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DELAWARE (State or other jurisdiction of incorporation or organization) | 58-1954497 (I.R.S. Employer Identification No.) |
1940 Northwest 67th
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Large accelerated filer ¨ | Accelerated filer x | |
Non-accelerated filer ¨ | (Do not check if a smaller reporting company) | Smaller reporting company ¨ |
Title of Each Class of Securities to be Registered | Number of Shares to be Registered(1) | Proposed Maximum Offering Price Per Share(2) | Proposed Maximum Aggregate Offering Price(2) | Amount of Registration Fee | ||||||||||||
Common Stock, $0.01 par value | 5,000,000 | $ | 1.94 | $ | 9,700,000 | $ | 381.22 |
Pursuant to Rule 416(a) of the Securities Act of | |||||
(1) Includes (a) 4,010,638 shares which have been issued by the Company pursuant to a private placement;
(2) | The proposed maximum aggregate offering price, estimated solely for the purpose of calculating the registration fee, has been computed pursuant to Rule 457(c) of the Securities Act of 1933 and is based on the average of the high and low prices of Perma-Fix Environmental Services, Inc.’s common stock, $0.001 par value, on April 1, 2009, as reported by The Nasdaq Capital Markets. |
(2)Estimated solely for the purposes of calculatingmay be changed. We may not sell these securities until the registration feestatement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell securities, and is not soliciting an offer to buy securities in accordance with Rule 457(c) and (g) onany state where the basis of the average of the high and low price as quoted on the NASDAQ Small Cap Market on September 26, 2002.
(3) Estimated in accordance with Rule 457(g) for the purpose of calculating the registration fee.
(4) Previously paid.
April 7, 2009
PermaFix
offering. Our common stock is traded on the Nasdaq SmallCap MarketNASDAQ Capital Markets under the symbol "PESI" and on the Boston Stock Exchange under the symbol "PES."“PESI”. OnNovember 26, 2002, April 1, 2009, the closing price of our common stock as reported on the Nasdaq SmallCap MarketNASDAQ Capital Markets was $2.50.$1.94.
InvestmentInvesting in these securitiesour common stock involves a high degree of risk.See "RISK FACTORS" You should carefully consider the Risk Factors beginning on page 2 of this prospectus.prospectus before you make an investment decision.
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offense.
The information in this prospectus is not complete and may be changed. These securities may not be sold until the related registration statement filed with the SEC 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 where the offer or sale is not permitted.
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1 | |
THE COMMON STOCK WE MAY OFFER | 2 |
RISK | 2 |
SPECIAL NOTE REGARDING FORWARD-LOOKING | |
USE OF PROCEEDS | 12 |
DESCRIPTION OF COMMON STOCK | 13 |
13 | |
EXPERTS | 13 |
WHERE YOU CAN FIND MORE |
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Our Industrial Waste Management Services (“Nuclear Segment”), which include:
· | Treatment, storage, processing and disposal of mixed waste (which is waste that contains both low-level radioactive and hazardous waste) including on and off-site waste remediation and processing; |
· | Nuclear, low-level radioactive, and mixed waste treatment, processing and disposal; and |
· | Research and development of innovative ways to process low-level radioactive and mixed waste. |
* industrial waste and wastewater management services, including the collection, treatment, �� processing and disposal of hazardous and non-hazardous waste; and
* various waste management services to certain governmental agencies.
These services are primarily conducted through sixfour of our subsidiaries and through various locations within our government services group:subsidiaries:
· | Perma-Fix Northwest Richland, Inc. located in Richland, Washington, adjacent to the U.S. Department of Energy’s Hanford, Washington, facility; |
· | Perma-Fix of Florida, Inc., located in Gainesville, Florida; |
· | Diversified Scientific Services, Inc., located in Kingston, Tennessee; and |
· | East Tennessee Materials and Energy Corporation, located in Oak Ridge, Tennessee. |
Our NuclearIndustrial Waste Management Services (“Industrial Segment”), which include:
· | treatment storage, processing and disposal of hazardous and non-hazardous waste, and |
· | wastewater management services, including the collection, treatment, processing and disposal of hazardous and non-hazardous wastewater. |
These services are primarily conducted through three of our subsidiaries:
· | Perma-Fix of Fort Lauderdale, Inc., located in Ft. Lauderdale, Florida; |
· | Perma-Fix of South Georgia, Inc., located in Valdosta, Georgia; and |
· | Perma-Fix of Orlando, Inc., located in Orlando, Florida. |
Our Consulting Engineering Services include(“Engineering Segment”), which provide solutions to industrial and government customers for broad-scope environmental issues including:
· | Air, water, and hazardous waste permitting; |
· | air, soil, and water sampling; |
· | compliance reporting; |
· | emission reduction strategies; and |
· | compliance auditing. |
compliance support needed by our other segments. These services are primarily conducted through our subsidiary, Schreiber, Yonley & Associates, Inc., located in St. Louis,Ellisville, Missouri.
We have grown through both acquisitions and internal development.
We continue to place greater attention and resources on our nuclear business.
Prospective purchasers
We have a history of losses from operations and may continue to incurthe additional lossesinformation in the future which could adversely affect our abilityother reports we file with the Securities and Exchange Commission (“SEC”).
We have reported consolidated net losses in all annual periods, except 1999, whenus or that we reported net income of $1,570,000, before provision for preferred stock dividends, net of $120,000. For the year ended December 31, 2001, we had an audited net loss of $602,000, before provision for preferred stock dividends of $145,000. Our audited consolidated balance sheet at December 31, 2001, reflected an accumulated deficit of approximately $22,216,000.For the nine months ended September 30, 2002, we had unaudited net income of $2,354,000, before preferred stock dividends of $111,000. If we fail to become profitable or sustain profitability on an annualized basis in the foreseeable future, wecurrently deem immaterial also may be unable to fund our continuing operations.
Our substantial amount of debt could adversely affect our operations.
We have a substantial amount of debt. At October 31, 2002, our aggregate consolidated debt was approximately $31.4 million. If our floating rates of interest experienced an upward increase of 1%, our debt service would increase by approximately $164,000 annually. Our leverage could have material adverse consequences on our ability to operateimpair our business including the following:
* our ability to obtain additional financing in the future for refinancing indebtedness, acquisitions, working capital, capital expenditures or other purposes may be impaired; * funds available to us for our operations and general corporate purposes or for capital expenditures will be reduced because a substantial portion of our consolidated cash flow from operations will be dedicated to the paymentoperations. If any of the principal and interest on our indebtedness; * we may be more highly leveraged than certain of our competitors, which may place us at a competitive disadvantage; * the agreements governing our long-term indebtedness and credit facility contain certain restrictive financial and operating covenants; * if an event of default occurs, which is not cured or waived, under financial and operating covenants contained in either our or our subsidiaries' debt instruments, this could result in and have a material adverse effect on us; * we may be more vulnerable to a downturn in general economic conditions; and
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* certain of the borrowings under our debt agreements have floating rates of interest, which cause us to be vulnerable to increases in interest rates.
Our ability to make principal and interest payments, or to refinance indebtedness, will depend on both our and our subsidiaries' future operating performance and cash flow. Prevailing economic conditions, interest rate levels, and financial, competitive, business, and other factors affect us and our subsidiaries. Many of these factors are beyond our control.
Our industrial waste management services and nuclear waste management services subject us to potential environmental liability.
Our business of rendering services in connection with management of waste, including certain types of hazardous waste and low-level radioactive waste, subjects us tofollowing risks of liability for damages. Such liability could involve, without limitation: * claims for clean-up costs, personal injury or damage to the environment in cases in which we are held responsible for the release of hazardous or radioactive materials; * claims of employees, customers, or third parties for personal injury or property damage occurring in the course of our operations; and * claims alleging negligence or professional errors or omissions in the planning or performance of our services.We could also be deemed a responsible party for the cost of cleaning any property which may be contaminated by hazardous substances generated by us and disposed at such property or transported by us to a site selected by us, including properties we own or lease.
The conversion of our convertible preferred stock and exercise of our outstanding warrants and optionscould cause the market price of our common stock to fall, and may have dilution and other effects on our existing stockholders.
The conversion of our outstanding Series 17 Class Q Convertible Preferred Stock, par value $.001 per share (the "Series 17 Preferred"), and the exercise of our outstanding warrants and options could result in the issuance of up to 18,760,619 shares of common stock, assuming all outstanding warrants and options are currently exercisable and subject to adjustment pursuant to certain anti-dilution provisions. Such issuances would significantly reduce the percentage ownership of our existing common stockholders and could, among other things, depress the price of the common stock. This result could detrimentally affect our ability to raise additional equity capital. The issuance of such additional shares of common stock may also result in a change in control.
The conversion of our outstanding Series 17 Preferred could result in the issuance of up to 1,666,667 shares of common stock at a conversion price of $1.50 per share of common stock, subject to adjustment pursuant to certain anti-dilution provisions. The exercise of our outstanding warrants and options into common stock could result in the issuance of up to approximately 14,411,552 shares, and 2,682,400 shares, respectfully (assuming that all options and warrants are currently exercisable). The exercise prices of the outstanding warrants and options range from $1.00 per share to $5.25 per share, subject to adjustment pursuant to certain anti-dilution provisions. Consequently, upon such issuances, our stockholders could experience a significant dilution of their investment. Dilution of our common stock may potentially have a substantial and material adverse impact on our earnings per share.
The holders of all of our convertible preferred stock and the holders of many of our warrants and options may immediately sell the full amount of common stock received upon conversion of the convertible preferred stock or exercise of the warrants and options, as applicable. As these shares are sold, the price of the common stock may decrease.
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Our outstanding preferred stock and warrants subject us to a potential change in control, which could have an adverse effect on our management, the listing of our common stock, and our existing stockholders' ability to influence our management and policies.
As of September 12, 2002, Capital Bank-Grawe Gruppe AG ("Capital Bank"), f/k/a RBB Bank Aktiengesellschaft, owned of record, as agent for certain of its investors, 9,258,672 shares of our common stock, or approximately 27.0% of the outstanding shares of common stock, and had the right to acquire an additional 6,025,317 shares of common stock pursuant to the convertible preferred stock and warrants held in Capital Bank's name, as agent for certain investors. The Selling Stockholders table beginning on page 22 of this prospectus includes 109 persons and entities which, in the aggregate, beneficially own 3,143,115 shares of the common stock that are owned of record by Capital Bank and 2,725,548 shares of common stock issuable upon the exercise of warrants held in Capital Bank's name. If Capital Bank acquires all of the shares issuable to Capital Bank pursuant to such preferred stock and warrants, Capital Bank would own of record 15,283,989 shares of common stock, representing 37.9% of the then issued and outstanding common stock, assuming we issue no other shares of common stock and Capital Bank does not dispose of any shares. Consequently, if Capital Bank seeks to control us, we may be unable to avoid a change in control. See "POTENTIAL CHANGE IN CONTROL" beginning on page 13 of this prospectus.
If Capital Bank converts all of the preferred stock and exercises all the warrants that are held in its name, and all of the other holders of our currently outstanding warrants and options to purchase common stock exercise such warrants and options, then Capital Bank would own approximately 28.8% of our then issued and outstanding common stock, assuming we do not issue any other shares of our common stock and Capital Bank does not dispose of any shares.
Although we are not aware of any agreement or understanding among Capital Bank's investors to act as a group, if Capital Bank's investors agree to, or reach an understanding to, act as a group or otherwise to act in concert for the purposes of voting on matters subject to stockholder vote, our operations and management could be greatly impacted. For instance, this investor group could instruct Capital Bank to vote for a significant change of our directors or for the approval of a merger proposal. As a result, the ability of our other stockholders to influence our management and policies could be limited, and their ability to realize opportunities to sell some or all of their stock at prices that represent a premium over market prices could be lost.
Our senior credit facility provides that a change of control willactually occur, if (a) Dr. Louis F. Centofanti, our Chairman, President, and Chief Executive Officer, or Richard T. Kelecy, our Chief Financial Officer, cease to serve as senior executive officers in substantially the same capacity as served on the date of the credit facility or the persons who were members of our Board on the closing of the credit facility cease to constitute 50% of our Board. Each of these events could be an event of default under the terms of the credit facility. The terms of the Purchase Agreement covering our Subordinated Notes provide that if Dr. Centofanti ceases to be our President and Chief Executive Officer, the holders of the Subordinated Notes have the option to require us to prepay all amounts owing under the Subordinated Notes. The Purchase Agreement covering the Subordinated Notes also provides that if any person or group is successful in electing its nominees to 50% or more of the positions on our Board, then the holders of the Subordinated Notes have the option to require us to prepay all amounts owing under the Subordinated Notes plus a prepayment premium. If a group of Capital Bank investors were to successfully attempt to cause any of these changes in our management or Board membership, we would be in default under our senior credit facility or our Subordinated Notes, or both of them. See "If we cannot retain our key personnel, we may lose sufficient revenues, be required to prepay our Subordinated Notes, and default under our senior credit facility" beginning on page 7 of this prospectus. The Purchase Agreement and Subordinated Notes are discussed under "SUMMARY OF SECURITIES BEING OFFERED -- Note Warrants" beginning on page 15 of this prospectus.
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The rules of the Nasdaq SmallCap Market (the "Nasdaq") could deem such a change in control to be a change in financial structure or a merger or consolidation with Capital Bank. If so, Nasdaq could require us to requalify under the initial listing standards of Nasdaq to maintain the listing of our common stock on the Nasdaq. If we are required to requalify for listing on the Nasdaq, among other things, our common stock must have a minimum bid price of $4.00 per share. The market price of the common stock as of the effective date of this prospectus is below $4.00 and would not meet Nasdaq initial listing requirements.
Our ability to successfully operate M&EC could impact our future growth.
In June 2001, we acquired East Tennessee Materials and Energy Corporation ("M&EC"), a mixed waste processing facility in Oak Ridge, Tennessee. Prior to the acquisition, we had loaned and advanced approximately $12.1 million to M&EC for use in the operation and construction of M&EC's facility. At the closing of the M&EC acquisition, we advanced funds to M&EC to pay certain liabilities to the Internal Revenue Service, certain 401(k) plans, and several M&EC debt holders, in the aggregate amount of approximately $2.1 million. In order to acquire M&EC and to finance the construction of M&EC's facility, we borrowed a substantial amount of funds.
M&EC's facility is newly constructed, and M&EC had limited operating history prior to our acquisition of M&EC. We may be unable to effectively operate M&EC to achieve long-term profitability. If M&EC's operations fail to generate revenue sufficient for us to recoup the amounts loaned to M&EC and expended in the acquisition of M&EC, the potential growth of our business will be limited and our business, results of operations and financial condition wouldcould suffer.
If M&EC In that event, the trading price of our common stock could decline, and you may lose all or part of your investment in our common stock. The risks discussed below also include forward-looking statements and our actual results may differ substantially from those discussed in these forward-looking statements.
Currently, M&EC's revenues are generated primarily pursuantfinancial assurance that guarantees to three subcontracts under contractsthe state that in the event of closure of our permitted facilities will be closed in accordance with the U. S. Departmentregulations. The policies provide a maximum of Energy (the "DOE"). Each$35,000,000 of these subcontracts provides that the contractor, on its or the DOE's behalf, may terminate the contracts underfinancial assurance coverage of which the subcontractscoverage amount totals $32,515,000 at December 31, 2008. In March 2009, the policies were increased to provide a maximum of $39,000,000 of financial assurance coverage of which the coverage amounts totals $37,936,000. This additional increase was the result of additional financial assurance coverage requirement for our DSSI subsidiary to commercially store and dispose of PCB wastes under a permit issued at any time by notifying us. If we fail to maintain, renew, or replace these contracts, M&EC's revenuesthe EPA on November 26, 2008. The AIG subsidiary also provides other operating insurance policies for the Company and our subsidiaries. In the event of a failure of AIG, this could be materially reduced, and your investment could be materially and adversely affected.
If we cannot maintain our government permits or cannot obtain any required permits, we may not be able to continue or expand our operations.
Our business is subject to extensive, evolving, and increasingly stringent federal, state, and local environmental laws and regulations. Such federal, state, and local environmental laws and regulations govern our activities regarding the treatment, storage, recycling, disposal, and transportation of hazardous and non-hazardous waste and low-level radioactive waste. We must obtain and maintain permits, licenses and/or approvals to conduct these activities in compliance with such laws and regulations. Failure to obtain and maintain the required permits, licenses and/or approvals would have a material adverse effect onimpact our operations and financial condition. Ifour permits which we are unablerequired to maintainhave in order to operate our currently held permits, licenses, and/or approvals or obtain any additional permits, licenses and/or approvals which may be required as we expand our operations, we may not be able to continue certain of our operations.
Changes in environmental regulations and enforcement policies could subject us to additional liability and adversely affect our ability to continue certain operations.
Because the environmental industry continues to develop rapidly, we cannot predict the extent to which our operations may be affected by future enforcement policies as applied to existing laws, by changes to current environmental laws and regulations, or by the enactment of new environmental laws and regulations. Any predictions regarding possible liability under such laws are complicated further by current environmental laws which provide that we could be liable, jointly and severally, for certain activities of third parties over whom we have limited or no control.
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If we are unable to become profitable, we may be unable to comply with certain government regulations and could become subject to substantial fines or lose our permits.
The standards imposed by federal, state, and local environmental laws require us to incur additional expenses as necessary to upgrade our facility. Our inability to become profitable on a long-term basis could have a negative impact on our ability to remain in compliance with various federal, state, and local environmental regulations. Violation of such federal, state, and local regulations could result in the loss of one or more of our permits or subject us to substantial fines, penalties, or other liabilities that could have a material adverse impact on our financial condition and our ability to continue certain of our operations.
As our operations expand, we may be subject to increased litigation which could have a negative impact on our future financial results.
Our operations are regulated by numerous laws regarding procedures for waste treatment, storage, recycling, transportation, and disposal activities, all of which may provide the basis for litigation against us. In recent years, the waste treatment industry has experienced a significant increase in so-called "toxic-tort" litigation as those injured by contamination seek to recover for personal injuries or property damage. We believe that as our operations and activities expand, there will be a similar increase in the potential for litigation alleging that we are responsible for contamination or pollution caused by our normal operations, negligence or other misconduct, or for accidents which occur in the course of our business activities. Such litigation, if significant and not adequately insured against, could adversely affect our financial condition and our ability to fund our operations. Protracted litigation would likely cause us to spend significant amounts of our time, effort, and money. This could prevent our management from focusing on our operations and expansion.
facilities.
Our operations will suffer if we are unable
We are currently experiencing amaintain existing government contracts or win new government contracts over an extended period of rapid growth through internal expansion and strategic acquisitions. This growth has placed, and could continue to place, a significant strain on our management, personnel, and other resources. Our ability to grow will require us to effectively manage our collaborative arrangements and to continue to improve our operational, management, and financial systems and controls, and to successfully train, motivate, and manage our employees. If we are unable to effectively manage our growth, we may not realize the expected benefits of such growth, and such failure could have a material adverse effect on our operations and financial condition.
adversely affect our future revenues.
materially adversely affected.
· | accidents, terrorism, natural disasters or other incidents occurring at nuclear facilities or involving shipments of nuclear materials; |
· | failure of the federal government to approve necessary budgets, or to reduce the amount of the budget necessary, to fund remediation of U.S. Department of Energy (“DOE”) and U.S. Department of Defense (“DOD”) sites; |
· | civic opposition to or changes in government policies regarding nuclear operations; or |
· | a reduction in demand for nuclear generating capacity. |
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business. Allowable costs under U.S. government contracts are subject to audit by the U.S. government. If these audits result in determinations that costs claimed as reimbursable are not allowed costs or were not allocated in accordance with applicable regulations, we cannot retain our key personnel, we may lose significant revenues,could be required to prepayreimburse the U.S. government for amounts previously received.
governmental contracts or subcontracts involving governmental facilities, claims for civil or criminal fraud may be brought by the government or violations of these regulations, requirements or statutes.
Our credit facility provides
· | claims for clean-up costs, personal injury or damage to the environment in cases in which we are held responsible for the release of hazardous or radioactive materials; and |
· | claims of employees, customers, or third parties for personal injury or property damage occurring in the course of our operations; and |
· | claims alleging negligence or professional errors or omissions in the planning or performance of our services. |
operations and liquidity.
our Intellectual Property
waste management company. Our revenues in our Industrial Waste Management Services arebusiness is subject to economic downturns.
Our Industrial Waste Management Services segment is generally adversely affected by economic downturns. Reductions in industrial production results in reduced levelsextensive, evolving, and increasingly stringent federal, state, and local environmental laws and regulations. Such federal, state, and local environmental laws and regulations govern our activities regarding the treatment, storage, recycling, disposal, and transportation of hazardous and non-hazardous waste being generated and/and low-level radioactive waste. We must obtain and maintain permits or sent off for treatment. licenses to conduct these activities in compliance with such laws and regulations. Failure to obtain and maintain the required permits or licenses would have a material adverse effect on our operations and financial condition. If any of our facilities are unable to maintain currently held permits or licenses or obtain any additional permits or licenses which may be required to conduct its operations, we may not be able to continue those operations at these facilities, which could have a material adverse effect on us.
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quantity of rights to purchase our common stock could result in a significant dilution in the percentage ownership interest of our stockholders and the dilution in ownership value. Future sales of the shares issuable could also depress the market price of our common stock.
The terms of the Series 17 Preferred allow us to pay dividends on the outstanding Series 17 Preferred in cash or common stock. We currently intend to pay the dividends accruing on the Series 17 Preferred in common stock if, and when, declared and paid by our Board of Directors. The actual number of shares of common stock issuable in payment of accrued dividends on the Series 17 Preferred will depend upon the length of time the Series 17 Preferred is outstanding and the price of the common stock at the time of payment of dividends. Our credit facilityCredit Facility prohibits us from paying cash dividends on our common stock.
Wemarket price of our common stock will not realize a benefit fromcontinue to fluctuate. This may make it difficult for you to resell the common stock when you want or at prices you find attractive.
Weany, that future issuances or sales of shares of common stock or the availability of shares of common stock for future issuance, will have approximately $19.2 million in net operating loss carryforwards which will expire from 2007 to 2021 if not used againston the trading price of our common stock. Such future federal income tax liabilities. Our net loss carryforwards are subject to various limitations and have not been approved by the Internal Revenue Service. We anticipate the net loss carryforwards will be used toissuances could also significantly reduce the federal income tax payments which we would otherwise be required to make with respect to income, if any, generated in future years.
percentage ownership and dilute the ownership value of our existing common stockholders.
The issued
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Under our Restated Certificate of Incorporation, as amended (the "Certificate"), as of October 1, 2002, 40,701,618 shares of common stock (including 988,000 treasury shares) are available for future issuance, of which 18,760,619 areStock reserved for issuance under our outstanding preferred stock, options and warrants.share rights plan). These authorizedunissued shares are necessary to provide us with the ability to issue common stock from time to time as needed for proper corporate purposes, such as: * raising capital funds through private or public offerings; * acquiring other companies; * declaring stock splits or stock dividends; and * issuing common stock under warrants, preferred stock, or other rights which may be granted by us from time to time in the future.
Additional authorization of shares of common stock could be used by incumbentour management to make it more difficult, and thereby discourage an attempt to acquire control of us, even thoughus.
Important factors, which could cause actual results and performance of the Company to differ materially from such statements. The words “believe,” “expect,” “anticipate,” “intend,” “will,” “may,” and similar expressions identify forward-looking statements. Forward-looking statements include, without limitation, the statements listed under “Special Note Regarding Forward-Looking Statements” in our 2008 Form 10-K, all of which are incorporated by reference herein, as well as those forward-looking statements identified in our other SEC filings incorporated by reference in this prospectus.
· | general economic conditions; |
· | material reduction in revenues; |
· | inability to collect in a timely manner a material amount of receivables; |
· | increased competitive pressures; |
· | the ability to maintain and obtain required permits and approvals to conduct operations; |
· | the ability to develop new and existing technologies in the conduct of operations; |
· | ability to retain or renew certain required permits; |
· | discovery of additional contamination or expanded contamination at any of the sites or facilities leased or owned by us or our subsidiaries which would result in a material increase in remediation expenditures; |
· | changes in federal, state and local laws and regulations, especially environmental laws and regulations, or in interpretation of such; |
· | potential increases in equipment, maintenance, operating or labor costs; |
· | management retention and development; |
· | financial valuation of intangible assets is substantially more/less than expected; |
· | the requirement to use internally generated funds for purposes not presently anticipated; |
· | the inability to maintain the listing of our Common Stock on the NASDAQ; |
· | terminations of contracts with federal agencies or subcontracts involving federal agencies, or reduction in amount of waste delivered to us under these contracts or subcontracts; |
· | disposal expense accrual could prove to be inadequate in the event the waste requires retreatment; and |
· | other factors described under “Risk Factors” in this prospectus and in the other documents we have filed with the SEC and that are incorporated herein by reference, including the factors described under “Business,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in our annual report on Form 10-K for the fiscal year ended December 31, 2008 and that may be discussed from time to time in other reports filed with the SEC subsequent to the registration statement of which this prospectus is a part. |
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* future federal tax audit or auditsdate on which could reduce our loss carryforwards; * limitations imposed by the Internal Revenue Code or our inability to utilize our loss carryforwards; * inability to develop new and existing technologies in the conduct of operations or to develop such technologies for commercial use; * changes in federal, state, and local laws and regulations, especially environmental regulations, or in the interpretation of such laws and regulations; * potential increases in equipment, maintenance, operating or labor costs; * management retention and development; * inability to become profitable, and, if unable to become profitable, our inability to secure additional liquidity in the form of additional equity or debt; * inability to maintain the listing of our common stock on the Nasdaq; * cancellation of one or more subcontracts issued to M&EC in connection with government contracts; * M&EC's limited operating history; and * the factors set forth under "Risk Factors" beginning on page 2 of this prospectus.
In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "would," "expect," "plan," "anticipate," "believe," "continue," or the derivative of these terms or other similar expressions. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified by the cautionary statements included in this prospectus.that statement is made. We undertake no obligation to update or revise ourforward-looking statements,publicly any forward-looking statement, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this prospectus might not occur.
Private Placement: Unit Warrants and Placement Agent Warrants
On July 30, 2001, we completed a private placement offering of units (the "Private Placement") to accredited investors. Each unit is comprised of one share of our common stock and one warrant to purchase one share of common stock (a "Unit Warrant"). The purchase price for each unit was $1.75, and the exercise price of each Unit Warrant is $1.75, subject to adjustment under certain conditions. We accepted subscriptions for 4,397,566 of the maximum 4,400,000 units offered, for an aggregate purchase price of $7,695,740. This prospectus is part of the registration statement which registers for resale 4,010,638 of the 4,397,566 shares of common stock issued pursuant to the Private Placement and 4,352,893 of the 4,397,566 shares of common stock issuable upon the exercise of the Unit Warrants issued pursuant to the Private Placement.
Under the terms of the Private Placement, we appointed Larkspur Capital Corporation ("Larkspur"), Ryan, Beck & Co., formerly Ryan, Beck & Co., L.L.C. ("Ryan Beck"), and National Securities Corporation ("National") as placement agents (each, a "Placement Agent") to place the units as our agent and to assist in completing the Private Placement. We paid each Placement Agent a private placement fee equal to 7.5% of the aggregate purchase price for units placed by that particular Placement Agent. We also issued to each Placement Agent warrants to purchase up to the number of shares of common stock equal to 7% of the aggregate purchase price for units placed by that particular Placement Agent, divided by $1.75 (the "Placement Agent Warrants"). The Placement Agent Warrants are for a term of five years and have an exercise price of $1.75 per share. As a result, we paid the Placement Agents $202,500 in total fees and issued to them Placement Agent Warrants for the purchase of up to an aggregate of 108,000 shares of common stock. On June 26, 2002, Ryan Beck assigned a portion of its Placement Agent Warrants for the purchase of 11,000 shares to managing directors of Ryan Beck. On July 17, 2002, Larkspur assigned all of its Placement Agent Warrants for the purchase of 34,000 shares to certain managing directors of Larkspur. On July 30, 2002, Ryan Beck assigned to Associated Mezzanine Investors, L.L.C. ("AMI") a portion of such warrants for the purchase of 10,000 shares, and Larkspur assigned to AMI a portion of such warrants for the purchase of 10,000 shares. This prospectus is part of the registration statement which registers for resale the 108,000 shares issuable upon the exercise of the Placement Agent Warrants.
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The exercise price and the number of shares of common stock issuable upon the exercise of the Unit Warrants and Placement Agent Warrants are subject to adjustment, from time to time, if we:
* consolidate with, or merge into, another corporation (other than a consolidation or merger which does not result in any reclassification or change of the outstanding common stock).
The Private Placement was sold only to accredited investors as that term is defined under Regulation D of the Act. Capital Bank, as agent for certain of its investors, subscribed for 842,995 units under the Private Placement. Asserting Austrian law, Capital Bank would not disclose the identities of its investors to us at the time of the Private Placement, but Capital Bank did represent to us that all of its investors were accredited investors. Capital Bank directly owns, as agent for its investors, 9,258,672 shares of common stock, or 27.0% of our outstanding common stock as of September 12, 2002, and holds warrants and convertible preferred stock entitling it to purchase or receive up to an additional 6,025,317 shares of common stock. See "POTENTIAL CHANGE IN CONTROL" beginning on page 13 of this prospectus for a discussion of Capital Bank's ownership of our securities as agent for its various investors.
Our common stock is listed for trading on the Nasdaq and the Boston Stock Exchange ("BSE"). Although the BSE approved the listing of the shares of common stock to be issued in connection with the Private Placement and upon the exercise of the Unit Warrants and the Placement Agent Warrants, the Nasdaq advised the Company that the Private Placement could violate Nasdaq Rule 4350(i)(1)(D) governing the listing of additional securities on the Nasdaq as originally structured.
Rule 4350(i)(1)(D) generally provides that a corporation may not, through a private offering such as the Private Placement, issue a number of shares of common stock equal to or greater than 20% of the corporation's outstanding common stock at a price less than the greater of book or market value of the common stock without first obtaining shareholder approval. Because the price of our common stock as reported on the Nasdaq rose from $1.6875 per share on the date the Private Placement commenced to $2.27 on the date the Private Placement terminated, numerous subscription agreements were executed at a time when the market value per share of common stock was greater than the $1.75 purchase price per unit. The Nasdaq claimed that the subscription agreements executed on a date when the market price was greater than the $1.75 unit purchase price represented sales at less than the greater of book or market value of the common stock, thereby violating Rule 4350(i)(1)(D).
In order to comply with Rule 4350(i)(1)(D), we agreed with Nasdaq to restructure the Private Placement so that (a) the number of Units offered was reduced from 5,000,000 to 4,400,000, and (b) the Unit Warrants and the Placement Agent Warrants could not be exercisable until our stockholders approved the issuance of the shares of common stock upon the exercise of the Unit Warrants and the Placement Agent Warrants. As a result of the modifications, only 4,397,566 shares of common stock, representing approximately 19.5% of the issued and outstanding shares of common stock as of the commencement of the Private Placement, were issued under the Private Placement without stockholder approval.
On June 14, 2002, we held a special meeting of our stockholders (the "Special Meeting"). At the Special Meeting, the stockholders entitled to vote approved the issuance of the shares of common stock issuable upon the exercise of the Unit Warrants and the Placement Agent Warrants.
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Amendment to our Charter
Prior to our Special Meeting held on June 14, 2002, our Restated Certificate of Incorporation, as amended (the "Certificate"), authorized 52,000,000 shares of capital stock of the Company, comprised of 50,000,000 shares of authorized common stock, par value $.001 per share, and 2,000,000 shares of authorized preferred stock, par value $.001 per share. At the Special Meeting,our Board of Directors recommended, and our stockholders approved, an amendment to the Certificate increasing our authorized shares of common stock from 50,000,000 to 75,000,000 (the "Amendment").
The Amendment was necessary to allow the issuance of common stock upon the exercise or conversion of all of our outstanding convertible securities and other rights to acquire our common stock. As of September 12, 2002, 34,298,382 shares of common stock were issued and outstanding, leaving 40,701,618 authorized shares (including 988,000 treasury shares) available to satisfy our existing reserve obligations. As of that date, at least 20,356,763 shares of common stock are required to be reserved for potential issuances, which include the following shares:
* 315,669 shares issuable or which could be issuable under our 1992 Outside Directors Stock Option and Incentive Plan;
* approximately 3,681,691 shares issuable or which could be issuable under our 1993 Nonqualified Stock Option Plan;
* approximately 194,084 shares issuable or which could be issuable under our 1996 Employee Stock Purchase Plan;
* 14,411,552 shares issuable upon exercise of outstanding warrants granted by the Company (including the various warrants included in this prospectus); and
* up to 1,666,667 shares issuable upon conversion of 2,500 outstanding shares of our Series 17 Class Q Convertible Preferred Stock (the "Series 17 Preferred").
By increasing the number of authorized shares of common stock beyond the existing reserve requirement, shares will be available for issuance from time to time as needed for such proper corporate purposes as may be determined by the Board of Directors. These corporate purposes might include the following:
The Board may issue authorized common stock without future stockholder approval, except as may be required by applicable law or rule ofprospectus supplement, we intend to use the BSE or Nasdaq (if the Company's securities are then listed on the BSE or the Nasdaq). The issuance of additional shares of common stock could have a detrimental effect upon existing holders of the Company's common stock (see "RISK FACTORS").
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Amendments to the Oak Ridge Contracts
As previously discussed in this prospectus, our subsidiary, M&EC, is primarily operating under three subcontracts involving contracts with the DOE. For a number of months, M&EC has been in negotiations with the general contractor to amend the pricing terms of the subcontracts to allow M&EC to bill additional amounts primarily for drum density and chemical content and for certain surcharges under other conditions. On July 2, 2002, the pricing structure under the subcontracts was amended to allow M&EC to charge additional amounts for certain waste drums received primarily in connection with drum density and chemical content. The amended pricing structure applies to all waste received by M&EC under the subcontracts from January 1, 2002, and on all future waste received under these subcontracts. As a result of these amendments, M&EC billed approximately an additional $2million in the third quarter for work completed during the first six months of 2002. M&EC is still in negotiations as to any surcharges that may be added to the pricing structure under the subcontracts.
Bio-Fix(R) Process In September 2002, we completed the construction of our new Bio-Fix(R) process at our Ohio waste treatment facility. The facility has begun accepting commercial wastewater for treatment through this process. The Bio-Fix(R) process is a new technology which we developed utilizing our patented variable depth biological treatment process and several proprietary water treatment processes. The Bio-Fix(R) process is designed to remove certain organic constituents from highly organic, contaminated wastewaters. We believe that the Bio-Fix(R) process will enable us to treat heavily contaminated wastewater streams, such as waste oils, phenals, and "lean" waters, at more competitive prices than traditional methods.
The new process meets the EPA's new centralized treatment standards that become effective in 2003, potentially giving us an advantage over competing treatment facilities.
As of September 12, 2002, Capital Bank owned of record, as agent for certain accredited investors, 9,258,672 shares of common stock representing 27.0% of our issued and outstanding common stock. As of that date, Capital Bank also had the right to acquire an additional 6,025,317 shares of common stock, comprised of (a) 842,995 shares issuable upon exercise of the Unit Warrants purchased in the Private Placement by Capital Bank as agent for certain investors; (b) 3,515,655 shares of common stock issuable under various other warrants held by Capital Bank, as agent for certain investors; and (c) 1,666,667 shares of common stock issuable to Capital Bank upon the conversion of 2,500 shares of Series 17 Preferred held by Capital Bank. The Selling Stockholders table beginning on page 22 of this prospectus includes 109 persons and entities which, in the aggregate, beneficially own 3,143,115 shares of the common stock that are owned of record by Capital Bank and 2,725,548 shares of common stock issuable upon the exercise of warrants held in Capital Bank's name, all as of September 12, 2002.
If Capital Bank were to acquire all of the shares of common stock issuable upon exercise of the various warrants held by Capital Bank and the shares of common stock issuable upon conversion of the Series 17 Preferred, then Capital Bank would own of record 15,283,989 shares of common stock, representing 37.9% of the issued and outstanding common stock. The foregoing estimates assume that we do not issue any other shares of common stock; no other warrants or options are exercised; we do not acquire additional shares of common stock as treasury stock; and Capital Bank does not dispose of any shares of common stock.
Capital Bank has advised us that it is a banking institution regulated by the banking regulations of Austria which holds shares of our common stock on behalf of numerous investors. Capital Bank asserts that it is precluded by Austrian law from disclosing the identities of its investors, unless so approved by each such investor. Asserting Austrian law, Capital Bank would not disclose to us the identities of its investors but did represent that all of its investors are accredited investors under Rule 501 of Regulation D promulgated under the Act. In addition, Capital Bank has advised us that none of
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its investors beneficially own more than 4.9% of our common stock. Certain of its investors recently gave Capital Bank permission to disclose their identities in order to be included as Selling Stockholders in this prospectus. Capital Bank has further informed us that its clients (and not Capital Bank) maintain full voting and dispositive power over such shares. Consequently, Capital Bank has advised us that it believes it is not the beneficial owner, as such term is defined in Rule 13d-3, of the shares of our common stock registered in the name of Capital Bank because it has neither voting nor investment power, as such terms are defined in Rule 13d-3, over such shares. Capital Bank has informed us that it does not believe that it is required to file, and has not filed, reports under Section 16(a) or to file either Schedule 13D or Schedule 13G in connection with the shares of our common stock registered in the name of Capital Bank.
If Capital Bank's investors agree to, or reach an understanding to, act as a group or otherwise to act in concert for the purposes of voting on matters subject to stockholder vote, our operations and management could be greatly impacted. For example, if Capital Bank acquires the shares of common stock described in the previous paragraph, the Capital Bank investor group may be able to cause a change in at least 50% of the members of our Board of Directors. This change in Board membership could be an event of default under our $22 million credit facility (the "Credit Facility") and our $5.6 million outstanding Subordinated Notes. If the Capital Bank investor group were to cause Dr. Louis Centofanti to be removed from our Board of Directors or as our president and chief executive officer, the removal could be an event of default under the Credit Facility and the Subordinated Notes. The Company is not aware of any agreement or understanding among Capital Bank's investors to act as a group.
If the representations by Capital Bank are incorrect or Capital Bank was historically acting on behalf of its investors as a group, rather than on behalf of each investor independent of other investors, then Capital Bank and/or the investor group would have become a beneficial owner (as that term is defined under Rule 13d-3 as promulgated under the Exchange Act of 1934, as amended (the "Exchange Act")) of more than 10% of our common stock. Capital Bank and/or its investor group has not filed with the Securities and Exchange Commission and the Company, among other reports, any Forms 3, 4 or 5, and has not filed any applicable Schedules 13D or 13G as a result of acquiring shares of our voting equity securities.
Because Capital Bank (a) has advised us that it holds the common stock as a nominee only and that it does not have or share voting or investment power over our common stock held in its name and that no one investor of Capital Bank for which it holds our common stock holds more than 4.9% of our issued and outstanding common stock; (b) has no right to, and is not believed to possess the power to, exercise control over our management or our policies; (c) has not nominated, and has not sought to nominate, a director to our board; and (d) has no representative serving as an executive officer of the Company, we do not believe that Capital Bank is an affiliate of the Company.
We will not receive any part of the proceeds of the sale of Shares. We will receive approximately $19,732,000 if the Selling Stockholders exercise, for cash, all of the warrants covering Shares included in this prospectus. However, this amount would be reduced by $6,689,000 if all of the warrants having a cashless exercise option are exercised on a cashless basis. Any proceeds received by us from the exercise of these warrantswill be used by us for general corporate purposes.
We have agreed to pay all costs and fees relating to the registration of the common stock covered by this prospectus, except for any discounts, concessions, or commissions payable to underwriters, dealers, or agents incident to the offering of the Shares covered by this prospectus, or any legal fees incurred by any Selling Stockholders relating to this offering.
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The 17,931,966 Shares covered by this prospectus are comprised of the following:
* 4,010,638 shares issued pursuant to our Private Placement (see page 10);
* 4,352,893 shares issuable upon the exercise of the Unit Warrants (see page 10);
* 108,000 shares issuable upon the exercise of the Placement Agent Warrants (see page 10);
* 1,281,731 shares issuable upon the exercise of the Note Warrants (see page 15);
* 1,793,178 shares issued pursuant to the Exchange Agreement (see page 17);
* 1,741,926 shares issuable upon the exercise of the Exchange Warrant (see page 17);
* 625,000 shares issuable upon the exercise of the Capital Exchange Warrant (see page 17);
* 817,142 shares issuable upon the exercise of the BHC Warrants (see page 18);
* 610,000 shares issuable upon the exercise of the National Warrants (see page 20); and
* 2,591,458 shares issuable upon the exercise of the Consultant Warrants (see page 20).
Private Placement; Unit Warrants; and Placement Agent Warrants
The 4,010,638 shares issued pursuant to our recent Private Placement, the 4,352,893 shares issuable upon the exercise of Unit Warrants, and the 108,000 shares issuable upon the exercise of the Placement Agent Warrants are registered for resale in the registration statement, of which this prospectusis a part. These shares are discussed under "RECENT DEVELOPMENTS - Private Placement; Unit Warrants and Placement Agent Warrants" beginning on page 10 of this prospectus. An additional 386,928 shares issued pursuant to the Private Placement and 44,673 shares issuable upon the exercise of Unit Warrants are not included in the Shares covered by this prospectus.
Note Warrants
On July 31, 2001, we issued approximately $5.6 million of our 13.50% Senior Subordinated Notes due July 31, 2006 (the "Subordinated Notes"). The Subordinated Notes were issued pursuant to the terms of a Note and Warrant Purchase Agreement, dated July 31, 2001 (the "Purchase Agreement"), between Associated Mezzanine Investors - PESI (I), L.P. ("AMI"), Bridge East Capital, L.P. ("BEC"), and us. The Subordinated Notes are unsecured and are unconditionally guaranteed by our subsidiaries. Our payment obligations under the Notes are subordinate to our payment obligations to our primary lender and to certain other of our debts up to an aggregate amount of $25 million. The net proceeds from the sale of the Subordinated Notes were used to repay certain short-term loans.
securities offered by this prospectus for general corporate purposes and working capital requirements, which may include the repayment of indebtedness. Under the terms of our existing Credit Facility, we may also use a portion of the Purchase Agreement,net proceeds to fund possible investments in and acquisitions of complimentary businesses, partnerships, minority investments, products or technologies with the consent of our Credit Facility lender. Currently, there are no commitments or agreements regarding such acquisitions or investments that are material. Pending their ultimate use, we issuedintend to AMIinvest the net proceeds in money market funds, commercial paper and BEC warrantsgovernmental and non-governmental debt securities with maturities of up to three years. The terms of our existing Credit Facility require us to maintain such investments with our Credit Facility lender or its affiliates, which investments serve as additional collateral under the Credit Facility.
· | through one or more underwriters or dealers, |
· | directly to purchasers, |
· | through agents, or |
· | through a combination of any of these methods of sale. |
· | from time to time in one or more transactions at a fixed price or prices, which may be changed from time to time, |
· | at market prices prevailing at the times of sale, |
· | at prices related to such prevailing market prices, or |
· | at negotiated prices. |
The Note Warrants are exercisable at any time, from time to time, beginning July 31, 2001, until July 31, 2008 at an exercise price of $1.50 per share of common stock. The Note Warrants may also be exercised at the option of the holder pursuant to a cashless exercise provision, which permits the holder to surrender the Note Warrants in exchange for the
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number of shares of common stock equal to the product of the number of shares of common stock designated to be exercised multiplied by a fraction, the numerator of which is the current market price of the common stock less $1.50, the denominator of which is the current market price. The number of shares of common stock issuable upon exercise of the Note Warrants and the exercise price of the Note Warrants are subject to adjustment under certain circumstances summarized below.
If, at any time after July 31, 2001, we issue or sell additional shares of common stock (including certain option and convertible securities under which common stock may be issued) without consideration or for a consideration per share less than the market price of the common stock on the date of, and immediately prior to, such issue or sale, the exercise price of the Note Warrants will be reduced to a price determined by multiplying the exercise price by a fraction:
(a) the number of shares of common stock outstanding immediately prior to such issue or sale, plus
(b) the number of shares of common stock which the aggregate consideration received by us for the total number of such additional shares of common stock issued or sold would purchase at the then market price; and
Upon an adjustment in the exercise price of the Note Warrants, the number of shares issuable upon exercise of the Note Warrants will be adjusted by multiplying the number of shares of common stock which would otherwise be issuable upon such exercise by a fraction:
* the numerator of which is $1.50; and
* the denominator of which is the exercise price, as may be adjusted under the terms of the Note Warrants.
If after July 31, 2001, we declare a dividend or other distribution on our common stock other than a dividend payable in common stock or options for common stock or a regular periodic dividend payable in cash and declared out of earned surplus of the Company, the exercise price in effect prior to the record date for such dividend will be reduced to a price determined by multiplying the exercise price by a fraction (a) the numerator of which will be the current market price on such record date less the value of the dividend or distribution applicable to one share of common stock; and (b) the denominator of which shall be the current market price.
The Note Warrants' anti-dilution terms further provide that, if after July 31, 2001, we:
* consolidate with or merge into another person without being the continuing or surviving corporation; or
* consolidate or merge with another person in which we are the continuing or surviving corporation but our common stock or other securities are exchanged for other securities of another person; or
* we transfer all or substantially all of our properties; or
* we effect a capital reorganization or reclassification of our common stock or other securities which are not subject to the anti-dilution provisions discussed above,
then the holders of the Note Warrants will be entitled to receive the amount of cash, securities or other property, which the holder would have been entitled to receive if holder had exercised the Note Warrants immediately prior to the transaction.
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An exception to the above sentence is if a purchase, tender, or exchange offer has been accepted by our stockholders and following such purchase, tender, or exchange offer, the maker thereof, together with its affiliates own more than 50% of our outstanding common stock, then holders of the Note Warrants have the option to receive the amount of cash, securities, or other property to which the holder would have been entitled, if the holder of the Note Warrants had exercised the Note Warrants prior to the expiration of such purchase, tender or exchange offer and accepted such offer, and all of the common stock held by such holder had purchased pursuant to such purchase, tender or exchange offer.
The Subordinated Notes and Note Warrants were sold pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended (the "Act"), and/or Rule 506 of Regulation D promulgated under the Act, and, therefore, were not registered under the Act. outstanding.
In connection with the salepayment of the Subordinated Notes, we entered into an Option Agreement, dated July 31, 2001, with AMI and BEC (the "Option Agreement"). Pursuantdividends, subject to the Option Agreement,rights, if any, of preferred stock holders. However, we granted each purchaserhave never paid a dividend and we do not anticipate paying a dividend in the foreseeable future. Our current secured credit facility prohibits us from paying cash dividends on our common stock. Upon any liquidation, dissolution or winding up of our business, the Subordinated Notes an irrevocable option requiring us to purchase any or all of the Note Warrants or the sharesholders of common stock issuable under the Note Warrantsare entitled to share equally in all assets available for distribution after payment of all liabilities and provision for liquidation preference of shares of preferred stock then held by the purchaser (the "Put Option").outstanding. The Put Option may be exercised at any time commencing July 31, 2004, and ending July 31, 2008. In addition, each purchaser granted us an irrevocable option to purchase all the Note Warrants or the sharesholders of common stock issuable under the Note Warrants then held by the purchaser (the "Call Option"). The Call Option may be exercised at any time commencing July 31, 2005,have no preemptive rights and ending July 31, 2008. The purchase price under the Put Option and the Call Option is based on the quotient obtained by dividing (a) the sum of six times our consolidated EBITDA for the period of the 12 most recent consecutive months minus Net Debt plus the Warrant Proceeds by (b) the number of Diluted Shares (as the terms EBITDA, Net Debt, Warrant Proceeds, and Diluted Shares are defined in the Option Agreement).
Pursuantno rights to the guidance under EITF 00-19 on accounting for, and financial presentation of, securities that could potentially be settled in our stock, the Put Option would be classified outside of equity, based on the ability of the holder to require cash settlement. Also, EITF Topic D-98 discusses the accounting for a security that will become redeemable at a future determinable date and its redemption is variable. This is the case with the Note Warrants as the date is fixed, but the put or call price varies. The EITF gives two possible methodologies for valuing the securities. We have selected to account for the changes in redemption value immediately as they occur, and we will adjust the carrying value of the security to equal the redemption value at the end of each reporting period. On June 30, 2002, the purchase price under the Put Option was in a negative position and, as a result, no liability was recorded for the redemption of the Put Option.
Exchange Agreement and Exchange Warrants
On July 9, 2001, we entered into an agreement (the "Exchange Agreement") with Capital Bank to issue to Capital Bank, as agent for certain of its accredited investors, 1,893,505 shares of common stock and a warrant to purchase up to 1,839,405 shares of common stock at an exercise price of $1.75 per share (the "Exchange Warrant") in satisfaction of all amounts due or to become due under the Loan Agreement, dated August 29, 2000, between us and Capital Bank (the "$3 Million Loan") and a related Unsecured Promissory Note issued by us in favor of Capital Bank in the original principal amount of $3,000,000 (the "$3 Million Note"), including our obligations to issue to Capital Bank shares of common stock if the $3 Million Note was not paid by certain due dates. The $3 Million Note was due on July 1, 2001. This prospectus is part of a registration statement which registers for resale (a) 1,793,178 of the 1,893,505 shares issued on July 9, 2001, pursuant to the Exchange Agreement and (b) 1,741,926 of the 1,839,405 shares issuable upon the exercise of the Exchange Warrant.
Upon the closing of the Exchange Agreement effective July 9, 2001, we paid to Capital Bank a closing fee of $325,000, payable in $75,000 cash and by issuing to Capital Bank 105,932 shares of common stock, with the number of shares being equal to the quotient of $250,000 divided by the last closing bid price of the common stock as quoted on the
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Nasdaq on June 26, 2001. In addition, for consulting services in connection with the Exchange Agreement, we issued to Herbert Strauss a five-year warrant for the purchase of up to 625,000 shares of common stock at a purchase price of $1.75 per share (the "Capital Exchange Warrant"). The terms of the Exchange Warrant and the Capital Exchange Warrant are substantively similar.
The Exchange Warrant is exercisable at any time, from time to time, on or after July 9, 2001, and prior to July 9, 2006. If we propose to sell substantially all of our assets or merge or consolidate, or effect a merger or consolidation in which we are not the survivor, and the consideration to be received by us or our shareholders consists solely of cash, then the Exchange Warrant will terminate unless exercised by the effective date of the sale or merger transaction. If the consideration to be received by us or our shareholders consists, in whole or in part, of consideration other than cash, the holder of the Exchange Warrant will have the right thereafter to purchase the kind and amount of the shares and other securities and property which would have been owned or entitled to be received after such sale or merger transaction had the Exchange Warrant been exercised immediately prior to such transaction.
The exercise price and the number of shares of common stock issuable upon exercise of the Exchange Warrant are subject to adjustment, from time to time, if we:
* subdivide our outstanding shares of common stock,
* combine our outstanding shares ofconvert their common stock into a smaller number of shares of common stock,any other securities. There are no redemption or
* issue any shares of our capital stock in reclassification of our common stock for the number of shares of common stock issuable upon exercise of the Exchange Warrant.
Upon any such transaction, the Exchange Warrant will be adjusted so that the holder of the Exchange Warrant will be entitled sinking fund provisions applicable to receive the kind and number of shares of common stock or of our other securities which the holder would have owned or been entitled to receive had the Exchange Warrant been exercised in advance of such transaction.
The holder of the Exchange Warrant will be entitled to purchase the number of shares of common stock or other securities, resulting from such adjustment at an exercise price per share of common stock or other security determined by:
* multiplying the exercise price in effect immediately prior to such adjustment by the number of shares of common stock purchasable pursuant to the Exchange Warrant immediately prior to such adjustment, divided by, * the number of shares of common stock or other securities resulting from such adjustment.
The issuance of the common stock, the Exchange Warrant and the Capital Exchange Warrant under the terms of the Exchange Agreement was made pursuant to Section 4(2) and/or Rule 506 under Regulation D promulgated under the Act. Capital Bank has advised us that it is precluded by Austrian law from disclosing the identities of its investors at the time of the Exchange Agreement transaction, without the investors' permission. Asserting Austrian law, Capital Bank would not disclose to us the identities of its investors, but did represent to us that all of its investors are accredited investors under Rule 501 of Regulation D promulgated under the Act. Certain of its investors recently gave permission to Capital Bank to disclose their identities in order to be included as a Selling Stockholder in this prospectus. In addition, Capital Bank has advised the Company that none of its investors beneficially own more than 4.9% of our common stock. See "POTENTIAL CHANGE OF CONTROL" for a discussion of Capital Bank's holdings of our securities.
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Until the summer of 2001, Herbert Strauss was employed by Capital Bank and was the Company's relationship contact at Capital Bank. During the summer of 2001, Capital Bank undertook a series of management changes. These changes included Mr. Strauss terminating his employment at Capital Bank and becoming a consultant to Capital Bank with the obligation to fulfill certain of his prior duties. It was during this period in which Mr. Strauss assisted the Company with the exchange of debt for equity. As compensation for his assistance to the Company, Mr. Strauss was issued the Common Stock Purchase Warrant, dated July 9, 2001, for the right to purchase up to 625,000 shares of the Company's common stock at an exercise price of $1.75 per share.
Effective January 1, 2002, the Company and Mr. Strauss entered into a Consulting Agreement in which Mr. Strauss agreed to provide certain financial advisory and consulting services with respect to European investors only. Such services include assisting the Company with the introduction to investment bankers, general business development, and market exposure in Europe. The term of this agreement is one year, but will be terminated earlier if Capital Bank advises the Company that Capital Bank does not approve of the consulting arrangement. Mr. Strauss will be paid a consulting fee of $5,000 per month during the term of the agreement.
BHC Warrants
On January 31, 2001, we entered into a definitive loan agreement with BHC Interim Funding, L.P. ("BHC"), pursuant to which BHC loaned us $6 million (the "BHC Loan"). The BHC Loan was payable on March 31, 2002, with interest payable monthly on the outstanding principal balance of the BHC Loan at the annual rate of 13.75%. We repaid the BHC Loan in full on July 31, 2001. Pursuant to the terms of the BHC Loan, we issued to BHC certain warrants (the "BHC Warrants") for the purchase of up to 817,142 shares of common stock at an initial exercise price of $1.4578 per share. This prospect is part of the registration statement which registers for resale the 817,142 shares issuable upon the exercise of the BHC Warrants.
The BHC Warrants allow the holder to exercise the BHC Warrant without paying the exercise price in cash. Upon a cashless exercise, the holder will receive the number of shares of common stock equal to:
* the number of shares as to which the BHC Warrants are being exercised, minus
* the number of shares having an aggregate fair market value equal to the product of (a) the exercise price multiplied by (b) the number of shares as to which the BHC Warrants are being exercised.
The exercise price and the number of shares of common stock issuable upon exercise of the BHC Warrants are subject to adjustment, from time to time, upon the occurrence of any of the following events. If we issue shares of common stock for a price per share less than the exercise price in effect before such issuance, the exercise price will be reduced to a price determined by multiplying the exercise price by a fraction having:
* the numerator equal to the total number of common stock shares outstanding plus the number of shares of common stock which the aggregate consideration received by us would purchase at such exercise price; and
* the denominator equal to the total number of shares of common stock outstanding immediately after such issuance.
These adjustments will not be made as a result of the grant or exercise of rights or options under our existing stock purchase and stock option plans or under our warrants which were outstanding on January 1, 2001.
If we issue options or rights to subscribe for shares of common stock, or any securities convertible into or exchangeable for shares of common stock, for a price less than the exercise price, the exercise price in effect immediately prior to such issuance will be reduced to a price computed by the above-listed method. If we subdivide, combine, or pay a dividend in shares of common stock outstanding, the exercise price and number of shares issuable upon exercise of the
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BHC Warrants will be proportionately decreased, or increased, as appropriate. If the exercise price is adjusted, the number of shares of common stock issuable upon the exercise of the BHC Warrant will be equal to:
* the product of: (a) the number of shares of common stock issuable upon the exercise of the BHC Warrant immediately prior to such adjustment, and (b) the exercise price immediately prior to such adjustment, divided by
* the exercise price immediately after such adjustment.
The exercise price and the number of shares of common stock issuable upon exercise of the BHC Warrants are subject to adjustment, from time to time, if we:
* reorganize or reclassify the outstanding shares of common stock;
* merge or consolidate with another corporation; or
* sell, lease or convey all, or substantially all, of our property, assets, business and goodwill to another entity.
Upon any such transaction, the BHC Warrant will be adjusted so that the holder of the BHC Warrant will be entitled to receive the kind and number of shares of common stock or of our other securities which the holder would have owned or been entitled to receive had the BHC Warrant been exercised in advance of such transaction.
If we make a distribution of assets or securities to our stockholders, prior to the expiration of the BHC Warrant and prior to the exercise of the BHC Warrant, the holder of the BHC Warrant will be entitled, upon the exercise, to receive, in addition to the common stock it is entitled to receive, the same kind and amount of assets or securities as would have been distributed to it in a distribution had it been the holder of record of shares of common stock receivable upon exercise of the BHC Warrant on the record date for determination of those entitled to receive the distribution.
If we dissolve, liquidate, or wind up our affairs at any time prior to the expiration or exercise of the BHC Warrant, the holder of the BHC Warrant will be entitled to receive, in lieu of our common stock, the same kind and amount of assets as would have been issued, distributed or paid to it upon the exercise of the BHC Warrant on the record date for the determination of those entitled to receive any such liquidating distribution.
The holder of the BHC Warrants may, at any time and from time to time during the term of the BHC Warrants, request the registration of the BHC Warrant and common stock issuable upon the exercise of the BHC Warrants. Inaddition, the holder of the BHC Warrants is entitled, subject to certain conditions, to include the BHC Warrant and common stock issuable upon the exercise of the BHC Warrant in a registration statement covering other securities which the Registrant proposes to register.
National Warrants
On December 5, 2000, we entered into a financial advisory and consulting agreement (the "Advisory and Consulting Agreement") with National Securities Corporation ("National"). Pursuant to the terms of the Advisory and Consulting Agreement, National performed various financial advisory services for the Company, including disseminating information to the investment community at large; and advising us as to the timing and structure of future offerings of equity securities. Pursuant to the terms of the Advisory and Consulting Agreement, we issued to National two warrants (collectively, the "National Warrants"), consisting of (a) a warrant, dated June 1, 2001, for the purchase of up to 250,000 shares of common stock and exercisable for a period of five years at an exercise price of $1.50 per share, and (b) a warrant, dated June 1, 2001, for the purchase of up to 360,000 shares of common stock and exercisable for a period of five years at an exercise price of $1.75 per share. On July 30, 2002, National assigned a portion of the National Warrants to various
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brokers and entities controlled by brokers of National entitling the assignees to acquire 247,000 shares of common stock at an exercise price of $1.50 per share and 340,000 shares of common stock at an exercise price of $1.75 per share.
The terms of the National Warrants provide that the holder may exercise a National Warrant without paying the exercise price in cash. Upon a cashless exercise, the holder will receive the number of shares equal to the product of (a) the number of shares of common stock as to which the National Warrant is being exercised, multiplied by (b) a fraction, the numerator of which is the market price of our common stock minus the exercise price, and the denominator is the market price.
If we declare and pay a dividend in common stock into a greater number of shares, or if theAll outstanding shares of common stock are subdivided, combined or consolidated, then the number of shares issuable upon the exercise of the National Warrant or the exercise price will be proportionately increased or decreased, as appropriate.
If we merge or consolidate with another entityfully paid and we are not the surviving entity, or if we sell or convey all or substantially all of our property, the holder of a National Warrant may receive, upon its exercise, the kindnonassessable.
The terms of the National Warrants provide that the holder has certain piggyback registration rights. This prospectus is part of the registration statement which registersregistrar for resale the 610,000 shares of our common stock that are issuable upon exercise of the National Warrants.
Consultant Warrants
We have issued an aggregate of 2,591,458 warrants to purchase common stock (collectively, the "Consultant Warrants") in connection with retaining and compensating Larkspur Capital Corporation ("Larkspur"), Ryan, Beck & Co. ("Ryan Beck"), and Strategic Growth International, Inc. ("Strategic") for consulting and advisory services rendered to us. These consulting services related to the negotiation and completion of our $22 million credit facility, the BHC Loan, and the Purchase Agreement covering our Subordinated Notes. A portion of the Consultant Warrants issued to Larkspur and Ryan Beck were assigned by Larkspur and Ryan Beck to certain officers and/or managing directors of Larkspur and Ryan Beck or trusts controlled by such officer or managing director. Except as otherwise noted below, each of these warrants are for a term of five years with an exercise price of $1.44 per share. This prospectus is part of the registration statement which registers for resale the 2,591,458 shares of our common stock that are issuable upon the exercise of the Consultant Warrants.
In connection with retaining the services of Larkspur, Ryan Beck, and Strategic, we issued warrants to purchase an aggregate of 630,000 shares of common stock, consisting of (a) warrants issued to each of Larkspur and Ryan Beck, dated January 25, 2000, for the purchase of up to 75,000 shares and (b) warrants issued to Strategic, dated April 1, 1999, for the purchase of up to 480,000 shares. The warrants granted to Strategic are for a term of four years and have an exercise price of $1.20 per share as to 240,000 shares and $1.40 per share as to 240,000 shares.
In connection with the negotiation and completion of our $22 million credit facility, we issued warrants for the purchase of an aggregate of 1,283,332 shares of common stock, consisting of (a) warrants issued to each of Larkspur and Ryan Beck, dated December 22, 2000, for the purchase of up to 534,722 shares, and (b) warrants issued to Strategic, dated December 22, 2000, for the purchase of up to 213,888 shares.
In connection with the negotiation and completion of the BHC Loan, we issued warrants for the purchase of an aggregate of 349,999 shares of common stock, consisting of (a) warrants issued to each of Larkspur and Ryan Beck, dated January 31, 2001, for the purchase of up to 85,069 shares, (b) warrants issued to Strategic dated February 1, 2001, for the purchase of up to 34,028 shares, (c) warrants issued to each of Larkspur and Ryan Beck, dated March 9, 2001, for the purchase of up to 60,764 shares, and (d) warrants issued to Strategic, dated March 9, 2001, for the purchase of up to 24,305 shares.
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In connection with the negotiation and completion of the Purchase Agreement and our Subordinated Notes, we issued warrants for the purchases of up to an aggregate of 328,127 shares of common stock consisting of (a) warrants issued to each of Larkspur and Ryan Beck, dated July 31, 2001, for the purchase of up to 136,720 shares, and (b) warrants issued to Strategic, dated July 31, 2001, for the purchase of up to 54,687 shares.
The terms of the Consultant Warrants provide that the holder may exercise a Consultant Warrant without paying the exercise price in cash. Upon a cashless exercise, the holder will receive the number of shares equal to the product of (a) the number of warrant shares as to which the warrant is being exercised, multiplied by (b) a fraction, the numerator of which is the market price of our common stock minus the exercise price, and the denominator is the market price.
The exercise price or number of shares issuable upon exercise of the Consultant Warrants may be proportionately increased or decreased, as appropriate, if we subdivide or combine our common stock, or pay a dividend in common stock. When the exercise price is adjusted, the number of shares issuable upon exercise will also be adjusted multiplying a number equal to the exercise price in effect immediately prior to such adjustment by the number of shares issuable upon exercise of the Consultant Warrants immediately prior to such adjustment and dividing the product by the adjusted exercise price.
The following table sets forth as to each Selling Stockholder: (a) the name of each Selling Stockholder, (b) the amount of shares beneficially owned as of September 12, 2002, (c) the number of shares of common stock owned by each Selling Stockholder which are included under this prospectus, (d) the number of shares beneficially owned after the offering, assuming that all shares of common stock being offered hereby are sold and that such are outstanding, and (e) the percentage of common stock beneficially owned after completion of the offering. Unless otherwise noted, each Selling Stockholder has sole voting and investment power over the shares of common stock listed as beneficially owned by the Selling Stockholder.
The common stock being offered includes shares of common stock which may be acquired upon: (a) the exercise of outstanding warrants, whether such are currently exercisable, and/or (b) conversion of outstanding shares of preferred stock, whether or not such are currently convertible.
The percentage of common stock beneficially owned after completion of this offering assumes: (a) all shares of common stock covered by this prospectus are sold, (b) the Selling Stockholder does not acquire beneficial ownership of additional shares of common stock after the date of this prospectus, and (c) we do not issue any additional shares of common stock after the date of this prospectus, except the shares of common stock which a person has the right to acquire upon the exercise of warrants and conversion of preferred stock outstanding as of the date of this prospectus, but such shares are not determined to be outstanding for the purpose of computing the percentage ownership of any other person. The amounts indicated are based on outstanding common stock of34,298,382 shares as of September 12, 2002.
Selling Stockholder | Common Stock Beneficially Owned Prior to Offering | Common Stock Being Offered | Common Stock Beneficially Owned After Offering Number % of Class | |
Associated Mezzanine-PESI(I), L.P. | 712,073(1) | 712,073 | 0 | * |
Associated Mezzanine Investors, L.L.C. | 20,000(1) | 20,000 | 0 | * |
David Avital | 286,000(2) | 286,000 | 0 | * |
Michael Bergin | 184,500(1) | 184,500 | 0 | * |
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| ||||
Selling Stockholder | Common Stock Beneficially Owned Prior to Offering | Common Stock Being Offered | Common Stock Beneficially Owned After Offering Number % of Class | |
BHC Interim Funding, L.P.** | 817,142(1) | 817,142 | 0 | * |
Bridge East Capital, L.P. | 569,658(1) | 569,658 | 0 | * |
Catalyst Venture Capital, LLC** | 185,000(1) | 185,000 | 0 | * |
CICI 1999 Qualified Annuity | 171,430(2) | 171,430 | 0 | * |
Gerald B. Cramer | 171,430(2) | 171,430 | 0 | * |
CRM 1999 Enterprise Fund 3 | 400,000(2) | 400,000 | 0 | * |
Paul Cronson** | 289,745(1) | 289,745 | 0 | * |
Michael DiDonna** | 1,000(1) | 1,000 | 0 | * |
Craig S. Eckenthal** | 114,286(2) | 114,286 | 0 | * |
Danny Ellis Living Trust | 700,000(3) | 500,000 | 200,000 | * |
Europa International, Inc. | 800,601(4) | 800,601 | 0 | * |
Harvey Gelfenbein | 57,142(2) | 57,142 | 0 | * |
Charlie Giaimo** | 7,000(1) | 7,000 | 0 | * |
Christopher Todd Goodwin Trust** | 3,000(1) | 3,000 | 0 | * |
Kelsey Ann Goodwin Trust** | 3,000(1) | 3,000 | 0 | * |
Robert L. Goodwin** | 283,747(1) | 283,747 | 0 | * |
A.C. Israel Enterprises | 571,430(2) | 571,430 | 0 | * |
Michael J. Kollender** | 265,542(1) | 265,542 | 0 | * |
Kuekenhof Partners, L.P. | 80,000(2) | 80,000 | 0 | * |
Kuekenhof Equity Fund, L.P. | 120,000(2) | 120,000 | 0 | * |
Jack Lahav | 1,158,026(5) | 1,142,858 | 15,168 | * |
Joseph LaMotta | 57,142(2) | 57,142 | 0 | * |
Jay B. Langner | 57,142(2) | 57,142 | 0 | * |
Rocco LaVista** | 13,000(1) | 13,000 | 0 | * |
CarlLeschinski** | 10,000(1) | 10,000 | 0 | * |
The F. M. Grandchildren Trust | 85,714(2) | 85,714 | 0 | * |
Mathers Associates | 457,142(2) | 457,142 | 0 | * |
Robert C. Mayer, Jr.** | 289,746(1) | 289,746 | 0 | * |
Peter Melhado** | 230,000(2) | 230,000 | 0 | * |
Meera Murdeshwar** | 47,037(1) | 47,037 | 0 | * |
National Securities Corporation** | 63,000(1) | 63,000 | 0 | * |
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| ||||
Selling Stockholder | Common Stock Beneficially Owned Prior to Offering | Common Stock Being Offered | Common Stock Beneficially Owned After Offering Number % of Class | |
Pamela Equities Corp. | 85,714(2) | 85,714 | 0 | * |
Josef Paradis | 286,000(2) | 286,000 | 0 | * |
Princeton Avenue Partners, LLC** | 185,000(1) | 185,000 | 0 | * |
Readington Associates | 114,286(2) | 114,286 | 0 | * |
Dr. Ralph Richart | 684,250(6) | 450,000 | 234,250 | * |
Randy F. Rock** | 265,540(1) | 265,540 | 0 | * |
Edward J. Rosenthal Profit Sharing Plan | 57,142(2) | 57,142 | 0 | * |
Ryan Beck & Co.** | 381,838(1) | 381,838 | 0 | * |
Yariv Sapir IRA | 171,428(2) | 171,428 | 0 | * |
Jeffrey Sherry** | 3,355(1) | 3,355 | 0 | * |
Strategic Growth International, Inc. | 806,908(1) | 806,908 | 0 | * |
Herbert Strauss | 625,000(1) | 625,000 | 0 | * |
Scott Wheeler** | 1,500(1) | 1,500 | 0 | * |
Bruce Wrobel | 300,000(2) | 300,000 | 0 | * |
Capital Bank-Grawe Gruppe AG, as agent for the following Selling Stockholders:(7)(8) | ||||
Ewald Altrichter | 19,802 | 19,802 | 0 | * |
Thomas Amtmann | 80,793 | 80,793 | 0 | * |
Dr. Thomas Bauer | 11,881 | 11,881 | 0 | * |
Dr. Thomas Bernhart | 11,881 | 11,881 | 0 | * |
Otto W. Beuchert | 11,881 | 11,881 | 0 | * |
Capital Leben | 260,400 | 260,400 | 0 | * |
Draxler Christa | 23,763 | 23,763 | 0 | * |
Class Financial Holdings Ltd. | 486,249(9) | 257,430 | 228,819 | * |
Gabriele Diesel | 17,228 | 17,228 | 0 | * |
Wolfgang Diesel | 74,853 | 74,853 | 0 | * |
Diesel Kinobetriebsgmbh | 22,773 | 22,773 | 0 | * |
Ing. Otto Dragoun | 149,507 | 149,507 | 0 | * |
Dragoun Projektentwicklung | 173,270 | 173,270 | 0 | * |
Dr. Manfred Ecker | 114,853 | 114,853 | 0 | * |
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| ||||
Selling Stockholder | Common Stock Beneficially Owned Prior to Offering | Common Stock Being Offered | Common Stock Beneficially Owned After Offering Number % of Class | |
Mag. Wolfgang Egger | 11,485 | 11,485 | 0 | * |
Wolfgang Erber | 35,644 | 35,644 | 0 | * |
Jakob Falkner | 264,697(10) | 230,697 | 34,000 | * |
Heidelinde Felber | 11,881 | 11,881 | 0 | * |
Peter Felber | 14,852 | 14,852 | 0 | * |
Wolfgang Fellner | 22,773 | 22,773 | 0 | * |
FMZ Privatstiftung | 39,605 | 39,605 | 0 | * |
Eifl Franz | 17,228 | 17,228 | 0 | * |
Ing. Wilhelm Fritsch | 11,881 | 11,881 | 0 | * |
Mag. Stefan Gfrerer | 34,654 | 34,654 | 0 | * |
Markus Gfrerer | 17,228 | 17,228 | 0 | * |
Peter Grasser | 79,209 | 79,209 | 0 | * |
Dir. Günther Grassl | 34,654 | 34,654 | 0 | * |
Dr. Andreas Grassl | 11,485 | 11,485 | 0 | * |
Dr. Ursula Groier | 11,485 | 11,485 | 0 | * |
DI Joachim Grutsch | 11,881 | 11,881 | 0 | * |
Alex Hahl | 11,485 | 11,485 | 0 | * |
Dr. Christian Harisch | 11,386 | 11,386 | 0 | * |
Jürgen Hasenhütl | 11,881 | 11,881 | 0 | * |
Mag. Helfried Heidinger | 35,644 | 35,644 | 0 | * |
Mag. Thomas Heidinger | 29,703 | 29,703 | 0 | * |
DI Andreas Heresch | 11,881 | 11,881 | 0 | * |
Ing. Peter Hittaller | 22,773 | 22,773 | 0 | * |
Dr. Margareta Hödl-Ganster | 79,209 | 79,209 | 0 | * |
DI Ferdinand Jeindl | 13,862 | 13,862 | 0 | * |
Dr. Erich Jeindl | 122,774 | 122,774 | 0 | * |
Mag. Oskar Jurinec | 11,485 | 11,485 | 0 | * |
Margarete Karner | 202,616(11) | 158,418 | 44,200 | * |
Bernhard Kaufmann | 45,545 | 45,545 | 0 | * |
Dr. Claudius Kern | 11,881 | 11,881 | 0 | * |
Kurt Kinast | 16,832 | 16,832 | 0 | * |
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| ||||
Selling Stockholder | Common Stock Beneficially Owned Prior to Offering | Common Stock Being Offered | Common Stock Beneficially Owned After Offering Number % of Class | |
Mag. Roland Klar | 23,763 | 23,763 | 0 | * |
Walter o. Mag. Elisabeth Kleinsasse | 11,881 | 11,881 | 0 | * |
Gertaud oder Peter J. Kneissl | 55,446 | 55,446 | 0 | * |
Alfred Knollmüller | 11,485 | 11,485 | 0 | * |
Ingrid Köberl | 14,852 | 14,852 | 0 | * |
Dr. Wilfried Köhler | 11,386 | 11,386 | 0 | * |
Kurt Koller | 11,881 | 11,881 | 0 | * |
DI Gernot Kornar | 26,535 | 26,535 | 0 | * |
Mag. Ursula Krachler | 11,485 | 11,485 | 0 | * |
Mag. Gerhard Krammer | 11,881 | 11,881 | 0 | * |
Karin Krekel | 45,545 | 45,545 | 0 | * |
Maria Regina Krenn | 23,763 | 23,763 | 0 | * |
Kronberg Intern. Holdings S.A. | 544,749(12) | 114,853 | 429,896 | 1.3% |
Gerlinde Lang | 11,881 | 11,881 | 0 | * |
Rudolf Laudon | 11,881 | 11,881 | 0 | * |
Helga o. Dr. Robert Lipa | 34,654 | 34,654 | 0 | * |
Gerald Mariacher | 13,862 | 13,862 | 0 | * |
Renate Melcher | 19,802 | 19,802 | 0 | * |
Elisabeth oder Michael Mittendrein | 11,881 | 11,881 | 0 | * |
Manfred Mostbacher | 11,881 | 11,881 | 0 | * |
Wolfgang oder Martina Nußhold | 138,616 | 138,616 | 0 | * |
Dietrich Oberdorfer | 34,654 | 34,654 | 0 | * |
Herbert Orthaber | 11,485 | 11,485 | 0 | * |
Vinzenz Pagger | 34,654 | 34,654 | 0 | * |
Helga Pfeifer | 17,288 | 17,228 | 0 | * |
Markus Plank | 11,485 | 11,485 | 0 | * |
Georg Plochberger | 345,550 | 345,550 | 0 | * |
Hermann oder Karin Pöltl | 79,209 | 79,209 | 0 | * |
Dr. Anne Prem | 57,427 | 57,427 | 0 | * |
Privatstiftung Hofmann | 346,540 | 346,540 | 0 | * |
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| ||||
Selling Stockholder | Common Stock Beneficially Owned Prior to Offering | Common Stock Being Offered | Common Stock Beneficially Owned After Offering Number % of Class | |
Mag. Gerhard Rauchenwald | 11,485 | 11,485 | 0 | * |
Dr. Oliver Reistenhofer | 79,209 | 79,209 | 0 | * |
Robert Ringbauer | 11,881 | 11,881 | 0 | * |
DI Divoky Rudolf | 11,881 | 11,881 | 0 | * |
Elisabeth Rumpf | 11,881 | 11,881 | 0 | * |
Gernot Rumpold | 69,308 | 69,308 | 0 | * |
Josef Russold | 25,743 | 25,743 | 0 | * |
Dr. Oliver Sauer | 11,881 | 11,881 | 0 | * |
Erika Schatzmann | 59,407 | 59,407 | 0 | * |
Claudia Schiller | 34,654 | 34,654 | 0 | * |
Jutta Schnirring | 45,545 | 45,545 | 0 | * |
Leopold Schreiber | 11,881 | 11,881 | 0 | * |
Helga o. Josef Schubert | 29,703 | 29,703 | 0 | * |
Evelyn Schwarz | 22,773 | 22,773 | 0 | * |
Dipl. Ing. Wolgang Steinbauer | 11,881 | 11,881 | 0 | * |
DI Georg Stöttner | 34,654 | 34,654 | 0 | * |
Franz oder Karin Teuschler | 22,773 | 22,773 | 0 | * |
Ingeborg Teuschler | 11,881 | 11,881 | 0 | * |
Rebecca u. Olivia Thomas | 11,881 | 11,881 | 0 | * |
Mag. Siegwald Töfferl | 57,427 | 57,427 | 0 | * |
Venus Privatstiftung | 79,209 | 79,209 | 0 | * |
Merkur Versicherung | 118,814 | 118,814 | 0 | * |
Gottfried Vorraber | 11,485 | 11,485 | 0 | * |
Dr. G. Wagner | 11,881 | 11,881 | 0 | * |
Gerald Weindorfer | 11,485 | 11,485 | 0 | * |
Albert Wiedner | 11,881 | 11,881 | 0 | * |
Franz Wiedner | 11,881 | 11,881 | 0 | * |
Anton Wieser jun. | 55,446 | 55,446 | 0 | * |
Hannelore Wilhelmer | 11,881 | 11,881 | 0 | * |
Dr. Helrnfried Winter | 138,616 | 138,616 | 0 | * |
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| ||||
Selling Stockholder | Common Stock Beneficially Owned Prior to Offering | Common Stock Being Offered | Common Stock Beneficially Owned After Offering Number % of Class | |
Christina Wolf | 11,485 | 11,485 | 0 | * |
Dr.Otto Wusche | 11,485 | 11,485 | 0 | * |
Susan Wuthe | 11,881 | 11,881 | 0 | * |
Mag. Alexander Zrost | 57,427 | 57,427 | 0 | * |
* Less than 1%.
** This Selling Stockholder is an affiliate of a registered broker-dealer.
(1) All of the shares indicated are issuable upon the exercise of warrants.
(2) One-half of the shares indicated are issuable upon the exercise of warrants.
(3) Includes 250,000 shares issuable upon the exercise of warrants and 100,000 owned of record by D.W. Investments, Inc. of which Mr. Ellis is the sole stockholder.
(4) Includes 571,428 shares issuable upon the exercise of warrants.
(5) Includes 571,429 shares issuable upon the exercise of warrants and 15,000 issuable upon the exercise of options.
(6) Includes 225,000 shares issuable upon the exercise of warrants.
(7) As of September 12, 2002, Capital Bank owned of record, as agent for certain accredited investors, 9,258,672 shares of common stock representing 27.0% of our issued and outstanding common stock. As of that date, Capital Bank also had the right to acquire an additional 6,025,317 shares of common stock, comprised of (a) 4,358,650 shares of common stock issuable under various warrants held by Capital Bank, as agent for certain investors and (b) 1,666,667 shares of common stock issuable to Capital Bank upon the conversion of 2,500 shares of Series 17 Preferred held by Capital Bank, as agent for certain investors.If Capital Bank were to acquire all of the shares of common stock issuable upon exercise of the various warrants held by Capital Bank and the shares of common stock issuable upon conversion of the Series 17 Preferred, then Capital Bank would own of record 15,283,989 shares of common stock, representing 37.9% of the issued and outstanding common stock (assuming no other issuances of our common stock). The Selling Stockholders identified in this table under the caption "Capital Bank-Grawe Gruppe AG, as agent for the following Selling Stockholders" include 109 persons and entities which, in the aggregate, beneficially own 3,143,115 shares of the common stock that are owned of record by Capital Bank and 2,725,548 shares of common stock issuable upon the exercise of warrants held in Capital Bank's name. The warrants held in Capital Bank's name are exercisable at exercise prices ranging from $1.4219 to $1.9688 per share of common stock. Capital Bank may also acquire additional shares as payment of dividends on the Seriesis Continental Stock Transfer & Trust Company 17 Preferred. None of the shares includedBattery Place, Floor 8, New York, New York 10004-1123.
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beneficially owns more than 4.9% of our issued and outstanding common stock. Based on these representations by Capital Bank, we believe that Capital Bank does not have, or share, voting or dispositive control, either directly or indirectly, of the shares of common stock owned of record by Capital Bank. Also, based on Capital Bank's representations and because Capital Bank (x) has no right to, and is not believed to possess the power to, exercise control over our management or our policies; (y) has not nominated, and has not sought to nominate, a director to our board; and (z) has no representative serving as our executive officer, we do not believe that Capital Bank is our affiliate. Capital Bank's address is Burgring 16, 8010 Graz, Austria. Capital Bank has advised us that it is a banking institution regulated by the banking regulations of Austria. Capital Bank is a wholly owned subsidiary of Grazer Wechselseitige Versicherung Aktiengesellschaft ("Grazer"). Capital Bank has advised us that Grazer is wholly owned by Grawe Vermogensverwaltung, a mutual insurance association ("Grawe"). Capital Bank has further advised us that the owners of Grawe are all insurance holders of Grazer with an insurance agreement for more than one year. See "POTENTIAL CHANGE IN CONTROL."
(8) Unless otherwise indicated, of the number of shares of common stock beneficially owned by each of the individuals and entities listed under the heading "Capital Bank Grawe-Gruppe AG, as agent for the following Selling Stockholders," approximately 50.5% are issued and outstanding, and approximately 49.5% are issuable upon the issuance of outstanding warrants. For example, if a Selling Stockholder listed under such heading is noted as beneficially owning 10,000 shares, those shares would be comprised of 5,050 issued and outstanding shares and 4,950 shares issuable upon the exercise of warrants.
(9) Includes 200,530 shares issuable upon the exercise of warrants.
(10) Includes 148,197 shares issuable upon the exercise of warrants.
(11) Includes 122,618 shares issuable upon the exercise of warrants.
(12) Includes 90,853 shares issuable upon the exercise of warrants.
The Shares may be offered and sold from time to time by the Selling Stockholders, or by pledges, donees, transferees or other successors in interest. The Selling Stockholders will act independently of us in making decisions with respect to the timing, market, or otherwise at prices related to the then current market price or in negotiated transactions. The Shares may be sold by the Selling Stockholders in one or more transactions on the Nasdaq and the BSE or otherwise at market prices then prevailing or in privately negotiated transactions. The Shares may be sold by one or more of the following:
* ordinary brokerage transactions and transactions in which the broker solicits purchasers;
* purchases and resale by a broker-dealer for its account pursuant to this prospectus; and
* a block trade in which the broker-dealer so engaged will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction.
We have not been advised by the Selling Stockholders that they have, as of the date hereof, made any arrangements relating to the distribution of the Shares covered by this prospectus, except that certain of the Selling Stockholders are broker-dealers. See "SELLING STOCKHOLDERS." Each Selling Stockholder that is an affiliate of a broker-dealer has advised us that such Selling Stockholder (a) acquired the shares covered by this prospectus in the ordinary course of business, and (b) at the time of such purchase, the Selling Stockholder had no agreements or understandings, directly or indirectly, with any person to distribute such shares. In effecting sales, broker-dealers engaged by the Selling Stockholders may arrange for other broker-dealers to participate, and, in such case, broker-dealers will receive commissions or discounts from the Selling Stockholders in amounts to be negotiated immediately prior to sale.
In offering the Shares, the Selling Stockholders and any broker-dealers and any other participating broker-dealers who execute sales for the Selling Stockholders may be deemed to be "underwriters" within the meaning of the
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Act in connection with such sales. Accordingly, any profits realized by the Selling Stockholders and the compensation of such broker-dealer may be deemed to be underwriting discounts and commissions. Any Shares covered by this prospectus which qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this prospectus.
Our
The financial statements of M&EC for the years ended December 31, 2000, and 1999 included in our definitive proxy statement, filed May 9, 2002, relating to our Special Meeting (the "Special Meeting Proxy") have been audited by Gallogly Fernandez & Riley, LLP ("GFR"), independent certified public accountants to the extent and for the periods set forth in their report incorporated herein by reference, and are incorporated by reference herein in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
Approximately 95% and 94% of the total hours spent on the audit of our financial statements for the years ended December 31, 2000 and 2001, respectively, were spent by GFR, as a member of the BDO alliance network of firms. Members of the BDO alliance network of firms, including GFR, are not full time, permanent employees of BDO.
The financial statements of our subsidiary, Diversified Scientific Services, Inc., included in the Special Meeting Proxy have been incorporated in reliance on the report of Arthur Andersen LLP, independent certified public accountants. We have not been able to obtain, after reasonable efforts, the written consent of Arthur Andersen LLP to the inclusion of its report in this prospectus, and we have not filed that consent in reliance on Rule 437a promulgated under the Act. Because Arthur Andersen has not consented to the inclusion of its report in this prospectus, your ability to assert claims against Arthur Andersen may be limited. In particular, because of this lack of consent, you will not be able to sue Arthur Andersen under Section 11(a)(4) of the Act for untrue statements of a material fact, if any, contained in the financial statements audited by Arthur Andersen or omissions to state a material fact, if any required to be stated in those financial statements.
Public Reference Room | |
450 Fifth Street, N.W. | |
Room 1024 | |
Washington, D.C. 20549 | |
1-800-SEC-0330 |
· | Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed March 31, 2009; |
· | Current Reports on Form 8-K filed with the Securities and Exchange Commission on March 2, 2009, March 11, 2009, and March 30, 2009; |
· | The description of our Series A Junior Participating Preferred Stock, par value $.001 per share, that is contained in the Form 8-A Registration Statement, filed on May 13, 2008, as amended October 2, 2008, including any amendments or reports filed for the purpose of updating such description. |
· | The description of the common stock of the Registrant that is contained in the Registration Statement on Form 8-A filed pursuant to Section 12 of the Exchange Act that became effective on October 30, 1992, including any amendments or reports filed for the purpose of updating such description. |
* Oursecurities described in this prospectus. These documents include periodic reports, such as annual reportreports on Form 10-K, for the fiscal year ended December 31, 2001; and
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* Our quarterly reportreports on Form 10-Q for the quarter ended March 31, 2002; and
* Our current reportreports on Form 8-K, as well as proxy statements. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained herein or in any other subsequently filed on June 19, 2002;
* Our quarterly report on Form 10-Q fordocument which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed to constitute a part of this prospectus, except as so modified or superseded.
* Our definitive proxy statement filed on October 9, 2002, relating to our 2002 Annual Meeting of Stockholders;
* Our quarterly report on Form 10-Q for the quarter ended September 30, 2002;
* Our current report on Form 8-K filed on November 26, 2002; and
* Description of our common stock contained in our Registration Statement on Form 8-A dated October 30, 1992.
extent such exhibits are specifically incorporated by reference. You canmay request a copy of these filings, at no cost, by writing or telephoning us at the following address and telephone number:
This prospectus is part of a registration statement we filed with You should not assume the SEC (Registration No. 333-70676). That registration statement and the exhibits filed along with the registration statement contain more information about the shares sold by the Selling Stockholders. Because information about contracts referred to in this prospectus or any prospectus supplement is not always complete, you should readaccurate as of any date other than the full contracts which are filed as exhibits todate on the registration statement. You may read and copy the full registration statement and its exhibits at the SEC's public reference rooms or their web site.
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PermaFixfront of those documents.
17,931,966 Shares
Perma-Fix Environmental Services, Inc.
Common Stock
________________
Prospectus
________________
_____________, 2002
SEC Registration Fee | $ | 381 | ||
Legal Fees (Including Blue Sky) | $ | 45,000 | ||
Accounting Fees and Expenses | $ | 10,000 | ||
Printing | $ | 2,500 | ||
Miscellaneous | $ | 500 | ||
Total: | $ | 58,381 |
| |
| |
| |
*Previously filed
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Exhibits.
(i) To include any prospectus required by Section 10(a)(3) of the Act;
(ii) To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, registration statement:
(i) | To include any prospectus required by section 10(a)(3) of the Securities Act; |
(ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement. |
(iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement;
Provided, however,, that paragraphs (1)(i), (1)(ii) and (1)(ii)(iii) do not apply if the registration statement is on Form S-3 or Form F-3, and the information required to be included
in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished
to the Commission by the Companyregistrant pursuant to SectionSections 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are incorporated by reference in this Registration Statement.the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
The Company hereby undertakes that, for purposes of determining any liability under the Act, each filing of the Company's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) 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 thethat time shall be deemed to be the initial bona fide offering thereof.
(i) | Each prospectus filed by the registrant pursuant to Rule 424(b)(3)shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and |
(ii) | Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date. |
(i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
(ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
(iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
(iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
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PERMA-FIX ENVIRONMENTALApril 2009.
PERMA-FIX ENVIRONMENTAL SERVICES, INC. | |
By: | /s/ Dr. Louis Centofanti |
Dr. Louis F. Centofanti Chairman of the Board Chief Executive Officer |
Ben Naccarato, and each of them, with full power of substitution and resubstitution and each with full power to act without the other, his or her true and lawful attorney-in-fact and agent, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission or any state, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their, his or her substitutes or substitute, may lawfully do or cause to be done by virtue hereof.
Signature | Title | Date | ||
/s/ Dr. Louis F. Centofanti | ||||
Dr. Louis F. Centofanti | Chairman of the Board of Directors, President, and Chief Executive Officer (Principal Executive Officer) |
| April 3, 2009 | |
/s/ Ben Naccarato | ||||
Ben Naccarato | Chief Financial Officer (Principal Financial and Accounting Officer) | April 3, 2009 | ||
/s/ Jon Colin | ||||
Jon Colin | Director | April 3, 2009 | ||
/s/ Jack Lahav | ||||
Jack Lahav | Director | April 6, 2009 |
/s/ Joe Reeder | ||||
Joe R. Reeder | Director | April 6, 2009 | ||
/s/ Larry Shelton | ||||
Larry Shelton | Director | April 3, 2009 | ||
/s/ Dr. Charles E. Young | ||||
Dr. Charles E. Young | Director | April 6, 2009 | ||
/s/ Robert L. Ferguson | ||||
Robert L. Ferguson | Director | April 5, 2009 | ||
/s/ Mark A. Zwecker | ||||
Director | April 4, 2009 |
Exhibit No. | Description | |
* By /s/ Louis Centofanti November 27, 2002Dr. Louis F. CentofantiAttorney In Fact
EXHIBIT INDEX
2008. | |||
3(ii) | Bylaws of | ||
| |||
2007. | |||
4.1 | Specimen Common Stock Certificate is incorporated by reference | ||
33-51874. | |||
| |||
Continental Stock Transfer & Trust Company, as Rights Agent, is incorporated by reference to Exhibit 4.1 the Registrant’s Form 8-K, filed on May 8, 2008. | |||
4.3 | Letter Amendment to Rights Agreement, dated | October 2, 2008. | |
4.4 | Certificate of | ||
May 8, 2008. | |||
| |||
Winters, LLP. | |||
| |||
| |||
Consent of BDO Seidman, | |||
Consent of Conner & Winters | to this registration statement) | ||
24.1 | Power of Attorney | ||
registration statement). |
* Previously filed.
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