PROMISSORY NOTE
Tulsa, Oklahoma
$1,000,000.00
May 20, 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.
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, as
described in the Agreement of even date, 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;
(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;
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(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) [omitted]
(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 previously acquired, 50% or more of
the outstanding shares of voting stock of Borrower.
1.2 "Maturity
Date" shall mean May 20, 2006.
1.3 "Person" means a natural person, or governmental agency or
other unit, or an enti
