stbernard_8k-ex0401.htm


    EXHIBIT
4.1

    
 

    WARRANT

     

    THIS
WARRANT (THE "WARRANT") IS ISSUED PURSUANT TO THE TERMS OF THE PROVISIONS OF A
WARRANT PURCHASE AGREEMENT (THE "AGREEMENT") BETWEEN ST. BERNARD SOFTWARE, INC.
(THE "COMPANY") AND THE INITIAL WARRANT HOLDER. A COPY OF SUCH AGREEMENT IS ON
FILE AT THE OFFICE OF THE CORPORATE SECRETARY OF THE COMPANY. THIS SECURITY WAS
SOLD IN A PRIVATE TRANSACTION, WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE, AND
MAY BE OFFERED OR SOLD ONLY IF REGISTERED UNDER THE SECURITIES ACT AND SUCH LAWS
OR IF AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND SUCH LAWS IS
AVAILABLE.

     

    
      	
              Company:

              Number
      of Shares: 

              Class
      of Shares: 

              Exchange
      Price: 

              Issue
      Date: 

              Expiration
      Date:

            	
              St.
      Bernard Software, Inc., a Delaware corporation

              450,000,
      as adjusted

              Common
      Shares, par value $0.01 per share

              $0.46
      per share 

              July
      21, 2008 

              July
      20, 2013

            


    

     

    The term
"Holder" shall initially refer to Partners for Growth II, L.P., a Delaware
limited partnership, which is the initial holder of this Warrant and shall
further refer to any subsequent permitted holder of this Warrant from time to
time.

     

    The
Holder is subject to certain restrictions as set forth in the
Agreement.

     

    The
Company does hereby certify and agree that, for good and valuable consideration
for the Warrant, the Holder, or its permitted successors and assigns, hereby is
entitled to exchange this Warrant in St. Bernard Software, Inc. (the "Company")
for Four Hundred Fifty Thousand (450,000) duly authorized, validly issued, fully
paid and non-assessable shares of its Common Stock, par value $0.01 each, upon
the terms and subject to the provisions of this Warrant. The shares of Common
Stock issuable upon exchange of this Warrant are referred to herein as the
"Warrant Stock," and the Warrant and the Warrant Stock are sometimes together
referred to as the "Securities."

     

    Section
1  Term, Price and
Exchange of Warrant.

     

    1.1  Term
of Warrant. This Warrant shall be exchangeable for a period of five
(5) years
from the Issue Date (hereinafter referred to as the "Expiration
Date").

     

    1.2  Exchange
Price. The price per share at which the Warrant Stock is issuable
upon exchange of this Warrant shall be $0.46, subject to Section 1.3 (a) hereof
and subject to adjustment from time to time as set forth herein (the "Exchange
Price").

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.3  Exercise
of Warrant; Exchange of Warrant.

     

    (a)  This
Warrant may be exercised, in whole or in part, upon surrender
to the
Company at its then principal offices in the United States of this Warrant to be
exchanged, together with the Ruin of election to exchange attached hereto as
Exhibit A duly completed and executed, and upon payment to the Company of the
Exercise Price for the number of shares of Warrant Stock in respect of which
this Warrant is then being exercised (an "Exercise"). In whole or in part in
lieu of an Exercise, Holder may exchange this Warrant as set forth in the
remainder of this Section 1.3 (an "Exchange").

     

    (b)  Upon an
Exchange, the Holder shall receive Warrant Stock such that,
without the payment of any funds, the Holder shall
surrender this Warrant in exchange for the number of shares of Warrant
Stock equal
to "X" (as defined below), computed using the following formula:

     

    X = Y * (A-B)

    A

    Where

     

    
      	
              X

            	
              =

            	the
      number of shares of Warrant Stock to be issued to
    Holder  
	
              Y

            	
              =

            	the
      number of shares of Warrant Stock to be exchanged under this
      Warrant 
	
              A

            	
              =

            	the
      Fair Market Value of one share of Warrant Stock  
	
              B

            	
              =

            	the
      Exchange Price (as adjusted to the date of such
    calculations) 
	 *	
              = 

            	multiplied
      by 


    

     

    (c)  For
purposes of this Warrant, the "Fair Market Value" of one share
of
Warrant Stock shall be (i) if the Company's common stock (the "Common Stock") is
or becomes listed on a national stock exchange, the closing price of a share of
Common Stock on the trading day immediately prior to the day Holder delivers its
Election of Exchange to the Company, or (ii) if the Common Stock is traded
over-the-counter, the closing bid price for the Common Stock on the trading day
immediately prior to the day Holder delivers its Election of Exchange to the
Company. If the Common Stock is not traded as contemplated in clauses (i) or
(ii) above, then the Fair Market Value of the Company's Warrant Stock shall be
the price per share which the Company could obtain from a willing buyer for
shares of Common Stock sold by the Company from its authorized but unissued
shares, as the Board of Directors of the Company ("Board") shall determine in
its reasonable good faith judgment, but in no event less than the price at which
qualified employee stock options issued at such time are exercisable. In the
event that Holder elects to convert the Warrant Stock through Exchange in
connection with a transaction in which the Warrant Stock is converted into or
exchanged for another security, Holder may effect a Exchange directly into such
other security.

     

    
      
        
        

      

      
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    (d)  Upon
Amender of this Warrant, and the duly completed and executed
form of election to exchange, and payment of the Exchange Price or conversion of
this Warrant through Exchange, the Company shall issue and deliver within 3
business days to the Holder or such other person as the Holder may designate in
writing a certificate or certificates for the number of shares of Warrant Stock
so purchased upon the Exchange or exercise of this Warrant. Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
Warrant Stock as of the date of the surrender of this Warrant, and the duly
completed and executed form of election to exchange, and payment of the Exchange
Price or conversion of this Warrant through Exchange; provided, that if the date
of surrender of this Warrant and payment of the Exchange Price is not a business
day, the certificates for the Warrant Stock shall be deemed to have been issued
as of the next business day (whether before or after the Expiration Date). If
this Warrant is exchanged or exercised in part, a new warrant of the same tenor
and for the number of shares of Warrant Stock not exchanged or exercised shall
be executed by the Company.

     

    1.4  Fractional
Interests. The Company shall not be required to issue fractions
of shares
of Warrant Stock upon the exchange of this Warrant. If any fraction of a share
of Common Stock would be issuable upon the exchange of this Warrant (or any
portion thereof), the Company shall purchase such fraction for an amount in cash
equal
to the same fraction of the last reported sale price of the Common Stock on the
NASDAQ National Market System or any other national securities exchange or
market on which the Common Stock is then listed or traded.

     

    1.5  Automatic
Conversion upon Expiration. In
the event that, upon the Expiration
Date, the Fair Market Value of one share of Common Stock (or other security
issuable upon the exchange hereof) as determined in accordance with Section
1.3(c) is greater than the Exchange Price in effect on such date, then this
Warrant shall automatically be deemed on and as of such date to be converted
pursuant to Section 1.3 as to all Warrant Stock (or such other securities) for
which it shall not previously have been exchanged or converted, and the Company
shall promptly deliver a certificate representing the Warrant Stock (or such
other securities) issued upon such conversion to the Holder.

     

    1.6  Treatment
of Warrant Upon Acquisition of Company.

     

    (a)  "Acquisition".
For the purpose of this Warrant, "Acquisition" means (i)
any sale or other disposition of all or substantially all of the assets of the
Company in whatever form, or any reorganization, consolidation, or merger of the
Company (whether in a single transaction or multiple related transactions) where
the holders of the Company's securities before the transaction beneficially own
less than
50% of the outstanding voting securities of the surviving entity after
the transaction(s).

     

    (b)  Treatment
of Warrant at Acquisition. Prior
to the closing of any Acquisition,
the Company shall use its commercially reasonable efforts to cause the successor
entity (if applicable in such Acquisition) to assume the obligations of this
Warrant, and, if assumed, this Warrant shall be exercisable for the same
securities, cash, and
property as would be payable for the Warrant Stock issuable upon exchange of the
unexchanged portion of this Warrant as if such Warrant Stock were outstanding on
the record date for the Acquisition and subsequent closing. The Warrant Price
and/or number of shares of Warrant Stock shall be adjusted
accordingly.

     

    
      
        
        

      

      
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    (c)  Optional
Purchase at Fair Value. If the successor entity (if applicable
in such Acquisition) does not assume the obligations of the Company under this
Warrant as set forth in subsection (b) above, the Company may, at its option,
elect to purchase and Holder may, at its option, require the Company to purchase
this Warrant at its "Fair Value." For purposes of this Warrant, "Fair Value"
shall mean that value determined by the parties using a Black-Scholes
Option-Pricing Model with the following assumptions: (A) a risk-free interest
rate equal to the risk-free interest rate at the time of the closing of the
Acquisition (or as close thereto as practicable), (B) a contractual life of the
Warrant equal to the remaining term of this Warrant as of the date of the
Acquisition, (C) an annual dividend yield equal to dividends declared on the
underlying Common Stock during the term of this Warrant (calculated on an annual
basis), and (D) a volatility factor of the expected market price of the
Company's Common Stock of (1) in the case of an Acquisition in which the
acquirer is publicly traded on a national securities exchange, the implied
volatility of the common stock of such acquirer over the one-year period prior
to the Acquisition, (2) in the case of an Acquisition in which the acquirer is a
non-public company, the implied volatility of an average of not less than three
publicly-traded companies in the same or similar industry to the Company with
such companies having similar revenues. The purchase price determined in
accordance with the above shall be paid upon the initial closing of the
Acquisition and shall not be subject to any post-Acquisition closing
contingencies or adjustments, but the parties may take such contingencies and
adjustments into account in determining the purchase price. This subsection
shall apply to the non-cash portion of an Acquisition subject to subsection (b)
above, in the case of such an Acquisition which is partly cash and partly other
property.

     

    Section
2.  Exchange and
Transfer of Warrant.

     

    (a)  This Warrant may be
transferred, in whole or in part, without restriction,
subject to (i) Holder's compliance with applicable securities laws and delivery
of an opinion of competent counsel as to the same, if so requested by the
Company, and (ii) the transferee holder of the new Warrant assuming in writing
the obligations of the Holder set forth in this Warrant and the Agreement. A
transfer may be registered with the Company by submission to it of this Warrant,
together with the annexed Assignment Form attached hereto as Exhibit B duly
completed and executed. After the Company's receipt of this Warrant and the
Assignment Form so completed and executed, the Company will issue and deliver to
the transferee a new warrant (representing the portion of this Warrant so
transferred) at the same Exchange Price per share and otherwise having the same
terms and provisions as this Warrant, which the Company will register in the new
holder's name. In the event of a partial transfer of this Warrant, the Company
shall concurrently issue and deliver to the transferring holder a new warrant
that entitles the transferring holder to purchase the balance of this Warrant
not so transferred and that otherwise is upon the same terms and conditions as
this Warrant. Upon the due delivery of this
Warrant for transfer, the transferee holder shall be deemed for all purposes to
have become the holder of the new warrant issued for the portion of this Warrant
so transferred, effective immediately prior to the close of business on the date
of such delivery, irrespective of the date of actual delivery of the new warrant
representing the portion of this Warrant so transferred.

     

    
      
        
        

      

      
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    (b)  In the
event of the loss, theft or destruction of this Warrant, the Company
shall execute and deliver an identical new warrant to the Holder in substitution
therefor upon the Company's receipt of (i) evidence reasonably satisfactory to
the Company of such event and (ii) if requested by the Company, an indemnity
agreement reasonably satisfactory in form and substance to the Company. In the
event of the mutilation of or other damage to the Warrant, the Company shall
execute and deliver an identical new warrant to the Holder in substitution
therefor upon the Company's receipt of the mutilated or damaged
warrant.

     

    (c)  The
Company shall pay all reasonable costs and expenses incurred in
connection with the exchange, exercise, transfer or replacement of this Warrant,
including, without limitation, the costs of preparation, execution and delivery
of a new warrant and of share certificates representing all Warrant
Stock.

     

    Section
3.  Certain
Covenants.

     

    (a)  The
Company shall at all times reserve for issuance and keep available
out of its authorized and unissued Common Stock, solely for the purpose of
providing for the exchange of this Warrant, such number of shares of Common
Stock as shall from time to time be sufficient therefor.

     

    (b)  The
Company will not, by amendment or restatement of its Certificate
of Incorporation or Bylaws or through reorganization, consolidation, merger,
amalgamation, sale of assets or otherwise, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant. Without limiting the
foregoing, the Company (i) will not increase the par value of any Warrant Stock
receivable upon the exchange of this Warrant above the amount payable therefor
upon such exchange and (ii) will take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares upon the exchange of this Warrant.

     

    (c)  So long as Holder holds
this Warrant, the Company shall deliver to Holder
such reports as it provides to its preferred stockholders generally, as and when
delivered to such stockholders. Notwithstanding the foregoing, the Company shall
provide Holder quarterly and annual financial statements as and when available,
so long as such statements are not publicly available. The parties shall not
treat the Warrant or the Warrant Stock as being granted or issued as property
transferred in connection with the performance of services or otherwise as
compensation for services rendered.

     

    
      
        
        

      

      
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    Section
4.  Adjustments to
Exchange Price and Number of Shares of Warrant Stock.

     

    4.1  Adjustments.
The Exchange Price shall be subject to adjustment from time to
time in accordance with this Section 4. Upon each adjustment of the Exchange
Price pursuant to this Section 4, the Holder shall thereafter be entitled to
acquire upon exchange, at the Exchange Price resulting from such adjustment, the
number of shares of Common Stock of the Company obtainable by multiplying the
Exchange Price in effect immediately prior to such adjustment by the number of
shares of Common Stock acquirable immediately prior to such adjustment and
dividing the product thereof by the new Exchange Price resulting from such
adjustment

     

    4.2  Subdivisions,
Combinations and Stock Dividends. If the
Company shall at any time
subdivide by split-up or otherwise, its outstanding Common Stock into a greater
number of shares, or issue additional Common Stock as a dividend, bonus issue or
otherwise with respect to any Common Stock, the Exchange Price in effect
immediately prior to such subdivision or share dividend or bonus issue shall be
proportionately reduced and the number of shares acquirable upon exchange
hereunder shall be proportionately increased. Conversely, in case the
outstanding Common Stock of the Company shall be combined into a smaller number
of shares, the Exchange Price in effect immediately prior to such combination
shall be proportionately increased.

     

    4.3  Reclassification,
Exchange, Substitutions, Etc. Upon any
reclassification, exchange,
substitution, or other event that results in a change of the number and/or class
of the securities issuable upon exchange or exercise of this Warrant, Holder
shall be entitled to receive, upon exchange or exercise of this Warrant, the
number and kind of securities and property that Holder would have received for
the Warrant Stock if this Warrant had been exercised immediately before such
reclassification, exchange, substitution, or other event. The Company or its
successor shall promptly issue to Holder an amendment to this Warrant setting
forth the number and kind of such new securities or other property issuable upon
exchange or exercise of this Warrant as a result of such reclassification,
exchange, substitution or other event that results in a change of the number
and/or class of securities issuable upon exchange or exercise of this Warrant.
The amendment to this Warrant shall provide for adjustments (as determined in
good faith by the Company's Board of Directors) which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Article
4 including, without limitation, adjustments to the Warrant Price and to the
number of securities or property issuable upon exchange of the new Warrant. The
provisions of this Section 4.3 shall similarly apply to successive
reclassifications, exchanges, substitutions, or other similar
events.

     

    4.4.  Notices
of Record Date, Etc. In the event that the Company
shall:

     

    (1)  declare or propose to
declare any dividend upon its Common Stock, whether payable in cash, property,
stock or other securities and whether or not a regular cash dividend,
or

     

    
      
        
        

      

      
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    (2)  offer for
sale any additional shares of any class or series of the Company's stock or
securities exchangeable for or convertible into such stock in any transaction
that would give rise (regardless of waivers thereof) to pre-emptive rights of
any class or series of stockholders, or

     

    (3)  effect or
approve any reclassification, exchange, substitution or recapitalization
of the capital stock of the Company, including any subdivision or combination of
its outstanding capital stock, or consolidation or merger of the Company with,
or sale of all or substantially all of its assets to, another corporation, or to
liquidate, dissolve or wind up (including an assignment for the benefit of
creditors), or

     

    (4)  offer holders of
registration rights the opportunity to participate in any public offering of the
Company's securities,

     

    then,
in connection with such event, the Company shall give to
Holder:

     

    (i)  at least
ten (10) days prior written notice of the date on which the books of the Company
shall close or a record shall be taken for such a dividend or offer in respect
of the matters referred to in (1) or (2) above, or for determining rights to
vote in respect of the matters referred to in (3) above; and

     

    (ii)  in the
case of the matters referred to in (3) above, at least ten (10) days prior
written notice of the date when the same is proposed to take place. Such notice
in accordance with the foregoing clause (1) shall also specify, in the case of
any such dividend, the date on which the holders of capital stock shall be
entitled thereto and the terms of such dividend, and such notice in accordance
with clause (2) shall also specify the date on which the holders of capital
stock shall be entitled to exchange their capital stock for securities or other
property deliverable upon such reorganization, reclassification, exchange,
substitution, consolidation, merger or sale, as the case may be, and the terms
of such exchange Each such written notice shall be given by first class mail,
postage prepaid, addressed to the holder of this Warrant at the address of
Holder; and

     

    (iii)  in the case of the matter
referred to in (4) above, the same notice as is given or required to be given to
the holders of such registration rights.

     

    4.5  Adjustment
by Board of Directors. If any event occurs as to which, in the
opinion
of the Board of Directors of the Company, the provisions of this Section 4 are
not strictly applicable or if strictly applicable would not fairly protect the
rights of the Holder in accordance with the essential intent and principles of
such provisions, then the Board of Directors shall make an adjustment in the
application of such provisions, in accordance with such essential intent and
principles, so as to protect such rights, but in no event shall  any
adjustment have the effect of increasing the Exchange Price as otherwise
determined pursuant to any of the provisions of this Section 4, except in the
case of a combination of shares of a type contemplated in Section 4.2 and then
in no event to an amount larger than the Exchange Price as adjusted pursuant to
Section 4.2.

     

    
      
        
        

      

      
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    4.6  Officers'
Statement as to Adjustments. Whenever
the Exchange Price and/or
number of shares of Warrant Stock subject to the Warrant is required to be
adjusted as provided in Section 4, the Company shall forthwith file at each
office designated for the exchange of this Warrant with a copy to the Holder
notice parties set forth in Section 7 hereof a statement, signed by the Chief
Executive Officer or Chief Financial Officer of the Company, showing in
reasonable detail the facts requiring such adjustment, the Exchange Price and
number of issuable shares that will be effective after such adjustment;
provided, however, such statement shall not be required to the extent the
information requested in this Section 4.6 is available through the Company's
current reports filed with the Securities and Exchange Commission. If at any
time the information described in this Section 4.6 is readily available through
the Company's reports filed with the Securities and Exchange Commission, the
Company shall not be required to provide a separate notice of adjustment to the
Holder; provided, however, if such information is not readily available through
the Company's current reports filed with the Securities Exchange Commission and
made public, the Company shall cause a notice setting forth any such adjustments
to be sent by mail, first class, postage prepaid, to the record Holder of this
Warrant at its notice address(es) appearing in Section 7.

     

    4.7  Issue
of Securities other than Common Stock. In the
event that at any time, as
a result of any adjustment made pursuant to Section 4, the Holder thereafter
shall become entitled to receive any securities of the Company, other than
Common Stock, thereafter the number of such other shares so receivable upon
exchange of this Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Common Stock contained in Section 4.

     

    Section
5.  Rights and
Obligations of the Warrant Holder.

     

    This
Warrant shall not entitle the Holder to any rights of a holder of Common Stock
in the Company until such time as this Warrant is exchanged or
exercised.

     

    Section
6.  Restrictive Stock
Legend.

     

    This
Warrant and the Warrant Stock have not been registered under any securities
laws. Accordingly, any share certificates issued pursuant to the exchange of
this Warrant shall (until receipt of an opinion of counsel in customary form
that such legend is no longer necessary) bear the following legend:

     

    THIS
WARRANT AND THE WARRANT STOCK ISSUABLE UPON EXCHANGE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT"), AND HAVE BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OF DISTRIBUTION THEREOF.
NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL IN CUSTOMARY FORM THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE ACT.

     

    
      
        
        

      

      
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    Section
7.  Notices.

     

    Any
notice or other communication required or permitted to be given here shall be in
writing and shall be effective (a) upon hand delivery or delivery by e-mail or
facsimile at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received) or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received),
or (b) on the third business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communication shall be:

     

    if to
Holder, at

     

    Partners
for Growth II, L.P.

    180
Pacific Avenue

    San
Francisco, California 94111 

    Attention:
Chief Financial Officer 

    Fax:
(415) 781-0510

     

    with a
copy (not constituting notice) to

     

    Greenspan
Law Corporation 

    Attn:
Benjamin Greenspan, Esq. 

    620
Laguna Road

    Mill
Valley, CA 94941

    Fax:
(415) 358-4780

    Email:
ben@greenspan-law.com

     

    or

    if to the
Company, at

     

    Mr. John
Burke

    Chief
Financial Officer

    St.
Bernard Software, Inc. 

    15015
Avenue of Science

    San
Diego, CA 92128

    Fax:
(858) 676-3678

    Email:
JBurke@stbernard.com

     

    with a
copy (not constituting notice) to:

     

    
      
        
        

      

      
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    Mintz
Levin

    3580
Carmel Mountain Road

    Suite
300

    San
Diego, CA 92130 Attn: Jeremy Glaser Fax: (858) 320-3001

    Email.
JGlaser@Mintz.com

     

    Each
party hereto may from time to time change its address for notices under this
Section 7 by giving at least 10 calendar days' notice of such changes address to
the other party hereto.

     

    Section
8.  Amendments and
Waivers.

     

    This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought. This Warrant may
only be amended by an instrument in writing signed by both parties.

     

    Section
9.  Applicable Law;
Severability.

     

    This
Warrant shall be governed by and construed and enforced in accordance with the
laws of the State of Delaware. If any one or more of the provisions contained in
this Warrant, or any application of any provision thereof, shall be invalid,
illegal, or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and all other
applications of any provision thereof shall
not in any way be affected or impaired thereby.

     

    Section
10.  Construction.

     

    The terms
of the Warrant Purchase Agreement to which this Warrant is attached as Exhibit 1
are incorporated by reference herein. Terms used but not defined herein have the
meaning set forth in the Warrant Purchase Agreement.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
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    IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed on the
day and year first above written.

     

    
    

     

    
      	COMPANY:  	ACKNOWLEDGED AND
      AGREED: 
	 	 
	ST. BERNARD
      SOFTWARE, INC. 	HOLDER: 
	 	 
	 	Partners for Growth
      II, LP. 
	By:  /s/ Vincent A.
      Rossi                           
      	 
	 	By:   /s/ Andrew W.
      Kahn                      
      
	Name:  Vincent
      A. Rossi	      
      Andrew W. Kahn, Manager of 
	 	
                    
      Partners for Growth II, LLC, Its General Partner 

            
	Title:  Chief
      Executive  Officer	 


    

     

     

     

    
      
        
        

      

      
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    Exhibit
A

     

    To:St.
Bernard Software, Inc.

     

    ELECTION
TO EXCHANGE

     

    1.    The
undersigned hereby exercises its right to exchange its Warrant for
______________________ fully
paid, validly issued and nonassessable Shares covered by the attached
Warrant in accordance with the terms thereof.

     

    1.    The
undersigned hereby elects to exercise the attached Warrant for fully paid,
validly
issued and nonassessable Shares by payment of $_________ as specified in the
attached
Warrant. This right is exercised with respect to ____________ of
shares.

     

    [Strike
the paragraph above that does not apply.]

     

    The
undersigned requests that certificates for such shares be issued in the name of,
and delivered to:

     

    ____________________

    ____________________

    ____________________

     

    2.    By its
execution below and for the benefit of the Company, the undersigned
hereby
restates each of the representations and warranties in Section 4 of the Warrant
Purchase Agreement as of the date hereof.

     

    
       

      
        	Date:
      ______________________ 	[Holder] 
	 	 
	 	 
	 	By 
      _________________________ 
	 	
                Name: 

              
	 	
                Title: 

              
	 	 


      

       

       

      
        
          
          

        

        
          A-1

          
            

          

        

        
          
          

        

      

       

    

    Exhibit
B

     

    ASSIGNMENT
FORM

     

    To:  St. Bernard Software,
Inc.

     

    The
undersigned hereby assigns and transfers this Warrant to

     

    _______________________________________________

    (Insert
assignee's social security or tax identification number)

     

     

    
      
        

      

    

    (Print or
type assignee's name, address and postal code)

     

    
      
        

      

       

    

    
      
        

      

    

     

    and
irrevocably appoints __________________________________ to transfer this
Warrant
on the books of the Company.

     

    
       

      
        	Date:
      ______________________ 	Partners for Growth
      II, L.P.
	 	 
	 	 
	 	By 
      ___________________________________ 
	 	
                Name:
      _____________________, Manager of 

              
	 	
                Partners for Growth
      II, LLC, Its General Partner 

              
	 	 


      

    

     

     

     

    B-1