AMENDMENT NO. 1
TO
AGREEMENT
This Amendment No. 1 to Agreement is entered into as of the 24th day of
May, 2005, and amends that certain agreement (the "Agreement") between Cyber
Defense Systems, Inc., a Florida corporation ("Cyber"); Techsphere Systems
International, LLC, a Georgia LLC (referred to herein as "TSI"); Xxxxxxx X.
Xxxxxxxx, Xxxxx Xxxxx, Cherokee Raiders, L.P. ("Cherokee Raiders") and Proxity,
Inc., being Persons owning a majority of the issued and outstanding voting
shares of capital stock of Cyber (the "Existing Cyber Controlling
Shareholders"); and Xxxx Xxxxxx, Xxxxx Xxxxxx, Xx Xxxxxxx, Xxxxx Xxxxxxx and
Xxxx Xxxxxxxxx, being Persons owning a majority of the issued and outstanding
voting equity interests in TSI (the "Existing Controlling TSI Equity Owners").
In consideration of the mutual covenants contained herein, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree to replace Section 1 of the Agreement with the
following:
"1. Loans.
(a) Cyber agrees to loan TSI the sum of $1 million for the purpose of
(i) allowing TSI to pay $750,000 of its remaining $1 million on the
license fee owed to 21st Century Airships, Inc. ("C21") no later
than May 25th, pursuant to the License Agreement dated January 16,
2004 (the "C21 License Agreement"), assuming C21 acknowledges that
such payment shall cure any existing default (the "C21 Payment"),
and (ii) providing $250,000 to TSI for working capital and to pay
outstanding legal and accounting fees. The loan from Cyber to TSI
shall be represented by a promissory note substantially in the form
set forth as Exhibit B-1, in the principal amount of $1 million (the
"TSI Note"). The TSI Note shall bear interest at a variable rate
equal to the "Prime Rate" regularly published in The Wall Street
Journal, plus 1.5%, and shall mature on May 24, 2006.
(b) In addition, Cyber agrees to issue C21 a promissory note in the
amount of $250,000 as payment in full of the balance of the license
fee owed by TSI to C21. Such note shall mature on August 24, 2005,
and shall bear simple interest at the rate of 12% per annum. As
consideration for Cyber's issuance of such note, TSI shall issue a
promissory note to Cyber in substantially the form of Exhibit B-2
(the "C21 Note"). The C21 Note shall be in the principal amount of
$250,000, shall be payable in full on May 24, 2006, and shall bear
simple interest at the rate of 12% per annum.
(c) No later than July 1, 2005, in order for TSI to avoid litigation,
Cyber shall use its best efforts to renegotiate certain other
obligations of TSI (XxXxxxx/Xxxxxx/Xxxxxxxx), copies of which are
attached to this Agreement as Exhibit A (collectively, the "Other
Creditors"). In the event Cyber issues any stock, notes or other
property to any of the Other Creditors, or provides any funds to
TSI, for the purpose of effecting any such renegotiation, the
indebtedness owed by TSI to Cyber as result of such action by Cyber
shall be evidenced by one or more promissory notes issued by TSI to
Cyber (collectively, the "Other Creditor Notes"). The terms of each
Other Creditor Note shall be mutually acceptable to Cyber and TSI.
(d) The TSI Note, the C21 Note and the Other Creditor Notes shall be
secured by a first lien in all of TSI's assets; provided, however,
at the effective time of the Merger (as hereafter defined) such
security interest shall be released by Cyber. TSI hereby grants
Cyber a first lien in all of its assets pursuant to the Security
Agreement attached as Exhibit C and agrees to execute such other
documents that Cyber may be necessary to allow Cyber to perfect its
security interest is such assets.
(e) TSI and Cyber shall have the right to amend, replace or cancel the
TSI Note, the C21 Note, the Other Creditor Notes and the Security
Agreement in any manner they desire without the consent of the other
parties to this Agreement."
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1
to Agreement as of the date first above written.
"Cyber"
Cyber Defense Systems, Inc.
By:
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Xxxxxxx X. Xxxxxxxx, CEO
"TSI"
` Techsphere Systems International, LLC
By:
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Xxxx Xxxxxx, President
"Existing Cyber Controlling Shareholders"
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Xxxxxxx X. Xxxxxxxx
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Xxxxx Xxxxx
Cherokee Raiders, L.P.
By:
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Title:
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"Existing Controlling TSI Equity Owners"
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Xxxx Xxxxxx
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Xxxxx Xxxxxx
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Xx Xxxxxxx
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Xxxxx Xxxxxxx
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Xxxx Xxxxxxxxx
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