EXHIBIT 10.56
                                                                   -------------


                               SECURITY AGREEMENT
                               ------------------

         SECURITY AGREEMENT (this "Agreement"),  made this 13th day of November,
2000,  by and among the  individuals  and  entities  listed on Schedule 1 hereto
(collectively the "Secured Parties"),  and COMMODORE APPLIED TECHNOLOGIES,  INC.
(the "Debtor");


                              W I T N E S S E T H :
                              ---------------------

         WHEREAS,   the  Debtor  will  receive  substantial  benefits  from  the
transactions  contemplated  by the  Securities  Purchase  Agreement of even date
herewith (the "Purchase Agreement");

         WHEREAS,  concurrently  with the  execution  and delivery  hereof,  the
Secured Parties,  Debtor and Commodore  Environmental Services, Inc ("COES") are
entering into the Purchase Agreement, pursuant to which the Secured Parties have
agreed,  subject to the terms and  conditions  thereof,  to purchase  promissory
notes in the  aggregate  principal  amount of up to $500,000 to be  evidenced by
those   certain   promissory   notes  of  the  Debtor  of  even  date   herewith
(collectively, the "Notes"); and

         WHEREAS,  in order to induce the Secured  Parties to purchase the Notes
pursuant to the Purchase Agreement the Secured Parties have required that Debtor
grant the Secured  Parties with a perfected  lien on the  Collateral (as defined
below), pursuant to the terms and conditions of this Agreement.

         NOW, THEREFORE,  for good and valuable  consideration,  the receipt and
sufficiency  of which are  hereby  acknowledged,  the  parties  hereby  agree as
follows:

1.       Definitions.
         -----------

         (a) All terms used  herein  which are defined in Article 1 or Article 9
of the Uniform  Commercial  Code as adopted in the State of New York, as amended
from time to time,  (the "Code") shall have the meanings  given  therein  unless
otherwise  defined in this Agreement.  All references to the plural herein shall
also mean the  singular  and to the  singular  shall also mean the  plural.  All
references to Secured  Parties and Debtor  pursuant to the definitions set forth
in the recitals  hereto,  or to any other person  herein,  shall  include  their
respective   heirs,   executors,   administrators,   personal   representatives,
successors and permitted  assigns.  The words "hereof,"  "herein,"  "hereunder,"
"this  Agreement" and words of similar import when used in this Agreement  shall
refer to this  Agreement  as a whole and not any  particular  provision  of this
Agreement  and as  this  Agreement  now  exists  or may  hereafter  be  amended,
modified, supplemented, extended, renewed, restated or replaced.


<PAGE>

         (b) In addition to those  capitalized  terms defined  elsewhere in this
Agreement,  the  following  terms shall have the following  respective  meanings
wherever used in this Agreement:

         "Accounts"  shall mean the collective  reference to (i) all present and
future rights of the Debtor and all of its  100%-owned  subsidiaries  to receive
payment for goods sold or leased, for services  rendered,  or for loans or other
financial  accommodations  extended,  whether or not evidenced by instruments or
chattel paper,  and whether or not earned by  performance;  and (ii) all present
and future  rights of the  Debtor to receive  cash  distributions  from  Dispute
Resolution Management, Inc., a Utah corporation ("DRM"), an 81% owned subsidiary
of the  Debtor,  whether  in the  form of  dividends,  loans,  bonuses,  fees or
otherwise.  Notwithstanding the foregoing, the term "Accounts" shall not mean or
include  Accounts  which have  heretofore  been  assigned,  pledged or otherwise
encumbered by Debtor or any  wholly-owned  subsidiary of Debtor to KBK Financial
Corporation.

         "Collateral" shall have the meaning set forth in Section 2 below.

         "Event of Default" shall have the meaning ascribed thereto in the Note.

         "Obligations"  shall mean the  collective  reference to all  principal,
interest,  collection costs,  expenses,  fees and other amounts owing or payable
from time to time under the Notes,  and any further  amounts which,  pursuant to
the Purchase Agreement,  this Agreement and/or any Ancillary  Agreement,  may be
deemed part of and/or added to the Obligations,  whether arising before or after
the  commencement  of any case with  respect to Debtor  under the United  States
Bankruptcy  Code or any similar  statute  (including,  without  limitation,  the
payment of interest and other  amounts which would accrue and become due but for
the commencement of such case).

         "Person" or "person" shall mean any  individual,  sole  proprietorship,
partnership,   corporation,   limited   liability   company,   business   trust,
unincorporated  association,  joint stock  corporation,  trust, joint venture or
other entity or any  government  or any agency or  instrumentality  or political
subdivision thereof.

         "Security Interests" shall mean the liens and security interests in the
Collateral granted by Debtor for the ratable benefit of Secured Parties, and all
rights and remedies in respect thereof, pursuant to this Agreement.

         (c)  Unless  otherwise  separately  defined  in  this  Agreement,   all
capitalized  terms when used herein,  shall have the same meaning and definition
as set forth in the Purchase Agreement.

2.       The Security Interests.
         ----------------------

         In order to secure the due and punctual  payment and performance of all
Obligations owing to the Secured Parties from time to time, Debtor hereby grants
to Secured  Parties,  for its ratable  benefit,  a continuing  lien and security
interest in, and hereby  assigns to Secured  Parties as collateral  security,  a
first priority lien on all Accounts,  whether now owned or hereafter acquired or
existing, and wherever located (collectively, the "Collateral").


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<PAGE>


3.       Filing; Further Assurances.
         --------------------------

         Debtor will, at its expense, execute, deliver, file and record (in such
manner and form as Secured Parties shall require),  or permit Secured Parties to
file and record, (a) all financing statements,  (b) all carbon,  photographic or
other  reproductions  of financing  statements or this Agreement (which shall be
sufficient as a financing statement hereunder), (c) all endorsements to title to
any  vehicles  or other  Collateral  as may be  required in order to perfect the
Security  Interests  therein,  and (d) all specific  assignments or other papers
that may be necessary or  desirable,  or that  Secured  Parties may request,  in
order to create,  preserve,  perfect or  validate  any  Security  Interest or to
enable Secured Parties to exercise and enforce its rights hereunder with respect
to any of the  Collateral.  Debtor hereby  appoints  Secured Parties as Debtor's
attorney-in-fact  to execute and file, in the name and on behalf of Debtor, such
additional financing statements as Secured Parties may request. In addition,  in
the event and to the extent that any of Collateral consists of or is represented
by  instruments or other  evidences of ownership such as would require  physical
possession of same in order to perfect the Security  Interests  therein,  Debtor
will  promptly,  at its  expense,  deliver  same to  Secured  Parties,  with any
necessary endorsements thereon. If any Account becomes evidenced by a promissory
note or any other  instrument for the payment of money,  Debtor will immediately
deliver such instruments to Secured Parties appropriately endorsed.

4.       Representations and Warranties of Debtor.
         ----------------------------------------

         Debtor hereby represents and warrants as follows:

                  (a) That  Debtor is the valid and  lawful  owner of all of the
Collateral,  free  from  any  and  all  adverse  liens,  security  interests  or
encumbrances;

                  (b) All Accounts (i) represent complete bona fide transactions
with  customers in the ordinary  course of Debtor's  business  which  require no
further  act under any  circumstances  on  Debtor's  part to make such  Accounts
payable by the account debtors, (ii) to the best of Debtor's knowledge,  are not
subject to any present, future or contingent offsets, disputes or counterclaims,
(iii) do not represent bill and hold sales, consignment sales, guaranteed sales,
sale or return or other similar  understandings  or obligations of any affiliate
or subsidiary of Debtor,  (iv) to the best of Debtor's  knowledge,  there are no
facts, events or occurrences which in any way impair the validity or enforcement
thereof or tend to reduce the amount  payable  under any Accounts and (v) Debtor
has no knowledge that any customer is unable  generally to pay its debts as they
become due.

                  (c) That Debtor has full right,  power and  authority to grant
to  Secured  Parties  the  Security  Interests  pursuant  to the  terms  of this
Agreement,  and  that,  except  as set  forth in this  Agreement,  the  Security
Interests  do  not  conflict  with  any  rights  of  any  other  persons  or any
commitments of Debtor to any other persons;

                  (d) That no financing statement covering any of the Collateral
is on file in any public office,  other than financing statements filed pursuant
to this Agreement.


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<PAGE>

5.       Covenants of Debtor.
         -------------------

         Debtor hereby covenants and agrees as follows:

                  (a) That Debtor will take all commercially reasonable steps to
defend the Collateral and the Security  Interests against all claims and demands
of all  persons  at any time  claiming  any  adverse  interest  therein or there
against;

                  (b) That Debtor will give  written  notice  thereof to Secured
Parties at least  thirty  (30) days prior to any change in the  location  of the
principal  office of Debtor or the office where  Debtor  maintains or stores (i)
its books and records  pertaining to the Accounts and/or any other Collateral or
(ii) any other Collateral;

                  (c)  That  Debtor  will   promptly  pay  any  and  all  taxes,
assessments and governmental  charges upon the Collateral prior to the date that
penalties  may attach  thereto or same  become a lien on any of the  Collateral,
except to the extent that such taxes, assessments and charges shall be contested
by Debtor in good faith and through appropriate proceedings;

                  (d) That Debtor will immediately notify Secured Parties of any
event causing a material loss or diminution in the value of the Collateral,  and
the amount (or Debtor's best estimate of the amount) of such loss or diminution;

                  (e) That Debtor will at all times have and maintain  insurance
with  respect  to all  insurable  Collateral  in  amounts  and of  types  as are
customarily  maintained  by  other  companies  of  comparable  size  and type of
business,  each of which insurance  policies shall name the Secured Parties as a
loss payee as its interests may appear.  All policies of insurance shall provide
for a minimum of ten (10) business days' written notice to Secured Parties prior
to any cancellation,  modification or non-renewal thereof.  Debtor shall, on the
date  hereof  and from  time to time upon  request  hereafter,  furnish  Secured
Parties with  certificates or other evidence  satisfactory to Secured Parties of
compliance with the foregoing insurance provisions;

                  (f) That Debtor will keep all of the Collateral  free from any
and all adverse liens, security interests or encumbrances, and in good order and
repair,  reasonable  wear and tear  excepted,  and will not waste or destroy the
Collateral or any part thereof;

                  (g) That  Debtor  will not  dispose  of any of the  Collateral
whether by sale, lease or otherwise;

                  (h) That Debtor will place  notations  upon Debtor's  books of
account and any  financial  statement  prepared  by Debtor to  disclose  Secured
Parties' security interest in the Collateral;

                  (i) That  Debtor  will  perform  all  other  reasonable  steps
requested by Secured Parties to create and maintain in Secured  Parties' favor a
valid perfected security interest in all Collateral;

                  (j) That Debtor  will at any time and from time to time,  upon
the  written  request  of  Secured  Parties  and at the sole  expense of Debtor,
promptly and duly execute and deliver any and all such further  instruments  and

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<PAGE>

documents and take such further actions as Secured  Parties' may reasonably deem
desirable to obtain the full  benefits of this  Agreement  and of the rights and
powers herein granted, including, without limitation: (i) using its best efforts
to secure all consents and approvals necessary or appropriate for the assignment
to or for the  benefit of Secured  Parties of any  license or  contract  held by
Debtor or in which Debtor has any rights not  heretofore  assigned;  (ii) filing
and financing or continuation statements under the UCC with respect to the liens
and security interests granted hereunder or under any other Ancillary Agreement;
(iii) transferring Collateral to Secured Parties' possession (if such Collateral
consists of chattel paper or if a security  interest in such  Collateral  can be
perfected only by possession, or if otherwise requested by Secured Parties); and
(iv) using its efforts to obtain waivers, in form and substance  satisfactory to
Secured  Parties,  of liens from  landlords and  mortgagees.  Debtor also hereby
authorizes Secured Parties to file any such financing or continuation  statement
without the signature of Debtor to the extent  permitted by  applicable  law. If
any amount payable under or in connection with any of the Collateral is or shall
become evidenced by any instrument, such instrument, other than checks and notes
received in the ordinary  course of business,  shall be duly endorse in a manner
satisfactory to Secured Parties immediately upon Debtor receipt thereof.

                  (k)  That  Debtor  will  not  change  its  name,  identity  or
corporate structure in any manner which might make any financing or continuation
statement  filed by Secured  Parties to be seriously  misleading  without giving
Secured Parties at least thirty (30) days prior written notice thereof and taken
such action  necessary or reasonably  requested by Secured Parties to amend such
financing statement or continuation statement;

                  (l)  That  Debtor  will  not  use  any  of the  Collateral  in
violation of any applicable law.

6.       Records Relating to Collateral.
         ------------------------------

         Debtor will keep and maintain complete and accurate records  concerning
the  Collateral,  including all chattel paper  included in the Accounts,  at its
principal  executive office as set forth in Exhibit A annexed hereto, or at such
other  place(s) of business  as Secured  Parties may approve in writing.  Debtor
will (a) faithfully hold and preserve such records and chattel paper, (b) permit
representatives  of Secured  Parties,  at any time during normal business hours,
upon reasonable  notice,  and without undue disruption of Debtor'  business,  to
examine and  inspect the  Collateral  and to make copies and  abstracts  of such
records and chattel paper,  and (c) furnish to Secured Parties such  information
and reports  regarding the  Collateral as Secured  Parties may from time to time
reasonably request.

7.       Collections with Respect to Accounts.
         ------------------------------------

         Debtor will, at its expense:

                  (a)  endeavor  to  collect  or  cause  to  be  collected  from
customers  and other  Persons  indebted on Accounts or obligated  to  distribute
funds  in  respect  of the  Accounts,  as and  when  due,  any and all  amounts,
including interest, owing under or on account of each Account.


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<PAGE>

                  (b)  take or  cause to be taken  such  appropriate  action  to
repossess goods,  the sale of which gave rise to any Account,  or to enforce any
rights or liens under  Accounts,  as Debtor or Secured  Parties may deem proper,
and in the name of  Debtor or  Secured  Parties,  as  Secured  Parties  may deem
proper;  provided,  that (i) Debtor  will use its best  judgment  to protect the
interests of Secured  Parties,  and (ii) Debtor shall not be required under this
Section 7 to take any action  which  would be contrary  to any  applicable  law.
Debtor shall,  at the request of Secured  Parties  following the  occurrence and
during the continuance of an Event of Default, notify the account debtors of the
Security  Interests  of Secured  Parties  in any of the  Accounts,  and  Secured
Parties may itself at any such time so notify account  debtors.  Secured Parties
shall  have full power at any time after  such  notice to  collect,  compromise,
endorse,  sell or  otherwise  deal with any or all  outstanding  Accounts or the
proceeds  thereof in the name of either Secured Parties or Debtor.  In the event
that, after notice to any account debtors directing payments to Secured Parties,
Debtor receives any payment(s) on any Account(s), then, such payment(s) shall be
held by Debtor in trust for  Secured  Parties  and  immediately  turned  over to
Secured  Parties as aforesaid,  for  application  in accordance  with Section 11
below.

8.       General Authority.
         -----------------

                  (a) In the event that any Secured Parties shall at any time be
required to take action to defend the Security  Interests,  or Debtor shall fail
to satisfy its  obligations  under Section 5(c),  5(e) or 5(f)hereof,  then such
Secured Parties shall have the right,  but shall not be obligated,  to take such
steps and make such  payments as may be required in order to effect  compliance,
and such  Secured  Parties  shall have the right  either to demand  and  receive
immediate  reimbursement from Debtor for all costs and expenses incurred by such
Secured Parties in connection  therewith,  and/or to add such costs and expenses
to the Obligations;

                  (b) Debtor hereby  irrevocably  appoints  Secured  Parties the
true and lawful  attorney for Debtor,  with full power of  substitution,  in the
name of Debtor,  the Secured Parties or otherwise,  for the sole use and benefit
of the Secured Parties,  but at Debtor' expense,  to the extent permitted by law
to  exercise,  at any time and from time to time  during the  continuance  of an
Event of Default,  any or all of the following powers with respect to any or all
of the  Collateral  (which powers shall be in addition and  supplemental  to any
powers, rights and remedies of the Secured Parties described herein):

                           (i) to demand,  sue for,  collect,  receive  and give
acquittance  for any and all  monies  due or to  become  due  upon or by  virtue
thereof;

                           (ii) to receive,  take,  endorse,  assign and deliver
any  and  all  checks,  notes,  drafts,   documents  and  other  negotiable  and
non-negotiable  instruments  and chattel  paper taken or received by any Secured
Parties in connection therewith;

                           (iii)  to  settle,  compromise,   discharge,  extend,
compound, prosecute or defend any action or proceeding with respect thereto;

                           (iv) to sell,  transfer,  assign or otherwise deal in
or with same, or the proceeds or avails  thereof,  or the related goods securing
the  Accounts,  as fully and  effectually  as if any  Secured  Parties  were the
absolute owner thereof;


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<PAGE>

                           (v) to  extend  the  time  of  payment  of any or all
thereof and to make any allowance and other adjustments with reference  thereto;
and

                           (vi)  to  discharge   any  taxes,   liens,   security
interests or other encumbrances at any time placed thereon.

         Anything hereinabove contained to the contrary notwithstanding, Secured
Parties  shall give Debtor not less than ten (10)  business  days' prior written
notice of the time and place of any sale or other intended disposition of any of
the  Collateral,  except any  Collateral  which is  perishable  or  threatens to
decline  speedily  in value  or is of a type  customarily  sold on a  recognized
market.  Secured  Parties and Debtor  hereby agree that such notice  constitutes
"reasonable notification" within the meaning of Section 9-504(3) of the Code.

9.       Remedies Upon Event of Default.
         ------------------------------

                  (a) If  any  Event  of  Default  shall  have  occurred  and be
continuing,  then,  any  Secured  Parties  may  exercise  all of the  rights and
remedies  of a Secured  Parties  under the Code  (whether  or not the Code is in
effect in the jurisdiction where such rights and remedies are exercised) and, in
addition,  any Secured  Parties may,  without being required to give any notice,
except as herein provided or as may be required by mandatory  provisions of law,
(a)  apply  the  cash,  if any,  then  held by it as  Collateral  in the  manner
specified  in Section 11  hereof,  and (b) if there  shall be no such cash or if
such cash shall be  insufficient to pay all of the Obligations in full, sell the
Collateral,  or any part  thereof,  at public or private sale or at any broker's
board or on any  securities  exchange,  for  cash,  upon  credit  or for  future
delivery,  and  at  such  price  or  prices  as the  Secured  Parties  may  deem
satisfactory.  Secured Parties may require Debtor to assemble all or any part of
the  Collateral  and  make it  available  to  Secured  Parties  at a place to be
designated  by Secured  Parties  which is  reasonably  convenient  to Debtor and
Secured Parties.  Any holder of a Note may be the purchaser of any or all of the
Collateral  so sold at any  public  sale  (or,  if the  Collateral  is of a type
customarily sold on a recognized  market or is of a type which is the subject of
widely  distributed  standard  price  quotations,   at  any  private  sale)  and
thereafter  hold  same,  absolutely  free from any right or claim of  whatsoever
kind.  Secured Parties are authorized,  at any such sale, if it reasonably deems
same to be advisable,  to restrict the prospective  bidders or purchasers of any
of the Collateral  which could be subject to federal or state securities laws to
persons  who will  represent  and agree that they are  purchasing  for their own
account for investment and not with a view to the distribution or sale of any of
such  Collateral.  Upon any such sale,  Secured  Parties shall have the right to
deliver,  assign and transfer to the purchaser  thereof the  Collateral so sold.
Each  purchaser at any such sale shall hold the  Collateral so sold  absolutely,
free from any claim or right of whatsoever  kind,  including any equity or right
of  redemption  of  Debtor.  To the  extent  permitted  by  law,  Debtor  hereby
specifically waives all rights of redemption,  stay or appraisal which it has or
may have under any rule of law or statute  now  existing or  hereafter  adopted.
Secured  Parties shall give Debtor not less than thirty (30) days' prior written
notice of its  intention  to make any such public or private  sale or sales at a
broker's  board or on a securities  exchange.  Such notice,  in case of a public
sale, shall state the time and place fixed for such sale, and in case of sale at
a broker's board or on a securities exchange,  shall state the board or exchange
at which  such  sale is to be made and the day on which the  Collateral,  or the
portion  thereof  being  sold,  will first be offered  for sale at such board or
exchange.  Any  such  public  sale  shall be held at such  time or times  within
ordinary  business hours and at such place or places as Secured  Parties may fix
in the notice of such sale. At any such sale,  the Collateral may be sold in one

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<PAGE>

lot as an entirety or in separate  parcels,  as Secured  Parties may  determine.
Secured  Parties  shall not be obligated to make such sale  pursuant to any such
notice. Secured Parties may, without notice or publication, except for notice to
Debtor not less than five (5) business days prior to the adjourn  date,  adjourn
any public or private sale or cause the same to be  adjourned  from time to time
by  announcement  at the time and place fixed for the sale, and such sale may be
made at any time or place to  which  the same may be  adjourned.  In case of any
sale of all or any part of the Collateral on credit or for future delivery,  the
Collateral so sold may be retained by Secured Parties until the selling price is
paid by the purchaser thereof,  but no Secured Parties shall incur any liability
in the  case  of the  failure  of  such  purchaser  to  take  up and pay for the
Collateral so sold and, in case of any such failure,  such  Collateral may again
be sold upon like notice.  Secured  Parties,  instead of exercising the power of
sale  herein  conferred  upon it,  may  proceed  by a suit or suits at law or in
equity to  foreclose  the Security  Interests  and sell the  Collateral,  or any
portion  thereof,  under a judgment or decree of a court or courts of  competent
jurisdiction.

                  (b) In furtherance of the foregoing powers of Secured Parties,
Debtor hereby  authorizes and appoints the Secured Parties,  with full powers of
substitution,  as the true and lawful  attorney-in-fact  of Debtor, in his name,
place and stead, to take any and all such action as Secured Parties, in its sole
discretion,  may deem necessary or appropriate in furtherance of the exercise of
the aforesaid  powers during the continuance of an Event of Default.  Such power
of attorney shall be coupled with an interest,  and shall be  irrevocable  until
the Notes are fully paid.  Without  limitation of the  foregoing,  such power of
attorney shall not in any manner be affected or impaired by reason of any act of
Debtor or by operation  of law.  Nothing  herein  contained,  however,  shall be
deemed to require or impose any duty upon any Secured Parties to exercise any of
the rights or powers granted herein.

10.      Right of Secured Parties to Use and Operate Collateral.
         ------------------------------------------------------

         Upon the occurrence and during the continuance of any Event of Default,
to the extent  permitted by law, Secured Parties shall have the right and power,
with or without legal process, to enter upon any or all of Debtor's premises, to
take possession of all or any part of the Collateral,  and to exclude Debtor and
all persons claiming under Debtor wholly or partly therefrom,  and thereafter to
sell same in accordance herewith and/or hold, store, and/or use, operate, manage
and control the same.  Upon any such taking of possession,  Secured Parties may,
from  time  to  time,  at  the  expense  of  Debtor,   make  all  such  repairs,
replacements,  alterations,  additions  and  improvements  to the  Collateral as
Secured  Parties may deem proper.  In such case,  Secured Parties shall have the
right to manage and control the  Collateral  and to carry on the business and to
exercise all rights and powers of Debtor in respect  thereof as Secured  Parties
shall deem proper, including the right to enter into any and all such agreements
with  respect to the leasing  and/or  operation  of the  Collateral  or any part
thereof as Secured Parties may see fit; and Secured Parties shall be entitled to
collect and receive all rents, issues,  profits, fees, revenues and other income
of the same and every part thereof. Such rents, issues,  profits, fees, revenues
and other income  shall be applied to pay the expenses of holding and  operating
the Collateral and of conducting the business  thereof,  and of all maintenance,
repairs, replacements,  alterations, additions and improvements, and to make all


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<PAGE>


payments which any Secured Parties may be required or may elect to make, if any,
for taxes,  assessments,  insurance and other charges upon the Collateral or any
part thereof,  and all other payments which any Secured  Parties may be required
or  authorized to make under any provision of this  Agreement  (including  legal
costs and  reasonable  attorneys'  fees).  The remainder of such rents,  issues,
profits,  fees,  revenues and other income shall be applied in  accordance  with
Section 11 below,  and,  unless  otherwise  provided  or required by law or by a
court of competent jurisdiction, any surplus shall be paid over to Debtor.

11.      Application of Collateral and Proceeds.
         --------------------------------------

         The proceeds of any sale of, or other realization upon, all or any part
of the Collateral shall be applied in the following order of priorities:

                  (a)  first,  to  pay  the  expenses  of  such  sale  or  other
realization,  and all expenses,  liabilities and advances incurred or made by or
on  behalf  of any  Secured  Parties  in  connection  therewith,  and any  other
unreimbursed  expenses  for  which  any  Secured  Parties  are to be  reimbursed
pursuant to Sections 8 and 12 hereof;

                  (b) second, to the payment of the Obligations then outstanding
in such  order or manner  as  Secured  Parties,  in its sole  discretion,  shall
determine; and

                  (c) finally,  to pay to Debtor,  or its successors or assigns,
or as a court of competent  jurisdiction may direct,  any surplus then remaining
from such proceeds.

12.      Expenses; Secured Parties' Lien.
         -------------------------------

         Debtor will, forthwith upon demand, pay to Secured Parties:

                  (a) the amount of any taxes or other charges which the Secured
Parties  have been  required to pay,  under  operation  of law, by reason of the
Security Interests  (including any applicable  transfer taxes) or to free any of
the Collateral from any lien thereon; and

                  (b)  the  amount  of  any  and  all  reasonable  out-of-pocket
expenses,  including the reasonable fees and disbursements of its counsel and of
any Secured Partiess not regularly in its employ,  which any Secured Parties may
incur in connection with (i) the collection, sale or other disposition of any of
the  Collateral,  (ii) the exercise by any Secured  Parties of any of the powers
conferred  upon  it  hereunder,  and/or  (iii)  any  default  on  Debtor's  part
hereunder.

13.      Termination of Security Interests; Release of Collateral.
         --------------------------------------------------------

         Upon the payment in full of all  Obligations,  the  Security  Interests
shall  terminate and all rights in the Collateral  shall revert to Debtor.  Upon
any such termination of the Security Interests or release of Collateral, Secured
Parties will, at Debtor'  expense,  execute and deliver to Debtor such documents
as Debtor shall  reasonably  request to evidence the termination of the Security
Interests or the release of such Collateral, as the case may be.


                                       9
<PAGE>

14.      Right of Set-Off.
         ----------------

         In  furtherance  and  not  in  limitation  of  any  provisions   herein
contained,  Debtor  hereby agrees that any and all deposits or other sums at any
time due from any  Secured  Parties  to  Debtor  shall at all  times  constitute
security for the Obligations,  and any Secured Parties may exercise any right of
set-off  against  such  deposits or other sums as may accrue or exist  hereunder
and/or under applicable law.

15.      Notices.
         -------

         All notices or communications hereunder shall be in writing,  addressed
to the Secured  Parties at the addresses set forth on Schedule 1 attached hereto
and to  Debtor  at  the  address  listed  on  Exhibit  A.  Any  such  notice  or
communication  shall  be sent  certified  or  registered  mail,  return  receipt
requested,  addressed  as above  (or to such  other  address  as such  party may
designate  in writing  from time to time),  and the actual date of  receipt,  as
shown by the receipt  therefor,  shall  determine  the time at which  notice was
given.

16.      Waivers; Non-Exclusive Remedies.
         -------------------------------

         No failure on the part of any Secured Parties to exercise, and no delay
in  exercising,  and no course of dealing with  respect to, any right,  power or
remedy under this  Agreement  shall operate as a waiver  thereof;  nor shall any
single or partial exercise by any Secured Parties of any right,  power or remedy
under this Agreement  preclude any exercise of any other right, power or remedy.
The remedies in this Agreement are cumulative and are not exclusive of any other
remedies provided by law, in equity or otherwise.

17.      Changes in Writing.
         ------------------

         Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally but only by a statement in writing signed by the
party against which enforcement of the change, waiver,  discharge or termination
is sought.

18.      Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
         ------------------------------------------------------------

                  (a)  This  Agreement  shall   (irrespective  of  where  it  is
executed, delivered and/or performed) be governed by and construed in accordance
with the laws of the State of New York  (without  giving effect to principles of
conflicts of law), except as otherwise  required by mandatory  provisions of law
and except to the extent that  remedies  provided by the laws of any State other
than New York are governed by the laws of said State.

                  (b) The  parties  hereby  consent to the  jurisdiction  of all
courts  sitting in the State of New York, and of all courts from which an appeal
therefrom  may be taken,  with respect to any action or  proceeding  relating to
this Agreement or any related transactions.  THE PARTIES HEREBY WAIVES ANY RIGHT
TO TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING, AND CONSENTS THAT THE SECURED
PARTIES MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN  EVIDENCE OF
THE CONSENT OF THE PARTIES HERETO WITH RESPECT TO JURISDICTION AND THE WAIVER OF
THE RIGHT TO TRIAL BY JURY.

                                       10
<PAGE>

19.      Severability.
         ------------

         If any  provision  hereof  is  held  invalid  or  unenforceable  in any
jurisdiction,  such  provision  shall  (for  purposes  of  enforcement  in  such
jurisdiction  only) be reduced in scope and  effect to the extent  necessary  to
render same  enforceable,  and the other provisions  hereof shall remain in full
force and effect in such jurisdiction.

20.      Headings.
         --------

         The captions and Section headings in this Agreement are for convenience
of  reference  only,  and shall not limit or  otherwise  affect  the  meaning or
interpretation of any provision hereof.

21.      Assignment.
         ----------

         This Agreement may not be assigned by Debtor without  Secured  Parties'
prior  written  consent,  but shall  otherwise  be binding upon and inure to the
benefit  of  the  parties  hereto  and  their   respective   heirs,   executors,
administrators, personal representatives, successors and assigns.

22.      Counterparts; Fax Signatures.
         ----------------------------

         This  Agreement  may  be  executed  simultaneously  in  any  number  of
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together  shall   constitute  one  and  the  same  instrument  when  instruments
originally  executed  by each party  shall  have been  received  by Debtor.  Any
signature delivered via facsimile transmission shall be deemed to be an original
signature hereto.


         IN WITNESS  WHEREOF,  this  Agreement  has been executed by the parties
hereto as of the date first set forth above.

                          COMMODORE APPLIED TECHNOLOGIES, INC.


                          By:     /s/ Paul E. Hannesson
                          ---------------------------------------------------
                          Name:  Paul E. Hannesson
                          Title: Chairman, Chief Executive Officer and President


                                       11
<PAGE>


                                            INVESTORS:


                                            MATHERS ASSOCIATES


                                            /s/ Norbert J. Zeelander
                                            ------------------------------------
                                            Norbert J Zeelander, General Partner



                                            KLASS PARTNERS, LTD.


                                            /s/ Misha Krakowsky
                                            ------------------------------------
                                            Misha Krakowsky, President


                                            /s/ Jon Paul Hannesson
                                            ------------------------------------
                                            Jon Paul Hannesson


                                            /s/ Steven A. Weiss
                                            ------------------------------------
                                            Stephen A. Weiss


                                       12
<PAGE>


                                   Schedule 1


                                   INVESTORS
                                   ---------
<TABLE>
<CAPTION>


    -------------------------------------------- -------------------------------- -----------------------------------
                                                                                    Number of Shares of CXI Common
                 Name and Address:                 Principal Amount Invested:                   Stock:

    -------------------------------------------- -------------------------------- -----------------------------------
    <S>                                                     <C>                              <C>

    Mathers Associates
    230 Mathers Road                                        $150,000                           300,000
    Ambler, PA 19002
    -------------------------------------------- -------------------------------- -----------------------------------
    Klass Partners, Ltd.
    391 Brooke Avenue                                        250,000                           500,000
    Toronto, Ontario M5M 2L5
    Canada
    -------------------------------------------- -------------------------------- -----------------------------------
    Jon Paul Hannesson
    150 East 58th Street                                     75,000                            150,000
    Suite 3410
    New York, NY 10155
    -------------------------------------------- -------------------------------- -----------------------------------
    Stephen A. Weiss
    200 Park Avenue, 14th Floor                              25,000                             50,000
    New York, NY 10166
    -------------------------------------------- -------------------------------- -----------------------------------
    Total . . . .                                          $500,000                          1,000,000
    -------------------------------------------- -------------------------------- -----------------------------------

</TABLE>




                                       13
<PAGE>


STATE OF NEW YORK    )
                     )  ss.:
COUNTY OF NEW YORK   )


         On this day of November,  2000,  before me, a Notary  Public in and for
the         jurisdiction         aforesaid,          personally         appeared
________________________________,  to me known,  who being by me duly sworn, did
depose  and  say  that  he is the  _____________________  of  COMMODORE  APPLIED
TECHNOLOGIES,  INC., a Delaware corporation,  the corporation named in and which
executed the foregoing Security Agreement; that he is duly authorized to execute
same; and that he subscribed, swore to and acknowledged the same in his capacity
as  such  officer  and as the  authorized  and  binding  act  and  deed  of said
corporation.



                                     --------------------------------
                                              Notary Public


                                       14
<PAGE>



                                    EXHIBIT A
                                    ---------

                              TO SECURITY AGREEMENT
                              ---------------------

             Additional Information, Representations and Warranties
             ------------------------------------------------------

                  [PLEASE CONFIRM FOLLOWING REPS & WARRANTIES]


(1)    The exact name of Debtor is as first set forth in the Security Agreement.

(2)    Debtor has the following subsidiaries:

       [                                  ]

(3)    Debtor owns and uses the following trade names:

       [                                  ]

(4)    Debtor is duly organized, validly existing and in good standing under the
       laws of the State of Delaware.

(5)    The  principal  executive  office of Debtor is  located  at 150 East 58th
       Street,  32nd Floor,  New York, New York 10155, and the books and records
       pertaining  to the  Accounts  and other  Collateral  are  located at such
       address.

(6)    Debtor is not required,  by the nature of its business or the location of
       its  property  or assets,  to be  qualified  to do  business as a foreign
       corporation in any jurisdiction.

(7)    Debtor has no place of  business  other than that  disclosed  in Item (5)
       above.

(8)    Debtor does not own or have  interests  in personal  property  located at
       places other than that disclosed in item (5) above.

(9)    Debtor does not own property consisting of leasehold  improvements and/or
       fixtures only at the location specified in item (5) above.



                                       15
<PAGE>