8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): February 25, 2011

CYBERDEFENDER CORPORATION

(Exact name of Company as specified in Charter)

Delaware	333-138430	65-1205833
(State or other jurisdiction of incorporation or organization)	(Commission File No.)	(IRS Employee Identification No.)

617 West 7th Street, Suite 1000

Los Angeles, California 90017

 (Address of Principal Executive Offices)

213-689-8631

(Issuer Telephone number)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Company under any of the following provisions (see General Instruction A.2 below).

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)).

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13(e)-4(c))

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The following discussion provides only a brief description of the agreements and instruments described below.  The discussion is qualified in its entirety by the full texts of the agreements and instruments.

By way of background, as previously disclosed in a Form 8-K filed with the Securities and Exchange Commission on December 13, 2010, effective as of December 3, 2010, CyberDefender Corporation (the “Company”) and GR Match, LLC (“GRM”) entered into a Revolving Credit Loan Agreement (the “Revolving Credit Loan Agreement”) pursuant to which GRM has made available to the Company a secured revolving credit facility in the principal amount not to exceed $5,000,000 (the “Revolving Credit Facility”).  The Revolving Credit Facility was subject to the terms and conditions set forth in: (i) the Revolving Credit Loan Agreement; (ii) a Revolving Credit Note, dated December 3, 2010, payable by the Company to the order of GRM in the principal amount of $5,000,000 (the “Revolving Credit Note”); and (iii) a Security Agreement executed by the Company in favor of GRM, effective as of December 3, 2010 (the “Security Agreement” and, together with the Revolving Credit Loan Agreement and the Revolving Credit Note, collectively, the “Revolving Credit Facility Documents”).   Pursuant to the terms and conditions of the Revolving Credit Facility Documents, GRM has advanced funds to the Company, and the Company has used the funds solely for the Company’s payments of amounts owing to GRM pursuant to the Media and Marketing Services Agreement, dated March 24, 2009, by and between the Company and GRM, as amended (the “Media Services Agreement”).

Effective as of February 25, 2011, the Company and GRM entered into a Loan Modification Agreement (the “Loan Modification Agreement”) pursuant to which the Company and GRM agreed to convert the existing indebtedness evidenced by the Revolving Credit Facility Documents to indebtedness that is convertible into shares of the Company’s common stock. Pursuant to the Loan Modification Agreement, the Company and GRM agreed: (i) to amend and restate the Revolving Credit Note on the terms and conditions of an Amended and Restated Nine Percent (9%) Secured Convertible Promissory Note made as of February 25, 2011, and due March 31, 2012 (the “Amended and Restated Note”); (ii) that the entire outstanding indebtedness under the Revolving Credit Facility will be repaid in accordance with the terms and conditions of the Amended and Restated Note; and (iii) that the Revolving Credit Agreement is replaced and superseded in its entirety by the Loan Modification Agreement.

The principal amount of the Amended and Restated Note is $5,700,733.94. Simple interest on the aggregate unconverted and outstanding principal amount of the Amended and Restated Note at the rate of 9% per annum is payable by the Company to GRM on the first day of each calendar quarter during the term of the Amended and Restated Note. At any time, and until it is paid in full, the Amended and Restated Note may be converted by GRM to shares of the Company’s common stock, in whole or in part and from time to time. The Conversion Price is the lower of $2.20 or a price which is equal to the lowest Volume Weighted Average Price (as that term is defined in the Amended and Restated Note) for any five consecutive Trading Day (as that term is defined in the Amended and Restated Note) period ending on or prior to March 31, 2011, and subject to adjustment as set forth in the Amended and Restated Note. GRM has additional rights in the event of certain “fundamental transactions,” as that term is defined in the Amended and Restated Note, including a merger or consolidation of the Company or a sale of all or substantially all of the Company’s assets.

With respect to conversion, the Loan Modification Agreement provides that GRM has certain “piggyback” and demand rights with respect to shares of the Company’s common stock issued upon conversion of the Amended and Restated Note.

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The Amended and Restated Note: (i) provides for a reduction in the Conversion Price in the event of a “Dilutive Issuance” (as that term is defined in the Amended and Restated Note) during the period from February 25, 2011 through June 30, 2011, but in no event reduced to an amount less than $1.75; and (ii) permits the Company, in order to cause the stockholder approval requirements of the NASDAQ Marketplace Rules (as that term is defined in the Amended and Restated Note) not to apply to a Dilutive Issuance, to limit the amount of the reduction to the Conversion Price upon a Dilutive Issuance and pay GRM an amount calculated in accordance with the provisions of the Amended and Restated Note.

Pursuant to the Security Agreement, the Company granted to GRM a second lien priority security interest in all of the Company’s assets subject only to liens existing on the original issue date in favor of GRM under: (i) the 9% Secured Convertible Promissory Note, dated March 31, 2010, in the original amount of $5,300,000, issued by the Company in favor of GRM (the “Senior Promissory Note”); (ii) the Loan and Securities Purchase Agreement, dated as of March 31, 2010, by and between the Company and GRM (the “Loan and Securities Purchase Agreement”); and (iii) the Security Agreement, dated as of March 31, 2010, executed by the Company in favor of GRM (collectively, the “Senior Loan Documents”).  The Amended and Restated Note provides that the Security Agreement and the liens created under the Security Agreement remain in full force and effect and secure the Company’s obligations under the Amended and Restated Note, and that the Company’s indebtedness and obligations to GRM under the Amended and Restated Note are subordinated to the Company’s indebtedness to GRM under the Senior Loan Documents.

Upon an Event of Default (as that term is defined in the Amended and Restated Note), the interest rate on the outstanding principal balance and all other amounts due and owing under the Amended and Restated Note will increase to 15% per annum and the full principal amount, together with all accrued but unpaid interest, is due and payable in cash.

The Loan Modification Agreement provides that, upon an Event of Default (as that term is defined in the Loan Modification Agreement) GRM also has the right, but not the obligation, in GRM’s sole discretion and at the Company’s sole cost and expense, but subject to approval by a majority of the independent directors of the Company’s Board of Directors (the “Board”), which approval will not be withheld unreasonably, to require the Company to retain a consultant or hire a Company executive who would be senior to the Company’s Chief Executive Officer and Chief Financial Officer (the “Senior Business Advisor”).  The Senior Business Advisor would oversee the management and operations of the Company, subject to the direction of the Company’s Board of Directors.  The Senior Business Advisor would report directly to the Board, and the Company’s existing senior management would report to the Senior Business Advisor during the tenure of the Senior Business Advisor, which would be only for the duration of the Event of Default.  The Company would: (1) invite the Senior Business Advisor to attend all meetings of the Board in a nonvoting observer capacity and would give the Senior Business Advisor copies of all notices, minutes, consents and other materials that the Company provides to its directors and officers at the same time and in the same manner as they are provided to the directors and officers; and (2) provide the Senior Business Advisor with access to all financial information of the Company; provided, however, that the Senior Business Advisor will agree to hold in confidence and trust all information so provided and provided further that the Company will reserve the right to withhold any information and to exclude the Senior Business Advisor from any Board meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel.

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Item 1.01             Entry into a Material Definitive Agreement

The following discussion provides only a brief description of the agreements and instruments described below.  The discussion is qualified in its entirety by the full texts of the agreements and instruments.

In connection with the matters described above, effective as of February 25, 2011, the Company and GRM entered into a second amendment to the Senior Promissory Note (the “Second Amendment”).  Pursuant to the Second Amendment, Section 1 of the Senior Promissory Note was amended and restated to provide that the Original Conversion Price (as that term is defined in the Senior Promissory Note) shall be $2.20.

In connection with the matters described above, effective as of February 25, 2011, the Company and GRM entered into a limited waiver of the provisions of Section 4.13 of the Loan and Securities Purchase Agreement (the “Waiver”). Pursuant to the Waiver, GRM agreed to a one-time waiver of its right to participate in a Qualified Common Stock Offering (as that term is defined in the Waiver) that closes on or before June 30, 2011.

In connection with the matters described above, effective as of February 25, 2011, the Company and GRM entered into a Fifth Amendment to the Media Services Agreement (the “Fifth Amendment”) which amends and restates Section 2.2 of the Media Services Agreement to provide that the Company shall reimburse GRM for certain Media Costs (as that term is defined in the Media Services Agreement) no later than 30 days following the Company’s receipt of the applicable GRM invoice.

On February 28, 2011, the Company issued a public announcement of the matters described above.

Item 9.01             Financial Statements and Exhibits

Exhibit 99.1	Loan Modification Agreement
Exhibit 99.2	Amended and Restated Note
Exhibit 99.3	Second Amendment
Exhibit 99.4	Waiver
Exhibit 99.5	Fifth Amendment
Exhibit 99.6	Public Announcement issued February 28, 2011

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.

Dated:  March 1, 2011

CYBERDEFENDER CORPORATION
By:	/s/ Kevin Harris
	Kevin Harris, Chief Financial Officer

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EX-99.1

LOAN MODIFICATION AGREEMENT

This Loan Modification Agreement (this “Agreement”) is made and entered into effective as of February 25, 2011, by and between CyberDefender Corporation, a Delaware corporation (the “Company”), and GR Match, LLC, a Delaware limited liability company (the “Lender”).

WHEREAS, the Lender has made available to the Company a revolving credit facility on the terms and conditions set forth in the Revolving Credit Loan Documents (as defined below).

WHEREAS, the Company has requested that the Lender amend and restate the Revolving Credit Note on the terms and conditions of this Agreement and the Amended and Restated Note (as defined below) in order to convert the existing indebtedness evidenced by the Revolving Credit Note from a revolving credit facility payable in accordance with the terms of the Revolving Credit Note to indebtedness that is convertible into shares of Common Stock and is payable in accordance with the terms and conditions of this Agreement and the Amended and Restated Note.

WHEREAS, the Company and the Lender hereby agree to modify the indebtedness evidenced by the Revolving Credit Loan Documents on the terms and conditions of this Agreement and the Amended and Restated Note.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and Lender agree as follows:

ARTICLE I.

DEFINITIONS

1.1           Definitions.  In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Amended and Restated Note (as defined herein), and (b) the following terms have the meanings indicated in this Section 1.1:

“Action” shall have the meaning ascribed to such term in Section 3.1(j).

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144 under the Securities Act.

“Amended and Restated Note” means the Amended and Restated Nine Percent (9%) Secured Convertible Promissory Note in the form of Exhibit A attached hereto due, subject to the terms therein, March 31, 2012, issued by the Company to the Lender pursuant to this Agreement.

“Business Day” means any day except Saturday, Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close and, upon the Company becoming listed or quoted on a Trading Market, except any day that the Common Stock is not traded on the Trading Market.

“Change of Control Transaction” shall have the meaning given to such term in the Amended and Restated Note.

“Closing” means the closing of the transactions contemplated by this Agreement and the issuance of the Amended and Restated Note.

“Closing Date” means the Business Day when all of the Loan Documents have been executed and delivered by the Company and the Lender, and all conditions precedent to the parties’ respective obligations to effect the Closing have been satisfied or waived.

“Commission” means the United States Securities and Exchange Commission.

“Common Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed into.

“Common Stock Equivalents” means any securities of the Company which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“Conversion Price” shall have the meaning ascribed to such term in the Amended and Restated Note.

“ERISA” means the Employee Retirement Income Security Act of 1974, and any regulations or rulings issued pursuant thereto, as amended or replaced and as in effect from time to time.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Fifth Amendment to Media and Marketing Services Agreement” means that certain Fifth Amendment to the Media and Marketing Services Agreement in the form attached hereto and made part hereof as Exhibit B.

“Fundamental Transaction” shall have the meaning given to such term in the Amended and Restated Note.

“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

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“Indebtedness” shall mean (a) any liabilities for borrowed money or amounts owed (other than trade accounts payable that are incurred in the ordinary course of business and that are not more than one hundred twenty (120) days past due), (b) all guaranties, endorsements and other contingent obligations in respect of Indebtedness of others, whether or not the same are or should be reflected in the Company's balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments due under leases required to be capitalized in accordance with GAAP.

“Indemnified Party” shall have the meaning assigned to such term in Section 4.9(c).

“Indemnifying Party” shall have the meaning assigned to such term in Section 4.9(c).

“Intellectual Property Rights” shall have the meaning assigned to such term in Section 3.1(m)(i).

“Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

“Loan Documents” means this Agreement, the Security Agreement, the Amended and Restated Note, the Second Amendment, and the Fifth Amendment to Media and Marketing Services Agreement.

“Losses” shall have the meaning assigned to such term in Section 4.9(a).

“Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).

“Maximum Rate” shall have the meaning ascribed to such term in Section 6.16.

“Note Shares” means the shares of Common Stock issuable upon conversion of the Amended and Restated Note, including any shares of Common Stock issued in payment of interest thereunder.

“Outstanding Indebtedness” shall mean the outstanding principal balance of the Revolving Credit Note, together with all accrued but unpaid interest earned thereon through the Closing Date (as defined below), the repayment fee contemplated in Section 2(d) of the  Revolving Credit Note, and all other amounts owing pursuant to the Revolving Credit Loan Documents as of the Closing Date.

“Permitted Indebtedness” shall have the meaning given to such term in the Security Agreement.

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“Permitted Lien” shall have the meaning given to such term in the Security Agreement.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

"Property" means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

“Registration Statement” means a registration statement covering the resale of the Note Shares filed with the Commission pursuant to the Company’s obligations under Section 4.6 of this Agreement.

“Required Minimum” means, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable in the future pursuant to the Loan Documents, including any Note Shares (including Note Shares issuable as payment of interest), ignoring any conversion or exercise limits set forth therein.

“Restatement 8-K” shall have the meaning ascribed to such term in Section 3.1(h).

“Revolving Credit Loan Agreement” means that certain Revolving Credit Loan Agreement, dated December 7, 2010 to be effective as of December 3, 2010, by and between the Lender and the Company.

“Revolving Credit Loan Documents” means the Revolving Credit Loan Agreement, the Security Agreement and the Revolving Credit Note.

“Revolving Credit Note” means that certain Revolving Credit Note in the principal amount of Five Million Dollars ($5,000,000), dated December 3, 2010, issued by the Company in favor of the Lender.

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“SEC Documents” shall have the meaning ascribed to such term in Section 3.1(h).

“Second Amendment” means that certain Second Amendment to the Senior Promissory Note in the form attached hereto and made part hereof as Exhibit C.

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“Securities” means the Amended and Restated Note and the Note Shares.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated hereunder.

“Security Agreement” means that certain Security Agreement, dated December 7, 2010 to be effective as of December 3, 2010, granted by the Company in favor of the Lender.

“Senior Business Advisor” shall have the meaning ascribed to such term in Section 4.11(a).

“Senior Loan Agreement” means that certain Loan and Securities Purchase Agreement, dated as of March 31, 2010, by and between CyberDefender Corporation, a California corporation (as predecessor in interest to the Company) and the Lender, as amended.

“Senior Loan Documents” means, collectively, (i) the Senior Promissory Note, (ii) Senior Loan Agreement, and (iii) that certain Security Agreement, dated as of March 31, 2010, granted by the Company in favor of the Lender.

“Senior Promissory Note” means that certain 9% Secured Convertible Promissory Amended and Restated Note, dated March 31, 2010, issued by CyberDefender Corporation, a California corporation (as predecessor in interest to the Company) in favor of the Lender, as amended.

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board.

“Waiver” means that certain Waiver in the form attached hereto and made part hereof as Exhibit D.

ARTICLE II.

LOAN

2.1           Modification of Revolving Credit Loan Documents.  Effective as of the Closing, (i) the Revolving Credit Note is hereby amended and restated in its entirety on the terms and conditions of the Amended and Restated Note, (ii) the entire Outstanding Indebtedness shall be repaid in accordance with the terms and conditions of the Amended and Restated Note, and (iii) the Revolving Credit Loan Agreement is hereby replaced and superseded in its entirety by this Agreement and shall be deemed null and void and of no further force and effect.  The Company acknowledges that the obligations of the Company under the Revolving Credit Note were secured by a security interest in all assets of the Company pursuant to the terms and conditions of the Security Agreement.  Notwithstanding the amendment and restatement of the Revolving Credit Note on the terms and conditions of the Amended and Restated Note, the Security Agreement and the liens created thereby shall remain in full force and effect and shall secure the obligations of the Company under the Amended and Restated Note and this Agreement, with the same priority as immediately prior to the Closing.

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2.2          Closing.  The Closing shall occur upon satisfaction of the conditions set forth in Sections 2.3 and 2.4.

2.3          Deliveries.

(a)          At or prior to the Closing, the Company shall deliver to the Lender the following:

(i) this Agreement, duly executed by the Company;

(ii)          the Amended and Restated Note, duly executed by the Company;

(iii) the Second Amendment, duly executed by the Company;

(iv)         the Fifth Amendment to Media and Marketing Services Agreement, duly executed by the Company;

(v)          the Waiver, duly executed by the Company; and

(vi)         resolutions of the board of directors of the Company authorizing and approving the Company’s execution and delivery of the Loan Documents, the consummation of the transactions contemplated thereby and the issuance of the Note Shares, if applicable, in accordance with the terms and conditions hereof.

(b)          At or prior to the Closing, the Lender shall deliver to the Company the following:

(i) this Agreement, duly executed by the Lender;

(ii)          the Second Amendment, duly executed by the Lender;

(iii)         the Fifth Amendment to Media and Marketing Services Agreement, duly executed by the Lender;

(iv)         the Waiver, duly executed by the Lender; and

(v)          the Revolving Credit Note, marked as cancelled.

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2.4          Closing Conditions.

(a)          The obligations of the Company to effect the Closing are subject to the following conditions being met:

(i)           the accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Lender contained herein;

(ii)          all obligations, covenants and agreements of the Lender required to be performed at or prior to the Closing Date shall have been performed; and

(iii)         the delivery by the Lender to the Company of the items set forth in Section 2.3(b) of this Agreement.

(b)          The obligations of the Lender to effect the Closing are subject to the following conditions being met:

(i)           the accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Company contained herein;

(ii)          all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;

(iii)         the delivery by the Company to the Lender of the items set forth in Section 2.3(a) of this Agreement;

(iv)         there shall have been no Material Adverse Effect with respect to the Company since the date hereof; and

(v)          from the date hereof to the Closing Date, a banking moratorium shall not have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of the Lender, makes it impracticable or inadvisable to purchase the Amended and Restated Note at the Closing.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1           Representations and Warranties of the Company.  Except as set forth in the SEC Documents (defined below) or specifically disclosed herein, the Company hereby makes the following representations and warranties to the Lender:

(a)           Subsidiaries.  The Company has no (and has never had any) subsidiaries and does not presently own, of record or beneficially, or control, directly or indirectly, any capital stock, securities convertible into capital stock or other equity interest in any Person, nor is the Company, directly or indirectly, a participant in any joint venture or partnership with any Person.

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(b)           Organization and Qualification.  The Company is duly incorporated, validly existing and in good standing under the laws of the State of Delaware.  The Company has the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  The Company is not in violation or default of any of the provisions of its certificate of incorporation, bylaws or other organizational or charter documents.  The Company is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in (i) a material adverse effect on the legality, validity or enforceability of any Loan Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Loan Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

(c)           Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Loan Documents, to issue the Amended and Restated Note to the Lender and to otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of each of the Loan Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby 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.  Each Loan Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, 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.

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(d)           No Conflicts; Third Party Rights.  The execution, delivery and performance of the Loan Documents by the Company and the consummation by the Company of the other transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of the Company’s 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, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company debt or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company is bound or affected (or result in the imposition of any material Liens upon any of the Company’s Property or assets), 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.  Except for the right of first offer granted to the Lender pursuant to the Senior Loan Documents, (i) no Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Loan Documents and (ii) the transactions contemplated by the Loan Documents do not conflict with any rights granted to any third parties to purchase any debt or equity securities of the Company.

(e)           Filings, Consents and Approvals.  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Loan Documents, other than the consent of the Company's board of directors to the transactions contemplated by the Revolving Credit Loan Documents.

(f)           Issuance of the Note Shares.  The Note Shares, when issued in accordance with the applicable Loan Documents, will be duly and validly issued, fully paid and non-assessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Loan Documents.  The Note Shares, when issued in accordance with the terms of the Loan Documents, will be validly issued, fully paid and non-assessable, free and clear of all Liens imposed by the Company.  The Company has reserved from its duly authorized capital stock a number of shares of Common Stock for issuance of the Note Shares at least equal to the Required Minimum as of the date hereof.

(g)           Capitalization.  The capitalization of the Company is as disclosed in its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2010.  Except as a result of the transactions contemplated by the Loan Documents or otherwise as set forth in such Quarterly Report, there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Note Shares will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Lender) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and non-assessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.  No further approval or authorization of any stockholder, the board of directors of the Company or others is required for the issuance and sale of the Note Shares.  There are no stockholder agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.  The Company has at least forty (40) stockholders of Common Stock of record prior to the date hereof.

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(h)           SEC Documents.  The Company hereby makes reference to the Annual Report on Form 10-K for the fiscal year ended December 31, 2009, and any amendments thereto, and the Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2010, June 30, 2010, and September 30, 2010, respectively, and any amendments thereto, filed by the Company with the Commission, and the Current Report on Form 8-K filed by the Company with the Commission on November 23, 2010 (the “Restatement 8-K”), which are available for review on the Commission’s website, www.sec.gov: (collectively, the “SEC Documents”).  As of the date thereof, the SEC Documents complied in all material respects with the requirements of the Exchange Act, and the rules and regulations promulgated thereunder and none of the SEC Documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.  The financial statements of the Company included in the SEC Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) (except, in the case of unaudited statements, as permitted by the applicable form under the Exchange Act) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the financial position of the Company as of the dates thereof and its consolidated statements of operations, stockholder equity and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal and recurring year-end audit adjustments which were and are not expected to have a Material Adverse Effect).  Except as and to the extent set forth on the balance sheet of the Company as of September 30, 2010, including the notes thereto, the Company has no liability or obligation of any nature (whether accrued, absolute, contingent or otherwise and whether required to be reflected on a balance sheet or not).

(i)           Material Changes.  Since September 30, 2010 (i) except as set forth in the Restatement 8-K, there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) except as set forth in the Restatement 8-K, the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) except as set forth in the Restatement 8-K, the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholder or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, (v) the Company has not sold any assets, individually or in the aggregate, outside of the ordinary course of business, (vi) except as set forth in the SEC Documents and up to an additional One Million Dollars ($1,000,000), the Company has not made any material capital expenditures, individually or in the aggregate and (vii) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company equity incentive plans.  The Company does not have pending before the Commission any request for confidential treatment of information.

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(j)           Litigation.  Except as previously disclosed to the Lender in writing, there is no action, suit, inquiry, notice of violation, Proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, or any of its properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Loan Documents or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect.  Neither the Company nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.  There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company.

(k)           Compliance. The Company is not (i) in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company under), nor has the Company received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) in violation of any order of any court, arbitrator or governmental body, or (iii) except as set forth in the Restatement 8-K, in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business, all rules and regulations of the applicable Trading Market on which the Company's Common Stock is listed or quoted for trading, and all such laws that affect the environment, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.

(l)           Title to Assets. The Company has good and marketable title in fee simple to all real property owned by it that is material to the business of the Company and good and marketable title in all personal property owned by it that is material to the business of the Company, in each case free and clear of all Liens, except for (i) Permitted Liens, (ii) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and (iii) Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company are held by it under valid, subsisting and enforceable leases with which the Company is in compliance.

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(m)         Intellectual Property.

(i)           Patents and Trademarks. Except as set forth in the Schedule 3(m)(i) hereto, the Company has, or has the rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or material for use in connection with its business and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”).  Except as set forth in the written litigation disclosure provided to the Lender pursuant to Section 3.1(j) above, the Company has not received a notice (written or otherwise) that the Intellectual Property Rights used by the Company violate or infringe upon the rights of any Person.  To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights. The Company has taken reasonable security measures to protect the secrecy, confidentiality and value of all of its intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(ii)           Know-How Necessary for the Business. The Intellectual Property Rights are all those necessary for the operation of the Company's businesses as it is currently conducted or as reflected in SEC Documents. The Company is the owner of all right, title, and interest in and to each of the Intellectual Property Rights, free and clear of all liens, security interests, charges, encumbrances, equities, and other adverse claims, other than Permitted Liens, and has the right to use all of the Intellectual Property Rights.

(n)           Broker’s Fees. The Lender shall not be obligated to pay any commission, brokerage fee, or finder’s fee based on any alleged agreement or understanding between the Company and a third person in respect of the transactions contemplated hereby.  The Company hereby agrees to indemnify the Lender 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 Company and any such third person, whether express or implied from the actions of the Company or anyone acting or purporting to act on behalf of the Company.

(o)           Solvency.  After giving effect to the debt incurred by the Company in connection with this Agreement and the Loan Documents: (i) the Company will not be left with remaining assets which would constitute unreasonably small capital after giving effect to the nature of the Company's business; (ii) the Company does not intend to, and does not believe that it will, incur debts beyond its ability to pay as such debts mature; and (iii) the Company will be able to pay its debts as they become due.

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(p)           No Bankruptcy Filing.  The Company is not (i) a debtor in any outstanding or pending action or proceeding pursuant to any bankruptcy law, (ii) contemplating either the filing of a petition under any bankruptcy law or the liquidation of all or any portion of its assets or property, and (iii) aware that any other Person is contemplating the filing a petition under any bankruptcy law against the Company.

(q)           Foreign Corrupt Practices.  Neither the Company nor any director, officer, agent, employee or other Person acting on behalf of the Company has, in the course of its actions for, or on behalf of, the Company (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

(r)           Tax Status.  The Company (i) has timely made or filed all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has timely paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim.  The Company is not operated in such a manner as to qualify as a passive foreign investment company, as defined in Section 1297 of the U.S. Internal Revenue Code of 1986, as amended

(s)           Disclosure.  All disclosures furnished by or on behalf of the Company to the Lender regarding the Company, its business and the transactions contemplated hereby with respect to the representations and warranties made herein are true and correct with respect to such representations and warranties and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. Except as set forth in the Restatement 8-K, each public announcement issued by the Company during the twelve (12) months preceding the date of this Agreement did not at the time of announcement contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading.  No event or circumstance has occurred or information exists with respect to the Company or its business, properties, liabilities, prospects, operations (including results thereof) or conditions (financial or otherwise), which, under applicable law, rule or regulation, requires public disclosure at or before the date hereof or announcement by the Company but which has not been so publicly disclosed.  The Company acknowledges and agrees that the Lender does not make and has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.

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(t)           Acknowledgment of the Lender’s Reliance.  The Company acknowledges that the Lender is entering into the transactions contemplated by this Agreement in reliance upon the representations and warranties contained herein.  The Lender shall be entitled to such reliance notwithstanding any investigation which has been or will be conducted by the Lender or on its behalf.

3.2          Representations and Warranties of the Lender.  The Lender hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows:

(a)           Organization; Authority.  The Lender is a limited liability company, duly formed, validly existing and in good standing under the laws of the State of Delaware, with full right, power and authority to enter into and to consummate the transactions contemplated by the Loan Documents and otherwise to carry out its obligations hereunder and thereunder.  The execution, delivery and performance by the Lender of the transactions contemplated by this Agreement have been duly authorized by all necessary limited liability company action on the part of the Lender.  Each Loan Document to which it is a party has been duly executed by the Lender, and when delivered by the Lender in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Lender, enforceable against it 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.

(b)           Own Account.  The Lender understands that the Amended and Restated Note, and, upon conversion of the Amended and Restated Note, the Note Shares may or may be, as the case may be, “restricted securities” and, subject to the provisions of this Agreement, have not or may not have been registered under the Securities Act or any applicable state securities law and will acquire the Note Shares not with a view to or for distributing or reselling such Note Shares or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Note Shares in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other Persons to distribute or regarding the distribution of such Note Shares (this representation and warranty not limiting the Lender’s right to sell the Note Shares in compliance with applicable federal and state securities laws) in violation of the Securities Act or any applicable state securities law.

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(c)           Lender Status.  At the time the Lender engaged in discussions with the Company regarding the transactions contemplated hereby, it was, and at the date hereof it is, and on each date on which it converts the Amended and Restated Note it will be either: (i) an “accredited investor” as defined in Rule 501 under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.  The Lender is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.

(d)           Experience of the Lender.  The Lender, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters and is capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment.  The Lender is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

(e)           General Solicitation.  The Lender is not entering into the transactions contemplated hereby as a result of any advertisement, article, notice or other communication regarding the Amended and Restated Note published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

(f)           Access to Company Information.  The Lender acknowledges that it has been afforded access and the opportunity to obtain all financial and other information concerning the Company that the Lender desires (including the opportunity to meet with the Company’s executive officers, either in person or telephonically).  The Lender has reviewed copies of the SEC Documents and is familiar with the contents thereof, including, without limitation, the risk factors contained in the SEC Documents, and there is no further information about the Company that the Lender desires in determining whether to enter into the transactions contemplated by this Agreement.

(g)           Broker’s Fees. 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 Lender and a third party in respect of the transactions contemplated hereby.  The Lender 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 Lender and any such third person, whether express or implied from the actions of the Lender or anyone acting or purporting to act on behalf of the Lender.

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ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1          Transfer Restrictions.

(a)           The Securities may only be disposed of in compliance with federal and state securities laws.  In connection with any transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Lender or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act.  As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of a Lender under this Agreement.

(b)           The Lender agrees to the imprinting, so long as is required by this Section 4.1, of a legend on the Note in the following form:

NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAS BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

The Company acknowledges and agrees that the Lender may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and, if required under the terms of such arrangement, the Lender may transfer pledged or secured Securities to the pledgees or secured parties.  Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith.  Further, no notice shall be required of such pledge.  At the Lender’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities.

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(c)           If all or any portion of the Note is converted at a time when the applicable Note Shares may be sold under Rule 144(b)(1)(i) or if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission) then such Note Shares shall be issued free of all legends.  The Company agrees that at such time as such legend is no longer required under this Section 4.1(c), it will, no later than five (5) Business Days following the delivery by the Lender to the Company or the Company’s transfer agent of a certificate representing the Note Shares, as applicable, issued with a restrictive legend, deliver or cause to be delivered to the Lender a certificate representing such shares that is free from all restrictive and other legends.

(d)           The Lender agrees that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance that the Lender will sell any Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities are sold pursuant to a registration statement, they will be sold in compliance with the plan of distribution set forth therein.

4.2          Integration.  The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Lender or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market.

4.3          Conversion Procedures.  The form of Notice of Conversion included in the Amended and Restated Note sets forth the totality of the procedures required of the Lender in order to convert the Amended and Restated Note.  No additional legal opinion or other information or instructions shall be required of the Lender to convert their Amended and Restated Note.  The Company shall honor conversions of the Amended and Restated Note and shall deliver the Note Shares in accordance with the terms, conditions and time periods set forth in the Loan Documents.

4.4          [Intentionally omitted]

4.5          Non-Public Information.  Lender acknowledges that it will have access to material non-public information of the Company so long as one more of its principals or designees serves as a director, board observer or officer of the Company.

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4.6          Registration Rights.

(a)           Piggyback Rights.  The Lender shall have piggy-back registration rights with respect to all of the Securities (except for registrations on Commission Form S-4, S-8 or equivalent forms).  Accordingly, the Company agrees to include all of the Securities (other than Securities that have been previously registered for resale under this Section 4.6(a)) in any registration statement on Form S-1, Form S-3 or equivalent form filed with the Commission, in order to register the resale of such shares pursuant and subject to Rule 415 of the Securities Act.  In addition, the Company agrees to use its commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other state securities or state Blue-Sky laws as shall be reasonably requested by the Lender; provided, however, that the Company shall not be required to qualify to do business or to file a general consent to service of process in any such states unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act.  The Company acknowledges and agrees that it shall make all filings, disclosures, updates and any other actions which are necessary in order to keep any registration statement which includes any shares issuable upon exercise hereof continuously effective under the Securities Act for at least twenty-four (24) months following the effective date of such registration statement.  Notwithstanding the foregoing, the Company may suspend the effectiveness of such registration statement for a period not to exceed ninety (90) days after the effective date thereof if the Company’s board of directors reasonably believes that the continued effectiveness thereof would be materially detrimental to the Company because such action would (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or the Exchange Act, as applicable (each, a “Material Suspension Event”), and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly; provided, however, that the Company shall not register any securities for resale for its own account or that of any other stockholder during such ninety (90) day period.  All expenses (other than underwriting discounts, commissions and special counsel fees of the Lender) incurred in connection with registration pursuant to this Section 4.6(a) shall be borne and paid by the Company.

(b)          Demand Rights.

(i)           Upon written demand by the Lender to the Company, the Company shall (i) prepare and file with the SEC, as soon as practicable thereafter but in no event later than forty-five (45) days thereafter, a registration statement on Form S-1, Form S-3 or other applicable form in order to register the resale of all the Securities that the Lender requests to be registered (other than Securities that have been previously registered for resale under this Section 4.6(b)), pursuant and subject to Rule 415 of the Securities Act, (ii) use its best efforts to cause such registration statement to become effective as soon as practicable after the filing date thereof, and (iii) make all filings, disclosures, updates and any other actions which are necessary in order to keep such registration statement continuously effective under the Securities Act for at least twenty-four (24) months following the effective date of such registration statement.  Notwithstanding anything herein to the contrary, in the event that all of the Securities that are requested by the Lender to be registered on a registration statement pursuant to this Section 4.6(b) are not registered on such registration statement, the Lender shall have the right to demand that the Company register any such remaining unregistered Securities on a subsequent registration statement on Form S-1 or other applicable form as soon as reasonably practicable on the terms and conditions set forth in this Section 4.6(b).

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(ii)           Notwithstanding the foregoing, the Company may elect to delay the filing of such registration statement for a period not to exceed ninety (90) days, or may suspend the effectiveness of such registration statement after the effective date thereof for a period not to exceed ninety (90) days, if, in either case, the Company’s board of directors reasonably believes that the filing or continued effectiveness, as the case may be, of such registration statement would be materially detrimental to the Company because such action would cause a Material Suspension Event, and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly; provided, however, that the Company may not invoke this right more than once in any twelve (12) month period, and provided further that the Company shall not register any securities for resale for its own account or that of any other stockholder during such ninety (90) day period.  All expenses (other than underwriting discounts, commissions and special counsel fees of the Lender) incurred in connection with registration pursuant to this Section 4.6(b) shall be borne and paid by the Company.  Except as otherwise provided in Section 4(b)(i) above, the Lender may not exercise its demand right pursuant to this Section 4.6(b) more than twice.

(c)           Rule 144.  The Company shall keep available adequate currentpublic information, as that term is defined in Rule 144 promulgated by the Commission under the Securities Act, file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act or the Exchange Act (or within any extension periods permitted under applicable regulations of the Commission), as applicable, and provide to the Lender such information as may be reasonably requested by the Lender in order to make available to the Lender the benefits of Rule 144 of the Securities Act and any other rule or regulation of the Securities Act or the Exchange Act, as applicable,  that may at any time permit the Lender to sell securities of the Company to the public without registration or pursuant to a registration on Form S-1, Form S-3 or any equivalent form.

(d)           Filing of Registration Statement Following Closing.  Without limiting or otherwise prejudicing the rights granted to the Lender pursuant to Sections 4.6(a) through (c) above, the Company acknowledges and agrees that, not later than forty-five (45) days following the Closing Date, it shall prepare and file with the SEC a registration statement on Form S-1, Form S-3 or any other equivalent form in order to register the resale of (i) all of the Securities; (ii) all of the “Securities” (as defined in the Senior Loan Agreement); (iii) all shares of Common Stock or other securities issuable to the Lender upon the Lender’s exercise of (A) those certain Warrants to Purchase Common Stock of CyberDefender Corporation, each dated May 6, 2009 (Certificate Numbers WC-195 and WC-196), (B) that certain Amended and Restated Warrant to Purchase Common Stock of CyberDefender Corporation, dated May 6, 2009 (Certificate Number WC-198) and (C) that certain Common Stock Purchase Warrant purchased by the Lender on March 27, 2009, in each case to the extent that such shares are not subject to an effective registration statement on Form S-1 or other applicable form as of the Closing Date and in each case irrespective of whether the Lender has exercised all or any portion of such warrants as of the Closing Date; and (iv) the “Securities” (as defined in that certain Securities Purchase Agreement, dated as of June 3, 2009, by and between CyberDefender Corporation, a California corporation (as predecessor in interest to the Company), and the Lander, that such Securities are not subject to an effective registration statement on Form S-1, Form S-3 or other equivalent form as of the Closing Date.  The Company’s obligations relating to the filing and maintenance of such registration statement shall be subject to all of the terms and conditions of Section 4.6(b) above.

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4.7          Reservation and Listing of Note Shares.

(a)           The Company shall at all times maintain a reserve from its duly authorized and unissued shares of Common Stock for issuance pursuant to the Loan Documents in such amount as may be required to fulfill its obligations in full under the Loan Documents.

(b)           If, on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than the Required Minimum on such date, then the board of directors of the Company shall use commercially reasonable efforts to amend the Company’s certificate or articles of incorporation to increase the number of authorized but unissued shares of Common Stock to at least the Required Minimum at such time, as soon as possible and in any event not later than the seventy-fifth (75th) day after such date.

(c)           The Company shall, if applicable: (i) in the time and manner required by the principal Trading Market, prepare and file with such Trading Market an additional shares listing application covering a number of shares of Common Stock at least equal to the Required Minimum on the date of such application, (ii) take all steps necessary to cause such shares of Common Stock to be approved for listing on such Trading Market as soon as possible thereafter, if required, (iii) provide to the Lender evidence of such listing, if applicable, and (iv) maintain the listing of such Common Stock on any date at least equal to the Required Minimum on such date on such Trading Market or another Trading Market.

4.8          Form D; Blue Sky Filings.  The Company agrees to timely file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof, promptly upon request of the Lender.  The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Lender under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of any Lender.

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4.9          Indemnification.

(a)           Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify, defend and hold the Lender and its Affiliates, and each of their directors, managers, officers, stockholders, members, employees, investment advisors, brokers and agents, as the case may be, harmless to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs and expenses (including, without limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, to the extent arising out of or relating to (1) any untrue or alleged untrue statement of a material fact contained in a registration statement, prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus covering any of the Note Shares, 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; (2) 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 Agreement, except to the extent, but only to the extent, that (i) such untrue statements or omissions are based solely upon information regarding the Lender furnished in writing to the Company by the Lender expressly for use therein, or to the extent that such information relates to the Lender or the Lender’s proposed method of distribution of Note Shares and was reviewed and expressly approved in writing by the Lender expressly for use in such registration statement, prospectus or form of prospectus or in any amendment or supplement thereto which covers the Note Shares; or (3) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Loan Documents. The Company shall notify the Lender promptly of the institution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware.

(b)           Indemnification by the Lender. The Lender shall, notwithstanding any termination of this Agreement,  indemnify, defend and hold the Company and its Affiliates, and each of their directors, managers, officers, stockholders, members, employees and agents, as the case may be, harmless from and against all Losses, as incurred, to the extent arising out of or relating to any untrue or alleged untrue statement of a material fact contained in any registration statement, any prospectus, or any form of prospectus, or in any amendment or supplement thereto or in any preliminary prospectus covering any of the Note Shares, 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 not misleading to the extent, but only to the extent, that (i)  such untrue statement or omission is contained in any information so furnished in writing by the Lender to the Company specifically for inclusion in such registration statement or such prospectus or (ii) such information relates to the Lender’s proposed method of distribution of Note Shares and was reviewed and expressly approved in writing by the Lender expressly for use in such registration statement, prospectus or form of prospectus or in any amendment or supplement thereto. In no event shall the liability of the Lender hereunder be greater in amount than the dollar amount of the net proceeds received by the Lender upon the sale of the Note Shares giving rise to such indemnification obligation.

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(c)           Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all reasonable fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have prejudiced the Indemnifying Party.

An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of no more than one separate counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

Subject to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten (10) Business Days of written notice thereof to the Indemnifying Party; provided, that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is judicially determined to be not entitled to indemnification hereunder.

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4.10        Securities Laws Disclosure; Publicity.  Subject to the terms and conditions of this Section 4.10, the Company shall, on or before 8:30 a.m., New York time, on the fourth (4th) Business Day after the date of this Agreement, (i) issue a public announcement disclosing the transactions contemplated by the Loan Documents and (ii) file a Current Report on Form 8-K describing all the material terms of the transactions contemplated by the Loan Documents in the form required by the Exchange Act and attaching all the material Loan Documents (including, without limitation, this Agreement (and all schedules to this Agreement)).  The Company and the Lender shall consult with each other in issuing any public announcements with respect to the transactions contemplated hereby, and neither the Company nor the Lender shall issue any such public announcement or otherwise make any such public statement without the prior consent of the Company, with respect to any public announcement of the Lender, or without the prior consent of the Lender, with respect to any public announcement of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law or regulation, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of the Lender, or include the name of the Lender in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of the Lender, except (i) as required by federal securities law or regulation in connection with the filing with the Commission on Form 8-K of the final Loan Documents (including signature pages thereto) and a summary thereof and (ii) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Lender with prior notice of such disclosure permitted under this subclause (ii).

4.11        Engagement of Senior Business Advisor.

(a)           In the event of an Event of Default (as defined in the Amended and Restated Note), in addition to all remedies available to the Lender under the Loan Documents and/or applicable law, the Lender shall have the right (but not the obligation), exercisable upon written notice to the Company at any time during which such Event of Default shall be continuing, to cause the Company to retain a consultant or a Company executive, selected by the Lender in its sole discretion (but subject to approval by a majority of the independent directors of the Company’s Board of Directors, which approval shall not be withheld unreasonably), to oversee the management and operations of the Company (such person, the “Senior Business Advisor”), at the Company’s sole cost and expense; provided that the Senior Business Advisor’s compensation shall not exceed that of the Company’s Chief Financial Officer at the time of the Company's engagement of the Senior Business Advisor.  The Company shall approve, execute, deliver and file, and shall cause its stockholders, Board of Directors and officers, as the case may be, to approve, execute, deliver and file, any consents, amendments, filings, or other agreements or documents necessary to cause the Senior Business Advisor to be retained by the Company as provided above not later than three (3) Business Days following the Company's receipt of the above-referenced notice from the Lender.  The Company shall retain the Senior Business Advisor for so long as, and only for so long as, an Event of Default shall occur and be continuing.  The Company's Board of Directors may remove the Senior Business Advisor upon written notice to the Senior Business Advisor and the Lender immediately upon the Company's cure of any such Event of Default, (as reasonably determined by the Lender), and the Lender shall cooperate with the Company as reasonably requested by the Company in connection with such removal.

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(b)           The Senior Business Advisor shall report directly to, and be subject to the direction of, the Company's Board of Directors.  The Senior Business Advisor shall be senior to the Company's senior executive officers, including, without limitation, the Company's Chief Executive Officer and Chief Financial Officer, each of whom shall report to, and be subject to the direction of, the Senior Business Advisor during the Company’s engagement of the Senior Business Advisor.  The Senior Business Advisor shall have the same power and authority to bind the Company as is granted to the Company's senior executive officers. The Company shall (i) invite the Senior Business Advisor to attend all meetings of its Board of Directors in a nonvoting observer capacity and, in this respect, shall give the Senior Business Advisor copies of all notices, minutes, consents and other materials that the Company provides to its directors and officers at the same time and in the same manner as provided to such directors and officers, as the case may be and (ii) provide the Senior Advisor with access to all financial information of the Company, including, without limitation, budgets, projections, plans and results of operations; provided, however, that the Senior Business Advisor shall agree to hold in confidence and trust all information so provided and provided further that the Company reserves the right to withhold any information and to exclude the Senior Business Advisor from any Board of Directors meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel.

(c)           The Company shall enter into an indemnification agreement with the Senior Business Advisor on terms reasonably satisfactory to the Senior Business Advisor indemnifying the Senior Business Advisor for any losses, damages or other expenses incurred by the Senior Business Advisor relating to or arising out of the Senior Business Advisor's performance of services as an advisor to the Company.  The Company shall add the Senior Business Advisor as an additional insured under the Company's directors and officers liability insurance policy to the extent such coverage is available on commercially reasonable terms.

(d)           From and after the closing of any sale or transfer of the Lender’s rights under the Amended and Restated Note to a third party other than an Affiliate of the Lender, this Section 4.11 shall be of no further force and effect.

4.12        Further Assurances.   The Company shall execute, at the request of the Lender, execute or otherwise authenticate and deliver to the Lender any notices, certificates, financing statements, financing statement changes and any and all additional instruments, documents and other records, and the Company shall perform all actions, that from time to time the Lender may reasonably deem necessary or desirable to carry into effect the transactions contemplated by the Loan Documents or to establish or maintain a perfected security interest in the Collateral (as defined in the Security Agreement) having the priority provided for in the Security Agreement, or to otherwise protect the Lender’s interest in the Collateral.

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ARTICLE V.

NEGATIVE COVENANTS

The Company covenants and agrees that, until payment in full and/or the conversion of all principal and interest outstanding under the Amended and Restated Note, it will not do, directly or indirectly, any of the following unless the Lender consents thereto in writing:

5.1           Issuance of Indebtedness.  Other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any Indebtedness.

5.2           Payment of Indebtedness.  (i) Make any lease payments or payments of principal, interest, fees, or penalties under any Indebtedness other than (1) regularly scheduled payments of principal and interest and lease payments (at the rates and on the terms set forth in the agreement evidencing such Indebtedness) or (2) the repayment of Permitted Indebtedness; (ii) purchase or redeem (or offer to purchase or redeem) any Indebtedness; or (iii) deposit any monies, securities or other Property with any trustee or other Person to provide assurance that the principal or any portion thereof of any Indebtedness will be paid when due or otherwise to provide for the defeasance of any Indebtedness.

5.3           Liens.  Other than Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom.

5.4           Distributions.  Repay, repurchase or offer to repay, repurchase or otherwise acquire for cash any shares of its Common Stock or Common Stock Equivalents or any other security, including preferred stock, or Indebtedness of the Company that is paripassu with, or junior or subordinate to the Indebtedness evidenced by the Loan Documents (unless otherwise permitted pursuant to a written subordination agreement with the Lender) other than as to (a) the Note Shares (as defined in the Senior Loan Documents) as permitted or required under the Senior Loan Documents and (b) repurchases of Common Stock or Common Stock Equivalents of departing officers and directors of the Company, provided that such repurchases shall not exceed an aggregate of One Hundred Thousand Dollars ($100,000) for all officers and directors during the term of the Amended and Restated Note.

5.5           Dividends.  Pay cash dividends or distributions on any equity securities of the Company.

5.6           Certain Restrictions.  Enter into any agreement which expressly restricts the ability of the Company to enter into amendments, modifications or waivers of any of the Loan Documents (other than pursuant to the Loan Documents).

5.7           Transfer Ownership Interests.  Enter into any Change of Control Transaction or Fundamental Transaction.

           5.8            Issuance of Senior Equity Securities.  Issue any shares of preferred stock or any other equity securities with rights, privileges or preferences senior to the Common Stock.

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ARTICLE VI

MISCELLANEOUS

6.1           Fees and Expenses.  The amount of legal fees and expenses incurred by the Lender incident to the negotiation, preparation, execution, delivery and performance of the Revolving Credit Loan Documents and the Loan Documents shall be added to the original principal balance of the Amended and Restated Note.  Except as set forth in the preceding sentence, each party shall pay the fees and expenses of its advisers, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.  The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Note Shares to the Lender.

6.2           Entire Agreement.  The Loan Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, including, without limitation, the revolving Credit Note and the Revolving Credit Loan Agreement, which the parties acknowledge have been merged into such documents, exhibits and schedules.

6.3           Notices.  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (Eastern Standard Time) on a Business Day, (b) the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Business Day or later than 5:30 p.m. (Eastern Standard Time) on any Business Day, (c) the 2nd Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given.  The address for such notices and communications shall be as set forth on the signature pages attached hereto.

6.4           Amendments; Waivers.  Except as otherwise set forth herein, any provision of this Agreement may be waived, modified, supplemented or amended in a written instrument signed by the Company and the Lender.  No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

6.5           Headings.  The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

6.6           Successors and Assigns.  Subject to Section 4.11(d) above, this Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.  The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Lender (other than by merger).

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6.7           No Third-Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

6.8           Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of the Loan Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof.  Each party agrees that all Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Loan Documents (whether brought against a party hereto or its respective affiliates, directors, officers, stockholders, employees or agents) shall be commenced exclusively in the state or federal courts sitting in the City of Los Angeles.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of Los Angeles for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Loan Documents), and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such Proceeding is improper or is an inconvenient venue for such Proceeding.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.  The parties hereby waive all rights to a trial by jury.  If either party shall commence a Proceeding to enforce any provisions of the Loan Documents, then the prevailing party in such Proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding.

6.9           Execution.  This Agreement may be executed in multiple counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

6.10         Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

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6.11           Rescission and Withdrawal Right.  Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Loan Documents, whenever the Lender exercises a right, election, demand or option under a Loan Document and the Company does not timely perform its related obligations within the periods therein provided, then the Lender may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights; provided, however, in the case of a rescission of a conversion of a Amended and Restated Note, the Lender shall be required to return any shares of Common Stock subject to any such rescinded conversion notice.

6.12           Replacement of Note Shares.  If any certificate or instrument evidencing any Note Shares is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction.  The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Note Shares.

6.13           Remedies.  In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Lender and the Company will be entitled to specific performance under the Loan Documents.  The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Loan Documents and hereby agrees to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

6.14           Payment Set Aside. To the extent that the Company makes a payment or payments to the Lender pursuant to any Loan Document or the Lender enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

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6.15           Usury.  To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any Proceeding that may be brought by the Lender in order to enforce any right or remedy under any Loan Document to which the Lender is a party.  Notwithstanding any provision to the contrary contained in any Loan Document, it is expressly agreed and provided that the total liability of the Company under the Loan Documents for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the Loan Documents exceed such Maximum Rate.  It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Loan Documents is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to the Loan Documents from the effective date forward, unless such application is precluded by applicable law.  If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to the Lender with respect to indebtedness evidenced by the Lender’s Loan Documents, such excess shall be applied by the Lender to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at the Lender’s election.

6.16           Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Loan Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Loan Documents or any amendments hereto.

(Signature Pages Follow)

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IN WITNESS WHEREOF, the parties hereto have caused this Loan Modification Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

CYBERDEFENDER CORPORATION		Address for Notice:
By:		617 West 7th Street, Suite 1000
	Name:  Gary Guseinov	Los Angeles CA 90017
	Title:  Chief Executive Officer	Fax: 213-689-8639

With a copy to (which shall not constitute notice):

Richardson & Patel, LLP

750 Third Avenue, 9th Floor

New York, NY 10017

Attention:  Kevin Friedmann

Fax: 917-591-6898

 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR LENDER FOLLOWS]

[LENDER SIGNATURE PAGE TO

LOAN MODIFICATION AGREEMENT]

IN WITNESS WHEREOF, the undersigned have caused this Loan Modification Agreement to be duly executed by its/his/her respective authorized signatories as of the date first indicated above.

GR MATCH, LLC,	Address for Notice:
a Delaware limited liability company
By:	GR Match, LLC
Name:	c/o Guthy-Renker LLC
Title:	3340 Ocean Park Boulevard, Suite 3000
	Santa Monica, CA 90405
	Attention: Business Affairs
	Fax: 310-581-3443

With a copy to (which shall not constitute notice):

Guthy-Renker LLC

3340 Ocean Park Boulevard, Suite 3000

Santa Monica, CA 90405

Fax:  310-581-3443

Attention: General Counsel

Schedule 3(m)(i) – Patents and Trademarks

The Lender has filed applications for the following trademarks: CYBERPD and RAMPMYSPEED.   The Lender has agreed to transfer the Lender's rights in these trademarks to the Company.

EXHIBIT A

Form of Amended and Restated Note

See attached

EXHIBIT B

Form of Fifth Amendment to Media and Marketing Services Agreement

See attached

EXHIBIT C

Form of Second Amendment to Senior Promissory Note

See attached

EXHIBIT D

Form of Waiver

See attached

EX-99.2

AMENDED AND RESTATED 9% SECURED CONVERTIBLE PROMISSORY NOTE

$5,700,773.94      February 25, 2011

THIS AMENDED AND RESTATED 9% SECURED CONVERTIBLE PROMISSORY NOTE (this “Note”) is made as of the 25th day of February, 2011, by and between CyberDefender Corporation, a Delaware corporation, having a principal place of business at 617 West 7th Street, Suite 1000, Los Angeles, CA 90017 (the “Company”), and GR Match, LLC, a Delaware limited liability company, or its registered assigns (the “Holder”).

WHEREAS, the Company has made available to the Company a revolving credit facility in the original principal amount of Five Million Dollars ($5,000,000) on the terms and conditions of that certain Revolving Credit Loan Agreement, dated December 7, 2010 to be effective as of December 3, 2010, by and between the Holder and the Company (the “Revolving Credit Loan Agreement”), which revolving credit facility is evidenced by that certain Revolving Credit Note, dated as of December 3, 2010 (the “Revolving Credit Note”), in the original principal amount of Five Million Dollars ($5,000,000), together with interest as therein stated;

WHEREAS, the Company has requested that the Holder amend and restate the Revolving Credit Note on the terms and conditions of this Note in order to convert the outstanding principal balance of the Revolving Credit Note, together with all accrued but unpaid interest earned, the repayment fee contemplated in Section 2(d) of the Revolving Credit Note, and all other amounts owing pursuant to the Revolving Credit Note(collectively, the “Outstanding Indebtedness”)  from a revolving credit facility payable in accordance with the terms of the Revolving Credit Note to indebtedness that is convertible into shares of Common Stock and is payable in accordance with the terms and conditions of this Note and the Loan Modification Agreement; and

WHEREAS, pursuant to the Loan Modification Agreement, the Company and the Holder have agreed that the Revolving Credit Note shall be amended and restated in its entirety on the terms and conditions of this Note and that the Outstanding Indebtedness shall be repaid in accordance with the terms and conditions of this Note.

NOW THEREFORE, for and in consideration of the recitals hereinabove set forth which are incorporated herein and are true and correct and a material part of this Note, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Maker agree that, as of the date hereof, the terms of the Revolving Credit Note are hereby amended and restated in their entirety as follows and that the Outstanding Indebtedness shall be repaid in accordance with the terms and conditions of this Note:

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AMENDED AND RESTATED 9% SECURED CONVERTIBLE PROMISSORY NOTE

Due March 31, 2012

THIS AMENDED AND RESTATED 9% SECURED CONVERTIBLE PROMISSORY NOTE (this “Note”) is a duly authorized and issued nine percent (9%) Secured Convertible Promissory Note of CyberDefender Corporation, a Delaware corporation, having a principal place of business at 617 West 7th Street, Suite 1000, Los Angeles, CA 90017 (the “Company”).

FOR VALUE RECEIVED, the Company promises to pay to the order of GR Match, LLC, a Delaware limited liability company, or its registered assigns (the “Holder”), the principal sum of Five Million Seven Hundred Thousand Seven Hundred Seventy Three and 94/100 Dollars ($5,700,773.94), as may be adjusted as provided herein, on March 31, 2012, or such earlier date as this Note is required or permitted to be repaid as provided hereunder (the “Maturity Date”), and to pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Note in accordance with the provisions hereof.  This Note is subject to the following additional provisions:

Section 1.             Definitions.  For the purposes hereof, in addition to the terms defined elsewhere in this Note: (a) capitalized terms not otherwise defined herein have the meanings given to such terms in the Loan Modification Agreement (defined below), and (b) the following terms shall have the following meanings:

“Alternate Consideration” shall have the meaning set forth in Section 5(e) hereof.

“Bankruptcy Event” means any of the following events: (i) the Company or any Significant Subsidiary (as such term is defined in Rule 1.02(s) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any Significant Subsidiary thereof; (ii) there is commenced against the Company or any Significant Subsidiary thereof any such case or proceeding that is not dismissed within sixty (60) days after commencement; (iii) the Company or any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered; (iv) the Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within sixty (60) days; (v) the Company or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors; (vi) the Company or any Significant Subsidiary thereof calls a meeting of substantially all of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or (vii) the Company or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close.

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“Change of Control Transaction” means the occurrence after the date hereof of any of (i) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d5(b)(1) promulgated under the Exchange Act), other than by the Holder or any of its Affiliates, of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of fifty percent (50%) of the voting securities of the Company, or (ii) a replacement at one time or within a one (1) year period of more than one-half (1/2) of the members of the Company's board of directors which is not approved by a majority of those individuals who are members of the board of directors on the date hereof (or by those individuals who are serving as members of the board of directors on any date whose nomination to the board of directors was approved by a majority of the members of the board of directors who are members on the date hereof), or (iii) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth above in (i) or (ii).

“Common Stock Equivalents” shall have the meaning set forth in Section 5(b)(i) hereof.

“Conversion Date” shall have the meaning set forth in Section 4(a) hereof.

“Conversion Price” shall have the meaning set forth in Section 4(b) hereof.

“Dilutive Issuance” shall have the meaning set forth in Section 5(b)(i) hereof.

“Dilutive Issuance Closing” shall have the meaning set forth in Section 5(b)(i) hereof.

“Dilutive Issuance Fully Adjusted Conversion Price” shall have the meaning set forth in Section 5(b)(i) hereof.

“Event of Default” shall have the meaning set forth in Section 7 hereof.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Fundamental Transaction” shall have the meaning set forth in Section 5(e) hereof.

“Late Fee” shall have the meaning set forth in Section 2(c) hereof.

“Loan Modification Agreement” means that certain Loan Modification Agreement by and between the Holder and the Company, dated as of even date herewith, pursuant to which the Revolving Credit Note is converted to this Note, as amended, modified or supplemented from time to time in accordance with its terms.

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“Original Conversion Price” shall be $2.20 USD.

“Original Issue Date” shall mean February 25,2011.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Revolving Credit Note” means that certain Revolving Credit Note, dated as of December 7, 2010 to be effective as of December 3, 2010, issued by the Company in favor of the Holder, in the original principal amount of Five Million Dollars ($5,000,000).

“Rule 5635 Adjusted Conversion Price” shall have the meaning set forth in Section 5(b)(ii) hereof.

“Security Agreement” means that certain Security Agreement, dated December 7, 2010 to be effective as of December 3, 2010, granted by the Company in favor of the Holder.

“Senior Loan Documents” means, collectively, that certain (i) 9% Secured Convertible Promissory Note, dated March 31, 2010, issued by the Company in favor of the Holder, as amended, (ii) Loan and Securities Purchase Agreement, dated March 31, 2010, by and between the Company and the Holder, as amended, and (iii) Security Agreement, dated March 31, 2010, executed by the Company in favor of the Holder.

“Trading Day” means a day on which the principal Trading Market is open for business.

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board.

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Business Day from 9:30 a.m. Eastern Standard Time to 4:02 p.m. Eastern Standard Time); (b)  if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then listed or quoted on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink Sheets, LLC (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Lender and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

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Section 2.             Interest.

a)           Payment of Interest. The Company shall pay simple interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Note at the rate of nine percent (9%) per annum.  Interest shall be payable on the first (1st) day of each calendar quarter during the term of this Note in immediately available funds (except that, if any such date is not a Business Day, then such payment shall be due on the next succeeding Business Day) (each such date, an “Interest Payment Date”); provided, however, that the Lender may elect to cause the accrued but unpaid interest for any applicable quarter to be added to then outstanding principal amount of the Note in lieu of a cash payment of interest by delivering written notice to the Company no less than fifteen (15) days prior to the Interest Payment Date, or such shorter period as the Company may agree.  In addition to the foregoing, all accrued but unpaid interest shall be payable on each Conversion Date (as to that principal amount then being converted), at the Holder's option, (a) in the number of Note Shares equal to the aggregate unpaid and accrued interest divided by the Conversion Price or (b) in immediately available funds.

b)           Interest Calculations. Interest shall be calculated on the basis of a 360-day year and shall accrue daily commencing on the Original Issue Date until payment in full of the principal sum, together with all accrued and unpaid interest and other amounts which may become due hereunder, has been made.  Interest shall cease to accrue with respect to any principal amount converted, provided that the Company actually delivers the Note Shares within the time period required by either Section 4(c) or Section 6 (as applicable) or payment of the accrued but unpaid interest on the amount of the Note being converted in immediately available funds as provided in Section 2(a).

c)           Late Fee.  All amounts owing hereunder which are not paid on or prior to the due date therefor shall incur a late fee in an amount equal to ten percent (10%) of the amount due (“Late Fee”).

d)           Prepayment.  The Company shall have no right to prepay this note without the prior written consent of the Holder, which consent may be granted or withheld in the Holder’s sole and absolute discretion.

e)           Application of Payments.  All payments on account of the indebtedness evidenced by this Note shall be made to the Holder, on the day when due in lawful money of the United States.  All payments shall be first applied to late charges, costs of collection or enforcement and other similar amounts due, if any, under this Note and then to interest due and payable hereunder and the remainder to principal due and payable hereunder.  Remittances in payment of any part of the indebtedness other than in the required amount in immediately available U.S. funds shall not, regardless of any receipt or credit issued therefor, constitute payment until the required amount is actually received by the holder hereof in immediately available U.S. funds.

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Section 3.            Registration of Transfers and Exchanges.

a)           Different Denominations. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder.  No service charge will be made for such registration of transfer or exchange.

b)           Investment Representations. This Note has been issued subject to certain investment representations of the Holder set forth in the Loan Modification Agreement and may be transferred or exchanged only in compliance with the Loan Modification Agreement and applicable federal and state securities laws and regulations.

Section 4.            Conversion.

a)           Voluntary Conversion. At any time following the Original Issue Date and until payment hereof in full (including interest), this Note shall be convertible into Note Shares at the option of the Holder, in whole or in part at any time and from time to time.  The Holder shall effect conversions by delivering to the Company the form of Notice of Conversion attached hereto as Annex A (a “Notice of Conversion”), specifying therein the principal amount of the Note and interest thereon to be converted and the date on which such conversion is to be effected (a “Conversion Date”).  If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is received hereunder.  To effect conversions hereunder, the Holder shall not be required to physically surrender the Note to the Company unless the entire principal amount of this Note, plus all accrued and unpaid interest thereon and any Late Fees, has been so converted or paid in full by the Company. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Note in an amount equal to the applicable amount of principal converted.  The Holder and the Company shall maintain records showing the principal amount converted and the date of such conversions.  The Company shall deliver any objection to any Notice of Conversion promptly, but in no event later than three (3) Business Days of receipt of such notice.  In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note may be less than the amount stated on the face hereof.  Conversion Notices shall be irrevocable after five (5) Business Days following the Company’s receipt of such notice.

b)           Conversion Price.  The conversion price in effect on any Conversion Date shall be equal to the lower of (i) the Original Conversion Price or (ii) a price which is equal to the lowest VWAP for any five (5) consecutive Trading Day period ending on or prior to March 31, 2011, in each case subject toadjustment pursuant to Section 5 below (the “Conversion Price”).

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c)           Mechanics of Conversion.

i.           Note Shares Issuable Upon Conversion.  The number of shares of Note Shares issuable upon a conversion hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Note to be converted (plus all accrued and unpaid interest thereon and any Late Fees, if applicable) by (y) the Conversion Price.

ii.           Delivery of Certificate Upon Conversion.  Not later than five (5) Trading Days after any Conversion Date, the Company will deliver to the Holder a certificate or certificates representing the number of Note Shares being acquired upon the conversion of this Note or a portion of this Note.

iii.           Reservation of Certificates. Certificates for the Note Shares issued upon conversion of this Note shall be made without charge to the Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate; provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Note so converted and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.

iv.           Failure to Deliver Certificates. If in the case of any Notice of Conversion such certificate or certificates are not delivered to or as directed by the Holder by the third Trading Day after the Conversion Date, the Holder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such certificate or certificates, to rescind such conversion, in which event the Company shall promptly return to the Holder the Note (if previously delivered to the Company) and the outstanding principal amount and amount of any accrued but unpaid interest, penalties or Late Fees shall be automatically, without notice, restored as though the Holder had not delivered such Conversion Notice, and the Holder shall promptly return the Common Stock certificates representing the principal amount of this Note tendered for conversion to the Company.

v.           Reservation of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Note and the payment of interest on this Note, if applicable, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder, not less than such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Loan Modification Agreement) be issuable (taking into account the adjustments and restrictions of Section 5) upon the conversion of the outstanding principal amount of this Note and payment of interest hereunder. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable and, if one or more registration statements covering the Note Shares are then effective under the Securities Act, shall be registered for public sale in accordance with such registration statements.

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vi.           No Fractional Shares.  The Company shall not issue fractions of a share or scrip representing fractional shares of Common Stock upon conversion of Note.  If any fraction of a share of Common Stock would be issuable on the conversion of the Note (or specified portions thereof), the Company shall pay to the Holder a cash adjustment in respect of such fraction, equal to the value of such fraction based on the then Conversion Price.

vii.          Transfer Taxes. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates,.

Section 5.             Certain Adjustments.

a)           Stock Dividends and Stock Splits.  If the Company, at any time while this Note is outstanding shall: (A) pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company pursuant to this Note), (B) subdivide outstanding shares of Common Stock into a larger number of shares, (C) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issue, by reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

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b)           Subsequent Equity Issuance.

i.   In the event the Company shall, at any time after the Original Issue Date and prior to June 30, 2011,sell and issue (i) any shares of Common Stock or (ii) any securities of the Company which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock (collectively, “Common Stock Equivalents”), in each case at an issuance, exercise or conversion price per share, as the case may be, less than the then Conversion Price (such issuances collectively, a “Dilutive Issuance”), then, subject to Section 5(b)(ii) below, the Conversion Price shall be reduced, concurrently with the closing of such Dilutive Issuance (the “Dilutive Issuance Closing”), to an amount equal to the issuance, exercise or conversion price per share, as the case may be, applicable to such Dilutive Issuance (but in no event reduced to an amount less than One and 75/100 Dollars ($1.75) (subject to adjustment for any stock dividends and/or stock splits in the same manner as provided in Section 5(a) above with respect to adjustments to the Conversion Price) (the “Dilutive Issuance Fully Adjusted Conversion Price”).  Such adjustment shall be made whenever a Dilutive Issuance occurs.

ii.   If an adjustment to the Conversion Price pursuant to Section 5(b)(i) above would cause the stockholder approval requirements of Rule 5635 of the NASDAQ Marketplace Rules to apply to the Company’s issuance of shares of Common Stock or Common Stock Equivalents pursuant to the applicable Dilutive Issuance, then the Company may elect, upon prior written notice to Holder and the Company’s payment to Holder of the Rule 5635 Election Payment (as defined below) by wire transfer of immediately available funds to an account designated by Holder concurrently with the closing of such Dilutive Issuance, to cause the Conversion Price to be reduced to the lowest price which would not cause the stockholder approval requirements of Rule 5635 of the NASDAQ Marketplace Rules to apply to the Company’s issuance of shares of Common Stock or Common Stock Equivalents pursuant to such Dilutive Issuance (the “Rule 5635 Adjusted Conversion Price”).   “Rule 5635 Election Payment” shall mean an amount equal to the product of (A) the VWAP for the five (5) consecutive Trading Day period ending on the date of the applicable Dilutive Issuance Closing multiplied by (B) the difference of (x) the number of shares of Common Stock that would be issued to Holder if Holder converted the entire outstanding principal balance of this Note, together with all accrued but unpaid interest earned thereon, on the date of the applicable Dilutive Issuance Closing (assuming a conversion price equal to the Dilutive Issuance Fully Adjusted Conversion Price) less (y) the number of shares of Common Stock that would be issued to Holder if Holder converted the entire outstanding principal balance of this Note, together with all accrued but unpaid interest earned thereon, on the date of the applicable Dilutive Issuance Closing (assuming a conversion price equal to the Rule 5635 Adjusted Conversion Price).

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iii.   A Dilutive Issuance shall not include:  (a) shares of Common Stock issued to employees, officers, directors or consultants (other than any consultant which engages in any business which is competitive with or provides any services which are similar to the business of or services provided by Holder or any of its Affiliates (as determined at the time of the Dilutive Issuance) of the Company, (b) securities issued upon the exercise or exchange of or conversion of any securities issued and outstanding on the date hereof, or (c) securities issued pursuant to acquisitions or strategic transactions.

c)           Calculations.  All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.  For purposes of this Section 5, the number of shares of Common Stock outstanding as of a given date shall be the sum of the aggregate number of issued and to be converted shares of Common Stock (excluding treasury shares, if any) outstanding.

d)           Notice to the Holder.

i.           Adjustment to Conversion Price.  Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the Company shall promptly mail to the Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

ii.           Notice to Allow Conversion by the Holder.  If (A) the Company shall declare a dividend (or any other distribution) on the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party (other than a merger for the sole purpose of changing the Company’s state of incorporation to Delaware), any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Note, and shall cause to be mailed to the Holder at the Holder’s last address appearing on the  stock books of the Company, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer, share exchange or other applicable transaction is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice.  The Holder is entitled to convert this Note during the period commencing the date of such notice to the effective date of the event triggering such notice.

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e)           Fundamental Transaction. If, at any time while this Note is outstanding, (A) the Company effects any merger or consolidation of the Company with or into another Person where the Company is not the surviving entity (other than a merger for the sole purpose of changing the Company’s state of incorporation to Delaware), (B) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (D) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then upon any subsequent conversion of this Note, the Holder shall have the right to receive, for each Note Share that would have been issuable upon such conversion absent such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of one share of Common Stock (the “Alternate Consideration”).  For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note following such Fundamental Transaction.  To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new Note consistent with the foregoing provisions and evidencing the Holder's right to convert such Note into Alternate Consideration. The Company will utilize its best efforts to ensure that terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this paragraph (c) and insuring that this Note (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.  Failure to obtain such terms by the Company shall not cause an Event of Default and the Holder shall then be required to convert in accordance with the terms of the Fundamental Transaction.

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Section 6.               [Intentionally Omitted].

Section 7.               Events of Default.

a)           “Event of Default,” wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

i.           any default in the cash payment of (A) the principal of amount of this Note, or (B) interest (including any Late Fee) on this Note, in each case free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date, Interest Payment Date or the Maturity Date or by acceleration or otherwise) which default, solely in the case of an interest payment or other default under clause (B) above, is not cured, within five (5) Trading Days;

ii.           the Company shall fail for any reason to deliver certificates to the Holder representing the Note Shares no later than the fifth (5th) Trading Day after a Conversion Date or any Forced Conversion Date pursuant to Section 4(c) or the Company shall provide at any time notice to the Holder, including by way of public announcement, of the Company’s intention not to comply with requests for conversion of this Note in accordance with the terms hereof;

iii.           the Company shall fail to have available a sufficient number of authorized and unreserved shares of Common Stock to issue to the Holder upon a conversion hereunder;

iv.           the Company shall materially fail to observe or perform any other covenant or agreement contained in, or otherwise commit any breach of the Loan Documents, and such failure or breach shall not, if subject to the possibility of a cure by the Company, have been remedied within earlier to occur of (A) five (5) Trading Days after notice of such failure sent by the Holder and (B) ten (10) Trading Days after the Company has become or should have become aware of such failure;

v.           the Company shall purchase more than a de minimis number of shares of Common Stock or Common Stock Equivalents (not including a redemption of this Note hereunder);

vi.           any representation or warranty made in this Note, any other Loan Documents, any written statement pursuant hereto or thereto or any other report, financial statement or certificate made or delivered to the Holder in connection with the Loan Documents shall be untrue or incorrect in any material respect as of the date when made or deemed made;

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vii.           the Company shall have become subject to a Bankruptcy Event;

viii.           the occurrence of an “Event of Default” under the Senior Loan Documents or the Company's default on any of its obligations under any other mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than $150,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;

ix.           the Common Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume listing or quotation for trading thereon within five (5) Trading Days;

x.           the Company shall be a party to any Change of Control Transaction or Fundamental Transaction;

xi.           any monetary judgment, writ or similar final process shall be entered or filed against the Company or its property or other assets for more than One Hundred Thousand Dollars ($100,000), and such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a period of forty five (45) calendar days.

b)           Remedies Upon Event of Default.  If any Event of Default occurs and is continuing, the full principal amount of this Note, together with all accrued but unpaid interest and any and all other amounts due and owing under this Note shall become, at the Holder’s election, immediately due and payable in cash.  In addition to the foregoing, upon the occurrence of an Event of Default, interest will be charged on the outstanding principal balance of this Note and all other amounts then and thereafter due and payable hereunder at the rate of fifteen percent (15%) per annum, or such lower maximum amount of interest permitted to be charged under applicable law, for so long as such Event of Default continues.  When this Note shall have been paid in full in accordance herewith, the Holder shall promptly surrender this Note to or as directed by the Company.

Section 8.               Waivers.

a)           No Waiver Except in Writing. No provision of this Note will be deemed waived by the Holder, unless waived in a writing executed by the Holder, which expressly refers to this Note, and no such waiver shall be implied from any act or conduct of the Holder, or any omission by the Holder to take action with respect to any provision of this Note.  No such express written waiver shall affect any other provision of this Note, or cover any default or time period or event, other than the matter to which an express written waiver has been given.

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b)           Waiver of Statute of Limitations. The Company further waives and renounces for itself, its successors and assigns, all rights to the benefits of any statute of limitations and any moratorium, reinstatement, marshalling, forbearance, valuation, stay, extension, redemption, appraisement, or exemption and homestead laws now provided, or which may hereafter be provided, by the laws of the United States and the State of California against the enforcement and collection of the obligations evidenced by this Note.

c)           Waiver of Presentment. All parties now or hereafter liable with respect to this Note, whether the Company, principal, surety, guarantor, endorsee or otherwise hereby severally waive presentment for payment, demand, notice of nonpayment or dishonor, protest and notice of protest.  No failure to accelerate the indebtedness evidenced hereby, acceptance of a past due installment following the expiration of any cure period provided by this Note or applicable law, or indulgences granted from time to time shall be construed (i) as a novation of this Note or as a reinstatement of the indebtedness evidenced hereby or as a waiver of such right of acceleration or of the right of the Holder thereafter to insist upon strict compliance with the terms of this Note, or (ii) to prevent the exercise of such right of acceleration or any other right granted hereunder or by the laws of the State of California.  The Company hereby expressly waives the benefit of any statute or rule of law or equity now provided, or which may hereafter be provided, which would produce a result contrary to or in conflict with the foregoing.

Section 9.               Miscellaneous.

a)           Notices.  Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation, any Notice of Conversion, shall be in writing and delivered either personally, by facsimile or sent by a nationally recognized overnight courier service, addressed to the Company at the address set forth above, facsimile number (213) 689-8639, Attn: Chief Financial Officer or such other address or facsimile number as the Company may specify for such purposes by notice to the Holder delivered in accordance with this Section, with any fax delivery followed up by overnight delivery service.  Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile or sent by a nationally recognized overnight courier service addressed to the Holder at the facsimile telephone number or address of the Holder appearing on the books of the Company, or if no such facsimile telephone number or address appears, then at the principal place of business of the Holder, if any.  Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of: (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section 9 prior to 5:30 p.m. (Eastern Standard Time), (ii) the date after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section 9(a) later than 5:30 p.m. (Eastern Standard Time) on any date and earlier than 11:59 p.m. (Eastern Standard Time) on such date, (iii) the second Business Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) if personally delivered, upon actual receipt by the party to whom such notice is required to be given.

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b)           Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal and interest of this Note at the time, place, and rate, and in the coin or currency, herein prescribed.  This Note is a direct debt obligation of the Company.

c)           Secured Obligation; Priority.  The obligations of the Company under the Revolving Credit Note were secured by a security interest in all assets of the Company pursuant to the terms and conditions of the Security Agreement.  Notwithstanding the amendment and restatement of the Revolving Credit Note on the terms and conditions of this Note, the Security Agreement and the liens created thereby shall remain in full force and effect and shall secure the obligations of the Company under this Note, with the same priority as immediately prior to the execution hereof.  The Holder acknowledges and agrees that all of the Company's indebtedness and obligations to the Holder evidenced by this Note, are subordinated in right of payment and priority to the Company's indebtedness and obligations evidenced by the Senior Loan Documents.

d)           Lost or Mutilated Note.  If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note (as adjusted for any conversions) so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, and indemnity, if requested, all reasonably satisfactory to the Company.

e)           Governing Law.  This Note shall be governed by and construed and enforced in accordance with the laws of the State of California (without regard to conflicts of laws), except where federal law is applicable (including, without limitation, any applicable federal usury ceiling or other federal law preempting state usury laws).  Any and all actions brought by the Company or Holder under this Note shall be brought in the state or federal courts located in the City of Los Angeles, California (the “California Courts”). The Company hereby irrevocably submits to the exclusive jurisdiction of the California Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Loan Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such California Courts, or such California Courts are improper or inconvenient venue for such proceeding. The Company hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to the Company at the address in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. The Company hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Note or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of the Loan Documents, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

15

f)           Time Is of The Essence. The Company agrees that time is of the essence with respect to every provision hereof, and hereby consents to any and all renewals, extensions or modifications of the terms hereof, including, without limitation, time for payment, and the Company further agrees that any such renewal, extension or modification, or the release or substitution of any person or security for the indebtedness evidenced hereby, shall not affect the liability of any parties not released in writing by the Holder for the indebtedness evidenced by this Note.  Any such renewals, extension, modifications, releases or substitutions may be made without notice to any of such parties.

g)           Severability.  If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder violates applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest.  The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such law as though no such law has been enacted.

h)           Next Business Day.  Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

16

i)           Headings; Certain Rules of Construction.  The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect any of the provisions hereof.  The provisions of this Note shall be construed as a whole according to their common meaning, not strictly for or against any party, or any person or entity, who is or may become liable for the payment of this Note, and to achieve the objectives of the parties unconditionally to impose on the Company the indebtedness evidence by this Note.  Whenever the words “including,” “includes” or “include” are used in this Note (including any exhibit hereto), they shall be read non-exclusively as though the phrase “without limitation” immediately followed the same.  Unless the context requires otherwise, the singular includes the plural, and vice versa, and the masculine includes the feminine, and neuter adjectives include one another.

j)           Amendment.  This Note may be modified or amended only by a writing duly executed by the Company and the Holder which expressly refers to this Note and the intent of the parties so to amend this Note.

k)           Manner of Payment; No Offsets.  All payments due hereunder shall be made in lawful money of the United States of America.  Except as otherwise set forth in this Note, all sums due hereunder shall be payable without offset, demand, abatement or counterclaim of any kind or nature whatsoever, all of which are hereby waived by the Company.

l)           No Intent of Usury.  None of the terms and provision contained in this Note or in other documents or instruments related hereto, shall ever be construed to create a contact for the use, forbearance or detention of money requiring payment of interest at a rate in excess of the maximum interest permitted to be charged by application laws or regulation governing this Note.  Without limiting the above, this Note is subject to the express condition that at no time shall the Company be obligated or required to pay any amount under this Note including any interest on the principal balance at a rate in excess of the maximum interest rate which the Company is permitted by applicable law to contract or agree to pay.  In determining whether or not the interest or any other amount paid or payable under this Note exceeds the maximum rate permitted under applicable law (i) the Company and the Holder shall to the extent permitted under applicable law characterize any non-principal payment, as a fee, premium or expense rather than interest, and (ii) all sums paid or agreed to be paid to the Holder for the use, forbearance, or detention of the debt, shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term until payment in full so that the rate or amount of interest on account of the debt does not exceed the maximum lawful rate of interest.

m)           No Impairment.  No reference herein to any other agreements between the Holder and the Company and no provision of this Note or such other agreements shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the place, at the time, and in the currency herein prescribed.

17

n)           Remedies Cumulative.  The rights and remedies of the Holder as provided in this Note shall be cumulative and concurrent and may be pursued singly, successively or together against the Company or any other Persons who are, or may become liable for all or any part of this indebtedness, and any other funds, property or security held by the Holder for the payment hereof, or otherwise, at the sole discretion of the Holder.  Failure to exercise any such right or remedy shall in no event be construed as waiver or release of such rights or remedies, or the right to exercise them at any later time.  The right, if any, of the Company, and all other Persons, who are, or may become, liable for this indebtedness, to plead any and all statutes of limitation as a defense is expressly waived by each and all of such parties to the full extent permissible by law.

o)           Reimbursement of Collection Expenses.  The Company agrees to reimburse the Holder, immediately upon written notice from the Holder, all actual costs, expenses, disbursements, charges and reasonable attorney’s fees and costs incurred by the Holder or its counsel in the enforcement or attempted enforcement of this Note.  Without limitation on the foregoing, the Company agrees to pay all costs of collection, including reasonable attorneys’ fees and costs (whether or not for salaried attorneys regularly employed by the Holder) and all costs of any action or proceeding (including any bankruptcy proceeding or any non-judicial foreclosure or private sale), in case any payment is not paid when due, or in case it becomes necessary to enforce any other obligation of the Company hereunder, or in the event the Holder is made a party to any litigation because of the existence of the indebtedness evidenced by this Note, or any of them.

p)           Successors and Assigns.  The provisions of this Note shall inure to the benefit of the Holder and its successors and assigns.  The Company shall not assign or otherwise transfer this Note without the prior written consent of the Holder.

q)           Execution.  This Note may be executed in multiple counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

r)           Negotiable Instrument.This Note is negotiable.

[Signature Page Follows]

18

IN WITNESS WHEREOF, the Company and the Holder have caused this Amended and Restated 9% Secured Convertible Promissory Note to be duly executed by their duly authorized officers as of the date first above indicated.

CYBERDEFENDER CORPORATION,

a Delaware corporation

By:
	Gary Guseinov
	Chief Executive Officer

GR MATCH,

a Delaware limited liability company

By:
	Bennet Van de Bunt
	Manager

19

ANNEX A

NOTICE OF CONVERSION

The undersigned hereby elects to convert principal under the nine percent (9%) Secured Convertible Promissory Note of CyberDefender Corporation, a Delaware corporation (the “Company”), due March 31, 2012, into ________ shares of Common Stock of the Company, par value $0.001 per share, according to the conditions hereof, as of the date written below.  If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith.  No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.

Conversion calculations:  ___________________________

Date to Effect Conversion:                                           _______________________

Principal Amount of Note(s) to be converted:  $  ___________

Accrued but Unpaid Interest to be converted: $  ___________

Total Conversion Amount:  $  ____________________

Total shares of Common Stock issuable:________________

GR Match, LLC,

a Delaware limited liability company

By:

Name:

Title:

20

EX-99.3

SECOND AMENDMENT TO 9% SECURED CONVERTIBLE PROMISSORY NOTE

This SECOND AMENDMENT TO 9% SECURED CONVERTIBLE PROMISSORY NOTE (this “Second Amendment”) is made and entered into effective as of February 25, 2011, by and between GR MATCH, LLC,a Delaware limited liability company (“Lender”), CYBERDEFENDER CORPORATION,a Delaware corporation (“Borrower”).  Lender and Borrower may each be referred to herein as a “Party” and, collectively, as the “Parties.”

RECITALS

WHEREAS, Lender loaned funds to CyberDefender Corporation,a California corporation (as predecessor in interest to Borrower) (“CyberDefender California”), pursuant to the terms and conditions of that certain Loan and Securities Purchase Agreement, dated as of March 31, 2010, by and between Lender and CyberDefender California, which loan is evidenced by that certain 9% Secured Convertible Promissory Note, dated March 31, 2010, issued by CyberDefender California in favor of Lender in the original principal amount of Five Million Three Hundred Thousand Dollars ($5,300,000), as amended by that certain First Amendment to 9% Secured Convertible Promissory Note, dated December 7, 2010 to be effective as of December 3, 2010 (collectively, the “Promissory Note”); and

WHEREAS, the Parties desire to further amend the Promissory Note as set forth herein.

NOW THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agrees as follows:

1.           Amendment to Section 1 of the Promissory Note.  The definition of “Original Conversion Price” set forth in Section 1 of the Promissory Note is hereby amended and restated in its entirety as follows, and any references to “Original Conversion Price” set forth in the Promissory Note shall be deemed automatically amended to refer to the Original Conversion Price, as amended by this Second Amendment:

   “Original Conversion Price” shall be $2.20 USD.

2.           Conflict; Full Force and Effect.  In the event of any conflict between this Second Amendment and the Promissory Note, this Second Amendment shall control.  The Parties acknowledge and agree that, except as expressly provided herein, the provisions of the Promissory Note shall remain unmodified and in full force and effect.

3.           Successors and Assigns.  This Second Amendment is and shall be binding upon each of the Parties and their respective successors and assigns.

4.           Recitals.  The recitals to this Second Amendment are hereby incorporated by reference herein.

5.           Governing Law.  This Second Amendment shall be governed by the laws of the State of California, without regard to its principles of conflict of laws.

6.           Entire Agreement.  This Second Amendment and the Promissory Note contain the complete understanding and agreement of the Parties relating to the subject matter hereof and thereof and supersede any prior understanding or agreement related thereto, whether written or oral.

7.           Counterparts.  This Second Amendment may be executed in multiple counterparts, each of which will be deemed an original, but together they will constitute one and the same instrument.

[signatures on following page]

2

IN WITNESS WHEREOF, this Second Amendment has been duly executed by the Parties as of the date first above written.

GR Match, LLC,
a Delaware limited liability company
By:
	Name:
	Title:
CyberDefender Corporation,
a Delaware corporation
By:
	Name: Gary Guseinov
	Title: Chief Executive Officer

EX-99.4

WAIVER

THIS WAIVER (this “Waiver”) is made and entered into effective as of February 25, 2011, by and between  GR MATCH, LLC, a Delaware limited liability company (“Lender”), and CYBERDEFENDER CORPORATION, a Delaware corporation (“Borrower”).

WHEREAS, Lender loaned funds to Borrower pursuant to the terms and conditions of that certain Loan and Securities Purchase Agreement, dated as of March 31, 2010, by and between Borrower (as successor in interest to CyberDefender Corporation, a California corporation) and Lender (the “GRM Loan Agreement”), which loan is evidenced by that certain 9% Secured Convertible Promissory Note, dated March 31, 2010, issued by Borrower in favor of Lender (the “GRM Promissory Note”);

WHEREAS, as security for Borrower’s obligations under the Note, Borrower has granted to Lender a first lien priority security interest in all of Borrower’s assets pursuant to the terms and conditions of that certain Security Agreement, dated as of March 31, 2010, executed by Borrower in favor of Lender (the “GRM Security Agreement” and, together with the GRM Loan Agreement and the GRM Promissory Note, collectively, the “GRM Loan Documents”);

WHEREAS, pursuant to Section 4.13 of the GRM Loan Agreement, Borrower has granted to Lender a right of first offer with respect to Borrower’s sale and issuance of any debt or equity securities of Borrower (other than equity securities offerings in excess of Twenty Million Dollars ($20,000,000); and

WHEREAS, Borrower has requested that Lender grant a limited waiver of Lender’s right of first offer granted pursuant to Section 4.13 of the GRM Loan Agreement, and Lender has agreed to grant such limited waiver to Borrower, on the terms and conditions set forth in this Waiver.

NOW, THEREFORE,in consideration of the mutual covenants contained in this Waiver, and for valuable consideration, the receipt and sufficiency of which is acknowledged, the parties agree as follows:

1.           Lender’s Waiver of Right of First Offer.  Lender hereby agrees to a one-time waiver of its right to participate in a Qualified Common Stock Offering (as defined below) that closes on or prior to June 30, 2010.   “Qualified Common Stock Offering” means the sale and issuance by Borrower of shares of Common Stock (as defined in the GRM Loan Agreement) of Borrower (and not of any other type of debt or equity securities of Borrower) via a private placement transaction, whether in a single transaction or a series of related transactions, so long as (i) the issuance price per share is not less than One Dollar and 75/100 ($1.75) and (ii) the number of shares issued in connection with such offering constitute not more than twenty percent (20%) of the number of then issued and outstanding shares of Common Stock of the Company.

2.           Limits of this Waiver.

2.1           This Waiver shall not (i) release or discharge Borrower from any liability or obligation, whether past, present or future, as borrower under the GRM Loan Documents, (ii) be construed as a waiver of any rights or remedies of Lender under the GRM Loan Documents (other than the waiver provided for herein) or (iii) be construed as a waiver of Lender’s right to consent to any actions of Borrower after the date hereof which, under the terms and conditions of the GRM Loan Documents or any other agreements between Borrower and Lender, require the prior consent of Lender, including, without limitation, Borrower’s issuance of any Common Stock Equivalents after the date hereof.

2.2           No waiver by Lender, or a failure by Lender to promptly exercise any one or more of the rights, options and remedies available to Lender under this Waiver or the GRM Loan Documents, shall be deemed a waiver thereof or of any other provision of this Waiver or the GRM Loan Documents.

3.           Conflict; Full Force and Effect.  In the event of any conflict between this Waiver and the GRM Loan Documents, this Waiver shall control.  The parties acknowledge and agree that, except as expressly provided herein, the provisions of the GRM Loan Documents shall remain unmodified and in full force and effect.

4.           Successors and Assigns.  This Waiver shall be binding upon each of the parties and their respective successors and permitted assigns.

5.           Recitals.  The recitals to this Waiver are hereby incorporated by reference herein.

6.           Governing Law.  This Waiver shall be governed by the laws of the State of California, without regard to its principles of conflict of laws.

7.           Entire Agreement.  This Waiver contains the complete understanding and agreement of the parties relating to the subject matter hereof and supersedes any prior understanding or agreement related thereto, whether written or oral.

8.           Counterparts.  This Waiver may be executed in multiple counterparts, each of which will be deemed an original, but together they will constitute one and the same instrument.

[signatures on following page]

2

IN WITNESS WHEREOF, this Waiver has been duly executed by the parties as of the date first above written.

GR Match, LLC,
a Delaware limited liability company
By:
	Name:
	Title:
CyberDefender Corporation,
a Delaware corporation
By:
	Name: Gary Guseinov
	Title: Chief Executive Officer

EX-99.5

FIFTH AMENDMENT TO MEDIA AND MARKETING SERVICES AGREEMENT

This FIFTH AMENDMENT TO MEDIA AND MARKETING SERVICES AGREEMENT (this “Fifth Amendment”) is made and entered into effective as of the 25th day of February, 2011, by and between CyberDefender Corporation, a Delaware 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.”

RECITALS

WHEREAS, GRM and CyberDefender Corporation, a California corporation (as predecessor in interest to CyberDefender), entered into that certain Media and Marketing Services Agreement, dated as of March 24, 2009, to be effective as of March 1, 2009, as amended by that certain First Amendment thereto, dated as of June 4, 2009, that certain Second Amendment thereto, dated as of October 26, 2009, that certain Third Amendment thereto, dated as of October 22, 2010, to be effective October 15, 2010, and that certain Fourth Amendment thereto, dated as of December 7, 2010, to be effective December 3, 2010  (collectively, the “Agreement”); and

WHEREAS, the Parties desire to further amend the Agreement as set forth herein.

NOW THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agrees as follows:

1.           Amendment to Section 2.2 of the Agreement.  Section 2.2 of the Agreement is hereby amended and restated in its entirety as follows:

2.2           Reimbursement of Media Costs.  GRM shall deliver to CyberDefender weekly or monthly invoices, at GRM's sole discretion, 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 week or month, as the case may be (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 applicable Reimbursement Amount to GRM not later than thirty (30) days after its receipt of the applicable invoice.

2.           Conflict; Full Force and Effect.  In the event of any conflict between this Fifth Amendment and the Agreement, this Fifth Amendment shall control.  The Parties acknowledge and agree that, except as expressly provided herein, the provisions of the Agreement shall remain unmodified and in full force and effect.

3.           Successors and Assigns.  This Fifth Amendment is and shall be binding upon each of the Parties and their respective successors and assigns.

4.           Recitals.  The recitals to this Fifth Amendment are hereby incorporated by reference herein.

5.           Governing Law.  This Fifth Amendment shall be governed by the laws of the State of California, without regard to its principles of conflict of laws.

6.           Entire Agreement.  This Fifth Amendment and the Agreement contain the complete understanding and agreement of the Parties relating to the subject matter hereof and thereof and supersede any prior understanding or agreement related thereto, whether written or oral.

7.           Counterparts.  This Fifth Amendment may be executed in multiple counterparts, each of which will be deemed an original, but together they will constitute one and the same instrument.

IN WITNESS WHEREOF, this Fifth Amendment has been duly executed by the Parties as of the date first above written.

GR Match, LLC,
a Delaware limited liability company
By:
	Name:
	Title:
CyberDefender Corporation,
a Delaware corporation
By:
	Name: Gary Guseinov
	Title: Chief Executive Officer

EX-99.6

CyberDefender Corporation Restructures Debt with GR Match, LLC

Los Angeles – February 28, 2011 – CyberDefender Corporation (NASDAQ: CYDE) (“CyberDefender”), a provider of Internet security software, utilities and remote technical support services that work together to maximize online safety for consumers, today announced that it has reached an agreement with GR Match, LLC (GRM), an affiliate of Guthy-Renker LLC, on the restructuring of the current $5.0 million credit facility and $5.3 million long-term convertible debt financing provided by GRM.

Under terms of the agreement, the $5.0 million revolving credit facility previously due prior to March 31, 2011 or before the closing of an equity offering, has been restructured into a note due March 31, 2012, convertible into common stock at a price of $2.20 per share. In addition, CyberDefender’s $5.3 million convertible note due March 31, 2012 has been restructured to reflect a new conversion price of $2.20 per share. The principal balances of both notes will be adjusted to reflect all accrued and unpaid interest and financing related fees and carry an interest rate of 9% per annum, with interest paid quarterly.

“Restructuring our debt provides us with additional financial flexibility as we continue to expand our business and carry out our strategic objectives for 2011. GRM continues to serve as a valuable partner and we believe that their willingness to restructure the debt to convertible instruments demonstrates their belief in CyberDefender’s long-term value,” said Gary Guseinov, CyberDefender Chief Executive Officer.

“We’re pleased to help CyberDefender continue to grow,” said Co-CEO of Guthy-Renker, Ben Van de Bunt. “We believe the unique direct response marketing GRM is contributing to CyberDefender, along with financial support, is permitting CyberDefender to differentiate itself in a competitive environment and will let them continue to capture market share.”

About CyberDefender

CyberDefender is a provider of Internet security software, utilities and remote technical support services that work together to ensure maximum safety for consumers in a digital world. The company develops and markets antispyware/antivirus software and a remote, live technical support service. In addition, CyberDefender offers identity protection and computer optimization services. With millions of active users on its cloud based collaborative Internet security network, CyberDefender leverages the power of community to protect its customers from the rapidly growing number of new online threats every year. CyberDefender products are fully compatible with Microsoft Windows® XP, Vista®, and 7 Operating systems. All products are available at www.cyberdefender.com. Investor relations information is available at www.cyberdefendercorp.com.

Forward Looking Statements

Statements in this public announcement that are not statements of historical or current fact concerning CyberDefender’s future growth and future business and financial prospects constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The forward-looking statements include statements concerning: future GAAP revenue and future gross sales; future market demand for CyberDefender’s products and services; the future capacity of the call center; efforts to increase CuberDefender’s patent portfolio; the launch of the the new direct marketing partnership program; the introduction of products and services into the SMB market; and the introduction of products through U.S.-based retail channels and channels in select international markets.  Such forward-looking statements involve known and unknown risks, uncertainties and other unknown factors that could cause CyberDefender's actual results to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. Factors that could cause CyberDefender's results to be materially different from the forward-looking statements include, but are not limited to, whether CyberDefender will be able to find financing as required and whether CyberDefender's revenues will eventually exceed its expenses. The forward-looking statements also are subject generally to other risks and uncertainties that are described from time to time in CyberDefender's reports and registration statements filed with the Securities and Exchange Commission, which are available for review at http://www.sec.gov/.

Contacts

Public Relations:

The Bohle Company

Luis Levy

(310) 785-0515 ext. 204

PR@cyberdefender.com

Investor Relations:

The Piacente Group Brandi FlobergLee Roth(212) 481-2050IR@CyberDefender.comIR Site: www.CyberDefenderCorp.com