Loan and Security Agreement


 Exhibit 10.1 
 LOAN AND SECURITY AGREEMENT 
 THIS LOAN AND SECURITY AGREEMENT (this
“Agreement”) dated as of the Effective Date between SILICON VALLEY BANK, a California corporation (“Bank”), and ST. BERNARD SOFTWARE, INC., a Delaware corporation (“Borrower”), provides the
terms on which Bank shall lend to Borrower and Borrower shall repay Bank. The parties agree as follows: 
  

	 	1	ACCOUNTING AND OTHER TERMS 

 Accounting terms
not defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP (unless otherwise permitted herein). Capitalized terms not otherwise defined in this Agreement shall have the meanings set
forth in Section 13. All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent such terms are defined therein. 
  

	 	2	LOAN AND TERMS OF PAYMENT 

 2.1 Promise to
Pay. Borrower hereby unconditionally promises to pay Bank the outstanding principal amount of all Credit Extensions and accrued and unpaid interest thereon as and when due in accordance with this Agreement. 
 2.1.1 Revolving Advances. 
 (a)
Availability. Subject to the terms and conditions of this Agreement and to deduction of Reserves, Bank shall make Advances not exceeding the Availability Amount. Amounts borrowed hereunder may be repaid and, prior to the Revolving Line
Maturity Date, reborrowed, subject to the applicable terms and conditions precedent herein. 
 (b) Termination; Repayment. The
Revolving Line terminates on the Revolving Line Maturity Date, when the principal amount of all Advances, the unpaid interest thereon, and all other Obligations relating to the Revolving Line shall be immediately due and payable. 
 2.1.2 Letters of Credit Sublimit. 
 (a) As part of the Revolving Line, Bank shall issue or have issued Letters of Credit for Borrower’s account. Such aggregate amounts utilized hereunder shall at all times reduce the amount otherwise available for Advances under the
Revolving Line. The face amount of outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit and any Letter of Credit Reserve) may not exceed the Letter of Credit Sublimit. If, on the Revolving Line Maturity Date, there are
any outstanding Letters of Credit, then on such date Borrower shall provide to Bank cash collateral in an amount equal to 105% of the face amount of all such Letters of Credit plus all interest, fees, and costs due or to become due in connection
therewith (as estimated by Bank in its good faith business judgment), to secure all of the Obligations relating to said Letters of Credit. All Letters of Credit shall be in form and substance acceptable to Bank in its sole discretion and shall be
subject to the terms and conditions of Bank’s standard Application and Letter of Credit Agreement (the “Letter of Credit Application”). Borrower agrees to execute any further documentation in connection with the Letters of
Credit as Bank may reasonably request. Borrower further agrees to be bound by the regulations and interpretations of the issuer of any Letters of Credit guarantied by Bank and opened for Borrower’s account or by Bank’s interpretations of
any Letter of Credit issued by Bank for Borrower’s account, and Borrower understands and agrees that Bank shall not be liable for any error, negligence, or mistake, whether of omission or commission, in following Borrower’s instructions or
those contained in the Letters of Credit or any modifications, amendments, or supplements thereto. 
 (b) The obligation of Borrower to
immediately reimburse Bank for drawings made under Letters of Credit shall be absolute, unconditional, and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, such Letters of Credit, and the Letter of Credit
Application. 
  

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 (c) Borrower may request that Bank issue a Letter of Credit payable in a Foreign Currency. If a demand
for payment is made under any such Letter of Credit, Bank shall treat such demand as an Advance to Borrower of the equivalent of the amount thereof (plus fees and charges in connection therewith such as wire, cable, SWIFT or similar charges) in
Dollars at the then-prevailing rate of exchange in San Francisco, California, for sales of the Foreign Currency for transfer to the country issuing such Foreign Currency. 
 (d) To guard against fluctuations in currency exchange rates, upon the issuance of any Letter of Credit payable in a Foreign Currency, Bank shall create a reserve (the “Letter of Credit Reserve”)
under the Revolving Line in an amount equal to ten percent (10%) of the face amount of such Letter of Credit. The amount of the Letter of Credit Reserve may be adjusted by Bank from time to time to account for fluctuations in the exchange rate.
The availability of funds under the Revolving Line shall be reduced by the amount of such Letter of Credit Reserve for as long as such Letter of Credit remains outstanding. 
 2.1.3 Foreign Exchange Sublimit. As part of the Revolving Line, Borrower may enter into foreign exchange contracts with Bank under which Borrower
commits to purchase from or sell to Bank a specific amount of Foreign Currency (each, a “FX Forward Contract”) on a specified date (the “Settlement Date”). FX Forward Contracts shall have a Settlement Date of at least one
(1) FX Business Day after the contract date and shall be subject to a reserve of ten percent (10%) of each outstanding FX Forward Contract (the “FX Reserve”). The aggregate amount of FX Forward Contracts at any one time may not
exceed the ten (10) times the amount of the FX Reserve, and the FX Reserve may not exceed the FX Sublimit. 
 2.1.4 Cash
Management Services Sublimit. Borrower may use an amount up to the Cash Management Sublimit for Bank’s cash management services which may include merchant services, direct deposit of payroll, business credit card, and check cashing services
identified in Bank’s various cash management services agreements (collectively, the “Cash Management Services”). Any amounts used by Borrower for Cash Management Services will be treated as Advances under the Revolving Line,
will accrue interest at the interest rate applicable to Advances, and will reduce the amount otherwise available for Credit Extensions thereunder. 
 2.1.5 Term Loans. 
 (a) Term Loan Advances. Subject to the terms and conditions of this Agreement, Bank agrees to
lend to Borrower, during the Draw Period, term loan advances (each a “Term Loan Advance” and collectively the “Term Loan Advances”) in an aggregate amount not to exceed the Term Loan Amount. Each Term Loan Advance,
other than the final Term Loan Advance, must be in an amount equal to at least $200,000. Borrower may only request up to six (6) Term Loan Advances hereunder and the first such Term Loan Advance shall be made on the Effective Date in the amount
of One Million Dollars ($1,000,000). When repaid, the Term Loan Advances may not be re-borrowed. 
 (b) Repayment. Borrower shall
repay each Term Loan Advance as follows: Interest accrues from the date of each Term Loan Advance at the rate in Section 2.3(a) and is payable monthly. For the first six months after the Effective Date, Borrower will pay interest only on
whatever Term Loan Advances may be outstanding. Thereafter, each Term Loan Advance will be payable in 18 equal monthly installments of principal, plus accrued interest, but based on a 36 month amortization schedule, commencing on the date that is
six months after the Effective Date and continuing on the same date of each month thereafter until the Term Loan Maturity Date, on which date all remaining principal and accrued interest shall be paid in full. 
 (c) Term Loan Reserve. Notwithstanding the foregoing, an amount equal to outstanding principal amount of the Term Loans shall be reserved against
the Revolving Line which would otherwise be available to Borrower as set forth above. 
 2.2 Overadvances. If at any time or for any
reason the total of all outstanding Credit Extensions and all other monetary Obligations exceeds the lesser of (i) the Borrowing Base or (ii) the Revolving Line (an “Overadvance”), Borrower shall immediately pay the amount
of the excess in cash to Bank, without notice or demand. Without limiting Borrower’s obligation to repay to Bank the amount of any Overadvance, Borrower agrees to pay Bank interest on the outstanding amount of any Overadvance, on demand, at the
Default Rate. 
  

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 2.3 Payment of Interest on the Credit Extensions. 
 (a) Interest Rate. Subject to Section 2.3(b), the amounts outstanding under the Revolving Line and the Term Loan shall accrue interest at a
per annum rate equal to two (2) percentage points above the Applicable Rate, which interest shall be payable monthly. Notwithstanding the foregoing, if Borrower achieves a full calendar quarter of profitability and for as long as Borrower
maintains profitability, the amounts outstanding under the Revolving Line and the Term Loan shall accrue interest at a per annum rate equal to one (1) percentage point above the Applicable Rate, which interest shall be payable monthly

 (b) Default Rate. Immediately upon the occurrence and during the continuance of an Event of Default, Obligations shall bear
interest at a rate per annum which is five percentage points above the rate that is otherwise applicable thereto (the “Default Rate”). Payment or acceptance of the increased interest rate provided in this Section 2.3(b) is not
a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Bank. 
 (c) Adjustment to Interest Rate. Changes to the interest rate of any Credit Extension based on changes to the Prime Rate shall be effective on the effective date of any change to the Prime Rate and to the
extent of any such change. 
 (d) 360-Day Year. Interest shall be computed on the basis of a 360-day year for the actual number of
days elapsed. 
 (e) Debit of Accounts. Bank may debit any of Borrower’s deposit accounts, including the Designated Deposit
Account, for principal and interest payments or any other amounts Borrower owes Bank when due. These debits shall not constitute a set-off. 
 (f) Payment; Interest Computation; Float Charge. Interest is payable monthly on the last calendar day of each month. In computing interest on the Obligations, all payments received after 12:00 p.m. Pacific time on any day shall be
deemed received on the next Business Day. In addition, Bank shall be entitled to charge Borrower a “float” charge in an amount equal to three (3) Business Days interest, at the interest rate applicable to the Credit Extensions, on all
Payments received by Bank. Said float charge is not included in interest for purposes of computing Minimum Monthly Interest (if any) under this Agreement. The float charge for each month shall be payable on the last day of the month. Bank shall not,
however, be required to credit Borrower’s account for the amount of any item of payment which is unsatisfactory to Bank in its good faith business judgment, and Bank may charge Borrower’s Designated Deposit Account for the amount of any
item of payment which is returned to Bank unpaid. 
 2.4 Fees. Borrower shall pay to Bank: 
 (a) Commitment Fee. A fully earned, non-refundable commitment fee of $40,000, on the Effective Date and each yearly anniversary thereof;

 (b) Letter of Credit Fee. Bank’s customary fees and expenses for the issuance or renewal of Letters of Credit, upon the
issuance or renewal of such Letter of Credit by Bank; 
 (c) Early Termination Fee. Subject to the terms of Section 4.1, the
Early Termination Fee in accordance with Section 12.1; 
 (d) Due Diligence Fee. A Due Diligence fee of $10,000, receipt of which
is hereby acknowledged. Bank agrees that any amounts not utilized to pay Bank Expenses incurred through the Effective Date shall be applied in reduction of the commitment fee set forth in Section 2.4(a); 
 (e) Collateral Monitoring Fee. A monthly collateral monitoring fee of $750, payable in arrears on the last day of each month (prorated for any
partial month at the beginning and upon termination of this Agreement); and 
 (f) Bank Expenses. All Bank Expenses (including
reasonable attorneys’ fees and expenses, plus expenses, for documentation and negotiation of this Agreement) incurred through and after the Effective Date, when due. 
  

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	 	3	CONDITIONS OF LOANS 

 3.1 Conditions
Precedent to Initial Credit Extension. Bank’s obligation to make the initial Credit Extension is subject to the condition precedent that Borrower shall consent to or have delivered, in form and substance reasonably satisfactory to Bank,
such documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate, including, without limitation: 
 (a) duly executed original signatures to the Loan Documents to which it is a party; 
 (b) a duly executed original signature to the
Warrant; 
 (c) its Operating Documents and a good standing certificate of Borrower certified by the Secretary of State of the State of
Delaware as of a date no earlier than thirty (30) days prior to the Effective Date; 
 (d) duly executed original signatures to the
completed Borrowing Resolutions for Borrower; 
 (e) a payoff letter from [Camel Financial]; 
 (f) evidence that (i) the Liens securing Indebtedness owed by Borrower to Camel Financial will be terminated and (ii) the documents and/or
filings evidencing the perfection of such Liens, including without limitation any financing statements and/or control agreements, have or will, concurrently with the initial Credit Extension, be terminated. 
 (g) certified copies, dated as of a recent date, of financing statement searches, as Bank shall request, accompanied by written evidence (including any
UCC termination statements) that the Liens indicated in any such financing statements either constitute Permitted Liens or have been or, in connection with the initial Credit Extension, will be terminated or released; 
 (h) the Perfection Certificate executed by Borrower; 
 (i) a copy of its Investors’ Rights Agreement and any amendments thereto; 
 (j) evidence satisfactory
to Bank that the insurance policies required by Section 6.7 hereof are in full force and effect, together with appropriate evidence showing loss payable and/or additional insured clauses or endorsements in favor of Bank; 
 (k) payment of the fees and Bank Expenses then due as specified in Section 2.4 hereof. 
 3.2 Conditions Precedent to all Credit Extensions. Bank’s obligations to make each Credit Extension, including the initial Credit Extension,
is subject to the following: 
 (a) except as otherwise provided in Section 3.4, timely receipt of an executed Transaction Report;

 (b) the representations and warranties in Section 5 shall be true in all material respects on the date of the Transaction Report and
on the Funding Date of each Credit Extension; 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, and no Default or Event of Default shall have occurred and be continuing or
result from the Credit Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the representations and warranties in Section 5 remain true in all material respects; 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; and 
  

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 (c) in Bank’s sole discretion, there has not been any material impairment in the general affairs,
management, results of operation, financial condition or the prospect of repayment of the Obligations, or there has not been any material adverse deviation by Borrower from the most recent business plan of Borrower presented to and accepted by Bank.

 3.3 Covenant to Deliver. Borrower agrees to deliver to Bank each item required to be delivered to Bank under this Agreement as a
condition to any Credit Extension. Borrower expressly agrees that the extension of a Credit Extension prior to the receipt by Bank of any such item shall not constitute a waiver by Bank of Borrower’s obligation to deliver such item, and any
such extension in the absence of a required item shall be in Bank’s sole discretion. 
 3.4 Procedures for Borrowing. Subject to
the prior satisfaction of all other applicable conditions to the making of an Advance set forth in this Agreement, to obtain an Advance (other than Advances under Sections 2.1.2, 2.1.3 or 2.1.4), Borrower shall notify Bank (which notice shall be
irrevocable) by electronic mail, facsimile, or telephone by 12:00 p.m. Pacific time on the Funding Date of the Advance. Together with such notification, Borrower must promptly deliver to Bank by electronic mail or facsimile a completed Transaction
Report executed by a Responsible Officer or his or her designee. Bank shall credit Advances to the Designated Deposit Account. Bank may make Advances under this Agreement based on instructions from a Responsible Officer or his or her designee or
without instructions if the Advances are necessary to meet Obligations which have become due. Bank may rely on any telephone notice given by a person whom Bank believes is a Responsible Officer or designee. 
  

	 	4	CREATION OF SECURITY INTEREST. 

 4.1 Grant
of Security Interest. Borrower hereby grants Bank, to secure the payment and performance in full of all of the Obligations, a continuing security interest in, and pledges to Bank, the Collateral, wherever located, whether now owned or hereafter
acquired or arising, and all proceeds and products thereof. Borrower represents, warrants, and covenants that the security interest granted herein is and shall at all times continue to be a first priority perfected security interest in the
Collateral (subject only to Permitted Liens that may have superior priority to Bank’s Lien under this Agreement). If Borrower shall acquire a commercial tort claim, Borrower shall promptly notify Bank in a writing signed by Borrower of the
general details thereof and grant to Bank in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to Bank. 
 If this Agreement is terminated, Bank’s Lien in the Collateral shall continue until the Obligations (other than inchoate indemnity obligations and
cash collateralized Letters of Credit extending beyond the termination date of this Agreement) are repaid in full in cash. Upon payment in full in cash of the Obligations (other than inchoate indemnity obligations and cash collateralized Letters of
Credit extending beyond the termination date of this Agreement) and at such time as Bank’s obligation to make Credit Extensions has terminated, Bank shall, at Borrower’s sole cost and expense, release its Liens in the Collateral and all
rights therein shall revert to Borrower. 
 4.2 Authorization to File Financing Statements. Borrower hereby authorizes Bank to file
financing statements, without notice to Borrower, with all appropriate jurisdictions to perfect or protect Bank’s interest or rights hereunder, including a notice that any disposition of the Collateral other than as permitted under this
Agreement, by either Borrower or any other Person, shall be deemed to violate the rights of Bank under the Code. 
  

	 	5	REPRESENTATIONS AND WARRANTIES 

 Borrower
represents and warrants as follows: 
 5.1 Due Organization, Authorization; Power and Authority. Borrower is duly existing and in good
standing in its jurisdiction of formation and is qualified and licensed to do business and is in good standing in any jurisdiction in which the conduct of its business or its ownership of property requires that it be qualified except where the
failure to do so could not reasonably be expected to have a material adverse effect on Borrower’s business. In connection with this Agreement, Borrower has delivered to Bank a completed certificate signed by Borrower, entitled “Perfection
Certificate”. Borrower represents and warrants to Bank that (a) Borrower’s exact legal name is that indicated on the Perfection Certificate and on the signature page hereof; (b) Borrower is an organization of the type and is
organized in the jurisdiction set forth in the Perfection Certificate; (c) the Perfection Certificate 

  

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accurately sets forth Borrower’s organizational identification number or accurately states that Borrower has none; (d) the Perfection Certificate
accurately sets forth Borrower’s place of business, or, if more than one, its chief executive office as well as Borrower’s mailing address (if different than its chief executive office); (e) Borrower (and each of its predecessors) has
not, in the past five (5) years, changed its jurisdiction of formation, organizational structure or type, or any organizational number assigned by its jurisdiction; and (f) all other information set forth on the Perfection Certificate
pertaining to Borrower and each of its Subsidiaries is accurate and complete (it being understood and agreed that Borrower may from time to time update certain information in the Perfection Certificate after the Effective Date to the extent
permitted by one or more specific provisions in this Agreement). If Borrower is not now a Registered Organization but later becomes one, Borrower shall promptly notify Bank of such occurrence and provide Bank with Borrower’s organizational
identification number. 
 The execution, delivery and performance by Borrower of the Loan Documents to which it is a party have been duly
authorized, and do not (i) conflict with any of Borrower’s organizational documents, (ii) contravene, conflict with, constitute a default under or violate any material Requirement of Law, (iii) contravene, conflict or violate any
applicable order, writ, judgment, injunction, decree, determination or award of any Governmental Authority by which Borrower or any its Subsidiaries or any of their property or assets may be bound or affected, (iv) require any action by,
filing, registration, or qualification with, or Governmental Approval from, any Governmental Authority (except such Governmental Approvals which have already been obtained and are in full force and effect) or (v) constitute an event of
default under any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which it is a party or by which it is bound in which the default could reasonably be expected to have a material adverse effect on
Borrower’s business. 
 5.2 Collateral. Borrower has good title to, has rights in, and the power to transfer each item of the
Collateral upon which it purports to grant a Lien hereunder, free and clear of any and all Liens except Permitted Liens. Borrower has no deposit accounts other than the deposit accounts with Bank, the deposit accounts, if any, described in the
Perfection Certificate delivered to Bank in connection herewith, or of which Borrower has given Bank notice and taken such actions as are necessary to give Bank a perfected security interest therein. 
 No portion of the Collateral in excess of Ten Thousand Dollars ($10,000) per location is in the possession of any third party bailee (such as a
warehouse). Except as hereafter disclosed to Bank in writing by Borrower, none of the components of the Collateral in excess of Ten Thousand Dollars ($10,000) per location shall be maintained at locations other than as provided in the Perfection
Certificate. In the event that Borrower, after the date hereof, intends to store or otherwise deliver any portion of the Collateral in excess of Ten Thousand Dollars ($10,000) per location to a bailee, then Borrower will first receive the written
consent of Bank and such bailee must acknowledge in writing that the bailee is holding such Collateral for the benefit of Bank. 
 All
Inventory is in all material respects of good and marketable quality, free from material defects. 
 Borrower is the sole owner of or has
sufficient rights to use its intellectual property, except for non-exclusive licenses granted to its customers in the ordinary course of business. Each patent is valid and enforceable and no part of the intellectual property has been judged invalid
or unenforceable, in whole or in part, and to the best of Borrower’s knowledge, no claim has been made that any part of the intellectual property violates the rights of any third party. 
  

	 	5.3	Accounts Receivable. 

 (a) For each Account with
respect to which Advances are requested, on the date each Advance is requested and made, such Account shall be an Eligible Account or an Advanced Billing Account. 
 (b) All statements made and all unpaid balances appearing in all invoices, instruments and other documents evidencing the Accounts are and shall be true and correct and all such invoices, instruments and other
documents, and all of Borrower’s Books are genuine and in all respects what they purport to be. Whether or not an Event of Default has occurred and is continuing, Bank may notify any Account Debtor owing Borrower money of Bank’s security
interest in such funds and verify the amount of such Eligible Account or Advanced Billing Account. All sales and other transactions underlying or giving rise to each Account shall comply in all material respects with all applicable laws and
governmental rules and regulations. Borrower has no knowledge of any actual or imminent Insolvency Proceeding of any Account Debtor whose accounts are an Eligible Account or an Advanced Billing Account in 

  

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any Transaction Report. To the best of Borrower’s knowledge, all signatures and endorsements on all documents, instruments, and agreements relating to
all Accounts are genuine, and all such documents, instruments and agreements are legally enforceable in accordance with their terms. 
 5.4 Litigation. Except as disclosed on the Perfection Certificate, there are no actions or proceedings pending or, to the knowledge of the Responsible Officers, threatened in writing by or against Borrower or any of its Subsidiaries
involving more than Fifty Thousand Dollars ($50,000). 
 5.5 No Material Deviation in Financial Statements. All consolidated financial
statements for Borrower and any of its Subsidiaries delivered to Bank fairly present in all material respects Borrower’s consolidated financial condition and Borrower’s consolidated results of operations. There has not been any material
deterioration in Borrower’s consolidated financial condition since the date of the most recent financial statements submitted to Bank. 
 5.6 Solvency. The fair salable value of Borrower’s assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities; Borrower is not left with unreasonably small capital after the transactions in
this Agreement; and Borrower is able to pay its debts (including trade debts) as they mature. 
 5.7 Regulatory Compliance. Borrower
is not an “investment company” or a company “controlled” by an “investment company” under the Investment Company Act. Borrower is not engaged as one of its important activities in extending credit for margin stock
(under Regulations T and U of the Federal Reserve Board of Governors). Borrower has complied in all material respects with the Federal Fair Labor Standards Act. Neither Borrower nor any of its Subsidiaries is a “holding company” or an
“affiliate” of a “holding company” or a “subsidiary company” of a “holding company” as each term is defined and used in the Public Utility Holding Company Act of 2005. Borrower has not violated any laws,
ordinances or rules, the violation of which could reasonably be expected to have a material adverse effect on its business. None of Borrower’s or any of its Subsidiaries’ properties or assets has been used by Borrower or any Subsidiary or,
to the best of Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally. Borrower and each of its Subsidiaries have obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given all notices to, all Government Authorities that are necessary to continue their respective businesses as currently conducted. 
 5.8 Subsidiaries; Investments. Borrower does not own any stock, partnership interest or other equity securities except for Permitted Investments.

 5.9 Tax Returns and Payments; Pension Contributions. Borrower 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. Borrower may defer payment of any contested taxes, provided that Borrower (a) in good faith contests its obligation to pay
the taxes by appropriate proceedings promptly and diligently instituted and conducted, (b) notifies Bank in writing of the commencement of, and any material development in, the proceedings, (c) posts bonds or takes any other steps required
to prevent the governmental authority levying such contested taxes from obtaining a Lien upon any of the Collateral that is other than a “Permitted Lien”. Borrower is unaware of any claims or adjustments proposed for any of Borrower’s
prior tax years which could result in material additional taxes becoming due and payable by Borrower. Borrower has paid all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms,
and Borrower has not withdrawn from participation in, and has not permitted partial or complete termination of, or permitted the occurrence of any other event with respect to, any such plan which could reasonably be expected to result in any
liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency. 
 5.10 Use of Proceeds. Borrower shall use the proceeds of the Credit Extensions solely as working capital and to fund its general business requirements and not for personal, family, household or agricultural purposes. 
 5.11 Full Disclosure. No written representation, warranty or other statement of Borrower in any certificate or written statement given to Bank, as
of the date such representation, warranty, or other statement was made, taken together with all such written certificates and written statements given to Bank, contains any untrue statement of a material fact or omits to state a material fact


  

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necessary to make the statements contained in the certificates or statements not misleading (it being recognized by Bank that the projections and forecasts
provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results).

  

	 	6	AFFIRMATIVE COVENANTS 

 Borrower shall do all
of the following: 
  

	 	6.1	Government Compliance. 

 (a) Maintain its and all
its Subsidiaries’ legal existence and good standing in their respective jurisdictions of formation and maintain qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to have a material adverse effect
on Borrower’s business or operations. Borrower shall comply, and have each Subsidiary comply, with all laws, ordinances and regulations to which it is subject, noncompliance with which could reasonably be expected to have a material adverse
effect on Borrower’s business. 
  

	 	6.2	Financial Statements, Reports, Certificates. 

 (a)
Borrower shall provide Bank with the following: 
 (i)(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, a Transaction Report (and any schedules related thereto); 
 (ii) within fifteen (15) days after the end of each month, (A) monthly accounts receivable agings, aged by invoice date, (B) monthly
accounts payable agings, aged by invoice date, and outstanding or held check registers, if any, (C) monthly reconciliations of accounts receivable agings (aged by invoice date), transaction reports and general ledger; (D) a schedule of
Advanced Billing Accounts; and (E) a Deferred Revenue report. 
 (iii) as soon as available, and in any event within thirty
(30) days after the end of each month, monthly unaudited financial statements prepared on a non-GAAP basis consistent with past practices of Borrower; 
 (iv) within thirty (30) days after the end of each month a monthly Compliance Certificate signed by a Responsible Officer, certifying that as of the end of such month, Borrower was in full compliance with all of
the terms and conditions of this Agreement, and setting forth calculations showing compliance with the financial covenants set forth in this Agreement and such other information as Bank shall reasonably request, including, without limitation, a
statement that at the end of such month there were no held checks; 
 (v) within forty five (45) days after the end of each fiscal year
of Borrower, (A) annual operating budgets (including income statements, balance sheets and cash flow statements, by month) for the upcoming fiscal year of Borrower, and (B) annual financial projections for the following fiscal year (on a
quarterly basis) as approved by Borrower’s board of directors, together with any related business forecasts used in the preparation of such annual financial projections; and 
 (vi) within five (5) days after the date Borrower is required to file such reports, all reports on Form 10-K, 10-Q and 8-K filed with the Securities
and Exchange Commission or a link thereto on Borrower’s or another website on the Internet. 
  

	 	6.3	Accounts Receivable. 

 (a) Schedules and
Documents Relating to Accounts. Borrower shall deliver to Bank transaction reports and schedules of collections, as provided in Section 6.2, on Bank’s standard forms; provided, however, that Borrower’s failure to execute
and deliver the same shall not affect or limit Bank’s Lien and other rights in all of Borrower’s Accounts, nor shall Bank’s failure to advance or lend against a specific Account affect or limit Bank’s Lien and other rights
therein. If reasonably requested by Bank, Borrower shall furnish Bank with copies (or, at Bank’s request, originals) of all contracts, orders, invoices, and other similar documents, and all 

  

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shipping instructions, delivery receipts, bills of lading, and other evidence of delivery, for any goods the sale or disposition of which gave rise to such
Accounts. In addition, Borrower shall deliver to Bank, on its request, the originals of all instruments, chattel paper, security agreements, guarantees and other documents and property evidencing or securing any Accounts, in the same form as
received, with all necessary endorsements, and copies of all credit memos. 
 (b) Disputes. Borrower shall promptly notify Bank of all
material disputes or claims relating to Accounts. Borrower may forgive (completely or partially), compromise, or settle any Account for less than payment in full, or agree to do any of the foregoing so long as (i) Borrower does so in good
faith, in a commercially reasonable manner, in the ordinary course of business, in arm’s-length transactions, and reports the same to Bank in the regular reports provided to Bank; (ii) no Default or Event of Default has occurred and is
continuing; and (iii) after taking into account all such discounts, settlements and forgiveness, the total outstanding Advances will not exceed the Availability Amount. 
 (c) Collection of Accounts. Borrower shall have the right to collect all Accounts, unless and until a Default or an Event of Default has occurred
and is continuing. Whether or not an Event of Default has occurred and is continuing, Borrower shall hold all payments on, and proceeds of, Accounts in trust for Bank, and Borrower shall immediately deliver all such payments and proceeds to Bank in
their original form, duly endorsed, to be applied to the Obligations pursuant to the terms of Section 9.4 hereof. Bank may, in its good faith business judgment, require that all proceeds of Accounts be deposited by Borrower into a lockbox
account, or such other “blocked account” as Bank may specify, pursuant to a blocked account agreement in such form as Bank may specify in its good faith business judgment. 
 (d) Returns. Provided no Event of Default has occurred and is continuing, if any Account Debtor returns any Inventory to Borrower, Borrower
shall promptly (i) determine the reason for such return, (ii) issue a credit memorandum to the Account Debtor in the appropriate amount, and (iii) provide a copy of such credit memorandum to Bank, upon request from Bank. In the event
any attempted return occurs after the occurrence and during the continuance of any Event of Default, Borrower shall hold the returned Inventory in trust for Bank, and immediately notify Bank of the return of the Inventory. 
 (e) Verification. Bank may, from time to time, with prior notice to Borrower unless an Event of Default shall have occurred and be
continuing, verify directly with the respective Account Debtors the validity, amount and other matters relating to the Accounts, either in the name of Borrower or Bank or such other name as Bank may choose. 
 (f) No Liability. Bank shall not be responsible or liable for any shortage or discrepancy in, damage to, or loss or destruction of, any
goods, the sale or other disposition of which gives rise to an Account, or for any error, act, omission, or delay of any kind occurring in the settlement, failure to settle, collection or failure to collect any Account, or for settling any Account
in good faith for less than the full amount thereof, nor shall Bank be deemed to be responsible for any of Borrower’s obligations under any contract or agreement giving rise to an Account. Nothing herein shall, however, relieve Bank from
liability for its own gross negligence or willful misconduct. 
 6.4 Remittance of Proceeds. Except as otherwise provided in
Section 6.3(c), deliver, in kind, all proceeds arising from the disposition of any Collateral to Bank in the original form in which received by Borrower not later than the following Business Day after receipt by Borrower, to be applied to the
Obligations pursuant to the terms of Section 9.4 hereof; provided that, if no Default or Event of Default has occurred and is continuing, Borrower shall not be obligated to remit to Bank the proceeds of the sale of worn out or obsolete
Equipment disposed of by Borrower in good faith in an arm’s length transaction for an aggregate purchase price of $50,000 or less (for all such transactions in any fiscal year). Borrower agrees that it will not commingle proceeds of Collateral
with any of Borrower’s other funds or property, but will hold such proceeds separate and apart from such other funds and property and in an express trust for Bank. Nothing in this Section limits the restrictions on disposition of Collateral set
forth elsewhere in this Agreement. 
 6.5 Taxes; Pensions. Timely file all required tax returns and reports and timely pay all
foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except for deferred payment of any taxes contested pursuant to the terms of Section 5.9 hereof, and pay all amounts necessary to fund all present
pension, profit sharing and deferred compensation plans in accordance with their terms. 
  

 9 







 6.6 Access to Collateral; Books and Records. At reasonable times, on one (1) Business
Day’s notice (provided no notice is required if an Event of Default has occurred and is continuing), Bank, or its agents, shall have the right to inspect the Collateral and the right to audit and copy Borrower’s Books. The foregoing
inspections and audits shall be at Borrower’s expense, and the charge therefor shall be $750 per person per day (or such higher amount as shall represent Bank’s then-current standard charge for the same), plus reasonable out-of-pocket
expenses. In the event Borrower and Bank schedule an audit more than ten (10) days in advance, and Borrower cancels or seeks to reschedules the audit with less than ten (10) days written notice to Bank, then (without limiting any of
Bank’s rights or remedies), Borrower shall pay Bank a fee of $1,000 plus any out-of-pocket expenses incurred by Bank to compensate Bank for the anticipated costs and expenses of the cancellation or rescheduling. The Initial Audit shall be
concluded no later than sixty (60) days after the Effective Date; provided no default by Borrower hereunder shall be deemed to have occurred in the event that Bank elects not to, or otherwise fails through no fault of Borrower, to complete the
Initial Audit within such timeframe. 
 6.7 Insurance. Keep its business and the Collateral insured for risks and in amounts standard
for companies in Borrower’s industry and location and as Bank may reasonably request. Insurance policies shall be in a form, with companies, and in amounts that are reasonably satisfactory to Bank. All property policies shall have a
lender’s loss payable endorsement showing Bank as the sole lender loss payee and waive subrogation against Bank, and all liability policies shall show, or have endorsements showing, Bank as an additional insured. All policies (or the loss
payable and additional insured endorsements) shall provide that the insurer shall endeavor to give Bank at least twenty (20) days notice before canceling, amending, or declining to renew its policy. At Bank’s request, Borrower shall
deliver certified copies of policies and evidence of all premium payments. Proceeds payable under any property policy shall, at Bank’s option, be payable to Bank on account of the Obligations. If Borrower fails to obtain insurance as required
under this Section 6.7 or to pay any amount or furnish any required proof of payment to third persons and Bank, Bank may make all or part of such payment or obtain such insurance policies required in this Section 6.7, and take any action
under the policies Bank deems prudent. 
 6.8 Operating Accounts. 
 (a) No later than one hundred twenty (120) days after the Effective Date and at all times thereafter, maintain its primary and its
Subsidiaries’ primary operating and other deposit accounts and securities accounts with Bank and Bank’s Affiliates which accounts shall represent at least 85% of the dollar value of Borrower’s and such Subsidiaries accounts at all
financial institutions. 
 (b) Provide Bank five (5) days’ prior written notice before establishing any Collateral Account at or
with any bank or financial institution other than Bank or Bank’s Affiliates. 
 6.9 Financial Covenants. 
 Borrower shall maintain at all times, to be tested as of the last day of each month, unless otherwise noted, on a consolidated basis with respect to
Borrower and its Subsidiaries: 
 (a) Tangible Net Worth. A Tangible Net Worth not less than negative Seventeen Million Two Hundred
Thousand Dollars ($17,200,000), increasing quarterly by fifty percent (50%) of Net Income and monthly by fifty percent (50%) of issuances of equity after the Effective Date and the principal amount of Subordinated Debt. 
 6.10 Protection of Intellectual Property Rights. Borrower shall: (a) use commercially reasonable efforts to protect, defend and maintain the
validity and enforceability of its intellectual property; (b) promptly advise Bank in writing of material infringements of its intellectual property; and (c) not allow any intellectual property material to Borrower’s business to be
abandoned, forfeited or dedicated to the public without Bank’s written consent. 
 6.11 Litigation Cooperation. From the date
hereof and continuing through the termination of this Agreement, make available to Bank, without expense to Bank, Borrower and its officers, employees and agents and Borrower’s books and records, to the extent that Bank may deem them reasonably
necessary to prosecute or defend any third-party suit or proceeding instituted by or against Bank with respect to any Collateral or relating to Borrower. 
  

 10 







 6.12 Further Assurances. Execute any further instruments and take further action as Bank
reasonably requests to perfect or continue Bank’s Lien in the Collateral or to effect the purposes of this Agreement. 
  

	 	7	NEGATIVE COVENANTS 

 Borrower shall not do
any of the following without Bank’s prior written consent: 
 7.1 Dispositions. Convey, sell, lease, transfer or otherwise dispose
of (collectively, “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, except for Transfers (a) of Inventory in the ordinary course of business; (b) of worn-out or
obsolete Equipment; (c) in connection with Permitted Liens and Permitted Investments; (d) the sale of Borrower’s equity securities to investors so long as there is no Change of Control and (e) of non-exclusive licenses for the
use of the property of Borrower or its Subsidiaries in the ordinary course of business. 
 7.2 Changes in Business, Management, Control,
or Business Locations. (a) Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower and such Subsidiary, as applicable, or reasonably related or incidental thereto;
(b) liquidate or dissolve; or (c) (i) have a change in management or (ii) permit or suffer any Change in Control. Borrower shall not, without at least twenty (20) days’ prior written notice to Bank: (1) add any new
offices or business locations, including warehouses (unless such new offices or business locations contain less than Ten Thousand Dollars ($10,000) in Borrower’s assets or property), (2) change its jurisdiction of organization,
(3) change its organizational structure or type, (4) change its legal name, or (5) change any organizational number (if any) assigned by its jurisdiction of organization. 
 7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire,
or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person. A Subsidiary may merge or consolidate into another Subsidiary or into Borrower. 
 7.4 Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness.

 7.5 Encumbrance. Create, incur, allow, or suffer any Lien on any of its property, or assign or convey any right to receive income,
including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, permit any Collateral not to be subject to the first priority security interest granted herein (subject to Permitted Liens), or enter into
any agreement, document, instrument or other arrangement (except with or in favor of Bank) with any Person which directly or indirectly prohibits or has the effect of prohibiting Borrower or any Subsidiary from assigning, mortgaging, pledging,
granting a security interest in or upon, or encumbering any of Borrower’s or any Subsidiary’s intellectual property, except as is otherwise permitted in Section 7.1 hereof and the definition of “Permitted Lien” herein.

 7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account except pursuant to the terms of Section 6.8 hereof.

 7.7 Distributions; Investments. (a) Pay any dividends or make any distribution or payment or redeem, retire or purchase any
capital stock provided that (i) Borrower may convert any of its convertible securities into other securities pursuant to the terms of such convertible securities or otherwise in exchange thereof, (ii) Borrower may pay dividends solely in
common stock; and (iii) Borrower may repurchase the stock of former employees or consultants pursuant to stock repurchase agreements so long as an Event of Default does not exist at the time of such repurchase and would not exist after giving
effect to such repurchase, provided such repurchase does not exceed in the aggregate of Fifty Thousand Dollars ($50,000) per fiscal year; or (b) directly or indirectly make any Investment other than Permitted Investments, or permit any of its
Subsidiaries to do so. 
  

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 7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to exist any
material transaction with any Affiliate of Borrower, except for (i) the sale of equity securities to Borrower’s existing investors and (ii) transactions that are in the ordinary course of Borrower’s business, in each case, upon
fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person. 
 7.9 Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt, except under the terms of the subordination, intercreditor, or other similar agreement to which such Subordinated Debt is
subject, or (b) amend any provision in any document relating to the Subordinated Debt which would increase the amount thereof or adversely affect the subordination thereof to Obligations owed to Bank. 
 7.10 Compliance. Become an “investment company” or a company controlled by an “investment company”, under the Investment
Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System), or use the proceeds of any Credit Extension
for that purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or
regulation, if the violation could reasonably be expected to have a material adverse effect on Borrower’s business, or permit any of its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in, permit partial
or complete termination of, or permit the occurrence of any other event with respect to, any present pension, profit sharing and deferred compensation plan which could reasonably be expected to result in any liability of Borrower, including any
liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency. 
  

	 	8	EVENTS OF DEFAULT 

 Any one of the following
shall constitute an event of default (an “Event of Default”) under this Agreement: 
 8.1 Payment Default. Borrower
fails to (a) make any payment of principal or interest on any Credit Extension on its due date, or (b) pay any other Obligations within three (3) Business Days after such Obligations are due and payable (which three (3) day grace
period shall not apply to payments due on the Revolving Line Maturity Date). During the cure period, the failure to cure the payment default is not an Event of Default (but no Credit Extension will be made during the cure period); 
 8.2 Covenant Default. 
 (a) Borrower
fails or neglects to perform any obligation in Sections 6.2, 6.7, 6.8 or 6.9 or violates any covenant in Section 7; or 
 (b) Borrower
fails or neglects to perform, keep, or observe any other term, provision, condition, covenant or agreement contained in this Agreement or any Loan Documents, and as to any default (other than those specified in this Section 8) under such other
term, provision, condition, covenant or agreement that can be cured, has failed to cure the default within ten (10) days after the occurrence thereof; provided, however, that if the default cannot by its nature be cured within the ten
(10) day period or cannot after diligent attempts by Borrower be cured within such ten (10) day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional period (which shall not in any
case exceed thirty (30) days) to attempt to cure such default, and within such reasonable time period the failure to cure the default shall not be deemed an Event of Default (but no Credit Extensions shall be made during such cure period).
Grace periods provided under this section shall not apply, among other things, to financial covenants or any other covenants set forth in subsection (a) above; 
 8.3 Material Adverse Change. A Material Adverse Change occurs; 
 8.4 Attachment. (a) Any
material portion of Borrower’s assets is attached, seized, levied on, or comes into possession of a trustee or receiver; (b) the service of process seeking to attach, by trustee or similar process, any funds of Borrower or of any entity
under control of Borrower (including a Subsidiary) on deposit with Bank or any Bank Affiliate; (c) Borrower is enjoined, restrained, or prevented by court order from conducting any part of its business; or (d) a notice of lien, levy, or
assessment is filed against any of Borrower’s assets by any government agency, and the same under clauses (a) through (d) hereof are not, within ten (10) days after the occurrence thereof, discharged or stayed (whether through
the posting of a bond or otherwise); provided, however, no Credit Extensions shall be made during any ten (10) day cure period; 
  

 12 







 8.5 Insolvency. (a) Borrower is unable to pay its debts (including trade debts) as they
become due or otherwise becomes insolvent; (b) Borrower begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower and not dismissed or stayed within thirty (30) days (but no Credit Extensions shall be
made while of any of the conditions described in clause (a) exist and/or until any Insolvency Proceeding is dismissed); 
 8.6 Other
Agreements. There is a default in any agreement to which Borrower is a party with a third party or parties resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount
in excess of Fifty Thousand Dollars ($50,000) or that could have a material adverse effect on Borrower’s or any Guarantor’s business; 
 8.7 Judgments. One or more judgments, orders, or decrees for the payment of money in an amount, individually or in the aggregate, of at least Fifty Thousand Dollars ($50,000) (not covered by independent third-party insurance as to
which liability has been accepted by such insurance carrier) shall be rendered against Borrower and shall remain unsatisfied, unvacated, or unstayed for a period of ten (10) days after the entry thereof (provided that no Credit Extensions will
be made prior to the satisfaction, vacation, or stay of such judgment, order, or decree); 
 8.8 Misrepresentations. Borrower or any
Person acting for Borrower makes any representation, warranty, or other statement now or later in this Agreement, any Loan Document or in any writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document, and such
representation, warranty, or other statement is incorrect in any material respect when made; 
 8.9 Subordinated Debt. A default or
breach occurs under any agreement between Borrower and any creditor of Borrower that signed a subordination, intercreditor, or other similar agreement with Bank, or any creditor that has signed such an agreement with Bank breaches any terms of such
agreement; or 
  

	 	9	BANK’S RIGHTS AND REMEDIES 

 9.1
Rights and Remedies. While an Event of Default occurs and continues Bank may, without notice or demand, do any or all of the following: 
 (a) declare all Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs all Obligations are immediately due and payable without any action by Bank); 
 (b) stop advancing money or extending credit for Borrower’s benefit under this Agreement or under any other agreement between Borrower and Bank;

 (c) demand that Borrower (i) deposits cash with Bank in an amount equal to the aggregate amount of any Letters of Credit remaining
undrawn, as collateral security for the repayment of any future drawings under such Letters of Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii) pay in advance all Letter of Credit fees scheduled to be paid or payable
over the remaining term of any Letters of Credit; 
 (d) terminate any FX Forward Contracts; 
 (e) settle or adjust disputes and claims directly with Account Debtors for amounts on terms and in any order that Bank considers advisable, notify any
Person owing Borrower money of Bank’s security interest in such funds, and verify the amount of such account; 
 (f) make any payments
and do any acts it considers necessary or reasonable to protect the Collateral and/or its security interest in the Collateral. Borrower shall assemble the Collateral if Bank requests and make it available as Bank designates. Bank may enter premises
where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Borrower
grants Bank a license to enter and occupy any of its premises, without charge, to exercise any of Bank’s rights or remedies; 
  

 13 







 (g) apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any
amount held by Bank owing to or for the credit or the account of Borrower; 
 (h) ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell the Collateral. Bank is hereby granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower’s labels, patents, copyrights, mask works, rights of use of any name,
trade secrets, trade names, trademarks, service marks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with
Bank’s exercise of its rights under this Section, Borrower’s rights under all licenses and all franchise agreements inure to Bank’s benefit; 
 (i) place a “hold” on any account maintained with Bank and/or deliver a notice of exclusive control, any entitlement order, or other directions or instructions pursuant to any agreements providing control of
any Collateral; 
 (j) demand and receive possession of Borrower’s Books; and 
 (k) exercise all rights and remedies available to Bank under the Loan Documents or at law or equity, including all remedies provided under the Code
(including disposal of the Collateral pursuant to the terms thereof). 
 9.2 Power of Attorney. Borrower hereby irrevocably appoints
Bank as its lawful attorney-in-fact, exercisable upon the occurrence and during the continuance of an Event of Default, to: (a) endorse Borrower’s name on any checks or other forms of payment or security; (b) sign Borrower’s name
on any invoice or bill of lading for any Account or drafts against Account Debtors; (c) settle and adjust disputes and claims about the Accounts directly with Account Debtors, for amounts and on terms Bank determines reasonable; (d) make,
settle, and adjust all claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge, encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based thereon, or otherwise take any
action to terminate or discharge the same; and (f) transfer the Collateral into the name of Bank or a third party as the Code permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to sign Borrower’s name on any documents
necessary to perfect or continue the perfection of Bank’s security interest in the Collateral regardless of whether an Event of Default has occurred until all Obligations have been satisfied in full and Bank is under no further obligation to
make Credit Extensions hereunder Bank’s foregoing appointment as Borrower’s attorney in fact, and all of Bank’s rights and powers, coupled with an interest, are irrevocable until all Obligations have been fully repaid and performed
and Bank’s obligation to provide Credit Extensions terminates. 
 9.3 Protective Payments. If Borrower fails to obtain the
insurance called for by Section 6.7 or fails to pay any premium thereon or fails to pay any other amount which Borrower is obligated to pay under this Agreement or any other Loan Document, Bank may obtain such insurance or make such payment,
and all amounts so paid by Bank are Bank Expenses and immediately due and payable, bearing interest at the then highest applicable rate, and secured by the Collateral. Bank will make reasonable efforts to provide Borrower with notice of Bank
obtaining such insurance at the time it is obtained or within a reasonable time thereafter. No payments by Bank are deemed an agreement to make similar payments in the future or Bank’s waiver of any Event of Default. 
 9.4 Application of Payments and Proceeds. Borrower shall have no right to specify the order or the accounts to which Bank shall allocate or apply
any payments required to be made by Borrower to Bank or otherwise received by Bank under this Agreement when any such allocation or application is not specified elsewhere in this Agreement. If an Event of Default has occurred and is continuing, Bank
may apply any funds in its possession, whether from Borrower account balances, payments, proceeds realized as the result of any collection of Accounts or other disposition of the Collateral, or otherwise, to the Obligations in such order as Bank
shall determine in its sole discretion. Any surplus shall be paid to Borrower by credit to the Designated Deposit Account or to other Persons legally entitled thereto; Borrower shall remain liable to Bank for any deficiency. If Bank, in its good
faith business judgment, directly or indirectly enters into a deferred payment or other credit transaction with any purchaser at any sale of Collateral, Bank shall have the option, exercisable at any time, of either reducing the Obligations by the
principal amount of the purchase price or deferring the reduction of the Obligations until the actual receipt by Bank of cash therefor. 
  

 14 







 9.5 Bank’s Liability for Collateral. So long as Bank complies with reasonable banking
practices regarding the safekeeping of the Collateral in the possession or under the control of Bank, Bank shall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral;
(c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss, damage or destruction of the Collateral. 
 9.6 No Waiver; Remedies Cumulative. Bank’s failure, at any time or times, to require strict performance by Borrower of any provision of this
Agreement or any other Loan Document shall not waive, affect, or diminish any right of Bank thereafter to demand strict performance and compliance herewith or therewith. No waiver hereunder shall be effective unless signed by Bank and then is only
effective for the specific instance and purpose for which it is given. Bank’s rights and remedies under this Agreement and the other Loan Documents are cumulative. Bank has all rights and remedies provided under the Code, by law, or in equity.
Bank’s exercise of one right or remedy is not an election, and Bank’s waiver of any Event of Default is not a continuing waiver. Bank’s delay in exercising any remedy is not a waiver, election, or acquiescence. 
 9.7 Demand Waiver. Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at
maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Bank on which Borrower is liable. 
  

	 	10	NOTICES 

 All notices, consents, requests,
approvals, demands, or other communication (collectively, “Communication”), other than Advance requests made pursuant to Section 3.4, by any party to this Agreement or any other Loan Document must be in writing and be delivered
or sent by facsimile at the addresses or facsimile numbers listed below. Bank or Borrower may change its notice address by giving the other party written notice thereof. Each such Communication shall be deemed to have been validly served, given, or
delivered: (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the U.S. mail, registered or certified mail, return receipt requested, with proper postage prepaid; (b) upon transmission, when sent by
facsimile transmission (with such facsimile promptly confirmed by delivery of a copy by personal delivery or United States mail as otherwise provided in this Section 10); (c) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address or facsimile number indicated below. Advance requests made
pursuant to Section 3.4 must be in writing and may be in the form of electronic mail, delivered to Bank by Borrower at the e-mail address of Bank provided below and shall be deemed to have been validly served, given, or delivered when sent
(with such electronic mail promptly confirmed by delivery of a copy by personal delivery or United States mail as otherwise provided in this Section 10). Bank or Borrower may change its address, facsimile number, or electronic mail address by
giving the other party written notice thereof in accordance with the terms of this Section 10. 
  

							
	 If to Borrower:
	  	ST. BERNARD SOFTWARE, INC.	  	
		  	15015 Avenue of Science	  	
		  	San Diego, CA 92128	  	
		  	Attn:	 	 Legal
	  	
		  	Fax:	 	 858-676-5034
	  	
		  	Email:	 	  
	  	
			
	 If to Bank:
	  	Silicon Valley Bank	  	
		  	38 Technology West, Suite 150	  	
		  	Irvine, CA 92618-5313	  	
		  	Attn: Derek Brunelle – Relationship Manager	  	
		  	Fax: (949) 789-1930	  	
		  	Email: dbrunelle@svb.com	  	

  

	 	11	CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE 

 California law governs the Loan Documents without regard to principles of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in Santa Clara County,
California; provided, however, that nothing in this 

  

 15 







 
Agreement shall be deemed to operate to preclude Bank from bringing suit or taking other legal action in any other jurisdiction to realize on the Collateral
or any other security for the Obligations, or to enforce a judgment or other court order in favor of Bank. Borrower expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and Borrower hereby
waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court. Borrower hereby
waives personal service of the summons, complaints, and other process issued in such action or suit and agrees that service of such summons, complaints, and other process may be made by registered or certified mail addressed to Borrower at the
address set forth in Section 10 of this Agreement and that service so made shall be deemed completed upon the earlier to occur of Borrower’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage
prepaid. 
 TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS
AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL. 
 WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO
WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial by jury is not enforceable, the parties hereto agree that any and all disputes or controversies of any nature between them arising at any time shall be
decided by a reference to a private judge, mutually selected by the parties (or, if they cannot agree, by the Presiding Judge of the Santa Clara County, California Superior Court) appointed in accordance with California Code of Civil Procedure
Section 638 (or pursuant to comparable provisions of federal law if the dispute falls within the exclusive jurisdiction of the federal courts), sitting without a jury, in Santa Clara County, California; and the parties hereby submit to the
jurisdiction of such court. The reference proceedings shall be conducted pursuant to and in accordance with the provisions of California Code of Civil Procedure §§ 638 through 645.1, inclusive. The private judge shall have the power, among
others, to grant provisional relief, including without limitation, entering temporary restraining orders, issuing preliminary and permanent injunctions and appointing receivers. All such proceedings shall be closed to the public and confidential and
all records relating thereto shall be permanently sealed. If during the course of any dispute, a party desires to seek provisional relief, but a judge has not been appointed at that point pursuant to the judicial reference procedures, then such
party may apply to the Santa Clara County, California Superior Court for such relief. The proceeding before the private judge shall be conducted in the same manner as it would be before a court under the rules of evidence applicable to judicial
proceedings. The parties shall be entitled to discovery which shall be conducted in the same manner as it would be before a court under the rules of discovery applicable to judicial proceedings. The private judge shall oversee discovery and may
enforce all discovery rules and order applicable to judicial proceedings in the same manner as a trial court judge. The parties agree that the selected or appointed private judge shall have the power to decide all issues in the action or proceeding,
whether of fact or of law, and shall report a statement of decision thereon pursuant to the California Code of Civil Procedure § 644(a). Nothing in this paragraph shall limit the right of any party at any time to exercise self-help remedies,
foreclose against collateral, or obtain provisional remedies. The private judge shall also determine all issues relating to the applicability, interpretation, and enforceability of this paragraph. 
  

	 	12	GENERAL PROVISIONS 

 12.1.1 Termination
Prior to Revolving Line Maturity Date. This Agreement may be terminated prior to the Revolving Line Maturity Date by Borrower, effective three (3) Business Days after written notice of termination is given to Bank. Notwithstanding any such
termination, Bank’s lien and security interest in the Collateral shall continue until Borrower fully satisfies its Obligations (other than inchoate indemnity obligations and cash collateralized Letters of Credit extending beyond the termination
date of this Agreement). If such termination is at Borrower’s election or at Bank’s election due to the occurrence and continuance of an Event of Default, Borrower shall pay to Bank, in addition to the payment of any other expenses or fees
then-owing, a termination fee in an amount equal to (x) Eighty Thousand Dollars ($80,000) for an early termination on or before the first anniversary of the Effective Date or (y) Forty Thousand Dollars ($40,000) for an early termination on
or after the first anniversary of the Effective Date (the “Early Termination Fee”). The Early Termination Fee shall be due and payable on the effective date of such termination and thereafter shall bear interest at a rate equal to the
highest rate applicable to any of the Obligations. Notwithstanding the foregoing, Bank agrees to waive the Early Termination Fee if Bank agrees to refinance and redocument this Agreement under another division of Bank (in its sole and exclusive
discretion) prior to the Revolving Line Maturity Date. 
  

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 12.2 Successors and Assigns. This Agreement binds and is for the benefit of the successors and
permitted assigns of each party. Borrower may not assign this Agreement or any rights or obligations under it without Bank’s prior written consent (which may be granted or withheld in Bank’s discretion). Bank has the right, without the
consent of or notice to Borrower, to sell, transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations, rights, and benefits under this Agreement and the other Loan Documents. 
 12.3 Indemnification. Borrower agrees to indemnify, defend and hold Bank and its directors, officers, employees, agents, attorneys, or any other
Person affiliated with or representing Bank harmless against: (a) all obligations, demands, claims, and liabilities (collectively, “Claims”) asserted by any other party in connection with the transactions contemplated by the
Loan Documents; and (b) all losses or Bank Expenses incurred, or paid by Bank from, following, or arising from transactions between Bank and Borrower (including reasonable attorneys’ fees and expenses), except for Claims and/or losses
directly caused by Bank’s gross negligence or willful misconduct. 
 12.4 Time of Essence. Time is of the essence for the
performance of all Obligations in this Agreement. 
 12.5 Severability of Provisions. Each provision of this Agreement is severable
from every other provision in determining the enforceability of any provision. 
 12.6 Amendments in Writing; Integration. All
amendments to this Agreement must be in writing and signed by both Bank and Borrower. This Agreement and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior
agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Agreement and the Loan Documents merge into this Agreement and the Loan Documents. 
 12.7 Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, are an original, and all taken together, constitute one Agreement. 
 12.8 Survival. All covenants,
representations and warranties made in this Agreement continue in full force until this Agreement has terminated pursuant to its terms and all Obligations (other than inchoate indemnity obligations and any other obligations which, by their terms,
are to survive the termination of this Agreement) have been satisfied. The obligation of Borrower in Section 12.2 to indemnify Bank shall survive until the statute of limitations with respect to such claim or cause of action shall have run.

 12.9 Confidentiality. In handling any confidential information, Bank shall exercise the same degree of care that it exercises for
its own proprietary information, but disclosure of information may be made: (a) to Bank’s Subsidiaries or Affiliates; (b) to prospective transferees or purchasers of any interest in the Credit Extensions (provided, however, Bank shall
use commercially reasonable efforts to obtain such prospective transferee’s or purchaser’s agreement to the terms of this provision); (c) as required by law, regulation, subpoena, or other order; (d) to Bank’s regulators or
as otherwise required in connection with Bank’s examination or audit; and (e) as Bank considers appropriate in exercising remedies under this Agreement. Confidential information does not include information that either: (i) is in the
public domain or in Bank’s possession when disclosed to Bank, or becomes part of the public domain after disclosure to Bank; or (ii) is disclosed to Bank by a third party, if Bank does not know that the third party is prohibited from
disclosing the information. 
 12.10 Attorneys’ Fees, Costs and Expenses. In any action or proceeding between Borrower and Bank
arising out of or relating to the Loan Documents, the prevailing party shall be entitled to recover its reasonable attorneys’ fees and other costs and expenses incurred, in addition to any other relief to which it may be entitled. 

 

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	 	13	DEFINITIONS 

 13.1 Definitions. As
used in this Agreement, the following terms have the following meanings: 
 “Account” is any “account” as defined
in the Code with such additions to such term as may hereafter be made, and includes, without limitation, all accounts receivable and other sums owing to Borrower. 
 “Account Debtor” is any “account debtor” as defined in the Code with such additions to such term as may hereafter be made. 
 “Advance” or “Advances” means an advance (or advances) under the Revolving Line. 
 “Advanced Billing Accounts” means renewal invoices which do not include a purchase order and have not reached the existing subscription
expiration date for subscription services which might not be renewed. 
 “Affiliate” of any Person is a Person that owns or
controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person’s senior executive officers, directors, partners and, for any Person that is a limited
liability company, that Person’s managers and members. 
 “Agreement” is defined in the preamble hereof. 
 “Applicable Rate” the greater of (i) the Prime Rate or (ii) seven and one half percent (7.50%) per annum. 
 “Availability Amount” is (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 the Term Loans
and minus (f) the outstanding principal balance of any Advances. 
 “Bank” is defined in the preamble hereof.

 “Bank Expenses” are all audit fees and expenses, costs, and expenses (including reasonable attorneys’ fees and
expenses) for preparing, amending, negotiating, administering, defending and enforcing the Loan Documents (including, without limitation, those incurred in connection with appeals or Insolvency Proceedings) or otherwise incurred with respect to
Borrower. 
 “Borrower” is defined in the preamble hereof 
 “Borrower’s Books” are all Borrower’s books and records including ledgers, federal and state tax returns, records regarding
Borrower’s assets or liabilities, the Collateral, business operations or financial condition, and all computer programs or storage or any equipment containing such information. 
 “Borrowing Base” means (i) seventy percent (70%) of Eligible Accounts and (ii) sixty percent (60%) of Advanced
Billing Accounts, as determined by Bank from Borrower’s most recent Transaction Report; provided, however, that Bank may, with notice to Borrower, decrease the foregoing percentage in its good faith business judgment based on events,
conditions, contingencies, or risks which, as determined by Bank, may adversely affect Collateral. 
 “Borrowing
Resolutions” are those resolutions substantially in the form attached hereto as Exhibit B. 
 “Business Day” is any
day that is not a Saturday, Sunday or a day on which Bank is closed. 
 “Cash Equivalents” means (a) marketable direct
obligations issued or unconditionally guaranteed by the United States or any agency or any State thereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more than one
(1) year after its creation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc.; and (c) Bank’s certificates of deposit issued maturing no more than one
(1) year after issue. 
  

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 “Cash Management Services” is defined in Section 2.1.4. 
 “Cash Management Sublimit” means a sublimit under the Revolving Line for Cash Management Services in an aggregate amount not to exceed
Two Hundred Fifty Thousand Dollars ($250,000), minus the outstanding amount of the FX Reserve and Letters of Credit. 
 “Change
in Control” means any event, transaction, or occurrence as a result of which (a) any “person” (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as an amended (the
“Exchange Act”)), other than a trustee or other fiduciary holding securities under an employee benefit plan of Borrower, is or becomes a beneficial owner (within the meaning Rule 13d-3 promulgated under the Exchange Act), directly
or indirectly, of securities of Borrower, representing thirty five percent (35%) or more of the combined voting power of Borrower’s then outstanding securities; or (b) during any period of twelve consecutive calendar months,
individuals who at the beginning of such period constituted the Board of Directors of Borrower (together with any new directors whose election by the Board of Directors of Borrower was approved by a vote of at least two-thirds of the directors then
still in office who either were directions at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason other than death or disability to constitute a majority of the directors then in
office; provided however that a sale of equity securities to venture capital investors reasonably acceptable to Bank in a bona fide equity financing transaction shall not be deemed a Change of Control. 
 “Code” is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the State of California;
provided, that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9
shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to, Bank’s Lien on any Collateral is governed by the Uniform
Commercial Code in effect in a jurisdiction other than the State of California, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes on the provisions thereof
relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions. 
 “Collateral” is any and all properties, rights and assets of Borrower described on Exhibit A. 
 “Collateral Account” is any Deposit Account, Securities Account, or Commodity Account. 
 “Commodity
Account” is any “commodity account” as defined in the Code with such additions to such term as may hereafter be made. 
 “Communication” is defined in Section 10. 
 “Compliance Certificate” is that certain
certificate in the form attached hereto as Exhibit C. 
 “Contingent Obligation” is, for any Person, any direct or
indirect liability, contingent or not, of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly liable; (b) any obligations for undrawn letters of credit for the account of that Person; and (c) all obligations from any interest rate, currency or commodity
swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent Obligation” does
not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum
reasonably anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under any guarantee or other support arrangement. 
 “Credit Extension” is any Advance, each Term Loan, Letter of Credit, FX Reserve, amount utilized for Cash Management Services, or any
other extension of credit by Bank for Borrower’s benefit. 
 “Default Rate” is defined in Section 2.3(b).

  

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 “Deferred Revenue” is all amounts received or invoiced in advance of performance under
contracts and not yet recognized as revenue. 
 “Deposit Account” is any “deposit account” as defined in the Code
with such additions to such term as may hereafter be made. 
 “Designated Deposit Account” is Borrower’s deposit
account, account number                     , maintained with Bank. 
 “Dollars,” “dollars” and “$” each mean lawful money of the United States. 
 “Domestic Subsidiary” means a Subsidiary organized under the laws of the United States or any state or territory thereof or the District
of Columbia. 
 “Draw Period” is the period of time from the Effective Date through the earliest to occur of (a) the
date that is six (6) months from the Effective Date, (b) an Event of Default, or (c) the existence of any Default. 
 “Effective Date” is the date Bank executes this Agreement as indicated on the signature page hereof. 
 “Eligible Accounts” means Accounts which arise in the ordinary course of Borrower’s business that meet all Borrower’s representations and warranties in Section 5.3. Bank reserves the right at any time after
the Effective Date, with notice to Borrower, to adjust any of the criteria set forth below and to establish new criteria in its good faith business judgment. Eligible Accounts shall not include: 
 (a) Advanced Billing Accounts; 
 (b) Accounts
for which the Account Debtor has not been invoiced; 
 (c) Accounts that the Account Debtor has not paid within ninety (90) days of
invoice date except (i) as approved in writing in Bank and (ii) for accounts where Hewlett Packard, EMC2 (Legato), Symantec (Veritas), Syncsort or Symantec (Altiris) are the Account Debtor provided that the aggregate dollar amount of any
such Eligible Accounts shall not exceed Six Hundred Thousand Dollars ($600,000) at any time: 
 (d) Accounts owing from an Account Debtor,
fifty percent (50%) or more of whose Accounts have not been paid within ninety (90) days of invoice date; 
 (e) Accounts with
credit balances over ninety (90) days from invoice date; 
 (f) Accounts owing from an Account Debtor, including Affiliates, whose total
obligations to Borrower exceed twenty-five (25%) of all Accounts, for the amounts that exceed that percentage, unless Bank approves in writing; 
 (g) Accounts owing from an Account Debtor which does not have its principal place of business in the United States except for Eligible Foreign Accounts; 
 (h) Accounts owing from an Account Debtor which is a federal, state or local government entity or any department, agency, or instrumentality thereof
except for Accounts of the United States if Borrower has assigned its payment rights to Bank and the assignment has been acknowledged under the Federal Assignment of Claims Act of 1940, as amended; 
 (i) Accounts owing from an Account Debtor to the extent that Borrower is indebted or obligated in any manner to the Account Debtor (as creditor, lessor,
supplier or otherwise—sometimes called “contra” accounts, accounts payable, customer deposits or credit accounts), with the exception of customary credits, adjustments and/or discounts given to an Account Debtor by Borrower in the
ordinary course of its business; 
  

 20 







 (j) Accounts for demonstration or promotional equipment, or in which goods are consigned, or sold on a
“sale guaranteed”, “sale or return”, “sale on approval”, “bill and hold”, or other terms if Account Debtor’s payment may be conditional; 
 (k) Accounts for which the Account Debtor is Borrower’s Affiliate, officer, employee, or agent; 
 (l) Accounts in which the Account Debtor disputes liability or makes any claim (but only up to the disputed or claimed amount), or if the Account Debtor
is subject to an Insolvency Proceeding, or becomes insolvent, or goes out of business; 
 (m) Accounts owing from an Account Debtor with
respect to which Borrower has received Deferred Revenue (but only to the extent of such Deferred Revenue); and 
 (n) Accounts for which Bank
in its good faith business judgment determines collection to be doubtful. 
 “Eligible Foreign Accounts” means Accounts
arising in the ordinary course of Borrower’s business from an Account Debtor that does not have its principal place of business in the United States or Canada but are otherwise Eligible Accounts that are (a) covered by credit insurance
satisfactory to Bank, less any deductible and (b) supported by letter(s) of credit acceptable to Bank provided that the dollar amount of all Eligible Foreign Accounts shall not exceed Two Hundred Thousand Dollars ($200,000) at any time.

 “Equipment” is all “equipment” as defined in the Code with such additions to such term as may hereafter be
made, and includes without limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing. 
 “ERISA” is the Employee Retirement Income Security Act of 1974, and its regulations. 
 “Event of Default” is defined in Section 8. 
 “Foreign Currency” means lawful money of a
country other than the United States. 
 “Foreign Subsidiary” means any Subsidiary which is not a Domestic Subsidiary.

 “Funding Date” is any date on which a Credit Extension is made to or on account of Borrower which shall be a Business
Day. 
 “FX Business Day” is any day when (a) Bank’s Foreign Exchange Department is conducting its normal business
and (b) the Foreign Currency being purchased or sold by Borrower is available to Bank from the entity from which Bank shall buy or sell such Foreign Currency. 
 “FX Forward Contract” is defined in Section 2.1.3. 
 “FX Reserve” is
defined in Section 2.1.3. 
 “FX Sublimit” means a sublimit under the Revolving Line for the FX Reserve in an aggregate
amount not to exceed Two Hundred Fifty Thousand Dollars ($250,000), minus the outstanding amount of Letters of Credit and amounts utilized for Cash Management Services. 
 “GAAP” is generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other Person as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the
date of determination. 
 “General Intangibles” is all “general intangibles” as defined in the Code in effect on
the date hereof with such additions to such term as may hereafter be made, and includes without limitation, all copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work,


  

 21 







 
whether published or unpublished, any patents, trademarks, service marks and, to the extent permitted under applicable law, any applications therefor,
whether registered or not, any trade secret rights, including any rights to unpatented inventions, payment intangibles, royalties, contract rights, goodwill, franchise agreements, purchase orders, customer lists, route lists, telephone numbers,
domain names, claims, income and other tax refunds, security and other deposits, options to purchase or sell real or personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance
policies (including without limitation key man, property damage, and business interruption insurance), payments of insurance and rights to payment of any kind. 
 “Governmental Approval” is any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration, filing or notice, of, issued by, from or to, or other act
by or in respect of, any Governmental Authority. 
 “Governmental Authority” is any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government,
any securities exchange and any self-regulatory organization. 
 “Indebtedness” is (a) indebtedness for borrowed money
or the deferred price of property or services, such as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations,
and (d) Contingent Obligations. 
 “Initial Audit” is Bank’s inspection of Borrower’s Accounts, the
Collateral, and Borrower’s Books. 
 “Insolvency Proceeding” is any proceeding by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.

 “Inventory” is all “inventory” as defined in the Code in effect on the date hereof with such additions to such
term as may hereafter be made, and includes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products, including without limitation such inventory as is temporarily out
of Borrower’s custody or possession or in transit and including any returned goods and any documents of title representing any of the above. 
 “Investment” is any beneficial ownership interest in any Person (including stock, partnership interest or other securities), and any loan, advance or capital contribution to any Person. 
 “Letter of Credit” means a standby letter of credit issued by Bank or another institution based upon an application, guarantee,
indemnity or similar agreement on the part of Bank as set forth in Section 2.1.2. 
 “Letter of Credit Application” is
defined in Section 2.1.2(a). 
 “Letter of Credit Sublimit” means a sublimit under the Revolving Line for Letters of
Credit in an aggregate amount not to exceed Two Hundred Fifty Thousand Dollars ($250,000), minus the outstanding amount of the FX Reserve and amounts utilized for Cash Management Services. 
 “Letter of Credit Reserve” has the meaning set forth in Section 2.1.2(d). 
 “Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security interest or other encumbrance of any kind, whether
voluntarily incurred or arising by operation of law or otherwise against any property. 
 “Loan Documents” are,
collectively, this Agreement, the Warrant, the Perfection Certificate, any note, or notes or guaranties executed by Borrower, and any other present or future agreement between Borrower any Guarantor and/or for the benefit of Bank in connection with
this Agreement, all as amended, restated, or otherwise modified. 
 “Material Adverse Change” is (a) a material
impairment in the perfection or priority of Bank’s Lien in the Collateral or in the value of such Collateral; (b) a material adverse change in the business, operations, or condition (financial or otherwise) of Borrower; 

  

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(c) a material impairment of the prospect of repayment of any portion of the Obligations; or (d) Bank determines, based upon information available
to it and in its reasonable judgment, that there is a reasonable likelihood that Borrower shall fail to comply with one or more of the financial covenants in Section 6 during the next succeeding financial reporting period. 
 “Net Income” means, as calculated on a consolidated basis for Borrower and its Subsidiaries for any period as at any date of
determination, the net profit (or loss), after provision for taxes, of Borrower and its Subsidiaries for such period taken as a single accounting period. 
 “Obligations” are Borrower’s obligation to pay when due any debts, principal, interest, Bank Expenses and other amounts Borrower owes Bank now or later, whether under this Agreement, the Loan
Documents, or otherwise, including, without limitation, all obligations relating to letters of credit (including reimbursement obligations for drawn and undrawn letters of credit), cash management services, and foreign exchange contracts, if any,
and including interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and the performance of Borrower’s duties under the Loan Documents. Notwithstanding anything to the contrary
contained herein, the term “Obligations” shall not include the obligations of Borrower under the Warrant or any equity-related documents executed solely in connection with the Warrant. 
 “Operating Documents” are, for any Person, such Person’s formation documents, as certified with the Secretary of State of such
Person’s state of formation on a date that is no earlier than 30 days prior to the Effective Date, and, (a) if such Person is a corporation, its bylaws in current form, (b) if such Person is a limited liability company, its limited
liability company agreement (or similar agreement), and (c) if such Person is a partnership, its partnership agreement (or similar agreement), each of the foregoing with all current amendments or modifications thereto. 
 “Perfection Certificate” is defined in Section 5.1. 
 “Permitted Indebtedness” is: 
 (a) Borrower’s Indebtedness to Bank under this Agreement
and the other Loan Documents; 
 (b) Indebtedness existing on the Effective Date and shown on the Perfection Certificate; 
 (c) Subordinated Debt; 
 (d) unsecured
Indebtedness to trade creditors and with respect to surety bonds and similar obligations incurred in the ordinary course of business; 
 (e)
Indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary course of business; 
 (f) Indebtedness in an
aggregate principal amount not to exceed One Hundred Fifty Thousand Dollars ($150,000) secured by Permitted Liens; and 
 (g) extensions,
refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (f) above, provided that the principal amount thereof is not increased or the terms thereof are not modified to impose more
burdensome terms upon Borrower or its Subsidiary, as the case may be. 
 “Permitted Investments” are: 
 (a) Investments shown on the Perfection Certificate and existing on the Effective Date; 
 (b) (i) Cash Equivalents, and (ii) any Investments permitted by Borrower’s investment policy, as amended from time to time, provided that such
investment policy (and any such amendment thereto) has been approved by Bank; 
  

 23 







 (c) Investments consisting of the endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of Borrower; 
 (d) Investments consisting of deposit accounts in which Bank has a perfected
security interest; 
 (e) Investments accepted in connection with Transfers permitted by Section 7.1; 
 (f) Investments of Subsidiaries in or to other Subsidiaries or Borrower and Investments by Borrower in Subsidiaries not to exceed Three Hundred Thousand
Dollars ($300,000) per month. 
 (g) Investments consisting of (i) travel advances and employee relocation loans and other employee
loans and advances in the ordinary course of business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase plans or agreements
approved by Borrower’s Board of Directors; 
 (h) Investments (including debt obligations) received in connection with the bankruptcy or
reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business; 
 (i) Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates,
in the ordinary course of business; provided that this paragraph (i) shall not apply to Investments of Borrower in any Subsidiary; and 
 (j) joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the non-exclusive licensing of technology, the development of technology or the providing of technical support, provided that any
cash investments by Borrower do not exceed Fifty Thousand Dollars ($50,000) in the aggregate in any fiscal year. 
 “Permitted
Liens” are: 
 (a) Liens existing on the Effective Date and shown on the Perfection Certificate or arising under this Agreement and
the other Loan Documents; 
 (b) Liens for taxes, fees, assessments or other government charges or levies, either not delinquent or being
contested in good faith and for which Borrower maintains adequate reserves on its Books, provided that no notice of any such Lien has been filed or recorded under the Internal Revenue Code of 1986, as amended, and the Treasury Regulations
adopted thereunder; 
 (c) purchase money Liens (i) on Equipment acquired or held by Borrower incurred for financing the acquisition of
the Equipment securing no more than One Hundred Fifty Thousand Dollars ($150,000) in the aggregate amount outstanding, or (ii) existing on Equipment when acquired, if the Lien is confined to the property and improvements and the proceeds
of the Equipment; 
 (d) Liens of carriers, warehousemen, suppliers, or other Persons that are possessory in nature arising in the ordinary
course of business so long as such Liens attach only to Inventory, securing liabilities in the aggregate amount not to exceed Fifty Thousand Dollars ($50,000) and which are not delinquent or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto; 
 (e) Liens to secure payment of workers’ compensation, employment insurance, old-age pensions, social security and other like obligations incurred in the ordinary course of business (other than Liens imposed by
ERISA); 
 (f) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through
(e), but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness may not increase; 
  

 24 







 (g) leases or subleases of real property granted in the ordinary course of business, and leases,
subleases, non-exclusive licenses or sublicenses of property (other than real property or intellectual property) granted in the ordinary course of Borrower’s business, if the leases, subleases, licenses and sublicenses do not prohibit
granting Bank a security interest; 
 (h) non-exclusive license of intellectual property granted to third parties in the ordinary course of
business;  
 (i) Liens arising from attachments or judgments, orders, or decrees in circumstances not constituting an Event of
Default under Sections 8.4 and 8.7; and 
 (j) Liens in favor of other financial institutions arising in connection with Borrower’s
deposit and/or securities accounts held at such institutions permitted by Section 6.8 hereof. 
 “Person” is any
individual, sole proprietorship, partnership, limited liability company, joint venture, company, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or
government agency. 
 “Prime Rate” is Bank’s most recently announced “prime rate,” even if it is not
Bank’s lowest rate. 
 “Registered Organization” is any “registered organization” as defined in the Code with
such additions to such term as may hereafter be made 
 “Requirement of Law” is as to any Person, the organizational or
governing documents of such Person, and any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject. 
 “Reserves” means, as of any date of determination,
such amounts as Bank may from time to time establish and revise in its good faith business judgment, reducing the amount of Advances and other financial accommodations which would otherwise be available to Borrower (a) to reflect events,
conditions, contingencies or risks which, as determined by Bank in its good faith business judgment, do or may adversely affect (i) the Collateral or any other property which is security for the Obligations or its value (including without
limitation any increase in delinquencies of Accounts), (ii) the assets, business or prospects of Borrower or any Guarantor, or (iii) the security interests and other rights of Bank in the Collateral (including the enforceability,
perfection and priority thereof); or (b) to reflect Bank’s good faith belief that any collateral report or financial information furnished by or on behalf of Borrower or any Guarantor to Bank is or may have been incomplete, inaccurate or
misleading in any material respect; or (c) in respect of any state of facts which Bank determines in good faith constitutes an Event of Default or may, with notice or passage of time or both, constitute an Event of Default. 
 “Responsible Officer” is any of the Chief Executive Officer, President, Chief Financial Officer and Controller of Borrower. 

“Revolving Line” is an Advance or Advances in an amount up to Four Million Dollars ($4,000,000). 
 “Revolving Line Maturity Date” is the date two (2) years from the Effective Date. 
 “Securities Account” is any “securities account” as defined in the Code with such additions to such term as may hereafter be
made. 
 “Settlement Date” is defined in Section 2.1.3. 
 “Subordinated Debt” is indebtedness incurred by Borrower subordinated to all of Borrower’s now or hereafter indebtedness to Bank
(pursuant to a subordination, intercreditor, or other similar agreement in form and substance satisfactory to Bank entered into between Bank and the other creditor), on terms acceptable to Bank. 
  

 25 







 “Subsidiary” means, with respect to any Person, any Person of which more than 50.0% of
the voting stock or other equity interests (in the case of Persons other than corporations) is owned or controlled directly or indirectly by such Person or one or more of Affiliates of such Person. 
 “Tangible Net Worth” is, on any date, (a) Borrower’s net worth, minus (b) any intangible assets, plus
(c) Subordinated Debt. 
 “Term Loan” is a loan made by Bank pursuant to the terms of Section 2.1.5 hereof.

 “Term Loan Advance” is as defined in Section 2.1.5(a) hereof. 
 “Term Loan Amount” is an amount equal to Two Million Dollars ($2,000,000). 
 “Term Loan Payment” is defined in Section 2.1.5(b). 
 “Transaction Report” is that certain report of transactions and schedule of collections in the form attached hereto as Exhibit D. 
 “Transfer” is defined in Section 7.1. 
 “Warrant” is that certain Warrant to Purchase Stock dated May 16, 2007 executed by Borrower in favor of Bank. 
 [Signature page follows.] 
  

 26 







 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the
Effective Date. 
  

					
	 BORROWER:
	 	
	
	 ST. BERNARD SOFTWARE, INC.

			
	 By
	 	 /s/ Vincent A. Rossi
	 	
	 Name:
	 	 Vincent A. Rossi
	 	
	 Title:
	 	 CEO
	 	
		
	 BANK:
	 	
		
	 SILICON VALLEY BANK
	 	
			
	 By
	 	 /s/ Kurt Miklinski
	 	
	 Name:
	 	 Kurt Miklinski
	 	
	 Title:
	 	  
	 	


							
	 Effective Date:
	 	  
	 	







 EXHIBIT A 
 The Collateral consists of all of Borrower’s right, title and interest in and to the following personal property: 
 All goods, Accounts (including health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases, license agreements, franchise agreements, General Intangibles (except as provided
below), commercial tort claims, documents, instruments (including any promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts, fixtures, letters of credit rights (whether or not the letter of credit is evidenced by
a writing), securities, and all other investment property, supporting obligations, and financial assets, whether now owned or hereafter acquired, wherever located; and 
 all Borrower’s Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and
replacements, products, proceeds and insurance proceeds of any or all of the foregoing. 
 Notwithstanding the foregoing, the Collateral does
not include any of the following, whether now owned or hereafter acquired: (i) more than 65% of the presently existing and hereafter arising issued and outstanding shares of capital stock owned by Borrower of any Foreign Subsidiary which shares
entitle the holder thereof to vote for directors or any other matter, or (ii) any copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work, whether published or
unpublished, any patents, patent applications and like protections, including improvements, divisions, continuations, renewals, reissues, extensions, and continuations-in-part of the same, trademarks, service marks and, to the extent permitted under
applicable law, any applications therefor, whether registered or not, and the goodwill of the business of Borrower connected with and symbolized thereby, know-how, operating manuals, trade secret rights, rights to unpatented inventions, and any
claims for damage by way of any past, present, or future infringement of any of the foregoing; provided, however, the Collateral shall include all Accounts, license and royalty fees and other revenues, proceeds, or income arising out of or relating
to any of the foregoing. 
 Pursuant to the terms of a certain negative pledge arrangement with Bank, Borrower has agreed not to encumber any
of its copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work, whether published or unpublished, any patents, patent applications and like protections, including
improvements, divisions, continuations, renewals, reissues, extensions, and continuations-in-part of the same, trademarks, service marks and, to the extent permitted under applicable law, any applications therefor, whether registered or not, and the
goodwill of the business of Borrower connected with and symbolized thereby, know-how, operating manuals, trade secret rights, rights to unpatented inventions, and any claims for damage by way of any past, present, or future infringement of any of
the foregoing, without Bank’s prior written consent. 
  

 2 







 EXHIBIT B 
 BORROWING RESOLUTIONS 
 

 
 CORPORATE BORROWING CERTIFICATE 
  

							
	BORROWER:	  	ST. BERNARD SOFTWARE, INC.	  		  	DATE: May 11, 2007
	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 
 ___________________________________. 
                     [print name of state] 
 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

				
	  
	 	  
	 	  
	 	 ̈
				
	  
	 	  
	 	  
	 	 ̈
				
	  
	 	  
	 	  
	 	 ̈
				
	  
	 	  
	 	  
	 	 ̈

 RESOLVED FURTHER, that any one of the persons
designated above with a checked box beside his or her name may, from time to time, add or remove any individuals to and from the above list of persons authorized to act on behalf of Borrower. 
 RESOLVED FURTHER, that such individuals may, on behalf of Borrower: 
 Borrow Money. Borrow money from Silicon Valley Bank (“Bank”). 
 Execute Loan Documents. Execute any loan documents Bank requires. 
 Grant Security. Grant Bank a security interest in any of Borrower’s assets. 
  

 1 







 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. 
 RESOLVED FURTHER, that all acts authorized by the above resolutions and any prior acts relating thereto are ratified. 
 5. The persons listed above are Borrower’s officers or employees with their titles and signatures shown next to their names. 
  

			
	 By:
	 	  

	 Name:
	 	  

	 Title:
	 	  



 *** If the Secretary, Assistant Secretary or other certifying officer executing
above is designated by the resolutions set forth in paragraph 4 as one of the authorized signing officers, this Certificate must also be signed by a second authorized officer or director of Borrower. 
  

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

	                 [print title]
	 	

  

			
	 By:
	 	  

	 Name:
	 	  

	 Title:
	 	  



  

 2 







 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



	*	($17,200,000) increasing quarterly by fifty percent (50%) of Net Income and monthly by fifty percent (50%) of issuances of equity after the Effective Date and the
principal amount of Subordinated Debt. 







 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.”) 
  


	
	
	

	
	


  

									
	ST. BERNARD SOFTWARE, INC.	 		 	BANK USE ONLY
					
		 		 		 	Received by:	 	  

	By:	 	  
	 		 		 	AUTHORIZED SIGNER
	Name:	 	  
	 		 	Date:	 	  

	Title:	 	  
	 		 	Verified:	 	  

		 		 		 		 	AUTHORIZED SIGNER
		 		 		 	Date:	 	  

				
		 		 		 	Compliance Status:
                Yes                       
 No







 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: Negative $17,200,000 plus fifty percent (50%) of quarterly Net
Income and fifty percent (50%) of issuances of equity after the Effective Date and the principal amount of Subordinated Debt 
 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 Negative $17,200,000 plus fifty percent (50%) of quarterly Net Income and
fifty percent (50%) of issuances of equity after the Effective Date and the principal amount of Subordinated Debt? 
  

			
	                  No, not
in compliance
	 	                 Yes, in compliance