COMMODORE SEPARATION TECHNOLOGIES, INC.
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
_____________, 1997
Commodore Environmental Services, Inc.
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
This letter agreement sets forth the terms and conditions under which
Commodore Separation Technologies, Inc., a Delaware corporation ("CST"), agrees
to provide a $_____________ credit commitment to Commodore Environmental
Services, Inc., a Delaware corporation ("COES").
1. Credit Commitment.
(a) Subject to the terms and conditions hereof and of the Non-
Negotiable Promissory Note, of even date herewith, made by COES in favor of CST,
a copy of which is attached hereto (the "Note"), CST agrees from time to time
during the two-year period commencing on the closing date of the initial public
offering of securities of CST, to make loans (each, a "Loan") to COES up to a
maximum aggregate amount of $_____________, which amount includes any accrued
and unpaid interest on amounts advanced and loaned by CST hereunder. COES shall
use the proceeds of each Loan for its working capital needs. Interest on the
outstanding principal amount of the Note shall be twelve percent (12%) per
annum, as more fully set forth in the Note. Subject to Section 2 below, the
maximum credit commitment may be reduced under certain circumstances. COES's
obligations under the Note shall be secured by a lien and pledge in the
Collateral, as more fully set forth in the Pledge Agreement.
(b) By written request to CST, accompanied by a description of the
proposed use(s) of such loan proceeds, COES may from time to time request that
CST make a Loan in the amount specified therein and CST will make such Loan.
Subject to CST's review and approval of the written request, CST may, in its
discretion, disburse the amount of the Loan requested by wire transfer in
immediately available funds to an account or accounts designated in writing by
COES, or by check if mutually agreed, within three (3) business days following
COES's written request. Each such request for a Loan shall constitute COES's
representation and warranty to CST that no Event of Default (as such term is
defined in the Note) shall have occurred or be continuing at such time, or would
occur after giving effect to any such Loan.
(c) Except as otherwise provided in Section 2 below, COES will pay
the entire principal balance then outstanding of the Note together with accrued
interest, in cash, on the second annual anniversary of the date hereof.
2. Mandatory Payments.
(a) During the term of the Note, COES will pay, in whole or in part,
the principal balance then outstanding of the Note, together with accrued
interest, with the cash proceeds in excess of $______________, from the issuance
of any note, bond, debenture, evidence of indebtedness, share of capital stock
or any other security ("securities"), other than secured financing of assets in
the ordinary course of business, issued by COES after the date hereof (a
"Financing"). The obligation of COES to pay the outstanding balance under the
Note pursuant to the preceding sentence shall be superior and first in priority
to any other use of the proceeds of a Financing, and COES agrees not to enter
into any agreement or instrument during the term of the Note which would modify
or alter the foregoing priority.
(b) In the event no amounts are outstanding under the Note at the
time of a Financing, the maximum credit commitment set forth in Section 1(a)
above will be reduced by the amount of the cash proceeds of any such Financing.
3. Change in Control. A Change in Control (as defined below) during the
term of the Note shall be considered an Event of Default, in which case COES
shall be required, unless waived by CST in whole or in part, to pay the entire
principal balance then outstanding of the Note, together with accrued interest,
on or within ten (10) days following the Change in Control. A "Change in
Control" shall be deemed to have occurred when (a) a third person, including a
"group," as such term is defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, other than CST or its affiliates, becomes (other than as a result
of a purchase from COES) the beneficial owner of shares of COES having 10% or
more of the total number of votes that may be cast for the election of directors
of COES and such beneficial owner continues for five consecutive days, or (b) as
a result of, or in connection with, any cash tender or exchange offer, merger or
other business combination, sale of assets or contested election or any
combination of the foregoing transactions, the persons who were directors of
COES before such transaction shall cease for any reason to constitute at least a
majority of the Board of Directors of COES or any successor.
4. Representations. Each of the parties hereto represents severally and
as to itself only that this letter agreement has been duly authorized, executed
and delivered by it and, assuming the due authorization, execution and delivery
of this letter agreement by the other party hereto, constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms,
except to the extent that enforceability (x) may be limited by bankruptcy,
insolvency or other similar laws affecting or relating to the enforcement of
creditors' rights generally and (y) is subject to general principles of equity
(whether such enforceability is considered in a proceeding in equity or at law).
2
5. Notices. All notices, requests and demands to or upon COES or CST to
be effective shall be in writing and shall be deemed to have been duly given or
made when delivered by hand, or when sent by certified mail, postage prepaid,
addressed as follows or to such other address as may hereafter be notified by
the respective parties hereto:
CST: Commodore Separation Technologies, Inc.
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx X. Xxxxxx, Ph.D., Chairman
COES: Commodore Environmental Services, Inc.
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxx X. Xxxxxxxxx, Chairman
6. Miscellaneous. This letter agreement and the Note represent the
entire agreement and understanding between CST and COES with respect to the
subject matter hereof. This letter agreement and the Note may not be amended
except by an instrument in writing executed by CST and COES. This letter
agreement shall be governed by and construed in accordance with the laws of the
State of New York, without giving effect to its choice of law rules. This letter
agreement may be executed in counterparts.
If the foregoing correctly sets forth our agreement, please acknowledge
your acceptance of the terms of this letter agreement by signing and returning a
copy of this letter agreement and the Note to the undersigned.
Very truly yours,
COMMODORE SEPARATION
TECHNOLOGIES, INC.
By:
--------------------------------------------
Name:
Title:
Agreed and Accepted
this ____ day of _________ 1997
COMMODORE ENVIRONMENTAL SERVICES, INC.
By:
-----------------------------------
Name:
Title:
3
NON-NEGOTIABLE PROMISSORY NOTE
------------------------------
Dated: ______________
FOR VALUE RECEIVED, the undersigned, COMMODORE ENVIRONMENTAL SERVICES,
INC., a Delaware corporation ("Borrower"), promises to pay to COMMODORE
SEPARATION TECHNOLOGIES, INC., a Delaware corporation ("CST"), at the principal
executive offices of CST, 000 Xxxx 00xx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx
00000, or at such commercial bank within the United States of America as CST may
designate to Borrower from time to time, in lawful money of the United States of
America and in immediately available funds, the outstanding amount of all loans
made by CST to Borrower from time to time in accordance with the provisions
hereof. Borrower further agrees to pay interest in like money at such office or
commercial bank on the unpaid aggregate principal amount hereof at a rate equal
to twelve percent (12%) per annum.
1. Payment of this Note is secured by certain collateral (the
"Collateral") under the terms of the Pledge Agreement, of even date herewith,
between Borrower and CST.
2. Principal and interest shall be due and payable in the manner set
forth below:
(a) Accrued interest on the unpaid principal amount hereof shall be
paid quarterly in cash.
(b) Borrower will pay, in whole or in part, the principal balance
then outstanding of this Note, together with accrued interest, on or
within five (5) days after each date Borrower receives cash proceeds in
excess of $___________ from a Financing, as such term is defined in the
letter agreement, of even date herewith, between Borrower and CST (the
"Letter Agreement").
(c) Borrower will pay the entire principal balance then outstanding
of this Note, together with accrued interest, in cash, on the second
annual anniversary of the date hereof.
(d) All payments (including prepayments) made hereunder shall be
applied first to the payment of accrued and unpaid interest, with the
balance remaining applied to the payment of the unpaid principal balance
of this Note.
(e) This Note may, at the option of Borrower, be prepaid at any time
in whole or in part, without premium or penalty.
3. Borrower is borrowing the principal sum of this Note pursuant to the
Letter Agreement, the terms of which are incorporated herein by reference and
supersede the terms of this Note in the event of any conflict. This Note shall
be non-negotiable.
4. CST is authorized to record the date and amount of each loan made by
it and the date and amount of each payment, prepayment or reduction of the
principal amount hereof on the schedule annexed hereto and made a part hereof,
and any such recordation shall constitute prima facie evidence of the accuracy
of the information so recorded.
5. Notwithstanding any provision to the contrary contained in this
Note, it is expressly agreed that the entire principal amount outstanding at any
time under this Note, and all accrued and unpaid interest, shall immediately
become due and payable (without demand for payment, notice of non-payment,
presentment, notice of dishonor, protest, notice of protest or any other notice,
all of which are hereby expressly waived by Borrower):
(a) upon the default in the payment of any interest or principal due
under this Note, which default continues uncured for a period of ten
(10) days;
(b) if Borrower shall make an assignment for the benefit of
creditors; or shall admit in writing its inability to pay its debts; or
if a receiver or trustee shall be appointed for Borrower or for
substantially all of its assets and, if appointed without its consent,
such appointment is not discharged or stayed within thirty (30) days; or
if proceedings under any law relating to bankruptcy, insolvency or the
reorganization or relief of debtors are instituted by or against the
Borrower and, if contested by it, are not dismissed or stayed within
thirty (30) days; or if any writ of attachment or execution or any
similar process is issued or levied against Borrower or any significant
part of its property and is not released, stayed, bonded or vacated
within thirty (30) days after its issue or levy; or if Borrower takes
corporate action in furtherance of any of the foregoing;
(c) after a Change in Control, as provided, and as such term is
defined, in the Letter Agreement (each, an "Event of Default"); or
(d) any event of default which results in the acceleration of
indebtedness of Borrower to any other person under any note, indenture,
agreement or undertaking and that is not cured within thirty (30) days.
6. All notices, requests and demands to or upon Borrower or CST to be
effective shall be in writing and shall be deemed to have been duly given or
made when delivered by hand, or when sent by certified mail, postage prepaid,
addressed as follows or to such other address as may hereafter be notified by
the respective parties hereto:
COES: Commodore Environmental Services, Inc.
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxx X. Xxxxxxxxx, Chairman
-2-
CST: Commodore Separation Technologies, Inc.
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx X. Xxxxxx, Ph.D., Chairman
7. No failure or delay on the part of CST in exercising any of its
rights, powers or privileges hereunder shall operate as a waiver thereof, nor
shall a single or partial exercise thereof preclude any other or further
exercise of any right, power or privilege. Borrower hereby waives demand for
payment, notice of non-payment, presentment, notice of dishonor, protest, notice
of protest or any other notice in connection with the delivery, acceptance,
performance or enforcement of this Note.
8. In case any one or more Events of Default shall occur and be
continuing, CST may proceed to protect and enforce its rights by an action at
law, suit in equity or other appropriate proceeding. Borrower shall pay all
reasonable costs of collection when incurred, including reasonable attorneys'
fees.
9. This Note shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to its choice of law rules.
IN WITNESS WHEREOF, the Borrower has executed this Non-Negotiable
Promissory Note as of the date first above written.
COMMODORE ENVIRONMENTAL SERVICES, INC.
By:
-------------------------------------
Name:
Title:
-3-
GRID PROMISSORY NOTE SCHEDULE
Amount of Unpaid Principal Available
Amount of Principal Paid Amount of Credit Notation
Date Loan or Prepaid Note Commitment Made By
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