Exhibit 10.5
PROMISSORY NOTE
Principal Sum: $800,000 Date: October 13, 2003
FOR VALUE RECEIVED, TOTAL IDENTITY CORP., a Florida corporation (the
"Maker") promises to pay to ROBERT DAVID (the "Holder"), at such address as the
Holder may from time to time designate in writing to the Maker, the Principal
Sum of $800,000.00, with interest on the unpaid balance at the rate of 8% per
annum ("Interest"). This is the promissory note referred to in the Stock
Purchase Agreement dated October 13, 2003 by and between the Maker and the
Holder (the "Stock Purchase Agreement"), and this Note shall be subject to all
of the terms and conditions of the Stock Purchase Agreement. This Note is also
secured in accordance with the terms of a Pledge Agreement of even date herewith
by and between the Maker and the Holder. The principal amount of this Note is
subject to offset as provided in Section 2 of the Stock Purchase Agreement.
Principal and Interest shall be paid in ten equal quarterly
installments of principal, with interest on the outstanding amount of the Note
at the rate of 8% per annum. The initial installment shall be due and payable
six months following the date of the closing of the Stock Purchase Agreement.
Prepayment in any amount is allowed at any time, and from time to time, without
penalty.
For purposes of this Note, a default shall include the
following:
1. The Maker fails to make payment within 15 days of its due
date.
2. The Maker becomes insolvent or unable to pay his debts as they
mature or makes an assignment for the benefit of creditors, or
any proceeding is instituted by or against the Maker alleging
that the Maker is insolvent or unable to pay his debts as they
mature, and any such proceeding, if involuntary, is not
dismissed or stayed on appeal or otherwise within 30 days.
3. The entry of any judgment or the levy of any attachment
against the Maker or any property of the Maker, which judgment
or attachment is not paid or released within 30 days.
4. Any transfer by the Maker of any collateral securing this Note
or the transfer by the Maker of all or substantially all of
its assets except to a company wholly-owned by the Maker.
5. The transfer by any guarantor of all or substantially all of
its assets.
6. The making of any assignment for the benefit of creditors by
the Maker or any guarantor.
Time is hereby declared to be of the essence, and if a default occurs
under this Note, then the entire Principal and accrued Interest shall at once
become due and payable at the option of the Holder upon written notice to the
Maker. Failure to exercise this option shall not constitute a waiver of the
right to exercise the same in the event of any subsequent default.
Except as provided in this Note, presentment, protest, notice, notice
of dishonor, demand for payment, notice of protest and notice of non-payment are
hereby waived.
The Maker agrees to pay all of the Holder's expenses of collecting and
enforcing this Note, and any guarantee or collateral securing this Note,
including, without limitation, expenses and reasonable fees of legal counsel,
court costs and the cost of appellate proceedings.
The failure or delay by the Holder of this Note in exercising any of
his rights hereunder in any instance shall not constitute a waiver thereof in
that or any other instance. The Holder of this Note may not waive any of its
rights, except in an instrument in writing signed by the Holder.
This Note may not be amended except in a writing signed by the Maker
and the Holder.
TOTAL IDENTITY CORP., a Florida corporation
By: /S/ RICHARD R. DWYER
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Richard R. Dwyer
President
GUARANTY
Total Identity Systems Corp., a New York corporation, hereby
unconditionally guarantees the obligations of Total Identity Corp., a Florida
corporation, under the foregoing Promissory Note dated October 13, 2003 in the
principal amount of $800,000, issued by Total Identity Corp. in favor of Robert
David.
TOTAL IDENTITY SYSTEMS CORP., a New York corporation
By: /S/ RICHARD R. DWYER
----------------------
Richard R. Dwyer
President