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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 22, 1997
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Commodore Applied Technologies, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-11871 11-3312952
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
150 East 58th Street, Suite 3400
New York, New York 10155
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 308-5800
(Former Name or Former Address, if Changed Since Last Report)
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CURRENT REPORT ON FORM 8-K
COMMODORE APPLIED TECHNOLOGIES, INC.
January 22, 1997
Item 2. Acquisition or Disposition of Assets.
ACQUISITION OF COMMODORE SEPARATION
TECHNOLOGIES, INC. AND COMMODORE CFC TECHNOLOGIES, INC.
Effective as of December 2, 1996, Commodore Applied Technologies, Inc.,
a Delaware corporation ("Applied"), acquired (i) 10,000,000 shares of common
stock, par value $.001 per share (the "Separation Stock"), of Commodore
Separation Technologies, Inc., a Delaware corporation ("Separation"),
representing all of the issued and outstanding shares of capital stock of
Separation, and (ii) 100 shares of common stock, par value $.001 per share (the
"Refrigerant Stock"), of Commodore CFC Technologies, Inc., a Delaware
corporation ("Refrigerant"), representing all of the issued and outstanding
shares of capital stock of Refrigerant, from Commodore Environmental Services,
Inc., a Delaware corporation ("Environmental") and the owner of 69.3% of the
outstanding common stock of Applied, as part of a corporate restructuring of
Environmental to consolidate all of its current environmental technology
businesses within Applied. In addition, Environmental assigned to Applied
outstanding Separation notes aggregating $976,000 at November 26, 1996,
representing advances previously made by Environmental to Separation, which
Applied has agreed to contribute to the equity of Separation prior to the
consummation of a proposed initial public offering of Separation's securities.
Separation is a process technology company which has developed and
intends to commercialize its separation technology and recovery system, known as
CST, which it believes is capable of effectively separating and extracting
various solubilized materials, including metals, organic chemicals,
biochemicals, radionuclides and other targeted substances, from liquid and
gaseous process streams. Refrigerant is a company which has developed and
patented a process which, in test applications of limited quantities of CFCs,
has been able to separate mixtures of refrigerants so that they can be returned
to productive use at purity levels meeting industry standards.
Pursuant to a Stock Purchase Agreement dated as of December 2, 1996
(the "Stock Purchase Agreement") between Environmental and Applied, in
consideration for the transfer of Separation Stock and Refrigerant Stock to
Applied, Applied paid Environmental $3,000,000 in cash and, subject to
compliance with any applicable stockholder approval or notice requirements, has
agreed to issue to Environmental a warrant expiring December 1, 2003 to purchase
7,500,000 shares of Applied common stock (the "Warrant Shares") at an exercise
price of $15.00 per share. The consideration for the Separation Stock and the
Refrigerant Stock was
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determined as a result of arm's-length negotiations between representatives of
both Applied and Environmental.
By virtue of the foregoing transaction, each of Separation and
Refrigerant will be direct, wholly-owned subsidiaries of Applied. The
acquisition of Separation and Refrigerant will be accounted for under the
purchase method of accounting.
The information set forth above is qualified in its entirety by
reference to the Stock Purchase Agreement, dated as of December 2, 1996, between
Environmental and Applied, a copy of which is attached hereto as Exhibit 1.
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
COMMODORE SEPARATION TECHNOLOGIES, INC.
In accordance with Item 7(a), the financial statements of
Commodore Separation Technologies, Inc. shall be provided not later than 60 days
after the date hereof.
COMMODORE CFC TECHNOLOGIES, INC.
In accordance with Item 7(a), the financial statements of
Commodore CFC Technologies, Inc. shall be provided not later than 60 days after
the date hereof.
(b) Pro Forma Financial Information.
In accordance with Item 7(b), the pro forma financial
information shall be provided not later than 60 days after the date hereof.
(c) Exhibits.
Exhibit No. Description
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1 Stock Purchase Agreement, dated as of December 2, 1996,
between Environmental and Applied.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Current Report to be signed on its behalf by
the undersigned thereunto duly authorized.
COMMODORE APPLIED TECHNOLOGIES, INC.
Date: January 24, 1997. By: /s/ William E. Ingram
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William E. Ingram
Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
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<S> <C>
1 Stock Purchase Agreement, dated as of December 2, 1996,
between Environmental and Applied.
</TABLE>
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of December 2, 1996 (the
"Agreement"), by and between Commodore Environmental Services, Inc., a Delaware
corporation ("Commodore"), and Commodore Applied Technologies, Inc., a Delaware
corporation and 69.3%-owned subsidiary of Commodore ("Applied").
W I T N E S S E T H:
WHEREAS, Commodore is the owner of (i) 10,000,000 shares of common
stock, par value $.001 per share (the "Separation Stock"), of Commodore
Separation Technologies, Inc., a Delaware corporation ("Separation"), and (ii)
100 shares of common stock, par value $.001 per share (the "Refrigerant Stock"),
of Commodore CFC Technologies, Inc., a Delaware corporation ("Refrigerant" and,
together with Separation, the "Subsidiaries");
WHEREAS, Commodore desires to implement a corporate restructuring to
consolidate all of its current environmental technology businesses within
Applied; and
WHEREAS, in order to accomplish said corporate restructuring,
Commodore desires to sell, and Applied desires to purchase, all of the
Separation Stock and the Refrigerant Stock on the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby mutually acknowledged, the parties agree as follows:
1. Purchased Shares and Note
Subject to the terms and conditions herein stated, Commodore hereby
sells, assigns, transfers and delivers to Applied, and Applied hereby purchases
from Commodore, all right, title and interest of Commodore in and to (a) the
Separation Stock and the Refrigerant Stock (together, the "Purchased Shares"),
and (b) the demand promissory note, dated as of September 30, 1996 (the "Note"),
issued by Separation to Commodore in the original principal amount of $408,000
and having a current principal balance of $______ and unpaid accrued interest
thereunder of $_________, for a total purchase price of (i) Three Million
Dollars ($3,000,000) and, (ii) subject to compliance with any applicable
stockholder approval or notice requirements, the issuance of a warrant to
purchase 7,500,000 shares of common stock, par value $.001 per share, of
Applied, at an exercise price of $15.00 per share and expiring on December 1,
2003 (the "Applied Warrant"), a copy of which is attached as Exhibit A hereto.
2. Payment of Consideration
In furtherance of the consummation of the transactions contemplated
hereby, simultaneously with the execution and delivery of this Agreement,
Applied is (i) paying the cash
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portion of the purchase price by delivering to Commodore Applied's check in the
amount of $3,000,000 payable to the order of Commodore, or by wire transferring
such amount in immediately available funds to Commodore's designated account
and, (ii) subject to compliance with any applicable stockholder approval or
notice requirements, delivering to Commodore the Applied Warrant, and (b)
Commodore is delivering to Applied (i) the certificates representing the
Separation Stock and the Refrigerant Stock, and (ii) the original executed Note,
in each case properly endorsed and/or accompanied by instruments of transfer
duly executed in blank.
3. Closing Date
The consummation of the transactions contemplated by this Agreement
(the "Closing") is taking place simultaneously with the execution and delivery
of this Agreement on December 2, 1996 (the "Closing Date") at the principal
executive offices of Commodore in New York, New York.
4. Representations and Warranties
4.1 BY COMMODORE. Commodore represents and warrants as follows and
acknowledges that Applied is relying upon such representations and warranties in
connection with the purchase by Applied of the Purchased Shares:
(a) The Subsidiaries are corporations duly incorporated, validly
existing and in good standing under the laws of State of
Delaware;
(b) The authorized capital stock of (i) Separation consists of
50,000,000 shares of common stock and 5,000,000 shares of
preferred stock, and (ii) Refrigerant consists of 1,000 shares
of common stock; and of such authorized capital, only the
Purchased Shares have been duly issued and are outstanding and
are fully paid and non-assessable;
(c) No person, corporation or other entity has any agreement,
option or warrant, or any right or privilege (whether by law,
pre-emptive or contractual, or whether by means of any
exercise, conversion or other right or action) which has the
effect of or is capable of becoming an agreement, option or
warrant, for the purchase from either of the Subsidiaries of
any securities (including convertible securities) of the
Subsidiaries;
(d) All of the Purchased Shares and the Note are owned by
Commodore as the registered and beneficial owner of record,
with good and marketable title thereto, free and clear of all
mortgages, liens, charges, security interests, adverse claims,
pledges, encumbrances, restrictions and demands whatsoever
(other than restrictions imposed by federal or state
securities laws);
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(e) No person, corporation or other entity (other than the Applied
pursuant to this Agreement) has any agreement, option or
warrant, or any right or privilege (whether by law,
pre-emptive or contractual, or whether by means of any
exercise, conversion or other right or action) which has the
effect of or is capable of becoming an agreement, option or
warrant, for the purchase of any of the Purchased Shares or
the Note;
(f) Neither Commodore nor the Subsidiaries is party to, bound or
affected by or subject to any indenture, mortgage, lease,
agreement, instrument, charter or by-law provision, statute,
regulation, order, judgment, decree or law which would be
violated, contravened or breached by, or under which any
default would occur as a result of, the consummation of the
transactions provided for herein;
(g) Commodore has all requisite corporate power and authority to
execute, deliver and perform its obligations under this
Agreement; the execution, delivery and performance of this
Agreement by Commodore has been duly authorized by all
necessary corporate action on the part of Commodore; and this
Agreement constitutes the legal, valid and binding obligation
of Commodore, enforceable against Commodore in accordance with
its terms; and
(h) The current principal balance of, and unpaid accrued interest
under, the Note are as set forth in Section 1 hereof.
4.2 BY APPLIED. Applied represents and warrants as follows and
acknowledges that Commodore is relying upon such representations and warranties
in connection with the sale by Commodore of the Purchased Shares:
(a) Applied is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware;
(b) Applied has all requisite corporate power and authority to
execute, deliver and perform its obligations under this
Agreement; the execution, delivery and performance of this
Agreement by Applied (except the issuance and delivery of the
Applied Warrant hereunder, which is subject to compliance with
any applicable stockholder approval or notice requirements)
has been duly authorized by all necessary corporate action on
the part of Applied; and this Agreement and the Applied
Warrant constitute the legal, valid and binding obligations of
Applied, enforceable against Applied in accordance with their
respective terms;
(c) Applied is not a party to, bound or affected by or subject to
any indenture, mortgage, lease, agreement, instrument, charter
or by-law
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provision, statute, regulation, order, judgment, decree or law
which would be violated, contravened or breached by, or under
which any default would occur as a result of, the consummation
of the transactions provided for herein; and
(d) Applied is purchasing the Purchased Shares and the Note for
its own account for investment purposes, and not with a view
to the distribution thereof in violation of any applicable
securities laws.
5. Survival of Representations and Warranties
5.1 COMMODORE. The representations and warranties of Commodore
contained in this Agreement, or any agreement, certificate or other document
delivered or given pursuant to this Agreement, shall survive the consummation of
the transactions contemplated by this Agreement and, notwithstanding such
completion or any investigation made by or on behalf of Applied, shall continue
in full force and effect for the benefit of Applied and any claim in respect
thereof shall be made in writing:
(a) with respect to representations and warranties of Commodore,
relating to matters other than tax matters, for a period of
three years after the Closing Date; and
(b) with respect to representations and warranties of Commodore,
relating to tax liability or other tax matters, within the
period commencing on the Closing Date and expiring on the date
on which the last applicable limitation period (without giving
effect to any voluntary extension(s) hereafter granted by or
on behalf of either of the Subsidiaries) under any applicable
taxation legislation expires with respect to any fiscal year
of the Subsidiaries which is relevant in determining any
relevant tax liability of the Subsidiaries.
5.2 APPLIED. The representations and warranties of Applied
contained in this Agreement, or any agreement, certificate or other document
delivered or given pursuant to this Agreement, shall survive the completion of
the transactions contemplated by this Agreement and, notwithstanding such
completion or any investigation made by or on behalf of Commodore, shall
continue in full force and effect for the benefit of Commodore and any claim in
respect thereof shall be made in writing for a period of three years after the
Closing Date.
5.3 GENERAL. The provisions of this Section 5 respecting the
expiration of claims periods is expressly subject to Section 8.3 hereof.
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6. Transfer and Assumption
6.1 TRANSFER. This Agreement shall operate as an immediate and
effective transfer and assignment of the Purchased Shares and the Note by
Commodore to Applied as at the date hereof. The parties agree to do all such
other acts and things as may be necessary to give effect to the provisions
hereof, and without limiting the generality of the foregoing, to validly and
effectively transfer the Purchased Shares and the Note from Commodore to Applied
as at the Closing Date, and to validly and effectively issue the Applied Warrant
to Commodore as at the date hereof. Commodore hereby irrevocably constitutes and
appoints the Secretary of each of the Subsidiaries as its attorney to transfer
the Purchased Shares to Applied as at the date hereof on the books of the
Subsidiaries, with full power of substitution in the premises.
6.2 ASSUMPTION. In addition to the transfer and assignment of the
Purchased Shares and the Note, this Agreement shall serve to constitute an
immediate assignment by Commodore to Applied, and an assumption by Applied, of
any and all further lending and/or funding obligations (whether written or
verbal) of Commodore in favor of the Subsidiaries; and from and after the date
hereof, Commodore shall have no further obligation to extend any loans, advances
or other financial accommodations to either of the Subsidiaries (any and all of
which obligations are hereby assumed by Applied).
7. Additional Covenants
7.1 Each of Commodore and Applied shall take or cause to be taken
all necessary or desirable actions, steps and corporate proceedings to approve
or authorize the transactions contemplated by this Agreement and the execution
and delivery of this Agreement and other agreements and documents contemplated
hereby, and shall cause all necessary meetings of directors and stockholders of
the Subsidiaries to be held for such purpose.
7.2 In connection with the next annual meeting of Applied's
stockholders, Applied shall cause to be included in management's proxy materials
a proposal, with management's recommendation, for Applied's stockholders to
ratify the Applied Warrant and the issuance thereof to Commodore pursuant to
this Agreement.
8. Indemnification
8.1 Each party hereto agrees to indemnify and hold harmless the
other party from and in respect of any cost, claim, loss, damage, liability or
expense which such other party may suffer or incur, whether at law or in equity,
arising out, resulting from or in connection with the inaccuracy of any
representation or warranty contained herein, for the time periods provided in
Section 4.1 hereof.
8.2 No claim for indemnification will arise until written notice
thereof is given to the party from whom indemnification is sought or claimed
(the "Indemnitor"). Such notice shall be sent within a reasonable time following
the determination by the party seeking
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indemnification (the "Indemnitee") that a claim for indemnity may exist. In the
event that any legal proceedings shall be instituted or any claim or demand is
asserted by any third person in respect of which either party may seek any
indemnification from the other party, the Indemnitee shall give or cause to be
given to the Indemnitor written notice thereof and the Indemnitor shall have the
right, at its option and expense, to be present at the defense of such
proceedings, claim or demand, but not to control the defense, negotiation or
settlement thereof, which control shall at all times remain with the Indemnitee,
unless the Indemnitor irrevocably acknowledges full and complete responsibility
for indemnification of the Indemnitee in respect of the subject claim, in which
case the Indemnitor may assume such control through counsel of its choice,
provided however, that no settlement shall be entered into without the
Indemnitee's prior written consent (which shall not be unreasonably withheld).
The parties agree to cooperate fully with each other in connection with the
defense, negotiation or settlement of any such third party legal proceeding,
claim or demand.
8.3 Notwithstanding anything in this Agreement to the contrary, the
indemnity provided for in this Section 8 shall apply to any loss, claim, cost,
damage, expense or liability, whether or not the actual amount thereof shall
have been ascertained prior to the final day upon which a claim for indemnity
with respect thereto may be made hereunder in accordance with Section 5 hereof,
so long as written notice thereof shall have been given to the party from whom
indemnification is sought prior to said date, setting forth specifically and in
reasonable detail, so far as is known, the matter as to which indemnification is
being sought, but nothing herein shall be construed to require payment of any
claim for indemnity until the actual amount payable shall have been finally
ascertained.
9. Tax Treatment
It is the intention of the parties for the transaction contemplated
by this Agreement to qualify as a tax-free reorganization pursuant to Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended, thereby resulting
in no currently recognized gain or loss to either Commodore or Applied.
10. Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
11. Entire Agreement
This Agreement, together with the Applied Warrant, constitutes the
entire agreement between the parties relating to the subject matter hereof.
There are no verbal statements, representations, warranties, undertakings or
agreements between the parties. This agreement may be amended only by an
instrument in writing signed by both parties.
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12. Time of the Essence
Time shall be of the essence of this Agreement.
13. Assignment
Neither this Agreement nor any rights or obligations hereunder may
be assigned by either party without the prior written consent of the other
party, which consent may be withheld in either party's sole and absolute
discretion.
14. Binding Effect
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
COMMODORE ENVIRONMENTAL SERVICES, INC.
By: /s/ Paul E. Hannesson
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Name: Paul E. Hannesson
Title: Chairman of the Board
COMMODORE APPLIED TECHNOLOGIES, INC.
By: /s/ Paul E. Hannesson
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Name: Paul E. Hannesson
Title: Chairman of the Board
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