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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS, AND
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT THERETO
UNDER THE ACT AND APPLICABLE LAWS OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
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Certificate No. WC-___
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Warrant to Purchase ___________ Shares of
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Dated: __________, 2008
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Common Stock (subject to adjustment)
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WARRANT TO PURCHASE COMMON STOCK
of CYBERDEFENDER CORPORATION
This certifies that, for value received, ______________, or
registered assigns (the “ Holder ”) is entitled,
subject to the terms set forth below, to purchase from
CyberDefender Corporation, a California corporation (the “
Company ”), up to ______________ shares of its common
stock, no par value (the “ Common Stock ”), as
constituted on the date hereof (the “ Warrant Issue
Date ”), upon surrender hereof, at the principal office
of the Company referred to below, with the Notice of Exercise form
annexed hereto duly executed, and simultaneous payment therefor in
lawful money of the United States or otherwise as hereinafter
provided, at the Exercise Price set forth in Section 2 below. The
number and character of such shares of Common Stock and the
Exercise Price are subject to adjustment as provided herein. The
term “Warrant” as used herein shall include this
Warrant and any warrants delivered in substitution or exchange
therefor as provided herein. This Warrant is being issued pursuant
to the Securities Purchase Agreement, dated the date hereof, by and
between the Company and the Holder, and in connection with the
corresponding Subscription Application of the Holder.
1. Term of Warrant. Subject to the terms and
conditions set forth herein, this Warrant shall be exercisable, in
whole or in part, during the term commencing on the Warrant Issue
Date and ending at 5:00 p.m., Eastern Standard Time, on the five
(5) year anniversary of the Warrant Issue Date (the “
Term ”), and shall be void thereafter.
2. Exercise Price. The exercise price at which
this Warrant may be exercised shall be $1.25 per share of Common
Stock (the “ Exercise Price ”), as such Exercise
Price may be adjusted from time to time pursuant to Section 11
hereof.
3. Exercise of Warrant .
(a) Method of Exercise . The purchase rights
represented by this Warrant are exercisable by the Holder in whole
or in part, at any time, or from time to time, during the Term, by
the surrender of this Warrant and the Notice of Exercise annexed
hereto duly completed and executed on behalf of the Holder, at the
principal office of the Company (or such other office or agency of
the Company as it may designate by notice in writing to the Holder
at the address of the Holder appearing on the books of the
Company), upon (i) payment (A) in cash or by check acceptable to
the Company, (B) by cancellation by the Holder of indebtedness or
other obligations of the Company to the Holder, or (C) by a
combination of (A) and (B), of the purchase price of the shares to
be purchased or (ii) a net issue exercise as provided in Section
3(c) below. (b) Issuance of Shares .
This Warrant shall be deemed to have been exercised immediately
prior to the close of business on the date of its surrender for
exercise as provided above, and the person entitled to receive the
shares of Common Stock issuable upon such exercise shall be treated
for all purposes as the holder of record of such shares as of the
close of business on such date. As promptly as practicable on or
after such date and in any event within ten (10) days thereafter,
the Company at its expense shall issue and deliver to the person or
persons entitled to receive the same a certificate or certificates
for the number of shares issuable upon such exercise. In the event
that this Warrant is exercised in part, the Company at its expense
will execute and deliver a new Warrant of like tenor exercisable
for the remaining number of shares for which this Warrant may then
be exercised. (c) Net Issue Exercise.
Notwithstanding any provisions herein to the contrary, if the fair
market value of one share of Common Stock is greater than the
Exercise Price (at the date of calculation as set forth below), in
lieu of exercising this Warrant for cash, the Holder may elect to
receive shares equal to the value (as determined below) of this
Warrant (or the portion thereof being canceled) by surrender of
this Warrant at the principal office of the Company together with
the properly endorsed Notice of Exercise and notice of such
election, in which event the Company shall issue to the Holder a
number of shares of Common Stock computed using the following
formula:
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X =
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Y (A-B)
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A
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Where
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X
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=
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The number of shares of Common Stock to be
issued to the Holder
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Y
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=
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the number of shares of Common Stock purchasable
under this Warrant or, if only a portion of this Warrant is being
exercised, the portion of this Warrant being canceled (at the date
of such calculation)
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A
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=
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the fair market value of one share of the Common
Stock (at the date of such calculation)
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B
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=
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Exercise Price (as adjusted to the date of such
calculation).
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2
For purposes of the above calculation, fair market value of one
share of Common Stock shall be determined by the Company’s
Board of Directors in good faith; provided, however, that where
there exists a public market for the Common Stock at the time of
such exercise, the fair market value of one share of Common Stock
shall be the average of the closing bid and asked prices of the
Common Stock quoted on the OTC Bulletin Board or the closing price
of the Common Stock quoted on the Nasdaq Capital Market or on any
exchange on which the Common Stock is listed, whichever is
applicable, as reported by Bloomberg L.P. for the five (5) trading
days prior to the date of determination of fair market value.
4. No Fractional Shares or Scrip. No
fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Warrant. In lieu of any fractional
share to which the Holder would otherwise be entitled (after
aggregating all shares that are being issued upon such exercise),
the Company shall make a cash payment equal to the Exercise Price
multiplied by such fraction. 5. Replacement
of Warrant. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this
Warrant and, in the case of loss, theft or destruction, on delivery
of an indemnity agreement reasonably satisfactory in form and
substance to the Company or, in the case of mutilation, on
surrender and cancellation of this Warrant, the Company at its
expense shall execute and deliver, in lieu of this Warrant, a new
warrant of like tenor and amount. 6. Rights
of Stockholders. Subject to Sections 9 and 11 of this Warrant,
the Holder shall not be entitled to vote or receive dividends or be
deemed the holder of the Common Stock or any other securities of
the Company that may at any time be issuable on the exercise hereof
for any purpose, nor shall anything contained herein be construed
to confer upon the Holder, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any
meeting thereof or to give or withhold consent to any corporate
action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value, or change of stock
to no par value, consolidation, merger, conveyance, or otherwise)
or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until this Warrant shall have been
exercised as provided herein.
7. Transfer of Warrant.
3
(a) Warrant Register. The Company
will maintain a register (the “ Warrant Register
”) containing the names and addresses of the Holder or
Holders. Any Holder of this Warrant or any portion thereof may
change its address as shown on the Warrant Register by written
notice to the Company requesting such change. Any notice or written
communication required or permitted to be given to the Holder may
be delivered or given by mail to such Holder as shown on the
Warrant Register and at the address shown on the Warrant Register.
Until this Warrant is transferred on the Warrant Register of the
Company, the Company may treat the Holder as shown on the Warrant
Register as the absolute owner of this Warrant for all purposes,
notwithstanding any notice to the contrary. (b)
Warrant Agent. The Company may, by written notice to the
Holder, appoint an agent for the purpose of maintaining the Warrant
Register referred to in Section 7(a) above, issuing the Common
Stock or other securities then issuable upon the exercise of this
Warrant, exchanging this Warrant, replacing this Warrant, or any or
all of the foregoing (the “ Warrant Agent ”).
Thereafter, any such registration, issuance, exchange or
replacement, as the case may be, shall be made at the office of the
Warrant Agent. (c) Transferability and
Negotiability of Warrant. This Warrant may not be transferred
or assigned in whole or in part without compliance with all
applicable federal and state securities laws by the transferor and
the transferee (including the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company,
if such are requested by the Company). Subject to the provisions of
this Warrant with respect to compliance with the Securities Act of
1933, as amended (the “ Act ”), title to this
Warrant may be transferred by endorsement (by the Holder executing
the Assignment Form annexed hereto) and delivery in the same manner
as a negotiable instrument transferable by endorsement and
delivery. (d) Exchange of Warrant Upon a
Transfer. Upon surrender of this Warrant for exchange,
properly endorsed on the Assignment Form and subject to the
provisions of this Warrant with respect to compliance with the Act
and with the limitations on assignments and transfers contained in
this Section 7, the Company at its expense shall issue to or on the
order of the Holder a new warrant or warrants of like tenor, in the
name of the Holder or as the Holder (on payment by the Holder of
any applicable transfer taxes) may direct, for the number of shares
issuable upon exercise hereof. (e)
Compliance with Securities Laws. (i) The
Holder of this Warrant, by acceptance hereof, acknowledges that
this Warrant and the shares of Common Stock to be issued upon
exercise hereof are being acquired for investment purposes, and
that the Holder will not offer, sell or otherwise dispose
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