Media and Marketing Services Agreement

This MEDIA AND MARKETING SERVICES AGREEMENT (this “ Agreement” ) is dated as of March ___, 2009, to be effective as of March 1, 2009 (the “ Effective Date ”) by and between CyberDefender Corporation, a California corporation (“ CyberDefender ”), and GR Match, LLC, a Delaware limited liability company (“ GRM ”).  GRM and CyberDefender may each be referred to herein as a “Party” and, collectively, as the “Parties.”

WHEREAS, CyberDefender currently advertises, markets and sells via the Internet a line of antivirus and Internet security products which includes, but is not limited to, those products commonly referred to as CyberDefender Early Detection Center, CyberDefender Registry Cleaner, CyberDefenderULTIMATE 2008, CyberDefenderCOMPLETE 2008, CyberDefender Identity Protection Services, MyIdentityDefender Toolbar, and CyberDefenderFREE (collectively, the “ CyberDefender Products ”);

WHEREAS, GRM has expertise in advising companies in direct response media campaigns, including radio and television direct response commercials, to promote various products and services, and in the purchasing of media time in connection with the foregoing; and š

WHEREAS, CyberDefender desires to receive from GRM, and GRM desires to provide to CyberDefender, certain media purchasing, production, advertising and marketing services in connection with the advertising, marketing, sale and distribution of the CyberDefender Products on the terms and conditions set forth herein.

NOW THEREFORE, in consideration of the foregoing premises and the respective agreements, covenants, representations, warranties and conditions herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1.           Services; Responsibilities of Parties .

1.1          GRM Services . During the Term (as defined below), GRM shall provide the following services (collectively, the “ GRM Services ”) in connection with the advertising, marketing and sale of the CyberDefender Products:

(i)           Manage and purchase media time on CyberDefender's behalf for airing of television and radio direct response advertising of the CyberDefender Products as reasonably determined by GRM and in accordance with the budget requirements set forth in Section 2.1 below, taking into account for any particular media the track record of success of such media for similar direct response advertising campaigns (collectively, the “ Media Campaign ”).  Notwithstanding anything herein to the contrary, GRM may, and CyberDefender may cause GRM to, pause, modify or indefinitely suspend the purchase of media time at any time upon prior notice to and after consultation with the other; provided, however, that (i) in the event that CyberDefender causes GRM to pause or suspend its purchase of media time hereunder upon written notice to GRM, the Term (as defined below) shall be automatically extended as provided in Section 5.1 and (ii) in the event that GRM elects, upon written notice to CyberDefender, to pause or suspend its purchase of media time hereunder for any reason other than based on a breach or default under this Agreement by CyberDefender, then CyberDefender may elect to purchase media on its own until such time that GRM elects to resume purchasing media hereunder.

(ii)          Create, develop, and/or produce (or cause a third party reasonably acceptable to CyberDefender to create, develop, and/or produce) television and radio direct response commercials (“ Commercials ”) in connection with the advertisement and marketing of the CyberDefender Products.

(iii)         Provide such other production, advertisement and marketing services as agreed to by the Parties in writing   from time to time during the Term.

(i)           License to GRM the right to use the CyberDefender Marks (as defined below) in accordance with the terms and conditions of Section 7.3 below in connection with GRM’s provision of the GRM Services.

(ii)         No later than fifteen (15) days prior to the commencement of each month , provide the GRM Representative with a detailed monthly forecast of sales and expenses in connection with the CyberDefender Products (a “ Monthly Forecast ”), in a format mutually agreed to by the Parties.  The Parties acknowledge that GRM’s ability to perform the GRM Services in a timely and effective manner is contingent upon GRM’s timely receipt of the Monthly Forecast.

(iii)        Be responsible for all aspects of running the day to day business of CyberDefender in connection with the advertisement, marketing, sale and distribution of the CyberDefender Products, including, without limitation, managing and operating all inbound call centers, product fulfillment, customer services, and all other aspects of the day to day operations of CyberDefender's business.

(iv)        Promptly notify the GRM Representative (as defined below) of any inquiries or notices received by CyberDefender or any of its employees, agents or representatives from any governmental entity or agency, state attorney general or governmental investigative body, or of any notices of actual third party suits or claims, relating to the CyberDefender Products or CyberDefender's advertising, marketing, sale or distribution thereof, and deliver a copy of any written correspondence relating thereto, or a summary of any oral inquiry or notice, to the GRM Representative no later than five (5) business days following CyberDefender’s receipt of such correspondence or inquiry.

(v)         At the written request of GRM, apply for, register, and maintain new, separately identifiable Internet website addresses and domain names which will be exclusively used to receive and process orders of CyberDefender Products from customers who respond to the Commercials and any other applicable advertisements included in the Media Campaign (collectively, the “ DR Websites ”).  CyberDefender shall not, and shall cause its employees and agents and representatives not to, engage in any activities which would cause orders from customers who respond to the Commercials or any other applicable advertisements included in the Media Campaign to be diverted to any Internet websites or other channels of order intake or processing other than the DR Websites.

(vi)        As soon as reasonably practicable following the execution hereof, but in no event later than forty five (45) days following the execution hereof, CyberDefender shall apply for and establish a merchant services account with Lidle Merchant Services (the “ Merchant Services Account ”).  CyberDefender acknowledges and agrees that, following the establishment of the Merchant Services Account, it shall cause all proceeds from all credit card sales (or any sales by any other electronic form of payment) of CyberDefender Products which are made via the DR Websites to be processed through the Merchant Services Account and agrees that it shall not, and shall cause its employees and agents and representatives not to, engage in any activities which would cause such sales of CyberDefender Products which are made via the DR Websites to be processed other than through the Merchant Services Account.  CyberDefender agrees that it shall provide all documents, filings and information as reasonably requested by Lidle Merchant Services to establish and maintain the Merchant Services Account throughout the Term.

(i)           GRM shall designate one (1) representative reasonably acceptable to CyberDefender who shall serve as the primary point of contact for CyberDefender in dealing with GRM in matters referring or relating to the GRM Services (the “ GRM Representative ”). The GRM Representative shall be available to CyberDefender during GRM’s normal business hours.  The initial GRM Representative shall be Boris Shimanovsky.  GRM may change its GRM Representative at any time upon prior written notice to CyberDefender.

(ii)         CyberDefender shall designate one (1) representative reasonably acceptable to GRM who shall serve as the primary point of contact for GRM in dealing with CyberDefender in matters referring or relating to the GRM Services (the “ CyberDefender Representative ”).  The CyberDefender Representative shall be responsible for issuing all consents or approvals and making all requests on behalf of CyberDefender. The initial CyberDefender Representative shall be Gary Guseinov.  CyberDefender may change its CyberDefender Representative at any time upon prior written notice to GRM.

(iii)        GRM and CyberDefender shall mutually determine all content and other creative aspects of the Commercials; provided, however, that GRM shall have final approval over the amounts of all costs and expenditures incurred by GRM in connection with the creation, development and/or production of the Commercials.  Until the Parties are able to mutually agree on the content of a particular Commercial, GRM shall have no obligation to produce, revise, edit and/or otherwise modify, as the case may be, such Commercial and/or manage and purchase media time for such Commercial.

1.4          Exclusivity .  During the Term, GRM shall be the exclusive provider for CyberDefender of all media purchasing and direct response production services comprising the GRM Services, and, except as provided in Section 1.1(i) , CyberDefender shall not carry out such services on its own or obtain such services from any other Party without the prior written consent of GRM.

1.5          Board of Directors Seat .  On the ninety-first (91 ^st ) day following the execution of this Agreement, CyberDefender’s Board of Directors shall appoint a representative of GRM, as selected by GRM and reasonably acceptable to CyberDefender, to CyberDefender's Board of Directors (the “ GRM Director ”), unless a Party has delivered a notice of termination pursuant to Section 5.2 prior to such date, in which case there shall be no GRM Director.  CyberDefender hereby acknowledges and agrees that it shall approve, execute, deliver and file, and shall cause its shareholders and Board of Directors, as the case may be, to approve, execute, deliver and file, any consents, amendments, filings, or other agreements or documents necessary to cause the GRM Director to be appointed to CyberDefender's Board of Directors as provided above.  CyberDefender hereby acknowledges and agrees that the GRM Director (or any successor GRM Director designated by GRM in its sole discretion) shall, subject to and in accordance with CyberDefender’s articles of incorporation, bylaws and applicable law or regulation, continue to serve on CyberDefender's Board of Directors throughout the Term and thereafter so long as, and only so long as, GRM owns Common Stock, no par value, of CyberDefender (“ Common Stock ”), or holds warrants which grant GRM the right to purchase Common Stock of CyberDefender (whether vested or unvested), which collectively constitute at least five percent (5%) of CyberDefender’s issued and outstanding Common Stock on a fully diluted basis.  CyberDefender agrees to enter into an indemnification agreement with the GRM Director on terms reasonably satisfactory to GRM indemnifying the GRM Director for any losses, damages or other expenses incurred by the GRM Director relating to or arising out of the GRM Director's performance of services as a member of CyberDefender's Board of Directors.

2.            Media Placement Costs; Payment Obligations .

2.1          Budgeted Media Placement Costs .  Not later than fifteen (15) days prior to the beginning of each month, CyberDefender shall deliver to GRM a budget which sets forth the aggregate maximum dollar amount that GRM shall expend on media placement (“ Media Placement Costs ”), for radio and television direct response advertising for the following month (the “ Monthly Media Budget ”); provided, however, that GRM shall have the option, in its sole discretion, to advance less than the amount of Media Placement Costs set forth in any Monthly Media Budget.  GRM shall not   expend more than the Media Placement Costs set forth in any Monthly Media Budget, nor shall it   expend more than four hundred thousand dollars ($400,000) in Media Placement Costs during the first ninety (90) days following the Effective Date, without CyberDefender’s prior written consent.

2.2          Reimbursement of Media Costs .  GRM shall deliver to CyberDefender monthly invoices which set forth in reasonable detail (i) the amount of all actual out of-pocket Media Placement Costs incurred by GRM in connection with providing the GRM Services during such month (not to exceed the amount of the Media Placement Costs set forth in the applicable Monthly Media Budget without CyberDefender's prior written consent) and (ii) an amount equal to two and one half percent (2.5%) (the “ Overhead Expense Reimbursement Percentage ”) of such Media Placement Costs, which represents CyberDefender's allocable share of GRM's overhead expenses incurred in connection with providing the GRM Services (collectively, the “ Reimbursement Amount ”).  CyberDefender shall pay the Reimbursement Amount to GRM not later than forty five (45) days after its receipt of the applicable invoice.  

2.3          Grant of Security Interest .  As security for CyberDefender's prompt payment of any amounts owing to GRM under Section 2.2 (the “ Payment Obligations ”), as soon as reasonably practicable following the execution hereof, but in no event later than forty five (45) days following the execution hereof, subject to the approval of the holders of at least seventy five percent (75%) in aggregate principal amount of CyberDefender’s 10% Secured Convertible Debentures, CyberDefender shall grant GRM a security interest and lien in the any proceeds held in the Merchant Service Account, including, without limitation, any settlement accounts and/or reserve accounts held in connection therewith, and any rights to receive credits or payments under any merchant services agreement or other similar agreement relating to the Merchant Services Account.  The Parties agree that such security interest shall be evidenced by a security agreement in the form of and on terms and conditions reasonably satisfactory to GRM (the “ Security Agreement ”), which shall be executed by the Parties not later than forty five (45) days following the execution hereof.  CyberDefender shall execute, deliver and pay all fees for any documents, filings, certificates, or agreements necessary in order to create, perfect, maintain and enforce this security interest.

3.            Warrants; Accelerated Vesting .

3.1          Replacement Warrant .  The Parties acknowledge and agree that, in consideration of GRM's agreement to create, finance, test, and evaluate certain radio commercials for the CyberDefender Products, and in accordance with the terms and conditions of that certain Letter of Intent Agreement, dated as of October 30, 2008, by and between GRM and CyberDefender (the “ Letter of Intent ”), CyberDefender previously issued to GRM a Warrant to Purchase Common Stock, dated as of November 7, 2008 (the “ Original Warrant ”), pursuant to which CyberDefender granted to GRM the right to purchase 1,000,000 shares of Common Stock of CyberDefender on the terms and conditions set forth therein.  The Parties acknowledge and agree that they have agreed to modify the terms and conditions of the Original Warrant.  In furtherance thereof, the Parties acknowledge and agree that, not later than fifteen (15) business days following the execution hereof, CyberDefender shall issue to GRM, in replacement of the Original Warrant, a five-year warrant to purchase, for cash or on a cashless basis, 1,000,000 shares of Common Stock of CyberDefender at an exercise price of $1.25 per share, subject to the terms and conditions of a Warrant to Purchase Common Stock of CyberDefender in the form of and on terms and conditions substantially similar to the Original Warrant and such other terms mutually acceptable to CyberDefender and GRM (the “ Replacement Warrant ”), and the Original Warrant shall be cancelled.

3.2          Additional Vested Warrant .  The Parties further acknowledge and agree that, not later than fifteen (15) business days following the execution hereof, in consideration of GRM’s agreement to create, develop, and/or produce television direct response commercials in connection with the advertisement and marketing of the CyberDefender products, and as contemplated in the Letter of Intent, CyberDefender shall issue to GRM a five-year warrant to purchase, for cash only, an additional 1,000,000 shares of Common Stock of CyberDefender at an exercise price of $1.25 per share, subject to the terms and conditions of a Warrant to Purchase Common Stock of CyberDefender in the form of and on terms and conditions mutually acceptable to CyberDefender and GRM (the “ Additional Vested Warrant ”).

3.3          Media Services Warrant .  The Parties further acknowledge and agree that, not later than fifteen (15) business days following the execution hereof, in consideration of the services to be provided by GRM herein, CyberDefender shall issue to GRM a five-year warrant to purchase, for cash only, an additional 8,000,000 shares of Common Stock of CyberDefender at an exercise price of $1.25 per share, subject to the terms and conditions of a Warrant to Purchase Common Stock of CyberDefender in the form of and on terms and conditions mutually acceptable to CyberDefender and GRM (the “ Media Services Warrant ”).  Subject to the terms set forth herein, GRM's rights to purchase such shares of Common Stock of CyberDefender shall vest as follows: One (1) share of Common Stock of CyberDefender shall vest for each two dollars ($2) of Media Placement Costs advanced by GRM hereunder.

3.4          Accelerated Vesting .  Any unexpired and unvested rights of GRM to purchase shares of Common Stock of CyberDefender pursuant to the Media Services Warrant shall immediately vest in full in the event GRM terminates this Agreement pursuant to Sections 5.2(i) or (ii) or in the event CyberDefender terminates this Agreement pursuant to Section 5.2(iii) .

4.            Gross Revenue Renewal Royalty

4.1          Royalty .

CyberDefender acknowledges and agrees that in the event that (i) the average closing price of CyberDefender’s Common Stock as reported by Bloomberg LP for the twenty (20) trading days preceding January 1, 2010 is not at least three dollars ($3.00) per share (as adjusted for any splits, subdivisions or combinations of shares), or (ii) Common Stock of CyberDefender is not publicly traded on any stock exchange or over the counter market as of December 31, 2009, CyberDefender shall pay a royalty (the “ Royalty ”) to GRM in an amount equal to twenty percent (20%) of “Gross Renewal Revenue.”  “Gross Renewal Revenue” means the aggregate gross revenue, net of refunds and chargebacks, earned by CyberDefender as a result of renewals and/or re-orders of any CyberDefender Products by CyberDefender customers who both (i) became customers of CyberDefender during the period commencing as of the Effective Date and expiring as of the earlier of (A) the expiration or earlier termination of this Agreement or (B) the date following January 1, 2010 upon which the average closing price of CyberDefender’s Common Stock as reported by Bloomberg LP for the twenty (20) trading days preceding such date is at least five dollars ($5.00) per share (as adjusted for any splits, subdivisions or combinations of shares) and (ii) initially purchased any CyberDefender Product via any of the DR Websites.

4.2            Payment .  If the Royalty to GRM is triggered pursuant to Section 4.1 , CyberDefender shall pay the Royalty to GRM in arrears on a monthly basis, with each payment to be made no later than fifteen (15) days following the end of each month for which any Royalty is due (the “ Royalty Payment Date ”).

4.3          Royalty Statements; Audit Rights .

(i)           Simultaneously with CyberDefender's delivery of each Royalty payment, CyberDefender shall provide GRM with reasonably detailed accounting statements showing CyberDefender's Gross Renewal Revenue for the preceding month and the calculation of the Royalty payment for such month (the “ Royalty Statements ”).  An executive officer of CyberDefender shall certify, to his knowledge, the accuracy of each Royalty Statement.  At any time within one (1) year   after receiving an applicable Royalty Statement, GRM may review, copy, and examine (a “ Royalty Examination ”) CyberDefender’s books and records kept in connection with the Business, including, without limitation, records of all CyberDefender Product sales made via any of the DR Websites (but no more than twice each fiscal year) to determine the accuracy of such Royalty Statement by providing CyberDefender with at least fifteen (15) calendar days prior written notice of such requested Royalty Examination (the “ Royalty Examination Notice ”), which notice shall specify the particular Royalty Statement(s) which will be examined.  Any Royalty Examination conducted by GRM shall be conducted during normal business hours at the place where CyberDefender’s applicable books and records are maintained and at GRM's sole cost and expense (subject to paragraph (ii) below) and shall not unreasonably interfere with CyberDefender’s regular business operations.

(ii)           Both Parties agree to resolve any dispute in connection with the calculation of the Royalty payments in accordance with Section 18 below.  If CyberDefender fails to dispute the results of any Royalty Examination in writing within ten (10) business days of its receipt of such results, it shall be deemed to have accepted the results of such Royalty Examination.  If any (1) Royalty Examination which has been accepted by CyberDefender, or (2) resolution of any dispute in connection with the calculation of the Royalty payments in accordance with Section 18 below determines that the amount of Royalty payments that GRM is owed for the applicable month is greater than the amount of Royalty payments that CyberDefender has actually paid to GRM, then CyberDefender shall pay GRM such amount of unpaid Royalties within seven (7) business days of the final determination of such amount.  If the amount by which CyberDefender has underpaid Royalties for any period exceeds five percent (5%) of the amount of Royalties actually paid to GRM with respect to such month, CyberDefender shall reimburse GRM for its reasonable out-of-pocket costs incurred in connection with GRM’s Royalty Examination plus interest on the amount of the underpaid Royalties at an interest rate equal to the "LIBOR Rate" (as defined below) (at the time of such payment) from the time such underpaid Royalties became due until the date that such payments are made.  The "LIBOR Rate" shall mean the three month London Interbank Offered Rate as published in the "Money Rates" column of The Wall Street Journal , or any successor index or publication.  The LIBOR Rate shall be adjusted on the first day of each month based on any change in the LIBOR Rate as of the last business day immediately preceding the first day of such month.

4.4          Survival of Royalty Obligations .  CyberDefender’s obligation to make any Royalty payments shall survive the expiration or termination of this Agreement.

5.            Term/Termination; Breach of Payment Obligations .

5.1          Term .  Subject to any termination rights set forth herein, the term (the “ Term ”) of this Agreement shall commence upon the Effective Date and continue until August 31, 2010 unless earlier terminated in accordance with the provisions of this Agreement   (the “ Termination Date ”); provided, however, that in the event CyberDefender causes GRM to pause or suspend its purchase of media time hereunder as contemplated in Section 1.1(i) , the Term shall be automatically extended such period of time equal to the period of time which CyberDefender causes GRM to pause or suspend such media purchasing.

5.2          Termination.   This Agreement may be terminated prior to the end of the Term under the following circumstances and as provided elsewhere herein:

(i)           By either Party, if the other Party breaches any provision of this Agreement or defaults in the performance of any obligation hereunder, unless such breach or default is cured within fifteen (15)   business   days following receipt of written notice thereof from the non-breaching Party; provided, however, that if such breach is not capable of being cured within fifteen (15)   business   days, the breaching Party shall have the right to cure such breach after the expiration of the fifteen (15)