PROMISSORY NOTE
Tulsa, Oklahoma
$1,000,000.00
May 24, 2005
FOR VALUE
RECEIVED, Techsphere Systems International, LLC, a Georgia
limited liability company ("Borrower"),
promises to pay to the order of Cyber
Defense Systems, Inc., a Florida
corporation, or order ("Lender"), in lawful
money of the United States of America, in
the manner and at the times provided
herein, at Lender's office at 10901
Roosevelt Blvd, Suite 100D, St. Petersburg,
Florida 33716, or such other place as may
be designated in writing by notice to
Borrower from Lender or any subsequent
holder of this Note, by 5 pm Central
Standard Time on the Maturity Date the
principal sum of One Million and No/100
Dollars ($1,000,000.00), plus such
additional sum as may be provided in Section
1 of that certain Agreement between
Borrower and Lender of even date as
evidenced by an amendment attached hereto,
with interest on the unpaid principal
balance from the date of this note (the
"Note") until paid, at a rate equal to
the sum of the Prime Rate plus one and
one-half percent (1.5%) per annum;
provided, however, upon the occurrence of
an Event of Default, then, at the
option of Lender, and without notice to
Borrower, interest shall, commencing as
of the date of such default, be computed
and payable on the then unpaid balance
of the principal and accrued interest at a
rate equal to the sum of the Prime
Rate plus ten percent (10%) per annum,
until paid in full. This Note supersedes
and replaces that certain promissory note
in the amount of $1,000,000.00, dated
May 20, 2004, made by Borrower in favor of
Lender.
1.
Definitions. In addition to the terms defined elsewhere in this
Note,
for purposes of this Note, the following
terms shall have the meanings ascribed
to them:
1.1 "Event of Default" shall mean any of the following events:
(a) Borrower shall fail to make a payment due on the Note and
such
nonpayment shall continue for a period of five (5) days;
(b) Borrower shall: (i) apply for or consent to the
appointment of a receiver, trustee or liquidator of itself, or of
all or a
substantial part of its assets; (ii) except for the notes due
Hadden/McClure/Fontaine and the remainder of the License Fee due
21st
Century
Airships, Inc. as described in the Agreement between Borrower
and
Lender
dated May 20, 2005 (the "Agreement"), admit in writing its
inability
to pay its debts as they fall due; (iii) make a general
assignment
for the benefit of creditors; (iv) be adjudicated a bankrupt or
insolvent;
or (v) file a voluntary petition in bankruptcy or file a
petition
or answer seeking reorganization or an arrangement with
creditors
or seeking
to take advantage of any insolvency law, or admit (by answer,
default or
otherwise) the material allegations of a petition filed against
it in any
bankruptcy, reorganization, arrangement or insolvency
proceeding, or take or omit to take any action for the purpose or
with the
result of
effecting any of the foregoing;
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(c) A garnishment, attachment, levy or execution shall be
issued
against any of the material property or assets of Borrower, and
60
days shall
elapse without the proceeding or action being dismissed or
nullified;
(d) An involuntary proceeding shall be filed against the
Borrower
seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law
or
regulation, and 60 days after such filing shall elapse without
the
proceeding
being dismissed;
(e) An order by a court shall be entered appointing a
receiver,
custodian or trustee, other than as provided in Section 1.1(b),
for all or
a substantial part of the Borrower's property, without the
Borrower's
consent or acquiescence, and 60 days after such entry shall
elapse
without the appointment being vacated or stayed, or 60 days
after
the
expiration of any stay shall elapse without the appointment
being
vacated;
(f) Any representation or warranty made by Borrower in the
Security
Agreement shall prove to be untrue or inaccurate in any
material
respect as
of the date on which such representation or warranty was or is
made;
(g) Borrower shall fail to perform, observe or comply with any
covenant
or agreement contained in the Security Agreement (other than
failure to
make any payment due under the Note), and such failure is not
remedied
or waived within 20 days after it receives notice of such
failure
commenced;
(h) The Borrower shall hereafter default in any payment due
under the
Agreement to License between Borrower and 21st Century
Airships,
Inc.,
dated January 16, 2004;
(i) The Borrower shall cease doing business for fifteen (15)
consecutive days, dissolve or file a Certificate of Dissolution
with the
Secretary
of State; or
(j) Other than the Merger into Lender described in the
Agreement of even
date, there shall be any consolidation, merger,
conveyance
or transfer that results, directly or indirectly, in a change
of control
of Borrower. Change of control with respect to Borrower means
the
acquisition by any Person, or two or more Persons acting in
concert,
of
beneficial ownership (within the meaning of Rule 13d-3 of the SEC
under
the
Securities Exchange Act of 1934) of stock representing, together
with
shares
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