Exhibit 10.1

 

SECOND Amendment to 

AMENDED AND RESTATED Loan and security agreement

 

THIS SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this
“Amendment”) is entered into this 14th day of February, 2020, by and among
SILICON VALLEY BANK, a California corporation (“Bank”), RESEARCH SOLUTIONS,
INC., a Nevada corporation (“Research Solutions”), and REPRINTS DESK, INC., a
Delaware corporation (“Reprints”; together with Research Solutions, individually
and collectively, “Borrower”).

 

Recitals

 

A. Bank and Borrower have entered into that certain Amended and Restated Loan
and Security Agreement dated as of December 31, 2017 (as amended, modified,
supplemented or restated from time to time, the “Loan Agreement”).

 

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

 

C. Borrower has requested that Bank amend the Loan Agreement to make certain
revisions to the Loan Agreement as more fully set forth herein.

 

D. Bank has agreed to so amend certain provisions of the Loan Agreement, but
only to the extent, in accordance with the terms, subject to the conditions and
in reliance upon the representations and warranties set forth below.

 

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 Section 2.7 (Payment of Interest on the Credit Extensions). Section 2.7(a)
of the Loan Agreement is hereby amended by deleting it in its entirety and
replacing it with the following:

 

(a) Interest Rate. Subject to Section 2.7(b), the principal amount outstanding
under the Revolving Line shall accrue interest at a floating per annum rate
equal the greater of (i) one percent (1.00%) above the Prime Rate, and (ii) five
and one-half of one percent (5.50%), which interest shall be payable monthly in
accordance with Section 2.7(e) below.

 

   

 

 

2.2 Section 2.8 (Fees). Section 2.8 of the Loan Agreement is hereby amended by
adding clause (f) immediately after clause (e) therein as follows:

 

(f) Second Amendment Anniversary Fee. A fully earned, non-refundable anniversary
fee of Twelve Thousand Five Hundred Dollars ($12,500) (the “Second Amendment
Anniversary Fee”) is earned as of the Second Amendment Effective Date and is due
and payable on the earlier to occur of (i) the one (1) year anniversary of the
Second Amendment Effective Date, (ii) the termination of this Agreement, or
(iii) the occurrence of an Event of Default (the earliest to occur of (i)
through (iii), the “Second Amendment Anniversary Fee Payment Date”).

 

2.3 Section 6.2 (Financial Statements, Reports, Certificates). Section 6.2(a) of
the Loan Agreement is hereby amended by deleting it in its entirety and
replacing it with the following:

 

(a) a (A) Borrowing Base Report (and any schedules related thereto and including
any other information requested by Bank with respect to Borrower’s Accounts
including an account receivable ledger listing and client listing), (B) monthly
accounts receivable agings, aged by invoice date, (C) monthly accounts payable
agings, aged by invoice date, and outstanding or held check registers, if any,
and (D) monthly reconciliations of accounts receivable agings (aged by invoice
date), transaction reports and general ledger:

 

(i) no later than Friday of each week when a Streamline Period is not in effect
and at the time of each request for an Advance, and

 

(ii) within seven (7) days after the end of each month when a Streamline Period
is in effect and at the time of each request for an Advance;

 

2.4 Section 6.6 (Access to Collateral; Books and Records). Section 6.6 of the
Loan Agreement is hereby amended by deleting the last sentence thereof and
replacing it with the following:

 

“In the event Borrower and Bank schedule an audit more than eight (8) days in
advance, and Borrower cancels or seeks to or reschedules the audit with less
than eight (8) days written notice to Bank, then (without limiting any of Bank’s
rights or remedies) Borrower shall pay Bank a fee of Two Thousand Dollars
($2,000) plus any out-of-pocket expenses incurred by Bank to compensate Bank for
the anticipated costs and expenses of the cancellation or rescheduling.”

 

2.5 Section 6.12 (Online Banking). Section 6.12(b) of the Loan Agreement is
hereby amended by deleting it in its entirety and replacing it with the
following:

 

(b) Comply with the terms of Bank’s Online Banking Agreement as in effect from
time to time and ensure that all persons utilizing Bank’s online banking
platform are duly authorized to do so by an Administrator. Bank shall be
entitled to assume the authenticity, accuracy and completeness on any
information, instruction or request for a Credit Extension submitted via Bank’s
online banking platform and to further assume that any submissions or requests
made via Bank’s online banking platform have been duly authorized by an
Administrator.

 

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2.6 Section 6.13 (Formation or Acquisition of Subsidiaries). Section 6.13 of the
Loan Agreement is hereby amended by deleting the text in the first sentence
leading up to clause (a) of such Section and replacing it with the following:

 

“Notwithstanding and without limiting the negative covenants contained in
Sections 7.3 and 7.7 hereof, at the time that Borrower or any Guarantor forms
any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary
after the Effective Date (including, without limitation, pursuant to a
Division), Borrower and such Guarantor shall…”

 

2.7 Section 7.1 (Dispositions). Section 7.1 of the Loan Agreement is hereby
amended by deleting the text in the first sentence leading up to clause (a) of
such Section and replacing it with the following:

 

“Convey, sell, lease, transfer, assign, or otherwise dispose of (including,
without limitation, pursuant to a Division) (collectively, “Transfer”), or
permit any of its Subsidiaries to Transfer, all or any part of its business or
property, except for Transfers…”

 

2.8 Section 7.3 (Mergers or Acquisitions). Section 7.3 of the Loan Agreement is
hereby amended by deleting the first sentence leading up to clause (a) of such
Section and replacing it with the following:

 

“Merge or consolidate, or permit any of its Subsidiaries to merge or
consolidate, with any other Person, or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or
property of another Person (including, without limitation, by the formation of
any Subsidiary or pursuant to a Division) except where…”

 

2.9 Section 13 (Definitions).

 

(a) The following defined terms and their definitions set forth in Section 13.1
of the Loan Agreement are hereby amended by deleting them in their entirety and
replacing them with the following:

 

“Administrator” is an individual that is named:

 

(a) as an “Administrator” in the “SVB Online Services” form completed by
Borrower with the authority to determine who will be authorized to use SVB
Online Services (as defined in Bank’s Online Banking Agreement as in effect from
time to time) on behalf of Borrower; and

 

(b) as an Authorized Signer of Borrower in an approval by the Board.

 

“Net Income” means, as calculated on a consolidated basis for Borrower and its
Subsidiaries for any period as at any date of determination, the net profit,
after provision for taxes, of Borrower and its Subsidiaries for such period
taken as a single accounting period.

 

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“Obligations” are Borrower’s obligations to pay when due any debts, principal,
interest, fees, Bank Expenses, the Termination Fee, the Anniversary Fee, the
Second Amendment Anniversary Fee, and other amounts Borrower owes to Bank now or
later, whether under this Agreement, the other Loan Documents, or otherwise,
including, without limitation, all obligations relating to Bank Services and
interest accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank, and to perform Borrower’s duties under
the Loan Documents.

 

“Revolving Line Maturity Date” is February 14, 2022.

 

(b) The following defined terms are hereby added to Section 13.1 of the Loan
Agreement in alphabetical order:

 

“Division” means, in reference to any Person which is an entity, the division of
such Person into two (2) or more separate Persons, with the dividing Person
either continuing or terminating its existence as part of such division,
including, without limitation, as contemplated under Section 18-217 of the
Delaware Limited Liability Company Act for limited liability companies formed
under Delaware law, or any analogous action taken pursuant to any other
applicable law with respect to any corporation, limited liability company,
partnership or other entity.

 

“Second Amendment Anniversary Fee” is defined in Section 2.8(f).

 

“Second Amendment Effective Date” is February 14th, 2020.

 

3. Compliance Certificate. The Compliance Certificate appearing as Exhibit B to
the Loan Agreement is deleted in its entirety and replaced with the Compliance
Certificate attached as Exhibit B attached hereto.

 

4. Limitation of Amendments.

 

4.1 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.

 

4.2 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.

 

4.3 In addition to those Events of Default specifically enumerated in the Loan
Documents, the failure to comply with the terms of any covenant or agreement
contained herein shall constitute an Event of Default and shall entitle the Bank
to exercise all rights and remedies provided to the Bank under the terms of any
of the other Loan Documents as a result of the occurrence of the same.

 

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5. Representations and Warranties. To induce Bank to enter into this Amendment,
Borrower hereby represents and warrants to Bank as follows:

 

5.1 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;

 

5.2 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;

 

5.3 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;

 

5.4 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;

 

5.5 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;

 

5.6 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

 

5.7 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.

 

6. Integration. This Amendment and the Loan Documents represent the entire
agreement about this subject matter and supersede prior negotiations or
agreements. All prior agreements, understandings, representations, warranties,
and negotiations between the parties about the subject matter of this Amendment
and the Loan Documents merge into this Amendment and the Loan Documents.

 

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7. 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.

 

8. 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 (i) Addendum to Intellectual
Property Security Agreement by Research Solutions in favor of Bank, (ii)
Addendum to Intellectual Property Security Agreement by Reprints in favor of
Bank, both dated of even date herewith, and (c) payment of (i) a fully-earned
and non-refundable amendment fee in the amount of Fifteen Thousand Dollars
($15,000), and (ii) Bank’s legal fees and expenses in connection with the
negotiation and preparation of this Amendment.

 

[Signature page follows.]

 

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In Witness Whereof, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first written above.

 

 

BANK         SILICON VALLEY BANK         By: /s/ Chris Lee     Name: Chris Lee  
  Title: Director               BORROWER         RESEARCH SOLUTIONS, INC.      
  By: /s/ Alan Urban     Name: Alan Urban     Title: CFO         REPRINTS DESK,
INC.         By: /s/ Alan Urban     Name: Alan Urban     Title: CFO  

 

 

[Signature Page to Second Amendment to Amended and Restated Loan and Security
Agreement]

 

   

 

 

EXHIBIT B
COMPLIANCE CERTIFICATE

 

TO: SILICON VALLEY BANK Date:    FROM:   RESEARCH SOLUTIONS, INC. and REPRINTS
DESK, INC.    

 

The undersigned authorized officer of RESEARCH SOLUTIONS, INC. (“Research
Solutions”) and REPRINTS DESK, INC., (“Reprints”; together with Research
Solutions, individually and collectively, “Borrower”) certifies that under the
terms and conditions of the Amended and Restated Loan and Security Agreement
between Borrower and Bank (the “Agreement”), (1) Borrower is in complete
compliance for the period ending _______________ with all required covenants
except as noted below, (2) there are no Events of Default, (3) all
representations and warranties in the Agreement are true and correct in all
material respects on this date except as noted below; provided, however, that
such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date, (4) Borrower, and each of its
Subsidiaries, has timely filed all required tax returns and reports, and
Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower except as otherwise
permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no
Liens have been levied or claims made against Borrower or any of its
Subsidiaries, if any, relating to unpaid employee payroll or benefits of which
Borrower has not previously provided written notification to Bank. Attached are
the required documents supporting the certification. The undersigned certifies
that these are prepared in accordance with GAAP consistently applied from one
period to the next except as explained in an accompanying letter or footnotes.
The undersigned acknowledges that no borrowings may be requested at any time or
date of determination that Borrower is not in compliance with any of the terms
of the Agreement, and that compliance is determined not just at the date this
certificate is delivered. Capitalized terms used but not otherwise defined
herein shall have the meanings given them in the Agreement.

 

Please indicate compliance status by circling Yes/No under “Complies” column.  
Reporting Covenants Required Complies       Monthly financial statements with
Compliance Certificate Monthly within 30 days Yes   No 10-Q, 10-K and 8-K

Within 5 days after filing with

SEC

Yes   No A/R & A/P Agings

Streamline Period not in effect:

Weekly and with each Advance request;

Streamline Period in effect:

Monthly within 7 days and with each Advance request

Yes   No Borrowing Base Reports

Streamline Period not in effect:

Weekly and with each Advance request;

Streamline Period in effect:

Monthly within 7 days and with each Advance request

Yes   No Board approved projections FYE within 30 days and as amended/updated
Yes   No

 

   

 

 

    The following Intellectual Property was registered after the Effective Date
(if no registrations, state “None”)    

  

Financial Covenant Required Actual Complies         Maintain as indicated:      
Minimum Adjusted Quick Ratio 1.15:1.0 _____:1.0 Yes   No Minimum Tangible Net
Worth $1,500,000*______ $_______ Yes   No

* plus (f) fifty percent (50%) of quarterly Net Income (for the quarter ending
December 31, 2017 and each fiscal quarter ending thereafter) and (ii) fifty
percent (50%) of issuances of equity and Subordinated Debt after October 1,
2017.

 

 

Streamline Period Applies       AQR ≥ 1.30 to 1.0 Streamline Period in Effect
Yes   No AQR < 1.30 to 1.0 Streamline Period not in Effect Yes   No

  

The following financial covenant analyses and information set forth in Schedule
1 attached hereto are true and accurate as of the date of this Certificate.

 

The following are the exceptions with respect to the certification above: (If no
exceptions exist, state “No exceptions to note.”)

   

 

 

 

 

RESEARCH SOLUTIONS, INC.    BANK USE ONLY                               By:    
Received by:   Name:       AUTHORIZED SIGNER Title:             Date:          
  REPRINTS DESK, INC.                           By:     Verified:   Name:      
AUTHORIZED SIGNER Title:             Date:                     Compliance
Status:    Yes     No

  

   

 

 

Schedule 1 to Compliance Certificate

 

Financial Covenants of Borrower

 

In the event of a conflict between this Schedule and the Agreement, the terms of
the Agreement shall govern.

 

Dated:   ____________________

 

I. Adjusted Quick Ratio (Section 6.9(a))

  

Required: 1.15:1.00

  

Actual:

 

  A. Aggregate value of the unrestricted and unencumbered cash and cash
equivalents of Borrower and its Subsidiaries maintained with Bank   $      B.
Aggregate value of the net billed accounts receivable of Borrower and its
Subsidiaries   $      C. Quick Assets (the sum of lines A and B)   $      D.
Aggregate value of Obligations to Bank   $      E. Aggregate value of
liabilities of Borrower and its Subsidiaries (including all Indebtedness) that
matures within one (1) year and current portion of Subordinated Debt permitted
by Bank to be paid by Borrower less the current portion of Deferred Revenue and
less the current portion of accrued lease liabilities   $      F. Current
Liabilities (the sum of lines D and E)   $      G. Adjusted Quick Ratio (line C
divided by line F)    

 

Is line G equal to or greater than 1.15:1:00?

 

No, not in compliance ___ Yes, in compliance

 

   

 

 

II. Tangible Net Worth (Section 6.9(b))

  

Required: $1,500,000 plus each of the foregoing increasing by (i) fifty percent
(50%) of quarterly Net Income (starting with the fiscal quarter ending December
31, 2017 and continuing with each fiscal quarter ending thereafter) plus (ii)
fifty percent (50%) of issuances of equity and Subordinated Debt after October
1, 2017.

  

Total Required Amount:

 

  1. 50% of quarterly Net Income (starting with the fiscal quarter ending
December 31, 2017 and continuing with each fiscal quarter ending thereafter   $
    2. 50% of issuances of equity and Subordinated Debt after October 1, 2017  
$     3. Total Required Amount ($1,500,000, plus Line 1 plus Line 2)   $  

  

Actual:

 

  A. Aggregate value of total assets of Borrower and its Subsidiaries   $     B.
Aggregate value of goodwill of Borrower and its Subsidiaries   $     C.
Aggregate value of intangible assets of Borrower and its Subsidiaries   $     D.
Aggregate value of liabilities that should, under GAAP, be classified as
liabilities on Borrower’s consolidated balance sheet, including all Indebtedness
  $     E. Aggregate value of Indebtedness of Borrower subordinated to
Borrower’s indebtedness to Bank   $     F. Tangible Net Worth (line A minus line
B minus line C minus line D plus line E)   $  

 

Is line F equal to or greater than the applicable Total Required Amount in Line
3 above?

 

No, not in compliance   ___ Yes, in compliance