SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO.1)
COMMODORE APPLIED TECHNOLOGIES, INC.
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(Name of Issuer)
COMMON STOCK, PAR VALUE $0.001 PER SHARE
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(Title of Class of Securities)
202630 10 9
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(CUSIP Number)
STEPHEN A. WEISS, ESQ.
GREENBERG TRAURIG
THE METLIFE BUILDING
200 PARK AVENUE, 15TH FLOOR
NEW YORK, NEW YORK 10166
(212) 801-9200
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
APRIL 17, 2000
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box |_|.
Note. Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits. See Rule
13d-7(b) for other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 11 Pages)
<PAGE>
CUSIP NO. 202630 10 9 SCHEDULE 13D/A Page 2 of 12 Pages
(1) Name of Reporting Persons. S.S. or I.R.S. Identification No. of Above
Persons (Entities Only)
Paul E. Hannesson
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(2) Check the Appropriate Box if a Member of a Group
(a) [ ] (b) [ ]
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(3) SEC Use Only
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(4) Source of Funds
OO (See Item 3)
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(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [_]
[ ]
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(6) Citizenship or Place of Organization
United States
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7 SOLE VOTING POWER
NUMBER OF 897,500(1)
SHARES -----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 2,983,650(2)
EACH -----------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 897,500(1)
WITH -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,983,650(2)
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(11) Aggregate Amount Beneficially Owned by Each Reporting Person
3,881,150(1)(2)
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(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares
[ ]
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(13) Percent of Class Represented by Amount in Row (11)
8.38%(3)
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(14) Type of Reporting Person
IN
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(1) Represents: (i) 750,000 shares of Common Stock of the Issuer owed directly
by Mr. Hannesson; and (ii) 147,500 shares of Common Stock of the Issuer
underlying currently exercisable options to purchase Common Stock of the
Issuer granted to Mr. Hannesson pursuant to the Non-Qualified Stock Option
Agreement dated July 13, 1999.
(2) Represents shares of Common Stock of the Issuer beneficially owned directly
by Environmental, which Mr. Hannesson is deemed to beneficially own
indirectly by virtue of his beneficial ownership of approximately 10.0% of
the issued and outstanding shares of Environmental common stock. Mr.
Hannesson shares voting and dispositive power with respect to such shares
with the members of Environmental's Board of Directors. This report should
not be deemed an admission that Mr. Hannesson is the beneficial owner of
such shares for purposes of Section 16 or for any other purpose.
(3) Calculated on the basis of 46,268,836 shares of Common Stock of the Issuer
outstanding as of April 17, 2000, giving effect to the full exercise of the
Environmental Warrants and the Common Stock underlying currently exercisable
options discussed in Note (1)(ii) above.
Page 2 of 11 Pages)
<PAGE>
This Amendment No.1 amends and supplements Items 3, 5 and 6 of the
Schedule 13D, dated November 24, 1999, which was filed on behalf of Commodore
Environmental Services Inc. ("Environmental"), Bently J. Blum and Paul E.
Hannesson (collectively, the "Reporting Persons") with respect to ownership of
common stock ("Common Stock") of Commodore Applied Technologies, Inc., a
Delaware corporation (the "Issuer"), to reflect a change in the number of shares
of Common Stock owned by Mr. Hannesson as a result of his exercise of certain
options to purchase additional shares of Common Stock of the Issuer.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
In March 1996, the Issuer was formed as a wholly-owned subsidiary of
Environmental. Prior to the Issuer's initial public offering in June 1996, in
exchange for the issuance of 15,000,000 shares of Common Stock of the Issuer
(representing 100% of the outstanding shares of Common Stock of the Issuer at
the time), Environmental contributed to the Issuer (i) all of the assets and
properties (including joint working proposals, quotations and bids in respect to
projects and contracts awarded for feasibility studies), subject to all of the
liabilities, of its operating divisions relating to certain environmental
remediation technologies and the exploitation of such technologies in all
commercial and governmental applications; (ii) all of the outstanding shares of
the capital stock of certain corporate entities engaged in similar businesses;
and (iii) a $3.0 million promissory note. As a result of the Issuer's initial
public offering in June 1996, Environmental's beneficial ownership interest in
the Issuer was reduced from 100% to 73%.
In December 1996, as part of a corporate restructuring to consolidate all
of its current environmental technology businesses within the Issuer,
Environmental transferred to the Issuer all of the capital stock of Separation
and Commodore CFC Technologies, Inc. In addition, Environmental assigned to the
Issuer notes aggregating $976,200 at December 2, 1996, representing advances
previously made by Environmental to Separation. In consideration for such
transfers, the Issuer paid Environmental $3.0 million in cash and issued to
Environmental a warrant expiring December 1, 2003 to purchase 7,500,000 shares
of Common Stock of the Issuer at an exercise price of $15.00 per share, valued
at $2.4 million. Such warrant was subsequently amended to, among other things,
reduce the exercise price thereof from $15.00 per share to $10.00 per share.
From May 1997 through February 1998, in a series of private transactions,
Environmental sold an aggregate of 6,801,856 of the 15,000,000 shares of Common
Stock of the Issuer that it owned to certain private investors.
In September 1997, Environmental provided a $4.0 million unsecured loan to
the Issuer, evidenced by the Issuer's 8% convertible subordinated note (the
"Convertible Note"). Pursuant to the terms of the Convertible Note, the Issuer
was obligated to pay Environmental interest only at the rate of 8% per annum,
payable quarterly. Unless converted into Common Stock of the Issuer at any time,
the unpaid principal amount of the Convertible Note was due and payable,
together with accrued and unpaid interest, on August 31, 2002. Payments of
principal and accrued interest under the Convertible Note was subordinated to
all other indebtedness for money borrowed of the Issuer. Environmental had the
right to convert the Convertible Note into shares of Common Stock of the Issuer
at a conversion price of $3.89 per share. Such conversion price was fixed at
approximately 85% of the five day average closing bid price of the Common Stock
($4.575 per share) prior to August 22, 1997, the date that the executive
committees of the respective Boards of Directors of Environmental and the Issuer
authorized such loan. In connection with the $4.0 million loan, the Issuer
issued Environmental a five-year warrant to purchase 1,000,000 shares of Common
Stock of the Issuer at an exercise price of $5.0325 per share (approximately
110% of the $4.575 five day average closing bid price of the Common Stock prior
to August 22, 1997).
In March 1998, the Issuer prepaid $2.0 million of the Convertible Note by
(i) paying Environmental the sum of $500,000 in cash and (ii) transferring to
Environmental a promissory note, dated August 30, 1996, in the principal amount
of $1.5 million. To induce Environmental to accept the Issuer's prepayment of
$2.0 million of the Convertible Note (and thereby give up the right to convert
$2.0 million of the Convertible Note into Common Stock of the Issuer), the
Issuer issued to Environmental an additional warrant to purchase up to 514,000
shares of Common Stock of the Issuer at an exercise price of $4.50 per share.
Such exercise price was fixed at approximately
(Page 3 of 11 Pages)
<PAGE>
110% of the closing sale price of the Common Stock on February 20, 1998, the
trading day immediately prior to the date the Board of Directors of
Environmental approved such prepayment. The estimated fair value of such warrant
is approximately $340,000.
In February 1998, Environmental provided a $5,450,000 unsecured loan to
the Issuer, evidenced by the Issuer's 8% non-convertible note (the "Intercompany
Note"). Pursuant to the terms of the Intercompany Note, interest on the unpaid
principal balance of the Intercompany Note was payable at the rate of 8% per
annum semiannually in cash. The unpaid principal amount of the Intercompany Note
was due and payable, together with accrued and unpaid interest, on the earlier
to occur of (a) December 31, 1999, or (b) consummation of any public offering or
private placement of securities of the Issuer with net proceeds aggregating in
excess of $6.0 million, other than in respect of working capital financing or
secured financing of assets received by the Issuer in the ordinary course of
business from any bank or other lending institution. In connection with the
loan, the Issuer amended and restated in its entirety the five-year warrant to
purchase 7,500,000 shares of Common Stock issued to Environmental on December 2,
1996 to, among other things, reduce the exercise price of the warrant from
$15.00 per share to $10.00 per share. In addition, the Issuer issued to
Environmental an additional five-year warrant to purchase 1,500,000 shares of
Common Stock of the Issuer at an exercise price of $10.00 per share. Such
warrant was subsequently amended to reduce the exercise price thereof from
$10.00 per share to $1.50 per share.
Effective September 28, 1998, the Issuer repaid the remaining balances on
the Convertible Note and the Intercompany Note, which totaled an aggregate of
$6,755,864, by (i) transferring 10,000,000 shares of Separation common stock,
representing 87% of Separation's outstanding common stock, to Commodore
Environmental Services, LLC, a Delaware limited liability company wholly-owned
by Environmental; (ii) issuing 20,909 shares of newly created 6% Series B
Convertible Preferred Stock, par value $0.001 per share (the "Series B Preferred
Stock"), 10,189 shares of newly created 6% Series C Convertible Preferred Stock,
par value $0.001 per share (the "Series C Preferred Stock"), and 20,391 shares
of newly created 6% Series D Convertible Preferred Stock, par value $0.001 per
share (the "Series D Preferred Stock"), of the Issuer to Environmental; (iii)
assigning to Environmental an account receivable due to the Issuer from
Separation in the amount of $357,000; and (vi) amending the warrant held by
Environmental to purchase 1,500,000 shares of Common Stock of the Issuer to
reduce the exercise price thereof from $10.00 per share to $1.50 per share.
Pursuant to certain anti-dilution provisions contained in the
Environmental Warrants, the respective per share exercise prices of and number
of shares subject to the Environmental Warrants were adjusted in November 1999
as follows:
<TABLE>
NUMBER OF SHARES NUMBER OF SHARES
ORIGINALLY ADJUSTED CURRENTLY ISSUABLE
ORIGINAL EXERCISE PRICE ISSUABLE ON EXERCISE EXERCISE PRICE ON EXERCISE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12/96 Warrant $10.00 (as amended) 7,500,000 $7.03 10,675,168
09/97 Warrant $5.0325 1,000,000 $3.78 1,331,062
02/98 Warrant $1.50 (as amended) 1,500,000 $1.28 1,754,029
03/98 Warrant $4.50 514,000 $3.56 650,281
TOTAL 10,514,000 14,410,540
========== ==========
</TABLE>
On November 24, 1999, Environmental elected to convert all of the issued
and outstanding shares of Series B Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock into an aggregate of 7,258,533 shares of Common Stock
of the Issuer, and such shares of Common Stock were issued to Environmental as
of that date.
As a result of the foregoing transactions, as of April 17, 2000,
Environmental was the beneficial owner of 29,867,217 shares of Common Stock of
the Issuer (including 14,410,540 shares of Common Stock underlying the
Environmental Warrants), representing approximately 64.5% of the issued and
outstanding shares of Common Stock of the Issuer as of such date, giving effect
to the full exercise of the Environmental Warrants.
(Page 4 of 11 Pages)
<PAGE>
Bentley J. Blum is the Chairman of the Board, President and Chief
Executive Officer of Environmental and a director of the Issuer. Mr. Blum is
deemed to be the beneficial owner of 29,937,217 shares of Common Stock of the
Issuer, representing approximately 64.7% of the issued and outstanding shares of
common stock of the Issuer as of April 17, 2000 (giving effect to the full
exercise of the Environmental Warrants and all options to purchase shares of
Common Stock of the Issuer held by Mr. Blum), by virtue of his beneficial
ownership of: (i) 70,000 shares of Common Stock underlying currently exercisable
stock options granted to Mr. Blum by the Issuer under its 1998 Stock Option
Plan; and (ii) 34,979,737 shares of Environmental common stock, which includes
4,500,000 shares of Environmental common stock underlying currently exercisable
stock options granted to Mr. Blum by Environmental and 2,000,000 shares of
Environmental common stock owned of record by Mr. Blum's spouse (but excludes
450,400 shares of Environmental common stock owned by Mr. Blum's mother and
385,000 shares of Environmental common stock owned by Mr. Blum's father),
collectively representing approximately 52.0% of the issued and outstanding
shares of Environmental common stock as of April 17, 2000. Mr. Blum disclaims
any beneficial interest in the shares of Environmental common stock owned by his
spouse, mother and father. The Board of Directors of Environmental has the power
to direct the vote and to direct the disposition of the 29,867,217 shares of
Common Stock of the Issuer beneficially owned directly by Environmental.
Environmental's Board of Directors currently consists of two directors, one of
which is Mr. Blum. By virtue of Mr. Blum's beneficial ownership of approximately
52.0% of the issued and outstanding shares of Environmental common stock and his
status as one of two members of the Board of Directors of Environmental, Mr.
Blum is deemed to be the indirect beneficial owner of all of the 29,867,217
shares of the Issuer's Common Stock beneficially owned directly by Environmental
and shares voting and dispositive power with respect to such shares with the
other member of Environmental's Board of Directors.
Paul E. Hannesson is the Chairman of the Board, President and Chief
Executive Officer of the Issuer. As of the date hereof, Mr. Hannesson is deemed
to be the beneficial owner of 3,881,150 shares of Common Stock of the Issuer,
representing approximately 8.38% of the issued and outstanding shares of common
stock of the Issuer as of such date (giving effect to the full exercise of the
Environmental Warrants and all options to purchase shares of Common Stock held
by Mr. Hannesson), by virtue of his beneficial ownership of: (i) 750,000 shares
of Common Stock of the Issuer; (ii) 147,500 shares of Common Stock of the Issuer
underlying currently exercisable options to purchase Common Stock of the Issuer
granted to Mr. Hannesson pursuant to the Non-Qualified Stock Option Agreement
dated July 13, 1999, as amended, (the "Stock Option Agreement"); and (iii)
6,325,705 shares of Environmental common stock, which includes 2,650,000 shares
of Environmental common stock owned of record by Mr. Hannesson's spouse,
3,150,000 shares of Environmental common stock owned of record by the Hannesson
Family Trust for the benefit of Mr. Hannesson's spouse, son and daughter, and
525,705 shares of Environmental common stock underlying currently exercisable
stock options granted to Mr. Hannesson by Environmental (but excludes 1,000,000
shares of Environmental common stock owned of record by each of Jon Paul and
Krista Hannesson, the adult children of Mr. Hannesson), collectively
representing approximately 10.0% of the issued and outstanding shares of
Environmental common stock as of April 17, 2000. Mr. Hannesson disclaims any
beneficial interest in the shares of Environmental common stock owned by or for
the benefit of his spouse and children. On April 17, 2000, Mr. Hannesson
transferred options to purchase 80,000 shares of Common Stock of the Issuer that
were currently exercisable and granted to Mr. Hannesson by the Issuer under the
Issuer's 1998 Stock Option Plan to his son and daughter in equal amounts of
40,000 options apiece. Mr. Hannesson expressly disclaims beneficial ownership in
these shares and this report should not be deemed an admission that Mr.
Hannesson is the beneficial owner of such shares for purposes of Section 16 or
for any other purpose. Additionally, Mr. Hannesson owns stock options to
purchase an aggregate of 2,000,000 shares of Common Stock of the Issuer, which
were granted to Mr. Hannesson by the Issuer pursuant to the Stock Option
Agreement. Such options are not currently exercisable, nor are they exercisable
within 60 days from April 17, 2000.
ITEM 5. INTEREST IN SECURITIES OF ISSUER.
(a) As of April 17, 2000, Environmental was the beneficial owner of
29,867,217 shares of Common Stock of the Issuer (including 14,410,540 shares of
Common Stock underlying the Environmental Warrants),
(Page 5 of 11 Pages)
<PAGE>
representing approximately 64.5% of the issued and outstanding shares of Common
Stock of the Issuer as of such date, giving effect to the full exercise of the
Environmental Warrants.
As of April 17, 2000, Bentley J. Blum was deemed to be the
beneficial owner of 29,937,217 shares of Common Stock of the Issuer,
representing approximately 64.7% of the issued and outstanding shares of common
stock of the Issuer as of such date (giving effect to the full exercise of the
Environmental Warrants and all options to purchase shares of Common Stock of the
Issuer held by Mr. Blum), by virtue of his beneficial ownership of: (i) 70,000
shares of Common Stock underlying currently exercisable stock options granted to
Mr. Blum by the Issuer under its 1998 Stock Option Plan; and (ii) 34,979,737
shares of Environmental common stock, which includes 4,500,000 shares of
Environmental common stock underlying currently exercisable stock options
granted to Mr. Blum by Environmental and 2,000,000 shares of Environmental
common stock owned of record by Mr. Blum's spouse (but excludes 450,400 shares
of Environmental common stock owned by Mr. Blum's mother and 385,000 shares of
Environmental common stock owned by Mr. Blum's father), collectively
representing approximately 52.0% of the issued and outstanding shares of
Environmental common stock as of April 17, 2000. Mr. Blum disclaims any
beneficial interest in the shares of Environmental common stock owned by his
spouse, mother and father. The Board of Directors of Environmental has the power
to direct the vote and to direct the disposition of the 29,867,217 shares of
Common Stock of the Issuer beneficially owned directly by Environmental.
Environmental's Board of Directors currently consists of two directors, one of
which is Mr. Blum. By virtue of Mr. Blum's beneficial ownership of approximately
52.0% of the issued and outstanding shares of Environmental common stock and his
status as one of two members of the Board of Directors of Environmental, Mr.
Blum is deemed to be the indirect beneficial owner of all of the 29,867,217
shares of the Issuer's Common Stock beneficially owned directly by Environmental
and shares voting and dispositive power with respect to such shares with the
other member of Environmental's Board of Directors.
As of the date hereof, Paul E. Hannesson was deemed to be the beneficial
owner of 3,881,150 shares of Common Stock of the Issuer, representing
approximately 8.38% of the issued and outstanding shares of common stock of the
Issuer as of such date (giving effect to the full exercise of the Environmental
Warrants and all options to purchase shares of Common Stock of the Issuer held
by Mr. Hannesson), by virtue of his beneficial ownership of: (i) 750,000 shares
of Common Stock of the Issuer; (ii) 147,500 shares of Common Stock of the Issuer
underlying currently exercisable options to purchase Common Stock of the Issuer
granted to Mr. Hannesson pursuant to the Stock Option Agreement; and (iii)
6,325,705 shares of Environmental common stock, which includes 2,650,000 shares
of Environmental common stock owned of record by Mr. Hannesson's spouse,
3,150,000 shares of Environmental common stock owned of record by the Hannesson
Family Trust for the benefit of Mr. Hannesson's spouse, son and daughter, and
525,705 shares of Environmental common stock underlying currently exercisable
stock options granted to Mr. Hannesson by Environmental (but excludes 1,000,000
shares of Environmental common stock owned of record by each of Jon Paul and
Krista Hannesson, the adult children of Mr. Hannesson), collectively
representing approximately 10.0% of the issued and outstanding shares of
Environmental common stock as of April 17, 2000. Mr. Hannesson disclaims any
beneficial interest in the shares of Environmental common stock owned by or for
the benefit of his spouse and children. On April 17, 2000, Mr. Hannesson
transferred options to purchase 80,000 shares of Common Stock of the Issuer that
were currently exercisable and granted to Mr. Hannesson by the Issuer under the
Issuer's 1998 Stock Option Plan to his son and daughter in equal amounts of
40,000 options apiece. This report should not be deemed an admission that Mr.
Hannesson is the beneficial owner of such shares for purposes of Section 16 or
for any other purpose. Mr. Hannesson expressly disclaims beneficial ownership of
these shares and this report should not be deemed an admission that Mr.
Hannesson is the beneficial owner of such shares for purposes of Section 16 or
for any other purpose. Additionally, Mr. Hannesson owns stock options to
purchase an aggregate of 2,000,000 shares of Common Stock of the Issuer, which
were granted to Mr. Hannesson by the Issuer pursuant to the Stock Option
Agreement. Such options are not currently exercisable, nor are they exercisable
within 60 days from April 17, 2000.
Except as set forth in response to this Item 5(a), none of the
Reporting Persons presently owns beneficially any shares of Common Stock.
(Page 6 of 11 Pages)
<PAGE>
(b) Environmental has sole voting and dispositive power with respect to
all of the 29,867,217 shares of Common Stock of the Issuer that it beneficially
owns.
Bentley J. Blum has sole voting and dispositive power with respect
to 70,000 shares of Common Stock of the Issuer underlying currently exercisable
stock options granted to Mr. Blum by the Issuer under its 1998 Stock Option
Plan. By virtue of Mr. Blum's beneficial ownership of approximately 52.0% of the
issued and outstanding shares of Environmental common stock and his status as
one of two members of the Board of Directors of Environmental, Mr. Blum is
deemed to be the indirect beneficial owner of all of the 29,867,217 shares of
the Issuer's Common Stock beneficially owned directly by Environmental and
shares voting and dispositive power with respect to such shares with Jerry
Karlik, the other member of Environmental's Board of Directors. Mr. Karlik's
business address is 150 East 58th Street, Suite 3400, New York, New York 10155,
and his present principal occupation is Vice President and director of
Environmental, a company engaged in investing in diverse environmental, chemical
and other businesses with a focus on new technologies that may have a
significant impact upon their markets. Environmental's address is 150 East 58th
Street, Suite 3400, New York, New York 10155. Mr. Karlik has not, during the
past five years, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors). Mr. Karlik was not, during the past five
years, a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is not subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
Paul E. Hannesson has sole voting and dispositive power with respect
to 897,500 shares of Common Stock of the Issuer by virtue of his beneficial
ownership of: (i) 750,000 shares of Common Stock of the Issuer; and (ii) 147,500
shares of Common Stock of the Issuer underlying currently exercisable options to
purchase Common Stock of the Issuer granted to Mr. Hannesson pursuant to the
Stock Option Agreement. By virtue of Mr. Hannesson's beneficial ownership of
approximately 10.0% of the issued and outstanding shares of Environmental common
stock, Mr. Hannesson is deemed to be the indirect beneficial owner of 2,983,650
shares of the Issuer's Common Stock beneficially owned directly by Environmental
and shares voting and dispositive power with respect to such shares with Bentley
J. Blum and Jerry Karlik, the members of Environmental's Board of Directors. Mr.
Hannesson also has sole voting and dispositive power with respect to 2,000,000
shares of Common Stock of the Issuer underlying stock options granted to Mr.
Hannesson by the Issuer pursuant to the Stock Option Agreement, which options
are not currently exercisable, nor are they exercisable within 60 days from
April 17, 2000.
(c) On November 24, 1999, Environmental elected to convert all of the
issued and outstanding shares of Series B Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock into an aggregate of 7,258,533 shares of
Common Stock of the Issuer, and such shares of Common Stock were issued to
Environmental as of that date. The Series B Preferred Stock was converted into
2,987,000 shares of Common Stock of the Issuer at a conversion price of $0.70
per share, the Series C Preferred Stock was converted into 1,358,533 shares of
Common Stock of the Issuer at a conversion price of $0.75 per share, and the
Series D Preferred Stock was converted into 2,913,000 shares of Common Stock of
the Issuer at a conversion price of $0.70 per share. The transaction was
effected in New York City on November 24, 1999 by Environmental's delivery to
the Issuer of a notice of conversion with respect to all of such preferred
stock, whereupon the Issuer caused its transfer agent to issue an aggregate of
7,258,533 shares of its Common Stock to Environmental as of such date.
(d) AND (e). Not Applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER.
I. COMMODORE ENVIRONMENTAL SERVICES, INC.
Environmental is the holder of the following Environmental Warrants:
(i) Warrant to purchase 10,675,168 shares of Common Stock of the Issuer at
an exercise price of $7.03 per share, which expires on December 1, 2003. The
warrant was originally issued to Environmental in December 1996
(Page 7 of 11 Pages)
<PAGE>
as a warrant to purchase 7,500,000 shares of Common Stock of the Issuer at an
exercise price of $15.00 per share. The warrant was subsequently amended in
February 1998 to, among other things, reduce the exercise price of the warrant
from $15.00 per share to $10.00 per share. Pursuant to certain anti-dilution
provisions contained in the warrant, in November 1999 the exercise price of
warrant was adjusted to reduce the exercise price from $10.00 per share to $7.03
per share, and the number of shares of Common Stock of the Issuer subject to the
warrant was adjusted to increase the number of shares from 7,500,000 shares to
10,675,168 shares.
(ii) Warrant to purchase 1,331,062 shares of Common Stock of the Issuer at
an exercise price of $3.78 per share, which expires on August 31, 2002. The
warrant was originally issued to Environmental in September 1997 as a warrant to
purchase 1,000,000 shares of Common Stock of the Issuer at an exercise price of
$5.0325 per share. Pursuant to certain anti-dilution provisions contained in the
warrant, in November 1999 the exercise price of warrant was adjusted to reduce
the exercise price from $5.0325 per share to $3.78 per share, and the number of
shares of Common Stock of the Issuer subject to the warrant was adjusted to
increase the number of shares from 1,000,000 shares to 1,331,062 shares.
(iii) Warrant to purchase 1,754,029 shares of Common Stock of the Issuer
at an exercise price of $1.28 per share, which expires on February 9, 2004. The
warrant was originally issued to Environmental in February 1998 as a warrant to
purchase 1,500,000 shares of Common Stock of the Issuer at an exercise price of
$10.00 per share. The warrant was subsequently amended effective September 1998
to reduce the exercise price of the warrant from $10.00 per share to $1.50 per
share. Pursuant to certain anti-dilution provisions contained in the warrant, in
November 1999 the exercise price of warrant was adjusted to reduce the exercise
price from $1.50 per share to $1.28 per share, and the number of shares of
Common Stock of the Issuer subject to the warrant was adjusted to increase the
number of shares from 1,500,000 shares to 1,754,029 shares.
(iv) Warrant to purchase 650,281 shares of Common Stock of the Issuer at
an exercise price of $3.56 per share, which expires on March 31, 2003. The
warrant was originally issued to Environmental in March 1998 as a warrant to
purchase 514,000 shares of Common Stock of the Issuer at an exercise price of
$4.50 per share. Pursuant to certain anti-dilution provisions contained in the
warrant, in November 1999 the exercise price of warrant was adjusted to reduce
the exercise price from $4.50 per share to $3.56 per share, and the number of
shares of Common Stock of the Issuer subject to the warrant was adjusted to
increase the number of shares from 514,000 shares to 650,281 shares.
II. BENTLEY J. BLUM
Mr. Blum and the Issuer are parties to the Blum Stock Option Agreement, in
which the Issuer granted to Mr. Blum non-qualified stock options to purchase up
to 70,000 shares of Common Stock of the Issuer, subject to adjustment, under the
Issuer's 1998 Stock Option Plan. Pursuant to the terms of the Blum Stock Option
Agreement, the purchase price of the shares of Common Stock of the Issuer
underlying the stock options is $0.4375 per share, subject to adjustment, and
the stock options will expire on December 14, 2008, subject to earlier
termination or cancellation under certain circumstances.
(Page 8 of 11 Pages)
<PAGE>
III. PAUL E. HANNESSON
Mr. Hannesson and the Issuer are parties to the Stock Option Agreement, in
which the Issuer granted to Mr. Hannesson non-qualified options to purchase up
to 2,400,000 shares of Common Stock. On April 17, 2000, these options partially
vested given Mr. Hannesson the right to purchase 400,000 shares of Commons Stock
of the Issuer. On that date, Mr. Hannesson partially exercised his options and
purchased 252,500 shares of Common Stock of the Issuer. Pursuant to the terms of
the Stock Option Plan, the purchase price of the shares of Common Stock of the
Issuer underlying the options is $.50, subject to adjustment as set forth in the
Stock Option Agreement. The options will vest in approximately 20% increments
upon the occurrence of certain events set forth in the Stock Option Agreement.
The stock options will expire, subject to earlier termination or cancellation
under certain circumstances, on July 13, 2003. As of April 17, 2000, the
remaining options granted under the Stock Option Agreement are not currently
exercisable, nor are they exercisable within 60 days from April 17, 2000.
Mr. Hannesson and Environmental are parties to an employment agreement,
dated November 18, 1996, which employment agreement expired by its terms on
December 31, 1999 (the "Hannesson Employment Agreement"). Pursuant to the
Hannesson Employment Agreement, Mr. Hannesson agreed to devote his business and
professional time and efforts to the business of Environmental as a senior
executive officer, and to serve in senior executive positions with one or more
of Environmental's subsidiaries at the time, including the Issuer. The Hannesson
Employment Agreement provides that Mr. Hannesson shall receive, among other
things, a base salary at an annual rate of $395,000 through December 31, 1997,
and will receive not less than $434,500 through December 31, 1998 and not less
than $477,950 through December 31, 1999, for services rendered to Environmental
and certain of its affiliates, including the Issuer. Pursuant to the Hannesson
Employment Agreement, Mr. Hannesson received, among other things: (i) a signing
bonus of (a) $150,000 cash and (b) options to purchase 950,000 shares of common
stock of Environmental, which options vested on the date of his employment
agreement (such options were subsequently exchanged for 500,000 shares of
Environmental common stock issued to the Hannesson Family Trust); and (ii)
options to purchase an aggregate of 2,500,000 shares of Environmental common
stock exercisable in installments over a period of five years commencing on the
date of the Hannesson Employment Agreement, all of which options were
subsequently canceled. Mr. Hannesson also received options to purchase common
stock of the Issuer and Separation in the amount of 1.0% of each company's total
outstanding shares of common stock on the date of grant, and is eligible to
receive incentive compensation of up to $225,000 per year for achieving certain
goals. Pursuant to the terms of the Hannesson Employment Agreement, Mr.
Hannesson is entitled to participate in the bonus plans of the Issuer, which may
from time to time include additional grants of stock options or other securities
to Mr. Hannesson in connection with his service as an executive officer and
director of the Issuer, which securities may be exchangeable for shares of
Common Stock of the Issuer.
Except for the foregoing, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among the Reporting Persons
and between such persons and any person with respect to Issuer's Common Stock.
The Environmental Warrants, the Blum Stock Option Agreement, the Hannesson
Stock Option Agreement, the Hannesson Employment Agreement and the Agreement of
Joint Filing, dated December 6, 1999, by and among Environmental, Bentley J.
Blum and Paul E. Hannesson, are incorporated herein by reference as Exhibits 1
through 8, and the descriptions herein of such documents are qualified in their
entirety by reference to such documents.
(Page 9 of 11 Pages)
<PAGE>
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following documents are being filed or incorporated by reference as
Exhibits to this Statement and are each incorporated by reference herein.
EXHIBIT NO. DOCUMENT
----------- --------
1 Warrant to purchase 10,675,168 shares of Common Stock
of the Issuer issued to Environmental. (1)
2 Warrant to purchase 1,331,062 shares of Common Stock
of the Issuer issued to Environmental. (2)
3 Warrant to purchase 1,754,029 shares of Common Stock
of the Issuer issued to Environmental. (3)
4 Warrant to purchase 650,281 shares of Common Stock of
the Issuer issued to Environmental. (5)
5 Non-qualified Stock Option Agreement, dated as of
December 15, 1998, between the Issuer and Bentley J.
Blum. (5)
6 Non-qualified Stock Option Agreement, dated as of
December 15, 1998, between the Issuer and Paul E.
Hannesson. (5)
7 Employment Agreement, dated November 18, 1996,
between Environmental and Mr. Hannesson. (4)
8 Agreement of Joint Filing, dated December 6, 1999, by
and among Environmental, Bentley J. Blum and Paul E.
Hannesson. (5)
9 Non-Qualified Stock Option Agreement, dated July 13,
1999, between the Issuer and Paul E. Hannesson, as
amended.(*)
----------------------------
(*) Filed herewith.
(1) Incorporated by reference and filed as an Exhibit to the Issuer's
Current Report on Form 8-K filed with the Securities and Exchange
Commission on February 23, 1998 (File No. 1-11871).
(2) Incorporated by reference and filed as an Exhibit to the Issuer's
Current Report on Form 8-K filed with the Securities and Exchange
Commission on October 3, 1997.
(3) Incorporated by reference and filed as an Exhibit to the Issuer's
Current Report on Form 8-K filed with the Securities and Exchange
Commission on January 5, 1999.
(4) Incorporated by reference and filed as an Exhibit to the
Environmental's Annual Report on Form 10-K for the year ended
December 31, 1996, filed with the Securities and Exchange Commission
on April 15, 1997 (File No. 0-10054).
(5) Incorporated by reference and filed as an Exhibit to the Schedule
13D filed with the Securities and Exchange Commission on December 6,
1999 (File No. 005-47303).
(Page 10 of 11 Pages)
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, the
undersigned do hereby certify that the information set forth in this statement
is true, complete and correct.
Dated: April ___, 2000
COMMODORE ENVIRONMENTAL SERVICES, INC.
By: /s/BENTLEY J. BLUM
----------------------------------------
Name: Bentley J. Blum
Title: Chairman of the Board, President and
Chief Executive Officer
/s/BENTLEY J. BLUM
-------------------
Bentley J. Blum
/s/PAUL E. HANNESSON
---------------------
Paul E. Hannesson
(Page 11 of 11 Pages)
<PAGE>
INDEX TO EXHIBITS
-----------------
EXHIBIT NO. DOCUMENT
----------- --------
1 Warrant to purchase 10,675,168 shares of Common Stock
of the Issuer issued to Environmental. (1)
2 Warrant to purchase 1,331,062 shares of Common Stock
of the Issuer issued to Environmental. (2)
3 Warrant to purchase 1,754,029 shares of Common Stock
of the Issuer issued to Environmental. (3)
4 Warrant to purchase 650,281 shares of Common Stock of
the Issuer issued to Environmental. (5)
5 Non-qualified Stock Option Agreement, dated as of
December 15, 1998, between the Issuer and Bentley J.
Blum. (5)
6 Non-qualified Stock Option Agreement, dated as of
December 15, 1998, between the Issuer and Paul E.
Hannesson. (5)
7 Employment Agreement, dated November 18, 1996,
between Environmental and Mr. Hannesson. (4)
8 Agreement of Joint Filing, dated December 6, 1999, by
and among Environmental, Bentley J. Blum and Paul E.
Hannesson. (5)
9 Non-Qualified Stock Option Agreement between the Issuer
and Paul E. Hannesson, dated July 13, 1999, as
amended.(*)
----------------------------
(*) Filed herewith.
(1) Incorporated by reference and filed as an Exhibit to the Issuer's
Current Report on Form 8-K filed with the Securities and Exchange
Commission on February 23, 1998 (File No. 1-11871).
(2) Incorporated by reference and filed as an Exhibit to the Issuer's
Current Report on Form 8-K filed with the Securities and Exchange
Commission on October 3, 1997.
(3) Incorporated by reference and filed as an Exhibit to the Issuer's
Current Report on Form 8-K filed with the Securities and Exchange
Commission on January 5, 1999.
(4) Incorporated by reference and filed as an Exhibit to the
Environmental's Annual Report on Form 10-K for the year ended
December 31, 1996, filed with the Securities and Exchange Commission
on April 15, 1997 (File No. 0-10054).
(5) Incorporated by reference and filed as an Exhibit to the Schedule
13D filed with the Securities and Exchange Commission on December 6,
1999 (File No. 005-47303).
OPTION NO. _______________
==================================
COMMODORE APPLIED TECHNOLOGIES, INC.
IN ACCORDANCE WITH THE
1998 STOCK OPTION PLAN
NON-QUALIFIED STOCK OPTION
GRANTED TO
PAUL E. HANNESSON
OPTIONEE
Number of Shares: 2,400,000 Price per Share $0.50
DATE GRANTED: July 13, 1999 EXPIRATION DATE: July 13, 2003
==================================
<PAGE>
NON-QUALIFIED STOCK OPTION AGREEMENT
This Non-Qualified Stock Option Agreement (this "AGREEMENT") is executed
and delivered on this ____ day of February 2000 effective as of the 13 day of
July 1999 (the "DATE OF GRANT") between COMMODORE APPLIED TECHNOLOGIES, INC., a
Delaware corporation (hereinafter referred to as the "COMPANY"), and PAUL E.
HANNESSON, residing at 150 East 58th Street, Suite 3400, New York, New York
10155 (hereinafter referred to as the "OPTIONEE").
BACKGROUND OF AGREEMENT
A. By action of its Board of Directors on August 3, 1999 (the "ORIGINAL
BOARD ACTION"), the Company determined, in connection with the employment of the
Optionee, to provide the Optionee with an opportunity to acquire up to Two
Million Four Hundred Thousand (2,400,000) Shares (such shares, the number of
which may be subject to adjustment in accordance with the provisions of this
Agreement, are hereinafter collectively referred to as the "OPTION SHARES") of
its Common Stock, $0.001 par value (the "COMMON STOCK"), on favorable terms and
thereby increase his proprietary interest in the continued progress and success
of the business of the Company.
B. As part of the Original Board Action, the Board of Directors of the
Company (the "BOARD OF DIRECTORS") established certain conditions (the "ORIGINAL
CONDITIONS") to the vesting of the Option Shares, subject to the right of the
Board of Directors to modify such conditions at a later time.
C. By action of the Board of Directors on December 22, 1999 (the
"SUBSEQUENT BOARD ACTION"), the Board of Directors modified the Original
Conditions with respect to 2.0 million of the Option Shares.
D. The Company and the Optionee desire to memorialize the terms upon
which the Optionee may acquire the Option Shares as hereinafter set forth.
PROVISIONS OF AGREEMENT
In consideration of the premises, the mutual covenants herein set forth and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and intending to be legally bound hereby, the Company and
the Optionee hereby agree as follows:
1. CONFIRMATION OF GRANT OF OPTION. Pursuant to the Original Board
Action and the Subsequent Board Action, the Company, subject to the terms this
Agreement, hereby grants to the Optionee as a matter of separate inducement and
agreement, and in addition to and not in lieu of salary, other grants of other
options to acquire Common Stock, or other compensation for services,
Page 2
<PAGE>
the right to purchase (hereinafter referred to as the "OPTION") the Option
Shares. The Option is NOT intended to qualify as an incentive stock option under
Section 422 of the Internal Revenue Code of 1986, as amended.
2. PURCHASE PRICE. The purchase price of shares of Common Stock covered
by the Option will be $0.50 per share, subject to adjustment as hereinafter
provided (the "EXERCISE COST").
3. EXERCISE OF OPTION. Subject to the term of the Option set forth in
Section 4 hereof, and other conditions set forth in Sections 5 and 6 hereof the
Option shall be exercisable on the terms and conditions hereinafter set forth:
(a) The Option shall be exercisable as to Five Hundred Thousand
(500,000) of the Option Shares originally subject thereto (after giving
effect to any adjustment pursuant to this Agreement) on the date next
following December 22, 1999 on which the Price of Common Stock is trades
at or above $2.00 per share for any twenty (20) consecutive trading
days.
(b) The Option shall be exercisable as to Five Hundred Thousand
(500,000) of the Option Shares originally subject thereto (after giving
effect to any adjustment pursuant to this Agreement) on the date next
following December 22, 1999 on which the Price of Common Stock trades at
or above $3.00 per share for any twenty (20) consecutive trading days.
(c) The Option shall be exercisable as to Five Hundred Thousand
(500,000) of the Option Shares originally subject thereto (after giving
effect to any adjustment pursuant to this Agreement) on the date next
following December 22, 1999 on which the Price of Common Stock trades at
or above $4.00 per share. for any twenty (20) consecutive trading days.
(d) The Option shall be exercisable as to Five Hundred Thousand
(500,000) of the Option Shares originally subject thereto (after giving
effect to any adjustment pursuant to this Agreement) on the date next
following December 22, 1999 on which the Price of Common Stock trades at
or above $5.00 per share for any twenty (20) consecutive trading days..
(e) The Option shall be exercisable as to Four Hundred Thousand
(400,000) of the Option Shares originally subject thereto (after giving
effect to any adjustment pursuant to this Agreement) upon the earlier of
the following occurrences: the successful completion of a power fund
financing in the amount of approximately $90 million or such other
circumstances as the Compensation Committee of the Company, in its
discretion, determines is appropriate, said discretion being subject
only to the approval of the Board of Directors.
(f) The Option may be exercised pursuant to the provisions of this
Section 3, by
Page 3
<PAGE>
notice and payment to the Company as provided in Sections 9 and 14
hereof.
4. TERM OF OPTION. Subject to earlier termination due to cessation of
employment or death or disability set forth in Sections 5 and 6 hereof, (i) the
term of the Option shall be a period of four (4) years from July 13, 1999
through and including July 12, 2003 and, subject to the provisions of Section 3
hereof, may be exercised in part or in full (at the sole discretion of the
Optionee) at any time(s) during such term and (ii) this Option, to the extent
unexercised, shall expire at 12:01 AM, New York time, on July 13, 2003. The
holder of the Option shall not have any rights to dividends or any other rights
of a stockholder with respect to any shares of Common Stock subject to the
Option until such shares shall have been issued to him (as evidenced by the
appropriate entry on the books of the Company or a duly authorized transfer
agent of the Company) provided that the date of issuance shall not be earlier
than the date this Option is exercised and payment of the full purchase price of
the shares of Common Stock (with respect to which the Option is exercised) is
made to the Company.
5. NON-TRANSFERABILITY OF OPTION. Except as hereinafter provided, the
Option shall not be assigned, transferred or otherwise disposed of, or pledged
or hypothecated in any way, and shall not be subject to execution, attachment or
other process, except as hereinafter provided. Any assignment, transfer, pledge,
hypothecation or other disposition of the Option attempted contrary to the
provisions hereof, or any levy of execution, attachment or other process
attempted upon the Option, will be null and void and without effect. Any attempt
to make any such assignment, transfer, pledge, hypothecation or other
disposition of the Option will cause the Option to terminate immediately upon
the happening of any such event; PROVIDED, HOWEVER, that any such termination of
the Option under the foregoing provisions of this Section 5 will not prejudice
any rights or remedies that the Company or any Parent or Subsidiary (as such
terms are defined below) may have under this Agreement or otherwise. As used
herein, the term "PARENT" means a corporation that directly or indirectly owns
more than fifty percent (50%) of the Company's outstanding Common Stock and the
term "SUBSIDIARY" means a corporation of which more than fifty percent (50%) of
its outstanding voting common stock is directly or indirectly owned by the
Company. Notwithstanding the foregoing, the Optionee may transfer all or any
part of the Option to his spouse, children or grandchildren (or to one or more
trusts for any such person's sole benefit).
6. EXERCISE UPON CESSATION OF EMPLOYMENT.
(a) If the Optionee at any time ceases to be an employee of the Company
and of any Parent or Subsidiary, the Option may, subject to the
provisions of Section 4 hereof, be exercised by the Optionee to the same
extent the Optionee would have been entitled under Section 3 hereof to
exercise the Option immediately prior to such cessation of employment,
at any time within ninety (90) days after such cessation of employment,
at the end of which period the Option, to the extent not then exercised,
shall terminate and the Optionee shall forfeit all rights hereunder,
even if the Optionee subsequently returns to the employ of the Company
or any Parent or Subsidiary. In no event, however, may the Option be
exercised after the expiration of the term provided in Section 4 hereof.
Page 4
<PAGE>
(b) The Option shall not be affected by any change of duties or position
of the Optionee so long as he continues to be an a full-time employee of
the Company or of any Parent or Subsidiary thereof. If the Optionee is
granted a temporary leave of absence, such leave of absence shall be
deemed a continuation of his employment by the Company or of any Parent
or Subsidiary thereof for the purposes of this Agreement, but only if
and so long as the employing corporation consents thereto.
7. EXERCISE UPON DEATH OR DISABILITY. If the Optionee dies while he is
employed by the Company or by any Parent or Subsidiary:
(a) on or after the first date upon which he would have been entitled to
exercise the Option under the provisions of Section 3 hereof, the Option
may, subject to the provisions of Section 4 hereof, be exercised with
respect to all or any part of the shares of Common Stock as to which the
deceased Optionee had not exercised the Option at the time of his death
(to the same extent the Optionee would have been entitled under Section
3 hereof to exercise the Option immediately prior to his death), by the
estate of the Optionee (or by the person or persons who acquire the
right to exercise the Option by written designation of the Optionee) at
any time within ninety (90) days after the death of the Optionee, at the
end of which period the Option, to the extent not then exercised, shall
terminate and the estate or other beneficiaries shall forfeit all rights
hereunder. In no event, however, may the Option be exercised after the
expiration of the term provided in Section 4 hereof.
(b) In the event that the employment of the Optionee by the Company and
any Parent or Subsidiary is terminated by reason of the Disability of
the Optionee and on or after the first date upon which he would have
been entitled to exercise the Option under the provisions of Section 3
hereof, the Option may, subject to the provisions of Section 4 hereof,
be exercised with respect to all or any part of the shares of Common
Stock as to which he had not exercised the Option at the time of his
Disability or Retirement (to the same extent the Optionee would have
been entitled under Section 3 hereof to exercise the Option immediately
prior to his employment termination due to Disability) by the Optionee
within the period ending ninety (90) days after the date of such
termination of employment, at the end of which period the Option, to the
extent not then exercised, shall terminate and the Optionee shall
forfeit all rights hereunder even if the Optionee subsequently returns
to the employ of the Company or any Parent or Subsidiary. In no event,
however, may the Option be exercised after the expiration of the term
provided in Section 4 hereof.
8. REGISTRATION. At the time of issuance, the shares of Common Stock
subject hereto and issuable upon the exercise hereof may not be registered under
the Securities Act of 1933, as amended (the "1933 ACT"), and, if required upon
the request of counsel to the Company, the Optionee will give a representation
as to his investment intent with respect to such shares prior to their issuance
as set forth in Section 9 hereof. The Company may register or qualify the shares
covered by the Option for sale pursuant to the 1933 Act at any time prior to or
after the exercise in whole or in part of the Option.
Page 5
<PAGE>
9. METHOD OF EXERCISE OF OPTION. (a) Subject to the terms and
conditions of this Agreement, the Option shall be exercisable by written notice
in the manner set forth in Exhibit A hereto (the "NOTICE") and provision for
payment to the Company in accordance with the procedure prescribed herein. Each
such Notice shall:
(i) state the election to exercise the Option and the number of Shares
with respect to which it is being exercised;
(ii) contain a representation and agreement as to investment intent, if
required by counsel to the Company with respect to such Shares, in a
form satisfactory to counsel to the Company;
(iii) be signed by the Optionee or the person or persons entitled to
exercise the Option and, if the Option is being exercised by any
person or persons other than the Optionee, be accompanied by proof,
satisfactory to counsel to the Company, of the right of such other
person or persons to exercise the Option;
(iv) include payment of the full purchase price for the shares of Common
Stock to be purchased pursuant to such exercise of the Option; and
(v) be received by the Company on or before the date of the expiration
of this Option. In the event the date of expiration of this Option
falls on a day that is not a regular business day at the Company's
executive office in New York, New York then such Notice must be
received at such office on or before the last regular business day
prior to such date of expiration.
(b) Payment of the purchase price of any shares of Common Stock in
respect of which the Option shall be exercised shall be made by the
Optionee or such person or persons at the place specified by the Company
on the date the Notice is received by the Company (i) by delivering to
the Company a certified or bank cashier's check payable to the order of
the Company, (ii) by delivering to the Company properly endorsed
certificates of shares of Common Stock (or certificates accompanied by
an appropriate stock power) with signature guaranties by a bank or trust
company, (iii) by having withheld from the total number of shares of
Common Stock to be acquired upon the exercise of this Option a specified
number of such shares of Common Stock, (iv) by any form of "cashless"
exercise, including the manner described in subsection (c) of this
Section 9 below, or (v) by any combination of the foregoing. For
purposes of the immediately preceding sentence, if required by the
Company, an exercise effected by the tender of Common Stock (or deemed
to be effected by the tender of Common Stock) may be consummated only
with Common Stock held by the Optionee for at least six (6) months and
one (1) day.
(c) A "cashless" exercise shall be elected by the Optionee by indicating
on the Notice of his intention to exercise such cashless exercise
rights. The number of shares of Common Stock issuable to the Optionee
upon any such "cashless" exercise shall be calculated as follows:
Page 6
<PAGE>
(i) The number of Option Shares issuable upon any full or partial
exercise of the Option (the "SUBJECT OPTION SHARES") shall be
multiplied by the Exercise Price then in effect. The product thereof
shall be deemed to be the "EXERCISE COST."
(ii) The Subject Option Shares shall be multiplied by the Closing Price
of the Common Stock on the business day immediately preceding the
date of exercise (the "EXERCISE CLOSING PRICE") and the product
thereof shall be deemed to be the "EXERCISE VALUE."
(iii) The Exercise Cost shall be subtracted from the Exercise Value and
the positive result thereof, if any, shall be deemed the "Profit."
(iv) The Company shall issue that number of Option Shares to the Optionee
as shall be determined by dividing the Profit by the Exercise
Closing Price.
(d) The Option shall be deemed to have been exercised with respect to
any particular shares of Common Stock if, and only if, the preceding
provisions of this Section 9 and the provisions of Section 10 hereof
shall have been complied with, in which event the Option shall be deemed
to have been exercised on the date the Notice and related payment were
received by the Company. Anything in this Agreement to the contrary
notwithstanding, any Notice given pursuant to the provisions of this
Section 9 shall be void and of no effect if all of the preceding
provisions of this Section 9 and the provisions of Section 10 shall not
have been complied with.
(e) The certificate or certificates for shares of Common Stock as to
which the Option shall be exercised will be registered in the name of
the Optionee (or in the name of the Optionee's estate or other
beneficiary if the Option is exercised after the Optionee's death), or
if the Option is exercised by the Optionee and if the Optionee so
requests in the notice exercising the Option, will be registered in the
name of the Optionee and another person jointly, with right of
survivorship, and will be delivered as soon as practical after the date
the Notice is received by the Company (accompanied by full payment of
the exercise price), but only upon compliance with all of the provisions
of this Agreement.
(f) If the Optionee fails to accept delivery of and pay for all or any
part of the number of Shares specified in such Notice, his right to
exercise the Option with respect to such undelivered Shares may be
terminated in the sole discretion of the Committee. The Option may be
exercised only with respect to full Shares.
(g) The Company shall not be required to issue or deliver any
certificate or certificates for shares of its Common Stock purchased
upon the exercise of any part of the Option prior to the payment to the
Company, upon its demand, of any amount requested by the Company for the
purpose of satisfying its liability, if any, to withhold federal, state
or local income or earnings tax or any other applicable tax or
assessment (plus interest or penalties thereon, if any, caused by a
delay in making such payment) incurred by reason of the exercise of this
Option or the transfer of shares thereupon. Such payment shall be made
by the Optionee in cash or, with the written consent of the
Page 7
<PAGE>
Company, by tendering to the Company shares of Common Stock equal in value to
the amount of the required withholding. In the alternative, the Company may, at
its option, satisfy such withholding requirements by withholding from the shares
of Common Stock to be delivered to the Optionee pursuant to an exercise of the
Option a number of shares of Common Stock equal in value to the amount of the
required withholding.
10. APPROVAL OF COUNSEL. The exercise of the Option and the issuance and
delivery of shares of Common Stock pursuant thereto shall be subject to approval
by the Company's counsel of all legal matters in connection therewith,
including, but not limited to, compliance with the requirements of the 1933 Act
and the Securities Exchange Act of 1934, as amended (the "1934 ACT"), and the
rules and regulations thereunder, and the requirements of any stock exchange or
automated trading medium upon which the Common Stock may then be listed or
traded.
11. RESALE OF COMMON STOCK. (a) If so requested by the Company, upon any
sale or transfer of the Common Stock purchased upon exercise of the Option the
Optionee shall deliver to the Company an opinion of counsel satisfactory to the
Company to the effect that either (i) the Common Stock to be sold or transferred
has been registered under the 1933 Act and that there is in effect a current
prospectus meeting the requirements of Section 10(a) of said Act which is being
or will be delivered to the purchaser or transferee at or prior to the time of
delivery of the certificates evidencing the Common Stock to be sold or
transferred, or (ii) such Common Stock may then be sold without violating
Section 5 of said Act.
(b) The Common Stock issued upon exercise of the Option shall bear the
following (or similar) legend if required by counsel for the Company:
THE SHARES EVIDENCED BY THIS CERTIFICATE
MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS THEY HAVE FIRST BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNLESS, IN THE OPINION OF
COUNSEL FOR THE COMPANY, SUCH
REGISTRATION IS NOT REQUIRED.
(c) The Company shall immediately take all reasonable steps to register
a sufficient number of shares of Common Stock under the Company's Plan
so that upon the exercise of the Option, Optionee may sell all or any
portion of the Option Shares issuable upon any full or partial exercise
of the Option free of the restriction set forth in Subsection (b) of
this Section 11.
12. RESERVATION OF SHARES. The Company shall at all times during the
term of the Option reserve and keep available such number of shares of the
Common Stock as will be sufficient to satisfy the requirements of this
Agreement.
13. LIMITATION OF ACTION. The Optionee and the Company each acknowledges
that
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<PAGE>
every right of action accruing to him or it, as the case may be, and
arising out of or in connection with this Agreement against the Company or a
Parent or Subsidiary, on the one hand, or against the Optionee, on the other
hand, shall, irrespective of the place where an action may be brought, cease and
be barred by the expiration of three years from the date of the act or omission
in respect of which such right of action arises.
14. NOTICES. Each notice relating to this Agreement shall be in
writing and delivered in person, by recognized overnight carrier or by
certified mail to the proper address. All notices to the Company shall be
addressed to it at Commodore Applied Technologies, Inc., 150 East 58th
Street, Suite 3400, New York, New York 10155 Attn: President. All
notices to the Optionee shall be addressed to the Optionee or such other
person or persons at the Optionee's address above specified. Anyone to
whom a notice may be given under this Agreement may designate a new
address by notice to that effect.
15. BENEFITS OF AGREEMENT. This Agreement shall inure to the
benefit of the Company, the Optionee and their respective heirs,
executors, administrators, personal representatives, successors and
assigns.
16. SEVERABILITY. In the event that any one or more provisions of this
Agreement shall be deemed to be illegal or unenforceable, such illegality or
unenforceability shall not affect the validity and enforceability of the
remaining legal and enforceable provisions hereof, which shall be construed as
if such illegal or unenforceable provision or provisions had not been inserted.
17. GOVERNING LAW. This Agreement will be construed and governed
in accordance with the laws of the State of Delaware.
18. EMPLOYMENT. Nothing contained in this Agreement shall be construed
as (a) a contract of employment between the Optionee and the Company or any
Parent or Subsidiary, (b) as a right of the Optionee to be continued in the
employ of the Company or of any Parent or Subsidiary or (c) as a limitation of
the right of the Company or of any Parent or Subsidiary to discharge the
Optionee at any time, with or without cause (subject to the terms of any
applicable employment agreement).
19. DEFINITIONS. Unless otherwise defined herein, all capitalized
terms used in this Agreement shall have the same definitions as set forth
in the Plan.
20. INCORPORATION OF TERMS OF PLAN. This Agreement shall be
interpreted under, and subject to, all of the terms and provisions of the
Plan, which are incorporated herein by reference.
Page 9
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date set forth above.
COMMODORE APPLIED
TECHNOLOGIES, INC.
ATTEST:
By:______________________________ By: /s/James M. DeAngelis
Name: ----------------------
Title: Name: James M. DeAngelis
Title: Chief Financial Officer
Senior Vice President
/s/Paul E. Hannesson
--------------------------------
Paul E. Hannesson
--------------------------------
Social Security Number
Page 10
<PAGE>
EXHIBIT A
NON-QUALIFIED STOCK OPTION EXERCISE FORM
[DATE]
Commodore Applied Technologies, Inc.
150 East 58th Street
Suite 3400
New York, NY 10155
Attention: [OFFICER]
Dear Sirs:
Pursuant to the provisions of the Non-Qualified Stock Option
Agreement dated [ ] (the "AGREEMENT"), whereby you have granted to me a
Non-Qualified Option (the "Option") to purchase up to [2.4 Million] shares of
the Common Stock of [ ] (the "Company") subject to the terms of the Agreement, I
hereby notify you that I elect to exercise my option to purchase [ ] of the
shares of Common Stock covered by such Option at the [$0.50] per share price
specified therein. In full payment of the price for the shares being purchased
hereby, I am delivering to you herewith (i) certified or bank cashier's check
payable to the order of the Company in the amount of $____________,1 or (ii) a
certificate or certificates for [ ] shares of Common Stock of the Company, and
which have a fair market value as of the date hereof of $___________, [and a
certified or bank cashier's check, payable to the order of the Company, in the
amount of $________________].2 Any such stock certificate or certificates are
endorsed, or accompanied by an appropriate stock power, to the order of the
Company, with my signature guaranteed by a bank or trust company or by a member
firm of the New York Stock Exchange. I hereby acknowledge that I am purchasing
these shares for investment purposes only and not for resale in violation of any
federal or state securities laws.
Very truly yours,
------------------------------
[Address]
(For notices, reports, dividend checks
and other communications to
stockholders.)
_____________________________
1 $_____________ of this amount is the purchase price of the shares,
and the balance represents payment of withholding taxes as follows:
Federal $_____________, State $_________ and Local $_______.
2 $_____________ of this amount is at least equal to the current
market value of one share of Common Stock of the Company, and the
balance represents payment of withholding taxes as follows: Federal
$________, State $_______ and Local $______.
<PAGE>
FIRST AMENDMENT TO
NON-QUALIFIED STOCK OPTION AGREEMENT
This First Amendment to Non-Qualified Stock Option Agreement (this
"AMENDMENT") is executed and delivered on this ____ day of May, 2000 between
COMMODORE APPLIED TECHNOLOGIES, INC., a Delaware corporation (hereinafter
referred to as the "COMPANY"), and PAUL E. HANNESSON, an individual who
maintains an office at 150 East 58th Street, Suite 3400, New York, New York
10155 (hereinafter referred to as the "OPTIONEE") and amends that certain
Non-Qualified Stock Option Agreement dated January 10, 2000 (the "ORIGINAL
OPTION AGREEMENT"), effective as of July 13, 1999 (the "DATE OF GRANT").
BACKGROUND OF AMENDMENT
A. By action of its Board of Directors on August 3, 1999, the Company
determined, in connection with the employment of the Optionee, to provide the
Optionee with an opportunity to acquire up to Two Million Four Hundred Thousand
(2,400,000) Shares (such shares, the number of which may be subject to
adjustment in accordance with the provisions of this Agreement, are hereinafter
collectively referred to as the "OPTION SHARES") of its Common Stock, $0.001 par
value (the "COMMON STOCK"), on favorable terms and thereby increase his
proprietary interest in the continued progress and success of the business of
the Company.
B. As part of the Original Board Action, the Board of Directors of the
Company (the "BOARD OF DIRECTORS") established certain conditions (the "ORIGINAL
CONDITIONS") to the vesting of the Option Shares, subject to the right of the
Board of Directors to modify such conditions at a later time.
C. By action of the Board of Directors on December 22, 1999, the Board
of Directors modified the Original Conditions with respect to 2.0 million of the
Option Shares.
D. By action of the Board of Directors on April 24, 2000, the Board of
Directors modified the Original Conditions with respect to the remaining 400,000
of the Option Shares.
E. The Company and the Optionee desire to memorialize the terms upon
which the Optionee may acquire the Remaining Option Shares as hereinafter set
forth.
PROVISIONS OF AGREEMENT
In consideration of the premises, the mutual covenants herein set forth
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged and intending to be legally bound hereby, the Company
and the Optionee hereby agree as follows:
<PAGE>
1. AMENDMENT OF SECTION 3(E) OF THE ORIGINAL AGREEMENT. Section 3(e)
of the Original Agreement is hereby amended to read in its entirety as
follows:
(e) The Option shall be immediately exercisable as to Four Hundred
Thousand (400,000) of the Option Shares originally subject thereto (after
giving effect to any adjustment pursuant to this Agreement).
2. AMENDMENT OF SECTION 6(A) OF THE ORIGINAL AGREEMENT. Section
6(a) of the Original Agreement is hereby amended to read in its entirety
as follows:
(a) If the Optionee at any time ceases to be an employee of the
Company and of any Parent or Subsidiary, the Option may, subject to the
provisions of Section 4 hereof, be exercised by the Optionee to the same
extent the Optionee would have been entitled under Section 3 hereof to
exercise the Option immediately prior to such cessation of employment, at
any time within two (2) years after such cessation of employment, at the
end of which period the Option, to the extent not then exercised, shall
terminate and the Optionee shall forfeit all rights hereunder, even if the
Optionee subsequently returns to the employ of the Company or any Parent or
Subsidiary. In no event, however, may the Option be exercised after the
expiration of the term provided in Section 4 hereof.
3. AMENDMENT OF SECTION 7(A) OF THE ORIGINAL AGREEMENT. Section
7(a) of the Original Agreement is hereby amended to read in its entirety
as follows:
(a) on or after the first date upon which he would have been
entitled to exercise the Option under the provisions of Section 3 hereof,
the Option may, subject to the provisions of Section 4 hereof, be exercised
with respect to all or any part of the shares of Common Stock as to which
the deceased Optionee had not exercised the Option at the time of his death
(to the same extent the Optionee would have been entitled under Section 3
hereof to exercise the Option immediately prior to his death), by the
estate of the Optionee (or by the person or persons who acquire the right
to exercise the Option by written designation of the Optionee) at any time
within two (2) years after the death of the Optionee, at the end of which
period the Option, to the extent not then exercised, shall terminate and
the estate or other beneficiaries shall forfeit all rights hereunder. In no
event, however, may the Option be exercised after the expiration of the
term provided in Section 4 hereof.
4. AMENDMENT OF SECTION 7(B) OF THE ORIGINAL AGREEMENT.
Section 7(b) of the Original Agreement is hereby amended to read in
its entirety as follows:
(b) In the event that the employment of the Optionee by the Company
and any Parent or Subsidiary is terminated by reason of the Disability of
the Optionee and on or after the first date upon which he would have been
entitled to exercise the Option under the provisions of Section 3 hereof,
the Option may, subject to the provisions of Section 4 hereof, be exercised
with respect to all or any
2
<PAGE>
part of the shares of Common Stock as to which he had not exercised the
Option at the time of his Disability or Retirement (to the same extent the
Optionee would have been entitled under Section 3 hereof to exercise the
Option immediately prior to his employment termination due to Disability)
by the Optionee within the period ending two (2) years after the date of
such termination of employment, at the end of which period the Option, to
the extent not then exercised, shall terminate and the Optionee shall
forfeit all rights hereunder even if the Optionee subsequently returns to
the employ of the Company or any Parent or Subsidiary. In no event,
however, may the Option be exercised after the expiration of the term
provided in Section 4 hereof.
5. ACKNOWLEDGEMENT REGARDING ORIGINAL AGREEMENT. The parties
acknowledge that the Original Agreement, as amended by this Amendment, remains
in full force and effect and that there are no defaults existing thereunder.
6. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall constitute an original but all of which
together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date set forth above.
COMMODORE APPLIED
TECHNOLOGIES, INC.
ATTEST:
By:______________________________ By: /s/James M. DeAngelis
Name: ----------------------
Title: Name: James M. DeAngelis
Title: Chief Financial Officer
Senior Vice President
/s/Paul E. Hannesson
--------------------------------
Paul E. Hannesson
