Exhibit 10.1

ST. BERNARD SOFTWARE, INC.

2006 EMPLOYEE STOCK PURCHASE PLAN

Adopted by the board of directors: December 18, 2006

Approved by stockholders:                     , 2007

 

1. PURPOSE.

(a) The purpose of this Plan is to provide a means by which Employees of the
Company and certain designated Related Corporations may be given an opportunity
to purchase shares of the Common Stock of the Company.

(b) The Company, by means of the Plan, seeks to secure and retain the services
of current and new Employees and to provide incentives for such persons to exert
maximum efforts for the success of the Company and its Related Corporations.

 

(c) The Company intends that the Purchase Rights be considered options issued
under an Employee Stock Purchase Plan.

 

2. DEFINITIONS.

As used in the Plan and any Offering, unless otherwise specified, the following
terms have the meanings set forth below:

(a) “Board” means the Board of Directors of the Company.

(b) “Code” means the Internal Revenue Code of 1986, as amended.

(c) “Committee” means a committee appointed by the Board in accordance with
Section 3(c) of the Plan.

(d) “Common Stock” means the common stock of the Company.

(e) “Company” means St. Bernard Software, Inc., a Delaware corporation.

(f) “Contributions” means the payroll deductions and other additional payments
specifically provided for in the Offering that a Participant contributes to fund
the exercise of a Purchase Right. A Participant may make additional payments
into his or her account if specifically provided for in the Offering, and then
only if the Participant has not already had the maximum permitted amount
withheld through payroll deductions during the Offering.

(g) “Corporate Transaction” means the occurrence, in a single transaction or in
a series of related transactions, of any one or more of the following events:

(i) a sale or other disposition of all or substantially all, as determined by
the Board in its sole discretion, of the consolidated assets of the Company and
its Subsidiaries;

(ii) a sale or other disposition of at least ninety percent (90%) of the
outstanding securities of the Company;

(iii the consummation of a merger, consolidation or similar transaction
following which the Company is not the surviving corporation; or

 

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(iv) the consummation of a merger, consolidation or similar transaction
following which the Company is the surviving corporation but the shares of
Common Stock outstanding immediately preceding the merger, consolidation or
similar transaction are converted or exchanged by virtue of the merger,
consolidation or similar transaction into other property, whether in the form of
securities, cash or otherwise.

(h) “Director” means a member of the Board.

(i) “Earnings” of an Employee with respect to any Offering has the meaning
defined in such Offering.

(j) “Eligible Employee” means an Employee who meets the requirements set forth
in the Offering for eligibility to participate in the Offering, provided that
such Employee also meets the requirements for eligibility to participate set
forth in the Plan.

(k) “Employee” means any person, including Officers and Directors, who is
employed for purposes of Section 423(b)(4) of the Code by the Company or a
Related Corporation. Neither service as a Director nor payment of a director’s
fee shall be sufficient to make an individual an Employee of the Company or a
Related Corporation.

(l) “Employee Stock Purchase Plan” means a plan that grants Purchase Rights
intended to be options issued under an “employee stock purchase plan,” as that
term is defined in Section 423(b) of the Code.

(m) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(n) “Fair Market Value” means, as of any date, the value of the Common Stock
determined as follows:

(i) If the Common Stock is listed on any established stock exchange or traded on
the Nasdaq Global Select Market or the Nasdaq Global Market (formerly the Nasdaq
National Market), the Fair Market Value of a share of Common Stock shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange (or the exchange or market with the
greatest volume of trading in the Common Stock) on the date of determination, as
reported in The Wall Street Journal or such other source as the Board deems
reliable.

(ii) If the Common Stock is listed or traded on the Nasdaq Capital Market
(formerly the Nasdaq Small Cap Market), the Fair Market Value of a share of
Common Stock shall be the mean between the bid and asked prices for the Common
Stock on the date of determination, as reported in The Wall Street Journal or
such other source as the Board deems reliable. Unless otherwise provided by the
Board, if there is no closing sales price (or closing bid if no sales were
reported) for the Common Stock on the date of determination, then the Fair
Market Value shall be the mean between the bid and asked prices for the Common
Stock on the last preceding date for which such quotation exists.

(iii) In the absence of such markets for the Common Stock, the Fair Market Value
shall be determined by the Board in good faith.

(o) “Initial Offering” means the first Offering under this Plan.

(p) “Offering” means the grant of Purchase Rights to purchase shares of Common
Stock under the Plan to Eligible Employees.

(q) “Offering Date” means a date selected by the Board for an Offering to
commence.

 

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(r) “Officer” means a person who is an officer of the Company within the meaning
of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.

(s) “Participant” means an Eligible Employee who holds an outstanding Purchase
Right granted pursuant to the Plan.

(t) “Plan” means this St. Bernard Software, Inc. 2006 Employee Stock Purchase
Plan.

(u) “Purchase Date” means one or more dates during an Offering established by
the Board on which Purchase Rights shall be exercised and as of which purchases
of shares of Common Stock shall be carried out in accordance with such Offering.

(v) “Purchase Period” means a period of time specified within an Offering
beginning on the Offering Date or on the next day following a Purchase Date
within an Offering and ending on a Purchase Date. An Offering may consist of one
or more Purchase Periods.

(w) “Purchase Right” means an option to purchase shares of Common Stock granted
pursuant to the Plan.

(x) “Related Corporation” means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code. The Board shall have the
authority to determine the time or times at which “parent corporation” or
“subsidiary corporation” status is determined within the forgoing definition.

(y) “Securities Act” means the Securities Act of 1933, as amended.

(z) “Trading Day” means any day on which the exchange(s) or market(s) on which
shares of Common Stock are listed, whether it be an established stock exchange,
the Nasdaq Global Select Market, the Nasdaq Global Market, Nasdaq Capital Market
or otherwise, is open for trading.

 

3. ADMINISTRATION.

(a) The Board shall administer the Plan unless and until the Board delegates
administration to a Committee, as provided in Section 3(c). Whether or not the
Board has delegated administration, the Board shall have the final power to
determine all questions of policy and expediency that may arise in the
administration of the Plan.

(b) The Board (or the Committee) shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:

(i) To determine when and how Purchase Rights to purchase shares of Common Stock
shall be granted and the provisions of each Offering of such Purchase Rights
(which need not be identical).

(ii) To designate from time to time which Related Corporations of the Company
shall be eligible to participate in the Plan.

(iii) To construe and interpret the Plan and Purchase Rights, and to establish,
amend and revoke rules and regulations for the administration of the Plan. The
Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan, in a manner and to the extent it shall deem necessary
or expedient to make the Plan fully effective.

(iv) To amend the Plan as provided in Section 15.

 

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(v) Generally, to exercise such powers and to perform such acts as it deems
necessary or expedient to promote the best interests of the Company and its
Related Corporations and to carry out the intent that the Plan be treated as an
Employee Stock Purchase Plan.

(vi) To adopt such procedures and sub-plans as are necessary or appropriate to
permit participation in the Plan by Employees who are foreign nationals or
employed outside the United States.

(c) The Board may delegate administration of the Plan to a Committee of the
Board composed of one (1) or more members of the Board. If administration of the
Plan is delegated to a Committee, the Committee shall have, in connection with
the administration of the Plan, the powers theretofore possessed by the Board,
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board some or all of the
powers previously delegated. If administration is delegated to a Committee,
references to the Board in this Plan and in the Offering document shall
thereafter be deemed to be to the Board or the Committee, as the case may be.

(d) All determinations, interpretations and constructions made by the Board in
good faith shall not be subject to review by any person and shall be final,
binding and conclusive on all persons.

 

4. SHARES OF COMMON STOCK SUBJECT TO THE PLAN.

(a) Subject to the provisions of Section 14(a) relating to adjustments upon
changes in Common Stock, the shares of Common stock that may be sold pursuant to
Purchase Rights granted under the Plan shall not exceed in the aggregate four
hundred thousand (400,000) shares of Common Stock, plus an annual increase to be
added on the first day of each Company fiscal year, beginning in 2008 and ending
in (and including) 2017, equal to the least of: (i) the difference between four
hundred thousand (400,000) and the number of shares remaining authorized for
issuance after the last purchase of share, (ii) four hundred thousand (400,000)
shares of Common Stock, or (iii) an amount determined by the Board or a
Committee. If any Purchase Right granted under the Plan shall for any reason
terminate without having been exercised, the shares of Common Stock not
purchased under such Purchase Right shall again become available for issuance
under the Plan.

(b) The Common Stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.

 

5. GRANT OF PURCHASE RIGHTS; OFFERING.

(a) The Board may from time to time grant or provide for the grant of Purchase
Rights to purchase shares of Common Stock under the Plan to Eligible Employees
in an Offering (consisting of one or more Purchase Periods) on an Offering Date
or Offering Dates selected by the Board. Each Offering shall be in such form and
shall contain such terms and conditions as the Board shall deem appropriate,
which shall comply with the requirements of Section 423(b)(5) of the Code that
all Employees granted Purchase Rights shall have the same rights and privileges.
The terms and conditions of an Offering shall be incorporated by reference into
the Plan and treated as part of the Plan. The provisions of separate Offerings
need not be identical, but each Offering shall include (through incorporation of
the provisions of this Plan by reference in the document comprising the Offering
or otherwise) the period during which the Offering shall be effective, which
period shall not exceed twenty-seven (27) months beginning with the Offering
Date, and the substance of the provisions contained in Sections 6 through 9,
inclusive.

(b) If a Participant has more than one Purchase Right outstanding under the
Plan, unless he or she otherwise indicates in agreements or notices delivered
hereunder: (i) each agreement or notice delivered by that Participant shall be
deemed to apply to all of his or her Purchase Rights under the Plan, and (ii) a
Purchase Right with a lower exercise price (or an earlier-granted Purchase
Right, if different Purchase Rights have identical exercise prices) shall be
exercised to the fullest possible extent before a Purchase Right with a higher
exercise price (or a later-granted Purchase Right if different Purchase Rights
have identical exercise prices) shall be exercised.

 

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6. ELIGIBILITY.

(a) Purchase Rights may be granted only to Employees of the Company or, as the
Board may designate as provided in Section 3(b), to Employees of a Related
Corporation. An Employee shall not be eligible to be granted Purchase Rights
under the Plan unless, on the Offering Date, such Employee has been in the
employ of the Company or the Related Corporation, as the case may be, for such
continuous period preceding such Offering Date as the Board may require, but in
no event shall the required period of continuous employment be greater than two
(2) years. In addition, the Board may provide that no Employee shall be eligible
to be granted Purchase Rights under the Plan unless, on the Offering Date, such
Employee’s customary employment with the Company or the Related Corporation is
more than twenty (20) hours per week and/or more than five (5) months per
calendar year.

(b) No Employee shall be eligible for the grant of any Purchase Rights under the
Plan if, immediately after any such Purchase Rights are granted, such Employee
owns stock possessing five percent (5%) or more of the total combined voting
power or value of all classes of stock of the Company or of any Related
Corporation. For purposes of this Section 6(c), the rules of Section 424(d) of
the Code shall apply in determining the stock ownership of any Employee, and
stock which such Employee may purchase under all outstanding Purchase Rights and
options (whether vested or unvested) shall be treated as stock owned by such
Employee.

(c) As specified by Section 423(b)(8) of the Code, an Eligible Employee may be
granted Purchase Rights under the Plan only if such Purchase Rights, together
with any other rights granted under all Employee Stock Purchase Plans of the
Company and any Related Corporations, do not permit such Eligible Employee’s
rights to purchase stock of the Company or any Related Corporation to accrue at
a rate which exceeds twenty five thousand dollars ($25,000) of Fair Market Value
of such stock (determined at the time such rights are granted, and which, with
respect to the Plan, shall be determined as of their respective Offering Dates)
for each calendar year in which such rights are outstanding at any time.

(d) Officers of the Company and any designated Related Corporation, if they are
otherwise Eligible Employees, shall be eligible to participate in Offerings
under the Plan. Notwithstanding the foregoing, the Board may provide in an
Offering that Employees who are highly compensated Employees within the meaning
of Section 423(b)(4)(D) of the Code shall not be eligible to participate.

 

7. PURCHASE RIGHTS; PURCHASE PRICE.

(a) On each Offering Date, each Eligible Employee, pursuant to an Offering made
under the Plan, shall be granted a Purchase Right to purchase up to that number
of shares of Common Stock purchasable either with a percentage or with a maximum
dollar amount, as designated by the Board, but in either case not exceeding
fifteen percent (15%), of such Employee’s Earnings (as defined by the Board in
each Offering) during the period that begins on the Offering Date (or such later
date as the Board determines for a particular Offering) and ends on the date
stated in the Offering, which date shall be no later than the end of the
Offering.

(b) The Board shall establish one (1) or more Purchase Dates during an Offering
as of which Purchase Rights granted pursuant to that Offering shall be exercised
and purchases of shares of Common Stock shall be carried out in accordance with
such Offering.

(c) In connection with each Offering made under the Plan, the Board may specify
a maximum number of shares of Common Stock that may be purchased by any
Participant on any Purchase Date during such Offering. In connection with each
Offering made under the Plan, the Board may specify a maximum aggregate number
of shares of Common Stock that may be purchased by all Participants pursuant to
such Offering. In addition, in connection with each Offering that contains more
than one Purchase Date, the Board may specify a maximum aggregate number of
shares of Common Stock that may be purchased by all Participants on any Purchase
Date

 

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under the Offering. If the aggregate purchase of shares of Common Stock issuable
upon exercise of Purchase Rights granted under the Offering would exceed any
such maximum aggregate number, then, in the absence of any Board action
otherwise, a pro rata allocation of the shares of Common Stock available shall
be made in as nearly a uniform manner as shall be practicable and equitable.

(d) The purchase price of shares of Common Stock acquired pursuant to Purchase
Rights shall be not less than the lesser of:

(i) an amount equal to eighty-five percent (85%) of the Fair Market Value of the
shares of Common Stock on the Offering Date; or

(ii) an amount equal to eighty-five percent (85%) of the Fair Market Value of
the shares of Common Stock on the applicable Purchase Date.

 

8. PARTICIPATION; WITHDRAWAL; TERMINATION.

(a) A Participant may elect to authorize payroll deductions pursuant to an
Offering under the Plan by completing and delivering to the Company, within the
time specified in the Offering, an enrollment form (in such form as the Company
may provide). Each such enrollment form shall authorize an amount of
Contributions expressed as a percentage of the submitting Participant’s Earnings
during the Offering (not to exceed the maximum percentage specified by the
Board). Each Participant’s Contributions shall remain the property of the
Participant at all times prior to the purchase of Common Stock, but such
Contributions may be commingled with the assets of the Company and used for
general corporate purposes except where applicable law requires that
Contributions be deposited with an independent third party. To the extent
provided in the Offering, a Participant may begin making Contributions after the
beginning of the Offering. To the extent provided in the Offering, a Participant
may thereafter reduce (including to zero) or increase his or her Contributions.
To the extent specifically provided in the Offering, in addition to making
Contributions by payroll deductions, a Participant may make Contributions
through the payment by cash or check prior to a specified Purchase Date of the
Offering.

(b) During an Offering, a Participant may cease making Contributions and
withdraw from the Offering by delivering to the Company a notice of withdrawal
in such form as the Company may provide. Such withdrawal may be elected at any
time prior to the end of the Offering, except as provided otherwise in the
Offering. Upon such withdrawal from the Offering by a Participant, the Company
shall distribute to such Participant all of his or her accumulated Contributions
(reduced to the extent, if any, such Contributions have been used to acquire
shares of Common Stock for the Participant) under the Offering, and such
Participant’s Purchase Right in that Offering shall thereupon terminate. A
Participant’s withdrawal from an Offering shall have no effect upon such
Participant’s eligibility to participate in any other Offerings under the Plan,
but such Participant shall be required to deliver a new enrollment form in order
to participate in subsequent Offerings.

(c) Purchase Rights granted pursuant to any Offering under the Plan shall
terminate immediately upon a Participant ceasing to be an Employee for any
reason or for no reason (subject to any post-employment participation period
required by law) or other lack of eligibility. The Company shall distribute to
such terminated or otherwise ineligible Employee all of his or her accumulated
Contributions (reduced to the extent, if any, such Contributions have been used
to acquire shares of Common Stock for the terminated or otherwise ineligible
Employee) under the Offering, without interest.

(d) Purchase Rights shall not be transferable by a Participant otherwise than by
will, the laws of descent and distribution, or by a beneficiary designation as
provided in Section 13. During a Participant’s lifetime, Purchase Rights shall
be exercisable only by such Participant.

 

(e) Unless otherwise specified in an Offering, the Company shall have no
obligation to pay interest on Contributions.

 

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9. EXERCISE.

(a) On each Purchase Date during an Offering, each Participant’s accumulated
Contributions (without any increase for interest) shall be applied to the
purchase of shares of Common Stock up to the maximum number of shares of Common
Stock permitted pursuant to the terms of the Plan and the applicable Offering,
at the purchase price specified in the Offering. No fractional shares shall be
issued upon the exercise of Purchase Rights unless specifically provided for in
the Offering.

(b) If any amount of accumulated Contributions remains in a Participant’s
account after the purchase of shares of Common Stock and such remaining amount
is less than the amount required to purchase one share of Common Stock on the
final Purchase Date of an Offering, then such remaining amount shall be held in
such Participant’s account for the purchase of shares of Common Stock under the
next Offering under the Plan, unless such Participant withdraws from such next
Offering, as provided in Section 8(b), or is not eligible to participate in such
Offering, as provided in Section 6, in which case such amount shall be
distributed to such Participant after the final Purchase Date, without interest.
If the amount of Contributions remaining in a Participant’s account after the
purchase of shares of Common Stock is at least equal to the amount required to
purchase one (1) whole share of Common Stock on the final Purchase Date of the
Offering, then such remaining amount shall be distributed in full to such
Participant at the end of the Offering.

(c) No Purchase Rights may be exercised to any extent unless the shares of
Common Stock to be issued upon such exercise under the Plan are covered by an
effective registration statement pursuant to the Securities Act and the Plan is
in material compliance with all laws applicable to the Plan. If on a Purchase
Date during any Offering hereunder the shares of Common Stock are not so
registered or the Plan is not in such compliance, no Purchase Rights or any
Offering shall be exercised on such Purchase Date, and the Purchase Date shall
be delayed until the shares of Common Stock are subject to such an effective
registration statement and the Plan is in such compliance, except that the
Purchase Date shall not be delayed more than twelve (12) months and the Purchase
Date shall in no event be more than twenty-seven (27) months from the Offering
Date. If, on the Purchase Date under any Offering hereunder, as delayed to the
maximum extent permissible, the shares of Common Stock are not registered and
the Plan is not in such compliance, no Purchase Rights or any Offering shall be
exercised and all Contributions accumulated during the Offering (reduced to the
extent, if any, such Contributions have been used to acquire shares of Common
Stock) shall be distributed to the Participants, without interest.

 

10. COVENANTS OF THE COMPANY.

The Company shall seek to obtain from each federal, state, foreign or other
regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to issue and sell shares of Common Stock upon exercise of the
Purchase Rights. If, after commercially reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
that counsel for the Company deems necessary for the lawful issuance and sale of
shares of Common Stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell shares of Common Stock upon exercise of
such Purchase Rights unless and until such authority is obtained.

 

11. USE OF PROCEEDS FROM SHARES OF COMMON STOCK.

Proceeds from the sale of shares of Common Stock pursuant to Purchase Rights
shall constitute general funds of the Company.

 

12. RIGHTS AS A STOCKHOLDER.

A Participant shall not be deemed to be the holder of, or to have any of the
rights of a holder with respect to, shares of Common Stock subject to Purchase
Rights unless and until the Participant’s shares of Common Stock acquired upon
exercise of Purchase Rights are recorded in the books of the Company (or its
transfer agent).

 

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13. DESIGNATION OF BENEFICIARY.

(a) A Participant may file a written designation of a beneficiary who is to
receive any shares of Common Stock and/or cash, if any, from the Participant’s
account under the Plan in the event of such Participant’s death subsequent to
the end of an Offering but prior to delivery to the Participant of such shares
of Common Stock or cash. In addition, a Participant may file a written
designation of a beneficiary who is to receive any cash from the Participant’s
account under the Plan in the event of such Participant’s death during an
Offering. Any such designation shall be on a form provided by or otherwise
acceptable to the Company.

(b) The Participant may change such designation of beneficiary at any time by
written notice to the Company. In the event of the death of a Participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such Participant’s death, the Company shall deliver such shares of
Common Stock and/or cash to the executor or administrator of the estate of the
Participant, or if no such executor or administrator has been appointed (to the
knowledge of the Company), the Company, in its sole discretion, may deliver such
shares of Common Stock and/or cash to the spouse or to any one or more
dependents or relatives of the Participant, or if no spouse, dependent or
relative is known to the Company, then to such other person as the Company may
designate.

 

14. ADJUSTMENTS UPON CHANGES IN SECURITIES; CORPORATE TRANSACTIONS.

(a) If any change is made in the shares of Common Stock, subject to the Plan, or
subject to any Purchase Right, without the receipt of consideration by the
Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan shall be appropriately adjusted in the
type(s), class(es) and maximum number of shares of Common Stock subject to the
Plan pursuant to Section 4, and the outstanding Purchase Rights shall be
appropriately adjusted in the type(s), class(es), number of shares and purchase
limits of such outstanding Purchase Rights. The Board shall make such
adjustments, and its determination shall be final, binding and conclusive.
(Notwithstanding the foregoing, the conversion of any convertible securities of
the Company shall not be treated as a “transaction not involving the receipt of
consideration by the Company.”)

(b) In the event of a Corporate Transaction, then: (i) any surviving or
acquiring corporation may continue or assume Purchase Rights outstanding under
the Plan or may substitute similar rights (including a right to acquire the same
consideration paid to stockholders in the Corporate Transaction) for those
outstanding under the Plan, or (ii) if any surviving or acquiring corporation
does not continue or assume such Purchase Rights or does not substitute similar
rights for Purchase Rights outstanding under the Plan, then, the Participants’
accumulated Contributions shall be used to purchase shares of Common Stock
within ten (10) business days prior to the Corporate Transaction under the
ongoing Offering, and the Participants’ Purchase Rights under the ongoing
Offering shall terminate immediately after such purchase.

 

15. AMENDMENT OF THE PLAN.

(a) The Board at any time, and from time to time, may amend the Plan. However,
stockholder approval shall be sought to the extent necessary and required for
the Plan to satisfy the requirements of Section 423 of the Code or other
applicable laws or regulations.

(b) Without stockholder consent and without regard to whether any participant
rights may be considered to have been “impaired,” the Board (or Committee) shall
be entitled to shorten the length of any ongoing Offerings, limit the frequency
and/or number of changes in the amount withheld during an Offering, establish
the exchange ratio applicable to amounts withheld in a currency other than U.S.
dollars, permit payroll withholdings in excess of the amount designed by a
participant in order to adjust for delays or mistakes in the Company’s
processing of properly completed withholding elections, establish reasonable
waiting and adjustment periods and/or accounting and crediting procedures to
ensure that amounts applied toward the purchase of Common Stock for each
participant properly correspond with amounts withheld from the participant’s
Compensation, and establish such other limitations or procedures as the Board
(or the Committee) determines in its sole discretion advisable and which are
consistent with the Plan.

 

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(c) The rights and obligations under any Purchase Rights granted before
amendment of the Plan shall not be impaired by any amendment of the Plan except:
(i) with the consent of the person to whom such Purchase Rights were granted,
(ii) as necessary to comply with any laws or governmental regulations
(including, without limitation, the provisions of the Code and the regulations
promulgated thereunder relating to Employee Stock Purchase Plans), or (iii) as
expressly allowed under Sections 14 and 15.

 

16. TERMINATION OR SUSPENSION OF THE PLAN.

(a) The Board in its discretion may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate at the time that all of the
shares of Common Stock reserved for issuance under the Plan, as increased and/or
adjusted from time to time, have been issued under the terms of the Plan. No
Purchase Rights may be granted under the Plan while the Plan is suspended or
after it is terminated.

(b) Any benefits, privileges, entitlements and obligations under any Purchase
Rights while the Plan is in effect shall not be impaired by suspension or
termination of the Plan except (i) as expressly allowed under Section 15 or with
the consent of the person to whom such Purchase Rights were granted, (ii) as
necessary to comply with any laws, regulations, or listing requirements, or
(iii) as necessary to ensure that the Plan and/or Purchase Rights comply with
the requirements of Section 423 of the Code.

 

17. EFFECTIVE DATE OF PLAN.

The Plan shall become effective on the later of (a) the date the Plan was
adopted by the Board and (b) the date the Plan was approved by the stockholders
of the Company (such date, the “Effective Date”); provided, however, in no event
may Purchase Rights be exercised unless and until the Plan has been approved by
the stockholders of the Company, which approval shall be within twelve
(12) months before or after the date the Plan is adopted by the Board.

 

18. MISCELLANEOUS PROVISIONS.

(a) The Plan and Offering do not constitute an employment contract. Nothing in
the Plan or in the Offering shall in any way alter the at will nature of a
Participant’s employment or be deemed to create in any way whatsoever any
obligation on the part of any Participant to continue in the employ of the
Company or a Related Corporation, or on the part of the Company or a Related
Corporation to continue the employment of a Participant.

(b) Any reference herein to a enrollment forms, written designation or other
“written” agreement or document shall include any agreement or document
delivered electronically or posted on the Company’s intranet.

(c) The provisions of the Plan shall be governed by the law of the State of
California without resort to that state’s conflicts of laws rules.

 

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ST. BERNARD SOFTWARE, INC.

2006 EMPLOYEE STOCK PURCHASE PLAN

OFFERING DOCUMENT

ADOPTED BY THE BOARD OF DIRECTORS:                     , 2006

In this document, capitalized terms not otherwise defined shall have the same
definitions as set forth in the St. Bernard Software, Inc. 2006 Employee Stock
Purchase Plan.

 

1. Grant; Offering Date.

(a) The Board hereby authorizes a series of Offerings pursuant to the terms of
this Offering document.

(b) The first Offering hereunder (the “Initial Offering”) shall begin on
[February 1, 2007] and shall end on [June 30, 2007], unless terminated earlier
as provided in the Plan. Thereafter, an Offering shall begin on the day after
the last Purchase Date of the immediately preceding Offering. Except as provided
below, each Offering shall be approximately six (6) months in duration, with one
(1) Purchase Period, which also shall be approximately six (6) months in length.
Except as provided below, a Purchase Date is the last day of a Purchase Period
or of an Offering, as the case may be. The Initial Offering shall consist of one
(1) Purchase Period ending on [June 30, 2007].

(c) Notwithstanding the foregoing: (i) if any Offering Date falls on a day that
is not a Trading Day, then such Offering Date shall instead fall on the next
subsequent Trading Day, and (ii) if any Purchase Date falls on a day that is not
a Trading Day, then such Purchase Date shall instead fall on the immediately
preceding Trading Day.

(d) Prior to the commencement of any Offering, the Board may change any or all
terms of such Offering and any subsequent Offerings. The granting of Purchase
Rights pursuant to each Offering hereunder shall occur on each respective
Offering Date unless prior to such date (i) the Board determines that such
Offering shall not occur, or (ii) no shares of Common Stock remain available for
issuance under the Plan in connection with the Offering.

 

2. Eligible Employees.

(a) Each Eligible Employee who, on the date that is one (1) week prior to the
Offering Date of an Offering hereunder, is (i) an employee of the Company;
(ii) an employee of a Related Corporation incorporated in the United States; or
(iii) an employee of a Related Corporation that is not incorporated in the
United States, provided that the Board or Committee has designated the employees
of such Related Corporation as eligible to participate in the Offering, shall be
granted a Purchase Right on the Offering Date of such Offering.

(b) Notwithstanding the foregoing, the following Employees shall not be Eligible
Employees or be granted Purchase Rights under an Offering:

(i) five percent (5%) stockholders (including ownership through unexercised
and/or unvested stock options) as described in Section 6(c) of the Plan; or

(ii) Employees in jurisdictions outside of the United States if, as of the
Offering Date of the Offering, the grant of such Purchase Rights would not be in
compliance with the applicable laws of any jurisdiction in which the Employee
resides or is employed.

 

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(c) Notwithstanding the foregoing, each person who first becomes an Eligible
Employee during an ongoing Offering shall not be able to participate in such
Offering.

 

3. Purchase Rights.

(a) Subject to the limitations set forth herein and in the Plan, a Participant’s
Purchase Right shall permit the purchase of the number of shares of Common Stock
purchasable with up to fifteen percent (15%) of such Participant’s Earnings paid
during the period of such Offering beginning immediately after such Participant
first commences participation; provided, however, that no Participant may have
more than fifteen percent (15%) of such Participant’s Earnings applied to
purchase shares of Common Stock under all ongoing Offerings under the Plan and
all other plans of the Company and Related Corporations that are intended to
qualify as Employee Stock Purchase Plans.

(b) For Offerings hereunder, “Earnings” means the base compensation paid to a
Participant, including all salary, wages and overtime pay (including amounts
elected to be deferred by the Participant, that would otherwise have been paid,
under any cash or deferred arrangement or other deferred compensation program
established by the Company or a Related Corporation), and all commissions,
bonuses, and other remuneration paid directly to such Participant, but excluding
all of the following: profit sharing, the cost of employee benefits paid for by
the Company or a Related Corporation, education or tuition reimbursements,
imputed income arising under any Company or a Related Corporation group
insurance or benefit program, traveling expenses, business and moving expense
reimbursements, income received in connection with stock options, contributions
made by the Company or a Related Corporation under any employee benefit plan,
and other similar items of compensation.

(c) Notwithstanding the foregoing, the maximum number of shares of Common Stock
that a Participant may purchase on any Purchase Date shall be such number of
shares as has a Fair Market Value (determined as of the Offering Date for such
Offering) equal to (x) $25,000 multiplied by the number of calendar years in
which the Purchase Right under such Offering has been outstanding at any time,
minus (y) the Fair Market Value of any other shares of Common Stock (determined
as of the relevant Offering Date with respect to such shares) that, for purposes
of the limitation of Section 423(b)(8) of the Code, are attributed to any of
such calendar years in which the Purchase Right is outstanding. The amount in
clause (y) of the previous sentence shall be determined in accordance with
regulations applicable under Section 423(b)(8) of the Code based on (i) the
number of shares previously purchased with respect to such calendar years
pursuant to such Offering or any other Offering under the Plan, or pursuant to
any other Company or Related Corporation plans intended to qualify as Employee
Stock Purchase Plans, and (ii) the number of shares subject to other Purchase
Rights outstanding on the Offering Date for such Offering pursuant to the Plan
or any other such Company or Related Corporation Employee Stock Purchase Plan.

(d) The maximum aggregate number of shares of Common Stock available to be
purchased by all Participants on a Purchase Date shall be one-half ( 1 / 2 ) of
the number of shares of Common Stock available under the Plan (rounded down to
the nearest whole share) as of the first day of the Company fiscal year in which
such Purchase Date occurs, after giving effect to the annual increase provided
in Section 4(a) of the Plan. If the aggregate purchase of shares of Common Stock
upon exercise of Purchase Rights granted under the Offering would exceed the
maximum aggregate number of shares available, the Board shall make a pro rata
allocation of the shares available in a uniform and equitable manner.

(e) Notwithstanding the foregoing, the maximum number of shares of Common Stock
that an Eligible Employee may purchase on any Purchase Date shall not exceed
[two thousand (2,000)] shares.

 

4. Purchase Price.

The purchase price of shares of Common Stock under an Offering shall be the
lesser of: (i) eighty-five percent (85%) of the Fair Market Value of such shares
of Common Stock on the applicable Offering Date, or (ii) eighty-five percent
(85%) of the Fair Market Value of such shares of Common Stock on the applicable
Purchase Date, in each case rounded up to the nearest whole cent per share.

 

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5. Participation.

(a) An Eligible Employee may elect to participate in an Offering on the Offering
Date. An Eligible Employee shall elect his or her payroll deduction percentage
on such enrollment form as the Company provides. The completed enrollment form
must be delivered to the Company prior to the date participation is to be
effective, unless a later time for filing the enrollment form is set by the
Company for all Eligible Employees with respect to a given Offering. Payroll
deduction percentages must be expressed in whole percentages of Earnings, with a
minimum percentage of one percent (1%) and a maximum percentage of fifteen
percent (15%). Except as provided in paragraph (f) below with respect to the
Initial Offering, Contributions may be made only through payroll deductions.

(b) A Participant may increase or decrease his or her participation level at any
time with such change to be effective commencing as of the next Offering. Any
such increase or decrease in participation level shall be made by delivering a
notice to the Company or a designated Related Corporation in such form as the
Company provides prior to the ten (10) day period (or such shorter period of
time as determined by the Company and communicated to Participants) immediately
preceding the next Offering Date for which it is to be effective.

(c) A Participant may decrease (including a decrease to zero percent (0%)) his
or her participation level at any time during a Purchase Period. Any such change
in participation level shall be made by delivering a notice to the Company or a
designated Related Corporation in such form as the Company provides prior to the
ten (10) day period (or such shorter period of time as determined by the Company
and communicated to Participants) immediately preceding the next Purchase Date
of the Purchase Period for which it is to be effective. Such change will become
effective as soon as administratively practicable following the Company’s
receipt of the notice.

(d) A Participant may withdraw from an Offering and receive a refund of his or
her Contributions (reduced to the extent, if any, such Contributions have been
used to acquire shares of Common Stock for the Participant on any prior Purchase
Date) without interest, at any time prior to the end of the Offering, excluding
only each ten (10) day period immediately preceding a Purchase Date (or such
shorter period of time determined by the Company and communicated to
Participants), by delivering a withdrawal notice to the Company or a designated
Related Corporation in such form as the Company provides. A Participant who has
withdrawn from an Offering shall not again participate in such Offering, but may
participate in subsequent Offerings under the Plan in accordance with the terms
of the Plan and the terms of such subsequent Offerings.

(e) Notwithstanding the foregoing or any other provision of this Offering
document or of the Plan to the contrary, neither the enrollment of any Eligible
Employee in the Plan nor any forms relating to participation in the Plan shall
be given effect until such time as a registration statement covering the
registration of the shares under the Plan that are subject to the Offering has
been filed by the Company and has become effective.

 

6. Purchases.

Subject to the limitations contained herein, on each Purchase Date, each
Participant’s Contributions (without any increase for interest) shall be applied
to the purchase of whole shares of Common Stock, up to the maximum number of
shares permitted under the Plan and an Offering.

 

7. Notices and Agreements.

Any notices or agreements provided for in an Offering or the Plan shall be given
in writing, in a form provided by the Company, and unless specifically provided
for in the Plan or this Offering, shall be deemed effectively given upon receipt
or, in the case of notices and agreements delivered by the Company, five
(5) days after deposit in the United States mail, postage prepaid.

 

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8. Exercise Contingent on Stockholder Approval.

The Purchase Rights granted under an Offering are subject to the approval of the
Plan by the stockholders of the Company as required for the Plan to obtain
treatment as an Employee Stock Purchase Plan under the Code. If the stockholders
of the Company fail to approve the Plan prior to the Purchase Date of the
Initial Offering, no Purchase Rights may be exercised on the Purchase Date of
the Initial Offering, all Contributions withheld by the Company shall be
returned to the Participants, the Initial Offering shall terminate and no new
offering shall commence until the Plan has been approved by the stockholders of
the Company.

 

9. Offering Subject to Plan.

Each Offering is subject to all the provisions of the Plan, and the provisions
of the Plan are hereby made a part of the Offering. The Offering is further
subject to all interpretations, amendments, rules and regulations which may from
time to time be promulgated and adopted pursuant to the Plan. In the event of
any conflict between the provisions of an Offering and those of the Plan
(including interpretations, amendments, rules and regulations which may from
time to time be promulgated and adopted pursuant to the Plan), the provisions of
the Plan shall control.

 

4.