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As filed with the Securities and Exchange Commission on May 4, 2000
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Registration No. 333-______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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U.S. ENERGY SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 52-1216347
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
515 N. FLAGLER DRIVE, SUITE 702
WEST PALM BEACH, FLORIDA 33401
(561) 820-9779
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
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SEYMOUR J. BEDER
CHIEF FINANCIAL OFFICER AND TREASURER
U.S. ENERGY SYSTEMS, INC.
515 N. FLAGLER DRIVE, SUITE 702
WEST PALM BEACH, FLORIDA 33401
(561) 820-9779
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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COPIES OF COMMUNICATIONS TO:
PAUL BERKOWITZ, ESQ.
JASON S. THALER, ESQ.
GREENBERG TRAURIG, P.A.
1221 BRICKELL AVENUE
MIAMI, FLORIDA 33131
(305) 579-0500
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO
THE PUBLIC: From time to time after this Registration
Statement becomes effective.
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If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. If this Form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------- ---------------------------- ------------------------- -------------------------
TITLE OF SHARES AMOUNT TO BE PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED REGISTERED AGGREGATE OFFERING REGISTRATION FEE
PRICE(1)
- -------------------------------------------------- ---------------------------- ------------------------- -------------------------
<S> <C> <C> <C>
Common Stock, par value $0.01 per share, all
of which are issuable upon conversion of
certain convertible preferred stock........ 5,178,375 $23,788,160 $6,280.07
- -------------------------------------------------- ---------------------------- ------------------------- -------------------------
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee, and
pursuant to Rule 457(c), based on the average of the high and low price for
the Common Stock reported by the Nasdaq Stock Market on May 2, 2000.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER OR SALE IS NOT PERMITTED.
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PROSPECTUS
MAY 4, 2000
U.S. ENERGY SYSTEMS, INC.
5,178,375 SHARES OF COMMON STOCK
($0.01 PAR VALUE)
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The selling shareholders are offering up to 5,178,375 shares of our
common stock. We will issue these shares upon conversion of (i) 1,138,889 shares
of our Series A Convertible Preferred Stock, (ii) 509 shares of our Series B
Convertible Preferred Stock, (iii) 114,000 common stock purchase warrants issued
in connection with our acquisition of Plymouth Cogeneration in 1994, (iv)
125,000 common stock purchase warrants issued to holders of our 9% debentures,
(v) debentures convertible into 45,750 shares of common stock, and (vi) 149,000
options to purchase common stock not covered under any of our stock option
plans. Additionally, we are registering 25,000 shares of common stock held by
the Estate of Richard H. Nelson, our former President and CEO, 21,662 shares of
common stock held by Energy Systems Investors, LLC and 2,407 shares of common
stock held by Lawrence I. Schneider, our President and Chief Executive Officer.
We will not receive any proceeds from the sale of common stock under
this prospectus.
Our common stock is traded on the Nasdaq Stock Market under the symbol
"USEY". On May 2, 2000, the closing price of our common stock as reported by
Nasdaq was $4.50 per share.
The selling shareholders may offer the shares through public or private
transactions, on or off Nasdaq, at prevailing market prices or at privately
negotiated prices. The selling shareholders may make sales directly to
purchasers or through agents, dealers or underwriters.
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 6 OF
THIS PROSPECTUS.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these shares or determined if this
prospectus is truthful and complete. Any representation to the contrary is a
criminal offense.
THE DATE OF THIS PROSPECTUS IS MAY 4, 2000
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS.
WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM
THAT CONTAINED IN THIS PROSPECTUS. THE SELLING SHAREHOLDERS ARE OFFERING TO
SELL, AND SEEKING OFFERS TO BUY, SHARES OF COMMON STOCK ONLY IN JURISDICTIONS
WHERE OFFERS AND SALES ARE PERMITTED. THE INFORMATION CONTAINED IN THIS
PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE
TIME OF DELIVERY OF THE PROSPECTUS OR OF ANY SALE OF THE COMMON STOCK.
TABLE OF CONTENTS
PAGE
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Prospectus Summary...........................................................3
Risk Factors.................................................................6
Note Regarding Forward-Looking Statements...................................12
Use Of Proceeds.............................................................12
Selling Shareholders........................................................13
Plan Of Distribution........................................................16
Legal Matters...............................................................16
Experts.....................................................................17
Where You Can Find More Information.........................................17
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PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION AND DOES NOT CONTAIN ALL
THE INFORMATION THAT IS IMPORTANT TO YOU. YOU SHOULD CAREFULLY READ THIS
PROSPECTUS AND THE DOCUMENTS WE HAVE REFERRED YOU TO IN "WHERE YOU CAN FIND MORE
INFORMATION" ON PAGE 17 FOR MORE INFORMATION ABOUT OUR COMPANY AND OUR FINANCIAL
STATEMENTS. IN THIS PROSPECTUS, REFERENCES TO "U.S. ENERGY," "WE," "OUR" AND
"US" REFER TO U.S. ENERGY SYSTEMS, INC.
YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED
INFORMATION ABOUT OUR COMPANY AND THE COMMON STOCK BEING SOLD IN THIS OFFERING
AND OUR FINANCIAL STATEMENTS AND THE NOTES TO THOSE STATEMENTS INCLUDED
ELSEWHERE IN THIS PROSPECTUS.
U.S. ENERGY SYSTEMS, INC.
Our business is composed of two separate but interrelated divisions:
o the energy division, which develops, owns and operates cogeneration
and independent energy facilities, and
o the environmental division, which furnishes environmental consulting
and remediation services, recovers and recycles used motor and
industrial oil, and processes waste water.
ENERGY DIVISION
We are a project developer, owner and operator of independent power
plants. Independent power plants produce electricity for sale either to direct
end users or to regulated public electric utility companies. Generally,
independent power plants have emerged as a result of federal and state laws
promulgated to eliminate the monopoly previously held by regulated electric
companies over the production and sale of electric power. The laws were passed
to enhance competition, as well as to encourage the production of cleaner and
more environmentally-friendly power in the United States.
Energy projects and facilities which we currently own or operate
include:
o STEAMBOAT 1 AND 1A GEOTHERMAL POWER PLANTS. Our 95%-owned
subsidiary, Steamboat Envirosystems, LLC, owns Steamboat 1 and 1A,
two geothermal power plants in Steamboat Hills, Nevada. Steamboat 1
and 1A produce a combined eight megawatts of electric power which is
sold under two power purchase agreements with Sierra Pacific Power
Company.
o STEAMBOAT 2 AND 3 GEOTHERMAL POWER PLANTS. As previously announced,
we reached agreement in principle with Far West Capital, Inc. to
acquire the Steamboat 2 and 3 geothermal power plants. The original
letter of intent has expired but the parties are continuing to work
together to put a final agreement in place. The plants, which
produce an aggregate of 40 megawatts of power, generate
approximately $12 million in annual sales under a long term contract
for sale of power to Sierra Pacific Power Corp.
o PLYMOUTH STATE COLLEGE, NEW HAMPSHIRE. In 1994, we acquired a 50%
interest in Plymouth Cogeneration Limited Partnership which owns and
operates a cogeneration plant producing 2.5 megawatts of electricity
and 25 million BTUs of heat at Plymouth State College, in Plymouth,
New Hampshire. The Plymouth facility provides 100% of the electrical
and heating requirements for the campus, which is a part of the
University of New Hampshire system, under a 20-year contract.
o LEHI COGENERATION PROJECT, UTAH. In January 1994, we purchased a 50%
equity interest in Lehi Independent Power Associates, which owns a
cogeneration facility in Lehi, Utah. The Lehi facility has been
dormant since 1990, and we, together with our partners, have been
exploring alternatives to initiate operations at the Lehi facility.
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o RENO ENERGY DISTRICT HEATING PROJECT. We have an 89.6% interest in
USE Geothermal, LLC, which provided a loan in the approximate amount
of $1.6 million to Reno Energy LLC. The loan is convertible into a
50% equity interest in Reno Energy for no additional consideration.
The proceeds of the loan are to be used to provide engineering,
design and financial services in connection with a facility which
will use geothermally-heated fresh water for space heating and
cooling, as well as for process heating, for nearby developments,
including an industrial park in South Meadows, Nevada. The Reno
facility is still in the planning and development stage. We believe
that when completed, the Reno facility will be the largest
geothermal district heating facility in the United States. The Reno
facility is scheduled to begin operations in 2001.
ENVIRONMENTAL DIVISION
Our acquisition of American Enviro-Services, Inc. in August 1997 marked
our expansion into the environmental services field. American Enviro-Services is
a primary supplier of a broad range of environmental services in the mid-western
United States, including:
o environmental assessments,
o oil and waste recycling;
o emergency response, and
o environmental remediation.
We currently have contracts with over 1,100 companies for the recovery,
hauling and recycling of industrial waste oil and water. We also contract with
local, state and federal governmental agencies and commercial businesses for the
cleanup and remediation of oil spills and leaks, Phase I, II and III
environmental assessments, emergency environmental response services,
remediation and other environmental and environmental-related services. At its
facilities in Newburgh, Indiana, American Enviro-Services converts otherwise
hazardous substances into environmentally and ecologically sound fuel and cleans
polluted soil and water. American Enviro-Services has also developed a system
for recovery and reprocessing of oil from spills on inland waterways. We
expanded our environmental division in January 1998 when we acquired
Commonwealth Petroleum Recycling, Inc., a waste oil recycling company located in
Shelbyville, Kentucky.
A large portion of the operations of our environmental division
consists of environmental remediation, clean-up and monitoring. Examples of the
projects currently in progress are the following:
o We continue to work on a three-year contract with the Warrick County
Commission to oversee and manage the closure and monitoring of the
solid waste landfill, along with all substations, in the County of
Warrick, Indiana. The contract, which commenced in March 1998,
requires that we close and monitor the landfill, build a transfer
station, and expand and redesign the substations and the recycling
facility for the County.
o We have expanded our services to provide emergency response on
inland waterways. These services have been approved by the United
States Coast Guard. The waterway response system includes 2,000 feet
of containment booms, a pontoon recovery system, a drum skimmer and
a 19 foot support boat, in addition to the on-shore recovery and
handling equipment. All recovered fluid is transported to the
American Enviro-Services treatment and recycling facilities.
o Our emergency response division has expanded and maintains fully
trained and equipped personnel, including emergency medical
technicians, to perform permitted confined space entry and confined
space rescue. A confined space has limited or restricted means for
entry or exit, and includes tanks, vessels, silos, storage bins,
hoppers, vaults and pits. OSHA guidelines specify that such rescuers
must be adequately equipped and trained to respond effectively to
rescue calls. In our operational area we are the only company that
meets these requirements.
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o American Enviro-Systems has recently expanded into the clean up and
disposal of material from clandestine laboratories. The recent
growth in illegal methamphetamine laboratories has provided new
opportunities for emergency response services. American
Enviro-Systems has signed service contracts with state and federal
enforcement agencies to clean up these sites.
While separate from our energy operations, the environmental division
serves several complementary needs, including environmental consultation and the
recovery and recycling of waste motor oils which potentially can be used to fuel
our power plants and those of third parties. We plan to use the services of our
environmental division in our energy operations and to expand this area of our
business through internal growth and acquisitions.
We were created in 1993 through the merger of Utility Systems Florida,
Inc. and Cogenic Energy Systems, Inc. Cogenic was originally incorporated in
1981 and filed for protection under Chapter 11 of the Bankruptcy Code in 1990.
Pursuant to a USF proposed plan of reorganization, which was approved by the
court in late 1993, USF merged into Cogenic. The resulting entity was renamed
U.S. Envirosystems, Inc. In May 1996, our name was changed to U.S. Energy
Systems, Inc. Our executive offices are located at 515 N. Flagler Drive, Suite
702, West Palm Beach, Florida 33401. Our telephone number is (561) 820-9779.
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RISK FACTORS
You should carefully consider the following risks, together with the
other information contained in this prospectus, before making an investment
decision. We may also face some non-material risks which we have not discussed
in the following description of our risk factors. If any of the following risks
occur, our business, financial condition or results of operations could be
materially adversely affected and the trading price of our common stock and
warrants could decline.
RISKS RELATED TO OUR COMPANY:
WE HAVE HAD A HISTORY OF LOSSES SUBSTANTIALLY THROUGHOUT OUR EXISTENCE.
We have a history of losses. Recent net losses before extraordinary
items, litigation settlement costs and preferred stock dividends are as follows:
For the year ended January 31, 1998...................... $767,000
For the year ended January 31, 1999...................... $522,000
For the year ended January 31, 2000...................... $467,000
To date, the Lehi facility has not been operational and Reno Energy is
still in development. We believe that there may eventually be revenue, positive
cash flow and profits from Lehi and Reno Energy, but there can be no assurances
that this will occur. Although the Plymouth cogeneration plant has not provided
profits, such profits are expected to begin in the year 2001.
WE HAVE LIMITED AVAILABLE CAPITAL, AND WE MAY NEED ADDITIONAL FINANCING IN THE
FUTURE.
While we believe that our current and anticipated cash flow from
operations will be sufficient to meet our anticipated cash requirements for the
next twelve months, there is no assurance in this regard. Unless we generate
cash flows from operations to fund our working capital needs, we will be
required to obtain additional equity or debt financing to continue to operate
our business. If we should require additional capital, there can be no assurance
that this capital will be available to us, or if available, that it would be on
terms acceptable to us. If additional funds are raised by issuing equity
securities, significant dilution to existing stockholders may result. Any
inability by us to obtain additional financing, if required, will have a
material adverse effect on our operations, including the possible cessation of
operations.
We anticipate that some projects, if undertaken, will require us to
raise additional capital and there can be no assurance that capital will be
available on terms acceptable to us. If additional financing is not available on
acceptable terms, we may have to cancel, decline or defer new projects.
WE MAY FACE SUBSTANTIAL IMPEDIMENTS TO COMPLETING FUTURE ACQUISITIONS.
Our future growth strategy depends on our ability to identify and
acquire appropriate companies or power facilities in our existing lines of
business and companies operating in related lines of business, to integrate the
acquired operations effectively and to increase our market share. A number of
our competitors are better known companies with significantly greater financial
resources. We cannot assure you that we will be able to identify viable
acquisition candidates, that any identified candidates will be acquired, that
acquired companies or power facilities will be effectively integrated to realize
expected efficiencies and economies of scale, or that any acquisitions will
prove to be profitable. Acquisition of companies or power facilities requires
the expenditure of sizeable amounts of capital, and the intense competition
among companies pursuing similar acquisitions may further increase our capital
requirements. In the event that acquisition candidates are not identifiable or
acquisitions are prohibitively costly, we may be forced to alter our future
growth strategy. As we continue to pursue our acquisition strategy in the
future, our stock price, financial condition and results of operations may
fluctuate significantly from period to period.
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There may be liabilities which we fail or are unable to discover in the
course of performing due diligence investigations on each company or business we
seek to acquire, including liabilities arising from non-compliance with federal,
state or local environmental laws by prior owners, and for which we, as a
successor owner, may be responsible. We generally seek to minimize our exposure
to these liabilities by obtaining indemnification from each former owner, which
may be supported by deferring payment of a portion of the purchase price.
However, we cannot assure you that those indemnifications, even if obtainable,
enforceable and collectible, will be sufficient in amount, scope or duration to
fully offset the possible liabilities arising from the acquisitions.
WE RELY HEAVILY ON OUR EXECUTIVE MANAGEMENT.
We rely heavily upon our executive officers and key employees,
particularly our President and Chief Executive Officer, Lawrence I. Schneider,
who assumed this position at the sudden unexpected death of our former President
and Chief Executive Officer, Richard H. Nelson, on January 24, 2000. We are also
dependent on Howard Nevins, our Executive Vice President, who heads our
environmental division. The loss of either of these persons could have a
detrimental effect on us.
ALTHOUGH WE HAVE INSURANCE, IT MAY NOT COVER EVERY POTENTIAL RISK ASSOCIATED
WITH OUT OPERATIONS.
Although we maintain insurance of various types to cover many of the
risks that apply to our operations, including $2,000,000 of general liability
insurance as well as separate insurance for each project and separate insurance
for the operations of American Enviro-Services, our planned insurance will not
cover every potential risk associated with our operations. The occurrence of a
significant adverse event, the risks of which are not fully covered by
insurance, could have a material adverse effect on our financial condition and
results of operations. Moreover, no assurance can be given that we will be able
to maintain adequate insurance in the future at rates it considers reasonable.
WE HAVE A SIGNIFICANT NUMBER OF OPTIONS AND OTHER CONVERTIBLE SECURITIES
OUTSTANDING WHICH WILL HAVE A DILUTIVE EFFECT ON YOU BY DECREASING YOUR
PERCENTAGE OWNERSHIP OF OUR COMPANY.
We have outstanding options and other convertible securities which
provide for the issuance of an aggregate of 9,771,309 shares of common stock.
The exercise and conversion of these options and convertible securities, and the
issuances of common stock, will have a dilutive effect on our stockholders by
decreasing their percentage ownership in the company. Moreover, the holders of
these securities would be most likely to exercise or convert the securities at a
time when we could obtain capital by a new offering of securities on terms more
favorable than those provided by these securities. Consequently, the terms on
which we could obtain additional capital may be adversely affected.
THERE ARE MANY SHARES OF OUR COMMON STOCK ELIGIBLE FOR FUTURE SALE WHICH MAY
CAUSE THE MARKET PRICE OF OUR COMMON STOCK TO DROP SIGNIFICANTLY, EVEN IF OUR
BUSINESS IS DOING WELL.
The possibility that substantial amounts of our common stock may be
issued or freely resold in the public market may adversely affect prevailing
market prices for our common stock , even if our business is doing well. BASED
ON THE NUMBER OF OUR OUTSTANDING SHARES OF COMMON STOCK AT JANUARY 28, 2000, WE
WILL HAVE 9,549,124 SHARES OUTSTANDING UPON THE COMPLETION OF THIS OFFERING,
INCLUDING AN ADDITIONAL 7,600 SHARES OF COMMON STOCK HELD IN TREASURY. WE WILL
HAVE AN ADDITIONAL 9,771,309 SHARES RESERVED FOR ISSUANCE UPON THE CONVERSION OR
EXERCISE OF OUR OUTSTANDING CONVERTIBLE SECURITIES, OPTIONS OR WARRANTS. The
market price of our common stock could drop significantly if the holders of
these securities sell the underlying shares of common stock or if the market
perceives that they are intending to sell them. For a more detailed description,
see "Shares Eligible for Future Sale."
ANTI-TAKEOVER PROVISIONS COULD PREVENT OR DELAY A CHANGE IN CONTROL OF OUR
COMPANY.
Provisions of our certificate of incorporation and Delaware law could
make it more difficult for a third party to acquire us, even if doing so would
be beneficial to our stockholders. See "Description of Capital Stock."
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WE DO NOT INTEND TO PAY DIVIDENDS.
We have never declared or paid dividends on our common stock and
currently do not intend to pay dividends in the foreseeable future. The payment
of dividends in the future will be at the discretion of the Board of Directors.
OUR DIRECTORS HAVE LIMITED LIABILITY.
Our Certificate of Incorporation limits the liability of directors to
the maximum extent permitted by Delaware law. Delaware law provides that
directors of a corporation will not be liable to the corporation or its
stockholders for expenses incurred in derivative or third party actions arising
from a breach of their fiduciary duty as directors, except in some limited
circumstances. Accordingly, except in those circumstances, our directors will
not be liable to us or our stockholders for breach of their duty.
YOU MAY EXPERIENCE POTENTIAL ADVERSE EFFECTS OF THE REDEMPTION OF THE WARRANTS.
We may call the warrants for redemption at a redemption price of $.01
per warrant upon not less that 30 business days' prior written notice if the
last sale price of the common stock has been at least $6.00 on all 20 of the
last trading days ending on the third day prior to the date on which notice is
given. Notice of redemption of the warrants could force you to exercise the
warrants and pay the exercise price at a time when it may be disadvantageous for
you to do so, to sell the warrants at the current market price when you may
otherwise wish to hold the warrants, or to accept the redemption price, which
would be substantially less than the market value of the warrants at the time of
redemption.
RISKS RELATED TO OUR ENERGY BUSINESS:
THE ENERGY BUSINESS IS VERY COMPETITIVE AND INCREASED COMPETITION COULD
ADVERSELY AFFECT US.
In addition to competition from electric utilities in the markets where
our projects are located, our energy division also faces competition from
approximately 150 companies currently involved in the cogeneration and
independent power market throughout the United States. Some of these companies
are larger and better financed than we are. Although we believe that we will be
entering segments of the marketplace where we will not face extensive
competition, we cannot assure you that we will be able to enter these markets or
that there will not be competition in such markets. The entire industry also may
face competition from existing investor-owned utility companies and may be
adversely affected by the prices charged by those companies for conventional
energy sources, which, in turn, are affected by inflation and availability of
fossil fuel.
WE OPERATE IN AN EMERGING INDUSTRY AND HAVE LIMITED MARKETING CAPABILITIES.
Although the cogeneration and independent power plant industries have
been in existence for a number of years, they are still in their development
stages. As is typically the case in an emerging industry, levels of demand and
market acceptance for products and services are highly uncertain. We began
developing new power projects in November 1993, but have not yet commenced
significant marketing activities and currently have limited power marketing
experiences as well as limited financial, personnel and other resources to
undertake extensive marketing activities.
WE MAY EXPERIENCE PROJECT DEVELOPMENT RISKS.
Our ability to develop new projects, including the Reno Energy project,
is dependent on a number of other factors outside our control, including
obtaining power agreements, governmental permits and approvals, fuel supply and
transportation agreements, electrical transmission agreements, site agreements
and construction contracts. We cannot assure you that we will be successful in
obtaining these agreements, permits and appraisals. In particular, the Reno
Energy project is still in the planning and development stage and there are no
contracts with end users nor have we obtained the required governmental
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approvals. Project development involves significant environmental, engineering
and construction risks. Further, projects which are successfully developed may
still face risks inherent in start-up businesses, including lack of market
acceptance.
OUR BUSINESS OF OWNING AND OPERATING POWER PLANTS INVOLVES CONSIDERABLE RISKS.
The operation of power generation facilities involves many risks,
including the breakdown or failure of power generation equipment, transmission
lines or other equipment or processes and performance below expected levels of
output or efficiency. Although the facilities in which we are or will be
involved contain some redundancies and back-up mechanisms, we cannot assure you
that those redundancies or back-up mechanisms would allow the affected facility
to perform under applicable power agreements.
The development and operation of geothermal energy resources involve
risks and uncertainties similar to those experienced in the development of oil
and gas resources. The successful exploitation of a geothermal energy resource
ultimately depends upon the heat content of the extractable fluids, the geology
of the reservoir, the total amount of recoverable reserves, and operational
factors relating to the extraction of fluids, including operating expenses,
energy price levels, and capital expenditure requirements relating primarily to
the drilling of new wells. In connection with the development of a project, we
estimate the productivity of the geothermal resource and the expected decline in
that productivity. The productivity of a geothermal resource may decline more
than we anticipate, resulting in insufficient recoverable reserves being
available for sustained generation of the electrical power capacity desired.
WE MAY LOSE OUR STATUS AS A QUALIFYING FACILITY.
Under present federal law, we are not and will not be regulated as a
holding company under the Public Utility Holding Company Act of 1935 ("PUHCA")
as long as each power plant in which we have an interest is a qualifying
facility under the Public Utility Regulatory Policies Act of 1978 ("PURPA"). A
qualifying facility that is a cogeneration facility must produce not only
electricity but also thermal energy for use in an industrial or commercial
process or heating or cooling applications in specified proportions to the
facility's total energy output and must meet specified energy efficiency
standards. Under PURPA, a regulated public electric utility company must
purchase electricity at its avoided cost from an independent power plant which
has qualifying facility status. Qualifying facility status is granted to
independent power plants which use fossil fuel in a manner which allows for
recovery and use of a specified percentage of otherwise rejected heat thereby
achieving a higher degree of fuel efficiency. Qualifying facility status is also
granted to independent power plants which use renewable energy sources,
including geothermal, hydro, solar, wind, and waste products, without regard to
heat recovery. An independent power plant using fossil fuel, which loses its
ability to use recovered heat, could fall below the efficiency standards and
thereby lose its qualifying facility status. The regulated public electric
utility company, which may have been required to purchase electricity from the
independent power plant, could thereafter refuse to purchase that electricity.
Independent power plants which have qualifying facility status, and which are
not fossil fuel driven, are not required to meet efficiency standards regarding
qualifying facility status.
WE MAY BE UNABLE TO ACQUIRE OR RENEW THE NUMEROUS PERMITS AND APPROVALS REQUIRED
TO OPERATE POWER FACILITIES.
The construction and operation of power generation facilities require
numerous permits, approvals and certificates from appropriate federal, state and
local governmental agencies, as well as compliance with environmental protection
legislation and other regulations. While we believe that we are in substantial
compliance with all applicable rules and regulations and that the projects in
which we are involved have the requisite approvals for existing operations and
are operated as required by applicable laws, our operations and our projects
require compliance with a varied and complex body of laws and regulations that
both public officials and private individuals may seek to enforce. There can be
no assurance that new or existing laws and regulations which would have a
materially adverse affect would not be adopted or revised, nor can there be any
assurance that we will be able to obtain all necessary licenses, permits,
approvals and certificates for proposed projects or that completed facilities
will comply with all applicable permit conditions, statutes or regulations. In
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addition, regulatory compliance for the construction of new facilities is a
costly and time consuming process, and intricate and changing environmental and
other regulatory requirements may necessitate substantial expenditures for
permitting and may create a significant risk of expensive delays or significant
loss of value in a project if the project is unable to function as planned due
to changing requirements or local opposition.
WE MAY FAIL TO COMPLY WITH ENVIRONMENTAL LAWS WHICH COULD RESULT IN SUBSTANTIAL
REMEDIATION COSTS.
As is the case in all power projects, strict environmental regulations
established by federal, state and local authorities involving air and other
emissions must be met. While we take every precaution to ensure that applicable
regulations are met and we do not undertake projects which do not or cannot meet
these regulations, we cannot assure you that we are in continual compliance with
all applicable regulations. Should a condition occur in which emissions
standards at a specific project fall below allowable standards, there could be
costs involved in remediating that conditions. Additionally, as with all
industrial sites, there are standards for the safe handling of fuels and
chemicals which must be met. Again, we take every precaution to insure the
standards are met. However, exigencies may occur -- a fuel spillage for example
- -- which would require remediation with attendant costs.
SOME OF OUR FACILITIES ARE LOCATED IN EARTHQUAKE PRONE AREAS.
Areas in which we have acquired geothermal projects experience frequent
low-level seismic disturbances, and more significant seismic disturbances are
possible. While our power generation facilities are built to withstand
relatively significant levels of seismic disturbance, and we believe we will be
able to maintain adequate insurance protection, we cannot assure you that
earthquake, property damage or business interruption insurance will be adequate
to cover all potential losses sustained in the event of serious seismic
disturbances or that our insurance will continue to be available on commercially
reasonable terms.
RISKS RELATED TO OUR ENVIRONMENTAL BUSINESS:
OUR ENVIRONMENTAL DIVISION MUST COMPLY WITH A VARIETY OF LAWS AND REGULATIONS.
CHANGES IN THESE REGULATIONS COULD ADVERSELY AFFECT OUR BUSINESS.
Our environmental operations must comply with federal, state,
territorial, provincial and local requirements which regulate health, safety,
environment, zoning and land-use. Operating and other permits are generally
required for transfer and storage facilities, some collection vehicles, storage
tanks and other facilities owned or operated by us, and these permits can be
revoked or modified and must be renewed. Although we believe that our facilities
meet federal, state and local requirements in all material respects, we may be
required to expend considerable time, effort and money to keep our existing or
acquired facilities in compliance with applicable regulatory requirements,
including new regulations, and to maintain existing permits and approvals and to
obtain the permits and approvals necessary to increase our capacity. In
addition, environmental regulatory changes could cause us to spend additional
funds for corrective action for past and current operations at our facilities.
These factors could increase substantially our operating costs and impair our
investment in our facilities. These regulations are administered by the United
States Environmental Protection Agency and various other federal, state and
local environmental and health and safety agencies and authorities, including
the Occupational Safety and Health Administration of the United States
Department of Labor and by the provincial environmental ministries in Canada.
The requirements are enforceable by injunctions and fines or penalties,
including criminal penalties.
We believe that each of our facilities has all necessary operating
permits and that each permit will be renewed at the end of its existing term.
However, the issuance or renewal of any permit could include conditions
requiring further capital expenditures or corrective actions. Although we also
believe that each of our operating facilities complies in all material respects
with the applicable governmental requirements, it may be necessary to expend
considerable time, effort and money to keep existing or acquired facilities in
compliance with applicable requirements, including new regulations, to maintain
existing permits and approvals and to obtain the permits and approvals necessary
to increase their capacity.
The United States Comprehensive Environmental Response, Compensation
and Liability Act of 1980 ("CERCLA") imposes liability for natural resources
damages and the cleanup of sites from which there is a release or threatened
release of a hazardous substance into the environment on, among others, the
current and former owners and operators of the sites. Hundreds of substances are
-10-
<PAGE> 12
defined as "hazardous" under CERCLA and the release to the environment of these
substances, even in minute amounts, can result in substantial liability. The
statute provides for the remediation of contaminated facilities and imposes
costs on the responsible parties. The expense of conducting this kind of cleanup
can be significant. Even with our efforts to comply with applicable regulations
and to avoid any unregulated release of hazardous substances to the environment,
releases of these substances may occur as a result of our operations or those of
our predecessors. Given the substantial costs involved in a CERCLA cleanup and
the difficulty of obtaining insurance for environmental impairment liability,
this liability could have a material impact on our business, financial condition
and future prospects.
THE ENVIRONMENTAL BUSINESS IS VERY COMPETITIVE AND INCREASED COMPETITION COULD
ADVERSELY AFFECT US.
The industrial waste industry is highly competitive. Our environmental
division competes with local, regional and national companies of varying sizes,
as well as counties and municipalities that maintain their own waste collection
and disposal operations. The key competitive factors within the industrial waste
industry include:
o the breadth of services offered;
o the price, quality and reliability of service; and
o the technical proficiency in handling waste properly.
Knowledgeable customers are sensitive to the reputation and financial
strength of the companies they use to collect, treat, recycle and dispose of
their industrial waste primarily because customers, as the original generator of
the waste, remain liable under federal and state environmental laws for improper
disposal of waste. We cannot predict whether future competitive conditions will
have a material effect on our business, financial condition or future prospects.
OUR ENVIRONMENTAL BUSINESS IS CYCLICAL AND DOWNTURNS IN THE BUSINESS CYCLE COULD
ADVERSELY AFFECT US.
The industrial waste and environmental response industries are cyclical.
Industrial waste is dependent upon a stream of waste from industries which are
cyclical. If those cyclical industries slow significantly, the business that we
receive from those industries is likely to slow and our business would slow as a
result. Also, our business is somewhat seasonal because less waste is received
in winter months due to difficult working conditions.
-11-
<PAGE> 13
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934. Such statements are indicated by words or phrases such as
"believe," "anticipate," "expect," "intend," "plan," "will," "may" and other
similar expressions. These forward-looking statements are based on our current
expectations, assumptions, estimates and projections about our company and our
industry and involve risks and uncertainties. Our actual results could differ
materially from those anticipated in the forward-looking statements as a result
of factors more fully described in "Risk Factors" and elsewhere in this
prospectus. All subsequent written and oral forward-looking statements
attributable to our company or persons action on our behalf are expressly
qualified in their entirely by the cautionary statements in this paragraph. The
forward-looking statements made in this prospectus relate only to events as of
the date on which the statements are made. We undertake no obligation to update
publicly any forward-looking statements for any reason, even if new information
becomes available or other events occur in the future.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of shares of
common stock by the selling shareholders hereunder. We have agreed to pay all of
the expenses, estimated to be approximately $41,280.07, related to this
offering.
-12-
<PAGE> 14
SELLING SHAREHOLDERS
The following table provides information regarding the beneficial
ownership of the common stock by the selling shareholders as of the date of this
prospectus and as adjusted to reflect the sale of all of their shares. We are
registering shares issuable upon conversion of (i) 1,138,889 shares of our
Series A Convertible Preferred Stock, (ii) 509 shares of our Series B
Convertible Preferred Stock, (iii) 114,000 common stock purchase warrants issued
in connection with our acquisition of Plymouth Cogeneration in 1994, (iv)
125,000 common stock purchase warrants issued to holders of our 9% debentures,
(v) debentures convertible into 45,750 shares of common stock, and (vi) 149,000
options to purchase common stock not covered under any of our stock option
plans. Additionally, we are registering 25,000 shares of common stock held by
the Estate of Richard H. Nelson, our former President and CEO 21,662 shares of
common stock held by Energy Systems Investors, LLC and 2,407 shares of common
stock held by Lawrence I. Schneider, our President and Chief Executive Officer.
Except for Messrs. Schneider, Beder and Evans, none of the selling
shareholders have been officers, directors, or employees, or have had a material
relationship with us.
The following table sets forth certain information with respect to the
amount of share beneficially owned by the selling shareholders and is adjusted
to reflect the sale of shares offered hereby. The following table assumes that
each of the selling shareholders (i) exercises or converts all of his or her
options, warrants, preferred stock and/or convertible debentures; and (ii) sells
all of his or her shares.
<TABLE>
<CAPTION>
OWNERSHIP OF SHARES OWNERSHIP OF SHARES
OF COMMON STOCK NUMBER OF SHARES OFFERED OF COMMON STOCK
PRIOR TO OFFERING (INCLUDES SHARES UNDERLYING SECURITIES) AFTER OFFERING
-------------------- --------------------------------------------------- --------------------
COMMON PREFERRED
SELLING SHAREHOLDER SHARES PERCENTAGE STOCK OPTIONS WARRANTS STOCK DEBENTURES SHARES PERCENTAGE
------------------- ------ ---------- ------- ------- -------- --------- ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Seymour J. Beder.......... 5,642 * 12,500 5,642 *
515 N. Flagler Drive
Suite 702
W. Palm Beach, FL 33401
Noreen Boyer.............. 4,546 8,750
3141 Pt. Grey Road
Vancouver, BC V6K1B3
William Buik.............. 4,546 3,977
c/o Nesbitt Burns
1 First Canadian Place
P.O. Box 150
Toronto, Ontario M5X1H3
Aaron Daniels............. 2,273 4,375
1095 Park Avenue, #30
New York, NY 10128
David Doern IRA 85513720.. 4,546 * 4,546 8,750 4,546 *
360 Hamilton Avenue
8th Floor
White Plains, NY 10601
Energy Systems Investors, 21,662 4,444,444 21,662 *
LLC....................
927 Fifth Avenue
New York, NY 10021
Estate of Richard H. Nelson 25,000 * 25,000 25,000 *
12012 Longwood Green Dr.
Willington, FL 33414
</TABLE>
-13-
<PAGE> 15
<TABLE>
<CAPTION>
OWNERSHIP OF SHARES OWNERSHIP OF SHARES
OF COMMON STOCK NUMBER OF SHARES OFFERED OF COMMON STOCK
PRIOR TO OFFERING (INCLUDES SHARES UNDERLYING SECURITIES) AFTER OFFERING
-------------------- --------------------------------------------------- --------------------
COMMON PREFERRED
SELLING SHAREHOLDER SHARES PERCENTAGE STOCK OPTIONS WARRANTS STOCK DEBENTURES SHARES PERCENTAGE
------------------- ------ ---------- ------- ------- -------- --------- ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Europa International, Inc. 96,181 15,909
c/o Knoll Capital
Management
200 Park Avenue
Suite 3900
New York, NY 10166
Evan Evans................ 1,250 * 1,250 1,250 *
331 Old Toll Road
Madison, CT 06443
S. Jerome Feinberg........ 2,273 * 2,273 4,375 2,273 *
31 Bedford Boulevard
Bronx, NY 10468
Shirley Feinberg.......... 2,273 * 2,273 4,375 2,273 *
3333 Henry Hudson
Parkway, #1714
Bronx, NY 10468
S. Marcus Finkle.......... 22,546 8,750
117 AABC, Suite 311
Aspen, CO 81611
Harvey Ginsberg & Co. .... 3,000 8,750
675 Third Avenue
Suite 2800
New York NY 10017
Richard H. Grace.......... 4,546
c/o Smith Barney, Inc.
350 California Street
San Francisco, CA
94104-1402
L. William Kay II......... 7,046 * 4,546 8,750 7,046 *
4812 Drexelbrook Drive
Drexel Hill, PA 19026
Lawrence Kessler.......... 4,546 8,750
191 Brookwood Lane
New Canaan, CT 06840
Nils Kindwall............. 3,750
3299 Bridgegate Drive
Jupiter, FL 33477
Fred Knoll................ 67,500
Knoll Capital Management
200 Park Avenue,
Ste. 3900
New York, NY 10166
Sheldon Lieberbaum........ 2,273 4,375
220 East 72nd St., #28E
New York, NY 10021
Howard and Sylvia Minsky.. 4,546 8,750
100 Royal Palm Way
Palm Beach, FL 33480
Ronald Moody 9,000
16 Saville Row, 3rd Floor
London, England W1X1AE
</TABLE>
-14-
<PAGE> 16
<TABLE>
<CAPTION>
OWNERSHIP OF SHARES OWNERSHIP OF SHARES
OF COMMON STOCK NUMBER OF SHARES OFFERED OF COMMON STOCK
PRIOR TO OFFERING (INCLUDES SHARES UNDERLYING SECURITIES) AFTER OFFERING
-------------------- --------------------------------------------------- --------------------
COMMON PREFERRED
SELLING SHAREHOLDER SHARES PERCENTAGE STOCK OPTIONS WARRANTS STOCK DEBENTURES SHARES PERCENTAGE
------------------- ------ ---------- ------- ------- -------- --------- ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Theodore and Jill Rosen... 34,425 * 60,250 11,357 21,875 34,425 *
55 East 87th Street
New York, NY 10128
John P. Rosenthal......... 7,546 8,750
112 Park Avenue
New York, NY 10128
Marjorie Rosenthal........ 7,546 8,750
131 East 66th Street
New York, NY 10021
John Rostenberg IRA 8778723 4,546 * 4,546 8,750 4,546 *
66 North Old Stone
Bridge Road
Cos Cob, CT 06807
Lawrence I. Schneider..... 2,407 111,112 2,407 *
515 N. Flagler Drive
Suite 702
W. Palm Beach, FL 33401
SDZ Venture Partners...... 4,546 8,750
105 Mockingbird Lane
Seabrook, TX 77586
Seneca Limited............ 4,546 3,977
P.O. Box HM 2257
Hamilton HMJX, Bermuda
James & Norma Smith....... 4,546 3,977
P.O. Box 4657
Hinsdale, IL 60522
Robert B. Thomson......... 7,425 * 2,273 4,375 7,425 *
122 Sunlit Drive
Watching, NJ 07060
Tralida, L.L.P. .......... 9,090 7,955
310 S. Williams Blvd.
Suite 180
Tucson, AZ 85711
Trans Euro Investments Ltd. 11,363 9,943
C/o Consolidated Services
P.O. Box HM 2257
Hamilton HMJX, Bermuda
Donald Warner............. 3,750
19 Candlewood Acres Rd.
Brookfield, CT 06804
------- -------- -------- --------- -------
49,069 149,000 239,000 4,695,556 45,750
======= ======== ======== ========= =======
</TABLE>
- ----------
* Less than 1%
-15-
<PAGE> 17
PLAN OF DISTRIBUTION
GENERAL
TRANSACTIONS. The selling shareholders, and their respective donees and
pledgees, may offer and sell the common stock in one or more of the following
transactions:
o on the Nasdaq Stock market,
o in the over-the-counter market,
o in negotiated transactions,
o through put or call option transactions relating the shares, or
o in a combination of any of these transactions.
PRICES. The selling shareholders may sell their respective shares of
common stock at any of the following prices:
o fixed prices which may be changed,
o market prices prevailing at the time of sale,
o prices related to prevailing market prices or
o negotiated prices.
DIRECT SALES; AGENTS, DEALERS AND UNDERWRITERS. The selling
shareholders may effect transactions by selling the shares of common stock in
any of the following ways:
o directly to purchasers or
o to or through agents, dealers or underwriters designated from time
to time.
Agents, dealers or underwriters may receive compensation in the form of
underwriting discounts, concessions or commissions from the selling shareholders
and/or the purchasers of shares for whom they act as agent or to whom they sell
as principals, or both. The selling shareholders and any agents, dealers or
underwriters that act in connection with the sale of shares might be deemed to
be "underwriters" within the meaning of Section 2(11) of the Securities Act, and
any discount or commission received by them and any profit on the resale of
shares as principal might be deemed to be underwriting discounts or commissions
under the Securities Act.
SUPPLEMENTS. To the extent required, we will set forth in a supplement
to this prospectus filed with the SEC the number of shares to be sold, the
purchase price and public offering price, the name or names of any agent, dealer
or underwriter, and any applicable commissions or discounts with respect to a
particular offering.
STATE SECURITIES LAW. Under the securities laws of some states, the
selling shareholders may only sell the shares in those states through registered
or licensed brokers or dealers. In addition, in some states the selling
shareholders may not sell the shares unless they have been registered or
qualified for sale in that state or an exemption from registration or
qualification is available and is satisfied.
EXPENSES; INDEMNIFICATION. We will not receive any of the proceeds from
the sale of the common stock sold by the selling shareholders hereunder and will
bear all expenses related to the registration of this offering but will not pay
for any underwriting commissions, fees or discounts, if any. We will indemnify
the selling shareholders against some civil liabilities, including some
liabilities which may arise under the Securities Act.
LEGAL MATTERS
The validity of the shares offered hereby will be passed upon for us by
Greenberg Traurig, P.A., Miami, Florida.
-16-
<PAGE> 18
EXPERTS
Our financial statements as of January 31, 2000 and for each of the
years in the two-year period ended January 31, 2000, have been incorporated by
reference in this prospectus from our Annual Report on Form 10-KSB for the year
ended January 31, 2000 in reliance upon the report of Richard A. Eisner &
Company LLP, independent certified public accountants on their audit of those
financial statements, given upon the authority of said firm as experts in
accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC under File No. 000-24244. You may read and copy
any document in our public files at the SEC's offices at:
o Judiciary Plaza
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549,
o 500 West Madison Street
Suite 1400
Chicago, Illinois 60606
and
o 7 World Trade Center
Suite 1300
New York, New York 10048.
Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. Our SEC filings are also available to the public from
the SEC's web site at http://www.sec.gov through the SEC's electronic data
gathering analysis and retrieval system, EDGAR. Our common stock is traded on
the Nasdaq Stock market under the symbol "USEY."
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is
considered to be part of this prospectus. Later information that we file with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
by us:
o Our Annual Report on Form 10-KSB for the fiscal year ended January
31, 2000.
o Our Quarterly Reports on Form 10-QSB for the fiscal quarters ended
April 30, 1999, July 31, 1999 and October 31, 1999.
o The description of our common stock contained in our registration
statement on Form 8-A dated March 9, 1982.
-17-
<PAGE> 19
We will provide to you, without charge, a copy of any and all of the
documents or information referred to above that we have incorporated by
reference in this prospectus (other than exhibits to the documents unless those
exhibits are specifically incorporated by reference into this prospectus).
Requests for such copies should be directed to the following address:
U.S. Energy Systems, Inc.
515 North Flagler Drive, Suite 702
West Palm Beach, Florida 33401
Attn: Chief Financial Officer
Telephone (561) 820-9779
This prospectus is part of a registration statement that we filed with
the SEC. You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. You should not assume that the
information in this prospectus or any supplement is accurate as of any date
other than the date on the front of that document.
-18-
<PAGE> 20
================================================================================
5,178,375 SHARES
U.S. ENERGY SYSTEMS, INC.
COMMON STOCK
---------------------------
PROSPECTUS
---------------------------
May 4, 2000
==============================================================================
<PAGE> 21
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses (other than
underwriting and brokerage discounts, commissions and fees and legal fees
incurred by the Selling Shareholders, if any, payable by such Selling
Shareholders) payable in connection with the sale and distribution of the Shares
being registered. All amounts are estimates except the Securities and Exchange
Commission registration fee and the Nasdaq additional listing fee. All of the
expenses below will be paid by the Registrant.
Securities and Exchange Commission registration fee...... $ 6,280.07
Nasdaq additional listing fee............................ $ 5,000
Legal fees and expenses.................................. $ 10,000
Accounting fees and expenses............................. $ 5,000
Printing and engraving expenses.......................... $ 5,000
Transfer Agent and Registrar fees........................ $ 5,000
Miscellaneous............................................ $ 5,000
-----------
Total........................................... $ 41,280.07
===========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Certificate of Incorporation exculpates directors from
personal liability to the fullest extent permitted by Section 102(b)(7) of the
Delaware General Corporation Law. This provision provides that a corporation may
eliminate or limit the personal liability of a director to the corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such provision shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal benefit.
The Company's Certificate of Incorporation and Bylaws provide that the
Registrant shall indemnify, to the fullest extent authorized by the Delaware
General Corporation Law, each person who is involved in any litigation or other
proceeding because he or she is or was a director or officer of the Company
against all expense, loss or liability in connection therewith.
Section 145 of the Delaware General Corporation Law permits a
corporation to indemnify any director or officer of the corporation against
expenses (including attorneys' fees), judgements, fines and amounts paid in
settlements actually and reasonably incurred in connection with any action, suit
or proceeding brought by reason of the fact that such person is or was a
director or officer of the corporation, if such person acted in good faith and
in a manner that 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, if he or she had no reason to believe his or her conduct was
unlawful. In a derivative action indemnification may be made only for expenses
actually and reasonably incurred by any director or officer in connection with
II-1
<PAGE> 22
the defense or settlement of an action or suit, if such person has acted in good
faith and in a manner that he or she reasonably believed to be in or not opposed
to the best interests of the corporation, except that no indemnification shall
be made if such person shall have been adjudged to be liable to the corporation,
unless and only to the extent that the court in which the action or suit was
brought shall determine upon application that the defendant is reasonably
entitled to indemnification for such expenses despite such adjudication of
liability. The right to indemnification includes the right to be paid expenses
incurred in defending any proceeding in advance of its final disposition upon
the delivery to the corporation of an undertaking, by or on behalf of the
director or officer, to repay all amounts so advanced if it is ultimately
determined that such director or officer is not entitled to indemnification.
The Company has directors' and officers' liability insurance.
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- --------- -----------
5.1 Opinion of Greenberg Traurig, P.A.
23.1 Consent of Greenberg Traurig, P.A. (included in Exhibit 5)
23.2 Consent of Richard A. Eisner & Company, LLP
24 Power of Attorney (included on signature page)
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(2) 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;
(3) That, for the purpose of determining any liability under
the Securities Act of 1933, 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.
(4) 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 undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
in the 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 Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
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 Registrant 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 of 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-2
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of West Palm Beach, State of Florida on this 4th day of
May, 2000.
U.S. ENERGY SYSTEMS, INC.
By: /s/ LAWRENCE I. SCHNEIDER
---------------------------
Lawrence I. Schneider
President and CEO
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Lawrence I. Schneider and Seymour
J. Beder, respectively, his true and lawful attorney-in-fact, each acting alone,
with full powers of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments,
including any post-effective amendments, to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents to be filed in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that said attorney-in-fact or his substitute, each
acting alone, 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 below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/z/ THEODORE ROSEN Chairman of the Board of Directors May 4, 2000
- ------------------------------------------
Theodore Rosen
/z/ LAWRENCE I. SCHNEIDER President, Chief Executive Officer May 4, 2000
- ------------------------------------------ and Director
Lawrence I. Schneider
/s/ SEYMOUR J. BEDER Chief Financial and Accounting Officer May 4, 2000
- ------------------------------------------ and Controller
Seymour J. Beder (Principal Financial and Accounting
Officer)
/s/ HENRY SCHNEIDER Vice President and Director May 4, 2000
- ------------------------------------------
Henry Schneider
/s/ HOWARD NEVINS Director and Executive Vice President May 4, 2000
- ------------------------------------------
Howard Nevins
/s/ EVAN EVANS Director May 4, 2000
- ------------------------------------------
Evan Evans
/s/ ALLEN ROTHMAN Director May 4, 2000
- ------------------------------------------
Allen Rothman
/s/ ASHER F. FOGEL Director May 4, 2000
- ------------------------------------------
Asher F. Fogel
/s/ RICHARD T. BRANDT II Director May 4, 2000
- ------------------------------------------
Richard T. Brandt II
/s/ STANLEIGH FOX Director May 4, 2000
- ------------------------------------------
Stanleigh Fox
/s/ BURTON J. AHRENS Director May 4, 2000
- ------------------------------------------
Burton J. Ahrens
</TABLE>
II-3
<PAGE> 24
EXHIBIT INDEX
NUMBER DESCRIPTION PAGE
- ------ ----------- ----
5 Opinion of Greenberg Traurig, P.A.
23.1 Consent of Greenberg Traurig, P.A.
(contained in Exhibit 5 herein)
23.2 Consent of Richard A. Eisner & Co., LLP
24 Power of Attorney (included on signature page)
<PAGE> 1
EXHIBIT 5
May 4, 2000
U.S. Energy Systems, Inc.
515 N. Flagler Drive, Suite 702
West Palm Beach, Florida 33401
RE: OFFERING OF SHARES PURSUANT TO REGISTRATION STATEMENT ON FORM S-3
Gentlemen:
We have acted as counsel to U.S. Energy Systems, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Securities Act"), of a Registration Statement on Form S-3 (the
"Registration Statement") relating to the registration by the Company of
5,195,060 shares of the Company's common stock, par value $0.01 per share (the
"Common Stock"), which are initially issuable upon conversion of (i) 1,138,889
shares of our Series A Convertible Preferred Stock, (ii) 509 shares of our
Series B Convertible Preferred Stock, (iii) 114,000 common stock purchase
warrants issued in connection with our acquisition of Plymouth Cogeneration in
1994, (iv) 125,000 common stock purchase warrants issued to holders of our 9%
debentures, (v) debentures convertible into 45,750 shares of common stock, and
(vi) 149,000 options to purchase common stock not covered under any of our stock
option plans. Additionally, we are registering 25,000 shares held by the Estate
of Richard H. Nelson, our former President and CEO, 21,662 shares of common
stock held by Energy Systems Investors LLC and 2,407 shares of common stock held
by Lawrence I. Schneider, our President and Chief Executive Officer.
In so acting, we have examined originals, or copies certified or
otherwise identified to our satisfaction, of (a) the Amended and Restated
Certificate of Incorporation and By-Laws, as amended, of the Company as
currently in effect, (b) the Registration Statement, (c) the Certificate of
Designations for the Preferred Stock, (d) certain resolutions adopted by the
Company's Board of Directors, and (e) such other documents, records,
certificates and other instruments as in our judgment are necessary or
appropriate for purposes of this opinion.
Based on and subject to the foregoing, we are of the following opinion:
1. The Company is a corporation duly incorporated and validly existing
in good standing under the laws of the State of Delaware.
2. The shares of Preferred Stock are validly issued, fully paid and
non-assessable.
3. The shares of Common Stock underlying the shares of Preferred Stock
have been validly authorized and reserved for issuance and, when duly issued and
delivered upon conversion of the Preferred Stock in accordance with their
respective terms, will be validly issued and will be fully paid and
non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement. In giving such consent, we do not hereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act, or the rules or regulations of the Securities and Exchange
Commission promulgated thereunder.
Very truly yours,
GREENBERG TRAURIG, P.A.
By: /s/ PAUL BERKOWITZ
-----------------------
Paul Berkowitz
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
Board of Directors
U.S. Energy Systems, Inc.
We consent to the use of our report, dated April 7, 2000, incorporated herein by
reference, in the Registration Statement of U.S. Energy Systems, Inc., on Form
S-3 relating to the balance sheets of U.S. Energy Systems, Inc. as of January
31, 2000, and the related statements of operations, shareholders' equity and
cash flows for each of the years in the two-year period then ended, which report
appears in the January 31, 2000 Annual Report on Form 10-KSB of U.S. Energy
Systems, Inc. We also consent to the reference to our firm under the caption
"Experts" included in the Registration Statement.
Richard A. Eisner & Company, LLP
New York, New York
May 3, 2000
