Exhibit 10.3
RESTATED PROMISSORY NOTE
$1,314,367 Hillside, New Jersey
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As of December 31, 2001
FOR VALUE RECEIVED, MARKLAND TECHNOLOGIES, INC., a Florida corporation
(the "Borrower"), with a principal place of business at 1413 Chestnut Avenue,
Hillside, NJ 07205, hereby promises to pay to the order of JAMES LLC, a Cayman
Islands limited liability company (the "Lender") c/o Corporate Center, West Bay
Road, Grand Cayman, the principal sum of One Million Three Hundred Fourteen
Thousand Three Hundred Sixty Seven Dollars (US $1,314,367) payable in cash on
December 31, 2002 (the "Maturity Date"). The entire principal amount together
with interest at the rate of eight (8%) percent per annum, shall be paid on the
Maturity Date.
This Promissory Note is a restatement of the Three Million Five Hundred
Thousand Dollar ($3,500,000) Restated Promissory Note executed between the
parties in October 2000 and takes into account principal and interest converted
by Lender into Common Stock of Borrower since that date.
Subject to the availability of authorized shares of Common Stock,
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the Holder of this Note is entitled, at its option, to convert all or a portion
of this Debenture into shares of Common Stock of the Company, ("Common Stock")
of the Company at any time until the Maturity Date, at a conversion price for
each share of Common Stock (the "Conversion Rate") equal the Current Market
Price (as defined below):
(i) "Market Price of the Common Stock" means (x) the closing
bid price of the Common Stock for the period indicated in the relevant
provision, as reported by Bloomberg, LP or, if not so reported, as reported on
the over-the-counter market or (y) if the Common Stock is listed on a stock
exchange, the closing price on such exchange, as reported in The Wall Street
Journal.
(ii) "Current Market Price" means 80% of the average Market
Price of the Common Stock for the five (5) trading days immediately before the
relevant Conversion Date.
All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest or otherwise, shall be made
without set off or counterclaim and shall be made prior on the Maturity Date
thereof to the Lender at the address set forth above, or such other place as
Lender may from time to time designate in writing. If any payment or action to
be made or taken hereunder shall be stated to be or become due on a day which is
not a Business Day, such payment or action shall be made or taken on the next
following Business Day and such extension of time shall be included in computing
interest or fees, if any, in connection with such payment or action.
Any failure to repay the principal or interest due hereunder upon the
Maturity Date or any failure to adhere to the terms of this Note, or an Event of
Default under any other agreement or obligation between the Borrower and Lender,
shall be considered an Event of Default. Upon the occurrence of an Event of
Default the entire amount of the indebtedness evidenced by this Note hereby
shall be immediately due and payable. Upon the acceleration of the obligations
evidenced by this Note and failure by the Borrower to pay amounts then due
hereunder, Lender may proceed to protect, exercise and enforce all of its rights
and remedies under this Note and applicable law. The remedies provided in this
Note are cumulative and concurrent, may be pursued in any order, separately,
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successively or together, may be exercised as often as occasion therefor may
arise, and shall be in addition to, and not in substitution for, the rights and
remedies which would otherwise be vested in Lender for the recovery of damages,
or otherwise, in the event of a breach of any of the undertakings of the
Borrower hereunder. This Agreement may not be modified, altered or amended,
except by an agreement in writing signed by the Borrower and the Lender. The
Lender may not sell, assign or transfer this Note or any portion hereof.
This Note shall bind the Borrower and its successors and assigns, and
the benefits hereof shall inure to the benefit of the Lender and its successors
and assigns. All references herein to the "Borrower" and the "Lender" shall be
deemed to apply to the Borrower and the Lender, respectively, and their
respective successors and assigns.
Borrower may not prepay the loan evidenced by this Note, without the
consent of the Lender.
The Lender may not convert this Note or receive shares of Common Stock
as payment of interest hereunder to the extent such conversion or receipt of
such interest payment would result in the Lender, together with any affiliate
thereof, beneficially owning (as determined in accordance with Section 13(d) of
the Exchange Act and the rules promulgated thereunder) in excess of 9.999% of
the then issued and outstanding shares of Common Stock, including shares
issuable upon conversion of, and payment of interest on, the Notes held by such
Lender after application of this Section. Since the Lender will not be obligated
to report to the Company the number of shares of Common Stock it may hold at the
time of a conversion hereunder, unless the conversion at issue would result in
the issuance of shares of Common Stock in excess of 9.999% of the then
outstanding shares of Common Stock without regard to any other shares which may
be beneficially owned by the Lender or an affiliate thereof, the Lender shall
have the authority and obligation to determine whether the restriction contained
in this Section will limit any particular conversion hereunder and to the extent
that the Lender determines that the limitation contained in this Section
applies, the determination of which portion of the principal amount of Notes are
convertible shall be the responsibility and obligation of the Lender. If the
Lender has delivered a Conversion Notice for a principal amount of Notes that
would result in the issuance of in excess of the permitted amount hereunder,
without regard to any other shares that the Lender or its affiliates may
beneficially own, the Company shall notify the Lender of this fact and shall
honor the conversion for the maximum principal amount permitted to be converted
on such Conversion Date and, at the option of the Lender, either retain any
principal amount tendered for conversion in excess of the permitted amount
hereunder for future conversions or return such excess principal amount to the
Lender. The provisions of this Section may be waived by a Lender (but only as to
itself and not to any other Holder) upon not less than 61 days prior notice to
the Company.
This Note shall for all purposes be governed by and construed and
enforced in accordance with the internal laws of the State of New York without
giving effect to its conflicts of law principles.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound
hereby, has executed this Note as of the date first written above with the
intention that this Note shall constitute a sealed instrument.
MARKLAND TECHNOLOGIES, INC.
By: /S/ Larry Shatsoff
Name: Larry Shatsoff
Title: President
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