Convertible Variable Promissory Note between Cyber Defense Systems, Inc. and William C. Robinson

Summary

Cyber Defense Systems, Inc. has borrowed $565,187.67 from William C. Robinson under a line of credit, with a maximum limit of $1,000,000. The loan accrues 12% annual interest and must be repaid by December 31, 2007, unless converted into company stock at $0.30 per share by the lender. The note is unsecured, allows for prepayment without penalty, and includes provisions for legal costs, dispute resolution, and governing law in Florida.

EX-10.1 2 v041169_ex10-1.txt Exhibit 10.1 CONVERTIBLE VARIABLE PROMISSORY NOTE UNDER A LINE OF CREDIT NOT TO EXCEED $1,000,000 Line of credit maximum amount: $1,000,000 Advances through March 31, 2006: $565,187.67 Amount of Note: $565,187.67 1. Names Borrower: Cyber Defense Systems, Inc. ("CYDF") 10901 Roosevelt Boulevard Suite 100D St. Petersburg, Florida 33716 Lender: William C. Robinson 2. Promise to Pay For value received, by way of working capital advances through March 31, 2006, Borrower promises to pay Lender $565,187.67 which includes a 10% lending facility fee of $20,465.00; plus interest at the rate of 12% per annum. 3. Method of Payments Borrower will make total payment(s) consisting of principle of $565,187.67 plus interest at the rate of 12% per annum. An option to convert some or all amounts due into CYDF Class A common stock at $0.30 per share is available to the lender at all times that there are amounts outstanding. Such shares will be restricted shares and the respective certificate(s) will bear the required legend(s) pursuant to Federal Securities laws. A form for such conversion(s) is attached hereto. 4. Date of Payments / Maturity Date Borrower will make payment of the outstanding amounts on or before December 31, 2007 net of any amounts earlier converted and / or prepaid. 5. Application of Payments Payments will be applied first to principle owed, at the time of payment and then to interest. 6. Prepayment Borrower may pre-pay all or any part of the principal without penalty. Should Borrower close on any funding of at least $7,000,000.00 gross, then the proceeds in excess of $7,000,000.00 will be used to make prepayments on this Note as well as to all Deferred Salary Noteholders and on the two Frank Lively Working Capital Advances Notes on a pro-rata basis. 7. Security This is an unsecured note. However, there is a Right of Conversion as described in paragraph. 3. 8. Collection Costs If Lender prevails in a lawsuit to collect on this note, Borrower will pay Lender's costs and lawyer's fees in an amount the court finds to be reasonable. 9. Entire Agreement This Variable Convertible Promissory Note is the entire agreement between the parties. It replaces and supercedes any and all oral agreements between the parties, as well as any prior writings as they may apply to these specific accrued / deferred salary notes. 10. Successors and Assigns This agreement binds and benefits the heirs, successors and assigns of the parties. 11. Notices All notices must be in writing. A notice may be delivered to a party at the address that follows a party's signature or to a new address that a party designates in writing. A notice may be delivered: o in person o by certified mail, or o by overnight courier. 12. Governing Law This agreement will be governed by and construed in accordance with the laws of the state of Florida. 13. Waiver If one party waives any term or provision of this agreement at any time, that waiver will be effective only for the specific instance and specific purpose for which the waiver was given. If either party fails to exercise or delays exercising any of its rights or remedies under this agreement, that party retains the right to enforce that term or provision at a later time. 14. Severability If any court determines that any provision of this agreement is invalid or unenforceable, any invalidity or unenforceability will affect only that provision and will not make any other provision of this agreement invalid or unenforceable and such provision shall be modified, amended or limited only to the extent necessary to render it valid and enforceable. 15. Disputes If a dispute arises, the parties will try in good faith to settle it through mediation conducted by a mediator to be mutually selected. The parties will share the costs of the mediator equally. Each party will cooperate fully and fairly with the mediator and will attempt to reach a mutually satisfactory compromise to the dispute. If the dispute is not resolved within 30 days after it is referred to the mediator, it will be arbitrated by an arbitrator to be mutually selected. Judgment on the arbitration award may be entered in any court that has jurisdiction over the matter. Costs of arbitration, including lawyers' fees, will be allocated by the arbitrator. <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<< borrower: cyber defense systems, inc. 10901 roosevelt boulevard - suite 100d st. petersburg, florida 33716 dated: 04/24/2006 ------------------------------------------------------------------------- by: /s/ david m. barnes ------------------------------------------------------------------------- david m. barnes chief financial officer cyber defense systems, inc. lender: dated: 04/24/2006 ------------------------------------------------------------------------- by: /s/ william c. robinson ------------------------------------------------------------------------- william c. robinson