Exhibit 10.1


 


SECOND LOAN MODIFICATION AGREEMENT


 


This Second Loan
Modification Agreement (this “Loan Modification Agreement”) is entered into as
of  November 17, 2008, by and among (a) SILICON VALLEY BANK, a California corporation, with its
principal place of business at 3003 Tasman Drive, Santa Clara, California
95054 and with a loan production office located at One Newton Executive Park, Suite 200,
2221 Washington Street, Newton, Massachusetts 02462 (“Bank”) and (b) NETWORK ENGINES, INC., a Delaware corporation,
with offices at 25 Dan Road, Canton, Massachusetts 02021 (“Network”), and ALLIANCE SYSTEMS, INC., a Texas corporation with offices at
3501 East Plano Parkway, Suite 100, Plano, Texas 75074 (“Alliance”)
(Network and Alliance are individually and collectively, jointly and severally,
“Borrower”).


 


1.             DESCRIPTION OF EXISTING
INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and obligations
which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant
to a loan arrangement dated as of October 11, 2007, evidenced by, among
other documents, a certain Loan and Security Agreement dated as of October 11,
2007, between Borrower and Bank, as amended by a certain First Loan
Modification Agreement dated as of August 1, 2008, between Borrower and
Bank (as amended, the “Loan Agreement”). 
Capitalized terms used but not otherwise defined herein shall have the
same meaning as in the Loan Agreement.


 


2.             DESCRIPTION OF COLLATERAL.  Repayment of the Obligations is secured by
the Collateral as described in the Loan Agreement (together with any other
collateral security granted to Bank, the “Security Documents”).  Hereinafter, the Security Documents, together
with all other documents evidencing or securing the Obligations shall be
referred to as the “Existing Loan Documents”.


 


3.             DESCRIPTION OF CHANGE IN TERMS.


 


A.                                   Modifications
to Loan Agreement.


 


1                                          The
Loan Agreement shall be amended by deleting the following definition, appearing
in Section 13.1 thereof:


 


“              “EBITDA”
shall mean (a) Net Income, plus (b) Interest Expense, plus (c) to
the extent deducted in the calculation of Net Income, depreciation expense and
amortization expense, plus (d) income tax expense.”


 


and inserting in lieu
thereof the following:


 


“              “EBITDA”
shall mean (a) Net Income, plus (b) Interest Expense, plus (c) to
the extent deducted in the calculation of Net Income, depreciation expense and
amortization expense, plus (d) income tax expense, plus (e) to the
extent deducted in the calculation of Net Income, non-cash stock compensation
and other one-time non-cash expenses approved by Bank in writing on a
case-by-case basis.”


 


4.             FEES.  Borrower shall reimburse Bank for all legal
fees and expenses incurred in connection with this amendment to the Existing
Loan Documents.


 


5.             PERFECTION CERTIFICATES.


 


(a)           Network hereby ratifies, confirms and
reaffirms, all and singular, the terms and disclosures contained in a certain
Perfection Certificate dated as of August 1, 2008, between Network and
Bank, and acknowledges, confirms and agrees the disclosures and information
Network provided to Bank in the Perfection Certificate have not changed, as of
the date hereof.


 

















 


(b)           Alliance hereby ratifies, confirms
and reaffirms, all and singular, the terms and disclosures contained in a
certain Perfection Certificate dated as of October 11, 2007, between
Alliance and Bank, and acknowledges, confirms and agrees the disclosures and
information Alliance provided to Bank in the Perfection Certificate have not
changed, as of the date hereof.


 


6.             CONSISTENT CHANGES.  The Existing Loan Documents are hereby
amended wherever necessary to reflect the changes described above.


 


7.             RATIFICATION OF LOAN DOCUMENTS.  Borrower hereby ratifies, confirms, and
reaffirms all terms and conditions of all security or other collateral granted
to the Bank, and confirms that the indebtedness secured thereby includes,
without limitation, the Obligations.


 


8.             NO DEFENSES OF BORROWER.  Borrower hereby acknowledges and agrees that,
as of the date of this Loan Modification Agreement, Borrower has no offsets,
defenses, claims, or counterclaims against Bank with respect to the
Obligations, or otherwise, and that if Borrower now has, or ever did have, any
offsets, defenses, claims, or counterclaims against Bank, whether known or
unknown, at law or in equity, all of them are hereby expressly WAIVED and
Borrower hereby RELEASES Bank from any liability thereunder.


 


9.             CONTINUING VALIDITY.  Borrower understands and agrees that in
modifying the existing Obligations, Bank is relying upon Borrower’s representations,
warranties, and agreements, as set forth in the Existing Loan Documents.  Except as expressly modified pursuant to this
Loan Modification Agreement, the terms of the Existing Loan Documents remain
unchanged and in full force and effect. 
Bank’s agreement to modifications to the existing Obligations pursuant
to this Loan Modification Agreement in no way shall obligate Bank to make any
future modifications to the Obligations. 
Nothing in this Loan Modification Agreement shall constitute a satisfaction
of the Obligations.  It is the intention
of Bank and Borrower to retain as liable parties all makers of Existing Loan
Documents, unless the party is expressly released by Bank in writing.  No maker will be released by virtue of this
Loan Modification Agreement.


 


10.           COUNTERSIGNATURE.  This Loan Modification Agreement shall become
effective only when it shall have been executed by Borrower and Bank.


 


[The remainder of this page is
intentionally left blank]


 

















 


This Loan
Modification Agreement is executed as a sealed instrument under the laws of the
Commonwealth of Massachusetts as of the date first written above.


 


 


	
  BORROWER:

  	
   

  	
  BANK:

  
	
   

  	
   

  	
   

  
	
  NETWORK
  ENGINES, INC.

  	
   

  	
  SILICON
  VALLEY BANK

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Douglas G. Bryant

  	
   

  	
  By:

  	
  /s/
  Michael J. Fell

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Douglas G. Bryant

  	
   

  	
  Name:

  	
  Michael J. Fell

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  CFO

  	
   

  	
  Title:

  	
  Relationship Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ALLIANCE
  SYSTEMS, INC.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Douglas G. Bryant

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Douglas G. Bryant

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  CFO