As filed with the Securities and Exchange Commission on February 16, 2000
Registration No. 333-92543
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
WASTE SYSTEMS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-420366
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
420 BEDFORD STREET, SUITE 300
LEXINGTON, MASSACHUSETTS 02420
(781) 862-3000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
---------------
PHILIP W. STRAUSS
CHAIRMAN, CHIEF EXECUTIVE OFFICER
AND PRESIDENT
WASTE SYSTEMS INTERNATIONAL, INC.
420 BEDFORD STREET, SUITE 300
LEXINGTON, MASSACHUSETTS 02420
(781) 862-3000
(Name, address, including zip code, and telephone
number, including area code, of agent for service of process)
-------------
Copies to:
NANCY H. CORBETT
MORGAN, LEWIS & BOCKIUS LLP
101 PARK AVENUE
NEW YORK, NEW YORK 10178
TEL: (212) 309-6000
FAX: (212) 309-6273
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
===============================================================================
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
Title of each class Proposed maximum Proposed maximum
of securities Amount to be offering price per aggregate offering Amount of
to be registered registered security(1) price(1) Registration Fee
- ---------------------- ---------------- ------------------- ------------------ ----------------
Common Stock,
par value $.01
per share 6,681,365 shares $4.00 $26,725,460 (2)
- --------------------- ---------------- ------------------- ------------------ ----------------
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended,
and based upon the average of the high and low sale prices of the
Common Stock reported on the Nasdaq National Market on February 4,
2000.
(2) Registration fee was previously paid.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
1
<PAGE>
SUBJECT TO COMPLETION, DATED FEBRUARY ___, 2000
6,681,365 SHARES
WASTE SYSTEMS INTERNATIONAL, INC.
COMMON STOCK
---------------
This prospectus relates to the offer and sale of 6,681,365 shares of common
stock of Waste Systems International, Inc. by the following stockholders:
o Kevin Baldwin;
o Kendall Baldwin;
o Kelly Baldwin;
o Kimberly Robb;
o Baldwin, L.P.;
o Chilton Investment Company Inc.;
o John Hancock Advisers;
o Evergreen Investment Management Company;
o Penn Capital Management;
o Tudor Investment Corporation;
o Saugatuck Partners L.P.;
o First Albany Corporation; and
o B-III Capital Partners, L.P.
We will not receive any of the proceeds from the sale of the shares
offered hereby. All expenses of registration of the shares which may be offered
hereby under the Securities Act will be paid by us (other than underwriting
discounts and selling commissions, and fees and expenses of advisors to any of
the Selling Stockholders).
Our common stock is traded on the Nasdaq National Market under the
symbol "WSII." On February 7, 2000, the closing price of the common stock as
reported on the Nasdaq Market was $4.375.
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 2 HEREOF.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
The information in this prospectus is not complete and may be changed.
The Selling Stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
THE DATE OF THIS PROSPECTUS IS FEBRUARY ___, 2000
<PAGE>
RISK FACTORS
An investment in Waste Systems involves a significant degree of risk. You should
consider carefully the following factors in addition to other information
included in this prospectus before making an investment in our common stock.
Our history of losses makes the common stock a highly speculative investment.
From Waste Systems' inception through September 30, 1999, we have had
aggregate net losses of approximately $56 million on aggregate revenues of
approximately $64 million and have had an accumulated loss from operations of
$30 million. Continued losses and negative cash flow may prevent us from
achieving our strategic objectives, as well as limit our ability to meet our
financial obligations.
Following Waste Systems' restructuring in 1996, we directed our focus
on becoming an integrated solid waste management company by implementing a
business strategy based on aggressive growth through acquisitions. Our ability
to become profitable and to maintain profitability as we pursue our business
strategy will depend upon several factors, including our ability to:
o execute our acquisition strategy and expand our revenue generating
operations while maintaining or reducing our proportionate administrative
expenses;
o locate sufficient financing to fund acquisitions; and
o adapt to changing conditions in the competitive market in which we
operate.
Risks of substantial voting control by Waste Systems' management and major
stockholders.
As of November 12, 1999, Waste Systems' directors, executive officers
and their affiliates and other major stockholders -- those holding 5% or more of
the common stock -- beneficially owned approximately 65.82% of the outstanding
shares of Common Stock. Accordingly, these stockholders are considered to have a
controlling influence over the election of directors and other corporate and
stockholder actions.
Issuance of additional equity may be dilutive to stockholders.
Future issuance of additional equity by us may dilute the interest of
our existing stockholders. We currently have:
o up to 4,955,143 shares of common stock issuable upon
conversion of our 7% Convertible Subordinated Notes
outstanding as of November 12, 1999, which are convertible at
$10 per share at any time by the holders of the notes, and by
us if the closing price of the common stock after May 13, 2000
remains above $10 per share for twenty consecutive trading
days;
o up to 1,500,000 shares of common stock issuable upon exercise
of outstanding warrants, which are exercisable at $6.25 per
share of common stock from September 2, 1999 to March 2, 2004;
o up to 3,213,118 shares of common stock issuable upon exercise
of options outstanding as of November 12, 1999 under our stock
option plans, subject to vesting requirements, at prices
ranging from $1.41 to $9.25; and
o an additional 786,882 shares of common stock reserved for
issuance as of November 12, 1999 under our stock option plans.
In addition, in August 1999, we closed a private placement of our
common stock for aggregate consideration of approximately $16 million at $7 per
share. The proceeds from the private placement will be used for potential future
acquisitions and general working capital purposes. Finally, our ability to
achieve our business objectives depends on our use of a combination of debt
financing and equity financing appropriate for executing our business strategy.
To the extent that additional equity securities are issued to finance future
acquisitions instead of issuing additional debt, the percentage ownership
interests of our existing stockholders will be diluted.
Future sales of common stock may adversely affect the market for our common
stock.
Stockholders may be adversely affected by future sales of common stock
by other stockholders. If any of our larger stockholders sell substantial
amounts of our common stock eligible for resale in the public market after this
offering, the market price of our common stock could fall. These sales may also
make it more difficult for us in the future to sell equity or equity-related
securities in the public market, whether for the purpose of general corporate
financing or for use as consideration in an acquisition, at a time and at a
price that we deem appropriate.
Upon completion of this offering, we will have 20,330,946 shares of our
common stock outstanding (based on the number of shares outstanding as of
February 7, 2000 and assuming no exercise of outstanding stock options after
that date), 20,105,236 of which are freely tradable without restriction under
the Securities Act.
In addition, we have already registered for resale:
o up to 4,955,143 shares of common stock issuable upon conversion of our 7%
Convertible Subordinated Notes at any time by the holders of the notes;
and
o 4,000,000 shares of common stock reserved for issuance under our stock
option plans; and
o 1,500,000 shares of common stock issuable upon the exercise of warrants
to purchase shares of common stock at an exercise price of $6.25 per
share, for resale by the holders.
Market conditions may reduce the trading price of our common stock.
The market price of our common stock has historically experienced and
may continue to experience high volatility. Our quarterly operating results,
changes in general conditions in the economy or the financial markets and other
developments affecting us or our competitors could cause the market price of our
common stock to fluctuate substantially. In addition, in recent years, the stock
market has experienced significant price and volume fluctuations. This
volatility has affected the market prices of securities issued by many companies
for reasons unrelated to their operating performance and may adversely affect
the price of our common stock.
It is unlikely that we will pay dividends to our stockholders in the future.
We have never declared or paid a cash dividend on our common stock. We
intend to retain earnings to repay debt and to finance the growth and
development of our business and do not anticipate paying cash dividends on our
common stock in the foreseeable future. Any declaration of dividends in the
future will depend, among other things, upon our results of operations,
financial condition and capital requirements as well as general business
conditions. Our outstanding debt securities also contain restrictions that
prohibit us from making dividend payments to our stockholders.
Anti-takeover provisions applicable to Waste Systems may not be favorable to our
stockholders.
Applicable sections of the Delaware General Corporation Law and our
charter and by-laws may have an anti-takeover effect and discourage takeover
attempts not first approved by our Board of Directors (including takeovers which
our stockholders may consider to be in their best interests). Such provisions
include:
o Section 203 of the Delaware General Corporation Law which, in
general, imposes restrictions upon certain acquirers
(including their affiliates and associates) of 15% or more of
our common stock;
o a charter provision giving our Board of Directors the ability
to issue shares of preferred stock and to establish the voting
rights, preferences and other terms of preferred stock without
further action by stockholders;
o a charter provision limiting the removal of directors only for
cause and requiring for such removal the approval of at least
two-thirds of the votes eligible to be cast by stockholders in
the election of the director to be removed;
o a by-law provision vesting exclusive authority in the Board of
Directors to determine the size of the Board of Directors and,
subject to limited exceptions, to fill any Board vacancies;
o a by-law provision vesting exclusive authority in the Board
of Directors to call special meetings of stockholders; and
o a by-law provision requiring advance notice for stockholder
proposals and nominations for election to the Board of
Directors.
These statutory, charter and by-law provisions could delay or frustrate the
removal of incumbent directors or the assumption of control by stockholders,
even if these events would be beneficial to stockholders. These provisions also
could discourage or make more difficult a merger, tender offer or proxy contest,
even if these events would be beneficial to the interest of stockholders.
Failure to achieve adjusted stockholders' equity of at least $40,000,000 will
increase our interest expense.
We must increase the interest rate payable on the Senior Notes to 13%,
14% and 15% per year if we do not achieve an Adjusted stockholders' equity, as
defined below, of at least $40,000,000 on each of December 31, 1999, June 30,
2000 and December 31, 2000, respectively. "Adjusted stockholders' equity" means
our stockholders' equity as shown on our consolidated balance sheets filed as
part of our regular reports with the Securities and Exchange Commission, less
the amount of any increase resulting from the issuance of shares of common stock
in exchange for our outstanding 7% Convertible Subordinated Notes, to the extent
that the issuance exceeds 2,343,646 shares of common stock in the aggregate.
Incurring more debt could further exacerbate the risks of our high level of
indebtedness.
Despite our current high level of indebtedness, we may incur additional
indebtedness to fund acquisitions, for general working capital purposes or for
other reasons. On August 3, 1999, we entered into a $25 million revolving credit
facility with The BankNorth Group, N.A. to fund acquisitions and for general
working capital, $17.5 million of which has been drawn to date. Any debt
incurred under this credit facility is secured debt that is guaranteed by our
subsidiaries. With this new debt added to our current level of debt, the related
risks of indebtedness could intensify for us.
We may not generate enough cash to service our indebtedness or our other
liquidity needs.
Our ability to make payments on and to refinance our indebtedness and
to fund planned capital expenditures will depend on our ability to generate cash
in the future. This ability depends in part on our operating performance and the
execution of our business strategy. It is also subject to influence by general
economic, financial, competitive, legislative, regulatory and other factors that
are beyond our control.
We cannot assure you that our business will generate sufficient cash
flow from operations, that we will realize anticipated cost savings from
operating efficiency improvements, or that we will be able to obtain future
financing in amounts sufficient to enable us to pay our indebtedness or to fund
our other liquidity needs.
<PAGE>
The following table outlines the schedule of our required debt
amortization payments:
Principal Payments Due During
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
at
September
30, 1999 2000 2001 2002 2003 2004 2005 2006 Remainder Total
- -------------------------- --------- ------- ------ ------- ------- ------ ------- ------ ------- ---------- -------
(Dollars in thousands)
Long-Term Debt
Bank Credit Facility... $17,500 -- -- $17,500 -- -- -- -- -- -- $17,500
Capital Leases, Equipment
and other Notes Payable 5,191 748 822 342 374 326 185 201 221 1,972 5,191
Senior Notes........... 100,000 -- -- -- -- -- -- -- 100,000 -- 100,000
10% Convertible
Subordinated Debentures... 400 -- 400 -- -- -- -- -- -- -- 400
7% Convertible
Subordinated Notes 49,551 -- -- -- -- -- -- 49,551 -- -- 49,551
Total............. $172,642 748 1,222 17,842 374 326 185 49,752 100,221 1,972 172,642
</TABLE>
In addition, as disclosed in the Risk Factor subsection above, we
entered into a $25 million revolving credit facility on August 3, 1999. We may
need to refinance all or a portion of our indebtedness on or before maturity. We
cannot assure you that we will be able to refinance any of our indebtedness on
commercially reasonable terms or at all.
Our high level of indebtedness could adversely affect our financial health.
We currently have a high level of indebtedness relative to
stockholders' equity. The following table illustrates our level of indebtedness
and ratio of earnings to fixed charges:
As of September 30,
1999
(dollars in thousands)
-----------------------
Long-term Indebtedness............................... $171,958
Stockholders' Equity................................. $39,803
Debt to Equity ratio................................. 4.32:1
Our high level of indebtedness could:
o limit our flexibility in planning for, or reacting to, changes
in business, industry and economic conditions;
o require us to dedicate a substantial portion of our cash flow
from operations to repaying indebtedness, thereby reducing the
availability of our cash flow to fund working capital, capital
expenditures and other general corporate purposes;
o place us at a competitive disadvantage compared to our
competitors with lower levels of indebtedness; and
o limit our ability to borrow additional funds, either because
of restrictive covenants in our debt documents or because of a
potential lender's limits on borrower indebtedness.
Our high level of indebtedness may have a direct negative impact on our
operations. It may also result in an event of default under our debt instruments
which, if not cured or waived, could have a material adverse effect on our
finances.
For the nine
months ended For the Years Ended
September 30, December 31,
-------------- -------------------
1999 1998 1997
-------- -------- --------
Ratio of Earnings to Fixed Charges.......... N/A N/A N/A
For the nine months ended September 30, 1999, we incurred net losses
that did not cover fixed charges by approximately $20.5 million; for the year
ended December 31, 1998, we incurred net losses that did not cover fixed charges
by approximately $6.6 million; and for the year ended December 31, 1997, we
incurred net losses that did not cover fixed charges by approximately $5.5
million. For purposes of computing this financial relationship of earnings to
fixed charges, earnings consist of pretax income (loss) from continuing
operations plus fixed charges. Fixed charges consist of interest expense and
financing costs, including capitalized interest and amortization of deferred
financing costs, and an estimated portion of rentals representing interest
costs.
We have no control over many factors in our ability to finance planned growth.
We require substantial funds to complete and bring to commercial
viability all of our currently planned projects. We also anticipate that future
business acquisitions will be financed not only through cash from operations and
the proceeds from previous debt offerings, but also by future borrowings under
bank credit facilities, offerings of Waste Systems stock as consideration for
acquisitions, or from the proceeds of additional equity or debt financings.
Therefore, our ability to satisfy our future capital and operating requirements
for planned growth is dependent on a number of pending or future financing
activities, and we cannot assure you that any of these financing activities will
be successfully completed.
Our future success depends upon our ability to manage rapid growth in operations
and personnel.
Our objective is continued growth by expanding our services in selected
markets where we can be one of the largest and most profitable fully-integrated
solid waste management companies. Accordingly, we may experience periods of
substantial rapid growth. This growth could place a significant strain on our
operational, financial and other resources. Any failure to expand our
operational and financial systems and controls in an efficient manner at a pace
consistent with our growth could have a material adverse effect on our business,
financial condition and results of operations.
Our future success is also highly dependent upon our continuing ability
to identify, hire, train and motivate a sufficient number of highly qualified
personnel for our planned growth. We face competition for recruiting qualified
personnel from our competitors, other companies not in the waste management
industry, government entities and other organizations. We cannot assure you that
we will be successful in attracting and retaining qualified personnel as
required for our present and future planned operations. Our inability to attract
and retain a sufficient number of qualified personnel could have a material
negative impact on our business, financial condition and results of operations.
Our future success depends upon our ability to identify, acquire and integrate
acquisition targets.
Our future success is highly dependent upon our continued ability to
successfully identify, acquire and integrate additional solid waste collection,
recycling, transfer and disposal businesses. As the solid waste management
industry continues to consolidate, competition for acquisition candidates within
the industry increases and the availability of suitable candidates on terms
favorable to us may decrease. We compete for acquisition candidates with larger,
more established companies that may have significantly greater capital resources
than we do, which can further decrease the availability of suitable acquisition
candidates at prices affordable to us. We cannot assure you that we will be able
to identify suitable acquisition candidates, to successfully negotiate
acquisitions on terms reasonable to us given our resources, to obtain financing
for those targets on favorable terms, or to successfully integrate any acquired
targets with our current operations.
A reduction in the market price of our common stock may limit our ability to
consummate future acquisitions.
We believe that a significant factor in our ability to consummate
acquisitions will be the attractiveness of our common stock as consideration for
potential acquisition targets. This attractiveness may be, in large part,
dependent upon the relative market price and capital prospects of our equity
securities as compared to the equity securities of our competitors. In addition,
some of our competitors have a significantly larger capitalization than we do,
which generally results in a more liquid market for their publicly traded
securities. If the market price of our common stock were to decline, we might be
unable to use our common stock as consideration for future acquisitions.
<PAGE>
Loss of key executives could affect our ability to achieve Waste Systems'
business objectives.
We depend to a high degree on the services of Philip Strauss, Chairman,
Chief Executive Officer and President, and Robert Rivkin, Executive Vice
President--Acquisitions, Secretary, Treasurer and Director, in planning to
achieve our business objectives. We have obtained $1 million key executive
insurance policies for each of Messrs. Strauss and Rivkin. However, if we lost
the services of either of these executives, our business, financial condition
and results of operations could suffer material adverse effects.
Failed acquisitions or projects may adversely affect our results of operations
and financial condition.
In accordance with generally accepted accounting principles, we record
some expenditures and advances relating to acquisitions, pending acquisitions
and landfill projects as assets on our balance sheet, then amortize or
depreciate these capitalized expenditures and advances over time, usually
matching an asset's depreciation against the revenues it generates. We also have
an accounting policy to record as an expense in the current accounting period
all unamortized capital expenditures and advances relating to any operation that
is permanently shut down, any acquisition that will not be consummated, and any
landfill project that is terminated. As a result of these accounting practices,
we may have to record the entire capitalized expenditure of any failed
acquisition or terminated project as a charge against earnings in the accounting
period in which the failure or termination occurs. A large, unexpected expense
against typical earnings could have a material adverse effect on our results of
operations, financial condition and our business.
Our business may not succeed due to the highly competitive nature of the solid
waste management industry.
The solid waste management industry is highly competitive and very
fragmented, and requires substantial labor and capital resources. Competition
exists for collection, recycling, transfer and disposal service customers, as
well as for acquisition targets. The markets we compete in or are likely to
compete in usually are served by one or more national, regional or local solid
waste companies who may have a respected market presence, and who may have
greater financial, marketing or technical resources than those available to us.
Competition for waste collection and disposal business is based on price, the
quality of service and geographical location. From time to time, competitors may
reduce the price of their services in an effort to expand or maintain market
share or to win competitively bid contracts.
We also compete with counties, municipalities and operators of
alternative disposal facilities that operate their own waste collection and
disposal facilities. The availability of user fees, charges or tax revenues and
the availability of tax-exempt financing may provide a competitive advantage to
public sector competitors in solid waste management. Additionally, alternative
disposal facilities such as recycling and incineration may reduce the demand for
the landfill-based solid waste disposal services that we provide and on which
our strategy is based. We cannot assure you that we will be able to remain
competitive with our larger and better capitalized competitors or with
tax-advantaged public sector operators.
Seasonal revenue fluctuations may make it more difficult to manage and finance
our business successfully.
Our revenues and results of operations tend to vary seasonally. We tend
to have lower revenues in the winter months of the fourth and first quarters of
the calendar year than in the warmer months of the second and third quarters.
The primary reasons for lower revenues in the winter months include:
o harsh winter weather conditions that interfere with collection
and transportation activities;
o the volume of winter month waste in our operating regions is
generally lower than that which occurs in warmer months; and
o the construction and demolition activities which generate
landfill waste are primarily performed in the warmer seasons.
We believe that the seasonality of the revenue stream will not have a material
adverse effect on our business, financial condition and results of operations on
an annualized basis. Still, higher warm weather revenues may not offset lower
cold season revenues, and seasonal revenue fluctuations may make it more
difficult to manage and finance our business successfully.
<PAGE>
Our geographic concentration exposes us to a higher degree of risk than our
geographically more diverse competitors.
Waste Systems has established solid waste management operations in
Central Pennsylvania, Vermont, Upstate New York, Eastern New England, and the
Baltimore, Maryland/Washington, D.C. region. Since our current primary source of
revenues will be concentrated in these geographic locations, our business,
financial condition and results of operations could be materially affected by
downturns in these local economies, severe weather conditions in these regions,
and each region's state and local regulations. Factors that have a greater
impact on our selected markets than on our other regions of the country are more
likely to have a negative effect on our business than on our larger regional and
national competitors in the waste management industry.
Industry consolidation in our operating regions has also increased the
competition for customers who generate waste streams. This may make it
increasingly difficult to expand operations within our selected markets. We
cannot assure you that we will be able to continue to increase the local waste
streams to our operating landfills or be able to expand our geographic markets
to mitigate the effects of adverse economic events that may occur in these
regions.
Potential difficulties in acquiring landfill capacity could increase our costs.
Our operations depend on our ability to expand the landfills we own or
operate and to develop or acquire new landfill sites. We cannot assure you that
we will be successful in obtaining new landfill sites or expanding the permitted
capacity of our existing landfills. The process of obtaining required permits
and approvals to open new landfills, and to operate and expand existing
landfills, has become increasingly difficult and expensive. The process can take
several years and involves hearings and compliance with zoning, environmental
and other requirements. We cannot assure you that we will be successful in
obtaining and maintaining required permits to open new landfills or expand the
existing landfills we own.
Even when granted, final permits to expand landfills are often not
approved until the remaining capacity of a landfill is very low. In the event we
exhaust our permitted capacity at one of our landfills, our ability to expand
internally will be limited and we will be required to cap and close that
landfill. Furthermore, as the solid waste management industry continues to
consolidate, there will be greater competition for potential landfill
acquisitions. As a result of insufficient landfill capacity, we could be forced
to transport waste greater distances to our own landfills that have capacity, or
to dispose of waste locally at landfills operated by our competitors. In either
case, the additional costs we would incur could have a material adverse effect
on our business.
Failure to obtain landfill closure performance bonds and letters of credit may
adversely affect our business.
We may be required to post a performance bond, surety bond or letter of
credit to ensure proper closure and post-closure monitoring and maintenance at
some of our landfills and transfer stations. Our failure to obtain performance
bonds, surety bonds or letters of credit in sufficient amounts or at acceptable
rates may have a material adverse effect on our business, financial condition
and results of operations.
Estimated accruals for landfill closure and post-closure costs may not meet our
actual financial obligations.
The closure and post-closure costs of our existing landfills and any
landfill we may own or operate in the future represent material financial
obligations. To meet these future obligations, we estimate and accrue closure
and post-closure costs based on engineering estimates of landfill usage and
remaining landfill capacity. We cannot assure you that the amount of funds
estimated and accrued for landfill closure and post-closure costs will be enough
to meet these future financial obligations. Any failure to meet these
obligations when they become due, or any use of significant funds to cover a gap
between such accruals and actual landfill closure and post-closure costs
incurred, may have a material adverse effect on our business, financial
condition and results of operations.
Environmental and other government regulations impose costs and uncertainty on
our operations.
We and our customers operate in a highly regulated environment, and our
landfill projects in particular usually will require federal, state and local
government permits and environmental approvals. Maintaining awareness of and
attempting to comply with applicable environmental legislation and regulations
require substantial expenditures of our personnel and financial resources. These
efforts, however, do not guarantee that we will meet all of the applicable
regulatory criteria necessary to obtain required permits and approvals.
Government regulators generally have broad discretion to deny, revoke,
or modify regulatory permits or approvals under a wide variety of circumstances.
In addition, government regulators may adopt new environmental legislation or
regulations or amend existing legislation, and may interpret or enforce existing
legislation in new ways. All of these circumstances may require us or our
customers to obtain additional permits or approvals.
Any delay in obtaining required regulatory permits or approvals may
delay our ability to obtain project financing, thereby increasing our need to
invest working capital in projects before obtaining more permanent financing.
These delays may also reduce our project returns by deferring the receipt of
project revenues to a later project completion date. If we are required to
cancel any planned project because we were unable to obtain required permits or
as a result of any other regulatory impediments, we may lose any investment we
have made in the project up to that point. The cancellation, or any substantial
delay in completion, of any project may have a significant negative effect on
our financial condition and results of operations.
We are exposed to potential liability for environmental damage and regulatory
noncompliance.
We are engaged in the collection, transfer and disposal of waste
described as non-hazardous, and we believe that we are currently in material
compliance with all applicable environmental laws. Despite these circumstances,
if harmful substances escape into the environment and cause damages or injuries
as a result of our operating activities, we are exposed to the risk that we will
be held liable for any damages and injuries, as well as for significant fines
for regulatory noncompliance.
Our environmental liability insurance may not cover all risks of loss.
We maintain environmental impairment liability insurance covering
particular claims for the sudden or gradual onset of environmental damage to the
extent of $5 million per landfill. If we were to incur liability for
environmental damage in excess of our insurance limits, our financial condition
could be adversely affected. We also carry a comprehensive general liability
insurance policy, which management considers adequate at this time to protect
our assets and operations from other risks.
Addressing local community concerns about our operations may adversely affect
our business.
Members of the public in the communities where we do business could
raise concerns with government regulators and others about the effects on their
communities of our existing or planned operations and, in some areas, the
proposed development of solid waste facilities. These concerns cannot always be
anticipated, and our attempts to address these concerns may result in unforeseen
delays, costs and litigation that could adversely affect our ability to achieve
our business objectives.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly, and current reports, proxy statements, and
other documents with the Securities and Exchange Commission. Our file number is
0-25988. You may read and copy any document we file at the SEC's public
reference room at Judiciary Plaza Building, 450 Fifth Street, NW, Room 1024,
Washington, D.C. 20549. You should call 1-800-SEC-0330 for more information on
the public reference room. The SEC maintains an Internet site at
http://www.sec.gov where certain information regarding issuers may be found.
This prospectus is part of a registration statement that we filed with
the SEC. The registration statement contains more information than this
prospectus regarding Waste Systems and its common stock, including certain
exhibits and schedules. You can get a copy of the registration statement from
the SEC at the address listed above or from its Internet site.
Our common stock is traded on The Nasdaq National Market. Proxy
statements and other information concerning us can also be inspected at the
offices of The Nasdaq Stock Market, 1735 K Street, N.W., Washington D.C. 20006.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to "incorporate" into this prospectus information we
file with the SEC in other documents. This means that we can disclose important
information to you by referring to other documents that contain that
information. The information may include documents filed after the date of this
prospectus which update and supersede the information you read in this
prospectus. The following documents and other materials, which we have filed
with the Securities and Exchange Commission, are incorporated and specifically
made a part of this prospectus by reference:
(1) Annual Report on Form 10-K for the fiscal year ended December
31, 1998, as amended by the Report on Form 10-K/A filed on
April 8, 1999, as further amended by the Report on Form 10-K/A
Amendment No. 2 filed on August 5, 1999;
(2) Quarterly Report on Form 10-Q for the quarter ended March 31,
1999, as amended by the Report on Form 10-Q/A filed on
August 5, 1999;
(3) Quarterly Report on Form 10-Q for the quarter ended June 30,
1999 filed on August 14, 1999;
(4) Quarterly Report on Form 10-Q for the quarter ended September
30, 1999 filed on November 15, 1999; and
(5) Current Report on Form 8-K filed on March 12, 1999, Current
Report on Form 8-K filed on March 25, 1999, as amended by
Current Report on Form 8-K/A filed on May 24, 1999 and Current
Report on Form 8-K filed on December 29, 1999.
In addition, all documents that we file with the Securities and
Exchange Commission pursuant to sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 after the date of this prospectus will be deemed
to be incorporated by reference into this prospectus and to be part of this
prospectus from the date of the filing of such documents with the Securities and
Exchange Commission. Any statement contained in this prospectus or in a document
incorporated or deemed to be incorporated by reference in this prospectus will
be deemed to be modified or superseded for purposes of this prospectus if a
statement contained in this prospectus or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes that statement. Any statement so modified or superseded
will not be deemed, except as so modified or superseded, to constitute a part of
this prospectus.
This prospectus incorporates documents by reference that are not
presented in this prospectus or delivered herewith. Copies of these documents,
other than exhibits to these documents that are not specifically incorporated by
reference in this prospectus, are available without charge to each person to
whom a copy of this prospectus is delivered, upon the written or oral request of
that person. Requests for any information should be directed to Waste Systems
International, Inc., 420 Bedford Street, Suite 300, Lexington, Massachusetts
02420 (telephone number (781) 862-3000), Attention: Chief Financial Officer.
<PAGE>
FORWARD-LOOKING STATEMENTS
This prospectus contains both historical and forward-looking
statements. These forward-looking statements are not facts; rather, they are
intentions and expectations relating to our plans, strategies and prospects.
These forward-looking statements are within the meaning of Section 27A of the
Securities and Exchange Act and are intended to be covered by the safe harbors
created thereby. The forward-looking statements can generally be identified by
our use of words such as "plan," "intend," believe," "expect," and other words
of similar import. Although we believe that our plans, intentions and
expectations reflected in or suggested by these forward-looking statements are
reasonable, we cannot assure you that we will achieve our plans, intentions or
expectations. We urge you to consider carefully the important factors that could
cause actual results to differ materially from the forward-looking statements.
These factors are described in the section entitled "Risk Factors" and elsewhere
in this prospectus. We make all the forward-looking statements in this
prospectus only as of the date of this prospectus, and we do not undertake to
publicly update these forward-looking statements to reflect subsequent events.
THE COMPANY
We are an integrated non-hazardous solid waste management company that
provides waste collection, recycling, transfer and disposal services to
commercial, industrial, residential and municipal customers within some regional
markets in the Northeast and Mid-Atlantic states where we operate. We are
achieving significant growth by implementing an active acquisition strategy, and
plan to contribute to our growth by generating increased sales from existing
operations and achieving greater operating efficiencies. Waste Systems is a
Delaware corporation. Our principal executive offices are located at 420 Bedford
Street, Suite 300, Lexington, Massachusetts 02420, and our telephone number is
(781) 862-3000.
Current Integrated Operations
We currently operate, and intend to expand, regional networks of
integrated waste collection and disposal operations. These integrated networks
consist of operating landfills, waste transfer stations, and waste collection
operations.
o Waste Collection Operations
We own multiple waste collection operating subsidiaries which serve as
conduits of waste flow to our transfer stations and landfill operations. As of
November 12, 1999, our waste collection operations serve a total of
approximately 73,000 commercial, industrial, residential and municipal customers
in the Vermont, Central Pennsylvania, Upstate New York, Eastern New England and
Baltimore, Maryland/Washington, D.C. markets.
o Landfill Operations
We currently own four landfills, one in Vermont and three in Central
Pennsylvania. Two of these were operating in 1998, and generated approximately
20% of our 1998 revenues. Of the remaining two, one began operating in March
1999 with the acquisition of Community Refuse Service, Inc., and we expect to
begin operating the other in December 1999. The aggregate remaining estimated
permitted capacity of these four owned landfills is approximately 24 million
cubic yards. In addition, we have a 16-year contract with the Town of South
Hadley, Massachusetts to operate that town's landfill, subject to receipt of
required permits, which we expect to begin operating in the first quarter of
2000. The South Hadley landfill has an estimated capacity of 2.0 million cubic
yards available for future disposal.
o Transfer Station Operations
We provide transfer station services supporting one of our landfills
and have acquired another transfer station that is permitted and has begun
construction. We recently completed the acquisition of two additional transfer
stations. The transfer stations serve as gateways of waste streams by receiving
and compacting solid waste collected by us and by third parties, which we then
transfer by long-haul trucks for disposal at landfills we operate.
<PAGE>
The Movement of the Solid Waste Management Industry Towards Consolidation and
Integration
The solid waste management industry is undergoing general trends toward
significant consolidation and integration. We believe these trends are due
primarily to the following factors:
o stringent environmental regulations which require increased capital
to maintain regulatory compliance;
o the inability of many smaller operators to achieve the competitive
economies of scale enjoyed by larger operators;
o the competitive and economic benefits of providing integrated
collection, recycling, transfer and disposal services; and
o the privatization of solid waste landfills, transfer stations, and
collection services by municipalities.
Although significant consolidation has occurred within the solid waste
management industry, we believe the industry remains highly fragmented and that
a substantial number of potential acquisition and privatization opportunities
remain, including in the Northeast and Mid-Atlantic states where we operate.
Our Strategy to Capitalize on Industry Consolidation and Integration
We seek to acquire independent collection, transfer station and
landfill operations in appropriate locales to integrate those acquisitions into
our current operations. Our objective is to expand the geographic scope of our
operations and to become one of the leading non-hazardous solid waste management
companies in each local market that we serve. The primary elements of our
strategy for achieving these objectives are:
o Executing our acquisition program. Our acquisition program
consists of identifying regional markets and acquiring
non-hazardous solid waste disposal assets in those targeted
markets that we can operate as part of a fully integrated
solid waste management operation. To establish ourselves
within a selected market, we seek acquisitions that are
consistent with our plan to acquire long-term disposal
capacity in targeted regional markets, collection companies
and transfer stations in the targeted regions to secure a
stable long-term waste flow, and small but complementary
"tuck-in" collection companies to increase a regional
operation's profitability.
o Generating internal growth. We plan to generate internal
growth from existing operations by increasing sales
penetration in our current and adjacent markets, soliciting
new commercial, industrial and residential customers,
marketing upgraded services to existing customers and, where
appropriate, raising prices.
o Increasing operating efficiency. We expect to increase our
operating efficiency through implementation of an
organizational system that sets operating standards and
analyzes operating criteria of our collection, transfer,
disposal and other services.
In connection with our growth strategy, Waste Systems currently is and
at any given time will be involved in potential acquisitions that are in various
stages of exploration and negotiation, ranging from initial discussions to the
execution of letters of intent and the preparation of definitive agreements.
Some of these potential acquisitions may be material. No assurance can be given,
however, that we will be successful in completing further acquisitions in
accordance with our growth strategy, or that acquisitions, if completed, will be
successful. For a description of the risks involved in our growth strategy,
please refer to the subsections of the "Risk Factors" section of this prospectus
on page 6 beginning with "We have no control over many factors in our ability to
finance planned growth."
<PAGE>
Our Key Strengths
Through the implementation of our growth strategy, we believe we
demonstrate the following key strengths:
o Development of Fully Integrated Operations
We continue to develop more fully integrated operations in our targeted
market areas. Throughout 1998 and during the nine months ended September 30,
1999, the Company increased the amount of waste collected by the Company that
was subsequently disposed at Company landfills, and increased the amount of the
waste delivered for disposal at the Company's landfills that was collected by
the Company. During the nine months ended September 30, 1999, nearly 100% of the
waste from the Company's Vermont operations was delivered for disposal at the
Moretown Landfill and approximately 41% of the waste delivered for disposal at
the Moretown Landfill during this period was collected by the Company. In
addition, approximately 65% of the waste from the Company's Central Pennsylvania
- - Altoona division operations was delivered for disposal at the Sandy Run
Landfill and approximately 70% of the waste delivered for disposal at the Sandy
Run Landfill during this period was collected by the Company. Since the
acquisition of Community Refuse, Inc., on March 1, 1999, approximately 93% of
the waste from the Company's Central Pennsylvania - Harrisburg division
operations was delivered for disposal at the Community Refuse, Inc. landfill and
approximately 19% of the waste delivered for disposal at the Community Refuse,
Inc. landfill during this period was collected by the Company. During the third
quarter, the Company acquired Eastern Trans-Waste of Maryland, Inc. and C&J
Trucking Company, Inc. and Affiliates. For the quarter ended September 30, 1999,
Eastern Trans-Wastes disposed of approximately 26% of its waste at the Community
Refuse, Inc. landfill. C&J Trucking Company, Inc. disposed of approximately 3%
of its waste at the Community Refuse, Inc. landfill. It is management's
intentions to fully internalize these operations with WSI owned landfills over
the next several quarters, including the Mostoller landfill which is expected to
open up in December 1999.
o Operating Efficiencies
We are achieving significant operating efficiencies and reducing costs
through consolidation and elimination of redundant corporate and service
functions in acquired businesses.
o Significant Disposal Capacity
We have approximately 26.0 million cubic yards of landfill capacity in
landfills we own or operate, of which 9.9 million cubic yards are fully
permitted and operating. We recently began construction on an additional 14.2
million cubic yards of landfill capacity, and 2.0 million cubic yards are
engaged in the final permitting process. This significant disposal capacity
gives us the opportunity to achieve a high degree of internalization by allowing
room for disposal of the waste streams generated by our growing collection and
transfer operations.
o Successful Acquirer and Consolidator
We believe that we have demonstrated our ability to realize value in
the fragmented solid waste management industry by completing acquisitions of
three landfills, five transfer stations, and 41 solid waste collection
operations in the Northeast and Mid-Atlantic regions since January 1998. Please
see the section of this prospectus entitled "Recent Developments" beginning on
page 15 for a more complete description of our current activities. We have been
effective in executing our acquisition program to expand our solid waste assets
in our targeted regional markets at prices we believe will provide opportunities
for increased profits and flexibility in operations. As a result of executing
our acquisition program, we have realized significant growth in revenue and
earnings before interest, taxes, depreciation and amortization or EBITDA, which
we believe is a measure commonly used by lenders and some investors to evaluate
a company's performance in our industry.
o Strong Management Team
Our management team has a demonstrated track record of identifying,
acquiring, integrating and operating non-hazardous solid waste disposal assets.
Our executives and operation managers average 13.2 years of experience in the
solid waste disposal industry. In addition, senior management owns a significant
equity stake in Waste Systems, which motivates them to achieve our objectives to
maximize the value of their Waste Systems stock.
RECENT DEVELOPMENTS
ACQUISITIONS.
During the year ended December 31, 1999, Waste Systems acquired five
collection companies and a landfill in Central Pennsylvania, one collection
company in Vermont, two collection companies, two transfer stations and a paper
recycling plant in Eastern New England, two collection companies and a transfer
station in Upstate New York and a collection company and a transfer station in
the Baltimore, Maryland/Washington D.C. region. The aggregate cost of these
acquisitions was approximately $113.0 million consisting of approximately $72.7
million in cash, $19.3 million in common stock, $11.6 million in Series C
Preferred Stock and $9.4 million in assumed liabilities. The acquisitions have
combined annual revenues of approximately $42.0 million. The acquisitions have
all been recorded using the purchase method of accounting. In accordance with
the terms of the issuance, on October 21, 1999, a special shareholders meeting
was held and the Series C Preferred Stock was converted into 1,763,000 shares of
common stock.
NEW REVOLVING CREDIT FACILITY
On August 3, 1999, we entered into a $25 million revolving credit
facility with The BankNorth Group, N.A. to fund acquisitions and for general
working capital purposes, $17.5 million of which has been drawn to date. Any
debt incurred under this credit facility is secured debt that is guaranteed by
our subsidiaries. The revolving credit agreement has a term of three years,
provides for an interest rate based on LIBOR, and includes other terms and
conditions customary for secured revolving credit facilities.
PRIVATE PLACEMENT OF 2,239,745 SHARES OF COMMON STOCK
In August 1999, we closed a private placement of our common stock for
aggregate consideration of approximately $16 million at $7 per share. The
proceeds from the private placement will be used for potential future
acquisitions and general working capital purposes.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock
offered hereby.
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth information with respect to the Selling
Stockholders, including:
o the number and approximate percentage of shares beneficially owned by each
of them as of November 12, 1999;
o the number of shares registered for sale; and
o the number and approximate percentage of shares to be owned by each of them
after the completion of this offering.
Except as otherwise disclosed below, none of the Selling Stockholders
has, or within the past three years has had, any position, office or other
material relationship with Waste Systems. Because the Selling Stockholders may
sell all or some portion of the shares of our common stock beneficially owned by
them, only an estimate (assuming each Selling Stockholder sells all of its
shares offered hereby) can be given as to the number of shares of our common
stock that will be beneficially owned by the Selling Shareholders after this
offering. The address of each person listed below is c/o Waste Systems
International, Inc., 420 Bedford Street, Suite 300, Lexington, Massachusetts
02420. All persons listed have sole voting and investment power with respect to
their shares unless otherwise indicated.
<TABLE>
<CAPTION>
COMMON STOCK COMMON STOCK
BENEFICIALLY OWNED BENEFICIALLY OWNED
PRIOR TO OFFERING1/ AFTER OFFERING
<S> <C> <C> <C> <C> <C>
NUMBER
OF SHARES
NAME NUMBER PERCENT OFFERED NUMBER PERCENT
- ---------------------------------------- ------------- --------------- -------------- ------------- -------------
Kevin Baldwin 700,781 3.44% 700,781 6/ 0 0%
Kendall Baldwin2/ 700,781 3.44% 700,781 6/ 0 0%
Kelly Baldwin3/ 743,776 3.66% 743,776 6/ 0 0%
Kimberly Robb4/ 743,776 3.66% 743,776 6/ 0 0%
Baldwin, L.P.5/ 1,552,506 7.64% 1,552,506 6/ 0 0%
Chilton Investment Company Inc. 1,759,700 7/ 8.55% 1,000,000 759,700 3.69%
John Hancock Advisers 1,845,397 8/ 8.67% 307,603 1,537,794 7.23%
Evergreen Investment Management Company 82,678 0.41% 71,428 11,250 0.06%
Penn Capital Management 159,875 0.79% 150,000 9,875 0.05%
Tudor Investment Corporation 71,428 0.35% 71,428 0 0%
Saugatuck Partners L.P. 50,000 0.25% 50,000 0 0%
First Albany Corporation 17,857 0.09% 17,857 0 0%
B-III Capital Partners, L.P. 8,019,955 9/ 35.02% 571,429 7,448,526 32.53%
- -------
</TABLE>
1/ Based on a total of 20,330,946 shares of common stock outstanding as of
February 7, 2000].
2/ Kendall Baldwin is an employee of Waste Systems and served as a Director
and as Vice-President of Eastern Trans-Waste of Maryland.
3/ Kelly Baldwin served as a Director and as Secretary and Treasurer of
Eastern Trans-Waste of Maryland.
4/ Kimberly Robb served as a Director and as President of Eastern Trans-Waste
of Maryland.
5/ After the closing of the acquisition of Eastern Trans-Waste of Maryland,
Kevin Baldwin, Kendall Baldwin, Kelly Baldwin and Kimberly Robb
collectively transferred by gift 142,106 shares of common stock of Waste
Systems and 800 shares of Series C preferred stock of Waste Systems (which
were converted into 1,410,400 shares of common stock of Waste Systems on
October 21, 1999) to Baldwin, L.P. Horace G. Baldwin is the general partner
of Baldwin, L.P.
6/ The former stockholders of Eastern Trans-Waste of Maryland were
contractually restricted from selling any shares of our Common Stock
pursuant to this Registration Statement until December 31, 1999. From
January 1, 2000 through June 30, 2000, the former stockholders of Eastern
Trans-Waste of Maryland may, subject to the effectiveness of this
Registration Statement, collectively sell up to 20% of their shares of
Common Stock (less any shares of Common Stock sold by the former
stockholders of Eastern Trans-Waste of Maryland pursuant to their
"piggyback" registration rights). After June 30, 2000, the former
stockholders of Eastern Trans-Waste of Maryland may sell their share of
Common Stock without any contractual restrictions.
7/ Includes 1,504,700 shares of Common Stock currently owned and 255,000
shares of Common Stock issuable upon the exercise of warrants to purchase
shares of Common Stock at an exercise price of $6.25 per share.
8/ Includes 898,715 shares of Common Stock currently owned, 916,682 shares of
Common Stock issuable upon conversion of Notes at a conversion price of
$10.00 as set forth in the Notes and 30,000 shares of Common Stock issuable
upon the exercise of warrants to purchase shares of Common Stock at an
exercise price of $6.25 per share.
9/ Includes 5,450,533 shares of Common Stock currently owned, 2,231,922 shares
of Common Stock issuable upon conversion of Notes at a conversion price of
$10.00 as set forth in the Notes and 337,500 shares of Common Stock
issuable upon the exercise of warrants to purchase shares of Common Stock
at an exercise price of $6.25 per share. DDJ Capital Management, LLC
("DDJ") serves as the investment manager to B-III; an affiliate of DDJ acts
as the general partner of B-III.
We have agreed to use our best efforts to keep this Registration
Statement effective generally for a period of three years.
<PAGE>
PLAN OF DISTRIBUTION
The shares of common stock registered hereunder and owned by the
Selling Stockholders may be offered and sold by means of this prospectus from
time to time as market conditions permit in the over-the-counter market, or
otherwise at prices and terms then prevailing or at prices related to the
then-current market price, or in negotiated transactions. These shares may be
sold by one or more of the following methods, without limitation:
o a block trade in which a broker or dealer so engaged will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
o a purchase by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this prospectus;
o ordinary brokerage transactions and transactions in which the broker solicits
a purchase; and
o face-to-face transactions between sellers and purchasers without a broker or
dealer.
In effecting sales, brokers or dealers engaged by the Selling
Stockholders may arrange for other brokers or dealers to participate. Such
brokers or dealers may receive commissions or discounts from Selling
Stockholders in amounts to be negotiated.
The Selling Stockholders and any brokers or dealers who act in
connection with the sale of the shares hereunder may be deemed to be
"underwriters" within the meaning of 2(11) of the Securities Act, and any
commissions received by them or any profit on any resale of the shares as
principal might be deemed to be underwriting discounts and commissions under the
Securities Act. We have agreed to indemnify the Selling Stockholders and we may
agree to indemnify any such broker or dealer who may be deemed to be an
underwriter against certain liabilities, including liabilities under the
Securities Act as an underwriter or otherwise.
We have advised the Selling Stockholders that, during such time as they
may be engaged in a distribution of the shares of common stock included herein,
they must comply with the applicable provisions of Regulation M under the
Exchange Act, as amended ("Regulation M") and, in connection therewith, the
Selling Stockholders may not engage in any stabilization activity in connection
with any of our securities, that they must furnish copies of this prospectus to
each broker-dealer through which the shares of our common stock included herein
may be offered, and that they may not bid for or purchase any of our securities
or attempt to induce any person to purchase any of our securities except as
permitted under Regulation M. The Selling Stockholders have also agreed to
inform us and broker-dealers through whom sales may be made hereunder when the
distribution of the shares is completed.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered by
this prospectus has been passed upon for Waste Systems by Morgan, Lewis &
Bockius LLP, New York, New York.
EXPERTS
The consolidated financial statements for each of the years in the
three-year period ended December 31, 1998 incorporated by reference in this
prospectus and elsewhere in this Registration Statement have been audited by
KPMG LLP, independent certified public accountants, and in reliance upon the
authority of said firm as experts in accounting and auditing.
<PAGE>
No dealer, representative or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and if given or made, such information or representations must not
be relied upon as having been authorized by Waste Systems. Neither the delivery
of this prospectus nor any sale made hereunder shall under any circumstances
create any implication that the information contained herein is correct as of
any date subsequent to the date hereof. This prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any securities offered hereby
by anyone in any jurisdiction in which such offer or solicitation is not
authorized or in which the person making such offer or solicitation is not
qualified to do so or to anyone to whom it is unlawful to make such offer or
solicitation.
TABLE OF CONTENTS
- ---------------------------------------------------------------- ----
RISK FACTORS 2
Our history of losses makes the common stock a highly 2
speculative investment.
Risks of substantial voting control by Waste Systems' 2
management and major stockholders.
Issuance of additional equity may be dilutive to stockholders. 2
Future sales of common stock may adversely affect the market 3
for our common stock.
Market conditions may reduce the trading price of our common 3
stock.
It is unlikely that we will pay dividends to our stockholders 3
in the future.
Anti-takeover provisions applicable to Waste Systems may not 3
be favorable to our stockholders.
Failure to achieve adjusted stockholders' equity of at least 4
$40,000,000 will increase our interest expense.
Incurring more debt could further exacerbate the risks of our 4
high level of indebtedness.
We may not generate enough cash to service our indebtedness or 4
our other liquidity needs.
Our high level of indebtedness could adversely affect our 5
financial health.
We have no control over many factors in our ability to finance 6
planned growth.
Our future success depends upon our ability to manage rapid 6
growth in operations and personnel.
Our future success depends upon our ability to identify, 6
acquire and integrate acquisition costs.
A reduction in the market price of our common stock may limit 6
our ability to consummate future acquisitions.
Loss of key executives could affect our ability to achieve 7
Waste Systems' business objectives.
Failed acquisitions or projects may adversely affect our 7
results of operations and financial condition.
Our business may not succeed due to the highly competitive 7
nature of the solid waste management industry.
Seasonal revenue fluctuations may make it more difficult to 7
manage and finance our business successfully.
Our geographic concentration exposes us to a higher degree of 8
risk than our geographically more diverse competitors.
Potential difficulties in acquiring landfill capacity could 8
increase our costs.
Failure to obtain landfill closure performance bonds and 8
letters of credit may adversely affect our business.
Estimated accruals for landfill closure and post-closure 8
costs may not meet our actual financial obligations.
Environmental and other government regulations impose 8
costs and uncertainty on our operations.
We are exposed to potential liability for environmental 9
damage and regulatory noncompliance.
Our environmental liability insurance may not cover all 9
risks of loss.
Addressing local community concerns about our operations 9
may adversely affect our business.
WHERE YOU CAN FIND MORE INFORMATION 10
DOCUMENTS INCORPORATED BY REFERENCE 10
FORWARD LOOKING STATEMENTS 11
THE COMPANY 11
Current Integrated Operations. 11
The Movement of the Solid Waste Management Industry 12
Towards Consolidation and Integration.
Our Strategy to Capitalize on Industry Consolidation and 12
Integration.
Our Key Strengths. 13
RECENT DEVELOPMENTS 14
Acquisitions. 14
New Revolving Credit Facility. 14
Private Placement of 2,239,745 Shares of Common Stock. 14
USE OF PROCEEDS 14
SELLING STOCKHOLDERS 15
PLAN OF DISTRIBUTION 17
LEGAL MATTERS 17
EXPERTS 17
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses to be incurred in connection with the
distribution of the common stock covered by this Registration Statement, all of
which will be paid by Waste Systems, are as follows:
SEC Registration Fee $ 7,830.00
Nasdaq Listing Fee *
Printing and Engraving Costs 5,000.00
Legal Fees and Expenses 10,000.00
Accounting Fees and Expenses 5,000.00
Miscellaneous 5,000.00
------------
Total 32,830.00*
- -----------------------------
* To be filed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL")
provides that a corporation may indemnify a director, officer, employee or agent
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement in respect of or in successful defense of any action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
We have obtained directors' and officers' insurance providing benefits
aggregating $5 million. In addition, Article X of our Second Amended and
Restated Certificate of Incorporation (the "Charter") provides that directors
and officers of Waste Systems, or others serving as a director or officer of
another corporation at our request, shall be indemnified to the fullest extent
permitted by the DGCL. Article X further provides that the indemnification
rights provided by such Article X shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any law, agreement or
vote of stockholders or disinterested directors or otherwise. Article VII of the
Charter further provides that no director shall be personally liable to us or
our stockholders for monetary damages for any breach of fiduciary duty by such
person as a director, except to the extent that the elimination or limitation of
liability is not permitted under the DGCL as in effect when such liability is
determined. Any amendment or repeal of Article VII by the stockholders or an
amendment to the DGCL shall not adversely affect any right or protection under
such Article existing at the time of such amendment or repeal with respect to
any act or omission occurring prior to such amendment or repeal of a person
serving as a director at the time of such amendment or repeal.
Article V of our By-laws provides that present and former directors and
officers of Waste Systems shall be indemnified by us to the fullest extent
authorized by the DGCL, as the same exists or may in the future be amended to
provide for broader indemnification rights, against any and all reasonable
expenses or liability incurred in connection with any threatened, pending or
completed legal proceeding in which any such person is involved as a result of
serving or having served as a director or officer of Waste Systems, as a
director or officer of any subsidiary of Waste Systems, or acting or having
acted in any capacity with any other entity at our written request or direction,
in each case if such person acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of Waste
Systems, and with respect to criminal actions or proceedings, that such person
had no reasonable cause to believe his or her conduct was unlawful. The By-laws
provide that any indemnification extended to an officer pursuant to Article V
shall include the reimbursement of expenses by us prior to the final disposition
of the proceeding upon the receipt of an undertaking by such indemnified person
to repay such payment if it is determined that such indemnified person is not
entitled to such reimbursement. The By-laws further provide that the previously
described provisions of Article V are deemed to be a contract between Waste
Systems and each director and officer. In addition, the By-laws provide that the
provisions with respect to indemnification and payment of expenses incurred in
defending a covered proceeding shall not be exclusive of any right which any
person may have or hereafter acquire under any statute, provision of the Charter
or the By-laws, agreement, vote of the stockholders or disinterested directors
or otherwise.
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
4.1 -- Amended and Restated Certificate of Incorporation of Waste Systems
(incorporated by reference to Exhibit 4.3 to the Registration
Statement of Waste Systems on Form S-3, No. 333-37217).
4.2 -- By-laws of Waste Systems (incorporated by reference to Exhibit 4.5
to the Registration Statement of Waste Systems on Form S-3,
No. 333-37217).
4.3 -- Registration Rights Agreement dated as of July 2, 1999 by and
between Waste Systems and each of Kevin Baldwin, Kendall Baldwin,
Kelly Baldwin and Kimberly Robb.
4.4 -- Consent of Baldwin, L.P. dated July 2, 1999.
5.1 -- Opinion of Morgan, Lewis & Bockius LLP.
23.1 -- Consent of KPMG LLP.
23.2 -- Consent of Morgan, Lewis & Bockius LLP (filed as part of
Exhibit 5).
24.1 -- Power of Attorney (included with the signature page hereof).
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which any offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in aggregate, represent
a fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any other material change to such information in the registration statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in this Registration Statement;
(2) That for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities being offered therein
and the offering of such securities at the time may be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities which are being registered which remain unsold at the
termination of the offering.
(4) That for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3
under the Securities Exchange Act of 1934; and where interim financial
information required to be presented by Article 3 of Regulation S-X is not set
forth in the prospectus, to deliver, or caused to be delivered to each person to
whom the prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such interim
financial information.
(6) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed by the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Lexington, State of Massachusetts on February ___,
2000.
Date: February ___, 2000 WASTE SYSTEMS INTERNATIONAL, INC.
By: /s/ James Elitzak
James Elitzak
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
POWER OF ATTORNEY
Each person whose signature appears below hereby appoints James Elitzak
as his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and any other registration statement
for the same offering filed pursuant to Rule 462 under the Securities Act of
1933, and to file the same, with all exhibits thereto and all other documents in
connection therewith, with the Commission, granting unto said attorney-in-fact
and agent full power and authority to do and perform each and every act and
thing appropriate or necessary to be done, as fully and for all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent or his substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date or dates indicated.
Date: February ___, 2000 By: /s/ Philip Strauss
----------------------------
Philip Strauss
Chairman, Chief Executive Officer and
President (Principal Executive Officer)
Date: February ___, 2000 By: /s/ Robert Rivkin
------------------------------
Robert Rivkin
Executive Vice President--Acquisitions,
Secretary, Treasurer and Director
Date: February ___, 2000 By: /s/ Jay J. Matulich
------------------------------
Jay J. Matulich--Director
Date: February ___, 2000 By: /s/ David J. Breazzano
------------------------------
David J. Breazzano--Director
Date: February ___, 2000 By: /s/ Charles Johnston
------------------------------
Charles Johnston--Director
Date: February ___, 2000 By: /s/ Judy K. Mencher
------------------------------
Judy K. Mencher--Director
Date: February ___, 2000 By: /s/ William B. Philipbar
-------------------------------
William B. Philipbar--Director
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- --------- -------------------------------------------------------------------
4.1 -- Amended and Restated Certificate of Incorporation of Waste Systems
(incorporated by reference to Exhibit 4.3 to the Registration
Statement of Waste Systems on Form S-3, No. 333-37217).
4.2 -- By-laws of Waste Systems (incorporated by reference to Exhibit 4.5
to the Registration Statement of Waste Systems on Form S-3, No.
333-37217).
4.3 -- Registration Rights Agreement, dated as of July 2, 1999, by and
between Waste Systems and each of Kevin Baldwin, Kendall Baldwin,
Kelly Baldwin and Kimberly Robb.
4.4 -- Consent of Baldwin, L.P. dated July 2, 1999.
5.1 -- Opinion of Morgan, Lewis & Bockius LLP.
23.1 -- Consent of KPMG LLP.
23.2 -- Consent of Morgan, Lewis & Bockius LLP (filed as part of Exhibit 5).
24.1 -- Power of Attorney (included with the signature page hereof).
<PAGE>
Exhibit 4.3
REGISTRATION RIGHTS AGREEMENT (this Agreement) dated as of
July 2, 1999 by and between Waste Systems International, Inc., a corporation
organized under the laws of the State of Delaware (the Company), and each of
Kevin Baldwin, Kendall Baldwin, Kelly Baldwin and Kimberly Robb and their
respective permitted transferees and assigns (collectively, the Shareholders and
individually a Shareholder). Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to them in the Merger Agreement
(defined below).
W I T N E S S E T H :
WHEREAS, concurrently herewith, the Company, WSI Acquisition
Co., a Delaware corporation and a wholly-owned indirect subsidiary of the
Company, Eastern Trans-Waste of Maryland, Inc., a Maryland corporation, and each
of the Shareholders is entering into an Agreement and Plan of Merger, dated as
of July 2, 1999 (the Merger Agreement); and
WHEREAS, the execution and delivery of this Agreement is a
condition to entering into the Merger Agreement;
NOW THEREFORE, in consideration of the mutual covenants and
agreements and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
REGISTRATION OF PURCHASER COMMON STOCK
1.1 Purchaser shall prepare and file with the SEC two
registration statements on Form S-3, as follows: (i) the first registration
statement (the Initial Registration Statement), to be filed within 30 days after
the Closing Date, to register for resale by the Shareholders the Purchaser
Common Stock, and (ii) the second registration statement (the Second
Registration Statement; and the Initial Registration Statement together with the
Second Registration Statement, the Registration Statements) within 30 days
following the date (the Conversion Date) on which the Purchaser Preferred Stock
converts into shares of Common Stock of the Company, to register for resale by
the Shareholders such shares of Common Stock issued upon conversion of the
Purchaser Preferred Stock. Purchaser shall use its best efforts to cause the
Registration Statements to become effective within 180 days following the
Closing Date and shall keep the Registration Statements effective for at least
three years from the respective dates of effectiveness of such Registration
Statements.
1.2 If Purchaser has not caused the Registration Statements to
become effective within 180 days after the Closing Date, each Shareholder shall
be entitled to redeem (i) the shares of Purchaser Preferred Stock held by such
Shareholder, in whole or in part, for immediately available funds in an amount
equal to (1) the Liquidation Preference per share of Purchaser Preferred Stock
redeemed plus (2) interest accrued thereon at a rate of 8% per annum from the
Closing Date through the date of redemption and (ii) the shares of Purchaser
Common Stock held by such Shareholder, in whole or in part, for immediately
available funds in an amount equal to (1) the Exchange Price per share of
Purchaser Common Stock redeemed plus (2) interest accrued thereon at a rate of
8% per annum from the Closing Date through the date of redemption.
ARTICLE II
PIGGYBACK REGISTRATIONS
2.1 Right to Piggyback. Whenever the Company proposes to
register any of its equity securities under the Securities Act (other than for
use in a Rule 145 transaction or for registrations for employee plans) and the
registration form to be used may be used for the registration of Registrable
Securities (a Piggyback Registration), the Company will give notice to the
Shareholders of its intention to effect such a registration and will include in
such registration all Registrable Securities with respect to which the Company
has received a written request from any Shareholder for inclusion therein within
fifteen (15) days after the receipt of the Company's notice, subject to the
provisions of Section 2.2 and 2.3 hereof. Such requests for inclusion shall
specify the number of Registrable Securities intended to be disposed of by such
Shareholder and the intended method of distribution thereof.
2.2 Priority on Primary Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf of the Company,
and the managing underwriters advise the Company that in their opinion the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering, the Company will include in such
registration (i) first, the securities the Company proposes to sell, (ii)
second, that number of the Registrable Securities and other shares of Common
Stock proposed to be included in such registration, pro rata among the
respective holders thereof based upon the total number of shares which such
holders proposed to include in such registration.
2.3 Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders
(other than the Shareholders) of the Company's securities, and the managing
underwriters advise the Company that in their opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering, the Company will include in such registration only so
many of the Registrable Securities requested to be included in such registration
by one or more Shareholders that the managing underwriters deem advisable, pro
rata among the respective Shareholders thereof based upon the total number of
shares which such Shareholders proposed to include in such registration.
ARTICLE III
HOLDBACK AGREEMENTS
3.1 Holdback Obligations. The Shareholders agree not to effect
any public sale or distribution of equity securities of the Company during the
seven (7) days prior to, and the 90-day period beginning on, the effective date
of any underwritten registration in which they are participating (except as part
of such underwritten registration) that relates to Registrable Securities,
unless (i) the managing underwriters of the registered public offering otherwise
agree or (ii) the officers, directors and 5% stockholders of the Company shall
not be similarly restricted.
ARTICLE IV
LOCK-UP AGREEMENT
4.1 Purchaser and each Shareholder agrees that (x) until
December 31, 1999, no Shareholder shall sell any shares of Purchaser Common
Stock; provided, however, that (i) the Shareholders may collectively sell up to
20% of their shares of Purchaser Common Stock through exercise of their rights
set forth in Article II hereof and (ii) each Shareholder may make unlimited
gifts of his or her shares of Purchaser Common Stock (including, without
limitation, transfers to trusts for estate planning purposes or other vehicles
including partnership and escrow agreements) provided that any donee agrees to
be bound by the terms of the foregoing restrictions, (y) during the period from
January 1, 2000 through June 30, 2000, the Shareholders may collectively sell up
to 20% of their shares of Purchaser Common Stock (less the number of shares of
Purchaser Common Stock sold by the Shareholders pursuant to clause (i) of this
Section 4.1) and may make unlimited gifts of their shares of Purchaser Common
Stock (including, without limitation, transfers to trusts for estate planning
purposes or other vehicles including partnership and escrow agreements) provided
that any donee agrees to be bound by the terms of the foregoing restrictions,
and (z) after June 30, 2000, no restrictions on sales of shares of Purchaser
Common Stock by the Shareholders shall apply. Any donee as described in clause
(ii) or clause (y) of this Section 4.1 shall be deemed a Shareholder for
purposes of this Agreement and a party hereto.
ARTICLE V
REGISTRATION PROCEDURES
5.1 With respect to the Initial and Second Registration
Statements and whenever the Company has determined to effect a registration of
its shares and one or more Shareholders have exercised their Piggyback
Registration rights as herein provided, the Company will use reasonable efforts
to effect the registration and the sale of such Registrable Securities in
accordance with the intended method of disposition thereof as quickly as
possible, and pursuant thereto the Company will as expeditiously as reasonably
possible:
(a) prepare and file with the Commission a Registration
Statement with respect to such Registrable Securities and use all reasonable
efforts to cause such Registration Statement to become and remain effective
until the completion of the distribution contemplated thereby; provided, that as
promptly as practicable before filing a Registration Statement or Prospectus or
any amendments or supplements thereto, the Company will (i) furnish to counsel
selected by the holders of Registrable Securities, without charge, copies of all
such documents proposed to be filed, and (ii) notify each holder of Registrable
Securities covered by such Registration Statement of (x) any request by the
Commission to amend such Registration Statement or amend or supplement any
Prospectus, or (y) any stop order issued or threatened by the Commission, and
take all reasonable actions required to prevent the entry of such stop order or
to promptly remove it if entered;
(b) (i) prepare and file with the Commission such amendments
and supplements to such Registration Statement and the Prospectus used in
connection therewith as may be necessary to keep such Registration Statement
effective until all Registrable Securities covered by such Registration
Statement are sold in accordance with the intended plan of distribution set
forth in such Registration Statement, and (ii) comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
Registration Statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such Registration
Statement;
(c) furnish to each seller of Registrable Securities, without
charge, such number of conformed copies of such Registration Statement, each
amendment and supplement thereto, the Prospectus included in such Registration
Statement (including each preliminary Prospectus and, in each case including all
exhibits) and such other documents as such seller may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by such
seller;
(d) use all reasonable efforts (if the offering is
underwritten) to furnish to each seller of Registrable Securities, without
charge, a signed copy, addressed to such seller (and the underwriters, if
necessary), of an opinion of counsel for the Company or special counsel to the
holders of the Registrable Securities covered by such Registration Statement,
dated the effective date of such Registration Statement (and, if such
Registration Statement includes an underwritten public offering, dated the date
of the closing under the underwriting agreement), covering substantially the
same matters with respect to such Registration Statement (and the Prospectus
included therein) as are customarily covered in opinions of issuers counsel
delivered to the underwriters in underwritten public offerings, and such other
legal matters as the seller (or the underwriters, if any) may reasonably
request;
(e) notify the Shareholders, at a time when a Prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event known to the Company as a result of which the Prospectus
included in such Registration Statement, as then in effect, contains an untrue
statement of a material fact or omits to state any fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances under which they were made, and, at the request of any such
Shareholder, the Company will prepare and furnish such Shareholder, without
charge, a reasonable number of copies of a supplement to or an amendment of such
Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such Prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made;
(f) cause all Registrable Securities to be listed on each
securities exchange and quotation system on which similar securities issued by
the Company are then listed;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of the applicable
Registration Statement;
(h) make available for inspection by the Shareholders, any
underwriter participating in any disposition pursuant to such Registration
Statement and any attorney, accountant or other agent retained by any such
Shareholder or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such Shareholder, underwriter, attorney, accountant
or agent in connection with such Registration Statement to enable them to
conduct a reasonable investigation within the meaning of the Securities Act;
(i) use reasonable efforts to (i) register and qualify the
Registrable Securities covered by such Registration Statement under such
securities or blue sky laws of such jurisdictions as the Shareholders
representing a majority of the Registrable Securities then outstanding
reasonably request, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof at all
times until all Registrable Securities covered by such Registration Statement
are sold in accordance with the intended plan of distribution set forth in such
Registration Statement (Registration Period ), (iii) take such other actions as
may be necessary to maintain such registrations and qualifications in effect at
all times during the Registration Period and (iv) take all other actions
reasonably necessary or advisable to qualify the Registrable Securities for sale
in such jurisdictions; provided, however, that the Company shall not be required
in connection therewith or as a condition thereto (1) to qualify to do business
in any jurisdiction where it would not otherwise be required to qualify but for
this Section 5.1(i), (2) to subject itself to general taxation in any such
jurisdiction, (3) to file a general consent to service of process in any such
jurisdiction, (4) to provide any undertakings that cause more than nominal
expense or burden to the Company or (5) to make any change in its charter or
by-laws, which in each case the Board of Directors of the Company determines to
be contrary to the best interests of the Company and its stockholders;
(j) subject to other provisions hereof, use all reasonable
efforts to cause such Registrable Securities covered by such Registration
Statement to be registered with or approved by such other governmental agencies
or authorities or self-regulatory organizations as may be necessary to enable
the Shareholders to consummate the disposition of such Registrable Securities;
and
(k) promptly notify the Shareholders of the issuance of any
stop order by the Commission or the issuance by any state securities commission
or other regulatory authority of any order suspending the qualification or
exemption from qualification of any of the Registrable Securities under state
securities or ?blue sky laws, and use every reasonable effort to obtain the
lifting at the earliest possible time of any stop order suspending the
effectiveness of any Registration Statement or of any order preventing or
suspending the use of any preliminary Prospectus.
ARTICLE VI
REGISTRATION EXPENSES
6.1 Registration Expenses. All registration and filing fees,
fees and expenses of compliance with securities or blue sky laws (including the
fees and expenses of counsel in connection with blue sky qualifications of the
Registrable Securities), printing expenses, listing fees for securities to be
registered on a national securities exchange or the Nasdaq Stock Market and all
independent certified public accountants, underwriters (excluding discounts and
commissions) and other Persons retained by the Company (all such expenses being
herein called ?Registration Expenses ), will be borne by the Company.
6.2 Shareholders Expenses. The Company shall have no
obligation to pay any underwriting discounts or commissions attributable to the
sale of Registrable Securities, which expenses will be borne by all sellers of
securities (including the Shareholders) included in such registration in
proportion to the aggregate selling price of the securities to be so registered.
ARTICLE VII
INDEMNIFICATION
7.1 Company's Indemnification Obligations. The Company agrees
to indemnify and hold harmless each of the Shareholders (collectively, the
Holder Indemnitees), as follows:
(i) against any and all loss, liability, claim,
damage or expense arising out of or based upon an untrue
statement or alleged untrue statement of a material fact
contained in any Registration Statement (or any amendment or
supplement thereto), including all documents incorporated
therein by reference, or in any preliminary Prospectus or
Prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading;
(ii) against any and all loss, liability, claim,
damage and expense to the extent of the aggregate amount paid
in settlement of any litigation, investigation or proceeding
by any governmental agency or body, commenced or threatened,
or of any claim based upon any such untrue statement or
omission or any such alleged untrue statement or omission, if
such settlement is effected with the written consent of the
Company; and
(iii) against any and all expense incurred by them in
connection with investigating, preparing or defending against
any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or any
claim based upon any such untrue statement or omission or any
such alleged untrue statement or omission, to the extent that
any such expense is not paid under clause (i) or (ii) above;
provided, that this indemnity does not apply to any loss, liability, claim,
damage or expense to the extent arising out of an untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with information furnished to the Company by or on behalf of the
Shareholders expressly for use in the preparation of any Registration Statement
(or any amendment or supplement thereto), including all documents incorporated
therein by reference, or of any preliminary Prospectus or Prospectus (or any
amendment or supplement thereto); and provided further, that the Company will
not be liable to any holder under the indemnity agreement in this Section 7.1,
with respect to any preliminary Prospectus or the final Prospectus or the final
Prospectus as amended or supplemented, as the case may be, to the extent that
any such loss, liability, claim, damage or expense of such holder results from
the fact that such holder sold Registrable Securities to a Person to whom there
was not sent or given, at or prior to the written confirmation of such sale, a
copy of the final Prospectus or of the final Prospectus as then amended or
supplemented, whichever is most recent, if the Company has previously and timely
furnished copies thereof to such holder.
7.2 Holder's Indemnification Obligations. In connection with
any Registration Statement in which any Shareholder is participating, each such
Shareholder agrees to indemnify and hold harmless (in the same manner and to the
same extent as set forth in Section 7.1 of this Agreement) the Company and each
Person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act with respect to any statement
or alleged statement in or omission or alleged omission from such Registration
Statement, any preliminary, final or summary Prospectus contained therein, or
any amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made about such holder in reliance upon and in
conformity with information furnished to the Company by or on behalf of such
holder.
7.3 Notices; Defense; Settlement. Promptly after receipt by an
indemnified party hereunder of written notice of the commencement of any action
or proceeding involving a claim referred to in Section 7.1 or Section 7.2 of
this Agreement, such indemnified party will, if a claim in respect thereof is to
be made against an indemnifying party, give written notice to the latter of the
commencement of such action; provided, that the failure of any indemnified party
to give notice as provided herein shall not relieve the indemnifying party of
its obligations under Section 7.1 or Section 7.2 of this Agreement except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
the indemnifying party will be entitled to participate in and to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof. Unless (i) legal
counsel for the indemnifying party notifies the indemnified party that there are
or may be legal defenses available to the indemnified party or to other
indemnified parties which are different from or additional to those available to
the indemnifying party, which, if the indemnified party and the indemnifying
party were to be represented by the same counsel, would constitute a conflict of
interest of such counsel or prejudice prosecution of the defenses available to
such indemnified party, or (ii) the indemnifying party shall assume the defense
of a claim and fail to diligently prosecute such defense, then in each such case
the indemnified party, by notice to the indemnifying party, may employ its own
counsel and control the defense of the claim and the indemnifying party shall be
liable for the reasonable fees, charges and disbursements of one firm of counsel
employed by the indemnified party; and the indemnified party shall be promptly
reimbursed or any such fees, charges and disbursements, as and when incurred.
The indemnifying party will not, without the prior written consent of the
indemnified party, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action, suit or proceeding in respect of
which indemnification may be sought hereunder (whether or not such indemnified
party or any Person who controls such indemnified party is a party to such
claim, action, suit or proceeding), unless such settlement, compromise or
consent includes an unconditional release of such indemnified party from all
liability arising out of such claim, action, suit or proceeding. Notwithstanding
anything to the contrary set forth herein, and without limiting any of the
rights set forth above, in any event any party will have the right to retain, at
its own expense, counsel with respect to the defense of a claim.
7.4 Indemnity Provision. Each of the Company and the
Shareholders shall provide for the foregoing indemnity (with appropriate
modifications) in any underwriting agreement with respect to any required
registration or other qualification of securities under any Federal or state law
or regulation of any governmental authority other than the Securities Act.
7.5 Payments. The indemnification required by this Article VII
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
ARTICLE VIII
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
8.1 No Person may participate in any underwritten registration
hereunder unless such Person (i) agrees to sell such Person?s securities on the
basis provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such arrangements and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements, escrow agreements and other documents required under the terms of
such underwriting arrangements and consistent with the provisions of this
Agreement.
ARTICLE IX
DEFINITIONS
9.1 Terms. As used in this Agreement, the following
defined terms shall have the meanings set forth below:
Business Day means a day other than Saturday, Sunday or any
day on which banks located in the State of New York are authorized or obligated
to close.
Commission means the U.S. Securities and Exchange Commission.
Common Stock means the Common Stock of the Company, par value
$.01 per share.
Exchange Act means the Securities Exchange Act of 1934, as
amended, or any similar Federal statute then in effect, and any reference to a
particular section thereof shall include a reference to the equivalent section,
if any, of any such similar Federal statute, and the rules and regulations
thereunder.
Person means any individual, corporation, partnership,
association, trust or other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
Prospectus means the Prospectus included in any Registration
Statement (including without limitation, a Prospectus that disclosed information
previously omitted from a Prospectus filed as part of an effective Registration
Statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any Prospectus supplement, with respect to the terms
of the offering of any portion of the securities covered by such Registration
Statement, and all other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.
Registrable Securities means any shares of Common Stock,
including Purchaser Common Stock, held by the Shareholders. As to any particular
Registrable Securities, such securities will cease to be Registrable Securities
when they have been (x) effectively registered under the Securities Act and
disposed of in accordance with the registration statement covering them or (y)
transferred pursuant to Rule 144 (or any similar rule then in force) under the
Securities Act or otherwise transferred and, in each case, new certificates for
them not bearing a restrictive Securities Act legend have been delivered by the
Company and can be sold without complying with the registration requirements of
the Securities Act.
Registration Statement means any Registration Statement of the
Company which covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
Securities Act means the Securities Act of 1933, as amended,
or any similar Federal statute then in effect, and any reference to a particular
section thereof shall include a reference to a comparable section, if any, of
any such similar Federal statute, and the rules and regulations thereunder.
9.2 Defined Terms in Corresponding Sections. The following
defined terms, when used in this Agreement, shall have the meaning ascribed to
them in the corresponding Sections of this Agreement listed below:
Agreement -- Preamble
Company -- Preamble
Holder Indemnitees -- Section 7.1
Shareholders -- Preamble
Piggyback Registration -- Section 2.1
Registration Expenses -- Section 6.1
ARTICLE X
MISCELLANEOUS
10.1 Remedies. In the event of a breach by any party to this
Agreement of its obligations under this Agreement, any party injured by such
breach, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The parties agree that the provisions of this
Agreement shall be specifically enforceable, it being agreed by the parties that
the remedy at law, including monetary damages, for breach of any such provision
will be inadequate compensation for any loss and that any defense in any action
for specific performance that a remedy at law would be adequate is waived.
10.2 Amendments and Waivers. Except as otherwise provided
herein, no modification, amendment or waiver of any provision of this Agreement
will be effective against the Company or any holder of Registrable Securities,
unless such modification, amendment or waiver is approved in writing by the
Company and the Shareholders representing a majority of the Registrable
Securities then outstanding. The failure of any party to enforce any of the
provisions of this Agreement will in no way be construed as a waiver of such
provisions and will not affect the right of such party thereafter to enforce
each and every provision of this Agreement in accordance with its terms.
10.3 Successors and Assigns. All covenants and agreements in
this Agreement by or on behalf of any of the parties hereto will bind and inure
to the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not.
10.4 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally against written receipt or by facsimile transmission or
mailed by pre-paid registered or certified mail, return receipt requested or
mailed by overnight courier prepaid to the parties at the following addresses or
facsimile numbers:
(a) If to the Company, to:
Waste Systems International, Inc.
420 Bedford Street, Suite 300
Lexington, MA 02420
Facsimile No.: (781) 862-2929
Attn: Arthur L. Streeter II, Esq.
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Facsimile No.: (212) 309-6273
Attn.: Nancy H. Corbett, Esq.
(b) If to the Shareholders, to:
Kendall Baldwin
412 Deale Road
Tracy's Landing, Maryland 20779
Kevin Baldwin
1717 Fallowfield Court
Crofton, Maryland 21114
Kelly Baldwin
2123 Colonel Way
Odenton, Maryland 21113
Kimberly Robb
6714 Duck Lane
Tracy's Landing, Maryland 20779
with a copy to:
Cooper and Associates, P.C.
1050 17th St., N.W.
Suite 400
Washington, D.C. 20036
Facsimile No.: (202) 293-5855
Attn.: A. J. Cooper, Esq.
(c) If to any other holder, to:
The last address (or facsimile number) for
such Person set forth in the records of the Company.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section 8.4, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section 8.4, be deemed given upon receipt of confirmation,
(iii) if delivered by mail in the manner described above to the address as
provided in this Section 8.4, be deemed given on the earlier of the third full
Business Day following the day of mailing or upon receipt, and (iv) if delivered
by overnight courier to the address provided in this Section 8.4, be deemed
given on the earlier of the first Business Day following the date sent by such
overnight courier or upon receipt. Any party from time to time may change its
address, facsimile number or other information for the purpose of notices to
that party by giving notice specifying such change to the other parties hereto.
10.5 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (i) such provision will be
fully severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (iv) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
10.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware.
10.7 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
ARTICLE XI
RULE 144 REPORTING
11.1 The Company hereby agrees as follows:
(a) The Company shall use its best efforts to make and keep
public information available, as those terms are understood and defined in Rule
144 under the Securities Act at all times.
(b) The Company shall use its best efforts to file with the
Commission in a timely manner all reports and other documents as the Commission
may prescribe under Section 13(a) or 15(d) of the Exchange Act at any time after
the Company has become subject to such reporting requirements of the Exchange
Act.
(c) The Company shall furnish, without charge, to each holder
of Registrable Securities forthwith upon request (i) a written statement by the
Company as to its compliance with the reporting requirements of Rule 144, and of
the Securities Act and the Exchange Act, (ii) a copy of the most recent annual
or quarterly report of the Company, and (iii) such other reports and documents
so filed as a holder may reasonably request to avail itself of any rule or
regulation of the Commission allowing a holder of Registrable Securities to sell
any such securities without registration.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
COMPANY:
WASTE SYSTEMS INTERNATIONAL, INC.
By: /s/ Robert S. Rivkin
--------------------------------------
Name: Robert S. Rivkin
Title: Executive Vice President - Acquisitions, Secretary,
Treasurer and Director
SHAREHOLDERS:
/s/ Kevin Baldwin
---------------------------------
Kevin Baldwin
/s/ Kendall Baldwin
---------------------------------
Kendall Baldwin
/s/ Kelly Baldwin
---------------------------------
Kelly Baldwin
/s/ Kimberly Robb
---------------------------------
Kimberly Robb
<PAGE>
Exhibit 4.4
CONSENT OF BALDWIN, L.P.
This Consent is made by H.G. Baldwin, as general partner, on behalf of
Baldwin, L.P., a limited partnership organized in accordance with the Maryland
Uniform Limited Partnership Act, pursuant to the Registration Rights Agreement
dated as of July 2, 1999 ("Registration Rights Agreement"), by and among Waste
Systems International, Inc., a Delaware corporation, and each of Kevin Baldwin,
Kendall Baldwin, Kelly Baldwin and Kimberly Robb and their respective permitted
transferees and assigns as set forth in the Registration Rights Agreement (each
a "Shareholder"). All capitalized terms not defined herein shall have the
meanings set forth in the Registration Rights Agreement.
In accordance with Article IV, Section 4.1 of the Registration Rights
Agreement, Baldwin, L.P., as a donee of One Hundred Forty Two Thousand One
Hundred Six (142,106) shares of Purchaser Common Stock and Eight Hundred (800)
Shares of Purchaser Preferred Stock from each Shareholder and a permitted
transferee under the Registration Rights Agreement, hereby agrees, that for
purposes of Section 4.1 of the Registration Rights Agreement, Baldwin, L.P.
shall be deemed a "Shareholder" subject to the restrictions of clauses (x), (y)
and (z) of such Section 4.1, and otherwise agrees to be bound by the terms of
the restrictions contained in Section 4.1 of the Registration Rights Agreement.
IN WITNESS WHEREOF, the undersigned general partner of Baldwin, L.P.
has signed this Consent as of the 2nd day of July, 1999.
BALDWIN, L.P.
By:/s/ H.G. Baldwin
H.G. Baldwin, General Partner
Exhibit 5.1
_______________, 1999
Waste Systems International, Inc.
420 Bedford Street - Suite 300
Lexington, Massachusetts 02420
Re: Issuance of Shares Pursuant to
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to Waste Systems International, Inc., a
Delaware corporation (the "Company"), in connection with the preparation and
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended, of a Registration Statement on Form S-3 (the "Registration
Statement") relating to the secondary offering by certain Selling Stockholders
of an aggregate of 2,678,620 shares (the "Shares") of the Company's Common
Stock, par value $.01 per share.
In so acting, we have examined originals, or copies certified or
otherwise identified to our satisfaction, of the Certificate of Incorporation of
the Company and the By-Laws of the Company and such other documents or
instruments as we have deemed necessary for purposes of the opinions expressed
below. We have assumed that the Shares have been issued against receipt of the
consideration approved by the Board of Directors of the Company or a committee
thereof, which was no less than the par value thereof, and were issued in
compliance with applicable federal and state securities laws.
Based on the foregoing, we are of the following opinion:
1. The Company is a corporation duly incorporated and validly existing
under the laws of the State of Delaware.
2. The Shares have been duly authorized and validly issued and are
fully paid and non-assessable.
We are expressing the opinions above as members of the Bar of the State
of New York and express no opinion as to any law other than the General
Corporation Law of the State of Delaware.
We consent to the use of this opinion as an exhibit to the Registration
Statement and to the use of our name under the caption "Legal Matters" in the
Registration Statement.
Very truly yours,
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use of our report incorporated herein by reference
and to the reference to our firm under the heading "Experts" in the prospectus.
KPMG LLP
Boston, Massachusetts
February 16, 1999
