EXHIBIT 10.54
SOVCAP EQUITY PARTNERS
c/o SovCap Investment Management Group, LLC
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October 27, 1999
COMPOSITECH LTD.
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To Whom It May Concern:
Reference is made to the Series 1 Bridge Note Purchase and Security
Agreement, dated March 16, 1999, by and among the Compositech Ltd. and the
Purchasers listed therein, as amended by that certain First Amendment to the
Series 1 Bridge Note Purchase and Security Agreement, Dated April 21,1999 and
executed by the Company and certain Purchasers in connection with the Second
Closing and that certain Second Amendment to the Series 1 Bridge Note Purchase
and Security Agreement, dated July 28, 1999 and executed by the Company and
certain purchasers in connection with the Third Closing (as so amended, the
"Purchase Agreement"). Defined terms used but not defined herein shall have the
meanings ascribed thereto in the Purchase Agreement or the Company's Series 1
Secured Convertible Bridge Financing Notes (the "Bridge Notes") issued pursuant
thereto.
The Company has requested that Representative and all other Purchasers
grant an extension of maturity under the original Bridge Notes from the original
Maturity Date provided for in each respective Bridge Note to March 31, 2000, and
also to defer any exercise of any existing or newly issued Purchaser Warrants
until after March 31, 2000. In exchange therefor the Company has agreed to
increase the principal amount of each such Bridge Note and issue to each
Purchaser additional warrants to purchase additional shares of the Company's
Common Stock. This action is necessary in order for the Company to complete
certain financing transactions necessary for the continued operations of the
Company, and this contemplated action and the terms and provisions of the new
Bridge Notes, to the extent they differ from those contained in the original
Bridge Notes, have been fully agreed to by the Company.
In accordance with Section 2.5 of the Purchase Agreement appointing SovCap
Equity Partners, Ltd. as Representative for all other Purchasers under the
Purchase Agreement, Representative hereby confirms that it has agreed with the
Company (i) to tender or cause to be tendered all outstanding Bridge Notes and
Repricing Warrants; (ii) that such cancelled notes will be exchanged for newly
issued Bridge Notes containing revised principal amounts and otherwise
substantially the same terms as the original Bridge Notes except (a) the
maturity date for all newly issued Bridge Notes shall be March 31, 2000 as
agreed to by Representative and Company, (b) the principal amount will be
increased per agreement of the Company and Representative, and (c) any other
conforming changes that would need to be made to the new Bridge Notes to effect
the agreement of the Company and Representative; (iii) that such Repricing
Warrants will be exchanged for newly issued Repricing Warrants with
substantially the same terms; (iv) to issue to each Purchaser new Purchase
Warrants evidencing the right of each Purchaser to purchase additional shares of
the Company's Common Stock under the terms thereof; and (v) that the Purchasers
will
not exercise any outstanding Purchaser Warrants or Purchaser Warrants to be
issued as contemplated by this agreement until March 31, 2000.
This agreement, as summarized above, is subject in all instances to (i) the
Company executing (a) new Bridge Notes in substance reasonably acceptable to
Representative and (b) executing any other document or instrument reasonably
requested by Representative necessary in its discretion to evidence the
transactions contemplated in this letter, and (ii) to the delivery of an opinion
of counsel to the Company in form and substance satisfactory to Representative
with respect to all the transactions contemplated in this letter. Representative
on behalf of itself or any other Purchaser does not consent to the waiver of or
waive any rights or interest under the Bridge Notes currently issued and
outstanding under the Purchase Agreement, the Bridge Notes and all such rights
and interests therein remaining in full force and effect until the original
Bridge Notes are replaced with new Bridge Notes that have fully executed by the
Company and delivered to Representative. Upon issue of the new Bridge Notes,
Representative hereby agrees that no event of default will have occurred under
the old Bridge Notes.
The Company has agreed to take all actions necessary to evidence the
transactions contemplated in this letter and further to refrain from directly or
indirectly taking any action which would prevent, hinder, or frustrate the
transactions contemplated in this letter or its intent and purpose. The
Company's agreement to the contents of this letter and the accuracy of the
within summary between the Company and Representative is indicated and
acknowledged by its signature below.
SOVCAP EQUITY PARTNERS, LTD.:
By:
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Name:
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Title:
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COMPOSITECH LTD.:
By:
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Name:
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Title:
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