<PAGE>
As filed with the Securities and Exchange Commission on January 20, 1998
Registration No. 333- ______
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
COMMODORE APPLIED TECHNOLOGIES, INC.
(Exact name of issuer as specified in its charter)
Delaware 11-3312952
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 East 58th Street, Suite 3400
New York, New York 10155
(212) 308-5800
(Address, Including Zip Code, Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
PAUL E. HANNESSON
Chairman of the Board, President and Chief Executive Officer
Commodore Applied Technologies, Inc.
150 East 58th Street, Suite 3400
New York, New York 10155
(212) 308-5800
(Name, Address, Including Zip Code, and Telephone Number, Including
Area Code, of Agent For Service)
Copies of communications to:
STEPHEN A. WEISS, ESQ.
ANTHONY J. MARSICO, ESQ.
Greenberg Traurig Hoffman
Lipoff Rosen & Quentel
200 Park Avenue
New York, New York 10166
Tel: (212) 801-9200
Fax: (212) 801-6400
----------------
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following
box. [ ]
(continued on following page)
===============================================================================
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================
Proposed Proposed
Amount maximum maximum
Title of to be offering aggregate Amount of
Securities to be registered registered(1) price per share offering price registration fee
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.001 per share 2,582,700 shares(2) $3.59(3) $9,271,893.00 $2,735.21
</TABLE>
===============================================================================
(1) In the event of a stock split, stock dividend, or similar transaction
involving the common stock, par value $0.001 per share (the "Common
Stock"), of the Registrant, in order to prevent dilution, the number of
shares of Common Stock registered hereby shall be automatically increased
to cover the additional shares of Common Stock in accordance with Rule 416
under the Securities Act of 1933, as amended (the "Securities Act").
(2) Pursuant to Rule 429 under the Securities Act, this Registration Statement
contains a combined prospectus that relates to an aggregate of 4,686,601
shares of Common Stock, consisting of (i) 2,582,700 shares of Common Stock
being registered hereby and (ii) 2,103,901 unsold shares of Common Stock
previously registered pursuant to the Registrant's Registration Statement
on Form S-3 (Registration No. 333-38357), declared effective by the
Commission on October 31, 1997, which are being carried forward hereby. A
registration fee of $2,849.83 was paid in connection with the registration
of the 2,103,901 unsold shares of Common Stock on Registration Statement
No. 333-38357.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act. Represents the average
of the high and low prices (rounded to the nearest cent) reported for the
Common Stock on AMEX on January 16, 1998.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
Pursuant to Rule 429 under the Securities Act, this Registration
Statement contains a combined prospectus that also relates to an aggregate of
2,103,901 unsold shares of the Registrant's Common Stock previously registered
pursuant to the Registrant's Registration Statement on Form S-3 (Registration
No. 333-38357), which was declared effective by the Commission on October 31,
1997 (the "Previously Registered Securities"). A registration fee of $2,849.83
was paid in connection with the registration of the Previously Registered
Securities on Registration Statement No. 333-38357. In the event that any of
the Previously Registered Securities are offered and sold prior to the
effective date of this Registration Statement, the amount of such Previously
Registered Securities so sold will not be included in any prospectus
hereunder. This Registration Statement is a new Registration Statement and
also constitutes Post-Effective Amendment No. 1 to Registration Statement No.
333-38357. In accordance with Section 8(c) of the Securities Act, such
Post-Effective Amendment shall hereafter become effective concurrently with
the effectiveness of this Registration Statement.
<PAGE>
Information contained herein is subject to completion or amendment. A
Registration Statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the Registration Statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such state.
Subject to Completion, dated January 20, 1998
PROSPECTUS
4,686,601 Shares
Commodore Applied Technologies, Inc.
Common Stock
---------------------
This Prospectus relates to an aggregate of 4,686,601 shares (each, a
"Share" and collectively, the "Shares") of common stock, par value $0.001 per
share (the "Common Stock"), of Commodore Applied Technologies, Inc., a
Delaware corporation (the "Company"), which may be offered from time to time
by or for the accounts of the holders thereof (such holders being hereinafter
described as the "Selling Stockholders"). The number of Shares includes: (i)
1,562,200 Shares (subject to adjustment) which may be transferred to certain
Selling Stockholders upon conversion of an aggregate of 29,200 shares of 7%
Series D Convertible Preferred Stock, par value $0.01 per share and
liquidation preference of $100 per share (the "Series D Preferred Stock"), of
Commodore Environmental Services, Inc., a Delaware corporation and the owner
of approximately 52% of the outstanding shares of Common Stock of the Company
("Environmental"); (ii) 1,260,000 Shares (subject to adjustment) which may be
transferred to certain Selling Stockholders upon exercise of certain five-year
common stock purchase warrants (the "Environmental Warrants"), which were
issued to the holders of the Series D Preferred Stock; (iii) 284,887 Shares
(subject to adjustment) which may be issued to certain Selling Stockholders
upon conversion of an aggregate of 5,325 shares of 7% Series A Convertible
Redeemable Preferred Stock, par value $0.001 per share and liquidation
preference of $100 per share (the "Series A Preferred Stock"), of the Company;
(iv) 600,000 Shares (the "Private Placement Shares") issued to certain Selling
Stockholders in connection with a private placement of Common Stock by the
Company in October 1997 (the "Common Stock Private Placement"); (v) 79,407
Shares (subject to adjustment) which may be issued to certain Selling
Stockholders upon exercise of certain five-year common stock purchase warrants
(the "Company Warrants") issued to affiliates of the placement agents in
connection with the sale of the Series A Preferred Stock and the Common Stock
Private Placement; (vi) 714,166 Shares heretofore transferred to certain
Selling Stockholders upon prior conversions of Series D Preferred Stock; and
(vii) 185,941 Shares heretofore issued to certain Selling Stockholders upon
prior conversions of Series A Preferred Stock. The Shares which have been and
may be received by certain Selling Stockholders upon conversion of the Series
D Preferred Stock and upon exercise of the Environmental Warrants have been
and will be transferred to such Selling Stockholders from the account of
Environmental, which currently owns 11,949,137 shares of Common Stock of the
Company and warrants to purchase an additional 8,500,000 shares of Common
Stock. See "Recent Developments," "Selling Stockholders" and "Plan of
Distribution."
The number of Shares offered hereby includes such presently
indeterminable number of Shares as may be received by certain Selling
Stockholders upon conversion of the Series D Preferred Stock and the Series A
Preferred Stock, and upon exercise of the Environmental Warrants and the
Company Warrants. The number of Shares indicated to be transferable by
Environmental upon conversion of the Series D Preferred Stock and offered for
resale hereby is an estimate that assumes a Series D Preferred Stock
conversion price of $2.00 per share and is subject to adjustment. The number
of Shares indicated to be issuable by the Company upon conversion of the
Series A Preferred Stock and offered for resale hereby is an estimate that
assumes a Series A Preferred Stock conversion price of $2.00 per share and is
also subject to adjustment. Such amounts also include estimates of the number
of Shares which may be issued as accrued dividends for one year on the Series
D Preferred Stock and the Series A Preferred Stock. The actual number of
Shares to be received by the Selling Stockholders upon conversion of the
Series D Preferred Stock and the Series A Preferred Stock could be materially
less or more than such estimated amounts depending upon factors which cannot
be predicted at this time, including, among others, the actual conversion
prices of the Series D Preferred Stock and the Series A Preferred Stock. If
required, the actual number of Shares to be received by the Selling
Stockholders upon conversion of the Series D Preferred Stock and the Series A
Preferred Stock and resold hereby will be reflected in a supplement to this
Prospectus following the converson of such securities. See "Selling
Stockholders" and "Plan of Distribution."
The Common Stock is traded on the American Stock Exchange ("AMEX") under
the symbol "CXI." On January 16, 1998, the last reported sale price of the
Common Stock on AMEX was $3.625 per share. Prospective investors are urged to
obtain a current price quotation.
(continued on following page)
<PAGE>
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. THE COMPANY
WILL NOT RECEIVE ANY PROCEEDS FROM THIS OFFERING. SEE "RISK FACTORS" BEGINNING
ON PAGE 14.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is ________, 1998.
<PAGE>
The Series D Preferred Stock and the Environmental Warrants were issued
by Environmental, and the Series A Preferred Stock, the Private Placement
Shares and the Company Warrants were issued by the Company, in transactions
exempt from registration under the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state securities laws. 60,000 shares of
Series D Preferred Stock and Environmental Warrants to purchase 750,000 Shares
at an exercise price of $7.14 per Share (subject to adjustment) were issued to
three investors in connection with a $6.0 million private placement by
Environmental consummated on May 20, 1997 (as amended). An additional 28,000
shares of Series D Preferred Stock and Environmental Warrants to purchase
425,000 Shares at an exercise price of $5.15 per Share (subject to adjustment)
were issued to three additional investors in connection with a $2.8 million
private placement by Environmental consummated on August 18, 1997 (as
amended). Affiliates of the placement agent in connection with such private
placements received Environmental Warrants to purchase an aggregate of 85,000
Shares at exercise prices of $7.14 as to 60,000 Shares and $5.15 as to 25,000
Shares. 18,000 shares of Series A Preferred Stock were issued to six investors
in connection with a $1.8 million private placement by the Company consummated
on August 15, 1997. The placement agent in connection with the sale of the
Series A Preferred Stock received, among other things, Company Warrants to
purchase 19,407 Shares at $5.80 per Share. 700,000 shares of Common Stock were
issued to five investors in connection with the $2.6 million Common Stock
Private Placement by the Company in October 1997. Affiliates of the placement
agent in connection with the Common Stock Private Placement received Company
Warrants to purchase 60,000 Shares at $3.67 per Share. See "Recent
Developments," "Summary Financial Data," "Capitalization" and "Selling
Stockholders."
The Series D Preferred Stock is convertible into Shares at a conversion
price per Share equal to 85% of the lower of (a) the average of the low
prices, or (b) the average of the closing bid prices of the Common Stock (the
"Average Closing Bid Price") on AMEX as reported by Bloomberg, L.P.
("Bloomberg") for the five consecutive trading days immediately prior to the
date of conversion; provided, however, that the conversion price of the Series
D Preferred Stock will be equal to certain amounts set forth in the
Certificate of Designation, Rights and Preferences of the Series D Preferred
Stock if the Average Closing Bid Price of the Common Stock for any consecutive
30 days is equal to or less than $2.00. Notwithstanding the foregoing, in no
event will the conversion price of the Series D Preferred Stock be less than
$1.50. The Series A Preferred Stock is convertible into Shares at a conversion
price per Share equal to the lesser of (a) $4.64, or (b) 88% of the average of
the last reported sale price per share of the Common Stock (the "Average Share
Price") on AMEX as reported by Bloomberg for the five consecutive trading days
immediately prior to the date of conversion. Subject to customary
anti-dilution provisions, the minimum conversion price of the Series A
Preferred Stock is $2.00 per Share; provided, however, that if the Average
Share Price of the Common Stock is less than $2.00 for any 60 consecutive
calendar days, the holders of Series A Preferred Stock may, among other
things, elect to convert their shares of Series A Preferred Stock into Shares
without regard to such minimum $2.00 per Share price. See "Recent
Developments--Sale of Series D Preferred Stock by Environmental" and "--Sale
of Company Series A Preferred Stock."
The Shares may be sold from time to time by the Selling Stockholders or
their transferees. To the knowledge of the Company, no underwriting
arrangements have been entered into by the Selling Stockholders as of the date
hereof. The distribution of the Shares by the Selling Stockholders may be
effected in one or more transactions that may take place on AMEX, including
ordinary broker's transactions, privately negotiated transactions, or through
sales to one or more dealers as principals for resale of such Shares, at
prevailing market prices, or negotiated prices. Underwriting discounts and
usual and customary or specifically negotiated brokerage fees or commissions
will be paid by the Selling Stockholders in connection with the sale of the
Shares. The Selling Stockholders, and any broker-dealers, agents, or
underwriters through whom the Shares are sold, may be deemed "underwriters"
within the meaning of the Securities Act with respect to securities offered by
them, and any profits realized or commissions received by them may be deemed
underwriting compensation. See "Plan of Distribution."
The Company will not receive any proceeds from the sale of the Shares by
the Selling Stockholders. See "Use of Proceeds." By agreement with the Selling
Stockholders, the Company will pay all of the expenses incurred in connection
with the registration of the Shares under the Securities Act (other than
agent's or underwriter's commissions and discounts), estimated to be
approximately $30,000. See "Plan of Distribution."
2
<PAGE>
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, AND ANY INFORMATION OR REPRESENTATION NOT
CONTAINED OR INCORPORATED HEREIN BY REFERENCE MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR ANY OTHER
PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL
FOR SUCH PERSON TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS AT ANY TIME NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
---------------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549,
and at the Commission's Regional Offices located at 7 World Trade Center,
Suite 1300, New York, New York 10048, and at the Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material
can also be obtained at prescribed rates from the Public Reference Section of
the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. Additionally, the Company files such reports, proxy statements and
other information with the Commission electronically via the Commission's
EDGAR system. The Commission maintains a Web site that contains reports, proxy
statements and other information regarding registrants that file
electronically with the Commission via the EDGAR system. The address of the
Commission's Web site is "http://www.sec.gov".
The Common Stock is traded on AMEX under the symbol "CXI." Reports, proxy
statements and other information concerning the Company can also be inspected
at the offices of AMEX located at 86 Trinity Place, New York, New York 10006.
The Company has filed with the Commission a registration statement on
Form S-3 (herein, together with all amendments and exhibits, referred to as
the "Registration Statement") under the Securities Act with respect to the
Common Stock offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission.
For further information regarding the Company and the Common Stock offered
hereby, reference is hereby made to the Registration Statement and to the
exhibits and schedules filed therewith. The Registration Statement, including
the exhibits and schedules thereto, may be inspected at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549 and copies of all or any part thereof
may be obtained from such office upon payment of the prescribed fees.
3
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the
Commission (File No. 1-11871) under the Exchange Act are hereby incorporated
in this Prospectus by reference:
(a) The Company's Annual Report on Form 10-K for the year ended December
31, 1996;
(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30 and September 30, 1997;
(c) The Company's Current Report on Form 8-K, dated January 22, 1997;
(d) Amendment No. 1 on Form 8-K/A to the Company's Current Report on Form
8-K, dated January 22, 1997;
(e) The Company's Current Report on Form 8-K, dated August 15, 1997;
(f) The Company's definitive Proxy Statement, dated May 28, 1997, filed in
connection with the Company's 1997 Annual Meeting of Stockholders held
on June 17, 1997; and
(g) The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A, dated June 24, 1996, as amended by
the Company's Registration Statement on Form 8-A/A, dated June 26,
1996, including any other amendment or report filed for the purpose of
updating such description.
In addition, all documents filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of Common Stock hereby
shall be deemed to be incorporated by reference into this Prospectus and to be
a part hereof from the respective dates of filing of such documents.
Any statement contained herein or in a document all or part of which is
incorporated or deemed to be incorporated herein by reference shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any subsequently filed document which
also is or is deemed to be incorporated herein by reference modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus. All information appearing in this Prospectus is qualified in
its entirety by the information and financial statements (including the notes
thereto) appearing in the documents incorporated herein by reference, except
to the extent set forth in the immediately preceding sentence.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon the written or
oral request of such person, a copy of any or all of the documents
incorporated herein by reference (other than exhibits to such documents unless
such exhibits are specifically incorporated by reference into the documents
that this Prospectus incorporates). Written requests for copies should be
directed to Michael D. Fullwood, Senior Vice President, Chief Financial and
Administrative Officer, Secretary and General Counsel, at the principal
executive offices of Commodore Applied Technologies, Inc., 150 East 58th
Street, Suite 3400, New York, New York 10155. Telephone requests may be
directed to Mr. Fullwood at (212) 308-5800.
4
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
THE STATEMENTS CONTAINED IN THIS PROSPECTUS OR IN DOCUMENTS INCORPORATED
HEREIN BY REFERENCE THAT ARE NOT HISTORICAL FACTS, INCLUDING, WITHOUT
LIMITATION, IN PARTICULAR, STATEMENTS MADE (1) UNDER THE CAPTION "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" IN
THE COMPANY'S ANNUAL REPORTS ON FORM 10-K, IN THE COMPANY'S QUARTERLY REPORTS
ON FORM 10-Q AND IN ANY AMENDMENTS TO SUCH REPORTS, AND (2) IN THE COMPANY'S
CURRENT REPORTS ON FORM 8-K AND IN ANY AMENDMENTS TO SUCH REPORTS, MAY, IN
SOME CASES, INCLUDE STATEMENTS OF FUTURE EXPECTATIONS, PROJECTIONS OF REVENUE
AND INCOME, STATEMENTS OF FUTURE ECONOMIC PERFORMANCE AND OTHER
"FORWARD-LOOKING" STATEMENTS (AS DEFINED IN THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995) THAT ARE SUBJECT TO IMPORTANT FACTORS THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN ANY SUCH FORWARD-LOOKING
STATEMENTS. SUCH FACTORS INCLUDE, AMONG OTHERS, THE FOLLOWING: GENERAL
ECONOMIC AND BUSINESS CONDITIONS; COMPETITIVE FACTORS IN THE INDUSTRY,
INCLUDING ADDITIONAL COMPETITION FROM EXISTING COMPETITORS OR FUTURE ENTRANTS
TO THE INDUSTRY; SOCIAL AND ECONOMIC CONDITIONS; LOCAL, STATE AND FEDERAL
REGULATIONS; CHANGES IN BUSINESS STRATEGY OR DEVELOPMENT PLANS; THE
AVAILABILITY, TERMS AND DEPLOYMENT OF CAPITAL; THE AVAILABILITY OF QUALIFIED
PERSONNEL; AND OTHER FACTORS DETAILED HEREIN IN THE SECTION ENTITLED "RISK
FACTORS," ELSEWHERE HEREIN AND IN THE COMPANY'S OTHER COMMISSION FILINGS.
5
<PAGE>
THE COMPANY
The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information appearing
elsewhere in this prospectus or incorporated herein by reference. Investors
should also carefully consider the information set forth under the heading
"Risk Factors." As used herein, the term "Company" shall include Commodore
Applied Technologies, Inc. and its subsidiaries.
The Company, through its four principal subsidiaries, is primarily
engaged in (i) the development and commercialization of a variety of
environmental technologies for the destruction of hazardous materials, (ii)
providing environmental, technical and remediation services, and (iii) the
separation and recovery of metals, organic and other chemical compounds.
Decontamination and Neutralization of Hazardous Materials. Commodore
Solution Technologies, Inc., a wholly owned subsidiary of the Company
("Solution"), uses a patented non-thermal, portable and scalable process known
as SET(TM) for treating and decontaminating soils and other materials and
surfaces containing PCBs, pesticides, dioxins and other toxic contaminants to
an extent sufficient to satisfy current federal environmental guidelines.
Based on the results of laboratory testing, SET(TM) also appears capable of
neutralizing substantially all known chemical weapons materials and warfare
agents. On October 8, 1997, the U.S. Army announced that Teledyne-Commodore
LLC, a fifty-fifty joint venture of Teledyne Environmental, Inc. and Commodore
Government Environmental Technologies, Inc., had been named a finalist in the
Alt Tech II program to select an alternative technology to incineration.
Teledyne-Commodore LLC employs the SET(TM) technology. On March 15, 1996, the
United States Environmental Protection Agency ("EPA") issued to the Company a
Nationwide Permit for PCB disposal, which allows Solution to use SET(TM)
on-site to treat PCB-contaminated soils and metallic surfaces at any location
in the United States. Based on currently published lists of EPA national
operating permits, the Company believes that Solution possesses the only
non-thermal PCB treatment technology for multiple applications permitted under
the EPA's Alternate Destruction Technology Program. On April 3, 1996, the
Company was selected by the U.S. Department of Commerce as one of nine
companies to participate in the Rapid Commercialization Initiative ("RCI"),
which is a component of the Clinton Administration's efforts to streamline the
commercialization process for new environmental technologies, and to build
cooperative interactions between businesses and government to bring
environmental technologies to market more rapidly and efficiently. Solution is
currently negotiating potential collaborative joint working and marketing
arrangements with established engineering and environmental service
organizations. Solution, through its wholly owned subsidiary Commodore
Advanced Sciences, Inc. ("CAS"), received a Notice of Award on October 1, 1997
of a subcontract to remediate mixed waste (a combination of radioactive and
hazardous waste) at a U.S. Department of Energy ("DOE") facility at Weldon
Spring, Missouri, utilizing the SET(TM) technology. The Notice of Award was
made by the MK-Ferguson Group of Morrison Knudsen Corporation, the DOE's site
contractor. This is the first award to the Company of a contract employing the
SET(TM) technology in the remediation of mixed waste.
CFC Destruction, Separation and Recycling. Commodore CFC Technologies,
Inc. ("CFC Technologies"), a wholly owned subsidiary of the Company, is
applying certain environmental technologies to the destruction, separation and
recycling of CFCs and other ozone-depleting substances. CFC Technologies
received an exclusive, worldwide license from Environmental for the SET(TM)
technology for use relating to destruction of refrigerants. CFC Technologies
also owns a selective refrigerant destruction technology based on its aqueous
process for which patents are pending. In addition to these technologies, CFC
Technologies, through its wholly owned subsidiary, Commodore Refrigerant
Technologies, Inc. ("CORT"), has acquired an interest in a refrigerant
separation technology owned by Climate Supply (Atlantic) Inc. ("Climate
Supply"), a Canadian corporation located near Halifax, Nova Scotia. Climate
Supply owns patented equipment and a patented process which separates
refrigerants by the "fractional distillation" method. On September 1, 1996,
CORT entered into a joint venture, known as CORTCLIMATE, with Climate Supply
to pursue, with certain limited territorial exceptions, worldwide refrigerant
destruction, selective destruction and separation based on the SET(TM)
process, the aqueous technology and Climate Supply's fractional distillation
technology. To date, CORTCLIMATE has entered into a series of agreements with
certain companies throughout the world to establish refrigerant processing
centers where used refrigerant can be destroyed, selectively destroyed or
separated based on the SET(TM), aqueous and fractional distillation separation
technologies.
6
<PAGE>
Environmental, Technical and Remediation Services. CAS, a wholly owned
subsidiary of Solution, provides a full range of environmental, technical and
remediation services, including identification, investigation, remediation and
management of hazardous and mixed waste sites, to government agencies,
including the DOE and U.S. Department of Defense ("DOD"), and to
private-sector domestic and foreign industrial clients. CAS offers alternative
remediation approaches which may involve providing on-site waste containment
or management of on-site/off-site remediation and waste removal. CAS can also
redesign ongoing production processes and develop engineering plans and
technical specifications to minimize or eliminate the generation of hazardous
waste. The Company believes that CAS' integration of engineering and
environmental skills, plus its access to innovative technologies, provide CAS
with a competitive advantage in redesigning production processes. CAS has been
awarded environmental support services contracts by the DOE and DOD that will
be performed over the next several years. The Company intends to incorporate
Solution's SET(TM) technology into the products and services offered by CAS,
with a view to increasing the quality and scope of services offered by CAS and
providing the Company with a broader customer base for the SET(TM) technology.
Separation and Recovery Technology. Commodore Separation Technologies,
Inc., an 87% owned subsidiary of the Company ("Separation"), has developed and
intends to commercialize its separation technology and recovery system known
as SLiM(TM) (supported liquid membrane technology). Based on the results of
more than 100 laboratory and other tests to date, the Company believes that
SLiM(TM) can separate and recover chromium, cadmium, silver, mercury,
platinum, lead, zinc, nickel, trichlorethylene, polychlorinated biphenyls,
methylene chloride, amino acids, antibiotics, radionuclides, and other organic
and inorganic targeted substances from liquid and gaseous feedstreams. In
August 1996, Separation completed an on-site demonstration of SLiM(TM) for the
decontamination of chromium-contaminated groundwater at the Port of Baltimore,
Maryland. During this demonstration, an SLiM(TM) unit, in a single feedstream
pass through, reduced the contamination level of chromium from over 630 parts
per million (ppm) to less than one ppm. The results of this test were verified
by Artesian Laboratories, Inc., an independent testing laboratory. Separation
has since completed additional on-site demonstrations of SLiM(TM) at the Port
of Baltimore with similar results. Due to the success of such demonstrations,
in December 1997, Separation was awarded its first commercial project by the
State of Maryland and entered into a multi-year, sole-source contract with the
Maryland Environmental Service for the decontamination of
chromium-contaminated groundwater at the Port of Baltimore. In January 1997,
Separation entered into a license agreement with Lockheed Martin Energy
Research Corporation ("Lockheed Martin"), manager of the Oak Ridge National
Laboratory, a U.S. Department of Energy national laboratory, pursuant to which
Separation received the exclusive worldwide license, subject to a government
use license, to use and develop the technology related to the separation of
the radionuclides technetium and rhenium from mixed wastes containing
radioactive materials. Separation is currently negotiating potential
collaborative joint working and marketing arrangements with established
engineering and environmental service organizations.
The Company believes that its chemical processes and technologies offer a
safe, efficient and cost effective alternative to traditional methods for the
separation, destruction and disposal of toxic substances, which can be
utilized in a wide variety of industrial, military and other applications. The
Company is currently in the process of introducing these processes and
technologies on a commercial scale. In July 1996, the Company completed an
initial public offering (the "Initial Public Offering") of Common Stock and
Class A Warrants from which it received net proceeds of approximately $30.5
million. In April 1997, Separation completed an initial public offering of its
equity securities from which it received net proceeds of approximately $11.1
million.
The Company was incorporated in the State of Delaware in March 1996. The
principal executive offices of the Company are located at 150 East 58th
Street, Suite 3400, New York, New York 10155, and its telephone number is
(212) 308-5800.
7
<PAGE>
RECENT DEVELOPMENTS
Sale of Series D Preferred Stock by Environmental
On May 20, 1997, pursuant to 7% Preferred Stock Purchase Agreements (the
"Series D Purchase Agreements"), Environmental completed the sale to three
investors, for an aggregate purchase price of $6.0 million, of (i) 60,000
shares of Series D Preferred Stock, and (ii) Environmental Warrants entitling
the holders to purchase from Environmental an aggregate of 600,000 Shares. In
connection with an August 18, 1997 amendment to the May 20, 1997 Series D
Purchase Agreements, Environmental Warrants entitling the holders to purchase
from Environmental an additional 150,000 Shares were issued to the investors.
On August 14, 1997, Environmental completed the sale to three additional
investors, for an aggregate purchase price of $2.8 million, of (i) 28,000
additional shares of Series D Preferred Stock, and (ii) Environmental Warrants
entitling the holders to purchase from Environmental an additional 425,000
Shares.
The Series D Preferred Stock has a liquidation preference of $100 per
share (plus accumulated and unpaid dividends) (the "Series D Liquidation
Preference") and pays a 7% per-annum cumulative dividend, payable, at
Environmental's option, at the time of conversion in cash or shares of Common
Stock which are owned by Environmental, at the Series D Conversion Price (as
defined). Environmental currently owns 11,949,137 shares of Common Stock and
has reserved from such holdings a sufficient number of shares of Common Stock
to permit the conversion in full of the outstanding shares of Series D
Preferred Stock.
The Series D Preferred Stock has separate class voting rights as to
matters affecting such securities and votes together with holders of Common
Stock on all matters requiring stockholder approval on an "as converted"
basis, as though such shares of Series D Preferred Stock had been converted
into Common Stock on the record date used to determine the Common Stock
entitled to vote on such transaction or matter.
The Series D Preferred Stock may be converted by the holders at any time
or from time to time at the Series D Conversion Price (as defined). However,
each holder of Series D Preferred Stock may not convert more than 20% of its
shares of Series D Preferred Stock in any one month, subject to the right to
accumulate conversions so that any shares of Series D Preferred Stock not
converted in any one calendar month may be accumulated with the number of
convertible shares of Series D Preferred Stock in the next calendar month. The
Series D Preferred Stock is convertible by the holders into that number of
Shares equal to the Series D Liquidation Preference divided by the Series D
Conversion Price. The Series D Conversion Price is defined to mean an amount
equal to 85% of the lower of (i) the average of the low prices, or (ii) the
Average Closing Bid Price of the Common Stock on AMEX as reported by Bloomberg
for the five consecutive trading days immediately prior to the date of
conversion; provided, however, that the Series D Conversion Price will be
equal to certain amounts set forth in the Certificate of Designation, Rights
and Preferences of the Series D Preferred Stock if the Average Closing Bid
Price of the Common Stock for any consecutive 30 days is equal to or less than
$2.00. Notwithstanding the foregoing, in no event will the Series D Conversion
Price be less than $1.50. In the event that the Common Stock is not traded on
AMEX, the Average Closing Bid Price will be based on the average closing bid
price (or, if not available, the mean of the high and low price) of such
Common Stock on the over-the-counter market or the principal national
securities exchange or the Nasdaq National Market or Nasdaq SmallCap Market
system on which the Common Stock then trades.
The Environmental Warrants entitle the registered holders thereof to
purchase an aggregate of 1,260,000 Shares presently owned by Environmental.
The Environmental Warrants to purchase an aggregate of 750,000 Shares issued
to the investors in connection with the May 20, 1997 sale, as amended, are
exercisable at an initial exercise price equal to $7.14 per Share. The
Environmental Warrants to purchase 425,000 Shares issued to the investors in
connection with the August 14, 1997 sale transaction, as amended, are
exercisable at an initial exercise price of $5.15 per Share. Such exercise
prices are (in addition to customary anti-dilution adjustments) subject to
reset on August 18, 1998 to an exercise price equal to the lesser of (i) the
exercise price in effect immediately prior to August 18, 1998, or (ii) 110% of
the closing bid price of the Common Stock on August 17, 1998. In addition, if
the Common Stock trades at less than 50% of the August 17, 1998 closing bid
price for any 10 consecutive trading days, the exercise price is subject to
further reset (on one occasion only) to 50% of such August 17, 1998 closing
bid price.
8
<PAGE>
The transactions described above were deemed exempt from registration
under the Securities Act as transactions by an issuer not involving any public
offering. The recipients of the Series D Preferred Stock and the Environmental
Warrants in connection with the foregoing transactions represented their
intentions to acquire such securities for investment only and not with a view
to or for sale in connection with any distribution thereof, and appropriate
legends were contained in the Environmental Warrants and affixed to the
certificates representing the Series D Preferred Stock. Environmental engaged
Avalon Research Group, Inc. as a finder in connection with the sale of the
Series D Preferred Stock and the Environmental Warrants. Such firm received
fees aggregating $792,000 and, together with other transaction costs of
approximately $176,000, Environmental received aggregate net proceeds of
approximately $7.8 million from the sale of the Series D Preferred Stock and
Environmental Warrants. In addition to its commissions, affiliates of Avalon
Research Group, Inc. received Environmental Warrants to purchase an aggregate
of 85,000 Shares at exercise prices of $7.14 as to 60,000 Shares and $5.15 as
to 25,000 Shares.
As of the date of this Prospectus, an aggregate of 3,050,863 shares of
Common Stock have been transferred by Environmental to certain Selling
Stockholders upon conversion of an aggregate of 59,800 shares of Series D
Preferred Stock. Such shares were transferred based upon Series D Conversion
Prices ranging from $2.6031 per share to $1.50 per share. The 1,562,200 Shares
indicated to be transferable by Environmental upon conversion of the remaining
29,200 shares of Series D Preferred Stock and offered for resale hereby is an
estimate that assumes a Series D Conversion Price of $2.00 per share and is
subject to adjustment. Such amount also includes an estimate of the number of
Shares which may be issued as accrued dividends for one year on the Series D
Preferred Stock. The actual number of Shares to be received by the Selling
Stockholders upon conversion of the Series D Preferred Stock could be
materially less or more than such estimated amount depending upon factors
which cannot be predicted at this time, including, among others, the actual
Series D Conversion Prices. Because the shares of Common Stock which have been
and may be received by certain Selling Stockholders upon conversion of the
Series D Preferred Stock and upon exercise of the Environmental Warrants have
been and will be transferred to such Selling Stockholders from the account of
Environmental, the conversion of the Series D Preferred Stock and exercise of
the Environmental Warrants have not caused and will not cause any increase in
the number of outstanding shares of Common Stock.
Sale of Company Series A Preferred Stock
On August 15, 1997, pursuant to a Series A Convertible Preferred Stock
Purchase Agreement (the "Series A Purchase Agreement"), the Company completed
the sale to six investors, for an aggregate purchase price of $1.8 million, of
18,000 shares of newly-created Series A Preferred Stock of the Company.
The Series A Preferred Stock has a liquidation preference of $100 per
share (plus accumulated and unpaid dividends) (the "Series A Liquidation
Preference") and pays a 7% per-annum cumulative dividend, payable, at the
Company's option, at the time of conversion in cash or shares of Common Stock
at the Series A Conversion Price (as defined). The Series A Preferred Stock
ranks prior to all other classes of equity securities of the Company,
including Common Stock, as to distributions of assets upon liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary.
The Series A Preferred Stock has separate class voting rights as to
matters affecting such securities (which requires the consent or approval of
holders of 66-2/3% of the Series A Preferred Stock), and votes together with
holders of Common Stock on all matters requiring stockholder approval on an
"as converted" basis, as though such shares of Series A Preferred Stock had
been converted into Common Stock on the record date used to determine Common
Stock entitled to vote on such transaction or matter.
The Series A Preferred Stock may be converted by the holders thereof at
any time or from time to time at the Series A Conversion Price (as defined).
However, prior to July 31, 1999, each holder of Series A Preferred Stock may
not convert more than 20% of his or her shares of Series A Preferred Stock in
any one month, subject to the right to accumulate conversions so that any
shares of Series A Preferred Stock not converted in any one calendar month may
be accumulated with the number of convertible shares of Series A Preferred
Stock in the next calendar month. To the extent not converted voluntarily, as
of August 1, 1999 all remaining shares of Series A Preferred Stock will be
automatically converted into Shares at the Series A Conversion Price then in
effect.
9
<PAGE>
The Series A Preferred Stock is convertible by the holders thereof into
that number of Shares equal to the Series A Liquidation Preference divided by
the Series A Conversion Price. The Series A Conversion Price is defined to
mean an amount equal to the lesser of (a) $4.64, or (b) 88% of the Average
Share Price on AMEX as reported by Bloomberg for the five consecutive trading
days immediately prior to the date of conversion. Subject to customary
anti-dilution provisions, the minimum conversion price is $2.00 per Share;
provided, however, that if the Average Share Price is less than $2.00 for any
60 consecutive calendar days, the holders of the Series A Preferred Stock may
either demand mandatory redemption of such Series A Preferred Stock (at $100
per share plus accrued and unpaid dividends) or convert their shares of Series
A Preferred Stock into Shares without regard to such minimum $2.00 per Share
price.
So long as the Shares issuable upon conversion of the Series A Preferred
Stock are subject to a current registration statement under the Securities
Act, the Company has the right to voluntarily redeem the shares of Series A
Preferred Stock on not more than 60 and not less than 15 days prior notice, at
a redemption price equal to the sum of $100 per share, plus accrued and unpaid
dividends, and a redemption premium designed to provide the investor with a
12% annual yield on its shares of Series A Preferred Stock.
The Series A Preferred Stock is subject to mandatory redemption at $100
per share plus accrued and unpaid dividends upon the occurrence of certain
events, including (i) the Average Share Price for any 60 consecutive days
shall be less than $2.00, (ii) the Common Stock is not listed on any exchange
or over the-counter market for 15 consecutive trading days, or (iii) the
Company is required to obtain stockholder approval under AMEX or other stock
exchange regulations in order to issue shares of Common Stock upon conversion
of the Series A Preferred Stock and fails to obtain such requisite stockholder
approval within 90 calendar days.
The above transaction was deemed exempt from registration under the
Securities Act as a transaction by an issuer not involving any public
offering. The recipients of the Series A Preferred Stock represented their
intentions to acquire such securities for investment only and not with a view
to or for sale in connection with any distribution thereof, and appropriate
legends were contained in the Company Warrants and affixed to the certificates
representing the shares of Series A Preferred Stock. Pacific Continental
Securities, Inc. acted as placement agent in connection with the sale of the
Series A Preferred Stock and received $117,000 as compensation therefor, as
well as Company Warrants expiring on August 31, 2002 entitling the placement
agent to purchase 19,407 Shares at $5.80 per Share.
As of the date of this Prospectus, an aggregate of 579,238 shares of
Common Stock have been issued by the Company to certain Selling Stockholders
upon conversion of an aggregate of 12,675 shares of Series A Preferred Stock.
Such shares were issued based upon Series A Conversion Prices ranging from
$2.816 per share to $2.00 per share. The 284,887 Shares indicated to be
issuable by the Company upon conversion of the remaining 5,325 shares of
Series A Preferred Stock and offered for resale hereby is an estimate that
assumes a Series A Conversion Price of $2.00 per share and is subject to
adjustment. Such amount also includes an estimate of the number of Shares
which may be issued as accrued dividends for one year on the Series A
Preferred Stock. The actual number of Shares to be received by the Selling
Stockholders upon conversion of the Series A Preferred Stock could be
materially less or more than such estimated amount depending upon factors
which cannot be predicted at this time, including, among others, the actual
Series A Conversion Prices.
Sale of 700,000 Shares of Common Stock
On October 2, 1997, the Company completed the sale of 600,000 shares of
Common Stock to four investors for an aggregate purchase price of $2,205,000.
Pursuant to stock purchase agreements, dated September 26, 1997 (the "Common
Stock Purchase Agreements"), by and between the Company and each of four
private investors, if, during the twelve-month period following October 2,
1997 (the "Anniversary Period"), the Company shall (i) sell any shares of
Common Stock, (ii) issue any security convertible into or exercisable for
Common Stock, or (iii) issue any shares of Common Stock during such
Anniversary Period (but not thereafter) upon conversion of its currently
outstanding Series A Preferred Stock, in each case, for a selling price,
conversion price or exercise price per share which shall be lower than the
$3.675 per share purchase price of the 600,000
10
<PAGE>
shares of Common Stock (such lower price being the "Reset Price"), the $3.675
per share purchase price will be adjusted downward at the end of the
Anniversary Period so as to equal the Reset Price. The lowest selling price,
conversion price or exercise price per share at which the Company issues
Common Stock or securities convertible or exercisable into Common Stock during
the Anniversary Period will determine the applicable Reset Price, except that
(a) the lowest sales, exercise or conversion prices associated with issuance
by the Company of up to 10,000 shares of Common Stock, and (b) the transfer of
Shares by Environmental upon conversion of outstanding shares of Series D
Preferred Stock or upon exercise of outstanding Environmental Warrants shall
be excluded in determining the Reset Price.
On October 8, 1997, the Company completed the sale of an additional
100,000 shares of Common Stock to one additional investor for an aggregate
purchase price of $393,125. The stock purchase agreement in connection with
such sale contains terms identical to those contained in the Common Stock
Stock Purchase Agreements in connection with the Sale of the 600,000 shares of
Common Stock, except that the Anniversary Period is defined to mean the
twelve-month period following October 8, 1997, and the Reset Price is
calculated based on a purchase price of $3.93125 per share.
Cappello Capital Corp. acted as placement agent in connection with the
Common Stock Private Placement and received $209,475 in compensation therefor.
Affiliates of the placement agent received Company Warrants expiring September
30, 2002 to purchase an aggregate of 60,000 Shares at $3.675 per share.
The above transaction was deemed exempt from registration under the
Securities Act as a transaction by an issuer not involving any public
offering. The recipients of the shares of Common Stock in the Common Stock
Private Placement represented their intentions to acquire such securities for
investment only and not with a view to or for sale in connection with any
distribution thereof, and appropriate legends were affixed to the certificates
representing such shares of Common Stock.
The Company received aggregate net proceeds of approximately $4.0 million
from the sale of the Series A Preferred Stock and the Common Stock Private
Placement.
Convertible Loan from Environmental to the Company
On September 23, 1997, Environmental provided the Company with a $4.0
million unsecured loan, evidenced by the Company's 8% convertible subordinated
note due August 31, 2002 (the "Convertible Loan").
Pursuant to the terms of such note, the Company is obligated to pay
Environmental interest only at the rate of 8% per annum, payable quarterly on
the last day of December, March, June and September. Unless converted into
Common Stock, the unpaid principal amount of the note is due and payable,
together with accrued and unpaid interest, on the 2002 maturity date.
The Company may at its option prepay the note at any time or from time to
time, without premium or penalty, upon 30 days advance written notice. Such
right of prepayment is subject to Environmental's right to convert the note
into Common Stock prior to the date fixed for prepayment. Payments of
principal and accrued interest under the Company note is fully subject and
subordinated to all other indebtedness for money borrowed of the Company.
Environmental has the right to convert the note into shares of Common
Stock at a conversion price of $3.89 per share (one full share of Common Stock
for each $3.89 principal amount of the note so converted). Such conversion
price was fixed at approximately 85% of the five-day average closing bid price
of Common Stock ($4.575 per share) as traded on AMEX for the five trading days
prior to August 22, 1997, the date that the executive committees of the
respective Boards of Directors of each of Environmental and the Company
authorized the Convertible Loan. In consideration of the Convertible Loan,
Environmental received warrants expiring August 31, 2002 to purchase 1,000,000
shares of Common Stock at an exercise price of $5.0325 per share
(approximately 110% of the $4.575 five-day average closing bid price of Common
Stock through August 22, 1997). Such exercise price is subject to customary
anti-dilution adjustments.
With the proceeds from the sale of the Series A Preferred Stock and the
Common Stock Private Placement, and the proceeds from the Convertible Loan,
the Company believes that it has sufficient cash reserves to meet expenses
incurred in the ordinary course of business until the third quarter of 1998.
The foregoing does not, however, include funds that may be required to finance
capital equipment or acquisition opportunities which may arise in the future.
Although the Company believes that funds will be available for such purposes
and that it will secure sufficient commercial business to achieve operating
profits in the second half of 1998, there is no assurance that this will be
the case or that the Company will ever be able to achieve profitability.
11
<PAGE>
SUMMARY FINANCIAL DATA
(in thousands, except per share data)
The summary financial data included in the following table as of December
31, 1995 and 1996 and for the years ended December 31, 1994, 1995 and 1996 are
derived from the Consolidated Financial Statements included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, incorporated
herein by reference. The summary financial data as of September 30, 1997 and
for the nine months ended September 30, 1996 and 1997 are derived from the
unaudited Consolidated Financial Statements included in the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997,
incorporated herein by reference. Financial data for the year ended December
31, 1996 and for the nine months ended September 30, 1997 are not necessarily
indicative of the results of operations to be expected in the future. The
summary financial data should be read in conjunction with the Consolidated
Financial Statements referenced above.
Consolidated Statement of Operations Data:
<TABLE>
<CAPTION>
Nine months ended
Year ended December 31, September 30,
------------------------------------- --------------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenue:
Contract revenue ........................ $ -- $ -- $ 5,123 $ 35 $ 15,717
Cost of sales:
Cost of sales ........................... -- -- 4,136 64 12,479
Research and development ............... 380 1,815 2,364 1,604 2,185
General and administrative ............... 1,369 1,773 3,412 1,346 9,398
Amortization ........................... -- -- 219 -- 771
Minority interests ..................... -- -- -- -- (201)
Write-off of in-process technology ...... 2,424 -- -- -- --
-------- -------- --------- --------- ---------
Loss from operations ..................... (4,173) (3,588) (5,008) (2,979) (8,915)
Interest income ........................ 7 6 477 229 507
Interest expense ........................ (551) (274) (617) (383) (1,162)
Income taxes ........................... -- -- -- -- (2)
Equity in net losses of subsidiary ...... -- -- (495) -- (1,466)
-------- -------- --------- --------- -----------
Net loss ................................. $ (4,717) $ (3,856) $ (5,643) $ (3,133) $ (11,038)
======== ======== ========= ========= ===========
Net loss per share ........................ $ (0.31) $ (0.26) $ (0.31) $ (0.18) $ (0.51)
======== ======== ========= ========= ===========
Weighted average number of shares ......... 15,000 15,000 18,100 16,971 21,650
Pro forma information (1):
Net loss (2) ........................... $ (6,888) $ (10,678)
Preferred dividends (3) .................. (342) (94)
--------- -----------
Net loss attributable to common stock-
holders $ (7,230) $ (10,772)
========= ===========
Weighted average number of shares
outstanding (4) ........................ 18,800 22,350
========= ===========
Net loss per share ..................... $ (0.38) $ (0.48)
========= ===========
</TABLE>
Consolidated Balance Sheet Data:
<TABLE>
<CAPTION>
December 31, September 30, 1997
----------------------- ---------------------------
Pro Forma
1995 1996 Actual As Adjusted(5)
----------- --------- --------- ---------------
<S> <C> <C> <C> <C>
Cash and cash equivalents ...... $ 4 $ 4,617 $ 1,839 $ 4,398
Temporary investments ......... -- 7,459 12,997 12,997
Total assets .................. 1,091 33,456 32,635 35,194
Long term debt .................. -- 118 3,162 3,162(6)
Total liabilities ............... 9,633 13,380 9,371 9,371
Minority interests ............ -- -- 5,226 5,226
Redeemable securities ......... -- -- 1,626 4,185(7)
Stockholders' equity ............ (8,542) 20,076 16,412 16,412(8)
</TABLE>
12
<PAGE>
- ------------
(1) Gives effect to the sale of the Series A Preferred Stock, the Common Stock
Private Placement, and the Convertible Loan from Environmental to the
Company as described herein as if such transactions had occurred on
January 1, 1996. Management has estimated the fair values of the warrants
issued in connection with the Convertible Loan from Environmental and the
beneficial conversion feature associated with the sale of Series A
Preferred Stock. Management is in the process of engaging an expert in the
field of valuations to determine the actual fair values of these items.
(2) Includes pro forma interest expense for the year ended December 31, 1996
of $320 of cash to be paid and estimated amounts for (a) the beneficial
conversion feature of $750 immediately recognized and (b) the discount
amortization of $175 on the Convertible Loan from Environmental. Includes
pro forma interest expense for the nine months ended September 30, 1997 of
$240 cash to be paid and $150 of estimated discount amortization on the
Convertible Loan from Environmental, based on the assumption in (1) and an
offset to interest expense for the $750 beneficial conversion feature
mentioned above, which was recorded by the Company in the nine months
ended September 30, 1997.
(3) Pro forma preferred dividends represent the 7% dividend rate on the Series
A Preferred Stock plus the amortization of the beneficial conversion
feature based on the assumption in (1).
(4) Pro forma weighted average shares outstanding include the 600,000 shares
of Common Stock issued on October 2, 1997 and the 100,000 shares of Common
Stock issued on October 8, 1997, based on the assumption in (1). Pro forma
weighted average shares outstanding does not assume conversion of any
options, warrants, or other securities as such conversion would have an
antidilutive effect.
(5) Gives effect to the Common Stock Private Placement as described herein as
if such transaction had occurred on September 30, 1997. Management has
estimated the fair values of the warrants issued in connection with the
Convertible Loan from Environmental and the beneficial conversion feature
associated with the sale of Series A Preferred Stock. Management is in the
process of engaging an expert in the field of valuations to determine the
actual fair values of these items.
(6) Includes the $4,000 face amount of the Convertible Loan from Environmental
to the Company, less the estimated $1,270 discount on the loan.
(7) Represents the estimated fair value of the Series A Preferred Stock at the
time of issuance and the proceeds from the Common Stock Private Placement.
The estimated fair value of the Series A Preferred Stock is calculated as
the $1,800 face amount of the securities less the estimated value of the
beneficial conversion feature, $216. The price reset feature associated
with the Common Stock Private Placement contains certain provisions which
may require the refund of a portion of the cash proceeds from the sale.
Accordingly, this security has been classified as a redeemable security
until such time as the reset feature lapses.
(8) Includes the $1,270 estimated value of the warrant associated with the
Convertible Loan from Environmental, and the $216 and $750 estimated
values of the beneficial conversion features related to the sale of the
Series A Preferred Stock and the Convertible Loan from Environmental,
respectively, offset by the immediate recognition of interest expense
related to the estimated value of the beneficial conversion feature of the
Convertible Loan from Environmental.
13
<PAGE>
RISK FACTORS
The securities offered hereby are highly speculative in nature and
involve a high degree of risk. Prior to making an investment decision,
prospective investors in the Shares offered hereby should give careful
consideration to the information set forth in this Prospectus or incorporated
herein by reference and, in particular, should evaluate the risk factors set
forth below.
Limited Operating History; History of Losses; Future Losses; Initial
Commercialization Stage
The Company's limited operating history has consisted primarily of
development of SET(TM) and remediation equipment, conducting laboratory tests,
and planning on-site tests and demonstrations. The Company is subject to all
of the business risks associated with a new enterprise, including, but not
limited to, risks of unforeseen capital requirements, failure of market
acceptance, failure to establish business relationships, and competitive
disadvantages as against larger and more established companies. For the fiscal
year ended December 31, 1996, the Company had total revenues of $5,123,000 and
a net loss of $5,643,000, compared to total revenues of $0 and a net loss of
$3,856,000 for the fiscal year ended December 31, 1995. For the nine months
ended September 30, 1997, the Company had total revenues of $15,717,000 and a
net loss of $11,038,000, compared to total revenues of $35,000 and a net loss
of $3,133,000 for the nine months ended September 30, 1996. At December 31,
1996, the Company had stockholders' equity of $20,076,000, and working capital
of $8,991,000, compared to an accumulated stockholders' deficit of $8,542,000
and a working capital deficit of $9,200,000 at December 31, 1995. At September
30, 1997, the Company had stockholders' equity of $16,412,000, and working
capital of $14,382,000.
The Company anticipates that it will continue to incur significant
operating losses through 1998 and may incur additional losses thereafter,
depending upon its ability to consummate collaborative working arrangements or
licenses with third parties and the operation and financial success of any
environmental projects which the Company and its potential working partners
may be awarded. Other than revenues generated by CAS, which the Company
acquired effective October 1, 1996, the Company has generated nominal revenues
to date, and there can be no assurance as to whether or when it will generate
material revenues or achieve profitable operations.
SET(TM) and SLiM(TM) Unproven on Large-Scale Commercial Basis
SET(TM) and SLiM(TM) have never been utilized on a large-scale basis, and
there can be no assurance that such technologies will perform successfully on
a large-scale commercial basis or that they will be profitable to the Company.
The Company has never utilized SET(TM) and SLiM(TM) under the conditions and
in the volumes that will be required to be profitable and cannot predict all
of the difficulties that may arise. In addition, most of the results of the
tests conducted by the Company on SET(TM) and SLiM(TM) have not been verified
by an independent testing laboratory. Thus, it is possible that the Company's
SET(TM) and SLiM(TM) technologies may require further research, development,
design and testing, as well as regulatory clearances, prior to larger-scale
commercialization. Additionally, the Company's ability to operate its business
successfully will depend on a variety of factors, many of which are outside
the Company's control, including competition, cost and availability of
supplies, changes in governmental initiatives and requirements, changes in EPA
and other regulatory requirements, and the costs associated with equipment
repair and maintenance.
No Assurance of Collaborative Agreements, Licenses or Project Contracts
The Company's business strategy is based upon entering into collaborative
joint working arrangements with established engineering and environmental
companies, or format joint venture agreements relative to the application of
SET(TM) and SLiM(TM) as enabling technologies for specified industries or
markets. To date, only CAS and its collaborative joint working partners and
Separation have been awarded material project contracts. There can be no
assurance that the Company will enter into any definitive joint project
arrangements or joint venture collaborative agreements with its prospective
working partners or others, or that such agreements, if entered into, will be
on terms and conditions that are sufficiently attractive to the Company to
enable it to generate profits. In the event the Company is unable to enter
into commercially attractive collaborative working arrangements for one or
more commercial or industrial remediation projects, in order to produce
revenues for the Company, it may
14
<PAGE>
be necessary to license SET(TM) and/or SLiM(TM) to unaffiliated third parties.
There is no assurance that the Company will be able to enter into such license
arrangements or that such licenses will produce any income to the Company.
Even if the Company is able to complete additional joint working arrangements,
there is no assurance that the Company and its working partners will be
awarded contracts to perform decontamination or remediation projects. Even if
such contracts are awarded, there is no assurance that these contracts will be
profitable to the Company. In addition, any project contract which may be
awarded to the Company and/or any of its joint working partners may be
curtailed, delayed, redirected or eliminated at any time. Problems experienced
on any specific project, or delays in the implementation and funding of
projects, could materially adversely affect the Company's business and
financial condition.
Uncertainty of Market Acceptance
Many prospective users of SET(TM) have already committed substantial
resources to other forms of environmental remediation technology, including
incineration, plasma arc, vitrification, molten metal, molten salt, chemical
neutralization, catalytic electrochemical oxidation and supercritical wet
oxidation. In addition, many prospective users of SLiM(TM) have committed
substantial resources to other forms of process stream treatments or
technologies. The Company's growth and future financial performance will
depend on demonstrating to prospective collaborative partners and users the
advantages of SET(TM), SLiM(TM) and the Company's other environmental
technologies over alternative technologies. There can be no assurance that the
Company and its prospective collaborative partners will be successful in this
effort. Furthermore, it is possible that competing alternatives may be
perceived to have, or may actually have, certain advantages over SET(TM),
SLiM(TM) and/or the Company's other environmental technologies for certain
industries or applications.
Risk of Environmental Liability
The Company's operations, as well as the use of the specialized technical
equipment by its customers, are subject to numerous federal, state and local
regulations relating to the storage, handling, emission and transportation of
certain regulated materials. There is always the risk that such materials
might be mishandled, or that there might be equipment or technology failures,
which could result in significant claims against the Company. Any such claims
against the Company could materially adversely affect the Company's business,
financial condition and results of operations.
As SET(TM), SLiM(TM) and the Company's other environmental technologies
are commercialized, the Company may be required to obtain environmental
liability insurance in the future in amounts greater than those it currently
maintains. There can be no assurance that such insurance will provide coverage
against all claims, and claims may be made against the Company (even if
covered by the Company's insurance policy) for amounts substantially in excess
of applicable policy limits. Any such event could have a material adverse
effect on the Company's business, financial condition and results of
operations.
Potential Need for Additional Financing
In July 1996, the Company completed the Initial Public Offering, from
which it received net proceeds of approximately $30.5 million. In April 1997,
Separation completed an initial public offering of its equity securities, from
which it received net proceeds of approximately $11.1 million. In August and
October 1997, the Company completed the private placement of 18,000 shares of
Series A Preferred Stock and the Common Stock Private Placement, respectively,
from which the Company received aggregate net proceeds of approximately $4.0
million. In addition, in September 1997, the Company received the $4.0 million
Convertible Loan from Environmental.
Prior to such financings, financing for all of the Company's activities
had been provided in the form of direct equity investments and loans by
Environmental. While the Company believes that it has sufficient cash reserves
to meet expenses incurred in the ordinary course of business until the third
quarter of 1998, the Company's future capital requirements will depend on
certain factors, many of which are not within the Company's control. These
include the ongoing development and testing of SET(TM), SLiM(TM) and the
Company's other environmental technologies; the nature and timing of
remediation and clean-up projects and permits required; and the availability
of financing.
15
<PAGE>
In the environmental remediation market, the Company may not be able to
enter into favorable business collaborations and might thus be required to bid
upon projects for its own account. If such bids were successful, the Company
would be required to make significant expenditures on personnel and capital
equipment which would require significant financing in amounts substantially
in excess of the net proceeds of the above financings. In addition, the
Company's lack of operational experience and limited capital resources could
make it difficult, if not highly unlikely, to successfully bid on major
reclamation or clean-up projects. In such event, the Company's business
development could be limited to remediation of smaller commercial and
industrial sites with significantly lower potential for profit.
In addition, the expansion of the Company's business will require the
commitment of significant capital resources toward the hiring of technical and
operational support personnel, the development of a manufacturing and testing
facility for SET(TM) and SLiM(TM) equipment, and the building of equipment to
be used both for on-site test demonstrations and the remediation of
contaminated elements. In the event the Company is presented with one or more
significant reclamation or clean-up projects, individually or in conjunction
with collaborative working partners, it may require additional capital to take
advantage of such opportunities. There can be no assurance that such financing
will be available or, if available, that it will be on favorable terms. If
adequate financing is not available, the Company may be required to delay,
scale back or eliminate certain of its research and development programs, to
relinquish rights to certain of its technologies, or to license third parties
to commercialize technologies that the Company would otherwise seek to develop
itself.
Competition and Technological Alternatives
The Company anticipates that the primary markets for its technologies
will be for hazardous and toxic waste and industrial by-products treatment and
disposal, the destruction or neutralization of chemical weapons materials and
warfare agents, and the concentration of radioactive wastes. The Company has
had limited experience in marketing its technologies and has a small sales and
marketing organization, whereas other participants in both the private and
public sectors include several large domestic and international companies and
numerous small companies, many of whom have substantially greater financial
and other resources and more manufacturing, marketing and sales experience
than the Company. Any one or more of the Company's competitors or other
enterprises not presently known to the Company may develop technologies which
are superior to SET(TM), SLiM(TM) or other technologies utilized by the
Company. To the extent that the Company's competitors are able to offer more
cost-effective remediation alternatives, the Company's ability to compete
could be materially and adversely affected.
Unpredictability of Patent Protection and Proprietary Technology
The Company has seven United States patents which issued between 1987 and
1996, and which relate to SET(TM), electrochemistry of halogenated organic
compounds, separation and destruction of CFCs and decontamination of soils
containing mercury and radioactive metals. The Company also has one Canadian
patent relating to its SET(TM) technology. The Company has filed five
additional United States patent applications relating to separation and
destruction of CFCs and removal of heavy metals from soil. In November 1995,
the Company filed a provisional patent application relating to the destruction
of chemical warfare agents. On September 15, 1997, Separation filed two United
States continuation-in-part ("CIP") provisional patent applications and, on
September 16, 1997, filed one international patent application covering the
principal features of its SLiM(TM) technology. One of the CIP provisional
patent applications covers the joint inventions of Srinivas Kilambi, Ph.D.,
Separation's former Senior Vice President-Technology, and Lockheed Martin. The
other CIP provisional patent application and the international patent
application cover the sole inventions of Dr. Kilambi.
The Company's success depends, in part, on its ability to obtain
additional patents, protect the patents which it owns, maintain trade secrecy
protection and operate without infringing on the proprietary rights of third
parties. The patents currently owned by the Company are improvement patents
which are more difficult to monitor for infringement than those that would be
contained in a patent covering a pioneering invention or technology. There can
be no assurance that any of the Company's pending patent applications will be
approved, that the Company will develop additional proprietary technology that
is patentable, that any patents issued to the Company will provide the Company
with competitive advantages or will not be challenged by third parties or that
16
<PAGE>
the patents of others will not have an adverse effect on the Company's ability
to conduct its business. Furthermore, there can be no assurance that others
will not independently develop similar or superior technologies, duplicate any
elements of SET(TM), SLiM(TM) or the Company's other technologies, or design
around such technologies. It is possible that the Company may need to acquire
licenses to, or to contest the validity of, issued or pending patents of third
parties. There can be no assurance that any license acquired under such
patents would be made available to the Company on acceptable terms, if at all,
or that the Company would prevail in any such contest. In addition, the
Company could incur substantial costs in defending itself in suits brought
against the Company for alleged infringement of another party's patents or in
defending the validity or enforceability of the Company's patents, or in
bringing patent infringement suits against other parties based on the
Company's patents.
In addition to patent protection, the Company also relies on trade
secrets, proprietary know-how and technology which it seeks to protect, in
part, by confidentiality agreements with its prospective working partners and
collaborators, employees and consultants. There can be no assurance that these
agreements will not be breached, that the Company would have adequate remedies
for any breach, or that the Company's trade secrets and proprietary know-how
will not otherwise become known or be independently discovered by others.
Government Regulation
The Company and its customers are required to comply with a number of
federal, state and local laws and regulations in the areas of safety, health
and environmental controls, including, without limitation, the Resource
Conservation and Recovery Act, as amended ("RCRA"), and the Occupational
Safety and Health Act of 1970 ("OSHA"), which may require the Company, its
prospective working partners or its customers to obtain permits or approvals
to utilize SET(TM) and/or SLiM(TM), or the Company's other environmental
technologies and related equipment on certain job sites. In addition, if the
Company begins to market SET(TM) and SLiM(TM) internationally, the Company
will be required to comply with laws and regulations and, when applicable,
obtain permits or approvals in those other countries. There is no assurance
that such required permits and approvals will be obtained. Furthermore,
particularly in the environmental remediation market, the Company may be
required to conduct performance and operating studies to assure government
agencies that SET(TM) and/or SLiM(TM), and their by-products, do not pose
environmental risks. There is no assurance that such studies, if successful,
will not be more costly or time-consuming than anticipated.
In addition, the Company's Nationwide Permit issued by the EPA contains
numerous conditions for maintaining the Nationwide Permit, including
notification of all job sites, periodic reporting to the EPA as to activities
at the job sites, prior notification to and approval by the EPA with respect
to any single-site centralized remediation facility that the Company may seek
to establish and certain restrictions on the disposal of byproducts from the
use of SET(TM), and there can be no assurance that the Company will be able to
comply with such conditions in order to maintain and/or obtain renewal of the
Nationwide Permit.
Further, if new environmental legislation or regulations are enacted or
existing legislation or regulations are amended, or are interpreted or
enforced differently, the Company, its prospective working partners and/or its
customers may be required to meet stricter standards of operation and/or
obtain additional operating permits or approvals. There can be no assurance
that the Company will meet all of the applicable regulatory requirements.
Unspecified Acquisition-Related Risks
As part of its growth strategy, the Company will seek to acquire or
invest in complementary (including competitive) businesses, products or
technologies. The Company may allocate a significant portion of its available
working capital to finance a portion of the purchase price relating to
possible acquisitions of, or investments in, complementary (including
competitive) business, products or technologies. In the event any such
acquisition or investment opportunity arises in the future, it is probable
that the Company will also be required to obtain additional financing to
complete such transaction. The process of integrating such acquired assets
into the Company's operations may result in unforeseen operating difficulties
and expenditures and may absorb significant management attention that would
otherwise be available for the ongoing development of the Company's business.
There can be no assurance that the anticipated benefits of any acquisitions
will be realized. In addition,
17
<PAGE>
future acquisitions by the Company could result in potentially dilutive
issuances of equity securities, the incurrence of debt and contingent
liabilities and amortization expenses related goodwill and other intangible
assets, any of which could materially adversely affect the Company's operating
results and financial position. Acquisitions also involve other risks,
including entering markets in which the Company has no or limited prior
experience. The Company currently has no commitments or agreements with
respect to any possible acquisitions or investments.
Dependence on Key Management and Other Personnel
The Company is dependent on the efforts of its senior management and
scientific staff, including, among others, Paul E. Hannesson, Chairman of the
Board, President and Chief Executive Officer, Edwin L. Harper, Ph.D., Vice
Chairman, Michael D. Fullwood, Senior Vice President, Chief Financial and
Administrative Officer, Secretary and General Counsel, and Kenneth L. Adelman,
Ph.D., Executive Vice President--Marketing and International Development of
the Company and President and Chief Operating Officer of Solution. The Company
is also dependent on the efforts of Kenneth J. Houle, President and Chief
Operating Officer of Separation. The proceeds of key-man life insurance
policies on the lives of certain of such individuals may not be adequate to
compensate the Company for the loss of any of such individuals. The loss of
the services of any one or more of such persons may have a material adverse
effect on the Company.
The Company's future success will depend in large part upon its ability
to attract and retain skilled scientific, management, operational and
marketing personnel. The Company faces competition for hiring such personnel
from other companies, government entities and other organizations. There can
be no assurance that the Company will continue to be successful in attracting
and retaining such personnel.
Potential Conflicts of Interest
Paul E. Hannesson and Michael D. Fullwood, the Chairman of the Board,
President and Chief Executive Officer and the Senior Vice President, Chief
Financial and Administrative Officer, Secretary and General Counsel of the
Company, respectively, also serve in the same capacities with, and devote a
significant portion of their business and professional time and efforts to the
business of, Environmental and Separation. In addition, Bentley J. Blum, Edwin
L. Harper, Ph.D., Kenneth L. Adelman, Ph.D. and David L. Mitchell (the
"Environmental Directors"), all of whom are directors of the Company, also
serve as directors of Environmental and Separation. While the Company believes
that its business and technologies are distinguishable from those of
Environmental, and that it does not compete in the markets in which
Environmental competes, Messrs. Hannesson and Fullwood and the Environmental
Directors may have potential conflicts of interest with respect to, among
other things, potential corporate opportunities, business combinations, joint
ventures and/or other business opportunities that may become available to
them, the Company and/or Environmental. Moreover, while Messrs. Hannesson and
Fullwood have agreed to devote a portion of their business and professional
time and efforts to the Company, potential conflicts of interest also include
the amount of time and effort devoted by them to the affairs of Environmental
and Separation. The Company may be materially adversely affected if Messrs.
Hannesson and Fullwood and/or the Environmental Directors choose to place the
interests of Environmental or Separation before those of the Company. Each of
Messrs. Hannesson and Fullwood and the Environmental Directors has agreed
that, to the extent such opportunities arise, he will carefully consider a
number of factors, including whether such opportunities are within the
Company's line of business or consistent with its strategic objectives and
whether the Company will be able to undertake or benefit from such
opportunities. In addition, the Company's Board of Directors has adopted a
policy whereby any future transactions between the Company and any of its
subsidiaries, affiliates, officers, directors, principal stockholders or any
affiliates of the foregoing will be on terms no less favorable to the Company
than could reasonably be obtained in "arms length" transactions with
independent third parties, and any such transactions will also be approved by
a majority of the Company's disinterested outside directors. Messrs. Hannesson
and Fullwood and the Environmental Directors also owe fiduciary duties of care
and loyalty to the Company under Delaware law. However, the failure of the
Company's management to resolve any conflicts of interest in favor of the
Company could materially adversely affect the Company's business, financial
condition and results of operations.
18
<PAGE>
Control by Principal Stockholder
Environmental, a public company whose common stock trades in the
so-called "pink sheets" of the National Quotation Bureau, Inc. (the "Pink
Sheets") and is quoted on the OTC Bulletin Board of the National Association
of Securities Dealers, Inc. (the "OTCBB"), currently owns approximately 52% of
the outstanding shares of Common Stock of the Company. Accordingly, events or
circumstances having an adverse effect on Environmental, including
fluctuations in the market price of its common stock, could have a material
adverse effect on the market price of the Shares.
Bentley J. Blum, a director of the Company and Environmental,
beneficially owned, directly and through entities controlled by him,
approximately 51.0% of the outstanding common stock of Environmental as of
January 16, 1998. Paul E. Hannesson, the Chairman of the Board, President and
Chief Executive Officer of the Company and Environmental, beneficially owned
approximately 11.8% of the outstanding common stock of Environmental as of
such date. Accordingly, through his ownership or control of a controlling
stock interest in Environmental, Mr. Blum will be able to control, subject to
the terms of a voting agreement, the voting of Environmental's shares at all
meetings of stockholders of the Company and, because the Common Stock does not
have cumulative voting rights, will be able to determine the outcome of the
election of all of the Company's directors and determine corporate and
stockholder action on other matters. Messrs. Blum and Hannesson are
brothers-in-law.
Potential Adverse Effect on Market Price of Securities from Future Sales of
Common Stock
No assurance can be given as to the effect, if any, that future sales of
Common Stock, or the availability of shares of Common Stock for future sales,
will have on the market price of the Common Stock from time to time. Sales of
substantial amounts of Common Stock (including shares issued upon the exercise
of warrants or stock options), or the possibility that such sales could occur,
could adversely affect the market price of the Common Stock and could also
impair the Company's ability to raise capital through an offering of its
equity securities in the future. Assuming conversion of all of the Series D
Preferred Stock and Series A Preferred Stock, and the exercise of all of the
Environmental Warrants and the Company Warrants, upon completion of this
offering the Company will have approximately 24,553,532 shares (subject to
adjustment) of Common Stock outstanding, of which approximately 10,980,101
currently publicly traded shares of Common Stock, 1,847,087 Shares (subject to
adjustment) to be issued to the Selling Stockholders upon conversion of the
Series D Preferred Stock and the Series A Preferred Stock, and 1,339,407
Shares (subject to adjustment) to be issued to the Selling Stockholders upon
exercise of the Environmental Warrants and the Company Warrants will be
transferable without restriction under the Securities Act. The remaining
10,386,937 shares of Common Stock to be outstanding upon completion of this
offering are "restricted securities" (as that term is defined in Rule 144
promulgated under the Securities Act) which may be publicly sold only if
registered under the Securities Act, or if sold in accordance with an
applicable exemption from registration such as Rule 144. In general, under
Rule 144 as currently in effect, subject to the satisfaction of certain other
conditions, a person, including an affiliate of the Company, who has
beneficially owned restricted securities for at least one year, is entitled to
sell (together with any person with whom such individual is required to
aggregate sales), within any three-month period, a number of shares that does
not exceed the greater of 1% of the total number of outstanding shares of the
same class, or, if the stock is quoted on the Nasdaq Stock Market or a
national securities exchange, the average weekly trading volume during the
four calendar weeks preceding the sale. A person who has not been an affiliate
of the Company for at least the immediately preceding three months, and who
has beneficially owned restricted securities for at least two years, is
entitled to sell such restricted shares under Rule 144 without regard to any
of the limitations described above.
Volatility of Market Prices of Common Stock
The market price for the Company's Common Stock has been historically
volatile. Future announcements of new technologies and changing policies and
regulations of the federal government and state governments and other external
factors, as well as potential fluctuations in the Company's financial results,
may have a significant impact on the price of the Common Stock in the future.
Effect of Series A Preferred Stock on Holders of Common Stock
The Series A Preferred Stock has separate class voting rights as to
matters affecting such securities (which requires the consent or approval of
holders of 66 2/3% of the Series A Preferred Stock), and votes together with
19
<PAGE>
the holders of Common Stock on all matters requiring stockholder approval on
an "as converted" basis, as though such shares of Series A Preferred Stock had
been converted into Common Stock on the record date used to determine Common
Stock entitled to vote on such transaction or matter. As a result, depending
on the applicable conversion rate of the Series A Preferred Stock on such
record date, each share of Series A Preferred Stock will be entitled to cast
multiple votes with respect to transactions or matters on which each share of
Common Stock may only cast one vote. In addition, in the event of a
liquidation of the Company, the holders of the Series A Preferred Stock would
be entitled to receive distributions in preference to the holders of the
Common Stock.
Certain Anti-Takeover Provisions and Potential Adverse Effect on Market Price
of Securities from Issuance of Preferred Stock
The Company's certificate of incorporation (the "Certificate of
Incorporation") and by-laws (the "By-laws") contain certain provisions that
could have the effect of delaying or preventing a change of control of the
Company, which could limit the ability of security holders to dispose of their
shares in such transactions. The Certificate of Incorporation authorizes the
Board of Directors to issue one or more series of preferred stock without
stockholder approval. Such preferred stock could have voting and conversion
rights that adversely affect the voting power of the holders of Common Stock,
or could result in one or more classes of outstanding securities that would
have dividend, liquidation or other rights superior to those of the Common
Stock. Issuance of such preferred stock may have an adverse effect on the then
prevailing market price of the Common Stock. Additionally, the Company is
subject to the anti-takeover provisions of Section 203 of the Delaware General
Corporation Law, which prohibits the Company from engaging in a "business
combination" with an "interested stockholder" for a period of three years
after the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed
manner. Section 203 could have the effect of delaying or preventing a change
of control of the Company.
Potential Adverse Effect on Market Price of Shares as a Result of Environmental
Common Stock
As of January 12, 1998, there were an aggregate of approximately
59,233,583 shares of common stock of Environmental issued and outstanding, of
which approximately 20,000,000 shares are publicly held. Environmental's
common stock trades in the Pink Sheets and is quoted on the OTCBB. On January
12, 1998, the closing bid price of such Environmental common stock was $0.50
per share. The prevailing per share trading price of Environmental common
stock may have a direct impact on the future trading price of the Common
Stock, especially since the approximately $29,600,000 market capitalization of
Environmental at January 12, 1998 is less than the approximately $37,800,000
market value of Environmental's interest in the Company. In addition,
potential negative developments affecting Environmental which may be unrelated
to the Company's business may adversely affect the market value of the Shares.
Limitations on Liability of Directors and Officers
The Company's Certificate of Incorporation includes provisions to
eliminate, to the full extent permitted by the Delaware General Corporation
Law as in effect from time to time, the personal liability of directors of the
Company for monetary damages arising from a breach of their fiduciary duties
as directors. The Certificate of Incorporation also includes provisions to the
effect that (subject to certain exceptions) the Company shall, to the maximum
extent permitted from time to time under the laws of the State of Delaware,
indemnify, and upon request shall advance expenses to, any director or officer
to the extent that such indemnification and advancement of expenses is
permitted under such law, as it may from time to time be in effect. In
addition, the Company's By-laws require the Company to indemnify, to the full
extent permitted by law, any director, officer, employee or agent of the
Company for acts which such person reasonably believes are not in violation of
the Company's corporate purposes as set forth in the Certificate of
Incorporation. As a result of such provisions in the Certificate of
Incorporation and the By-laws, stockholders may be unable to recover damages
against the directors and officers of the Company for actions taken by them
which constitute negligence, gross negligence or a violation of their
fiduciary duties, which may discourage or deter stockholders from suing
directors, officers, employees and agents of the Company for breaches of their
duty of care, even though such action, if successful, might otherwise benefit
the Company and its stockholders.
20
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale or other
disposition of the Shares by the Selling Stockholders hereunder.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
September 30, 1997, and as adjusted giving effect to the Common Stock Private
Placement as described herein. This table should be read in conjunction with
the Company's Consolidated Financial Statements incorporated herein by
reference.
<TABLE>
<CAPTION>
(in thousands)
September 30, 1997
---------------------------------------
Pro Forma
Actual As Adjusted
------------------ ------------------
<S> <C> <C>
Long-term debt, including current portion:
Leases payable ................................................... $ 70 $ 70
Convertible Loan from Environmental to the Company,
net of estimated $1,270 discount ................................. 2,730 2,730
Other payables to Environmental .................................... 362 362
---------- ----------
Total long-term debt ............................................. 3,162 3,162
---------- ----------
Redeemable securities:
Series A Preferred Stock, $.001 par value; 80,000 shares authorized;
18,000 shares issued and outstanding ........................... 1,626 1,626
Common Stock with reset feature .................................... -- 2,559(1)
---------- ------------
Total redeemable securities ....................................... 1,626 4,185
---------- ------------
Stockholders' equity:
Common Stock, $.001 par value; 50,000,000 shares authorized;
21,650,000 and 22,350,000 shares issued and outstanding,
respectively ................................................... 22 22
Additional paid-in capital ....................................... 41,688(2) 41,688(2)
Accumulated deficit ................................................ (25,298)(3) (25,298)(3)
------------ ------------
Total stockholders' equity ....................................... 16,412 16,412
------------ ------------
Total capitalization ................................................ $ 21,200 $ 23,759
============ ============
</TABLE>
- ------------
(1) The price reset feature associated with the Common Stock Private Placement
contains certain provisions which may require the refund of a portion of
the cash proceeds from the sale. Accordingly, this security has been
classified as a redeemable security until such time as the reset feature
lapses.
(2) Includes the estimated $1,270 fair value of warrants issued in connection
with the Convertible Loan from Environmental and the estimated $216 and
$750 fair values of the beneficial conversion features associated with the
sale of the Series A Preferred Stock and the Convertible Loan from
Environmental, respectively. Management is in the process of engaging an
expert in the field of valuations to determine the actual fair values of
these items.
(3) Includes the effect of immediately recognizing additional interest expense
relating to the estimated $750 fair value of the beneficial conversion
feature associated with the Convertible Loan from Environmental.
21
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth the name of each Selling Stockholder, the
number of Shares owned by the Selling Stockholders (where indicated by
footnote, on a pro forma basis as if all the outstanding shares of Series D
Preferred Stock and Series A Preferred Stock had been converted into Common
Stock at an assumed conversion price of $2.00, and all the outstanding
Environmental Warrants and Company Warrants had been exercised in full, as of
the date hereof), and the number of Shares which may be offered for resale
pursuant to this Prospectus. The information included below is based upon
information provided by the Selling Stockholders. The actual number of Shares
owned or offered could be materially less or more than such estimated amount
depending upon factors which cannot be predicted at this time and, if
required, will be reflected in a supplement to this Prospectus. Because each
Selling Stockholder may offer all, some or none of the Shares it holds, and
because there are currently no agreements, arrangements or understandings with
respect to the sale of any of the Shares, no definitive estimate as to the
number of Shares that will be held by each such Selling Stockholder after such
offering can be provided, and the following table has been prepared on the
assumption that all Shares offered under this Prospectus will be sold to
parties unaffiliated with the Selling Stockholders. Except as indicated, none
of the Selling Stockholders has had a material relationship with the Company
within the past three years, other than as a result of the ownership of the
Shares or other securities of the Company.
<TABLE>
<CAPTION>
Shares Shares
Owned Prior to Number of Owned After
the Offering Shares Which the Offering
--------------------------------- May be Sold -------------------
Name Number Percent(1) in this Offering Number Percent
- -------------------------------------------- ------------------ ------------ ------------------ -------- --------
<S> <C> <C> <C> <C> <C>
American Investment Group
of New York, L.P. ........................ 1,273,785(2) 5.6% 1,273,785 * *
Okemo Partners Limited ..................... 429,212(3) 1.9% 429,212 * *
Milton Partners ........................... 474,087(4) 2.1% 474,087 * *
Elara Ltd. ................................. 949,934(5) 4.1% 949,934 * *
Porter Partners, L.P. ..................... 285,333(6) 1.2% 285,333 * *
EDJ Limited .............................. 39,015(7) * 39,015 * *
Michael Margolies ........................ 63,750(8) * 63,750 * *
Adam B. Cohen .............................. 10,625(8) * 10,625 * *
Alan P. Jacobs ........................... 10,625(8) * 10,625 * *
Nelson Partners ........................... 113,474(9) * 113,474 * *
Olympus Securities, Ltd. .................. 138,681(10) * 138,681 * *
Leonardo, L.P. ........................... 73,893(11) * 73,893 * *
Raphael, L.P. .............................. 29,557(12) * 29,557 * *
Ramius Fund, Ltd. ........................ 44,336(13) * 44,336 * *
Fortune Fund Ltd--Seeker III ............... 70,887(14) * 70,887 * *
DFA Group Trust - Small
Company Subtrust ........................ 300,300(15) 1.3% 300,300 * *
U.S. 9-10 Small Company Portfolio ......... 157,700(15) * 157,700 * *
DFA Group Trust - 6-10 Subtrust ............ 125,400(15) * 125,400 * *
U.S. 6-10 Small Company Series ............ 16,600(15) * 16,600 * *
Linda Cappello ........................... 27,000(16) * 27,000 * *
Gerard K. Cappello ........................ 18,000(16) * 18,000 * *
Lawrence K. Fleischman ..................... 15,000(16) * 15,000 * *
Pacific Continental Securities, Inc. ...... 19,407(16) * 19,407 * *
</TABLE>
- ------------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) Percentages based on 22,929,238 shares of Common Stock outstanding as of
January 20, 1998.
(2) Includes: (i) 256,785 Shares transferred by Environmental to the Selling
Stockholder upon conversion of certain of its shares of Series D
Preferred Stock, which Shares have not been sold by or for the Selling
Stockholder as of the date hereof; and (ii) a pro forma estimate of the
number of additional Shares that would be owned by the Selling
Stockholder if it had (a) converted all of its 12,000 outstanding shares
of Series D Preferred Stock at an assumed conversion price of $2.00 per
share, and (b) exercised all of its
22
<PAGE>
Environmental Warrants in full as of the date hereof. Such pro forma
estimate also includes an estimate of the number of Shares transferable by
Environmental to the Selling Stockholder as accrued dividends for one year
on the Selling Stockholder's outstanding shares of Series D Preferred
Stock.
(3) Includes: (i) 197,212 Shares transferred by Environmental to the Selling
Stockholder upon conversion of certain of its shares of Series D
Preferred Stock, which Shares have not been sold by or for the Selling
Stockholder as of the date hereof; and (ii) a pro forma estimate of the
number of additional Shares that would be owned by the Selling
Stockholder if it had (a) converted all of its 2,000 outstanding shares
of Series D Preferred Stock at an assumed conversion price of $2.00 per
share, and (b) exercised all of its Environmental Warrants in full as of
the date hereof. Such pro forma estimate also includes an estimate of the
number of Shares transferable by Environmental to the Selling Stockholder
as accrued dividends for one year on the Selling Stockholder's
outstanding shares of Series D Preferred Stock.
(4) Includes: (i) 10,087 Shares transferred by Environmental to the Selling
Stockholder upon conversion of certain of its shares of Series D
Preferred Stock, which Shares have not been sold by or for the Selling
Stockholder as of the date hereof; and (ii) a pro forma estimate of the
number of additional Shares that would be owned by the Selling
Stockholder if it had (a) converted all of its 4,000 outstanding shares
of Series D Preferred Stock at an assumed conversion price of $2.00 per
share, and (b) exercised all of its Environmental Warrants in full as of
the date hereof. Such pro forma estimate also includes an estimate of the
number of Shares transferable by Environmental to the Selling Stockholder
as accrued dividends for one year on the Selling Stockholder's
outstanding shares of Series D Preferred Stock.
(5) Includes: (i) 196,934 Shares transferred by Environmental to the Selling
Stockholder upon conversion of certain of its shares of Series D
Preferred Stock, which Shares have not been sold by or for the Selling
Stockholder as of the date hereof; and (iii) a pro forma estimate of the
number of additional Shares that would be owned by the Selling
Stockholder if it had (a) converted all of its 8,000 outstanding shares
of Series D Preferred Stock at an assumed conversion price of $2.00 per
share, and (b) exercised all of its Environmental Warrants in full as of
the date hereof. Such pro forma estimate also includes an estimate of the
number of Shares transferable by Environmental to the Selling Stockholder
as accrued dividends for one year on the Selling Stockholder's
outstanding shares of Series D Preferred Stock.
(6) Includes: (i) 48,033 Shares transferred by Environmental to the Selling
Stockholder upon conversion of certain of its shares of Series D
Preferred Stock, which Shares have not been sold by or for the Selling
Stockholder as of the date hereof; and (ii) a pro forma estimate of the
number of additional Shares that would be owned by the Selling
Stockholder if it had (a) converted all of its 2,800 outstanding shares
of Series D Preferred Stock at an assumed conversion price of $2.00 per
share, and (b) exercised all of its Environmental Warrants in full as of
the date hereof. Such pro forma estimate also includes an estimate of the
number of Shares transferable by Environmental to the Selling Stockholder
as accrued dividends for one year on the Selling Stockholder's
outstanding shares of Series D Preferred Stock.
(7) Includes: (i) 5,115 Shares transferred by Environmental to the Selling
Stockholder upon conversion of certain of its shares of Series D
Preferred Stock, which Shares have not been sold by or for the Selling
Stockholder as of the date hereof; and (ii) a pro forma estimate of the
number of additional Shares that would be owned by the Selling
Stockholder if it had (a) converted all of its 400 outstanding shares of
Series D Preferred Stock at an assumed conversion price of $2.00 per
share, and (b) exercised all of its Environmental Warrants in full as of
the date hereof. Such pro forma estimate also includes an estimate of the
number of Shares transferable by Environmental to the Selling Stockholder
as accrued dividends for one year on the Selling Stockholder's
outstanding shares of Series D Preferred Stock.
(8) Includes a pro forma estimate of the number of Shares that would be owned
by the Selling Stockholder if it had exercised all of its Environmental
Warrants in full as of the date hereof.
(9) Includes: (i) 65,324 Shares issued by the Company to the Selling
Stockholder upon conversion of certain of its shares of Series A
Preferred Stock, which Shares have not been sold by or for the Selling
Stockholder as of the date hereof; and (ii) a pro forma estimate of the
number of additional Shares that would be owned by the Selling
Stockholder if it had converted all of its 900 outstanding shares of
Series A Preferred Stock
23
<PAGE>
at an assumed conversion price of $2.00 per share. Such pro forma estimate
also includes an estimate of the number of Shares issuable by the Company
to the Selling Stockholder as accrued dividends for one year on the Selling
Stockholder's outstanding shares of Series A Preferred Stock.
(10) Includes: (i) 79,831 Shares issued by the Company to the Selling
Stockholder upon conversion of certain of its shares of Series A
Preferred Stock, which Shares have not been sold by or for the Selling
Stockholder as of the date hereof; and (ii) a pro forma estimate of the
number of additional Shares that would be owned by the Selling
Stockholder if it had converted all of its 1,100 outstanding shares of
Series A Preferred Stock at an assumed conversion price of $2.00 per
share. Such pro forma estimate also includes an estimate of the number of
Shares issuable by the Company to the Selling Stockholder as accrued
dividends for one year on the Selling Stockholder's outstanding shares of
Series A Preferred Stock.
(11) Includes: (i) 20,393 Shares issued by the Company to the Selling
Stockholder upon conversion of certain of its shares of Series A
Preferred Stock, which Shares have not been sold by or for the Selling
Stockholder as of the date hereof; and (ii) a pro forma estimate of the
number of additional Shares that would be owned by the Selling
Stockholder if it had converted all of its 1,000 outstanding shares of
Series A Preferred Stock at an assumed conversion price of $2.00 per
share. Such pro forma estimate also includes an estimate of the number of
Shares issuable by the Company to the Selling Stockholder as accrued
dividends for one year on the Selling Stockholder's outstanding shares of
Series A Preferred Stock.
(12) Includes: (i) 8,157 Shares issued by the Company to the Selling
Stockholder upon conversion of certain of its shares of Series A
Preferred Stock, which Shares have not been sold by or for the Selling
Stockholder as of the date hereof; and (ii) a pro forma estimate of the
number of additional Shares that would be owned by the Selling
Stockholder if it had converted all of its 400 outstanding shares of
Series A Preferred Stock at an assumed conversion price of $2.00 per
share. Such pro forma estimate also includes an estimate of the number of
Shares issuable by the Company to the Selling Stockholder as accrued
dividends for one year on the Selling Stockholder's outstanding shares of
Series A Preferred Stock.
(13) Includes: (i) 12,236 Shares issued by the Company to the Selling
Stockholder upon conversion of certain of its shares of Series A
Preferred Stock, which Shares have not been sold by or for the Selling
Stockholder as of the date hereof; and (ii) a pro forma estimate of the
number of additional Shares that would be owned by the Selling
Stockholder if it had converted all of its 600 outstanding shares of
Series A Preferred Stock at an assumed conversion price of $2.00 per
share. Such pro forma estimate also includes an estimate of the number of
Shares issuable by the Company to the Selling Stockholder as accrued
dividends for one year on the Selling Stockholder's outstanding shares of
Series A Preferred Stock.
(14) Includes a pro forma estimate of the number of Shares that would be owned
by the Selling Stockholder if it had converted all of its 1,325
outstanding shares of Series A Preferred Stock at an assumed conversion
price of $2.00 per share. Such pro forma estimate also includes an
estimate of the number of Shares issuable by the Company to the Selling
Stockholder as accrued dividends for one year on the Selling
Stockholder's outstanding shares of Series A Preferred Stock.
(15) Represents Shares issued by the Company to the Selling Stockholder in
connection with the Common Stock Private Placement on October 2, 1997,
which Shares have not been sold by or for the Selling Stockholder as of
the date hereof.
(16) Includes a pro forma estimate of the number of Shares that would be owned
by the Selling Stockholder if it had exercised all of its Company
Warrants in full as of the date hereof.
24
<PAGE>
PLAN OF DISTRIBUTION
All or a portion of the Shares offered hereby may be sold, from time to
time, by the Selling Stockholders in one or more transactions on AMEX, in the
over-the-counter market, in transactions independent of AMEX or the
over-the-counter market, in separately negotiated transactions, or otherwise.
Such sales may be made either at fixed prices which may be changed, at market
prices prevailing at the time of sale, at prices related to prevailing market
prices or at negotiated prices. The Shares may be sold by the Selling
Stockholders by one or more of the following methods, without limitation: (i)
block trades in which a broker or dealer will attempt to sell the Shares as
agent, but may position and resell a portion of the block as principal to
facilitate the transaction; (ii) purchases by a broker or dealer as principal
and resale by such broker or dealer for its account pursuant to this
Prospectus; (iii) an exchange distribution in accordance with the rules of
such exchange; (iv) ordinary brokerage transactions and transactions in which
a broker may solicit purchasers; (v) privately negotiated transactions; (vi)
short sales; and (vii) a combination of any such methods of sale. In effecting
sales, brokers and dealers engaged by the Selling Stockholders may arrange for
other brokers or dealers to participate. Brokers or dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Stockholders (or, if any such broker-dealer acts as agent for the
purchaser of such Shares, from such purchaser) in amounts to be negotiated
which may be less than, or in excess of, those customary in the types of
transactions involved. Broker-dealers may agree with the Selling Stockholders
to sell a specified number of such Shares at a stipulated price per Share,
and, to the extent such broker-dealer is unable to do so acting as agent for a
Selling Stockholder, to purchase as principal any unsold Shares at the price
required to fulfill the broker-dealer commitment to the Selling Stockholder.
Broker-dealers who acquire the Shares as principal may thereafter resell such
Shares from time to time in transactions (which may involve block transactions
and sales to and through other broker-dealers, including transactions of the
nature described above) on AMEX, in the over-the-counter market, in
transactions independent of AMEX or the over-the-counter market, in separately
negotiated transactions, or otherwise, at fixed prices which may be changed,
at market prices prevailing at the time of sale, at prices related to
prevailing market prices or at negotiated prices. In connection with such
resales, such broker-dealers may pay to or receive from the purchasers of such
Shares compensation as described above.
Any or all of the sales or other transactions involving the Shares
described above, whether effected by a Selling Stockholder, any broker-dealer
or others, may be made pursuant to this Prospectus. In addition, any Shares
that qualify for sale pursuant to Rule 144 under the Securities Act may be
sold under Rule 144 rather than pursuant to this Prospectus.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers.
The Selling Stockholders and any broker-dealers or agents that
participate with the Selling Stockholders in the distribution of the Shares
may be deemed to be "underwriters" within the meaning of the Securities Act,
and any commissions received by them and any profit received by them may be
deemed to be underwriting commissions or discounts under the Securities Act.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Shares may not simultaneously engage in
market-making activities with respect to the Common Stock of the Company for a
period of one business day prior to the commencement of such distribution. In
addition and without limiting the foregoing, each Selling Stockholder will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, Regulation M, which
provisions may limit the timing of purchases and sales of shares of Common
Stock by the Selling Stockholders. All of the foregoing may limit the
marketability of the Shares.
To the knowledge of the Company, no underwriting arrangements have been
entered into by the Selling Stockholders with respect to the Shares as of the
date hereof. Upon the Company being notified by a Selling Stockholder that any
material arrangement has been entered into with a broker or dealer for the
sale of Shares through a block trade, special offering or secondary
distribution, or a purchase by a broker or dealer, a supplement to this
Prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing (a) the name of each such Selling Stockholder and
of the participating broker or dealer, (b) the number of Shares
25
<PAGE>
involved, (c) the price at which such Shares were sold, (d) the commissions
paid or the discounts or concessions allowed to such broker or dealer, where
applicable, (e) that such broker or dealer did not conduct any investigation
to verify the information set out or incorporated by reference in this
Prospectus, and (f) other facts material to the transaction.
The Company will maintain the effectiveness of this Registration
Statement until the earlier of (i) such time as all of the Shares have been
disposed of in accordance with the intended methods of disposition set forth
herein, or (ii) such time as the Shares are no longer subject to volume or
manner of sale restrictions under the Securities Act.
The Company and the Selling Stockholders have agreed to indemnify each
other and their respective officers and directors and certain other persons
against liabilities in connection with any offering of the Shares, including
liabilities arising under the Securities Act.
By agreements with the Selling Stockholders, the Company will pay all of
the expenses incurred in connection with the registration of the Shares under
the Securities Act (other than agent's or underwriter's commissions and
discounts), estimated to be approximately $30,000.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for the
Company by Greenberg Traurig Hoffman Lipoff Rosen & Quentel, New York, New
York ("Greenberg Traurig"). Stephen A. Weiss, a shareholder of Greenberg
Traurig, holds options to purchase 275,000 shares of Environmental common
stock.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference, except as they relate to the unaudited nine-month periods ended
September 30, 1997 and 1996, have been audited by various independent
accountants. The periods covered by these audits are indicated in the
individual accountants' reports. Such financial statements have been so
incorporated in reliance on the reports of the various independent accountants
given on the authority of such firms as experts in auditing and accounting.
26
<PAGE>
===============================================================================
No dealer, salesperson or other person is authorized to give any information
or to make any representation not contained in this Prospectus in connection
with this offering, and any information or representation not contained herein
must not be relied upon as having been authorized by the Company or any other
person. This Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy any securities other than the registered securities to
which it relates or an offer to or solicitation of any person in any
jurisdiction where such an offer or solicitation would be unlawful. Neither
the delivery of this Prospectus at any time nor any sale made hereunder shall
under any circumstances, create any implication that the information herein
contained is correct as of any time subsequent to the date of this Prospectus.
-----------------------------------
TABLE OF CONTENTS
Page
-----
Available Information ............... 3
Incorporation of Certain Documents by
Reference ........................ 4
Special Note Regarding Forward-Looking
Statements ........................ 5
The Company ........................ 6
Recent Developments .................. 8
Summary Financial Data ............... 12
Risk Factors ........................ 14
Use of Proceeds ..................... 21
Capitalization ..................... 21
Selling Stockholders ............... 22
Plan of Distribution ............... 25
Legal Matters ........................ 26
Experts .............................. 26
===============================================================================
<PAGE>
===============================================================================
4,686,601 Shares
COMMODORE
APPLIED
TECHNOLOGIES, INC.
Common Stock
------------
PROSPECTUS
------------
_________________, 1998
===============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses (subject to future
contingencies) incurred or expected to be incurred by the Company in
connection with the issuance and distribution of the securities being
registered pursuant to this Registration Statement (items marked with an
asterisk (*) represent estimated expenses). The Company has agreed to pay all
the costs and expenses of this offering.
Securities and Exchange Commission registration fee ...... $ 2,735.21
Legal fees and expenses ................................. 15,000.00*
Accounting fees and expenses ........................... 2,500.00*
Miscellaneous ............................................. 10,000.00*
----------
Total ................................................ $30,235.21
==========
Item 15. Indemnification of Directors and Officers.
Section 145(a) of the General Corporation Law of the State of Delaware
(the "General Corporation Law") provides that a Delaware corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or
in the right of the corporation) by reason of the fact that he or she is or
was a director, officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or enterprise, against expenses, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him or her
in connection with such action, suit or proceeding if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal
action, or proceeding, had no cause to believe his or her conduct was
unlawful.
Section 145(b) of the General Corporation Law provides that a Delaware
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or
in the right of the corporation to procure a judgment in its favor by reason
of the fact that such person acted in any of the capacities set forth above,
against expenses actually and reasonably incurred by him or her in connection
with the defense or settlement of such action or suit if he or she acted under
similar standards as set forth above, except that no indemnification may be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the
extent that the court in which such action or suit was brought shall determine
that despite the adjudication of liability, but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to be
indemnified for such expenses which the court shall deem proper.
Section 145 of the General Corporation Law provides that to the extent a
director or officer of a corporation has been successful on the merits or
otherwise in the defense of any action, suit or proceeding referred to in
subsections (a) and (b) or in the defense of any claim, issue or matter
therein, he or she shall be indemnified against expenses actually and
reasonably incurred by him or her in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of
any other rights to which the indemnified party may be entitled; and that the
corporation may purchase and maintain insurance on behalf of such person
against any liability asserted against him or her or incurred by him or her in
any such capacity or arising out of his or her status as such, whether or not
the corporation would have the power to indemnify him or her against such
liabilities under such Section 145.
Section 102(b)(7) of the General Corporation Law provides that a
corporation in its original certificate of incorporation or an amendment
thereto validly approved by stockholders may eliminate or limit personal
liability of members of its board of directors or governing body for monetary
damages for breach of a director's fiduciary duty. However, no such provision
may eliminate or limit the liability of a director for breaching his or her
duty of loyalty, failing to act in good faith, engaging in intentional
misconduct or knowingly violating a law,
II-1
<PAGE>
paying a dividend or approving a stock repurchase or redemption which was
illegal, or obtaining an improper personal benefit. A provision of this type
has no effect on the availability of equitable remedies, such as injunction or
rescission, for breach of fiduciary duty. The Company's Certificate of
Incorporation contains such a provision.
Article Thirteenth of the Company's Certificate of Incorporation
eliminates the personal liability of directors and/or officers to the Company
or its stockholders for monetary damages for breach of fiduciary duty as a
director; provided that such elimination of the personal liability of a
director and/or officer of the Company does not apply to (i) any breach of
such person's duty of loyalty to the Company or its stockholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) actions prohibited under Section 174 of the
General Corporation Law (i.e., liabilities imposed upon directors who vote for
or assent to the unlawful payment of dividends, unlawful repurchases or
redemption of stock, unlawful distribution of assets of the Company to the
stockholders without the prior payment or discharge of the Company's debts or
obligations, or unlawful making or guaranteeing of loans to directors and/or
officers), or (iv) any transaction from which the director derived an improper
personal benefit. In addition, Article Fourteenth of the Company's Certificate
of Incorporation and Article VI of the Company's By-laws provide that the
Company shall indemnify its corporate personnel, directors and officers to the
fullest extent permitted by the General Corporation Law, as amended from time
to time.
The Company has in force a combined insurance policy with its affiliates
under which its directors and officers are insured, with limits of $20 million
per occurrence and $20 million in the aggregate, against certain expenses in
connection with the defense of such actions, suits or proceedings to which
they are parties by reason of being or having been directors or officers of
the Company.
The Company and its officers, directors and other persons are entitled to
be indemnified under certain circumstances for certain securities law
violations in accordance with the provisions of an underwriting agreement
dated June 28, 1996, by and among the Company, Bentley J. Blum and National
Securities Corporation, as representative of the several underwriters.
The Company and the Selling Stockholders have agreed to indemnify each
other and their respective officers and directors and certain other persons
against liabilities in connection with any offering of the Shares, including
liabilities arising under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
as disclosed above, the Company has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
II-2
<PAGE>
Item 16. Exhibits
<TABLE>
<CAPTION>
Exhibit
Number
- -------- Description
<S> <C>
4.1 Form of Specimen Certificate of Common Stock. (1)
4.2 Form of 7% Preferred Stock Securities Purchase Agreement, dated May 20, 1997, among Envi-
ronmental, the Company and Okemo Partners Limited. (2)
4.3 Form of 7% Preferred Stock Securities Purchase Agreement, dated May 20, 1997, among Envi-
ronmental, the Company and American Investment Group of New York, L.P. (2)
4.4 Form of 7% Preferred Stock Securities Purchase Agreement, dated May 20, 1997, among Envi-
ronmental, the Company and Milton Partners. (2)
4.5 Form of Common Stock Purchase Warrant to purchase 200,000 shares of Common Stock of the
Company issued to Milton Partners. (2)
4.6 Form of Common Stock Purchase Warrant to purchase 100,000 shares of Common Stock of the
Company issued to Okemo Partners Limited. (2)
4.7 Form of Common Stock Purchase Warrant to purchase 300,000 shares of
Common Stock of the Company issued to American Investment Group of
New York, L.P. (2)
4.8 Certificate of Designation, Rights and Preferences of Environmental Series D Preferred Stock. (2)
4.9 Amendment No. 1, dated August 18, 1997, to 7% Preferred Stock Securities Purchase Agreement,
dated May 20, 1997. (3)
4.10 7% Preferred Stock Securities Purchase Agreement, dated August 14, 1997, among Environmen-
tal, the Company and Elara Ltd. (3)
4.11 Amendment No. 1, dated August 20, 1997, to 7% Preferred Stock Securities Purchase Agreement,
dated August 14, 1997, among Environmental, the Company and Elara Ltd. (3)
4.12 7% Preferred Stock Securities Purchase Agreement, dated August 14,
1997, among Environmental, the Company and Porter Partners, L.P.
(3)
4.13 Amendment No. 1, dated August 20, 1997, to 7% Preferred Stock Securities Purchase Agreement,
dated August 14, 1997, among Environmental, the Company and Porter Partners, L.P. (3)
4.14 7% Preferred Stock Securities Purchase Agreement, dated August 14, 1997, among Environmen-
tal, the Company and EDJ Limited. (3)
4.15 Amendment No. 1, dated August 20, 1997, to 7% Preferred Stock Securities Purchase Agreement,
dated August 14, 1997, among Environmental, the Company and EDJ Limited. (3)
4.16 Common Stock Purchase Warrant to purchase 325,000 shares of Common Stock of the Company
issued to Elara Ltd. (3)
4.17 Common Stock Purchase Warrant to purchase 50,000 shares of the Company issued to Porter
Partners Ltd. (3)
4.18 Common Stock Purchase Warrant to purchase 12,500 shares of Common Stock of the Company
issued to EDJ Limited. (3)
4.19 Amendment to Certificate of Incorporation of Environmental and Amended and Restated Certifi-
cate of Designation, Rights and Preferences of Environmental Series D Preferred Stock. (3)
4.20 Series A Convertible Preferred Stock Purchase Agreement, dated as of August 15, 1997, among
the Company, Nelson Partners, Olympus Securities, Ltd., Leonardo, L.P., Raphael, L.P., Ramius
Fund, Ltd. and Fortune Fund Ltd. -- Seeker III (collectively, the "Series A Preferred
Purchasers"). (4)
4.21 Certificate of Designation, Rights and Preferences of Series A Preferred Stock. (4)
4.22 Registration Rights Agreement between the Company and the Series A Preferred Purchasers. (4)
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number
- --------- Description
<S> <C>
4.23 Common Stock Purchase Warrant to purchase 50,000 shares of Common Stock of the Company
issued to Milton Partners. (3)
4.24 Common Stock Purchase Warrant to purchase 25,000 shares of Common Stock of the Company
issued to Okemo Partners Limited. (3)
4.25 Common Stock Purchase Warrant to purchase 75,000 shares of Common
Stock of the Company issued to American Investment Group of New
York, L.P. (3)
4.26 $4.0 million convertible note of the Company payable to Environmental. (3)
4.27 Common Stock Purchase Warrant to purchase 1,000,000 shares of Common Stock of the Com-
pany issued to Environmental. (3)
4.28 Stock Purchase Agreements, dated as of September 26, 1997, by and between the Company and
each of DFA Group Trust--Small Company Subtrust, U.S. 9-10 Small Company Portfolio, DFA
Group Trust--6-10 Subtrust and U.S. 6-10 Small Company Series. (4)
4.29 7% Preferred Stock Securities Purchase Agreement, dated August 14, 1997, among Environmental,
the Company and Porter Partners, L.P. (3)
4.30 Common Stock Purchase Warrant to purchase 37,500 shares of Common Stock of the Company
issued to Porter Partners, L.P. (3)
4.31 Stock Purchase Agreement, dated as of October 7, 1997, by and between the Company and Elara
Ltd. (5)
*4.32 Common Stock Purchase Warrant to purchase 27,000 shares of Common Stock of the Company
issued to Linda Cappello.
*4.33 Common Stock Purchase Warrant to purchase 18,000 shares of Common Stock of the Company
issued to Gerard K. Cappello.
*4.34 Common Stock Purchase Warrant to purchase 15,000 shares of Common Stock of the Company
issued to Lawrence K. Fleischman.
*4.35 Common Stock Purchase Warrant to purchase 19,407 shares of Common Stock of the Company
issued to Pacific Continental Securities, Inc.
*5.1 Opinion of Greenberg Traurig Hoffman Lipoff Rosen & Quentel.
10.1 Notice of Award to Advanced Sciences, Inc. of subcontract to remediate mixed waste at Weldon
Spring, Missouri. (5)
*23.1 Consent of Tanner + Co.
*23.2 Consent of Price Waterhouse LLP.
*23.3 Consent of Greenberg Traurig Hoffman Lipoff Rosen & Quentel (included in Exhibit 5.1).
*24.1 Power of Attorney. (6)
</TABLE>
- ------------
* Filed herewith.
(1) Incorporated herein by reference. Filed as an exhibit to Amendment No. 2
to the Company's Registration Statement on Form S-1, filed with the
Commission on June 25, 1996, Registration No. 333-4396.
(2) Incorporated herein by reference. Filed as an exhibit to Environmental's
Current Report on Form 8-K, dated May 20, 1997 and filed with the
Commission on July 1, 1997 (Commission File No. 0-10054).
(3) Incorporated herein by reference. Filed as an exhibit to Amendment No. I
on Form 8-K/A-I to Environmental's Current Report on Form 8-K, dated May
20, 1997, filed with the Commission on October 3, 1997.
(4) Incorporated herein by reference. Filed as an exhibit to the Company's
Current Report on Form 8-K, dated August 15, 1997 and filed with the
Commission on October 3, 1997 (Commission File No. 1-11871).
II-4
<PAGE>
(5) Incorporated herein by reference. Filed as an exhibit to the Company's
Registration Statement on Form S-3 (Registration No. 333-38357), which was
declared effective by the Commission on October 31, 1997.
(6) Contained on the signature page hereof.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in this Registration Statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent
no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
provided, however, that the undertakings set forth in
paragraphs (a)(1)(i) and (a)(l)(ii) shall not apply if the
information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the Company
pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in this Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of the annual report of the employee benefit plans
pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York on this
20th day of January, 1998.
COMMODORE APPLIED TECHNOLOGIES, INC.
By /s/ Paul E. Hannesson
-------------------------------------
Paul E. Hannesson
Chairman of the Board, President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Paul E. Hannesson and Michael D. Fullwood, and
each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, and any other regulatory
authority, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to
the requirements of the Securities Act of 1933, this Registration Statement
has been signed below by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Paul E. Hannesson Chairman of the Board, President and January 20, 1998
---------------------- Chief Executive Officer (principal execu-
Paul E. Hannesson tive officer)
/s/ Michael D. Fullwood Senior Vice President, Chief Financial January 20, 1998
---------------------- and Administrative Officer, Secretary and
Michael D. Fullwood General Counsel (principal financial and
accounting officer)
/s/ Bentley J. Blum Director January 20, 1998
----------------------
Bentley J. Blum
/s/ Edwin L. Harper Director January 20, 1998
----------------------
Edwin L. Harper, Ph.D.
/s/ Kenneth L. Adelman Director January 20, 1998
----------------------
Kenneth L. Adelman
/s/ Herbert A. Cohen Director January 20, 1998
----------------------
Herbert A. Cohen
/s/ David L. Mitchell Director January 20, 1998
----------------------
David L. Mitchell
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- -------- -----------
<S> <C>
4.1 Form of Specimen Certificate of Common Stock. (1)
4.2 Form of 7% Preferred Stock Securities Purchase Agreement. dated May 20, 1997, among
Environmental, the Company and Okemo Partners Limited. (2)
4.3 Form of 7% Preferred Stock Securities Purchase Agreement, dated May 20, 1997, among
Environmental, the Company and American Investment Group of New York, L.P. (2)
4.4 Form of 7% Preferred Stock Securities Purchase Agreement, dated May 20, 1997, among
Environmental, the Company and Milton Partners. (2)
4.5 Form of Common Stock Purchase Warrant to purchase 200,000 shares of Common Stock of the
Company issued to Milton Partners. (2)
4.6 Form of Common Stock Purchase Warrant to purchase 100,000 shares of Common Stock of the
Company issued to Okemo Partners Limited. (2)
4.7 Form of Common Stock Purchase Warrant to purchase 300,000 shares of Common Stock of the
Company issued to American Investment Group of New York, L.P. (2)
4.8 Certificate of Designation, Rights and Preferences of Environmental Series D Preferred Stock. (2)
4.9 Amendment No. 1, dated August 18, 1997, to 7% Preferred Stock Securities Purchase Agreement,
dated May 20, 1997. (3)
4.10 7% Preferred Stock Securities Purchase Agreement, dated August 14, 1997, among Environmental,
the Company and Elara Ltd. (3)
4.11 Amendment No. 1, dated August 20, 1997, to 7% Preferred Stock Securities Purchase Agreement,
dated August 14, 1997, among Environmental, the Company and Elara Ltd. (3)
4.12 7% Preferred Stock Securities Purchase Agreement, dated August 14, 1997, among Environmental,
the Company and Porter Partners, L.P. (3)
4.13 Amendment No. 1, dated August 20, 1997, to 7% Preferred Stock Securities Purchase Agreement,
dated August 14, 1997, among Environmental, the Company and Porter Partners, L.P. (3)
4.14 7% Preferred Stock Securities Purchase Agreement, dated August 14, 1997, among Environmental,
the Company and EDJ Limited. (3)
4.15 Amendment No. 1, dated August 20, 1997, to 7% Preferred Stock Securities Purchase Agreement,
dated August 14, 1997, among Environmental, the Company and EDJ Limited. (3)
4.16 Common Stock Purchase Warrant to purchase 325,000 shares of Common Stock of the Company
issued to Elara Ltd. (3)
4.17 Common Stock Purchase Warrant to purchase 50,000 shares of the Company issued to Porter
Partners Ltd. (3)
4.18 Common Stock Purchase Warrant to purchase 12,500 shares of Common Stock of the Company
issued to EDJ Limited. (3)
4.19 Amendment to Certificate of Incorporation of Environmental and Amended and Restated
Certificate of Designation, Rights and Preferences of Environmental Series D Preferred Stock. (3)
4.20 Series A Convertible Preferred Stock Purchase Agreement, dated as of August 15, 1997, among the
Company, Nelson Partners, Olympus Securities, Ltd., Leonardo, L.P., Raphael, L.P., Ramius Fund,
Ltd. and Fortune Fund Ltd. -- Seeker III (collectively, the "Series A Preferred Purchasers"). (4)
4.21 Certificate of Designation, Rights and Preferences of Series A Preferred Stock. (4)
4.22 Registration Rights Agreement between the Company and the Series A Preferred Purchasers. (4)
4.23 Common Stock Purchase Warrant to purchase 50,000 shares of Common Stock of the Company
issued to Milton Partners. (3)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
- ---------- -----------
<S> <C>
4.24 Common Stock Purchase Warrant to purchase 25,000 shares of Common Stock of the Company
issued to Okemo Partners Limited. (3)
4.25 Common Stock Purchase Warrant to purchase 75,000 shares of Common Stock of the Company issued
to American Investment Group of New York, L.P. (3)
4.26 $4.0 million convertible note of the Company payable to Environmental. (3)
4.27 Common Stock Purchase Warrant to purchase 1,000,000 shares of Common Stock of the Company
issued to Environmental. (3)
4.28 Stock Purchase Agreements, dated as of September 26, 1997, by and between the Company and
each of DFA Group Trust--Small Company Subtrust, U.S. 9-10 Small Company Portfolio, DFA
Group Trust--6-10 Subtrust and U.S. 6-10 Small Company Series. (4)
4.29 7% Preferred Stock Securities Purchase Agreement, dated August 14, 1997, among Environmental,
the Company and Porter Partners, L.P. (3)
4.30 Common Stock Purchase Warrant to purchase 37,500 shares of Common Stock of the Company
issued to Porter Partners, L.P. (3)
4.31 Stock Purchase Agreement, dated as of October 7, 1997, by and between the Company and Elara
Ltd. (5)
*4.32 Common Stock Purchase Warrant to purchase 27,000 shares of Common Stock of the Company issued
to Linda Cappello.
*4.33 Common Stock Purchase Warrant to purchase 18,000 shares of Common Stock of the Company
issued to Gerard K. Cappello.
*4.34 Common Stock Purchase Warrant to purchase 15,000 shares of Common Stock of the Company
issued to Lawrence K. Fleischman.
*4.35 Common Stock Purchase Warrant to purchase 19,407 shares of Common Stock of the Company
issued to Pacific Continental Securities, Inc.
*5.1 Opinion of Greenberg Traurig Hoffman Lipoff Rosen & Quentel.
10.1 Notice of Award to Advanced Sciences, Inc. of subcontract to remediate mixed waste at Weldon
Spring, Missouri. (5)
*23.1 Consent of Tanner + Co.
*23.2 Consent of Price Waterhouse LLP.
*23.3 Consent of Greenberg Traurig Hoffman Lipoff Rosen & Quentel (included in Exhibit 5.1).
*24.1 Power of Attorney. (6)
</TABLE>
- ------------
* Filed herewith.
(1) Incorporated herein by reference. Filed as an exhibit to Amendment No. 2
to the Company's Registration Statement on Form S-1, filed with the
Commission on June 25, 1996, Registration No. 333-4396.
(2) Incorporated herein by reference. Filed as an exhibit to Environmental's
Current Report on Form 8-K, dated May 20, 1997 and filed with the
Commission on July 1, 1997 (Commission File No. 0-10054).
(3) Incorporated herein by reference. Filed as an exhibit to Amendment No. I
on Form 8-K/A-I to Environmental's Current Report on Form 8-K, dated May
20, 1997, filed with the Commission on October 3, 1997.
(4) Incorporated herein by reference. Filed as an exhibit to the Company's
Current Report on Form 8-K, dated August 15, 1997 and filed with the
Commission on October 3, 1997 (Commission File No. 1-11871).
(5) Incorporated herein by reference. Filed as an exhibit to the Company's
Registration Statement on Form S-3 (Registration No. 333-38357), which was
declared effective by the Commission on October 31, 1997.
(6) Contained on the signature page hereof.
<PAGE>
STOCK PURCHASE WARRANT
WARRANT TO PURCHASE 27,000 SHARES
of
COMMON STOCK
No. PW-l EXPIRES AT 5:00 P.M., PACIFIC TIME, ON SEPTEMBER 30, 2002
COMMODORE APPLIED TECHNOLOGIES, INC.
This certifies that Linda S. Cappello, the registered holder hereof or
assigns (the "Warrantholder") is entitled to purchase from Commodore Applied
Technologies, Inc., a Delaware corporation (the "Company"), at any time before
the expiration time and date shown above (the "Expiration Time") at the purchase
price per share of $3.675 (the "Warrant Price"), the number of shares shown
above of the Common Stock of the Company. The number and class of shares
purchasable upon exercise of this Warrant and the Warrant Price per share shall
be subject to adjustment from time to time as set forth below.
Section 1. Transferability and Form of Warrant.
1.1 Registration. This Warrant shall be numbered and shall be registered on
the books of the Company.
1.2 Transfer. This Warrant shall be transferable on the books of the
Company only upon delivery thereof duly endorsed by the Warrantholder or duly
authorized attorney or representative, accompanied by proper evidence of
succession, assignment or authority to transfer. Upon any registration of
transfer, the Company shall execute and deliver a new Warrant to the person
entitled thereto. This Warrant may be divided or combined, upon request to the
Company by the Warrantholder, into a certificate or certificates representing
the right to purchase the same aggregate number of shares. Unless the context
indicates otherwise, the term "Warrantholder" shall include any transferee or
transferees of a Warrant and the term "Warrant" shall include any and all
warrants issued upon division, exchange, substitution or transfer of this
Warrant.
1.3 Form of Warrant. The Warrant shall be executed on behalf of the Company
by its President, Vice President or other authorized officer, and shall be dated
as of the date of signature thereof by the Company either upon initial issuance
or upon division, exchange, substitution or transfer. A Warrant bearing the
signature of an individual who was at any time the proper officer of the Company
shall bind the Company, notwithstanding that such individual shall have ceased
to hold such office prior to the delivery of such Warrant. The form of election
to exercise this Warrant and the form of assignment of this Warrant shall be
substantially as attached hereto.
Section 2. Payment of Taxes.
The Company will pay all documentary stamp taxes, if any, attributable to
the initial issuance of shares to the Warrantholder; provided, however, that the
Company shall not be required to pay any tax or taxes which may be payable in
respect of any secondary transfer of the Warrant or the shares.
Section 3. Mutilated or Missing Warrants.
In case this Warrant shall be mutilated, lost, stolen or destroyed, the
Company shall, at the request of the Warrantholder, issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant, or
in lieu of and in substitution for the lost, stolen or destroyed Warrant, a new
Warrant
<PAGE>
of like tenor, but only upon receipt of evidence satisfactory to the Company of
such loss, theft or destruction of such Warrant. The applicant shall also comply
with such other reasonable regulations and pay such other reasonable
administrative charges as the Company may prescribe.
Section 4. Reservation of Shares.
There has been reserved, and the Company shall at all times keep reserved
so long as this Warrant remains outstanding, out of its authorized shares of
capital stock, such number and class of shares as shall be subject to purchase
under this Warrant. Such reserved shares shall be used solely for issuances upon
exercise of this Warrant. Shares of any class issued upon exercise of this
Warrant shall have all the rights and privileges of other shares of the same
class, whenever issued, subject to the adjustment provisions set forth below.
Section 5. Exercise of Warrant.
5.1 Exercise by Cash Payment. The Holder of this Warrant shall have the
right at any time and from time to time to exercise this Warrant in full or in
part by surrender of this Warrant to the Company accompanied by payment to the
Company in cash or by certified or cashier's check or by wire transfer of funds
of the aggregate Warrant Price for the number of shares in respect of which this
Warrant is then exercised.
5.2 Cashless Exercise. This Warrant may be exercised in full or in part by
surrender of this Warrant to the Company accompanied by written notice
substantially in the form attached hereto of the holder's election to effect
cashless exercise ("Cashless Exercise"). Upon Cashless Exercise, the holder
shall be entitled to receive, in respect of each share for which this Warrant is
then exercised, that number of shares of Common Stock (or such other class of
shares as may then be issuable upon exercise hereof) which, valued at Current
Market Value, have a value equal to the Current Market Value of each share as to
which this Warrant is then being exercised less the Warrant Price payable for
such share. Current Market Value of the Common Stock shall be as defined in
Section 7.
5.3 Delivery of Certificates. Upon exercise of this Warrant the Company
shall issue and cause to be delivered with all reasonable dispatch to or upon
the written order of the Warrantholder and in such name or names as the
Warrantholder may designate, a certificate or certificates for the number of
full shares issuable upon such exercise together with cash, as provided in
Section 7 hereof, in respect of any fractional shares. The Company shall effect
such issuance immediately and shall transmit the certificates by messenger or
overnight delivery service to reach the address designated by the Warrantholder
within two business days after receipt of the Warrant Price or, in the case of a
cashless exercise, after receipt of the Warrant. Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
shares as of the date of surrender of the Warrant and payment of the Warrant
Price, as aforesaid, notwithstanding that the certificates representing such
shares shall not actually have been delivered or that the stock transfer books
of the Company shall then be closed. In the event of partial exercise a new
Warrant evidencing the remaining portion of this Warrant will be issued by the
Company.
Section 6. Adjustment of Warrant Price and Number of Shares.
6.1 Adjustments. The number and kind of securities purchasable upon the
exercise of the Warrants and the Warrant Price shall be subject to adjustment
from time to time upon the happening of certain events, as follows:
(a) If the shares purchasable upon exercise of the Warrants are
subdivided, combined or reclassified, or if other shares of the kind so
purchasable are issued in respect thereof as a
2
<PAGE>
dividend thereon (excluding dividends required by the charter provisions
governing such shares), the number and class of shares purchasable upon
exercise of the Warrants immediately prior thereto shall be adjusted so
that the Warrantholder shall be entitled to receive the kind and number of
shares or other securities of the Company which it would have owned or
would have been entitled to receive after the happening of any of the
events described above, had the Warrants been exercised immediately prior
to the happening of such event or any record date with respect thereto. Any
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(b) If the shares purchasable upon exercise of the Warrants become
entitled to receive a distribution of evidences of indebtedness or assets
(excluding dividends required by the charter provisions governing such
shares) or rights, options, warrants or convertible securities containing
the right to subscribe for or purchase securities or assets of the Company,
then, in each case, the number of shares thereafter purchasable upon the
exercise of the Warrants shall be determined by multiplying the number of
shares theretofore purchasable upon exercise of the Warrants by a fraction,
of which the numerator shall be the then Current Market Value on the date
of such distribution, and of which the denominator shall be such Current
Market Value on such date minus the then fair value of the portion of the
assets or evidence of indebtedness so distributed or of such subscription
rights, options or warrants applicable to one share. Such adjustment shall
be made whenever any such distribution is made and shall become effective
on the date of distribution retroactive to the record date for the
determination of shareholders entitled to receive such distribution.
Current Market Value shall have the meaning set forth in Section 7.
(c) No adjustment in the number of shares purchasable hereunder shall
be required unless such adjustment would require an increase or decrease of
at least one percent (1%) in the number of shares then purchasable upon the
exercise of a Warrant; provided, however, that any adjustments which by
reason of this paragraph (c) are not required to be made immediately shall
be carried forward and taken into account in any subsequent adjustment.
(d) Whenever the purchase price per share is adjusted pursuant to the
provisions of Section 3 of the Stock Purchase Agreements entered into on or
about the date hereof between the Company and certain entities advised by
Dimensional Fund Advisors, inc., an equal adjustment shall be made in the
Warrant Price.
(e) Whenever the Warrant Price or the number or class of shares
purchasable upon the exercise of a Warrant is adjusted as herein provided,
a corresponding adjustment in the number of shares so purchasable or the
Warrant Price, as the case may be, shall be made so that the aggregate
Warrant Price payable upon full exercise of this Warrant shall remain the
same. If such adjustment results in more than one class of security being
purchasable upon exercise of this Warrant, the adjusted Warrant Price shall
be allocated to such securities on the basis of their respective fair
market values.
(f) Whenever the number or class of shares purchasable upon the
exercise of a Warrant or the Warrant Price is adjusted as herein provided,
the Company shall cause to be promptly mailed to the Warrantholder by first
class mail, postage prepaid, notice of such adjustment or adjustments
setting forth the number and class of shares purchasable upon the exercise
of a Warrant and the Warrant Price after such adjustment, together with a
brief statement of the facts requiring such adjustment and the computation
by which such adjustment was made. If any holder disputes the computation
of such adjustment, the Company shall cause independent public accountants
selected by the Company to verify and, if necessary, correct such
computation.
3
<PAGE>
(g) The term "Common Stock" shall mean (i) the class of stock
designated as the Common Stock of the Company at the issue date of this
Warrant or (ii) any other class of stock resulting from successive changes
or reclassifications of such Common Stock. In the event that at any time,
as a result of an adjustment made pursuant to this Section, the
Warrantholder shall become entitled to purchase any securities of the
Company other than shares of Common Stock, thereafter the number of such
other securities so purchasable upon exercise of the Warrant and the
Warrant Price of such securities shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions contained in this Section.
6.2 No Adjustment for Dividends. Except as provided in Subsection 6.1, no
adjustment in respect of any dividends shall be made during the term of the
Warrant or upon the exercise of the Warrant.
6.3 Preservation of Purchase Rights upon Reclassification. Consolidation.
etc. In case of any reclassification of the securities of the Company or any
consolidation of the Company with or merger of the Company into another
corporation or in case of any sale or conveyance to another corporation of the
property, assets or business of the Company as an entirety or substantially as
an entirety, the Company or such successor or purchasing corporation, as the
case may be, shall provide by agreement that the Warrantholder shall have the
right thereafter upon payment of the Warrant Price in effect immediately prior
to such action to purchase upon exercise of the Warrant the kind and amount of
shares and other securities and property which he would have owned or have been
entitled to receive after the happening of such reclassification, consolidation,
merger, sale or conveyance had the Warrant been exercised immediately prior to
such action. Such agreement shall provide for adjustments, which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section. The provisions of this subsection shall similarly apply to successive
reclassifications, consolidations, mergers, sales or conveyances.
6.4 Statement on Warrant Certificates. Irrespective of any adjustments in
the Warrant Price or the number of securities purchasable upon the exercise of
the Warrant, the Warrant certificate or certificates theretofore or thereafter
issued may continue to express the same price and number of securities as are
stated in the similar Warrant certificates initially issued.
Section 7. Fractional Interests; Current Market Value; Closing Bid Price.
The Company shall not be required to issue fractional shares on the
exercise of the Warrant. If any fraction of a share would, except for the
provisions of this Section, be issuable on the exercise of the Warrant (or
specified portion thereof), the Company shall pay an amount in cash equal to the
then Current Market Value multiplied by such fraction. The term "Current Market
Value" of the Common Stock shall mean (i) if the Common Stock is traded in the
over-the-counter market or on the National Association of Securities Dealers,
Inc. Automated Quotations System ("NASDAQ"), the average per share closing sale
prices of the Common Stock on the 20 consecutive trading days immediately
preceding the date in question, as reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common Stock is traded on a national
securities exchange, the average for the 20 consecutive trading days immediately
preceding the date in question of the daily per share closing bid prices of the
Common Stock on the principal stock exchange on which it is listed, or (iii) if
the Common Stock is not so listed or traded, the fair market value of the Common
Stock as determined in good faith by the board of directors of the Company. The
term "closing sale price" shall mean the last sale price on the day in question
as reported by NASDAQ or an equivalent generally accepted reporting service or
(as the case may be) as reported by the principal stock exchange on which the
Common Stock is listed, or if not so reported, as reasonably determined in good
faith by the Board of Directors of the Company.
4
<PAGE>
Section 8. No Rights as Shareholder; Notices to Warrantholder.
Nothing contained herein shall be construed as conferring upon the
Warrantholder any rights whatsoever as a shareholder of the Company, including
the right to vote, to receive dividends, to consent or to receive notices as a
shareholder in respect of any meeting of shareholders for the election of
directors of the Company or any other matter. If, however, at any time prior to
the expiration of the Warrant and prior to its exercise, any of the following
events shall occur:
(a) any action which would require an adjustment pursuant to Sections
6.1 or 6.3; or
(b) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation, merger or sale of its property,
assets and business, as an entirety) shall be proposed;
then in any one or more of said events, the Company shall give notice in writing
of such event to the Warrantholder at least 20 days prior to the date fixed as a
record date or the date of closing the transfer books or other applicable date
with respect thereto. Such notice shall specify such record date or the date of
closing the transfer books, as the case may be.
Any notice to the Warrantholder shall be given at the address of the
Warrantholder appearing on the books of the Company, and if the Warrantholder
has specified a telecopier address, by facsimile transmission to such address.
Section 9. Registration and Indemnification.
The holder of this Warrant and the holder of shares of Common Stock issued
upon exercise of this Warrant shall have the same rights and obligations with
respect to registration under the Securities Act of 1933, and with respect to
indemnification in connection with any such registration, as if such holder were
one of the Purchasers under the Stock Purchase Agreement entered into on or
about the date hereof between the Company and the certain entities advised by
Dimensional Fund Advisors, Inc., excluding, however, the provisions of the last
two sentences of Section (8)(b)(i) of said Agreements. Such rights and
obligations shall continue until not more than one year after the expiration or
earlier exercise of this Warrant.
Section 10. Expiration of Warrant.
10.1 If not theretofore exercised, this Warrant shall terminate at 5:00
p.m. Pacific time on the date shown in the caption hereof.
Section 11. Successors.
All the covenants and provisions of this Agreement by or for the benefit of
the Company or the Warrantholder shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 12. Merger or Consolidation of the Company.
The Company will not merge or consolidate with or into any other
corporation or sell all or substantially all of its property to another
corporation, unless the provisions of Section 6.3 are complied with.
Section 13. Applicable Law.
This Agreement shall be deemed to be a contract made under the laws of the
State of New York and for all purposes shall be construed in accordance with the
laws of said State.
5
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by a
duly authorized officer of the Company.
Commodore Applied Technologies, Inc.
By: /s/ Michael D. Fullwood
--------------------------------------
as of 9/30/97
6
<PAGE>
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant in respect of _____________ of the shares
provided for therein, and requests that certificates be issued in the name of:
_______________________________________________________________
(Please Print Name, Address and Taxpayer Identification Number)
_______________________________________________________________
and, if said number of shares shall not be all the shares purchasable hereunder,
that a new Warrant certificate for the balance of the shares purchasable under
the within Warrant be registered in the name of the undersigned Warrantholder or
his Assignee as below indicated and delivered to the address stated below.
The undersigned:
|_| elects to pay the full Warrant Price in cash or by certified or cashier's
check or wire funds transfer
|_| elects "cashless exercise" pursuant to Section 5.2 of the Warrant
"Current Market Value" for purposes of Cashless Exercise is: $_______
Number of shares issuable on Cashless Exercise is: __________ shares
Dated: _________________ _____________________________
Signature of Warrantholder
The above signature must correspond with the name appearing upon the face of
this Warrant in every particular, without alteration or enlargement or any
change whatever.
Name of Assignee, if any: __________________________
(Please Print)
_________________________________________________________
(Please print Name, Address and Taxpayer
Identification Number)
_________________________________________________________
Signature Guaranteed: Signature guarantee is required if certificates are to be
registered in the name of any person other than the name
written upon the face of the Warrant. Signature must be
guaranteed by a commercial bank or trust company or a
member firm of the New York Stock Exchange.
7
<PAGE>
ASSIGNMENT
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
_____________________________________________________________
(Name and Address of Assignee Must Be Printed or Typewritten)
_____________________________________________________________
_____________________________________________________________
(Taxpayer Identification Number of Assignee)
the within Warrant, hereby irrevocably constituting and appointing
__________________ Attorney to transfer said Warrant on the books of the
Company, with full power of substitution in the premises.
Dated: ________________, 19__ ______________________________
Signature of Registered Holder
Signature Guaranteed: The above signature must correspond with the name
appearing upon the face of this Warrant in every
particular, without alteration or enlargement or any
change whatever, and must be guaranteed by a commercial
bank or trust company or a member firm of the New York
Stock Exchange.
8
<PAGE>
STOCK PURCHASE WARRANT
WARRANT TO PURCHASE 18,000 SHARES
of
COMMON STOCK
No. PW-2 EXPIRES AT 5:00 P.M., PACIFIC TIME, ON SEPTEMBER 30, 2002
COMMODORE APPLIED TECHNOLOGIES, INC.
This certifies that Gerard K. Cappello, the registered holder hereof or
assigns (the "Warrantholder") is entitled to purchase from Commodore Applied
Technologies, Inc., a Delaware corporation (the "Company'), at any time before
the expiration time and date shown above (the "Expiration Time") at the purchase
price per share of $3.675 (the "Warrant Price"), the number of shares shown
above of the Common Stock of the Company. The number and class of shares
purchasable upon exercise of this Warrant and the Warrant Price per share shall
be subject to adjustment from time to time as set forth below.
Section 1. Transferability and Form of Warrant.
1.1 Registration. This Warrant shall be numbered and shall be registered on
the books of the Company.
1.2 Transfer. This Warrant shall be transferable on the books of the
Company only upon delivery thereof duly endorsed by the Warrantholder or duly
authorized attorney or representative, accompanied by proper evidence of
succession, assignment or authority to transfer. Upon any registration of
transfer, the Company shall execute and deliver a new Warrant to the person
entitled thereto. This Warrant may be divided or combined, upon request to the
Company by the Warrantholder, into a certificate or certificates representing
the right to purchase the same aggregate number of shares. Unless the context
indicates otherwise, the term "Warrantholder" shall include any transferee or
transferees of a Warrant and the term "Warrant" shall include any and all
warrants issued upon division, exchange, substitution or transfer of this
Warrant.
1.3 Form of Warrant. The Warrant shall be executed on behalf of the Company
by its President, Vice President or other authorized officer, and shall be dated
as of the date of signature thereof by the Company either upon initial issuance
or upon division, exchange, substitution or transfer. A Warrant bearing the
signature of an individual who was at any time the proper officer of the Company
shall bind the Company, notwithstanding that such individual shall have ceased
to hold such office prior to the delivery of such Warrant. The form of election
to exercise this Warrant and the form of assignment of this Warrant shall be
substantially as attached hereto.
Section 2. Payment of Taxes.
The Company will pay all documentary stamp taxes, if any, attributable to
the initial issuance of shares to the Warrantholder; provided, however, that the
Company shall not be required to pay any tax or taxes which may be payable in
respect of any secondary transfer of the Warrant or the shares.
Section 3. Mutilated or Missing Warrants.
In case this Warrant shall be mutilated, lost, stolen or destroyed, the
Company shall, at the request of the Warrantholder, issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant, or
in lieu of and in substitution for the lost, stolen or destroyed Warrant, a new
Warrant
<PAGE>
of like tenor, but only upon receipt of evidence satisfactory to the Company of
such loss, theft or destruction of such Warrant. The applicant shall also comply
with such other reasonable regulations and pay such other reasonable
administrative charges as the Company may prescribe.
Section 4. Reservation of Shares.
There has been reserved, and the Company shall at all times keep reserved
so long as this Warrant remains outstanding, out of its authorized shares of
capital stock, such number and class of shares as shall be subject to purchase
under this Warrant. Such reserved shares shall be used solely for issuances upon
exercise of this Warrant. Shares of any class issued upon exercise of this
Warrant shall have all the rights and privileges of other shares of the same
class, whenever issued, subject to the adjustment provisions set forth below.
Section 5. Exercise of Warrant.
5.1 Exercise by Cash Payment. The Holder of this Warrant shall have the
right at any time and from time to time to exercise this Warrant in full or in
part by surrender of this Warrant to the Company accompanied by payment to the
Company in cash or by certified or cashier's check or by wire transfer of funds
of the aggregate Warrant Price for the number of shares in respect of which this
Warrant is then exercised.
5.2 Cashless Exercise. This Warrant may be exercised in full or in part by
surrender of this Warrant to the Company accompanied by written notice
substantially in the form attached hereto of the holder's election to effect
cashless exercise ("Cashless Exercise"). Upon Cashless Exercise, the holder
shall be entitled to receive, in respect of each share for which this Warrant is
then exercised, that number of shares of Common Stock (or such other class of
shares as may then be issuable upon exercise hereof) which, valued at Current
Market Value, have a value equal to the Current Market Value of each share as to
which this Warrant is then being exercised less the Warrant Price payable for
such share. Current Market Value of the Common Stock shall be as defined in
Section 7.
5.3 Delivery of Certificates. Upon exercise of this Warrant the Company
shall issue and cause to be delivered with all reasonable dispatch to or upon
the written order of the Warrantholder and in such name or names as the
Warrantholder may designate, a certificate or certificates for the number of
full shares issuable upon such exercise together with cash, as provided in
Section 7 hereof, in respect of any fractional shares. The Company shall effect
such issuance immediately and shall transmit the certificates by messenger or
overnight delivery service to reach the address designated by the Warrantholder
within two business days after receipt of the Warrant Price or, in the case of a
cashless exercise, after receipt of the Warrant. Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
shares as of the date of surrender of the Warrant and payment of the Warrant
Price, as aforesaid, notwithstanding that the certificates representing such
shares shall not actually have been delivered or that the stock transfer books
of the Company shall then be closed. In the event of partial exercise a new
Warrant evidencing the remaining portion of this Warrant will be issued by the
Company.
Section 6. Adjustment of Warrant Price and Number of Shares.
6.1 Adjustments. The number and kind of securities purchasable upon the
exercise of the Warrants and the Warrant Price shall be subject to adjustment
from time to time upon the happening of certain events, as follows:
(a) If the shares purchasable upon exercise of the Warrants are
subdivided, combined or reclassified, or if other shares of the kind so
purchasable are issued in respect thereof as a
2
<PAGE>
dividend thereon (excluding dividends required by the charter provisions
governing such shares), the number and class of shares purchasable upon
exercise of the Warrants immediately prior thereto shall be adjusted so
that the Warrantholder shall be entitled to receive the kind and number of
shares or other securities of the Company which it would have owned or
would have been entitled to receive after the happening of any of the
events described above, had the Warrants been exercised immediately prior
to the happening of such event or any record date with respect thereto. Any
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(b) If the shares purchasable upon exercise of the Warrants become
entitled to receive a distribution of evidences of indebtedness or assets
(excluding dividends required by the charter provisions governing such
shares) or rights, options, warrants or convertible securities containing
the right to subscribe for or purchase securities or assets of the Company,
then, in each case, the number of shares thereafter purchasable upon the
exercise of the Warrants shall be determined by multiplying the number of
shares theretofore purchasable upon exercise of the Warrants by a fraction,
of which the numerator shall be the then Current Market Value on the date
of such distribution, and of which the denominator shall be such Current
Market Value on such date minus the then fair value of the portion of the
assets or evidence of indebtedness so distributed or of such subscription
rights, options or warrants applicable to one share. Such adjustment shall
be made whenever any such distribution is made and shall become effective
on the date of distribution retroactive to the record date for the
determination of shareholders entitled to receive such distribution.
Current Market Value shall have the meaning set forth in Section 7.
(c) No adjustment in the number of shares purchasable hereunder shall
be required unless such adjustment would require an increase or decrease of
at least one percent (1%) in the number of shares then purchasable upon the
exercise of a Warrant; provided, however, that any adjustments which by
reason of this paragraph (c) are not required to be made immediately shall
be carried forward and taken into account in any subsequent adjustment.
(d) Whenever the purchase price per share is adjusted pursuant to the
provisions of Section 3 of the Stock Purchase Agreements entered into on or
about the date hereof between the Company and certain entities advised by
Dimensional Fund Advisors, inc., an equal adjustment shall be made in the
Warrant Price.
(e) Whenever the Warrant Price or the number or class of shares
purchasable upon the exercise of a Warrant is adjusted as herein provided,
a corresponding adjustment in the number of shares so purchasable or the
Warrant Price, as the case may be, shall be made so that the aggregate
Warrant Price payable upon full exercise of this Warrant shall remain the
same. If such adjustment results in more than one class of security being
purchasable upon exercise of this Warrant, the adjusted Warrant Price shall
be allocated to such securities on the basis of their respective fair
market values.
(f) Whenever the number or class of shares purchasable upon the
exercise of a Warrant or the Warrant Price is adjusted as herein provided,
the Company shall cause to be promptly mailed to the Warrantholder by first
class mail, postage prepaid, notice of such adjustment or adjustments
setting forth the number and class of shares purchasable upon the exercise
of a Warrant and the Warrant Price after such adjustment, together with a
brief statement of the facts requiring such adjustment and the computation
by which such adjustment was made. If any holder disputes the computation
of such adjustment, the Company shall cause independent public accountants
selected by the Company to verify and, if necessary, correct such
computation.
3
<PAGE>
(g) The term "Common Stock" shall mean (i) the class of stock
designated as the Common Stock of the Company at the issue date of this
Warrant or (ii) any other class of stock resulting from successive changes
or reclassifications of such Common Stock. In the event that at any time,
as a result of an adjustment made pursuant to this Section, the
Warrantholder shall become entitled to purchase any securities of the
Company other than shares of Common Stock, thereafter the number of such
other securities so purchasable upon exercise of the Warrant and the
Warrant Price of such securities shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions contained in this Section.
6.2 No Adjustment for Dividends. Except as provided in Subsection 6.1, no
adjustment in respect of any dividends shall be made during the term of the
Warrant or upon the exercise of the Warrant.
6.3 Preservation of Purchase Rights upon Reclassification, Consolidation,
etc. In case of any reclassification of the securities of the Company or any
consolidation of the Company with or merger of the Company into another
corporation or in case of any sale or conveyance to another corporation of the
property, assets or business of the Company as an entirety or substantially as
an entirety, the Company or such successor or purchasing corporation, as the
case may be, shall provide by agreement that the Warrantholder shall have the
right thereafter upon payment of the Warrant Price in effect immediately prior
to such action to purchase upon exercise of the Warrant the kind and amount of
shares and other securities and property which he would have owned or have been
entitled to receive after the happening of such reclassification, consolidation,
merger, sale or conveyance had the Warrant been exercised immediately prior to
such action. Such agreement shall provide for adjustments, which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section. The provisions of this subsection shall similarly apply to successive
reclassifications, consolidations, mergers, sales or conveyances.
6.4 Statement on Warrant Certificates. Irrespective of any adjustments in
the Warrant Price or the number of securities purchasable upon the exercise of
the Warrant, the Warrant certificate or certificates theretofore or thereafter
issued may continue to express the same price and number of securities as are
stated in the similar Warrant certificates initially issued.
Section 7. Fractional Interests; Current Market Value; Closing Bid Price.
The Company shall not be required to issue fractional shares on the
exercise of the Warrant. If any fraction of a share would, except for the
provisions of this Section, be issuable on the exercise of the Warrant (or
specified portion thereof), the Company shall pay an amount in cash equal to the
then Current Market Value multiplied by such fraction. The term "Current Market
Value" of the Common Stock shall mean (i) if the Common Stock is traded in the
over-the-counter market or on the National Association of Securities Dealers,
Inc. Automated Quotations System ("NASDAQ"), the average per share closing sale
prices of the Common Stock on the 20 consecutive trading days immediately
preceding the date in question, as reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common Stock is traded on a national
securities exchange, the average for the 20 consecutive trading days immediately
preceding the date in question of the daily per share closing bid prices of the
Common Stock on the principal stock exchange on which it is listed, or (iii) if
the Common Stock is not so listed or traded, the fair market value of the Common
Stock as determined in good faith by the board of directors of the Company. The
term "closing sale price" shall mean the last sale price on the day in question
as reported by NASDAQ or an equivalent generally accepted reporting service or
(as the case may be) as reported by the principal stock exchange on which the
Common Stock is listed, or if not so reported, as reasonably determined in good
faith by the Board of Directors of the Company.
4
<PAGE>
Section 8. No Rights as Shareholder; Notices to Warrantholder.
Nothing contained herein shall be construed as conferring upon the
Warrantholder any rights whatsoever as a shareholder of the Company, including
the right to vote, to receive dividends, to consent or to receive notices as a
shareholder in respect of any meeting of shareholders for the election of
directors of the Company or any other matter. If, however, at any time prior to
the expiration of the Warrant and prior to its exercise, any of the following
events shall occur:
(a) any action which would require an adjustment pursuant to Sections
6.1 or 6.3; or
(b) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation, merger or sale of its property,
assets and business, as an entirety) shall be proposed;
then in any one or more of said events, the Company shall give notice in writing
of such event to the Warrantholder at least 20 days prior to the date fixed as a
record date or the date of closing the transfer books or other applicable date
with respect thereto. Such notice shall specify such record date or the date of
closing the transfer books, as the case may be.
Any notice to the Warrantholder shall be given at the address of the
Warrantholder appearing on the books of the Company, and if the Warrantholder
has specified a telecopier address, by facsimile transmission to such address.
Section 9. Registration and Indemnification.
The holder of this Warrant and the holder of shares of Common Stock issued
upon exercise of this Warrant shall have the same rights and obligations with
respect to registration under the Securities Act of 1933, and with respect to
indemnification in connection with any such registration, as if such holder were
one of the Purchasers under the Stock Purchase Agreement entered into on or
about the date hereof between the Company and the certain entities advised by
Dimensional Fund Advisors, Inc., excluding, however, the provisions of the last
two sentences of Section (8)(b)(i) of said Agreements. Such rights and
obligations shall continue until not more than one year after the expiration or
earlier exercise of this Warrant.
Section 10. Expiration of Warrant.
10.1 If not theretofore exercised, this Warrant shall terminate at 5:00
p.m. Pacific time on the date shown in the caption hereof.
Section 11. Successors.
All the covenants and provisions of this Agreement by or for the benefit of
the Company or the Warrantholder shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 12. Merger or Consolidation of the Company.
The Company will not merge or consolidate with or into any other
corporation or sell all or substantially all of its property to another
corporation, unless the provisions of Section 6.3 are complied with.
Section 13. Applicable Law.
This Agreement shall be deemed to be a contract made under the laws of the
State of New York and for all purposes shall be construed in accordance with the
laws of said State.
5
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by a
duly authorized officer of the Company.
Commodore Applied Technologies, Inc.
By: /s/ Michael D. Fullwood
------------------------------------
as of 9/30/97
6
<PAGE>
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise the
right of purchase represented by the within Warrant in respect of _____________
of the shares provided for therein, and requests that certificates be issued in
the name of:
______________________________________________________________________
(Please Print Name, Address and Taxpayer Identification Number)
______________________________________________________________________
and, if said number of shares shall not be all the shares purchasable hereunder,
that a new Warrant certificate for the balance of the shares purchasable under
the within Warrant be registered in the name of the undersigned Warrantholder or
his Assignee as below indicated and delivered to the address stated below.
The undersigned:
[ ] elects to pay the full Warrant Price in cash or by certified or cashier's
check or wire funds transfer
[ ] elects "cashless exercise" pursuant to Section 5.2 of the Warrant
"Current Market Value" for purposes of Cashless Exercise is: $__________
Number of shares issuable on Cashless Exercise is: __________ shares
Dated: ________________ ______________________________
Signature of Warrantholder
The above signature must correspond with the name appearing upon the face of
this Warrant in every particular, without alteration or enlargement or any
change whatever.
Name of Assignee, if any: __________________________
(Please Print)
________________________________________________________
(Please print Name, Address and Taxpayer
Identification Number)
________________________________________________________
Signature Guaranteed: Signature guarantee is required if certificates
are to be registered in the name of any person
other than the name written upon the face of the
Warrant. Signature must be guaranteed by a
commercial bank or trust company or a member firm
of the New York Stock Exchange.
7
<PAGE>
ASSIGNMENT
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
____________________________________________________________________
(Name and Address of Assignee Must Be Printed or Typewritten)
____________________________________________________________________
____________________________________________________________________
(Taxpayer Identification Number of Assignee)
the within Warrant, hereby irrevocably constituting and appointing
__________________ Attorney to transfer said Warrant on the books of the
Company, with full power of substitution in the premises.
Dated: ________________, 19__ _________________________________
Signature of Registered Holder
Signature Guaranteed: The above signature must correspond with the name
appearing upon the face of this Warrant in every
particular, without alteration or enlargement or
any change whatever, and must be guaranteed by a
commercial bank or trust company or a member firm
of the New York Stock Exchange.
8
<PAGE>
STOCK PURCHASE WARRANT
WARRANT TO PURCHASE 15,000 SHARES
of
COMMON STOCK
No. PW-3 EXPIRES AT 5:00 P.M., PACIFIC TIME, ON SEPTEMBER 30, 2002
COMMODORE APPLIED TECHNOLOGIES, INC.
This certifies that Lawrence K. Fleischman, the registered holder hereof or
assigns (the "Warrantholder") is entitled to purchase from Commodore Applied
Technologies, Inc., a Delaware corporation (the "Company"), at any time before
the expiration time and date shown above (the "Expiration Time") at the purchase
price per share of $3.675 (the "Warrant Price"), the number of shares shown
above of the Common Stock of the Company. The number and class of shares
purchasable upon exercise of this Warrant and the Warrant Price per share shall
be subject to adjustment from time to time as set forth below.
Section 1. Transferability and Form of Warrant.
1.1 Registration. This Warrant shall be numbered and shall be registered on
the books of the Company.
1.2 Transfer. This Warrant shall be transferable on the books of the
Company only upon delivery thereof duly endorsed by the Warrantholder or duly
authorized attorney or representative, accompanied by proper evidence of
succession, assignment or authority to transfer. Upon any registration of
transfer, the Company shall execute and deliver a new Warrant to the person
entitled thereto. This Warrant may be divided or combined, upon request to the
Company by the Warrantholder, into a certificate or certificates representing
the right to purchase the same aggregate number of shares. Unless the context
indicates otherwise, the term "Warrantholder" shall include any transferee or
transferees of a Warrant and the term "Warrant" shall include any and all
warrants issued upon division, exchange, substitution or transfer of this
Warrant.
1.3 Form of Warrant. The Warrant shall be executed on behalf of the Company
by its President, Vice President or other authorized officer, and shall be dated
as of the date of signature thereof by the Company either upon initial issuance
or upon division, exchange, substitution or transfer. A Warrant bearing the
signature of an individual who was at any time the proper officer of the Company
shall bind the Company, notwithstanding that such individual shall have ceased
to hold such office prior to the delivery of such Warrant. The form of election
to exercise this Warrant and the form of assignment of this Warrant shall be
substantially as attached hereto.
Section 2. Payment of Taxes.
The Company will pay all documentary stamp taxes, if any, attributable to
the initial issuance of shares to the Warrantholder; provided, however, that the
Company shall not be required to pay any tax or taxes which may be payable in
respect of any secondary transfer of the Warrant or the shares.
Section 3. Mutilated or Missing Warrants.
In case this Warrant shall be mutilated, lost, stolen or destroyed, the
Company shall, at the request of the Warrantholder, issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant, or
in lieu of and in substitution for the lost, stolen or destroyed Warrant, a new
Warrant
<PAGE>
of like tenor, but only upon receipt of evidence satisfactory to the Company of
such loss, theft or destruction of such Warrant. The applicant shall also comply
with such other reasonable regulations and pay such other reasonable
administrative charges as the Company may prescribe.
Section 4. Reservation of Shares.
There has been reserved, and the Company shall at all times keep reserved
so long as this Warrant remains outstanding, out of its authorized shares of
capital stock, such number and class of shares as shall be subject to purchase
under this Warrant. Such reserved shares shall be used solely for issuances upon
exercise of this Warrant.. Shares of any class issued upon exercise of this
Warrant shall have all the rights and privileges of other shares of the same
class, whenever issued, subject to the adjustment provisions set forth below.
Section 5. Exercise of Warrant.
5.1 Exercise by Cash Payment. The Holder of this Warrant shall have the
right at any time and from time to time to exercise this Warrant in full or in
part by surrender of this Warrant to the Company accompanied by payment to the
Company in cash or by certified or cashier's check or by wire transfer of funds
of the aggregate Warrant Price for the number of shares in respect of which this
Warrant is then exercised.
5.2 Cashless Exercise. This Warrant may be exercised in full or in part by
surrender of this Warrant to the Company accompanied by written notice
substantially in the form attached hereto of the holder's election to effect
cashless exercise ("Cashless Exercise"). Upon Cashless Exercise, the holder
shall be entitled to receive, in respect of each share for which this Warrant is
then exercised, that number of shares of Common Stock (or such other class of
shares as may then be issuable upon exercise hereof) which, valued at Current
Market Value, have a value equal to the Current Market Value of each share as to
which this Warrant is then being exercised less the Warrant Price payable for
such share. Current Market Value of the Common Stock shall be as defined in
Section 7.
5.3 Delivery of Certificates. Upon exercise of this Warrant the Company
shall issue and cause to be delivered with all reasonable dispatch to or upon
the written order of the Warrantholder and in such name or names as the
Warrantholder may designate, a certificate or certificates for the number of
full shares issuable upon such exercise together with cash, as provided in
Section 7 hereof, in respect of any fractional shares. The Company shall effect
such issuance immediately and shall transmit the certificates by messenger or
overnight delivery service to reach the address designated by the Warrantholder
within two business days after receipt of the Warrant Price or, in the case of a
cashless exercise, after receipt of the Warrant. Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
shares as of the date of surrender of the Warrant and payment of the Warrant
Price, as aforesaid, notwithstanding that the certificates representing such
shares shall not actually have been delivered or that the stock transfer books
of the Company shall then be closed. In the event of partial exercise a new
Warrant evidencing the remaining portion of this Warrant will be issued by the
Company.
Section 6. Adjustment of Warrant Price and Number of Shares.
6.1 Adjustments. The number and kind of securities purchasable upon the
exercise of the Warrants and the Warrant Price shall be subject to adjustment
from time to time upon the happening of certain events, as follows:
(a) If the shares purchasable upon exercise of the Warrants are
subdivided, combined or reclassified, or if other shares of the kind so
purchasable are issued in respect thereof as a
2
<PAGE>
dividend thereon (excluding dividends required by the charter provisions
governing such shares), the number and class of shares purchasable upon
exercise of the Warrants immediately prior thereto shall be adjusted so
that the Warrantholder shall be entitled to receive the kind and number of
shares or other securities of the Company which it would have owned or
would have been entitled to receive after the happening of any of the
events described above, had the Warrants been exercised immediately prior
to the happening of such event or any record date with respect thereto. Any
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(b) If the shares purchasable upon exercise of the Warrants become
entitled to receive a distribution of evidences of indebtedness or assets
(excluding dividends required by the charter provisions governing such
shares) or rights, options, warrants or convertible securities containing
the right to subscribe for or purchase securities or assets of the Company,
then, in each case, the number of shares thereafter purchasable upon the
exercise of the Warrants shall be determined by multiplying the number of
shares theretofore purchasable upon exercise of the Warrants by a fraction,
of which the numerator shall be the then Current Market Value on the date
of such distribution, and of which the denominator shall be such Current
Market Value on such date minus the then fair value of the portion of the
assets or evidence of indebtedness so distributed or of such subscription
rights, options or warrants applicable to one share. Such adjustment shall
be made whenever any such distribution is made and shall become effective
on the date of distribution retroactive to the record date for the
determination of shareholders entitled to receive such distribution.
Current Market Value shall have the meaning set forth in Section 7.
(c) No adjustment in the number of shares purchasable hereunder shall
be required unless such adjustment would require an increase or decrease of
at least one percent (1%) in the number of shares then purchasable upon the
exercise of a Warrant; provided, however, that any adjustments which by
reason of this paragraph (c) are not required to be made immediately shall
be carried forward and taken into account in any subsequent adjustment.
(d) Whenever the purchase price per share is adjusted pursuant to the
provisions of Section 3 of the Stock Purchase Agreements entered into on or
about the date hereof between the Company and certain entities advised by
Dimensional Fund Advisors, inc., an equal adjustment shall be made in the
Warrant Price.
(e) Whenever the Warrant Price or the number or class of shares
purchasable upon the exercise of a Warrant is adjusted as herein provided,
a corresponding adjustment in the number of shares so purchasable or the
Warrant Price, as the case may be, shall be made so that the aggregate
Warrant Price payable upon full exercise of this Warrant shall remain the
same. If such adjustment results in more than one class of security being
purchasable upon exercise of this Warrant, the adjusted Warrant Price shall
be allocated to such securities on the basis of their respective fair
market values.
(f) Whenever the number or class of shares purchasable upon the
exercise of a Warrant or the Warrant Price is adjusted as herein provided,
the Company shall cause to be promptly mailed to the Warrantholder by first
class mail, postage prepaid, notice of such adjustment or adjustments
setting forth the number and class of shares purchasable upon the exercise
of a Warrant and the Warrant Price after such adjustment, together with a
brief statement of the facts requiring such adjustment and the computation
by which such adjustment was made. If any holder disputes the computation
of such adjustment, the Company shall cause independent public accountants
selected by the Company to verify and, if necessary, correct such
computation.
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<PAGE>
(g) The term "Common Stock" shall mean (i) the class of stock
designated as the Common Stock of the Company at the issue date of this
Warrant or (ii) any other class of stock resulting from successive changes
or reclassifications of such Common Stock. In the event that at any time,
as a result of an adjustment made pursuant to this Section, the
Warrantholder shall become entitled to purchase any securities of the
Company other than shares of Common Stock, thereafter the number of such
other securities so purchasable upon exercise of the Warrant and the
Warrant Price of such securities shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions contained in this Section.
6.2 No Adjustment for Dividends. Except as provided in Subsection 6.1, no
adjustment in respect of any dividends shall be made during the term of the
Warrant or upon the exercise of the Warrant.
6.3 Preservation of Purchase Rights upon Reclassification, Consolidation,
etc. In case of any reclassification of the securities of the Company or any
consolidation of the Company with or merger of the Company into another
corporation or in case of any sale or conveyance to another corporation of the
property, assets or business of the Company as an entirety or substantially as
an entirety, the Company or such successor or purchasing corporation, as the
case may be, shall provide by agreement that the Warrantholder shall have the
right thereafter upon payment of the Warrant Price in effect immediately prior
to such action to purchase upon exercise of the Warrant the kind and amount of
shares and other securities and property which he would have owned or have been
entitled to receive after the happening of such reclassification, consolidation,
merger, sale or conveyance had the Warrant been exercised immediately prior to
such action. Such agreement shall provide for adjustments, which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section. The provisions of this subsection shall similarly apply to successive
reclassifications, consolidations, mergers, sales or conveyances.
6.4 Statement on Warrant Certificates. Irrespective of any adjustments in
the Warrant Price or the number of securities purchasable upon the exercise of
the Warrant, the Warrant certificate or certificates theretofore or thereafter
issued may continue to express the same price and number of securities as are
stated in the similar Warrant certificates initially issued.
Section 7. Fractional Interests; Current Market Value; Closing Bid Price.
The Company shall not be required to issue fractional shares on the
exercise of the Warrant. If any fraction of a share would, except for the
provisions of this Section, be issuable on the exercise of the Warrant (or
specified portion thereof), the Company shall pay an amount in cash equal to the
then Current Market Value multiplied by such fraction. The term "Current Market
Value" of the Common Stock shall mean (i) if the Common Stock is traded in the
over-the-counter market or on the National Association of Securities Dealers,
Inc. Automated Quotations System ("NASDAQ"), the average per share closing sale
prices of the Common Stock on the 20 consecutive trading days immediately
preceding the date in question, as reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common Stock is traded on a national
securities exchange, the average for the 20 consecutive trading days immediately
preceding the date in question of the daily per share closing bid prices of the
Common Stock on the principal stock exchange on which it is listed, or (iii) if
the Common Stock is not so listed or traded, the fair market value of the Common
Stock as determined in good faith by the board of directors of the Company. The
term "closing sale price" shall mean the last sale price on the day in question
as reported by NASDAQ or an equivalent generally accepted reporting service or
(as the case may be) as reported by the principal stock exchange on which the
Common Stock is listed, or if not so reported, as reasonably determined in good
faith by the Board of Directors of the Company.
4
<PAGE>
Section 8. No Rights as Shareholder; Notices to Warrantholder.
Nothing contained herein shall be construed as conferring upon the
Warrantholder any rights whatsoever as a shareholder of the Company, including
the right to vote, to receive dividends, to consent or to receive notices as a
shareholder in respect of any meeting of shareholders for the election of
directors of the Company or any other matter. If, however, at any time prior to
the expiration of the Warrant and prior to its exercise, any of the following
events shall occur:
(a) any action which would require an adjustment pursuant to Sections
6.1 or 6.3; or
(b) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation, merger or sale of its property,
assets and business, as an entirety) shall be proposed;
then in any one or more of said events, the Company shall give notice in writing
of such event to the Warrantholder at least 20 days prior to the date fixed as a
record date or the date of closing the transfer books or other applicable date
with respect thereto. Such notice shall specify such record date or the date of
closing the transfer books, as the case may be.
Any notice to the Warrantholder shall be given at the address of the
Warrantholder appearing on the books of the Company, and if the Warrantholder
has specified a telecopier address, by facsimile transmission to such address.
Section 9. Registration and Indemnification.
The holder of this Warrant and the holder of shares of Common Stock issued
upon exercise of this Warrant shall have the same rights and obligations with
respect to registration under the Securities Act of 1933, and with respect to
indemnification in connection with any such registration, as if such holder were
one of the Purchasers under the Stock Purchase Agreement entered into on or
about the date hereof between the Company and the certain entities advised by
Dimensional Fund Advisors, Inc., excluding, however, the provisions of the last
two sentences of Section (8)(b)(i) of said Agreements. Such rights and
obligations shall continue until not more than one year after the expiration or
earlier exercise of this Warrant.
Section 10. Expiration of Warrant.
10.1 If not theretofore exercised, this Warrant shall terminate at 5:00
p.m. Pacific time on the date shown in the caption hereof.
Section 11. Successors.
All the covenants and provisions of this Agreement by or for the benefit of
the Company or the Warrantholder shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 12. Merger or Consolidation of the Company.
The Company will not merge or consolidate with or into any other
corporation or sell all or substantially all of its property to another
corporation, unless the provisions of Section 6.3 are complied with.
Section 13. Applicable Law.
This Agreement shall be deemed to be a contract made under the laws of the
State of New York and for all purposes shall be construed in accordance with the
laws of said State.
5
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by a
duly authorized officer of the Company.
Commodore Applied Technologies, Inc.
By: /s/ Michael D. Fullwood
--------------------------------
as of 9/30/97
6
<PAGE>
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant in respect of _____________ of the shares
provided for therein, and requests that certificates be issued in the name of:
_______________________________________________________________
(Please Print Name, Address and Taxpayer Identification Number)
_______________________________________________________________
and, if said number of shares shall not be all the shares purchasable hereunder,
that a new Warrant certificate for the balance of the shares purchasable under
the within Warrant be registered in the name of the undersigned Warrantholder or
his Assignee as below indicated and delivered to the address stated below.
The undersigned:
|_| elects to pay the full Warrant Price in cash or by certified or cashier's
check or wire funds transfer
|_| elects "cashless exercise" pursuant to Section 5.2 of the Warrant
"Current Market Value" for purposes of Cashless Exercise is: $____________
Number of shares issuable on Cashless Exercise is: ______________ shares
Dated: _________________ ______________________________
Signature of Warrantholder
The above signature must correspond with the name appearing upon the face of
this Warrant in every particular, without alteration or enlargement or any
change whatever.
Name of Assignee, if any: _________________________
(Please Print)
___________________________________________________
(Please print Name, Address and Taxpayer
Identification Number)
___________________________________________________
Signature Guaranteed: Signature guarantee is required if certificates are to be
registered in the name of any person other than the name
written upon the face of the Warrant. Signature must be
guaranteed by a commercial bank or trust company or a
member firm of the New York Stock Exchange.
7
<PAGE>
ASSIGNMENT
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
_____________________________________________________________
(Name and Address of Assignee Must Be Printed or Typewritten)
_____________________________________________________________
_____________________________________________________________
(Taxpayer Identification Number of Assignee)
the within Warrant, hereby irrevocably constituting and appointing
___________________ Attorney to transfer said Warrant on the books of the
Company, with full power of substitution in the premises.
Dated: ________________, 19__ _______________________________
Signature of Registered Holder
Signature Guaranteed: The above signature must correspond with the name
appearing upon the face of this Warrant in every
particular, without alteration or enlargement or any
change whatever, and must be guaranteed by a commercial
bank or trust company or a member firm of the New York
Stock Exchange.
8
<PAGE>
STOCK PURCHASE WARRANT
WARRANT TO PURCHASE 19,407 SHARES
of
COMMON STOCK
No. PW-4 EXPIRES AT 5:00 P.M., EASTERN TIME, ON AUGUST 31, 2002
COMMODORE APPLIED TECHNOLOGIES, INC.
This certifies that Pacific Continental Securities, Inc., the registered
holder hereof or assigns (the "Warrantholder"), is entitled to purchase from
Commodore Applied Technologies, Inc., a Delaware corporation (the "Company"), at
any time before the expiration time and date shown above (the "Expiration Time")
at the purchase price per share of $5.80 (the "Warrant Price"), the number of
shares shown above of the Common Stock of the Company. The number and class of
shares purchasable upon exercise of this Warrant and the Warrant Price per share
shall be subject to adjustment from time to time as set forth below.
Section 1. Transferability and Form of Warrant.
1.1 Registration. This Warrant shall be numbered and shall be registered on
the books of the Company.
1.2 Transfer. This Warrant shall be transferable on the books of the
Company only upon delivery thereof duly endorsed by the Warrantholder or duly
authorized attorney or representative, accompanied by proper evidence of
succession, assignment or authority to transfer. Upon any registration of
transfer, the Company shall execute and deliver a new Warrant to the person
entitled thereto. This Warrant may be divided or combined, upon request to the
Company by the Warrantholder, into a certificate or certificates representing
the right to purchase the same aggregate number of shares. Unless the context
indicates otherwise, the term "Warrantholder" shall include any transferee or
transferees of a Warrant and the term "Warrant" shall include any and all
warrants issued upon division, exchange, substitution or transfer of this
Warrant.
1.3 Form of Warrant. The Warrant shall be executed on behalf of the Company
by its President, Vice President or other authorized officer, and shall be dated
as of the date of signature thereof by the Company either upon initial issuance
or upon division, exchange, substitution or transfer. A Warrant bearing the
signature of an individual who was at any time the proper officer of the Company
shall bind the Company, notwithstanding that such individual shall have ceased
to hold such office prior to the delivery of such Warrant. The form of election
to exercise this Warrant and the form of assignment of this Warrant shall be
substantially as attached hereto.
<PAGE>
Section 2. Payment of Taxes.
The Company will pay all documentary stamp taxes, if any, attributable to
the initial issuance of shares to the Warrantholder; provided, however that the
Company shall not be required to pay any tax or taxes which may be payable in
respect of any secondary transfer of the Warrant or the shares.
Section 3. Mutilated or Missing Warrants.
In case this Warrant shall be mutilated, lost, stolen or destroyed, the
Company shall, at the request of the Warrantholder, issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant, or
in lieu of and in substitution for the lost, stolen or destroyed Warrant, a new
Warrant of like tenor, but only upon receipt of evidence satisfactory to the
Company of such loss, theft or destruction of such Warrant. The applicant shall
also comply with such other reasonable regulations and pay such other reasonable
administrative charges as the Company may prescribe.
Section 4. Reservation of Shares.
There has been reserved, and the Company shall at all times keep reserved
so long as this Warrant remains outstanding, out of its authorized shares of
capital stock, such number and class of shares as shall be subject to purchase
under this Warrant. Such reserved shares shall be used solely for issuances upon
exercise of this Warrant. Shares of any class issued upon exercise of this
Warrant shall have all the rights and privileges of other shares of the same
class, whenever issued, subject to the adjustment provisions set forth below.
Section 5. Exercise of Warrant.
5.1 Exercise by Cash Payment. The Holder of this Warrant shall have the
right at any time and from time to time to exercise this Warrant in full or in
part by surrender of this Warrant to the Company accompanied by payment to the
Company in cash or by certified or cashier's check or by wire transfer of funds
of the aggregate Warrant Price for the number of shares in respect of which this
Warrant is then exercised.
5.2 Cashless Exercise. This Warrant may be exercised in full or in part by
surrender of this Warrant to the Company accompanied by written notice
substantially in the form attached hereto of the holder's election to effect
cashless exercise ("Cashless Exercise"). Upon Cashless Exercise, the holder
shall be entitled to receive, in respect of each share for which this Warrant is
then exercised, that number of shares of Common Stock (or such other class of
shares as may then be issuable upon exercise hereof) which, valued at Current
Market Value, have a value equal to the Current Market Value of each share as to
which this Warrant is then being exercised less the Warrant Price payable for
such share. Current Market Value of the Common Stock shall be as defined in
Section 7.
5.3 Delivery of Certificates. Upon exercise of this Warrant the Company
shall issue and cause to be delivered with all reasonable dispatch to or upon
the written order of
2
<PAGE>
the Warrantholder and in such name or names as the Warrantholder may designate,
a certificate or certificates for the number of full shares issuable upon such
exercise together with cash, as provided in Section 7 hereof, in respect of any
fractional shares. The Company shall effect such issuance immediately and shall
transmit the certificates by messenger or overnight delivery service to reach
the address designated by the Warrantholder within two business days after
receipt of the Warrant Price or, in the case of a cashless exercise, after
receipt of the Warrant. Such certificate or certificates shall be deemed to have
been issued and any person so designated to be named therein shall be deemed to
have become a holder of record of such shares as of the date of surrender of the
Warrant and payment of the Warrant Price, as aforesaid, notwithstanding that the
certificates representing such shares shall not actually have been delivered or
that the stock transfer books of the Company shall then be closed. In the event
of partial exercise a new Warrant evidencing the remaining portion of this
Warrant will be issued by the Company.
Section 6. Adjustment of Warrant Price and Number of Shares.
6.1 Adjustments. The number and kind of securities purchasable upon the
exercise of the Warrants and the Warrant Price shall be subject to adjustment
from time to time upon the happening of certain events, as follows:
(a) If the shares purchasable upon exercise of the Warrants are
subdivided, combined or reclassified, or if other shares of the kind so
purchasable are issued in respect thereof as a dividend thereon (excluding
dividends required by the charter provisions governing such shares), the
number and class of shares purchasable upon exercise of the Warrants
immediately prior thereto shall be adjusted so that the Warrantholder shall
be entitled to receive the kind and number of shares or other securities of
the Company which it would have owned or would have been entitled to
receive after the happening of any of the events described above, had the
Warrants been exercised immediately prior to the happening of such event or
any record date with respect thereto. Any adjustment made pursuant to this
paragraph (a) shall become effective immediately after the effective date
of such event retroactive to the record date, if any, for such event.
(b) If the shares purchasable upon exercise of the Warrants become
entitled to receive a distribution of evidences of indebtedness or assets
(excluding dividends required by the charter provisions governing such
shares) or rights, options, warrants or convertible securities containing
the right to subscribe for or purchase securities or assets of the Company,
then, in each case, the number of shares thereafter purchasable upon the
exercise of the Warrants shall be determined by multiplying the number of
shares theretofore purchasable upon exercise of the Warrants by a fraction,
of which the numerator shall be the then Current Market Value on the date
of such distribution, and of which the denominator shall be such Current
Market Value on such date minus the then fair value of the portion of the
assets or evidence of indebtedness so distributed or of such subscription
rights, options or warrants applicable to one share. Such adjustment shall
be made whenever any such distribution is made and shall become effective
on the date of distribution retroactive to the record date for the
determination of shareholders entitled to
3
<PAGE>
receive such distribution. Current Market Value shall have the meaning set
forth in Section 7.
(c) No adjustment in the number of shares purchasable hereunder shall
be required unless such adjustment would require an increase or decrease of
at least one percent (1%) in the number of shares then purchasable upon the
exercise of a Warrant; provided, however, that any adjustments which by
reason of this paragraph (c) are not required to be made immediately shall
be carried forward and taken into account in any subsequent adjustment.
(d) Whenever the Warrant Price or the number or class of shares
purchasable upon the exercise of a Warrant is adjusted as herein provided,
a corresponding adjustment in the number of shares so purchasable or the
Warrant Price, as the case may be, shall be made so that the aggregate
Warrant Price payable upon full exercise of this Warrant shall remain the
same. If such adjustment results in more than one class of security being
purchasable upon exercise of this Warrant, the adjusted Warrant Price shall
be allocated to such securities on the basis of their respective fair
market values.
(e) Whenever the number or class of shares purchasable upon the
exercise of a Warrant or the Warrant Price is adjusted as herein provided,
the Company shall cause to be promptly mailed to the Warrantholder by first
class mail, postage prepaid, notice of such adjustment or adjustments
setting forth the number and class of shares purchasable upon the exercise
of a Warrant and the Warrant Price after such adjustment, together with a
brief statement of the facts requiring such adjustment and the computation
by which such adjustment was made. If any holder disputes the computation
of such adjustment, the Company shall cause independent public accountants
selected by the Company to verify and, if necessary, correct such
computation.
(f) The term "Common Stock" shall mean (i) the class of stock
designated as the Common Stock of the Company at the issue date of this
Warrant or (ii) any other class of stock resulting from successive changes
or reclassifications of such Common Stock. In the event that at any time,
as a result of an adjustment made pursuant to this Section, the
Warrantholder shall become entitled to purchase any securities of the
Company other than shares of Common Stock, thereafter the number of such
other securities so purchasable upon exercise of the Warrant and the
Warrant Price of such securities shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions contained in this Section.
6.2 No Adjustment for Dividends. Except as provided in Subsection 6.1, no
adjustment in respect of any dividends shall be made during the term of the
Warrant or upon the exercise of the Warrant.
6.3 Preservation of Purchase Rights upon Reclassification, Consolidation,
etc. In case of any reclassification of the securities of the Company or any
consolidation of the Company with or merger of the Company into another
corporation or in case of any sale or conveyance to another corporation of the
property, assets or business of the Company as an
4
<PAGE>
entirety or substantially as an entirety, the Company or such successor or
purchasing corporation, as the case may be, shall provide by agreement that the
Warrantholder shall have the right thereafter upon payment of the Warrant Price
in effect immediately prior to such action to purchase upon exercise of the
Warrant the kind and amount of shares and other securities and property which he
would have owned or have been entitled to receive after the happening of such
reclassification, consolidation, merger, sale or conveyance had the Warrant been
exercised immediately prior to such action. Such agreement shall provide for
adjustments, which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section. The provisions of this subsection
shall similarly apply to successive reclassifications, consolidations, mergers,
sales or conveyances.
6.4 Statement on Warrant Certificates. Irrespective of any adjustments in
the Warrant Price or the number of securities purchasable upon the exercise of
the Warrant, the Warrant certificate or certificates theretofore or thereafter
issued may continue to express the same price and number of securities as are
stated in the similar Warrant certificates initially issued.
Section 7. Fractional Interests; Current Market Value; Closing Bid Price.
The Company shall not be required to issue fractional shares on the
exercise of the Warrant. If any fraction of a share would, except for the
provisions of this Section, be issuable on the exercise of the Warrant (or
specified portion thereof), the Company shall pay an amount in cash equal to the
then Current Market Value multiplied by such fraction. The term "Current Market
Value" of the Common Stock shall mean (i) if the Common Stock is traded in the
over-the-counter market or on the National Association of Securities Dealers,
Inc. Automated Quotations System ("NASDAQ"), the average per share closing sale
prices of the Common Stock on the 20 consecutive trading days immediately
preceding the date in question, as reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common Stock is traded on a national
securities exchange, the average for the 20 consecutive trading days immediately
preceding the date in question of the daily per share closing bid prices of the
Common Stock on the principal stock exchange on which it is listed, or (iii) if
the Common Stock is not so listed or traded, the fair market value of the Common
Stock as determined in good faith by the board of directors of the Company. The
term "closing sale price" shall mean the last sale price on the day in question
as reported by NASDAQ or an equivalent generally accepted reporting service or
(as the case may be) as reported by the principal stock exchange on which the
Common Stock is listed, or if not so reported, as reasonably determined in good
faith by the Board of Directors of the Company.
Section 8. No Rights as Shareholder; Notices to Warrantholder.
Nothing contained herein shall be construed as conferring upon the
Warrantholder any rights whatsoever as a shareholder of the Company, including
the right to vote, to receive dividends, to consent or to receive notices as a
shareholder in respect of any meeting of shareholders for the election of
directors of the Company or any other matter. If,
5
<PAGE>
however, at any time prior to the expiration of the Warrant and prior to its
exercise, any of the following events shall occur:
(a) any action which would require an adjustment pursuant to Sections
6.1 or 6.3; or
(b) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation, merger or sale of its property,
assets and business, as an entirety) shall be proposed;
then in any one or more of said events, the Company shall give notice in writing
of such event to the Warrantholder at least 20 days prior to the date fixed as a
record date or the date of closing the transfer books or other applicable date
with respect thereto. Such notice shall specify such record date or the date of
closing the transfer books, as the case may be.
Any notice to the Warrantholder shall be given at the address of the
Warrantholder appearing on the books of the Company, and if the Warrantholder
has specified a telecopier address, by facsimile transmission to such address.
Section 9. Registration and Indemnification.
The holder of this Warrant and the holder of shares of Common Stock issued
upon exercise of this Warrant shall have the same rights and obligations with
respect to registration under the Securities Act of 1933, as amended, and with
respect to indemnification in connection with any such registration, as if such
holder were one of the Purchasers under the Series A Convertible Preferred Stock
Purchase Agreement entered into as of August 15, 1997 between the Company and
the certain purchasers listed on Exhibit A thereto. Such rights and obligations
shall continue until not more than one year after the expiration or earlier
exercise of this Warrant.
Section 10. Expiration of Warrant.
10.1 If not theretofore exercised, this Warrant shall terminate at 5:00
p.m. Eastern time on the date shown in the caption hereof.
Section 11. Successors.
All the covenants and provisions of this Agreement by or for the benefit of
the Company or the Warrantholder shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 12. Merger or Consolidation of the Company.
The Company will not merge or consolidate with or into any other
corporation or sell all or substantially all of its property to another
corporation, unless the provisions of Section 6.3 are complied with.
6
<PAGE>
Section 13. Applicable Law.
This Agreement shall be deemed to be a contract made under the laws of the
State of New York, without regard to the choice of laws provisions thereof, and
for all purposes shall be construed in accordance with the laws of said State.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by a
duly authorized officer of the Company.
Commodore Applied Technologies, Inc.
By: /s/ Michael D. Fullwood
------------------------------------
Name:
Title:
7
<PAGE>
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant in respect of ________________ of the shares
provided for therein, and requests that certificates be issued in the name of:
____________________________________________________________________
(Please Print Name, Address and Taxpayer Identification Number)
____________________________________________________________________
and, if said number of shares shall not be all the shares purchasable hereunder,
that a new Warrant certificate for the balance of the shares purchasable under
the within Warrant be registered in the name of the undersigned Warrantholder or
his Assignee as below indicated and delivered to the address stated below.
The undersigned:
[ ] elects to pay the full Warrant Price in cash or by certified or cashier's
check or wire funds transfer
[ ] elects "cashless exercise" pursuant to Section 5.2 of the Warrant
"Current Market Value" for purposes of Cashless Exercise is: $___________
Number of shares issuable on Cashless Exercise is: __________ shares
Dated:____________________ ________________________________________
Signature of Warrantholder
The above signature must correspond with the name appearing upon the face of
this Warrant in every particular, without alteration or enlargement or any
change whatever.
Name of Assignee, if any: ________________________________________
(Please Print)
___________________________________________
(Please print Name, Address and Taxpayer
Identification Number)
___________________________________________
Signature Guaranteed: Signature guarantee is required if certificates
are to be registered in the name of any person
other than the name written upon the face of the
Warrant. Signature must be guaranteed by a
commercial bank or trust company or a member firm
of the New York Stock Exchange.
8
<PAGE>
ASSIGNMENT
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_______________________________________________________________
(Name and Address of Assignee Must Be Printed or Typewritten)
_______________________________________________________________
_______________________________________________________________
(Taxpayer Identification Number of Assignee)
the within Warrant, hereby irrevocably constituting and appointing_____________
_________________ Attorney to transfer said Warrant on the books of the Company,
with full power of substitution in the premises.
Dated: _____________, 199_ _______________________________
Signature of Registered Holder
Signature Guaranteed: The above signature must correspond with the name
appearing upon the face of this Warrant in every
particular, without alteration or enlargement or
any change whatever, and must be guaranteed by a
commercial bank or trust company or a member firm
of the New York Stock Exchange.
9
<PAGE>
EXHIBIT 5.1
January 20, 1998
Commodore Applied Technologies, Inc.
150 East 58th Street, Suite 3400
New York, New York 10155
Re: Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
We have acted as counsel to Commodore Applied Technologies, Inc., a
Delaware corporation (the "Company"), in connection with the preparation of a
Registration Statement on Form S-3 (the "Registration Statement") to be filed
under the Securities Act of 1933, as amended (the "Securities Act"), covering
up to 2,582,700 shares of the Company's common stock, par value $0.001 per
share (the "Shares"), which are being registered in connection with the
proposed sale of the Shares by the persons and entities listed as selling
stockholders therein.
In connection with this opinion, we have examined the Registration
Statement, the Company's Certificate of Incorporation, By-laws and minutes,
and such other documents and records as we have deemed relevant. In our
examinations, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
with the originals of all documents submitted to us as copies. In addition, we
have made such other examinations of law and of fact as we have deemed
appropriate in order to form a basis for the opinion hereinafter expressed.
We have been informed by the Company that the Shares have been and
will be transferred or issued, and the certificates evidencing the same have
been and will be duly delivered, against receipt of the consideration
stipulated therefor, which has not been and will not be less than the par
value of the Shares.
Based on the foregoing, we are of the opinion that the Shares have
been duly authorized and have been, or when transferred or issued, delivered
and paid for in accordance with the foregoing assumptions will be, validly
issued, fully paid and non-assessable.
The opinion set forth above is limited to the Delaware General
Corporation Law, as amended.
<PAGE>
Commodore Applied Technologies, Inc.
Registration Statement on Form S-3
January 20, 1998
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Prospectus forming a pert of the Registration Statement.
In giving this opinion and consent, we do not thereby admit that we are acting
within the category of persons whose consent is required under Section 7 of
the Securities Act, or the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.
Very truly yours,
/s/ GREENBERG TRAURIG HOFFMAN
LIPOFF ROSEN & QUENTEL
<PAGE>
EXHIBIT 23.1
TANNER + CO.
Certified Public Accountants
675 East 500 South, Suite 640
Salt Lake City, Utah 84102
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-3 of our report dated January 19, 1996,
relating to the consolidated financial statements of Commodore Applied
Technologies, Inc. (the "Company") for the year ended December 31, 1995, which
appears on page F-1A of the Company's Annual Report on Form 10-K for the year
ended December 31, 1996, and to the reference to our firm under the caption
"Experts" in the Prospectus.
/s/ Tanner + Co.
- -----------------------
Tanner + Co.
Salt Lake City, Utah
January 20, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement on Form S-3 of our report
dated April 11, 1997 appearing on page F-1 of Commodore Applied Technologies,
Inc.'s Annual Report on Form 10-K for the year ended December 31, 1996. We
also consent to the reference to us under the caption "Experts" in such
Prospectus.
Price Waterhouse LLP
Philadelphia, Pennsylvania
January 20, 1998
