Document:

CONSENT
      AND WAIVER

     

    Dated
      as
      of March 23, 2007

     

    GENERAL
      RECITALS

     

    WHEREAS,
      CyberDefender Corporation, a California corporation (the "Company"),
      has
      informed the undersigned holders (“Debenture
      Holders”)
      of the
      Company’s 10% Secured Convertible Debentures issued on September 12, 2006 (the
“Debentures”)
      that
      certain parties (the "Lenders")
      wish
      to purchase up to $864,000 in aggregate principal amount of the Company’s 8%
      Senior Secured Notes (the “OID
      Notes”)
      and
      common stock purchase warrants of the Company (the “New
      Warrants”)
      substantially in accordance with the terms set forth on the term sheet attached
      hereto as Exhibit
      A
      (the
“Debt
      Financing”),
      and
      that the Company believes the Debt Financing is in the best interests of the
      Company and its stockholders;

     

    WHEREAS,
      reference is hereby made to the Securities Purchase Agreement, dated as of
      September 12, 2006, by and among the Company and the purchasers signatory
      thereto (the “Agreement”);

     

    WHEREAS,
      reference is hereby made to the Registration Rights Agreement, dated as of
      September 12, 2006, by and among the Company and the purchasers signatory
      thereto (the “RRA”);

     

    WHEREAS,
      reference is hereby made to the Common Stock Purchase Warrants issued pursuant
      to the Agreement (the “Prior
      Warrants”).

     

    WHEREAS,
      the
      undersigned Debenture Holders hold at least 75% of the currently outstanding
      principal amount of the Debentures and 75% of the unexercised Warrant Shares
      (as
      defined in the Agreement) currently issuable pursuant to the Prior
      Warrants;

     

    RECITALS
      RELATING TO CONSENT AND WAIVER 

    UNDER
      SECURITIES PURCHASE AGREEMENT

     

    WHEREAS,
      Section
      4.14(a) of the Agreement prohibits the Company from issuing shares of Common
      Stock or Common Stock Equivalents (as defined in the Agreement) until 90 days
      after the Effectiveness Date (as defined in the RRA);

     

    WHEREAS,
      Section
      5.5 of the Agreement provides that any provision of the Agreement may be waived,
      modified, supplemented or amended in a written instrument signed by the Company,
      Bushido Capital Master Fund L.P. in its capacity as agent for the Purchasers
      (as
      defined in the Agreement) (the “Agent”),
      and
the
      holders of at least 75% in principal amount of the outstanding
      Debentures;

     

    WHEREAS,
      Section
      4.19 of the Agreement, titled “Most Favored Nation Provision” (the “MFN
      Provision”),
      would
      provide the Purchasers (as defined in the Agreement) with the right to exchange
      their respective Debentures for OID Notes and New Warrants, in lieu of cash
      consideration on a $1.00 for $1.00 basis, based on the outstanding principal
      amount of the Debentures, along with any accrued but unpaid interest, liquidated
      damages and other amounts owing on the Debentures, and the undersigned Debenture
      Holders wish to waive the right provided by the MFN Provision, for and on behalf
      of all the Purchasers;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    WHEREAS,
      the
      Company wishes to issue 50,000 shares of common stock (the “Oceana
      Shares”)
      to
      Oceana Partners, LLC (“Oceana”)
      in
      consideration of Oceana initiating research coverage of the Company for a 12
      month period;

    

    WHEREAS,
      Oceana or its designee(s) will be owed a placement fee consisting in part of
      10%
      warrant coverage entitling it or its designee(s) to receive warrants to purchase
      up to 80,000 shares of common stock at an exercise price of $1.20 per share
      (the
“Placement
      Warrants”);

    

    WHEREAS,
      the
      Debenture Holders wish to direct the Company to issue warrants, in the same
      form
      as the Prior Warrants, to purchase an aggregate of 150,000 shares of common
      stock at an exercise price of $1.00 per share (the “Security
      Interest Modification Warrants”),
      such
      warrants to be distributed to all the Purchasers on a pro rata basis, in
      consideration of the Purchasers executing an Amended and Restated Security
      Agreement which shall cause the OID Notes to be ranked pari passu with the
      Debentures;

     

    RECITALS
      RELATING TO CONSENT AND WAIVER 

    UNDER
      REGISTRATION RIGHTS AGREEMENT

    

    WHEREAS,
      the
      Company has incurred liquidated damages under Section 2(b) of the RRA in the
      amount of $169,917.33 as of the date hereof (the “Liquidated
      Damages”);

    

    WHEREAS,
      Section
      6(f) of the RRA provides that the provisions of the RRA may not be amended,
      modified or supplemented and waivers or consents to departures from the
      provisions thereof may not be given, unless the same shall be in writing and
      signed by the Company, the Agent and the holders of at least 75% in principal
      amount of the outstanding Debentures;

     

    WHEREAS,
      the
      undersigned Debenture Holders wish to direct the Company to pay the Liquidated
      Damages, at each Purchaser’s election, by either (i) issuing to each so electing
      Purchaser such Purchaser’s pro rata portion of Liquidated Damages in common
      stock valued for such purpose at $0.85 per share (the “Damages
      Shares”),
      or
      (ii) increasing the principal amount of each so electing Purchaser’s Debenture
      by such Purchaser’s pro rata portion of the Liquidated Damages, in lieu of cash
      as full and final payment of the Liquidated Damages; 

     

    WHEREAS,
      the
      Company and the undersigned Debenture Holders wish to amend the definition
      of
“Effectiveness Date” in the RRA, as provided herein;

     

    
      
         

      

      
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    RECITALS
      RELATING TO CONSENT AND WAIVER 

    UNDER
      DEBENTURES AND PRIOR WARRANTS

    

    WHEREAS,
      the
      Company filed an amendment to its Articles of Incorporation on October 31,
      2006
      in order to effect a 0.93173414:1 reverse stock split (the “Reverse
      Split”);

    

    WHEREAS,
      in
      connection with the Agreement and the issuance of the Debentures and Prior
      Warrants, the Company and the Purchasers had an understanding that the Reverse
      Split would not cause an adjustment of the Conversion Price (as defined in
      the
      Debentures) or the Exercise Price (as defined in the Prior
      Warrants);

    

    WHEREAS,
      in
      connection with the Company’s first interest payment under the Debentures due
      April 1, 2007 (the “April
      1 Payment”),
      the
      Company and the Debenture Holders wish to direct the Company to make the April
      1
      Payment, at each Purchaser’s election, by either (i) increasing each so electing
      Purchaser’s Debenture by such Purchaser’s pro rata portion of the April 1
      Payment, or (ii) issuing to each so electing Purchaser such Purchaser’s pro rata
      portion of the April 1 Payment in common stock valued for such purpose at $0.85
      per share; 

    

    WHEREAS,
      the
      undersigned Debenture Holders wish to waive the occurrence of an Event of
      Default under Section 8(a)(iii) of the Debentures occurring as a result of
      the
      Company’s failure to file the Registration Statement by the Filing Date and
      respond to SEC comments within the required ten-day period, provided that such
      waiver shall apply solely to the period from the first occurrence of such Event
      of Default until the next filing of an amendment on Form SB-2/A to the
      Registration Statement after the date hereof;
      

    

    NOW,
      THEREFORE,
      in
      consideration of the premises set forth above, the proposed Debt Financing
      and
      for other good and valuable consideration, the receipt and sufficiency of which
      are hereby acknowledged, the undersigned hereby agree as follows:

     

     Section
      1. Consent
      of Debenture Holders to Issuance of OID Notes, New Warrantsand Security Interest
      Modification Warrants.
      The
      undersigned Debenture Holders hereby waive, for and on behalf of all the
      Purchasers pursuant to Section 5.5 of the Agreement and solely in connection
      with the Debt Financing, the prohibitions set forth in Section 4.14(a) of the
      Agreement and Sections 7(a) and 7(b) of the Debentures and hereby consent to
      the
      Company issuing the OID Notes, the New Warrants and the Security Interest
      Modification Warrants and to perfecting the security interest of the Lenders
      in
      connection with the Debt Financing.  

     

      Section
      2. Consent
      of Debenture Holders to Potential Issuance of Damages
      Shares.
      The
      undersigned Debenture Holders hereby waive, for and on behalf of all the
      Purchasers pursuant to Section 5.5 of the Agreement and solely in connection
      with the possible issuance of the Damages Shares, the prohibition set forth
      in
      Section 4.14(a) of the Agreement. 

     

      Section
      3. Consent
      of Debenture Holders to Increase in Principal Amount of Debentures as Payment
      for Liquidated Damages and April 1 Payment.
      The
      Debenture Holders hereby waive, for and on behalf of all Purchasers pursuant
      to
      Section 9(k) of the Debentures and solely in connection with the possible
      increase in principal amount of the Debentures as payment of the Liquidated
      Damages and the April 1 Payment (to the extent such election is made by each
      Purchaser), the prohibitions set forth in Sections 7(a) and (b) of the
      Debentures. Each Purchaser’s pro rata portion of the April 1 Payment and the
      Liquidated Damages (to the extent each Purchaser so elects) shall be added
      to
      the principal amount of the Debentures in full satisfaction of the applicable
      portion of the April 1 Payment and the Liquidated Damages; provided that such
      addition shall be made only as of the date hereof and any further liquidated
      damages and interest or other charges accruing on such added amount shall be
      incurred only from and after the date hereof. No additional warrants shall
      be
      issued as a result of such addition to the principal amount of the Debentures.
      

     

    
      
         

      

      
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      Section
      4. Consent
      of Debenture Holders to Issuance of Oceana Shares and Placement
      Warrants.
      The
      undersigned Debenture Holders hereby waive, for and on behalf of all the
      Purchasers pursuant to Section 5.5 of the Agreement and solely in connection
      with the issuance of the Oceana Shares and the Placement Warrants, the
      prohibition set forth in Section 4.14(a) of the Agreement.

     

     Section
      5. Waiver
      of Most Favored Nation Provision.
      The
      undersigned Debenture Holders hereby waive, for and on behalf of all the
      Purchasers pursuant to Section 5.5 of the Agreement and solely in connection
      with the Debt Financing, the right provided to the Purchasers under Section
      4.19
      of the Agreement.

     

     Section
      6. Waiver
      of Anti-Dilution Rights.
      The
      undersigned Debenture Holders hereby waive, for and on behalf of all the
      Purchasers pursuant to Section 9(k) of the Debentures and Section 5(l) of the
      Prior Warrants, solely in connection with the issuance of the Damages Shares,
      the Oceana Shares and the Security Interest Modification Warrants, any
      adjustment to the Conversion Price (as defined in the debentures) and the
      Exercise Price (as defined in the Prior Warrants). 

     

     Section
      7. Consent
      to Issuance of Damages Shares in Lieu of Cash for Liquidated Damages; Waiver
      of
      Further Liquidated Damages.
      The
      undersigned Debenture Holders hereby (i) consent, for and on behalf of all
      the
      Purchasers, to the Company issuing the Damages Shares to the so electing
      Purchasers on a pro rata basis as full and final payment of the Liquidated
      Damages, and hereby accept, for and on behalf of all the so electing Purchasers,
      the Damages Shares as full and final payment of the Liquidated Damages, and
      (ii)
      waive, for and on behalf of all the Purchasers, all liquidated damages that
      may
      accrue or that may have accrued in excess of the Liquidated Damages under
      Section 2(b) of the RRA during the period from September 12, 2006 through the
      New Effectiveness Date (as defined in Section 8 below). This waiver shall not
      diminish or affect the Company’s obligations under Section 2(b) of the RRA with
      respect to any liquidated damages that may accrue after the New Effectiveness
      Date. The Company agrees that it shall register the Damages Shares with the
      Securities and Exchange Commission as soon as commercially practicable following
      the New Effectiveness Date.

     

     Section
      8. Waiver
      of Event of Default under Section 8(a)(iii) of the
      Debentures.
      The
      undersigned Debenture Holders hereby waive, for and on behalf of all the
      Purchasers, the Event of Default under Section 8(a)(iii) of the Debentures
      occurring as a result of the Company’s failure to file the Registration
      Statement by the Filing Date and respond to SEC comments within the required
      ten-day period, and any other Events of Default arising out of such failures;
      provided that such waiver shall apply solely to the period from the first
      occurrence of such Event of Default until the next filing of an amendment on
      Form SB-2/A to the Registration Statement following the date hereof; and
      provided further that such waiver shall not affect the Company’s obligation to
      pay liquidated damages in the manner set forth herein in respect of such Events
      of Default.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

     Section
      9. Third
      Amendment to Registration Rights Agreement.
      The
      undersigned Debenture Holders hereby agree to amend, pursuant to Section 6(f)
      of
      the RRA, the definition of Effectiveness Date, in its entirety as
      follows:

     

    “Effectiveness
      Date”
means,
      with respect to the initial Registration Statement required to be filed
      hereunder, April 30, 2007 and, with respect to any additional Registration
      Statements which may be required pursuant to Section 3(c), the 60th
      calendar
      day following the date on which the Company first knows, or reasonably should
      have known, that such additional Registration Statement is required hereunder;
      provided,
      however,
      in the
      event the Company is notified by the Commission that one of the above
      Registration Statements will not be reviewed or is no longer subject to further
      review and comments, the Effectiveness Date as to such Registration Statement
      shall be the fifth Trading Day following the date on which the Company is so
      notified if such date precedes the dates required above.

    

     Section
      10. Agreement
      to Exclude Reverse Stock Split from Causing Adjustment under Debentures and
      Prior Warrants.
      The
      undersigned Debenture Holders hereby agree, for and on behalf of all the
      Purchasers, that the Reverse Split shall not cause any adjustment of the
      Conversion Price under Section 5(a) of the Debentures or of the Exercise Price
      under 3(a) of the Prior Warrants.

     

     Section
      11. Pro
      Rata Calculations.
      All pro
      rata calculations contemplated hereunder shall be made by dividing each
      Purchaser’s Subscription Amount under the September 12 Agreement by the
      aggregate of all Subscription Amounts under the September 12
      Agreement.

     

     Section
      12. Alternative
      Payment Methods Binding on All Purchasers.
      Each
      Purchaser shall be required to accept as full and final payment of such
      Purchaser’s pro rata portion of the Liquidated Damages and the April 1 Payment
      either shares of common stock or an increase in the principal amount of such
      Purchaser’s Debenture, as provided herein.

     

     Section
      13. Effectiveness.
      This
      Consent and Waiver shall be deemed effective when executed and delivered to
      the
      Company by (i) the Agent, and (ii) the holders of at least 75% in principal
      amount of the currently outstanding Debentures.

     

     Section
      14. Counterparts.
      This
      Consent may be executed in separate original or facsimile counterparts, each
      of
      which shall be deemed to be an original instrument and all of which taken
      together shall constitute a single instrument.

     

     Section
      15. Recitals
      Incorporated.
      The
      Recitals of this Consent and Waiver are incorporated herein and made a part
      hereof.

     

    *
      * *
      *

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF,
      the
      undersigned have executed and delivered this Consent and Waiver as of the date
      first written above. 

     

    

    
      	 	
              COMPANY:

            
	 	 	 	 
	 	
              CyberDefender
                Corporation,
                

            
	 	
              a
                California corporation

            
	 	 	 	 
	 	
              By:
                

            	 
	 	
            	
              Name:

            	
              Gary
                Guseinov

            
	 	
               

            	
              Title:

            	
              Chief
                Executive Officer

            

    

     

    [SIGNATURES
      CONTINUE ON NEXT PAGE]

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    [PURCHASER
      SIGNATURE PAGE TO CYBERDEFENDER CONSENT AND WAIVER]

    

    
      	
              Purchasers:

            	
              Signature

            
	
              Bushido
                Capital Master Fund, LP

               

              By:
                Louis Rabman

              Its:
                President

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

               

              By:
                Christopher Rossman

              Its:
                Attorney In Fact

            	 
	
              Camofi
                Master LDC

               

              By:
                Jeffrey M. Haas

              Its:
                Authorized Signatory

            	 
	
              Richardson
                & Patel, LLP

               

              By:
                Kevin Friedmann

              Its:
                Partner

            	 
	
              Robert
                Goggin

               

            	 

    

     

    
      
         

      

      
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    EXHIBIT
      A

    

    Term
      Sheet

     

     

    
      
         

      

      
        8DESCRIPTION
        OF ADVANCES MADE BY 

      CYBERDEFENDER
        CORPORATION TO GARY GUSEINOV

      

      In
        2005
        and 2006 CyberDefender Corporation (the “Company”) made a series of advances to
        Mr. Gary Guseinov for personal expenses which advances totaled $146,170 and
        $89,059 respectively. These were
        non-business related expenses charged to the Company’s credit card. There was no
        formal written agreement between Mr. Guseinov and the Company relating to
        repayment of these advances and the advances did not accrue interest.
As
        of
        September 30, 2006, all advances were either repaid or reclassified as salary.
        Since October 1, 2006, no further advances have been made to Mr.
        Guseinov.

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