Document:

Exhibit 10.16.1

Exhibit 10.16.1

THIRD AMENDMENT TO

FOURTH AMENDED AND RESTATED LOAN AGREEMENT

THIS THIRD AMENDMENT TO FOURTH AMENDED AND RESTATED LOAN AGREEMENT (this “Amendment”),
dated as of September 29, 2010, is made and entered into on the terms and conditions hereinafter
set forth, by and between CUMBERLAND PHARMACEUTICALS, INC., a Tennessee corporation (the
“Borrower”), and BANK OF AMERICA, N.A., a national banking association (the
“Bank”).

RECITALS:

1. The Borrower and the Bank are parties to a Fourth Amended and Restated Loan Agreement dated
as of July 22, 2009, as amended by a First Amendment to Fourth Amended and Restated Loan Agreement
dated as of February 11, 2010 and by a Second Amendment to Fourth Amended and Restated Loan
Agreement dated as of May 24, 2010 (as the same heretofore has been or hereafter may be further
amended, restated, supplemented, extended, renewed, replaced or otherwise modified from time to
time, the “Loan Agreement”), pursuant to which the Bank has agreed to extend credit to the
Borrower subject to and upon the terms and conditions set forth in the Loan Agreement.

2. The parties hereto desire to amend the Loan Agreement in certain respects as more
particularly hereinafter set forth.

3. Capitalized terms used but not otherwise defined in this Amendment shall have the same
meanings as in the Loan Agreement.

AGREEMENTS:

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth,
and for other good and valuable consideration, the receipt and sufficiency of all of which are
hereby acknowledged, the parties hereto agree as follows:

1. Amendment of Section 1.1. Subsection (a) of Section 1.1 of the Loan Agreement is
hereby amended by deleting the words and figures “Four Million Dollars ($4,000,000)” and
substituting in lieu thereof the words and figures “Six Million Dollars ($6,000,000)”.

2. Amendment of Section 1.3. Subsection (c) of Section 1.3 of the Loan Agreement is
hereby amended to read as follows:

	 	(c)	 	The “Applicable Margin” means and refers to the following percentages
per annum, based upon the Borrower’s Leverage Ratio as set forth in the most recent
compliance certificate received by the Bank pursuant to Section 8.2(c):

	 	 	 	 	 	 	 	 	 
	Pricing Level	 	Leverage Ratio	 	 	Applicable Margin	 
	 
	 	 	 	 	 	 	 	 
	1
	 	 	< 1.00	 	 	 	3.50	%
	2
	 	 	3 1.00	 	 	 	4.50	%

Any increase or decrease in the Applicable Margin resulting from a change in the
Borrower’s Leverage Ratio shall become effective as of the first banking day
following the date a compliance certificate is delivered pursuant to
Section 8.2(c); provided, however, that if a compliance certificate is not
delivered when due in accordance with Section 8.2(c), then Pricing Level 2
shall apply as of the first banking day after the date on which
such compliance certificate was required to have been delivered until the first
banking day after the date on which such certificate is delivered.

 

 

 

3. Amendment of Section 2.4. Subsection (b) of Section 2.4 of the Loan Agreement is
hereby amended to read as follows:

	 	(b)	 	The Borrower will repay principal in equal consecutive installments in the
amount of Six Hundred Sixty-Six Thousand Six Hundred Sixty-Seven and No/100ths Dollars
($666,667.00) each beginning on December 31, 2010 and continuing on the last day of
each March, June, September and December thereafter until December 31, 2012 (the
“Repayment Period”). In any event, on the last day of the Repayment Period,
the Borrower will repay the entire remaining principal balance plus any interest or
other charges outstanding under this facility.

4. Amendments of Section 3.1. Section 3.1 of the Loan Agreement is hereby amended as
follows:

(a) Subsection (a) of Section 3.1 of the Loan Agreement is hereby amended to read as
follows:

	 	(a)	 	Fee Letter. The Borrower agrees to pay to the Bank
fees and other compensation as provided in the fee letter of even date
herewith, by and between the Bank and the Borrower, as the same may be
supplemented, amended, modified and/or amended and restated from time to time
pursuant to agreement of the Borrower and the Bank (as so supplemented,
amended, modified and/or amended and restated, the “Fee Letter”).

(b) The definition of “Applicable Facility No. 1 Commitment Fee Rate” set forth in
clause (i) of subsection (b) of Section 3.1 of the Loan Agreement is hereby amended to read
as follows:

“Applicable Facility No. 1 Commitment Fee Rate” means one-half of one
percent (0.50%) per year.

5. Amendment of Section 8.3. Section 8.3 of the Loan Agreement is hereby amended by
replacing the table set forth therein with the following:

	 	 	 
	Quarterly Period(s) Ending	 	Leverage Ratio
	 
	 	 
	09-30-10 – 12-31-10
	 	2.00 to 1.00
	03-31-11 – 09-30-11
	 	1.75 to 1.00
	12-31-11 and thereafter
	 	1.25 to 1.00

6. Amendment of Section 8.4. Section 8.4 of the Loan Agreement is hereby amended by
deleting the first sentence thereof and substituting in lieu thereof the following:

To maintain on a consolidated basis a Fixed Charge Coverage Ratio of at least 1.25 to 1.00,
calculated as of the end of each quarter-annual reporting period for which the Bank requires
financial statements, using the results of the twelve-month period ending with the end of
that reporting period; provided, however, that (i) for the September 30, 2010 calculation
date, the calculation shall be made using the results of only the three-month period then
ended, (ii) for the December 31, 2010 calculation date, the calculation shall be made using
only the results of the six-month period then ended, and (iii) for the March 31, 2011
calculation date, the calculation shall be made using only the results of the nine-month
period then ended.

 

-2-

 

7. Addition to Section 8.9. Section 8.9 of the Loan Agreement is hereby amended by
adding the following sentence at the end:

The Borrower covenants and agrees that the deposits maintained by the Borrower and its
Subsidiaries with the Bank and its affiliates shall not at any time be in an aggregate
amount less than the sum of (a) the maximum amount of the Facility No. 1 Commitment at such
time, (including both the principal amount then outstanding plus the unfunded portion),
plus (b) the aggregate principal amount then outstanding in respect of the Facility
No. 2 Commitment.

8. Amendment of Other Loan Documents. Each of the Loan Documents is hereby amended in
all respects necessary to reflect that the “Facility No. 1 Commitment” (by whatever terminology is
used to make reference thereto) shall mean and refer to “a line of credit in a principal amount not
to exceed Six Million Dollars ($6,000,000) outstanding at any one time.”

9. Conditions to Effectiveness. This Amendment shall be effective only upon the
satisfaction of the following conditions:

(a) the Borrower, the Bank and the other parties whose names appear on the signature
page(s) hereof shall have executed and delivered a counterpart of this Amendment;

(b) the Borrower shall have executed and delivered to the Bank an amended and restated
promissory note evidencing the indebtedness of the Borrower to the Bank in connection with
the Facility No. 1 Commitment;

(c) the Borrower shall have paid to the Bank, in immediately available funds:

(1) the principal amount outstanding in respect of the Facility No. 2
Commitment that is in excess of $6,000,000.00, together with all accrued and unpaid
interest, fees, premiums and other amounts due and payable in respect of the
Facility No. 2 Commitment at the time of or in connection with such principal
payment (including amounts payable pursuant to subsection 2.5(a) of the Loan
Agreement); and

(2) all amounts that are then due and payable pursuant to the Fee Letter (if
any);

(d) each of the representations and warranties of the Borrower contained in
Section 10 shall be true and correct as of the date as of which all of the other
conditions contained in this Section 9 shall have been satisfied;

(e) the Borrower shall have paid all cost and expenses, including attorney’s fees,
reasonably incurred by the Bank in connection with the preparation, execution, delivery and
any recording or filing of this Amendment or any instrument, document or agreement
contemplated hereby; and

(f) the Bank shall have received such other documents, instruments, certificates,
opinions and approvals as it reasonably may have requested.

10. Representations and Warranties of the Borrower. As an inducement to the Bank to
enter into this Amendment, the Borrower hereby represents and warrants that on and as of the date
hereof, and taking into account the provisions hereof, the representations and warranties contained
in the Loan Agreement and the other Loan Documents are true and correct in all material respects,
except for representations and warranties that expressly relate to an earlier date, which remain
true and correct as of said earlier date.

 

-3-

 

11. Effect of Amendment; Continuing Effectiveness of Loan Agreement and Loan
Documents.

(a) Neither this Amendment nor any other indulgences that may have been granted to the
Borrower by the Bank shall constitute a course of dealing or otherwise obligate the Bank to
modify, expand or extend the agreements contained herein, to agree to any other amendments
to the Loan Agreement or to grant any consent to, waiver of or indulgence with respect to
any other noncompliance with any provision of the Loan Documents.

(b) Upon and after the effectiveness of this Amendment, each reference in the Loan
Agreement to “this Agreement”, “hereunder”, “hereof” 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 modified hereby. This Amendment shall
constitute a Loan Document for all purposes of the Loan Agreement and the other Loan
Documents.

(c) Except to the extent amended or modified hereby, the Loan Agreement, the other Loan
Documents and all terms, conditions and provisions thereof shall continue in full force and
effect in all respects and shall be construed in accordance with the modification of the
Loan Agreement effected hereby.

12. Release and Waiver. The Borrower hereby acknowledges and stipulates that it has
no claims or causes of action of any kind whatsoever against the Bank, its affiliates, officers,
directors, employees or agents. The Borrower represents that it is entering this Amendment freely,
and with the advice of counsel as to its legal alternatives. The Borrower hereby releases the
Bank, its affiliates, officers, directors, employees and agents, from any and all claims, causes of
action, demands and liabilities of any kind whatsoever whether direct or indirect, fixed or
contingent, liquidated or unliquidated, disputed or undisputed, known or unknown, that the Borrower
has or may acquire in the future relating in any way to any event, circumstance, action or failure
to act to the date of this Amendment, excluding, however, claims or causes of actions resulting
solely from the Bank’s own gross negligence or willful misconduct. The release by the Borrower
herein, together with the other terms and provisions of this Amendment, are executed by the
Borrower advisedly and without coercion or duress from the Bank, the Borrower having determined
that the execution of this Amendment, and all of its terms, conditions and provisions are in the
Borrower’s economic best interest.

13. Further Actions. Each of the parties to this Amendment agrees that at any time
and from time to time upon written request of the other party, it will execute and deliver such
further documents and do such further acts and things as such other party reasonably may request in
order to effect the intents and purposes of this Amendment.

14. Counterparts. This Amendment may be executed in multiple counterparts or copies,
each of which shall be deemed an original hereof for all purposes. One or more counterparts or
copies of this Amendment may be executed by one or more of the parties hereto, and some different
counterparts or copies executed by one or more of the other parties. Each counterpart or copy
hereof executed by any party hereto shall be binding upon the party executing same even though
other parties may execute one or more different counterparts or copies, and all counterparts or
copies hereof so executed shall constitute but one and the same agreement. Each party hereto, by
execution of one or more counterparts or copies hereof, expressly authorizes and directs any other
party hereto to detach the signature pages and any corresponding acknowledgment, attestation,
witness or similar pages relating thereto from any such counterpart or copy hereof executed by the
authorizing party and affix same to one or more other identical counterparts or copies hereof so
that upon execution of multiple counterparts or copies hereof by all parties hereto, there shall be
one or more counterparts or copies hereof to which is(are) attached signature pages containing
signatures of all parties hereto and any corresponding acknowledgment, attestation, witness or
similar pages relating thereto.

 

-4-

 

15. Miscellaneous.

(a) This Amendment shall be governed by, construed and enforced in accordance with the
laws of the State of Tennessee, without reference to the conflicts or choice of law
principles thereof.

(b) The headings in this Amendment and the usage herein of defined terms are for
convenience of reference only, and shall not be construed as amplifying, limiting or
otherwise affecting the substantive provisions hereof.

(c) All references herein to the preamble, the recitals or sections, paragraphs,
subparagraphs, annexes or exhibits are to the preamble, recitals, sections, paragraphs,
subparagraphs, annexes and exhibits of or to this Amendment unless otherwise specified. The
words “hereof”, “herein” and “hereunder” and words of similar import, when used in this
Amendment, refer to this Amendment as a whole and not to any particular provision of this
Amendment.

(d) Any reference herein to any instrument, document or agreement, by whatever
terminology used, shall be deemed to include any and all amendments, modifications,
supplements, extensions, renewals, substitutions and/or replacements thereof as the context
may require.

(e) When used herein, (1) the singular shall include the plural, and vice versa, and
the use of the masculine, feminine or neuter gender shall include all other genders, as
appropriate, (2) “include”, “includes” and “including” shall be deemed to be followed by
“without limitation” regardless of whether such words or words of like import in fact follow
same, and (3) unless the context clearly indicates otherwise, the disjunctive “or” shall
include the conjunctive “and”.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and
delivered as of the date first written above.

[Remainder of Page Intentionally Left Blank;

Signature Pages Follow]

 

-5-

 

[Signature Page to Third Amendment to Fourth Amended and Restated Loan Agreement

(Cumberland Pharmaceuticals, Inc.) dated as of September 29, 2010]

	 	 	 	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CUMBERLAND PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ David L. Lowrance	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	David L. Lowrance	 	 
	 

	 	 	 	 	 	 

	 	 
	 

	 	 	 	Title:
	 	CFO	 	 
	 

	 	 	 	 	 	 

	 	 

CONSENTED TO AND APPROVED:

CUMBERLAND PHARMA SALES CORP.

	 	 	 	 	 	 	 
	By:
	 	/s/ A.J. Kazimi	 	 
	 	 	 	 	 
	 

	 	Name:	 	A.J. Kazimi	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:
	 	CEO	 	 
	 

	 	 	 	 

	 	 

ACKNOWLEDGED:

CUMBERLAND EMERGING TECHNOLOGIES, INC.

	 	 	 	 	 	 	 
	By:
	 	/s/ David L. Lowrance	 	 
	 	 	 	 	 
	 

	 	Name:	 	David L. Lowrance	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:
	 	CFO	 	 
	 

	 	 	 	 

	 	 

 

-6-

 

[Signature Page to Third Amendment to Fourth Amended and Restated Loan Agreement

(Cumberland Pharmaceuticals, Inc.) dated as of September 29, 2010]

	 	 	 	 	 	 	 	 	 
	 	 	BANK:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ H. Hope Walker	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	H. Hope Walker	 	 
	 

	 	 	 	 	 	 

	 	 
	 

	 	 	 	Title:
	 	V.P.	 	 
	 

	 	 	 	 	 	 

	 	 

 

-7-stbernard_8k-ex1001.htm

EXHIBIT 10.1

 

SEVENTH AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

 

THIS SEVENTH AMENDMENT to Loan and Security Agreement (this “Amendment”) is entered into this 29th day of September 2010, 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, 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 and that certain Sixth Amendment to Loan and Security Agreement dated as of March 23, 2010 (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) increase the sublimit for letters of credit, (ii) revise the financial covenants 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   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 Eighteen Million Dollars ($18,000,000) at all times, increasing quarterly by fifty percent (50%) of Net Income and monthly by fifty percent (50%) of issuances of equity after September 30, 2010 and the principal amount of Subordinated Debt received after September 30, 2010.”

 

 

  

  

  

 

2.2   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:

 

 “Cash Management Sublimit” means a sublimit under the Revolving Line for Cash Management Services in an aggregate amount not to exceed Six Hundred Fifty Thousand Dollars ($650,000), minus the outstanding amount of the FX Reserve and Letters of Credit.

 

“FX Sublimit” means a sublimit under the Revolving Line for the FX Reserve in an aggregate amount not to exceed Six Hundred Fifty Thousand Dollars ($650,000), minus the outstanding amount of Letters of Credit and amounts utilized for Cash Management Services.

 

“Letter of Credit Sublimit” means a sublimit under the Revolving Line for Letters of Credit in an aggregate amount not to exceed Six Hundred Fifty Thousand Dollars ($650,000), minus the outstanding amount of  the FX Reserve and amounts utilized for Cash Management Service.

 

“Seventh Amendment Effective Date’ is September 29, 2010

 

2.3   Bank hereby agrees that Borrower’s August 2010 monthly financial statements that would otherwise be due on September 30, 2010 shall instead be due no later than October 20, 2010.

 

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

 

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 Sixth Amendment 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;

 

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;

 

 

  

2

  

 

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

 

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

 

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

 

6.   Effectiveness.  This Amendment shall be effective as of the date first written above upon (a) the due execution and delivery to Bank of this Amendment by each party hereto (b) the payment by Borrower of a variance fee in the amount of Two Thousand Dollars ($2,000).

 

7.   Reference to and Effect on the Loan Agreement and the Other Documents.  (i) On and after the Seventh 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.]

 

 

 

 

 

 

 

 

  

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/ Thalia Gietzen

Name:   Thalia Gietzen

Title:     VP of Finance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

 

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

	
Billings to plan

	
80%

	
_____%

	
Yes     No

* A Tangible Net Worth not less than negative Eighteen Million Dollars ($18,000,000) at all times, increasing quarterly by fifty percent (50%) of Net Income and monthly by fifty percent (50%) of issuances of equity after 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.”)

 

 

	
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 Eighteen Million Dollars ($18,000,000) at all times, increasing quarterly by fifty percent (50%) of Net Income and monthly by fifty percent (50%) of issuances of equity after September 30, 2010 and the principal amount of Subordinated Debt received after September 30, 2010.

 

Actual:

 

	
A.

	
Aggregate net worth of Borrower

	
$______

 

	
B.

	
Aggregate value of intangible assets of Borrower

	
$______

 

	
C.

	
Aggregate Subordinated Debt

 

	
$______

	
D

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

	
$______

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

 

 

	    _______ No, not in compliance	 ________ Yes, in compliance

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