AGREEMENT
I. GENERAL
o The parties to this Agreement are Cyber Defense Systems, Inc.
("Cyber"), Sierra Nevada Corporation ("SNC") and Techsphere Systems
International, Inc. ("TSI") (collectively the "Three Parties"). It
is the intention of the Three Parties to work together as a team to
obtain contracts for TSI's Airships.
o The parties desire to do business together and clarify the
interaction of the Prior Agreements between and among the parties.
II. CONFIRMATION OF PRIOR AGREEMENTS
o The Three Parties agree that the Prior Agreements shall remain in
full force and effect except as expressly clarified or modified
herein.
o The Three Parties are aware of and attach copies of the following
agreements between and among them: (1) Exclusive Agreement to
Provide Integration Services (the "Exclusive Agreement") dated June
30, 2004; (2) Memorandum of Agreement (the "MOA") dated November 4,
2004; and (3) Subcontract Agreement (the "IDIQ") dated May 11, 2005
(collectively, the "Prior Agreements").
o In the event of an inconsistency between this Agreement and any of
the remaining terms of the Prior Agreements, this Agreement shall
control.
III. TERMS OF AGREEMENT
o SNC shall serve as the prime contractor to Government End-Users for
all TSI Airships; provided however, if a third party desires to
purchase or lease a TSI Airship for a Government End-User, that
third party may serve as prime contractor to the U.S. Government as
long as SNC serves as the first tier subcontractor(1) under the
third party prime contractor for design, construction, purchase,
integration, and delivery of the Airship from TSI and further
provided that under either situation TSI serves as the second tier
subcontractor in accordance with the Exclusive Agreement and IDIQ
for the design and construction of the Airship and its component
parts, not including the Integrated Payload as defined in the
Exclusive Agreement. This provision should not be construed to alter
the requirements of the MOA, section 2.2 of the Exclusive Agreement
or the IDIQ, such as: (1) no TSI Airships may be sold or leased to a
Government End-User without an integrated payload; (2) SNC has the
exclusive right to contract with any Government End-User to provide
the integration of the Airships; (3) TSI will continue to be the
manufacturer of the Airships to be purchased or leased as described
in the IDIQ, with appropriate protections for each party's
intellectual property rights as defined in the IDIQ. Neither of the
Three Parties' rights shall be affected by a merger, sale or other
change in control at either of the other parties.
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(1) First tier subcontractor means a company awarded a subcontract directly by
a prime contractor.
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o Unless otherwise agreed to in a purchase order, all funds that flow
through SNC in payment of the Airship or the component parts thereof
will be paid according to the terms of the IDIQ.
o As the prime contractor (or first tier subcontractor), SNC has no
intent to manufacture any type of Airship. SNC's future purchases of
Airships from TSI shall be governed by the terms of the IDIQ;
provided however, that this provision shall not be construed to
limit the parties' rights and obligations under the Prior Agreements
between the Three Parties for the full term of the 21st Century
License Agreement dated January 16, 2004.
o Pursuant to section 1.) b. of the MOA and subject to the remaining
terms of the MOA, SNC will give the first right of refusal to TSI
(or its affiliated companies) to lease or sell other non-TSI
manufactured airships to SNC as long as the leasing or procurement
offer is cost competitive and meets customer requirements.
o As the prime contractor (or first tier subcontractor), after
consultation with the TSI and Cyber contact person, SNC shall submit
the Three Parties' Airship proposals to Government End-Users and to
third parties serving as prime contractors to Government End-Users
as set forth above. This provision shall not be construed to limit
SNC's right of first refusal to integrate Payloads on Airships
purchased or leased to non-Government End-Users for which TSI will
serve as the prime contractor, so long as SNC is cost competitive
and meets customer requirements.
o The Three Parties shall market the Airships as follows:
o Within two (2) business days after any of the Three Parties learns
of a viable marketing opportunity for Airships and prior to any
marketing presentation (whether written or oral), the party that
learns of the opportunity shall provide written notice of the
opportunity to the other parties for the purpose of the Three
Parties developing an appropriate plan of action.
o Notice under this subsection shall be delivered to the designated
contact person for each Party as follows:
o For SNC: Xxxx Xxxxxxxx
o For Cyber/TSI: Xxxxx Xxxxxxx
o It is understood that SNC, as the prime contractor, should be the
party to schedule a meeting with, respond to an RFP from, or
otherwise send materials to Government End-Users; however if another
party has special contacts within a third party prime contractor
which will be issuing an RFP which will enhance the contract being
awarded for a TSI Airship, then the Three Parties will jointly
determine the best course of action. All Government End-User Airship
marketing activities shall be consistent with SNC's right under the
MOA to "coordinate all marketing and sales activities to the US
Government as the lead responsible party." This does not preclude
Cyber/TSI from marketing or conducting business development for its
airships, as long as it is consistent with SNC's right to
"coordinate all marketing and sales activities to the US Government
as the lead responsible party."
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o SNC claims that it is owed the sum of $780,000.00 in overdue
invoices by Cyber. On the condition that all of the remaining terms
of this payment proposal are acceptable: (1) SNC will agree to
reduce its claim for $780,000 by $280,000 (an amount incurred for
the unmanned portion of the NAVAIR demonstration and other costs);
(2) Cyber will deliver the four MAA SA-90 airship Pods to TSI free
and clear of any liens or other encumbrance, within ninety (90) days
of final signature of this Agreement; and (3) if a demonstration
contract is awarded and TSI delivers to SNC the completed MAA-90
airship, free and clear of any liens or other encumbrances, within
one hundred twenty (120) days from the date of award of the
demonstration contract, SNC will set-off the $500,000 payment due
SNC from Cyber as described in the Delivery Order attached hereto
and incorporated herein as Exhibit "A." To the extent that a
demonstration contract is not awarded and TSI does not deliver to
SNC the completed airship free and clear of any liens or other
encumbrances within one hundred twenty (120) days from the date of
award of the demonstration contract, the promissory note executed by
Cyber attached hereto as Exhibit "B" shall become due and payable in
full in accordance with its terms.
o SNC recognizes that TSI may need to secure financing from a third
party in order to complete and deliver the MAA SA-90 set forth in
the Delivery Order. As such, TSI may ask that any payments due from
SNC to TSI be paid directly to that third party creditor. If
requested by TSI, SNC will execute proper documentation to
accomplish such direct payment to TSI's creditor on terms acceptable
to SNC. Nothing in this provision shall be construed to waive or
limit SNC's rights under the Delivery Order.
o Pursuant to a Marketing and Sales Agreement between TSI and Cyber
dated May 1, 2004, Cyber may be entitled to certain sales
commissions as set forth therein. For each commission claimed for
sales to Government End-Users, Cyber must warrant that it qualifies
as a "bona fide agency(2)" entitled to a "contingent fee(3)"
commission under 48 C.F.R. 3.401.
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(2) Bona fide agency means an established commercial or selling agency,
maintained by a contractor for the purpose of securing business, that
neither exerts nor proposes to exert improper influence to solicit or
obtain Government contracts nor holds itself out as being able to obtain
any Government contract or contracts through improper influence. Improper
influence means any influence that induces or tends to induce a Government
employee or officer to give consideration or to act regarding a Government
contract on any basis other than the merits of the matter.)
(3) Contingent fee means any commission, percentage, brokerage, or other fee
that is contingent upon the success that a person or concern has in
securing a Government contract.
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o The Three Parties recognize and acknowledge that the other parties
may have certain intellectual property rights in the materials and
methods used for construction, integration, and delivery of
Airships. Therefore, the Three Parties agree to cooperate in good
faith such that the Airships may be constructed, integrated, and
delivered with all parties IP rights preserved. Further, it is
understood by the Three Parties that the exchange of drawing
packages does not constitute the purchase of intellectual property,
unless otherwise agreed in writing. Finally, the Three Parties agree
to finalize a list of the Three Parties respective IP rights within
thirty (30) days of signing this Agreement. Upon completion, such
list shall be incorporated as Exhibit C to this Agreement.
o The Three Parties shall sign a new agreed upon mutual non-disclosure
agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of April 25,
2006.
SIERRA NEVADA CORPORATION
By:
-------------------------------------
NAME: Xxxx Xxxxxxx
TITLE: Corporate Director, Contracts
DATE: __________________
TECHSPHERE SYSTEMS INTERNATIONAL
By:
-------------------------------------
NAME: Xxxxx Xxxxxxx
TITLE:
DATE: __________________
CYBER DEFENSE SYSTEMS, INC.
By:
-------------------------------------
NAME:
TITLE:
DATE: __________________
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Exhibit B
To
Agreement Dated April 25, 2006
PROMISSORY NOTE
$500,000 Xxxxxx, Xxxxxx 00000
April 25, 2006
FOR VALUE RECEIVED, Cyber Defense Systems, Inc. ("Maker") hereby promises to pay
to the order of Sierra Nevada Corporation ("Holder"), the principal sum of five
hundred thousand Dollars ($500,000) together with accrued interest at the rate
of eight and one half percent (8.5%) per annum, compounded annually. Interest
begins to accrue on the 25th day of August, 2006.
1. Payments of Principal and Interest. All payments of principal and interest
under this Note shall be made in lawful money of the United States of America in
immediately available funds at Sierra Nevada Corporation, 000 Xxxxxxx Xxxxxx,
Xxxxxx, XX 00000. All principal and interest under this Note shall be due and
payable in full by the 25th day of August, 2006 or ten (10) business days after
written demand therefore from Holder to Maker (the "Maturity Date"). This Note
may be prepaid in whole or in part at any time and from time to time without
premium or penalty. If principal and interest is not paid in full on the 25th
day of August, 2006, a 24% penalty per annum on the unpaid principal and
interest balance will be due until such time as the principal, accrued interest
and penalties are paid in full. Provided that this Promissory Note shall be
marked "Paid in Full" and deemed satisfied and the security interest referenced
in Section 6 of this Promissory Note shall be cancelled, when Cyber fulfills the
terms and conditions of the paragraph on page 3 of the Agreement and the 001
paragraph in Exhibit A of the Agreement dated April 25, 2006 which reference
this Promissory Note, or otherwise pays off this Promissory Note in accordance
with its terms.
2. Waiver of Notice. Maker hereby waives presentment for payment, demand, notice
of dishonor, protest, notice of protest and all other demands and notices in
connection with the delivery, performance and enforcement of this Note or any
extension or renewal hereof and agrees that it will not be necessary for Holder
to first institute suit in order to enforce payment of this Note.
3. Events of Default. Each of the following shall constitute an "Event of
Default" hereunder:
(a) Maker's failure to pay when due any amount under this Note; and
(b) Maker's commencement of any voluntary proceeding under any bankruptcy,
insolvency or readjustment of debt law or statute, of any jurisdiction, whether
now or subsequently in effect; or Maker is adjudicated insolvent or bankrupt by
a court of competent jurisdiction; or Maker petitions or applies for, acquiesces
in, or consents to, the appointment of any receiver or trustee of Maker or for
all or substantially all of his property or assets; or Maker makes an assignment
for the benefit of his creditors; or Maker admits in writing his inability to
pay his debts as they mature.
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4. Acceleration on Default. Upon the occurrence of an Event of Default the
entire unpaid principal balance and any other amounts owed by Maker to Holder
under this Note shall become immediately due and payable.
5. Remedies. Upon the occurrence of an Event of Default, Holder may avail itself
of any legal or equitable rights which Holder may have at law or in equity or
under this Note, including, without limitation, the right of offset against any
amounts Holder owes to Maker. Failure to exercise any right or remedy upon the
occurrence of an Event of Default shall not constitute a waiver of the right to
exercise the same. The acceptance by Holder of any payment hereunder that is
less than payment in full of all amounts due and payable at the time of such
payment shall not constitute a waiver of the right to exercise any of the rights
or remedies set forth herein. If this Note is referred to an attorney for
collection after the occurrence and during the continuance of an Event of
Default, Maker shall pay all of Holder's reasonable costs, fees (including
reasonable attorney's fees) and expenses in connection with such collection
efforts. The principal amount of this Note shall continue to be effective or be
reinstated, as the case may be, if at any time any amount received by Holder in
respect of this Note is rescinded or must otherwise be restored or returned by
Holder including without limitation upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of Maker or upon the appointment of
any intervenor or conservator of, or trustee or similar official for Maker or
any substantial part of its properties, or otherwise, all as though such
payments had not been made.
6. Security Interest. To secure timely payment and performance of its
obligations under this Note, Maker hereby grants to Holder a first-priority
security interest in Maker's Airship Pods (i.e., CYBER PODS) and all
improvements and additions thereto (the "Collateral"), and Maker hereby
authorizes Holder to file financing statements evidencing such security
interest. The Maker shall execute an agreement giving the Holder a security
interest in the Collateral within 15 days of signing this Note.
7. Governing Law. This Note shall be construed and enforceable in accordance
with, and be governed by the internal laws of, the State of Nevada without
regard to principles of conflict of laws. Maker agrees that the state and
federal courts in Nevada or any other court in which Holder initiates
proceedings have exclusive jurisdiction over all matters arising out of this
Note.
8. Jury Trial. MAKER HEREBY WAIVES THE RIGHT TO TRIAL BY JURY OF ANY MATTERS
ARISING OUT OF THIS NOTE.
9. Benefit and Binding Nature. This Note shall inure to the benefit of Holder
and his successors and assigns and shall be binding upon Maker and his
successors, beneficiaries, heirs, administrators and executors. This Note
constitutes the entire understanding and agreement between the parties with
regard to the matter hereof, and supercedes all prior agreements and
understandings, express or implied, oral or written, relating to the subject
matter hereof.
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10. Confessed Judgment. MAKER HEREBY APPOINTS AND CONSTITUTES ______________ AS
HIS ATTORNEY-IN-FACT AND AUTHORIZES HIM, IN THE EVENT OF A DEFAULT, TO CONFESS
JUDGMENT AGAINST MAKER IN THE CLERK'S OFFICE OF ANY COURT IN THE STATE OF
NEVADA, UPON SUBMISSION TO SUCH COURT OF A WRITTEN VERIFIED STATEMENT FROM THE
HOLDER INDICATING (1) THE AMOUNT UNPAID AND OWING HEREON, TOGETHER WITH
ALLOWABLE COURT COSTS AND ACTUAL ATTORNEYS' FEES, (2) THE FACTS GIVING RISE TO
THE INDEBTEDNESS AND (3) SUCH OTHER INFORMATION REQUIRED BY LAW. SO LONG AS THIS
NOTE SHALL REMAIN UNPAID, THIS POWER OF ATTORNEY IS COUPLED WITH AN INTEREST AND
IRREVOCABLE. ]
[SIGNATURE PAGE FOLLOWS]
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SIGNATURE PAGE TO
PROMISSORY NOTE
IN WITNESS WHEREOF, Maker has duly executed and delivered this Promissory Note
as of the date first set forth above.
MAKER
-----------------------------
[Name]
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