SECURITIES
      PURCHASE AGREEMENT

     

    This
      Securities Purchase Agreement (this “Agreement”)
      is
      dated as of ___________, 2008 among CyberDefender Corporation, a California
      corporation (the “Company”),
      and
      the purchaser identified on the signature page hereto (the “Purchaser”).

     

    WHEREAS,
      subject to the terms and conditions set forth in this Agreement and pursuant
      to
      Section 4(2) of the Securities Act of 1933, as amended (the “Securities
      Act”)
      and
      Rule 506 promulgated thereunder, the board of directors of the Company has
      authorized the sale and issuance to the Purchaser and other purchasers who
      are
“accredited investors” within the meaning of Rule 501 under the Securities Act
      (collectively, the “Other
      Purchasers”,
      and
      together with the Purchaser, the “Purchasers”)
      of up
      to $1,200,000 in aggregate principal amount of the Company’s 10% Convertible
      Promissory Notes and warrants to purchase common stock of the Company, subject
      to the terms and conditions of this form of Agreement (the “Offering”).

     

    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 each Purchaser 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 Notes (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.
      With
      respect to a Purchaser, any investment fund or managed account that is managed
      on a discretionary basis by the same investment manager as the Purchaser will
      be
      deemed to be an Affiliate of the Purchaser.

     

    “Business
      Day”
means
      any day except Saturday, Sunday, any day which shall be 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.

     

    “Closing”
means
      the closing of the purchase and sale of the Securities pursuant to Section
      2.1.

    


    “Closing
      Date”
means
      the Business Day when all of the Transaction Documents have been executed and
      delivered by the Company and the Purchaser, and all conditions precedent to
      (i)
      the Purchaser’s obligations to pay the Subscription Amount and (ii) the
      Company’s obligations to deliver the Securities have been satisfied or
      waived.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    “Commission”
means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
means
      the common stock of the Company, no par value 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 Notes.

     

    “Effective
      Date”
means
      the date that the initial Registration Statement filed by the Company pursuant
      to the Registration Rights Agreement is first declared effective by the
      Commission.

     

    “Escrow
      Agent”
means
      Richardson & Patel, LLP, having an escrow account as set forth on
Annex
      A
      attached
      hereto.

     

    “Escrow
      Agreement”
means
      the Escrow Agreement by and among the Company, the Purchasers and the Escrow
      Agent, in the form of Exhibit
      D
      attached
      hereto.

     

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

    


    “Exempt
      Issuance”
means
      the issuance of (a) shares of Common Stock, options or warrants to employees,
      officers, directors or consultants of the Company, (b) securities upon the
      exercise or exchange of or conversion of any Securities issued hereunder and/or
      other securities exercisable or exchangeable for or convertible into shares
      of
      Common Stock issued and outstanding on the date of this Agreement, (c)
      securities issued pursuant to acquisitions or strategic transactions approved
      by
      a majority of the disinterested directors, provided any such issuance shall
      only
      be to a Person which is, itself or through its subsidiaries, an operating
      company in a business synergistic with the business of the Company and in which
      the Company receives benefits in addition to the investment of funds.


    


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

     

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

     

    “Intellectual
      Property Rights”
shall
      have the meaning ascribed to such term in Section 3.1(o).


    
      
        
        

      

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

     

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

     

    “Material
      Permits”
shall
      have the meaning ascribed to such term in Section 3.1(m).

     

    “Maximum
      Rate”
shall
      have the meaning ascribed to such term in Section 5.17.

     

    “Notes”
means
      the 10% Convertible Promissory Notes in the form of Exhibit
      A
      attached
      hereto due, subject to the terms therein, eleven months from the Closing Date,
      issued by the Company to the Purchasers pursuant to this form of
      Agreement.

     

    “Note
      Shares”
mean
      the shares of Common Stock issuable upon conversion of the Notes, including
      any
      shares of Common Stock issued in payment of interest thereunder.

     

    “Offering”
has
      the
      meaning set forth in the recitals hereof.

     

    “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.

     

    “Registration
      Rights Agreement”
means
      the Registration Rights Agreement, dated the date hereof, among the Company
      and
      the Purchasers, in the form of Exhibit
      B
      attached
      hereto.

     

    “Registration
      Statement”
means
      a
      registration statement meeting the requirements set forth in the Registration
      Rights Agreement and covering the resale of the Underlying Shares by each
      Purchaser as provided for in the Registration Rights Agreement.

     

    “Required
      Approvals”
shall
      have the meaning ascribed to such term in Section 3.1(e).

     

    “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 Transaction
      Documents, including any Underlying Shares (including Underlying Shares issuable
      as payment of interest), ignoring any conversion or exercise limits set forth
      therein, and assuming that the Conversion Price is at all times on and after
      the
      date of determination 75% of the then Conversion Price on the Business Day
      immediately prior to the date of determination.


    
      
        
        

      

      
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    “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.

     

    “Securities”
means
      the Notes, the Warrants and the Underlying Shares.

     

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

     

    “Short
      Sales”
shall
      include all “short sales” as defined in Rule 200 of Regulation SHO under the
      Exchange Act (but shall not be deemed to include the location and/or reservation
      of borrowable shares of Common Stock). 

     

    “Subordination
      Agreement”
means
      the Subordination Agreement in the form attached hereto as Exhibit
      E.

     

    “Subscription
      Amount”
      means
      the
      aggregate amount
      to be
      paid for the Note and Warrant purchased hereunder as specified below the
      Purchaser’s name on the signature page of this Agreement and next to the heading
“Subscription Amount”, in United States Dollars and in immediately available
      funds.

     

    “Subsidiary”
means
      any subsidiary of the Company as set forth on Schedule
      3.1(a).

     

    “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.

     

    “Transaction
      Documents”
means
      this form of Agreement, the Notes, the Warrants, the Registration Rights
      Agreement, and any other documents or agreements executed by the Purchasers
      in
      connection with the transactions contemplated hereby.

     

    Transfer
      Agent”
means
      Continental Stock Transfer & Trust Company, with a mailing address of 17
      Battery Place, New York, NY 10004 and a facsimile number of (212) 616-7616,
      and
      any successor transfer agent of the Company.

     

    “Underlying
      Shares”
means
      the Note Shares and the shares of Common Stock issued and issuable upon exercise
      of the Warrants. 


    
      
        
        

      

      
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    “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. New York City time to 4:02 p.m. New York City 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 Holder and reasonably acceptable to
      the
      Company, the fees and expenses of which shall be paid by the
      Company.

     

    “Warrants”
means
      the Common Stock purchase warrants, in the form of Exhibit C
      attached
      hereto, delivered to the Purchasers pursuant to this form of
      Agreement.

     

    “Warrant
      Shares”
means
      the shares of Common Stock issuable upon exercise of the Warrants.

     

    ARTICLE
      II.

    PURCHASE
      AND SALE

     

    2.1 Closing.
      On the
      Closing Date, upon the terms and subject to the conditions set forth herein
      and
      substantially concurrent with the execution and delivery of this Agreement
      by
      the parties hereto, the Company agrees to sell, and the Purchaser agrees to
      purchase, a Note in principal amount of the Subscription Amount and a Warrant
      to
      purchase the number of Warrant Shares determined in accordance with Section
      2.2(a)(iii) below. The Purchaser shall deliver to the Company immediately
      available funds via wire transfer or a certified check equal to the Subscription
      Amount (or, if the Subscription Amount is to be paid by cancellation of
      indebtedness, evidence of such cancellation reasonably satisfactory to the
      Company), the Company shall deliver to the Purchaser the Purchaser’s Note and
      Warrant, and the Company and the Purchaser shall deliver the other items set
      forth in Section 2.2 deliverable at the Closing. The Closing shall occur upon
      satisfaction of the conditions set forth in Sections 2.2 and 2.3.

     

    Deliveries2.2 .

     

    (a) On
      the
      Closing Date, the Company shall deliver or cause to be delivered to the
      Purchaser the following:

     

    
      
        (i)
          this
          Agreement duly executed by the Company;

      

    

     

    (ii) a
      Note in
      the principal amount equal to the Purchaser’s Subscription Amount, registered in
      the name of the Purchaser;

     

    (iii) a
      Warrant
      registered in the name of the Purchaser to purchase up to a number of shares
      of
      Common Stock equal to 50% of the Purchaser’s Subscription Amount divided by
      $1.25, at an exercise price of $1.25 per share,
      subject
      to adjustment therein;


    
      
        
        

      

      
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    (iv) the
      Escrow Agreement duly executed by the Company; and

     

    (v) the
      Registration Rights Agreement duly executed by the Company.

     

    (vi) the
      Subordination Agreement duly executed by the Company.

    


    (b) On
      the
      Closing Date, the Purchaser shall deliver or cause to be delivered to the
      Company the following: 

     

    
      
        (i)
          this
          Agreement duly executed by the Purchaser;

      

    

     

    (ii) the
      Purchaser’s Subscription Amount by wire transfer to the Company;

     

    (iii) the
      Escrow Agreement duly executed by the Purchaser; and 

     

    (iv) the
      Registration Rights Agreement duly executed by the Purchaser.

     

    (v) the
      Subordination Agreement duly executed by the Purchaser.

    


    2.3 Closing
      Conditions. 

     

    (a) The
      obligations of the Company hereunder in connection with 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 Purchaser contained herein;

     

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

     

    (iii) the
      delivery by the Purchaser of the items set forth in Section 2.2(b) of this
      Agreement.

     

    (iv) the
      Company obtaining the written consent and waiver of the holders of at least
      75%
      of the outstanding principal amount of the Company’s 10% Secured Convertible
      Debentures, for and on behalf of all the holders of such debentures (the
“Debenture
      Holders”),
      consenting to the issuance of up to $1,200,000 in aggregate principal amount
      of
      the Notes. 

    


    (b) The
      respective obligations of the Purchaser hereunder in connection with 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;


    
      
        
        

      

      
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    (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 of the items set forth in Section 2.2(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 each Purchaser, makes it impracticable or inadvisable
      to
      purchase the Note and Warrant at the Closing.

     

    ARTICLE
      III.

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1 Representations
      and Warranties of the Company.
      Except
      as set forth in the SEC Documents, the Company hereby makes the following
      representations and warranties to each Purchaser.

     

    (a) Subsidiaries.
      The
      Company has no subsidiaries, therefore all references in the Transaction
      Documents to the Subsidiaries or any of them in the Transaction Documents shall
      be disregarded.

     

    (b) Organization
      and Qualification.
      The
      Company and each of the Subsidiaries is an entity duly incorporated or otherwise
      organized, validly existing and in good standing under the laws of the
      jurisdiction of its incorporation or organization (as applicable), with the
      requisite power and authority to own and use its properties and assets and
      to
      carry on its business as currently conducted. Neither the Company nor any
      Subsidiary is in violation or default of any of the provisions of its respective
      certificate or articles of incorporation, bylaws or other organizational or
      charter documents. Each of the Company and the Subsidiaries 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 Transaction Document, (ii) a
      material adverse effect on the results of operations, assets, business,
      prospects or condition (financial or otherwise) of the Company and the
      Subsidiaries, 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 Transaction 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.


    
      
        
        

      

      
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    (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 Transaction Documents
      and otherwise to carry out its obligations hereunder and thereunder. The
      execution and delivery of each of the Transaction Documents by the Company
      and
      the consummation by it of the transactions contemplated hereby 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 other than in connection with the Required
      Approvals. Each Transaction 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.

     

    (d) No
      Conflicts.
      The
      execution, delivery and performance of the Transaction 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 or any Subsidiary’s certificate or articles of
      incorporation, bylaws or other organizational or charter documents, or (ii)
      subject to the Required Approvals, conflict with, or constitute a default (or
      an
      event that with notice or lapse of time or both would become a default) under,
      result in the creation of any Lien upon any of the properties or assets of
      the
      Company or any Subsidiary, 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 or Subsidiary debt or otherwise) or other understanding
      to
      which the Company or any Subsidiary is a party or by which any property or
      asset
      of the Company or any Subsidiary is bound or affected, except for the
      acceleration of the maturity date of the Company’s 18-month 10% Convertible
      Debentures, in the aggregate principal amount up to $480,000, which will have
      an
      accelerated maturity date of September 12, 2009, or (iii) subject to the
      Required Approvals, 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 or a Subsidiary is subject
      (including federal and state securities laws and regulations), or by which
      any
      property or asset of the Company or a Subsidiary 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.


    
      
        
        

      

      
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    (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
      Transaction Documents, other than (i) the filing with the Commission of the
      Registration Statement, and (ii) the filing of Form D with the Commission and
      such filings as are required to be made under applicable state securities laws,
      and (iii) the written consent of the holders of at least 75% of the outstanding
      principal amount of the Company’s 10% Secured Convertible Debentures issued on
      or about September 12, 2006 (collectively, the “Required
      Approvals”).

     

    (f) Issuance
      of the Securities.
      The
      Securities are duly authorized and, when issued and paid for in accordance
      with
      the applicable Transaction 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 Transaction Documents.
      The Underlying Shares, when issued in accordance with the terms of the
      Transaction 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 Underlying Shares at least equal to the Required Minimum on
      the
      date hereof. 

     

    (g) Capitalization.
      The
      capitalization of the Company is as disclosed in its Quarterly Report on Form
      10-Q for the quarter ended September 30, 2008. Except as a result of the
      purchase and sale of the Securities 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 or any Subsidiary is or may become bound to issue additional shares
      of
      Common Stock or Common Stock Equivalents. The issuance and sale of the
      Securities will not obligate the Company to issue shares of Common Stock or
      other securities to any Person (other than the Purchasers) 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 Securities. There are no stockholders 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 40 shareholders of
      Common Stock of record prior to the date hereof. 


    
      
        
        

      

      
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    (h) SEC
      Documents.
      The
      Company hereby makes reference to the following documents filed by the Company
      with the Commission, which are available for review on the Commission’s website,
      www.sec.gov: (collectively, the “SEC
      Documents”):
      (a)
      Annual Report on Form 10-K for the fiscal year ended December 31, 2007; (b)
      and
      Quarterly Reports on Form 10-Q for the periods ended March 31, June 30 and
      September 30, 2008; and any amendments thereto. As of their respective dates,
      the SEC Documents complied in all material respects with the requirements of
      the
      Securities Exchange Act of 1934, as amended (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, stockholders’ 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 on the Company, its business, financial condition
      or
      results of operations). Except as and to the extent set forth on the balance
      sheet of the Company as of September 30, 2008, 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, 2008, except as disclosed as a subsequent event in the Company’s
      Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 (i)
      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) 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) 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 stockholders or purchased,
      redeemed or made any agreements to purchase or redeem any shares of its capital
      stock and (v) the Company has not issued any equity securities to any officer,
      director or Affiliate, except pursuant to existing Company stock option plans.
      The Company does not have pending before the Commission any request for
      confidential treatment of information.

     

    (j) Litigation.
      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, any Subsidiary or any of their respective 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 Transaction Documents or the Securities 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 Subsidiary, 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. 


    
      
        
        

      

      
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    3.2 Representations
      and Warranties of the Purchasers.
      Each
      Purchaser hereby, for itself and for no other Purchaser, represents and warrants
      as of the date hereof and as of the Closing Date to the Company as
      follows:

     

    (a) Organization;
      Authority.
      If the
      Purchaser is not an individual, the Purchaser is an entity duly organized,
      validly existing and in good standing under the laws of the jurisdiction of
      its
      organization with full right, corporate or partnership power and authority
      to
      enter into and to consummate the transactions contemplated by the Transaction
      Documents and otherwise to carry out its obligations hereunder and thereunder.
      The execution, delivery and performance by the Purchaser of the transactions
      contemplated by this Agreement have been duly authorized by all necessary
      corporate or similar action on the part of the Purchaser if the Purchaser is
      not
      an individual. Each Transaction Document to which it is a party has been duly
      executed by the Purchaser, and when delivered by the Purchaser in accordance
      with the terms hereof, will constitute the valid and legally binding obligation
      of the Purchaser, 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
      Purchaser understands that the Securities are “restricted securities” and have
      not been registered under the Securities Act or any applicable state securities
      law and is acquiring the Securities as principal for its own account and not
      with a view to or for distributing or reselling such Securities 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 Securities 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 Securities (this representation
      and warranty not limiting the Purchaser’s right to sell the Securities pursuant
      to the Registration Statement or otherwise in compliance with applicable federal
      and state securities laws) in violation of the Securities Act or any applicable
      state securities law. The Purchaser is acquiring the Securities hereunder in
      the
      ordinary course of its business if the Purchaser is an entity.

     

    (c) Purchaser
      Status.
      At the
      time the Purchaser was offered the Securities, it was, and at the date hereof
      it
      is, and on each date on which it exercises any Warrants or converts any Notes
      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 Purchaser is not required to be registered
      as a broker-dealer under Section 15 of the Exchange Act.


    
      
        
        

      

      
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    (d) Experience
      of the Purchaser.
      The
      Purchaser, either alone or together with its representatives, has such
      knowledge, sophistication and experience in business and financial matters
      so as
      to be 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 Purchaser 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
      Purchaser is not purchasing the Securities as a result of any advertisement,
      article, notice or other communication regarding the Securities 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
      Purchaser acknowledges that it has been afforded access and the opportunity
      to
      obtain all financial and other information concerning the Company that the
      Purchaser desires (including the opportunity to meet with the Company’s
      executive officers, either in person or telephonically). The Purchaser has
      reviewed copies of the SEC Documents and is familiar with the contents thereof,
      including, without limitation, the risk factors contained in the Company’s
      Annual Report on Form 10-K for the fiscal year ended December 31, 2007, and
      there is no further information about the Company that the Purchaser desires
      in
      determining whether to acquire the Securities.

     

    (g) Broker’s
      Fees.
      Purchaser acknowledges and agrees that the Company may compensate its placement
      agent, 1st
      Worldwide Financial Partners, LLC (“1st Worldwide”), in the amount of up to 6%
      of the Purchaser’s Subscription Amount plus a 5-year warrant, substantially in
      the form of the Warrants, to purchase up to 6% of the number of shares of Common
      Stock into which the Purchaser’s Note may be converted as of the Closing Date at
      an exercise price of $1.25 per share, but only if 1st
      Worldwide or its sub-agents introduced the Purchaser to the Company. The Company
      shall not be obligated to pay any commission, brokerage fee, or finder’s fee
      based on any alleged agreement or understanding between the Purchaser and a
      third person in respect of the transactions contemplated hereby. The Purchaser
      hereby agrees to indemnify the Company against any claim by any third person
      for
      any commission, brokerage fee, finder’s fee, or other payment with respect to
      this Agreement or the transactions contemplated hereby based on any alleged
      agreement or understanding between the Purchaser and any such third person,
      whether express or implied from the actions of the Purchaser or anyone acting
      or
      purporting to act on behalf of the Purchaser.


    
      
        
        

      

      
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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 state and federal
      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 Purchaser 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 Purchaser
      under this Agreement and the Registration Rights Agreement.

     

    (b) The
      Purchasers agree to the imprinting, so long as is required by this Section
      4.1,
      of a legend on any of the Securities in the following form:

     

    NEITHER
      THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE]
      [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 SECURITY AND THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION]
      OF THIS SECURITY 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 Purchaser 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 the Registration Rights Agreement and, if required under the terms of such
      arrangement, the Purchaser 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 appropriate Purchaser’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, including, if the Securities are subject
      to registration pursuant to the Registration Rights Agreement, the preparation
      and filing of any required prospectus supplement under Rule 424(b)(3) under
      the
      Securities Act or other applicable provision of the Securities Act to
      appropriately amend the list of Selling Stockholders
      thereunder.


    
      
        
        

      

      
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    (c) The
      Company shall cause its counsel to issue a legal opinion to the Company’s
      transfer agent from time to time after the Effective Date while the Registration
      Statement is effective in order to effect the removal of the legend hereunder,
      provided that such legend removal is in connection with a planned resale of
      Underlying Shares at or around the time such opinion is requested, and that
      such
      opinion may only cover the number of shares planned for sale at such time.
      If
      all or any portion of a Note or Warrant is converted or exercised (as
      applicable) at a time when the applicable Underlying 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 Underlying
      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 three Business Days following the delivery by a Purchaser to the
      Company or the Company’s transfer agent of a certificate representing Underlying
      Shares, as applicable, issued with a restrictive legend, deliver or cause to
      be
      delivered to the Purchaser a certificate representing such shares that is free
      from all restrictive and other legends. 

     

    (d) Each
      Purchaser, severally and not jointly with the other Purchasers, 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
      Purchaser 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 Purchasers 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
      and Exercise Procedures.
      The
      form of Notice of Exercise included in the Warrants and the form of Notice
      of
      Conversion included in the Notes set
      forth
      the totality of the procedures required of the Purchasers in order to exercise
      the Warrants or convert the Notes. No additional legal opinion or other
      information or instructions shall be required of the Purchasers to exercise
      their Warrants or convert their Notes. The Company shall honor exercises of
      the
      Warrants and conversions of the Notes and shall deliver Underlying Shares in
      accordance with the terms, conditions and time periods set forth in the
      Transaction Documents.


    
      
        
        

      

      
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    4.4 Securities
      Laws Disclosure; Publicity.
      The
      Company shall not consult with Purchasers in issuing any press releases with
      respect to the transactions contemplated hereby. Notwithstanding the foregoing,
      the Company shall not publicly disclose the name of any Purchaser, or include
      the name of any Purchaser in any filing with the Commission or any regulatory
      agency or Trading Market, without the prior written consent of the Purchaser,
      except (i) as required by federal securities law in connection with (A) any
      registration statement contemplated by the Registration Rights Agreement and
      (B)
      the filing of final Transaction Documents (including signature pages thereto)
      with the Commission and (ii) to the extent such disclosure is required by law
      or
      Trading Market regulations.

     

    4.5 Non-Public
      Information.
      Except
      with respect to the material terms and conditions of the transactions
      contemplated by the Transaction Documents, the Company covenants and agrees
      that
      neither it nor any other Person acting on its behalf will provide any Purchaser
      or its agents or counsel with any information that the Company believes
      constitutes material non-public information, unless prior thereto the Purchaser
      shall have executed a written agreement regarding the confidentiality and use
      of
      such information. The Company understands and confirms that each Purchaser
      shall
      be relying on the foregoing representations in effecting transactions in
      securities of the Company.

     

    4.6 [Intentionally
      Ommitted]

     

    4.7 Reservation
      and Listing of Securities.

     

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


    
      
        
        

      

      
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    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 Purchaser. 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 Purchasers 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
      Purchaser.


    
      
        
        

      

      
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    ARTICLE
      V.

    MISCELLANEOUS

     

    5.1 [Intentionally
      Omitted]

     

    5.2 Fees
      and Expenses.
      Except
      as expressly set forth in the Transaction Documents to the contrary, each party
      shall pay the fees and expenses of its advisers, counsel, 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 Securities to the
      Purchasers.

     

    5.3 Entire
      Agreement.
      The
      Transaction 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, which the parties acknowledge have been merged
      into such documents, exhibits and schedules.

     

    5.4 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. (New York City 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. (New York City 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.

     

    5.5 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 Purchasers holding at least 51% in principal amount of the then-outstanding
      Notes. 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.

     

    5.6 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.

     

    5.7 Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns. Neither the Company nor the Purchase
      may
      assign this Agreement or any rights or obligations hereunder without the prior
      written consent of the other (other than by merger). 


    
      
        
        

      

      
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    5.8 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.

     

    5.9 Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of the Transaction 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 legal
      proceedings concerning the interpretations, enforcement and defense of the
      transactions contemplated by this Agreement and any other Transaction Documents
      (whether brought against a party hereto or its respective affiliates, directors,
      officers, shareholders, employees or agents) shall be commenced exclusively
      in
      the state and 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 Transaction 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 any such court, that such suit, action or
      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 suit, action or 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 an action or proceeding to enforce any provisions of the
      Transaction Documents, then the prevailing party in such action or 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 action or proceeding.

     

    5.10 Survival.
      The
      representations and, warranties, shall survive the Closing and the delivery,
      of
      the Securities, for the applicable statue of limitations.

     

    5.11 Execution.
      This
      Agreement may be executed in two or more 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.

     

    5.12 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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    5.13 Rescission
      and Withdrawal Right.
      Notwithstanding anything to the contrary contained in (and without limiting
      any
      similar provisions of) any of the other Transaction Documents, whenever any
      Purchaser exercises a right, election, demand or option under a Transaction
      Document and the Company does not timely perform its related obligations within
      the periods therein provided, then the Purchaser 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 Note or exercise of a Warrant, the
      Purchaser shall be required to return any shares of Common Stock subject to
      any
      such rescinded conversion or exercise notice.

     

    5.14 Replacement
      of Securities.
      If any
      certificate or instrument evidencing any Securities 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
      Securities.

     

    5.15 Remedies.
      In
      addition to being entitled to exercise all rights provided herein or granted
      by
      law, including recovery of damages, the Purchaser and the Company will be
      entitled to specific performance under the Transaction 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 Transaction
      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. 

     

    5.16 Payment
      Set Aside.
      To the
      extent that the Company makes a payment or payments to the Purchaser pursuant
      to
      any Transaction Document or the Purchaser 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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    5.17 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 claim, action
      or
      proceeding that may be brought by the Purchaser in order to enforce any right
      or
      remedy under any Transaction Document to which the Purchaser is a party.
      Notwithstanding any provision to the contrary contained in any Transaction
      Document, it is expressly agreed and provided that the total liability of the
      Company under the Transaction 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
      Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum
      contract rate of interest allowed by law and applicable to the Transaction
      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 Transaction 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 Purchaser with respect to
      indebtedness evidenced by the Purchaser’s Transaction Documents, such excess
      shall be applied by the Purchaser 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 Purchaser’s election.

     

    5.18 [Intentionally
      Ommitted] 

     

    5.19 Liquidated
      Damages.
      The
      Company’s obligations to pay any partial liquidated damages or other amounts
      owing under the Transaction Documents is a continuing obligation of the Company
      and shall not terminate until all unpaid partial liquidated damages and other
      amounts have been paid notwithstanding the fact that the instrument or security
      pursuant to which such partial liquidated damages or other amounts are due
      and
      payable shall have been canceled.

     

    5.20 Construction.
      The
      parties agree that each of them and/or their respective counsel has reviewed
      and
      had an opportunity to revise the Transaction 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 Transaction Documents or any amendments hereto.

     

    (Signature
      Pages Follow)


    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
      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 401

              
	 	
                Name:
                  Gary Guseinov

              	 	
                Los
                  Angeles CA 90017

              
	 	
                Title:
                  Chief Executive Officer

              	 	 


      

    

     

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

    


    Richardson
      & Patel, LLP

    405
      Lexington Ave., 26th
      Floor

    New
      York,
      NY 10174

    Attention:
      Kevin Friedmann

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGE FOR PURCHASER FOLLOWS]


    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    


    [PURCHASER
      SIGNATURE PAGE TO 

    CYBERDEFENDER
      SECURITIES PURCHASE AGREEMENT]

    


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

     

    
      	
              Name of Purchaser:

            	     


    

    


    
      	
              Signature of Authorized Signatory of Purchaser:

            	     


    

    


    
      	
              Name of Authorized Signatory:

            	  
              


    

    


    
      	
              Title of Authorized Signatory:

            	     


    

    


    
      	
              Email Address of Purchaser:

            	   
              


    

    


    
      	
              Facsimile Number of Purchaser:

            	   
              


    

    


    Address for Notice of Purchaser:

    
 

    Address
      for Delivery of Securities for Purchaser (if not same as above):

    
 

    Subscription
      Amount:

    


    Warrant
      Shares:

    


    EIN
      Number: [PROVIDE
      THIS UNDER SEPARATE COVER]


    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    


    ANNEX
      A

    


    ESCROW
      AGENT WIRE INSTRUCTIONS


     

    RICHARDSON
      & PATEL LLP

    CLIENT
      TRUST ACCT.

    


    
      	
              BANK NAME:

            	
              COMERICA
                BANK OF CALIFORNIA

            
	 	
              WESTWOOD
                OFFICE

            
	 	
              10900
                WILSHIRE BLVD.

            
	 	
              LOS
                ANGELES, CALIF. 90024

            
	 	
              PHONE
                NUMBER: 

            	
              800-888-3595

            
	 	
              ABA
                NUMBER:

            	
              121137522

            
	 	
              ACCT.
                NUMBER:

            	
              1891937581

            
	 	
              BENEFICIARY:

            	
              RICHARDSON
                & PATEL LLP

            
	 	 	
              CLIENT
                TRUST ACCT. RE
                CYBERDEFENDER

            


    


    
      
        
        

      

      
        23