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 as of May 5, 2015, by and between
SILICON VALLEY BANK (“Bank”) and SAJAN, INC. (“Borrower”).


 


RECITALS


 


A.           Bank and Borrower
are parties to that certain Amended and Restated Loan and Security Agreement dated as of March 28, 2013, as amended by a First
Amendment to Amended and Restated Loan and Security Agreement dated as of March 26, 2015 (the “First Amendment”; as
amended by the First Amendment, the “Loan Agreement”).


 


B.           The First Amendment
incorrectly stated that compliance with Section 6.9(a) is tested at the end of each quarter, rather than at the end of each month.
This Amendment corrects that mistake.


 


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 6.9
(Financial Covenants). Section 6.9 is amended and restated, to read as follows:


 


6.9 Financial Covenants. Maintain
at all times the following covenants, to be tested as of the last day of each month:


 


(a)  Tangible Net Worth.
On a consolidated basis, Tangible Net Worth of at least $2,500,000, increasing as of the last day of each fiscal quarter of Borrower
by an amount equal to 25% of the sum of (i) Net Income for such quarter, (ii) any increase in the principal amount of outstanding
Subordinated Debt during such quarter, and (iii) the net amount of proceeds received by Borrower in such quarter from the sale
or issuance of equity securities. Losses in any quarter shall not reduce the required Tangible Net Worth.


 


(b)  EBITDA. Upon
the consummation of a Permitted Acquisition, Section 6.9(a) shall cease to be of any force or effect, and thereafter Borrower shall
maintain, on a consolidated basis, EBITDA of at least $1.00 for the trailing six (6) month period ending on the last day of each
month.


 






    	 



    	 



    

 


2.2.           Exhibit C
(Compliance Certificate). Exhibit C of the Loan Agreement is replaced by Exhibit C attached hereto.


 


3.           Limitation
of Amendments.


 


3.1.           The amendments
set forth in Section 2, above, are effective for the purposes set forth herein and shall be limited precisely as written
and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan
Document, or (b) otherwise prejudice any right or remedy which Bank may now have or may have in the future under or in connection
with any Loan Document.


 


3.2.           This Amendment
shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties,
covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall
remain in full force and effect.


 


4.           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.


 


5.           Effectiveness.
This Amendment shall be deemed effective upon (a) the due execution and delivery to Bank of this Amendment by each party hereto
and (b) such other documents as the Bank may reasonably request.


 


[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.


 


BORROWER:


 


SAJAN, INC.


 


	By	/s/ Thomas P. Skiba	 
	Name:	Thomas Skiba	 
	Title:	Chief Financial Officer	 


 


 


 


BANK:


 


SILICON VALLEY BANK


 


	By	/s/ Tom Hertzberg	 
	Name:	Tom Hertzberg	 
	Title:	Vice President	 


 


 


 


 




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Schedule 1 to Compliance Certificate


 


Financial Covenants of Borrower


 


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


 


Dated:           


 


		I.	Tangible Net Worth (Section 6.9) (a)



 


		Required:	$2,500,000



 


Actual:


 


	A.	Total Assets	$_____
	 	 	 
	B.	Intangible Assets	$_____
	 	 	 
	C.	Total Liabilities	$_____
	 	 	 
	D.	Subordinated Debt	$_____
	 	 	 
	E.	Tangible Net Wort (A-B- C÷D)	______


 


Is line E equal to or great than $2,500,000*?


 


_______ No, not in compliance           _______
Yes, in compliance


 


*For measurements after the First
Amendment Date, increase by 25% of Net income, increase in the principal amount of Subordinated Debt and new equity net proceeds
on quarterly basis.


 


		II.	EBITDA (Section 6.9 (b))



 


		Required:	$1.00 for rolling 6-month period



 


Actual:


 


	 	A.	Net Income [Line II.A]	$_____
	 	 	 	 	 
	 	B.	To the extent included in the determination of Net Income
	 	 	 	 	 
	 	 	1.	The provision for income taxes	$_____
	 	 	 	 	 
	 	 	2.	Depreciation expense	$_____
	 	 	 	 	 
	 	 	3.	Amortization expense	$_____
	 	 	 	 	 



 






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	 	 	4.	Net Interest Expense	$_____
	 	 	 	 	 
	 	 	5.	All other charges which are both non-cash and non-recurring	$_____
	 	 	 	 	 
	 	 	6.	All non-cash income	$_____
	 	 	 	 	 
	 	 	7.	The sum of lines 1 through 5 minus line 6	$_____
	 	 	 	 	 
	 	C.	EBITDA (line A plus line B.7)	______


 


Is line C equal to or greater than $1.00?


 


_______ No, not in compliance           _______
Yes, in compliance


 




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EXHIBIT
C


 


COMPLIANCE
CERTIFICATE


 


	TO:	SILICON VALLEY BANK	Date: 	   
	FROM:	SAJAN, INC.	 


 


The undersigned authorized
officer of SAJAN, INC. (“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 continuing
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 requited 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 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 Covenant	Required	Complies
	 	 	 
	Monthly financial statements with Compliance Certificate	Monthly within 30 days	Yes    No
	
        Audited financial statements

        10-Q, 10-K, and 8-K
	
        Annually within 120 days of FYE

        Within 5 days after filing with SEC
	
        Yes    No

        Yes    No

	Transaction Report, A/R & A/P Agings	Monthly within 30 days	Yes    No
	Collateral Audit	Annually, unless conditions Warrant.  Requirement waived if no amounts are outstanding on the LOC	Yes    No
	Annual financial projections	Within 30 days of FYE	Yes    No


 


 



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	Financial Covenant	Required	Actual	Complies
	Maintain at all times (measured monthly)	 	 	 
	Minimum Tangible Net Worth	$2,500,000*	$	Yes    No
	
        *plus 25% of quarterly Net Income, Subordinated
        Debt and new equity

        EBITDA (after Permitted Acquisition) trailing
        6 months
	$1.00	$	Yes    No


 


 


The following financial
covenant analys[is][es] and information set forth in Schedule 1, if any, attached hereto arc true and accurate as of the date of
this Certificate.


 


 


 




 


 






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