<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
NUCLEAR METALS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or Item 22(a)(2) of
Schedule 14A.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
5) Total fee paid:
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/ / Fee paid previously by written preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: ________________________________________________
2) Form Schedule or Registration Statement No.: ___________________________
3) Filing Party: __________________________________________________________
4) Date Filed: ____________________________________________________________
<PAGE>
NUCLEAR METALS, INC.
Dear Shareholder:
As discussed in our remarks at NMI's Annual Meeting of Shareholders on March
26, 1997, the Board of Directors and Management believe that, at this time, it
is in our shareholders' long-term best interests to change the Company's name
and to create several new subsidiaries as described in the enclosed proxy
materials.
In 1955, when Massachusetts Institute of Technology spun out Nuclear Metals,
Inc., the name was a good fit with the business. We are today a much more
diversified metallurgical technology company with very little of our future
business expected to be derived from the nuclear industry. The Company will in
the future continue to provide advanced metallurgical solutions to the
aerospace, defense, medical, electronics and premium sporting goods markets on a
global basis. As we grow these businesses, in some cases, we expect, with
strategic partners, changing the name of the Company to STARMET CORPORATION is
expected to enhance market identification for our products and should, over the
long term, improve shareholder value.
Your company has developed several new metallurgical materials and process
inventions, such as those involved in our Beralcast-Registered Trademark-,
Ducrete-Registered Trademark-, and advanced PREP-Registered Trademark- Powders
technologies, which we believe have significant growth potential. In order to
bring these technologies to market as rapidly as possible, we will continue
searching for partners who can provide capital equipment, production
manufacturing skills and established market channels. No single partner fits all
of our growth technologies. In addition, the complexity of the business and the
exposure of each activity to the risk of the others has made it difficult to
finance growth or implement strategic partnerships within our current
organizational structure. The proposed new organizational structure involves the
creation of several new subsidiaries, each focused on specific technologies or
markets. We believe the proposed structure will increase our flexibility to
bring on a major partner and/or raise capital to grow our different products,
markets and technologies. We expect that strategic partnering and fundraising
may occur at both the parent or subsidiary levels, and that our subsidiaries may
eventually even be spun out or otherwise develop an independent strategy. While
the work to successfully implement our business goals remains to be done, we are
confident the proposed reorganization will, over the long term, improve
shareholder value.
The enclosed proxy provides additional information on these two proposals
and requests your approval at a Special Meeting to be held on September 29,
1997. If approved by the shareholders, the new company name and restructuring
are expected to become effective on October 1, 1997.
<TABLE>
<S> <C>
George J. Matthews Robert E. Quinn
Chairman President
</TABLE>
<PAGE>
NUCLEAR METALS, INC.
NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS
SEPTEMBER 29, 1997, 10:00 A.M.
You are hereby notified that a Special Meeting of the Stockholders of
Nuclear Metals, Inc. (the "Company") will be held on September 29, 1997 at 10:00
a.m. at the offices of the Company at 2229 Main Street, Concord, Massachusetts,
to consider and act upon the following matters:
1. To amend the Articles of Organization of the Company to change in the
Company's name to "Starmet Corporation."
2. To approve a plan to reorganize the Company pursuant to a Plan of
Reorganization, dated June 24, 1997 (the "Reorganization"), a copy of
which is attached as Annex A to the accompanying Proxy Statement.
3. To transact such other business as may properly come before the meeting.
Even if you plan to attend the meeting, please be sure to sign, date and
return the enclosed proxy in the enclosed envelope to:
Boston EquiServe
P. O. Box 8200
Boston, MA 02266-5523
Attention: Jennifer Donahue
If the Reorganization is effected and the Company sells or transfers all or
substantially all of its assets, any holder ("Dissenting Shareholder") of the
Company's stock who (i) has not voted his or her shares in favor of the
Reorganization and (ii) files with the Company, before the taking of the vote on
the Reorganization at the Special Meeting, written objection to the
Reorganization stating that such holder intends to demand payment for such
shares ("Dissenting Shares") pursuant to Section 76 of the Massachusetts General
Laws, Chapter 156B (Chapter 156B is hereafter referred to as the "MBCL"), if the
Reorganization is effected, shall not be entitled to remain a shareholder of the
Company, and has or may have the right to demand in writing from the Company
within 20 days after the date of mailing to such shareholder of notice in
writing that the Reorganization has become effective, payment for such
shareholder's shares and an appraisal of the value thereof. The Company and such
shareholder shall in such case have the rights and duties and shall follow the
procedures set forth in Sections 76 and 86 to 98, inclusive, of the MBCL, a copy
of which is attached as Annex B to the accompanying Proxy Statement.
Only stockholders of record on the books of the Company at the close of
business on July 31, 1997 will be entitled to receive notice of and vote at this
meeting.
By order of the Board of Directors,
THOMAS A. WOOTERS, Clerk
August 22, 1997
IMPORTANT
IN ORDER TO SECURE A QUORUM AND TO AVOID THE EXPENSE OF SENDING FOLLOW-UP
LETTERS, PLEASE MAIL YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. YOUR
COOPERATION IS GREATLY APPRECIATED.
<PAGE>
NUCLEAR METALS, INC.
2229 MAIN STREET
CONCORD, MA 01742
PROXY STATEMENT
SOLICITATION AND VOTING OF PROXIES
This proxy statement and the accompanying proxy card are being mailed to
common stockholders commencing on or about August 22, 1997. The accompanying
proxy is solicited by the Board of Directors of Nuclear Metals, Inc.
(hereinafter called the "Company") for use at the Special Meeting of
Stockholders to be held on September 29, 1997, and any adjournment or
adjournments thereof. The cost of solicitation of proxies will be borne by the
Company. Directors, officers and a few employees may assist in the solicitation
of proxies by mail, telephone, telegraph, and personal interview without
additional compensation. The Company may reimburse brokers, banks and others
holding shares of the Company in their names for others for the cost of
forwarding proxy material and obtaining proxies from their principals. The
Company has retained Georgeson & Company Inc. Wall Street Plaza, New York, New
York 10005, to assist in the solicitation of proxies at an estimated cost of
$7,500, plus reasonable out-of-pocket expenses.
When a proxy is returned properly signed, the shares represented thereby
will be voted by the proxies named in accordance with the stockholder's
directions. You are urged to specify your choices on the enclosed proxy card. If
the proxy is signed and returned without specifying choices, the shares will be
voted "FOR" proposals 1 and 2 and in the discretion of the proxies as to any
other matters that may properly come before the meeting. Sending in a proxy will
not affect a stockholder's right to attend the meeting and vote in person. A
proxy may be revoked by notice in writing delivered to the Clerk at any time
prior to its use or by voting in person at the meeting. A proxy may also be
revoked by a later dated proxy. A stockholder's attendance at the meeting will
not by itself revoke a proxy.
RECORD DATE AND VOTING SECURITIES
The Board of Directors (hereinafter called the "Board") has fixed July 31,
1997 as the record date for the meeting. The only outstanding class of voting
securities of the Company is its common stock (the "Common Stock"). Only
stockholders of record on the record date are entitled to notice of and to vote
at the meeting. On the record date, there were 4,784,028 shares of Common Stock,
$.10 par value, of the Company issued and outstanding, of which 3,024,768 shares
are entitled to one vote per share. The remaining 1,759,260outstanding shares of
Common Stock are subject to the Massachusetts Control Share Acquisition Act and,
as a result, have no voting rights and would obtain voting rights only upon
authorization from a majority of stockholders other than the holders of such
shares, officers of the Company and those directors of the Company who are also
employees. See "Principal and Management Stockholders" elsewhere herein.
The Company's present By-laws provide that a quorum shall consist of the
representation in person or by proxy at a meeting of stockholders entitled to
vote 51% of the votes that are entitled to be cast at the meeting. Abstentions
and broker non-votes will be counted for purpose of determining the presence or
absence of a quorum. "Broker non-votes" are shares held by brokers or nominees
which are present in person or represented by proxy, but which are not voted on
a particular matter because instructions have not been received from the
beneficial owner. The effect of abstentions and broker non-votes on proposals to
be brought before the Special Meeting is discussed below.
The approval of a majority of the outstanding shares entitled to vote is
required to approve proposal 1 concerning the change of the Company's name. The
approval of two-thirds of the outstanding shares entitled to vote is required to
approve proposal 2 concerning the Reorganization of the Company (although
shareholder
1
<PAGE>
approval may not be required if the Company effects only part of the
Reorganization, as discussed below in "Reorganization of Company"). The approval
of a majority of the votes properly cast at the Special Meeting is required to
approve any other business which may properly be brought before the Special
Meeting or any adjournment thereof.
Abstentions may be specified on all proposals and will be counted as present
for purposes of the proposal on which the abstention is noted. Because (i) the
proposal to change the name of the Company requires the approval of a majority
of the outstanding shares entitled to vote at the Special Meeting, either in
person or by proxy, and (ii) the proposal to approve of the Reorganization
requires the approval of two-thirds of the outstanding shares entitled to vote
at the Special Meeting, either in person or by proxy, abstentions and broker
non-votes will have the effect of a negative vote.
The Board and management of the Company deem the proposals described herein
to be in the best interest of the Company and its shareholders. The Board
recommends that the stockholders approve all of the proposals described herein.
Management intend to vote their shares of Common Stock in favor of each
proposal. See "Principal and Management Stockholders" as discussed below. For
these purposes, management includes George J. Matthews, Wilson B. Tuffin, Robert
E. Quinn, James M. Spiezio, William T. Nachtrab, Kenneth A. Smith and Frank H.
Brenton.
Representatives of Arthur Andersen LLP are expected to be present at the
meeting, with the opportunity to make a statement if they desire to do so, and
are expected to be available to respond to appropriate questions.
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth certain information as of July 31, 1997, with
respect to the Common Stock of the Company owned or deemed beneficially owned as
determined under the rules of the Securities and Exchange Commission, directly
or indirectly, by each stockholder known to the Company to own beneficially more
than 5% of the Company's Common Stock, by each director, by the executive
officers named in the Summary Compensation Table, elsewhere herein, and by all
directors and executive officers of the Company and its subsidiaries as a group.
In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, a person is deemed to be the beneficial owner, for purposes of this
table, of any shares of Common Stock of the Company if he or she has or shares
voting power or investment power with respect to such security or has the right
to acquire beneficial ownership at any time within 60 days of July 31, 1997. As
used herein "voting power" is the power to vote or direct the voting of shares,
and "investment power" is the power to dispose of or direct the disposition of
shares. Except as indicated in the notes following the table below, each person
named has sole voting and investment power with respect to the shares listed as
being beneficially owned by such person.
2
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<TABLE>
<CAPTION>
NO. COMMON
SHARES AND PERCENT
NATURE OF OF
BENEFICIAL COMMON
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP STOCK (1)
- ---------------------------------------------------------------------------------------------- ------------------ ---------
<S> <C> <C>
Charles Alpert 2,424,680(1)(2) 50.68%
Joseph Alpert
WIAF Investors Co.
466 Arbuckle Avenue
Lawrence, NY 11516
and
Melvin B. Chrein, M.D.
Meryl J. Chrein
Marshall J. Chrein
Michael Chrein
21 Copper Beech Lane
Lawrence, NY 11559
George J. Matthews 411,430(3) 8.60%
Chairman of the Board of Directors,
Director & Consultant
c/o Matthews Associates Limited
100 Corporate Place
Peabody, MA 01960
Wilson B. Tuffin 403,748(4) 8.44%
Vice Chairman and Director
23 Arlington Street
Acton, MA 01720
Dimensional Fund Advisors, Inc. 352,000(5) 7.36%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Robert E. Quinn 48,810(6) 1.02%
President and Director
Kenneth A. Smith, Director 11,332(7) *
Frank H. Brenton, Director 11,332(7) *
James M. Spiezio 11,664(8) *
Vice President, Finance and
Administration
William T. Nachtrab 11,664(8) *
Vice President, Technology
All directors and executive officers as a group (7 persons) 909,980(9) 19.02%
</TABLE>
3
<PAGE>
- ------------------------
* Less than one percent
(1) Does not reflect the effect on voting rights of the Massachusetts Control
Share Acquisition Act. The Company is subject to Chapter 110D of the
Massachusetts General Laws which governs "control share acquisitions," which
are acquisitions of beneficial ownership of shares which would raise the
voting power of the acquiring person above any one of three thresholds:
one-fifth, one-third or one-half of the total voting power. All shares
acquired by the person making the control share acquisition within 90 days
before or after any such threshold is crossed obtain voting rights only upon
the authorization from a majority of the stockholders other than the person
acquiring such shares, officers of the Company and those directors of the
Company who also are employees. Based on certain filings made with the SEC,
the Company believes that certain control share acquisitions have occurred
and that the members of the group which effected such control share
acquisitions, namely Wiaf Investors Co., Charles Alpert, Joseph Alpert,
Melvin B. Chrein, Meryl J. Chrein, Marshall J. Chrein and Michael Chrein
(collectively the "Investor Group") are the holders of 1,759,260 shares (the
"Affected Shares") which were acquired in control share acquisitions (within
the meaning of Chapter 110D) and accordingly will have no voting rights
unless or until such voting rights are authorized as described above.
(2) Derived from Schedules 13DA, dated October 3, 1994, submitted to the
Company. The seven persons named are described as a group in such Schedules
13DA. The persons named reported ownership of the following shares: WIAF
Investors Co. 1,724,856; Melvin B. Chrein 176,800; Meryl J. Chrein 256,200;
Charles Alpert 50,000; Joseph Alpert 50,000; Michael Chrein 18,200; and
Marshall J. Chrein 36,400. Each person reported sole voting and dispositive
power with respect to the shares owned by such person. Also includes 14,044
and 56,180 shares which Melvin B. Chrein and WIAF Investors Co.,
respectively, have the right to acquire upon conversion of outstanding 10%
Convertible Subordinated Debentures and 27,000, 12,000 and 3,000 shares
which Charles Alpert or nominee, Melvin B. Chrein and Marshall J. Chrein,
respectively, have the right to acquire under outstanding Warrants.
(3) Includes 6,666 shares which may be purchased upon the exercise of options
and 13,960 shares which Mr. Matthews' wife has the right to acquire upon
conversion of an outstanding 10% Convertible Subordinated Debenture, as to
which Mr. Matthews disclaims beneficial ownership.
(4) Includes 3,332 shares which may be purchased upon the exercise of options.
(5) The officers of Dimensional Fund Advisors, Inc. also serve as officers of
DFA Investment Dimensions Group, Inc. (the "Fund") and The DFA Investment
Trust Company (the "Trust"), each an open-end management investment company
registered under the Investment Company Act of 1940. In their capacity as
officers of the Fund and the Trust, these persons vote 142,600 shares which
are owned by the Fund and 13,000 shares which are owned by the Trust.
(6) Includes 26,664 shares which may be purchased upon the exercise of options.
(7) Includes 5,332 shares which may be purchased upon the exercise of options.
(8) Includes 9,664 shares which may be purchased upon the exercise of options.
(9) See notes (3), (4), (6), (7) and (8) above.
PROPOSAL NO. 1--CHANGE OF CORPORATE NAME
One of the purposes of the meeting is to solicit the consent of the
stockholders of a majority of the Company's Common Stock to the proposed
amendment of the Company's Articles of Organization to effect a change in the
Company's corporate name to Starmet Corporation.
4
<PAGE>
Under Massachusetts General Laws, Chapter 156B (Chapter 156B is hereafter
referred to as the "MBCL"),
Section 70, an amendment to a corporation's Articles of Organization changing
the corporate name requires a vote of a majority of the Common Stock outstanding
and entitled to vote thereon. Upon the approval of a majority of such
stockholders, the Company will file Articles of Amendment to its Articles of
Organization, in accordance with the provisions of the MBCL, effecting the
Company's name change.
The Company believes that it is advisable and in the best interest of the
Company that the Company's name be changed to Starmet Corporation. The Board has
adopted a resolution deeming such name change advisable and in the best interest
of the Company, and has recommended that the Articles of Organization of the
Company be amended by striking Article I thereof in its entirety and
substituting the following: "The exact name of the corporation is: Starmet
Corporation." The Board now submits the proposed amendment to the Company's
stockholders entitled to vote with respect to such proposed amendment, for their
approval. It is the view of the Company that the name "Nuclear Metals, Inc."
does not adequately reflect the Company's present and planned future businesses.
After careful thought and analysis, the Company believes that the name "Starmet
Corporation" will more readily identify the Company with its products and will
assist the Company in expanding its market base. The Company does not believe
that any material adverse ramifications will result from changing the Company's
name to Starmet Corporation. If the Company's Articles of Organization are so
amended, the Company will be known by its new name, Starmet Corporation.
Subject to stockholder approval of the proposed name change amendment, the
Board has determined that it is advisable to change its present trading symbol
with The Nasdaq Stock Market, "NUCM." The Company has caused the trading symbol
"STMT" to be reserved pending such approval and expects to adopt such symbol
upon the amendment of its Articles of Organization as herein described.
THIS PROPOSAL HAS BEEN UNANIMOUSLY APPROVED BY THE BOARD OF DIRECTORS,
WHICH RECOMMENDS THAT STOCKHOLDERS VOTE FOR ITS ADOPTION.
PROPOSAL NO. 2--REORGANIZATION OF COMPANY
The Company is headquartered in Concord, Massachusetts and currently has
three wholly-owned subsidiaries: Carolina Metals, Inc., a Delaware corporation
with a plant and operations in Barnwell, South Carolina ("CMI"), NMI Holdings,
Inc., a Massachusetts securities corporation ("NMI Holdings"), and NMI Foreign
Sales Corporation, a U.S. Virgin Islands corporation which serves as a sales
agent for the Company and CMI with respect to certain foreign sales ("NMI
Sales").
The Company currently conducts three principal businesses. The Company
develops specialty metal products, including beryllium products, specialty
medical and aerospace powders, and also produces
Beralcast-Registered Trademark-, a patented engineering material useful in
electronic and secondary structural applications for a variety of aerospace,
avionics and commercial applications. The Company also manufactures depleted
uranium penetrators for military applications, including ordinance and armor.
The Company also offers uranium related services, the recycling of various
low-level radioactive metals and has developed Ducrete-TM-, a material which may
be useful in radiation shielding. CMI currently holds most of its uranium
services and recycle assets and performs a portion of this work at its Barnwell
facility, but the Company also directly holds certain of these assets and
performs some of this work at Concord.
The following diagram illustrates the current structure of the Company.
[DIAGRAM OF CURRENT CORPORATE STRUCTURE]
The Company believes that it would be in the best interests of its
shareholders for the Company to facilitate the financing required for its
anticipated growth by separating its different production processes and to have
the flexibility to operate its diverse business lines through one or more
operating subsidiaries. Therefore, the Board
5
<PAGE>
has devised and the Company seeks approval of the Reorganization, which provides
for (i) the change of the Company from a manufacturing entity into a research
and development, technology licensing, prototyping and holding company, (ii) the
formation of five new operating subsidiaries of the Company, and (iii) the
transfer by the Company of certain assets and liabilities to CMI and such
subsidiaries in return for 100% of the duly authorized, issued and outstanding
Common Stock of such new subsidiaries; provided, however, that the Company shall
have the right to create or operate subsidiaries which are not 100% owned by it.
The Reorganization is contingent upon certain regulatory, shareholder, lender,
and other third party approvals. If all required approvals and consents are not
obtained by October 1, 1997 (the "Effective Date"), the Company may delay and
not implement all or a part of the Reorganization. However, the failure to
implement the Reorganization due to lack of required approvals or otherwise does
not mean the Company may not implement certain aspects of the Reorganization
either currently or at some point in the future. To be completed in full in a
single transaction, the Reorganization must receive the approval of two-thirds
of the outstanding shares of Common Stock entitled to vote.
It is currently proposed that the five subsidiaries expected to be created
as part of the Reorganization would engage in the following lines of business:
1) The DU products subsidiary would engage in the manufacture and sale
of depleted uranium penetrators for military applications and the
fabrication of an assortment of specialty metal products;
2) The specialty powders subsidiary would engage in the manufacture and
sale of high purity, spherical metal powders;
3) The Beralcast aerospace subsidiary would engage in the manufacture
and sale of Beralcast products for use by the government and aerospace
industry;
4) The Beralcast commercial subsidiary would engage in the manufacture
and sale of Beralcast products for general commercial use; and
5) The specialty metals subsidiary would engage in the fabrication and
sale of specialty metal products.
CMI (to be renamed to reflect the change of the Company's name) would
continue its current operations, and the Company may contribute additional
Company assets which it holds directly and are used in the uranium services and
recycle operations to CMI as part of the Reorganization. It is expected that NMI
Holdings and NMI Sales also will be renamed to reflect the Company's new name.
It is expected that each subsidiary to be formed will initially have the
same address as the Company or the Company's facility in Barnwell, South
Carolina and will be formed as either a corporation or a limited liability
company. It is anticipated that the Reorganization will not significantly impact
either NMI Holdings or NMI Sales other than the name change.
To effect the Reorganization, the Company would transfer some or all of the
assets related to each business activity, subject to certain related debts,
obligations and liabilities (including contingent liabilities), to the
respective subsidiary in exchange for 100% of such subsidiary's issued and
outstanding stock; provided, however, that the Company shall have the right to
create or operate subsidiaries which are not 100% owned by it. The Company also
would transfer the remaining assets used at CMI's South Carolina facility to CMI
in consideration of the assumption of the debts, obligations and liabilities
associated with such assets. Each subsidiary then would assume all operating
liabilities related to its respective business activity. The Company anticipates
that some or all of the employees of the Company would be re-employed by the
Company's subsidiaries in connection with any implementation of the
Reorganization. The following diagram illustrates the effect of the
Reorganization as currently planned and assuming it is fully implemented.
6
<PAGE>
[DIAGRAM OF PLANNED CORPORATE STRUCTURE]
The Company believes that the Reorganization is critical to its future
success. However, the Company also wishes to maximize its flexibility to adapt
to changing circumstances and to exploit new opportunities. Therefore, if the
shareholders approve the Reorganization, the Company, acting through its Board,
reserves for itself the power to vary the terms of the Reorganization consistent
with the purposes of the Reorganization. The Board may implement all, some or
none of the Reorganization, or may implement additional transactions not
specified therein, including the sale of equity interests of one or more
subsidiaries or other indirectly owned and newly formed subsidiaries to third
parties. The final structure of the Company after the Reorganization may be
substantially different from the structure as currently contemplated. If the
Reorganization is approved by the shareholders, the Board will have five years
from the Effective Date to implement some, all, or none, or vary the terms of,
the Reorganization, or may implement additional transactions, upon terms and
conditions agreed to by the Board.
Furthermore, the Reorganization may be terminated and the transactions
contemplated hereby may be abandoned by the Company at any time before or after
approval thereof by the shareholders of the Company, if the Board determines
that (i) such termination is in the best interest of the shareholders, or (ii)
the Board determines that the number of shareholders who have indicated that
they will exercise dissenters' rights under Massachusetts law would be
sufficient, if such shares were purchased as a result of an appraisal process,
to cause the Company a material financial hardship.
The Reorganization is not expected to have a material effect on the
consolidated financial statements of the Company. Notwithstanding the new
structure, the Company expects to continue to report its financial operations
and condition on a consolidated basis. Subject to bank or other agreements which
may restrict the payment of dividends, the net income of the Company's
subsidiaries, reflected as income on the Company's consolidated financial
statements, will be available for the payment of dividends to shareholders of
the Company in the discretion of the Company's Board of Directors and to the
extent the Company has received dividends or other distributions from the
subsidiaries. Subject to the foregoing, so long as the Company's subsidiaries
are wholly-owned, the Reorganization is not expected to have a material adverse
effect on the Company's ability to pay dividends to stockholders of the Company.
Massachusetts law, as currently in effect, requires shareholder approval for
the sale, lease or exchange of all or substantially all of a corporation's
assets. Because the Reorganization contemplates the exchange of substantially
all of the assets of the Company, it has been submitted to the shareholders for
a vote; however, the submission of the Reorganization for shareholder approval
will not affect the Company's rights under applicable Massachusetts law to
dispose of less than substantially all of its assets (including by transfer to
one or more subsidiaries) without shareholder approval. Thus, even if the
Reorganization is not approved by the shareholders, the Company may in the
future transfer portions of its assets to subsidiaries or other affiliated
entities or to third parties on terms and for consideration approved by the
Board, subject to applicable Massachusetts law, without seeking shareholder
approval. Approval of the Reorganization by shareholders will not preclude the
shareholders' right to challenge any future dispositions by the Company of the
stock or assets of its subsidiaries or affiliated entities if such dispositions
are not made as part of the Reorganization or otherwise in compliance with
applicable Massachusetts law.
Following the Reorganization, the Company expects to retain certain assets
and will continue to carry on certain administrative functions, including
executive management functions, Company marketing, regulatory oversight and
compliance (including securities reporting and tax filings), treasury functions
and the preparation of annual financial statements, billing activities and
certain payroll, employee benefit and pension activities, as well as other
routine operational and administrative functions generally performed by a
diversified holding company. The Company also may enter into employee benefit
sharing and tax sharing agreements with each
7
<PAGE>
subsidiary, as necessary, to properly allocate such items to each subsidiary.
The Company also may continue to hold title to certain real estate and lease or
license some or all of such real estate to one or more subsidiaries, or the
Company may contribute all or part of such real estate directly to a subsidiary
as part of the Reorganization, at the discretion of the Board. The Company also
may elect to hold certain patents and other intellectual property in its own
name, which may then be licensed to one or more subsidiaries for use in the
business and operations of such subsidiary.
At or after the Effective Date, additional financing transactions, including
the issuance of debt and/or equity instruments may occur at the level of the
Company or of the subsidiaries. Debt or equity of a subsidiary, rather than the
Company, may be issued, among other reasons, to reduce the total cost of capital
to the Company and the subsidiaries, minimize risk to the Company and its
shareholders, or to allow for the most economic and efficient development of a
subsidiary's business. Several of the Company's businesses currently are in a
developmental stage, or otherwise have significant near-term financing needs. To
satisfy these financing needs, it is anticipated that significant equity
interests in the Company or in one or more subsidiaries may be issued, in the
immediate future. The Company is currently exploring financing alternatives with
third parties in light of the Reorganization. It is possible that the Company or
one or more subsidiaries may issue debt, convertible debt or equity prior to,
simultaneously with or soon after the Reorganization.
The foregoing description of the Reorganization sets forth the general terms
of the planned Reorganization; however, the Reorganization provides the Board
with flexibility in determining the specific transactions which will effect the
Reorganization.
REASONS FOR THE REORGANIZATION
If the Reorganization is fully implemented, the business operations of the
Company will be conducted primarily by operating subsidiaries each of which will
operate in a specific business or market segment. The Company believes that this
new structure will permit greater flexibility and efficiency in the management
and financing of existing and future business operations and business
opportunities. The new structure is expected to facilitate the Company's entry
into new businesses, and the financing or formation of joint ventures or other
business ventures with third parties. In addition, the Reorganization is
expected to further the objective of operating the Company's businesses, and any
additional businesses acquired or developed in the future, on a more
self-sufficient, stand-alone economic basis, decreasing the risk that
liabilities attributable to any one of the Company's businesses could be imposed
upon one or more of the Company's unrelated businesses. The Reorganization is
intended to be interpreted liberally so as to facilitate the achievement of
those purposes.
EFFECT ON SHAREHOLDERS' RIGHTS
The Reorganization will not alter a shareholder's percentage ownership
interest in the Company, and the Common Stock will not be affected by the
proposed Reorganization. The shareholders of the Company will continue as such
with the same voting, dividend, and liquidation rights and ownership interests
as before. However any dividends or other payments from the subsidiaries would
be paid to the Company and not the Company's shareholders. As a result of the
Reorganization, the shareholders of the Company will not directly elect the
governing bodies of the subsidiaries. The members of the governing bodies of the
subsidiaries will initially be elected at the discretion of the Board.
Notwithstanding that fact, however, the overall management of the affairs and
operations of controlled subsidiaries will be under the effective control of the
Board and are not expected to change significantly in the near term as a result
of the Reorganization.
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OTHER EFFECTS ON THE COMPANY AND ITS SHAREHOLDERS
Except for the changes described herein, consummation of the Reorganization
is not expected to result in any immediate material change in the overall
operations of the Company. Similarly, the Reorganization will not result in any
changes in the current membership of the Board, and the officers of the Company
are expected to remain the same after consummation of the proposed
Reorganization. Persons who currently are serving as officers of the Company may
become officers and/or directors of the Company's subsidiaries.
While the Reorganization is not expected to create any conflict of interests
between the Company and its shareholders, in the event that the subsidiaries,
through public or private sale, should be owned in part by persons other than
the Company or its shareholders, such conflicts could arise.
POSSIBLE DISADVANTAGES
Some possible disadvantages of the Reorganization include the requirement
for observing corporate or organizational formalities between and among the
subsidiaries, together with possible increases in accounting and administrative
costs, and possible duplication of some administrative and operational
functions. The Board believes that these disadvantages are not likely to be
significant or material. Furthermore, in contemplation of the transfer of assets
to any of the subsidiaries, the Company may be required to obtain regulatory
approval from local, state and federal agencies (see "Required Approvals,"
discussed below). The cost and length of time required for this process is
uncertain. As discussed above, the shareholders of the Company will not elect
the governing bodies of any of the subsidiaries. However, the shareholders will
be electing the directors of the Company, who will have overall responsibility
for the management of the Company and its subsidiaries. The Board believes that
the advantages of the proposal as described above outweigh any possible
disadvantages.
REQUIRED APPROVALS
The business activities of the Company are regulated by various local, state
and federal agencies, and the Reorganization, as currently proposed, will
require, at a minimum, the approval of the following agencies: (i) the United
States Nuclear Regulatory Commission, (ii) the Town of Concord, (iii) the
Massachusetts Department of Environmental Protection, (iv) the Federal Aviation
Commission, (v) the Massachusetts Department of Public Health, and (vi) the
United States Department of the Army. The failure of the Company to obtain such
approvals on a timely basis could have a material impact on the timing of, or
the completion of, all or a portion of the Reorganization.
The Reorganization will also require the consent of certain Company
contractors, customers, creditors and suppliers (referred to collectively as a
"Third Party" or "Third Parties"). In particular, the Reorganization requires
the consent of the Company's principal lender, State Street Bank and Trust
Company ("State Street"), both in its capacity as lender under the Company's
line of credit, and also as bond trustee for the outstanding industrial revenue
bonds collateralized by the Barnwell facility, as well as Palmetto Federal
Savings Bank of South Carolina as principal lender to CMI. To the extent that
certain Third Party consents to the Reorganization are not be received by the
Effective Date, the Board reserves the right to alter the structure, terms or
timing of the Reorganization.
THIS PROPOSAL HAS BEEN UNANIMOUSLY APPROVED BY THE BOARD OF DIRECTORS,
WHICH RECOMMENDS THAT STOCKHOLDERS VOTE FOR ITS ADOPTION.
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DISSENTERS' RIGHTS
THE FOLLOWING IS A SUMMARY OF THE DISSENTERS' RIGHTS PROVIDED TO THE
COMPANY'S SHAREHOLDERS UNDER CHAPTER 156B OF THE MASSACHUSETTS GENERAL LAWS (THE
"MBCL"). A COPY OF THE STATUTORY PROVISIONS HAS BEEN ATTACHED AS ANNEX B.
APPRAISAL RIGHTS OF DISSENTING SHAREHOLDERS. Holders of Company Common
Stock who file a written objection to and do not vote in favor of the
Reorganization may, under certain circumstances, generally described below, and
by following procedures prescribed by the MBCL, exercise dissenters' rights and
receive in cash the appraised value of their shares of Company Common Stock. The
failure of a Dissenting Shareholder to follow the appropriate procedures,
including not voting in favor of the Reorganization, may result in the
termination or waiver of such rights. A failure to return a proxy, or a failure
to vote (or abstain from voting), or a vote in person or by proxy against the
Reorganization, will not waive dissenters' rights if all appropriate procedures
are followed.
While the Dissenting Shareholder may perfect his or her appraisal rights in
accordance with the procedures outlined below, the Massachusetts Supreme
Judicial Court has held that a Dissenting Shareholder may not obtain payment for
shares until (i) the Company has approved of the transaction and (ii) the
Company has in fact consummated a sale of its assets. WALSH V. WOLLASTON GOLF
CLUB, 353 MASS. 247 (1967). Appraisal rights in connection with the
Reorganization will be triggered only upon a sale of "all or substantially all"
of the Company's assets. Neither Section 76 of the MBCL nor the Massachusetts
courts have not provided a bright line quantitative definition of "substantially
all of the assets." Instead, the courts have determined the issue on a
case-by-case basis, looking at the amount of assets sold, how the sale of assets
will affect the company's income and whether the sale will change the nature of
the business.
Subject to the foregoing, Section 76 and Sections 86 through 98, inclusive,
of the MBCL (a copy of which is attached as Annex B to this Proxy Statement)
entitle any holder of record of shares of Common Stock who files written
objection to the Reorganization prior to the taking of the vote on the
Reorganization at the Special Meeting and who does not consent to or vote in
favor of the Reorganization, to demand in writing that the Company pay to such
shareholder in cash the "fair value" (as such term is used in the MBCL) of such
shares determined by appraisal (exclusive of any value arising from the
accomplishment or expectation of the Reorganization). In the event that the
Company effects a sale of all or substantially all of its assets, holders of
Dissenting Shares who perfect appraisal rights in accordance with the MBCL will
be entitled to receive the fair value of their shares, as determined in
accordance with the MBCL.
Any shareholder of record contemplating making a demand for appraisal of his
or her shares is urged to review carefully the provisions of Section 76 and
Sections 86 through 98 of the MBCL, particularly the procedural steps required
to perfect dissenters' rights thereunder. Dissenters' rights will be lost if the
procedural requirements of MBCL Section 76 and Sections 86 through 98 are not
fully satisfied.
Under Massachusetts statutory law, procedures relating to dissenters' rights
are stated to be the exclusive remedy available to a shareholder objecting to
the Reorganization, except upon grounds that the Reorganization will be or is
illegal or fraudulent as to such shareholder. However, in COGGINS V. NEW ENGLAND
PATRIOTS FOOTBALL CLUB, INC., 397 Mass. 525 (1986), the Massachusetts Supreme
Judicial Court held that dissenting shareholders are not limited to the
statutory remedy of judicial appraisal in certain circumstances.
Set forth below is a summary of the procedures relating to the exercise of
dissenters' rights. The following summary does not purport to be a complete
statement of the provisions of MBCL Section 76 and Sections 86 through 98 and is
qualified in its entirety by reference to the full text thereof attached hereto
as Annex B.
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FILING WRITTEN DEMAND. Prior to the taking of the vote at the Special
Meeting, a shareholder of record who intends to exercise dissenters' rights must
deliver to the Company a written objection to the proposed Reorganization,
stating that such shareholder intends to demand payment for such shareholder's
shares of Company Common Stock if the Reorganization is consummated. Such
written objection should be sent to the Company at 2229 Main Street, Concord,
Massachusetts 01742, Attention: Vice President of Finance. The failure to
consent to the Reorganization or the return of a proxy by a shareholder with
instructions to vote the shares of Company Common Stock covered thereby against
the Reorganization (or abstaining from voting) is not sufficient to satisfy the
requirement of delivering written objection to the Company.
NO VOTE IN FAVOR OF REORGANIZATION. Shares of Company Common Stock for
which appraisal is sought must not be voted in favor of the Reorganization. The
submission of a blank proxy which has not been properly revoked will serve to
waive dissenters' rights, but a failure to return a proxy or a failure to vote
(or abstaining from voting), or a vote in person or by proxy against the
Reorganization, will not waive such dissenters' rights.
NOTICE OF REORGANIZATION. Within 10 days after the Reorganization becomes
effective, the Company, as required by Section 88 of the MBCL, will notify each
shareholder who has purported to comply with the provisions of MBCL Section 86,
and whose shares were not voted in favor of the Reorganization, that the
Reorganization has become effective. The giving of such notice shall not be
deemed to create any rights in such shareholder receiving such notice to demand
payment for such shares. The notice shall be sent by registered or certified
mail, addressed to the shareholder at such shareholder's last known address as
it appears in the records of the Company. (Note: For the purposes of notice, the
Reorganization will become effective upon a sale, exchange or transfer of all or
substantially all of the Company's assets and not necessarily upon the
shareholders' vote for the Reorganization.)
WRITTEN DEMAND. Within 20 days after the mailing of notice by the Company,
any Dissenting Shareholder must demand in writing from the Company payment of
the fair value of such shareholder's shares of Company Common Stock. If the
Company and such shareholder shall have agreed as to the fair value of such
shares, the Company shall pay to such shareholder the fair value of such shares
within 30 days after the expiration of the 20-day period during which such
demand may be made.
SETTLEMENT OF APPRAISAL. Any shareholder shall, with the Company's consent,
have the right to withdraw a demand for appraisal. Within four months after the
expiration of the 30-day period discussed in the immediately preceding
paragraph, if the Company and any shareholder seeking appraisal have not agreed
upon the fair value of such shareholder's shares of Common Stock, the Company or
any such shareholder who has complied with MBCL Section 86 may, by filing a bill
in equity with the Superior Court, Suffolk County, Massachusetts (the
"Massachusetts Court"), demand a determination of the fair value of the shares
of Common Stock of all shareholders with whom agreements as to the value of
their shares have not been reached. If no such bill is filed within such
four-month period, such shareholder will forfeit dissenters' rights. Upon the
filing of any such bill, notice of the time and place fixed by the Massachusetts
Court for a hearing will be given by the Company by registered or certified mail
to all who have demanded payment for their shares and with whom agreements as to
the value of their shares have not been reached. After the hearing on such bill,
the Massachusetts Court will determine the shareholders who have complied with
the provisions of MBCL Section 86 and who have become entitled to dissenters'
rights, and the court will appraise the shares of Common Stock determining the
fair value thereof as of the date immediately preceding the Special Meeting,
exclusive of any element of value arising from the accomplishment or
expectations of the Reorganization.
PAYMENT AND COSTS. When the fair value is so determined, the Massachusetts
Court will direct the payment by the Company of such value, with interest
thereon as the Massachusetts Court determines, to the shareholders entitled to
receive the same, upon surrender to the Company by such shareholders of the
certificates representing their shares of Common Stock. Costs of any appraisal
proceeding (other than attorneys' and experts' fees,
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which are the responsibility of the party retaining such attorneys or experts)
and expenses of any master appointed by the Massachusetts Court may be taxed
upon the parties thereto by the Massachusetts Court as the Massachusetts Court
deems equitable in the circumstances. All payments to Dissenting Shareholders
and costs of the notice described above will be borne by the Company.
FEDERAL AND STATE INCOME TAX MATTERS
GENERAL DISCUSSION
The following discussion is based on current law and on certain facts and
circumstances relating to the Company as of the date hereof. Assurance cannot be
given that future legislative enactments, administrative pronouncements, or
court decisions will not modify or rescind, possibly on a retroactive basis, the
legal basis for statements or conclusions contained herein. Moreover, assurance
cannot be given that facts or circumstances will not exist that would, if known
to the Company or its advisors, cause the Company to materially alter the
statements or conclusions contained herein. The Company does not anticipate
seeking or receiving a ruling from the Internal Revenue Service or any other
taxing authority as to the tax effects of the Reorganization.
The discussion addresses, in summary form, certain principal aspects of the
expected United States federal income taxation of the Reorganization to the
Company and the Subsidiaries, based on current expectations as to the manner in
which the Reorganization will be accomplished. In addition, the discussion
summarizes certain anticipated significant federal and state income tax
consequences of the Reorganization for the Company and the subsidiaries. Except
as specifically set forth herein, the discussion does not address the taxation
of any operations or transactions other than the Reorganization. The discussion
does not purport to deal with all federal tax considerations relating to or
resulting from the Reorganization, and, except for the limited discussion below
of certain potential state tax consequences of the Reorganization, the
discussion does not address any state, local, or foreign tax issues relating to
the Reorganization. In addition, the discussion does not address any taxes other
than taxes on net income.
As a result of the Reorganization, alone or in combination with other
factors, the tax liabilities of the Company and its subsidiaries may differ
materially and, perhaps, adversely, from the tax liabilities which would be
incurred by the Company and its subsidiaries in the absence of the
Reorganization. The Company can give no assurances relating to either the extent
of or the manner of determining its federal, state, local or foreign tax
liabilities following the Reorganization. Such liabilities will result from a
combination of facts and legal developments that cannot now be determined, and
the Company reserves sole discretion to take any actions which may affect such
liabilities, as well as sole discretion to report all operations and
transactions in the manner which the Company determines to be appropriate.
BECAUSE THE REORGANIZATION WILL NOT ALTER THE NATURE OF THE INTERESTS HELD
BY STOCKHOLDERS IN THE COMPANY, EXCEPT FOR THE CHANGE OF THE NAME OF THE
COMPANY, THE REORGANIZATION GENERALLY IS NOT EXPECTED TO HAVE SIGNIFICANT DIRECT
U.S. FEDERAL TAX IMPLICATIONS FOR STOCKHOLDERS OF THE COMPANY. HOWEVER, THE
DISCUSSION DOES NOT PURPORT TO DEAL WITH THE TAX CONSIDERATIONS APPLICABLE TO
PARTICULAR STOCKHOLDERS OR HOLDERS OF OTHER INTERESTS IN THE COMPANY.
STOCKHOLDERS AND HOLDERS OF OTHER INTERESTS IN THE COMPANY ARE ENCOURAGED TO
CONSULT, AND MUST RELY ON, THEIR OWN TAX ADVISORS WITH RESPECT TO THE FEDERAL,
STATE, LOCAL, AND FOREIGN TAX CONSEQUENCES OF THE REORGANIZATION.
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FEDERAL INCOME TAX TREATMENT
THE REORGANIZATION. If and to the extent that subsidiaries are formed which
are corporations, transfers of assets to and assumptions of liabilities by such
corporate subsidiaries generally are expected to qualify as a series of tax-free
contributions of capital to controlled corporations pursuant to section 351 of
the Internal Revenue Code of 1986, as amended (the "Code"). If and to the extent
that subsidiaries are formed which are limited liability companies ("LLC's"),
and if the LLC is a wholly owned LLC, then the transfers of assets to and
assumptions of liabilities by such LLC subsidiaries are generally expected to be
disregarded for federal tax purposes, and such LLC subsidiaries are expected to
be treated as divisions of the Company; if the LLC is jointly owned with any
other individual or entity, then the transfers of assets and the assumptions of
liabilities by such LLC subsidiares are generally expected to be treated as
tax-free contributions to partnerships for federal tax purposes. Specific
expected federal tax consequences of the Reorganization are as follows:
1. The Company generally will recognize no gain or loss on the transfer
of the assets and liabilities of each line of business to each newly formed
corporate subsidiary;
2. The Company generally will obtain basis in the stock of each newly
formed corporate subsidiary equal to its basis in the assets contributed to
that subsidiary net of liabilities assumed by that subsidiary;
3. The Company generally will recognize no gain or loss on the transfer
of assets and liabilities to its existing corporate subsidiaries;
4. The Company generally will obtain additional basis in the stock of
each existing corporate subsidiary equal to its basis in the assets
contributed to that subsidiary net of liabilities assumed by that
subsidiary;
5. Each corporate subsidiary generally will receive assets from the
Company with a carryover basis;
6. Each corporate subsidiary generally will receive assets from the
Company with a carryover holding period;
7. The general expectations set forth in 1., 2., and 4 through 6. above
with respect to transfers to newly formed corporate subsidiaries may not
apply if a less than 80% owned newly formed corporate subsidiary assumes
certain liabilities of the Company (or if the property transferred is
subject to liabilities) in excess of the Company's basis in the assets
transferred to such corporate subsidiary. In such event, the Company may
realize gain equal to the difference between such liabilities and the basis
of the assets transferred, and such gain would be treated as gain from the
sale of assets and allocated among the assets transferred. The Company's
basis in its stock in such corporate subsidiary would be decreased by the
amount of liabilities assumed (or liabilities to which the transferred
property is subject) and increased by the amount of gain recognized, and the
corporate subsidiary would take such assets with a carryover basis, adjusted
to reflect any gain recognized, and a carryover holding period;
8. The Company generally is expected to be treated, for federal tax
purposes generally, as continuing to own all assets transferred to each
wholly owned LLC subsidiary, with the same basis and holding period and
without recognition of gain or loss, and generally is expected to be
treated, for federal tax purposes, as if all obligations assumed by each LLC
subsidiary are continuing liabilities of the Company;
9 The Company generally expects to be treated, for federal tax
purposes, as contributing assets to a partnership in exchange for a
partnership interest when it transfers assets to a less than wholly owned
LLC subsidiary. Generally, the Company will not recognize gain or loss on
such transfers, except to the extent that certain liabilities assumed by the
LLC subsidiary or to which the transferred property is subject exceed the
Company's basis in the assets transferred. Any such gain would be treated as
gain from the disposition of
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a capital asset. The Company's basis in its LLC interest generally will
equal its basis in the assets transferred, adjusted to reflect any
liabilities assumed or liabilities to which the contributed property is
susbject plus any gain recognized, and the LLC will take assets with a
carryover basis, and a carryover holding period. LLCs also may elect to be
taxed as corporations, in which case such an LLC would be treated as a
corporate subsidiary, but any LLCs formed in the Reorganization are expected
to be taxed as partnerships for federal income tax purposes;
10. Immediately following the Reorganization, the Company and its
greater than 80% corporate subsidiaries expect to continue to be members of
a federal consolidated group, as that term is defined by Section 1504 of the
Code and the regulations thereunder, and expect to file a single
consolidated federal income tax return;
11. Following the Reorganization, the income and losses of any less than
wholly owned LLC subsidiary will be allocated among its members, including
the Company, based on the terms of the LLC operating agreement and the Code
and regulations thereunder; and
12. The renaming of the Company and its existing subsidiaries is
expected to have no impact on the tax liabilities or attributes of any
entity in that federal consolidated group.
ADDITIONAL FEDERAL TAX CONSEQUENCES. In the event equity interests in
excess of 20% of the stock of any corporate subsidiary of the Company are sold
or issued to persons other than the Company or a subsidiary of the Company, such
subsidiary would cease to be a member of the consolidated group
("Deconsolidate"). A corporate subsidiary which Deconsolidates is referred to
herein as a "Deconsolidated Subsidiary". In certain circumstances, U.S. federal
tax liabilities may be triggered by a Deconsolidation. Generally, an "excess
loss account" is maintained to reflect losses of a company applied against
income of other members of a consolidated group over and above amounts invested
in the company by other members of the consolidated group. When a company which
has an excess loss account is Deconsolidated, the consolidated group may be
required to recognize income based on the excess loss account. Thus, if a
subsidiary of the Company produced losses in excess of investment in such
subsidiary by the Company and other subsidiaries, and if the subsidiary were
subsequently Deconsolidated, income may be triggered to the remaining members of
the consolidated group. Following a Deconsolidation, losses of a Deconsolidated
Subsidiary could not be used to offset gains or income of the consolidated group
for tax purposes; losses, including net operating loss carryforwards, of the
consolidated group could not offset gains or income of the Deconsolidated
Subsidiary; and income and gain of the Deconsolidated Subsidiary would be
separately taxed to the Deconsolidated Subsidiary. For U.S. federal income tax
purposes, the Company had carryforward net operating losses of approximately
$7.8 million as of the close of its last fiscal year, which carryforward net
operating losses expire from 2009 to 2011. Dividends distributed by a
Deconsolidated Subsidiary or a less than 80% owned newly formed Corporate
Subsidiary to the Company or to another subsidiary generally would be expected
to be taxable to the recipient except to the extent offset by a dividends
received deduction or by other credits, deductions, or losses of the recipient.
The transfer of equity interests in a wholly owned LLC subsidiary generally
would cause the LLC to become taxable as a partnership for U.S. federal income
tax purposes (absent on election to be taxed as a corporation), with income and
losses of the LLC being allocated among its members based on the terms of the
LLC operating agreement and the Code and regulations thereunder.
POTENTIAL STATE TAX CONSEQUENCES
In addition to the principal expected federal tax consequences of the
Reorganization described above, there may be state income tax consequences of
the Reorganization which will cause the state tax liabilities of the Company and
its subsidiaries to differ materially and adversely from the state tax
liabilities which would have been due if the Company and its current
subsidiaries were to have similar operations under the current
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corporate structure. The Company and its subsidiaries are currently taxable in
multiple states. In particular, the Company is based at present in Massachusetts
and a principal subsidiary is based at present in South Carolina. Following the
Reorganization, the Company and one or more of its subsidiaries expect to file
combined or consolidated returns in multiple jurisdictions, including but not
necessarily limited to the states in which the Company and its subsidiaries now
file returns. Different states tax income of corporations which are included in
a consolidated group for federal income tax purposes in different manners and
allocate and apportion income in different manners. In addition, different
states' taxation of LLCs can vary from the taxation of LLCs at the federal
level. Because of these and other differences in the tax laws of different
states, the Company and its subsidiaries following the Reorganization are likely
to be taxed for state law purposes in a materially different manner than the
Company and its subsidiaries are currently taxed.
For example, the Company has significant net operating losses and, because
of differences in the manner in which losses are determined and applied under
the Code and Massachusetts law, the Company's carryforward net operating losses
for Massachusetts corporate excise tax purposes currently exceed the Company's
carryforward net operating losses for federal purposes. As of the close of its
last fiscal year, the Company has approximately $14 million in net operating
loss carryforwards for Massachusetts tax purposes, and portions of such net
operating loss carryforwards expire annually between 1998 and 2001. Because
Massachusetts, by regulation, provides that carryforward net operating losses of
one company may not be used to offset income of other members of a combined
group filing a single return, income of corporate subsidiaries of the Company
which would, if earned directly by the Company, be offset by carryforward net
operating losses of the Company may be subject to current Massachusetts
taxation. The Company may mitigate the loss of Massachusetts net operating loss
carryforwards by organizing some or all of the subsidiaries as LCCs, income of
which may continue to be taxed to the Company and offset against the Company's
net operating losses. Similarly, the Company currently is classified as a
defense contractor under Massachusetts law, which permits the Company to use a
favorable apportionment of income between Massachusetts and other states.
Following the Reorganization, it is expected that most of the Company's
subsidiaries and perhaps the Company itself may not be classified as defense
contractors and so may not obtain the benefits of such a classification.
However, to the extent the Company and any subsidiaries qualify as
"manufacturing corporations" under Massachusetts law, similar benefits may be
phased in over the next five years, mitigating the loss of such benefits.
Similar issues may arise in other states in which the Company or any of its
subsidiaries does business. The examples set forth in this paragraph are
included solely for illustrative purposes. The Company has made no determination
that these examples illustrate the only or the most significant Massachusetts or
state tax implications of the transactions. In addition, the effect of the
examples set forth herein may be mitigated by other factors, including the
Company's ability to deduct state taxes paid in determining federal income tax
liabilities, and are subject to change based on legislative, administrative, or
judicial action.
STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Any stockholder desiring to present a proposal for consideration at the
Company's 1998 annual meeting of stockholders, scheduled to be held on or about
March 18, 1998, and included in the Company's proxy statement, must submit the
proposal to the Company so that it is received at the executive offices of the
Company not later than October 31, 1997. Any stockholder desiring to submit a
proposal should consult applicable regulations of the Securities and Exchange
Commission.
OTHER MATTERS
As of the date of this proxy statement, management of the Company knows of
no matter not specifically referred to above as to which any action is expected
to be taken at the meeting of stockholders. It is intended, however, that the
persons named as proxies will vote the proxies, insofar as the same are not
instructed to the
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contrary, in regard to such other matters and the transaction of such other
business as may properly be brought before the meeting, as seems to them to be
in the best interests of the Company and its stockholders.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Securities and
Exchange Commission are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1996.
(b) The Company's Quarterly Report on Form 10-Q for the period ended
March 31, 1997.
(c) The Company's Quarterly Report on Form 10-Q for the period ended
June 30, 1997.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934 are incorporated
herein by reference and constitute a part hereof from their respective dates of
filing. The Company will provide without charge to each person to whom this
Proxy Statement is delivered, upon request, a copy of any document incorporated
by reference herein. Requests for such copies should be directed to the Vice
President of Finance.
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company
furnishes its stockholders with annual reports containing financial statements
audited by its independent public accountants, and quarterly reports containing
unaudited financial information for the first three quarters of each fiscal
year. Such reports, proxy statements and other information may be inspected and
copied at the public reference facilities maintained by the Securities and
Exchange Commission (the "Commission") at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the regional offices of the
Commission located at 7 World Trade Center, 13th Floor, New York, New York 10048
and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may also be obtained by mail from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. In addition, certain filings made
with the Commission through its Electronic Data Gathering, Analysis and
Retrieval ("EDGAR") system, including this Proxy Statement, are publicly
available through the Commission's site on the Internet's World Wide Web,
located at http://www.sec.gov.
FORWARD LOOKING STATEMENTS
Certain statements in this Proxy Statement relate to future events and
expectations, such as the anticipated affects and benefits of the proposed
reorganization of the Company and as such constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. For this purpose, any statements contained herein that are not
statements of historical fact may be deemed to be forward-looking statements.
Without limiting the generality of the foregoing, the words "believes,"
"anticipates," "plans," "expects," and similar expressions are intended to
identify forward-looking statements. Such forward-looking statements are based
on a number of assumptions and involve a number of risks and uncertainties, and,
accordingly, actual results could differ materially from those projected in the
forward-looking statements. Factors that may cause such differences include, but
are not limited to, the factors described in Exhibit 99 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1997.
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ANNEX A
PLAN OF REORGANIZATION
This Plan of Reorganization ("Plan") is dated as of June 24, 1997 and
provides the framework for the restructuring of Nuclear Metals, Inc., a
Massachusetts corporation (the "Company"), into a parent holding company with
eight wholly-owned direct or indirect subsidiaries, each operating separate and
distinct lines of business.
INTRODUCTION
The Company is headquartered in Concord, Massachusetts and currently has
three wholly-owned subsidiaries, Carolina Metals, Inc., a Delaware corporation
with a plant and operations in Barnwell, South Carolina ("CMI"), NMI Holdings,
Inc., a Massachusetts securities corporation ("NMI Holdings"), and NMI Foreign
Sales Corporation, a U.S. Virgin Islands corporation which serves as a sales
agent for the Company and CMI with respect to certain foreign sales ("NMI
Sales"). EXHIBIT A to this Plan gives a schematic representation of the current
structure of the Company and its subsidiaries.
The Company currently conducts three principal lines of business. The
Company manufactures depleted uranium penetrators for military use, as well as
the associated fabrication of a large assortment of specialty metal products
using foundry, extrusion and machining capabilities, which are sold for military
and regulated industrial use. The Company offers uranium related services, the
recycling of low-level contaminated steel, and the production of depleted
uranium metal and Ducrete()TM, a material used for radiation shielding. CMI
currently holds most of its Uranium Services and Recycle assets and performs
most of this work at its Barnwell facility, but the Company also directly holds
certain of these assets and performs some of this work at Concord. The Company
also develops and manufactures specialty metal products, including
beryllium-based products, specialty medical and aerospace powders, and
Beralcast-Registered Trademark-, a patented engineering alloy composed of
beryllium and aluminum which is used for a variety of electronic and structural
applications with military and commercial use.
The Company believes that it would be in the best interests of its
shareholders for the Company to facilitate the financing required for its
anticipated growth by separating its different production processes and to have
the flexibility to operate its diverse business lines through one or more
operating subsidiaries. Therefore, the Board of Directors of the Company
("Board") has devised and the Company seeks approval of this Plan, which
provides for (i) the change of the Company from a manufacturing entity into a
research and development, technology licensing, prototyping and holding company,
(ii) the formation of five new operating subsidiaries of the Company, and (iii)
the transfer by the Company of certain assets and liabilities to CMI and such
subsidiaries in return for 100% of the duly authorized, issued and outstanding
Common Stock of such subsidiary. This restructuring is contingent upon certain
regulatory, shareholder, lender, and third party approvals. If all required
approvals and consents are not obtained by October 1, 1997 (the "Effective
Date"), the Company may not implement all or a part of the restructuring.
However, the failure to implement the restructuring due to lack of required
approvals or otherwise does not mean the Company may not implement certain
aspects of the restructuring at some point in the future. To be completed in
full the restructuring must receive requisite stockholder approval.
As part of the restructuring, the Company will seek shareholder approval to
amend its Articles of Organization to change its name from "Nuclear Metals,
Inc." to "Starmet Corporation". The Company believes that Nuclear Metals, Inc.
does not accurately reflect the Company's present and planned future businesses.
The proposed name change must be approved by a majority of shareholders of each
class of stock entitled to vote thereon.
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If the reorganization and name change is approved by the shareholders, the
Company will also seek to change its present NASDAQ trading symbol from "NUCM"
to "STMT".
ARTICLE I
THE RESTRUCTURING
SECTION 1.1 FORM OF RESTRUCTURING. The Restructuring will entail the
transfer of some or substantially all of the Company's assets to five newly
formed Massachusetts corporations (each a "Subsidiary," and with CMI and other
existing subsidiaries, collectively the "Subsidiaries"), each of which would
operate a separate line of business. The assets contributed by the Company to
each Subsidiary would roughly approximate the assets utilized in the existing
product lines specified below. In exchange for the contributed assets, the
Company would receive 100% of the duly authorized, issued and outstanding Common
Stock of such Subsidiary, and each Subsidiary would assume the liabilities and
obligations associated with the contributed assets. CMI, which would be renamed
would continue its current operations, and the Company may contribute additional
Company assets which it holds directly and are used in the Uranium Services and
Recycle operations to CMI as part of the restructuring. The product lines
expected to be contributed to a Subsidiary are as follows:
(i) uranium services and the recycling of low-level contaminated steel and
other metals and the production of Ducrete()TM to be conducted through
CMI, which would change its name as of the Effective Date;
(ii) the manufacture of aluminum beryllium products for use by the
government and the aerospace industry;
(iii) the manufacture of aluminum beryllium products for general commercial
and industrial use;
(iv) the manufacture of specialty metal products using foundry, extrusion
and machining capabilities;
(v) the manufacture of high purity, spherically shaped metal powders for
industrial and medical use;
(vi) the manufacture of depleted uranium penetrators for military
applications and the production of related specialty metal products;
(vii) NMI Sales would change its name to a name derivative of the new parent
company name, and continue its present operations with no change in its
assets; and
(viii)NMI Holdings would change its name to a name derivative of the new
parent company name and continue its present business with no change in
its assets.
(The transfer of assets to the Subsidiaries is referred to hereinafter as
the "Restructuring", and each such transfer or other disposition of assets is
referred to hereafter as a "Restructuring Transaction".) At this time, it is not
anticipated that the Restructuring will significantly impact either NMI Holdings
or NMI Sales other than the name change. A schematic representation of the
post-restructuring organization of the Company and its subsidiaries is set forth
in EXHIBIT B. The Company anticipates that some Company employees would be
transferred to the Subsidiaries as part of the Restructuring.
SECTION 1.2 PURPOSES OF THE RESTRUCTURING. If the Restructuring is fully
implemented, the business operations of the Company will be conducted by
operating Subsidiaries which each have a specific business and marketing area.
The Company believes that this new structure will permit greater flexibility and
efficiency in the management and financing of existing and future business
operations and business opportunities. The new company structure is expected to
facilitate the Company's entry into new businesses, and also the financing and
formation of joint ventures or other business ventures with third parties. In
addition, the Restructuring is expected to further the objective of operating
the Company's businesses, and any additional businesses acquired or developed in
the future, on a more self-sufficient, stand-alone economic basis, decreasing
the risk that
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liabilities attributable to any one of the Company's businesses could be imposed
upon one or more of the Company's unrelated businesses. This Plan is intended to
be interpreted liberally so as to facilitate the achievement of those purposes.
SECTION 1.3 BOARD OF DIRECTORS DISCRETION IN IMPLEMENTING PLAN. The
Company believes that the Restructuring is necessary to its future success.
However, the Company also wishes to maximize its flexibility to adapt to
changing circumstances and to exploit new opportunities. Therefore, if the
shareholders approve the Restructuring, the Company, acting through the Board,
reserves for itself the power to vary the terms of the Restructuring and the
Restructuring Transactions consistent with the purposes of this Plan. The Board
may implement all, some or none of the Restructuring Transactions, or may
implement additional transactions not specified therein, including the sale of
equity interests of one or more Subsidiaries or other indirectly owned and newly
formed subsidiaries, to third parties as part of the Restructuring. The final
structure of the Company after the Restructuring may be substantially different
from the structure as currently contemplated. If the Plan is approved by the
Shareholders, the Board will have five years from the Effective Date to
implement some, all, or none, or vary the terms of, the Restructuring
Transactions, or may implement additional transactions, upon terms and
conditions agreed to by the Board.
SECTION 1.4 ACTIONS ON EFFECTIVE DATE. On or before the Effective Date,
the Company shall form the Subsidiaries, and as of the Effective Date, it shall
transfer certain assets and liabilities to each Subsidiary. The Company will
file Articles of Amendment to its Articles of Organization that will change the
Company name to Starmet Corporation, and CMI, NMI Holdings and NMI Sales will
change their names to, respectively, Starmet CMI Corporation, Starmet Holdings
Corporation and Starmet FSC, Ltd. or similar names. The Company shall retain so
much of the assets, accounts, research and development, administrative
functions, personnel and liabilities of Company, as are determined by the Board.
On the Effective Date, each Subsidiary will be authorized to issue Common Stock
and to transfer such shares of Common Stock to the Company in exchange for the
transfer of the assets, liabilities, accounts, and personnel of the Company. The
foregoing shall not preclude the sale of securities to additional parties on the
Effective Date.
SECTION 1.5 ROLE OF THE COMPANY AFTER RESTRUCTURING. Following the
Restructuring, the Company may retain certain assets and will continue to carry
on certain administrative functions, including executive management functions,
Company marketing, regulatory oversight and compliance (including securities
reporting and tax filings), treasury functions and the preparation of annual
financial statements, billing activities and certain payroll, employee benefit
and pension activities, as well as other routine operational and administrative
functions generally performed by a diversified company. The Company may also
enter benefit sharing and tax sharing agreements with each Subsidiary as
necessary to properly allocate such items to each Subsidiary. The Company may
also continue to hold title to certain real estate and lease or license some or
all of such real estate to one or more Subsidiaries, or the Company may
contribute all or part of such real estate directly to a Subsidiary as part of
the Restructuring, at the discretion of the Board. The Company may also elect to
hold certain patents and other intellectual property in its own name, which may
then be licensed to one or more Subsidiaries for use in the business and
operations of such Subsidiary.
The Company may retain the assets of, and continue to perform, certain
research and development operations, which will be directed towards both the
needs of the Subsidiaries and the development of new technologies which may be
contributed to additional newly formed Subsidiaries as part of the
Restructuring. As part of its R&D operations, the Company may engage in the
development of prototypes, testing and low volume production of such new
products, or it may contribute such products to a Subsidiary as part of the
Restructuring.
SECTION 1.6 ADDITIONAL FINANCING TRANSACTIONS. Additional financing
transactions, including the issuance of debt and/or equity instruments may occur
at or after the Effective Date at the level of the Company or of the
Subsidiaries. Debt or equity of a Subsidiary, rather than the Company, may be
issued when the Company
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determines that such financing structure reduces the total cost of capital to
the Company and the Subsidiaries, minimizes risk to the Company and its
shareholders, and allows for the most economic and efficient development of a
Subsidiary's business. Several of the Company's businesses are currently in a
developmental stage, or otherwise have significant near-term financing needs. To
satisfy these financing needs, it is anticipated that significant equity
interests in the Company or in one or more Subsidiaries may be issued, in the
immediate future. The Company is currently exploring financing alternatives with
third parties in light of the Restructuring. It is possible that the Company or
one or more Subsidiaries may issue debt, convertible debt or equity prior to,
simultaneously with or soon after the Restructuring (each such transaction is
included within the term Restructuring Transaction, and is referred to
separately herein as a "Financing Transaction").
ARTICLE II
SHAREHOLDER AND THIRD PARTY CONSENTS
SECTION 2.1 SHAREHOLDER APPROVAL AND SHAREHOLDER RIGHTS. The Plan
requires the affirmative vote of two-thirds of the shares of each class of
Company stock outstanding and entitled to vote thereon for its adoption by the
Company. Shareholder approval for the Restructuring is necessary under
Massachusetts law if the Restructuring is fully implemented, as it will involve
the transfer of substantially all of the Company's assets. If the Plan is
approved by the shareholders, the Company will have five years from the
Effective Date to implement, at one time or in stages over time, all or any
portion of the Restructuring, or may elect not to effect the Restructuring at
all or may elect to implement one or more Restructuring Transaction or to
implement additional transactions. The Company currently intends to implement
the Restructuring as of the Effective Date.
The submission of the Plan to the shareholders for approval will not affect
the Company's rights, under Massachusetts law, to dispose of less than
substantially all of the Company's assets (including transfers of certain assets
to one or more Subsidiaries) without shareholder approval. Therefore, even if
the Restructuring is not approved by the shareholders, the Company may, if it
determines it would be in the best interests of the shareholders, in the future
implement certain Restructuring Transactions and transfer portions of its assets
to Subsidiaries, other newly formed affiliated entities or third parties,
without seeking shareholder approval unless otherwise required by law, on terms
and for consideration as approved by the Board.
SECTION 2.2 THIRD PARTY CONSENTS AND APPROVALS. It is currently planned
that outstanding debt instruments, options, debentures, and warrants of the
Company will remain obligations of the Company. Following the Restructuring,
holders of debt, warrants, options and debentures of the Company will continue
to hold the same instruments in the Company upon the same terms and conditions.
The Subsidiaries of the Company will also have the authority to issue similar
instruments and securities.
Besides shareholder approval, the Restructuring and some or all of the
Restructuring Transactions require third party approvals from federal, state and
local regulators for the licenses or contracts granted thereby, as well as the
consent of certain Company contractors, consultants, customers, and suppliers
(referred to collectively as a "Third Party" or "Third Parties"). In particular,
the Restructuring requires the consent of the Bank's principal lender, State
Street Bank and Trust Company ("State Street"), both in its capacity as lender
under the Company's line of credit, and also as bond trustee for the outstanding
industrial revenue bonds collateralized by the Barnwell facility. State Street's
consent to the Restructuring is a condition to the completion of the
Restructuring. To the extent that certain Third Party consents to the
Restructuring or a specific Restructuring Transaction are not be received by the
Effective Date, the Board reserves the right to alter the structure of the
Restructuring and the terms, structure and timing of a specific Restructuring
Transaction.
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ARTICLE III
FEDERAL TAX TREATMENT
SECTION 3.1 FEDERAL TAX ASPECTS. The Restructuring is intended to qualify
as a tax-free contribution of capital by the Company to each Subsidiary under
Section 351 of the Internal Revenue Code of 1986, as amended (the "Code").
ARTICLE IV
MISCELLANEOUS
SECTION 4.1 BOARD OF DIRECTORS. The Board of Directors of each Subsidiary
shall initially consist of certain members of the Company's Board and certain
Company officers, and the officers of the Subsidiaries shall initially be the
officers of the Company. The officers and directors of the Company are not
expected to change as part of the Restructuring. Following the selection of the
initial Board of Directors of each Subsidiary, the nomination of new Subsidiary
directors will be the responsibility of the Company in its capacity as sole
shareholder of each Subsidiary, and such Subsidiary Board of Directors will
appoint officers for each Subsidiary. It is not expected that the Restructuring
will immediately affect the overall management of the affairs and operations of
the Company as presently conducted. The books and records of the Company and
each Subsidiary will be maintained at the Company's principal place of business.
SECTION 4.2 TERMINATION. The Plan and the Restructuring may be terminated
and the transactions contemplated hereby may be abandoned by the Company at any
time before or after approval thereof by the shareholders of the Company, if the
Board determines that (i) such termination is in the best interest of the
shareholders, or (ii) the Board determines that the number of shareholders have
indicated that they will exercise dissenters' rights under Massachusetts law
would be sufficient, if such shares were purchased as a result of the appraisal
process, to cause the Company a material financial hardship.
SECTION 4.3 SPECIAL MEETING. The Board shall cause a Special Meeting of
shareholders of the Company to be called so that the shareholders of the Company
may vote on the adoption of the Plan.
SECTION 4.4 ALLOCATION PROCEDURES. To the extent that, after the
Restructuring, costs associated with (i) the Company, (ii) a Restructuring
Transaction or (iii) with any Subsidiary's line of business, are to be allocated
among such Subsidiary and the Company such costs may be allocated by the Board
of the Company.
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EXHIBIT A
CURRENT CORPORATE STRUCTURE OF THE COMPANY
[DIAGRAM OF CURRENT CORPORATE STRUCTURE]
EXHIBIT B
CONTEMPLATED CORPORATE STRUCTURE OF THE COMPANY
[DIAGRAM OF CONTEMPLATED CORPORATE STRUCTURE]
<PAGE>
ANNEX B
EXCERPTS FROM CHAPTER 156B OF THE MASSACHUSETTS GENERAL LAWS
SECTION 76. DISSENTING STOCKHOLDER; RIGHT TO DEMAND PAYMENT FOR STOCK
A stockholder in any corporation which shall have voted to sell, lease or
exchange all or substantially all its property and assets, or which shall have
adopted any amendment of its articles of organization which adversely affects
the rights of such stockholder, who objects to such action, in the manner
provided in section eighty-six, shall be entitled, if such sale, lease or
exchange shall have been consummated or such amendment shall have become
effective, as the case may be, to demand payment for his stock from the
corporation and an appraisal thereof in accordance with the provisions of
sections eight-six to ninety-eight, inclusive, and such stockholder and the
corporation shall have the rights and duties and follow the procedure set forth
in those sections.
SECTION 86. SELECTIONS APPLICABLE TO APPRAISAL; PREREQUISITES
If a corporation proposes to take a corporate action as to which any section
of this chapter provides that a stockholder who objects to such action shall
have the right to demand payment for his shares and an appraisal thereof,
sections eighty-seven to ninety-eight, inclusive, shall apply except as
otherwise specifically provided in any section of this chapter. Except as
provided in sections eighty-two and eighty-three, no stockholder shall have such
right unless (1) he files with the corporation before the taking of the vote of
the shareholders on such corporate action, written objection to the proposed
action stating that he intends to demand payment for his shares if the action is
taken and (2) his shares are not voted in favor of the proposed action.
SECTION 87. STATEMENT OF RIGHTS OF OBJECTING STOCKHOLDERS IN NOTICE OF MEETING;
FORM
The notice of the meeting of stockholders at which the approval of such
proposed action is to be considered shall contain a statement of the rights of
objecting stockholders. The giving of such notice shall not be deemed to create
any rights in any stockholder receiving the same to demand payment for his
stock, and the directors may authorize the inclusion in any such notice of a
statement of opinion by the management as to the existence or non-existence of
the right of the stockholders to demand payment for their stock on account of
the proposed corporate action. The notice may be in such form as the directors
or officers calling the meeting deem advisable, but the following form of notice
shall be sufficient to comply with this section:
"If the action proposed is approved by the stockholders at the meeting and
effected by the corporation, any stockholder (1) who files with the corporation
before the taking of the vote on the approval of such action, written objection
to the proposed action stating that he intends to demand payment for his shares
if the action is taken and (2) whose shares are not voted in favor of such
action has or may have the right to demand in writing from the corporation (OR,
IN THE CASE OF CONSOLIDATION OR MERGER, THE NAME OF THE RESULTING OR SURVIVING
CORPORATION SHALL BE INSERTED), within twenty days after the date of mailing to
him of notice in writing that the corporate action has become effective, payment
for his shares and an appraisal of the value thereof. Such corporation and any
such stockholder shall in such cases have the rights and duties and shall follow
the procedure set forth in sections 88 to 98, inclusive, of chapter 156B of the
General Laws of Massachusetts."
SECTION 88. NOTICE OF EFFECTIVENESS OF ACTION OBJECTED TO
The corporation taking such action, or in the case of a merger or
consolidation the surviving or resulting corporation, shall, within ten days
after the date on which such corporate action became effective, notify each
stockholder who filed a written objection meeting the requirements of section
eight-six and whose shares were not voted in favor of the approval of such
action, that the action approved at the meeting of the corporation of which he
is a stockholder has become effective. The giving of such notice shall not be
deemed to create any rights
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in any stockholder receiving the same to demand payment for his stock. The
notice shall be sent by registered or certified mail, addressed to the
stockholder at his last known address as it appears in the records of the
corporation.
SECTION 89. DEMAND FOR PAYMENT; TIME FOR PAYMENT
If within twenty days after the date of mailing of a notice under subsection
(e) of section eighty-two, subsection (f) of section eighty-three, or section
eighty-eight, any stockholder to whom the corporation was required to give such
notice shall demand in writing from the corporation taking such action, or in
the case of a consolidation or merger from the resulting or surviving
corporation, payment for his stock, the corporation upon which such demand is
made shall pay to him the fair value of his stock within thirty days after the
expiration of the period during which such demand may be made.
SECTION 90. DEMAND FOR DETERMINATION OF VALUE; BILL IN EQUITY; VENUE
If during the period of thirty days provided for in section eight-nine the
corporation upon which such demand is made and any such objecting stockholder
fail to agree as to the value of such stock, such corporation or any such
stockholder may within four months after the expiration of such thirty-day
period demand a determination of the value of the stock of all such objecting
stockholders by a bill in equity filed in the superior court in the county where
the corporation in which such objecting stockholder held stock has or has its
principal office in the commonwealth.
SECTION 91. PARTIES TO SUIT TO DETERMINE VALUE; SERVICE
If the bill is filed by the corporation, it shall name as parties respondent
all stockholders who have demanded payment for their shares and with whom the
corporation has not reached agreement as to the value thereof. If the bill is
filed by a stockholder, he shall bring the bill in his own behalf and in behalf
of all other stockholders who have demanded payment for their shares and with
whom the corporation has not reached agreement as to the value thereof, and
service of the bill shall be made upon the corporation by subpoena with a copy
of the bill annexed. The corporation shall file with its answer a duly verified
list of all such other stockholders, and such stockholders shall thereupon be
deemed to have been added as parties to the bill. The corporation shall give
notice in such form and returnable on such date as the court shall order to each
stockholder party to the bill by registered or certified mail, addressed to the
last known address of such stockholder as shown in the records of the
corporation, and the court may order such additional notice by publication or
otherwise as it deems advisable. Each stockholder who makes demand as provided
in section eight-nine shall be deemed to have consented to the provisions of
this section relating to notice, and the giving of notice by the corporation to
any such stockholder in compliance with the order of the court shall be a
sufficient service of process on him. Failure to give notice to any stockholder
making demand shall not invalidate the proceedings as to other stockholders to
whom notice was properly given, and the court may at any time before the entry
of a final decree make supplementary orders of notice.
SECTION 92. DECREE DETERMINING VALUE AND ORDERING PAYMENT; VALUATION DATE
After hearing the court shall enter a decree determining the fair value of
the stock of this stockholders who have become entitled to the valuation of and
payment for their shares, and shall order the corporation to make payment of
such value, together with interest, if any, as hereinafter provided, to the
stockholders entitled thereto upon the transfer by them to the corporation of
the certificates representing such stock if certificated or, if uncertificated,
upon receipt of an instruction transferring such stock to the corporation. For
this purpose, the value of the shares shall be determined as of the day
preceding the date of the vote approving the proposed
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corporate action and shall be exclusive of any element of value arising from the
expectation or accomplishment of the proposed corporate action.
SECTION 93. REFERENCE TO SPECIAL MASTER
The court in its discretion may refer the bill or any question arising
thereunder to a special master to hear the parties, make findings and report the
same to the court, all in accordance with the usual practice in suits in equity
in the superior court.
SECTION 94. NOTATION ON STOCK CERTIFICATES OF PENDENCY OF BILL
On motion the court may order stockholder parties to the bill to submit
their certificates of stock to the corporation for the notation thereon of the
pendency of the bill and may order the corporation to note such pendency in its
records with respect to any uncertificated shares held by such stockholder
parties, and may on motion dismiss the bill as to any stockholder who fails to
comply with such order.
SECTION 95. COSTS; INTEREST
The costs of the bill, including the reasonable compensation and expenses of
any master appointed by the court, but exclusive of fees of counsel or of
experts retained by any party, shall be determined by the court and taxed upon
the parties to the bill, or any of them, in such manner as appears to be
equitable, except that all costs of giving notice to stockholders as provided in
this chapter shall be paid by the corporation. Interest shall be paid upon any
award from the date of the vote approving the proposed corporate action, and the
court may on application of any interested party determine the amount of
interest to be paid in the case of any stockholder.
SECTION 96. DIVIDENDS AND VOTING RIGHTS AFTER DEMAND FOR PAYMENT
Any stockholder who has demanded payment for his stock as provided in this
chapter shall not thereafter be entitled to notice of any meeting of
stockholders or to vote such stock for any purpose and shall not be entitled to
the payment of dividends or other distribution on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the date of the vote approving the proposed corporate action) unless:
(1) A bill shall not be filed within the time provided in section
ninety;
(2) A bill, filed, shall be dismissed as to such stockholder; or
(3) Such stockholder shall with the written approval of the corporation,
or in the case of a consolidation or merger, the resulting or surviving
corporation, deliver to it a written withdrawal of his objections to and an
acceptance of such corporate action.
Notwithstanding the provisions of clauses (1) to (3), inclusive, said
stockholder shall have only the rights of a stockholder who did not so demand
payment for his stock as provided in this chapter.
SECTION 97. STATUS OF SHARES PAID FOR
The shares of the corporation paid for by the corporation pursuant to the
provisions of this chapter shall have the status of treasury stock, or in the
case of a consolidation or merger the shares or the securities of the resulting
or surviving corporation into which the shares of such objecting stockholder
would have been converted had he not objected to such consolidation or merger
shall have the status of treasury stock or securities.
SECTION 98. EXCLUSIVE REMEDY; EXCEPTION
The enforcement by a stockholder of his right to receive payment for his
shares in the manner provided in this chapter shall be an exclusive remedy
except that this chapter shall not exclude the right of such stockholder to
bring or maintain an appropriate proceeding to obtain relief on the ground that
such corporate action will be or is illegal or fraudulent as to him.
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NUCLEAR METALS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints George J. Matthews and Robert E. Quinn, or
either or them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated below, all the
shares of Common Stock of Nuclear Metals, Inc. held of record by the undersigned
on July 31, 1997, at the Special Meeting of Stockholders to be held on September
29, 1997, or any adjournment thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted "FOR" proposals 1 and 2.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY
IN ENCLOSED ENVELOPE.
Please sign this proxy exactly as your name appears on the books of the
Corporation. Joint owners should each sign personally. Trustees and other
fiduciaries should indicate the capacity in which they sign, and where more than
one name appears, a majority must sign. If a corporation, this signature should
be that of an authorized officer who should state his or her title.
<PAGE>
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE
1) To change the name of the Company to "Starmet Corporation."
/ / For / / Withhold / / For All Except
2) To approve the Plan of Reorganization of the Company.
/ / For / / Against / / Abstain
3) In their discretion, the proxies are authorized to vote upon such other
business as may
properly come before the meeting.
<TABLE>
<S> <C>
Please be sure to sign and date this Proxy. Date
</TABLE>
Stockholder sign here Co-owner sign here
