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EXHIBIT 10.1

 
SEVENTH AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
 
THIS SEVENTH AMENDMENT to Loan and Security Agreement (this “Amendment”) is
entered into this 29th day of September 2010, by and between Silicon Valley Bank
(“Bank”) and ST. BERNARD SOFTWARE, INC., a Delaware corporation (“Borrower”)
whose address is 15015 Avenue of Science, San Diego, CA 92128.
 
Recitals
 
A.   Bank and Borrower have entered into that certain Loan and Security
Agreement dated as of May 11, 2007 as amended by that certain First Amendment to
Loan and Security Agreement dated as of July 9, 2007, that certain Second
Amendment to Loan and Security Agreement dated as of August 13, 2007, that
certain Third Amendment to Loan and Security Agreement dated as of January 25,
2008, that certain Fourth Amendment to Loan and Security Agreement dated as of
July 23, 2008, that certain Fifth Amendment to Loan and Security Agreement dated
as of February 27, 2009 and that certain Sixth Amendment to Loan and Security
Agreement dated as of March 23, 2010 (as the same may from time to time be
further amended, modified, supplemented or restated, 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 (i) increase
the sublimit for letters of credit, (ii) revise the financial covenants and
(iii) make certain other 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 6.9 (Financial Covenants).  Section 6.9(a) is amended in its
entirety and replaced with the following:
 
“(a)           Tangible Net Worth.  A Tangible Net Worth not less than negative
Eighteen Million Dollars ($18,000,000) 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.”
 
 
 
 

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2.2   Section 13 (Definitions).  The following terms and their respective
definitions set forth in Section 13.1 are amended in their entirety and replaced
with the following:
 
 “Cash Management Sublimit” means a sublimit under the Revolving Line for Cash
Management Services in an aggregate amount not to exceed Six Hundred Fifty
Thousand Dollars ($650,000), minus the outstanding amount of the FX Reserve and
Letters of Credit.
 
“FX Sublimit” means a sublimit under the Revolving Line for the FX Reserve in an
aggregate amount not to exceed Six Hundred Fifty Thousand Dollars ($650,000),
minus the outstanding amount of Letters of Credit and amounts utilized for Cash
Management Services.
 
“Letter of Credit Sublimit” means a sublimit under the Revolving Line for
Letters of Credit in an aggregate amount not to exceed Six Hundred Fifty
Thousand Dollars ($650,000), minus the outstanding amount of  the FX Reserve and
amounts utilized for Cash Management Service.
 
“Seventh Amendment Effective Date’ is September 29, 2010
 
2.3   Bank hereby agrees that Borrower’s August 2010 monthly financial
statements that would otherwise be due on September 30, 2010 shall instead be
due no later than October 20, 2010.
 
2.4   Exhibit C to the Agreement is hereby replaced with 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.   Representations and Warranties.  To induce Bank to enter into this
Amendment, Borrower hereby represents and warrants to Bank as follows:
 
4.1   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;
 
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 on the Sixth
Amendment 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;
 
4.4   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;
 
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;
 
 
 
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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 variance fee in the amount
of Two Thousand Dollars ($2,000).
 
7.   Reference to and Effect on the Loan Agreement and the Other Documents.  (i)
On and after the Seventh 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.
 

 
[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/ Derek R. Brunelle
Name:   Derek R. Brunelle
Title:     Relationship Manager
BORROWER
 
ST. BERNARD SOFTWARE, INC.
 
 
By:        /s/ Thalia Gietzen
Name:   Thalia Gietzen
Title:     VP of Finance

 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 

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EXHIBIT C
 

COMPLIANCE CERTIFICATE
 
 

TO:         SILICON VALLEY BANK      Date: _________________ FROM:  ST. BERNARD
SOFTWARE, INC.  

 

The undersigned authorized officer of 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.
 
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
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 of each month
Yes     No

Financial Covenant
Required
Actual
Complies
       
Maintain on a Monthly Basis:
     
Minimum Tangible Net Worth
$_______*
$_______
Yes     No
Billings to plan
80%
_____%
Yes     No

* A Tangible Net Worth not less than negative Eighteen Million Dollars
($18,000,000) 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.
 
 
 

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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.”)

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ST. BERNARD SOFTWARE, INC.
 
 
By:_______________________________
Name:_____________________________
Title:______________________________
 
BANK USE ONLY
 
Received by: ______________________________
          authorized signer
Date:  ___________________________________
 
Verified: _________________________________
         authorized signer
 
Date:  ___________________________________
 
Compliance Status:                  Yes     No

 
 
 
 
 
 
 
 
 

 
 
 

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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: ____________________

Tangible Net Worth (Section 6.9(a))
 
Required:         A Tangible Net Worth not less than Eighteen Million Dollars
($18,000,000) 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, in compliance

 
 
 
 
 
 
 

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