<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 28, 1996
REGISTRATION STATEMENT NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
MOLTEN METAL TECHNOLOGY, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 52-1659959
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
400-2 TOTTEN POND ROAD
WALTHAM, MASSACHUSETTS 02154
(617) 487-9700
(Address, including zip code, and telephone number, including area code of
Registrant's principal executive offices)
-----------------------------------
WILLIAM M. HANEY, III
CHAIRMAN OF THE BOARD OF DIRECTORS AND
CHIEF EXECUTIVE OFFICER
MOLTEN METAL TECHNOLOGY, INC.
400-2 Totten Pond Road
Waltham, Massachusetts 02154
(617) 487-9700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------------------
with a copy to:
ETHAN E. JACKS, ESQ.
Vice President and General Counsel
MOLTEN METAL TECHNOLOGY, INC.
400-2 Totten Pond Road
Waltham, Massachusetts 02154
(617) 487-9700
----------------------------
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
----------------------------
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, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. /X/
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
Title of Each Class of Proposed Maximum Offering Proposed Maximum Amount of
Securities Being Registered Amount to be Registered Price Per Security(1) Aggregate Offering Price(1) Registration Fee(2)
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<S> <C> <C> <C> <C>
5-1/2% Convertible
Subordinated Notes Due 2006 $142,750,000.00 $142,750,000.00 $142,750,000.00 $49,225.00
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Common Stock 3,683,871 shares(3) (4) (4) (4)
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</TABLE>
(1) Estimated solely for purposes of determining the registration fee.
(2) Filing fee computed pursuant to Rule 457(o) under the Securities Act of
1933, as amended (the "Securities Act"), based on the principal amount of
the Notes offered hereby.
(3) Represents the number of shares of Common Stock into which the Notes are
convertible, based upon the initial conversion price of $38.75 per share.
To the extent that additional shares of Common Stock become issuable upon
conversion of the Notes, such additional shares also are being registered
hereby.
(4) Pursuant to Rule 457(i) under the Securities Act, no additional
registration fee is payable with respect to the shares of Common Stock into
which the Notes are convertible.
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.
<PAGE> 2
MOLTEN METAL TECHNOLOGY, INC.
CROSS REFERENCE SHEET BETWEEN ITEMS IN PART I OF FORM S-3 AND THE PROSPECTUS
<TABLE>
<CAPTION>
REGISTRATION STATEMENT
ITEM NUMBER AND CAPTION CAPTION IN PROSPECTUS
----------------------- ---------------------
<S> <C>
1. Forepart of the Registration Statement and Outside Front
Cover Page of Prospectus ....................................... Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus ..................................................... Inside Front and Outside Back Cover Pages
of Prospectus
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges ...................................... Risk Factors; Selected Consolidated Financial Data
4. Use of Proceeds ................................................ Use of Proceeds
5. Determination of Offering Price ................................ Outside Front Cover Page of Prospectus
6. Dilution ...................................................... Not Applicable
7. Selling Security-Holders ....................................... Selling Holders
8. Plan of Distribution ........................................... Outside Front Cover Page of Prospectus;
Plan of Distribution
9. Description of Securities to be Registered ..................... Outside Front Cover Page of Prospectus;
Description of Notes; Description of Capital
Stock
10. Interests of Named Experts and Counsel ......................... Legal Matters; Experts
11. Material Changes ............................................... Not Applicable
12. Incorporation of Certain Documents by Reference .............. Inside Front Cover Page of Prospectus
13. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities ................................. Not Applicable
</TABLE>
<PAGE> 3
SUBJECT TO COMPLETION DATED AUGUST 28, 1996
PROSPECTUS
$142,750,000
[MOLTEN METAL TECHNOLOGY LOGO]
5-1/2% Convertible Subordinated Notes Due 2006
This Prospectus relates to the 5-1/2% Convertible Subordinated Notes Due
2006 (the "Notes") of Molten Metal Technology, Inc. (the "Company") and the
shares of the Company's common stock, par value $.01 per share (the "Common
Stock"), issuable upon conversion of the Notes. The Notes were issued and sold
May 1, 1996 and May 9, 1996 (the "Original Offering") in transactions exempt
from the registration requirements of the Securities Act of 1933, as amended
(the "Securities Act"), to persons reasonably believed by Lazard Freres & Co.
LLC, Alex. Brown & Sons Incorporated and Oppenheminer & Co., Inc., as the
initial purchasers of the Notes (collectively, the "Initial Purchasers"), to be
"qualified institutional buyers" (as defined by Rule 144A under the Securities
Act), other institutional "accredited investors" (as defined in Rule 501(a)(2),
(3) or (7) under the Securities Act) or in transactions complying with
Regulation S under the Securities Act. The Notes (other than Notes originally
sold pursuant to Regulation S) and the Common Stock issuable upon conversion
thereof (collectively, the "Securities") may be offered and sold from time to
time by the holders named herein or by their transferees, pledgees, donees or
their successors (collectively, the "Selling Holders") pursuant to this
Prospectus. The Registration Statement of which this Prospectus is a part has
been filed with the Securities and Exchange Commission pursuant to a
registration rights agreement dated as of April 25, 1996 (the "Registration
Rights Agreement") between the Company and the Initial Purchasers, entered into
in connection with the Original Offering.
The Notes will mature on May 1, 2006. Interest on the Notes will be paid
semiannually on May 1 and November 1 of each year, commencing November 1, 1996.
The Notes are convertible, at the option of the holder thereof, at any time
after 90 days following the date of original issuance thereof and prior to
maturity, unless previously redeemed, into shares of Common Stock at a
conversion price of $38.75 per share, subject to adjustment in certain events.
On August 23, 1996, the last reported sale price of the Common Stock on the
Nasdaq National Market (symbol "MLTN") was $31.75 per share.
The Notes are redeemable, in whole or in part, at the option of the
Company, at any time on and after May 1, 1999, at the redemption prices set
forth herein together with accrued interest. A Note also will be subject to
redemption, at the option of the Company, in whole but not in part, at any time,
at 100% of their principal amount plus accrued interest in the event of certain
changes affecting U.S. taxes applicable to such Note. The Notes do not provide
for any sinking fund. Upon a Change of Control (as defined) or in the event the
Common Stock is no longer publicly traded, holders of the Notes will have the
right, subject to certain restrictions and conditions, to require the Company to
purchase all or any part of the Notes at a purchase price equal to 100% of the
principal amount thereof together with accrued and unpaid interest to the date
of purchase. See "Description of the Notes -- Repurchase Rights."
The Notes are unsecured obligations of the Company and are subordinate in
right of payment to all existing and future Senior Debt (as defined) of the
Company.
The Securities may be sold by the Selling Holders from time to time
directly to purchasers or through agents, underwriters or dealers. See "Plan of
Distribution." If required, the names of any such agents or underwriters
involved in the sale of the Securities in respect of which this Prospectus is
being delivered and the applicable agent's commission, dealer's purchase price
or underwriter's discount, if any, will be set forth in an accompanying
supplement to this Prospectus. The Selling Holders and broker-dealers, agents or
underwriters which participate in the distribution of the Securities may be
deemed to be "underwriters" within the meaning of the Securities Act, and any
commission received by them and any profit on the resale of the Securities
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. See "Plan of Distribution."
The Selling Holders will receive all of the net proceeds from the sale of
the Securities and will pay all underwriting discounts and selling commissions,
if any, applicable to the sale of the Securities. The Company is responsible for
the payment of all other expenses incident to the offer and sale of the
Securities.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is _________________, 1996.
<PAGE> 4
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance therewith
files reports and other information with the Securities and Exchange Commission
(the "Commission"). Reports, proxy statements and other information filed by the
Company may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 5th Street, N.W., Washington,
D.C. 20549, as well as at the following regional offices: 7 World Trade Center,
Suite 1300, New York, New York 10048 and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can also be obtained at prescribed rates from the Public Reference
Section of the Commission at 450 5th Street, N.W., Washington, D.C. 20549. In
addition, the Company is required to file electronic versions of these documents
with the Commission through the Commission's Electronic Data Gathering,
Analysis, and Retrieval (EDGAR) system. The Commission maintains a World Wide
Web site at http://www.sec.gov that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. Statements contained in this Prospectus as to the contents
of any contract or other document are not necessarily complete, and in each
instance, reference is made to the copy of such contract or other document, if
any, filed as an exhibit to the Registration Statement on Form S-3 of which this
Prospectus is a part, each such statement being qualified in all respects by
such reference.
The Company has agreed to distribute to holders of the Notes reports,
information and documents specified in Section 13 or 15(d) of the Exchange Act,
so long as the Notes are outstanding, whether or not the Company is subject to
such informational requirements of the Exchange Act. While any Notes remain
outstanding, the Company will make available, upon request, to any holder of the
Notes, the information required by Rule 144(d)(4) under the Securities Act
during any period in which the Company is not subject to Section 13 or 15(d) of
the Exchange Act. Any such request should be directed to the Company, Investor
Relations at 400-2 Totten Pond Road, Waltham, Massachusetts 02154 (Telephone No.
(617) 487-9700).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are incorporated in this Prospectus by
reference:
The Company's Annual Report on Form 10-K for the Company's fiscal year
ended December 31, 1995 filed with the Securities and Exchange Commission
pursuant to Section 13 of the Exchange Act.
The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1996.
The Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1996.
The Company's Current Reports on Form 8-K dated April 19, 1996, April
29, 1996 and July 2, 1996.
The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed pursuant to Section 12(g) of
the Exchange Act dated December 24, 1992, including any amendment or report
filed for the purpose of amending such description.
All documents filed by the Company with the Commission after the date
of this Prospectus pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act and prior to the termination of the offering of Common Stock covered by this
Prospectus shall be deemed to be incorporated by reference in this Prospectus
and to be made a part hereof from the date of the filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed to constitute a part of this
Prospectus, except as so modified or superseded.
The Company will provide without charge to each person to whom a copy
of this Prospectus has been delivered, on request, a copy of any or all of the
documents referred to herein that have been incorporated by reference, other
than exhibits to such documents. Requests for such copies should be directed to
Investor Relations, Molten Metal Technology, Inc., 400-2 Totten Pond Road,
Waltham, MA 02154 (Telephone No. (617) 487-9700).
No person has been authorized to give any information or to make any
representation not contained in this Prospectus, and, if given or made, such
information or representation must not be relied upon as having been authorized
by the Company, any Selling Holder or any of the Initial Purchasers. This
Prospectus does not constitute an offer to sell
<PAGE> 5
or a solicitation of an offer to buy any of the securities offered hereby to any
person in any jurisdiction in which it is unlawful to make any such offer or
solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall in any circumstances create any implication that there has been
no change in the affairs of the Company since the date hereof.
The documents incorporated herein by reference contain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Exchange Act, including statements regarding,
among other items, (i) the Company's growth strategies; (ii) anticipated trends
in the Company's business; (iii) the Company's plans to construct CEP plants;
and (iv) the Company's ability to enter into contracts with potential customers
and joint venture partners. These forward-looking statements are based largely
on the Company's expectations and are subject to a number of risks and
uncertainties, certain of which are beyond the Company's control. Actual results
could differ materially from these forward-looking statements as a result of
various factors including, among others (i) the effect of environmental
regulation, (ii) the availability of markets for recovered materials, (iii)
future capital needs, (iv) dependence on certain customers, and (v) competition.
In addition, these and other factors are discussed in Exhibit 99.1 to the
Company's Current Report on Form 8-K, filed with the Commission on July 2, 1996
(which discussion is hereby incorporated by reference herein). In light of these
risks and uncertainties, there can be no assurance that the forward-looking
information contained in any such documents will in fact transpire.
2
<PAGE> 6
THE COMPANY
The Company is an environmental technology company engaged in the
commercialization and continued development of its innovative, proprietary
processing technology known as Catalytic Extraction Processing ("CEP"). The core
of CEP is a molten metal bath operating at approximately 3,000(degree)F into
which hazardous, non-hazardous and radioactive wastes and industrial by-products
can be injected. The catalytic and solvent effect of the molten metal bath
causes these waste feedstocks to dissociate into their constituent elements and
dissolve into the molten metal. The addition of various selected chemicals
("reactants") to the molten metal enables reformation and recovery of products
("Elemental Recycling(TM)") for re-use as a raw material by the feedstock
generator or for sale to other users. MMT believes that the primary market for
its CEP technology will be on-site systems integrated into existing commercial
and government facilities. MMT intends primarily to own and operate commercial
CEP systems either by itself or through joint ventures, and to license its
technology to industrial partners, commercial customers, and government agencies
under arrangements which provide for up-front license fees and on-going tolling
or license fees based upon the volume of feedstocks processed and the sale of
recovered products.
The technology underlying CEP was initially developed by a founder of
the Company and a member of its Technical Advisory Board in connection with
their efforts to develop a means of capturing additional energy and material
value in the steelmaking process. The two original patents underlying CEP were
transferred to the Company in 1990, shortly after its founding. The Company has
further developed the CEP technology to address the requirements of regulators
and potential customers. As of December 1995, the Company owned 67 patents
relating to CEP. The first two commercial CEP units were "commissioned"
(mechanically complete at customer sites and turned over to operations) in late
1995. The Company currently is developing various applications of its CEP
technology to address its target markets. In each market, the Company has
entered into a partnership or collaborative arrangement with industry leaders,
including Lockheed Martin Corporation ("LMC"), Westinghouse Electric Corporation
and Hoechst Celanese Corporation, and is negotiating a joint venture arrangement
with Nichimen Corporation and NKK Plant Engineering Corporation.
For the initial commercialization of CEP, MMT has identified three
markets where it believes CEP offers the greatest immediate value and meets
pressing customer needs: (i) commercial low-level radioactive waste; (ii) U.S.
government waste; and (iii) industrial hazardous waste, including applications
for chlorinated waste streams and the conversion of waste streams into
industrial gasses. In the commercial low-level radioactive waste sector, MMT
estimates that over three million cubic feet of waste is generated annually in
the United States by more than 1,300 generators, including nuclear power plants
and medical and research facilities. In the U.S. government market, MMT
estimates that the United States Department of Energy ("DOE") and the Department
of Defense ("DoD") together spend nearly $8 billion annually on waste management
and cleanup programs, making the U.S. government the world's largest consumer of
environmental goods and services. The industrial waste sector includes hazardous
wastes as well as non-hazardous wastes and byproducts. Based on data obtained
from the United States Environmental Protection Agency ("EPA"), MMT estimates
that over 300 million tons of waste generated annually in the United States are
classified as hazardous or toxic under the Resource Conservation and Recovery
Act of 1976, as amended ("RCRA"), or the Toxic Substance Control Act. In
addition to the U.S. hazardous waste market, MMT is targeting the international
market for processing solid waste incinerator ash and discarded automobile
components.
In order to further demonstrate CEP's Elemental Recycling capability on
a variety of prospective customer feedstocks, MMT has constructed a research,
development, testing and demonstration facility in Fall River, Massachusetts
that is equipped with several commercial-scale CEP systems (the "Fall River
Facility"). Since February 1993, through internally and customer-funded
technical development programs, the Company has demonstrated CEP's ability to
dissociate feedstocks and recover products in laboratory, bench-scale,
pilot-scale and commercial-scale trials in its Fall River Facility.
The Company currently is developing various applications for its CEP
technology for particular classes of wastes. Quantum-CEP(TM) has been developed
to process radioactive wastes and mixed wastes (containing both radioactive and
hazardous constituents). Current commercialization programs for Quantum-CEP are
focused on applications for low-level radioactive and mixed waste. Quantum-CEP
dissociates hazardous and toxic materials, while separating and containing
radioactive elements in a stable, self-shielding form suitable for storage or
final disposal. This results in a substantial reduction in the volume of
radioactive materials requiring storage or disposal, in addition to the
potential recycling benefits. Other applications being developed by the Company
include Cerex-
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<PAGE> 7
CEP(TM) for the processing of halogenated inorganic waste streams and the
recovery of metals, Hyco-CEP(TM) for the conversion of organic waste streams
into industrial gasses and Halo-CEP(TM) for the processing of halogenated
organic waste streams and the recovery of acids. In each case, these CEP
applications use a molten metal bath to separate waste compounds into their
elemental constituents and reconfigure the elements into potential gaseous,
ceramic, and metal products.
The Company has its principal executive offices at 400-2 Totten Pond
Road, Waltham, MA 02154. The telephone number of said offices is (617) 487-9700.
RISK FACTORS
An investment in the Securities offered by this Prospectus involves a
high degree of risk. Accordingly, prospective investors should consider
carefully the following risk factors, in addition to the other information
concerning the Company and its business contained in this Prospectus, before
purchasing the Securities offered hereby.
Uncertainty of Future Profitability. Although the Company had net
income of $354,789 for the year ended December 31, 1995 and net income of
$2,299,563 for the six months ended June 30, 1996, the Company has had losses in
each of the preceding years since its incorporation. Losses have resulted
principally from costs incurred in connection with research and development
activities and from costs associated with the Company's administrative and
marketing activities. A significant portion of the Company's revenues consisted
of license fees from M4 Environmental L.P., the Company's joint venture with LMC
("M4") (approximately $9,000,000 in 1995 and $7,500,000 for the six months ended
June 30, 1996) which could decline in future periods. In addition, the Company
currently recognizes its share of the revenues (approximately $834,000 in 1995
and $2,676,000 for the six months ended June 30, 1996), but not the expenses, of
M4 in accordance with the terms of its agreements with LMC.
The Company's future profitability is dependent upon its ability to
successfully commercialize its CEP technology. There can be no assurance that
the Company will generate sufficient revenue to pay interest and principal on
the Notes or to achieve continued profitability.
Uncertainty of Market Acceptance. The Company's CEP technology is a new
technology for which there is no established market. There can be no assurance
that feedstock generators will view the Company's CEP process as an economically
and environmentally acceptable means of disposing of their hazardous and
non-hazardous wastes and industrial by-products, which could result in the
Company experiencing difficulty in selling its CEP systems. Moreover, there can
be no assurance that the economic terms under which generators may be willing to
use the Company's CEP process will be profitable to the Company. In addition, a
particular generator may be subject to environmental regulation unique to its
location which may affect its ability to use CEP.
Initial Commercialization Stage. To date, the testing of CEP largely
has been limited to trials conducted under controlled testing conditions.
Certain commercial-scale tests of CEP have been conducted and the Company has
developed computer simulations which it uses to model and predict various CEP
system functions. The Company currently is conducting start-up operations and
testing at the Scientific Ecology Group, Inc. facility in Oak Ridge, Tennessee
and at the M4 Technology Center. However, no demonstration has yet been made
that a commercial CEP system, once installed and operated at a customer's
location, will process such customer's feedstock and recover commodity and
specialty products of commercial quality and in significant quantities. There
can be no assurance that the Company will be able to operate CEP systems on a
sustained basis in commercial-scale use or that such systems can be operated
profitably. In addition, the Company may experience problems associated with the
engineering, construction and scale-up of its CEP systems, including cost
overruns and start-up delays resulting from technical or mechanical problems.
Reliance on Environmental Regulation. Federal, state and local
environmental legislation and regulations require substantial expenditures and
impose liabilities for noncompliance. Environmental laws and regulations are,
and will continue to be, a principal factor affecting demand for the systems and
services being developed or offered by the Company. The level of enforcement
activities by federal, state and local environmental protection agencies and
changes in regulations will also affect demand. Any changes in these regulations
which increase compliance standards may require MMT to change or improve the CEP
technology to meet more stringent regulatory
4
<PAGE> 8
requirements. To the extent that the burdens of complying with such laws and
regulations may be eased, the demand for the Company's services could be
materially adversely affected. In addition, international environmental
regulations and enforcement of such regulations vary by country and are subject
to changes which may adversely affect the Company's operations and its ability
to commercialize its CEP technology internationally.
Availability of Markets for Recovered Materials. CEP has been designed
to perform Elemental Recycling. There can be no assurance, however, that the
Company's CEP process will be successful in recovering materials in a form that
is commercially usable or saleable or that the Company would not be materially
adversely affected by a decrease in the demand for the recovered materials.
Potential Environmental Liability. The Company's business exposes it to
the risk that harmful substances such as hazardous or toxic wastes or
radioactive materials will escape into the environment and cause substantial
damages or injuries. The Company's operations at the Fall River Facility and
potential ownership or operation of CEP systems expose it to possible liability
for investigation and clean-up costs under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, and RCRA and to
possible liability under RCRA for violations of requirements applicable to the
generation, transportation, treatment, storage and disposal of hazardous waste.
In addition, the Company may be exposed to certain environmental risks resulting
from the actions of its customers. Although the Company maintains general
liability insurance, this insurance is subject to coverage limits and generally
excludes coverage for losses or liabilities relating to environmental damage or
pollution. The Company has obtained environmental impairment liability insurance
for its Fall River Facility in compliance with applicable state and federal
regulatory standards. Although the Company has developed plans to conduct its
operations prudently and to structure its relationships with customers and
contractors in a manner so as to minimize its exposure to environmental risks,
the Company could be materially adversely affected by a claim that is not
covered or only partially covered by insurance.
Regulatory Status of Operations. The Company and its customers operate
in a highly regulated environment and certain of the operations at the Fall
River Facility and at individual facilities at which CEP systems will be
integrated will be required to have federal, state and local government permits
and approvals. Any of these permits or approvals may be subject to denial,
revocation or modification under various circumstances. Failure to obtain or
comply with the conditions of permits or approvals may adversely affect the
introduction or operation of the Company's CEP systems and may subject the
Company to penalties. The Company's ability to satisfy permitting requirements
for a particular CEP system, including the Fall River Facility, does not assure
that permitting requirements for other CEP systems will be more easily
satisfied, if at all. In addition, if new environmental legislation or
regulations are enacted or existing legislation or regulations are amended or
are interpreted or enforced differently, the Company or its customers may be
required to obtain additional operating permits or approvals. There can be no
assurance that the Company will meet all of the applicable regulatory
requirements.
Future Capital Needs. The Company will require substantial funds to
construct the commercial CEP systems that it anticipates it will own and
operate, to continue its development activities and to fund further operations
at its Fall River Facility. The amount and timing of the Company's expenditures
and the Company's future capital requirements could vary significantly and will
depend on certain factors, many of which are not within the Company's control,
including customers' willingness to finance, own and operate their CEP systems;
the terms of any collaborative arrangements entered into by the Company; the
progress of the Company's development of CEP; the nature and timing of permits
required for CEP systems; and the availability of alternative sources of
financing. In the event that the Company elects to pursue an operations plan at
a location or in a manner that would require a RCRA Part B storage permit, the
permit application and approval process could potentially require substantial
additional expenditures of capital. There can be no assurance that such
financing will be available or, if available, that it will be on favorable
terms.
Dependence on Certain Customers. During the year ended December 31,
1995, revenue from M4 accounted for approximately 69% of the Company's total
revenue. The Company anticipates that a substantial portion of its revenue for
1996 also will be from M4 and variations from this expectation could have a
material effect on 1996 revenue. Also during 1995, revenue from the DOE
accounted for approximately 30% of the Company's total revenue, and the Company
anticipates that a substantial portion of its revenue for 1996 also will be from
the DOE. Failure to reach agreement with the DOE regarding additional funding
could have a material effect on 1996 revenue and results of operations.
5
<PAGE> 9
Dependence on Collaborative Relationships. The Company's future success
may depend, in part, on its collaborative relationships.
Importance of United States Government Market and Risks of Government
Contracting. The Company anticipates that a significant portion of the market
for CEP systems will be United States government agencies such as the DOE and
the DoD. The Company's existing government contracts can generally be canceled,
delayed or modified at the sole option of the government and are generally
subject to annual funding limitations and public sector financing constraints.
The Company believes that any future government contracts will be structured
similarly. In addition, under the terms of future government contracts, if any,
the Company may be required to grant the federal government greater rights with
respect to the Company's intellectual property than the Company would grant
private parties. As a result of engaging in the government contracting business,
the Company has been and will in the future be subject to audits, and may be
subject to investigation, by government agencies. The Company also faces the
risks associated with such contracting, which could include substantial civil
and criminal fines and penalties. In addition to potential damage to the
Company's business reputation, the failure by the Company to comply with the
terms of any of its government contracts could result in the Company's
suspension or debarment from future government contracts for a significant
period of time. The fines and penalties that could result from noncompliance
with appropriate standards and regulations, or the Company's suspension or
debarment, could have a material adverse effect on the Company's business,
particularly in light of the increasing importance to the Company of work for
various government agencies.
Competition. The Company anticipates that the initial market for CEP
will be the hazardous and non-hazardous waste and industrial by-products
treatment and disposal market, which is characterized by several large companies
and numerous small companies. Existing technologies may prove more
cost-effective than CEP, or new technologies which are superior to those of the
Company may be developed. In addition, the Company and its customers will
compete with other producers of raw materials and recycled products for the sale
of products recovered from the CEP process. Many of the Company's competitors
are large companies with substantially greater financial resources than the
Company. To the extent these competitors offer comparable services or products
at lower prices or of higher quality, or more cost-effective waste disposal
alternatives, the Company's ability to compete effectively could be adversely
affected.
Unpredictability of Patent Protection and Proprietary Technology. The
Company's success depends, in part, on its ability to obtain additional patents,
protect the patents which it owns, maintain trade secret protection and operate
without infringing on the proprietary rights of third parties. There can be no
assurance that any of the Company's pending patent applications will be
approved, that the Company will develop additional proprietary processes that
are patentable, that any patents issued or licensed to the Company will provide
the Company with competitive advantages or will not be challenged by third
parties or that the patents of others will not have an adverse effect on the
ability of the Company to conduct its business. Furthermore, there can be no
assurance that others will not independently develop similar or superior
technologies, duplicate any of the Company's processes or design around the
patented processes developed by the Company. It is possible the Company may need
to acquire licenses to, or to contest the validity of, issued or pending patents
of third parties relating to the Company's technology. There can be no assurance
that any license under such patents would be made available to the Company on
acceptable terms, if at all, or that the Company would prevail in any such
contest. In addition, the Company could incur substantial costs in defending
itself in suits brought against the Company on its patents or in bringing suits
against other parties.
In addition to patent protection, the Company also relies on trade
secrets, proprietary know-how and technology which it seeks to protect, in part,
by confidentiality agreements with its collaborators, employees and consultants.
There can be no assurance that these agreements will not be breached, that the
Company would have adequate remedies for any breach or that the Company's trade
secrets and proprietary know-how will not otherwise become known or be
independently discovered by others.
Dependence on Key Management and Qualified Personnel. The Company is
highly dependent upon the efforts of its senior management and scientific staff.
The Company maintains key man insurance in the amount of $1.0 million on the
lives of each of William M. Haney, III, Chairman of the Board of Directors and
Chief Executive Officer, and Dr. Christopher J. Nagel, Executive Vice President
of Science and Technology. The Company is the
6
<PAGE> 10
sole beneficiary of these policies, but the proceeds of such policies may not be
adequate to compensate the Company for the loss of either individual. The loss
of the services of one or more of these individuals may have a material adverse
effect upon the Company.
The Company's future success will depend in large part upon its ability
to attract and retain further highly skilled scientific, managerial,
manufacturing and marketing personnel. The Company faces competition for hiring
such personnel from other companies, research and academic institutions,
government entities and other organizations. With the exception of William M.
Haney, III, Eugene Berman, Vice President of Regulatory and Community Affairs,
and G. Earl McConchie, Vice President, Chemical Business Unit, the Company does
not have any employment agreements with any of its executive officers for a
specific time. There can be no assurance that the Company will continue to be
successful in attracting and retaining such personnel.
Lack of Established Market. The Notes are a new issue of securities
with no established trading market. Although the Initial Purchasers have advised
the Company that they each currently intend to make a market in the Notes, they
are not obligated to do so and any such market making may be discontinued at any
time without notice, at their sole discretion. The Company does not intend to
apply for listing of the Notes on any securities exchange. Accordingly, there
can be no assurance as to development of a market for the Notes or as to the
liquidity of any market that may develop. Moreover, to the extent that they
trade at all, the Notes may trade at a discount from their stated principal.
Possible Volatility of Share Price. There has been a history of
volatility in the market prices for securities of emerging growth companies such
as the Company, which volatility often has been unrelated to or
disproportionately impacted by the operating performance of such companies.
There can be no assurance that the market for the Notes and Common Stock
issuable upon conversion thereof will not be subject to similar fluctuations.
Factors such as announcements of technological developments, sales of waste
treatment or disposal systems or status of collaborative agreements of the
Company or its competitors, government regulatory action, public concern as to
the safety of products developed by the Company, patent or proprietary rights
developments and market conditions in general could have a significant impact on
the future market price of the Company's securities, including the Notes and
Common Stock.
7
<PAGE> 11
USE OF PROCEEDS
All of the Securities offered hereby are being offered by the Selling
Holders. The Selling Holders will receive all of the net proceeds from the
Securities sold pursuant to this Prospectus.
PRICE RANGE OF COMMON STOCK
Since February 10, 1993, the first day of trading for the Common Stock,
the Common Stock has traded on the Nasdaq National Market under the symbol
"MLTN." The following table sets forth, for the periods indicated, the high and
low sale prices per share of the Common Stock as reported by the Nasdaq National
Market.
<TABLE>
<CAPTION>
HIGH LOW
PRICE PRICE
----- -----
<S> <C> <C>
YEAR ENDING DECEMBER 31, 1994
First Quarter .............................. $31.00 $19.63
Second Quarter ............................. $25.38 $16.50
Third Quarter .............................. $25.75 $16.50
Fourth Quarter ............................. $23.25 $16.00
YEAR ENDING DECEMBER 31, 1995
First Quarter .............................. $19.25 $13.75
Second Quarter ............................. $26.25 $15.75
Third Quarter .............................. $33.25 $21.00
Fourth Quarter ............................. $41.25 $27.50
YEAR ENDING DECEMBER 31, 1996
First Quarter .............................. $40.25 $29.75
Second Quarter ............................. $36.50 $28.00
Third Quarter (through August 23, 1996)..... $32.75 $21.75
</TABLE>
On August 23, 1996, the last sale price of the Common Stock, as
reported by the Nasdaq National Market, was $31.75 per share. As of August 23,
1996, there were 811 holders of record of the Common Stock.
DIVIDEND POLICY
The Company has never declared or paid cash dividends on its Common
Stock and does not anticipate doing so in the foreseeable future.
8
<PAGE> 12
CAPITALIZATION
The following table sets forth the current portion of long-term debt
and the actual capitalization of the Company as of June 30, 1996, which reflects
the issuance of $143,750,000 principal amount of Notes on May 1, 1996.
<TABLE>
<CAPTION>
JUNE 30, 1996
-------------
<S> <C>
Current portion of long-term debt ............................ $ 194,321
5-1/2% Convertible Subordinated Notes Due 2006 ............... 143,750,000
Other long-term debt, excluding current portion .............. 22,789,092
-------------
166,733,413
-------------
Stockholders' equity:
Preferred stock, $.01 par value, 3,000 shares authorized;
no shares issued or outstanding ......................... --
Common stock, $.01 par value, 100,000,000 shares authorized;
23,467,466 shares issued and outstanding ................ 234,675
Additional paid-in capital ................................. 158,974,939
Valuation allowance for short-term investments ............. (737,071)
Accumulated deficit ........................................ (34,339,384)
-------------
Total stockholders' equity ............................ 124,133,159
-------------
Total capitalization .................................. $ 290,866,572
=============
</TABLE>
9
<PAGE> 13
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
STATEMENT OF OPERATIONS DATA
<S> <C> <C> <C> <C> <C>
Revenue .......................................... $ 1,960,379 $ 2,526,327 $ 4,721,953 $ 14,398,829 $ 44,181,398
Operating expenses:
Cost of revenue .............................. 1,177,693 2,172,399 2,205,316 11,057,163 34,901,904
Research and development ..................... 574,775 4,208,319 10,837,484 14,417,327 10,986,234
Selling, general and administrative .......... 1,117,190 4,133,270 5,661,953 7,132,256 2,877,371
------------ ------------ ------------ ------------ ------------
2,869,658 10,513,988 18,704,753 32,606,746 48,765,509
Equity income from affiliate ..................... -- -- -- -- 834,294
------------ ------------ ------------ ------------ ------------
Income (loss) from operations .................... (909,279) (7,987,661) (13,982,800) (18,207,917) (3,749,817)
Interest income .................................. 323,590 400,559 1,861,077 4,376,403 5,559,690
Interest expense ................................. (17,500) (15,972) (160,233) (737,741) (1,455,084)
------------ ------------ ------------ ------------ ------------
Net income (loss) .............................. $ (603,189) $ (7,603,074) $(12,281,956) $(14,569,255) $ 354,789
============ ============ ============ ============ ============
Net income (loss) per share(1) ................. $ (0.05) $ (0.59) $ (0.69) $ (0.67) $ 0.01
============ ============ ============ ============ ============
Weighted average common and common equivalent
shares outstanding ........................... 12,652,353 12,843,220 17,811,830 21,904,213 24,710,423
============ ============ ============ ============ ============
Supplementary net loss per share (1) ............. $ (0.04) $ (0.52) $ (0.67)
============ ============ ============
Supplementary weighted average
common shares outstanding .................... 14,319,018 14,509,887 18,293,320
============ ============ ============
Ratio of earnings to fixed charges (2) ........... -- -- -- -- --
<CAPTION>
SIX MONTHS ENDED JUNE 30,
----------------------------
1995 1996
---- ----
STATEMENT OF OPERATIONS DATA
<S> <C> <C>
Revenue .......................................... $ 12,097,239 $ 42,820,260
Operating expenses:
Cost of revenue .............................. 8,517,162 30,718,193
Research and development ..................... 5,893,853 9,327,001
Selling, general and administrative .......... 3,078,102 4,629,218
------------ ------------
17,489,117 44,674,412
Equity income from affiliate ..................... 183,378 2,676,036
------------ ------------
Income (loss) from operations .................... (5,208,500) 821,884
Interest income .................................. 2,752,287 3,585,378
Interest expense ................................. (915,289) (2,107,699)
------------ ------------
Net income (loss) .............................. $ (3,371,502) $ 2,299,563
============ ============
Net income (loss) per share(1) ................. $ (0.15) $ 0.08
============ ============
Weighted average common and common equivalent
shares outstanding ........................... 22,225,888 27,619,150
============ ============
Supplementary net loss per share(1) ..............
Supplementary weighted average
common shares outstanding ....................
Ratio of earnings to fixed charges (2) ........... -- 1.80
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------------------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Working capital .................................. $ 4,229,318 $ (72,876) $ 103,689,795 $ 95,318,381 $ 89,306,823
Total assets ..................................... 6,141,265 11,523,176 123,628,053 135,541,524 153,336,001
Long-term liabilities, less current maturities (3) 2,174,586 3,538,531 3,625,427 24,549,733 26,818,466
Convertible preferred stock ...................... 50,000 72,727 -- -- --
Accumulated deficit .............................. (2,539,451) (10,142,525) (22,424,481) (36,993,736) (36,638,947)
Stockholders' equity ............................. 2,672,795 5,264,679 116,333,308 102,135,257 109,908,656
<CAPTION>
JUNE 30,
1996
--------
<S> <C>
BALANCE SHEET DATA
Working capital .................................. $ 222,088,091
Total assets ..................................... 310,010,547
Long-term liabilities, less current maturities (3) 172,529,774
Convertible preferred stock ...................... --
Accumulated deficit .............................. (34,339,384)
Stockholders' equity ............................. 124,133,159
</TABLE>
(1) Net income (loss) per share is determined by dividing n
the weighted average number of common and common equivalent shares
outstanding during the period. Common share equivalents consist of common
stock which may be issuable upon exercise of outstanding stock options and
warrants. Common share equivalents have been excluded from weighted average
number of common shares in loss periods since their effect is
anti-dilutive. It was a condition of the Company's initial public offering,
which occurred in February 1993, that all the preferred stock be converted
into common stock. The net loss per share information for the year ended
December 31, 1993 has been calculated to reflect the conversion of
preferred stock as of its actual date of conversion. Supplementary net loss
per share information is presented to reflect the conversion of preferred
stock as if it occurred on the later of the first day of the period or the
date of issuance of the preferred-stock.
(2) For purposes of computing the ratio of earnings to fixed charges, earnings
include earnings before income taxes, amortization of deferred debt
acquisition costs and interest expense, including that portion of rental
expense attributed to interest costs. Fixed charges consist of amortization
of deferred debt acquisition costs, interest expense, including that
portion of rental expense attributable to interest costs and interest
capitalized during the period. Earnings are inadequate to cover fixed
charges for the years ended December 31, 1991, 1992, 1993, 1994 and 1995
and for six months ended June 30, 1995. The deficiency of earnings to fixed
charges for the years ended December 31, 1991, 1992, 1993, 1994 and 1995
was $603,189, $7,603,074, $12,281,956, $14,569,255 and $127,363,
respectively and $3,426,637 for the six months ended June 30, 1995. On a
pro forma basis giving effect to the Offering as of the first day of the
period, the deficiency of earnings to fixed charges for the year ended
December 31, 1995 was $8,473,613 and $630,150 for the six months ended June
30, 1996. Such calculation assumes no interest income on investment of the
net proceeds of the Offering.
(3) Includes (i) deferred revenue of $700,000 at December 31, 1991 and
$1,900,000 at December 31, 1992, (ii) payments due under a technology
purchase agreement of $1,474,586 at December 31, 1991, 1992, 1993, 1994 and
1995 and (iii) deferred income of $2,459,918 at December 31, 1995.
10
<PAGE> 14
DESCRIPTION OF THE NOTES
GENERAL
The Notes were issued pursuant to an Indenture dated as of May 1, 1996
(the "Indenture"), between the Company and The Bank of New York, as trustee (the
"Trustee"). The following summary of certain provisions of the Indenture does
not purport to be complete and is qualified in its entirety by reference to the
Indenture, copies of which are available for inspection at the corporate trust
office of the Trustee in New York, New York and at the offices of the Paying
Agent referred to below. The definitions of certain terms used in the following
summary are set forth below under " -- Certain Definitions." Capitalized terms
used but not defined herein have the meanings ascribed to them in the Notes and
the Indenture.
The Notes are unsecured obligations of the Company, subordinated in
right of payment to all existing and future Senior Debt of the Company to the
extent set forth in the Indenture. The Indenture does not limit the amount of
other indebtedness or securities that may be issued by the Company or any of its
Subsidiaries.
PRINCIPAL, MATURITY AND INTEREST
The Notes bear interest from May 1, 1996, at the rate of 5-1/2% per
annum and will mature on May 1, 2006. The Notes are limited to $143,750,000
aggregate principal amount. Interest on the Notes is payable semiannually on May
1 and November 1 of each year (each an "Interest Payment Date"), commencing on
November 1, 1996, to holders of record at the close of business on the 15th of
April or 15th of October (each a "Regular Record Date") immediately preceding
such Interest Payment Date. Interest will be computed on the basis of a 360-day
year comprised of twelve 30-day months. Interest on the Notes will accrue from
the most recent date to which interest has been paid or, if no interest has been
paid, from May 1, 1996. See also " -- Payment and Conversion" below.
OPTIONAL REDEMPTION
Redemption at the Option of the Company
The Notes will not be subject to redemption prior to May 1, 1999, and
will be redeemable on such date and thereafter at the option of the Company, in
whole or in part (in any integral multiple of $5,000), upon prior notice as
described under " -- Selection and Notice" below, at the following redemption
prices (expressed as percentages of the principal amount), if redeemed during
the 12-month period beginning May 1 of the years indicated:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
1999...................................... 102.75%
2000...................................... 102.29
2001...................................... 101.83
2002...................................... 101.38
2003...................................... 100.92
2004...................................... 100.46
</TABLE>
and at May 1, 2005 and thereafter, 100%, in each case together with accrued
interest to the redemption date (subject to the right of holders of record on
the relevant record date to receive interest due on an Interest Payment Date).
If less than all Notes are to be redeemed, the Trustee will select the Notes to
be redeemed by lot, pro rata or by such other method as the Trustee shall deem
fair and equitable. On or after the redemption date, interest will cease to
accrue on the Notes, or portion thereof, called for redemption.
Redemption of Notes for Taxation Reasons
A Note will also be redeemable at the option of the Company in whole,
but not in part, at any time, upon prior notice as described under " --
Selection and Notice" below, at a Redemption Price of 100% of its principal
amount,
11
<PAGE> 15
together with accrued interest to the Redemption Date, if the Company has or
will become obligated to pay Additional Amounts (as described under " -- Payment
of Additional Amounts" below) with respect to such Note as a result of any
change in, or amendment to, the laws (including any regulations or rulings
promulgated thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or any change in the official position
regarding the application or interpretation of such laws, regulations or
rulings, which change or amendment is announced or becomes effective on or after
the date of this Prospectus, and such obligation cannot be avoided by the
Company taking reasonable measures available to it; provided, that no such
notice of redemption shall be given earlier than 90 days prior to the earliest
date on which the Company would be obligated to pay any such Additional Amounts
with respect to such Note were a payment in respect of the Notes then due. Prior
to the giving of any notice of redemption pursuant to this paragraph, the
Company shall deliver to the Trustee (i) a certificate stating that the Company
is entitled to effect such redemption and setting forth a statement of facts
showing that the conditions precedent to the right of the Company so to redeem
have occurred and (ii) an opinion of independent counsel of recognized standing
selected by the Company to the effect that the Company has or will become
obligated to pay such Additional Amounts as a result of such change or
amendment. Any Note converted into shares of Common Stock prior to the date
fixed for redemption with respect to such Note will not be subject to the
foregoing redemption.
Redemption Procedures
Notice of intention to redeem Notes will be given to holders of the
Notes in accordance with " -- Selection and Notice" below, not more than 60 nor
less than 30 days prior to the Redemption Date.
Notice of redemption will specify, among other things, the Redemption
Date, the applicable Redemption Price and, in the case of partial redemption,
the aggregate principal amount of Notes to be redeemed and the aggregate
principal amount of the Notes which will be outstanding after such partial
redemption. In addition, in the case of a partial redemption, such notice will
specify the last date on which exchanges or registration of transfers of Notes
may be made pursuant to the provisions described under " -- Exchange and
Transfer " above and will specify the serial numbers and the portions thereof
called for redemption, which will be selected in such manner as the Trustee
shall deem to be fair and appropriate.
Cancellation and Reacquisition
All Notes that are redeemed or purchased by the Company or any of its
Subsidiaries will forthwith be canceled and accordingly may not be reissued or
resold.
The Company or any Subsidiary or affiliate of the Company may at any
time purchase Notes in the open market or otherwise.
MANDATORY REDEMPTION
The Company is not required to make mandatory redemption or sinking
fund payments with respect to the Notes.
REPURCHASE RIGHTS
Upon any Designated Event (as defined below) with respect to the
Company, each holder of Notes will have the right (the "Repurchase Right"), at
the holder's option, to require the Company to repurchase all of such holder's
Notes, or a portion thereof which is $5,000 or any integral multiple thereof, on
the date (the "Repurchase Date") that is 45 days after the date of the Company
Notice (as defined below) at a price equal to 100% of the principal amount of
the Notes, plus accrued interest, if any, to the Repurchase Date; provided,
however, that installments of interest due on an Interest Payment Date occurring
on or prior to the Repurchase Date shall be payable to the registered holders of
the applicable Notes on the relevant Regular Record Date.
Within 30 days after the occurrence of a Designated Event, the Company
is obligated to give notice (the "Company Notice") as provided in the Indenture,
of the occurrence of such Designated Event and the Repurchase Right arising as a
result thereof. To exercise the Repurchase Right, a holder of Notes must deliver
on or before the 30th day after the date of the Company Notice irrevocable
written notice to the Company (or an agent designated by the Company
12
<PAGE> 16
for such purpose) and the Trustee of the holder's exercise of such right
together with the Notes with respect to which the right is being exercised, duly
endorsed for transfer. The submission of a Note pursuant to the exercise of a
Repurchase Right will be irrevocable on the part of the holder (unless the
Company fails to repurchase the Note on the Repurchase Date) and the right to
convert such Note will expire upon such submission.
The Company will comply with the requirements of Rules 13e-4 and 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of the Notes in connection with a Designated Event.
On the Repurchase Date, the Company will, to the extent lawful, (1)
accept for payment Notes or portions thereof tendered, (2) deposit with the
Paying Agent an amount equal to the purchase price in respect of all Notes or
portions thereof so tendered plus accrued interest thereon payable on such
Repurchase Date and (3) deliver or cause to be delivered to the Trustee the
Notes so accepted together with an Officers' Certificate stating the Notes or
portions thereof tendered to the Company. The Paying Agent shall promptly mail
to each holder of Notes so accepted payment in an amount equal to the purchase
price for such Notes plus accrued interest thereon payable on such Repurchase
Date, and the Trustee shall promptly authenticate and mail to each holder a new
Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided, that each such new Note shall be in a principal
amount of $5,000 or an integral multiple thereof. The Company will publicly
announce the results of the offer to repurchase on or as soon as practicable
after the Repurchase Date. There can be no assurance that the Company will have
the financial resources necessary to repurchase the Notes in such circumstances.
"Designated Event" means a Change of Control (as defined below) or a
Termination of Trading (as defined below).
A "Change of Control" will be deemed to have occurred when: (i) any
"person" or "group" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Permitted Holders, is or becomes the
"Beneficial Owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
including all shares that any such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time), directly or
indirectly, of more than 50% of the total voting power of the Voting Stock of
the Company; provided, however, that the Permitted Holders do not have the right
or ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors of the Company (for the purposes
of this clause (i), such other person shall be deemed to beneficially own any
Voting Stock of a specified corporation held by a parent corporation, if such
other person is the Beneficial Owner, directly or indirectly, of more than 50%
of the voting power of the Voting Stock of such parent corporation and the
Permitted Holders do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the board of
directors of such parent corporation); (ii) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election by such
Board of Directors of the Company or whose nomination for election by the
shareholders of the Company was approved by a vote of 66-2/3% of the directors
of the Company then still in office who were either directors at the beginning
of such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of the Company then in office; or (iii) the merger or consolidation of
the Company with or into another Person or the merger of another Person with or
into the Company, or the sale of all or substantially all the assets of the
Company to another Person (other than a Person that is controlled by the Company
or the Permitted Holders), and, in the case of any such merger or consolidation,
the securities of the Company that are outstanding immediately prior to such
transaction and which represent 100% of the aggregate voting power of the Voting
Stock of the Company are changed into or exchanged for cash, securities or
property, unless pursuant to such transaction such securities are changed into
or exchanged for, in addition to any other consideration, securities of the
surviving corporation that represent, immediately after such transaction, at
least a majority of the aggregate voting power of the Voting Stock of the
surviving corporation.
"Permitted Holders" means any of William M. Haney, III, John T. Preston
or Dr. Christopher J. Nagel or any of their affiliates or family members.
A "Termination of Trading" shall have occurred if the Common Stock (or
other common stock into which the Notes are then convertible) is neither listed
for trading on a U.S. national securities exchange nor approved for trading on
an established automated over-the-counter trading market in the United States.
13
<PAGE> 17
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
Except as described above with respect to a Designated Event, the
Indenture does not contain any other provisions that permit the holders of the
Notes to require that the Company repurchase or redeem the Notes in the event of
a takeover, recapitalization or similar restructuring.
The Designated Event purchase feature of the Notes, insofar as it
pertains to a Change of Control, may in certain circumstances make more
difficult or discourage a takeover of the Company, and, thus, the removal of
incumbent management. Such purchase feature, however, is not the result of
management's knowledge of any specific effort to accumulate the Company's stock
or to obtain control of the Company by means of a merger, tender offer,
solicitation or otherwise, or part of a plan by management to adopt a series of
anti-takeover provisions. Instead, such purchase feature is a result of
negotiations between the Company and the Initial Purchasers. Management has no
present intention to engage in a transaction involving a Change of Control,
although it is possible that the Company could decide to do so in the future.
Subject to the limitations on mergers, consolidations and sale of assets
described herein, the Company could, in the future, enter into certain
transactions, including acquisitions, refinancings or other recapitalizations,
that would not constitute a Change of Control under the Indenture, but that
could increase the amount of debt (including Senior Debt) outstanding at such
time or otherwise affect the Company's capital structure or credit ratings. The
payment of the purchase price is subordinated to the prior payment of Senior
Debt as described under " -- Subordination of Notes" below.
Any future credit agreements or other agreements relating to debt of
the Company may contain prohibitions or restrictions on the Company's ability to
effect the repurchase of the Notes. In the event a Designated Event occurs at a
time when such prohibitions or restrictions are in effect, the Company could
seek the consent of its lenders to the purchase of Notes or could attempt to
refinance the borrowings that contain such prohibition. If the Company does not
obtain such a consent or repay such borrowings, the Company will be effectively
prohibited from purchasing Notes. In such case, the Company's failure to
purchase tendered Notes would constitute an Event of Default under the
Indenture.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, selection
of Notes for redemption will be made by the Trustee, on a pro rata basis, by lot
or by such method as the Trustee shall deem fair and appropriate, provided that
no Notes of $5,000 or less shall be redeemed in part. Notice of redemption shall
be mailed by first class mail at least 30 but not more than 60 days before the
redemption date to each holder of Notes to be redeemed at its registered
address. If any Note is to be redeemed in part only, the notice of redemption
that relates to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the holder thereof upon
cancellation of the original Note. On and after the redemption date, interest
ceases to accrue on Notes or portions of them called for redemption.
REGISTRATION RIGHTS
In connection with the Original Offering, the Company entered into a
Registration Rights Agreement dated April 25, 1996 between the Company and the
Initial Purchasers (the "Shelf Registration Agreement"). Pursuant to the Shelf
Registration Agreement, the Company agreed for the benefit of the holders of the
Notes (other than Notes originally sold pursuant to Regulation S under the
Securities Act), that (i) it will, at its cost, within 120 days after the
Closing Date, file a shelf registration statement (the "Shelf Registration
Statement") with the Commission with respect to resales of the Notes and the
Common Stock issuable upon conversion thereof, (ii) within 180 days after the
date of the Closing Date, such Shelf Registration Statement shall be declared
effective by the Commission and (iii) the Company will maintain such Shelf
Registration Statement continuously effective under the Securities Act until the
third anniversary of the date of the Closing Date (or, in the event that Rule
144(k) under the Securities Act is amended to provide for a shorter holding
period, until the end of such shorter period) or such earlier date as of which
all the Securities have been sold pursuant to such Shelf Registration Statement.
If the Company fails to comply with clause (i) above then, at such time, the per
annum interest rate on the Notes will increase by 25 basis points. Such increase
will remain in effect until the date on which such Shelf Registration Statement
is filed, on which date the interest rate on the Notes will revert to the
interest rate originally borne by the Notes plus any increase in such interest
rate pursuant to the
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<PAGE> 18
following sentence. If the Shelf Registration Statement is not declared
effective as provided in clause (ii) above, then, at such time and on each date
that would have been the successive 30th day following such time, the per annum
interest rate on the Notes (which interest rate will be the original interest
rate on the Notes plus any increase or increases in such interest rate pursuant
to the preceding sentence and this sentence) will increase by an additional 25
basis points; provided, that the interest rate will not increase by more than 50
basis points pursuant to this sentence and will not increase by more than 75
basis points pursuant to this sentence and the preceding sentence. Such increase
or increases will remain in effect until the date on which such Shelf
Registration Statement is declared effective, on which date the interest rate on
the Notes will revert to the interest rate originally borne by the Notes.
Pursuant to clause (iii) above, however, if the Company fails to keep the Shelf
Registration Statement continuously effective for the period specified above,
then at such time as the Shelf Registration Statement is no longer effective and
on each date thereafter that is the successive 30th day subsequent to such time
and until the earliest of (i) the date that the Shelf Registration Statement is
again deemed effective or (ii) the date that is the third anniversary of the
date of the Closing Date (or, in the event that Rule 144(k) under the Securities
Act is amended to provide for a shorter holding period, until the end of such
shorter period) or (iii) the date as of which all of the Securities are sold
pursuant to the Shelf Registration Statement, the per annum interest rate on the
Notes will increase by an additional 25 basis points; provided, however, that
the interest rate will not increase by more than 50 basis points pursuant to
this sentence. The Company shall have the right, however, to suspend the use of
the prospectus which will be a part of the Shelf Registration Statement, as more
fully described below.
The Company will be permitted to suspend the use of the prospectus
which is a part of the Shelf Registration Statement for a period not to exceed
30 days in any three month period or four periods not to exceed an aggregate of
60 days in any 12 month period under certain circumstances relating to pending
corporate developments, public filings with the Commission and similar events.
The Company will pay all expenses of the Shelf Registration Statement, provide
to each registered holder copies of such prospectus, notify each such registered
holder when the Shelf Registration Statement has become effective and take
certain other actions as are required to permit, subject to the foregoing,
unrestricted resales of the Securities.
CONVERSION
The holder of any Note has the right, exercisable at any time after 90
days following the date of original issuance thereof and prior to maturity, to
convert the principal amount thereof (or any portion thereof that is an integral
multiple of $5,000) into shares of Common Stock at the conversion price set
forth on the cover page of this Prospectus, subject to adjustment as described
below (the "Conversion Price"), except that if a Note is called for redemption,
the conversion right will terminate at the close of business on the Business Day
immediately preceding the date fixed for redemption, and except that if a Note
is submitted pursuant to the exercise of a Repurchase Right, the right to
convert such Note will expire upon such submission. Except as described below,
no adjustment will be made on conversion of any Notes for interest accrued
thereon or for dividends on any Common Stock issued. If Notes not called for
redemption are converted after a record date for the payment of interest and
prior to the next succeeding Interest Payment Date, such Notes must be
accompanied by funds equal to the interest payable on such succeeding Interest
Payment Date on the principal amount so converted. No fractional shares will be
issued upon conversion but a cash adjustment will be made for any fractional
interest.
The Conversion Price is subject to adjustment upon the occurrence of
certain events, including: (i) the issuance of shares of Common Stock as a
dividend or distribution on the Common Stock; (ii) the subdivision or
combination of the outstanding Common Stock; (iii) the issuance to all holders
of Common Stock of rights or warrants to subscribe for or purchase Common Stock
(or securities convertible into Common Stock) at a price per share less than the
then current market price per share (determined as provided in the Indenture);
(iv) the distribution of shares of Capital Stock of the Company (other than
Common Stock), evidences of indebtedness or other assets (excluding dividends in
cash, except as described in clause (v) below) to all holders of Common Stock;
(v) the distribution, by dividend or otherwise, of cash to all holders of Common
Stock in an aggregate amount that, together with the aggregate of any other
distributions of cash that did not trigger a Conversion Price adjustment to all
holders of its Common Stock within the 12 months preceding the date fixed for
determining the stockholders entitled to such distribution and all Excess
Payments (as defined below) in respect of each tender offer or other negotiated
transaction by the Company or any of its Subsidiaries for Common Stock concluded
within the preceding 12 months not triggering a Conversion Price adjustment,
exceeds 10% of the product of the current market price per share (determined as
provided in the Indenture) on the date fixed for the determination of
stockholders entitled to receive such distribution times the number of shares of
Common Stock
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outstanding on such date; (vi) payment of an Excess Payment in respect of a
tender offer or other negotiated transaction by the Company or any of its
Subsidiaries for Common Stock, if the aggregate amount of such Excess Payment,
together with the aggregate amount of cash distributions made within the
preceding 12 months not triggering a Conversion Price adjustment and all Excess
Payments in respect of each tender offer or other negotiated transaction by the
Company or any of its Subsidiaries for Common Stock concluded within the
preceding 12 months not triggering a Conversion Price adjustment, exceeds 10% of
the product of the current market price per share (determined as provided in the
Indenture) on the expiration of such tender offer or consummation of such
negotiated transaction times the number of shares of Common Stock outstanding on
such date; and (vii) the distribution to substantially all holders of Common
Stock of rights or warrants to subscribe for securities (other than those
securities referred to in clause (iii) above). In the event of a distribution to
substantially all holders of Common Stock of rights to subscribe for additional
shares of the Company's Capital Stock (other than those securities referred to
in clause (iii) above), the Company may, instead of making any adjustment in the
Conversion Price, make proper provision so that each holder of a Note who
converts such Note after the record date for such distribution and prior to the
expiration or redemption of such rights shall be entitled to receive upon such
conversion, in addition to shares of Common Stock, an appropriate number of such
rights. No adjustment of the Conversion Price will be made until cumulative
adjustments amount to one percent or more of the Conversion Price as last
adjusted.
If the Company reclassifies or changes its outstanding Common Stock, or
consolidates with or merges into any person or transfers or leases all or
substantially all its assets, or is a party to a merger that reclassifies or
changes its outstanding Common Stock, the Notes will become convertible into the
kind and amount of securities, cash or other assets which the holders of the
Notes would have owned immediately after the transaction if the holders had
converted the Notes immediately before the effective date of the transaction.
The Indenture also provides that if rights, warrants or options expire
unexercised the Conversion Price shall be readjusted to take into account the
actual number of such warrants, rights or options which were exercised.
An "Excess Payment" means the excess of (A) the aggregate of the cash
and fair market value of other consideration paid by the Company or any of its
Subsidiaries with respect to the shares acquired in the tender offer or other
negotiated transaction over (B) the market value of such acquired shares after
giving effect to the completion of the tender offer or other negotiated
transaction.
The Company may, at its option, make such reductions in the Conversion
Price, in addition to those set forth above, as the Board of Directors deems
advisable in order that any stock dividend, subdivision of shares, distribution
or rights to purchase stock or securities or distribution of securities
convertible into or exchangeable for stock made by the Company to its
stockholders will not be taxable to its recipients.
SUBORDINATION OF NOTES
The Notes are subordinate in right of payment to all existing and
future Senior Debt. The Indenture does not restrict the amount of Senior Debt or
other indebtedness of the Company or any Subsidiary of the Company.
The payment of the principal of, interest on or any other amounts due
on the Notes is subordinated in right of payment to the prior payment in full of
all Senior Debt of the Company. Upon the maturity of any Senior Debt of the
Company by lapse of time, acceleration or otherwise, such Senior Debt shall
first be paid in full, or duly provided for, before any payment may be made with
respect to the Notes. In addition, no payment on account of principal, premium,
if any, or interest on, or redemption or repurchase of, the Notes or any coupon
may be made by the Company if there is a default in the payment of principal,
premium, if any, or interest or other amounts (including a default under any
repurchase or redemption obligation) with respect to any Senior Debt or if any
other event of default with respect to any Senior Debt, permitting the holders
thereof to accelerate the maturity thereof, shall have occurred and shall not
have been cured or waived or shall not have ceased to exist after written notice
to the Company and the Trustee by any holder of Senior Debt.
At June 30, 1996, the Company had Senior Debt of approximately $24
million. There are no restrictions in the Indenture on the creation of
additional Senior Debt or any other indebtedness.
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Upon any distribution of its assets in connection with any dissolution,
winding-up, liquidation or reorganization of the Company or acceleration of the
principal amount due on the Notes because of an Event of Default, all Senior
Debt must be paid in full before the holder of the Notes are entitled to any
payments whatsoever.
If payment of the Notes is accelerated because of an Event of Default,
the Company or the Trustee shall promptly notify the holders of Senior Debt or
the trustee(s) for such Senior Debt of the acceleration. The Company may not pay
the Notes until five days after such holders or trustee(s) of Senior Debt
receive notice of such acceleration and, thereafter, may pay the Notes only if
the subordination provisions of the Indenture otherwise permit payment at the
that time.
As a result of these subordination provisions, in the event of the
Company's insolvency, holders of the Notes may recover ratably less than general
creditors of the Company.
The Company is obligated to pay reasonable compensation to the Trustee
and to indemnify the Trustee against any losses, liabilities or expenses
incurred by it in connection with its duties relating to the Notes. The
Trustee's claims for payments will be senior to those of holders of Notes in
respect of all funds collected or held by the Trustee.
PAYMENT AND CONVERSION
Payment of principal of and premium, if any, on the Notes will be made
to the registered holder thereof against surrender of such Notes at the
corporate trust office of the Trustee in New York City or, subject to any
applicable laws and regulations, at the offices of the Paying Agents, by dollar
check drawn on, or by transfer to, a dollar account (such transfer to be made
only to holders of an aggregate principal amount of Notes in excess of
$5,000,000) maintained by the holder with a bank in New York City. Interest on
the Notes will be payable semiannually on May 1 and November 1 of each year to
the person in whose name such Note is registered at the close of business on the
preceding April 15 and October 15 (a "Regular Record Date"), subject to certain
exceptions in the case of Notes redeemed or repurchased upon a Designated Event
between a Regular Record Date and the next succeeding Interest Payment Date.
Payments of such interest will be made by a dollar check drawn on a bank in New
York City mailed to the holder at such holder's registered address or, upon
application by the holder thereof to the Registrar, not later than the
applicable Regular Record Date, by transfer to a dollar account (such transfer
to be made only to holders of an aggregate principal amount of Notes in excess
of $5,000,000) maintained by the holder with a bank in New York City.
The Company has initially appointed as Paying Agent and Conversion
Agent The Bank of New York. The Company may at any time terminate the
appointment of any Paying Agent or Conversion Agent and appoint additional or
other Paying Agents and Conversion Agents, provided that until the Notes have
been delivered to the Trustee for cancellation, or moneys sufficient to pay the
principal of and premium, if any, and interest on the Notes have been made
available for payment and either paid or refunded to the Company as provided in
the Indenture, it will maintain a Paying Agent and Conversion Agent in New York
City for payments with respect to the Notes and for surrender of the Notes for
conversion. Notice of any such termination or appointment and of any change in
the office through which any Paying Agent or Conversion Agent will act will be
given in accordance with " -- Selection and Notice" above .
All monies paid by the Company to a Paying Agent for the payment of
principal of or premium, if any, or interest on any Notes which remains
unclaimed at the end of two years after such payment has become due and payable
will be repaid to the Company, and the holder of such Note will thereafter look
only to the Company for payment thereof.
In any case where the due date for the payment of the principal of and
premium, if any, on or interest with respect to any Note or the date fixed for
redemption of any Note shall be at any place of payment a day on which banking
institutions are authorized or obligated by law to close, then payment of
principal and premium, if any, or interest need not be made on such date at such
place but may be made on the next succeeding day at such place which is not a
day on which banking institutions are authorized or obligated to close, with the
same force and effect as if made on the date for such payment or the date fixed
for redemption, and no interest shall accrue with respect to the period after
such date.
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PAYMENT OF ADDITIONAL AMOUNTS
The Company will pay to the holder of a Note who is a United States
Alien such Additional Amounts as may be necessary in order that every net
payment of the principal of and premium, if any, and interest on such Note,
after deduction or withholding for or on account of any present or future tax,
assessment or governmental charge imposed upon or as a result of such payment by
the United States or any political subdivision or taxing authority thereof or
therein, will not be less than the amount provided for in such Note to be then
due and payable; provided, however, that the foregoing obligation to pay
Additional Amounts will not apply to:
(a) any tax, assessment or other governmental charge which
would not have been so imposed but for (i) the existence of any present
or former connection between such holder or the beneficial owner (or
between a fiduciary, settlor, beneficiary, member, shareholder of or
possessor of a power over such holder or beneficial owner, if such
holder or beneficial owner is an estate, a trust, a partnership or a
corporation) and the United States, including, without limitation, such
holder or beneficial owner (or such fiduciary, settlor, beneficiary,
member, shareholder or possessor) being or having been a citizen or
resident of the United States or treated as a resident thereof, or
being or having been engaged in a trade or business or present therein,
or having or having had an office, fixed place of business or permanent
establishment therein, (ii) such holder's or beneficial owner's present
or former status as a personal holding company or a foreign personal
holding company with respect to the United States, a foreign private
foundation or other foreign tax exempt organization described in
Section 1443 of the U.S. Internal Revenue Code of 1986, as amended (the
"Code"), a controlled foreign corporation or a passive foreign
investment company for United States tax purposes or a corporation
which accumulates earnings to avoid U.S. federal income tax, (iii) such
holder or the beneficial owner (or such fiduciary, settlor,
beneficiary, possessor, member or shareholder) is considered as having
made an election the effect of which is to make payments of principal
of and premium, if any, and interest on such Note subject to U.S.
federal income tax; or (iv) such holder's status as a bank whose
receipt of interest on a Note is described in Section 881(c)(3)(A) of
the Code;
(b) any tax, assessment or other governmental charge which would
have been so imposed but for the presentation by the holder of such
Note for payment on a date more than 15 days after the date on which
such payment became due and payable or the date on which payment
thereof is duly provided for, whichever occurs later;
(c) any estate, inheritance, gift, sales transfer, excise,
personal property or similar tax, assessment or governmental charge;
(d) any tax, assessment or other governmental charge which would
not have been imposed but for the failure to comply with any
certification, identification or other reporting requirements
concerning the nationality, residence, identity or present or former
connection with the United States of the holder or beneficial owner of
such Note if compliance is required by statute or by regulation, ruling
other administrative action of the United States or any political
subdivision or tax authority thereof or therein as a precondition to
exemption from such tax, assessment or other governmental charge;
(e) any tax, assessment or other governmental charge which is
payable otherwise than by deduction or withholding from payments of
principal of and premium, if any, or interest on such Note;
(f) any tax, assessment or other governmental charge imposed as a
result of a holder's or beneficial owner's past or present status as a
"10-percent shareholder" with respect to the Company within the meaning
of Sections 871(h)(3)(B) or 881(c)(3)(B) of the Code;
(g) any tax, assessment or other governmental charge required to
be withheld by any Paying Agent from any payment of the principal of or
premium, if any, or interest on such Note, if such payment can be made
without such withholding by any other Paying Agent;
(h) any tax, assessment or other governmental charge imposed on a
holder that is not the beneficial owner of such Note or that is a
partnership or a fiduciary, but only to the extent that any beneficial
owner, beneficiary or settlor with respect to such fiduciary or member
of the partnership would not have been entitled
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to the payment of Additional Amounts had the beneficial owner,
beneficiary, settlor or member directly received its beneficial or
distributive share of payment on such Note; or
(i) any combination of items (a), (b), (c), (d), (e), (f), (g)
and (h).
As used in this Prospectus, the term "United States Alien" means any
person who, for U.S. federal income tax purposes, is (i) a foreign corporation,
(ii) a nonresident alien individual, (iii) an estate or trust that is not an
estate or trust that is subject to U.S. federal income taxation regardless of
the source of its income, or (iv) a foreign partnership one or more of the
members of which is, for U.S. federal income tax purposes, a foreign
corporation, a nonresident alien individual, an estate or trust that is not an
estate or trust that is subject to U.S. federal income taxation regardless of
the source of its income or a foreign partnership as otherwise defined in this
clause (iv).
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Indenture provides that the Company may not consolidate or merge
with or into any Person (whether or not the Company is the surviving
corporation), or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its properties or assets unless (i) (a) the Company
is the surviving or continuing corporation or (b) the person formed by or
surviving any such consolidation or merger (if other than the Company), or the
person which acquires by sale, assignment, transfer, lease, conveyance or other
disposition the properties and assets of the Company, is a corporation organized
or existing under the laws of the United States, any state hereof or the
District of Columbia; (ii) the entity or person formed by or surviving any such
consolidation or merger (if other than the Company) assumes all the obligations
of the Company, pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee, under the Notes and the Indenture, (iii) such sale,
assignment, transfer, lease, conveyance or other disposition of all or
substantially all of the Company's properties or assets shall be as an entirety
or virtually as an entirety to one person and such person shall have assumed all
the obligations of the Company, pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee, under the Notes and the Indenture; (iv)
immediately after such transaction no Default or Event of Default exists; and
(v) the Company or such person shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such transaction and
the supplemental indenture comply with the Indenture and that all conditions
precedent in the Indenture relating to such transaction have been satisfied.
Under certain circumstances described above involving a Change of Control, each
holder of Notes may have the right to require the Company to repurchase such
Notes. See " -- Repurchase Rights".
REPORTS
Whether or not required by the rules and regulation of the Commission,
so long as any Notes are outstanding, the Company will file with the Commission
and furnish to the Trustee all quarterly and annual financial information
required to be contained in a filing with the Commission on Forms 10-Q and 10-K,
including a "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and, with respect to the annual consolidated financial
statements only, a report thereon by the Company's independent auditors.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event
of Default: (i) default for 30 days in the payment when due of interest on the
Notes; (ii) default in payment when due of principal on the Notes; (iii) failure
by the Company to comply with the provisions described under " -- Repurchase
Rights"; (iv) failure by the Company for 60 days after notice to comply with any
other covenants and agreements contained in the Indenture or the Notes; (v)
default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any indebtedness for money
borrowed by the Company or any of its Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Subsidiaries), whether such indebtedness
or guarantee now exists or is created after the date on which the Notes are
first authenticated and issued, which default (a) is caused by a failure to pay
when due principal or interest on such indebtedness within the grace period
provided in such indebtedness (which failure continues beyond any applicable
grace period) (a "Payment Default") or (b) results in the acceleration of such
indebtedness prior to its express maturity and, in each case, the principal
amount of any such indebtedness, together with the principal amount of any other
such indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $15 million or more; (vi) failure
by the Company or any Subsidiary of the Company to pay final judgments (other
than any judgment as to which a reputable insurance company has accepted full
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<PAGE> 23
liability) aggregating in excess of $5 million, which judgments are not stayed
within 60 days after their entry; and (vii) certain events of bankruptcy or
insolvency with respect to the Company or any of its Material Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company or any Material
Subsidiary, all outstanding Notes will become due and payable without further
action or notice. Subject to certain limitations, holders of a majority in
principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest.
The holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of the interest or premium on, or the principal of, the Notes or the
failure of the Company to repurchase Notes in connection with any Designated
Event.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required, upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
DELIVERY AND FORM
The Notes offered hereby will be issued in certificated registered
form, without coupons, in minimum denominations of $5,000 and integral multiples
above such amount. The Notes will be issued in a form eligible for deposit with
The Depository Trust Company.
EXCHANGE AND TRANSFER
At the option of the holder thereof and subject to the terms of the
Notes and of the Indenture, Notes will be exchangeable for an equal aggregate
principal amount of Notes of different authorized denominations, in each case
without service charge (other than the cost of delivery) and upon payment of any
taxes and other governmental charges. The registered holder of a Note will be
treated by the Company, the Trustee and their respective agents for all purposes
as the owner of such Note.
The transfer of Notes may be registered, and Notes may be presented in
exchange for other Notes of different authorized denominations, at the office of
the Trustee in The City of New York, without service charge (other than the cost
of delivery) and upon payment of any taxes or other governmental charges.
In the event of a partial redemption, the Company will not be required
(i) to register the transfer of Notes for a period of 15 days immediately
preceding the date on which notice is given identifying the serial numbers of
the Notes called for such redemption or (ii) to register the transfer or
exchange of any Note, or portion thereof, called for redemption.
The Company has initially appointed as Registrar and Transfer Agent The
Bank of New York acting through its corporate trust office in New York City. The
Company reserves the right to vary or terminate the appointment of the Registrar
or of any Transfer Agent or to appoint additional or other registrars or
transfer agents or to approve any change in the office through which any
Registrar or any Transfer Agent acts, provided that there will be at all times a
Registrar in New York City.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next succeeding paragraph, the Indenture or
the Notes may be amended or supplemented with the consent of the holders of at
least a majority in principal amount of the then outstanding Notes (including
consents obtained in connection with a tender offer or exchange offer for
Notes), and any existing Default or Event of Default or compliance with any
provision of the Indenture or the Notes may be waived with the consent of the
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<PAGE> 24
holders of a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange offer
for Notes).
Without the consent of each holder affected, an amendment or waiver may
not (with respect to any Notes held by a nonconsenting holder of Notes) (i)
reduce the amount of Notes whose holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal of or change the fixed maturity
of any Note or alter the provisions with respect to the redemption of the Notes,
(iii) reduce the rate of or change the time for payment of interest on any Note,
(iv) waive a default in the payment of principal of or interest on any Notes
(except a rescission of acceleration of the Notes by the holders of at least a
majority in aggregate principal amount of the Notes and a waiver of the payment
default that resulted from such acceleration), (v) make any Note payable in
money other than that stated in the Notes, (vi) make any change in the
provisions of the Indenture relating to waivers of past Defaults or Events of
Default or the rights of holders of Notes to receive payments of principal of or
interest on the Notes, (vii) waive a redemption payment with respect to any
Note, (viii) impair the right to convert the Notes into Common Stock or
adversely affect the Repurchase Rights, (ix) modify the conversion or
subordination provisions of the Indenture in a manner adverse to the holders of
the Notes or (x) make any change in the foregoing amendment and waiver
provisions.
Notwithstanding the foregoing, without the consent of any holder of
Notes, the Company and the Trustee may amend or supplement the Indenture or the
Notes to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to holders of the Notes
in the case of a merger or consolidation, to make any change that would provide
any additional rights or benefits to the holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such holder, or to
comply with requirements of the Commission in order to qualify, or maintain the
qualification of, the Indenture under the Trust Indenture Act of 1939.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the
Trustee, should it become a creditor of the Company, to obtain payment of claims
in certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage in
other transactions; however, if it acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the Commission for permission
to continue or resign.
The holders of a majority in principal amount of the then outstanding
Notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that, in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any holder of Notes, unless such holder shall have offered to the
Trustee security and indemnity satisfactory to it against any loss, liability or
expense.
ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain a copy of the Indenture
without charge by writing to Molten Metal Technology, Inc., Investor Relations
Department, 400-2 Totten Pond Road, Waltham, MA 02154.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture.
Reference is made to the Indenture for a full disclosure of all such terms, as
well as any other capitalized terms used herein for which no definition is
provided.
"Capital Stock" means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) equity of such Person, including any preferred stock,
but excluding any debt securities convertible into such equity.
"Default" means any event that is or, with the passage of time or the
giving of notice or both, would be an Event of Default.
21
<PAGE> 25
"Material Subsidiary" means any Subsidiary of the Company which is a
"significant subsidiary" as defined in Rule 1-02(w) of Regulation S-X under the
Securities Act and the Exchange Act (as such Regulation is in effect on the date
hereof).
"Representative" means the trustee, agent or representative (if any)
for an issue of Senior Debt.
"Senior Debt" means (a) all indebtedness of the Company, including the
principal of, premium, if any, and interest on such indebtedness whether
outstanding on the date of the Indenture or thereafter created, (i) for borrowed
money, (ii) constituting purchase money indebtedness for the payment of which
the Company is directly or contingently liable, (iii) constituting reimbursement
obligations under bank letters of credit, (iv) under interest rate and currency
swaps, caps, floors, collars or similar agreements or arrangements intended to
protect the Company against fluctuations in interest or currency exchange rates,
(v) for commitment, standby and other fees due and payable to financial
institutions with respect to credit facilities available to the Company, (vi)
under any lease of any real or personal property, whether outstanding on the
date of execution of the Indenture or thereafter created, incurred or assumed,
which obligations are capitalized on the books of the Company in accordance with
generally accepted accounting principles, (vii) constituting obligations of the
Company for guarantees of indebtedness or obligations of others which would be
included in the preceding clauses (i)-(vi) if the Company were the direct
obligor, or (viii) indebtedness or obligations of others secured in whole or in
part by a lien on any of the Company's property, unless, in any such case, by
the terms of the instrument creating or evidencing such indebtedness it is
provided that such indebtedness is not superior in right of payment to the Notes
or to other indebtedness which is pari passu with, or subordinated to, the
Notes, and (b) any modifications, refundings, deferrals, renewals or extensions
of any such Senior Debt, or securities, notes or other evidences of indebtedness
issued in exchange for such Senior Debt. As used in the preceding sentence the
term "purchase money indebtedness" shall mean indebtedness evidenced by a note,
debenture, bond or other similar instrument (whether or not secured by any lien
or other security interest) given in connection with the acquisition of any
business, properties or assets of any kind acquired by the Company or any
Subsidiary; provided, however, that, without limiting the generality of the
foregoing, such term shall not include any conditional sale contract or any
account payable or any other indebtedness created or assumed by the Company in
the ordinary course of business in connection with the obtaining of inventories
or services.
"Subsidiary" means any corporation, association or other business
entity of which more than 50% of the total voting power of shares of Capital
Stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any person or one or more of the other
Subsidiaries of that person or a combination thereof.
OTHER INDEBTEDNESS
As of June 30, 1996, the Company had an aggregate of approximately $24
million of debt outstanding which is senior to the Notes. Certain of the
outstanding Senior Debt as of June 30, 1996 is described below.
TAX-EXEMPT BONDS
In 1994, the Company completed a tax-exempt bond financing in
connection with its Fall River Facility. Pursuant to the financing, the Company
entered into a loan agreement with the Massachusetts Industrial Finance Agency
which issued $21,000,000 aggregate principal amount of its Solid Waste Disposal
Facility Revenue Bonds. The bonds are payable in annual sinking fund
installments beginning in 1998 and ending in 2014 and bear interest at 8.25% per
annum payable semi-annually. The loan agreement requires compliance with certain
covenants which include restrictions on future indebtedness, profitability and
consolidations or mergers. In connection with the issuance, the Company has
received approximately $16,300,000 in cash for qualified expenditures through
June 30, 1996 and approximately $5,450,000 in restricted cash and short-term
investments (including interest earned on such amounts) that will be used to
fund future qualified expenditures. Unamortized debt issuance costs at June 30,
1996 was $879,000. These costs are being amortized over the term of the debt
using the effective interest rate method.
22
<PAGE> 26
LOAN AGREEMENTS
In 1993, the Company borrowed $1,944,000 from the Town of Fall River,
Massachusetts pursuant to certain loan agreements. The loans bear interest at an
effective annual rate of 8.50%, payable in monthly or semi-annual installments.
The loans are due in August 1997 and are secured by certain equipment and a
letter of credit in the amount of $210,000.
LINE OF CREDIT
In 1994, the Company entered into a revolving line of credit agreement
with a bank. The agreement provides for a maximum of $1.5 million to be borrowed
and repaid upon demand. Interest accrues at the bank's prime rate plus 0.50% and
is payable monthly. As of June 30, 1996, the Company has not borrowed against
the line of credit.
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 100,000,000 shares
of Common Stock, $.01 par value, and 3,000 shares of Preferred Stock, $.01 par
value ("Preferred Stock").
COMMON STOCK
Holders of Common Stock are entitled to one vote per share for each
share held of record on all matters submitted to a vote of stockholders.
Accordingly, holders of a majority of the shares of Common Stock entitled to
vote in any election of Directors may elect all of the Directors standing for
election. Subject to preferential dividend rights with respect to any
outstanding Preferred Stock, holders of Common Stock are entitled to receive
ratably such dividends, if any, as may be declared by the Board of Directors out
of funds legally available therefor. Upon liquidation, dissolution or winding up
of the Company, holders of Common Stock are entitled to share ratably in the
assets of the Company legally available, and subject to any prior rights of any
outstanding Preferred Stock. Holders of Common Stock have no cumulative voting
rights nor any preemptive, subscription, redemption or conversion rights. All
outstanding shares of Common Stock are validly issued, fully paid and
non-assessable. The rights, preferences and privileges of holders of Common
Stock are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of Preferred Stock which the Company may
designate and issue in the future.
As of August 23, 1996, there were 23,497,394 shares of Common Stock
outstanding held by 811 holders of record.
PREFERRED STOCK
No Preferred Stock currently is outstanding. The Board of Directors is
authorized, without stockholder approval, to issue the Preferred Stock in one or
more series, with such rights, preferences and qualifications as the Board of
Directors may in its discretion determine. If the Company issues Preferred
Stock, the terms of the Preferred Stock may include, among other things,
extraordinary voting, dividend, redemption or conversion rights which could
discourage unsolicited takeovers of the Company and adversely affect the holders
of Common Stock.
WARRANTS
As of July 30, 1996, certain holders affiliated with Oppenheimer & Co.
held warrants to purchase an aggregate of up to 43,105 shares of Common Stock at
an exercise price of $10.56 per share. The holders of such warrants are entitled
to certain registration rights in respect of the shares of Common Stock issuable
upon exercise of such warrants. See "--Registration Rights."
As of July 30, 1996, there were also two outstanding warrants held by
Am-Re Services, one of which is a warrant (the "Insurance Warrant") to purchase
up to 125,000 shares of Common Stock at $12.25 per share and the other of which
is a warrant (the "Project Finance Warrant") to purchase up to 250,000 shares of
Common Stock (of which 200,000 shares may be purchased at $12.25 per share and
50,000 shares at $18.37 per share). The shares
23
<PAGE> 27
covered by the Insurance Warrant vest according to a schedule based upon the
Company obtaining acceptable environmental impairment insurance for the first
five CEP facilities developed by the Company that require environmental
impairment insurance. The shares covered by the Project Finance Warrant vest
according to a schedule based upon the Company accepting project financing by or
through Am-Re Services for the first five CEP plants developed by the Company
that require project financing. See "Business--Commercial Developments." Am-Re
Services is entitled to certain registration rights in respect of the shares of
Common Stock issuable upon exercise of such warrants. See "--Registration
Rights."
As of July 30, 1996, EPRI held an outstanding warrant to purchase up to
100,000 shares of Common Stock at an exercise price of $23.375 per share. The
warrant will vest in increments upon the closing of contracts for CEP plants for
which EPRI has provided minimum levels of funding and upon customer acceptance
of such plants.
DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS
Certain anti-takeover provisions. The Company is subject to the
provisions of Section 203 of the General Corporation Law of Delaware. Section
203 prohibits certain publicly held Delaware corporations from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an
"interested stockholder," unless the business combination is approved in a
prescribed manner. A "business combination" includes mergers, asset sales and
other transactions resulting in a financial benefit to the interested
stockholder. Subject to certain exceptions, an "interested stockholder" is a
person or entity who, together with affiliates and associates, owns (or within
the preceding three years, did own) 15% or more of the corporation's voting
stock. This statute contains provisions enabling a corporation to avoid the
statute's restrictions if the stockholders holding a majority of the
corporation's voting stock approve an amendment to the corporation's Certificate
of Incorporation or By-Laws.
The Amended and Restated Certificate of Incorporation provides that the
Board of Directors shall have the authority, without stockholder approval, to
issue Preferred Stock in one or more series, with such rights, preferences and
qualifications as the Board of Directors may determine in its discretion. See
"--Preferred Stock." The Amended and Restated By-laws require that any
stockholder proposing to nominate, at any special or annual meeting of
stockholders, one or more persons for election to the Board of Directors, must
give written notice of his or her intention to do so no later than 80 days prior
to the date of such special or annual meeting. The Amended and Restated
Certificate of Incorporation and Amended and Restated By-laws further provide
that vacancies on the Board of Directors shall be filled by a vote of the
majority of the Directors then in office and that any actions requiring approval
of the stockholders may only be approved by the stockholders at a meeting or by
written consent of the holders of at least 66 2/3% of the outstanding capital
stock entitled to vote thereon. The Amended and Restated Certificate of
Incorporation allows amendments of certain provisions thereof, and the Amended
and Restated By-Laws allow amendments to any provision thereof, only with a 66
2/3% or greater vote of the outstanding Common Stock. These provisions of the
Company's Amended and Restated Certificate of Incorporation and Amended and
Restated By-Laws could have the effect of making it more difficult for a third
party to acquire, or of discouraging a third party from attempting to acquire,
control of the Company and therefore may limit the price that certain investors
might be willing to pay in the future for shares of the Company's Common Stock.
The provisions described above, although having an anti-takeover effect, are
designed primarily to provide time for management of the Company to assess and
respond to takeover threats, to encourage any person who might contemplate a
takeover to first consult with the Board of Directors and to negotiate the terms
of any proposed offer or business combination with the Board of Directors, and
to ensure that any takeover is fair to all of the Company's stockholders and
other constituencies.
Elimination of Monetary Liability for Officers and Directors. The
Company's Amended and Restated Certificate of Incorporation also incorporates
certain provisions permitted under the General Corporation Law of Delaware
relating to the liability of Directors. The provisions eliminate a Director's
liability for monetary damages for a breach of fiduciary duty, including gross
negligence, except in circumstances involving certain wrongful acts, such as the
breach of a Director's duty of loyalty or acts or omissions which involve
intentional misconduct or a knowing violation of law. These provisions do not
eliminate a Director's duty of care. Moreover, the provisions do not apply to
claims against a Director for violations of certain laws, including federal
securities laws. The Company's Amended and Restated Certificate of Incorporation
also contains provisions to indemnify the Directors, officers, employees or
other agents to the fullest extent permitted by the General Corporation Law of
Delaware. The
24
<PAGE> 28
Company believes that these provisions will assist the Company in attracting or
retaining qualified individuals to serve as Directors.
Indemnification of Officers and Directors. The Company's Amended and
Restated Certificate of Incorporation also contains provisions to indemnify the
Directors, officers, employees or other agents to the fullest extent permitted
by the General Corporation Law of Delaware. These provisions may have the
practical effect in certain cases of eliminating the ability of shareholders to
collect monetary damages from directors. The Company believes that these
provisions will assist the Company in attracting or retaining qualified
individuals to serve as Directors.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock of the Company is
The First National Bank of Boston.
REGISTRATION RIGHTS
The holders of 7,519,391 shares of Common Stock (the "Registrable
Shares") have certain rights to register such shares for sale under the
Securities Act. In addition, warrants to purchase 418,105 shares of Common Stock
are exercisable for additional Registrable Shares. Holders of Registrable Shares
have the right to participate in any registration of securities by the Company
in which shares are proposed to be sold by the Company or by selling
shareholders. William M. Haney, III also has the right, pursuant to his
Employment Agreement, to participate in any such registration of securities by
the Company. The Company is required, with respect to each such registration, to
notify Mr. Haney and each holder of Registrable Shares in writing of the
proposed offering.
The holders of Registrable Shares have the right to require the Company
to register such Registrable Shares under the Securities Act on not more than
two occasions. In addition, so long as the Company is eligible to register the
Common Stock on Form S-3, the holders may from time to time request the Company
to register Registrable Shares on Form S-3, provided that the Company is not
required to effect more than three such registrations in any 12-month period.
Am-Re Services and American Re-Insurance Company have certain
registration rights with respect to the 438,885 shares of Common Stock purchased
by American Re-Insurance Company and the 375,000 shares issuable upon exercise
of the Insurance Warrant and the Project Finance Warrant (collectively, the
"Am-Re Registrable Shares"). Holders of the Am-Re Registrable Shares have
certain demand registration rights commencing after June 30, 1997 and certain
incidental registration rights, subject to acceleration in the event of sales of
Common Stock in excess of specified levels by Messrs. Haney, Nagel or Preston or
all MMT Directors and officers as a group.
In connection with the agreement signed by LMC and the Company with
respect to the acquisition by M4 of the Retech division of Lockheed
Environmental Systems & Technologies Co., the Company has agreed to issue
approximately 308,000 shares of Common Stock to LMC. MMT also has agreed to file
a "shelf" registration statement with respect to such shares.
25
<PAGE> 29
SELLING HOLDERS
The Notes originally were issued by the Company and sold by the Initial
Purchasers, in a transaction exempt from the registration requirements of the
Securities Act, to persons reasonably believed by such Initial Purchasers to be
"qualified institutional buyers" (as defined in Rule 144A under the Securities
Act), other institutional "accredited investors" (as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act) or in transactions complying with the
provisions of Regulation S under the Securities Act. The Selling Holders (which
term includes their transferees, pledgees, donees or their successors) may from
time to time offer and sell pursuant to this Prospectus any or all of the
Securities.
The following table sets forth information with respect to the Selling
Holders and the respective principal amounts of Notes and shares of Common Stock
beneficially owned by each Selling Holder. Such information has been obtained
from the Selling Holders. Except as otherwise disclosed herein, none of the
Selling Holders has, or within the past three years has had, any position,
office or other material relationship with the Company or any of its
predecessors or affiliates. Because the Selling Holders may offer all or some
portion of the Securities pursuant to this Prospectus, no estimate can be given
as to the amount of the Securities that will be held by the Selling Holders upon
termination of any such sales. In addition, the Selling Holders identified below
may have sold, transferred or otherwise disposed of all or a portion of their
Notes, since the date on which they provided the information regarding their
Notes, in transactions exempt from the registration requirements of the
Securities Act.
<TABLE>
<CAPTION>
Principal Amount of Number of
Notes Shares of
Beneficially Owned Common Stock
Selling Holder and Offered Hereby Beneficially Owned(1)
- -------------- ------------------ ---------------------
<S> <C> <C>
General Motors Employees Domestic
Group Trust.................................. $31,790,000 48,000
Phoenix Income & Growth Fund...................... 6,250,000 --
Massachusetts Mutual Life Insurance Company....... 4,400,000 --
Oregon Equity Fund................................ 3,500,000 --
Continental Casualty Company
Separate Equity Trading Account.............. 3,000,000 --
OCM Convertible Trust............................. 3,000,000 --
STI Capital Management............................ 3,000,000 714,700
TCW Convertible Securities Fund................... 2,830,000 --
Phoenix Convertible Fund Ashore & Co.............. 2,750,000 --
Allmerica Select Growth and Income Fund........... 2,200,000 --
Delaware State Employees' Retirement Fund......... 2,070,000 --
State of Connecticut Combined
Investment Funds............................. 2,050,000 --
BNY Hamilton Equity Income Fund................... 2,000,000 --
The Common Fund................................... 2,000,000 --
Robertson Stephens Growth & Income Fund........... 2,000,000 --
SAIF Corporation.................................. 2,000,000 --
Delta Airlines Master Trust....................... 1,990,000 --
Vanguard Equity Income Fund....................... 1,900,000 --
TCW Convertible Value Fund........................ 1,895,000 --
State of Michigan Employees Retirement Fund....... 1,305,000 --
Salkeld & Co...................................... 1,240,000 --
Offshore Strategies Ltd........................... 1,026,000 --
Commonwealth Life Insurance....................... 1,000,000 --
TCW Convertible Strategy Fund..................... 940,000 --
MassMutual Corporate Investors.................... 900,000 --
Grace Brothers, Ltd............................... 750,000 --
State Employers' Retirement Fund of the
State of Delaware............................ 730,000 --
</TABLE>
26
<PAGE> 30
<TABLE>
<S> <C> <C>
Declaration of Trust for the Defined Benefit Plans
of ICI American Holdings, Inc................ 635,000 --
Laterman Strategies 90's LP....................... 614,000 --
Meadow Lane Associates, L.P....................... 600,000 --
Delaware State Retirement Fund.................... 550,000 --
Thermo Electron Balanced Investment Fund.......... 550,000 --
Cincinnati Bell Telephone Convertible
Value Fund................................... 530,000 --
CoreStates Bank................................... 500,000 6,000
WAFRA Discretionary............................... 500,000 --
Value Line Convertible Fund....................... 500,000 --
MassMutual Participation Investors................ 450,000 --
Declaration of Trust for the Defined Benefit Plans
of ZENECA Holdings, Inc...................... 425,000 --
Laterman & Co..................................... 410,000 --
TCW/DW Income & Growth Fund....................... 355,000 --
Avery Dennison Employees Retirement Fund.......... 340,000 --
ICI American Holdings Pension..................... 325,000 --
Zeneca Holdings Pension........................... 325,000 --
TCW Convertible Value L.P......................... 300,000 --
OCM Convertible Limited Partnership............... 230,000 --
First Church of Christ, Scientist-Endowment....... 210,000 --
Hillside Capital Incorporated Corporate Account... 200,000 --
Kapiolani Medical Center.......................... 200,000 --
Queen's Health Systems............................ 200,000 --
Christian Science Trustees for Gifts and
Endowments................................... 180,000 --
Nalco Chemical Retirement......................... 150,000 --
Equi-Select Growth & Income Fund.................. 100,000 --
Nicholas-Applegate Strategic Income Fund.......... 100,000 --
Teepak, Inc. Master Retirement Trust.............. 55,000 --
Norwich University Endowment Fund................. 40,000 --
----------- -------
TOTALS....................................... $98,090,000 768,700
=========== =======
</TABLE>
- ---------------
(1) Does not include shares of Common Stock issuable upon conversion of Notes.
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Holders that the Securities
offered hereby may be sold from time to time to purchasers directly by the
Selling Holders. Alternatively, the Selling Holders may from time to time offer
the Securities to or through underwriters, broker/dealers or agents, who may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Selling Holders or the purchasers of Securities for whom
they may act as agents. The Selling Holders and any underwriters, broker/dealers
or agents that participate in the distribution of the Securities may be deemed
to be "underwriters" within the meaning of the Securities Act and any profit
realized by them on the sale of such Securities and any discounts, commissions,
concessions or other compensation received by any such underwriter,
broker/dealer or agent may be deemed to be underwriting discounts and
commissions under the Securities Act.
The Company has been advised by the Selling Holders that the Securities
may be sold from time to time in one or more transactions at fixed prices, at
market prices prevailing at the time of sale, at varying prices determined at
the time of sale or at negotiated prices. The sale of Securities may be effected
in transactions (which may involve crosses or block transactions) (i) on any
national securities exchange or quotation service on which the Securities may be
listed or quoted at the time of sale, (ii) in the over-the-counter market, (iii)
in transactions otherwise than on such exchanges or in the over-the-counter
market or (iv) through the writing of options. At the time a particular offering
of Securities is made,
27
<PAGE> 31
a supplement to this Prospectus, if required, will be distributed which will set
forth the aggregate amount and type of Securities being offered and the terms of
such offering, including the name or names of any underwriters, broker/dealers
or agents, any discounts, commissions and other terms constituting compensation
from the Selling Holders and any discounts, commissions or concessions allowed
or reallowed to be paid to broker/dealers.
To comply with the securities laws of certain jurisdictions, if
applicable, the Securities will be offered or sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions the Securities may not be offered or sold unless they have been
registered or qualified for sale in such jurisdictions or an exemption from
registration or qualification is available and complied with.
Under applicable rules and regulations of the Exchange Act, any person
engaged in a distribution of the Securities may not simultaneously engage in
market-making activities with respect to such Securities for a period of two or
nine business days prior to the commencement of such distribution. In addition
to and without limiting the foregoing, each Selling Holder and any other person
participating in a distribution will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including without
limitation Rules 10b-6 and 10b-7, which provisions may limit the timing of
purchases and sales of any of the Securities by the Selling Holders or any such
other person. All of the foregoing may affect the marketability of the
Securities and the ability of brokers or dealers to engage in market-making
activities with respect to the Securities.
Pursuant to the Registration Rights Agreement, all expenses of the
registration of the Securities will be paid by the Company, including without
limitation Commission filing fees and expenses of compliance with state
securities or "blue sky" laws; provided, however, that the Selling Holders will
pay all underwriting discounts and selling commissions, if any. The Selling
Holders will be indemnified by the Company against certain civil liabilities,
including certain liabilities under the Securities Act, or will be entitled to
contribution in connection therewith. The Company will be indemnified by the
Selling Holders against certain civil liabilities, including certain liabilities
under the Securities Act, or will be entitled to contribution in connection
therewith.
LEGAL MATTERS
The validity of the Securities offered hereby is being passed upon by
Elliot J. Mark, Esq., Assistant General Counsel to the Company.
EXPERTS
The consolidated financial statements incorporated in this Prospectus
by reference to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 have been so incorporated in reliance on the report of
Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
28
<PAGE> 32
================================================================================
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE COMMON STOCK TO WHICH IT RELATES OR
OF SUCH COMMON STOCK IN ANY STATE OR OTHER JURISDICTION WHERE, OR TO ANY PERSON
TO WHOM, SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. EXCEPT WHERE OTHERWISE
INDICATED HEREIN, THIS PROSPECTUS SPEAKS AS OF ITS DATE AND NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF.
--------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
The Company ............................................................... 3
Risk Factors .............................................................. 4
Use of Proceeds ........................................................... 8
Price Range of Common Stock ............................................... 8
Dividend Policy ........................................................... 8
Capitalization ............................................................ 9
Selected Consolidated Financial Data ...................................... 10
Description of the Notes .................................................. 11
Other Indebtedness ........................................................ 22
Description of Capital Stock .............................................. 23
Selling Holders ........................................................... 26
Plan of Distribution ...................................................... 27
Legal Matters ............................................................. 28
Experts ................................................................... 28
</TABLE>
$142,750,000
5-1/2% CONVERTIBLE
SUBORDINATED NOTES DUE 2006
[MOLTEN METAL TECHNOLOGY LOGO]
--------------------
PROSPECTUS
--------------------
, 1996
================================================================================
<PAGE> 33
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
securities being registered are set forth in the following table (all amounts
except the registration fee are estimated):
<TABLE>
<S> <C>
Registration fee..................................... $ 49,225
Accountants' fees and expenses....................... $ 10,000
Legal fees and expenses.............................. $ 5,000
Miscellaneous........................................ $ 15,000
Total................................................... $ 79,225
</TABLE>
All expenses in connection with the issuance and distribution of the
securities being offered shall be borne by the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 ("Section 145") of the Delaware General Corporation Law
provides a detailed statutory framework covering indemnification of directors
and officers against liabilities and expenses arising out of legal proceedings
brought against them by reason of their status or service as directors or
officers. Article Seven of the Registrant's By-Laws provides for indemnification
of directors and officers to the full extent permitted by Section 145. Section
145 generally provides that a director or officer of a corporation (i) shall be
indemnified by the corporation for all expenses of such legal proceedings when
he/she is successful on the merits, (ii) may be indemnified by the corporation
for the expenses, judgments, fines and amounts paid in settlement of such
proceedings (other than a derivative suit), even if he/she is not successful on
the merits, if he/she acted in good faith and in a manner he/she reasonably
believed to be in or not opposed to the best interests of the corporation (and,
in the case of criminal proceeding, had no reasonable cause to believe his/her
conduct was unlawful), and (iii) may be indemnified by the corporation for
expenses of a derivative suit (a suit by a shareholder alleging a breach by a
director or officer of a duty owed to the corporation), even if he/she is not
successful on the merits, if he/she acted in good faith and in a manner he/she
reasonably believed to be in or not opposed to the best interests of the
corporation. No indemnification may be made under clause (iii) above, however,
if the director or officer is adjudged liable for negligence or misconduct in
the performance of his/her duties to the corporation, unless a court determines
that, despite such adjudication, but in view of all of the circumstances, he/she
is entitled to indemnification. The indemnification described in clauses (ii)
and (iii) above may be made only upon a determination that indemnification is
proper because the applicable standard of conduct has been met. Such a
determination may be made by a majority of a quorum of disinterested directors,
independent legal counsel, the stockholders or a court of competent
jurisdiction. The board of directors may authorize advancing litigation expenses
to a director or officer upon receipt of an undertaking by such director or
officer to repay such expenses if it is ultimately determined that he/she is not
entitled to be indemnified for them.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
5 Opinion of Elliot J. Mark, Esq., Assistant General Counsel of the Company, with respect
to the legality of the Securities being registered.
10.1 Purchase Agreement dated as of April 25, 1996 between the Company and Lazard FrEres
& Co. LLC.* (10.3)
10.2 Indenture dated as of May 1, 1996 between the Company and The Bank of New York, as
Trustee.* (10.4)
12 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Elliot J. Mark, Esq. (included in Exhibit 5).
24 Power of Attorney (included in signature page).
25 Form T-1 Statement of Eligibility and Qualification of Bank of New York, as Trustee for
the Notes.
</TABLE>
II-1
<PAGE> 34
- ----------------
*Incorporated by reference to the designated exhibit to the Company's
Form 10-Q for the quarter ended June 30, 1996.
ITEM 17. UNDERTAKINGS.
(a) The Company hereby undertakes:
(1) To file, during any period in which offers or sales are
being made pursuant to this Registration Statement, 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 the aggregate, represent a fundamental change in the
information set forth in this Registration Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this
Registration Statement or any material change to such
information 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 offered therein,
and the offering of such securities at that time shall 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 being registered which remain unsold at the
termination of the offering.
(b) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Company'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 this 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.
(c) 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 Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
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 whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-2
<PAGE> 35
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 Town of Waltham, Commonwealth of Massachusetts, on August 27,
1996.
MOLTEN METAL TECHNOLOGY, INC.
By: /s/ William M. Haney, III
-----------------------------------------
William M. Haney, III
President and Chief Executive Officer
POWER OF ATTORNEY AND SIGNATURES
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints William M. Haney, III, Benjamin T. Downs
and Ethan E. Jacks, and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, and in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement
on Form S-3 and to file the same with all exhibits thereto and other documents
in connection therewith with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as each such person
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their 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 below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ William M. Haney, III President, Chief Executive August 27, 1996
- ----------------------------------- Officer and Director (Principal
William M. Haney, III Executive Officer)
/s/ Christopher J. Nagel, Sc.D. Executive Vice President of August 27, 1996
- ----------------------------------- Science and Technology and
Christopher J. Nagel, Sc.D. Director
/s/ Benjamin T. Downs Executive Vice President of August 27, 1996
- ----------------------------------- Finance and Administration
Benjamin T. Downs (Principal Accounting Officer)
/s/ James B. Anderson Director August 27, 1996
- -----------------------------------
James B. Anderson
</TABLE>
II-3
<PAGE> 36
<TABLE>
<S> <C> <C>
/s/ Peter A. Lewis Director August 27, 1996
- -----------------------------------
Peter A. Lewis
/s/ John T. Preston Director August 27, 1996
- -----------------------------------
John T. Preston
/s/ Maurice F. Strong Director August 27, 1996
- -----------------------------------
Maurice F. Strong
/s/ Robert A. Swanson Director August 27, 1996
- -----------------------------------
Robert A. Swanson
</TABLE>
II-4
<PAGE> 37
<TABLE>
INDEX TO EXHIBIT
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
5 Opinion of Elliot J. Mark, Esq., Assistant General Counsel of the Company, with respect
to the legality of the Securities being registered.
10.1 Purchase Agreement dated as of April 25, 1996 between the Company and Lazard FrEres
& Co. LLC.* (10.3)
10.2 Indenture dated as of May 1, 1996 between the Company and The Bank of New York, as
Trustee.* (10.4)
12 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Elliot J. Mark, Esq. (included in Exhibit 5).
24 Power of Attorney (included in signature page).
25 Form T-1 Statement of Eligibility and Qualification of Bank of New York, as Trustee for
the Notes.
<FN>
- ----------------
*Incorporated by reference to the designated exhibit to the Company's
Form 10-Q for the quarter ended June 30, 1996.
</TABLE>
<PAGE> 1
Exhibit 5
[MOLTEN METAL TECHNOLOGY LETTERHEAD]
August 27, 1996
Securities and Exchange Commission
450 Fifth Street, NW
Washington, D.C. 20549
Re: Molten Metal Technology, Inc.
Registration Statement on Form S-3
Dear Sir or Madam:
I am Assistant General Counsel of Molten Metal Technology, Inc., a
Delaware corporation (the "Company"), and have assisted in the preparation of a
Registration Statement on Form S-3 (the "Registration Statement") to be filed
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Act"). The Registration Statement relates to the registration
under the Act of $142,750,000 principal amount of the Company's 5-1/2%
Convertible Subordinated Notes due 2006 (the "Notes") and the shares of the
Company's common stock, $.01 par value per share (the "Shares"), which are
issuable upon conversion of the Notes.
I am familiar with the Amended and Restated Certificate of
Incorporation of the Company, the corporate minute books, the Amended and
Restated By-Laws of the Company and the Registration Statement. I also have
examined such other documents, records and certificates and made such further
investigation as I have deemed necessary for the purposes of this opinion and
have assumed, without independent inquiry, the accuracy of these documents. In
that examination, I have assumed the genuineness of all signatures, the
conformity to the originals of all documents reviewed as copies, the
authenticity and completeness of all original documents reviewed in original
form and the legal competence of each individual executing such documents. I
further have assumed that all Shares to be issued upon the conversion of the
Notes will be issued in accordance with the terms of the Indenture dated as of
May 1, 1996 between the Company and the Bank of New York, as Trustee (the
"Indenture").
This opinion is solely limited to the Delaware General Corporation Law.
Based upon and subject to the foregoing, I am of the opinion that (i)
upon the authentication, issuance and delivery of the Notes in accordance with
the terms of the Indenture, the Notes will be validly issued and will be binding
obligations of the Company, enforceable in accordance with their terms, subject
to applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other laws affecting creditors' rights generally from time to time
in effect, and (ii) upon the issuance and delivery of the Shares upon conversion
of the Notes in accordance with
<PAGE> 2
Securities and Exchange Commission
August 27, 1996
Page 2
the terms of the Indenture, the Shares will be legally issued, fully paid and
nonassessable shares of Common Stock.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and the reference to me under the heading "Legal
Matters" in the preliminary prospectus constituting a part of the Registration
Statement.
Very truly yours,
/s/ Elliot J. Mark
------------------------------------
Elliot J. Mark, Esq.
Assistant General Counsel
<PAGE> 1
Exhibit 12
<TABLE>
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<CAPTION>
YEAR ENDED DECEMBER 31 SIX MONTHS ENDED JUNE 30,
-------------------------------------------------------------- -------------------------
1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS
Net Income (loss) $(603,189) $(7,603,074) $(12,281,956) $(14,569,255) $ 354,786 $(3,371,502) $2,299,563
Fixed charges deducted from
income (loss):
Interest expense 17,500 15,972 160,233 737,741 1,455,087 915,289 2,107,699
Amortization of debt issuance
costs - - - 20,952 50,285 25,143 98,662
Implicit interest in rent 23,000 118,333 171,667 340,667 463,000 246,268 321,319
-------- ---------- ---------- ---------- --------- ---------- ----------
40,500 134,305 331,900 1,099,360 1,968,372 1,186,700 2,527,680
-------- ---------- ---------- ---------- --------- --------- ----------
Earnings available for fixed
charges $(562,689) $(7,468,769) $(11,950,056) $(13,469,895) $2,323,158 $(2,184,802) $4,827,243
========= =========== ============ ============ ========== =========== ==========
FIXED CHARGES
Fixed charges per above $ 40,500 $ 134,305 $ 331,900 $ 1,099,360 $1,968,372 $ 1,186,700 $2,527,680
Capitalized interest - - - - 482,149 55,135 147,816
--------- ----------- ------------ ------------ --------- ----------- ----------
Total fixed charges $ 40,500 $ 134,305 $ 331,900 $ 1,099,360 $2,450,521 $ 1,241,835 $2,675,496
========= =========== ============ ============ ========== =========== ==========
Ratio of earnings to fixed
charges - - - - - - 1.80
========= =========== ============ ============ ========== =========== ==========
Deficiency of earnings to
fixed charges $(603,189) $(7,603,074) $(12,281,956) $(14,569,255) $ (127,363) $(3,426,637) -
========= =========== ============ ============ ========== =========== ==========
</TABLE>
<TABLE>
COMPUTATION OF PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES
AFTER ADJUSTMENT FOR ISSUANCE OF THE NOTES
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
1995 1996
------------ ----------
<S> <C> <C>
EARNINGS
Net income (loss) $(8,131,803) $ (533,694)
Fixed charges deducted from income (loss):
Interest expense 9,501,676 4,814,476
Amortization of debt issuance costs 490,285 245,142
Implicit interest in rent 463,000 321,319
----------- ----------
10,454,961 5,380,937
----------- ----------
Earnings available for fixed charges $ 2,323,158 $4,827,243
=========== ==========
FIXED CHARGES
Fixed charges per above $10,454,961 $5,380,937
Capitalized interest 341,810 76,456
----------- ----------
Total fixed charges $10,796,771 $5,457,393
=========== ==========
Ratio of earnings to fixed charges - -
=========== ==========
Deficiency of earnings to fixed charges $(8,473,613) $ (630,150)
=========== ==========
</TABLE>
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
March 5, 1996 appearing on Page F-1 of Molten Metal Technology, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1995. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
Price Waterhouse LLP
Boston, Massachusetts
August 23, 1996
<PAGE> 1
Exhibit 25
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) / /
--------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
--------------------
MOLTEN METAL TECHNOLOGY, INC.
(Exact name of obligor as specified in its charter)
Delaware 52-1659959
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
400-2 Totten Pond Road
Waltham, Massachusetts 02154
(Address of principal executive offices) (Zip code)
--------------------
5-1/2% Convertible Subordinated Notes Due 2006
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Name Address
-------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None. (See Note on page 3.)
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE
24 OF THE COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed
with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1
filed with Registration Statement No. 33-21672 and Exhibit 1 to Form
T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE> 3
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 23rd day of August, 1996.
THE BANK OF NEW YORK
By: /S/ VIVIAN GEORGES
--------------------------------
Name: VIVIAN GEORGES
Title: ASSISTANT VICE PRESIDENT
-4-
<PAGE> 5
Exhibit 7
- -------------------------------------------------------------------------------
<TABLE>
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business March 31, 1996,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin ... $ 2,461,550
Interest-bearing balances ............................ 835,563
Securities:
Held-to-maturity securities .......................... 802,064
Available-for-sale securities ........................ 2,051,263
Federal funds sold in domestic offices of the bank:
Federal funds sold ................................... 3,885,475
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .............................. 27,820,159
LESS: Allowance for loan and
lease losses ........................ 509,817
LESS: Allocated transfer risk
reserve ............................. 1,000
Loans and leases, net of unearned
income, allowance, and reserve ..................... 27,309,342
Assets held in trading accounts ........................ 837,118
Premises and fixed assets (including
capitalized leases) .................................. 614,567
Other real estate owned ................................ 51,631
Investments in unconsolidated
subsidiaries and associated
companies ............................................ 225,158
Customers' liability to this bank on
acceptances outstanding .............................. 800,375
Intangible assets ...................................... 436,668
Other assets ........................................... 1,247,908
-----------
Total assets ........................................... $41,558,682
===========
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
<S> <C>
LIABILITIES
Deposits:
In domestic offices ................................ $18,851,327
Noninterest-bearing .................. 7,102,645
Interest-bearing ..................... 11,748,682
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ................... 10,965,604
Noninterest-bearing .................. 37,855
Interest-bearing ..................... 10,927,749
Federal funds purchased and securities sold
under agreements to repurchase in domestic
offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds purchased ............................ 1,224,886
Securities sold under agreements to repurchase ..... 29,728
Demand notes issued to the U.S. Treasury ............. 118,870
Trading liabilities .................................. 673,944
Other borrowed money:
With original maturity of one year or less ......... 2,713,248
With original maturity of more than one year ....... 20,780
Bank's liability on acceptances executed
and outstanding .................................... 803,292
Subordinated notes and debentures .................... 1,022,860
Other liabilities .................................... 1,590,564
-----------
Total liabilities .................................... 38,015,103
-----------
EQUITY CAPITAL
Common stock ......................................... 942,284
Surplus .............................................. 525,666
Undivided profits and capital reserves ............... 2,078,197
Net unrealized holding gains (losses)
on available-for-sale securities ................... 3,197
Cumulative foreign currency translation adjustments .. (5,765)
-----------
Total equity capital ................................. 3,543,579
-----------
Total liabilities and equity capital ................. $41,558,682
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the
<PAGE> 7
Exhibit 7
best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot |
Thomas A. Renyi | Directors
Alan R. Griffith |
- -------------------------------------------------------------------------------
