stbernard_8k1-ex1001.htm


    Exhibit
10.1

     

    FIFTH
AMENDMENT

    TO

    LOAN
AND SECURITY AGREEMENT

     

    THIS
FIFTH AMENDMENT to Loan
and Security Agreement (this “Amendment”) is entered into this 27 day of
February 2009, by and between Silicon Valley Bank (“Bank”) and ST. BERNARD
SOFTWARE, INC., a Delaware corporation (“Borrower”) whose address is 15015
Avenue of Science, San Diego, CA 92128.

     

    Recitals

     

    A.           Bank
and Borrower have entered into that certain Loan and Security Agreement dated as
of May 11, 2007 as amended by that certain First Amendment to Loan and Security
Agreement dated as of July 9, 2007, that certain Second Amendment to Loan and
Security Agreement dated as of August 13, 2007, that certain Third Amendment to
Loan and Security Agreement dated as of January 25, 2008 and that certain Fourth
Amendment to Loan and Security Agreement dated as of July __, 2008 (as the same
may from time to time be further amended, modified, supplemented or restated,
the “Loan Agreement”).

     

    B.           Bank
has extended credit to Borrower for the purposes permitted in the Loan
Agreement.

     

    C.           Borrower
has requested that Bank amend the Loan Agreement to (i) extend the maturity date
and (ii) make certain other revisions to the Loan Agreement as more fully set
forth herein.

     

    D.           Bank
has agreed to so amend certain provisions of the Loan Agreement, but only to the
extent, in accordance with the terms, subject to the conditions and in reliance
upon the representations and warranties set forth below.

     

    Agreement

     

    Now,
Therefore, in
consideration of the foregoing recitals and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, and
intending to be legally bound, the parties hereto agree as follows:

     

    1.           Definitions.  Capitalized
terms used but not defined in this Amendment shall have the meanings given to
them in the Loan Agreement.

     

    2.           Amendments to Loan
Agreement.

     

    2.1           Section 2.3(a) (Interest
Rate).  Section 2.3(a) is amended in its entirety and replaced
with the following:

     

    “(a)           Interest
Rate.  Subject to Section 2.3(b), the amounts outstanding under
the Revolving Line shall accrue interest at a per annum rate equal to the
greater of (i) three and one half percentage points (3.50%) above the Prime Rate
or (ii) seven and one half percent (7.50%), which interest shall be payable
monthly.”

     

    2.2           Section 6.9(a) (Tangible Net
Worth).  Section 6.9(a) is amended in its entirety and replaced
with the following:

     

    “(a)           Tangible Net
Worth.  A Tangible Net Worth not less than negative Seventeen
Million Dollars ($17,00,000) at all times, increasing quarterly by fifty percent
(50%) of Net Income and monthly by fifty percent (50%) of issuances of equity
after January 31, 2009 and the principal amount of Subordinated Debt received
after January 31, 2009.”

     

    


    
      
        
           


        

        
          
          

          
            

          

        

        
           


        

      

    

    


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

     

    “Borrowing Base” means (i)
seventy percent (70%) of Eligible Accounts and (ii) the lesser of (a) sixty
percent (60%) of Advanced Billing Accounts or (b) Six Hundred Thousand Dollars
($600,000), as determined by Bank from Borrower’s Transaction Report submitted
at the end of the most recently ended month; 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.

     

    “Revolving Line Maturity Date”
is May 15, 2010.

     

    2.4           Section 13
(Definitions).  Subsection (c) of the defined term “Eligible
Accounts” set forth in Section
13.1 is amended in its entirety and replaced with the
following:

     

    “(c)           Accounts
that the Account Debtor has not paid within ninety (90) days of invoice date
except as approved in writing by Bank;”

     

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

     

    2.6           On
May 16, 2009, Borrower shall pay to Bank an amendment fee in the amount of
Twenty Thousand Dollars ($20,000).

     

    3.           Limitation
of Amendments.

     

    3.1           The
amendments set forth in Section
2, above, are effective for the purposes set forth herein and shall be
limited precisely as written and shall not be deemed to (a) be a consent to any
amendment, waiver or modification of any other term or condition of any Loan
Document, or (b) otherwise prejudice any right or remedy which Bank may now have
or may have in the future under or in connection with any Loan
Document.

     

    3.2           This
Amendment shall be construed in connection with and as part of the Loan
Documents and all terms, conditions, representations, warranties, covenants and
agreements set forth in the Loan Documents, except as herein amended, are hereby
ratified and confirmed and shall remain in full force and effect.

     

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

     

    4.1           Immediately
after giving effect to this Amendment (a) the representations and warranties
contained in the Loan Documents are true, accurate and complete in all material
respects as of the date hereof (except to the extent such representations and
warranties relate to an earlier date, in which case they are true and correct as
of such date), and (b) no Event of Default has occurred and is
continuing;

     

    4.2           Borrower
has the power and authority to execute and deliver this Amendment and to perform
its obligations under the Loan Agreement, as amended by this
Amendment;

     

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

     

    4.4           The
execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, have been duly authorized;

     

    


    
      
        
           


        

        
          2

          
            

          

        

        
           


        

      

    

    


    4.5           The
execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, do not and will not contravene (a) any law or regulation binding on
or affecting Borrower, (b) any contractual restriction with a Person binding on
Borrower, (c) any order, judgment or decree of any court or other governmental
or public body or authority, or subdivision thereof, binding on Borrower, or (d)
the organizational documents of Borrower;

     

    4.6           The
execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, do not require any order, consent, approval, license, authorization
or validation of, or filing, recording or registration with, or exemption by any
governmental or public body or authority, or subdivision thereof, binding on
either Borrower, except as already has been obtained or made; and

     

    4.7           This
Amendment has been duly executed and delivered by Borrower and is the binding
obligation of Borrower, enforceable against Borrower in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, liquidation, moratorium or other similar laws of general
application and equitable principles relating to or affecting creditors’
rights.

     

    5.           Counterparts.  This
Amendment may be executed in any number of counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument.

     

    6.           Effectiveness.  This
Amendment shall be effective as of the date first written above upon (a) the due
execution and delivery to Bank of this Amendment by each party
hereto.

     

    


     

    [Signature
page follows.]

    


    
      
        
           


        

        
          3

          
            

          

        

        
           


        

      

    

    


    


    In
Witness Whereof, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first written above.

     

    
    

    
      
        	
                BANK

                 

                SILICON
      VALLEY BANK

                 

                 

                By:              /s/
      Derek R.
      Brunelle             
      

                Name:              Derek
      R.
      Brunelle              

                Title:              Relationship
      Manager       

                 

              	
                BORROWER

                 

                ST.
      BERNARD SOFTWARE, INC.

                 

                 

                By:              /s/
      John T.
      Burke            
      

                Name:              John
      T. Burke       
             

                Title:              CFO                                 
      

                 

              


      



     

     

     

     

     

     

     

     

     

     

    


    
      
        
           


        

        
          4

          
            

          

        

        
           


        

      

    

    


    


    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

            


    

    


    * A
Tangible Net Worth not less than negative Seventeen Million Dollars
($17,000,000) at all times, increasing quarterly by fifty percent (50%) of Net
Income and monthly by fifty percent (50%) of issuances of equity after January
31, 2009 and the principal amount of Subordinated Debt received after January
31, 2009.

    


    
      
        
           


        

        
          
          

          
            

          

        

        
           


        

      

    

    


    


    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.

               

               

              By:                                                       

              Name:                                                  

              Title:                                                    

               

            	
              BANK
      USE ONLY

               

              Received
      by: _____________________

              authorized
      signer

              Date:      _________________________

               

              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:                      A
Tangible Net Worth not less than negative Seventeen Million Dollars
($17,000,000) at all times, increasing quarterly by fifty percent (50%) of Net
Income and monthly by fifty percent (50%) of issuances of equity after January
31, 2009 and the principal amount of Subordinated Debt received after January
31, 2009.

     

    Actual:

     

    
      	 	A.	 	
              Aggregate
      net worth of Borrower

            	 	$	 
    	 
	 	B.	 	
              Aggregate
      value of intangible assets of Borrower

            	 	$	 
    	 
	 	C.	 	
              Aggregate
      Subordinated Debt

            	 	$	 	 
	 	D.	 	
              Tangible
      Net Worth (line A minus line B plus line C)

            	 	$	 
    	 


    

    


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

     

    
      	
              _____  No,
      not in compliance

            	
              _____  Yes,
      in compliance