Document:

CYBERDEFENDER
      CORPORATION

    

    2005
      EQUITY INCENTIVE PLAN

     

    1. NAME.

    

    The
      name
      of the plan is the “Cyberdefender Corporation 2005 Equity Incentive
      Plan.”

    

    2. PURPOSE.

    

    The
      purpose of this Plan is to provide incentives to attract, retain and motivate
      eligible persons whose present and potential contributions are important to
      the
      success of the Company, and its Parent and Subsidiaries (if any), by offering
      them an opportunity to participate in the Company’s future performance through
      awards of Options, Restricted Stock and Stock Awards. Capitalized terms not
      defined in the text are defined in Section 3.

    

    3. DEFINITIONS.

    

    As
      used
      in this Plan, the following terms will have the following meanings:

    

    “AWARD”
means
      any award under this Plan, including any Option, Restricted Stock or Stock
      Award.

    

    “AWARD
      AGREEMENT”
means,
      with respect to each Award, the signed written agreement between the Company
      and
      the Participant setting forth the terms and conditions of the
      Award.

    

    “BOARD”
means
      the Board of Directors of the Company.

    

    “CAUSE”
means
      any cause, as defined by applicable law, for the termination of a Participant’s
      employment with the Company or a Parent or Subsidiary of the
      Company.

    

    “CODE”
means
      the Internal Revenue Code of 1986, as amended.

    

    “COMMITTEE”
means
      the Board of Directors.

    

    “COMPANY”
means
      Cyberdefender Corporation, a Delaware corporation, or any successor
      corporation.

    

    “DISABILITY”
means
      a
      disability, whether temporary or permanent, partial or total, as determined
      by
      the Committee.

    

    “EXCHANGE
      ACT”
means
      the Securities Exchange Act of 1934, as amended.

    

    “EXERCISE
      PRICE”
means
      the price at which a holder of an Option may purchase the Shares issuable upon
      exercise of the Option.

    

    
      
        
        

      

      
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    “FAIR
      MARKET VALUE”
means,
      as of any date, the value of a share of the Company’s Common Stock determined as
      follows:

     

    (a) if
      such
      Common Stock is publicly traded and is then listed on a national securities
      exchange, its closing price on the date of determination on the principal
      national securities exchange on which the Common Stock is listed or admitted
      to
      trading as reported in The
      Wall Street Journal;

    

    (b) if
      such
      Common Stock is quoted on the NASDAQ National Market, its closing price on
      the
      NASDAQ National Market on the date of determination as reported in The
      Wall Street Journal;

    

    (c) if
      such
      Common Stock is publicly traded but is not listed or admitted to trading on
      a
      national securities exchange, the average of the closing bid and asked prices
      on
      the date of determination as reported in The
      Wall Street Journal;

    

    (d) the
      price
      per share at which shares of the Company’s Common Stock are initially offered
      for sale to the public by the Company’s underwriters in the initial public
      offering of the Company’s Common Stock pursuant to a registration statement
      filed with the SEC under the Securities Act if the Award is made on the
      effective date of such registration statement; or

     

    (e)
      if
      none
      of the foregoing is applicable, by the Committee in good faith.

    

    “INSIDER”
means
      an officer or director of the Company or any other person whose transactions
      in
      the Company’s Common Stock are subject to Section 16 of the Exchange
      Act.

    

    “OPTION”
means
      an award of an option to purchase Shares pursuant to Section 7.

    

    “PARENT”
means
      any corporation (other than the Company) in an unbroken chain of corporations
      ending with the Company if each of such corporations other than the Company
      owns
      stock possessing 50% or more of the total combined voting power of all classes
      of stock in one of the other corporations in such chain.

    

    “PARTICIPANT”
means
      a
      person who receives an Award under this Plan.

    

    “PERFORMANCE
      FACTORS”
means
      the factors selected by the Committee, in its sole and absolute discretion,
      from
      among the following measures to determine whether the performance goals
      applicable to Awards have been satisfied:

     

    
      
        (a)
          Net
          revenue and/or net revenue growth;

        

        (b)
          Earnings before income taxes and amortization and/or earnings before income
          taxes and amortization growth;

        

        (c)
          Operating income and/or operating income growth;

        

        (d)
          Net
          income and/or net income growth;

        

        (e)
          Earnings per share and/or earnings per share growth;

        
           

          
            
              
              

            

            
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        (f)
          Total
          stockholder return and/or total stockholder return growth;

        

        (g)
          Return on equity;

        

        (h)
          Operating cash flow return on income;

        

        (i)
          Adjusted operating cash flow return on income;

        

        (j)
          Economic value added; and

        

        (k)
          Individual business objectives.

         

      

    

    “PERFORMANCE
      PERIOD”
means
      the period of service determined by the Committee, not to exceed five years,
      during which years of service or performance is to be measured for Restricted
      Stock Awards or Stock Awards.

    

    “PLAN”
means
      this Cyberdefender Corporation 2005 Equity Incentive Plan, as amended from
      time
      to time.

    

    “RESTRICTED
      STOCK AWARD”
means
      an award of Shares pursuant to Section 8.

    

    “SEC”
means
      the Securities and Exchange Commission.

    

    “SECURITIES
      ACT”
means
      the Securities Act of 1933, as amended.

    

    “SHARES”
means
      shares of the Company’s Common Stock reserved for issuance under this Plan, as
      adjusted pursuant to Sections 4 and 19, and any successor security.

    

    “STOCK
      AWARD”
means
      an award of Shares, or cash in lieu of Shares, pursuant to Section
      9.

    

    “SUBSIDIARY”
means
      any corporation (other than the Company) in an unbroken chain of corporations
      beginning with the Company if each of the corporations other than the last
      corporation in the unbroken chain owns stock possessing 50% or more of the
      total
      combined voting power of all classes of stock in one of the other corporations
      in such chain.

    

    “TERMINATION”
or
      “TERMINATED”
means,
      for purposes of this Plan with respect to a Participant, that the Participant
      has for any reason ceased to provide services as an employee, officer, director,
      consultant, independent contractor, or advisor to the Company or a Parent or
      Subsidiary of the Company. An employee will not be deemed to have ceased to
      provide services in the case of (i) sick leave, (ii) military leave, or (iii)
      any other leave of absence approved by the Company, provided that such leave
      is
      for a period of not more than 90 days, unless reemployment upon the expiration
      of such leave is guaranteed by contract or statute or unless provided otherwise
      pursuant to a formal policy adopted from time to time by the Company and issued
      and promulgated to employees in writing. In the case of any employee on an
      approved leave of absence, the Committee may make such provisions respecting
      suspension of vesting of the Award while on leave from the employ of the Company
      or a Subsidiary as it may deem appropriate, except that in no event may an
      Option be exercised after the expiration of the term set forth in the Option
      agreement. The Committee will have sole discretion to determine whether a
      Participant has ceased to provide services and the effective date on which
      the
      Participant ceased to provide services (the “Termination Date”).

    

    
      
        
        

      

      
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    4. SHARES
      SUBJECT TO THE PLAN.

    

    4.1 Number
      of Shares Available.
      Subject
      to Sections 4.2 and 19, the total aggregate number of Shares initially reserved
      and available for grant and issuance pursuant to this Plan will be 3,448,743
      Shares and will include Shares that are subject to: (a) issuance upon exercise
      of an Option but cease to be subject to such Option for any reason other than
      exercise of such Option; (b) an Award granted hereunder but forfeited or
      repurchased by the Company at the original issue price; and (c) an Award that
      otherwise terminates without Shares being issued. Subject to this Section 4.1,
      the number of Shares reserved and available for grant and issuance shall be
      increased on the first day of January of each year so that the total of all
      Common Stock available for Awards shall be the maximum amount allowable under
      Regulation 260.140.45 of Title 10 of the California Code of Regulations. At
      all
      times the Company shall reserve and keep available a sufficient number of Shares
      as shall be required to satisfy the requirements of all outstanding Options
      granted under this Plan and all other outstanding but unvested Awards granted
      under this Plan. At no time shall the total number of shares issuable upon
      exercise of all outstanding Awards exceed the applicable percentage as
      calculated in accordance with the conditions and exclusions of Regulation
      260.140.45 of Title 10 of the California Code of Regulations, based on the
      shares of the Company’s Common Stock which are outstanding at the time the
      calculation is made.

    

    4.2 Adjustment
      of Shares.
      In the
      event that the number of outstanding shares is changed by a stock dividend,
      recapitalization, stock split, reverse stock split, subdivision, combination,
      reclassification or similar change in the capital structure of the Company
      without consideration, then (a) the number of Shares reserved for issuance
      under
      this Plan, (b) the Exercise Prices of and number of Shares subject to
      outstanding Options, and (c) the number of Shares subject to other outstanding
      Awards will be proportionately adjusted, subject to any required action by
      the
      Board or the stockholders of the Company and compliance with applicable
      securities laws; provided, however, that fractions of a Share will not be issued
      but will either be replaced by a cash payment equal to the Fair Market Value
      of
      such fraction of a Share or will be rounded up to the nearest whole Share,
      as
      determined by the Committee.

    

    5. ELIGIBILITY.

    

    ISOs
      (as
      defined in Section 7 below) may be granted only to employees (including officers
      and directors who are also employees) of the Company or of a Parent or
      Subsidiary of the Company. All other Awards may be granted to employees,
      officers, directors, consultants, independent contractors and advisors of the
      Company or any Parent or Subsidiary of the Company, provided such consultants,
      contractors and advisors render bona fide services not in connection with the
      offer and sale of securities in a capital-raising transaction. A person may
      be
      granted more than one Award under this Plan.

    

    6. ADMINISTRATION.

    

    6.1 Committee
      Authority.
      This
      Plan will be administered by the Committee or by the Board acting as the
      Committee. Subject to the general purposes, terms and conditions of this Plan,
      and to the direction of the Board, the Committee will have full power to
      implement and carry out this Plan. Without limitation, the Committee will have
      the authority to:

    

    
      
        
        

      

      
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    (a) construe
      and interpret this Plan, any Award Agreement and any other agreement or document
      executed pursuant to this Plan;

    

    (b) prescribe,
      amend and rescind rules and regulations relating to this Plan or any
      Award;

    

    (c) select
      persons to receive Awards;

    

    (d) determine
      the form and terms of Awards;

    

    (e) determine
      the number of Shares or other consideration subject to Awards;

    

    (f) determine
      whether Awards will be granted singly, in combination with, in tandem with,
      in
      replacement of, or as alternatives to, other Awards under this Plan or any
      other
      incentive or compensation plan of the Company or any Parent or Subsidiary of
      the
      Company;

    

    (g) grant
      waivers of Plan or Award conditions;

    

    (h) determine
      the vesting, exercisability and payment of Awards;

    

    (i) correct
      any defect, supply any omission or reconcile any inconsistency in this Plan,
      any
      Award or any Award Agreement;

    

    (j) determine
      whether an Award has been earned; and

    

    (k) make
      all
      other determinations necessary or advisable for the administration of this
      Plan.

    

    6.2 Committee
      Discretion.
      Any
      determination made by the Committee with respect to any Award will be made
      at
      the time of grant of the Award or, unless in contravention of any express term
      of this Plan or Award, at any later time, and such determination will be final
      and binding on the Company and on all persons having an interest in any Award
      under this Plan. The Committee may delegate to one or more officers of the
      Company the authority to grant an Award under this Plan to Participants who
      are
      not Insiders of the Company.

    

    7. OPTIONS.

    

    The
      Committee may grant Options to eligible persons and will determine whether
      such
      Options will be Incentive Stock Options within the meaning of the Code (“ISO”)
      or Nonqualified Stock Options (“NQSOs”), the number of Shares subject to the
      Option, the Exercise Price of the Option, the period during which the Option
      may
      be exercised, and all other terms and conditions of the Option, subject to
      the
      following:

    

    7.1 Form
      of Option Grant.
      Each
      Option granted under this Plan will be evidenced by an Award Agreement which
      will expressly identify the Option as an ISO or an NQSO (hereinafter referred
      to
      as the “Stock Option Agreement”), and will be in such form and contain such
      provisions (which need not be the same for each Participant) as the Committee
      may from time to time approve, and which will comply with and be subject to
      the
      terms and conditions of this Plan.

    

    
      
        
        

      

      
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    7.2 Date
      of Grant.
      The
      date of grant of an Option will be the date on which the Committee makes the
      determination to grant such Option, unless otherwise specified by the Committee.
      The Stock Option Agreement and a copy of this Plan will be delivered to the
      Participant within a reasonable time after the granting of the
      Option.

    

    7.3 Exercise
      Period.
      Options
      may be exercisable within the times or upon the events determined by the
      Committee as set forth in the Stock Option Agreement governing such Option;
      provided, however, that no Option will be exercisable after the expiration
      of
      ten (10) years from the date the Option is granted; and provided further that
      no
      ISO granted to a person who directly or by attribution owns more than ten
      percent (10%) of the total combined voting power of all classes of stock of
      the
      Company or of any Parent or Subsidiary of the Company (“Ten Percent
      Stockholder”) will be exercisable after the expiration of five (5) years from
      the date the ISO is granted. The Committee also may provide for Options to
      become exercisable at one time or from time to time, periodically or otherwise,
      in such number of Shares or percentage of Shares as the Committee determines,
      provided, however, that in all events a Participant will be entitled to exercise
      an Option at the rate of at least 20% per year over five years from the date
      of
      grant, subject to reasonable conditions such as continued employment; and
      further provided that an Option granted to a Participant who is an officer,
      director or consultant may become fully exercisable, subject to reasonable
      conditions such as continued employment, at any time or during any period
      established by the Company.

    

    7.4 Exercise
      Price.
      The
      Exercise Price of an Option will be determined by the Committee when the Option
      is granted and may be not less than 85% of the Fair Market Value of the Shares
      on the date of grant; provided that: (a) the Exercise Price of an ISO will
      be
      not less than 100% of the Fair Market Value of the Shares on the date of grant;
      and (b) the Exercise Price of an Option granted to a Ten Percent Stockholder
      will not be less than 110% of the Fair Market Value of the Shares on the date
      of
      grant. Payment for the Shares purchased may be made in accordance with Section
      10 of this Plan.

    

    7.5 Method
      of Exercise.
      Options
      may be exercised only by delivery to the Company of a written stock option
      exercise agreement (the “Exercise Agreement”) in a form approved by the
      Committee, (which need not be the same for each Participant), stating the number
      of Shares being purchased, the restrictions imposed on the Shares purchased
      under such Exercise Agreement, if any, and such representations and agreements
      regarding the Participant’s investment intent and access to information and
      other matters, if any, as may be required or desirable by the Company to comply
      with applicable securities laws, together with payment in full of the Exercise
      Price for the number of Shares being purchased.

    

    7.6 Termination.
      Notwithstanding the exercise periods set forth in the Stock Option Agreement,
      exercise of an Option will always be subject to the following:

    

    (a) If
      the
      Participant’s service is Terminated for any reason except death or Disability,
      then the Participant may exercise such Participant’s Options only to the extent
      that such Options would have been exercisable upon the Termination Date no
      later
      than three (3) months after the Termination Date (or such longer time period
      not
      exceeding five (5) years as may be determined by the Committee, with any
      exercise beyond three (3) months after the Termination Date deemed to be an
      NQSO).

    

    (b) If
      the
      Participant’s service is Terminated because of the Participant’s death or
      Disability (or the Participant dies within three (3) months after a Termination
      other than for Cause or because of Participant’s Disability), then the
      Participant’s Options may be exercised only to the extent that such Options
      would have been exercisable by the Participant on the Termination Date and
      must
      be exercised by the Participant (or the Participant’s legal representative) no
      later than twelve (12) months after the Termination Date (or such longer time
      period not exceeding five (5) years as may be determined by the Committee,
      with
      any such exercise beyond (i) three (3) months after the Termination Date when
      the Termination is for any reason other than the Participant’s death or
      Disability, or (ii) twelve (12) months after the Termination Date when the
      Termination is for Participant’s death or Disability, deemed to be an
      NQSO).

    

    
      
        
        

      

      
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    (c) Notwithstanding
      the provisions in paragraph 7.6(a) above, if the Participant’s service is
      Terminated for Cause, as defined by applicable law, neither the Participant,
      the
      Participant’s estate nor such other person who may then hold the Option shall be
      entitled to exercise any Option with respect to any Shares whatsoever, after
      Termination, whether or not after Termination the Participant may receive
      payment from the Company or a Subsidiary for vacation pay, for services rendered
      prior to Termination, for services rendered for the day on which Termination
      occurs, for salary in lieu of notice, or for any other benefits. For the purpose
      of this paragraph, subject to the foregoing, Termination shall be deemed to
      occur on the date when the Company dispatches notice or advice to the
      Participant that his service is Terminated.

    

    7.7 Limitations
      on Exercise.
      The
      Committee may specify a reasonable minimum number of Shares that may be
      purchased on any exercise of an Option, provided that such minimum number will
      not prevent the Participant from exercising the Option for the full number
      of
      Shares for which it is then exercisable.

    

    7.8 Limitations
      on ISO.
      The
      aggregate Fair Market Value (determined as of the date of grant) of Shares
      with
      respect to which ISO are exercisable for the first time by a Participant during
      any calendar year (under this Plan or under any other incentive stock option
      plan of the Company, Parent or Subsidiary of the Company) will not exceed
      $100,000. If the Fair Market Value of Shares on the date of grant with respect
      to which ISO are exercisable for the first time by a Participant during any
      calendar year exceeds $100,000, then the Options for the first $100,000 worth
      of
      Shares to become exercisable in such calendar year will be ISO and the Options
      for the amount in excess of $100,000 that become exercisable in that calendar
      year will be NQSOs. In the event that the Code or the regulations promulgated
      thereunder are amended after the Effective Date of this Plan to provide for
      a
      different limit on the Fair Market Value of Shares permitted to be subject
      to
      ISO, such different limit will be automatically incorporated herein and will
      apply to any Options granted after the effective date of such
      amendment.

    

    7.9 Modification,
      Extension or Renewal.
      The
      Committee may modify, extend or renew outstanding Options and authorize the
      grant of new Options in substitution therefore, provided that any such action
      may not, without the written consent of a Participant, impair any of such
      Participant’s rights under any Option previously granted. Any outstanding ISO
      that is modified, extended, renewed or otherwise altered will be treated in
      accordance with Section 424(h) of the Code. The Committee may reduce the
      Exercise Price of outstanding Options without the consent of Participants
      affected by a written notice to them; provided, however, that the Exercise
      Price
      may not be reduced below the minimum Exercise Price that would be permitted
      under Section 7.4 of this Plan for Options granted on the date the action is
      taken to reduce the Exercise Price.

    

    7.10 No
      Disqualification.
      Notwithstanding any other provision in this Plan, no term of this Plan relating
      to ISO will be interpreted, amended or altered, nor will any discretion or
      authority granted under this Plan be exercised, so as to disqualify this Plan
      under Section 422 of the Code or, without the consent of the Participant
      affected, to disqualify any ISO under Section 422 of the Code.

    

    
      
        
        

      

      
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    8. RESTRICTED
      STOCK.

    

    A
      Restricted Stock Award is an offer by the Company to sell to an eligible person
      Shares that are subject to restrictions. The Committee will determine to whom
      an
      offer will be made, the number of Shares the person may purchase, the price
      to
      be paid (the “Purchase Price”), the restrictions to which the Shares will be
      subject, and all other terms and conditions of the Restricted Stock Award,
      subject to the following:

    

    8.1 Form
      of Restricted Stock Award.
      All
      purchases under a Restricted Stock Award made pursuant to this Plan will be
      evidenced by an Award Agreement (the “Restricted Stock Purchase Agreement”) that
      will be in such form (which need not be the same for each Participant) as the
      Committee will from time to time approve, and will comply with and be subject
      to
      the terms and conditions of this Plan. The offer of Restricted Stock will be
      accepted by the Participant’s execution and delivery of the Restricted Stock
      Purchase Agreement and full payment for the Shares to the Company within thirty
      (30) days from the date the Restricted Stock Purchase Agreement is delivered
      to
      the person. If such person does not execute and deliver the Restricted Stock
      Purchase Agreement along with full payment for the Shares to the Company within
      thirty (30) days, then the offer will terminate, unless otherwise extended
      by
      the Committee.

    

    8.2 Purchase
      Price.
      The
      Purchase Price of Shares sold pursuant to a Restricted Stock Award will be
      determined by the Committee on the date the Restricted Stock Award is granted
      and may not be less than 85% of the Fair Market Value of the Shares on the
      grant
      date, except in the case of a sale to a Ten Percent Stockholder, in which case
      the Purchase Price will be 100% of the Fair Market Value. Payment of the
      Purchase Price must be made in accordance with Section 10 of this
      Plan.

    

    8.3 Terms
      of Restricted Stock Awards.
      Restricted Stock Awards shall be subject to such restrictions as the Committee
      may impose. These restrictions may be based upon completion of a specified
      number of years of service with the Company or upon completion of the
      performance goals as set out in advance in the Participant’s individual
      Restricted Stock Purchase Agreement. Restricted Stock Awards may vary from
      Participant to Participant and between groups of Participants. Prior to the
      grant of a Restricted Stock Award, the Committee shall: (a) determine the
      nature, length and starting date of any Performance Period for the Restricted
      Stock Award; (b) select from among the Performance Factors to be used to measure
      performance goals, if any; and (c) determine the number of Shares that may
      be
      awarded to the Participant. Prior to the payment of any Restricted Stock Award,
      the Committee shall determine the extent to which such Restricted Stock Award
      has been earned. Performance Periods may overlap and Participants may
      participate simultaneously with respect to Restricted Stock Awards that are
      subject to different Performance Periods and have different performance goals
      and other criteria.

    

    8.4 Termination
      During Performance Period.
      If a
      Participant is Terminated during a Performance Period for any reason, then
      such
      Participant will be entitled to payment (whether in Shares, cash or otherwise)
      with respect to the Restricted Stock Award only to the extent earned as of
      the
      date of Termination in accordance with the Restricted Stock Purchase Agreement,
      unless the Committee determines otherwise.

    

    
      
        
        

      

      
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    9. STOCK
      AWARDS.

    

    9.1 Awards
      of Stock.
      A Stock
      Award is an award of Shares (which may consist of Restricted Stock) for services
      rendered to the Company or any Parent or Subsidiary of the Company. A Stock
      Award will be awarded pursuant to an Award Agreement (the “Stock Award
      Agreement”) that will be in such form (which need not be the same for each
      Participant) as the Committee will from time to time approve, and will comply
      with and be subject to the terms and conditions of this Plan. A Stock Award
      may
      be awarded upon satisfaction of such performance goals as are set out in advance
      in the Participant’s individual Stock Award Agreement (the “Performance Stock
      Award Agreement”) that will be in such form (which need not be the same for each
      Participant) as the Committee will from time to time approve, and will comply
      with and be subject to the terms and conditions of this Plan. Stock Awards
      may
      vary from Participant to Participant and between groups of Participants, and
      may
      be based upon the achievement of the Company, Parent or Subsidiary and/or
      individual performance factors or upon such other criteria as the Committee
      may
      determine.

    

    9.2 Terms
      of Stock Awards.
      The
      Committee will determine the number of Shares to be awarded to the Participant.
      If the Stock Award is being earned upon the satisfaction of performance goals
      pursuant to a Performance Stock Award Agreement, then the Committee will: (a)
      determine the nature, length and starting date of any Performance Period for
      each Stock Award; (b) select from among the Performance Factors to be used
      to
      measure the performance, if any; and (c) determine the number of Shares that
      may
      be awarded to the Participant. Prior to the payment of any Stock Award, the
      Committee shall determine the extent to which such Stock Award has been earned.
      Performance Periods may overlap and Participants may participate simultaneously
      with respect to Stock Awards that are subject to different Performance Periods
      and different performance goals and other criteria. The number of Shares may
      be
      fixed or may vary in accordance with such performance goals and criteria as
      may
      be determined by the Committee. The Committee may adjust the performance goals
      applicable to the Stock Awards to take into account changes in law and
      accounting or tax rules and to make such adjustments as the Committee deems
      necessary or appropriate to reflect the impact of extraordinary or unusual
      items, events or circumstances to avoid windfalls or hardships.

    

    9.3 Form
      of Payment.
      The
      earned portion of a Stock Award may be paid to the Participant by the Company
      either currently or on a deferred basis, with such interest or dividend
      equivalent, if any, as the Committee may determine. Payment may be made in
      the
      form of cash or whole Shares or a combination thereof, either in a lump sum
      payment or in installments, all as the Committee will determine.

    

    10. PAYMENT
      FOR SHARE PURCHASES.

    

    10.1 Payment.
      Payment
      for Shares purchased pursuant to this Plan may be made in cash (by check) or,
      where expressly approved for the Participant by the Committee and where
      permitted by law:

    

    (a) by
      cancellation of indebtedness of the Company to the Participant;

    

    (b) by
      surrender of shares that either: (1) have been owned by the Participant for
      more
      than six (6) months and have been paid for within the meaning of SEC Rule 144
      (and, if such shares were purchased from the Company by use of a promissory
      note, such note has been fully paid with respect to such shares); or (2) were
      obtained by the Participant in the public market;

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (c) by
      tender
      of a full recourse promissory note having such terms as may be approved by
      the
      Committee and bearing interest at a rate sufficient to avoid imputation of
      income under Sections 483 and 1274 of the Code; provided, however, that
      Participants who are not employees of the Company and officers and directors
      of
      the Company will not be entitled to purchase Shares with a promissory
      note;

    

    (d) by
      waiver
      of compensation due or accrued to the Participant for services
      rendered;

    

    (e) with
      respect only to purchases upon exercise of an Option, and provided that a public
      market for the Company’s stock exists:

    

    (1) through
      a
“same day sale” commitment from the Participant and a broker-dealer that is a
      member of the National Association of Securities Dealers (an “NASD Dealer”)
      whereby the Participant irrevocably elects to exercise the Option and to sell
      a
      portion of the Shares so purchased to pay for the Exercise Price, and whereby
      the NASD Dealer irrevocably commits upon receipt of such Shares to forward
      the
      Exercise Price directly to the Company; or

    

      (2) through
      a
“margin” commitment from the Participant and a NASD Dealer whereby the
      Participant irrevocably elects to exercise the Option and to pledge the Shares
      so purchased to the NASD Dealer in a margin account as security for a loan
      from
      the NASD Dealer in the amount of the Exercise Price, and whereby the NASD Dealer
      irrevocably commits upon receipt of such Shares to forward the Exercise Price
      directly to the Company; or

    

    (f) by
      any
      combination of the foregoing.

    

    10.2 Loan
      Guarantees.
      The
      Committee may help the Participant pay for Shares purchased under this Plan
      by
      authorizing a guarantee by the Company of a third-party loan to the
      Participant.

    

    11. WITHHOLDING
      TAXES.

    

    11.1 Withholding
      Generally.
      Whenever Shares are to be issued in satisfaction of Awards granted under this
      Plan, the Company may require the Participant to remit to the Company an amount
      sufficient to satisfy federal, state and local withholding tax requirements
      prior to the delivery of any certificate or certificates for such Shares.
      Whenever, under this Plan, payments in satisfaction of Awards are to be made
      in
      cash, such payment will be net of an amount sufficient to satisfy federal,
      state, and local withholding tax requirements.

    

    11.2 Stock
      Withholding.
      When,
      under applicable tax laws, a participant incurs tax liability in connection
      with
      the exercise or vesting of any Award that is subject to tax withholding and
      the
      Participant is obligated to pay the Company the amount required to be withheld,
      the Committee may allow the Participant to satisfy the minimum withholding
      tax
      obligation by electing to have the Company withhold from the Shares to be issued
      that number of Shares having a Fair Market Value equal to the minimum amount
      required to be withheld, determined on the date that the amount of tax to be
      withheld is to be determined. All elections by a Participant to have Shares
      withheld for this purpose will be made in accordance with the requirements
      established by the Committee and will be in writing in a form acceptable to
      the
      Committee.

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    12. PRIVILEGES
      OF STOCK OWNERSHIP.

    

    12.1 Voting
      and Dividends.
      No
      Participant will have any of the rights of a stockholder with respect to any
      Shares until the Shares are issued to the Participant. After Shares are issued
      to the Participant, the Participant will be a stockholder and will have all
      the
      rights of a stockholder with respect to such Shares, including the right to
      vote
      and receive all dividends or other distributions made or paid with respect
      to
      such Shares; provided, that if such Shares are Restricted Stock, then any new,
      additional or different securities the Participant may become entitled to
      receive with respect to such Shares by virtue of a stock dividend, stock split
      or any other change in the corporate or capital structure of the Company will
      be
      subject to the same restrictions as the Restricted Stock.

    

    12.2 Financial
      Statements.
      The
      Company will provide financial statements to each Participant prior to such
      Participant’s purchase of Shares under this Plan, and to each Participant
      annually during the period such Participant has Awards outstanding.

    

    13. NON-TRANSFERABILITY
      OF AWARDS.

    

    Awards
      of
      Stock and Restricted Stock granted under this Plan, and any interest therein,
      will not be transferable or assignable by the Participant, and may not be made
      subject to execution, attachment or similar process, other than by will or
      by
      the laws of descent and distribution. Awards of Options granted under this
      Plan,
      and any interest therein, will not be transferable or assignable by the
      Participant, and may not be made subject to execution, attachment or similar
      process, other than by will or by the laws of descent and distribution, by
      instrument to an inter vivos or testamentary trust in which the options are
      to
      be passed to beneficiaries upon the death of the trustor, or by gift to
“immediate family” as that term is defined in 17 C.F.R. 240.16a-1(e). During the
      lifetime of the Participant an Award will be exercisable only by the
      Participant. During the lifetime of the Participant, any elections with respect
      to an Award may be made only by the Participant unless otherwise determined
      by
      the Committee and set forth in the Award Agreement with respect to Awards that
      are not ISOs.

    

    14. CERTIFICATES.

    

    All
      certificates for Shares or other securities delivered under this Plan will
      be
      subject to such stop transfer orders, legends and other restrictions as the
      Committee may deem necessary or advisable, including restrictions under any
      applicable federal, state or foreign securities law, or any rules, regulations
      and other requirements of the SEC or any stock exchange or automated quotation
      system upon which the Shares may be listed or quoted.

    

    15. ESCROW;
      PLEDGE OF SHARES.

    

    To
      enforce any restrictions on a Participant’s Shares, the Committee may require
      the Participant to deposit all certificates representing Shares, together with
      stock powers or other instruments of transfer approved by the Committee
      appropriately endorsed in blank, with the Company or an agent designated by
      the
      Company to hold in escrow until such restrictions have lapsed or terminated,
      and
      the Committee may cause a legend or legends referencing such restrictions to
      be
      placed on the certificates. Any Participant who is permitted to execute a
      promissory note as partial or full consideration for the purchase of Shares
      under this Plan will be required to pledge and deposit with the Company all
      or
      part of the Shares so purchased as collateral to secure the payment of the
      Participant’s obligation to the Company under the promissory note; provided,
      however, that the Committee may require or accept other or additional forms
      of
      collateral to secure the payment of such obligation and, in any event, the
      Company will have full recourse against the Participant under the promissory
      note notwithstanding any pledge of the Participant’s Shares or other collateral.
      In connection with any pledge of the Shares, the Participant will be required
      to
      execute and deliver a written pledge agreement in such form as the Committee
      will from time to time approve. The Shares purchased with the promissory note
      may be released from the pledge on a pro rata basis as the promissory note
      is
      paid.

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    16. EXCHANGE
      OF AWARDS.

    

    The
      Committee may, at any time or from time to time, authorize the Company, with
      the
      consent of the respective Participants, to issue new Awards in exchange for
      the
      surrender and cancellation of any or all outstanding Awards.

    

    17. SECURITIES
      LAW AND OTHER REGULATORY COMPLIANCE.

    

    An
      Award
      will not be effective unless such Award is in compliance with all applicable
      federal and state securities laws, rules and regulations of any governmental
      body, and the requirements of any stock exchange or automated quotation system
      upon which the Shares may then be listed or quoted, as they are in effect on
      the
      date of grant of the Award and also on the date of exercise or other issuance.
      Notwithstanding any other provision in this Plan, the Company will have no
      obligation to issue or deliver certificates for Shares under this Plan prior
      to:
      (a) obtaining any approvals from governmental agencies that the Company
      determines are necessary or advisable; and/or (b) completion of any registration
      or other qualification of such Shares under any state or federal law or ruling
      of any governmental body that the Company determines to be necessary or
      advisable. The Company will be under no obligation to register the Shares with
      the SEC or to effect compliance with the registration, qualification or listing
      requirements of any state securities laws, stock exchange or automated quotation
      system, and the Company will have no liability for any inability or failure
      to
      do so.

    

    18. NO
      OBLIGATION TO EMPLOY.

    

    Nothing
      in this Plan or any Award granted under this Plan will confer or be deemed
      to
      confer on any Participant any right to continue in the employ of, or to continue
      any other relationship with, the Company or any Parent or Subsidiary of the
      Company or limit in any way the right of the Company or any Parent or Subsidiary
      of the Company to terminate Participant’s employment or other relationship at
      any time, with or without cause.

    

    19. CORPORATE
      TRANSACTIONS.

    

    19.1 Assumption
      or Replacement of Awards by Successor.
      In the
      event of (a) a dissolution or liquidation of the Company, (b) a merger or
      consolidation in which the Company is not the surviving corporation (other
      than
      a merger or consolidation with a wholly-owned subsidiary, a reincorporation
      of
      the Company in a different jurisdiction, or other transaction in which there
      is
      no substantial change in the stockholders of the Company or their relative
      stock
      holdings and the Awards granted under this Plan are assumed, converted or
      replaced by the successor corporation, which assumption will be binding on
      all
      Participants), (c) a merger in which the Company is the surviving corporation
      but after which the stockholders of the Company immediately prior to such merger
      (other than any stockholder that merges, or which owns or controls another
      corporation that merges, with the Company in such merger) cease to own their
      shares or other equity interest in the Company, (d) the sale of substantially
      all of the assets of the Company, or (e) the acquisition, sale, or transfer
      of
      more than 50% of the outstanding shares of the Company by tender offer or
      similar transaction, any or all outstanding Awards may be assumed, converted
      or
      replaced by the successor corporation (if any), which assumption, conversion
      or
      replacement will be binding on all Participants. In the alternative, the
      successor corporation may substitute equivalent Awards or provide substantially
      similar consideration to Participants as was provided to stockholders (after
      taking into account the existing provisions of the Awards). The successor
      corporation may also issue, in place of outstanding Shares of the Company held
      by the Participant, substantially similar shares or other property subject
      to
      repurchase restrictions no less favorable to the Participant. In the event
      such
      successor corporation (if any) refuses to assume or substitute Awards, as
      provided above, pursuant to a transaction described in this Subsection 19.1,
      such Awards will expire on such transaction at such time and on such conditions
      as the Committee will determine. Notwithstanding anything in this Plan to the
      contrary, the Committee may provide that the vesting of any or all Awards
      granted pursuant to this Plan will accelerate upon a transaction described
      in
      this Section 19. If the Committee exercises such discretion with respect to
      Options, such Options will become exercisable in full prior to the consummation
      of such event at such time and on such conditions as the Committee determines,
      and if such Options are not exercised prior to the consummation of the corporate
      transaction, they shall terminate at such time as determined by the
      Committee.

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    19.2 Other
      Treatment of Awards.
      Subject
      to any greater rights granted to Participants under the foregoing provisions
      of
      this Section 19, in the event of the occurrence of any transaction described
      in
      Section 19.1, any outstanding Awards will be treated as provided in the
      applicable agreement or plan of merger, consolidation, dissolution, liquidation,
      or sale of assets.

    

    19.3 Assumption
      of Awards by the Company.
      The
      Company, from time to time, also may substitute or assume outstanding awards
      granted by another company, whether in connection with an acquisition of such
      other company or otherwise, by either; (a) granting an Award under this Plan
      in
      substitution of such other company’s award; or (b) assuming such award as if it
      had been granted under this Plan if the terms of such assumed award could be
      applied to an Award granted under this Plan. Such substitution or assumption
      will be permissible if the holder of the substituted or assumed award would
      have
      been eligible to be granted an Award under this Plan if the other company had
      applied the rules of this Plan to such grant. In the event the Company assumes
      an award granted by another company, the terms and conditions of such award
      will
      remain unchanged (except that the exercise price and the number and nature
      of
      Shares issuable upon exercise of any such option will be adjusted appropriately
      pursuant to Section 424(a) of the Code). In the event the Company elects to
      grant a new Option rather than assuming an existing option, such new Option
      may
      be granted with a similarly adjusted Exercise Price.

    

    20. ADOPTION
      AND EFFECTIVE DATE.

    

    This
      Cyberdefender Corporation 2005 Equity Incentive Plan is effective as of ______,
      2005, the date it was adopted by the Board.

    

    21. STOCKHOLDER
      APPROVAL.

    

    This
      Plan
      shall be approved by the stockholders of the Company within twelve (12) months
      before or after the date this Plan is adopted by the Board.

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    22. TERM
      OF PLAN/GOVERNING LAW.

    

    Unless
      earlier terminated as provided herein, this Plan will terminate on ______,
      2015.
      This Plan and all agreements thereunder shall be governed by and construed
      in
      accordance with the laws of the State of California.

    

    23. AMENDMENT
      OR TERMINATION OF PLAN.

    

    The
      Board
      may at any time terminate or amend this Plan in any respect, including without
      limitation amendment of any form of Award Agreement or instrument to be executed
      pursuant to this Plan; provided, however, that the Board will not, without
      the
      approval of the stockholders of the Company, amend this Plan in any manner
      that
      requires such stockholder approval under the Code, if applicable, or by any
      stock exchange or market on which the Common Stock of the Company is listed
      for
      trading.

    

    24. NONEXCLUSIVITY
      OF THE PLAN.

    

    Neither
      the adoption of this Plan by the Board, the submission of this Plan to the
      stockholders of the Company for approval, nor any provision of this Plan will
      be
      construed as creating any limitations on the power of the Board to adopt such
      additional compensation arrangements as it may deem desirable, including,
      without limitation, the granting of stock options and bonuses otherwise than
      under this Plan, and such arrangements may be either generally applicable or
      applicable only in specific cases.

    

    25. ACTION
      BY COMMITTEE.

    

    Any
      action permitted or required to be taken by the Committee or any decision or
      determination permitted or required to be made by the Committee pursuant to
      this
      Plan shall be taken or made in the Committee’s sole and absolute
      discretion.

    

    *****************************************

    

    

    
      
        
        

      

      
        14RESIDENTIAL
      LEASE
      AGREEMENT - NEVADA

    

    

    Network
      Dynamics Corporation__________________________________
      (hereinafter referred to as "Tenant") and ____________ ("Tenant") agrees to
      lease from _International
      Equity Partners_____________________________________________
      (hereinafter referred to as "Landlord") ") the premises situated in
      ___Clark_________________________________
      County, Nevada and located at:

    __2747
      Paradise Road Unit 1502 , Las Vegas Nevada 89109______________________________________________________________________
      ("the premises"), upon the following terms and conditions: 

    

    Term:

    The
      term
      of this Lease is for ___3
      years____________________,
      commencing on the _1_
      day of
      _May_________________,
      2005___
      and
      expiring on the _31_
      day of
      ___May___________,
      2008___,
      unless renewed or extended pursuant to the terms herein.

    

    Payment
      of Rent:

    Monthly
      rent is _____Three
      Thousand Seven Hundred and Fifty_________________
      Dollars
($3,750_________________),
      payable in advance on the first day of each calendar month. Rent shall be made
      payable to ___International
      Equity Partners_____________________________________
      and
      mailed or delivered to the following address: ____8033
      Sunset Blvd Suite 896, Los Angeles CA
      90046____________________________________________________________.

    

    Rent
      may
      be delivered personally between the hours of ________ and _________ on the
      following days: _________________________________.

    

    Returned
      Check and Stop Payment:

    In
      each
      instance that a check offered by Tenant to Landlord for any amount due under
      this Agreement or in payment of rent is returned for lack of sufficient funds,
      a
      "stop payment" or any other reason, a service charge of $50____________
      will be assessed.

    

    Late
      Charges:

    If
      Tenant
      fails to pay the rent in full before the end of the _5____
      day
      after it's due, Tenant will be assessed a late charge of $_100______________.
      Landlord reserves and in no way waives the right to insist on payment of the
      rent in full on the date it is due.

    

    Tenant
      Examination and Acceptance of Premises:

    The
      Tenant acknowledges that he has examined the leased premises and his acceptance
      of this agreement is conclusive evidence that said premises are in good and
      satisfactory order and repair unless otherwise specified herein; and the Tenant
      agrees that no representations as to the condition of the premises have been
      made and that no agreement has been made to redecorate, repair or improve the
      premises unless hereinafter set forth specifically in writing. The Landlord
      will
      deliver the leased premises and all common areas in a habitable condition,
      pursuant to applicable State law. Tenant takes premises in its AS-IS condition.
      

    

    Occupancy
      and Use:

    The
      premises are to be used only as a private residence for Tenant(s). The premises
      shall be occupied by no more than ____five________
      (_5__)
      persons, including children. The premises shall not be used for any purpose
      other than a private residence without the prior written consent of the
      Landlord.

    

    Security
      Deposit:

    Upon
      execution of this lease, Tenant will deposit with Landlord the sum of
      _______Five
      thousand_________________
      Dollars ($__5,000_________),
      which is to be held as collateral security and applied on any rent or any other
      charge that may remain due and owing at the expiration of this agreement, any
      extension thereof or holding over period or applied on any damages to the
      premises caused by the Tenant, his family, invitees, employees, trades people
      or
      pets, or other expenses suffered by Landlord as a result of a breach of any
      covenant of the Lease. 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Insurance:

    Tenant
      is
      required to independently purchase renter’s insurance to protect any and all of
      Tenant’s personal property on the leased premises and/or in any common areas
      from any and all damages.

    

    Utilities:

    Tenant
      will be responsible and pay for the following utilities, including all required
      deposits (check those that apply):

    [x]
      Gas [
      x] Water [x] Electric [x] Refuse Collection [x] Telephone [x ] Cable
      TV

    

    Landlord
      will be responsible and pay for the following utilities, including all required
      deposits (check those that apply):

    [
      ] Gas [
      ] Water [ ] Electric [ ] Refuse Collection [ ] Telephone [ ] Cable
      TV

    

    Tenant
      shall be responsible for contacting and arranging for any utility service not
      provided by the Landlord, and for any utilities not listed above. Tenant shall
      be responsible for having same utilities disconnected on the day Tenant delivers
      the leased premises back unto Landlord upon termination or expiration of this
      Lease.

    

    Alterations
      and Repairs by Tenant:

    Tenant
      will not, without Landlord's prior written consent, alter, re-key or install
      any
      locks to the premises or install or alter any burglar alarm system, remodel
      or
      make any structural changes, alterations or additions to the premises (a
      reasonable number of picture hangers excepted).

    

    Assignment
      of Agreement and Subletting:

    Tenant
      will not sublet the premises or any portion thereof, or assign this Lease
      without the prior written consent of Landlord.

    

    Pets:

    No
      pet,
      animal, bird or other pet will be kept on the premises, even temporarily. If
      written permission is given by Landlord for pets, a separate agreement will
      be
      executed. Additional deposits, monthly fee and a non-refundable fee may apply.
      

    

    Quiet
      Enjoyment:

    Landlord
      agrees that Tenant, keeping and performing the covenants herein contained on
      the
      part of the Tenant to be kept and performed, shall at all times during the
      existence of this lease, renewals or extensions peaceably and quietly, have,
      hold, and enjoy the leased premises, without suit, trouble or hindrance from
      Landlord, or any person claiming under Landlord.

    

    Termination
      of Lease - Hold Over:

    Either
      Landlord or Tenant may terminate this lease at the expiration of said Lease
      or
      any extension thereof by giving the other thirty (30) days written notice prior
      to the due date. Since time
      is of the essence
      in
all
      matters
      of this Lease, and especially with respect to the issue of renewal, if Tenant
      shall hold over after the expiration of the term of this Lease, Tenant shall,
      in
      the absence of any written agreement to the contrary, be a tenant from month
      to
      month, as defined by applicable Nevada law, at the monthly rate in effect during
      the last month of the expiring term plus $_1,000____________, the resultant
      rent
      being Landlord’s present rental fee for month to month tenancies. All other
      terms and provisions of this Lease shall remain in full force and effect. In
      the
      event that Tenant holds over, Landlord or Tenant may terminate this lease by
      giving the other thirty (30) days written notice. Landlord may terminate this
      lease for any reason at any time with a 45 day notice.

    

    Default
      / Breach By Tenant:
      

    In
      the
      event of any default hereunder on the part of the Tenant, his family, servant,
      guests, invitees, or should the Tenant occupy the subject premises in violation
      of any lawful rule, regulation or ordinance issued or promulgated by the
      Landlord or any rental authority, then and in any of said events the Landlord
      shall have the right to terminate this Lease by any and all methods allowed
      Landlord by law.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Agents
      and Authority to Receive Legal Papers:

    Any
      notice which either party may or is required to give, shall be in writing and
      may be given by mailing the same, by certified mail, and shall be deemed
      sufficiently served upon Tenant if and when deposited in the mail addressed
      to
      the leased premises, or addressed to Tenant’s last known post office address, or
      hand delivered, or placed in Tenant’s mailbox to Tenant at the premises. If
      Tenant is more than one person, then notice to one shall be sufficient as notice
      to all. The Landlord, any person managing the premises and anyone designated
      by
      the Landlord as agent are authorized to accept service of process and receive
      other notices and demands, which may be delivered to:

    

    [
      ] The
      Landlord, __International
      Equity Partners____,
      at
      the following address:

    __8033
      Sunset Blvd #896____________________________________________

    __Los
      Angeles CA 90046___________________________________________

    Telephone:
      __702____________________________

    

    [
      ] The
      Manager, __________________________, at the following address:

    ______________________________________________

    ______________________________________________

    Telephone:
      ______________________________

    

    [
      ] The
      Owner,_______________________, at the following address:

    ______________________________________________

    ______________________________________________

    Telephone:
      ______________________________

    

    Tenant
      acknowledges receipt of an executed copy of this Lease.

    

    

    Tenant's
      signature: ____________________________________  Date:
      ___________________

    

    Landlord/Agent's
      signature: _________________________________  Date:
      ______________

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