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EXHIBIT 10.1
    
TENTH AMENDMENT
 
TO
 
LOAN AND SECURITY AGREEMENT
 
THIS TENTH AMENDMENT to Loan and Security Agreement (this “Amendment”) is
entered into as of September 2, 2011, by and between SILICON VALLEY BANK
(“Bank”) and EDGEWAVE, INC., a Delaware corporation (“Borrower”) whose address
is 15333 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, that certain Sixth Amendment to Loan and Security
Agreement dated as of March 23, 2010, that certain Seventh Amendment to Loan and
Security Agreement dated as of September 29, 2010, that certain Eighth Amendment
to Loan and Security Agreement dated as of May 12, 2011 and that certain Ninth
Amendment to Loan and Security Agreement dated as of June 30, 2011 (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 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 hereby is
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(b) hereby is amended and
restated in its entirety to read as follows:
 
“(b)           As of the last day of each month during which a Liquidity Period
has not been in effect, Borrower’s billings for the rolling three (3) months,
shall be at least seventy five percent (75%) of Borrower’s projected billings
for such month as outlined in Borrower’s forecast provided to Bank on August 4,
2011 and any revisions to such plan that are approved in writing by Bank.  Any
such revisions to such plan that are approved by Borrower’s board of directors
shall be provided to Bank within five (5) days of approval by Borrower’s board
of directors.”
   
 
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2.2   Section 13 (Definitions).  The following terms and their definitions set
forth in Section 13.1 hereby are amended in their entirety and replaced with the
following:
 
“Availability Amount” is, at the time of determination (a) the lesser of (i) the
Revolving Line or (ii) or the Borrowing Base minus (b) the amount of all
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit), minus (c) the FX Reserve, minus (d) any amounts used for Cash
Management Services, minus (e) the outstanding principal amount of Term Loan A,
minus (f) the outstanding principal balance of any Advances and, minus (g) when
a Liquidity Period is in effect, the aggregate outstanding principal amount of
Term Loan B and Term Loan C.
 
“Liquidity” means, at the time of determination, the sum of (a) Borrower’s cash
and Cash Equivalents plus (b) the Liquidity Amount.
 
“Liquidity Amount” means, at the time of determination, (a) the lesser of (i)
the Revolving Line or (ii) or the Borrowing Base minus (b) the amount of all
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit), minus (c) the FX Reserve, minus (d) any amounts used for Cash
Management Services, minus (e) the outstanding principal amount of Term Loan A,
and minus (f) the outstanding principal balance of any Advances.
 
“Liquidity Period” means the period beginning on the date on which Borrower’s
Liquidity is less than or equal to the Minimum Liquidity Amount and ending on
the date on which Borrower has maintained Liquidity in excess of the Minimum
Liquidity Amount for each of the immediately preceding thirty (30) days.
 
“Minimum Liquidity Amount” means an amount equal to Four Million Dollars
($4,000,000).
 
“Tenth Amendment Effective Date” is September 2, 2011.
 
“Term Loan A Maturity Date” is June 30, 2013.
 
2.3   Exhibit C to the Agreement hereby is replaced with Exhibit C attached
hereto.
 
2.4   Bank hereby waives Borrower’s requirement to comply with Section 6.9(b) of
the Loan Agreement for the June 2011 and July 2011 measuring periods.
 
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, hereby
are 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   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 after giving
effect to the waiver contained in Section 2.4, 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;
   
 
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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;
 
4.4   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;
 
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 Five Thousand Dollars ($5,000), and (c) 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 Tenth 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
 
BORROWER
 
EDGEWAVE, INC.
   
By: /s/ Andre Pelletier By: /s/ Thalia Gietzen Name Andre Pelletier Name: Thalia
Gietzen Title: Senior Relationship Manager Title: VP of Finance Date: September
8, 2011 Date: September 8, 2011                                

 
 
 
  
 
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EXHIBIT C
 
COMPLIANCE CERTIFICATE
 

 
TO:           SILICON VALLEY BANK
FROM:  EDGEWAVE, INC.
Date: __________________

 
   
The undersigned authorized officer of EDGEWAVE, 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
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.

**This test only applies for months in which a Liquidity Period has not been in
effect.
  
 
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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.”)
 

         

 
  
EDGEWAVE, 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 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,
in compliance
 
 
 
 
 
 
 
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