Exhibit 10.4

THIRD AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

THIS THIRD AMENDMENT to Loan and Security Agreement (this “Amendment”) is
entered into this 25th day of January 2008, 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 and that certain Second Amendment to
Loan and Security Agreement dated as of August 13, 2007 (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) reduce the
amount of the Revolving Line, 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 2.1.1 (Revolving Advances). A Sentence is hereby added to the end of
Section 2.1.1(a) as follows:

“Notwithstanding the foregoing, on January 25, 2008 or as soon thereafter as is
practical, Bank shall make an Advance to Borrower to refinance all outstanding
Indebtedness owing from Borrower to Bank with respect to Term Loan Advances made
to Borrower hereunder and thereafter Borrower shall not be permitted to request
any additional Term Advances hereunder.”

--------------------------------------------------------------------------------

2.2 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 three
percentage points (3.00%) above the Applicable Rate, which interest shall be
payable monthly.”

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

(i) Commitment Fee. A fully earned, non-refundable commitment fee of Twenty
Thousand Dollars ($20,000), on each yearly anniversary of the Effective Date;

2.4 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 (i) negative
Seventeen Million Two Hundred Thousand Dollars ($17,200,000) at all times until
May 31, 2008, (ii) negative Seventeen Million Eight Hundred Thousand Dollars
($17,800,000) at all times from June 1, 2008 through June 30, 2008,
(iii) negative Eighteen Million Dollars ($18,000,000) at all times from July 1,
2008 through August 31, 2008, (iv) negative Eighteen Million Four Hundred
Thousand Dollars ($18,400,000) at all times from September 1, 2008 through
September 30, 2008, (v) negative Eighteen Million Six Hundred Thousand Dollars
($18,600,000) at all times from October 1, 2008 through October 31, 2008,
(vi) negative Eighteen Million Eight Hundred Thousand Dollars ($18,800,000) at
all times from November 1, 2008 through November 30, 2008 and (vii) negative
Nineteen Million Dollars ($19,000,000) at all times from December 1, 2008
through December 31, 2008, in each case, increasing quarterly by fifty percent
(50%) of Net Income and monthly by fifty percent (50%) of issuances of equity
after February 8, 2008 and the principal amount of Subordinated Debt received
after February 8, 2008.”

2.5 Section 8.7 (Judgments). Section 8.7 of the Loan Agreement is amended by
substituting “Ninety-Nine Thousand Dollars ($99,000)” for “Fifty Thousand
Dollars ($50,000)” in the second line thereof.

2.6 Section 12.1 (Termination Prior to Revolving Line Maturity Date).
Section 12.1 is amended in its entirety and replaced with the following:

“Termination Prior to Revolving Line Maturity Date. This Agreement may be
terminated prior to the Revolving Line Maturity Date by Borrower, effective
three (3) Business Days after written notice of

 

2

--------------------------------------------------------------------------------

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

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

“Borrowing Base” means (i) seventy percent (70%) of Eligible Accounts and
(ii) sixty percent (60%) of Advanced Billing Accounts, as determined by Bank
from Borrower’s 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” is an Advance or Advances in an amount up to Two Million
Dollars ($2,000,000).

“Revolving Line Maturity Date” is May 15, 2009.

2.8 Section 13 (Definitions). A new subsection (j) is hereby added to the
definition of “Permitted Liens” set forth in Section 13.1 as follows:

“(j) Liens incurred in connection with Subordinated Debt.”

2.9 Exhibit A to the Agreement is hereby replaced with Exhibit A attached
hereto.

2.10 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

 

3

--------------------------------------------------------------------------------

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;

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

 

4

--------------------------------------------------------------------------------

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 due execution and delivery to Bank of an Intellectual
Property Security Agreement and a Warrant by Borrower; (d) receipt by Bank of an
amendment fee in the amount of Twenty Thousand Dollars ($20,000) and
(e) delivery by Borrower to Bank of a Subordination Agreement from all holders
of Subordinated Debt.

[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     BORROWER SILICON VALLEY BANK     ST. BERNARD SOFTWARE, INC. By:   /s/
Derek Brunelle     By:   /s/ Vincent Rossi Name:    Derek R. Brunelle     Name: 
  Vincent A. Rossi Title:   Relationship Manager     Title:   CEO

--------------------------------------------------------------------------------

EXHIBIT A

The Collateral consists of all of Borrower’s right, title and interest in and to
the following personal property:

All goods, Accounts (including health-care receivables), Equipment, Inventory,
contract rights or rights to payment of money, leases, license agreements,
franchise agreements, General Intangibles, commercial tort claims, documents,
instruments (including any promissory notes), chattel paper (whether tangible or
electronic), cash, deposit accounts, fixtures, letters of credit rights (whether
or not the letter of credit is evidenced by a writing), securities, and all
other investment property, supporting obligations, and financial assets, whether
now owned or hereafter acquired, wherever located; and

all Borrower’s Books relating to the foregoing, and any and all claims, rights
and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.

Notwithstanding the foregoing, the Collateral does not include any of the
following, whether now owned or hereafter acquired: (i) more than 65% of the
presently existing and hereafter arising issued and outstanding shares of
capital stock owned by Borrower of any Foreign Subsidiary which shares entitle
the holder thereof to vote for directors or any other matter or (ii) the Evault
Assets.

--------------------------------------------------------------------------------

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 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 (i) negative Seventeen Million Two Hundred
Thousand Dollars ($17,200,000) at all times until May 31,2008, (ii) negative
Seventeen Million Eight Hundred Thousand Dollars ($17,800,000) at all times from
June 1, 2008 through June 30,2008, (iii) negative Eighteen Million Dollars
($18,000,000) at all times from July 1, 2008 through August 31, 2008,
(iv) negative Eighteen Million Four Hundred Thousand Dollars ($18,400,000) at
all times from September 1, 2008 through September 30, 2008, (v) negative
Eighteen Million Six Hundred Thousand Dollars ($18,600,000) at all times from
October 1, 2008

--------------------------------------------------------------------------------

 

through October 31,2008, (vi) negative Eighteen Million Eight Hundred Thousand
Dollars ($18,800,000) at all times from November 1, 2008 through
November 30,2008 and (vii) negative Nineteen Million Dollars ($19,000,000) at
all times from December 1,2008 through December 31, 2008, in each case,
increasing quarterly by fifty percent (50%) of Net Income and monthly by fifty
percent (50%) of issuances of equity after February 8,2008 and the principal
amount of Subordinated Debt received after February 8, 2008.

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

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

                                                                               
                                        
                                        
                                        
                                                            

                                                                               
                                        
                                        
                                        
                                                            

________________________

 

ST. BERNARD SOFTWARE, INC     BANK USE ONLY     Received by:     By:          
AUTHORIZED SIGNER Name:         Date:     Title:                 Verified:      
      AUTHORIZED SIGNER       Date:                   Compliance Status:  
Yes  No

--------------------------------------------------------------------------------

Schedule 1 to Compliance Certificate

Financial Covenants of Borrower

In the event of a conflict between this Schedule and the Loan Agreement, the
terms of the Loan Agreement shall govern.

Dated:                     

Tangible Net Worth (Section 6.9(a))

Required: A Tangible Net Worth not less than (i) negative Seventeen Million Two
Hundred Thousand Dollars ($17,200,000) at all times until May 31, 2008,
(ii) negative Seventeen Million Eight Hundred Thousand Dollars ($17,800,000) at
all times from June 1,2008 through June 30, 2008, (iii) negative Eighteen
Million Dollars ($18,000,000) at all times from July 1, 2008 through August 31,
2008, (iv) negative Eighteen Million Four Hundred Thousand Dollars ($18,400,000)
at all times from September 1,2008 through September 30,2008, (v) negative
Eighteen Million Six Hundred Thousand Dollars ($18,600,000) at all times from
October 1, 2008, through October 31, 2008, (vi) negative Eighteen Million Eight
Hundred Thousand Dollars ($18,800,00’0) at all times from November 1,2008
through November 30, 2008 and (vii) negative Nineteen Million Dollars
($19,000,000) at all times from December 1, 2008 through December 31, 2008, in
each case, increasing quarterly by fifty percent (50%) of Net Income and monthly
by fifty percent (50%) of issuances of equity after February 8, 2008 and the
principal amount of Subordinated Debt received after February 8, 2008.

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