Exhibit 10.77
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MEMORANDUM OF UNDERSTANDING
FOR AMENDMENT OF
$500,000 CXI BRIDGE LOAN DOCUMENTS
1. Transaction: (i) Securities Purchase Agreement by and among
Commodore Environmental Services, Inc., a Delaware corporation ("COES")
Commodore Applied Technologies, Inc., a Delaware corporation ("CXI"), and
Xxxxxxx Associates, Klass Partners, Ltd., Xxx Xxxx Xxxxxxxxx and Xxxxxxx X.
Xxxxx, Esq. (individually an "Investor" and collectively, the "Investors"), (ii)
corresponding 12% Senior Secured Promissory Notes due February 12, 2001 (the
"Notes") in the aggregate principal amount of up to $500,000 issued to the
Investors in the proportion shown on Schedule A annexed hereto, (iii) the
Security Agreement (iv) the Registration Rights Agreement, (v) the "DRM
Undertaking", and all other documents executed and delivered incident thereto,
all dated as of November 13, 2000 (collectively the "Bridge Loan Documents").
2. Amendments: Notwithstanding anything to the contrary in the Bridge
Loan Documents, the Investors, CXI and COES hereby agree to amend the Bridge
Loan Documents as follows:
(a). The Maturity Date (as defined in the Notes) of all Notes will be
extended so that 50% of all of the unpaid principal and accrued
interest on the Notes shall be payable on or before on June 30, 2001
and the balance, or 50% of all unpaid principal and accrued interest on
the Notes, shall be due and payable on or before July 31, 2001. The
Notes shall be subject to mandatory prepayment as set forth in 2(b)
below.
(b). The Notes will be subject to earlier mandatory prepayment or whole
or in part, as the case may be, out of all net proceeds in excess of
$1.0 million which CXI or any subsidiary of CXI shall receive from any
third party in connection with any on or more debt and/or equity cash
financings (exclusive of any funds distributed to CXI from its Dispute
Resolution Management, Inc. ("DRM" subsidiary). Any such mandatory
prepayments shall be applied first to accrued and unpaid interest and
net to principal in the order of first maturing indebtedness. CXI shall
provide the Investors (or its representative, Xxxxxxxxx Traurig, LLP)
with true copies of all letters of intent or related written proposals
acceptable to CXI which are received by CXI in connection with any such
external financings, not later than 10 days from receipt of same;
failure to so provide the Investors with such copies to represent an
event of default under the Notes.
(c) An "event of default" under the Notes (as restated by the terms of
this Memorandum of Understanding ("MOU")) shall consist of: (i) CXI's
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failure to register under the Securities Act of 1933, as amended, for
the benefit of the Investors all shares of CXI common stock and shares
issuable under the CXI warrants described herein, pursuant to an
effective registration statement on Form S-3 or Form S-1 by not later
than May 31, 2001; (ii) the occurrence of an "Event of Default" by CXI
under the August 30, 2000 Amended and Restated Stock Purchase Agreement
among CXI, DRM, Xxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxx (the "DRM
Principals") and the related exercise by the DRM Principals of any of
their rights and remedies to foreclose upon 81% of the shares of
capital stock of DRM under a pledge agreement with CXI dated as of
August 30, 2000; or (iii) the voluntary or involuntary filing of any
proceedings against CXI under Chapter 11 of the Federal Bankruptcy Act
or similar state statutes.
(d) If and for so long as no event of default under the Notes shall
occur, the Investors shall irrevocably and unconditionally waive their
rights to all cash dividends, other distributions or loans from DRM to
CXI (the "DRM Distributions") from November 12, 2000 through and
including July 31, 2001. From and after the earlier to occur of an
event of default the Notes or July 31, 2001, all funding from DRM to
CXI, if any, will first be paid to the Investors or their successors
(to the extent the Notes are still unpaid) as per the terms of the
existing DRM Undertaking letter.
(e). Contemporaneously herewith, CXI shall issue to the Investors, pro
rata, warrants for an additional 1.0 million shares of CXI common stock
in the form as that attached hereto, each such warrant to have an
exercise price equal to the April 5, 2001 closing price for CXI's
common stock (i.e., $0.22 per share). The warrants will contain
cashless exercise features and the shares of CXI common stock issuable
upon exercise of the warrants will be included in S-3 registration
statement that CXI will file with the SEC by May 31, 2002. In all other
respects, the warrants shall be subject to the same registration rights
as are contained in the Registration Rights Agreement.
(f). CXI will file an S-3 registration statement with the SEC by May
31, 2002 and shall cause such registration statement to be declared
effective by the SEC by not later than August 31, 2002.
(g). The Investors shall subordinate their security agreement in their
Collateral (as defined in the Security Agreement) in favor of any
lender to the extent of the first $1.0 million of net proceeds (after
selling commissions but before other customary closing costs) received
by CXI in connection with any indebtedness owed by CXI to such third
party lender; provided, that such third party lender shall not be any
affiliate of CXI or its DRM subsidiary.
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3. Holders Representations. The Investors will, and hereby do,
represent that: (i) they are and since November 13, 2000, have been, the holders
of the Notes, (ii) they have full power and authority to agree to the terms
herein, and to make execute and deliver this Memorandum of Understanding and
(iii) if subsequent definitive agreements are necessary to implement this
Memorandum of Understanding, at the time thereof, they will have full power and
authority to agree to the terms herein, and to make execute and deliver such
definitive agreements.
4. Representations by Corporation Parties. Each corporation party
separately represents to the Investors and to each other corporation party that
(i) it has full power and authority to agree to the terms herein, and to make
execute and deliver this Memorandum of Understanding (ii) this Memorandum of
Understanding has been duly approved and authorized by the board of directors of
each of CXI, Commodore Environmental Services, Inc. and DRM; and (iii) if
subsequent definitive agreements are necessary to implement this Memorandum of
Understanding, at the time thereof, it will have full power and authority to
agree to the terms herein, and to make execute and deliver such definitive
agreements.
5. No default. Each investor hereby acknowledges and agrees that when
each party to this Memorandum of Understanding has executed and delivered this
Memorandum Of Understanding to each other party and when each of the conditions
precedent set forth below have been met, the Notes and all other Bridge Loan
Documents shall be deemed to be in compliance as of the Effective Date hereof.
6. Definitive Agreements. Any party hereto may request the preparation
of and execution and delivery by each party hereto of definitive agreements
which definitive agreements shall incorporate the terms hereof. In the absence
of the making, preparation and delivery of these agreements, this Memorandum of
Understanding is and shall be the definitive agreement of the parties with
respect the amendment of the Bridge Loan Documents.
7. Conditions Precedent. It shall be a condition precedent of the
effectiveness to this Memorandum of Understanding that on or before 1:00 P.M. on
Monday, April 16, 2001 each party hereto shall execute and deliver by facsimile
transmission a copy of this Memorandum of Understanding to each other party
hereto. This MOU may be executed in counterparts, each of which shall constitute
an original.
8. Incorporation by reference. All of the representations and
warranties made by each of the parties to the Security Purchase Agreement are
incorporated herein by reference and are hereby deemed to be made to each other
party as fully as if set forth at length herein. Except as otherwise set forth
herein, the Bridge Loan Documents shall remain in full force and effect as of
their original effective date according to the terms contained therein and
binding upon the parties thereto and hereto.
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9. Counterpart, Delivery and Fax Signatures. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument. The direct or indirect delivery by hand delivery, mail, courier,
facsimile or otherwise, by any party hereto to any other party hereto bearing
the facsimile signature of such party shall be deemed to be execution and
delivery of an original counterpart version of this Memorandum of Understanding
and shall be deemed to be effective and binding upon such person.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Memorandum of Understanding this 16th day of April 2001 and made effective as of
the 5th day of April 2001 (the "Effective Date").
COMMODORE APPLIED TECHNOLOGIES, INC.
By:
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Name: Xxxxxx X. Xxxxxx
Title: President
COMMODORE ENVIRONMENTAL SERVICES, INC.
By:
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Name: Xxxxx Xxxxxx
Title:
DISPUTE RESOLUTION MANAGEMENT, INC.
By:
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Name: Xxxxxxx X. Xxxxxxx
Title: President
INVESTORS:
XXXXXXX ASSOCIATES
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Xxxxxxx X. Xxxxxxxxx, General Partner
KLASS PARTNERS, LTD
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Xxxxx Xxxxxxxxx, President
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Xxx Xxxx Xxxxxxxxx
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Xxxxxxx X. Xxxxx
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Schedule A
INVESTORS
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Number of New Warrants for CXI
Name and Address: Principal Amount Invested: Common Stock:
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Xxxxxxx Associates
000 Xxxxxxx Xxxx $150,000 300,000
Xxxxxx, XX 00000
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Xxx Xxxx Xxxxxxxxx
000 Xxxx 00xx Xxxxxx 75,000 150,000
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
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Xxxxxxx X. Xxxxx
000 Xxxx Xxxxxx, 00xx Floor 25,000 50,000
Xxx Xxxx, XX 00000
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Klass Partners, Ltd.
000 Xxxxxx Xxxxxx $250,000 500,000
Xxxxxxx, Xxxxxxx X0X0X0
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Total $500,000 1,000,000
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