EXHIBIT 10.71
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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. (except for Klass Partners, Ltd., 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"). Klass Partners, Ltd. is not a party hereto.
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
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consist of: (i) CXI's failure to pay, when due, any
installment of principal and accrued interest under the
restated Notes or any other Notes due Klass Partners, Ltd.;
(ii) CXI's 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; (iii) 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
(iv) 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 is about to file with the SEC. 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
within ten days after the filing of its Form 10-K for the year
ended December 31, 2001, and shall cause such registration
statement to be declared effective by the SEC by not later
than May 31, 2001.
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(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;
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provided, that such third party lender shall not be any
affiliate of CXI or its DRM subsidiary.
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) Klass Partners, Ltd. has agreed to extend the maturity date of its Note
until May 1, 2001 pending a negotiation of a further extension of such maturity
date with Klass Partners, Ltd., (ii) 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
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their original effective date according to the terms contained therein and
binding upon the parties thereto and hereto.
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: /s/ XXXXXX X. XXXXXX
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Name: Xxxxxx X. Xxxxxx
Title: President
COMMODORE ENVIRONMENTAL SERVICES, INC.
By: /s/ XXXXX XXXXXX
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Name: Xxxxx Xxxxxx
Title:
DISPUTE RESOLUTION MANAGEMENT, INC.
By: /s/ XXXXXXX X. XXXXXXX
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Name: Xxxxxxx X. Xxxxxxx
Title: President
INVESTORS:
XXXXXXX ASSOCIATES
/s/ XXXXXXX X. XXXXXXXXX
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Xxxxxxx X. Xxxxxxxxx, General Partner
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/s/ XXX XXXX XXXXXXXXX
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Xxx Xxxx Xxxxxxxxx
/s/ XXXXXXX X. XXXXX
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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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Total . . . . $250,000 500,000
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