Document:

Unassociated Document

    Exhibit
      10.29

    

    NOTE
      CONVERSION AND WARRANT LOCK-UP AGREEMENT

    

    THIS
      NOTE
      CONVERSION AND WARRANT LOCK-UP AGREEMENT ("Agreement")
      is
      made as of August __, 2006 by and among CyberDefender Corporation, a California
      corporation (the “Company”), on the one hand, and the undersigned security
      holders of the Company set forth on Schedule A hereto (each, a “Bridge
      Investor”,
      collectively, the “Bridge
      Investors”),
      on
      the other hand. The Company and the Bridge Investors are sometimes referred
      to
      hereinafter collectively as the “Parties”,
      and
      each, individually, as a “Party”).
      

    

    RECITALS

    

    A. The
      Bridge Investors hold Secured Convertible Promissory Notes (collectively, the
      “Bridge
      Notes”)
      and
      Warrants to Purchase Common Stock (each, a “Bridge
      Warrant”,
      collectively, the “Bridge
      Warrants”)
      of the
      Company, as set forth on Schedule 3.1(g) of that certain Securities Purchase
      Agreement dated the date hereof by and among the Company and the purchasers
      identified therein (the “Purchase
      Agreement”).
      

    

    B. Pursuant
      to the Purchase Agreement, the Company is issuing in a private offering (the
      “Offering”)
      up to
      $4,500,000 of its 6% Secured Convertible Debentures (the “Debentures”)
      and
      Common Stock Purchase Warrants (the “Warrants”).

    

    C. Pursuant
      to this Agreement, the Bridge Investors are agreeing to convert the Bridge
      Notes
      into common stock of the Company at a 33% discount to the conversion price
      set
      forth in the Debentures and to adopt the transfer restrictions set forth herein
      with respect to the shares of common stock underlying the Bridge
      Warrants.

    

    D. The
      conversion price of the Debentures and the exercise price of the Warrants are
      equal to $12.5 million divided by the number of fully diluted outstanding shares
      of common stock of the Company, excluding the shares that are subject to the
      transfer restrictions set forth herein, so by agreeing to these transfer
      restrictions the Bridge Investors are benefiting indirectly by minimizing the
      dilutive effect of the Offering, this being the consideration for the Bridge
      Investors agreeing to such transfer restrictions.

    

    E. All
      capitalized terms used but not defined herein shall have the meanings ascribed
      to such terms in the Purchase Agreement.

     

    

    AGREEMENT

    

    NOW,
      THEREFORE, for good and valuable consideration, the receipt and sufficiency
      of
      which are hereby acknowledged, and in consideration of the mutual promises,
      covenants and conditions herein contained, the Parties agree as
      follows:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1. Conversion
      of Bridge Notes.
      Notwithstanding anything to the contrary in Section 5 of the Bridge Notes,
      the
      Bridge Investors hereby agree to the automatic conversion at the Closing of
      all
      outstanding principal and accrued interest of the Bridge Notes into common
      stock
      of the Company at a 33% discount to the Conversion Price, as defined in the
      Debentures. At or around the Closing, each Bridge Investor will surrender his,
      her or its Bridge Note for cancellation by the Company and the Company will
      issue a certificate to each Bridge Investor representing the number of shares
      of
      common stock into which such Bridge Investor’s Bridge Note is being
      automatically converted pursuant hereto. The automatic conversion and
      cancellation of the Bridge Notes contemplated hereby will be deemed to occur
      at
      the Closing regardless of the surrender of the original Bridge Notes and
      issuance of common stock certificates to the Bridge Investors. 

    

    2.  Warrant
      Lock-Up.
      Each
      Bridge Investor irrevocably agrees with the Company that, from the date hereof
      until and including the first anniversary of the Effective Date (such period,
      the “Restriction
      Period”),
      the
      undersigned shall not sell, contract to sell, hypothecate, pledge or otherwise
      dispose of (or enter into any transaction which is designed to, or might
      reasonably be expected to, result in the disposition (whether by actual
      disposition or effective economic disposition due to cash settlement or
      otherwise) by the undersigned or any Affiliate of the undersigned or any person
      in privity with the undersigned or any Affiliate of the undersigned), directly
      or indirectly, or establish or increase a put equivalent position or liquidate
      or decrease a call equivalent position within the meaning of Section 16 of
      the
      Exchange Act with respect to, any shares of Common Stock hereafter acquired
      by
      the undersigned upon exercise of the undersigned’s Bridge Warrant (the
“Securities”).
      Beneficial
      ownership shall be calculated in accordance with Section 13(d) of the Exchange
      Act. In order to enforce this covenant, the Company shall impose irrevocable
      stop-transfer instructions preventing the Transfer Agent from effecting any
      actions in violation of this Agreement. 

    

    Notwithstanding
      the foregoing, the undersigned may transfer Securities (i) as a bona
      fide
      gift or
      gifts, provided that the donee or donees thereof agree to be bound by the
      restrictions set forth herein, (ii) to any trust for the direct or indirect
      benefit of the undersigned or the immediate family of the undersigned, provided
      that the trustee of the trust agrees to be bound by the restrictions set forth
      herein, and provided further that any such transfer shall not involve a
      disposition for value, or (iii) in transactions relating to shares of Common
      Stock acquired by the undersigned in open market transactions after the
      completion of the transactions contemplated by the Purchase Agreement. For
      purposes of this Agreement, “immediate family” shall mean any relationship by
      blood, marriage or adoption, not more remote than first cousin. In addition,
      notwithstanding the foregoing, if the undersigned is a business entity, the
      entity may transfer the Securities to any Affiliate of such entity; provided,
      however,
      that in
      any such case, it shall be a condition to the transfer that the transferee
      execute an agreement stating that the transferee is receiving and holding such
      Securities subject to the provisions of this Agreement and there shall be no
      further transfer of such Securities except in accordance with this Agreement,
      and provided further that any such transfer shall not involve a disposition
      for
      value.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    3.  Cancellation
      of Agreement.
      This
      Agreement shall be cancelled and of no force or effect if the Closing does
      not
      occur on or before September 15, 2006.

    

    4.  Remedies.
      The
      undersigned Bridge Investors acknowledge that the execution, delivery and
      performance of this Agreement are a material inducement to the Company to
      complete the transactions contemplated by the Purchase Agreement and that the
      Company shall be entitled to specific performance of the undersigned’s
      obligations hereunder. 

     

    5.  Authority.
      Each
      undersigned Bridge Investor hereby represents that the undersigned has the
      power
      and authority to execute, deliver and perform this Agreement, that the
      undersigned has received adequate consideration therefor, and that the
      undersigned will indirectly benefit from the closing of the transactions
      contemplated by the Purchase Agreement.

     

    6.  Entire
      Agreement.
      This
      Agreement contains the sole, complete and entire agreement and understanding
      of
      the Parties concerning the matters contained herein and may not be altered,
      modified, or changed in any manner except by a writing duly executed by the
      Parties. No Party is relying on any representations other than those expressly
      set forth herein. All prior discussions and negotiations have been and are
      merged, integrated into and superseded by this Agreement.

     

    7.  Waiver.
      The
      delay or failure of a Party to exercise any right, power or privilege hereunder,
      or failure to strictly enforce any breach or default shall not constitute a
      waiver with respect thereto; and no waiver of any such right, power, privilege,
      breach or default on any one occasion shall constitute a waiver thereof on
      any
      subsequent occasion unless clear and express notice thereof in writing is
      provided.

    

    8.  Applicable
      Law; Venue.
      This
      Agreement shall be governed by and construed and enforced in accordance with
      and
      subject to the laws of the State of California, and any and all actions brought
      under this Agreement shall be brought in the state or federal courts of the
      United States sitting in the City of Los Angeles, State of
      California.

    

    9.  Advice
      of Counsel.
      The
      Parties represent that prior to the execution of this Agreement they had the
      opportunity to seek the benefit of independent legal counsel of their own
      selection regarding the substance of this Agreement. The Parties acknowledge
      and
      agree that the law firm Richardson & Patel LLP has not represented any Party
      other than the Company in connection with the negotiation, preparation,
      execution and delivery of this Agreement.

     

    10.  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 as to any Bridge Investor when such Bridge Investor has signed this
      Agreement and delivered such signature to the Company. The 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.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    11.  Recitals
      Incorporated.
      The
      recitals of this Agreement are incorporated herein and made a part
      hereof.

    

    

    [SIGNATURE
      PAGES FOLLOW]

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the Parties hereto have executed this Note Conversion and
      Warrant Lock-Up Agreement as of the day and year first written
      above.

     

    
      	 	 	 
	 	CyberDefender
              Corporation
	 
 	 
 	 
 
	 	By:  	 
	 	Name:  	
              
Gary
              Guseinov
	 	Title:	Chief Executive
              Officer

    

     

    

    [BRIDGE
      INVESTOR SIGNATURE PAGE FOLLOWS]

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      A 

    TO
      NOTE CONVERSION AND WARRANT LOCK-UP AGREEMENT

    
 

    
      
        
        

      

      
        6AMENDMENT
      TO REGISTRATION RIGHTS AGREEMENT

     

    This
      Amendment to Registration Rights Agreement (this “Amendment”), dated October 11,
      2006, is made by and among CyberDefender Corporation, a California corporation
      (the “Company”), and the several purchasers signatory hereto (each such
      purchaser, a “Purchaser” and, collectively, the “Purchasers”).

    

    WHEREAS,
      the
      parties to this Amendment entered into that certain Registration Rights
      Agreement dated as of September 12, 2006 (the “Agreement”); and

     

    WHEREAS,
      the
      parties to this Amendment desire to amend the Agreement as hereinafter
      provided;

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and other good and valuable consideration, the
      receipt and sufficiency of which are hereby acknowledged, the parties to this
      Amendment agree as follows:

     

    1.    The
      definition of Filing Date in Section 1 of the Agreement is hereby amended and
      restated in its entirety as follows: 

    

     

    “Filing
      Date”
means,
      with respect to the initial Registration Statement required hereunder, October
      31, 2006 and, with respect to any additional Registration Statements which
      may
      be required pursuant to Section 3(c), the 30th
      day
      following the date on which the Company first knows, or reasonably should have
      known that such additional Registration Statement is required hereunder.

     

    2.    Except
      as
      amended hereby, the Agreement shall continue in full force and effect in
      accordance with its terms.

     

    IN
      WITNESS WHEREOF,
      the
      parties have executed this Amendment as of the date set forth
      above.

     

    CyberDefender
      Corporation

    

     

    By:
      /s/
      Gary Guseinov        

    Name:
      Gary Guseinov

    Title:
      Chief Executive Officer

    

    

    [PURCHASER
      SIGNATURES FOLLOW]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    [PURCHASER
      SIGNATURE PAGE OF 

    AMENDMENT
      TO REGISTRATION RIGHTS AGREEMENT]

    

    

    
      	
              Purchasers:

            	
              Signature

            
	
              Bushido
                Capital Master Fund, LP

               

              By:
                Louis Rabman

              Its:
                President

            	
               

              /s/
                Louis Rabman

            
	
              Pierce
                Diversified Strategy Master Fund LLC, Series BUS (6)

               

              By:
                Christopher Rossman

              Its:
                Attorney In Fact

            	
               

              /s/
                Christopher Rossman

            
	
              Camofi
                Master LDC

               

              By:
                Jeffrey M. Haas

              Its:
                Authorized Signatory

            	
               

              /s/
                Jeffrey M. Haas

            
	
              Richardson
                & Patel, LLP

               

              By:
                Kevin Friedmann

              Its:
                Partner

            	
              /s/
                Kevin Friedmann

            
	
              Commercial
                Construction Management, Inc.

               

              By:
                Brian Sutcliffe

              Its:
                President

            	 
	
              Robert
                O’dell

            	 
	
              Michael
                R. DeBaecke

            	
              /s/
                Michael r. DeBaecke

            
	
              Garrett
                S. Goggin

            	 
	
              Robert
                Goggin

            	 
	
              William
                J. Santora

            	 
	
              Ricardo
                A. Salas

            	 
	
              Brian
                E. and Christine Boyle

            	
              /s/
                Brian E. Boyle

            
	
              Walter
                Buckley

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