CONSENT AND WAIVER AGREEMENT
THIS
CONSENT AND WAIVER AGREEMENT (this “Agreement”),
dated
as
of November 21, 2008 is entered into by and among Cyberdefender Corporation,
a
California corporation (the “Company”),
the
undersigned holders of at least 75% of the outstanding principal amount of
the
Debentures (as hereinafter defined) (the “Holders”)
and
the Agent (as defined in the Purchase Agreement).
WHEREAS,
pursuant
to a Securities
Purchase Agreement, dated September 12, 2006 (the “Purchase
Agreement”),
among
the Company and the purchasers signatory thereto, the Holders purchased from
the
Company 10% Secured Convertible Debentures (the “Debentures”)
and
warrants to purchase Common Stock of the Company issued pursuant thereto (the
“2006
Warrants”).
WHEREAS,
capitalized terms used but not defined herein have the meanings ascribed to
them
in the Purchase Agreement.
NOW
THEREFORE,
for
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and each of the undersigned Holders hereby agree
as
follows:
1. Each
of
the undersigned Holders hereby consents, as required by Section 7(a) of the
Debentures, to the issuance by the Company of up to $1,200,000 in aggregate
principal amount of the Company’s 10% Convertible Promissory Notes, due eleven
months from the date of issuance and convertible into shares of Common Stock
at
a conversion price of $1.25 per share, subject to adjustment as provided therein
(such financing, “New
Debt Financing”
and
such waiver, the “Waiver”);
provided,
however,
the
Waiver shall immediately terminate and be null and void as to any investment
pursuant to the New Debt Financing by any investor in such New Debt Financing
who is initially contacted by the Company, its placement agent or any
representative thereof on or after December 5, 2008.
2. The
Company hereby agrees to cause its legal counsel to issue a legal opinion to
each of the undersigned Holders and the Company’s Transfer Agent that the shares
of Common Stock issuable upon conversion of the Debentures (the “Debenture
Shares”)
and
“cashless exercise” of the 2006 Warrants (collectively, the “144
Eligible Securities”)
(a)
may be sold pursuant to Rule 144 under the Securities Act without volume
restrictions or manner of sale limitations as of the date hereof, assuming
such
Holders is not an “affiliate” of the Company as defined in Rule 405 under the
Securities Act, and (b) that the certificates representing the 144 Eligible
Securities may be issued without a restrictive legend as required pursuant
to
Section 4.1 of the Purchase Agreement.
3. Subject
to the terms and conditions set forth herein, each undersigned Holder hereby
acknowledges and agrees that the Company shall not be required to file or
maintain the effectiveness of any registration statement registering the resale
of any Debenture Shares or shares issuable upon exercise of the 2006 Warrants
(the “2006
Warrant Shares”).
The
Company agrees and acknowledges that the 2006 Warrant Shares and the shares
of
Common Stock underlying the 18 month 10% convertible debentures issued or
issuable to each of the Holders and each of the holders of the Debentures in
payment of interest and liquidated damages pursuant to prior consent and waiver
agreements (the “18
Month Debentures”)
shall
carry “piggyback” registration rights. As such, the Company shall include, in
the first resale registration statement filed by the Company on Form S-1, or
the
then equivalent form, after the date hereof, at the election of the holders
thereof (a) the 2006 Warrant Shares and (b) the shares of Common Stock
underlying the 18 Month Debentures (together the “Piggyback
Shares”);
all
such Piggyback Shares shall be included in the initial registration statement
filed after the date hereof; provided,
however,
to the
extent that all of the Piggyback Shares are not included in the initial
registration statement filed after the date hereof, each Holder shall have
the
right to request the inclusion of its Piggyback Shares in subsequent
registration statements until all such Piggyback Shares have been registered
in
accordance with the terms hereof. The Company shall use its best efforts to
cause any registration statement filed in connection with this paragraph 3
to be
declared effective by the Commission as promptly as is possible following it
being filed with the Commission and to remain effective until all Piggyback
Shares subject thereto have been sold or may be sold pursuant to Rule 144 under
the Securities Act without volume restrictions or manner of sale limitations.
All fees and expenses incident to the performance of or compliance with this
paragraph 3 by the Company shall be borne by the Company whether or not any
Piggyback Shares are sold pursuant to the registration statement. The Company
shall indemnify and hold harmless each Holder, the officers, directors, members,
partners, agents, brokers, investment advisors and employees of each of them,
each person who controls each Holder (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act), and the officers, directors,
members, shareholders, partners, agents and employees of each such controlling
person, to the fullest extent permitted by applicable law, from and against
any
and all losses, claims, damages, liabilities, costs (including, without
limitation, reasonable attorneys’ fees) and expenses (collectively, the
“Losses”),
as
incurred, arising out of or relating to (i) any untrue or alleged untrue
statement of a material fact contained in the registration statement, any
prospectus included therein or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to
be
stated therein or necessary to make the statements therein (in the case of
any
prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading or (ii) any violation
or alleged violation by the Company of the Securities Act, the Exchange Act
or
any state securities law, or any rule or regulation thereunder, in connection
with the performance of its obligations under this paragraph 3, except to the
extent, but only to the extent, that such untrue statements or omissions
referred to in (i) above are based solely upon information regarding a Holder
furnished in writing to the Company by such Holder expressly for use therein,
or
to the extent that such information relates to such Holder or such Holder’s
proposed method of distribution of Piggyback Shares and was reviewed and
expressly approved in writing by such Holder expressly for use in the
registration statement, such prospectus or such form of prospectus or in any
amendment or supplement thereto.
4. In
consideration of the Waiver and the consent provided by the Holders pursuant
to
this Agreement, the Company agrees to accelerate the maturity date of the 18
Month Debentures to September 12, 2009, which accelerated maturity date shall
become automatically effective as of the date the Company issues the Current
Report on Form 8-K described in paragraph 6 below. No later than five Business
Days after filing date of such Form 8-K, the Company shall provide replacement
debentures to each Holder memorializing such accelerated maturity date of the
18
Month Debentures.
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5. The
Company hereby makes to the Holders the following representations and
warranties:
i. Authorization;
Enforcement.
The
Company has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by this Agreement and otherwise to
carry out its obligations hereunder and thereunder. The execution and delivery
of this Agreement by the Company and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company, its board
of directors or its stockholders in connection therewith. This Agreement has
been duly executed by the Company and, when delivered in accordance with the
terms hereof will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms except (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may
be
limited by applicable law.
ii. No
Conflicts.
The
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby do not
and
will not: (i) conflict with or violate any provision of the Company’s
certificate or articles of incorporation, bylaws or other organizational or
charter documents, or (ii) conflict with, or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, result
in the creation of any Lien upon any of the properties or assets of the Company,
or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any material
agreement, credit facility, debt or other material instrument (evidencing a
Company debt or otherwise) or other material understanding to which the Company
is a party or by which any property or asset of the Company is bound or
affected, or (iii) conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company is subject (including
federal and state securities laws and regulations), or by which any property
or
asset of the Company is bound or affected; except in the case of each of clauses
(ii) and (iii), such as could not have or reasonably be expected to result
in a
Material Adverse Effect.
iii. Equal
Consideration.
Except
as set forth in this Agreement and prior consent and waiver agreements entered
into with the holders of at least 75% in outstanding principal amount of the
Debentures, no consideration has been offered or paid to any person to amend
or
consent to a waiver, modification, forbearance or otherwise of any provision
of
any of the Transaction Documents.
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iv. Survival
and Bring Down.
All of
the Company’s warranties and representations contained in this Agreement shall
survive the execution, delivery and acceptance of this Agreement by the parties
hereto.
v. Shell
Company.
The
Company is not and has never been a “shell company” as defined in Rule 405 under
the Securities Act and therefore Rule 144(i) under the Securities Act is not
applicable to the Company.
6. No
later
than 8:30 am (NY time) on December 6, 2008, the Company shall file a Current
Report on Form 8-K disclosing (i) any closings under the New Debt Financing
and
the material terms thereof, and (ii) the transactions contemplated by this
Agreement. The Company shall consult with the Holders in issuing any other
press
releases with respect to the transactions contemplated hereby.
7. Except
as
expressly set forth herein, all of the terms and conditions of the Transaction
Documents shall continue in full force and effect after the execution of this
Agreement and shall not be in any way changed, modified or superseded by the
terms set forth herein.
8. This
Agreement may be executed in two or more counterparts and by facsimile signature
or otherwise, and each of such counterparts shall be deemed an original and
all
of such counterparts together shall constitute one and the same
agreement.
9. The
Company has elected to provide all Holders with the same terms and form of
consent and waiver for the convenience of the Company and not because it was
required or requested to do so by the Holders. The obligations of each Holder
under this Agreement, and any Transaction Document are several and not joint
with the obligations of any other Holder, and no Holder shall be responsible
in
any way for the performance or non-performance of the obligations of any other
Holder under this Agreement or any Transaction Document. Nothing contained
herein or in any Transaction Document, and no action taken by any Holder
pursuant thereto, shall be deemed to constitute the Holders as a partnership,
an
association, a joint venture or any other kind of entity, or create a
presumption that the Holders are in any way acting in concert or as a group
with
respect to such obligations or the transactions contemplated by this consent
and
waiver or the Transaction Documents. Each Holder shall be entitled to
independently protect and enforce its rights, including without limitation,
the
rights arising out of this Agreement or out of the Transaction Documents, and
it
shall not be necessary for any other Holder to be joined as an additional party
in any proceeding for such purpose. Each Holder has been represented by its
own
separate legal counsel in their review and negotiation of this Agreement and
the
Transaction Documents.
[SIGNATURE
PAGES FOLLOW]
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IN
WITNESS WHEREOF, this Consent and Waiver Agreement is executed as of the date
first set forth above.
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CYBERDEFENDER
CORPORATION
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By:
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/s/
Xxxx Xxxxxxxx
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Name:
Xxxx Xxxxxxxx
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Title:
Chief Executive Officer
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[signature
page(s) of Holders to follow]
5
COUNTERPART
SIGNATURE PAGE
OF
HOLDER
TO
CONSENT
AND WAIVER,
AMONG
CYBERDEFENDER CORPORATION AND
THE
HOLDERS THEREUNDER
|
Name
of Holder: Bushido Capital Master Fund LP
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By:
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/s/
Xxxxxx X. Xxxxx
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Name:
Xxxxxx X. Xxxxx
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||
|
Title:
Director
|
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6
COUNTERPART
SIGNATURE PAGE
OF
HOLDER
TO
CONSENT
AND WAIVER,
AMONG
CYBERDEFENDER CORPORATION AND
THE
HOLDERS THEREUNDER
|
Name
of Holder: BCMF Trustees LLC
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||
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By:
|
/s/
Xxxxxx X. Xxxxx
|
|
|
Name:
Xxxxxx X. Xxxxx
|
||
|
Title:
Director
|
||
7
COUNTERPART
SIGNATURE PAGE
OF
HOLDER
TO
CONSENT
AND WAIVER,
AMONG
CYBERDEFENDER CORPORATION AND
THE
HOLDERS THEREUNDER
|
Name
of Holder: Xxxxxx Diversified Strategies Master Fund
LLC
Series BUS
|
||
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By:
|
/s/
Xxxxxx X. Xxxxx
|
|
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Name:
Xxxxxx X. Xxxxx
|
||
|
Title:
Attorney in Fact
|
||
8
COUNTERPART
SIGNATURE PAGE
OF
HOLDER
TO
CONSENT
AND WAIVER,
AMONG
CYBERDEFENDER CORPORATION AND
THE
HOLDERS THEREUNDER
|
Name
of Holder: CAMOFI Master LDC
|
||
|
By:
|
/s/
Xxxxxxx Xxxxxxxxx
|
|
|
Name:
Xxxxxxx Xxxxxxxxx
|
||
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