NINTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

2.6           Section 6.9 (Financial Covenants). Section 6.9(b) is amended in its entirety and replaced with the following:

 

 

2.7           Section 13 (Definitions). The following terms and their definitions set forth in Section 13.1 are amended in their entirety and replaced with the following:

 

"Applicable Termination Fee Amount" means (i) Twenty Four Thousand Dollars ($24,000) if this Agreement is terminated on or prior to June 30, 2012 or (ii) Twelve Thousand Dollars ($12,000) if this Agreement is terminated after June 30, 2012 but prior to the Revolving Line Maturity Date.

 

 

"Credit Extension" is any Advance, Term Loan A, Term Loan B, Term Loan C, each Letter of Credit, the FX Reserve, any amount utilized for Cash Management Services, or any other extension of credit by Bank for Borrower's benefit.

 

"Ninth Amendment Effective Date" is June 30, 2011.

 

"Revolving Line" is an Advance or Advances in an amount up to Three Million Dollars ($3,000,000).

 

"Revolving Line Maturity Date" is June 30, 2013.

 

"Term Loan C" is a loan made by Bank pursuant to the terms of Section 2.1.7 hereof

 

"Term Loan C Amount" is an amount equal to Two Hundred Thousand Dollars ($200,000).

 

"Term Loan C Maturity Date" is December 1, 2013. "Term Loan C Payment" is defined in Section 2.1.7 hereof.

 

2.8           Exhibit C to the Agreement is hereby replaced with Exhibit C attached hereto.

 

2.9          Bank hereby waives Borrower's requirement to comply with Section 6.7(b) of the Loan Agreement for the April 2011 measuring period.

 

 

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

 

 

4.2          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;

 

4.3          The organizational documents of Borrower delivered to Bank in connection with the execution hereof remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect;

 

 

4.5          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;

 

4.6          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 either Borrower, except as already has been obtained or made; and

 

4.7          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.

 

5.           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.

 

6.           Effectiveness. This Amendment shall be effective as of the date first written above upon a) the due execution and delivery to Bank of this Amendment by each party hereto (b) the payment by Borrower of a extension fee with respect to the Revolving Line in the amount of Twenty Four Thousand Dollars ($24,000), (c) the payment by Borrower of a facility fee with respect to Term Loan C in the amount of Two Thousand Dollars ($2,000), and (d) the due execution and delivery to Bank of updated Borrowing Resolutions for Borrower.

 

7.           Reference to and Effect on the Loan Agreement and the Other Documents. (i) On and after the Ninth Amendment Effective Date, each reference in the Loan Agreement to "this Agreement", "hereunder", "hereof', "herein" or words of like import referring to the Loan Agreement, and each reference in the other Loan Documents to the "Loan Agreement," "thereunder," "thereof' or words of like import referring to the Loan Agreement shall mean and be a reference to the Loan Agreement as amended by this Amendment; and (ii) except as specifically amended by this Amendment, the Loan Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed.

 

 

 

TO: SILICON VALLEY BANK	Date: _____
FROM: EDGEWAVE, INC. (F/K/A ST. BERNARD SOFTWARE, INC.)

 

The undersigned authorized officer of EDGEWAVE, INC. (F/K/A ST. BERNARD SOFTWARE, INC.) ("Borrower") certifies that under the terms and conditions of the 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 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 and except as otherwise permitted in the Agreement. 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.

 

 

Reporting Covenant	Required	Complies
Monthly financial statements with Compliance Certificate	Monthly within 30 days	Yes No
Annual Projections	FYE within 45 days	Yes No
10-Q, 10-K and 8-K	Within 5 days after filing with SEC	Yes No
A/R & A/P Agings, Deferred Revenue Report	Monthly within 15 days	Yes No
Transaction Report	(A) the more frequent of weekly or with each Advance request when there are Advances outstanding or (B) if there are no Advances outstanding, within fifteen (15) days after the end each month	Yes No

 

Financial Covenant	Required		Actual	Complies
Maintain on a Monthly Basis:
Minimum Tangible Net Worth		*	$ _______	Yes No
Billings to plan	75%		_______ %	Yes No

 

* A Tangible Net Worth not less than negative Twenty One Million Five Hundred Thousand Dollars (-$21,500,000) at all times, increasing quarterly by fifty percent (50%) of Net Income and monthly by fifty percent (50%) of issuances of equity after September 30, 2010 and the principal amount of Subordinated Debt received after September 30, 2010.

 

 

The following financial covenant analysis 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.")

 

 

 

EDGEWAVE, INC. (F/K/A ST. BERNARD	BANK USE ONLY
SOFTWARE, INC.)
	Received by:_______________________________
	AUTHORIZED SIGNER
By: ___________________________	Date: _____________________________________
Name: _________________________
Title: __________________________	Verified:___________________________________
	AUTHORIZED SIGNER
	Date: ____________________________________
	Compliance Status:     Yes      No

 

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

 

Dated:

 

Tangible Net Worth (Section 6.9(a))

 

Required:                      A Tangible Net Worth not less than negative Twenty One Million Five Hundred Thousand Dollars (-$21,500,000) at all times, increasing quarterly by fifty percent (50%) of Net Income and monthly by fifty percent (50%) of issuances of equity after September 30, 2010 and the principal amount of Subordinated Debt received after September 30, 2010.

 

Actual:

 

 

A.         Aggregate net worth of Borrower	$_____
B.         Aggregate value of intangible assets of Borrower	$_____
C.         Aggregate Subordinated Debt	$_____
D         Tangible Net Worth (line A minus line B plus line C)	$_____

 

 

 

 

Is line D equal to or greater than the dollar amount required above?

 

 

 

_____ No, not in compliance

_____ Yes, not in compliance

 

 

 

 

 

 

 

BORROWER: EDGEWAVE, INC.	DATE: June 2011
BANK:    Silicon Valley Bank

 

I hereby certify as follows, as of the date set forth above:

 

1.    I am the Secretary, Assistant Secretary or other officer of the Borrower. My title is as set forth below.

 

2.    Borrower's exact legal name is set forth above. Borrower is a corporation existing under the laws of the State of Delaware/

 

3.    Attached hereto are true, correct and complete copies of Borrower's Articles/Certificate of Incorporation (including amendments), as filed with the Secretary of State of the state in which Borrower is incorporated as set forth in paragraph 2 above. Such Articles/Certificate of Incorporation have not been amended, annulled, rescinded, revoked or supplemented, and remain in full force and effect as of the date hereof

 

4.    The following resolutions were duly and validly adopted by Borrower's Board of Directors at a duly held meeting of such directors (or pursuant to a unanimous written consent or other authorized corporate action). Such resolutions are in full force and effect as of the date hereof and have not been in any way modified, repealed, rescinded, amended or revoked, and Bank may rely on them until Bank receives written notice of revocation from Borrower.

 

RESOLVED, that any one of the following officers or employees of Borrower, whose names, titles and signatures are below, may act on behalf of Borrower:

 

Name	Title	Signature	Authorized to Add or Remove Signatories
Lou Ryan	CEO	/s/ Lou Ryan	þ
Thalia Gietzen	VP of Finance	/s/ Thalia Geitzen	þ

 

Grant Security. Grant Bank a security interest in any of Borrower's assets.

 

Negotiate Items. Negotiate or discount all drafts, trade acceptances, promissory notes, or other indebtedness in which Borrower has an interest and receive cash or otherwise use the proceeds. Letters of Credit. Apply for letters of credit from Bank.

Foreign Exchange Contracts. Execute spot or forward foreign exchange contracts.

Issue Warrants. Issue warrants for Borrower's capital stock.

 

Further Acts. Designate other individuals to request advances, pay fees and costs and execute other documents or agreements (including documents or agreement that waive Borrowers right to a jury trial) they believe to be necessary to effectuate such resolutions.

 

 

 

 

 

I, the CEO of Borrower, hereby certify as to paragraphs 1 through 5 above, as of the date set forth above.

 

By:  /s/ Lou Ryan Name:  Lou Ryan Title:    CEO