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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): DECEMBER 25, 1998
COMMODORE APPLIED TECHNOLOGIES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 1-11871 11-3312952
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
150 EAST 58TH STREET, SUITE 3400
NEW YORK, NEW YORK 10155
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 308-5800
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(Former Name or Former Address, if Changed Since Last Report)
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CURRENT REPORT ON FORM 8-K
COMMODORE APPLIED TECHNOLOGIES, INC.
DECEMBER 25, 1998
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 25, 1998, Commodore Applied Technologies, Inc. a Delaware
corporation (the "Company"), consummated the transfer of all 10,000,000 of its
shares of common stock, par value $.001 per share (the "Separation Stock"), of
Commodore Separation Technologies, Inc., a Delaware corporation ("Separation"),
representing approximately 87% of the issued and outstanding shares of capital
stock of Separation, to Commodore Environmental Services LLC, a Delaware limited
liability company wholly owned by Commodore Environmental Services, Inc., a
Delaware corporation ("COES"), as part of a debt repayment plan between the
Company and COES. The transfer is effective as of September 28, 1998. COES
currently owns approximately 35% of the outstanding shares of common stock of
the Company. Bentley J. Blum, a director of COES and the owner of approximately
52% of the outstanding shares of COES common stock, is also a director of the
Company and Separation.
As a result of the repayment, the Company has repaid all of its
$6,755,864 debt to COES by exchanging the debt for (i) the Separation Stock
(as repayment of $1,250,000 of debt); (ii) 20,909 shares of newly created 6%
Series B Convertible Preferred Stock of the Company (as repayment of
$2,090,870 of debt); (iii) 10,189 shares of newly created 6% Series C
Convertible Preferred Stock of the Company (as repayment of $1,018,864 of
debt); (iv) 20,391 shares of newly created 6% Series D Convertible Preferred
Stock of the Company (as repayment of $2,039,100 of debt); (v) assignment to
COES of an account receivable due to the Company from Separation in the
amount of $357,000; and (vi) amendment of an existing warrant owned by COES
to purchase 1,500,000 shares of the Company's common stock to reduce the
exercise price of such warrant from $10.00 per share to $1.50 per share. The
terms of the debt restructuring were determined as a result of arm's-length
negotiations between representatives of both the Company and COES, and were
supported by fairness opinions by an independent, third-party appraiser.
By virtue of the foregoing transaction, Separation has become the
indirect, 87%-owned subsidiary of COES. Paul E. Hannesson, the Chairman of
the Board, President and Chief Executive Officer of the Company and the
Chairman of the Board and Chief Executive Officer of Separation, and James M.
DeAngelis, the Vice President--Finance and Treasurer of the Company and the
Vice President--Sales & Marketing of Separation, will maintain their current
management positions in Separation. The acquisition of Separation by COES
will be accounted for under the purchase method of accounting.
The information set forth above is qualified in its entirety by
reference to: (i) the Amended Warrant to purchase 1,500,000 shares of Company
common stock, a copy of which is attached hereto as EXHIBIT 4.1; (ii) the
Certificate of Designation of 6% Series B Convertible Preferred Stock of the
Company, a copy of which is attached hereto as EXHIBIT 4.2; (iii) the
Certificate of Designation of 6% Series C Convertible Preferred Stock of the
Company, a copy of which is attached hereto as EXHIBIT 4.3; (iv) the
Certificate of Designation of 6% Series D Convertible Preferred Stock of the
Company, a copy of which is attached hereto as EXHIBIT 4.4; (v) the Debt
Repayment Agreement, dated as of September 28, 1998, between the Company and
COES, a copy of which is attached hereto as EXHIBIT 99.1; (vi) the
Registration Rights Agreement, dated as of September 28, 1998, between the
Company and COES, a copy of which is attached hereto as EXHIBIT 99.2; and
(vii) the Press Release of the Company, dated December 31, 1998, a copy of
which is attached hereto as EXHIBIT 99.3.
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Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION.
In accordance with Item 7(b) of Form 8-K, the pro forma
financial information shall be provided not later than 60 days after the date on
which this Current Report was filed.
(c) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
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<S> <C>
4.1 Amended Warrant to purchase 1,500,000 shares of Company
common stock.
4.2 Certificate of Designation of 6% Series B Convertible
Preferred Stock of the Company.
4.3 Certificate of Designation of 6% Series C Convertible
Preferred Stock of the Company.
4.4 Certificate of Designation of 6% Series D Convertible
Preferred Stock of the Company.
99.1 Debt Repayment Agreement, dated as of September 28,
1998, between the Company and COES.
99.2 Registration Rights Agreement, dated as of September
28, 1998, between the Company and COES.
99.3 Press Release, dated December 31, 1998.
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Current Report to be signed on its behalf by
the undersigned thereunto duly authorized.
COMMODORE APPLIED TECHNOLOGIES, INC.
Date: December 31, 1998 BY: /s/ James M. DeAngelis
---------------------------------
James M. DeAngelis, Treasurer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
4.1 Amended Warrant to purchase 1,500,000 shares of Company
common stock.
4.2 Certificate of Designation of 6% Series B Convertible
Preferred Stock of the Company.
4.3 Certificate of Designation of 6% Series C Convertible
Preferred Stock of the Company.
4.4 Certificate of Designation of 6% Series D Convertible
Preferred Stock of the Company.
99.1 Debt Repayment Agreement, dated as of September 28,
1998, between the Company and COES.
99.2 Registration Rights Agreement, dated as of September
28, 1998, between the Company and COES.
99.3 Press Release, dated December 31, 1998.
</TABLE>
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Exhibit 4.1
NEITHER THE WARRANTS REPRESENTED BY THIS
CERTIFICATE NOR THE SHARES ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED.
NEITHER THE WARRANTS NOR SUCH SHARES MAY
BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT, OR AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT.
COMMODORE APPLIED TECHNOLOGIES, INC.
AMENDED WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
No. 3/A 1,500,000 Shares
THIS CERTIFIES that, for value received, Commodore Environmental
Services, Inc. (the "Holder"), is entitled to subscribe for and purchase from
Commodore Applied Technologies, Inc., a Delaware corporation (the "Company"),
upon the terms and conditions set forth herein, at any time or from time to time
after November 15, 1998, and before 5:00 P.M. on December 31, 2000, New York
time (the "Exercise Period"), One Million Five Hundred Thousand (1,500,000)
shares of the Company's common stock, par value $.001 per share (the "Common
Stock"), at an exercise price of $1.50 per share (the "Exercise Price"). This
Amended Warrant amends and restates in its entirety a warrant, dated February
10, 1998, which was issued by the Company to the Holder as partial consideration
of the Holder's loan of $5.45 million to the Company pursuant to a promissory
note dated February 10, 1998. As used herein, the term "this Warrant" shall mean
and include this Amended Warrant and any Warrant or Warrants hereafter issued as
a consequence of the exercise or transfer of this Amended Warrant in whole or in
part.
The number of shares of Common Stock issuable upon exercise of this
Warrant (the "Warrant Shares") and payment of the Exercise Price may be adjusted
from time to time as hereinafter set forth.
1. This Warrant may be exercised during the Exercise Period, as to
the whole or any lesser number of the respective whole Warrant Shares, as
follows:
(a) by the surrender of this Warrant (with the form of election at
the end hereof duly executed) to the Company at its office as set forth in the
form of election attached hereto, or at such other place as is designated in
writing by the Company, together with a certified or bank cashier's check
payable to the order of the Company in an amount equal to the
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Exercise Price multiplied by the number of Warrant Shares for which this Warrant
is being exercised; or
(b) by surrender of this Warrant (with the notice of cashless
exercise at the end hereof duly executed) to the Company at its office as set
forth in the notice of cashless exercise attached hereto, or at such other place
as is designated in writing by the Company, in which event the Company shall
issue to the Holder the number of Warrant Shares determined as follows:
X = Y (A-B)/A
where:
X = the number of Warrant Shares to be issued to the Holder.
Y = the number of Warrant Shares with respect to which this
Warrant is being exercised.
A = the closing sale price of the Common Stock for the
trading day immediately prior to the date of exercise.
B = the Exercise Price.
Notwithstanding the foregoing, this Warrant may not be exercised unless and
until the Company shall have received written confirmation from the American
Stock Exchange (on which shares of Common Stock are listed) that the
transactions described in this Amended Warrant do not require the approval of
the Company's stockholders. The Company hereby undertakes to obtain such
confirmation as promptly as practicable. If the Company is unable to obtain such
confirmation, the Company will thereafter seek to obtain such approval as soon
as is reasonably practicable.
2. Upon each exercise of the Holder's rights to purchase Warrant
Shares, either pursuant to Section 1(a) or (b) above, the Holder shall be deemed
to be the holder of record of the Warrant Shares issuable upon such exercise,
notwithstanding that the transfer books of the Company shall then be closed or
certificates representing such Warrant Shares shall not then have been actually
delivered to the Holder. For purposes of Rule 144 promulgated under the
Securities Act of 1933, as amended (the "Act"), it is intended, understood and
acknowledged that the Warrant Shares issued in a cashless exercise transaction
pursuant to Section 1(b) above shall be deemed to have been acquired by the
Holder, and the holding period for the Warrant Shares shall be deemed to have
been commenced, on the issue date of the Warrant. As soon as practicable after
each such exercise of this Warrant and payment of the Holder a certificate or
certificates for the Warrant Shares issuable upon such exercise, registered in
the name of the Holder or its designee. If the Warrant should be exercised in
part only, the Company shall, upon surrender of this Warrant for cancellation,
execute and deliver a new Warrant evidencing the right of the Holder to purchase
the balance of the Warrant Shares (or portions thereof) subject to purchase
hereunder.
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3. Any Warrants issued upon the transfer or exercise in part of this
Warrant shall be numbered and shall be registered in a Warrant Register as they
are issued. The Company shall be entitled to treat the registered holder of any
Warrant on the Warrant Register as the Owner in fact thereof for all purposes
and shall not be bound to recognize any equitable or other claim to or interest
in such Warrant on the part of any other person, and shall not be liable for any
registration or transfer of Warrants which are registered or to be registered in
the name of a fiduciary or the nominee of a fiduciary unless made with the
actual knowledge that a fiduciary or nominee is committing a breach of trust in
requesting such registration or transfer, or with the knowledge of such facts
that its participation therein amounts to bad faith. This Warrant shall be
transferable only on the books of the Company upon delivery thereof duly
endorsed by the Holder or by his duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment, or authority to
transfer. In all cases of transfer by an attorney, executor, administrator,
guardian, or other legal representative, duly authenticated evidence of his or
its authority shall be produced. Upon any registration of transfer, the Company
shall deliver a new Warrant or Warrants to the person entitled thereto. This
Warrant may be exchanged, at the option of the Holder thereof, for another
Warrant, or other Warrants of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of Warrant
Shares (or portions thereof), upon surrender to the Company or its duly
authorized agent. Notwithstanding the foregoing, the Company shall have no
obligation to cause Warrants to be transferred on its books to any person if, in
the opinion of counsel to the Company, such transfer does not comply with the
provisions of the Act and the rules and regulations thereunder.
4. The Company shall at all times reserve and keep available out of
its authorized and unissued Common Stock, solely for the purpose of providing
for the exercise of the rights to purchase all Warrant Shares granted pursuant
to the Warrants, such number of shares of Common Stock as shall, from time to
time, be sufficient therefor. The Company covenants that all shares of Common
Stock issuable upon exercise of this Warrant, upon receipt by the Company of the
full Exercise Price therefor if such exercise is pursuant to Section 1(a) above
or upon receipt by the Company of the notice of cashless exercise duly executed
if such exercise is pursuant to Section 1(b) above, shall be validly issued,
fully paid, nonassessable, and free of preemptive rights.
5. (a) In case the Company shall at any time after the date the
Warrants were first issued (i) declare a dividend on the outstanding Common
Stock payable in shares of its capital stock, (ii) subdivide the outstanding
Common Stock, (iii) combine the outstanding Common Stock into a smaller number
of shares, or (iv) issue any shares of its capital stock by reclassification of
the Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation),
then, in each case, the Exercise Price, and the number of Warrant Shares
issuable upon exercise of this Warrant, in effect at the time of the record date
for such dividend or of the effective date of such subdivision, combination, or
reclassification, shall be proportionately adjusted so that the Holder after
such time shall be entitled to receive the aggregate number and kind of shares
which, if such Warrant had been exercised immediately prior to such time, he
would have owned upon such exercise and
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been entitled to receive by virtue of such dividend, subdivision, combination,
or reclassification. Such adjustment shall be made successively whenever any
event listed above shall occur.
(b) In case the Company shall issue or fix a record date for
the issuance to all holders of Common Stock of rights, options, or warrants to
subscribe for or purchase Common Stock (or securities convertible into or
exchangeable for Common Stock) at a price per share (or having a conversion or
exchange price per share, if a security convertible into or exchangeable for
Common Stock) less than the Exercise Price per share of Common Stock on such
record date, then, in each case, the Exercise Price shall be adjusted by
multiplying the Exercise Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of shares of Common
Stock outstanding on such record date plus the number of shares of Common Stock
which the aggregate offering price of the total number of shares of Common Stock
so to be offered (or the aggregate initial conversion or exchange price of the
convertible or exchangeable securities so to be offered) would purchase at such
current Exercise Price and the denominator of which shall be the number of
shares of Common Stock outstanding on such record date plus the number of
additional shares of Common Stock to be offered for subscription or purchase (or
into which the convertible or exchangeable securities so to be offered are
initially convertible or exchangeable). Such adjustment shall become effective
at the close of business on such record date; provided, however, that, to the
extent the shares of Common Stock (or securities convertible into or
exchangeable for shares of Common Stock) are not delivered, the Exercise Price
shall be readjusted after the expiration of such rights, options, or warrants
(but only with respect to Warrants exercised after such expiration), to the
Exercise Price which would then be in effect had the adjustments made upon the
issuance of such rights, options, or warrants been made upon the basis of
delivery of only the number of shares of Common Stock (or securities convertible
into or exchangeable for shares of Common Stock) actually issued. In case any
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the board of directors of the Company, whose
determination shall be conclusive absent manifest error. Shares of Common Stock
owned by or held for the account of the Company or any majority-owned subsidiary
shall not be deemed outstanding for the purpose of any such computation.
(c) In case the Company shall distribute to all holders of
Common Stock (including any such distribution made to the stockholders of the
Company in connection with a consolidation or merger in which the Company is the
continuing corporation) evidences of its indebtedness or assets (other than cash
dividends or distributions and dividends payable in shares of Common Stock), or
rights, options, or warrants to subscribe for or purchase Common Stock, or
securities convertible into or exchangeable for shares of Common Stock
(excluding those with respect to the issuance of which an adjustment of the
Exercise Price is provided pursuant to Section 5(b) hereof), then, in each case,
the Exercise Price shall be adjusted by multiplying the Exercise Price in effect
immediately prior to the record date for the determination of stockholders
entitled to receive such distribution by a fraction, the numerator of which
shall be the Exercise Price per share of Common Stock on such record date, less
the fair market value (as determined in good faith by the board of directors of
the Company, whose determination shall be conclusive absent manifest error) of
the portion of the evidences of indebtedness or assets so to be
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distributed, or of such rights, options, or warrants or convertible or
exchangeable securities, applicable to one share, and the denominator of which
shall be such current Exercise Price per share of Common Stock. Such adjustment
shall be made whenever any such distribution is made, and shall become effective
on the record date for the determination of shareholders entitled to receive
such distribution.
(d) In case the Company shall issue shares of Common Stock
or rights, options, or warrants to subscribe for or purchase Common Stock, or
securities convertible into or exchangeable for Common Stock (excluding shares,
rights, options, warrants, or convertible or exchangeable securities issued or
issuable (i) in any of the transactions with respect to which an adjustment of
the Exercise Price is provided pursuant to Sections 5(a), 5(b) or 5(c) above,
(ii) upon exercise of the Warrants or (iii) to management or employees of the
Company up to a maximum amount of shares of Common Stock), at a price per share
(determined, in the case of such rights, options, warrants, or convertible or
exchangeable securities, by dividing (x) the total amount received or receivable
by the Company in consideration of the sale and issuance of such rights,
options, warrants, or convertible or exchangeable securities, plus the minimum
aggregate consideration payable to the Company upon exercise, conversion, or
exchange thereof, by (y) the maximum number of shares covered by such rights,
options, warrants, or convertible or exchangeable securities) lower than the
Exercise Price per share of Common Stock in effect immediately prior to such
issuance, then the Exercise Price shall be reduced on the date of such issuance
to a price (calculated to the nearest cent) determined by multiplying the
Exercise Price in effect immediately prior to such issuance by a fraction, (iii)
the numerator of which shall be an amount equal to the sum of (A) the number of
shares of Common Stock outstanding immediately prior to such issuance plus (B)
the quotient obtained by dividing the consideration received by the Company upon
such issuance by such current Exercise Price, and (iv) the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
after such issuance. For the purposes of such adjustments, the maximum number of
shares which the holders of any such rights, options, warrants, or convertible
or exchangeable securities shall be entitled to initially subscribe for or
purchase or convert or exchange such securities into shall be deemed to be
issued and outstanding as of the date of such issuance, and the consideration
received by the Company therefor shall be deemed to be the consideration
received by the Company for such rights, options, warrants, or convertible or
exchangeable securities, plus the minimum aggregate consideration or premiums
stated in such rights, options, warrants, or convertible or exchangeable
securities to be paid for the shares covered thereby. No further adjustment of
the Exercise Price shall be made as a result of the actual issuance of shares of
Common Stock on exercise of such rights, options, or warrants or on conversion
or exchange of such convertible or exchangeable securities. On the expiration or
the termination of such rights, options, or warrants, or the termination of such
right to convert or exchange, the Exercise Price shall be readjusted (but only
with respect to Warrants exercised after such expiration or termination) to such
Exercise Price as would have obtained had the adjustments made upon the issuance
of such rights, options, warrants, or convertible or exchangeable securities
been made upon the basis of the delivery of only the number of shares of Common
Stock actually delivered upon
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the exercise of such rights, options, or warrants or upon the conversion or
exchange of any such securities; and on any change of the number of shares of
Common Stock deliverable upon the exercise of any such rights, options, or
warrants or conversion or exchange of such convertible or exchangeable
securities or any change in the consideration to be received by the Company upon
such exercise, conversion, or exchange, including, but not limited to, a change
resulting from the antidilution provisions thereof, the Exercise Price, as then
in effect, shall forthwith be readjusted (but only with respect to Warrants
exercised after such change) to such Exercise Price as would have been obtained
had an adjustment been made upon the issuance of such rights, options, or
warrants not exercised prior to such change, or securities not converted or
exchanged prior to such change, on the basis of such change. In case the Company
shall issue shares of Common Stock or any such rights, options, warrants, or
convertible or exchangeable securities for a consideration consisting, in whole
or in part, of property other than cash or its equivalent, then the "price per
share" and the "consideration received by the Company" for purposes of the first
sentence of this Section 5(d) shall be as determined in good faith by the board
of directors of the Company, whose determination shall be conclusive absent
manifest error. Shares of Common Stock owned by or held for the account of the
Company or any majority-owned subsidiary shall not be deemed outstanding for the
purpose of any such computation.
(e) No adjustment in the Exercise Price shall be required if
such adjustment is less than $.05; provided, however, that any adjustments which
by reason of this Section 5 are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations under this
Section 5 shall be made to the nearest cent or to the nearest one-thousandth of
a share, as the case may be.
(f) In any case in which this Section 5 shall require that
an adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, issuing to the Holder, if the Holder exercised this Warrant after such
record date, the shares of Common Stock, if any, issuable upon such exercise
over and above the shares of Common Stock, if any, issuable upon such exercise
on the basis of the Exercise Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to the Holder a due bill or other
appropriate instrument evidencing the Holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment
(g) Upon each adjustment of the Exercise Price as a result
of the calculations made in Sections 5(b), 5(c) or 5(d) hereof, this Warrant
shall thereafter evidence the right to purchase, at the adjusted Exercise Price,
that number of shares (calculated to the nearest thousandth) obtained by
dividing (A) the product obtained by multiplying the number of shares
purchasable upon exercise of this Warrant prior to adjustment of the number of
shares by the Exercise Price in effect prior to adjustment of the Exercise Price
by (B) the Exercise Price in effect after such adjustment of the Exercise Price.
(h) Whenever there shall be an adjustment as provided in
this Section 5, the Company shall promptly cause written notice thereof to be
sent by registered mail, postage prepaid, to the Holder, at its address as it
shall appear in the Warrant Register, which notice shall be accompanied by an
officer's certificate setting forth the number of Warrant Shares purchasable
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upon the exercise of this Warrant and the Exercise Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment and
the computation thereof, which officer's certificate shall be conclusive
evidence of the correctness of any such adjustment absent manifest error.
6. (a) In case of any consolidation with or merger of the Company
with or into another corporation (other than a merger or consolidation in which
the Company is the surviving or continuing corporation), or in case of any sale,
lease, or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety, such
successor, leasing, or purchasing corporation, as the case may be, shall (i)
execute with the Holder an agreement providing that the Holder shall have the
right thereafter to receive upon exercise of this Warrant solely the kind and
amount of shares of stock and other securities, property, cash, or any
combination thereof receivable upon such consolidation, merger, sale, lease, or
conveyance by a holder of the number of shares of Common Stock for which this
Warrant; might have been exercised immediately prior to such consolidation,
merger, sale, lease, or conveyance and (ii) make effective provision in its
certificate of incorporation or otherwise, if necessary, to effect such
agreement. Such agreement shall provide for adjustments which shall be as nearly
equivalent as practicable to the adjustments in Section 5.
(b) In case of any reclassification or change of the shares
of Common Stock issuable upon exercise of this Warrant (other than a change in
par value or from no par value to a specified par value, or as a result of a
subdivision or combination, but including any change in the shares into two or
more classes or series of shares), or in case of any consolidation or merger of
another corporation into the Company in which the Company is the continuing
corporation and in which there is a reclassification or change (including a
change to the right to receive cash or other property) of the shares of Common
Stock (other than a change in par value, or from no par value to a specified par
value, or as a result of a subdivision or combination, but including any change
in the shares into two or more classes or series of shares), the Holder shall
have the right thereafter to receive upon exercise of this Warrant solely the
kind and amount of shares of stock and other securities, property, cash, or any
combination thereof receivable upon such reclassification, change,
consolidation, or merger by a holder of the number of shares of Common Stock for
which this Warrant might have been exercised immediately prior to such
reclassification, change, consolidation, or merger. Thereafter, appropriate
provision shall be made for adjustments which shall be as nearly equivalent as
practicable to the adjustments in Section 5.
(c) The above provisions of this Section 6 shall similarly
apply to successive reclassifications and changes of shares of Common Stock and
to successive consolidations, mergers, sales, leases, or conveyances.
7. In case at any time the Company shall propose
to pay any dividend or make any distribution on shares of
Common Stock in shares of Common Stock or make any other distribution
(other than regularly
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scheduled cash dividends which are not in a greater amount per share
than the most recent such cash dividend) to all holders of Common
Stock; or
to issue any rights, warrants, or other securities to all
holders of Common Stock entitling them to purchase any additional
shares of Common Stock or any other rights, warrants, or other
securities; or
to effect any reclassification or change of outstanding
shares of Common Stock, or any consolidation, merger, sale, lease, or
conveyance of property, described in Section 6; or
to effect any liquidation, dissolution, or winding-up of the
Company; or
to take any other action which would cause an adjustment to
the Exercise Price;
then, and in any one or more of such cases, the Company shall give written
notice thereof, by registered mail, postage prepaid, to the Holder at the
Holder's address as it shall appear in the Warrant Register, mailed at least 15
days prior to (i) the date as of which the holders of record of shares of Common
Stock to be entitled to receive any such dividend, distribution, rights,
warrants, or other securities are to be determined, (ii) the date on which any
such reclassification, change of outstanding shares of Common Stock,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution, or winding-up is expected to become effective, and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange their shares for securities or other property, if any,
deliverable upon such reclassification, change of outstanding shares,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution, or winding-up, or (iii) the date of such action which would require
an adjustment to the Exercise Price.
8. (a) If at any time prior to the expiration of the Exercise
Period, the Company shall file a registration statement (other than a
registration statement on Form S-4, Form S-8, or any successor form) with the
Securities and Exchange Commission (the "Commission") while any Registrable
Securities (as hereinafter defined) are outstanding, the Company shall give all
the then holders of any Registrable Securities (the "Eligible Holders") at least
30 days prior written notice of the filing of such registration statement. If
requested by any Eligible Holder in writing within 20 days after receipt of any
such notice, the Company shall, at the Company's sole expense (other than the
fees and disbursements of counsel for the Eligible Holders and the underwriting
discounts, if any, payable in respect of the Registrable Securities sold by any
Eligible Holder), register or qualify all or, at each Eligible Holder's option,
any portion of the Registrable Securities of any Eligible Holders who shall have
made such request, concurrently with the registration of such other securities,
all to the extent requisite to permit the public offering. and sale of the
Registrable Securities through the facilities of all appropriate securities
exchanges and the over-the-counter market, and will use its best efforts through
its officers, directors, auditors, and counsel to cause such registration
statement to become effective as
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<PAGE>
promptly as practicable. Notwithstanding the foregoing, if the managing
underwriter of any such offering shall advise the Company in writing that, in
its opinion, the distribution of all or a portion of the Registrable Securities
requested to be included in the registration concurrently with the securities
being registered by the Company would materially adversely affect the
distribution of such securities by the Company for its own account, then any
Eligible Holder who shall have requested registration of his or its Registrable
Securities shall delay the offering and sale of such Registrable Securities (or
the portions thereof so designated by such managing underwriter) for such
period, not to exceed 90 days (the "Delay Period"), as the managing underwriter
shall request, provided that no such delay shall be required as to any
Registrable Securities if any securities of the Company are included in such
registration statement and eligible for sale during the Delay Period for the
account of any person other than the Company and any Eligible Holder unless the
securities included in such registration statement and eligible for sale during
the Delay Period for such other person shall have been reduced pro rata to the
reduction of the Registrable Securities which were requested to be included and
eligible for sale during the Delay Period in such registration. As used herein,
"Registrable Securities" shall mean the Warrants and the Warrant Shares which,
in each case, have not been previously sold pursuant to a registration statement
or Rule 144 promulgated under the Act.
(b) If, at any time prior to the expiration of the Exercise
Period, the Company shall receive a written request, from Eligible Holders who
in the aggregate own (or upon exercise of all Warrants then outstanding or
issuable would own) 50% of the total number of shares of Common Stock then
included (or upon such exercises would be included) in the Registrable
Securities (the "Majority Holders"), to register the sale of all or part of such
Registrable Securities, the Company shall, as promptly as practicable, prepare
and file with the Commission a registration statement sufficient to permit the
public offering and sale of the Registrable Securities through the facilities of
all appropriate securities exchanges and the over-the-counter market, and will
use its best efforts through its officers, directors, auditors, and counsel to
cause such registration statement to become effective as promptly as
practicable; provided, however, that the Company shall only be obligated to file
one such registration statement for which all expenses incurred in connection
with such registration (other than the fees and disbursements of counsel for the
Eligible Holders and underwriting discounts, if any, payable in respect of the
Registrable Securities sold by the Eligible Holders) shall be borne by the
Company. The Company shall not be obligated to effect any registration of its
securities pursuant to this Section 8(b) within six months after the effective
date of a previous registration statement prepared and filed in accordance with
Sections 8(a) or 8(b). Within three business days after receiving any request
contemplated by this Section 8(b), the Company shall give written notice to all
the other Eligible Holders, advising each of them that the Company is proceeding
with such registration and offering to include therein all or any portion of any
such other Eligible Holder's Registrable Securities, provided that the Company
receives a written request to do so from such Eligible Holder within 30 days
after receipt by him or it of the Company's notice.
(c) In the event of a registration pursuant to the
provisions of this Section 8, the Company shall use its best efforts to cause
the Registrable Securities so registered to be registered or qualified for sale
under the securities or blue sky laws of such jurisdictions as the
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<PAGE>
Eligible Holder or such holders may reasonably request; provided, however, that
the Company shall not be required to qualify to do business in any state by
reason of this Section 8(c) in which it is not otherwise required to qualify to
do business.
(d) The Company shall keep effective any registration or
qualification contemplated by this Section 8 and shall from time to time amend
or supplement each applicable registration statement, preliminary prospectus,
final prospectus, application, document, and communication for such period of
time as shall be required to permit the Eligible Holders to complete the offer
and sale of the Registrable Securities covered thereby. The Company shall in no
event be required to keep any such registration or qualification in effect for a
period in excess of nine months from the date on which the Eligible Holders are
first free to sell such Registrable Securities; provided, however, that, if the
Company is required to keep any such registration or qualification in effect
with respect to securities other than the Registrable Securities beyond such
period, the Company shall keep such registration or qualification in effect as
it relates to the Registrable Securities for so long as such registration or
qualification remains or is required to remain in effect in respect of such
other securities.
(e) In the event of a registration pursuant to the
provisions of this Section 8, the Company shall furnish to each Eligible Holder
such number of copies of the registration statement and of each amendment and
supplement thereto (in each case, including all exhibits), such reasonable
number of copies of each prospectus contained in such registration statement and
each supplement or amendment thereto (including each preliminary prospectus),
all of which shall conform to the requirements of the Act and the rules and
regulations thereunder, and such other documents, as any Eligible Holder may
reasonably request to facilitate the disposition of the Registrable Securities
included in such registration.
(f) In the event of a registration pursuant to the
provisions of this Section 8, the Company shall furnish each Eligible Holder of
any Registrable Securities so registered with an opinion of its counsel
(reasonably acceptable to the Eligible Holders) to the effect that (i) the
registration statement has become effective under the Act and no order
suspending the effectiveness of the registration statement, preventing or
suspending the use of the registration statement, any preliminary prospectus,
any final prospectus, or any amendment or supplement thereto has been issued,
nor has the Commission or any securities or blue sky authority of any
jurisdiction instituted or threatened to institute any proceedings with respect
to such an order, (ii) the registration statement and each prospectus forming a
part thereof (including each preliminary prospectus), and any amendment or
supplement thereto, complies as to form with the Act and the rules and
regulations thereunder, and (iii) such counsel has no knowledge of any material
misstatement or omission in such registration statement or any prospectus, as
amended or supplemented. Such opinion shall also state the jurisdictions in
which the Registrable Securities have been registered or qualified for sale
pursuant to the provisions of Section 8(c).
(g) In the event of a registration pursuant to the provision
of this Section 8, the Company shall enter into a cross-indemnity agreement and
a contribution agreement, each in customary form, with each underwriter, if any,
and, if requested, enter into an underwriting
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<PAGE>
agreement containing conventional representations, warranties, allocation of
expenses, and customary closing conditions, including, but not limited to,
opinions of counsel and accountants' cold comfort letters, with any underwriter
who acquires any Registrable Securities.
(h) In the event of a registration pursuant to the provisions of
this Section 8:
Each Eligible Holder shall furnish to the Company in writing
such appropriate information (relating to such Eligible Holder and the intention
of such Eligible Holder as to proposed methods of sale or other disposition of
their shares of Common Stock) and the identity of and compensation to be paid to
any proposed underwriters to be employed in connection therewith as the Company,
any underwriter, or the Commission or any other regulatory authority may
request;
the Eligible Holders shall enter into the usual and customary
form of underwriting agreement agreed to by the Company and any underwriter with
respect to any such offering, if required, and such underwriting agreement shall
contain the customary rights of indemnity between the Company, the underwriters,
and such Eligible Holders;
each Eligible Holder shall agree that he shall execute,
deliver and/or file with or supply the Company, any underwriters, the Commission
and/or any state or other regulatory authority such information, documents,
representations, undertakings and/or agreements necessary to carry out the
provisions of the registration covenants contained in this Section 8 and/or to
effect the registration or qualification of his or its Registrable Securities
under the Act and/or any of the laws and regulations of any state of
governmental instrumentality;
the Company's obligation to include any Registrable
Securities in a registration statement shall be subject to the written agreement
of each holder thereof to offer such securities in the same manner and on the
same terms and conditions as the other securities of the same class are being
offered pursuant to the registration statement, if such shares are being
underwritten;
in the event that all the Registrable Securities have not
been sold on or prior to the expiration of the period specified in Section 8(d)
above, the Company may de-register by post-effective amendment any Registrable
Securities covered by the registration statement, but not sold on or prior to
such date. The Company agrees that it will notify each holder of Registrable
Securities of the filing and effective date of such post-effective amendment;
and
each Eligible Holder agrees that upon notification by the
Company that the prospectus in respect to any public offering covered by the
provisions hereof is in need of revision, such Eligible Holder shall immediately
upon receipt of such notification (x) cease to offer or sell any securities of
the Company which must be accompanied by such
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<PAGE>
prospectus, (y) return all such prospectuses in such Eligible Holder's hands to
the Company, and (z) not offer or sell any securities of the Company until such
Holder has been provided with a current prospectus and the Company has given
such Eligible Holder notification permitting such Eligible Holder to resume
offers and sales.
(i) The Company agrees that until all the Registrable
Securities have been sold under a registration statement or pursuant to Rule 144
under the Act, it shall keep current in filing all reports, statements and other
materials required to be filed with the Commission to permit holders of the
Registrable Securities to sell such securities under Rule 144.
(j) Except for rights granted to holders of the Warrants,
the Company will not, without the written consent of the Majority Holders, grant
to any persons the right to request the Company to register any securities of
the Company, provided that the Company may grant such registration rights to
other persons so long as such rights are subordinate or pari passu to the rights
of the Eligible Holders.
9. (a) Subject to the conditions set forth below, the Company
agrees to indemnify and hold harmless each Eligible Holder, its officers,
directors, partners, employees, agents and counsel, and each person, if any, who
controls any such person within the meaning of Section 15 of the Act or Section
20(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
from and against any and all loss, liability, charge, claim, damage, and expense
whatsoever (which shall include, for all purposes of this Section 9, but not be
limited to, attorneys' fees and any and all reasonable expense whatsoever
incurred in investigating, preparing, or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation), as and when incurred, arising out of,
based upon, or in connection with: (i) any untrue statement or alleged untrue
statement of a material fact contained (A) in any registration statement,
preliminary prospectus, or final prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto, relating to the sale of
any of the Registrable Securities, or (B) in any application or other document
or communication (in this Section 9 collectively called an "application")
executed by or on behalf of the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
register or qualify any of the Registrable Securities under the securities or
blue sky laws thereof or filed with the Commission or any securities exchange;
or (ii) any omission or alleged omission to state a material fact required to be
stated in any document referenced in clause (A) or (B) above or necessary to
make the statements therein not misleading, unless such statement or omission
was made in reliance upon and in conformity with written information furnished
to the Company with respect to such Eligible Holder by or on behalf of such
person expressly for inclusion in any registration statement, preliminary
prospectus, or final prospectus, or any amendment or supplement thereto, or in
any application, as the case may be; or (iii) any breach of any representation,
warranty, covenant, or agreement of the Company contained in this Warrant. The
foregoing agreement to indemnify shall be in addition to any liability the
Company may otherwise have, including liabilities arising under this Warrant.
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<PAGE>
If any action is brought against any Eligible Holder or any of its
officers, directors, partners, employees, agents, or counsel, or any controlling
persons of such person (an "indemnified party") in respect of which indemnity
may be sought against the Company pursuant to the foregoing paragraph, such
indemnified party or parties shall promptly notify the Company in writing of the
institution of such action (but the failure so to notify shall not relieve the
Company from any liability other than pursuant to this Section 9(a), except to
the extent it may have been prejudiced in any material respect by such failure)
and the Company shall promptly assume the defense of such action, including the
employment of counsel (reasonably satisfactory to such indemnified party or
parties) and payment of expenses. Such indemnified party or parties shall have
the right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless the employment of such counsel shall have been authorized in
writing by the Company in connection with the defense of such action or the
Company shall not have promptly employed counsel reasonably satisfactory to such
indemnified party or parties to have charge of the defense of such action or
such indemnified party or parties shall have reasonably concluded that there may
be one or more legal defenses available to it or them or to other indemnified
parties which are different from or additional to those available to the
Company, in any of which events such fees and expenses shall be borne by the
Company and the Company shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties. Anything in this Section
10 to the contrary notwithstanding, the Company shall not be liable for any
settlement of any such claim or action effected without its written consent,
which shall not be unreasonably withheld. The Company shall not, without the
prior written consent of each indemnified party that is not released as
described in this sentence, settle or compromise any action, or permit a default
or consent to the entry of judgment in or otherwise seek to terminate any
pending or threatened action, in respect of which indemnity may be sought
hereunder (whether or not any indemnified party is a party thereto), unless such
settlement, compromise, consent, or termination includes an unconditional
release of each indemnified party from all liability in respect of such action.
The Company agrees promptly to notify the Eligible Holders of the commencement
of any litigation or proceedings against the Company or any of its officers or
directors in connection with the sale of any Registrable Securities or any
preliminary prospectus, prospectus, registration statement, or amendment or
supplement thereto, or any application relating to any sale of any Registrable
Securities.
(b) The Holder agrees to indemnify and hold harmless the
Company, each director of the Company, each officer of the Company who shall
have signed any registration statement covering Registrable Securities held by
the Holder, each other person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, and its
or their respective counsel, to the same extent as the foregoing indemnity from
the Company to the Holder in Section 9(a), but only with respect to statements
or omissions, if any, made in any registration statement, preliminary
prospectus, or final prospectus (as from time to time amended and supplemented),
or any amendment or supplement thereto, or in any application, in reliance upon
and in conformity with written information furnished to the Company with respect
to the Holder by or on behalf of the Holder expressly for inclusion in any such
registration statement, preliminary prospectus, or final prospectus, or any
amendment or supplement thereto, or in any application, as the case may be. If
any action shall be brought against the Company or any other person so
indemnified based on any such registration statement, preliminary prospectus, or
final prospectus, or any amendment or
13
<PAGE>
supplement thereto, or in any application, and in respect of which indemnity may
be sought against the Holder pursuant to this Section 9(b), the Holder shall
have the rights and duties given to the Company, and the Company and each other
person so indemnified shall have the rights and duties given to the indemnified
parties, by the provisions of Section 9(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 9(a) or
9(b) (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such case, or (ii) any indemnified or indemnifying party
seeks contribution under the Act, the Exchange Act or otherwise, then the
Company (including for this purpose any contribution made by or on behalf of any
director of the Company, any officer of the Company who signed any such
registration statement, any controlling person of the Company, and its or their
respective counsel), as one entity, and the Eligible Holders of the Registrable
Securities included in such registration in the aggregate (including for this
purpose any contribution by or on behalf of an indemnified party), as a second
entity, shall contribute to the losses, liabilities, claims, damages, and
expenses whatsoever to which any of them may be subject, on the basis of
relevant equitable considerations such as the relative fault of the Company and
such Eligible Holders in connection with the facts which resulted in such
losses, liabilities, claims, damages, and expenses. The relative fault, in the
case of an untrue statement, alleged untrue statement, omission, or alleged
omission, shall be determined by, among other things, whether such statement,
alleged statement, omission, or alleged omission relates to information supplied
by the Company or by such Eligible Holders, and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement, alleged statement, omission, or alleged omission. The Company and the
Holder agree that it would be unjust and inequitable if the respective
obligations of the Company and the Eligible Holders for contribution were
determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages, and expenses (even if the Holder and the other
indemnified parties were treated as one entity for such purpose) or by any other
method of allocation that does not reflect the equitable considerations referred
to in this Section 9(c). In no case shall any Eligible Holder be responsible for
a portion of the contribution obligation imposed on all Eligible Holders in
excess of its pro rata share based on the number of shares of Common Stock owned
(or which would be owned upon exercise of the Registrable Securities) by it and
included in such registration as compared to the number of shares of Common
Stock owned (or which would be owned upon exercise of the Registrable
Securities) by all Eligible Holders and included in such registration. No person
guilty of a fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who is not guilty of
such fraudulent misrepresentation. For purposes of this Section 9(c), each
person, if any, who controls any Eligible Holder within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act and each officer, director,
partner, employee, agent, and counsel of each such Eligible Holder or control
person shall have the same rights to contribution as such Eligible
14
<PAGE>
Holder or control person and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, each officer of the Company who shall have signed any such registration
statement, each director of the Company, and its or their respective counsel
shall have the same rights to contribution as the Company, subject in each case
to the provisions of this Section 9(c). Anything in this Section 9(c) to the
contrary notwithstanding, no party shall be liable for contribution with respect
to the settlement of any claim or action effected without its written consent.
This Section 9(c) is intended to supersede any right to contribution under the
Act, the Exchange Act or otherwise.
10. The issuance of any shares or other securities upon the exercise
of this Warrant, and the delivery of certificates or other instruments
representing such shares or other securities, shall be made without charge to
the Holder for any tax or other charge in respect of such issuance. The Company
shall not, however, be required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of any certificate in a name
other than that of the Holder and the Company shall not be required to issue or
deliver any such certificate unless and until the person or persons requesting
the issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
11. Certificates evidencing the Warrant Shares issued upon exercise of
the Warrants shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SHARES MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT, OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT."
12. Upon receipt of evidence satisfactory to the Company of the
loss, theft, destruction, or mutilation of any Warrant (and upon surrender of
any Warrant if mutilated), and upon reimbursement of the Company's reasonable
incidental expenses, the Company shall execute and deliver to the Holder thereof
a new Warrant of like date, tenor, and denomination.
13. The Holder of any Warrant shall not have, solely on account of such
status, any rights of a stockholder of the Company, either at law or in equity,
or to any notice of meetings of stockholders or of any other proceedings of the
Company, except as provided in this Warrant.
14. Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested or sent by Federal Express, Express Mail, or similar overnight
delivery or courier service or delivered (in person or by telecopy, telex, or
similar telecommunications equipment) against receipt to the party to whom it is
to be given, if
15
<PAGE>
sent to the Company, at: 150 East 58th Street, Suite 3400, New York, New York
10155, Attention: The Chairman or the Chief Executive Officer; or if sent to the
Holder, at the Holder's address as it shall appear on the Warrant Register; or
to such other address as the party shall have furnished in writing in accordance
with the provisions of this Section 14. Any notice or other communication given
by certified mail shall be deemed given at the time of certification thereof,
except for a notice changing a party's address which will be deemed given at the
time of receipt thereof. Any notice given by other means permitted by this
Section 14 shall be deemed given at the time of receipt thereof.
15. This Warrant shall be binding upon the Company and its successors
and assigns and shall inure to the benefit of the Holder and its successors and
assigns.
16. This Warrant shall be construed in accordance with the laws of the
State of New York applicable to contracts made and performed within such State,
without regard to principles of conflicts of law.
17. The Company irrevocably consents to the jurisdiction of the courts
of the State of New York and of any federal court located in such State in
connection with any action or proceeding arising out of or relating to this
Warrant, any document or instrument delivered pursuant to, in connection with or
simultaneously with this Warrant, or a breach of this Warrant or any such
document or instrument. In any such action or proceeding, the Company waives
personal service of any summons, complaint or other process.
Dated as of: September 28, 1998 COMMODORE APPLIED TECHNOLOGIES,
INC.
By: /s/ Paul E. Hannesson
--------------------------------------------
Name: Paul E. Hannesson
Title: President and Chief Executive Officer
16
<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)
FOR VALUE RECEIVED, ______________________________ hereby sells, assigns,
and transfers unto _____________________ a Warrant to purchase Shares, par value
$.001 per share, of Commodore Applied Technologies, Inc. (the "Company"),
together with all right, title, and interest therein, and does hereby
irrevocably constitute and appoint ___________________ attorney to transfer such
Warrant on the books of the Company, with full power of substitution.
Dated:
-------------------------
Signature
--------------------------
NOTICE
The signature on the foregoing Assignment must correspond to the name as
written upon the face of this Warrant in every particular, without alteration or
enlargement or any change whatsoever.
17
<PAGE>
To: Commodore Applied Technologies, Inc.
150 East 58th Street, Suite 3400
New York, New York 10155
ELECTION TO EXERCISE
The undersigned hereby exercises its rights to purchase ______________
Warrant Shares covered by the within warrant and tenders payment herewith in the
amount of $ _____________ in accordance with the terms thereof, and requests
that certificates for such securities be issued in the name of, and delivered
to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant, that a new Warrant for the balance of the Warrant
Shares covered by the within Warrant be registered in the name of, and delivered
to, the undersigned at the address stated below.
Dated: Name
----------------------------- --------------------------------
(Print)
Address:
-------------------------------------------------------------------
--------------------------------------
(Signature)
18
<PAGE>
To: Commodore Applied Technologies, Inc.
150 East 58th Street, Suite 3400
New York, New York 10155
NOTICE OF CASHLESS EXERCISE
(TO BE EXECUTED UPON EXERCISE OF WARRANT
PURSUANT TO SECTION 1(B))
The undersigned hereby irrevocably elects to exchange its Warrant for
___________ Warrant Shares pursuant to the cashless exercise provisions of the
within Warrant, as provided for in Section 1(b) of such Warrant, and requests
that a certificate or certificates for such Warrant Shares be issued in the name
of and delivered to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares which
the undersigned is entitled to purchase in accordance with the within Warrant,
that a new Warrant for the balance of the Warrant Shares covered by the within
Warrant be registered in the name of, and delivered to, the undersigned at the
address stated below.
Dated: Name
----------------------------- ------------------------------
(Print)
Address:
---------------------------------------------------------------------
-----------------------------------
(Signature)
(Signature must conform in all respects
to the name of the Holder as specified on
the face of the Warrant)
<PAGE>
Exhibit 4.2
CERTIFICATE OF DESIGNATION
OF
6% SERIES B CONVERTIBLE PREFERRED STOCK
OF
COMMODORE APPLIED TECHNOLOGIES, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
The undersigned officers of Commodore Applied Technologies, Inc. (the
"Company"), a corporation organized and existing under and by virtue of the
General Corporation Law of the State of Delaware (the "DGCL"), do hereby
certify:
That pursuant to the authority conferred upon the Board of Directors
of the Company (the "Board") by the Certificate of Incorporation of the Company,
as amended (the "Certificate of Incorporation"), the Board authorized the series
of preferred stock hereinafter provided for and established the voting powers
thereof and adopted the following resolutions creating a series of 25,000 shares
of preferred stock.
"RESOLVED, that pursuant to the authority vested in the Board by
virtue of the Certificate of Incorporation of the Company, there be
and hereby is authorized and created a series of preferred stock,
hereby designated as the Series B Convertible Preferred Stock, par
value $.001 per share (the "Series B Preferred Stock"); that the
number of shares of such Series B Preferred Stock shall be 25,000; and
that the designations, preferences and relative, participating,
optional or other special rights of the Series B Preferred Stock, and
the qualifications, limitations, or restrictions thereof shall be as
described in the Certificate of Designation, substantially in the form
presented to the Board of Directors; and it is further
RESOLVED, that pursuant to the Certificate of Designation of the
Series B Preferred Stock, the Company shall hereby reserve for
issuance upon the conversion of the Series B Preferred Stock that
number of shares of Common Stock of the Company sufficient to enable
the full conversion of the Series B Preferred Stock; and it is further
RESOLVED, that the proper officers of the Company be and each of them
hereby is, authorized, directed and empowered to execute and deliver,
for, in the name and on behalf of the Company any and all other
instruments, documents or certificates
<PAGE>
necessary or appropriate to create the Series B Preferred Stock,
including, without limitation, the filing of a Certificate of
Designations with the Secretary of State of the State of Delaware."
The designation and amount and the voting powers, preferences and
relative, participating, optional and other special rights of the shares of
Series B Preferred Stock, and the qualifications, limitations or restrictions
thereof are as set forth below.
1. Designation and Number. The designation of the series of
preferred stock fixed hereby shall be "6% Series B Convertible Preferred Stock"
(hereinafter referred to as the "Series B Preferred Stock") and the number of
shares constituting such series shall be twenty-five thousand (25,000), which
number may from time to time be increased (but not without the approval of the
holders of a majority of the then outstanding shares of Series B Preferred
Stock) or decreased (but not below the number then outstanding) by the Board of
Directors. The stated value of each share of this series shall be $100.00, and
each share of this series shall be validly issued and fully paid upon receipt by
the Company of legal consideration in an amount at least equal to such stated
value and shall not thereafter be assessable.
2. Rank. The Series B Preferred Stock shall rank: (i) prior to all
of the Company's common stock, par value $.001 per share ("Common Stock"), (ii)
prior to any class or series of capital stock of the Company hereafter created
either specifically ranking by its terms junior to the Series B Preferred Stock
or not specifically ranking by its terms senior to or on parity with the Series
B Preferred Stock (collectively with the Common Stock, "Junior Securities");
(iii) subject to the provisions of subparagraph 4(ii) hereof, on parity with any
class or series of capital stock of the Company hereafter created specifically
ranking by its terms on parity with the Series B Preferred Stock ("Parity
Securities"); and (iv) subject to the provisions of subparagraph 4(i) hereof,
junior to any class or series of capital stock of the Company heretofore or
hereafter created specifically ranking by its terms senior to the Series B
Preferred Stock ("Senior Securities"), in each case, as to payment of dividends
or as to distributions of assets upon liquidation, dissolution or winding-up of
the Company, whether voluntary or involuntary (all such distributions being
referred to collectively as "Distributions").
3. Dividends.
(i) The dividend rate of the Series B Preferred Stock shall be
computed at a rate of $6.00 per share per annum from the date of the issuance of
the Series B Preferred Stock. Dividends shall be payable quarterly in arrears
out of the assets of the Company legally available therefor on the last business
day of March, June, September and December of each year, commencing December 31,
1998 (each a "Dividend Payment Date"). Dividends may be paid by the Company in
cash or, at the election of the Company, by delivery of additional shares of
Series B Preferred Stock having an aggregate liquidation value equal to the
amount of such dividend. Dividends on shares of Series B Preferred Stock shall
not be cumulative.
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(ii) The Board shall declare and pay current dividends out of
funds legally available therefor (after giving effect to the payment of all
requisite dividends on Senior Securities).
(iii) In order to determine the holders of the Series B Preferred
Stock entitled to receive dividends, the Company shall fix a record date not
more than 60 days prior to any Dividend Payment Date. If any such Dividend
Payment Date should fall on a day that is not a Business Day, then the Company
shall pay the applicable dividend on the next succeeding Business Day. "Business
Day" shall mean a day other than a Saturday, Sunday or other day on which any
national securities exchange or quotation system on which the Common Stock of
the Company is traded or quoted is authorized or required by law to close.
4. Voting Rights.
The holders of the shares of Series B Preferred Stock (the
"Series B Holders") shall be entitled to the following voting rights in respect
of such shares.
(i) So long as any shares of Series B Preferred Stock are
outstanding, the consent of the holders of at least 66-2/3% of the outstanding
shares of Series B Preferred Stock at the time, given in person or by proxy,
either in writing without a meeting or by vote at any meeting called for such
purpose, in which the holders of the Series B Preferred Stock vote separately as
a class, shall be necessary for the Company to: (a) authorize, create, issue or
increase the authorized amount of any class or series of Senior Securities; (b)
reclassify any Junior Securities into Senior Securities; or (c) amend, repeal or
modify any provision of, or add any provision to, the Company's Certificate of
Incorporation, By-laws or this Certificate of Designation, if such action would
alter or change the rights, preferences, privileges or powers of, or the
restrictions provided for the benefit of the Series B Holders so as to adversely
affect the Series B Preferred Stock.
(ii) So long as any shares of Series B Preferred Stock are
outstanding, the consent of the holders of at least a majority of the
outstanding shares of Series B Preferred Stock at the time, given in person or
by proxy, either in writing without a meeting or by vote at any meeting called
for such purpose, in which the holders of the Series B Preferred Stock vote
separately as a class, shall be necessary for the Company to: (a) authorize,
create, issue or increase the authorized amount of any class or series of Parity
Securities; or (b) reclassify any Junior Securities into Parity Securities.
(iii) So long as any shares of Series B Preferred Stock are
outstanding, the Series B Holders shall vote together with the holders of Common
Stock and not as a separate class on any transaction with respect to which the
holders of Common Stock are entitled to vote pursuant to applicable Delaware law
or the Certificate of Incorporation.
(iv) On all matters on which the Series B Preferred Stock is
entitled to vote, the Series B Holders shall be entitled to one vote per share
of Series B Preferred Stock.
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5. Conversion Rights.
(i) Subject to the provisions of subparagraph (iv) of this
paragraph 5, each share of Series B Preferred Stock may be converted, at the
option of each Series B Holder, at any time and from time to time on or after
November 15, 1998, into fully-paid and non-assessable shares of Common Stock.
The number of shares of Common Stock to which the Series B Holder of each share
of Series B Preferred Stock shall be entitled upon conversion shall be the
product obtained by multiplying the number of shares of Series B Preferred Stock
to be converted by the Conversion Rate. The "Conversion Rate," that is, the
number of shares of Common Stock for which each share of Series B Preferred
Stock may be converted, shall be determined by dividing $100.00 by $0.70
("Conversion Price"). The Conversion Price shall be adjusted from time to time
as set forth in subsection (ii) hereof. The Company shall not issue fractional
shares of Common Stock upon conversion of Series B Preferred Stock but, in lieu
thereof, shall pay to a Series B Holder cash in an amount equal to such fraction
multiplied by the Last Sale Price of the Common Stock on the trading day prior
to the date on which the shares are converted. "Last Sale Price" shall mean (w)
the reported last sale price regular way or, in case no such reported sale takes
place on such day, the average of the reported closing bid and asked prices
regular way, in either case on the principal national securities exchange or
market on which the Common Stock is listed or admitted to trading or, (x) if not
listed or admitted to trading on any national securities exchange or market, on
the National Association of Securities Dealers Automated Quotations ("Nasdaq")
market or, (y) if the Common Stock is not listed or admitted to trading on any
national securities exchange or market or quoted on the Nasdaq market, the
average of the closing bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm selected from time to time
by the Board for that purpose or, (z) if the Common Stock is not listed or
admitted to trading or otherwise quoted as set forth above, the fair market
value of the Common Stock as determined in good faith using customary valuation
methods by the Board.
(ii) The Series B Preferred Stock shall be converted into Common
Stock in the following manner:
(A) Shares of Series B Preferred Stock received by the
Company in exchange for Common Stock shall be retired and canceled and shall no
longer be available for issuance as Series B Preferred Stock or any other series
of preferred stock.
(B) A Series B Holder shall give written notice to the
Company of its desire to convert all or a portion of the shares of Series B
Preferred Stock owned by such Series B Holder. Such notice shall be accompanied
by certificates, duly endorsed for conversion, evidencing the number of shares
of Series B Preferred Stock such Series B Holder desires to convert. The Company
will, as soon as practicable thereafter, deliver to such Series B Holder or to
such Series B Holder's nominee or nominees, a certificate or certificates for
the appropriate number of shares of Common Stock, together with cash, as
provided in subparagraph 5(i), with respect to any fractional shares otherwise
issuable upon conversion and, in the event of a partial conversion, a
certificate representing the balance, if any, of the shares of Series B
Preferred Stock represented by the surrendered certificate or certificates but
not converted to Common Stock.
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(C) In the event that shares of Series B Preferred Stock are
surrendered for conversion on any date during the period from the close of
business on a record date fixed for determining the Series B Holders entitled to
receive dividends to the opening of business on the corresponding Dividend
Payment Date, the Series B Holder shall continue to be entitled to receive such
dividend on such Dividend Payment Date. In the event that the date on which the
shares are converted is the Dividend Payment Date, such Series B Holder will be
entitled to receive the dividend payable with respect to such Series B Preferred
Stock.
(D) If, prior to the date on which all shares of Series B
Preferred Stock are converted, the Company shall (1) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock, (2) subdivide its
outstanding Common Stock, (3) combine its outstanding Common Stock into a
smaller number of shares of Common Stock or (4) issue by reclassification of its
Common Stock other securities of the Company, the Conversion Price in effect on
the opening of business on the record date for determining stockholders entitled
to participate in such transaction shall thereupon be adjusted, or, if
necessary, the right to convert shall be amended, such that the number of shares
of Common Stock receivable upon conversion of the shares of Series B Preferred
Stock immediately prior thereto shall be adjusted so that the Series B Holder
shall be entitled to receive, upon the conversion of such shares of Series B
Preferred Stock, the kind and number of shares of Common Stock 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
Series B Preferred Stock been converted immediately prior to the happening of
such event or any record date with respect thereto. Any adjustment made pursuant
to this subparagraph 5(ii)(D) shall become effective immediately after the
effective date of such event and such adjustment shall be retroactive to the
record date, if any, for such event. No adjustment with respect to any ordinary
cash dividends (made out of current earnings) on shares of Common Stock shall be
made.
(E) Except in respect of transactions described in
subparagraph 5(ii)(D) above, if, prior to the date on which all shares of Series
B Preferred Stock are converted, the Company shall sell or issue Common Stock or
rights, options, warrants or convertible securities (or rights, options or
warrants to purchase convertible securities) containing the right to subscribe
for or purchase shares of Common Stock (collectively, "Rights"), and the sale or
issuance price per share of Common Stock (or in the case of Rights, the sum of
the consideration paid or payable for any such Right entitling the holder
thereof to acquire one share of Common Stock and such additional consideration
paid or payable upon exercise or conversion of any such Right to acquire one
share of Common Stock) is less than the lower of the then current Conversion
Price or the then current average market price of the Common Stock (the closing
sale price as reported by the principal securities exchange on which the Common
Stock is listed or admitted to trading or by the Nasdaq market, or, if not
quoted thereon, the high bid price on the OTC Bulletin Board or in the National
Quotation Bureau sheet listing for the Common Stock, or if not listed therein,
as determined in good faith using customary valuation methods by the Board) (the
"Market Price") for the five (5) trading days immediately preceding the dates of
such sale or issuance (the "Current Common Stock Price"), the Conversion Price
shall thereupon be adjusted such that the number of shares of Common Stock
receivable upon conversion of the Series B Preferred Stock shall be the number
determined by multiplying (1) the number of shares of Common Stock receivable
upon conversion of the shares of Series B Preferred Stock immediately prior to
such issuance or sale by (2) a fraction (not to be less than one) with a
numerator equal to the
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<PAGE>
product of the number of shares of Common Stock outstanding after giving effect
to such sale or issuance (and assuming, in the case of Rights that such Rights
had been fully exercised or converted, as the case may be) and the Current
Common Stock Price and a denominator equal to the sum of (x) the product of the
number of shares of Common Stock outstanding immediately before the issuance or
sale or the record date, as the case may be, multiplied by the Current Common
Stock Price and (y) the aggregate consideration received or deemed to be
received by the Company for the shares of Common Stock to be issued or sold or
to be purchased or subscribed for upon exercise of such Rights. For the purposes
of such adjustments, the Common Stock which the holders of any such Rights shall
be entitled to subscribe for or purchase shall be deemed to be issued and
outstanding as of the date of such issuance or sale or the record date, as the
case may be.
(F) Except in respect of transactions described in
subparagraph 5(ii)(D) above, if, prior to the date on which all shares of Series
B Preferred Stock are converted, the Company shall declare, order, pay or make a
dividend or other distribution (including without limitation any distribution of
cash, other or additional stock or other securities or property or options, by
way of dividend or spin-off, reclassification, recapitalization or similar
corporate rearrangement or otherwise, but excluding dividends described in
paragraph 3 or in the last sentence of subparagraph 5(ii)(D)), then, in each
case, the Conversion Price shall thereupon be adjusted such that the number of
shares of Common Stock thereafter receivable upon the conversion of shares of
Series B Preferred Stock shall be determined by multiplying (1) the number of
shares of Common Stock theretofore receivable upon conversion of the shares of
the Series B Preferred Stock by (2) a fraction of which the numerator shall be
the then Conversion Price on the record date for the determination of
stockholders entitled to receive such dividend or other distribution, and of
which the denominator shall be such Conversion Price on such date minus the
amount of such dividend or distribution applicable to one share of Common Stock.
The Board shall determine the amount of such dividend or distribution allocable
to one share of Common Stock and such determination, if reasonable and based
upon the Board's good faith business judgment, shall be binding upon the Series
B Holder. 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 stockholders entitled to receive such
distribution.
(G) Upon the expiration of any Rights if such shall not have
been exercised, the Conversion Price, to the extent that shares of Series B
Preferred Stock have not been converted, shall, upon such expiration, be
readjusted and shall thereafter be such as they would have been had they been
originally adjusted (or had the original adjustment not been required, as the
case may be) on the basis of (1) the fact that the only shares of Common Stock
so issued were the shares of Common Stock, if any, actually issued or sold upon
the exercise of such Rights and (2) such shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Company (including
for purposes hereof, any underwriting discounts or selling commissions paid by
the Company) for the issuance, sale or grant of all such Rights, whether or not
exercised; provided, however, that no such readjustment shall have the effect of
increasing the Conversion Price by a proportion (relative to the Conversion
Price in effect immediately prior to such readjustment) in excess of the inverse
of the aggregate proportional adjustment thereof made in respect of the issue,
sale, grant or assumption of such Rights.
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If the consideration provided for in any Right or the
additional consideration, if any, payable upon the conversion or exchange of any
right shall be reduced, or the rate at which any Right is exercisable or
convertible into or exchangeable for shares of Common Stock shall be increased,
at any time under or by reason of provisions with respect thereto designed to
protect against dilution, then, effective concurrently with each such change,
the Conversion Price then in effect shall first be adjusted to eliminate the
effects (if any) of the issuance (or deemed issuance) of such Right on the
Conversion Price and then readjusted as if such Right had been issued on the
date of such change with the terms in effect after such change, but only if as a
result of such readjustment the Conversion Price then in effect hereunder is
thereby reduced.
(H) If, prior to the date on which all shares of Series B
Preferred Stock are converted, the Company shall (1) consolidate with or merge
with or into another person resulting in a reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock or (2) sell or
otherwise transfer all or substantially all of the assets of the Company, then a
Series B Holder shall thereafter have the right to convert such shares of Series
B Preferred Stock into the kind and amount of stock, securities or assets, if
any, such Series B Holder would have been entitled to receive upon such
consolidation, merger, sale or transfer had such Series B Holder converted its
shares of Series B Preferred Stock into Common Stock immediately prior to such
transaction.
(I) For the purposes of this paragraph 5: (x) the
consideration for the issue or sale of any additional shares of Common Stock
shall, irrespective of the accounting treatment of such consideration, be deemed
to be the consideration actually received by the Company and (1) insofar as it
consists of cash, be computed at the net amount of cash received by the Company,
plus any expense paid or incurred by the Company and any commissions or
compensation paid or concessions or discounts allowed to underwriters, dealers
or others performing similar services in connection with such issue or sale, (2)
insofar as it consists of property (including securities) other than cash, be
computed at the fair value thereof at the time of such issue or sale, as
determined in good faith by the Board, and (3) in case additional shares of
Common Stock are issued or sold together with other stock or securities or other
assets of the Company for consideration which covers both cash and property, be
the portion of such consideration so received, computed as provided in clauses
(1) and (2) above, allocable to such additional shares of Common Stock, all as
determined in good faith by the Board; (y) additional shares of Common Stock
deemed to have been issued pursuant to subparagraph 5(ii)(G) relating to Rights,
shall be deemed to have been issued for a consideration per share determined by
dividing (1) the total amount, if any, received by the Company as consideration
for the issue, sale or grant of the Rights in question, less the value of the
Rights not actually received by the Company as consideration therefor, plus the
minimum aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provisions contained therein
for a subsequent adjustment of such consideration to protect against dilution)
payable to the Company upon the exercise in or the conversion or exchange of
such Rights or, in the case of Rights which are rights, options or warrants for
convertible securities, the exercise of such Rights for convertible securities
and the conversion or exchange of such convertible securities, in each case
computing such consideration as provided in the foregoing clause (x) of this
subparagraph 5(ii)(I), by (2) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for subsequent adjustment of such number to protect against
dilution) issuable upon the exercise, conversion or exchange of such Rights;
and, (z) additional shares of
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Common Stock deemed to have been issued pursuant to subparagraph 5(ii)(D) and
(F), relating to stock dividends, stock splits, etc., shall be deemed to, have
been issued for no consideration. For the purposes of this paragraph 5, the term
"Common Stock" shall mean (i) the class of stock designated as Common Stock in
the Certificate of Incorporation of the Corporation as may be amended as of the
date hereof, or (ii) any other class of stock resulting from successive changes
or reclassification of such Common Stock consisting solely of changes in par
value or from par value to no par value, or from no par value to par value.
(J) No adjustment in the Conversion Price shall be required
unless explicitly provided for in this paragraph 5 and unless such adjustment
(plus any adjustments not previously made by reason of this subparagraph
5(ii)(J)), would require an increase or decrease of at least five percent (5%)
in such price; provided, however, that any adjustments which by reason of this
subparagraph 5(ii)(J) are not required to be made shall be carried forward and
shall be made at the time of and together with the next succeeding adjustment
which, together with any adjustment so carried forward, shall amount to an
increase or decrease of at least five percent (5%) in such price. All
calculations under this subparagraph 5(ii)(J) shall be made to the nearest cent.
(K) No adjustment shall be made (1) upon conversion of the
Series B Preferred Stock, (2) upon exercise of options and/or warrants of the
Company outstanding on the date hereof, and (3) with respect to options
thereafter granted to employees, officers, directors or stockholders of or
consultants to the Company, pursuant to existing stock option plans.
(L) Whenever the Conversion Price is adjusted pursuant to
any of the foregoing provisions of this paragraph 5, the Company shall forthwith
prepare a written statement signed by the president or any vice president and
the treasurer or any assistant treasurer or the secretary or any assistant
secretary of the Company, setting forth the adjusted Conversion Rate determined
as provided in this paragraph 5, and in reasonable detail the facts requiring
such adjustment. Such statement shall be filed among the permanent records of
the Company and a copy thereof shall be furnished to any Series B Holder
requesting the same, and shall at all reasonable times during business hours be
open to inspection by the Series B Holders. Within 10 days of the event
requiring an adjustment, the Company shall also cause a notice, stating that
such an adjustment has been made and setting forth the adjusted Conversion Rate,
to be mailed, first-class, postage prepaid, to all then Series B Holders of
record at their addresses as the same appear on the stock records of the
Company.
(M) If a Series B Holder has delivered notice to the Company
of its desire to convert all or a portion of its shares of Series B Preferred
Stock, and certificates, duly endorsed for conversion in respect of such shares
have been delivered to the Company, then all shares of Series B Preferred Stock
so tendered to the Company shall be deemed to be no longer outstanding and,
notwithstanding the failure of the Company to issue the Common Stock, such
Series B Holder shall be deemed, for all purposes (except as set forth in the
next sentence of this subparagraph 5(ii)(M)), to be a holder of the number of
shares of Common Stock into which the shares of Series B Preferred Stock such
Series B Holder is entitled to receive pursuant to the terms of this paragraph 5
in each case as of the close of business on the date on which such conversion
notice is delivered. The Company shall not, by amendment of its Certificate of
Incorporation as amended as of the date hereof, or through any reorganization,
transfer of assets,
8
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consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company but shall at all
times in good faith assist in the carrying out of all the provisions of this
paragraph 5. The Company shall at all times reserve and keep available out of
its authorized but unissued Common Stock the full number or shares of Common
Stock deliverable upon the conversion of all the then outstanding shares of
Series B Preferred Stock and shall take all such action and obtain all such
permits or orders as may be necessary to enable the Company to validly and
legally issue fully paid and non-assessable shares of Common Stock upon the
conversion of Series B Preferred Stock. The Company shall pay any and all
transfer, stamp and other like taxes that may be payable in respect of the
issuance or delivery to a Series B Holder of shares of Common Stock or
conversion of the Series B Preferred Stock by such holder.
(iii) The conversion of each share of Series B Preferred Stock provided
by this paragraph 5 shall be subject in all respects to the prior receipt by the
Company of the written confirmation (the "Written Confirmation") of the American
Stock Exchange that the designation and issuance of the Series B Preferred Stock
having the terms provided herein does not require approval by the stockholders
of the Company (the "Stockholder Approval"). The Company hereby undertakes to
obtain such Written Confirmation as soon as is reasonably practicable and to
advise the Holder promptly following the Company's receipt thereof. In the event
that the Company is unable to obtain such Written Confirmation, the Company will
undertake to obtain shareholder approval hereof as soon as is reasonably
practicable.
6. Liquidation Price. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company, the amount
that shall be paid to a Series B Holder shall be $100.00 per each share of
Series B Preferred Stock held by such Series B Holder (hereinafter called the
"Liquidation Price") and no more. Upon any liquidation, dissolution or
winding-up of the Company, the Series B Holders will be entitled to be paid,
after payment or provision for payment of the debts and other liabilities of the
Company and after payment or provision for payment is made upon any Senior
Securities, but before any Distribution or payment is made upon any Junior
Securities, an amount in cash equal to the aggregate Liquidation Price of all
shares outstanding, and the Series B Holders will not be entitled to any further
payment. If, upon any such liquidation, dissolution or winding-up of the
Company, the Company's assets to be distributed among the Series B Holders and
the holders of Parity Securities (the "Parity Holders") are insufficient to
permit payment in full to such Series B Holders and the Parity Holders of the
aggregate amount which they are entitled to be paid, then the available assets
to be distributed will be distributed ratably among such Series B Holders and
Parity Holders based upon the aggregate Liquidation Price of the Series B
Preferred Stock and the aggregate liquidation preference of any Parity
Securities held by each such Series B Holder and Parity Holder, respectively.
The Company will mail written notice of such liquidation, dissolution or
winding-up, not less than 30 days prior to the payment date stated therein, to
each Parity Holder of record. Neither the consolidation or merger of the Company
into or with any other corporation or any other person, nor the sale or transfer
by the Company of all or any part of its assets, nor the reduction of the
capital stock of the Company will be deemed to be a liquidation, dissolution or
winding-up of the Company within the meaning of paragraphs 2 and 6 hereof.
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IN WITNESS WHEREOF, the Company has caused this Certificate to be
signed in its name and on its behalf and attested as of this 28th day of
September, 1998, by duly authorized officers of the Company.
COMMODORE APPLIED TECHNOLOGIES, INC.
By: /s/ Paul E. Hannesson
----------------------------------------
Name: Paul E. Hannesson
Title: President and CEO
ATTEST:
/s/ Gregg M. Rosen
- -------------------------
Gregg M. Rosen
Assistant Secretary
<PAGE>
Exhibit 4.3
CERTIFICATE OF DESIGNATION
OF
6% SERIES C CONVERTIBLE PREFERRED STOCK
OF
COMMODORE APPLIED TECHNOLOGIES, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
The undersigned officers of Commodore Applied Technologies, Inc. (the
"Company"), a corporation organized and existing under and by virtue of the
General Corporation Law of the State of Delaware (the "DGCL"), do hereby
certify:
That pursuant to the authority conferred upon the Board of Directors
of the Company (the "Board") by the Certificate of Incorporation of the Company,
as amended (the "Certificate of Incorporation"), the Board authorized the series
of preferred stock hereinafter provided for and established the voting powers
thereof and adopted the following resolutions creating a series of 15,000 shares
of preferred stock.
"RESOLVED, that pursuant to the authority vested in the Board by virtue
of the Certificate of Incorporation of the Company, there be and hereby
is authorized and created a series of preferred stock, hereby
designated as the Series C Convertible Preferred Stock, par value $.001
per share (the "Series C Preferred Stock"); that the number of shares
of such Series C Preferred Stock shall be 15,000; and that the
designations, preferences and relative, participating, optional or
other special rights of the Series C Preferred Stock, and the
qualifications, limitations, or restrictions thereof shall be as
described in the Certificate of Designation, substantially in the form
presented to the Board of Directors; and it is further
RESOLVED, that pursuant to the Certificate of Designation of the Series
C Preferred Stock, the Company shall hereby reserve for issuance upon
the conversion of the Series C Preferred Stock that number of shares of
Common Stock of the Company sufficient to enable the full conversion of
the Series C Preferred Stock; and it is further
RESOLVED, that the proper officers of the Company be and each of them
hereby is, authorized, directed and empowered to execute and deliver,
for, in the name and on behalf of the Company any and all other
instruments, documents or certificates necessary or appropriate to
create the Series C Preferred Stock, including, without
<PAGE>
limitation, the filing of a Certificate of Designations with the
Secretary of State of the State of Delaware."
The designation and amount and the voting powers, preferences and
relative, participating, optional and other special rights of the shares of
Series C Preferred Stock, and the qualifications, limitations or restrictions
thereof are as set forth below.
1. Designation and Number. The designation of the series of
preferred stock fixed hereby shall be "6% Series C Convertible Preferred Stock"
(hereinafter referred to as the "Series C Preferred Stock") and the number of
shares constituting such series shall be twenty-five thousand (15,000), which
number may from time to time be increased (but not without the approval of the
holders of a majority of the then outstanding shares of Series C Preferred
Stock) or decreased (but not below the number then outstanding) by the Board of
Directors. The stated value of each share of this series shall be $100.00, and
each share of this series shall be validly issued and fully paid upon receipt by
the Company of legal consideration in an amount at least equal to such stated
value and shall not thereafter be assessable.
2. Rank. The Series C Preferred Stock shall rank: (i) prior to all
of the Company's common stock, par value $.001 per share ("Common Stock"), (ii)
prior to any class or series of capital stock of the Company hereafter created
either specifically ranking by its terms junior to the Series C Preferred Stock
or not specifically ranking by its terms senior to or on parity with the Series
C Preferred Stock (collectively with the Common Stock, "Junior Securities");
(iii) subject to the provisions of subparagraph 4(ii) hereof, on parity with the
Company's Series B Preferred Stock, par value $.001 per share, and any other
class or series of capital stock of the Company hereafter created specifically
ranking by its terms on parity with the Series C Preferred Stock ("Parity
Securities"); and (iv) subject to the provisions of subparagraph 4(i) hereof,
junior to any class or series of capital stock of the Company heretofore or
hereafter created specifically ranking by its terms senior to the Series C
Preferred Stock ("Senior Securities"), in each case, as to payment of dividends
or as to distributions of assets upon liquidation, dissolution or winding-up of
the Company, whether voluntary or involuntary (all such distributions being
referred to collectively as "Distributions").
3. Dividends.
(i) The dividend rate of the Series C Preferred Stock shall be computed at a
rate of $6.00 per share per annum from the date of the issuance of the Series C
Preferred Stock. Dividends shall be payable quarterly in arrears out of the
assets of the Company legally available therefor on the last business day of
March, June, September and December of each year, commencing December 31, 1998
(each a "Dividend Payment Date"). Dividends may be paid by the Company in cash
or, at the election of the Company, by delivery of additional shares of Series C
Preferred Stock having an aggregate liquidation value equal to the amount of
such dividend. Dividends on shares of Series C Preferred Stock shall not be
cumulative.
(ii) The Board shall declare and pay current dividends out of
funds legally available therefor (after giving effect to the payment of all
requisite dividends on Senior Securities).
(iii) In order to determine the holders of the Series C Preferred
Stock entitled to
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receive dividends, the Company shall fix a record date not more than 60 days
prior to any Dividend Payment Date. If any such Dividend Payment Date should
fall on a day that is not a Business Day, then the Company shall pay the
applicable dividend on the next succeeding Business Day. "Business Day" shall
mean a day other than a Saturday, Sunday or other day on which any national
securities exchange or quotation system on which the Common Stock of the Company
is traded or quoted is authorized or required by law to close.
4. Voting Rights.
The holders of the shares of Series C Preferred Stock (the
"Series C Holders") shall be entitled to the following voting rights in respect
of such shares.
(i) So long as any shares of Series C Preferred Stock are
outstanding, the consent of the holders of at least 66-2/3% of the outstanding
shares of Series C Preferred Stock at the time, given in person or by proxy,
either in writing without a meeting or by vote at any meeting called for such
purpose, in which the holders of the Series C Preferred Stock vote separately as
a class, shall be necessary for the Company to: (a) authorize, create, issue or
increase the authorized amount of any class or series of Senior Securities; (b)
reclassify any Junior Securities into Senior Securities; or (c) amend, repeal or
modify any provision of, or add any provision to, the Company's Certificate of
Incorporation, By-laws or this Certificate of Designation, if such action would
alter or change the rights, preferences, privileges or powers of, or the
restrictions provided for the benefit of the Series C Holders so as to adversely
affect the Series C Preferred Stock.
(ii) So long as any shares of Series C Preferred Stock are
outstanding, the consent of the holders of at least a majority of the
outstanding shares of Series C Preferred Stock at the time, given in person or
by proxy, either in writing without a meeting or by vote at any meeting called
for such purpose, in which the holders of the Series C Preferred Stock vote
separately as a class, shall be necessary for the Company to: (a) authorize,
create, issue or increase the authorized amount of any class or series of Parity
Securities; or (b) reclassify any Junior Securities into Parity Securities.
(iii) So long as any shares of Series C Preferred Stock are
outstanding, the Series C Holders shall vote together with the holders of Common
Stock and not as a separate class on any transaction with respect to which the
holders of Common Stock are entitled to vote pursuant to applicable Delaware law
or the Certificate of Incorporation.
(iv) On all matters on which the Series C Preferred Stock is
entitled to vote, the Series C Holders shall be entitled to one vote per share
of Series C Preferred Stock.
5. Conversion Rights.
(i) Subject to the provisions of subparagraph (iv) of this
paragraph 5, each share of Series C Preferred Stock may be converted, at the
option of each Series C Holder, at any time and from time to time on or after
November 15, 1998, into fully-paid and non-assessable shares of Common Stock.
The number of shares of Common Stock to which the Series C Holder of each share
of Series C Preferred Stock shall be entitled upon conversion shall be the
product obtained by multiplying the number of shares of Series C Preferred Stock
to be converted by the Conversion Rate. The "Conversion Rate," that is, the
number of shares of Common Stock for which each share
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<PAGE>
of Series C Preferred Stock may be converted, shall be determined by dividing
$100.00 by $0.75 ("Conversion Price"). The Conversion Price shall be adjusted
from time to time as set forth in subsection (ii) hereof. The Company shall
not issue fractional shares of Common Stock upon conversion of Series C
Preferred Stock but, in lieu thereof, shall pay to a Series C Holder cash in
an amount equal to such fraction multiplied by the Last Sale Price of the
Common Stock on the trading day prior to the date on which the shares are
converted. "Last Sale Price" shall mean (w) the reported last sale price
regular way or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way, in either
case on the principal national securities exchange or market on which the
Common Stock is listed or admitted to trading or, (x) if not listed or
admitted to trading on any national securities exchange or market, on the
National Association of Securities Dealers Automated Quotations ("Nasdaq")
market or, (y) if the Common Stock is not listed or admitted to trading on
any national securities exchange or market or quoted on the Nasdaq market,
the average of the closing bid and asked prices in the over-the-counter
market as furnished by any New York Stock Exchange member firm selected from
time to time by the Board for that purpose or, (z) if the Common Stock is not
listed or admitted to trading or otherwise quoted as set forth above, the
fair market value of the Common Stock as determined in good faith using
customary valuation methods by the Board.
(ii) The Series C Preferred Stock shall be converted into Common
Stock in the following manner:
(A) Shares of Series C Preferred Stock received by the
Company in exchange for Common Stock shall be retired and canceled and shall no
longer be available for issuance as Series C Preferred Stock or any other series
of preferred stock.
(B) A Series C Holder shall give written notice to the
Company of its desire to convert all or a portion of the shares of Series C
Preferred Stock owned by such Series C Holder. Such notice shall be accompanied
by certificates, duly endorsed for conversion, evidencing the number of shares
of Series C Preferred Stock such Series C Holder desires to convert. The Company
will, as soon as practicable thereafter, deliver to such Series C Holder or to
such Series C Holder's nominee or nominees, a certificate or certificates for
the appropriate number of shares of Common Stock, together with cash, as
provided in subparagraph 5(i), with respect to any fractional shares otherwise
issuable upon conversion and, in the event of a partial conversion, a
certificate representing the balance, if any, of the shares of Series C
Preferred Stock represented by the surrendered certificate or certificates but
not converted to Common Stock.
(C) In the event that shares of Series C Preferred Stock are
surrendered for conversion on any date during the period from the close of
business on a record date fixed for determining the Series C Holders entitled to
receive dividends to the opening of business on the corresponding Dividend
Payment Date, the Series C Holder shall continue to be entitled to receive such
dividend on such Dividend Payment Date. In the event that the date on which the
shares are converted is the Dividend Payment Date, such Series C Holder will be
entitled to receive the dividend payable with respect to such Series C Preferred
Stock.
(D) If, prior to the date on which all shares of Series C
Preferred Stock are converted, the Company shall (1) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock, (2) subdivide its
outstanding Common Stock, (3) combine
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<PAGE>
its outstanding Common Stock into a smaller number of shares of Common Stock or
(4) issue by reclassification of its Common Stock other securities of the
Company, the Conversion Price in effect on the opening of business on the record
date for determining stockholders entitled to participate in such transaction
shall thereupon be adjusted, or, if necessary, the right to convert shall be
amended, such that the number of shares of Common Stock receivable upon
conversion of the shares of Series C Preferred Stock immediately prior thereto
shall be adjusted so that the Series C Holder shall be entitled to receive, upon
the conversion of such shares of Series C Preferred Stock, the kind and number
of shares of Common Stock 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 Series C Preferred Stock been converted
immediately prior to the happening of such event or any record date with respect
thereto. Any adjustment made pursuant to this subparagraph 5(ii)(D) shall become
effective immediately after the effective date of such event and such adjustment
shall be retroactive to the record date, if any, for such event. No adjustment
with respect to any ordinary cash dividends (made out of current earnings) on
shares of Common Stock shall be made.
(E) Except in respect of transactions described in
subparagraph 5(ii)(D) above, if, prior to the date on which all shares of Series
C Preferred Stock are converted, the Company shall sell or issue Common Stock or
rights, options, warrants or convertible securities (or rights, options or
warrants to purchase convertible securities) containing the right to subscribe
for or purchase shares of Common Stock (collectively, "Rights"), and the sale or
issuance price per share of Common Stock (or in the case of Rights, the sum of
the consideration paid or payable for any such Right entitling the holder
thereof to acquire one share of Common Stock and such additional consideration
paid or payable upon exercise or conversion of any such Right to acquire one
share of Common Stock) is less than the lower of the then current Conversion
Price or the then current average market price of the Common Stock (the closing
sale price as reported by the principal securities exchange on which the Common
Stock is listed or admitted to trading or by the Nasdaq market, or, if not
quoted thereon, the high bid price on the OTC Bulletin Board or in the National
Quotation Bureau sheet listing for the Common Stock, or if not listed therein,
as determined in good faith using customary valuation methods by the Board) (the
"Market Price") for the five (5) trading days immediately preceding the dates of
such sale or issuance (the "Current Common Stock Price"), the Conversion Price
shall thereupon be adjusted such that the number of shares of Common Stock
receivable upon conversion of the Series C Preferred Stock shall be the number
determined by multiplying (1) the number of shares of Common Stock receivable
upon conversion of the shares of Series C Preferred Stock immediately prior to
such issuance or sale by (2) a fraction (not to be less than one) with a
numerator equal to the product of the number of shares of Common Stock
outstanding after giving effect to such sale or issuance (and assuming, in the
case of Rights that such Rights had been fully exercised or converted, as the
case may be) and the Current Common Stock Price and a denominator equal to the
sum of (x) the product of the number of shares of Common Stock outstanding
immediately before the issuance or sale or the record date, as the case may be,
multiplied by the Current Common Stock Price and (y) the aggregate consideration
received or deemed to be received by the Company for the shares of Common Stock
to be issued or sold or to be purchased or subscribed for upon exercise of such
Rights. For the purposes of such adjustments, the Common Stock which the holders
of any such Rights shall be entitled to subscribe for or purchase shall be
deemed to be issued and outstanding as of the date of such issuance or sale or
the record date, as the case may be.
5
<PAGE>
(F) Except in respect of transactions described in
subparagraph 5(ii)(D) above, if, prior to the date on which all shares of Series
C Preferred Stock are converted, the Company shall declare, order, pay or make a
dividend or other distribution (including without limitation any distribution of
cash, other or additional stock or other securities or property or options, by
way of dividend or spin-off, reclassification, recapitalization or similar
corporate rearrangement or otherwise, but excluding dividends described in
paragraph 3 or in the last sentence of subparagraph 5(ii)(D)), then, in each
case, the Conversion Price shall thereupon be adjusted such that the number of
shares of Common Stock thereafter receivable upon the conversion of shares of
Series C Preferred Stock shall be determined by multiplying (1) the number of
shares of Common Stock theretofore receivable upon conversion of the shares of
the Series C Preferred Stock by (2) a fraction of which the numerator shall be
the then Conversion Price on the record date for the determination of
stockholders entitled to receive such dividend or other distribution, and of
which the denominator shall be such Conversion Price on such date minus the
amount of such dividend or distribution applicable to one share of Common Stock.
The Board shall determine the amount of such dividend or distribution allocable
to one share of Common Stock and such determination, if reasonable and based
upon the Board's good faith business judgment, shall be binding upon the Series
C Holder. 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 stockholders entitled to receive such
distribution.
(G) Upon the expiration of any Rights if such shall not have
been exercised, the Conversion Price, to the extent that shares of Series C
Preferred Stock have not been converted, shall, upon such expiration, be
readjusted and shall thereafter be such as they would have been had they been
originally adjusted (or had the original adjustment not been required, as the
case may be) on the basis of (1) the fact that the only shares of Common Stock
so issued were the shares of Common Stock, if any, actually issued or sold upon
the exercise of such Rights and (2) such shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Company (including
for purposes hereof, any underwriting discounts or selling commissions paid by
the Company) for the issuance, sale or grant of all such Rights, whether or not
exercised; provided, however, that no such readjustment shall have the effect of
increasing the Conversion Price by a proportion (relative to the Conversion
Price in effect immediately prior to such readjustment) in excess of the inverse
of the aggregate proportional adjustment thereof made in respect of the issue,
sale, grant or assumption of such Rights.
If the consideration provided for in any Right or the
additional consideration, if any, payable upon the conversion or exchange of any
right shall be reduced, or the rate at which any Right is exercisable or
convertible into or exchangeable for shares of Common Stock shall be increased,
at any time under or by reason of provisions with respect thereto designed to
protect against dilution, then, effective concurrently with each such change,
the Conversion Price then in effect shall first be adjusted to eliminate the
effects (if any) of the issuance (or deemed issuance) of such Right on the
Conversion Price and then readjusted as if such Right had been issued on the
date of such change with the terms in effect after such change, but only if as a
result of such readjustment the Conversion Price then in effect hereunder is
thereby reduced.
(H) If, prior to the date on which all shares of Series C
Preferred Stock are converted, the Company shall (1) consolidate with or merge
with or into another person resulting in a reclassification, conversion,
exchange or cancellation of outstanding shares of
6
<PAGE>
Common Stock or (2) sell or otherwise transfer all or substantially all of the
assets of the Company, then a Series C Holder shall thereafter have the right to
convert such shares of Series C Preferred Stock into the kind and amount of
stock, securities or assets, if any, such Series C Holder would have been
entitled to receive upon such consolidation, merger, sale or transfer had such
Series C Holder converted its shares of Series C Preferred Stock into Common
Stock immediately prior to such transaction.
(I) For the purposes of this paragraph 5: (x) the
consideration for the issue or sale of any additional shares of Common Stock
shall, irrespective of the accounting treatment of such consideration, be deemed
to be the consideration actually received by the Company and (1) insofar as it
consists of cash, be computed at the net amount of cash received by the Company,
plus any expense paid or incurred by the Company and any commissions or
compensation paid or concessions or discounts allowed to underwriters, dealers
or others performing similar services in connection with such issue or sale, (2)
insofar as it consists of property (including securities) other than cash, be
computed at the fair value thereof at the time of such issue or sale, as
determined in good faith by the Board, and (3) in case additional shares of
Common Stock are issued or sold together with other stock or securities or other
assets of the Company for consideration which covers both cash and property, be
the portion of such consideration so received, computed as provided in clauses
(1) and (2) above, allocable to such additional shares of Common Stock, all as
determined in good faith by the Board; (y) additional shares of Common Stock
deemed to have been issued pursuant to subparagraph 5(ii)(G) relating to Rights,
shall be deemed to have been issued for a consideration per share determined by
dividing (1) the total amount, if any, received by the Company as consideration
for the issue, sale or grant of the Rights in question, less the value of the
Rights not actually received by the Company as consideration therefor, plus the
minimum aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provisions contained therein
for a subsequent adjustment of such consideration to protect against dilution)
payable to the Company upon the exercise in or the conversion or exchange of
such Rights or, in the case of Rights which are rights, options or warrants for
convertible securities, the exercise of such Rights for convertible securities
and the conversion or exchange of such convertible securities, in each case
computing such consideration as provided in the foregoing clause (x) of this
subparagraph 5(ii)(I), by (2) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for subsequent adjustment of such number to protect against
dilution) issuable upon the exercise, conversion or exchange of such Rights;
and, (z) additional shares of Common Stock deemed to have been issued pursuant
to subparagraph 5(ii)(D) and (F), relating to stock dividends, stock splits,
etc., shall be deemed to, have been issued for no consideration. For the
purposes of this paragraph 5, the term "Common Stock" shall mean (i) the class
of stock designated as Common Stock in the Certificate of Incorporation of the
Corporation as may be amended as of the date hereof, or (ii) any other class of
stock resulting from successive changes or reclassification of such Common Stock
consisting solely of changes in par value or from par value to no par value, or
from no par value to par value.
(J) No adjustment in the Conversion Price shall be required
unless explicitly provided for in this paragraph 5 and unless such adjustment
(plus any adjustments not previously made by reason of this subparagraph
5(ii)(J)), would require an increase or decrease of at least five percent (5%)
in such price; provided, however, that any adjustments which by reason of this
subparagraph 5(ii)(J) are not required to be made shall be carried forward and
shall be made at
7
<PAGE>
the time of and together with the next succeeding adjustment which, together
with any adjustment so carried forward, shall amount to an increase or decrease
of at least five percent (5%) in such price. All calculations under this
subparagraph 5(ii)(J) shall be made to the nearest cent.
(K) No adjustment shall be made (1) upon conversion of the
Series C Preferred Stock, (2) upon exercise of options and/or warrants of the
Company outstanding on the date hereof, and (3) with respect to options
thereafter granted to employees, officers, directors or stockholders of or
consultants to the Company, pursuant to existing stock option plans.
(L) Whenever the Conversion Price is adjusted pursuant to
any of the foregoing provisions of this paragraph 5, the Company shall forthwith
prepare a written statement signed by the president or any vice president and
the treasurer or any assistant treasurer or the secretary or any assistant
secretary of the Company, setting forth the adjusted Conversion Rate determined
as provided in this paragraph 5, and in reasonable detail the facts requiring
such adjustment. Such statement shall be filed among the permanent records of
the Company and a copy thereof shall be furnished to any Series C Holder
requesting the same, and shall at all reasonable times during business hours be
open to inspection by the Series C Holders. Within 10 days of the event
requiring an adjustment, the Company shall also cause a notice, stating that
such an adjustment has been made and setting forth the adjusted Conversion Rate,
to be mailed, first-class, postage prepaid, to all then Series C Holders of
record at their addresses as the same appear on the stock records of the
Company.
(M) If a Series C Holder has delivered notice to the Company
of its desire to convert all or a portion of its shares of Series C Preferred
Stock, and certificates, duly endorsed for conversion in respect of such shares
have been delivered to the Company, then all shares of Series C Preferred Stock
so tendered to the Company shall be deemed to be no longer outstanding and,
notwithstanding the failure of the Company to issue the Common Stock, such
Series C Holder shall be deemed, for all purposes (except as set forth in the
next sentence of this subparagraph 5(ii)(M)), to be a holder of the number of
shares of Common Stock into which the shares of Series C Preferred Stock such
Series C Holder is entitled to receive pursuant to the terms of this paragraph 5
in each case as of the close of business on the date on which such conversion
notice is delivered.
(iii) The Company shall not, by amendment of its Certificate of
Incorporation as amended as of the date hereof, or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company but shall at all times in good faith assist in the carrying out of all
the provisions of this paragraph 5. The Company shall at all times reserve and
keep available out of its authorized but unissued Common Stock the full number
or shares of Common Stock deliverable upon the conversion of all the then
outstanding shares of Series C Preferred Stock and shall take all such action
and obtain all such permits or orders as may be necessary to enable the Company
to validly and legally issue fully paid and non-assessable shares of Common
Stock upon the conversion of Series C Preferred Stock. The Company shall pay any
and all transfer, stamp and other like taxes that may be payable in respect of
the issuance or delivery to a Series C Holder of shares of Common Stock or
conversion of the Series C Preferred Stock by such holder.
8
<PAGE>
(iv) The conversion of each share of Series C Preferred Stock
provided by this paragraph 5 shall be subject in all respects to the prior
receipt by the Company of the written confirmation (the "Written Confirmation")
of the American Stock Exchange that the designation and issuance of the Series C
Preferred Stock having the terms provided herein does not require approval by
the stockholders of the Company (the "Stockholder Approval"). The Company hereby
undertakes to obtain such Written Confirmation as soon as is reasonably
practicable and to advise the Holder promptly following the Company's receipt
thereof. In the event that the Company is unable to obtain such Written
Confirmation, the Company will undertake to obtain shareholder approval hereof
as soon as is reasonably practicable.
6. Liquidation Price. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company, the amount
that shall be paid to a Series C Holder shall be $100.00 per each share of
Series C Preferred Stock held by such Series C Holder (hereinafter called the
"Liquidation Price") and no more. Upon any liquidation, dissolution or
winding-up of the Company, the Series C Holders will be entitled to be paid,
after payment or provision for payment of the debts and other liabilities of the
Company and after payment or provision for payment is made upon any Senior
Securities, but before any Distribution or payment is made upon any Junior
Securities, an amount in cash equal to the aggregate Liquidation Price of all
shares outstanding, and the Series C Holders will not be entitled to any further
payment. If, upon any such liquidation, dissolution or winding-up of the
Company, the Company's assets to be distributed among the Series C Holders and
the holders of Parity Securities (the "Parity Holders") are insufficient to
permit payment in full to such Series C Holders and the Parity Holders of the
aggregate amount which they are entitled to be paid, then the available assets
to be distributed will be distributed ratably among such Series C Holders and
Parity Holders based upon the aggregate Liquidation Price of the Series C
Preferred Stock and the aggregate liquidation preference of any Parity
Securities held by each such Series C Holder and Parity Holder, respectively.
The Company will mail written notice of such liquidation, dissolution or
winding-up, not less than 30 days prior to the payment date stated therein, to
each Parity Holder of record. Neither the consolidation or merger of the Company
into or with any other corporation or any other person, nor the sale or transfer
by the Company of all or any part of its assets, nor the reduction of the
capital stock of the Company will be deemed to be a liquidation, dissolution or
winding-up of the Company within the meaning of paragraphs 2 and 6 hereof.
9
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IN WITNESS WHEREOF, the Company has caused this Certificate to be
signed in its name and on its behalf and attested as of 28th day of September,
1998, by duly authorized officers of the Company.
COMMODORE APPLIED TECHNOLOGIES, INC.
By: /s/ Paul E. Hannesson
-----------------------------------
Name: Paul E. Hannesson
Title: President and CEO
ATTEST:
/s/ Gregg M. Rosen
- -------------------------
Gregg M. Rosen
Assistant Secretary
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Exhibit 4.4
CERTIFICATE OF DESIGNATION
OF
6% SERIES D CONVERTIBLE PREFERRED STOCK
OF
COMMODORE APPLIED TECHNOLOGIES, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
The undersigned officers of Commodore Applied Technologies, Inc. (the
"Company"), a corporation organized and existing under and by virtue of the
General Corporation Law of the State of Delaware (the "DGCL"), do hereby
certify:
That pursuant to the authority conferred upon the Board of Directors of
the Company (the "Board") by the Certificate of Incorporation of the Company, as
amended (the "Certificate of Incorporation"), the Board authorized the series of
preferred stock hereinafter provided for and established the voting powers
thereof and adopted the following resolutions creating a series of 25,000 shares
of preferred stock.
"RESOLVED, that pursuant to the authority vested in the Board by virtue
of the Certificate of Incorporation of the Company, there be and hereby
is authorized and created a series of preferred stock, hereby
designated as the Series D Convertible Preferred Stock, par value $.001
per share (the "Series D Preferred Stock"); that the number of shares
of such Series D Preferred Stock shall be 25,000; and that the
designations, preferences and relative, participating, optional or
other special rights of the Series D Preferred Stock, and the
qualifications, limitations, or restrictions thereof shall be as
described in the Certificate of Designation, substantially in the form
presented to the Board of Directors; and it is further
RESOLVED, that pursuant to the Certificate of Designation of the Series
D Preferred Stock, the Company shall hereby reserve for issuance upon
the conversion of the Series D Preferred Stock that number of shares of
Common Stock of the Company sufficient to enable the full conversion of
the Series D Preferred Stock; and it is further
RESOLVED, that the proper officers of the Company be and each of them
hereby is, authorized, directed and empowered to execute and deliver,
for, in the name and on behalf of the Company any and all other
instruments, documents or certificates necessary or appropriate to
create the Series D Preferred Stock, including, without
<PAGE>
limitation, the filing of a Certificate of Designations with the
Secretary of State of the State of Delaware."
The designation and amount and the voting powers, preferences and
relative, participating, optional and other special rights of the shares of
Series D Preferred Stock, and the qualifications, limitations or restrictions
thereof are as set forth below.
1. Designation and Number. The designation of the series of preferred
stock fixed hereby shall be "6% Series D Convertible Preferred Stock"
(hereinafter referred to as the "Series D Preferred Stock") and the number of
shares constituting such series shall be twenty-five thousand (25,000), which
number may from time to time be increased (but not without the approval of the
holders of a majority of the then outstanding shares of Series D Preferred
Stock) or decreased (but not below the number then outstanding) by the Board of
Directors. The stated value of each share of this series shall be $100.00, and
each share of this series shall be validly issued and fully paid upon receipt by
the Company of legal consideration in an amount at least equal to such stated
value and shall not thereafter be assessable.
2. Rank. The Series D Preferred Stock shall rank: (i) prior to all of
the Company's common stock, par value $.001 per share ("Common Stock"), (ii)
prior to any class or series of capital stock of the Company hereafter created
either specifically ranking by its terms junior to the Series D Preferred Stock
or not specifically ranking by its terms senior to or on parity with the Series
D Preferred Stock (collectively with the Common Stock, "Junior Securities");
(iii) subject to the provisions of subparagraph 4(ii) hereof, on parity with the
Company's Series B Preferred Stock, par value $.001 per share, the Company's
Series C Preferred Stock, par value $.001 per share, and any other class or
series of capital stock of the Company hereafter created specifically ranking by
its terms on parity with the Series D Preferred Stock ("Parity Securities"); and
(iv) subject to the provisions of subparagraph 4(i) hereof, junior to any class
or series of capital stock of the Company heretofore or hereafter created
specifically ranking by its terms senior to the Series D Preferred Stock
("Senior Securities"), in each case, as to payment of dividends or as to
distributions of assets upon liquidation, dissolution or winding-up of the
Company, whether voluntary or involuntary (all such distributions being referred
to collectively as "Distributions").
3. Dividends.
(i) The dividend rate of the Series D Preferred Stock shall be
computed at a rate of $6.00 per share per annum from the date of the issuance of
the Series D Preferred Stock. Dividends shall be payable quarterly in arrears
out of the assets of the Company legally available therefor on the last business
day of March, June, September and December of each year, commencing December 31,
1998 (each a "Dividend Payment Date"). Dividends may be paid by the Company in
cash or, at the election of the Company, by delivery of additional shares of
Series D Preferred Stock having an aggregate liquidation value equal to the
amount of such dividend. Dividends on shares of Series D Preferred Stock shall
not be cumulative.
(ii) The Board shall declare and pay current dividends out of
funds legally available therefor (after giving effect to the payment of all
requisite dividends on Senior Securities).
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<PAGE>
(iii) In order to determine the holders of the Series D Preferred
Stock entitled to receive dividends, the Company shall fix a record date not
more than 60 days prior to any Dividend Payment Date. If any such Dividend
Payment Date should fall on a day that is not a Business Day, then the Company
shall pay the applicable dividend on the next succeeding Business Day. "Business
Day" shall mean a day other than a Saturday, Sunday or other day on which any
national securities exchange or quotation system on which the Common Stock of
the Company is traded or quoted is authorized or required by law to close.
4. Voting Rights.
The holders of the shares of Series D Preferred Stock (the "Series
D Holders") shall be entitled to the following voting rights in respect of such
shares.
(i) So long as any shares of Series D Preferred Stock are
outstanding, the consent of the holders of at least 66-2/3% of the outstanding
shares of Series D Preferred Stock at the time, given in person or by proxy,
either in writing without a meeting or by vote at any meeting called for such
purpose, in which the holders of the Series D Preferred Stock vote separately as
a class, shall be necessary for the Company to: (a) authorize, create, issue or
increase the authorized amount of any class or series of Senior Securities; (b)
reclassify any Junior Securities into Senior Securities; or (c) amend, repeal or
modify any provision of, or add any provision to, the Company's Certificate of
Incorporation, By-laws or this Certificate of Designation, if such action would
alter or change the rights, preferences, privileges or powers of, or the
restrictions provided for the benefit of the Series D Holders so as to adversely
affect the Series D Preferred Stock.
(ii) So long as any shares of Series D Preferred Stock are
outstanding, the consent of the holders of at least a majority of the
outstanding shares of Series D Preferred Stock at the time, given in person or
by proxy, either in writing without a meeting or by vote at any meeting called
for such purpose, in which the holders of the Series D Preferred Stock vote
separately as a class, shall be necessary for the Company to: (a) authorize,
create, issue or increase the authorized amount of any class or series of Parity
Securities; or (b) reclassify any Junior Securities into Parity Securities.
(iii) So long as any shares of Series D Preferred Stock are
outstanding, the Series D Holders shall vote together with the holders of Common
Stock and not as a separate class on any transaction with respect to which the
holders of Common Stock are entitled to vote pursuant to applicable Delaware law
or the Certificate of Incorporation.
(iv) On all matters on which the Series D Preferred Stock is
entitled to vote, the Series D Holders shall be entitled to one vote per share
of Series D Preferred Stock.
5. Conversion Rights.
(i) Subject to the provisions of subparagraph (iv) of this
paragraph 5, each share of Series D Preferred Stock may be converted, at the
option of each Series D Holder, at any time
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and from time to time on or after November 15, 1998, into fully-paid and
non-assessable shares of Common Stock. The number of shares of Common Stock to
which the Series D Holder of each share of Series D Preferred Stock shall be
entitled upon conversion shall be the product obtained by multiplying the number
of shares of Series D Preferred Stock to be converted by the Conversion Rate.
The "Conversion Rate," that is, the number of shares of Common Stock for which
each share of Series D Preferred Stock may be converted, shall be determined by
dividing $100.00 by $0.70 ("Conversion Price"). The Conversion Price shall be
adjusted from time to time as set forth in subsection (ii) hereof. The Company
shall not issue fractional shares of Common Stock upon conversion of Series D
Preferred Stock but, in lieu thereof, shall pay to a Series D Holder cash in an
amount equal to such fraction multiplied by the Last Sale Price of the Common
Stock on the trading day prior to the date on which the shares are converted.
"Last Sale Price" shall mean (w) the reported last sale price regular way or, in
case no such reported sale takes place on such day, the average of the reported
closing bid and asked prices regular way, in either case on the principal
national securities exchange or market on which the Common Stock is listed or
admitted to trading or, (x) if not listed or admitted to trading on any national
securities exchange or market, on the National Association of Securities Dealers
Automated Quotations ("Nasdaq") market or, (y) if the Common Stock is not listed
or admitted to trading on any national securities exchange or market or quoted
on the Nasdaq market, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange member firm
selected from time to time by the Board for that purpose or, (z) if the Common
Stock is not listed or admitted to trading or otherwise quoted as set forth
above, the fair market value of the Common Stock as determined in good faith
using customary valuation methods by the Board.
(ii) The Series D Preferred Stock shall be converted into Common
Stock in the following manner:
(A) Shares of Series D Preferred Stock received by the
Company in exchange for Common Stock shall be retired and canceled and shall no
longer be available for issuance as Series D Preferred Stock or any other series
of preferred stock.
(B) A Series D Holder shall give written notice to the
Company of its desire to convert all or a portion of the shares of Series D
Preferred Stock owned by such Series D Holder. Such notice shall be accompanied
by certificates, duly endorsed for conversion, evidencing the number of shares
of Series D Preferred Stock such Series D Holder desires to convert. The Company
will, as soon as practicable thereafter, deliver to such Series D Holder or to
such Series D Holder's nominee or nominees, a certificate or certificates for
the appropriate number of shares of Common Stock, together with cash, as
provided in subparagraph 5(i), with respect to any fractional shares otherwise
issuable upon conversion and, in the event of a partial conversion, a
certificate representing the balance, if any, of the shares of Series D
Preferred Stock represented by the surrendered certificate or certificates but
not converted to Common Stock.
(C) In the event that shares of Series D Preferred Stock are
surrendered for conversion on any date during the period from the close of
business on a record date fixed for determining the Series D Holders entitled to
receive dividends to the opening of business on the
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corresponding Dividend Payment Date, the Series D Holder shall continue to be
entitled to receive such dividend on such Dividend Payment Date. In the event
that the date on which the shares are converted is the Dividend Payment Date,
such Series D Holder will be entitled to receive the dividend payable with
respect to such Series D Preferred Stock.
(D) If, prior to the date on which all shares of Series D
Preferred Stock are converted, the Company shall (1) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock, (2) subdivide its
outstanding Common Stock, (3) combine its outstanding Common Stock into a
smaller number of shares of Common Stock or (4) issue by reclassification of its
Common Stock other securities of the Company, the Conversion Price in effect on
the opening of business on the record date for determining stockholders entitled
to participate in such transaction shall thereupon be adjusted, or, if
necessary, the right to convert shall be amended, such that the number of shares
of Common Stock receivable upon conversion of the shares of Series D Preferred
Stock immediately prior thereto shall be adjusted so that the Series D Holder
shall be entitled to receive, upon the conversion of such shares of Series D
Preferred Stock, the kind and number of shares of Common Stock 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
Series D Preferred Stock been converted immediately prior to the happening of
such event or any record date with respect thereto. Any adjustment made pursuant
to this subparagraph 5(ii)(D) shall become effective immediately after the
effective date of such event and such adjustment shall be retroactive to the
record date, if any, for such event. No adjustment with respect to any ordinary
cash dividends (made out of current earnings) on shares of Common Stock shall be
made.
(E) Except in respect of transactions described in
subparagraph 5(ii)(D) above, if, prior to the date on which all shares of Series
D Preferred Stock are converted, the Company shall sell or issue Common Stock or
rights, options, warrants or convertible securities (or rights, options or
warrants to purchase convertible securities) containing the right to subscribe
for or purchase shares of Common Stock (collectively, "Rights"), and the sale or
issuance price per share of Common Stock (or in the case of Rights, the sum of
the consideration paid or payable for any such Right entitling the holder
thereof to acquire one share of Common Stock and such additional consideration
paid or payable upon exercise or conversion of any such Right to acquire one
share of Common Stock) is less than the lower of the then current Conversion
Price or the then current average market price of the Common Stock (the closing
sale price as reported by the principal securities exchange on which the Common
Stock is listed or admitted to trading or by the Nasdaq market, or, if not
quoted thereon, the high bid price on the OTC Bulletin Board or in the National
Quotation Bureau sheet listing for the Common Stock, or if not listed therein,
as determined in good faith using customary valuation methods by the Board) (the
"Market Price") for the five (5) trading days immediately preceding the dates of
such sale or issuance (the "Current Common Stock Price"), the Conversion Price
shall thereupon be adjusted such that the number of shares of Common Stock
receivable upon conversion of the Series D Preferred Stock shall be the number
determined by multiplying (1) the number of shares of Common Stock receivable
upon conversion of the shares of Series D Preferred Stock immediately prior to
such issuance or sale by (2) a fraction (not to be less than one) with a
numerator equal to the product of the number of shares of Common Stock
outstanding after giving effect to such sale or issuance (and assuming, in the
case of Rights that such Rights had been fully exercised or converted, as the
case may be) and the Current Common Stock
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Price and a denominator equal to the sum of (x) the product of the number of
shares of Common Stock outstanding immediately before the issuance or sale or
the record date, as the case may be, multiplied by the Current Common Stock
Price and (y) the aggregate consideration received or deemed to be received by
the Company for the shares of Common Stock to be issued or sold or to be
purchased or subscribed for upon exercise of such Rights. For the purposes of
such adjustments, the Common Stock which the holders of any such Rights shall be
entitled to subscribe for or purchase shall be deemed to be issued and
outstanding as of the date of such issuance or sale or the record date, as the
case may be.
(F) Except in respect of transactions described in
subparagraph 5(ii)(D) above, if, prior to the date on which all shares of Series
D Preferred Stock are converted, the Company shall declare, order, pay or make a
dividend or other distribution (including without limitation any distribution of
cash, other or additional stock or other securities or property or options, by
way of dividend or spin-off, reclassification, recapitalization or similar
corporate rearrangement or otherwise, but excluding dividends described in
paragraph 3 or in the last sentence of subparagraph 5(ii)(D)), then, in each
case, the Conversion Price shall thereupon be adjusted such that the number of
shares of Common Stock thereafter receivable upon the conversion of shares of
Series D Preferred Stock shall be determined by multiplying (1) the number of
shares of Common Stock theretofore receivable upon conversion of the shares of
the Series D Preferred Stock by (2) a fraction of which the numerator shall be
the then Conversion Price on the record date for the determination of
stockholders entitled to receive such dividend or other distribution, and of
which the denominator shall be such Conversion Price on such date minus the
amount of such dividend or distribution applicable to one share of Common Stock.
The Board shall determine the amount of such dividend or distribution allocable
to one share of Common Stock and such determination, if reasonable and based
upon the Board's good faith business judgment, shall be binding upon the Series
D Holder. 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 stockholders entitled to receive such
distribution.
(G) Upon the expiration of any Rights if such shall not have
been exercised, the Conversion Price, to the extent that shares of Series D
Preferred Stock have not been converted, shall, upon such expiration, be
readjusted and shall thereafter be such as they would have been had they been
originally adjusted (or had the original adjustment not been required, as the
case may be) on the basis of (1) the fact that the only shares of Common Stock
so issued were the shares of Common Stock, if any, actually issued or sold upon
the exercise of such Rights and (2) such shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Company (including
for purposes hereof, any underwriting discounts or selling commissions paid by
the Company) for the issuance, sale or grant of all such Rights, whether or not
exercised; provided, however, that no such readjustment shall have the effect of
increasing the Conversion Price by a proportion (relative to the Conversion
Price in effect immediately prior to such readjustment) in excess of the inverse
of the aggregate proportional adjustment thereof made in respect of the issue,
sale, grant or assumption of such Rights.
If the consideration provided for in any Right or the additional
consideration, if any, payable upon the conversion or exchange of any right
shall be reduced, or the rate at which any
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Right is exercisable or convertible into or exchangeable for shares of Common
Stock shall be increased, at any time under or by reason of provisions with
respect thereto designed to protect against dilution, then, effective
concurrently with each such change, the Conversion Price then in effect shall
first be adjusted to eliminate the effects (if any) of the issuance (or deemed
issuance) of such Right on the Conversion Price and then readjusted as if such
Right had been issued on the date of such change with the terms in effect after
such change, but only if as a result of such readjustment the Conversion Price
then in effect hereunder is thereby reduced.
(H) If, prior to the date on which all shares of Series D
Preferred Stock are converted, the Company shall (1) consolidate with or merge
with or into another person resulting in a reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock or (2) sell or
otherwise transfer all or substantially all of the assets of the Company, then a
Series D Holder shall thereafter have the right to convert such shares of Series
D Preferred Stock into the kind and amount of stock, securities or assets, if
any, such Series D Holder would have been entitled to receive upon such
consolidation, merger, sale or transfer had such Series D Holder converted its
shares of Series D Preferred Stock into Common Stock immediately prior to such
transaction.
(I) For the purposes of this paragraph 5: (x) the
consideration for the issue or sale of any additional shares of Common Stock
shall, irrespective of the accounting treatment of such consideration, be deemed
to be the consideration actually received by the Company and (1) insofar as it
consists of cash, be computed at the net amount of cash received by the Company,
plus any expense paid or incurred by the Company and any commissions or
compensation paid or concessions or discounts allowed to underwriters, dealers
or others performing similar services in connection with such issue or sale, (2)
insofar as it consists of property (including securities) other than cash, be
computed at the fair value thereof at the time of such issue or sale, as
determined in good faith by the Board, and (3) in case additional shares of
Common Stock are issued or sold together with other stock or securities or other
assets of the Company for consideration which covers both cash and property, be
the portion of such consideration so received, computed as provided in clauses
(1) and (2) above, allocable to such additional shares of Common Stock, all as
determined in good faith by the Board; (y) additional shares of Common Stock
deemed to have been issued pursuant to subparagraph 5(ii)(G) relating to Rights,
shall be deemed to have been issued for a consideration per share determined by
dividing (1) the total amount, if any, received by the Company as consideration
for the issue, sale or grant of the Rights in question, less the value of the
Rights not actually received by the Company as consideration therefor, plus the
minimum aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provisions contained therein
for a subsequent adjustment of such consideration to protect against dilution)
payable to the Company upon the exercise in or the conversion or exchange of
such Rights or, in the case of Rights which are rights, options or warrants for
convertible securities, the exercise of such Rights for convertible securities
and the conversion or exchange of such convertible securities, in each case
computing such consideration as provided in the foregoing clause (x) of this
subparagraph 5(ii)(I), by (2) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for subsequent adjustment of such number to protect against
dilution) issuable upon the exercise, conversion or exchange of such Rights;
and, (z)
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additional shares of Common Stock deemed to have been issued pursuant to
subparagraph 5(ii)(D) and (F), relating to stock dividends, stock splits, etc.,
shall be deemed to, have been issued for no consideration. For the purposes of
this paragraph 5, the term "Common Stock" shall mean (i) the class of stock
designated as Common Stock in the Certificate of Incorporation of the
Corporation as may be amended as of the date hereof, or (ii) any other class of
stock resulting from successive changes or reclassification of such Common Stock
consisting solely of changes in par value or from par value to no par value, or
from no par value to par value.
(J) No adjustment in the Conversion Price shall be required
unless explicitly provided for in this paragraph 5 and unless such adjustment
(plus any adjustments not previously made by reason of this subparagraph
5(ii)(J)), would require an increase or decrease of at least five percent (5%)
in such price; provided, however, that any adjustments which by reason of this
subparagraph 5(ii)(J) are not required to be made shall be carried forward and
shall be made at the time of and together with the next succeeding adjustment
which, together with any adjustment so carried forward, shall amount to an
increase or decrease of at least five percent (5%) in such price. All
calculations under this subparagraph 5(ii)(J) shall be made to the nearest cent.
(K) No adjustment shall be made (1) upon conversion of the
Series D Preferred Stock, (2) upon exercise of options and/or warrants of the
Company outstanding on the date hereof, and (3) with respect to options
thereafter granted to employees, officers, directors or stockholders of or
consultants to the Company, pursuant to existing stock option plans.
(L) Whenever the Conversion Price is adjusted pursuant to any
of the foregoing provisions of this paragraph 5, the Company shall forthwith
prepare a written statement signed by the president or any vice president and
the treasurer or any assistant treasurer or the secretary or any assistant
secretary of the Company, setting forth the adjusted Conversion Rate determined
as provided in this paragraph 5, and in reasonable detail the facts requiring
such adjustment. Such statement shall be filed among the permanent records of
the Company and a copy thereof shall be furnished to any Series D Holder
requesting the same, and shall at all reasonable times during business hours be
open to inspection by the Series D Holders. Within 10 days of the event
requiring an adjustment, the Company shall also cause a notice, stating that
such an adjustment has been made and setting forth the adjusted Conversion Rate,
to be mailed, first-class, postage prepaid, to all then Series D Holders of
record at their addresses as the same appear on the stock records of the
Company.
(M) If a Series D Holder has delivered notice to the Company
of its desire to convert all or a portion of its shares of Series D Preferred
Stock, and certificates, duly endorsed for conversion in respect of such shares
have been delivered to the Company, then all shares of Series D Preferred Stock
so tendered to the Company shall be deemed to be no longer outstanding and,
notwithstanding the failure of the Company to issue the Common Stock, such
Series D Holder shall be deemed, for all purposes (except as set forth in the
next sentence of this subparagraph 5(ii)(M)), to be a holder of the number of
shares of Common Stock into which the shares of Series D Preferred Stock such
Series D Holder is entitled to receive pursuant to the terms of this paragraph 5
in each case as of the close of business on the date on which such conversion
notice is delivered. The Company shall not, by amendment of its Certificate of
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Incorporation as amended as of the date hereof, or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company but shall at all times in good faith assist in the carrying out of all
the provisions of this paragraph 5. The Company shall at all times reserve and
keep available out of its authorized but unissued Common Stock the full number
or shares of Common Stock deliverable upon the conversion of all the then
outstanding shares of Series D Preferred Stock and shall take all such action
and obtain all such permits or orders as may be necessary to enable the Company
to validly and legally issue fully paid and non-assessable shares of Common
Stock upon the conversion of Series D Preferred Stock. The Company shall pay any
and all transfer, stamp and other like taxes that may be payable in respect of
the issuance or delivery to a Series D Holder of shares of Common Stock or
conversion of the Series D Preferred Stock by such holder.
(iii) The conversion of each share of Series D Preferred Stock
provided by this paragraph 5 shall be subject in all respects to the prior
receipt by the Company of the written confirmation (the "Written Confirmation")
of the American Stock Exchange that the designation and issuance of the Series D
Preferred Stock having the terms provided herein does not require approval by
the stockholders of the Company (the "Stockholder Approval"). The Company hereby
undertakes to obtain such Written Confirmation as soon as is reasonably
practicable and to advise the Holder promptly following the Company's receipt
thereof. In the event that the Company is unable to obtain such Written
Confirmation, the Company will undertake to obtain shareholder approval hereof
as soon as is reasonably practicable.
6. Liquidation Price. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company, the amount
that shall be paid to a Series D Holder shall be $100.00 per each share of
Series D Preferred Stock held by such Series D Holder (hereinafter called the
"Liquidation Price") and no more. Upon any liquidation, dissolution or
winding-up of the Company, the Series D Holders will be entitled to be paid,
after payment or provision for payment of the debts and other liabilities of the
Company and after payment or provision for payment is made upon any Senior
Securities, but before any Distribution or payment is made upon any Junior
Securities, an amount in cash equal to the aggregate Liquidation Price of all
shares outstanding, and the Series D Holders will not be entitled to any further
payment. If, upon any such liquidation, dissolution or winding-up of the
Company, the Company's assets to be distributed among the Series D Holders and
the holders of Parity Securities (the "Parity Holders") are insufficient to
permit payment in full to such Series D Holders and the Parity Holders of the
aggregate amount which they are entitled to be paid, then the available assets
to be distributed will be distributed ratably among such Series D Holders and
Parity Holders based upon the aggregate Liquidation Price of the Series D
Preferred Stock and the aggregate liquidation preference of any Parity
Securities held by each such Series D Holder and Parity Holder, respectively.
The Company will mail written notice of such liquidation, dissolution or
winding-up, not less than 30 days prior to the payment date stated therein, to
each Parity Holder of record. Neither the consolidation or merger of the Company
into or with any other corporation or any other person, nor the sale or transfer
by the Company of all or any part of its assets, nor the reduction of the
capital stock of the Company will be deemed to be a liquidation, dissolution or
winding-up of the Company within the meaning of paragraphs 2 and 6 hereof.
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IN WITNESS WHEREOF, the Company has caused this Certificate to be
signed in its name and on its behalf and attested as of this 28th day of
September, 1998, by duly authorized officers of the Company.
COMMODORE APPLIED TECHNOLOGIES, INC.
By: /s/ Paul E. Hannesson
--------------------------------------
Name: Paul E. Hannesson
Title: President and CEO
ATTEST:
/s/ Gregg M. Rosen
- -------------------------
Gregg M. Rosen
Assistant Secretary
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Exhibit 99.1
DEBT REPAYMENT AGREEMENT
THIS DEBT REPAYMENT AGREEMENT (this "Agreement") is made as of the 28th
day of September, 1998 (the "Effective Date") by and between COMMODORE
APPLIED TECHNOLOGIES, INC., a Delaware corporation ("Applied"), and COMMODORE
ENVIRONMENTAL SERVICES, INC., a Delaware corporation ("Environmental").
BACKGROUND OF AGREEMENT
A. On August 22, 1997, Environmental agreed to lend to Applied the
principal sum of Four Million ($4,000,000) Dollars (the "August 1997 Loan")
pursuant to that certain 8% Convertible Promissory Note (the "August Note")
of Applied in favor of Environmental. Applied received the proceeds of the
August 1997 Loan on September 23, 1997.
B. The outstanding principal amount of the August 1997 Loan, as of
September 28, 1998, is Two Million Thirty-Nine Thousand One Hundred Thirty
($2,039,130) Dollars.
C. On February 10, 1998, Environmental loaned to Applied the principal
sum of Five Million Four Hundred Fifty Thousand ($5,450,000) Dollars (the
"February 1998 Loan") pursuant to that certain Promissory Note dated February
10, 1998 (the "February Note") of Applied in favor of Environmental.
D. The outstanding principal amount of the February 1998 Loan, as of
September 28, 1998, is Four Million Six Hundred Twenty-Two Thousand Three
Hundred Fifteen ($4,622,315) Dollars and, as of the Effective Date, the
amount of principal and interest outstanding on the February 1998 Loan is
Four Million Seven Hundred Sixteen Thousand and Seven Hundred Thirty-Four
($4,716,734) Dollars (the "Outstanding Amount of the February 1998 Loan").
E. Applied owns ten million (10,000,000) shares (the "Separation
Stock") of the issued and outstanding common stock of Commodore Separation
Technologies, Inc., a Delaware corporation ("Separation").
F. Environmental and Applied desire to effect certain agreements
regarding repayment of the August 1997 Loan and the February 1998 Loan, all
upon the terms and conditions hereinafter set forth.
<PAGE>
PROVISIONS OF AGREEMENT
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound hereby, the
parties agree as follows:
Section 1. Repayment of the Outstanding Amount of the February 1998
Loan. Notwithstanding the provisions of the February Note or of any of the
other documents executed and delivered by the parties in connection with the
February 1998 Loan, the parties now agree that repayment of the Outstanding
Amount of the February 1998 Loan will be made by the following:
(a) Subject to the provisions of Section 3 below, Environmental or
its designee will either (a) acquire all of Applied's right,
title and interest in and to the Separation Stock or (b) agree
to extend the maturity of One Million One Hundred Fifty-Five
Thousand Five Hundred Eighty-One ($1,155,581) Dollars of unpaid
principal and Ninety-Four Thousand Four Hundred Nineteen
($94,419) Dollars of unpaid interest of the February 1998 Loan
(as of September 28, 1998) until March 31, 2000;
(b) Applied will issue to and Environmental will convert Two
Million Ninety Thousand Eight Hundred and Seventy ($2,090,870)
Dollars of the Outstanding Amount of the February 1998 Loan
into 20,909 shares of its 6% preferred stock, Series B (the
"Series B Preferred Stock") at the rate of one (1) share for
each One Hundred ($100.00) Dollars of such debt; and
(c) Subject to a reduction of such debt pursuant to Section 3(c)(i)
hereof, Applied will issue to and Environmental will convert One
Million Eighteen Thousand Eight Hundred Sixty-Four ($1,018,864)
Dollars of the Outstanding Amount of the February, 1998 Loan
into 10,189 shares of its 6% preferred stock, Series C (the
"Series C Preferred Stock") at the rate of one (1) share for
each One Hundred ($100) Dollars of such debt; and
(d) Except as hereinafter provided, Applied will issue to
Environmental its Amended Warrant for the Purchase of Shares of
Common Stock No. 3/A for 1,500,000 Shares of Common Stock
("Amended Warrant"), in the form attached hereto as Exhibit "A"
to purchase 1.5 million shares of Applied's common stock, which
Amended Warrant will provide for an exercise price per share of
Applied common stock subject to such warrant of $1.50.
Provided,
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however, that the terms of the Amended Warrant shall be adjusted
to reflect a value thereof not to exceed the sum of Three
Hundred Thousand ($300,000) Dollars if, during the 1998 audit
by Applied's external auditors, they determine that the value
of the Amended Warrant exceeds Three Hundred Thousand
($300,000) Dollars. In that event, Environmental shall have the
option to either accept the adjustment to the terms of the
Amended Warrant or void it and in lieu thereof reinstate it
with the original Warrant for the Purchase of Shares of Common
Stock No. 3/A for 1,500,000 Shares of Common Stock before it
was modified by the Amended Warrant.
(e) Subject to the provisions of section 3 below, Applied will
assign and does hereby assign to Environmental, and
Environmental hereby accepts assignment of, that certain
account receivable in the amount of Three Hundred Fifty-Seven
Thousand ($357,000) Dollars owed to Applied by Separation (the
"Separation Receivable") pursuant to that certain agreement
dated the day of , 1997 by and between Applied
and Separation, which amount represents payment due through the
Effective Date.
All such transactions will be effective as of September 28, 1998 and the
repayment amount for the February 1998 Loan will be the aggregate of the
outstanding principal amount of and accrued but unpaid interest on such Loan
as of such date.
Section 2. Repayment of August 1997 Loan. Subject to the provisions of
Section 3 hereof, notwithstanding the provisions of the August Note or of any
of the other documents executed and delivered by the parties in connection
with the August 1997 Loan, the parties now agree that repayment of the August
1997 Loan will be made by the delivery by Applied to Environmental of Twenty
Thousand Three Hundred Ninety-One (20,391) shares of Applied's 6% preferred
stock. Series D (the "Series D Preferred Stock") at the rate of one (1) share
for each One Hundred ($100.00) Dollars of such debt. Such transaction will be
effective as of September 28, 1998 and the repayment amount for the August
1997 Loan will be the aggregate of the outstanding principal amount of and
accrued but unpaid interest on such Loan as of such date.
Section 3. Provisions Regarding Separation Stock and Separation Receivable.
(a) As a condition precedent to the transactions described in Sections 1
and 2 hereof, Applied shall obtain two separate fairness opinions
(collectively, the "Fairness Opinions") as to (i) the transaction described
in Section 1(a) hereof (the "First Fairness Opinion") and (ii) all other
transactions to occur in accordance with Sections 1 and 2 (the "Second
Fairness Opinion").
(b) In the event that the conclusion expressed in the First Fairness
Opinion is that the transaction described in Section 1(a) hereof is fair to
Applied then
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Environmental shall (i) tender of the Separation Stock as payment of One
Million Two Hundred Twenty-Five Thousand Dollars ($1,250,000), and (ii)
accept an assignment of the Separation Receivable as payment of Three Hundred
Fifty-Seven Thousand ($357,000) Dollars, and (iii) accept issuance of the
Series C Preferred Stock at the rate referred to in Section 1(c) hereof,
against the unpaid principal of and interest on the February 1998 Loan as of
September 28, 1998. In connection therewith, Applied will deliver to
Environmental the share certificate(s) representing ownership of the
Separation Stock and will execute and deliver to Environmental an appropriate
executed stock power.
(c) In the event that the conclusion expressed in the First Fairness
Opinion concludes that the transaction described in Section 1(a) hereof is
unfair to Applied because the lowest range of the value of the Separation
Stock, as determined by the First Fairness Opinion, exceeds the highest range
of the value of the debt referred to in section 1(c) hereof, as determined by
the First Fairness Opinion, Environmental shall have the option, exercisable
by delivery of written notice of its election under this Section 3(c)
delivered to Applied not later than five (5) days following Environmental's
receipt of the determination of the First Fairness Opinion, either
(i) To accept tender of (A) the Separation Receivable as payment
against Three Hundred Fifty-Seven Thousand ($357,000) Dollars
of unpaid principal of the February 1998 Loan as of
September 28, 1998, (B) the Separation Stock, valued at 110% of
the lowest value within the range of value as established by the
First Fairness Opinion as payment of a corresponding equal amount
of the Outstanding Amount of the February, 1998 Loan valued at
the highest value within the range of value as established by the
First Fairness Opinion, and (C) accept tender of Series C
Preferred Stock in such amount as is necessary to repay
Environmental for the balance of the unpaid Outstanding Amount of
the February 1998 Loan pursuant to Section (1) hereof.
(ii) In lieu thereof, (A) to reject assignment of the Separation
Receivable and to extend the maturity date of the One Million One
Hundred Fifty-Five Thousand Five Hundred Eighty-One ($1,155,581)
Dollars of unpaid principal and Ninety-Four Thousand Four Hundred
Nineteen ($94,419) Dollars of unpaid interest of the February 1998
Loan until March 31, 2000 by the execution and delivery of an
Amended And Restated Promissory Note in the form attached hereto
as Exhibit B, (B) to receive a pledge of the Separation Stock as
security for the February 1998 Loan, as amended, in connection
with which the parties will execute and deliver a Stock Pledge
Agreement in the form attached hereto as Exhibit C, and (C) to
receive an option to purchase the Separation Stock for the Fair
Value for a period of three years following the
4
<PAGE>
Effective Date, in connection with which the parties will
execute a Stock Option Agreement in the form attached hereto
as Exhibit D.
Section 4. Provisions Regarding Series B Preferred Stock. The Series B
Preferred Stock will have the terms and conditions set forth in the Series B
Preferred Stock Designation, the form of which is attached hereto as Exhibit E.
Section 5. Provisions Regarding Series C Preferred Stock. The Series C
Preferred Stock will have the terms and conditions set forth in the Series C
Preferred Stock Designation, the form of which is attached hereto as Exhibit F.
Section 6. Provisions Regarding Series D Preferred Stock. The Series D
Preferred Stock will have the terms and conditions set forth in the Series D
Preferred Stock Designation, the form of which is attached hereto as Exhibit G.
Section 7. Provisions Regarding Registration Rights. The parties agree
that, simultaneously with the execution and delivery of this Agreement, they
will execute and deliver a Registration Rights Agreement in the form attached
as Exhibit H.
Section 8. Representations and Warranties of Applied.
Applied represents and warrants to Environmental as follows:
8.1 Due Incorporation. Applied is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware; it has
the corporate power and lawful authority to own, lease and operate its
assets, properties and business and to carry on its business, all as now
conducted. Applied is qualified to transact business in such jurisdictions
other than the State of Delaware as the conduct of its business requires.
8.2 Validity. This Agreement constitutes the legal, valid and binding
obligation of Applied enforceable against it in accordance with its terms
except as such enforcement may be limited by bankruptcy, insolvency or other
laws of general application relating to or affecting creditors' rights or by
general principles of equity limiting the availability of equitable remedies.
8.3 Outstanding Stock. The authorized and issued and outstanding shares
of the capital stock of Applied are as set forth in Applied's reports filed
pursuant to the Securities Exchange Act of 1934, as amended. All issued
shares of such capital stock are duly authorized, legally and validly issued,
fully paid and nonassessable, and free of any liens or encumbrances. Applied
does not have any other class of stock authorized or outstanding.
8.4 Outstanding Options, Warrants, etc. Except as set forth on Schedule
8.4, there are no outstanding options, warrants, convertible securities,
subscriptions or other agreements, commitments or rights of any nature to
acquire any securities of Applied.
5
<PAGE>
8.5 No Liens. Applied owns outright and has good and marketable title
to all of its assets, properties and business, including without limitation
the Separation Shares, except such liens or encumbrances as are disclosed on
Schedule 8.5 hereof.
8.6 No Breach. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
breach of any of the terms or conditions of, or constitute a default under,
the Certificate of Incorporation or By-Laws of Applied, or of any lease,
mortgage, bond, indenture or material agreement, franchise or other agreement
or instrument to which Applied is a party or by which it or any of its assets
or properties are bound.
Section 9. Covenants of Applied. Applied hereby makes the following
promises to Environmental:
9.1 Fairness Opinions. Promptly following the execution and delivery
hereof by the parties, Applied will locate and retain a professional to
render the Fairness Opinions. The identity and qualification of, and terms of
remuneration to, such professional shall be reasonably acceptable to
Environmental. The cost of obtaining the Fairness Opinions shall be borne by
Applied. The Fairness Opinions shall be obtained as soon as possible
following the execution and delivery hereof and in no event later than
October 31, 1998. Applied will use its reasonable best efforts to cause
Separation to provide such information as such professional reasonably may
require in order to render such opinions. In the event that Applied fails to
procure and deliver the First Fairness Opinion by October 31, 1998, the One
Million One Hundred Fifty-Five Thousand Five Hundred Eighty-One ($1,155,581)
Dollars of unpaid principal and Ninety-Four Thousand Four Hundred Nineteen
($94,419) Dollars of unpaid interest of the February 1998 Loan (calculated as
of September 28, 1998) shall be due and payable according to the February
Note.
9.2 Corporate Action. Applied will take all corporate action necessary
to enable Applied to perform fully its obligations under this Agreement,
including without limitation any that may be required by the American Stock
Exchange on which Applied's common stock is listed.
Section 10. Publicity and Reporting Obligations. The parties will agree
upon a joint announcement of the transactions contemplated to occur pursuant
to this Agreement and shall report under the Securities and Exchange Act of
1934 of the execution and delivery of this Agreement and its substance in
accordance with such announcement.
Section 11. Merger of Prior Agreements. This Agreement contains the sole
and entire agreement and understanding of the parties with respect to the
subject matter hereof. Any and all prior discussions, negotiations,
commitments and understandings relating thereto are hereby merged herein.
This Agreement cannot be changed or modified orally, but only by a writing
signed by parties hereto.
Section 12. Benefits; Assignment. The covenants and agreements herein
contained shall inure to the benefit of and be binding upon the parties
hereto and their
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<PAGE>
respective executors, administrators, heirs, successors and assigns. Without
limiting the generality of the forgoing, Environmental may assign or
otherwise transfer all or any part of this Agreement or the rights conferred
herein.
Section 13. Captions. The captions of the sections of this Agreement are
made for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
Section 14. Applicable Law. This Agreement shall be governed by the laws
of the State of Delaware.
Section 15. Severability. If any term or provision of this Agreement
shall be held invalid or unenforceable, at the option of Environmental, this
Agreement may then be terminated or the remainder of this Agreement shall not
be affected by such invalidity or unenforceability.
IN WITNESS WHEREOF, the parties hereto have executed, sealed and
delivered this Agreement as of the day and year first above written.
ATTEST: COMMODORE APPLIED TECHNOLOGIES, INC.
By: /s/ Gregg M. Rosen By: /s/ Paul E. Hannesson
----------------------------- --------------------------------
Gregg M. Rosen, Assistant Paul E. Hannesson, President and CEO
Secretary
ATTEST: COMMODORE ENVIRONMENTAL SERVICES, INC.
By: /s/ Melissa Berkowitz By: /s/ Bentley J. Blum
----------------------------- --------------------------------
Melissa Berkowitz, Secretary Bentley J. Blum, Chairman
7
<PAGE>
EXHIBIT LIST
Description Exhibit
- ----------- -------
Amended Warrant A
Amended and Restated Promissory Note B
Stock Pledge Agreement C
Stock Option Agreement D
Preferred Stock Designation, Series B E
Preferred Stock Designation, Series C F
Preferred Stock Designation, Series D G
Registration Rights Agreement H
8
<PAGE>
SCHEDULE LIST
-------------
<TABLE>
<CAPTION>
Description Schedule
- ----------- --------
<S> <C>
Stock Options 8.4
Liens 8.5
</TABLE>
9
<PAGE>
Exhibit 99.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement, dated as of September 28, 1998
(this "Agreement"), between COMMODORE APPLIED TECHNOLOGIES, INC., a Delaware
corporation (the "Company"), and COMMODORE ENVIRONMENTAL SERVICES, INC., a
Delaware corporation (the "Holder").
RECITALS
WHEREAS, it is a condition precedent to the obligations of the Holder
under that certain Debt Repayment Agreement, dated of even date herewith (the
"Debt Repayment Agreement"), that the Company grant certain registration rights
in respect of the Restricted Securities (as defined herein);
WHEREAS, the Company and the Holder desire to evidence such
registration rights by entering into this Agreement; and
WHEREAS, capitalized terms used herein and not otherwise defined herein
are used as defined in the Debt Repayment Agreement.
AGREEMENT
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. The following terms, as used herein, have the following
meanings.
"Board" means the Board of Directors of the Company.
"Business Day" means any day except a Saturday, Sunday or other day on
which banks in New York are authorized by law to close.
"Closing Date" means the date on which the completion of the
transactions specified in the Debt Repayment Agreement shall occur.
"Commission" means the U.S. Securities and Exchange Commission.
"Common Stock" means the common stock, par value $.001 per share, of
the Company.
"Company Registration Statement" means the Registration Statement of
the Company relating to the registration for sale of shares of the Company's
Common Stock contemplated by Section 2.3, including the Prospectus included
therein, all amendments and supplements thereto
<PAGE>
(including post-effective amendments) and all exhibits and material incorporated
by reference therein.
"Debt Repayment Agreement" has the meaning given to it in the recitals
to this Agreement.
"Effective Time" means the date of effectiveness of any Registration
Statement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"NASD" means the National Association of Securities Dealers, Inc.
"Person" means an individual, corporation, partnership, association,
trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement and by all
other amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
The term "Register" means to register under the Securities Act and
applicable state securities laws for the purpose of effecting a public sale of
securities.
"Registration Statement" means the Company Registration Statement
and/or the Shelf Registration Statement.
"Restricted Securities" means any Securities until (i) a registration
statement covering such Securities has been declared effective by the Commission
and such Securities have been disposed of pursuant to such effective
registration statement, (ii) such Securities are sold under circumstances in
which all the applicable conditions of Rule 144 (or any similar provisions then
in force) under the Securities Act are met, or such Securities may be sold
pursuant to Rule 144(k) (or any similar provision then in force) under the
Securities Act, and are freely tradable after such sale by the transferee, (iii)
such Securities are otherwise transferred, the Company has delivered a new
certificate or other evidence of ownership for such Securities not bearing a
legend restricting further transfer and such Securities may be resold without
registration under the Securities Act, or (iv) such Securities shall have ceased
to be outstanding.
"Securities" means, collectively, (i) shares of Common Stock issuable
upon conversion of shares of the Company's Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock held by the Holder and (ii)
8,198,144 shares of Common Stock held by the Holder.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration Statement" means the Registration Statement of the
Company relating to the shelf registration for resale of Restricted Securities
contemplated by Section 2.2 herein,
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<PAGE>
including the Prospectus included therein, all amendments and supplements
thereto (including post-effective amendments) and all exhibits and material
incorporated by reference therein.
As used in this Agreement, words in the singular include the plural,
and in the plural include the singular.
ARTICLE 2
REGISTRATION RIGHTS
2.1 Securities Subject to this Agreement.
(a) The Securities entitled to the benefits of this Agreement are the
Restricted Securities, but only for so long as they remain Restricted
Securities.
(b) A Person is deemed to be a holder of Restricted Securities (each, a
"Holder") whenever such Person is the registered holder of such Restricted
Securities on the books and records of the Company or its transfer agent.
2.2 Demand Registration.
(a) Subject to the limitations set forth in this Agreement, at any time
and from time to time (without limitation other than the total number of
Registrable Securities) on or after November 15, 1998, the Holder may request
the Company to register under the Securities Act, all or any portion of its
Restricted Securities for sale on terms and conditions comparable to those
normally applicable to offerings of equity securities in similar circumstances
as determined by the Company on Form S-1, Form S-3, if available, or such other
form as the Company deems appropriate; provided, however, that the request for
registration must be for a Shelf Registration Statement pursuant to Rule 415
under the Securities Act.
(b) In connection with the Shelf Registration Statement, the Company
shall comply with all the provisions of Section 2.4 below and shall use its
reasonable efforts to effect such registration to permit the sale of the
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof (as indicated in the information furnished to
the Company pursuant to Section 2.2(c)). Subject to Section 2.2(d), the Company
shall use its best efforts to keep each such Shelf Registration Statement
continuously effective, supplemented and amended as required by the provisions
of Section 2.2(d) to the extent necessary to ensure that it is available for
resales of Restricted Securities by the Holder, and to ensure that it conforms
with the requirements of this Agreement, the Securities Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of 24 months from the Effective Time or such longer period as required by
Section 2.2(d) or such shorter period that will terminate when all the
securities covered by the Shelf Registration Statement have been sold pursuant
to the Shelf Registration Statement or otherwise cease to be Restricted
Securities (the "Effective Period"). Upon the occurrence of any event that would
cause any Shelf Registration Statement or the Prospectus contained therein (i)
to contain a material misstatement or omission or (ii) not to be
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<PAGE>
effective and usable for sale or resale of Restricted Securities during the
period required by this Agreement, the Company shall file promptly an
appropriate amendment to such Shelf Registration Statement or the related
Prospectus or any document incorporated therein by reference, in the case of
clause (i), correcting any such misstatement or omission, and, in the case of
either clause (i) or (ii), use its reasonable efforts to cause such amendment to
be declared effective and such Registration Statement and the related Prospectus
to become usable for its intended purpose(s) as soon as practicable thereafter.
(c) The Holder may not include any of its Restricted Securities in a
Shelf Registration Statement pursuant to this Agreement unless and until such
Holder furnishes to the Company in writing, within 30 Business Days after
receipt of a written request therefor, such information specified in Item 507 of
Regulation S-K under the Securities Act and such other information as the
Company may reasonably request for use in connection with a Shelf Registration
Statement or Prospectus or preliminary Prospectus included therein and in any
application to the NASD. The Holder agrees to furnish promptly to the Company
all information required to be disclosed in order to make the information
previously furnished to the Company by such Holder not materially misleading.
2.3 Piggyback Registration.
(a) At any time that the Company proposes to file a Company
Registration Statement, either for its own account or for the account of a
stockholder or stockholders, the Company shall give the Holder written notice of
its intention to do so and of the intended method of sale (the "Registration
Notice") within a reasonable time prior to the anticipated filing date of the
Company Registration Statement effecting such registration (but in no event less
than 10 days before the anticipated filing date). The Holder may request
inclusion of any Restricted Securities in such Company Registration Statement by
delivering to the Company, within 10 Business Days after receipt of the
Registration Notice, a written notice (the "Piggyback Notice") stating the
number of Restricted Securities proposed to be included and that such shares are
to be included in any underwriting only on the same terms and conditions as the
shares of Common Stock otherwise being sold through underwriters under such
Company Registration Statement. The Company shall use its best efforts to cause
all Restricted Securities specified in the Piggyback Notice to be included in
the Company Registration Statement and any related offering, all to the extent
requisite to permit the sale by the Holder of such Restricted Securities in
accordance with the method of sale applicable to the other shares of Common
Stock included in such Company Registration Statement; provided, however, that
if, at any time after giving the Registration Notice and prior to the Effective
Time of the Company Registration Statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of such securities, the Company may, at its election, give
written notice of such determination to the Holder and, thereupon:
(i) in the case of a determination not to register, shall be
relieved of its obligation to register any Restricted Securities in
connection with such registration, and
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<PAGE>
(ii) in the case of a delay in registering, shall be permitted
to delay registering any Restricted Securities for the same period as
the delay in registering such other securities.
(b) The Company's obligation to include Restricted Securities in a
Company Registration Statement pursuant to Section 2.3(a) shall be subject to
the following limitations:
(i) The Company shall not be obligated to include any
Restricted Securities in a registration statement filed on Form S-4,
Form S-8 or such other similar successor forms then in effect under the
Securities Act.
(ii) If a Company Registration Statement involves an
underwritten offering and the managing underwriter advises the Company
in writing that, in its opinion, the number of securities requested to
be included in such Registration Statement exceeds the number which can
be sold in such offering without adversely affecting the offering, the
Company will include in such Registration Statement the number of such
Securities which the Company is so advised can be sold in such offering
without adversely affecting the offering, determined as follows:
(A) first, the securities proposed by the Company to be sold
for it own account, and
(B) second, any Restricted Securities requested to be
included in such registration and any other securities of the
Company pro rata among the holders thereof requesting such
registration on the basis of the number of shares of such
securities requested to be included by such holders.
(c) The Holder may not include any of its Restricted Securities in a
Company Registration Statement pursuant to this Agreement unless and until such
Holder furnishes to the Company in writing, within 30 Business Days after
receipt of a written request therefor, such information specified in Item 507 of
Regulation S-K under the Securities Act and such other information as the
Company may reasonably request for use in connection with the Registration
Statement or Prospectus or preliminary Prospectus included therein and in any
application to the NASD. The Holder agrees to furnish promptly to the Company
all information required to be disclosed in order to make all information
previously furnished to the Company by such Holder not materially misleading.
(d) The Company covenants not to grant any such piggyback registration
rights which would permit any holder of Common Stock to have piggyback
registration rights prior to, or on parity with, those of the Holder.
2.4 Registration Procedures. In connection with any Registration Statement
and any Prospectus required by this Agreement to permit the sale or resale of
Restricted Securities, the Company shall:
5
<PAGE>
(a) prepare and file with the Commission such amendments and
post-effective amendments to such Registration Statement as may be necessary to
keep such Registration Statement effective (i) if such Registration Statement is
a Company Registration Statement, until the earlier of such time as all of such
securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such Company
Registration Statement or (ii) if such Registration Statement is a Shelf
Registration Statement, for the applicable period set forth in Section 2.2(b)
herein; cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under the
Securities Act, and to comply fully with the applicable provisions of Rules 424
and 430A, as applicable, under the Securities Act in a timely manner; and comply
with the provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable period
in accordance with the intended method or methods of distribution by the sellers
thereof set forth in such Registration Statement or supplement or the
Prospectus;
(b) promptly (and in respect of events covered by clause (i) hereof, on
the same day as the Company shall receive notice of effectiveness) advise the
Holder and, if requested by such Persons, to confirm such advice in writing, (i)
when the Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and when the same has become effective, (ii) of any request by the
Commission for post-effective amendments to such Registration Statement or
post-effective amendments to such Registration Statement or post-effective
amendments or supplements to the Prospectus or for additional information
relating thereto, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of any such Registration Statement under the
Securities Act or of the suspension by any state securities commission of the
qualification of the Restricted Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of the preceding
purposes, and (iv) of the existence of any fact or the happening of any event
that makes any statement of a material fact made in any such Registration
Statement, the related Prospectus, any amendment or supplement thereto, or any
document incorporated by reference therein untrue, or that requires the making
of any additions to or changes in any such Registration Statement or the related
Prospectus in order to make the statements therein not misleading. If at any
time the Commission shall issue any stop order suspending the effectiveness of
such Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption from qualification of the Restricted Securities under state securities
or Blue Sky laws, the Company shall use its reasonable efforts to obtain the
withdrawal or lifting of such order at the earliest possible time;
(c) promptly furnish to the Holder, and each underwriter, if any,
without charge, at least one conformed copy of any Registration Statement, as
first filed with the Commission, and of each amendment thereto, including all
documents incorporated by reference therein and all exhibits (including exhibits
incorporated therein by reference) and such other documents as such Holder may
reasonably request;
(d) deliver to the Holder, and each underwriter, if any, without
charge, as many copies of the Prospectus (including each preliminary prospectus)
and any amendment or supplement thereto as such person reasonably may request.
6
<PAGE>
(e) enter into such customary agreements and take all such other
reasonable action in connection therewith (including those reasonably requested
by the Holder or the underwriter(s), if any) required in order to expedite or
facilitate the disposition of such Restricted Securities pursuant to such
Registration Statement, including, but not limited to, dispositions pursuant to
an underwritten registration, and in such connection:
(i) make such representations and warranties to the Holder and
underwriter(s), if any, in form, substance and scope as are customarily
made by issuers to underwriters in underwritten offerings (whether or
not sales of securities pursuant to such Registration Statement are to
be to an underwriter(s)) and confirm the same if and when requested;
(ii) obtain opinions of counsel to the Company addressed to
the Holder and underwriter(s), if any, covering the matters customarily
covered in opinions requested in underwritten offerings (whether or not
sales of securities pursuant to such Registration Statement are to be
made to an underwriter(s)) and dated the Effective Time of any
Registration Statement (and, in the case of any underwritten sale of
securities pursuant to such Registration Statement, each closing date
of sales to the underwriter(s) pursuant thereto);
(iii) use reasonable efforts to obtain comfort letters dated
the Effective Time of any Registration Statement (and, in the case of
any underwritten sale of securities pursuant to such Registration
Statement, each closing date of sales to the underwriter(s) pursuant
thereto) from the independent certified public accountants of the
Company addressed to the Holder and underwriter, if any, such letters
to be in customary form and covering matters of the type customarily
covered in comfort letters in connection with underwritten offerings
(whether or not sales of securities pursuant to such Registration
Statement are to be made to an underwriter(s));
(iv) provide for the indemnification provisions and procedures
of Section 2.8 hereof with respect to the Holder and the
underwriter(s), if any, and;
(v) deliver such documents and certificates as may be
reasonably requested by the Holder or the underwriter(s), if any, and
which are customarily delivered in underwritten offerings (whether or
not sales of securities pursuant to such Registration Statement are to
be made to an underwriter(s), with such documents and certificates to
be dated the Effective Time of any Registration Statement.
The actions required by clauses (i) through (v) above shall be done at
each closing under such underwriting or similar agreement, as and to the extent
required thereunder, and if at any time the representations and warranties of
the Company contemplated in clause (i) above cease to be true and correct, the
Company shall so advise the underwriter(s), if any, and the Holder promptly,
and, if requested by such Person, shall confirm such advice in writing;
7
<PAGE>
(f) prior to any public offering of Restricted Securities, cooperate
with the Holder, the underwriter(s), if any, and their respective counsel in
connection with the registration and qualification of the Restricted Securities
under the securities or Blue Sky laws of such U.S. jurisdictions as the Holder
or underwriter(s), if any, may reasonably request in writing by the time any
Registration Statement is declared effective by the Commission, and do any and
all other acts or filings necessary or advisable to enable disposition in such
U.S. jurisdictions of the Restricted Securities covered by any Registration
Statement and to file such consents to service of process or other documents as
may be necessary in order to effect such registration or qualification;
provided, however, that the Company shall not be required to register or qualify
as a foreign corporation in any jurisdiction where it is not then so qualified
or as a dealer in securities in any jurisdiction where it would not otherwise be
required to register or qualify but for this Section 2.4, or to take any action
that would subject it to the service of process in suits or to taxation, in any
jurisdiction where it is not then so subject;
(g) in connection with any sale of Restricted Securities that will
result in such securities no longer being Restricted Securities, cooperate with
the Holder and the underwriter(s), if any, to facilitate the timely preparation
and delivery of certificates representing Restricted Securities to be sold and
not bearing any restrictive legends; and enable such Restricted Securities to be
in such denominations and registered in such names as the Holder or the
underwriter(s), if any, may request at least two (2) Business Days prior to any
sale of Restricted Securities made by such underwriters;
(h) use its reasonable efforts to cause the disposition of the
Restricted Securities covered by any Registration Statement to be registered
with or approved by such other U.S. governmental agencies or authorities as may
be necessary to enable the seller or sellers thereof or the underwriter(s), if
any, to consummate the disposition of such Restricted Securities, subject to the
proviso contained in Section 2.4(f);
(i) if any fact or event contemplated by Section 2.4(b) shall exist or
have occurred, prepare a supplement or post-effective amendment to any
Registration Statement or related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statement therein not misleading;
(j) cooperate and assist in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the rules and
regulations of the NASD, and use its reasonable efforts to cause any
Registration Statement to become effective and approved by such U.S.
governmental agencies or authorities as may be necessary to enable the Holder to
consummate the disposition of such Restricted Securities;
(k) otherwise use its reasonable efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to its
security holders with regard to such Registration Statement, as soon as
practicable, a consolidated earnings statement meeting the requirements of Rule
158 (which need not be audited) for the twelve-month period (i) commencing
8
<PAGE>
at the end of any fiscal quarter in which Restricted Securities are sold to the
underwriter in a firm or best efforts underwritten offering or (ii) if not sold
to an underwriter in such an offering, beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of any
Registration Statement;
(l) provide a CUSIP number for all Restricted Securities not later than
the Effective Time of any Registration Statement;
(m) use its best efforts to qualify for inclusion, not later than the
Effective Time of such Registration Statement, all Restricted Securities covered
by such Registration Statement on the American Stock Exchange, or any other
trading market on which the Common Stock of the Company is then admitted for
trading, and
(n) provide promptly to Holder upon request each document filed with
the Commission pursuant to the requirements of Section 12 and Section 14 of the
Exchange Act.
The Holder agrees by acquisition of a Restricted Security that, upon
receipt of any notice from the Company of the existence of any fact of the kind
described in Section 2.4(b)(iv) or the commencement of a Blackout Period, such
Holder will forthwith discontinue disposition of Restricted Securities pursuant
to any Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 2.4(i), or until it
is advised in writing, in accordance with the notice provisions of Section 4.3
herein (the "Advice"), by the Company that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental filings that
are incorporated by reference in the Prospectus. If so directed by the Company,
the Holder will deliver to the Company all copies, other than permanent file
copies, then in such Holder's possession, of the Prospectus covering such
Restricted Securities that was current at the time of receipt of such notice. In
the event the Company shall give any such notice, the time period regarding the
effectiveness of the Shelf Registration Statement set forth in Section 2.2(b)
shall be extended by the number of days during the period from and including the
date of the giving of such notice pursuant to Section 2.4(b)(iv) or the
commencement of a Blackout Period to and including the date when the Holder
shall have received the copies of the supplemented or amended Prospectus
contemplated by Section 2.4(i) or shall have received (in accordance with the
notice provisions of Section 4.3) the Advice.
2.5 Preparation; Reasonable Investigation. In connection with preparation
and filing of each Registration Statement under the Securities Act, the Company
will give the Holder, its underwriter, if any, and their respective counsel and
accountants, the opportunity to participate in the preparation of such
Registration Statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give to
them access to its books and records and such opportunities to discuss the
business, finances and accounts of the Company and its subsidiaries with its
officers, directors and the independent public accountants who have certified
its financial statements as shall be necessary, in the reasonable opinion of the
Holder and such underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.
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<PAGE>
2.6 Certain Rights of the Holder. The Company will not file any
registration statement under the Securities Act which refers to the Holder by
name or otherwise without the prior approval of such Holder, which consent shall
not be unreasonably withheld or delayed.
2.7 Registration Expenses.
All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Holder, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses (including filings made with the NASD
and reasonable counsel fees in connection therewith); (ii) all reasonable fees
and expenses of compliance with federal securities and state Blue Sky or
securities laws (including all reasonable fees and expenses of one counsel to
the underwriter(s) in any underwriting) in connection with compliance with state
Blue Sky or securities laws for up to 10 states; (iii) all expenses of printing,
messenger and delivery services and telephone calls; (iv) all fees and
disbursements of counsel for the Company; and (v) all fees and disbursements of
independent certified public accountants of the Company (including the expenses
of any special audit and comfort letters required by or incident to such
performance), but excluding from this paragraph, fees and expenses of counsel to
the underwriter(s), if any, unless otherwise set forth herein.
2.8 Indemnification; Contribution.
(a) The Company agrees to indemnify and hold harmless (i) the Holder,
(ii) each other Person who participates as an underwriter in the offering or
sale of such securities, (iii) each person, if any, who controls (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
the Holder or underwriter (any of the persons referred to in this clause (iii)
being hereinafter referred to as a "controlling person") and (iv) the respective
officers, directors, partners, employees, representatives and agents of the
Holder or underwriter or any controlling person (any person referred to in
clause (i), (ii), (iii) or (iv) may hereinafter be referred to as an
"indemnified Person"), to the fullest extent lawful, from and against any and
all losses, claims, damages, liabilities, judgments or expenses, joint or
several (or actions or proceedings, whether commenced or threatened, in respect
thereof) (collectively, "Claims"), to which such indemnified Person may become
subject under either Section 15 of the Securities Act or Section 20 of the
Exchange Act or otherwise, insofar as such Claims arise out of or are based
upon, or are caused by any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement or Prospectus (or any
amendment or supplement thereto), or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or a violation by the Company of the
Securities Act or any state securities law, or any rule or regulation
promulgated under the Securities Act or any state securities law, or any other
law applicable to the Company relating to any such registration or
qualification, except insofar as such losses, claims, damages, liabilities,
judgments or expenses of any such indemnified Person; (x) are caused by any such
untrue statement or omission or alleged untrue statement or omission that is
based upon information relating to such indemnified Person furnished in writing
to the Company by or on behalf of any of such indemnified Person expressly for
use therein; (y) with respect to the preliminary Prospectus, result from the
fact that the Holder sold Securities to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the
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Prospectus, as amended or supplemented, if the Company shall have previously
furnished copies thereof to the Holder in accordance with this Agreement and
said Prospectus, as amended or supplemented, would have corrected such untrue
statement or omission; or (z) as a result of the use by an indemnified Person of
any Prospectus when, upon receipt of a Blackout Notice or a notice from the
Company of the existence of any fact of the kind described in Section
2.4(b)(iv), the indemnified Person or the Holder was not permitted to do so.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any indemnified Person and shall survive
the transfer of such securities by such Holder.
In case any action shall be brought or asserted against any of the
indemnified Persons with respect to which indemnity may be sought against the
Company, such indemnified Person shall promptly notify the Company and the
Company shall assume the defense thereof. Such indemnified Person shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of the indemnified Person unless (i) the employment of such counsel
shall have been specifically authorized in writing by the Company, (ii) the
Company shall have failed to assume the defense and employ counsel or (iii) the
named parties to any such action (including any implied parties) include both
the indemnified Person and the Company and the indemnified Person shall have
been advised in writing by its counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the Company (in which case the Company shall not have the right to
assume the defense of such action on behalf of the indemnified Person), it being
understood, however, that the Company shall not, in connection with such action
or similar or related actions or proceedings arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) at
any time for all the indemnified Persons, which firm shall be (x) designated by
such indemnified Persons and (y) reasonably satisfactory to the Company. The
Company shall not be liable for any settlement of any such action or proceeding
effected without the Company's prior written consent, which consent shall not be
withheld unreasonably, and the Company agrees to indemnify and hold harmless any
indemnified Person from and against any loss, claim, damage, liability, judgment
or expense by reason of any settlement of any action effected with the written
consent of the Company. The Company shall not, without the prior written consent
of each indemnified Person, settle or compromise or consent to the entry of
judgment on or otherwise seek to terminate any pending or threatened action,
claim, litigation or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not any indemnified Person is a
party thereto), unless such settlement, compromise, consent or termination
includes an unconditional release of each indemnified Person from all liability
arising out of such action, claim litigation or proceeding.
(b) The Holder agrees to indemnify and hold harmless the Company and
its directors, officers and any person controlling (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) the Company,
and the respective officers, directors, partners, employees, representatives and
agents of each person, to the same extent as the foregoing indemnity from the
Company to each of the indemnified Persons, but only (i) with respect to actions
based on information relating to the Holder furnished in writing by or on behalf
of such Holder expressly for use in any Registration Statement or Prospectus,
and (ii) to the extent of the
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gross proceeds, if any, received by such Holder from the sale or other
disposition of its Restricted Securities covered by such Registration Statement.
In case any action or proceeding shall be brought against the Company or its
directors or officers or any such controlling person in respect of which
indemnity may be sought against the Holder, such Holder shall have the rights
and duties given the Company in Section 2.8(a) (except that the Holder may but
shall not be required to assume the defense thereof), and the Company or its
directors or officers or such controlling person shall have the rights and
duties given to the Holder by Section 2.8(a).
(c) If the indemnification provided for in this Section 2.8 is
unavailable to an indemnified party under Section 2.8(a) or (b) (other than by
reason of exceptions provided in those Sections) in respect of any losses,
claims, damages, liabilities, judgments or expenses referred to therein, then
each applicable indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims damages, liabilities, judgments or expenses
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Holder on the other hand from
sale of Restricted Securities or (ii) if such allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company and the Holder in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities, judgments or expenses, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of the
Holder on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Holder and the parties relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid to a party as a result of the losses,
claims, damages, liabilities judgments and expenses referred to above shall be
deemed to include, subject to the limitations set forth in the second paragraph
of Section 2.8(a), any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any action or claim.
The Company and the Holder agree that it would not be just and
equitable if contribution pursuant to this Section 2.8(c) were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 2.8(c) the Holder (and
its related indemnified Persons) shall not be required to contribute, in the
aggregate, any amount in excess of the amount by which the dollar amount of
proceeds received by such Holder upon the sale of the Restricted Securities
exceeds the amount of any damages which such Holder has otherwise been required
to pay by reason of such untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentations (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
The indemnity, and contribution provisions contained in this
Section 2.8 are in addition to any liability which the indemnifying person may
otherwise have to the indemnified persons referred to above.
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2.9 Participation in Underwritten Registrations. The Holder may not
participate in any underwritten registration hereunder unless such Holder (a)
garees to sell such Holder's Restricted Securities on the basis provided in
any underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements and (b) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up letters and other documents required under the terms of such
underwriting arrangements.
2.10 Selection of Underwriters. The Holder may sell its Restricted
Securities in an underwritten offering. In any such underwritten offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holder if such registration is
pursuant to the Shelf Registration Statement, and by the Company if such
registration is pursuant to a Company Registration Statement; provided, however,
that such investment bankers and managers must be reasonably satisfactory to the
Company or the Holder, respectively. Such investment bankers and managers are
referred to herein as the "underwriters".
ARTICLE 3
RULE 144
3.1 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may permit the sale of
restricted securities (as that term is used in Rule 144 under the Securities
Act) to the public without registration, the Company agrees to use its best
efforts to:
(a) make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act, at all times;
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) so long as the Holder owns any Restricted Securities, furnish to
the Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 and of the Securities Act
and Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed as the Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing the Holder to sell any such Restricted Securities without
registration.
ARTICLE 4
MISCELLANY
4.1 Entire Agreement. This Agreement, together with the Debt Repayment
Agreement, constitutes the entire agreement between the parties with respect to
the subject matter hereof and
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supersedes all prior agreement and understandings, both oral and written,
between the parties with respect to the subject matter hereof.
4.2 Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent holders of Restricted Securities; provided, however, that this
Agreement shall not inure to the benefit of or be binding upon a successor or
assign of the Holder unless and to the extent such successor or assign
acquired Restricted Securities from the Holder at a time when the Holder
could not transfer such Restricted Securities pursuant to any Registration
Statement or pursuant to Rule 144 under the Securities Act as contemplated by
clause (ii) of the definition of Restricted Securities.
4.3. Notices. All notices and other communications given or made pursuant
hereto or pursuant to any other agreement among the parties, unless otherwise
specified, shall be in writing and shall be deemed to have been duly given or
made if sent by telecopy (with confirmation in writing), delivered personally or
by overnight courier or sent by registered or certified mail (postage prepaid,
return receipt requested) to the parties at the telecopy number, if any, or
address set forth below or at such other addresses as shall be furnished by the
parties by like notice. Notices sent by telecopier shall be effective when
receipt is acknowledged, notices delivered personally or by overnight courier
shall be effective upon receipt and notices sent by registered or certified mail
shall be effective three days after mailing:
if to the Holder: Commodore Environmental Services, Inc.
150 East 58th Street, Suite 3800
New York, New York 10155
Attention: Bentley J. Blum
Fax: (212) 753-0731
Phone (212) 308-5800
with copies to: Sable, Makoroff & Gusky, P.C.
Frick Building, Seventh Floor
Pittsburgh, PA 15219
Attention: Gregg M. Rosen, Esq.
Fax: (412) 281-2859
Telephone: (412) 471-4996
with copies to: Greenberg Traurig
The MetLife Building
200 Park Avenue
New York, New York 10166
Attention: Anthony J. Marsico, Esq.
Fax: (212) 801-6400
Telephone: (212) 801-9362
-and-
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if to the Company: Commodore Applied Technologies, Inc.
150 East 58th Street, Suite 3800
New York, New York 10155
Attention: Paul E. Hannesson
Fax: (212) 753-0731
Phone (212) 308-5800
with copies to: Sable, Makoroff & Gusky, P.C.
Frick Building, Seventh Floor
Pittsburgh, PA 15219
Attention: Gregg M. Rosen, Esq.
Fax: (412) 281-2859
Telephone: (412) 471-4996
with copies to: Greenberg Traurig
The MetLife Building
200 Park Avenue
New York, New York 10166
Attention: Anthony J. Marsico, Esq.
Fax: (212) 801-6400
Telephone: (212) 801-9362
4.4 Headings The headings contained in this Agreement are for convenience
only and shall not affect the meaning or interpretation of this Agreement.
4.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
4.6 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of New York, without giving effect to the
choice law provisions thereof.
4.7 Specific Enforcement. Each party hereto acknowledges that the remedies
at law of the other parties for a breach or threatened breach of this Agreement
would be inadequate, and, in recognition of this fact, any party to this
Agreement, without posting any bond, and in addition to all other remedies which
may be available, shall be entitled to obtain equitable relief in the form of
specific performance, a temporary restraining order, a temporary to permanent
injunction or any other equitable remedy which may then be available.
4.8 Amendment and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless the Company has obtained the
unanimous written consent of the Holders of the Restricted Securities.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
COMMODORE APPLIED TECHNOLOGIES, INC.
By: /s/ Paul E. Hannesson
-----------------------------------
Name: Paul E. Hannesson
Title: President and CEO
COMMODORE ENVIRONMENTAL SERVICES, INC.
By: /s/ Bentley J. Blum
-----------------------------------
Name: Bentley J. Blum
Title: Chairman
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Exhibit 99.3
[LOGO]
Commodore Applied Technologies, Inc.
News Release
For release: Immediate
Contact: James M. DeAngelis
Melissa C. Berkowitz
(212) 308-5800
Commodore Applied Technologies, Inc.
Completes Debt Restructuring
- Restructuring adds approximately $9 million new equity
New York, N.Y., December 31, 1998--Commodore Applied Technologies, Inc. (ASE:
CXI, CXIW), announced today that it has consummated a debt restructuring plan
with its creditor and 35% stockholder, Commodore Environmental Services, Inc.
(OTCBB: COES) following the completion of the fairness opinions.
As a result of the restructuring, CXI has repaid all of its $6,755,864 debt to
COES by exchanging the debt for (i) all of the company's shareholdings in
Commodore Separation Technologies, Inc. (NASDAQ: CXOT, CXOTP, CXOTW) as
repayment of $1,250,000 of debt; (ii) the issuance of 20,909 shares of a new 6%
Series B Convertible Preferred Stock as repayment of $2,090,870 of debt; (iii)
the issuance of 10,189 shares of a new 6% Series C Convertible Preferred Stock
as repayment of $1,018,864 of debt; (iv) the issuance of 20,391 shares of a new
6% Series D Convertible Preferred Stock as repayment of $2,039,100 of debt (v)
assignment to COES of an account receivable due to the company from CXOT in the
amount of $357,000 as repayment of $357,000 debt; and (vi) amendment of an
existing warrant owned by COES to purchase 1,500,000 shares of common stock of
the company which amendment reduced the exercise price from $10.00 to $1.50.
This sale and debt repayment plan should result in an increase of approximately
$9 million in equity on the Company's balance sheet.
Paul E. Hannesson, Chairman, President and Chief Executive Officer, and James M.
DeAngelis, Treasurer of CXI, will maintain their current management positions in
CXOT following this restructuring.
These materials contain forward-looking statements based on a series of
projections and estimates regarding economics within the company's markets, the
industries in which the company operates, the effects of legislation and
regulations, as well as business and competitive outlook.
XXXXX
