AGREEMENT
This Agreement entered into as of the 24th day of May, 2005, by and among
21st Century Airships, Inc., a Canadian corporation ("C21"), Techsphere Systems
International, LLC, a Georgia limited liability company ("TSI"), and Cyber
Defense Systems, Inc., a Florida corporation ("Cyber").
In consideration of the mutual covenants contained herein, and other good
and valuable consideration the receipt of which is hereby acknowledged, the
parties agree as follows:
1. C21 and TSI are parties to an Agreement to License dated January 16,
2004 (the "License").
2. Pursuant to Section 3A of the License, TSI is obligated to pay a total
License Fee of $3 million to C21. A total of $ 2 million of the License Fee has
been paid by TSI to C21 to date. C21 hereby agrees to allow TSI to pay the
balance of the License fee by payment of $750,000 in cash from TSI upon the
execution and delivery of this Agreement and the balance by delivery of a
promissory note from Cyber in the principal amount of $250,000, payable in full
on August 24, 2005, together with accrued simple interest at the rate of 12% per
annum.
3. C21 further agrees that upon its receipt of such $750,000 in cash from
TSI and the promissory note from Cyber in the amount of $250,000, (i) the
License Fee will have been paid in full, and (ii) no other amounts will be
currently due and owing by TSI under Section 3A of the License. For greater
certainty, the parties acknowledge that the foregoing shall not release TSI from
its obligations in the future to make Royalty Payments pursuant to Section 3B of
the License if and when applicable.
4. Each of TSI and C21 represents and warrants to and covenants with Cyber
that
(a) C21 acknowledges that TSI is currently constructing an airship
for Sierra Nevada Corporation pursuant to a MAA Subcontract (the "Initial SNC
Airship"),which is an "at-cost/at-risk" contract with the understanding by TSI
that an agency of the United States government ("Agency") is a potential
purchaser. Under the terms of the License, TSI would owe to C21 proportionate
royalty payments of funds received to construct the Initial SNC Airship pursuant
to Section 3B of the License; however, C21 has agreed to allow TSI to delay
payment of the royalties in respect of the Initial SNC Airship until SNC is
under contract with the Agency (or such other purchaser SNC can secure to
purchase the Initial SNC Airship) and makes payment to TSI of the funds it
receives over and above the actual construction cost incurred in respect of the
Initial SNC Airship.
(b) As a result of the execution and delivery of this Agreement and
the amendments to the License effected hereby, neither TSI nor C21 is in breach
of any of its representations, warranties or covenants under the License, and
the License is in full force and effect as of the date hereof ;
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(c) Upon the occurrence of any future act or omission by TSI that
could result in the termination under Section 5 B of the License, C21 shall
provide Cyber with written notice of the event and an opportunity to cure the
default within 30 days thereof; and
(d) C21 and TSI hereby amend the License to the extent necessary to
reflect their agreements as set forth in this Agreement.
5. C21 is aware that in consideration for Cyber's agreement to loan TSI
the funds necessary to pay the remaining installment of the License Fee to C21,
TSI and its controlling equity owners have granted Cyber an option which, if
exercised by Cyber, will result in (i) the merger of a wholly-owned subsidiary
of Cyber into TSI (with TSI being the surviving corporation), and (ii) the
existing equity owners of TSI becoming holders of approximately 45% of the
issued and outstanding voting capital stock of Cyber.
(b) In order to effect such merger, it will be necessary for TSI to
convert from a limited liability company to a corporation, either by way of (i)
an assignment by TSI of all of its assets (including the License) to a new
corporation wholly-owned by the existing TSI equity owners, or (ii) the
assignment by the existing TSI equity owners of all of their interests in TSI to
a new corporation wholly-owned by the existing TSI equity owners, or (iii)
merger of TSI into a limited liability company organized under the laws of a
state that allows conversion of limited liability companies into corporations,
or (iv) any other method that will result in the License being owned by a
corporation that is wholly-owned by the existing equity owners of TSI.
(c) C21 consents to the foregoing and agrees that neither the
conversion of TSI to a corporation nor the merger of Cyber's wholly-owned
subsidiary into TSI, with TSI being the surviving corporation, will result in a
breach of the License or otherwise adversely affect the rights and obligations
of TSI and C21 under the License.
6. Cyber shall be entitled to rely upon the agreements, acknowledgments,
and representations of C21 in this Agreement.
7. The individual signing for each party has full power and authority to
sign this Agreement, which shall be binding on the party.
8. This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the same
instrument. Any signature delivered by facsimile transmission shall be deemed a
valid and binding signature for all purposes hereof.
(signatures follow)
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In Witness Whereof, the parties have executed this Agreement as of the
date first written above.
21st Century Airships, Inc.
By:
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Hokan Colting, CEO
Techsphere Systems International, LLC
By:
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Xxxx Xxxxxx, President
Cyber Defense Systems, Inc.
By:
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Xxxxxxx X. Xxxxxxxx, CEO
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