Exhibit 10.16


 


THIS
PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), NOR UNDER ANY STATE SECURITIES LAW AND MAY NOT
BE SOLD, PLEDGED, OFFERED FOR SALE, ASSIGNED OR TRANSFERRED UNLESS (A) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES
ACT, AND ANY APPLICABLE STATE SECURITIES LAW REQUIREMENTS HAVE BEEN MET OR (B) EXEMPTIONS
FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT AND THE
REGISTRATION OR QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS
ARE AVAILABLE.


 


	
   

  	
  $      ,000.00

  
	
   

  	
  Principal Amount of

  
	
   

  	
  Bridge Note

  



 


ICOP DIGITAL, INC.


 


PROMISSORY NOTE


 


,
2005


 


1.                                       Bridge
Note.  FOR VALUE RECEIVED, ICOP
Digital, Inc., a Colorado corporation (the “Borrower”), promises to pay to
the order of                        
(the “Bridge Note Lender”), the principal amount of                   
Thousand Dollars ($    ,000.00).  The unpaid balance of the principal amount
shall accrue interest at the rate of eight (8%) percent per annum based on a 365-day
year.


 


2.                                       Maturity.  Except as otherwise provided herein, the
principal and interest hereunder shall become due and payable in full on the
date six months from the first Closing (as defined herein), except that in the
event of the closing of a Public Offering (as defined herein), the principal amount and
accrued and unpaid interest will become immediately due and payable.  The first Closing of the Bridge
Note(s) Offering will be on the second business day following the
receipt by First National Bank of Olathe, KS, as Escrow Agent of not less than $1,200,000 of the loan principal
from the Bridge Note Lender(s) as a
group (the “Closing”).  The Borrower plans to sells units of its
equity securities for total gross proceeds of an aggregate amount of
approximately Ten Million Dollars ($10,000,000.00) in a secondary offering of
units of Common Stock and Warrants (the “Public
Offering”).


 


3.                                       Prepayment.  Subject to the conversion rights provided for
in paragraph 5, hereof, Borrower may prepay any or all amounts due under this
Bridge Note at any time without penalty in readily available funds.  The prepayment shall not effect the Bridge
Note Lender’s rights to receive the Warrants provided for in paragraph 4
hereof.


 


4.                                       Warrants
Issued Upon Public Offering or Otherwise. 
At Closing each Lender will receive Warrant(s) to purchase a number of
shares of the Borrower’s Common Stock equal to the


 



















quotient of the principal amount of such Lenders’ Bridge Note(s),
divided by the Public Offering Unit
Price and the product of such quotient
shall then be multiplied by 1.5 to yield the number of shares.  The Warrant(s)
will have an exercise price per share equal to 50% of the Public Offering Unit Price.  In the event there is no Public Offering within twelve (12)
months of the first Closing,
the number of shares under the Warrant shall equal the quotient of (a) 0.75
times the principal amount of such
Lenders’ Bridge Note(s), divided by the lesser of $5.00 ( assuming a
1:10 reverse stock split) and the average 4 PM NY Time closing bid price as
reported on the Bloomberg system for the 10 trading days ending on the trading
day immediately preceding the delivery of an exercise notice to the
Company.  The exercise price of the Warrants
shall be the lesser of $5.00 (assuming a 1:10 reverse stock split) and the
average 4 PM NY Time closing bid price as reported on the Bloomberg system for
the 10 trading days ending on the trading day immediately preceding the
delivery of an exercise notice.  The Warrants will be exercisable for five
years from the date of issuance, provided that if the Borrower files a
registration statement for a Public
Offering, then the Warrant(s)
will not be exercisable until the earlier of 90 days after the Public Offering closing and one (1) year
after filing of the Public Offering registration
statement.  Subject to the exercisability
limitations in the foregoing sentence, the Warrant(s) will provide for cashless exercise if, at any time
after one (1) year from the date of issuance of the Bridge Note(s) and Warrant(s), the Borrower does not
have available both an effective registration statement and current prospectus
covering the issuance or resale of the Borrower’s Common Stock issued or
issuable upon exercise of the Warrant(s).  The Warrant(s)
will be non-callable.


 


5.                                       Conversion
Rights                                            In
the event there is no Public Offering of the Borrower’s Common Stock and/or Warrants
within twelve (12) months from the first Closing, the Lender(s) shall have the right to
convert the principal
and unpaid interest of the Bridge Note(s) into shares of Common Stock at
a conversion price of $5.00 per share (assuming a 1:10 reverse stock split).


 


6.                                       SEC
Reporting                  As long as any
of the Bridge Note(s) and/or Warrant(s) are outstanding the Borrower
will maintain the listing of Borrowers Common Stock under Section 12 (g) of
the Securities Exchange Act of 1934, as amended (Exchange Act), and will file
all reports required by the Exchange Act in a timely manner.


 


7.                                       Anti
Dilution Provision.  Except for the
1:10 reverse stock split anticipated herein, should at any time from the date
of Closing until the conversion of the Bridge Notes provided for in paragraph 5
the Borrower issue a stock dividend, combine outstanding shares into a lesser
number of shares (reverse split) or increase the number of outstanding shares
without a receipt of new consideration (forward split) then the number of
shares into which the Bridge Note may be converted and the conversion price
shall be adjusted to reflect such event so that the relative interest of the
Bridge Note Lender shall be fully protected from dilution resulting from such
an event.  Notice of the required
adjustment including the number  of
shares and the new conversion price shall be promptly mailed to each Bridge
Note Lender subsequent to each such adjustment event.


 


8.                                       Default.  In the event of an occurrence of any event of
default specified below, the principal and all accrued interest on this Bridge
Note shall become immediately due and payable


 


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without notice, except as specified below.  The occurrence of any of the following events
shall constitute an event of default under this Bridge Note:


 


(a)                                  The
Borrower fails to make any payment hereunder when due, which failure has not
been cured within fifteen (15) days following such failure.


 


(b)                                 If the
Borrower shall default in the payment or performance of any material
obligation, or any defined event of default, under any contract or instrument
pursuant to which Borrower has incurred any debt or other liability to any
person or entity, including the Bridge Note Lender.


 


(c)                                  If the
Borrower shall file a petition to take advantage of any insolvency act; make an
assignment for the benefit of its creditors; commence a proceeding for the
appointment of a receiver, trustee, liquidator or conservator of itself of a
whole or any substantial part of its property; file a petition or answer
seeking reorganization or arrangement or similar relief under the federal
bankruptcy laws or any other applicable law or statute of the United States of
America or any state.


 


(d)                                 If a
court of competent jurisdiction shall enter an order, judgment or decree
appointing a custodian, receiver, trustee, liquidator or conservator of the
Borrower or of the whole or any substantial part of its properties, or approve
a petition filed against the Borrower seeking reorganization or arrangement or
similar relief under the federal bankruptcy laws or any other applicable law or
statute of the Untied States of America or any state; or if, under the
provisions of any other law for the relief or aid of debtors, a court of
competent jurisdiction shall assume custody or control of the Borrower or of
the whole or any substantial part of its properties; or if there is commenced
against the Borrower any proceeding for any of the foregoing relief and such
proceeding or petition remains undismissed for a period of 30 days; or if the
Borrower by any act indicates its consent to or approval of any such proceeding
or petition.


 


(e)                                  If (i) any judgment
remaining unpaid, unstayed or undismissed for a period of 60 days is rendered
against the Borrower which by itself or together with all other such judgments
rendered against the Borrower remaining unpaid, unstayed or undismissed for a
period of 60 days, is in excess of $500,000, or (ii) there is any
attachment or execution against the Borrower’s properties remaining unstayed or
undismissed for a period of 60 days which by itself or together with all other
attachments and executions against the Borrower’s properties remaining unstayed
or undismissed for a period of 60 days is for an amount in excess of $500,000.


 


9.                                       Security.  Repayment of the Bridge Note shall be secured
by a lien on all tangible and intangible assets of the Borrower as described in
that certain Security Agreement executed contemporaneously herewith.


 


10.                                 Successors and Assigns.  This Bridge Note is transferable and
assignable by the Bridge Note Lender subject to the requirement that any such
assignment or transfer be, in the opinion of the Borrower’s counsel, in full
compliance with applicable federal and state securities laws.  All


 


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covenants, agreements and undertakings in
this Bridge Note by or on behalf of any of the parties shall bind and inure to
the benefit of the respective successors and assigns of the parties whether so
expressed or not.


 


11.                                 Notices.  Any and all notices, requests, consents and
demands required or permitted to be given hereunder shall be in writing and
shall be deemed given and received (i) upon personal delivery, (ii) upon
the first business day following the receipt of confirmation of facsimile
transmission to the telefax number as indicated below, or (iii) upon the
third business day after deposit in the United States mail, by certified or
registered mail, postage prepaid and addressed as follows:


 


To Bridge
Note Lender:


 


 


To the
Borrower:


 


ICOP Digital, Inc.


11011 King
Street, Suite 260


Overland
Park, Kansas 66210


Telefax:  (913) 469-1662


 


Either party may change by notice the address to which notices to that
party are to be addressed.


 


12.                                 Waiver/Amendment.  The Borrower hereby waives presentment for
payment, demand, protest and notice of protest for nonpayment of this Bridge Note
and consents to any extension or postponement of the time of payment or any
other indulgence.  This Bridge Note may
only be amended or modified by written agreement signed by the Borrower and
Bridge Note Lender.


 


13.                                 Expenses.  In the event that Bridge Note Lender brings
legal action against the Borrower, or the Borrower brings legal action against
Bridge Note Lender, to enforce or otherwise determine the meaning or
enforceability of this Bridge Note or any provision hereof, each party shall
bear its own expenses, including attorney fees, directly attributable to such
action.  However, in any action for
breach of this Bridge Note, including nonpayment, the prevailing party in any
such dispute shall be entitled to recover all reasonable costs and attorney
fees incurred in connection with such action.


 


14.                                 Bridge
Note Bridge Note Lender is Not a Shareholder.  No Bridge Note Lender of this Bridge Note,
solely by virtue of the ownership of this Bridge Note, shall be considered a
shareholder of the Borrower for any purpose, nor shall anything in this Bridge
Note be construed to confer on any Bridge Note Lender of this Bridge Note any
rights of a shareholder of the Borrower including, without limitation, any
right to vote, give or withhold consent to any corporate action, receive notice
of meetings of shareholders or receive dividends.


 


15.                                 Registration
Rights.  In the event there is no
Public Offering of the Borrower’s common shares and warrants within 12 months
of the first Closing therefore permitting the right of Bridge


 


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Note Lenders to convert pursuant to paragraph 5 above, the Borrower
agrees to immediately register the resale of the Common Shares of the Borrower
to be received by the Bridge Note Lender upon conversion of all or any portion
of this Bridge Note in a Registration Statement filed with the U.S. Securities
and Exchange Commission.  The Borrower
agrees to pay all expenses of registration and the Bridge Note Lender agrees to
cooperate in all reasonable respects with the Borrower and its counsel as
required to file the Registration Statement registering the resale of the
shares.  The Borrower agrees to use its
reasonable best efforts to have said Registration Statement declared effective
at the earliest practicable date after filing.


 


16.                                 Choice
of Law.  This Bridge Note shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of Colorado.


 


IN WITNESS WHEREOF, this Bridge Note has been executed and delivered on
the date specified on the first page hereof by the duly authorized
representative of the Borrower and the Bridge Note Lender.


 


Borrower:


 


	
   

  	
  ICOP DIGITAL, INC., a Colorado corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  DAVID C.
  OWEN, President & CEO

  



 


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CONVERSION NOTICE


 


To convert this Bridge Note into common stock of the Borrower, check
the box:  o


 


To convert only part of this Bridge Note, state the principal amount to
be converted (must be a minimum of $100,000 or a multiple of $100,000):  $            .


 


If you want the stock certificate made out in another person’s name,
fill in the form below:


 


(Insert assignee’s soc. sec. or tax I.D. no.)


 


 


(Print or type assignee’s name, address and
zip code)


 


 


	
  Your Signature:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
  (Sign exactly as your name appears on the

  Bridge Note)

  
				



 


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