THIRD LOAN MODIFICATION AGREEMENT

Exhibit 10.1

THIRD LOAN MODIFICATION AGREEMENT

This Third Loan Modification Agreement (this “Loan Modification Agreement”) is entered into as of December 21, 2012, by and between (i) SILICON VALLEY BANK, a California corporation with a loan production office located at 000 Xxxxxxxxxx Xxxx, Xxxxxxxx 0, Xxxxx 000, Xxxxxx, Xxxxxxxxxxxx 00000 (“Bank”), (ii) SAFEGUARD SCIENTIFICS, INC., a Pennsylvania corporation (“SFE”), with offices located at 000 Xxxxx Xxxx Xxxxx, Xxxxxxxx 000, Xxxxx, Xxxxxxxxxxxx 00000, SAFEGUARD DELAWARE, INC., a Delaware corporation (“SDI”), SAFEGUARD SCIENTIFICS (DELAWARE), INC., a Delaware corporation (“SSI”), and SAFEGUARD DELAWARE II, INC., a Delaware corporation (“SDII”, and together with SFE, SDI, and SSI, individually and collectively, jointly and severally, the “Borrower”), each with offices located at 0000 X. Xxxxxx Xx., Xxxxx 0000, Xxxxxxxxxx, XX 00000.

1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and obligations which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to a loan arrangement dated as of May 27, 2009, evidenced by, among other documents, a certain Amended and Restated Loan and Security Agreement dated as of May 27, 2009, between Borrower and Bank, as amended by a certain Joinder and First Loan Modification Agreement, dated as of December 31, 2010, and as further amended by a certain Second Loan Modification Agreement, dated as of April 29, 2011 (as amended, the “Loan Agreement”). Capitalized terms used but not otherwise defined herein shall have the same meaning as in the Loan Agreement.

2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the Collateral as described in the Loan Agreement (together with any other collateral security granted to Bank, the “Security Documents”). Hereinafter, the Security Documents, together with all other documents evidencing or securing the Obligations shall be referred to as the “Existing Loan Documents”.

3. DESCRIPTION OF CHANGE IN TERMS.

A. Modification to Loan Agreement.

1 The Loan Agreement shall be amended by deleting the following text appearing as Section 2.4(b) thereof:

“(b) Anniversary Fee. A fully earned, non-refundable anniversary fee (the “Anniversary Fee”) of One Hundred Thousand Dollars ($100,000) shall be due and payable on the one (1) year anniversary of the Effective Date (the “First Anniversary”) and the Revolving Line Maturity Date; provided, however, that such Anniversary Fee shall not be earned or payable (in each case, as calculated on a pro-rated basis) to the extent that Borrower maintains, during the three hundred sixty-five (365) day period ending on the First Anniversary and on the Revolving Line Maturity Date (as applicable), an Average Daily Balance not less than the Minimum Required Balance.”

and inserting in lieu thereof the following:

“(b) [Reserved];”

2 The Loan Agreement shall be amended by deleting the following text appearing as Section 2.4(d) thereof:

“(d) Unused Revolving Line Facility Fee. A fee (the “Unused Revolving Line Facility Fee”), which fee shall be paid quarterly, in arrears, on the last day of each fiscal quarter, in an amount equal to one quarter of one percent (0.25%) per annum of the average unused portion of the Revolving Line for such fiscal quarter; provided, however, that such Unused Revolving Line Facility Fee shall not be earned or payable (in each case, as calculated on a daily pro-rated basis) to the extent that Borrower maintains during such quarter an Average Daily Balance not less than the Minimum Required Balance. Borrower shall not be entitled to any credit, rebate or repayment of any Unused Revolving Line Facility Fee previously earned by Bank pursuant to this Section 2.4(d) notwithstanding any termination of this Agreement, or suspension or termination of Bank’s obligation to make loans and advances hereunder; and”

1

and inserting in lieu thereof the following:

“(d) [Reserved]; and”

3 The Loan Agreement shall be amended by deleting the following definition appearing in Section 13.1 thereof:

“Unused Revolving Line Facility Fee” is defined in Section 2.4(d).

4 The Loan Agreement shall be amended by deleting the following definition from Section 13.1 thereof:

““Revolving Line Maturity Date” is December 31, 2012.”

and inserting in lieu thereof the following:

““Revolving Line Maturity Date” is December 31, 2014.”

4. CONDITIONS PRECEDENT. As a condition precedent to the effectiveness of this Loan Modification Agreement and the Bank’s obligation to make further Advances under the Revolving Line, the Bank shall have received the following documents prior to or concurrently with this Agreement, each in form and substance satisfactory to the Bank:

A. Bank shall have received copies, certified by a duly authorized officer of each Borrower, to be true and complete as of the date hereof, of each of (i) the governing documents of each Borrower as in effect on the date hereof, (ii) the resolutions of each Borrower authorizing the execution and delivery of this Loan Modification Agreement, the other documents executed in connection herewith and each Borrower’s performance of all of the transactions contemplated hereby, and (iii) an incumbency certificate giving the name and bearing a specimen signature of each individual who shall be so authorized on behalf of each Borrower;

B. a good standing certificate of each Borrower, certified by the Secretary of State of the state of incorporation of each respective Borrower, together with a certificate of foreign qualification from the Secretary of State (or comparable governmental entity) of each state in which each Borrower is qualified to transact business as a foreign entity, if any, in each case dated as of a recent date prior to the date hereof;

C. certified copies, dated as of a recent date, of financing statement and other lien searches of New each Borrower, as Bank may request and which shall be obtained by Bank, accompanied by written evidence (including any UCC termination statements) that the Liens revealed in any such searched either (i) will be terminated prior to or in connection with the Loan Modification Effective Date, or (ii) in the sole discretion of Bank, will constitute Permitted Liens;

D. such other documents as Bank may reasonably request.

5. FEES. Borrower shall pay to Bank an extension and modification fee equal to Fifty Thousand Dollars ($50,000), which fee shall be due on the date hereof and shall be deemed fully earned as of the date hereof. Borrower shall also reimburse Bank for all legal fees and expenses incurred in connection with the Existing Loan Documents and this Loan Modification Agreement.

6. AUTHORIZATION TO FILE. Borrower hereby authorizes Bank to file UCC financing statements without notice to Borrower, with all appropriate jurisdictions, as Bank deems appropriate, in order to further perfect or protect Bank’s interest in the Collateral, including a notice that any disposition of the Collateral, by either the Borrower or any other Person, shall be deemed to violate the rights of the Bank under the Code.

2

7. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever necessary to reflect the changes described above.

8. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and reaffirms all terms and conditions of all security or other collateral granted to the Bank, and confirms that the indebtedness secured thereby includes, without limitation, the Obligations.

9. NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that Borrower has no offsets, defenses, claims, or counterclaims against Bank with respect to the Obligations, or otherwise, and that if Borrower now has, or ever did have, any offsets, defenses, claims, or counterclaims against Bank, whether known or unknown, at law or in equity, all of them are hereby expressly WAIVED and Borrower hereby RELEASES Bank from any liability thereunder.

10. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the existing Obligations, Bank is relying upon Borrower’s representations, warranties, and agreements, as set forth in the Existing Loan Documents. Bank’s agreement to modifications to the existing Obligations pursuant to this Loan Modification Agreement in no way shall obligate Bank to make any future modifications to the Obligations. Nothing in this Loan Modification Agreement shall constitute a satisfaction of the Obligations. It is the intention of Bank and Borrower to retain as liable parties all makers of Existing Loan Documents, unless the party is expressly released by Bank in writing. No maker will be released by virtue of this Loan Modification Agreement.

11. RIGHT OF SET-OFF. In consideration of Bank’s agreement to enter into this Loan Modification Agreement, Borrower hereby reaffirms and hereby grants to Bank, a lien, security interest and right of set off as security for all Obligations to Bank, whether now existing or hereafter arising upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of Bank or any entity under the control of Silicon Valley Bank (including a Bank subsidiary) or in transit to any of them. At any time after the occurrence and during the continuance of an Event of Default, without demand or notice, Bank may set off the same or any part thereof and apply the same to any liability or obligation of Borrower even though unmatured and regardless of the adequacy of any other collateral securing the loan. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

12. JURISDICTION/VENUE. Section 11 of the Loan Agreement is hereby incorporated by reference in its entirety.

13. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective only when it shall have been executed by Borrower and Bank.

[The remainder of this page is intentionally left blank]

3

This Loan Modification Agreement is executed as of the date first written above.

BORROWER:

SAFEGUARD SCIENTIFICS, INC.

By		/s/ Xxxxxxx X. XxXxxxxxx
Name:		Xxxxxxx X. XxXxxxxxx
Title:		Senior Vice President - Finance

SAFEGUARD DELAWARE, INC.
By		/s/ Xxxxxxx X. XxXxxxxxx
Name:		Xxxxxxx X. XxXxxxxxx
Title:		Vice President

SAFEGUARD SCIENTIFICS (DELAWARE), INC.

By		/s/ Xxxxxxx X. XxXxxxxxx
Name:		Xxxxxxx X. XxXxxxxxx
Title:		Vice President

SAFEGUARD DELAWARE II, INC.

By		/s/ Xxxxxxx X. XxXxxxxxx
Name:		Xxxxxxx X. XxXxxxxxx
Title:		Vice President

BANK:

SILICON VALLEY BANK

By		/s/
Name:
Title:		Senior Vice President

4