Milford $500k Note

Exhibit 10.86
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$500,000.00                                                        June 13, 2001


                             SECURED PROMISSORY NOTE


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         This Note has not been registered under the Securities Act of 1933, as
amended, or any state securities laws, and no sale, transfer or other
disposition of any interest herein or therein may be made unless, in the written
opinion of counsel to the Corporation, such transfer would not violate or
require registration under any such statute.

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         1.       Background.
                  -----------

         A.   This Note ("Milford Note") is issued in conjunction with a
              Security Agreement ("Milford Security Agreement") by and among
              Commodore Applied Technologies, Inc. ("CXI" or "Borrower"),
              Commodore Advanced Sciences, Inc. ("CASI") and Milford Capital &
              Management ("Milford" or "Holder"), a Warrant ("Milford Warrant"),
              issued to Milford, a Registration Rights Agreement ("Milford
              Registration Rights Agreement"), by and between CXI and Milford, a
              Guaranty ("Milford Guaranty") by Commodore Advanced Sciences, Inc
              in favor in favor of Milford, a Secured Promissory Note (the
              "Shaar Note") from CXI to The Shaar Fund, Ltd. ("Shaar"), a
              Security Agreement ("Shaar Security Agreement") by and between CXI
              and Shaar, a Warrant ("Shaar Warrant") issued to Shaar, a
              Registration Rights Agreement (the "Shaar Registration Rights
              Agreement") by and between CXI and Shaar and a Guaranty ("Shaar
              Guaranty") by Commodore Advanced Sciences, Inc in favor in favor
              of Shaar,. The Milford Note, the Milford Security Agreement, the
              Milford Warrant, the Milford Registration Rights Agreement, the
              Milford Guaranty, the Shaar Note, the Shaar Security Agreement,
              the Shaar Warrant the Shaar Registration Rights Agreement and the
              Shaar Guaranty are sometimes hereinafter collectively referred to
              as the "Loan Documents".

         B.   On November 4, 1999, CXI entered into a Securities Purchase
              Agreement with Shaar, issued a Common Stock Purchase Warrant to
              Shaar, entered into a Registration Rights Agreement with Shaar and
              filed a related Certificate of Designation for Series E Preferred
              Stock (collectively, and as thereafter amended, the "Series E
              Credit"); on March 15, 2000, CXI entered into a Securities
              Purchase Agreement with Shaar, issued a Common Stock Purchase
              Warrant to Shaar, entered into a Registration Rights Agreement
              with Shaar and filed a related Certificate of Designation for
              Series F Preferred Stock (collectively, and as thereafter amended,
              the "Series F Credit").

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         2. Payment. The Borrower, for value received, hereby promises to pay to
the order of Holder the aggregate principal amount of Five Hundred Thousand
Dollars ($500,000.00) ("Principal Balance"), together with interest on the
outstanding Principal Balance hereunder on or before February 13, 2002. (the
"Maturity Date"). Beginning on July 13, 2001, Borrower shall make monthly
payments of principal and interest to the Holder according to Schedule A which
is annexed hereto and incorporated herein by reference. All payments of
principal and/or interest shall be paid no later than 3:00 p.m. New York City
time on the date set forth in Schedule A; provided, however, that Borrower shall
be entitled to a fifteen (15) day period ("Grace Period") in which to make each
such payment (and interest shall accrue during such Grace Period at the rates
per annum specified herein). Each such payment shall be made in lawful money of
the United States of America by wire transfer of immediately available funds of
the Borrower payable to Milford as follows:


         TO: Milford Capital & Management, Attn: David Melina, 125 Old Gate
Lane, Milford, CT 06460; Phone: 203-882-0629; Fax: 203-878-5071 or at such other
address as the Holder shall from time to time indicate by written notice to
Borrower.

         The outstanding Principal Balance of this Note shall bear simple,
non-cumulative interest from the date hereof until paid in full, at an interest
rate of fifteen percent (15%) per annum.

         By acceptance of this Note, the Holder agrees that it will promptly
deliver and surrender this Note to the Borrower upon full payment thereof
(including interest and fees), and that it will promptly notify the Borrower of
any disposition of the Note and of the name and address of the transferee of
this Note. For purposes of this Note, the Borrower may assume that the
registered Holder is the holder hereunder unless notified to the contrary in the
manner provided in Section 5.

         This Note may be prepaid, in whole or in part, at any time, on five (5)
business days prior notice, without penalty.

         3. Events of Default. Any of the following events which occur and are
continuing shall constitute an "Event of Default": (a) if the Borrower fails to
make any payment of any principal or interest under this Note when same is due,
including the allowance for the Grace Period; (b) if a receiver, trustee or
other such official is appointed for the Borrower, or if any proceedings are
commenced by or against the Borrower under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation law or
statute of the federal government or any state government and, if such
proceedings are instituted against the Borrower, (i) the Borrower by any action
or failure to act indicates his approval of, consent to or acquiescence therein;
(ii) an order shall be entered approving the petition or granting relief in such

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proceeding or (iii) such proceeding remains undismissed, undischarged or
unbonded for a period of forty-five (45) days; (c) except as hereinafter
provided, if the Borrower breaches any covenant set forth in any of the Loan
Documents and such breach is not cured within thirty (30) days of notice
thereof; (d) if Borrower voluntarily files for protection under any applicable
bankruptcy or insolvency statutes; (e) if Borrower shall default under any
obligations relating to the Series E Credit or the Series F Credit; (f) any
representation or warranty made or deemed made by a Borrower or any subsidiary
of Borrower (a "Subsidiary") in any agreement between or among the Borrower
and/or such Subsidiary and the Lender, or which is contained in any certificate,
document, opinion, financial or other statement furnished at any time under or
in connection therewith, shall prove to have been incorrect in any material
respect on or as of the date made or deemed made: (g) either Borrower or any
Subsidiary shall: (i) fail to pay any material indebtedness, as the case may be,
or any interest or premium thereon, when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise); or (ii) fail to perform
or observe any material term, covenant or condition on its part to be performed
or observed under any agreement or instrument relating to any such indebtedness,
when required to be performed or observed, if the effect of such failure to
perform or observe is to accelerate, or to permit the acceleration of, after the
giving of notice or passage of time, or both, the maturity of such indebtedness,
whether or not such failure to perform or observe shall be waived by the holder
of such indebtedness; or any such indebtedness shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; or (iii) fail to make any
payment due under or otherwise fail to perform or observe any covenant contained
in the Milford Guaranty; (h) Borrower or any Subsidiary shall generally not, or
be unable to, or shall admit in writing its inability to, pay its debts as such
debts become due; (i) there shall occur a loss, theft, damage or destruction of
any material portion of the tangible assets of a Borrower or a Subsidiary for
which there is either no insurance coverage or for which, in the reasonable
opinion of Lender, there is insufficient insurance coverage; or (j) other than
as a result of or inaction on the part of the Holder, Holder shall fail to have
a perfected first priority security interest in, except for the Patents in
foreign jurisdictions, the Collateral (as defined in the Milford Security
Agreement) subject only to the rights, if any, of Shaar under the Shaar Security
Agreement. Upon the occurrence of an Event of Default, the entire Principal
Balance and all unpaid accrued interest of this Note, together with the
Additional Obligations (as hereinafter defined) shall, at the Holder's option,
become immediately due and payable upon written notice thereof (other than in
the case of an Event of Default described in clauses (b) and (d) above in which
case the entire Principal Balance, accrued interest and all Additional
Obligations shall become immediately due and payable without any required
written notice to the Borrower.

         4. Additional Obligations. In addition to the payments of Principal
Balance and interest due under this Note and set forth in Section 2 hereof,
Borrower agrees to pay:

         a)   to P&L Financial Services, the sum of Twenty Five Thousand Dollars
              ($25,000.00) (the "Commission"), which Commission shall be due and
              payable at the time the Borrower receives the Principal Balance
              from the Holder, and

         b)   b) to the Holder, the aggregate amount of Fifty Thousand Dollars
              ($50,000.00) (the "Exit Fee") on or before the Maturity Date.

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The Commission and the Exit Fee shall hereinafter collectively be referred to as
the "Additional Obligations".

         5. Covenants of Borrower. Borrower hereby covenants and agrees that :

         a)   It will promptly send to Holder copies of all notices or other
              correspondence or communications issued to or by Shaar in respect
              to the Loan Documents, and

         b)   The terms and provisions of the Loan Documents to which Shaar is a
              party ("Shaar Loan Documents") are comparable and substantially
              similar to of the Loan Documents to which Milford is a party, and
              CXI will not modify the terms of the Shaar Loan Documents without
              Milford's written consent.

         c)   On or before December 31, 2001, CXI will file a registration
              rights statement with the Securities and Exchange Commission
              ("Commission") for the shares of CXI common stock that are the
              subject of the Series E Credit and Series F Credit as yet
              unregistered and will cause such registration rights statement to
              become effective on or before March 31, 2002.

         6. Communications and Notices. Except as otherwise specifically
provided herein, all communications and notices provided for in this Note shall
be sent by first class mail, facsimile or telegram to the Holder at Milford
Capital Management, Attn: David Melina, 125 Old Gate Lane, Milford, CT 06460;
Phone: 203-882-0629; Fax: 203-878-5071 or to the Borrower at James DeAngelis,
Chief Financial Officer, at 2121 Jamieson Avenue, Suite 1406, Alexandria,
Virginia 22314, Phone: 703-567-1284; Fax: (703) 566-7526. Any first-class mail
notice provided pursuant to this Section 5 shall be deemed given three days
after being sent by first-class mail. Notices sent by telegram or facsimile
shall be deemed received upon delivery. The Borrower and the Holder may from
time to time change their respective addresses, for purposes of this Section 5,
by written notice to the other parties; provided, however, that notice of such
change shall be effective only upon receipt.

         7. Governing Law; Jurisdiction. This Note shall be construed in
accordance with and governed by the laws of the State of New York. For the
purposes of any suit, action or proceeding involving this Note, the Borrower and
the Holder hereby expressly submit itself to the jurisdiction of the state
courts of the State of New York and to the jurisdiction of the United States
District Court for the State of New York, and consent that any order, process,
notice of motion or other application to or by any such court or a judge thereof
may be served within or without such court's jurisdiction by certified mail or
by personal service, provided that a reasonable time for appearance is allowed,
and the Borrower and the Holder agree that such court shall have exclusive
jurisdiction over any such suit, action or proceeding commenced by either or
both of said parties. The Borrower and the Holder hereby irrevocably waive any
objection that it may now or hereafter have to the laying of venue of any suit,

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action or proceeding arising out of or relating to this Note brought in the
state courts of the State of New York or in the United States District Court for
the State of New York and hereby further irrevocably waive any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum.

         8. Assignment. This Note shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto; provided that Borrower
shall not be permitted to assign its obligations hereunder.

         9. Security. This Note shall be secured by a security interest in
certain assets of the Corporation as set forth in the Security Agreement dated
the date hereof by and among the Corporation and the Holders.

         10. Enforcement and Waiver. No failure or delay on the part of Holder
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 diligence, presentment, 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.

         11. Modification. This Note may not be changed or terminated orally,
nor may any of its provisions be waived, except by an agreement in writing
signed by the party against whom enforcement of such change or termination is
sought.

         12. Remedies. In case any one or more Events of Default shall occur and
be continuing, Holder 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.

         13. Collection Costs. In the event that the Holder shall place this
Note in the hands of an attorney for collection during the continuance of any
Event of Default, the Borrower shall further be liable to the Holder for all
costs and expenses (including reasonable attorneys' fees) which may be incurred
by the Holder in enforcing this Note, which amounts may, at the Holder's option,
be added to the principal hereof.

         14. Waiver of Jury Trial. THE BORROWER EXPRESSLY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER
THIS NOTE OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO
THIS NOTE OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED

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IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT
OR TORT OR OTHERWISE; AND THE BORROWER HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THIS WAIVER OF THE RIGHT TO TRIAL
BY JURY.






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         IN WITNESS WHEREOF, the Borrower has executed this Note on the date
first above written.


                           COMMODORE APPLIED TECHNOLOGIES, INC.



                           By: ________________________________________________
                               James M. DeAngelis, Vice President and Treasurer

STATE OF NEW YORK )
                                                     ) ss:
COUNTY OFNEW YORK )


         On this _____ day of June, 2001, before me, a Notary Public in and for
the jurisdiction aforesaid, personally appeared James M. DeAngelis, to me known,
who being by me duly sworn, did depose and say that he is the Vice President and
Treasurer of President of Commodore Applied Technologies, Inc., and that he is
duly authorized to execute same; and that he subscribed, swore to and
acknowledged the same in his capacity as such officer and as the authorized and
binding act and deed of said corporation.




                                                ----------------------------
                                                         Notary Public


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                                   SCHEDULE A
<TABLE>
<CAPTION>



------------------------------- -------------- ----------------- ------------- ---------------
         Payment Date              Milford         Milford         Milford     Milford Total
                                  Principal       Principal        Interest       Payment
                                   Payment         Balance         Payment
------------------------------- -------------- ----------------- ------------- ---------------
            <S>                  <C>             <C>              <C>           <C>
                 June 13, 2001                   $500,000.00
------------------------------- -------------- ----------------- ------------- ---------------
                 July 13, 2001   $62,500.00       437,500.00      $6,250.00     $68,750.00
------------------------------- -------------- ----------------- ------------- ---------------
               August 13, 2001    62,500.00       375,000.00       5,468.75      67,968.75
------------------------------- -------------- ----------------- ------------- ---------------
            September 13, 2001    62,500.00       312,500.00       4,687.50      67,187.50
------------------------------- -------------- ----------------- ------------- ---------------
              October 13, 2001    62,500.00       250,000.00       3,906.25      66,406.25
------------------------------- -------------- ----------------- ------------- ---------------
             November 13, 2001    62,500.00       187,500.00       3,125.00      65,625.00
------------------------------- -------------- ----------------- ------------- ---------------
             December 13, 2001    62,500.00       125,000.00       2,343.75      64,843.75
------------------------------- -------------- ----------------- ------------- ---------------
              January 13, 2002    62,500.00       62,500.00        1,562.50      64,062.50
------------------------------- -------------- ----------------- ------------- ---------------
             February 13, 2002    62,500.00           0              781.25      63,281.25
------------------------------- -------------- ----------------- ------------- ---------------
                March 13, 2002
------------------------------- -------------- ----------------- ------------- ---------------
                April 13, 2002
------------------------------- -------------- ----------------- ------------- ---------------
                  May 13, 2002
------------------------------- -------------- ----------------- ------------- ---------------
                 June 13, 2002
------------------------------- -------------- ----------------- ------------- ---------------

</TABLE>

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