SECURITIES PURCHASE AGREEMENT
THIS
SECURITIES PURCHASE AGREEMENT
(this
“Agreement”)
is
made as of ____________, 2008 by and among CyberDefender Corporation, a
California corporation (the “Company”),
and
the purchaser whose name and address is set forth on the signature page annexed
hereto (the “Purchaser”).
The
foregoing parties are sometimes referred to hereinafter individually as a
“Party” or collectively as the “Parties.”
RECITALS
WHEREAS,
pursuant
to the Subscription Application of the Purchaser of even date herewith (each
a
“Subscription
Application”),
and
pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
“Securities
Act”),
and
Rule 506 promulgated thereunder, the Company desires to sell to the Purchaser
and the Purchaser desires to acquire from the Company that number of units
of
the Company’s securities (the “Units”)
as are
set forth on the Purchaser’s signature page annexed hereto, at a price of
$25,000 per Unit, subject to the terms and conditions of this Agreement and
the
other documents or instruments contemplated hereby (the “Offering”);
and
WHEREAS,
each
Unit consists of: (i) 25,000 shares of the Company’s common stock, no par value
(the “Common
Stock”),
and
(ii) a warrant, in the form attached hereto as Exhibit
A,
to
purchase up to 18,750 shares of Common Stock at an exercise price of $1.25
per
share for a 5 year period commencing upon the Closing (collectively,
“Warrants”).
NOW,
THEREFORE,
in
consideration of the mutual covenants and agreements hereinafter set forth,
and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties do hereby covenant and agree as
follows:
AGREEMENT
Section
1. Sale
and Issuance of Units.
1.1 Subject
to the terms and conditions of this Agreement, the Company has authorized the
sale and issuance of up to 160 Units. At the Closing, the Company shall sell
and
issue to the Purchaser, and the Purchaser shall purchase from the Company,
the
number of Units set forth on the Purchaser’s signature page hereto. The Company
intends to enter into this same form of purchase agreement with certain other
purchasers (collectively, the “Other
Purchasers”)
and
expects to complete sales of Units to them. The maximum number of Units that
the
Company may sell to the Purchaser and Other Purchasers combined is 160. The
Purchaser’s obligations hereunder are expressly not subject to or conditioned on
the purchase of Units by any or all of such Other Purchasers.
1.2 The
aggregate purchase price for the Units to be purchased by the Purchaser (the
“Purchase
Price”)
shall
be the amount set forth on the Purchaser’s signature page hereto.
Section
2. The
Closing.
2.1 The
closing of the sale and issuance to the Purchaser (the “Closing”)
shall
take place on the date when the Company’s legal counsel, Xxxxxxxxxx & Xxxxx,
LLP (the “Escrow Agent”), receives all of the materials required pursuant to the
Escrow Agreement annexed hereto as Exhibit
B
(the
“Escrow
Agreement”),
including, without limitation, immediately available funds via wire transfer
or
a certified check equal to the subscription amount set forth on the Purchaser’s
signature page hereto.
2.2 At
the
Closing, the Company shall instruct its transfer agent to issue and deliver
to
the Purchaser a certificate representing the Common Stock, against receipt
by
the Escrow Agent of a certified bank check or wire transfer in an aggregate
amount equal to the Purchase Price for the Units set forth on the Purchaser’s
signature page hereto.
Section
3. Representations
and Warranties of the Company.
The
Company hereby represents and warrants to the Purchaser as follows:
3.1 Organization.
The
Company is duly organized, validly existing and in good standing under the
laws
of the State of California and is qualified to conduct its business as a foreign
corporation in each jurisdiction where the failure to be so qualified would
have
a material adverse effect on the Company.
3.2 Authorization
of Agreement, Etc.
The
execution, delivery, and performance by the Company of its obligations under
this Agreement, the Escrow Agreement, the Subscription Application, the Warrants
and each other document or instrument contemplated hereby or thereby
(collectively, the “Transaction
Documents”)
has
been duly authorized by all requisite corporate action on the part of the
Company; and this Agreement and the Transaction Documents have been duly
executed and delivered by the Company. Each of the Transaction Documents, when
executed and delivered by the Company, constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium, or other similar laws affecting creditors’
rights and remedies generally, and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
| 3.3 |
Issuance
of Common Stock and Warrants.
|
The
Units
are duly authorized and, when paid for and issued in accordance with the
Transaction Documents, will be duly and validly issued, fully paid, and
nonassessable, free and clear of all liens. The Company has reserved from its
duly authorized capital stock the maximum number of shares of Common Stock
issuable pursuant to this Agreement and upon exercise of the
Warrants.
Section
4. Representations
and Warranties of the Purchaser.
The
Purchaser hereby represents and warrants to the Company as follows:
2
4.1 Authorization
of the Documents.
The
Purchaser has all requisite power and authority (corporate or otherwise) to
execute, deliver, and perform its obligations under the Transaction Documents,
and the execution, delivery, and performance by the Purchaser of its obligations
under the Transaction Documents has been duly authorized by all requisite action
on the part of the Purchaser and each such Transaction Document, when executed
and delivered by the Purchaser, shall constitute the valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws affecting creditors’
rights and remedies generally, and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
4.2 Investment
Representations.
All
of
the representations, warranties, and information of the Purchaser as set forth
in the Purchaser’s Subscription Application are incorporated by reference
herein, shall be deemed to be a part hereof, and shall be true and correct
at
the Closing with the same force and effect as if made by the Purchaser as of
the
date thereof.
4.3 Access
to Company Information.
The
Purchaser acknowledges that it has been afforded access and the opportunity
to
obtain all financial and other information concerning the Company that such
Purchaser desires (including the opportunity to meet with the Company’s
executive officers, either in person or telephonically). The Purchaser has
reviewed copies of all reports filed by the Company (the “Filings”)
with
the Securities and Exchange Commission (the “Commission”)
under
the Securities Exchange Act of 1934, as amended (the “Exchange
Act”),
since
July 19, 2007, and has reviewed the Company’s Registration Statement on Form
SB-2, as amended (Commission file number 333-138430) (the “Registration
Statement”),
all
of which are available for review at xxx.xxx.xxx.
The
Purchaser further acknowledges that it is familiar with the contents of the
Filings and the Registration Statement, including, without limitation, the
risk
factors contained in the Registration Statement, and that there is no further
information about the Company that the Purchaser desires in determining whether
to acquire the Units in the Offering.
Section
5. Brokers
and Finders.
The
Company is obligated to compensate its placement agent, 1st
Worldwide Financial Partners, LLC
(“1st
Worldwide”), in the amount of 9% of the gross proceeds of the Offering plus a
5-year warrant, substantially in the form of the Warrants, to purchase 9% of
the
number of shares of Common Stock issued in the Offering (not including shares
underlying the Warrants) at an exercise price of $1.00 per share, but only
with
respect to investments sourced by 1st Worldwide or its sub-agents. In addition,
1st Worldwide will receive a non-accountable expense allowance equal to 2.5%
of
the Purchase Price. The Company shall not be obligated to pay any commission,
brokerage fee, or finder’s fee based on any alleged agreement or understanding
between the Purchaser and a third person in respect of the transactions
contemplated hereby. The Purchaser hereby agrees to indemnify the Company
against any claim by any third person for any commission, brokerage fee,
finder’s fee, or other payment with respect to this Agreement or the
transactions contemplated hereby based on any alleged agreement or understanding
between the Purchaser and any such third person, whether express or implied
from
the actions of the Purchaser or anyone acting or purporting to act on behalf
of
the Purchaser.
3
Section
6. Indemnification
by the Purchaser.
The
Purchaser hereby agrees to indemnify and defend (with counsel acceptable to
the
Company) the Company and its officers, directors, employees, and agents and
hold
them harmless from and against any and all liability, loss, damage, cost, or
expense, including costs and reasonable attorneys’ fees, incurred on account of
or arising from:
(i) any
breach of or inaccuracy in any of the Purchaser’s representations, warranties,
or agreements made herein, in any of the Transaction Documents, or in any
document or instrument contemplated hereby or thereby; and
(ii) any
action, suit, or proceeding based on a claim that the Purchaser’s
representations, warranties or agreements made herein, in any of the Transaction
Documents, or in any document or instrument contemplated hereby or thereby,
were
inaccurate or misleading, or otherwise cause for obtaining damages or redress
from the Company or any current or former officer, director, employee, or agent
of the Company under the Securities Act.
Section
7. Anti-Dilution
Protection
From
and
after the date of this Agreement, in the event the Company sells Common
Stock for less than $1.00 per share or issues securities convertible into or
exercisable for Common Stock at a conversion price or exercise price less than
$1.00 per share (a “Dilutive Issuance”), then the Company will issue the number
of additional shares of Common Stock to the Purchaser, without additional
consideration, equal to the product of the Purchaser’s subscription amount
hereunder multiplied by a fraction, the numerator of which is the number of
shares of Common Stock sold and issued at the closing of such Dilutive Issuance
plus the number of shares which the aggregate offering price of the total number
of shares of Common Stock sold and issued at the closing of such Dilutive
Issuance would purchase at $1.00 per share, and the denominator of which is
the
number of shares of Common Stock issued and outstanding on the date of such
Dilutive Issuance plus the number of additional shares of Common Stock sold
and
issued at the closing of such Dilutive Issuance. Notwithstanding the foregoing,
no additional shares will be issued hereunder in respect of an Exempt Issuance.
“Exempt Issuance” means (i) Common Stock or options issued pursuant to a board
approved equity incentive plan, (ii) Common Stock issued upon the exercise
or
conversion of options, warrants or convertible debentures outstanding on the
Closing Date, and (iii) securities issued in connection with strategic
transactions the primary purpose of which is not to raise capital.
Section
8. Successors
and Assigns.
This
Agreement shall bind and inure to the benefit of the Company, the Purchaser,
and
their respective successors and assigns.
4
Section
9. Entire
Agreement.
This
Agreement and the other writings and agreements referred to in this Agreement
or
delivered pursuant to this Agreement contain the entire understanding of the
Parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, whether written or verbal, among the Parties
with
respect thereto.
Section
10. Notices.
All
notices, demands and requests of any kind to be delivered to any Party in
connection with this Agreement shall be in writing and shall be deemed to have
been duly given if personally delivered or if sent by internationally-recognized
overnight courier or by registered or certified mail, return receipt requested
and postage prepaid, addressed as follows:
if
to the
Company, to:
CyberDefender
Corporation
000
0xx
Xxxxxx, Xxxxx 000
Xxx
Xxxxxxx XX 00000
Attention:
Chief Executive Officer
with
a
copy to:
Xxxxxxxxxx
& Xxxxx LLP
The
Chrysler Building
000
Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention
Xxxxx Xxxxxxxxx
if
to the
Purchaser, to:
at
the
address of the Purchaser set forth on the Purchaser’s signature page
hereto;
or
to
such other address as the Party to whom notice is to be given may have furnished
to the other Parties to this Agreement in writing in accordance with the
provisions of this Section. Any such notice or communication shall be deemed
to
have been received (i) in the case of personal delivery, on the date of such
delivery, (ii) in the case of internationally-recognized overnight courier,
on
the next business day after the date when sent and (iii) in the case of mailing,
on the third business day following that on which the piece of mail containing
such communication is posted.
Section
11. Amendments.
This
Agreement may not be modified or amended, nor may any provision of this
Agreement be waived, except as evidenced by a written agreement duly executed
by
the holders of at least 66% of the Common Stock and shares underlying Warrants
issued to the Purchaser and all Other Purchasers combined.
5
Section
12. Governing
Law; Waiver of Jury Trial.
All
questions concerning the construction, interpretation, and validity of this
Agreement shall be governed by and construed and enforced in accordance with
the
domestic laws of the State of New York without giving effect to any choice
or
conflict of law provision or rule (whether in the State of New York or any
other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York. In furtherance of the foregoing, the internal
law of the State of New York will control the interpretation and construction
of
this Agreement, even if under such jurisdiction’s choice of law or conflict of
law analysis, the substantive law of some other jurisdiction would ordinarily
or
necessarily apply.
Section
13. Submission
to Jurisdiction.
Any
legal
action or proceeding with respect to this Agreement may be brought in the courts
of the State of California and the United States of America located in the
City
of Los Angeles, California and, by execution and delivery of this Agreement,
the
Company hereby accepts for itself and in respect of its property, generally
and
unconditionally, the jurisdiction of the aforesaid courts. The Purchaser hereby
irrevocably waives, in connection with any such action or proceeding, any
objection, including, without limitation, any objection to the venue or based
on
the grounds of forum non conveniens, which it may now or hereafter have to
the
bringing of any such action or proceeding in such respective jurisdictions.
The
Purchaser hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to it at its address
as set forth herein.
Section
14. Severability.
It
is the
desire and intent of the Parties that the provisions of this Agreement be
enforced to the fullest extent permissible under the law and public policies
applied in each jurisdiction in which enforcement is sought. Accordingly, in
the
event that any provision of this Agreement would be held in any jurisdiction
to
be invalid, prohibited, or unenforceable for any reason, such provision, as
to
such jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of
such
provision in any other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited,
or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
Section
15. Independence
of Agreements, Covenants, Representations and Warranties.
All
agreements and covenants hereunder shall be given independent effect so that
if
a certain action or condition constitutes a default under a certain agreement
or
covenant, the fact that such action or condition is permitted by another
agreement or covenant shall not affect the occurrence of such default, unless
expressly permitted under an exception to such covenant. In addition, all
representations and warranties hereunder shall be given independent effect
so
that if a particular representation or warranty proves to be incorrect or is
breached, the fact that another representation or warranty concerning the same
or similar subject matter is correct or is not breached will not affect the
incorrectness of or a breach of a representation and warranty hereunder. The
exhibits and any schedules annexed hereto are hereby made part of this Agreement
in all respects.
6
Section
16. Counterparts.
This
Agreement may be executed in any number of counterparts, and each such
counterpart of this Agreement shall be deemed to be an original instrument,
but
all such counterparts together shall constitute but one agreement. Facsimile
counterpart signatures to this Agreement shall be acceptable and
binding.
Section
17. Headings.
The
section and paragraph headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of
this Agreement.
Section
18. Expenses.
Each
Party shall pay its own fees and expenses incurred in connection with the
negotiation, execution, delivery and performance of this Agreement, the
Transaction Documents and any document or instrument contemplated hereby or
thereby.
Section
19. Preparation
of Agreement.
The
Company prepared this Agreement and the Transaction Documents solely on its
behalf. Each Party to this Agreement acknowledges that: (i) the Party had the
advice of, or sufficient opportunity to obtain the advice of, legal counsel
separate and independent of legal counsel for any other Party hereto; (ii)
the
terms of the transactions contemplated by this Agreement are fair and reasonable
to such Party; and (iii) such Party has voluntarily entered into the
transactions contemplated by this Agreement without duress or coercion. Each
Party further acknowledges that such Party was not represented by the legal
counsel of any other Party hereto in connection with the transactions
contemplated by this Agreement, nor was he or it under any belief or
understanding that such legal counsel was representing his or its interests.
Each Party agrees that no conflict, omission, or ambiguity in this Agreement,
or
the interpretation thereof, shall be presumed, implied, or otherwise construed
against any other Party to this Agreement on the basis that such Party was
responsible for drafting this Agreement.
*
* * *
*
[SIGNATURE
PAGES FOLLOW]
7
IN
WITNESS WHEREOF,
each of
the undersigned has duly executed this Securities Purchase Agreement as of
the
date first written above.
| COMPANY: | ||
|
CYBERDEFENDER
CORPORATION
|
||
| |
|
|
| By: | ||
|
Name: Xxxx Xxxxxxxx |
||
|
Title:
Chief Executive Officer
|
||
[PURCHASER’S
SIGNATURE PAGE FOLLOWS]
[PURCHASER
SIGNATURE PAGE TO CYBERDEFENDER CORPORATION
PURCHASER:
|
______________________________
|
________________________________
|
|
Name
of Purchaser (Individual or
|
Name
of Individual representing
|
|
Institution)
|
Purchaser
(if an Institution)
|
|
______________________________
|
________________________________
|
|
Title
of Individual representing
|
Signature
of Individual Purchaser or
|
|
Purchaser
(if an Institution)
|
Individual
representing Purchaser
|
Address:
Telephone:
Facsimile:
________________________________
Number
of
Units________________________________
Aggregate
Purchase PriceEXHIBIT
A
Form
of Warrant
EXHIBIT
B
Escrow
Agreement
