable is not the obligation of an Account Debtor who has asserted or may be reasonably
be expected to assert any counterclaims or offsets against Borrower (including offsets
for any “contra accounts” owed by Borrower to the Account Debtor for goods
purchased by Borrower or for services performed for Borrower). |
| (e) | The
Receivable represents a genuine obligation of the Account Debtor and to the extent any
credit balances exist in favor of the Account Debtor, such credit balances shall be deducted
in calculating the Receivable Amount. |
| (f) | Borrower
has sent an invoice to the Account Debtor in the amount of the Receivable. |
| (g) | Borrower
is not prohibited by the laws of the state where the Account Debtor is located from bringing
an action in the courts of that state to enforce the Account Debtor’s obligation
to pay the Receivable. Borrower has taken all appropriate actions to ensure access to
the courts of the state where Account Debtor is located, including, where necessary;
the filing of a Notice of Business Activities Report or other similar filing with the
applicable state agency or the qualification by Borrower as a foreign corporation authorized
to transact business in such state. |
| (h) | The
Receivable is owned by Borrower free of any title defects or any liens or interests of
others except the security interest in favor of Lender, and Lender has a perfected, first
priority security interest in such Receivable. |
| (i) | The
Account Debtor on the Receivable is not any of the following: (1) an employee, Affiliate,
parent or subsidiary of Borrower, or an entity which has common officers or directors
with Borrower; (2) the U.S. government or any agency or department of the U.S. government
unless Borrower complies with the procedures in the Federal Assignment of Claims Act
of 1940 (41 U.S.C. §15) with respect to the Receivable, and the underlying contract
expressly provides that neither the U.S. government nor any agency or department thereof
shall have the right of set-off against Borrower; (3) any person or entity located in
a foreign country unless (A) the Receivable is supported by an irrevocable letter of
credit issued by a bank acceptable to Lender, and (B) if requested by Lender, the original
of such letter of credit and/or any usance drafts drawn under such letter of credit and
accepted by the issuing or confirming bank have been delivered to Lender; or (4) an Account
Debtor as to which 25% or more of the aggregate dollar amount of all outstanding
Receivables owing from such Account Debtor have not been paid within 90 days from invoice
date. |
| (j) | The
Receivable is not in default (a Receivable will be considered in default if any of the
following occur: (i) the Receivable is not paid within 90 days from its invoice
date; (ii) the Account Debtor obligated upon the Receivable suspends business, makes
a general assignment for the benefit of creditors, or fails to pay its debts generally
as they come due; or (iii) any petition is filed by or against the Account Debtor
obligated upon the Receivable under any bankruptcy law or any other law or laws for the
relief of debtors). |
| (k) | The
Receivable does not arise from the sale of goods which remain in Borrower’s possession
or under Borrower’s control. |
| (l) | The
Receivable is not evidenced by a promissory note or chattel paper, nor is the Account
Debtor obligated to Borrower under any other obligation which is evidenced by a promissory
note. |
| (m) | the
Receivable is not that portion of Receivables due from an Account Debtor which is in
excess of 35% of Borrower's aggregate dollar amount of all outstanding domestic
Receivables, provided however (i) for the Account Debtors Bluestar and Scansource, the
Receivable is not that portion of Receivable in excess of 50% of Borrower’s aggregate
dollar amount for all outstanding domestic Receivables and 35% of Borrower’s aggregate
dollar amount for all outstanding Receivables (including both domestic and foreign Receivables),
and (ii) for the Account Debtor Ingram Micro, the Receivable is not that portion of Receivable
in excess of 50% of Borrower’s aggregate dollar amount for all outstanding domestic
Receivables and effective upon execution hereof through the earlier of (i) the close
of the EXIM Line of Credit or (ii) March 31, 2014, the Receivable is not that portion
of Receivables in excess of 50% of Borrower’s aggregate dollar amount for all outstanding
Receivables (including both domestic and foreign Receivables), and after such period,
40% of Borrower’s aggregate dollar amount for all outstanding Receivables (including
both domestic and foreign Receivables). |
| (n) | The
Receivable is otherwise acceptable to Lender. |
"Domestic
Eligible Receivable Amount" means at any time the sum of the Receivable Amounts of the Domestic Eligible Receivables.
“Domestic
Facility Fee” means a fee equal to 1.00% of the Domestic Credit Limit due upon the date of this Agreement and each
anniversary thereof so long as any Advances are outstanding or available hereunder.
“Domestic
Line of Credit” means the revolving line of credit under which Borrower may request Lender to issue Advances with
respect to Domestic Eligible Receivables up to the Domestic Credit Limit, as specified in Section 1.1 hereof.
“Domestic
Overadvance” means at any time the amount (if any) by which the total amount of the outstanding Advances with respect
to Domestic Eligible Receivables (including deemed Advances with respect to the FX Sublimit) exceeds the lesser of the Domestic
Credit Limit or the Domestic Borrowing Base.
“Due
Diligence Fee” means a payment of an annual fee equal to $600 due upon the date of this Agreement and upon each
anniversary thereof so long as any Advance is outstanding or available hereunder.
“Eligible
Receivable” means a Domestic Eligible Receivable or an EXIM Eligible Receivable.
“EXIM
Application Fee” means a fee in the amount of $100 per annum.
“EXIM
Bank” means Export-Import Bank of the United States.
“EXIM
Bank Expenses” are all reasonable fees that the Lender pays to the EXIM Bank in consideration of the issuance of
the EXIM Guarantee.
"EXIM
Borrowing Base" means at any time (i) the EXIM Eligible Receivable Amount multiplied by the applicable Advance Rate,
minus (ii) such reserves as Lender may deem proper and necessary from time to time.
“EXIM
Credit Limit” means $1,000,000, which is intended to be the maximum amount of Advances at any time outstanding with
respect to EXIM Eligible Receivables.
“EXIM
Documents” means the EXIM Guarantee, the Borrower Agreement, and each other agreement executed in connection therewith.
“EXIM
Eligible Receivables” means Eligible Export-Related Accounts Receivable as defined in the Borrower Agreement.
“EXIM
Facility Fee” means a fee equal to 1.00% of the EXIM Credit Limit due upon the date of this Agreement and each anniversary
thereof so long as any Advances are outstanding or available hereunder.
“EXIM
Guarantee” means the Master Guaranty Agreement executed by EXIM Bank in favor of Lender.
“EXIM
Line of Credit” means the revolving line of credit under which Borrower may request Lender to issue Advances with
respect to EXIM Eligible Receivables up to the EXIM Credit Limit, as specified in Section 1.1 hereof.
“EXIM
Overadvance” means at any time an amount equal to the amount (if any) by which the total amount of the outstanding
Advances with respect to EXIM Eligible Receivables exceeds the lesser of the EXIM Credit Limit or the EXIM Borrowing Base.
“Event
of Default” has the meaning set forth in Section 7.1.
“Finance
Charge” means an interest amount equal to the Finance Charge Percentage of the ending daily Account Balance for
the relevant period.
“Finance
Charge Percentage” means a rate per year equal to the Prime Rate plus 1.50 percentage points, plus an additional
5.00 percentage points during any period that an Event of Default has occurred and is continuing.
"FX
Sublimit" means $100,000.
"Inventory"
means and includes all of Borrower's now owned or hereafter acquired goods, merchandise and other personal property, wherever
located, to be furnished under any consignment, arrangement, contract of service or held for sale or lease, all raw materials,
work in process, finished goods and materials and supplies of any kind, nature or description which are or might be used or consumed
in Borrower's business or used in selling or furnishing such goods, merchandise and other personal property, and all documents
of title or other documents representing them.
“Lender”
means Bridge Bank, National Association, and its successors and assigns.
“Lockbox”
is defined in the Lockbox Agreement.
“Lockbox
Agreement” is defined in Section 1.4(a).
"Maintenance
Fee" means the amount equal to 0.20 (%) percentage points per month of the ending daily Account Balance for the relevant
period.
“Maturity
Date” means two years from the date hereof or such earlier date as Lender shall have declared the Obligations immediately
due and payable pursuant to Section 7.2.
“Month
End” means the last calendar day of each month.
“Obligations”
means all liabilities and obligations of Borrower to Lender of any kind or nature, present or future, arising under or in connection
with this Agreement or under any other document, instrument or agreement, whether or not evidenced by any note, guarantee or other
instrument, whether arising on account or by overdraft, whether direct or indirect (including those acquired by assignment) absolute
or contingent, primary or secondary, due or to become due, now owing or hereafter arising, and however acquired; including, without
limitation, all Advances, Finance Charges, fees, interest, expenses, professional fees and attorneys’ fees.
“Overadvance”
means a Domestic Overadvance or an EXIM Overadvance.
“Permitted
Indebtedness” means:
| (a) | Indebtedness
under this Agreement or that is otherwise owed to the Lender. |
| (b) | Indebtedness
existing on the date hereof and specifically disclosed on a schedule to this Agreement. |
| (c) | Purchase
money indebtedness (including capital leases) incurred to acquire capital assets in ordinary
course of business and not exceeding $25,000 in
total principal amount at any time outstanding. |
| (d) | Other
indebtedness in an aggregate amount not to exceed $25,000 at any time outstanding; provided
that such indebtedness is junior in priority (if secured) to the Obligations and provided
that the incurrence of such Indebtedness does not otherwise cause and Event of Default
hereunder. |
| (e) | Indebtedness
incurred in the refinancing of any indebtedness set forth in (a) through (d) above, provided
that the principal amount thereof is not increased or the terms thereof are not modified
to impose more burdensome terms upon the Borrower. |
“Permitted
Liens” means the following but only with respect to property not consisting of Receivables or Inventory:
| (g) | Liens
securing any of the indebtedness described in clauses (a) through (d) of the definition
of Permitted Indebtedness. |
| (h) | Liens
for taxes, fees, assessments or other governmental charges or levies, either not delinquent
or being contested in good faith by appropriate proceedings, provided the same have no
priority over any of Lender’s security interests. |
| (i) | Liens
incurred in connection with the extension, renewal or refinancing of the indebtedness
described in clause (e) of the definition of Permitted Indebtedness, provided that any
extension, renewal or replacement lien shall be limited to the property encumbered by
the existing lien and the principal amount of the indebtedness being extended, renewed
or refinanced does not increase. |
| (j) | Liens
securing Subordinated Debt. |
"Person"
shall mean any individual, sole proprietorship, partnership, limited liability partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability company, institution, public benefit corporation, entity or government
(whether national, federal, provincial, state, county, city, municipal or otherwise, including any instrumentality, division,
agency, body or department thereof), and shall include such Person's successors and assigns.
“Prime
Rate” means the greater of 3.25% per year or the variable per annum rate of interest most recently announced 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 Lender’s
Prime Rate.
“Receivable
Amount” means as to any Receivable, the Receivable Amount due from the Account Debtor after deducting all discounts,
credits, offsets, payments or other deductions of any nature whatsoever, whether or not claimed by the Account Debtor.
“Receivables”
means Borrower’s rights to payment arising in the ordinary course of Borrower’s business, including accounts, chattel
paper, instruments, contract rights, documents, general intangibles, letters of credit, drafts, and bankers acceptances.
“Subordinated
Debt” means indebtedness of Borrower that is expressly subordinated to the indebtedness of Borrower owed to Lender
pursuant to a subordination agreement satisfactory in form and substance to Lender.
“UCC”
means the California Uniform Commercial Code, as amended or supplemented from time to time.
| (a) | In
this Agreement: (i) references to the plural include the singular and to the singular
include the plural; (ii) references to any gender include any other gender; (iii) the
terms “include” and “including” are not limiting; (iv) the
term “or” has the inclusive meaning represented by the phrase “and/or,”
(v) unless otherwise specified, section and subsection references are to this Agreement,
and (vi) any reference to any statute, law, or regulation shall include all amendments
thereto and revisions thereof. |
| (b) | Neither
this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved
using any presumption against either Borrower or Lender, whether under any rule of construction
or otherwise. On the contrary, this Agreement has been reviewed by each party hereto
and their respective counsel. In case of any ambiguity or uncertainty, this Agreement
shall be construed and interpreted according to the ordinary meaning of the words used
to accomplish fairly the purposes and intentions of all parties hereto. |
| (c) | Titles
and section headings used in this Agreement are for convenience only and shall not be
used in interpreting this Agreement. |
| 13. | Jury
Trial Waiver. THE UNDERSIGNED
ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY
BE WAIVED UNDER CERTAIN CIRCUMSTANCES. TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER
CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, WAIVES
ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR ANY OTHER DOCUMENT, INSTRUMENT OR AGREEMENT BETWEEN THE UNDERSIGNED
PARTIES. |
| 14. | JUDICIAL
REFERENCE PROVISION. |
| 14.1 | In
the event the Jury Trial Waiver set forth above is not enforceable, the parties elect
to proceed under this Judicial Reference Provision. |
| 14.2 | With
the exception of the items specified in Section 14.3, below, any controversy, dispute
or claim (each, a “Claim”) between the parties arising out
of or relating to this Agreement or any other document, instrument or agreement between
the undersigned parties (collectively in this Section, the “Loan Documents”),
will be resolved by a reference proceeding in California in accordance with the provisions
of Sections 638 et seq. of the California Code of Civil Procedure (“CCP”),
or their successor sections, which shall constitute the exclusive remedy for the resolution
of any Claim, including whether the Claim is subject to the reference proceeding. Except
as otherwise provided in the Loan Documents, venue for the reference proceeding will
be in the state or federal court in the county or district where the real property involved
in the action, if any, is located or in the state or federal court in the county or district
where venue is otherwise appropriate under applicable law (the “Court”). |
| 14.3 | The
matters that shall not be subject to a reference are the following: (i) nonjudicial foreclosure
of any security interests in real or personal property, (ii) exercise of self-help remedies
(including, without limitation, set-off), (iii) appointment of a receiver and (iv) temporary,
provisional or ancillary remedies (including, without limitation, writs of attachment,
writs of possession, temporary restraining orders or preliminary injunctions). This reference
provision does not limit the right of any party to exercise or oppose any of the rights
and remedies described in clauses (i) and (ii) or to seek or oppose from a court of competent
jurisdiction any of the items described in clauses (iii) and (iv). The exercise of, or
opposition to, any of those items does not waive the right of any party to a reference
pursuant to this reference provision as provided herein. |
| 14.4 | The
referee shall be a retired judge or justice selected by mutual written agreement of the
parties. If the parties do not agree within ten (10) days of a written request to do
so by any party, then, upon request of any party, the referee shall be selected by the
Presiding Judge of the Court (or his or her representative). A request for appointment
of a referee may be heard on an ex parte or expedited basis, and the parties agree that
irreparable harm would result if ex parte relief is not granted. Pursuant to CCP §
170.6, each party shall have one peremptory challenge to the referee selected by the
Presiding Judge of the Court (or his or her representative). |
| 14.5 | The
parties agree that time is of the essence in conducting the reference proceedings. Accordingly,
the referee shall be requested, subject to change in the time periods specified herein
for good cause shown, to (i) set the matter for a status and trial-setting conference
within fifteen (15) days after the date of selection of the referee, (ii) if practicable,
try all issues of law or fact within one hundred twenty (120) days after the date of
the conference and (iii) report a statement of decision within twenty (20) days after
the matter has been submitted for decision. |
| 14.6 | The
referee will have power to expand or limit the amount and duration of discovery. The
referee may set or extend discovery deadlines or cutoffs for good cause, including a
party’s failure to provide requested discovery for any reason whatsoever. Unless
otherwise ordered based upon good cause shown, no party shall be entitled to “priority”
in conducting discovery, depositions may be taken by either party upon seven (7) days
written notice, and all other discovery shall be responded to within fifteen (15) days
after service. All disputes relating to discovery which cannot be resolved by the parties
shall be submitted to the referee whose decision shall be final and binding. |
| 14.7 | Except
as expressly set forth herein, the referee shall determine the manner in which the reference
proceeding is conducted including the time and place of hearings, the order of presentation
of evidence, and all other questions that arise with respect to the course of the reference
proceeding. All proceedings and hearings conducted before the referee, except for trial,
shall be conducted without a court reporter, except that when any party so requests,
a court reporter will be used at any hearing conducted before the referee, and the referee
will be provided a courtesy copy of the transcript. The party making such a request shall
have the obligation to arrange for and pay the court reporter. Subject to the referee’s
power to award costs to the prevailing party, the parties will equally share the cost
of the referee and the court reporter at trial. |
| 14.8 | The
referee shall be required to determine all issues in accordance with existing case law
and the statutory laws of the State of California. The rules of evidence applicable to
proceedings at law in the State of California will be applicable to the reference proceeding.
The referee shall be empowered to enter equitable as well as legal relief, enter equitable
orders that will be binding on the parties and rule on any motion which would be authorized
in a court proceeding, including without limitation motions for summary judgment or summary
adjudication. The referee shall issue a decision at the close of the reference proceeding
which disposes of all claims of the parties that are the subject of the reference. Pursuant
to CCP § 644, such decision shall be entered by the Court as a judgment or an order
in the same manner as if the action had been tried by the Court and any such decision
will be final, binding and conclusive. The parties reserve the right to appeal from the
final judgment or order or from any appealable decision or order entered by the referee.
The parties reserve the right to findings of fact, conclusions of laws, a written statement
of decision, and the right to move for a new trial or a different judgment, which new
trial, if granted, is also to be a reference proceeding under this provision. |
| 14.9 | If
the enabling legislation which provides for appointment of a referee is repealed (and
no successor statute is enacted), any dispute between the parties that would otherwise
be determined by reference procedure will be resolved and determined by arbitration.
The arbitration will be conducted by a retired judge or justice, in accordance with the
California Arbitration Act §1280 through §1294.2 of the CCP as amended from
time to time. The limitations with respect to discovery set forth above shall apply to
any such arbitration proceeding. |
| 14.10 | THE
PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS RESOLVED UNDER
THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER CONSULTING
(OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER OWN CHOICE,
EACH PARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, AGREES
THAT THIS REFERENCE PROVISION WILL APPLY TO ANY CONTROVERSY, DISPUTE OR CLAIM BETWEEN
OR AMONG THEM ARISING OUT OF OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS. |
| 15. | EXECUTION,
EFFECTIVENESS, SURVIVAL.
This Agreement may be executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when taken
together shall constitute a single contract. This Agreement and the other documents executed
in connection herewith constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and understandings,
oral or written, relating to the subject matter hereof. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery of a
manually executed counterpart of this Agreement. This Agreement shall become effective
upon the execution and delivery hereof by Borrower and Lender and shall continue in full
force and effect until the Maturity Date and thereafter so long as any Obligations remain
outstanding hereunder. Lender reserves the right to issue press releases, advertisements,
and other promotional materials describing any successful outcome of services provided
on Borrower’s behalf. Borrower agrees that Lender shall have the right to identify
Borrower by name in those materials. |
| 16. | Other
Agreements. Any security
agreements, liens and/or security interests securing payment of any obligations of Borrower
owing to Lender or its Affiliates also secure the Obligations, and are valid and subsisting
and are not adversely affected by execution of this Agreement. An Event of Default under
this Agreement constitutes a default under other outstanding agreements between Borrower
and Lender or its Affiliates. |
| 17. | REVIVAL
AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or payment of the Obligations
by Borrower or any guarantor, or the transfer to Lender of any property should for any
reason subsequently be asserted, or declared, to be void or voidable under any state
or federal law relating to creditors' rights, including provisions of the United States
Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or
recoverable payments of money or transfers of property (each, a "Voidable Transfer"),
and if Lender is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that Lender is required or elects to repay
or restore, and as to all reasonable costs, expenses, and reasonable attorneys' fees
of Lender related thereto the liability of Borrower and such guarantor automatically
shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer
had never been made. |
| 18. | PATRIOT
ACT NOTIFICATION. Lender hereby notifies Borrower that pursuant to the requirements
of the USA Patriot Act, Title III of Pub. L. 107-56, signed into law October 26, 2001
(“Patriot Act”), Lender is required to obtain, verify and record
information that identifies Borrower, which information includes the names and addresses
of Borrower and other information that will allow Lender to identify Borrower in accordance
with the Patriot Act. |
| 19. | 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. |
IN
WITNESS WHEREOF, Borrower and Lender have executed this Agreement on the day and year above written.
| BORROWER: |
LENDER: |
| |
|
SOCKET
MOBILE, INC.
By
/s/ David W. Dunlap
Name:
David W. Dunlap
Title:
CFO |
BRIDGE
BANK, NATIONAL ASSOCIATION
By
/s/ Anthony Crisci
Name:
Anthony Crisci
Title:
Vice President |
| |
|
Address
for Notices:
39700
Eureka Drive
Newark,
CA 94560
Fax:
(510) 933-3030 |
Address
for Notices:
55
Almaden Blvd.
San
Jose, CA 95113
Fax:
(408) 423-8510 |
