stbernard_8k-07232008.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of
Report (date of earliest event reported): July 23, 2008
ST.
BERNARD SOFTWARE, INC.
(Exact
Name of Registrant as Specified in its Charter)
Delaware
|
0-50813
|
20-0996152
|
(State or Other
Jurisdiction of
Incorporation or
Organization)
|
(Commission File
Number)
|
(I.R.S.
Employer Identification
No.)
|
15015
Avenue of Science
San
Diego, California 92128
(Address
of Principal Executive Offices) (Zip Code)
(858)
676-2277
(Registrant’s
telephone number,
including
area code)
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written communications pursuant
to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to
Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01 Entry into a
Material Definitive Agreement.
On July
21, 2008, St. Bernard Software, Inc., a Delaware corporation (“St. Bernard”), entered into a
Loan and Security Agreement (the “Loan Agreement”) and certain
other loan documents with Partners for Growth II, L.P. (“PFG”), which became effective
on July 23, 2008. Pursuant to the terms of the Loan Agreement, PFG provided St.
Bernard with a revolving line of credit (the “Loan”) in the amount not to
exceed the lesser of (a) $1,500,000 at any one time outstanding or (b) up to 30%
of the amount of St. Bernard’s aggregate Eligible Billings (as defined in the
Loan Agreement) over a rolling three month period calculated
monthly.
The
annual interest rate on the Loan is set at Prime Rate, quoted by Silicon Valley
Bank as its Prime Rate from time to time, plus 3% (the “Applicable
Rate”). St. Bernard is required to maintain a minimum
borrowing amount of at least $750,000 (the “Minimum Borrowing Amount”) or
pay PFG a minimum interest amount (the “Minimum Interest Amount”)
equal to $750,000, times the Applicable Rate, times the number of days (based on
a 360-day year) from the date of such failure to maintain the Minimum Borrowing
Amount to the Maturity Date (as defined in the Loan
Agreement). Pursuant to the terms of the Loan Agreement, St. Bernard
paid PFG a one-time commitment fee of $30,000 and agreed to reimburse PFG for
PFG’s reasonable attorneys’ fees in connection with the negotiation of the Loan
Agreement.
Subject
to the requirement to maintain the Minimum Borrowing Amount or pay the Minimum
Interest Amount, St. Bernard may borrow, repay and reborrow from time to time
until the Maturity Date. Proceeds of the initial loan amount will be used to pay
all indebtedness owing to Agility Capital LLC, with the remaining amount to be
used for working capital.
The Loan
Agreement will terminate on July 20, 2010, on which date all principal, interest
and other outstanding monetary obligations must be repaid to PFG. The
obligations under the Loan Agreement are secured by a security interest in
collateral comprised of substantially all of St. Bernard’s assets.
The Loan
Agreement contains affirmative, negative and financial covenants customary for
credit facilities of this type, including, among other things, limitations on
indebtedness, liens, sales of assets, mergers, investments, and
dividends. The Loan Agreement also requires that St. Bernard maintain
a Modified Net Income (as defined in the Loan Agreement) greater than zero. The
Loan Agreement contains events of default customary for credit facilities of
this type (with customary grace or cure periods, as applicable) and provides
that upon the occurrence and during the continuance of an event of default,
among other things, the interest rate on all borrowings will be increased, the
payment of all borrowings may be accelerated, PFG’s commitments may be
terminated and PFG shall be entitled to exercise all of its rights and remedies,
including remedies against the collateral.
The full
text of the Loan Agreement is attached as Exhibit 10.1 to this Current Report on
Form 8-K and is incorporated by reference herein.
In
connection with the execution of the Loan Agreement, St. Bernard issued a
warrant to PFG on July 21, 2008 (the “Warrant”), which allows PFG to
purchase up to 450,000 shares of St. Bernard common stock at an exercise price
equal to $0.46 per share. The Warrant expires on July 20, 2013. The full text of
the Warrant is attached as Exhibit 4.1 to this Current Report and is
incorporated by reference herein.
Pursuant
to the Loan Agreement, the following agreements, among others, were also entered
into by St. Bernard and PFG:
|
·
|
Warrant
Purchase Agreement; and
|
|
·
|
Intellectual
Property Security Agreement.
|
The
foregoing does not constitute a complete summary of the terms of the Loan
Agreement or the above-listed ancillary transaction documents, which are
attached as Exhibits. The descriptions of the terms of such
agreements are qualified in their entirety by reference to such
exhibits.
Item
2.03 Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
The
disclosure requirement of this Item 2.03 is included in Item 1.01 above and is
incorporated herein by reference.
Item
3.02 Unregistered
Sales of Equity Securities.
In
connection with the execution of the Loan Agreement, St. Bernard issued a
warrant to PFG on July 21, 2008 (the “Warrant”) in consideration of
the payment of $1,353 pursuant to the Warrant Purchase Agreement, dated as of
July 21, 2008 by and between St. Bernard and PFG (the “Warrant Purchase
Agreement”). The Warrant allows PFG to purchase up to 450,000
shares of St. Bernard common stock at an exercise price equal to $0.46 per
share. The Warrant expires on July 20, 2013.
The
Warrant and the shares of common stock to be issued upon exercise of the Warrant
have not been and will not be registered under the Securities Act of 1933, as
amended, or any state securities law and were sold in a private transaction
pursuant to an exemption from registration provided by Section 4(2) of the
Securities Act and/or Regulation D promulgated thereunder. Neither the Warrant
nor the shares of common stock issuable upon exercise of the Warrant may be
subsequently offered or sold within the United States absent registration or
exemption from such registration requirements and compliance with applicable
state laws.
The full
text of the Warrant and the Warrant Purchase Agreement are attached as Exhibits
4.1 and 4.2, respectively, to this Current Report and is incorporated by
reference herein.
Item
9.01 Financial
Statements and Exhibits.
(d) Exhibits.
Exhibit
Number
|
Description
|
4.1
|
Warrant
to purchase St. Bernard common stock dated July 21, 2008, issued to
Partners for Growth II, L.P.
|
4.2
|
Warrant
Purchase Agreement between St. Bernard Software, Inc., and Partners for
Growth II, L.P., dated July 21, 2008
|
10.1
|
Loan
And Security Agreement between St. Bernard Software, Inc., and Partners
for Growth II, L.P., dated July 21, 2008
|
10.2
|
Intellectual
Property Security Agreement between St. Bernard Software, Inc., and
Partners for Growth II, L.P., dated July 21,
2008
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
ST.
BERNARD SOFTWARE, INC.
|
|
|
|
|
|
Date: July
28, 2008
|
By:
|
/s/ Vincent
Rossi |
|
|
|
Vincent
Rossi |
|
|
|
Chief
Executive Officer |
|
|
|
|
|
EXHIBIT
INDEX
Exhibit
Number
|
Description
|
4.1
|
Warrant
to purchase St. Bernard common stock dated July 21, 2008, issued to
Partners for Growth II, L.P.
|
4.2
|
Warrant
Purchase Agreement between St. Bernard Software, Inc., and Partners for
Growth II, L.P., dated July 21, 2008
|
10.1
|
Loan
And Security Agreement between St. Bernard Software, Inc., and Partners
for Growth II, L.P., dated July 21, 2008
|
10.2
|
Intellectual
Property Security Agreement between St. Bernard Software, Inc., and
Partners for Growth II, L.P., dated July 21,
2008
|
5