THE SECURITIES
REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, 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 SUCH ACT AND APPLICABLE LAWS OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
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Warrant to Purchase 8,000,000
Shares of
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Common Stock (subject to
adjustment)
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WARRANT TO PURCHASE COMMON
STOCK
of
CYBEDEFENDER
CORPORATION
This certifies that, for value received, GR
Match, LLC, or registered assigns (“Holder”) is
entitled, subject to the terms and vesting conditions set forth
below, to purchase from CyberDefender Corporation (the
“Company”), a California corporation, 8,000,000
shares of the Common Stock, no par value, of the Company (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
subscription form attached hereto duly executed, and simultaneous
payment therefor in lawful money of the United States or otherwise
as hereinafter provided, at the Exercise Price as 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
below. 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 issued
pursuant to Section 3.3 of that certain Media and Marketing
Services Agreement, dated as of March 24, 2009, between the Holder
and the Company (the “Media Services
Agreement”).
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 May 6, 2014 ,
and shall be void thereafter; provided, however, that any shares of
Common Stock which remain unvested as of the Termination Date (as
defined in the Media Services Agreement) and do not automatically
vest upon such Termination Date in accordance with Section 3.4 of
the Media Services Agreement 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 4 hereof.
3. Vesting and
Exercise of Warrant .
(a)
Exercisability.
This Warrant is not immediately
exercisable, and will only become exercisable (“
Vested ”) in accordance with the vesting schedule set
forth on Appendix “A” attached hereto.
(b) Method of
Exercise . The purchase rights represented by this
Warrant, to the extent Vested, are exercisable by the Holder in
whole or in part, at any time, or from time to time, during the
term hereof as described in Section 1 above, 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.
(c) 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 seven (7) 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 number of
shares for which this Warrant may then be exercised.
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 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.
(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. On 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, and that the Holder will not offer,
sell or otherwise dispose of this Warrant or any shares of Common
Stock to be issued upon exercise hereof except under circumstances
that will not result in a violation of the Act or any state
securities laws.
(ii) This Warrant and
all shares of Common Stock issued upon exercise hereof or
conversion thereof shall be stamped or imprinted with a legend in
substantially the following form (in addition to any legend
required by state securities laws):
THE SECURITIES
REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, 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 SUCH ACT AND APPLICABLE LAWS OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
8. Reservation of
Stock. The Company covenants that during the term
this Warrant is exercisable, the Company will reserve from its
authorized and unissued Common Stock a sufficient number of shares
to provide for the issuance of Common Stock upon the exercise of
this Warrant and, from time to time, will take all steps necessary
to amend its Certificate of Incorporation (the
“Certificate”) to provide sufficient reserves of shares
of Common Stock issuable upon exercise of this
Warrant. The Company further covenants that all shares
of Common Stock that may be issued upon the exercise of rights
represented by this Warrant and payment of the Exercise Price, all
as set forth herein will be duly and validly authorized and issued,
fully paid and nonassessable and free from all taxes, liens and
charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously
therewith). The Company agrees that its issuance of this
Warrant shall constitute full authority to its officers who are
charged with the duty of executing stock certificates to execute
and issue the necessary certificates for shares of Common Stock
upon the exercise of this Warrant.
(a) Whenever the
Exercise Price or the shares purchasable hereunder shall be
adjusted pursuant to Section 11 hereof, the Company shall issue a
certificate signed by its Chief Financial Officer setting forth, in
reasonable detail, the event requiring the adjustment, the amount
of the adjustment, the method by which such adjustment was
calculated, and the Exercise Price and the shares purchasable
hereunder after giving effect to such adjustment, and shall cause a
copy of such certificate to be mailed (by first-class mail, postage
prepaid) to the Holder of this Warrant.
(i) the Company shall
take a record of the holders of its Common Stock (or other stock or
securities at the time receivable upon the exercise of this
Warrant) for the purpose of entitling them to receive any dividend
or other distribution, or any right to subscribe for or purchase
any shares of stock of any class or any other securities, or to
receive any other right, or
(ii) of any capital
reorganization of the Company, any reclassification of the capital
stock of the Company, any consolidation or merger of the Company
with or into another corporation or entity, or any conveyance of
all or substantially all of the assets of the Company to another
corporation or entity, or
(iii) of any voluntary
or involuntary dissolution, liquidation or winding-up of the
Company,
then, and in
each such case, the Company will mail or cause to be mailed to the
Holder or Holders a notice specifying, as the case may be, (A) the
date on which a record is to be taken for the purpose of such
dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, or (B) the date
on which such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up is to
take place, and the time, if any is to be fixed, as of which the
holders of record of Common Stock (or such stock or securities at
the time receivable upon the exercise of this Warrant) shall be
entitled to exchange their shares of Common Stock (or such other
stock or securities) for securities or other property deliverable
upon such reorganization, reclassification,
consolidation
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