Exhibit 10.16
U.S. ENERGY SYSTEMS, INC.
000 X. Xxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
October 7, 1996
RE: Amendment to Security Agreement, Promissory Note and Financing Statement
between U.S. Energy Systems, Inc. (formerly U.S. Envirosystems, Inc.)
("Borrower") and Solvation, Inc., a Delaware corporation ("Lender"), dated
as of December 15, 1995 and as amended from time to time thereafter
(collectively, the "Loan Agreement")
Gentlemen:
This letter is to confirm our understanding that the maturity of the above-
referenced Loan Agreement has been extended to October 25, 1996 (the
"Extension"), such that the Due Date, as referred to in the Loan Agreement and
related documents, shall mean the earlier of the date of the closing of the
public offering of the Borrower's Common Stock and October 25, 1996. Further,
the Commitment period, as referred to in the Loan Agreement and related
documents, shall mean the period from and including the Closing Date to but not
including the earlier of (i) the date of the closing of the public offering of
the common stock of USE; (ii) USE's decision not to pursue a public offering of
its common stock; (iii) the decision by USE's underwriter that the public
offering of USE's common stock is not feasible by October 25, 1996; and (iv)
October 25, 1996. All other terms and conditions of Loan Agreement shall remain
in effect. All capitalized terms not defined herein shall have the meanings
ascribed to them in the Loan Agreement.
If the forgoing confirms your understanding, please indicate acceptance of the
Extension of the Anchor Bridge Loan by executing and returning to us the
enclosed copy of this letter by facsimile whereupon the Extension shall become
effective.
Sincerely,
U.S. ENERGY SYSTEMS, INC. PLYMOUTH ENVIROSYSTEMS, INC.
BY: /s/ Xxxxxxx X. Xxxxxx
BY: /s/ Xxxxxxx X. Xxxxxx
LEHI ENVIROSYSTEMS, INC.
BY: /s/ Xxxxxxx X. Xxxxxx
AGREED TO:
SOLVATION, INC.
BY: /s/ Xxxxx Xxxxxxxxx
SECOND AMENDMENT TO
SECURITY AGREEMENT, PROMISSORY NOTE AND FINANCING
STATEMENT DATED JUNE 15, 1995
(and all collateral documents associated therewith)
All collectively hereinafter referred to as the "Anchor Bridge
Loan"
By and Between
ANCHOR CAPITAL COMPANY, LLC ("LENDER")
and
U.S. ENVIROSYSTEMS, INC. ("BORROWER")
AMENDMENT DATED MARCH 11, 1996
It is hereby recognized by Lender and Borrower that Borrower has not as of the
date hereinabove finalized its Registration Statement on Form SB-2 nor filed
same with the U.S. Securities and Exchange Commission ("SEC"). In addition it
is further recognized that the Anchor Bridge Loan shall become due and payable
on March 11, 1996 (the "Due Date"), such date being before the projected date of
Borrower's completing a public offering of Borrower's securities (the "Public
Offering"). Capitalized terms used herein shall have the same meaning as in the
Anchor Bridge Loan and the First Amendment unless otherwise noted herein.
In recognition of the foregoing facts, and in consideration of Lender's
agreement to extend the Due Date to May 31, 1996, Borrower and Lender agree that
the Anchor Bridge Loan shall be amended herewith as follows (Nothing contained
herein shall be deemed to be a waiver of any of Lender's or Borrower's rights
under the Anchor Bridge Loan and the First Amendment to the Anchor Bridge Loan):
A.) Borrower, immediately upon receipt thereof, shall provide Lender with
copies of all correspondence and executed agreements with any Xxxxxx Xxxxxxx,
Inc. (the "Underwriter"), Far West Capital (the "Far West Agreement"),
Westinghouse Credit Corporation (the Westinghouse Agreement") and Xxxxx (the
"Xxxxx Bridge" and the "Xxxxx Preferred Agreement").
B.) The terms and conditions of the preferred stock issued to Lender on June
15, 1995 shall be amended to provide that:
(1) The preferred stock shall be convertible into 205,000 common shares.
The preferred stock conversion right shall be contemporaneous with the
Public Offering and shall continue for a period of twelve (12) months
subsequent to the Public Offering.
(2) In the event that the conversion ratio results in a price per share
which is greater than the final price per share of the Public Offering (the
Public Offering Price), then the conversion ratio for the preferred stock
retained by Anchor Capital Company, L.L.C. (as per Section B(3) below)
shall be determined using the Public Offering Price multiplied by 85%,
(3) The preferred stock certificate for 57,500 shares currently issued to
Lender shall be reissued by Borrower as follows:
# OF UNITS
ENTITY # PREFERRED SHARES CONVERTED TO
------ ------------------ ------------
ANCHOR CAPITAL
COMPANY, L.L.C. 34,000 146,250
AMERICAN GROUP OF 33,750
NY, INC. 13,500
XXXXXXX X. XXXXX 10,000 25,000
(4) Borrower shall perform all reasonable and necessary procedures to
ensure that none of the entities described above shall have their shares
subject to a Lock-up Agreement with the Underwriter.
(5) The preferred stock shall (at Lender's sole discretion) take on any
additional rights and preferences granted to Xxxxx, except that,
(6) The Anchor Stock shall be registered in a shelf registration to be
filed within 30 days of the closing of the public offering.
C.) The Registration Statement shall be filed with the SEC before March 13,
1996. Borrower agrees to provide Lender with a copy of same before filing on or
before March 13, 1996. Borrower shall also provide evidence to Lender of the
filing of the Registration Statement on or before March 13, 1996.
D.) Borrower shall pay to Lender at the earlier to occur of May 31, 1996 or the
date of completion of the Public Offering, $660,00 plus such other amounts of
Default Interest and Late Payment Penalties as are calculated under the terms
and conditions of the Anchor Bridge Loan.
E.) The Anchor Bridge Loan shall remain the sole Senior Secured indebtedness of
Borrower.
F.) The due date of the Xxxxx Bridge shall be extended contemporaneously
herewith to May 31, 1996. The Xxxxx Bridge shall not have a due date earlier
than, nor be payable prior to, that of the Anchor Bridge Loan. Evidence of same
shall be provided to Anchor contemporaneously herewith.
G.) The Far West Agreement for the purchase of Geo 1 and Geo 1A shall be
extended to a date not earlier than May 31, 1996.
H.) The Westinghouse Agreement shall be extended to a date not earlier than May
31, 1996.
I.) In the event that Lender shall sell, assign or transfer all or any portion
of its interest in the Anchor Bridge Loan to any party, Lender shall still be
entitled to receive the Anchor Stock as per the terms and conditions of the
Anchor Bridge Loan, the First Amendment to the Anchor Bridge Loan and this
Second Amendment.
J.) In the event that Borrower does not fully comply with the terms and
conditions of this Second Amendment, Lender shall have the right to declare
Borrower in default of the Anchor Bridge Loan and shall proceed to protect its
interests under the terms of the Anchor Bridge Loan and this Second Amendment.
K.) Lender shall have the right to file this Second Amendment with all
governmental authorities which have a recorded lien related to the Anchor Bridge
Loan. The execution of this Second Amendment by Xxxxxxx X. Xxxxxx and Xxxxxxxx
Xxxxx, President and Chairman of Borrower, respectively, shall signify that this
Second Amendment is binding upon Borrower and is as of the date firstabove
written in full force and effect upon Borrower.
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The execution of this Second Amendment does not signify a waiver by Lender or
Borrower of any of their rights, privileges, remedies and actions currently
existing under the Anchor Bridge Loan. Lender preserves all of its available
rights, remedies and actions under the Anchor Bridge Loan as well as the First
Amendment thereto and this Second Amendment.
Unless otherwise specifically stated herein, this Second Amendment does not
change or alter any of the terms and conditions of the Security Agreement,
Promissory Note and Financing Statement and all collateral documents associated
therewith dated June 15, 1995 and the First Amendment thereto between Borrower
and Lender.
Anchor Capital Company, LLC
/s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------------------
By: Xxxxxxx X. Xxxxxxxxxx -- President
Date: 3/11/96
US Envirosystems, Inc.
/s/ Xxxxxxxx Xxxxx /s/ Xxxxxxx X. Xxxxxx
------------------------------------- ----------------------------------
By: Xxxxxxxx Xxxxx -- Chairman By: Xx. Xxxxxxx X. Xxxxxx -- President
Date: 3/11/96 Date: 3/11/96
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