Document:

ace_8k-ex1001.htm

Exhibit 10.1

LEGEND SECURITIES INC

                                                      MEMBER FINRA, MSRB, & S1PC

Dean Julia, CEO

Ace Marketing & Promotions, Inc.

457 Rockaway Avenue

Valley Stream, NY 11581

Phone: 516-256-7766

Fax: 516-256-7805

 

Re: Investor Relations Agreement with Legend Securities, Inc.

 

Dear Mr. Julia,

 

This letter (the "Agreement") shall confirm the engagement of Legend Securities, Inc., ("Legend") by Ace Marketing & Promotions, Inc. (the "Company" and collectively the "Parties" ) for purposes of providing, on a non-exclusive basis, investor awareness and business advisory services as set forth below in consideration for the fees and compensation described hereinafter:

	
1.

	
The Agreement shall be effective as of the date it is executed by the Parties(the "Effective Date"). 

 

	
2.

	
The Company agrees to provide Legend such information, historical financial data, projections, proformas, business plans, due diligence documentation, and other information (collectively the"Information") in the possession of the Company that Legend may reasonably request or require to perform the Services (as hereinafter defined) set forth herein. The Information provided by the Company to Legend shall be true, complete and accurate in all material respects as of the date specified therein and shall not set forth any untrue statements nor omit and fact required or necessary to make the Information provided not misleading. The Company acknowledges that Legend may rely during the Term on the accuracy and completeness of all Information provided by the Company without independent verification. The Company authorizes Legend to use such Information solely in connection with its performance of the Services. 

 

	
3. 

	
Legend will use its best efforts to furnish ongoing investor awareness and business advisory services(the "Services") as the Company may from time to time reasonably request the Services may include, without limitation, the following: 

 

	
  

	
§

	
Assistance with investor presentations such as, but not limited to, PowerPoint slide presentations, broker/dealer fact sheets, financial projections and budgets;

	
  

	
§

	
Sponsorship to capital conferences;

	
  

	
§

	
Identification and evaluation of financing transactions;

	
  

	
§

	
Identification and evaluation of acquisition and/or merger candidates;

	
  

	
§

	
Introductions to broker/dealers, research analysts, and investment companies that Legend believes could be helpful to the Company. 

 

  236 Richmond Valley Rd • Staten Island, NY 10309 • PHONE: (718) 233-2600 • FAX: (888) 586-6515

MAIN OFFICE: 45 Broadway, 32nd Fl • New York, NY 10006 • PHONE: (212) 344 -5747 • FAX: (212) 898 -1224

WWW. LEGEN DSECU RITI ES. COM

Memher FINRA/MSRR/SIPC

 

  

  

  

 

LEGEND SECURITIES INC

                                                      MEMBER FINRA, MSRB, & S1PC

 

 

	
4.

	
The term of this Agreement shall be Twelve (12) months from the Effective Date of this Agreement; provided that the Company may, in its discretion, extend the Term for up to an additional six (6) months by providing notice of such extension to Legend at any time prior to the expiration of this Agreement (such period, as it may be extended pursuant to this sentence, the "Term"), and the additional compensation owed to Legend during any such extension shall be the Monthly Advisory Fee described in Section 5. The Agreement may not be terminated by the Parties during the first ninety days  following the Effective Date (the "Introduction Period") other than as a result of a material breach of any provision of this agreement that is not uncured within ten (10) days following notification thereof by the non- breaching party. Following the Introduction Period and in the event that the Company desires to terminate this Agreement at any time prior to the expiration date, it shall provide Legend with written notice of its intention to terminate this Agreement and this Agreement shall so terminate immediately following delivery of such notice by the Company (the "Termination Date"), without any further responsibility for either party; provided, however, that Legend shall be entitled to receive all accrued compensation, including all vested - fees (as set forth below) and un-reimbursed expenses, if any, outstanding as of the Termination Date and Legend's obligations under Section 2 regarding Information of the Company shall survive such termination. Notice shall be deemed delivered when sent via e-mail, facsimile, or when deposited with a bonded overnight courier.

 

	
5.

	
In consideration for the services described herein, the Company shall pay to Legend a monthly advisory fee of ten thousand dollars ($10,000.00) per month (the "Monthly Advisory Fee"). The first month advisory fee shall be paid to Legend on the Effective Date and thereafter no later than the fifteenth (15th) day of each monthly anniversary of the Effective Date during the Term of this Agreement. The Monthly Advisory Fee shall be earned and payable each month and may not be deferred by the Company unless the Company submits a written request to the Legend and Legend approves such request in writing. Any fees that are deferred shall accumulate interest at a compound interest rate of 12.0% per annum on the aggregate balance of deferred Monthly Advisory Fees. The Monthly Advisory Fee shall be mailed to Legend at the following address: 

 

Legend Securities, Inc

Attn: Salvatore C.  Caruso

45 Broadway 32nd Fl.

New York, NY 10006 Phone: 212-344-5747 ext 3031 Fax: 212-898-1224

	
6.

	
Simultaneously with the execution of this Agreement, the Company shall issue and deliver to Legend the initial 75,000 shares from the total of 300,000 restricted shares of common stock. If the Company files a registration statement with the SEC within the next 6 months, the company will seek to include such shares on such registration statement. If the company does not file a registration statement with six months of the issuance of the shares, then the Company will issue Legend a Rule 144 opinion letter upon Legend's request in order to have any restrictions removed. The Company shall vest completely and in favor of the Legend as follows:

 

	
Date

	
Number of Shares

	
The Effective Date

	
75,000

	
Each 90 Day Anniversary of The Effective Date

	
75,000

 

 

  236 Richmond Valley Rd • Staten Island, NY 10309 • PHONE: (718) 233-2600 • FAX: (888) 586-6515

MAIN OFFICE: 45 Broadway, 32nd Fl • New York, NY 10006 • PHONE: (212) 344 -5747 • FAX: (212) 898 -1224

WWW. LEGEN DSECU RITI ES. COM

Memher FINRA/MSRR/SIPC

 

  

  

  

 

LEGEND SECURITIES INC

                                                      MEMBER FINRA, MSRB, & S1PC

 

	
7.

	
The Company will promptly notify Legend in writing upon the filing of any registration statement or other periodic reporting documents filed pursuant to the rules and regulations of the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

	
8.

	
The Company recognizes that Legend now renders and may continue to render financial consulting, management, investment banking and other services to other companies that may or may not conduct business and activities similar to those of the Company. Legend shall be free to render such advice and other services and the Company hereby consents thereto. Legend shall not be required to devote its full time and attention to the performance of its duties under this Agreement, but shall devote only so much of its time and attention as it deems reasonable or necessary to fulfill its obligation hereunder.

 

	
9.

	
During the Term of this Agreement the Company covenants, promises and agrees that the Company shall immediately notify Legend if it is the subject of any material investigation or material litigation.

	
10.

	
This Agreement shall be governed by and construed under the laws of the State of New York without regard to principals of conflicts of laws provisions. In the event of any dispute between the Company and Legend arising under or pursuant to the terms of this Agreement, or any matters arising under the terms of this Agreement, the same shall be settled only by arbitration through FINRA Dispute Resolution in County of New York, New York City, State of New York, in accordance with the Code of Arbitration Procedure published by FINRA Dispute Resolution. The determination of the arbitrators shall be final and bindingupon the Company and Legend and may be enforced in any court of appropriate jurisdiction. This Agreement shall be construed by and governed exclusively under the laws of the State of New York, without regard to its conflicts of law provisions. The venue shall be in County of New York, NY. 

 

	
11.

	
The Company shall reimburse Legend for all approved out of pocket expenses, including without limitation acceptable travel and lodging, printing, legal, and mailing cost that Legend may incur in performance of the Services under this Agreement, provided Legend receives the Company's prior approval for any and all out of pocket expenses above five hundred dollars.

 

	
12.

	
The Company may disclose to Legend certain Information that is Proprietary Information (as defined below) relating to certain privileged and confidential business matters that it would like Legend to evaluate. These disclosures will be given in strict secrecy and confidence and the Parties agree to use their best efforts to protect the integrity and confidentiality of the Proprietary Information. As used herein, Proprietary Information means any and all non-public data, ideas and information, in whatever form, tangible or intangible, which is provided to Legend by the Company in connection with the Agreement. If oral, in order to be considered "Proprietary Information" it must be followed by a written memo detailing the confidential nature of same and stamped "Proprietary Information."

 

	
13.

	
[A] The Company shall indemnify and hold harmless Legend and its directors, officers, employees, agents, attorneys and assigns from and against any and all losses, claims, costs, damages  or liabilities (including the reasonable fees and expenses of legal counsel) to which any of them may become subject in connection with the investigation, defense or settlement of any actions or claims:

 

(i) caused by any untrue statement or alleged untrue statement of any material fact contained in any Information provided by the Company or the omission or alleged omission to state a material fact required to be stated in any such Information or necessary to make the statements in any Information not misleading, provided such Information was used by Legend in rendering any Service hereunder; (ii) arising in any manner out of or in connection with the rendering of Services by Legend hereunder; or (iii) otherwise in connection with this Agreement; provided, however, that the Company will not be liable in any such case if and to the extent that any such loss, claim, cost, damage or liability arises out of any breach of this Agreement by Legend, or any misrepresentation or alleged misrepresentation of the material facts provided to Legend by the Company or arising from acts of gross negligence or malfeasance by Legend or any breach by Legend of this Agreement.

 

  236 Richmond Valley Rd • Staten Island, NY 10309 • PHONE: (718) 233-2600 • FAX: (888) 586-6515

MAIN OFFICE: 45 Broadway, 32nd Fl • New York, NY 10006 • PHONE: (212) 344 -5747 • FAX: (212) 898 -1224

WWW. LEGEN DSECU RITI ES. COM

Memher FINRA/MSRR/SIPC

 

  

  

  

 

LEGEND SECURITIES INC

                                                      MEMBER FINRA, MSRB, & S1PC

 

 

 

[B] Legend shall indemnify and hold harmless the Company and its directors, officers, employees, agents, attorneys and assigns from and against any and all losses, claims, costs, damages or liabilities (including the reasonable fees and expenses of legal counsel) to which any of them may become subject in connection with the investigation, defense or settlement of any actions or claims: (i) caused by any untrue statement or alleged untrue statement of any material fact contained in any information provided by Legend other than Information provided to Legend by the Company ("Legend Information") or the omission or alleged omission to state a material fact required to be stated in any such Legend Information or necessary to make the statements in any Legend Information not misleading; (ii) arising in any manner out of or in connection with the rendering of Services by Legend hereunder; or (iii) otherwise in connection with this Agreement; provided, however, that Legend will not be liable in any such case if and to the extent that any such loss, claim, cost, damage or liability arises out of any breach of this Agreement by the Company or arising from acts of gross negligence or malfeasance by the Company or any breach by the Company of this Agreement

[C] Promptly after receipt of notice of the commencement of any action, the party against whom an action is brought (the "Indemnified Party") shall, if a claim is also being made against the other party (the "Indemnifying Party") for indemnification pursuant to this Agreement, notify the Indemnifying Party in writing of such action; provided that, the Indemnifying Party shall be relieved from any obligation to indemnify the Indemnified Party pursuant to this Agreement to the extent that any delay by the Indemnified Party to provide notice to the Indemnifying Party pursuant to this Section impairs or prejudices the Indemnifying Party's ability to assume and defend any such action. In case any such action shall be brought against the Indemnified Party it shall notify the Indemnifying Party of the commencement of such action, and the Indemnifying Party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel reasonably satisfactory to the Indemnified Party, and, after notice from the Indemnifying Party to the Indemnified Party of its election so to assume and undertake the defense of such action, the Indemnifying Party shall not be liable to the Indemnified Party under this paragraph 13 for any legal expenses subsequently incurred by the Indemnified Party in connection with the defense of such action; if the Indemnified Party retains its own counsel, then Indemnified Party shall pay all fees, costs and expenses of such counsel, provided, however, that, if the defendants in any such action include both the Indemnified Party and the Indemnifying Party and the Indemnified Party shall have reasonably concluded that there may be reasonable defenses available to it which are different from or additional to those available to the Indemnifying Party or if the interests of the Indemnified Party reasonably may be deemed to conflict with the interests of the Indemnifying Party, the Indemnifying Party and the Indemnified Party shall have the right to select one separate counsel and to assume such legal defenses and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the Indemnifying Party as incurred.

 

 

 

 

  236 Richmond Valley Rd • Staten Island, NY 10309 • PHONE: (718) 233-2600 • FAX: (888) 586-6515

MAIN OFFICE: 45 Broadway, 32nd Fl • New York, NY 10006 • PHONE: (212) 344 -5747 • FAX: (212) 898 -1224

WWW. LEGEN DSECU RITI ES. COM

Memher FINRA/MSRR/SIPC

 

 

  

  

  

 

LEGEND SECURITIES INC

                                                      MEMBER FINRA, MSRB, & S1PC

 

 

 

	
14.

	
The Company acknowledges that Legend has made no guarantees that its performance hereunder will achieve any particular result with respect to the Company's business, stock price, trading volume, market capitalization or otherwise.

 

	
15.

	
All notices hereunder shall be in writing and shall be validly given, made or served if in writing and delivered in person or when received by facsimile transmission, or five days after being sent first class certified or registered mail, postage prepaid, or one day after being sent by nationally recognized overnight carrier to the party for whom intended at the address set forth after each Parties signatures.

 

	
16.

	
If any clause or provision of this Agreement is illegal, invalid or unenforceable under applicable present or future Laws effective during the Term, the remainder of this Agreement shall not be affected. In lieu of each clause or provision of this Agreement that is illegal, invalid or unenforceable, there shall be added as a part of this Agreement a clause or provision as nearly identical as may be possible and as may be legal, valid and enforceable. In the event any clause or provision of this Agreement is illegal, invalid or unenforceable as aforesaid and the effect of such illegality, invalidity or unenforceability is that either party no longer has the substantial benefit ofits bargain under this Agreement and a clause or provision as nearly identical as may be possible cannot be added, then, in such event, such party may in its discretion cancel and terminate this entire Agreement provided such party exercises such right within a reasonable time after such occurrence. 

	
17.

	
The Parties agree and acknowledge that they have jointly participated in the negotiation and drafting of this Agreement and that this Agreement has been fully reviewed and negotiated by the Parties and their respective counsel. In the event of an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumptions or burdens of proof shall arise favoring any party by virtue of the authorship of any of the provisions of this Agreement.

 

	
18.

	
This Agreement may not be modified, amended, supplemented, canceled or discharged, except by written instrument executed by all Parties. No failure to exercise, and no delay in exercising, any right, power or privilege under this Agreement shall operate as a waiver, nor shall any single or partial exercise of any right, power or privilege hereunder preclude the exercise of any other right, power or privilege. No waiver of any breach of any provision shall be deemed to be a waiver of any preceding or succeeding breach of the same or any other provision, nor shall any waiver be implied from any course of dealing between the Parties. To be effective, all waivers must be in writing, signed by both Parties. The rights and remedies of the Parties under this Agreement are in addition to all other rights and remedies, at law or equity, that they may have against each other except as may be specifically limited herein.

 

 

 

 

  236 Richmond Valley Rd • Staten Island, NY 10309 • PHONE: (718) 233-2600 • FAX: (888) 586-6515

MAIN OFFICE: 45 Broadway, 32nd Fl • New York, NY 10006 • PHONE: (212) 344 -5747 • FAX: (212) 898 -1224

WWW. LEGEN DSECU RITI ES. COM

Memher FINRA/MSRR/SIPC

 

  

  

  

 

LEGEND SECURITIES INC

                                                      MEMBER FINRA, MSRB, & S1PC

 

 

	
19.

	
This Agreement contains the entire understanding of the Parties in respect of its subject matter and supersedes all prior agreements and understandings (oral or written) between or among the Parties with respect to such subject matter. The Parties agree that prior drafts of this Agreement shall not be deemed to provide any evidence as to the meaning of any provision hereof or the intent of the Parties with respect thereto. Any amendment or modification to the Agreement shall be by written instrument only and must be executed by a representative, with complete authority, from the Company and Legend.

 

	
20.

	
This Agreement may be executed in any number of counterparts, each of which shall bean original but all of which together shall constitute one and the same instrument. A telecopy signature of any party shall be considered to have the same binding legal effect as an original signature.

 

	
21.

	
In the event that any dispute among the Parties to this Agreement should result in litigation, the substantially prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such substantially prevailing party under or with respect to this Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals and collection.

 

[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]

 

 

 

 

 

 

  236 Richmond Valley Rd • Staten Island, NY 10309 • PHONE: (718) 233-2600 • FAX: (888) 586-6515

MAIN OFFICE: 45 Broadway, 32nd Fl • New York, NY 10006 • PHONE: (212) 344 -5747 • FAX: (212) 898 -1224

WWW. LEGEN DSECU RITI ES. COM

Memher FINRA/MSRR/SIPC

 

  

  

  

 

 

LEGEND SECURITIES INC

                                                      MEMBER FINRA, MSRB, & S1PC

 

 

 

If the foregoing is in accordance with your understanding, kindly confirm your acceptance and agreement by signing and returning the enclosed duplicate of this Agreement that will thereupon constitute an agreement between us.

 

	 	

Very truly yours,

/s/ Salvatore C. Caruso                  

Salvatore C. Caruso, President

Legend Securities, Inc.

 

 

Accepted and approved this 6th day of June, 2011

 

By:/s/ Dean Julia                                   

Dean Julia, CEO

Ace Marketing   Promotions, Inc.

 

 

 

 

 

 

 

 

  236 Richmond Valley Rd • Staten Island, NY 10309 • PHONE: (718) 233-2600 • FAX: (888) 586-6515

MAIN OFFICE: 45 Broadway, 32nd Fl • New York, NY 10006 • PHONE: (212) 344 -5747 • FAX: (212) 898 -1224

WWW. LEGEN DSECU RITI ES. COM

Memher FINRA/MSRR/SIPCedgewave_8k-ex1001.htm

  

Exhibit 10.1

 

NINTH AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

 

THIS NINTH AMENDMENT to Loan and Security Agreement (this "Amendment") is entered into this 30th day of June 2011, by and between Silicon Valley Bank ("Bank") and EDGEWAVE, INC. (F/K/A ST. BERNARD SOFTWARE, INC.), a Delaware corporation ("Borrower") whose address is 15333 Avenue of Science, San Diego, CA 92128.

 

RECITALS

 

A.           Bank and Borrower have entered into that certain Loan and Security Agreement dated as of May 11, 2007 as amended by that certain First Amendment to Loan and Security Agreement dated as of July 9, 2007, that certain Second Amendment to Loan and Security Agreement dated as of August 13, 2007, that certain Third Amendment to Loan and Security Agreement dated as of January 25, 2008, that certain Fourth Amendment to Loan and Security Agreement dated as of July 23, 2008, that certain Fifth Amendment to Loan and Security Agreement dated as of February 27, 2009, that certain Sixth Amendment to Loan and Security Agreement dated as of March 23, 2010, that certain Seventh Amendment to Loan and Security Agreement dated as of September 29, 2010 and Eighth Amendment to Loan and Security Agreement dated as of May 12, 2011 (as the same may from time to time be further amended, modified, supplemented or restated, the "Loan Agreement").

 

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

 

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

 

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

 

AGREEMENT

 

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

 

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

 

2.           Amendments to Loan Agreement.

 

2.1          All references in the Loan Documents to Borrower's name "ST. BERNARD SOFTWARE, INC." shall hereafter mean and refer to "EDGEWAVE, INC."

 

2.2          Section 2.1.7 (Term Loan C). New Section 2.1.7 is added as follows:

 

"2.1.7 Term Loan C.

 

(a)          Term Loan C. Subject to the terms and conditions of this Agreement, Bank agrees to lend to Borrower, on the Ninth Amendment Effective Date or as soon thereafter as is practical, one term loan ("Term Loan C") in an aggregate amount equal to the Term Loan C Amount. When repaid, Term Loan C may not be re-borrowed. Borrower shall use the proceeds of Term Loan C for general working capital.

  

1

  

 

 

(b)           Repayment. Term Loan C shall be "interest only" for six (6) months from the of funding with interest due on the first day of the month, starting on August 1, 2011. Borrower shall repay Term Loan C in (i) twenty four (24) equal installments of principal, plus (ii) monthly payments of accrued interest (each, a "Term Loan C Payment"). Beginning on January 1, 2012 each Term Loan C Payment shall be payable on the first day of each month. Borrower's final Term Loan C Payment, due on the Term Loan C Maturity Date, shall include all outstanding principal and accrued and unpaid interest under Term Loan C.

 

(c)           Prepayment. At Borrower's option, so long as an Event of Default has not occurred and is not continuing, Borrower shall have the option to prepay all, but not less than all, of Term Loan C, provided Borrower (a) provides written notice to Bank of its election to exercise to prepay Term Loan C at least thirty (30) days prior to such prepayment, and (b) pays, on the date of the prepayment (i) all accrued and unpaid interest with respect to Term Loan C through the date the prepayment is made; (ii) all unpaid principal with respect to Term Loan C; (iii) a prepayment fee equal to (A) three percent (3.00%) of the Term Loan C Amount at the time of prepayment if prepayment occurs sooner than eighteen (18) months from the date Term Loan C is made or (B) two percent (2.00%) of the amount outstanding under Term Loan C at the time of prepayment if prepayment occurs more than eighteen (18) months from the date Term Loan C is made, (the "Term Loan C Prepayment Fee"), and such Term Loan Prepayment Fee shall bear interest until paid at a rate equal to the highest rate applicable to the Obligations; and (iv) all other sums, if any, that shall have become due and payable hereunder with respect to this Agreement. Notwithstanding the foregoing, Bank agrees to waive the Term Loan Prepayment Fee if Bank agrees to refinance and redocument this Agreement with Bank or under another division of Bank prior to the Term Loan C Maturity Date."

 

2.3           Section 2.3(a) (Interest Rate). New Section 2.3(a)(iv) is hereby added as follows:

 

"(iv)           Term Loan C. Subject to Section 2.3(b), the principal amount outstanding under Term Loan C shall accrue interest at a floating per annum rate equal to the greater of three percentage points (3.00%) above the Prime Rate or seven percent (7.00%) which interest shall be payable monthly in accordance with Section 2.3(1) below."

 

2.4           Section 2.4 (Fees). Section 2.4(c) is amended in its entirety and replaced with the following:

 

"(c)           Term Loan Prepayment Fees. The Term Loan Prepayment Fee in accordance with Section 2.1.6(c) and the Term Loan C Prepayment Fee in accordance with Section 2.1.7(c);"

 

2.5           Section 6.9 (Financial Covenants). Section 6.9(a) is amended in its entirety and replaced with the following:

 

"(a)           Tangible Net Worth. A Tangible Net Worth not less than negative Twenty One Million Five Hundred Thousand Dollars (-$21,500,000) at all times, increasing quarterly by fifty percent (50%) of Net Income and monthly by fifty percent (50%) of issuances of equity after September 30, 2010 and the principal amount of Subordinated Debt received after September 30, 2010."

 

 

  

2

  

 

2.6           Section 6.9 (Financial Covenants). Section 6.9(b) is amended in its entirety and replaced with the following:

 

"(b)          Billings to Plan. As of the last day of each month, Borrower' s billings for the rolling three (3) months, shall be at least seventy five percent (75%) of Borrower's projected billings for such month as outlined in Borrower's forecast provided to Bank on April 25, 2011 and any revisions to such plan that are approved in writing by Bank. Any such revisions to such plan that are approved by Borrower's board of directors shall be provided to Bank within five (5) days of approval by Borrower's board of directors."

 

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

 

"Applicable Termination Fee Amount" means (i) Twenty Four Thousand Dollars ($24,000) if this Agreement is terminated on or prior to June 30, 2012 or (ii) Twelve Thousand Dollars ($12,000) if this Agreement is terminated after June 30, 2012 but prior to the Revolving Line Maturity Date.

 

"Borrowing Base" means (i) eighty five percent (85%) of Eligible Accounts and (ii) the lesser of (a) sixty percent (60%) of Advanced Billing Accounts or (b) Seven Hundred Thousand Dollars ($700,000), 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.

 

"Credit Extension" is any Advance, Term Loan A, Term Loan B, Term Loan C, each Letter of Credit, the FX Reserve, any amount utilized for Cash Management Services, or any other extension of credit by Bank for Borrower's benefit.

 

"Ninth Amendment Effective Date" is June 30, 2011.

 

"Revolving Line" is an Advance or Advances in an amount up to Three Million Dollars ($3,000,000).

 

"Revolving Line Maturity Date" is June 30, 2013.

 

"Term Loan C" is a loan made by Bank pursuant to the terms of Section 2.1.7 hereof

 

"Term Loan C Amount" is an amount equal to Two Hundred Thousand Dollars ($200,000).

 

"Term Loan C Maturity Date" is December 1, 2013. "Term Loan C Payment" is defined in Section 2.1.7 hereof.

 

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

 

 

  

3

  

 

 

2.9          Bank hereby waives Borrower's requirement to comply with Section 6.7(b) of the Loan Agreement for the April 2011 measuring period.

 

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          The representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and after giving effect to the waiver contained in Section 2.9, 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 in connection with the execution hereof remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect;

 

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

 

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

 

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

 

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

 

 

  

4

  

 

 

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

 

6.           Effectiveness. This Amendment shall be effective as of the date first written above upon a) the due execution and delivery to Bank of this Amendment by each party hereto (b) the payment by Borrower of a extension fee with respect to the Revolving Line in the amount of Twenty Four Thousand Dollars ($24,000), (c) the payment by Borrower of a facility fee with respect to Term Loan C in the amount of Two Thousand Dollars ($2,000), and (d) the due execution and delivery to Bank of updated Borrowing Resolutions for Borrower.

 

7.           Reference to and Effect on the Loan Agreement and the Other Documents. (i) On and after the Ninth Amendment Effective Date, each reference in the Loan Agreement to "this Agreement", "hereunder", "hereof', "herein" or words of like import referring to the Loan Agreement, and each reference in the other Loan Documents to the "Loan Agreement," "thereunder," "thereof' or words of like import referring to the Loan Agreement shall mean and be a reference to the Loan Agreement as amended by this Amendment; and (ii) except as specifically amended by this Amendment, the Loan Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed.

 

 

 

 

 

 

[Signature page follows.]

 

 

 

 

 

 

 

 

 

 

 

  

5

  

 

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   Dept. Team Leader

	
BORROWER

 

EDGEWAVE, INC. (F/K/A ST. BERNARD SOFTWARE, INC.)

 

 

By:  /s/ Thalia Gietzen

Name: Thalia Gietzen

Title: VP of Finance

 

 

 

 

 

 

  

6

  

 

 

EXHIBIT C

 

COMPLIANCE CERTIFICATE

 

	
TO: SILICON VALLEY BANK

	
Date: _____

	
FROM: EDGEWAVE, INC. (F/K/A ST. BERNARD SOFTWARE, INC.)

	  

 

The undersigned authorized officer of EDGEWAVE, INC. (F/K/A 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 each month

	
Yes No

 

	
Financial Covenant

	
Required

	  	
Actual

	
Complies

	 	 	 	 	 
	
Maintain on a Monthly Basis:

	  	  	  	  
	
Minimum Tangible Net Worth

	  	
*

	
$ _______

	
Yes No

	
Billings to plan

	
75%

	  	 _______ %	
Yes No

 

* A Tangible Net Worth not less than negative Twenty One Million Five Hundred Thousand Dollars (-$21,500,000) at all times, increasing quarterly by fifty percent (50%) of Net Income and monthly by fifty percent (50%) of issuances of equity after September 30, 2010 and the principal amount of Subordinated Debt received after September 30, 2010.

 

 

  

 

  

 

The following financial covenant analysis and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate.

 

The following are the exceptions with respect to the certification above: (If no exceptions exist, state "No exceptions to note.")

 

 

 

 

 

 

	
EDGEWAVE, INC. (F/K/A ST. BERNARD

	
BANK USE ONLY

	
SOFTWARE, INC.)

	  
	 	
Received by:_______________________________

	 	
AUTHORIZED SIGNER

	
By: ___________________________

	
Date: _____________________________________

	
Name: _________________________

	
 

	
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:                      A Tangible Net Worth not less than negative Twenty One Million Five Hundred Thousand Dollars (-$21,500,000) at all times, increasing quarterly by fifty percent (50%) of Net Income and monthly by fifty percent (50%) of issuances of equity after September 30, 2010 and the principal amount of Subordinated Debt received after September 30, 2010.

 

Actual:

 

 

	
A.         Aggregate net worth of Borrower

 

	
$_____

 

	
B.         Aggregate value of intangible assets of Borrower

 

	
$_____

 

	
C.         Aggregate Subordinated Debt

 

	
$_____

 

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

	
$_____

 

 

 

 

 

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

 

 

 

	_____ No, not in compliance  	_____ Yes, not in compliance  

 

 

 

 

  

 

  

 

BORROWING RESOLUTIONS

 

 

CORPORATE BORROWING CERTIFICATE

 

	
BORROWER: EDGEWAVE, INC.

	
DATE: June 2011

	
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 Delaware/

 

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

	Lou Ryan	CEO 	/s/ Lou Ryan	þ
	Thalia Gietzen	VP of Finance	/s/ Thalia Geitzen	þ
	 	 	 	 

 

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.

 

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:  /s/ Thalia Gietzen

Name:  Thalia Gietzen

Title:    CEO

 

 

 

*** If the Secretary, Assistant Secretary or other certifyiing 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 CEO of Borrower, hereby certify as to paragraphs 1 through 5 above, as of the date set forth above.

 

	 	
By:  /s/ Lou Ryan

Name:  Lou Ryan

Title:    CEO

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