<PAGE>
As filed with the Securities and Exchange Commission on December 5, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------
COMMODORE SEPARATION TECHNOLOGIES, INC.
(Exact name of issuer as specified in its charter)
Delaware 11-3299195
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3240 Town Point Drive, Suite 200 30144
Kennesaw, Georgia (Zip Code)
(Address of Principal Executive Offices)
Commodore Separation Technologies, Inc. 1996 Stock Option Plan
(Full title of the plan)
PAUL E. HANNESSON
Chairman of the Board and Chief Executive Officer
Commodore Separation Technologies, Inc.
3240 Town Point Drive, Suite 200
Kennesaw, Georgia 30144
(Name and address of agent for service)
(770) 422-1518
(Telephone number, including area code, of agent for service)
Copies of communications to:
STEPHEN A. WEISS, ESQ.
ANTHONY J. MARSICO, ESQ.
Greenberg Traurig Hoffman
Lipoff Rosen & Quentel
153 East 53rd Street
New York, New York 10022
Tel: (212) 801-9200
Fax: (212) 223-7161
CALCULATION OF REGISTRATION FEE
================================================================================
<TABLE>
<CAPTION>
Proposed Proposed
Amount maximum maximum Amount of
Title of to be offering price aggregate registration
securities to be registered registered(1) per share offering price fee
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.001 per share . 996,689 shares(2) $4.42(3) $4,405,365.38 $1,299.58
- --------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.001 per share . 353,311 shares(4) $3.19(5) $1,127,062.00 $ 332.48
- --------------------------------------------------------------------------------------------------------------------
TOTAL: ................................. 1,350,000 shares $5,532,427.38 $1,632.06
</TABLE>
================================================================================
(1) Pursuant to Rule 416(a), the number of shares of Common Stock being
registered shall be adjusted to include any additional shares which may
become issuable as a result of stock splits, stock dividends, or similar
transactions in accordance with the anti-dilution provisions of the
Commodore Separation Technologies, Inc. 1996 Stock Option Plan (the
"Plan").
(2) Represents the aggregate number of shares issuable upon exercise of
currently outstanding options granted under the Plan.
(3) Computed in accordance with Rule 457(h) under the Securities Act of 1933,
as amended, solely for the purpose of calculating the total registration
fee. Represents the weighted average exercise price (rounded to the
nearest cent) at which the shares will be issued.
(4) Represents the aggregate number of shares underlying options presently
available for issuance under the Plan.
(5) Computed in accordance with Rules 457(c) and (h) under the Securities Act
of 1933, as amended, solely for the purpose of calculating the total
registration fee. Represents the average of the high and low prices
(rounded to the nearest cent) of the Common Stock as reported on the
Nasdaq SmallCap Market on December 1, 1997, because the exercise price at
which the shares will be issued in the future is not currently
determinable.
================================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part I of Form S-8
will be sent or given to participating employees as specified by Rule 428(b)(1)
of the Securities Act of 1933, as amended (the "Securities Act"). Such
documents are not required to be and are not filed with the Securities and
Exchange Commission either as part of this Registration Statement, or as a
prospectus or prospectus supplement pursuant to Rule 424. These documents and
the documents incorporated by reference into this Registration Statement
pursuant to Item 3 of Part II of this Registration Statement, taken together,
constitute a prospectus that meets the requirements of Section 10(a) of the
Securities Act.
The following reoffer prospectus filed as part of the Registration
Statement has been prepared in accordance with the requirements of Part I of
Form S-3 and, pursuant to General Instruction C of Form S-8, may be used by
certain officers, directors and controlling stockholders of the Company for
the resale to the public of shares of common stock, par value $.001 per share
(the "Common Stock"), of Commodore Separation Technologies, Inc. (the
"Company") to be issued to them upon exercise of options heretofore or
hereafter granted under the Commodore Separation Technologies, Inc. 1996 Stock
Option Plan. Such persons may be deemed to be in a control relationship with
the Company within the meaning of the Securities Act and the rules and
regulations of the Commission promulgated thereunder, and such shares of
Common Stock may be deemed to be "control securities" within the meaning of
General Instruction C to Form S-8.
I-1
<PAGE>
PROSPECTUS
899,189 Shares
Commodore Separation Technologies, Inc.
Common Stock
---------------------
This Prospectus relates to 899,189 shares of common stock, par value $.001
per share (the "Common Stock"), of Commodore Separation Technologies, Inc., a
Delaware corporation (the "Company"), which may be offered and sold from time
to time pursuant to this Prospectus (the "Shares") by the persons named in this
Prospectus as "Selling Stockholders" (the "Selling Stockholders"). The Selling
Stockholders will acquire the Shares upon exercise of options granted under the
Commodore Separation Technologies, Inc. 1996 Stock Option Plan (the "Plan").
See "SELLING STOCKHOLDERS."
The Shares offered hereby may be sold from time to time by the Selling
Stockholders, or by pledgees, donees, transferees or other successors in
interest, in one or more transactions (which may involve one or more block
transactions) on the Nasdaq SmallCap Market ("Nasdaq"), in sales occurring in
the public market off Nasdaq, in separately negotiated transactions, or in a
combination of such transactions. Such sales may be made either at fixed prices
which may be changed, at market prices prevailing at the time of sale, at
prices related to prevailing market prices or at negotiated prices. Some or all
of the Shares may be sold through brokers acting on behalf of the Selling
Stockholders or to dealers for resale by such dealers, and in connection with
such sales, such brokers or dealers may receive compensation in the form of
discounts or commissions from the Selling Stockholders and/or the purchasers of
such Shares for whom they may act as broker or agent (which discounts or
commissions may be less than, or in excess of, those customary in the types of
transactions involved). In addition, any Shares covered by this Prospectus that
qualify for sale pursuant to Rule 144 under the Securities Act may be sold
under Rule 144 rather than pursuant to this Prospectus. See "PLAN OF
DISTRIBUTION."
The Shares will be sold, or otherwise disposed of, for the account of the
Selling Stockholders, and the Company will not be entitled to any of the
proceeds from such sales or dispositions. See "USE OF PROCEEDS." All expenses
incurred in connection with the registration of the Shares are being borne by
the Company, but all brokerage commissions and other expenses incurred by
individual Selling Stockholders will be borne by each such Selling Stockholder.
See "PLAN OF DISTRIBUTION."
The Selling Stockholders and any dealer participating in the distribution
of any Shares or any broker executing selling orders on behalf of the Selling
Stockholders may be deemed to be "underwriters" within the meaning of the
Securities Act, in which event any profit on the sale of any or all of the
Shares by them and any discounts or commissions received by any such brokers or
dealers may be deemed to be underwriting discounts and commissions under the
Securities Act. See "PLAN OF DISTRIBUTION."
Upon the Company being notified by a Selling Stockholder that any material
arrangement has been entered into with a broker or dealer for the sale of
Shares through a block trade, special offering or secondary distribution, or a
purchase by a broker or dealer, a supplement to this Prospectus will be filed,
if required, pursuant to Rule 424(b) under the Securities Act, disclosing (a)
the name of each such Selling Stockholder and of the participating broker or
dealer, (b) the number of Shares involved, (c) the price at which such Shares
were sold, (d) the commissions paid or the discounts or concessions allowed to
such broker or dealer, where applicable, (e) that such broker or dealer did not
conduct any investigation to verify the information set out or incorporated by
reference in this Prospectus, and (f) other facts material to the transaction.
See "PLAN OF DISTRIBUTION."
There is no assurance that any of the Selling Stockholders will sell any
or all of the Shares. The Company's Common Stock is currently traded on Nasdaq
under the symbol "CXOT". On December 1, 1997, the last reported sale price of
the Common Stock on Nasdaq was $2.50 per share. Prospective investors are urged
to obtain a current price quotation.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 5 OF THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is December 5, 1997.
<PAGE>
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, AND ANY INFORMATION OR REPRESENTATION NOT
CONTAINED OR INCORPORATED HEREIN BY REFERENCE MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR ANY OTHER PERSON.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH
PERSON TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS AT ANY TIME NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE
IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE
DATE HEREOF.
---------------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The reports, proxy
statements and other information filed with the Commission, as well as the
Registration Statement (as defined below) of which this Prospectus is a part,
may be inspected and copied at the public reference facilities of the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's Regional Offices at Seven World Trade Center, 13th Floor, New
York, New York 10048 and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60601-2511. Copies of such material also can be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Also, the
Company files such reports, proxy statements and other information with the
Commission pursuant to the Commission's EDGAR system. The Commission maintains
a web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission
pursuant to the EDGAR system. The address of the Commission's web site is
"http://www.sec.gov".
The Common Stock is traded on Nasdaq under the symbol "CXOT". Reports,
proxy statements and other information concerning the Company can also be
inspected at the NASD Public Reference Room of the National Association of
Securities Dealers, Inc. Automated Quotation System at 1735 K Street, N.W.,
Washington, D.C. 20006-1506.
This Prospectus constitutes a part of a Registration Statement on Form S-8
(the "Registration Statement") filed by the Company on December 5, 1997 with
the Commission under the Securities Act. As permitted by the rules and
regulations of the Commission, this Prospectus omits certain information
contained in the Registration Statement and incorporates by reference certain
additional information. Such additional information can be inspected at and
obtained from the Commission in the manner set forth above. Statements
contained in this Prospectus or in any document incorporated herein by
reference as to the terms of any contract or other document referred to herein
or therein are not necessarily complete, and in each instance reference is made
to the copy of such contract or other document filed as an exhibit to the
Registration Statement or such other document, each such statement being
qualified in all respects by such reference.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the
Commission (File No. 0-22291) under the Exchange Act are incorporated herein by
reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1997;
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997;
(c) The Company's Current Report on Form 8-K, dated July 28, 1997; and
(d) The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A, dated March 24, 1997, including any
amendment or report filed for the purpose of updating such description.
In addition, all documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of
a post-effective amendment to the Registration Statement which indicates that
all securities offered hereby have been sold or which deregisters all such
securities then remaining unsold, shall be deemed to be incorporated herein by
reference and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus. All
information appearing in this Prospectus is qualified in its entirety by the
information and financial statements (including the notes thereto) appearing in
the documents incorporated herein by reference, except to the extent set forth
in the immediately preceding sentence.
Upon written or oral request, any of the documents incorporated by
reference in Item 3 of Part II of the Registration Statement (which documents
are incorporated by reference in this Section 10(a) Prospectus), other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference herein), as well as other documents required to be delivered to
employees pursuant to Rule 428(b), will be provided without charge to each
person (including any beneficial owner) to whom this Prospectus is delivered
upon the written or oral request of such person. Requests should be made to:
Commodore Separation Technologies, Inc.
3240 Town Point Drive, Suite 200
Kennesaw, Georgia 30144
Attention: Michael D. Fullwood
Telephone: (770) 422-1518
3
<PAGE>
THE COMPANY
The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information appearing
elsewhere in this Prospectus or incorporated herein by reference. Investors
should also carefully consider the information set forth under the heading
"RISK FACTORS."
The Company has developed and intends to commercialize its separation
technology and recovery system known as SLiM(TM) (Supported Liquid Membrane
technology). Based on the results of more than 100 laboratory and other tests
to date, the Company believes that SLiM(TM) can separate and recover
solubilized metals (e.g., chromium, cadmium, silver, mercury, platinum, lead,
zinc and nickel), radionuclides, gas, organics and biochemicals. SLiM(TM)
utilizes a process whereby a contaminated liquid or gaseous feedstream is
introduced into a fibrous membrane unit or module containing a proprietary
chemical solution, the composition of which is customized depending on the
types and concentrations of compounds in the feedstream. As the feedstream
enters the membrane, the targeted substance reacts with SLiM(TM)'s proprietary
chemical solution and is extracted through the membrane into a strip solution
where it is then stored. The remaining feedstream is either recycled or
discharged free of the extractant(s). In some instances, additional treatment
may be required prior to disposal.
SLiM(TM) is distinguishable from other existing forms of membrane
filtration technology in that it:
o requires lower initial capital costs and lower operating costs;
o has the capability of treating a variety of elements and compounds in
numerous industrial settings at greater speed and with a higher degree of
effectiveness, in a wide range of contaminant concentrations and volume
requirements;
o is environmentally safe, in most instances producing no sludges or other
harmful by-products which would require additional post-treatment prior
to disposal;
o can selectively extract target substances while extracting substantially
fewer unwanted substances;
o can typically operate on-site and in less space than competing
technologies;
o can extract metals, organic chemicals and other elements and compounds in
degrees of concentration and purity which permit their reuse; and
o has the capability, in a single process application, of selectively
extracting multiple elements or compounds from a mixed process stream.
The Company markets its technology to industries engaged in metallurgical
processing, metal plating and mining, as well as companies producing organic
chemicals and biochemicals and those engaged in gas separation. The Company is
also targeting governmental agencies that have sites which require remediation
and has already completed an on-site demonstration at the Port of Baltimore.
The Company intends to pursue collaborative joint working and marketing
arrangements with, or acquisitions of or investments in, companies that have a
presence in target markets and those that focus on obtaining environmental
remediation projects, including clean-up of harbors, groundwater and nuclear
waste sites. Advanced Sciences, Inc., an affiliate of the Company ("Advanced
Sciences"), will help market SLiM(TM) to the United States Department of Energy
and Department of Defense.
In April 1997, the Company successfully completed an initial public
offering of its equity securities (the "Initial Public Offering"), from which
it received net proceeds of approximately $11.1 million.
The Company was incorporated in the State of Delaware in November 1995.
The principal executive offices of the Company are located at 3240 Town Point
Drive, Suite 200, Kennesaw, Georgia 30144, and its telephone number is (770)
422-1518.
4
<PAGE>
RISK FACTORS
The securities offered hereby are highly speculative in nature and involve
a high degree of risk. Prior to making an investment decision, prospective
investors in the Shares offered hereby should give careful consideration to the
information set forth in this Prospectus or incorporated herein by reference
and, in particular, should evaluate the risk factors set forth below.
Limited Operating History; History of Losses; Future Losses; Initial
Commercialization Stage
The Company's limited operating history has consisted primarily of
development of SLiM(TM) and remediation equipment, conducting laboratory tests,
and planning on-site tests and demonstrations. The Company is subject to all of
the business risks associated with a new enterprise, including, but not limited
to, risks of unforeseen capital requirements, failure of market acceptance,
failure to establish business relationships, and competitive disadvantages as
against larger and more established companies. For the fiscal year ended June
30, 1997, the Company had total revenues of $8,000 and a net loss of
$3,171,000, compared to total revenues of $0 and a net loss of $61,000 for the
period from November 15, 1995 (date of inception) to June 30, 1996. For the
three months ended September 30, 1997, the Company had total revenues of $0 and
a net loss of $1,400,000, compared to total revenues of $0 and a net loss of
$291,000 for the three months ended September 30, 1996. At June 30, 1997, the
Company had stockholders' equity of $8,708,000, and working capital of
$7,817,000, compared to an accumulated stockholders' deficit of $61,000 and a
working capital deficit of $81,000 at June 30, 1996. At September 30, 1997, the
Company had stockholders' equity of $7,158,000, and working capital of
$5,939,000.
The Company anticipates that it will continue to incur significant
operating losses through 1997 and may incur additional losses thereafter,
depending upon its ability to consummate collaborative working arrangements or
licenses with third parties and the operation and financial success of any
environmental projects which the Company and its potential working partners may
be awarded. The Company has generated nominal revenues to date, and there can
be no assurance as to whether or when it will generate material revenues or
achieve profitable operations.
SLiM(TM) Unproven on Large-Scale Commercial Basis
SLiM(TM) has never been utilized on a large-scale basis, and there can be
no assurance that such technology will perform successfully on a large-scale
commercial basis or that it will be profitable to the Company. The Company has
never utilized SLiM(TM) under the conditions and in the volumes that will be
required to be profitable and cannot predict all of the difficulties that may
arise. In addition, most of the results of the tests conducted by the Company
on SLiM(TM) have not been verified by an independent testing laboratory. Thus,
it is possible that the Company's SLiM(TM) technology may require further
research, development, design and testing, as well as regulatory clearances,
prior to larger-scale commercialization. Additionally, the Company's ability to
operate its business successfully will depend on a variety of factors, many of
which are outside the Company's control, including competition, cost and
availability of supplies, changes in governmental initiatives and requirements,
changes in regulatory requirements, and the costs associated with equipment
repair and maintenance.
Dependence on Strategic Components from Suppliers; Limited Manufacturing
Operations
The Company currently has a limited number of sources of supply for some
SLiM(TM) components, such as fibers and membrane casings. Business disruptions
or financial difficulties of suppliers, or raw material shortages or other
causes beyond the Company's control, could adversely affect the Company by
increasing the cost of goods sold or reducing the availability of such
components. In its development to date, the Company has been able to obtain
adequate supplies of these strategic components. However, as it commences
commercial activities, the Company expects to experience a rapid and
substantial increase in its requirements for these components. If the Company
were unable to obtain a sufficient supply of required components, the Company
could experience significant delays in the manufacture of SLiM(TM) equipment,
which could result in the loss of orders and customers, and could have a
material adverse effect on the Company's business, financial condition and
results of operations. There can be no assurance that the Company will be able
to manufacture components more
5
<PAGE>
inexpensively than the cost of current sources of supply or that the Company
will not require alternative sources of such components or experience delays in
obtaining adequate SLiM(TM) components. The occurrence of any of such events
would have a material adverse effect on the Company's business, financial
condition and results of operations. In addition, if the cost of raw materials
or finished components were to increase, there can be no assurance that the
Company would be able to pass such increases to its customers.
No Assurance of Collaborative Agreements, Licenses or Project Contracts
The Company's business strategy is based upon entering into collaborative
joint working arrangements with established engineering and environmental
companies, or formal joint venture agreements relative to the application of
SLiM(TM) as an enabling technology for specified industries or markets. To
date, only Advanced Sciences and its collaborative joint working partners have
been awarded material project contracts. There can be no assurance that the
Company will enter into any definitive joint project arrangements or joint
venture collaborative agreements with its prospective working partners or
others, or that such agreements, if entered into, will be on terms and
conditions that are sufficiently attractive to the Company to enable it to
generate profits. In the event the Company is unable to enter into commercially
attractive collaborative working arrangements for one or more commercial or
industrial remediation projects, in order to produce revenues for the Company,
it may be necessary to license SLiM(TM) to unaffiliated third parties. There is
no assurance that the Company will be able to enter into such license
arrangements or that such licenses will produce any income to the Company. Even
if the Company is able to complete additional joint working arrangements, there
is no assurance that the Company and its working partners will be awarded
contracts to perform decontamination or remediation projects. Even if such
contracts are awarded, there is no assurance that these contracts will be
profitable to the Company. In addition, any project contract which may be
awarded to the Company and/or any of its joint working partners may be
curtailed, delayed, redirected or eliminated at any time. Problems experienced
on any specific project, or delays in the implementation and funding of
projects, could materially adversely affect the Company's business and
financial condition.
Uncertainty of Market Acceptance
Many prospective users of SLiM(TM) have committed substantial resources to
other forms of process stream treatments or technologies. The Company's growth
and future financial performance will depend on demonstrating to prospective
collaborative partners and users the advantages of SLiM(TM) over alternative
technologies. There can be no assurance that the Company and its prospective
collaborative partners will be successful in this effort. Furthermore, it is
possible that competing alternatives may be perceived to have, or may actually
have, certain advantages over SLiM(TM) for certain industries or applications.
Risk of International Operations
The Company intends to market SLiM(TM) in international markets, including
both industrialized and developing countries. International operations entail
various risks, including political instability, economic instability and
recessions, exposure to currency fluctuations, difficulties of administering
foreign operations generally, and obligations to comply with a wide variety of
foreign import and United States export laws, tariffs and other regulatory
requirements. The Company's competitiveness in overseas markets may be
negatively impacted when there is a significant increase in the value of the
dollar against the currencies of the other countries in which the Company does
business. In addition, the laws of certain foreign countries may not protect
the Company's proprietary rights to the same extent as the laws of the United
States and there may be no legal recourse for the Company in certain adverse
circumstances as United States companies may not have jurisdiction in other
countries.
Royalty Obligations
Pursuant to an assignment of technology agreement between the Company and
Srinivas Kilambi, Ph.D., the Company's Vice President-Technology, the Company
agreed to pay Dr. Kilambi a royalty through December 3, 2002 equal to 2% of the
Company's revenues actually received and attributed to the commercial
application of the technology acquired from Dr. Kilambi, except for
applications related to the radionuclides technetium and
6
<PAGE>
rhenium, for which Dr. Kilambi is entitled to receive a royalty of .66% of net
sales (less allowances for returns, discounts, commissions, freight and excise
or other taxes). Pursuant to a license agreement between the Company and
Lockheed Martin Energy Research Corporation ("Lockheed Martin"), the Company
made an initial cash payment of $50,000 upon the execution of the agreement and
is obligated to pay, commencing in the third year of the agreement, a royalty
to Lockheed Martin of 2% of net sales (less allowances for returns, discounts,
commissions, freight, and excise or other taxes) up to total net sales of
$4,000,000 and 1% of net sales thereafter. In addition, the Company has agreed
to guarantee Lockheed Martin, commencing in the third year of the agreement, an
annual minimum royalty of $15,000. Payments of such royalties to Dr. Kilambi
and Lockheed Martin are based on Company revenues and are not related to or
contingent upon the Company attaining profitability or positive cash flow. As a
result, such payments will adversely affect operating results and divert cash
resources from use in the Company's business, and possibly at times when the
Company's liquidity and access to funding may be limited.
Risk of Environmental Liability; Possible Inadequacy of Insurance Coverage
The Company's operations, as well as the use of the specialized technical
equipment by its customers, are subject to numerous federal, state and local
regulations relating to the storage, handling, emission and transportation of
certain regulated materials. There is always the risk that such materials might
be mishandled, or that there might be equipment or technology failures, which
could result in significant claims against the Company. Any such claims against
the Company could materially adversely affect the Company's business, financial
condition and results of operations.
As SLiM(TM) is commercialized, the Company may be required to obtain
environmental liability insurance in the future in amounts greater than those
it currently maintains. There can be no assurance that such insurance will
provide coverage against all claims, and claims may be made against the Company
(even if covered by the Company's insurance policy) for amounts substantially
in excess of applicable policy limits. Any such event could have a material
adverse effect on the Company's business, financial condition and results of
operations.
Potential Need for Additional Financing
In April 1997, the Company completed the Initial Public Offering of its
equity securities, from which it received net proceeds of approximately $11.1
million. Prior to the Initial Public Offering, financing for all of the
Company's activities had been provided in the form of direct equity investments
and loans by Commodore Applied Technologies, Inc., the owner of 87% of the
outstanding Common Stock of the Company ("Applied"), and Commodore
Environmental Services, Inc., the owner of approximately 65% of the outstanding
common stock of Applied ("Environmental"). The Company's future capital
requirements will depend on certain factors, many of which are not within the
Company's control. These include the ongoing development and testing of
SLiM(TM), the nature and timing of remediation and clean-up projects and
permits required, and the availability of financing.
In the environmental remediation market, the Company may not be able to
enter into favorable business collaborations and might thus be required to bid
upon projects for its own account. If such bids were successful, the Company
would be required to make significant expenditures on personnel and capital
equipment which would require significant financing in amounts substantially in
excess of the net proceeds of the Initial Public Offering. In addition, the
Company's lack of operational experience and limited capital resources could
make it difficult, if not highly unlikely, to successfully bid on major
reclamation or clean-up projects. In such event, the Company's business
development could be limited to remediation of smaller commercial and
industrial sites with significantly lower potential for profit.
In addition, the expansion of the Company's business will require the
commitment of significant capital resources toward the hiring of technical and
operational support personnel, the development of a manufacturing and testing
facility for SLiM(TM) equipment, and the building of equipment to be used both
for on-site test demonstrations and the remediation of contaminated elements.
In the event the Company is presented with one or more significant reclamation
or clean-up projects, individually or in conjunction with collaborative working
partners, it may require additional capital to take advantage of such
opportunities. There can be no assurance that such financing will be available
or, if available, that it will be on favorable terms. If adequate financing is
7
<PAGE>
not available, the Company may be required to delay, scale back or eliminate
certain of its research and development programs, to relinquish rights to
certain of its technologies, or to license third parties to commercialize
technologies that the Company would otherwise seek to develop itself. To the
extent the Company raises additional capital by issuing equity securities,
stockholders of the Company will be diluted.
Competition and Technological Alternatives
The Company anticipates that the primary markets for SLiM(TM) will be for
industrial by-products treatment and disposal. The Company has had limited
experience in marketing SLiM(TM) and has a small sales and marketing
organization, whereas other participants in both the private and public sectors
include several large domestic and international companies and numerous small
companies, many of whom have substantially greater financial and other
resources and more manufacturing, marketing and sales experience than the
Company. Any one or more of the Company's competitors or other enterprises not
presently known to the Company may develop technologies which are superior to
SLiM(TM). To the extent that the Company's competitors are able to offer more
cost-effective separation technology alternatives, the Company's ability to
compete could be materially and adversely affected.
Unpredictability of Patent Protection and Proprietary Technology
On September 15, 1997, the Company filed two United States
continuation-in-part ("CIP") provisional patent applications and, on September
16, 1997, filed one international patent application covering the principal
features of its SLiM(TM) technology. One of the CIP provisional patent
applications covers the joint inventions of Srinivas Kilambi, Ph.D., the
Company's Senior Vice President-Technology, and Lockheed Martin Energy Research
Corporation. The other CIP provisional patent application and the international
patent application cover the sole inventions of Dr. Kilambi.
The Company's success depends, in part, on its ability to obtain patents,
maintain trade secrecy, and operate without infringing on the proprietary
rights of third parties. There can be no assurance that any of the Company's
pending patent applications will be approved, that the Company will develop
additional proprietary technology that is patentable, that any patents issued
to the Company will provide the Company with competitive advantages or will not
be challenged by third parties or that the patents of others will not have an
adverse effect on the Company's ability to conduct its business. Furthermore,
there can be no assurance that others will not independently develop similar or
superior technologies, duplicate any elements of SLiM(TM), or design around
SLiM(TM). It is possible that the Company may need to acquire licenses to, or
to contest the validity of, issued or pending patents of third parties. There
can be no assurance that any license acquired under such patents would be made
available to the Company on acceptable terms, if at all, or that the Company
would prevail in any such contest. In addition, the Company could incur
substantial costs in defending itself in suits brought against the Company for
alleged infringement of another party's patents or in defending the validity or
enforceability of the Company's patents, or in bringing patent infringement
suits against other parties based on the Company's patents.
In addition to patent protection, the Company also relies on trade
secrets, proprietary know-how and technology which it seeks to protect, in
part, by confidentiality agreements with its prospective working partners and
collaborators, employees and consultants. There can be no assurance that these
agreements will not be breached, that the Company would have adequate remedies
for any breach, or that the Company's trade secrets and proprietary know-how
will not otherwise become known or be independently discovered by others.
Government Regulation
The Company and its customers are required to comply with a number of
federal, state and local laws and regulations in the areas of safety, health
and environmental controls, including, without limitation, the Resource
Conservation and Recovery Act, as amended ("RCRA"), and the Occupational Safety
and Health Act of 1970 ("OSHA"), which may require the Company, its prospective
working partners or its customers to obtain permits or approvals to utilize
SLiM(TM) and related equipment on certain job sites. In addition, if the
Company begins to market SLiM(TM) internationally, the Company will be required
to comply with laws and regulations and, when applicable, obtain permits or
approvals in those other countries. There is no assurance that such required
permits
8
<PAGE>
and approvals will be obtained. Furthermore, particularly in the environmental
remediation market, the Company may be required to conduct performance and
operating studies to assure government agencies that SLiM(TM) and its
by-products do not pose environmental risks. There is no assurance that such
studies, if successful, will not be more costly or time-consuming than
anticipated. Further, if new environmental legislation or regulations are
enacted or existing legislation or regulations are amended, or are interpreted
or enforced differently, the Company, its prospective working partners and/or
its customers may be required to meet stricter standards of operation and/or
obtain additional operating permits or approvals. There can be no assurance
that the Company will meet all of the applicable regulatory requirements.
Unspecified Acquisition-Related Risks
As part of its growth strategy, the Company will seek to acquire or invest
in complementary (including competitive) businesses, products or technologies.
The Company may allocate a significant portion of its available working capital
to finance a portion of the purchase price relating to possible acquisitions
of, or investments in, complementary (including competitive) business, products
or technologies. In the event any such acquisition or investment opportunity
arises in the future, it is probable that the Company will also be required to
obtain additional financing to complete such transaction. The process of
integrating such acquired assets into the Company's operations may result in
unforeseen operating difficulties and expenditures and may absorb significant
management attention that would otherwise be available for the ongoing
development of the Company's business. There can be no assurance that the
anticipated benefits of any acquisitions will be realized. In addition, future
acquisitions by the Company could result in potentially dilutive issuances of
equity securities, the incurrence of debt and contingent liabilities and
amortization expenses related to goodwill and other intangible assets, any of
which could materially adversely affect the Company's operating results and
financial position. Acquisitions also involve other risks, including entering
markets in which the Company has no or limited prior experience. The Company
currently has no commitments or agreements with respect to any possible
acquisitions or investments.
Effect of Acquisitions on Personnel
As noted above, future acquisitions by the Company could also result in
the possibility of changing current Company management with no opportunity for
the Company's stockholders to evaluate new key personnel.
Dependence on Key Management and Other Personnel
The Company is dependent on the efforts of its senior management and
scientific staff, including Paul E. Hannesson, Chairman of the Board and Chief
Executive Officer, Edwin L. Harper, Ph.D., Vice Chairman, Kenneth J. Houle,
President and Chief Operating Officer, Michael D. Fullwood, Senior Vice
President, Chief Financial and Administrative Officer, Secretary and General
Counsel, James M. DeAngelis, P.E., Senior Vice President--Marketing and Sales,
Srinivas Kilambi, Ph.D., Senior Vice President--Technology, Michael D.
Kiehnau, P.E., Vice President--Finance & Operations, Andrew P. Oddi, Vice
President and Treasurer, and William E. Ingram, Vice President and Controller.
The proceeds of key-man life insurance policies on the lives of certain of such
individuals may not be adequate to compensate the Company for the loss of any
of such individuals. The loss of the services of any one or more of such
persons may have a material adverse effect on the Company. Alan R. Burkart, who
had served as the Company's President and Chief Executive Officer since August
1996, resigned from such positions in December 1996 for health reasons.
Although Mr. Burkart had previously been listed as a key employee, the loss of
whom would materially adversely affect the Company, the Company believes that
the loss of the services of Mr. Burkart have not had and will not have a
material adverse effect on the Company.
The Company's future success will depend in large part upon its ability to
attract and retain skilled scientific, management, operational and marketing
personnel. The Company faces competition for hiring such personnel from other
companies, government entities and other organizations. There can be no
assurance that the Company will continue to be successful in attracting and
retaining such personnel.
Potential Conflicts of Interest
Paul E. Hannesson and Michael D. Fullwood, the Chairman of the Board and
Chief Executive Officer and the Senior Vice President, Chief Financial and
Administrative Officer, Secretary and General Counsel of the
9
<PAGE>
Company, respectively, also serve in the same capacities with, and devote a
significant portion of their business and professional time and efforts to the
business of, Environmental and Applied. In addition, Bentley J. Blum, Edwin L.
Harper, Ph.D., Kenneth L. Adelman, Ph.D. and David L. Mitchell (the
"Environmental Directors"), all of whom are directors of the Company, also
serve as directors of Environmental and Applied. While the Company believes
that its business and technologies are distinguishable from those of
Environmental and Applied, and that it does not compete in the markets in
which Environmental and Applied compete, Messrs. Hannesson and Fullwood and
the Environmental Directors may have potential conflicts of interest with
respect to, among other things, potential corporate opportunities, business
combinations, joint ventures and/or other business opportunities that may
become available to them, the Company, Environmental and/or Applied. Moreover,
while Messrs. Hannesson and Fullwood have agreed to devote a portion of their
business and professional time and efforts to the Company, potential conflicts
of interest also include the amount of time and effort devoted by them to the
affairs of Environmental and Applied. The Company may be materially adversely
affected if Messrs. Hannesson and Fullwood and/or the Environmental Directors
choose to place the interests of Environmental or Applied before those of the
Company. Each of Messrs. Hannesson and Fullwood and the Environmental
Directors has agreed that, to the extent such opportunities arise, he will
carefully consider a number of factors, including whether such opportunities
are within the Company's line of business or consistent with its strategic
objectives and whether the Company will be able to undertake or benefit from
such opportunities. In addition, the Company's Board of Directors has adopted
a policy whereby any future transactions between the Company and any of its
subsidiaries, affiliates, officers, directors, principal stockholders or any
affiliates of the foregoing will be on terms no less favorable to the Company
than could reasonably be obtained in "arms length" transactions with
independent third parties, and any such transactions will also be approved by
a majority of the Company's disinterested outside directors. Messrs. Hannesson
and Fullwood and the Environmental Directors also owe fiduciary duties of care
and loyalty to the Company under Delaware law. However, the failure of the
Company's management to resolve any conflicts of interest in favor of the
Company could materially adversely affect the Company's business, financial
condition and results of operations.
Control by Principal Stockholder
Applied is currently the owner of 87% of the outstanding Common Stock of
the Company (approximately 68.5% assuming conversion of all outstanding
convertible securities and exercise of all outstanding warrants). Applied is a
public company whose shares are traded on the American Stock Exchange.
Environmental, a public company whose common stock trades in the so-called
"pink sheets" of the National Quotation Bureau, Inc. and is quoted in the OTC
Bulletin Board of the National Association of Securities Dealers, Inc. (the
"OTCBB"), currently owns approximately 65% of the outstanding common stock of
Applied. Accordingly, events or circumstances having an adverse effect on
either or both of Environmental or Applied, including fluctuations in their
respective market prices, could have a material adverse effect on the market
price of the Shares.
Bentley J. Blum, a director of the Company, Environmental and Applied,
beneficially owned, directly and through entities controlled by him,
approximately 51.3% of the outstanding common stock of Environmental as of
December 1, 1997. Paul E. Hannesson, the Chairman of the Board and Chief
Executive Officer of the Company, and the Chairman of the Board, President and
Chief Executive Officer of Environmental and Applied, beneficially owned
approximately 11.9% of the outstanding common stock of Environmental as of such
date. Accordingly, through his indirect beneficial ownership of a controlling
stock interest in Applied, Mr. Blum will be able to control the voting of
Applied's shares at all meetings of stockholders of the Company and, because
the Common Stock does not have cumulative voting rights, will be able to
determine the outcome of the election of all of the Company's directors and
determine corporate and stockholder action on other matters. Messrs. Blum and
Hannesson are brothers-in-law.
Risk of Product Liability
The Company proposes initially to license SLiM(TM) equipment and, in the
future, to manufacture all or a substantial portion of that equipment. The
equipment will be utilized in a variety of industrial and other settings, and
will be used to handle materials resulting from pressurized and chemical
processes. Accordingly, the equipment will be subject to risks of breakdowns
and malfunctions, and there exists the possibility of claims for personal
injury and business losses arising out of such breakdowns and malfunctions.
There can be no assurance
10
<PAGE>
that the Company's product liability insurance will provide coverage against
all claims, and claims may be made against the Company (even if covered by the
Company's insurance policy) for amounts substantially in excess of applicable
policy limits. Any such event could have a material adverse effect on the
Company's business, financial condition and results of operations.
No Dividends on Common Stock
The Company has never paid any dividends on its Common Stock, and has no
plans to pay dividends on its Common Stock in the foreseeable future.
Furthermore, pursuant to the terms governing the Company's Convertible
Preferred Stock, the Company's Board of Directors may not declare dividends
payable to holders of Common Stock unless and until all accrued cash dividends
through the most recent past annual dividend payment date have been paid in
full to holders of the Convertible Preferred Stock.
Potential Adverse Effect on Market Price of Securities from Future Sales of
Common Stock
No assurance can be given as to the effect, if any, that future sales of
Common Stock, or the availability of shares of Common Stock for future sales,
will have on the market price of the Common Stock from time to time. Sales of
substantial amounts of Common Stock (including shares issued upon the exercise
of warrants or stock options), or the possibility that such sales could occur,
could adversely affect the market price of the Common Stock and could also
impair the Company's ability to raise capital through an offering of its equity
securities in the future. Assuming conversion of all securities convertible
into Common Stock, and the exercise of all outstanding warrants, options and
other rights to purchase Common Stock, including the currently outstanding
options granted pursuant to the Plan, upon completion of this offering the
Company will have approximately 15,600,339 shares (subject to adjustment) of
Common Stock outstanding, of which approximately 1,500,000 currently publicly
traded shares of Common Stock, 3,100,000 shares (subject to adjustment) issued
and to be issued upon conversion of securities convertible into Common Stock
and upon exercise of outstanding warrants to purchase Common Stock, and 996,689
shares (subject to adjustment) to be issued upon exercise of currently
outstanding options granted pursuant to the Plan will be transferable without
restriction under the Securities Act. The remaining 10,003,650 shares of Common
Stock to be outstanding upon completion of this offering are "restricted
securities" (as that term is defined in Rule 144 promulgated under the
Securities Act) which may be publicly sold only if registered under the
Securities Act, or if sold in accordance with an applicable exemption from
registration such as Rule 144. In general, under Rule 144 as currently in
effect, subject to the satisfaction of certain other conditions, a person,
including an affiliate of the Company, who has beneficially owned restricted
securities for at least one year, is entitled to sell (together with any person
with whom such individual is required to aggregate sales), within any
three-month period, a number of shares that does not exceed the greater of 1%
of the total number of outstanding shares of the same class, or, if the stock
is quoted on the Nasdaq Stock Market or a national securities exchange, the
average weekly trading volume during the four calendar weeks preceding the
sale. A person who has not been an affiliate of the Company for at least the
immediately preceding three months, and who has beneficially owned restricted
securities for at least two years, is entitled to sell such restricted shares
under Rule 144 without regard to any of the limitations described above.
Volatility of Market Prices of Common Stock
The market price for the Company's Common Stock has been historically
volatile. Future announcements of new technologies and changing policies and
regulations of the federal government and state governments and other external
factors, as well as potential fluctuations in the Company's financial results,
may have a significant impact on the price of the Common Stock in the future.
Certain Anti-Takeover Provisions and Potential Adverse Effect on Market Price
of Securities from Issuance of Preferred Stock
The Company's certificate of incorporation (the "Certificate of
Incorporation") and by-laws (the "By-Laws") contain certain provisions that
could have the effect of delaying or preventing a change of control of the
Company, which could limit the ability of security holders to dispose of their
Shares in such transactions. The Certificate of Incorporation authorizes the
Board of Directors to issue one or more series of preferred stock
11
<PAGE>
without stockholder approval. Such preferred stock could have voting and
conversion rights that adversely affect the voting power of the holders of
Common Stock, or could result in one or more classes of outstanding securities
that would have dividend, liquidation or other rights superior to those of the
Common Stock. Issuance of such preferred stock may have an adverse effect on
the then prevailing market price of the Common Stock. Additionally, the Company
is subject to the anti-takeover provisions of Section 203 of the Delaware
General Corporation Law, which prohibits the Company from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an
interested stockholder, unless the business combination is approved in a
prescribed manner. Section 203 could have the effect of delaying or preventing
a change of control of the Company.
Limitations on Liability of Directors and Officers
The Company's Certificate of Incorporation includes provisions to
eliminate, to the full extent permitted by the Delaware General Corporation Law
as in effect from time to time, the personal liability of directors of the
Company for monetary damages arising from a breach of their fiduciary duties as
directors. The Certificate of Incorporation also includes provisions to the
effect that (subject to certain exceptions) the Company shall, to the maximum
extent permitted from time to time under the laws of the State of Delaware,
indemnify, and upon request shall advance expenses to, any director or officer
to the extent that such indemnification and advancement of expenses is
permitted under such law, as it may from time to time be in effect. In
addition, the Company's By-Laws require the Company to indemnify, to the full
extent permitted by law, any director, officer, employee or agent of the
Company for acts which such person reasonably believes are not in violation of
the Company's corporate purposes as set forth in the Certificate of
Incorporation. As a result of such provisions in the Certificate of
Incorporation and the By-Laws, stockholders may be unable to recover damages
against the directors and officers of the Company for actions taken by them
which constitute negligence, gross negligence or a violation of their fiduciary
duties, which may discourage or deter stockholders from suing directors,
officers, employees and agents of the Company for breaches of their duty of
care, even though such action, if successful, might otherwise benefit the
Company and its stockholders.
Forward-Looking Statements
This Prospectus and the documents incorporated herein by reference contain
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. Such forward-looking statements may be
deemed to include, among other things, statements related to anticipated
improvements in financial performance and management's long-term performance
goals, as well as statements relating to the Company's business and growth
strategies, including anticipated internal growth and plans to pursue
additional acquisitions of complementary (including competitive) business,
products or technologies. Actual results could differ materially from those
addressed in the forward-looking statements as a result of the factors
discussed in this "RISK FACTORS" section and elsewhere herein and in the
documents incorporated herein by reference.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale or other
disposition of the Shares by the Selling Stockholders hereunder.
12
<PAGE>
SELLING STOCKHOLDERS
This Prospectus may be used by certain officers, directors and controlling
stockholders of the Company for the resale to the public of Shares to be issued
to them upon exercise of options heretofore or hereafter granted under the
Plan. Such persons may be deemed to be in a control relationship with the
Company within the meaning of the Securities Act and the rules and regulations
of the Commission thereunder, and such Shares may be deemed to be "control
securities" within the meaning of General Instruction C to Form S-8. The
securities referred to in this paragraph may also be resold pursuant to Rule
144 under the Securities Act or in other transactions exempt from registration.
The persons who may resell Shares pursuant to this Prospectus are referred
to in this Prospectus collectively as "Selling Stockholders." The following
table sets forth as to each Selling Stockholder: the name of the Selling
Stockholder; the nature of any position, office or other material relationship
with the Company or its affiliates within the past three (3) years; the number
of shares of Common Stock of the Company and the percentage of the outstanding
shares of such class owned as of December 1, 1997; the number of such shares
which may be sold hereby for the account of the Selling Stockholder; and the
number of such shares and percentage of the outstanding shares of such class
that will be owned by the Selling Stockholder, assuming the sale of all the
Shares offered hereby.
<TABLE>
<CAPTION>
Shares of Shares of
Common Stock Number of Common Stock
Owned Prior to Shares Owned After
the Sale(1) Which May the Sale
------------------------ Be Sold ----------------------
Name and Position/Relationship Number Percent(2) Hereby(3) Number Percent(2)
- ------------------------------ --------- ------------ ----------- -------- -----------
<S> <C> <C> <C> <C> <C>
Paul E. Hannesson(4) ......... 175,000 1.5% 175,000 * *
Edwin L. Harper(5) ......... 125,000 1.1% 125,000 * *
Kenneth J. Houle(6) ......... 100,000 * 100,000 * *
Michael D. Fullwood(7) ...... 67,500 * 67,500 * *
James M. DeAngelis(8) ...... 103,250 * 101,250 2,000 *
Srinivas Kilambi(9) ......... 67,500 * 67,500 * *
Michael D. Kiehnau(10) ...... 76,625 * 75,625 1,000 *
Andrew P. Oddi(11) ......... 50,625 * 50,625 * *
Kenneth L. Adelman(12) ...... 76,013 * 45,563 30,450 *
David L. Mitchell(13) ...... 45,563 * 45,563 * *
William R. Toller (14) ...... 45,563 * 45,563 * *
Total ..................... 932,639 8.1% 899,189 33,450 *
</TABLE>
- ------------
* Represents less than 1% of outstanding Common Stock.
(1) Shares of Common Stock issued or issuable to the Selling Stockholders upon
exercise of currently outstanding stock options or warrants, whether or
not exercisable, are included.
(2) Percentages based on 11,503,650 shares of Common Stock outstanding as of
December 1, 1997.
(3) Represents the aggregate number of Shares (subject to adjustment) issuable
to the Selling Stockholder upon exercise of currently outstanding options
granted under the Plan.
(4) Mr. Hannesson has been a director of the Company since its inception,
served as its Chairman of the Board from November 1995 to January 1, 1997,
and was re-elected Chairman of the Board and appointed Chief Executive
Officer effective May 1, 1997. Mr. Hannesson has been a director of
Applied since March 1996 and was appointed Chairman of the Board in
November 1996. Mr. Hannesson also served as Chief Executive Officer of
Applied from March to October 1996 and as President from March to
September 1996, and was re-appointed Chief Executive Officer on November
18, 1996 and President on May 1, 1997. Mr. Hannesson has been a director
of Environmental since February 1993 and was appointed its Chairman of the
Board and Chief Executive Officer in November 1996. Mr. Hannesson also
served as President of
13
<PAGE>
Environmental from February 1993 to July 1996 and was re-appointed
President on May 1, 1997. Mr. Hannesson also currently serves as the
Chairman of the Board and Chief Executive Officer of Commodore Solution
Technologies, Inc. ("Solution") and Commodore CFC Technologies, Inc.
("CFC"), both affiliates of the Company. Mr. Hannesson also serves as
Chairman of the Board of Lanxide Corporation ("Lanxide"), a research and
development company developing metal and ceramic materials. Lanxide is
affiliated with the Company by significant common ownership.
(5) Dr. Harper has been a director of the Company since January 1, 1997 and
was elected Vice Chairman of the Company effective May 1, 1997. Dr. Harper
served as Chairman of the Board and Chief Executive Officer of the Company
from January 1, to April 1997, and also as President of the Company for an
interim period from January 1, to January 27, 1997. Dr. Harper was also
elected a director of Applied, Environmental, Solution and CFC in May
1997, after having served as President and Chief Operating Officer of both
Environmental and Applied from November 1996 to April 1997, and was
elected Vice Chairman of Environmental and Applied effective May 1, 1997.
Dr. Harper also serves as a private consultant to the Company,
Environmental, Applied, Solution and CFC.
(6) Mr. Houle was appointed President and Chief Operating Officer of the
Company effective January 27, 1997.
(7) Mr. Fullwood was appointed Senior Vice President, Chief Financial and
Administrative Officer, Secretary and General Counsel of the Company,
Environmental, Applied, Solution and CFC effective May 12, 1997. Mr.
Fullwood was elected a director of Lanxide and was appointed Senior Vice
President, Chief Financial and Administrative Officer and General Counsel
of Lanxide on July 7, 1997.
(8) Mr. DeAngelis was appointed Senior Vice President--Marketing & Sales of
the Company effective September 1, 1996. He served prior to such time as
Vice President--Marketing of Environmental and President of CFC since
January 1993.
(9) Dr. Kilambi was appointed Senior Vice President--Technology of the Company
on April 1, 1997. Dr. Kilambi served as Vice President--Technology of the
Company from February 1996 to March 31, 1997, and was a part-time
consultant to the Company from December 1995 to February 1996.
(10) Mr. Kiehnau was appointed Vice President--Finance & Operations on April 1,
1997, after having served as the Company's Chief Financial Officer from
September 1996 to January 1997, and as its Vice President--Operations from
January 1, to March 31, 1997.
(11) Mr. Oddi was appointed Vice President and Treasurer of the Company,
Environmental, Applied, Solution and CFC effective May 1, 1997. Mr. Oddi
served as the Vice President--Finance of the Company from September 1996
to April 1997. Mr. Oddi also served as the Vice President of Finance,
Chief Financial Officer and Secretary of Applied from March to November
1996 and as Vice President of Finance & Administration and Chief Financial
Officer of Environmental from 1987 to April 1997.
(12) Dr. Adelman joined the Board of Directors of the Company in April 1997.
Dr. Adelman has also served as a director of Applied and Environmental
since July 1996 and was appointed Executive Vice President, Marketing and
International Development of Applied as of May 1, 1997.
(13) Mr. Mitchell has served as a director of the Company since April 1997 and
as a director of Applied and Environmental since July 1996.
(14) Mr. Toller has served as a director of the Company since April 1997. Mr.
Toller was elected a director and appointed Vice Chairman of Lanxide on
July 7, 1997.
The Company does not know whether any of the Selling Stockholders will use
this Prospectus in connection with the offer or sale of any Shares, or, if this
Prospectus is so used, how many Shares will be offered or sold. The information
set forth in this section may be updated by the Company by use of supplements
to this Prospectus issued subsequent to the date hereof.
14
<PAGE>
PLAN OF DISTRIBUTION
The Shares offered hereby may be sold from time to time by the Selling
Stockholders, or by pledgees, donees, transferees or other successors in
interest, in one or more transactions (which may involve one or more block
transactions) on the Nasdaq, in sales occurring in the public market off
Nasdaq, in separately negotiated transactions, or in a combination of such
transactions. Such sales may be made either at fixed prices which may be
changed, at market prices prevailing at the time of sale, at prices related to
prevailing market prices or at negotiated prices. Some or all of the Shares may
be sold through brokers acting on behalf of the Selling Stockholders or to
dealers for resale by such dealers, and in connection with such sales, such
brokers or dealers may receive compensation in the form of discounts or
commissions from the Selling Stockholders and/or the purchasers of such Shares
for whom they may act as broker or agent (which discounts or commissions may be
less than, or in excess of, those customary in the types of transactions
involved). In addition, any Shares covered by this Prospectus that qualify for
sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144
rather than pursuant to this Prospectus.
The Selling Stockholders and any dealer participating in the distribution
of any Shares or any broker executing selling orders on behalf of the Selling
Stockholders may be deemed to be "underwriters" within the meaning of the
Securities Act, in which event any profit on the sale of any or all of the
Shares by them and any discounts or commissions received by any such brokers or
dealers may be deemed to be underwriting discounts and commissions under the
Securities Act.
Any broker or dealer participating in any distribution of Shares in
connection with this offering may be deemed to be an "underwriter" within the
meaning of the Securities Act, and if so deemed will be required to deliver a
copy of this Prospectus, including a Prospectus Supplement, if required, to any
person who purchases any of the Shares from or through such broker or dealer.
The Company will inform the Selling Stockholders that the
anti-manipulation rules under the Exchange Act may apply to sales in the market
and will furnish the Selling Stockholders upon request with a copy of such
rules. The Company will also inform the Selling Stockholders of the need for
delivery of copies of this Prospectus.
Upon the Company being notified by a Selling Stockholder that any material
arrangement has been entered into with a broker or dealer for the sale of
Shares through a block trade, special offering or secondary distribution, or a
purchase by a broker or dealer, a supplement to this Prospectus will be filed,
if required, pursuant to Rule 424(b) under the Securities Act, disclosing (a)
the name of each such Selling Stockholder and of the participating broker or
dealer, (b) the number of Shares involved, (c) the price at which such Shares
were sold, (d) the commissions paid or the discounts or concessions allowed to
such broker or dealer, where applicable, (e) that such broker or dealer did not
conduct any investigation to verify the information set out or incorporated by
reference in this Prospectus, and (f) other facts material to the transaction.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold only through registered or licensed brokers
or dealers. In addition, in certain states, the Shares may not be sold unless
they have been registered or qualified for sale in such state or an exemption
from such registration or qualification requirement is available and is
complied with.
All expenses incurred in connection with the registration of the Shares
are being borne by the Company, but all brokerage commissions and other
expenses incurred by individual Selling Stockholders will be borne by each such
Selling Stockholder. There is no assurance that any of the Selling Stockholders
will sell any or all of the Shares offered hereby.
15
<PAGE>
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for
the Company by Greenberg Traurig Hoffman Lipoff Rosen & Quentel, New York, New
York ("Greenberg Traurig"). Stephen A. Weiss, a shareholder of Greenberg
Traurig, holds options to purchase 275,000 shares of Environmental common
stock.
EXPERTS
The financial statements incorporated in this Prospectus by reference,
except as they relate to the unaudited three-month periods ended September 30,
1997 and 1996, have been audited by various independent accountants. The
periods covered by these audits are indicated in the individual accountants'
reports. Such financial statements have been so incorporated in reliance on the
reports of the various independent accountants given on the authority of such
firms as experts in auditing and accounting.
16
<PAGE>
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- --------------------------------------------------------------------------------
No dealer, salesperson or other person is authorized to give any
information or to make any representation not contained in this Prospectus in
connection with this offering, and any information or representation not
contained herein must not be relied upon as having been authorized by the
Company or any other person. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any securities other than the
registered securities to which it relates or an offer to or solicitation of any
person in any jurisdiction where such an offer or solicitation would be
unlawful. Neither the delivery of this Prospectus at any time nor any sale made
hereunder shall, under any circumstances, create any implication that the
information herein contained is correct as of any time subsequent to the date
of this Prospectus.
--------------------------------------------
TABLE OF CONTENTS
Page
-----
Available Information ............... 2
Incorporation of Certain Documents by
Reference ........................ 3
The Company ........................ 4
Risk Factors ........................ 5
Use of Proceeds ..................... 12
Selling Stockholders ............... 13
Plan of Distribution ............... 15
Legal Matters ..................... 16
Experts ........................... 16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
899,189 Shares
COMMODORE
SEPARATION
TECHNOLOGIES, INC.
Common Stock
--------------------------------------------
PROSPECTUS
--------------------------------------------
December 5, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The Company hereby incorporates by reference into this Registration
Statement the following documents heretofore filed by the Company with the
Securities and Exchange Commission (the "Commission") (File No. 0-22291)
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"):
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1997;
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997;
(c) The Company's Current Report on Form 8-K, dated July 28, 1997; and
(d) The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A, dated March 24, 1997, including
any amendment or report filed for the purpose of updating such
description.
In addition, all documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of
a post-effective amendment to this Registration Statement which indicates that
all securities offered hereby have been sold or which deregisters all such
securities then remaining unsold, shall be deemed to be incorporated herein by
reference and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
The validity of the Common Stock to which this Registration Statement
relates will be passed upon for the Company by Greenberg Traurig Hoffman Lipoff
Rosen & Quentel, New York, New York ("Greenberg Traurig"). Stephen A. Weiss, a
shareholder of Greenberg Traurig, holds options to purchase 275,000 shares of
common stock of Commodore Environmental Services, Inc., the Company's indirect
parent.
Item 6. Indemnification of Directors and Officers.
Section 145(a) of the General Corporation Law of the State of Delaware
(the "General Corporation Law") provides that a Delaware corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation or enterprise, against expenses, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no cause to believe his or her conduct was unlawful.
II-1
<PAGE>
Section 145(b) of the General Corporation Law provides that a Delaware
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by reason of
the fact that such person acted in any of the capacities set forth above,
against expenses actually and reasonably incurred by him or her in connection
with the defense or settlement of such action or suit if he or she acted under
similar standards as set forth above, except that no indemnification may be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the
extent that the court in which such action or suit was brought shall determine
that despite the adjudication of liability, but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to be
indemnified for such expenses which the court shall deem proper.
Section 145 of the General Corporation Law further provides that to the
extent a director or officer of a corporation has been successful on the merits
or otherwise in the defense of any action, suit or proceeding referred to in
subsections (a) and (b) or in the defense of any claim, issue or matter
therein, he or she shall be indemnified against expenses actually and
reasonably incurred by him or her in connection therewith; that indemnification
provided for by Section 145 shall not be deemed exclusive of any other rights
to which the indemnified party may be entitled; and that the corporation may
purchase and maintain insurance on behalf of such person against any liability
asserted against him or her or incurred by him or her in any such capacity or
arising out of his or her status as such, whether or not the corporation would
have the power to indemnify him or her against such liabilities under such
Section 145.
Section 102(b)(7) of the General Corporation Law provides that a
corporation in its original certificate of incorporation or an amendment
thereto validly approved by stockholders may eliminate or limit personal
liability of members of its board of directors or governing body for monetary
damages for breach of a director's fiduciary duty. However, no such provision
may eliminate or limit the liability of a director for breaching his or her
duty of loyalty, failing to act in good faith, engaging in intentional
misconduct or knowingly violating a law, paying a dividend or approving a stock
repurchase or redemption which was illegal, or obtaining an improper personal
benefit. A provision of this type has no effect on the availability of
equitable remedies, such as injunction or rescission, for breach of fiduciary
duty. The Company's Certificate of Incorporation contains such a provision.
Article 11 of the Company's Certificate of Incorporation eliminates the
personal liability of directors to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director; provided that such
elimination of the personal liability of a director of the Company does not
apply to (i) any breach of such person's duty of loyalty to the Company or its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) actions prohibited
under Section 174 of the General Corporation Law (i.e., liabilities imposed
upon directors who vote for or assent to the unlawful payment of dividends,
unlawful repurchases or redemption of stock, unlawful distribution of assets of
the Company to the stockholders without the prior payment or discharge of the
Company's debts or obligations, or unlawful making or guaranteeing of loans to
directors and/or officers), or (iv) any transaction from which the director
derived an improper personal benefit. In addition, Article 12 of the Company's
Certificate of Incorporation and Article VI of the Company's By-Laws provide
that the Company shall indemnify its corporate personnel, directors and
officers to the fullest extent permitted by the General Corporation Law, as
amended from time to time.
The Company has in force a combined insurance policy with its affiliates
under which its directors and officers are insured (with limits of $20 million
per occurrence and $20 million in the aggregate) against certain expenses in
connection with the defense of such actions, suits or proceedings to which they
are parties by reason of being or having been directors or officers of the
Company.
The Company and its officers, directors and other persons are entitled to
be indemnified under certain circumstances for certain securities law
violations in accordance with the provisions of an underwriting agreement dated
April 3, 1997, by and among the Company, Commodore Applied Technologies, Inc.
and National Securities Corporation, as representative of the several
underwriters.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
as disclosed above, the Company has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
II-2
<PAGE>
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description
- ---------- ----------------------------------------------------------------------------------------------------
<S> <C>
4.1 Specimen Form of Common Stock Certificate. (1)
*4.2 Commodore Separation Technologies, Inc. 1996 Stock Option Plan.
*5.1 Opinion of Greenberg Traurig Hoffman Lipoff Rosen & Quentel.
*23.1 Consent of Tanner + Co.
*23.2 Consent of Price Waterhouse LLP.
*23.3 Consent of Greenberg Traurig Hoffman Lipoff Rosen & Quentel (contained in Exhibit 5.1).
*25.1 Power of Attorney (included as part of the signature page to this Registration Statement and
incorporated herein by reference).
</TABLE>
- ------------
* Filed herewith electronically.
(1) Incorporated herein by reference. Filed as an exhibit to Amendment No. 1 to
the Company's Registration Statement on Form S-1, Registration No.
333-11813, filed with the Commission on October 18, 1996.
Item 9. Undertakings.
(a) The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) shall not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(b) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
II-3
<PAGE>
where applicable, each filing of the annual report of the employee benefit
plans pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Company certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Kennesaw, State of Georgia, on December 2,
1997.
COMMODORE SEPARATION TECHNOLOGIES, INC.
By: /s/ Paul E. Hannesson
---------------------------------------
Paul E. Hannesson
Chairman of the Board and Chief
Executive Officer
-------------------------------
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Paul E. Hannesson and Michael D. Fullwood, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name, place and stead,
in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, and any other regulatory
authority, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitutes, may lawfully do or cause to be done by virtue hereof.
-------------------------------
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
- ----------------------------- ---------------------------------------------- -----------------
<S> <C> <C>
/s/ Paul E. Hannesson Chairman of the Board and Chief Executive December 2, 1997
- ---------------------------- Officer (principal executive officer)
Paul E. Hannesson
/s/ Michael D. Fullwood Senior Vice President, Chief Financial and December 2, 1997
- ---------------------------- Administrative Officer, Secretary and General
Michael D. Fullwood Counsel (principal financial and accounting
officer)
/s/ Edwin L. Harper Vice Chairman December 2, 1997
- ----------------------------
Edwin L. Harper, Ph.D.
/s/ Bentley J. Blum Director December 2, 1997
- ----------------------------
Bentley J. Blum
/s/ Kenneth L. Adelman Director December 2, 1997
- ----------------------------
Kenneth L. Adelman, Ph.D.
/s/ William R. Toller Director December 2, 1997
- ----------------------------
William R. Toller
/s/ David L. Mitchell Director December 2, 1997
- ----------------------------
David L. Mitchell
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
4.1 Specimen Form of Common Stock Certificate. (1)
*4.2 Commodore Separation Technologies, Inc. 1996 Stock Option Plan.
*5.1 Opinion of Greenberg Traurig Hoffman Lipoff Rosen & Quentel.
*23.1 Consent of Tanner + Co.
*23.2 Consent of Price Waterhouse LLP.
*23.3 Consent of Greenberg Traurig Hoffman Lipoff Rosen & Quentel (contained in Exhibit 5.1).
*25.1 Power of Attorney (included as part of the signature page to this Registration Statement and
incorporated herein by reference).
</TABLE>
- ------------
* Filed herewith electronically.
(1) Incorporated herein by reference. Filed as an exhibit to Amendment No. 1 to
the Company's Registration Statement on Form S-1, Registration No.
333-11813, filed with the Commission on October 18, 1996.
<PAGE>
EXHIBIT 4.2
COMMODORE SEPARATION TECHNOLOGIES, INC.
1996 STOCK OPTION PLAN
A. Purposes.
The purposes of the Commodore Separation Technologies, Inc. 1996 Stock
Option Plan (this "Plan") are to aid Commodore Separation Technologies, Inc.
(the "Company") and its subsidiaries in attracting and retaining capable
management and employees and to enable officers, directors and selected key
employees and/or consultants of the Company and its subsidiaries to acquire or
increase ownership interest in the Company on a basis that will encourage them
to perform at increasing levels of effectiveness and use their best efforts to
promote the growth and profitability of the Company and its subsidiaries.
Consistent with these objectives, this Plan authorizes the granting to
officers, directors and selected key employees and/or consultants of options
(collectively, "Options") to acquire shares of the Company's common stock, par
value $.001 per share ("Common Stock"), pursuant to the terms and conditions
hereinafter set forth. As used herein, the term "subsidiary" has the same
meaning as is ascribed to the term "subsidiary corporation" under Section 424
of the Internal Revenue Code of 1986, as amended (the "Code").
Options granted hereunder may be (i) "Incentive Options" (which term, as
used herein, shall mean Options that are intended to be "incentive stock
options" within the meaning of Section 422A of the Code) granted to selected
key employees of the Company, or (ii) "Nonqualified Options" (which term, as
used herein, shall mean Options that are not intended to be Incentive Options)
granted to officers, directors and/or selected key employees and/or consultants
of the Company.
B. Effective Date.
This Plan shall be effective as of September 5, 1996, which is the date of
adoption of this Plan by the Board of Directors of the Company (the "Board")
and approval hereof by the sole stockholder of the Company.
C. Administration.
1. This Plan shall be administered by a committee (the "Committee")
consisting of two or more members of the Board, who are selected by the Board.
To the extent possible, all members of the Committee should qualify as both
"Non-employee Directors," as such term is used in Rule 16b-3 as promulgated by
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, and an "outside director" as used in Section 162(m) of the
Code. All Committee members shall serve, and may be removed, at the pleasure of
the Board. Notwithstanding any other provision of this Plan, in the event that
the Board does not appoint a Committee, the Board shall serve as the Committee
and all references to the Committee shall be treated as references to the
Board.
2. A majority of the members of the Committee (but not less than two)
shall constitute a quorum, and any action taken by a majority of such members
present at any meeting at which a quorum is present, or acts approved in
writing by all such members, shall be the acts of the Committee.
3. Subject to the other provisions of this Plan, the Committee shall have
full authority to decide the date or dates on which Options will be granted
under this Plan (in each instance, the "Date of Grant"), to determine whether
the Options to be granted shall be Incentive Options or Nonqualified Options,
or a combination of both, to select the officers, directors and/or key
employees and/or consultants to whom Options will be granted, to determine the
number of shares of Common Stock to be covered by each Option, the price at
which such shares may be purchased upon the exercise of such Option (the
"Exercise Price") and other terms and conditions of such purchase, any vesting
requirements to be applicable to any Options, and any other terms and
conditions not inconsistent with the requirements of this Plan. In making such
determinations, the Committee shall solicit the recommendations of the Chairman
and President of the Company and may take into account each proposed optionee's
present and potential contributions to the Company's business and any other
factors which the Committee may deem relevant. Subject to the other provisions
of this Plan, the Committee shall also have full authority to (i) interpret
this Plan and any stock option agreements evidencing Options granted hereunder
("Option Agreements"), (ii) issue rules for administering this Plan, (iii)
change, alter, amend or rescind such
1
<PAGE>
rules, and (iv) make all other determinations necessary or appropriate for the
administration of this Plan. All determinations, interpretations and
constructions made by the Committee pursuant to this Part C shall be final and
conclusive. No member of the Board or the Committee shall be liable for any
action, determination or omission taken or made in good faith with respect to
this Plan or any Option granted hereunder.
D. Eligibility.
1. Subject to the provisions of Part G below, key employees of the Company
and its subsidiaries (including officers and directors who are employees) shall
be eligible to receive Incentive Options under this Plan, as determined by the
Committee.
2. All officers, directors and other senior management of and/or key
employees or consultants to the Company (as determined by the Committee) shall
be eligible to receive Nonqualified Options under this Plan.
E. Option Shares.
1. The shares subject to Options granted under this Plan shall be shares
of Common Stock and, except as otherwise required or permitted by Part E,
Section 3 below, (i) the aggregate number of shares with respect to which
Incentive Options may be granted hereunder shall not exceed 202,500 shares, and
(ii) the aggregate number of shares with respect to which Nonqualified Options
may be granted hereunder shall not exceed 1,147,500 shares. If an Option
expires, terminates or is otherwise surrendered, in whole or in part, the
shares allocable to the unexercised portion of such Option shall again become
available for grants of Options hereunder. As determined from time to time by
the Board, the shares available under this Plan for grants of Options may
consist either in whole or in part of authorized but unissued shares of Common
Stock or shares of Common Stock which have been reacquired by the Company
following original issuance.
2. The aggregate number of shares of Common Stock as to which Incentive
Options and Nonqualified Options may be granted hereunder (as provided in Part
E, Section 1 above), the number of shares covered by each outstanding Option,
and the Exercise Price applicable to each outstanding Option shall be
proportionately adjusted for any increase or decrease in the number of issued
or outstanding shares of Common Stock resulting from a stock split, combination
of shares, recapitalization or other subdivision or consolidation of shares or
other adjustment, or the payment of a stock dividend in respect of the Common
Stock; provided, however, that any fractional shares resulting from any such
adjustment shall be eliminated.
3. The aggregate fair market value, determined on the Date of Grant, of
the shares of stock with respect to which Incentive Options are exercisable for
the first time by an Optionee (as such term is defined in Part F below) during
any calendar year (under all incentive stock option plans of the Company and
its subsidiaries) may not exceed $100,000. To the extent that the aggregate
fair market value (determined as of the Date of Grant) of Shares of stock with
respect to which Incentive Options granted to an Optionee under the Option Plan
or other plans maintained by the Company or its parent or subsidiaries exceeds
$100,000, such Incentive Options shall constitute Nonqualified Options. In
determining which Incentive Options will be treated as Nonqualified Options
pursuant to the immediately preceding sentence, the order in which Incentive
Options were granted shall be taken into account; Incentive Options granted
earlier shall have priority in maintaining their status as Incentive Options
over Incentive Options that were granted later.
F. Terms and Conditions of Options.
The Committee may, in its discretion, subject to Part D above, grant to
prospective optionees only Incentive Options, only Nonqualified Options, or a
combination of both, and each Option granted shall be clearly identified as to
its status. Each Option granted pursuant to this Plan shall be evidenced by an
Option Agreement between the Company and the officer, director, key employee
and/or consultant to whom the Option is granted (the "Optionee") in such form
or forms as the Committee, from time to time, shall prescribe, which agreements
may but need not be identical to each other, but shall comply with and be
subject to the following terms and conditions:
1. Exercise Price. The Exercise Price at which each share of Common Stock
may be purchased pursuant to an Option shall be determined by the Committee,
except that (i) subject to Part G below, the Exercise Price at which each share
of Common Stock may be purchased pursuant to an Incentive Option shall be not
less than
2
<PAGE>
100% of the fair market value for each such share on the Date of Grant of such
Incentive Option, as determined by the Committee in good faith in accordance
with Section 422A of the Code and applicable regulations thereunder, and (ii)
the Exercise Price at which each share of Common Stock may be purchased
pursuant to a Nonqualified Option shall be not less than 100% of the fair
market value for each such share on the Date of Grant of such Nonqualified
Option, determined by the Committee as aforesaid; provided, however, that if
the consolidated net pre-tax income of the Company and its subsidiaries in the
full fiscal year immediately preceding the Date of Grant of such Nonqualified
Option (the "Prior Year") exceeded 125% of the mean average annual consolidated
net pre-tax income of the Company and its subsidiaries for the three fiscal
years immediately preceding the Prior Year, then the Exercise Price per share
under such Nonqualified Option may be an amount not less than 85% of the fair
market value per share on the Date of Grant of such Nonqualified Option,
determined by the Committee as aforesaid. For purposes hereof, the consolidated
net pre-tax income of the Company and its subsidiaries for any fiscal year
shall be the consolidated net pre-tax income of the Company and its
subsidiaries as reflected in the Company's consolidated audited financial
statements for such fiscal year, prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout all periods in
question. Anything contained in this Part F, Section 1 to the contrary
notwithstanding, in the event that the number of shares of Common Stock subject
to any Option is adjusted pursuant to Part E, Section 2 above, a corresponding
adjustment shall be made in the Exercise Price per share.
2. Duration of Options. The duration of each Option granted hereunder
shall be determined by the Committee, except that (i) subject to Part G below,
each Incentive Option granted hereunder shall expire and all rights to purchase
shares of Common Stock pursuant thereto shall cease no later than that date
which is the day before the tenth anniversary of the Date of Grant of such
Incentive Option, and (ii) each Nonqualified Option granted hereunder shall
expire and all rights to purchase shares of Common Stock pursuant thereto shall
cease no later than that date which is the day before the eighth anniversary of
the Date of Grant of such Nonqualified Option, subject to extension by mutual
written agreement of the Company and the subject Optionee (in each instance,
the "Expiration Date").
3. Vesting of Options. The vesting of each Option granted hereunder shall
be determined by the Committee. Only the vested portion(s) of any Option may be
exercised. Anything contained in this Part F or in any Option Agreement to the
contrary notwithstanding, an Optionee shall become fully (100%) vested in each
of his or her Incentive Options upon his or her termination of employment with
the Company or any of its subsidiaries by reason of death, disability or
retirement at age 65 or older in accordance with the Company's standard
retirement procedures then in effect (with such retirement being hereinafter
referred to as "retirement"). The Committee shall, in its sole discretion,
determine whether or not disability or retirement has occurred.
4. Merger, Consolidation, etc. In the event that the Company shall,
pursuant to action by the Board, at any time propose to merge into, consolidate
with, or sell or otherwise transfer all or substantially all of its assets to,
another corporation and provision is not made pursuant to the terms of such
transaction for (i) the assumption by the surviving, resulting or acquiring
corporation of all outstanding Options granted pursuant to this Plan, (ii) the
substitution of new options therefor, or (iii) the payment of cash or other
consideration in respect thereof, then the Committee shall cause written notice
of the proposed transaction to be given to each Optionee not less than thirty
(30) days prior to the anticipated effective date of the proposed transaction.
On a date which the Committee shall specify in such notice, which date shall be
not less than ten (10) days prior to the anticipated effective date of the
proposed transaction, each Optionee's Options shall become fully (100%) vested
and each Optionee shall have the right to exercise his or her Options to
purchase any or all shares then subject to such Options; and if the proposed
transaction is consummated, each Option, to the extent not previously exercised
prior to the effective date of the transaction, shall terminate on such
effective date. If the proposed transaction is abandoned or otherwise not
consummated, then to the extent that any Option not exercised prior to such
abandonment shall have vested solely by operation of this Part F, Section 4,
such vesting shall be annulled and be of no further force or effect and the
vesting period otherwise established for or applicable to such Option pursuant
to Part F, Section 3 above shall be reinstituted as of the date of such
abandonment; provided, however, that nothing herein contained shall be deemed
to retroactively affect or impair any exercise of any such vested Option prior
to the date of such abandonment.
5. Exercise of Options. A person entitled to exercise an Option, or any
portion thereof, may exercise it (or such vested portion thereof) in whole at
any time, or in part from time to time, by delivering to the Company
3
<PAGE>
at its principal office, directed to the attention of the President of the
Company or such other duly elected officer as shall be designated in writing by
the Committee to the Optionee, written notice specifying the number of shares
of Common Stock with respect to which the Option is being exercised, together
with payment in full of the aggregate Exercise Price for such shares. Such
payment shall be made in cash or by certified check or bank draft payable to
the order of the Company; provided, however, that the Committee may, in its
sole discretion, authorize such payment, in whole or in part, in any other
form, including payment by personal check or by the exchange of shares of
Common Stock owned of record by the person entitled to exercise the Option and
having a fair market value on the date of exercise equal to the price for which
the shares of Common Stock may be purchased pursuant to the Option.
6. Non-Transferability. No Incentive Option granted hereunder shall be
transferable other than by will or the laws of descent and distribution, and
during the subject Optionee's lifetime, no Incentive Option granted hereunder
may be exercised by anyone other than such Optionee; provided, however, that if
the Optionee dies or becomes incapacitated, the Incentive Option may be
exercised by his or her estate, legal representative or beneficiary, as the
case may be, subject to all other terms and conditions contained in this Plan
and the applicable Option Agreement. Any Nonqualified Option granted hereunder
may, if so provided in the subject Option Agreement, be transferable to members
of the Optionee's immediate family or by will or by the laws of decent and
distribution, and may, if so provided in the subject Option Agreement, be
pledged as collateral security in favor of another permitted holder of a
Nonqualified Option hereunder, solely as collateral for a loan made by such
other holder to the person making such pledge.
7. Termination of Employment; Competition. The following provisions shall
apply in the event of an Optionee's engaging in competition with the Company or
any of its subsidiaries, or in the event of the termination of an Optionee's
employment with the Company or any of its subsidiaries:
a. In the event that an Optionee shall engage or participate in, or
become involved with, in any manner or capacity (whether as employee,
agent, consultant, advisor, officer, director, manager, partner, joint
venturer, investor, shareholder (other than passive investments in less
than 5% of the outstanding securities of any company) or otherwise), any
business enterprise which is engaged in or derives any material revenues
from or is developing any form of membrane separation technology, or is
engaged in any other business conducted or operated by the Company or any
of its subsidiaries on the date on which such Optionee first became
involved with such other business enterprise, or in the event that an
Optionee's employment with the Company or any of its subsidiaries shall be
terminated either (A) by the Company or any of its subsidiaries for "Cause"
(as defined in any applicable employment agreement to which such Optionee
is a party), or (in the absence of a definition contained in any applicable
employment agreement) for fraud, dishonesty, habitual drunkenness or drug
use, for willful disregard of assigned duties or instructions by such
Optionee, or for concrete actions causing substantial harm to the Company
or any of its subsidiaries, or for other material breach by the Optionee of
any applicable employment agreement to which the Optionee is a party, or
(B) by the Optionee voluntarily and without the written consent of the
Company, then all outstanding Options granted hereunder to such Optionee
shall automatically and immediately terminate at the time that notice of
termination of employment is given, and shall not then or thereafter be
exercisable in whole or in part; provided, however, that nothing herein
contained shall be deemed to modify or amend the terms and conditions of
any applicable employment agreement, including but not limited to the
grounds upon which any Optionee's employment may be terminated.
b. In the event that an Optionee's employment with the Company or any of
its subsidiaries shall terminate (A) by reason of retirement, or (B) under
circumstances other than those specified in Part F, Section 7(a) above and
for other than death or disability, then all outstanding Options granted
hereunder to such Optionee shall terminate three (3) months after the date
of such termination of employment or on the Expiration Date, whichever
shall first occur; provided, however, that if such Optionee dies within
such three (3) month period, then all outstanding Options granted hereunder
to such Optionee shall terminate on the first anniversary of such
Optionee's death or on the Expiration Date, whichever shall first occur.
c. In the event of the death or disability of an Optionee while such
Optionee is employed by the Company or any of its subsidiaries, all
outstanding Options granted hereunder to such Optionee shall terminate on
the first anniversary of such death or disability, as the case may be, or
on the Expiration Date, whichever shall first occur.
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d. Anything contained in this Part F to the contrary notwithstanding, an
Option granted pursuant to this Plan may only be exercised following the
subject Optionee's termination of employment with the Company or any of its
subsidiaries for reasons other than death, disability or retirement if, and
to the extent that, such Option was exercisable immediately prior to such
termination of employment.
e. An Optionee's transfer of employment between the Company and any of
its subsidiaries or between subsidiaries shall not constitute a termination
of employment, and the Committee shall determine in each case whether an
authorized leave of absence for professional education, military service or
otherwise shall constitute a termination of employment.
f. Nothing contained in this Part F, Section 7 shall be deemed to modify
or affect any vesting schedule provided in any Option Agreement, which
vesting schedule shall continue in effect and be applied and enforced
notwithstanding any modification of the exercise period arising by reason
of the application of this Part F, Section 7.
8. No Rights as a Stockholder or to Continued Employment. No Optionee
shall have any rights as a stockholder of the Company with respect to any
shares covered by an Option prior to the date of issuance to such Optionee of
the certificate or certificates for such shares. Neither this Plan nor any
Option granted hereunder shall confer upon an Optionee any right to continued
employment by the Company or any of its subsidiaries or interfere in any way
with the right of the Company or its subsidiaries to terminate the employment
of such Optionee (subject to the terms and conditions of any applicable
employment agreement between the Company or any of its subsidiaries and the
subject Optionee).
9. Designation. Each Option Agreement entered into pursuant to this Plan
shall specify whether the Options evidenced thereby are Incentive Options,
Nonqualified Options, or a combination of both.
10. Other Terms and Conditions. Any Option Agreement entered into pursuant
to this Plan may contain such further terms and conditions (including, at any
time when the Common Stock is not traded on any national or regional securities
exchange or listed on any recognized automated quotation system such as NASDAQ,
a right of first refusal in favor of the Company in the event that the Optionee
shall seek to transfer any shares acquired upon exercise of the subject Option)
as the Committee may determine, provided that such other terms and conditions
are not in violation of, in conflict with or otherwise inconsistent with the
requirements of this Plan.
G. Ten Percent Stockholders.
The Committee shall not grant an Incentive Option to an individual who, at
the time such Incentive Option is to be granted, owns (directly or by
attribution pursuant to Section 424(d) of the Code) shares of capital stock of
the Company possessing more than 10% of the voting power of all classes of
capital stock of the Company unless (a) the Exercise Price at which each share
of Common Stock may be purchased pursuant to such Incentive Option is at least
110% of the fair market value of each such share on the Date of Grant
(determined as provided in Section F(1)(i) above), and (b) such Incentive
Option, by its terms, is not exercisable after the expiration of five years
from the Date of Grant thereof.
H. Issuance of Shares; Restrictions.
1. Subject to the conditions, restrictions and other qualifications
provided in this Part H, the Company shall, within thirty (30) business days
after an Option has been duly exercised in whole or in part, deliver to the
person who exercised the Option one or more certificates, registered in the
name of such person, for the number of shares of Common Stock with respect to
which the Option has been exercised. The Company may legend any stock
certificate issued hereunder to reflect any restrictions provided for in this
Part H, including but not limited to a "stop transfer" legend pursuant to
Section 2 below of this Part H.
2. Unless the shares subject to Options granted under the Plan have been
registered under the Securities Act of 1933, as amended (the "Act") (and, if
the person exercising the Option may be deemed an "affiliate" of the Company as
such term is defined in Rule 405 under the Act, such shares have been
registered under the Act for resale by such person), or the Company has
determined that an exemption from registration under the Act is available, the
Company may require, prior to and as a condition of the issuance of any shares
of Common
5
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Stock upon exercise of any Option, that the person exercising such Option
hereunder furnish the Company with a written representation in a form
prescribed by the Committee to the effect that such person is acquiring such
shares solely with a view to investment for his or her own account and not with
a view to the resale or distribution of all or any part thereof, and that such
person will not dispose of any of such shares otherwise than in accordance with
the provisions of Rule 144 under the Act unless and until either the sale or
distribution of such shares is registered under the Act or the Company is
satisfied that an exemption from such registration is available.
Anything herein contained to the contrary notwithstanding, the Company
shall not be obligated to sell or issue any shares of Common Stock pursuant to
the exercise of an Option granted hereunder unless and until the Company is
satisfied that such sale or issuance complies with all applicable provisions of
the Act and all other laws and/or regulations by which the Company is bound or
to which the Company or such shares may be subject; and the Company reserves
the right to delay the issuance and/or delivery of shares of Common Stock for
such period of time as may be required in order to effect compliance with the
applicable provisions of the Act and all other applicable laws and/or
regulations as aforesaid.
I. Substitute Options.
Anything herein contained to the contrary notwithstanding, Options may, at
the discretion of the Board, be granted under this Plan in substitution for
options to purchase shares of capital stock of another corporation which is
merged into, consolidated with or all or a substantial portion of the property
or stock of which is acquired by, the Company or a subsidiary. The terms,
provisions and benefits to each Optionee under such substitute Options shall in
all respects be identical to the terms, provisions and benefits to such
Optionee of his or her options of the other corporation on the date of
substitution, except that such substitute Options shall provide for the
purchase of shares of Common Stock of the Company instead of shares of such
other corporation.
J. Term of this Plan.
Unless this Plan has been sooner terminated pursuant to Section K below,
this Plan shall terminate on, and no Options hereunder shall be granted after,
the tenth (10th) anniversary of the date of Board adoption of this Plan.
Notwithstanding any such Plan termination, the provisions of this Plan shall
nonetheless continue thereafter to govern all Options theretofore granted
(including but not limited to any Nonqualified Options the Expiration Date of
which is extended to any date subsequent to the termination of this Plan) until
the exercise, expiration or cancellation of such Options.
K. Amendment and Termination of Plan.
The Board may at any time terminate this Plan, or amend this Plan from
time to time in such respects as the Board deems desirable; provided, however,
that, without the further approval of the Company's stockholders if such
stockholder approval is required by any federal or state law or regulation
(including without limitation, Rule 16b-3 or to comply with Section 162(m) of
the Code) or the rules of any stock exchange or automated quotation system on
which the Common Stock may then be listed or traded; and further provided,
that, subject to the provisions of Sections F and H above, no termination
hereof or amendment hereto shall adversely affect the rights of an Optionee or
other person holding an Option theretofore granted hereunder without the
consent of such Optionee or other person, as the case may be.
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EXHIBIT 5.1
[GREENBERG TRAURIG HOFFMAN LIPOFF ROSEN & QUENTEL LETTERHEAD]
December 5, 1997
Commodore Separation Technologies, Inc.
3240 Town Point Drive, Suite 200
Kennesaw, Georgia 30144
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel to Commodore Separation Technologies, Inc., a
Delaware corporation (the "Company"), in connection with the preparation of a
Registration Statement on Form S-8 (the "Registration Statement") to be filed
under the Securities Act of 1933, as amended (the "Securities Act"), for the
registration of an aggregate of 1,350,000 shares (the "Shares") of the
Company's common stock, par value $.001 per share (the "Common Stock"),
consisting of: (a) 996,689 shares of Common Stock issuable upon exercise of
currently outstanding options heretofore granted under the Commodore Separation
Technologies, Inc. 1996 Stock Option Plan (the "Plan"); and (b) 353,311 shares
of Common Stock underlying options presently available to be granted under the
Plan.
In connection with this opinion, we have examined the Registration
Statement, the Company's Certificate of Incorporation, By-Laws and minutes, and
such other documents and records as we have deemed relevant. In our
examinations, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
with the originals of all documents submitted to us as copies. In addition, we
have made such other examinations of law and of fact as we have deemed
appropriate in order to form a basis for the opinion hereinafter expressed.
With respect to the issuance of the Shares by the Company, we have assumed
that the Shares will be issued, and the certificates evidencing the same will
be duly delivered, in accordance with the respective terms of the Plan, and
against receipt of the consideration stipulated therefor, which will not be
less than the par value of the Shares.
Based on the foregoing, we are of the opinion that the Shares have been
duly authorized and, when issued and paid for in accordance with the foregoing
assumptions, will be validly issued, fully paid and non-assessable.
The opinion set forth above is limited to the Delaware General Corporation
Law, as amended.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this opinion and consent, we do not thereby
admit that we are acting within the category of persons whose consent is
required under Section 7 of the Securities Act, or the rules and regulations of
the Securities and Exchange Commission promulgated thereunder.
Very truly yours,
/s/ GREENBERG TRAURIG HOFFMAN LIPOFF
ROSEN & QUENTEL
<PAGE>
EXHIBIT 23.1
TANNER + CO.
Certified Public Accountants
675 East 500 South, Suite 640
Salt Lake City, Utah 84102
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8, and in the Prospectus constituting a part thereof, of
our report dated August 1, 1996, relating to the financial statements of
Commodore Separation Technologies, Inc. (the "Company") for the year ended June
30, 1996, which appears on page F-1A of the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1997, and to the reference of our firm
under the caption "Experts" in the Prospectus.
/s/ Tanner + Co.
- -----------
Tanner + Co.
Salt Lake City, Utah
December 5, 1997
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8, and in the Prospectus constituting a part thereof, of
our report dated August 6, 1997 appearing on page F-1 of Commodore Separation
Technologies, Inc.'s Annual Report on Form 10-K for the fiscal year ended June
30, 1997. We also consent to the reference to us under the caption "Experts" in
such Prospectus.
/s/ Price Waterhouse LLP
Philadelphia, Pennsylvania
December 5, 1997
