<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------- --------
Commission file number 0-21042
-------
Molten Metal Technology, Inc.
-----------------------------
(Exact name of registrant as specified in its charter)
Delaware 52-1659959
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
400-2 Totten Pond Road
Waltham, MA 02154
----------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 487-9700
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.01 par value 23,487,252
---------------------------- ----------------------------
Class Outstanding at August 12, 1996
<PAGE> 2
MOLTEN METAL TECHNOLOGY, INC.
<TABLE>
INDEX
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements
Consolidated Balance Sheet - June 30, 1996 and December 31, 1995 3
Consolidated Statement of Operations for the quarters ended
June 30, 1996 and 1995 and for the six months ended
June 30, 1996 and 1995 4
Consolidated Statement of Cash Flows for the six months ended
June 30, 1996 and 1995 5
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition 8-10
PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings *
Item 2. Changes in Securities *
Item 3. Defaults Upon Senior Securities *
Item 4. Submission of Matters to a Vote of Security Holders *
Item 5. Other Information *
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
- ----------
<FN>
* No information provided due to the inapplicability of item.
</TABLE>
<PAGE> 3
MOLTEN METAL TECHNOLOGY, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED BALANCE SHEET
<CAPTION>
JUNE 30, DECEMBER,31,
1996 1995
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 66,595,865 $ 6,644,856
Short-term investments 129,686,444 79,631,394
Accounts receivable 4,932,092 1,917,858
Accounts receivable from affiliate 28,628,439 15,412,196
Prepaid expenses and other current assets 5,592,865 2,309,398
------------ ------------
Total current assets 235,435,705 105,915,702
Restricted cash and investments 5,762,234 7,432,817
Fixed assets, net 45,394,739 34,679,390
Intangible assets, net 4,440,476 3,501,680
Investment in affiliate 13,281,417 834,794
Other assets 5,695,976 971,618
============ ============
$310,010,547 $153,336,001
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 194,321 $ 195,043
Accounts payable 7,474,143 9,827,490
Accrued expenses 2,988,663 1,713,557
Accrued interest 2,107,154 789,455
Deferred revenue from affiliate 583,333 4,083,334
------------ ------------
Total current liabilities 13,347,614 16,608,879
------------ ------------
Long-term debt 166,539,092 22,883,962
------------ ------------
Due to related parties 1,385,889 1,474,586
------------ ------------
Deferred income from affiliate 4,604,793 2,459,918
------------ ------------
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;
shares issued and outstanding: 23,467,466 at June 30, 1996 and
22,746,854 at December 31, 1995 234,675 227,469
Additional paid-in capital 158,974,939 146,631,297
Valuation allowance for short-term investments (737,071) (311,163)
Accumulated deficit (34,339,384) (36,638,947)
------------ ------------
Total stockholders' equity 124,133,159 109,908,656
============ ============
$310,010,547 $153,336,001
============ ============
</TABLE>
See notes to financial statements.
3
<PAGE> 4
MOTEN METAL TECHNOLOGY, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENT OF OPERATIONS
<CAPTION>
QUARTER ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
-------------------------- --------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Research and development ("R&D") $ 3,785,488 $ 4,034,471 $ 5,043,297 $ 6,676,665
Construction, R&D and consulting from affiliate 12,911,227 1,687,071 30,276,963 1,920,574
Technology transfer and success fees from affiliate 3,750,000 1,750,000 7,500,000 3,500,000
----------- ----------- ----------- -----------
20,446,715 7,471,542 42,820,260 12,097,239
Operating expenses:
Cost of revenue - R&D 3,724,952 4,034,472 4,903,283 6,676,665
Cost of revenue - construction, R&D and consulting
from affiliate 10,669,969 1,589,023 25,814,910 1,840,497
R&D 4,618,838 2,206,398 9,327,001 5,893,853
Selling, general and administrative ("SG&A") 2,210,886 1,136,581 4,629,218 3,078,102
----------- ----------- ----------- -----------
21,224,645 8,966,474 44,674,412 17,489,117
Equity income from affiliate 2,306,724 183,378 2,676,036 183,378
----------- ----------- ----------- -----------
Income (loss) from operations 1,528,794 (1,311,554) 821,884 (5,208,500)
Other income (expense):
Interest income 2,230,649 1,380,013 3,585,378 2,752,287
Interest expense (1,675,308) (436,169) (2,107,699) (915,289)
=========== =========== =========== ===========
Net income (loss) $ 2,084,135 $ (367,710) $ 2,299,563 $(3,371,502)
=========== =========== =========== ===========
Net income (loss) per share $ 0.08 $ (0.02) $ 0.08 $ (0.15)
=========== =========== =========== ===========
Weighted average common and common equivalent
shares outstanding 27,743,802 22,250,060 27,619,150 22,225,888
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
4
<PAGE> 5
MOLTEN METAL TECHNOLOGY, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
SIX MONTHS ENDED JUNE 30,
------------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 2,299,563 $(3,371,502)
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Depreciation and amortization 2,750,868 2,368,763
Equity income from affiliate (2,676,036) (183,378)
Compensation expense related to common stock options 120,903 31,248
Increase in accounts receivable (3,014,234) (759,110)
Increase in accounts receivable from affiliate (13,216,243) (1,401,609)
Increase in prepaid expenses and other current assets (3,283,467) (1,507,386)
Decrease (increase) in other assets (411,846) 65,589
Increase (decrease) in accounts payable (2,353,347) 1,162,936
Increase in accrued expenses 1,275,106 1,842,320
Increase (decrease) in accrued interest 1,317,699 (6,365)
Decrease in deferred revenue (3,500,001) (3,657,189)
Increase in deferred income from affiliate 2,144,875 135,048
------------ -----------
Net cash used in operating activities (18,546,160) (5,280,635)
------------ -----------
Cash flows from investing activities:
Purchase of fixed assets (13,251,320) (6,173,189)
Purchase of intangible assets (1,055,031) (404,467)
Redemption (purchase) of short-term investments, net (50,480,958) 19,607,650
Decrease in restricted cash 1,670,583 1,574,068
------------ -----------
Net cash provided by (used in) investing activities (63,116,726) 14,604,062
------------ -----------
Cash flows from financing activities:
Proceeds from issuances of common stock 2,459,358 621,660
Net proceeds from issuance of long-term debt 139,338,826 --
Payments to related parties (88,697) --
Principal repayments of long-term debt (95,592) (192,731)
------------ -----------
Net cash provided by financing activities 141,613,895 428,929
------------ -----------
Increase in cash and cash equivalents 59,951,009 9,752,356
Cash and cash equivalents at beginning of period 6,644,856 12,063,883
=============
Cash and cash equivalents at end of period $ 66,595,865 $21,816,239
============ ===========
Additional disclosure of non-cash investing and financing activities:
Issuance of common stock in exchange for investment in affiliate $ 9,770,587 $ --
============ ===========
</TABLE>
See notes to financial statements.
5
<PAGE> 6
MOLTEN METAL TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
Molten Metal Technology, Inc. (the "Company") is an environmental technology
company commercializing pollution prevention and waste recycling methods that
are broadly applicable to a wide variety of hazardous, non-hazardous and
radioactive wastes. The Company developed its core technology, Catalytic
Extraction Processing ("CEP"), to dissolve waste compounds to their constituent
elements in a molten metal bath and reconfigure the elements into useful raw
materials.
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.
Net income (loss) per share is determined by dividing net income (loss) by 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 the weighted average number of common shares
in loss periods since their effect is anti-dilutive.
Certain reclassifications have been made for consistent presentation. The
reclassifications have no effect on the net loss for the periods ending June 30,
1995.
The information furnished is unaudited and reflects all adjustments (consisting
of only normal recurring adjustments) which, in the opinion of management, are
necessary for a fair presentation of the financial position and results of
operations for the interim periods. The accompanying financial statements should
be read in conjunction with the Company's audited financial statements and
related footnotes for the year ended December 31, 1995 which are included in the
Company's annual report on Form 10-K for the year ended December 31, 1995. The
results of operations for the periods ended June 30, 1996 are not necessarily
indicative of the results to be expected for the full year.
NOTE 2. EQUITY TRANSACTIONS
During the quarter ended June 30, 1996, 94,351 shares of common stock were
issued upon the exercise of options.
In April 1996, the Company and Lockheed Martin Corporation("LMC") closed an
agreement to expand their partnership (M4 Environmental L.P. or "M4") through
the acquisition by M4 of the Retech division of Lockheed Environmental Systems &
Technologies Co., an indirect wholly-owned subsidiary of LMC. The Retech
division designs and manufactures metallurgical equipment and waste processing
6
<PAGE> 7
systems that utilize a plasma technology. Under this agreement, LMC contributed
approximately half of the assets of the Retech division to M4, and the Company
purchased substantially all of the remaining assets of the Retech division for
307,735 shares of its common stock, and then immediately contributed these
assets to M4. Pursuant to the agreement, the number of shares issued to LMC will
be adjusted when the value of net contributions from LMC to Retech is
determined.
NOTE 3. CONVERTIBLE DEBT
In May 1996, the Company issued $143,750,000 of Convertible Subordinated Notes
Due 2006 (the "Notes"). The Notes have a term of ten years and are payable in
full on May 1, 2006. The Notes bear interest at the rate of 5.50% per year
payable semi-annually. The Notes are convertible into shares of the Company's
common stock at a conversion price of $38.75 per share.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
<TABLE>
Revenues for the second quarter of 1996 increased to $20,447,000 from $7,472,000
in the second quarter of 1995 and increased to $42,820,000 for the first half of
1996 from $12,097,000 for the first half of 1995. The following table compares
sources of revenue for the periods ended June 30, 1996 and 1995:
<CAPTION>
Quarter ended June 30,
----------------------
1996 1995
---- ----
<S> <C> <C>
Engineering and construction $ 9,241,000 $1,537,000
R&D and consulting 7,456,000 4,185,000
Technology transfer and success fees 3,750,000 1,750,000
----------- ----------
$20,447,000 $7,472,000
=========== ==========
</TABLE>
<TABLE>
<CAPTION>
Six Months ended June 30,
-------------------------
1996 1995
---- ----
<S> <C> <C>
Engineering and construction $25,725,000 $ 1,620,000
R&D and consulting 9,595,000 6,977,000
Technology transfer and success fees 7,500,000 3,500,000
----------- -----------
$42,820,000 $12,097,000
=========== ===========
</TABLE>
The increases in engineering and construction revenue are due to the development
of CEP systems for M4 as the Company continues to escalate commercial
activities. R&D and consulting revenue increased from 1995 due to billings under
various development contracts with M4. Technology transfer and success fees
increased in 1996 as a result of the recognition of plant start-up fees from M4.
Under the terms of the partnership agreement with M4, the Company was entitled
to a fee of $2,000,000 upon the start-up of each of the first three CEP plants
developed by M4. As of June 30, 1996, the Company has earned each of these three
start-up fees. The existence and timing of the Company's commercial sales and
operations and related revenue will depend on a number of factors, including the
ability of the Company and its affiliates to successfully market, permit and
build CEP systems on a timely basis for their target markets, and no assurances
can be made in this regard.
Cost of revenues for the second quarter of 1996 increased to $14,395,000 from
$5,623,000 in the second quarter of 1995 and increased to $30,718,000 for the
first half of 1996 from $8,517,000 for the first half of 1995. The increases are
primarily attributable to an increase in engineering and construction activities
in connection with the development of CEP systems for M4.
R&D expenses for the second quarter of 1996 increased to $4,619,000 from
$2,206,000
8
<PAGE> 9
in the second quarter of 1995 and increased to $9,327,000 for the first half of
1996 from $5,894,000 for the first half of 1995. The increases reflect an
increase in costs associated with the continued development of CEP and the
performance of internally funded CEP demonstrations. SG&A expenses for the
second quarter of 1996 increased to $2,211,000 from $1,137,000 in the second
quarter of 1995 and increased to $4,629,000 for the first half of 1996 from
$3,078,000 for the first half of 1995. The increase reflects the hiring of
additional personnel and the expansion of corporate infrastructure. The Company
anticipates that total expenses will continue to increase as commercial
activities escalate. The classification of expenses between cost of revenue, R&D
and SG&A will depend on the number and amount of future cost reimbursement
contracts and the related absorption of R&D and SG&A expenses into cost of
revenue.
The Company accounts for its investment in M4 using the equity method. Equity
income from M4 for the second quarter of 1996 increased to $2,307,000 from
$183,000 in the second quarter of 1995 and increased to $2,676,000 for the first
half of 1996 from $183,000 for the first half of 1995 reflecting the Company's
share of revenue earned by M4. The increases in 1996 are due to an increase in
M4 revenue resulting from the inclusion of the Retech division's operations
subsequent to the acquisition in April 1996. Under the partnership agreement,
the Company and LMC share equally in M4's revenues and all expenses are
allocated to LMC until the capital accounts of the Company and LMC are equal.
Thereafter, the Company and LMC will share equally in the profits or losses of
M4. The Company anticipates that its capital account will become equal to LMC's
capital account within one year. The related effect on the Company's equity in
earnings of M4 could have a material adverse effect on future results of
operations.
Interest income for the second quarter of 1996 increased to $2,231,000 from
$1,380,000 in the second quarter of 1995 and increased to $3,585,000 for the
first half of 1996 from $2,752,000 for the first half of 1995. The increases are
due to interest earned on the net proceeds from the issuance of convertible debt
in May 1996. Interest expense for the second quarter of 1996 increased to
$1,675,000 from $436,000 in the second quarter of 1995 and increased to
$2,108,000 for the first half of 1996 from $915,000 for the first half of 1995.
The increases are due to interest on the convertible debt issued in May 1996.
FINANCIAL CONDITION
As of June 30, 1996, the Company's cash, cash equivalents and short-term
investments increased by approximately $110,006,000 from December 31, 1995. The
increase was primarily a result of the net proceeds from the issuance of
convertible debt. The increase was offset by cash used in operations and for the
acquisition of fixed assets. For the remainder of 1996, the Company expects to
incur significant additional expenditures related to the engineering,
construction and start-up of commercial CEP systems owned by itself and through
joint ventures. The Company intends to seek debt financing to finance or
re-finance a substantial portion of these
9
<PAGE> 10
expenditures. The amount, timing and effect on liquidity of capital
expenditures, including equity contributions to joint ventures, to be made by
the Company in connection with the development of commercial CEP systems will
depend on a number of factors, including the number of systems to be developed,
the timing of the development of such CEP systems, the terms of the development
arrangements with the Company's customers and partners and the extent to which
the Company is able to obtain financing for such CEP systems.
As of June 30, 1996, accounts receivable and accounts receivable from affiliate
increased by approximately $16,230,000 from December 31, 1995 due to amounts
earned under contracts with M4 and the United States Department of Energy. As of
June 30, 1996, total accounts receivable were $33,561,000. Of this amount,
$15,300,000 was unbilled at June 30, 1996 and approximately $3,115,000 was
collected subsequent to June 30, 1996.
During 1996, the Company earned revenue from M4 relating to services provided
for the engineering and construction of CEP systems and from fees earned for the
successful start-up of CEP systems. For items that are capitalized by M4, the
portion of the gross profit representing the Company's ownership interest
related to such revenue has been deferred, and will be recognized over the
period that the related assets are depreciated by M4. As of June 30, 1996, the
related deferred income increased by $2,145,000 from December 31, 1995 due to
billings under construction contracts with M4.
Certain statements contained in this Form 10-Q regarding future events or the
future financial performance of the Company are forward-looking statements
within the meaning of the federal securities laws. These statements are only
predictions and actual events or results may differ materially as a result of
various factors, including compliance with regulatory requirements, obtaining
required permits, customer acceptance of the Company's technology, successful
negotiation of customer contracts, obtaining required funding, and competition.
Additional factors which may cause actual results to differ are described in the
Company's filings with the Securities and Exchange Commission, including the
Form 8-K filed by the Company on July 3, 1996.
10
<PAGE> 11
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 - Sales Representative and Master Services Agreement dated as of
February 29, 1996 between the Company and Uhde GmbH*
10.2 - Partnership Restructuring Agreement dated as of March 15, 1996
between the Company and Lockheed Martin Corporation*
10.3 - Purchase Agreement dated as of April 25, 1996 between the
Company and Lazard Freres & Co. LLC
10.4 - Indenture dated as of May 1, 1996 between the Company and The
Bank of New York, as Trustee
11 - Computation of Primary and Fully-Diluted Net Income (Loss) Per
Share
27 - Financial Data Schedule
(b) Reports on Form 8-K - None.
- ----------------
*Confidential treatment has been requested for portions of this Exhibit.
11
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MOLTEN METAL TECHNOLOGY, INC.
-----------------------------
Date: August 9, 1996 By: /S/ Benjamin T. Downs
-------------- -----------------------------
Benjamin T. Downs
Executive Vice President of Finance
and Administration, Treasurer
(Principal Financial Officer and
Authorized Signatory)
12
<PAGE> 1
Exhibit 10.1*
SALES REPRESENTATIVE AND MASTER SERVICES AGREEMENT
This Agreement made this 29th day of February, 1996, by and between MOLTEN
METAL TECHNOLOGY, INC. ("MMT"), a Delaware corporation with its principal place
of business at 51 Sawyer Road, Waltham, Massachusetts 02154, and UHDE GMBH
("UHDE"), a German corporation, with its principal place of business at
Friedrich-Uhde-Strasse 15, 41441 Dortmund, Germany.
WITNESSETH:
-----------
WHEREAS, MMT is an environmental technology company engaged in the
commercialization and continued development of its proprietary processing
technology known as Catalytic Extraction Processing or CEP;
WHEREAS, UHDE is an international engineering and construction firm serving
the chemical process and other industries and is involved in the design and
marketing of innovative technologies, including environmental and partial
oxidation technologies; and
WHEREAS, the parties have complimentary skills and wish to enter into a
collaborative relationship directed toward rapidly commercializing CEP.
NOW, THEREFORE, for good and valuable consideration received by each party
from the other, including entry into this Agreement and the mutual covenants
contained herein, the parties agree as follows:
ARTICLE 1. DEFINED TERMS
- -------------------------
In addition to the defined terms found elsewhere in this Agreement, as used
in this Agreement the following terms shall have the following meanings:
"Advisers" means, with respect to any Person, any of such Person's
attorneys, accountants, lenders or consultants.
"Bankruptcy" means, with respect to any Person, (i) the filing by such
Person of a voluntary petition seeking liquidation, reorganization, arrangement
or readjustment, in any form, of its debts under Title 11 of the United States
Code (or any other federal or state insolvency law) or corresponding provisions
of German or other laws, (ii) the filing by such Person of an answer consenting
to or acquiescing in any such petition, (iii) the making by such Person of any
assignment for the benefit of its creditors or the admission by such Person in
writing of its inability to pay its debts as they mature, (iv) the filing of an
involuntary petition against such Person under Title 11 of the United States
Code, or corresponding provisions of German or other laws, of an application for
the appointment of a receiver for the assets of such Person, or an involuntary
petition seeking liquidation, reorganization, arrangement or readjustment of its
debts under any other federal or state insolvency law, provided that the same
shall not have been vacated, set aside or stayed within a 90 day period after
the occurrence of such event, or (v) the entry against such Person of a final
non-
- -----------------
*Confidential treatment has been requested for portions of this Exhibit 10.1.
<PAGE> 2
appealable order for relief under any bankruptcy, insolvency or similar law
now or hereafter in effect.
"Catalytic Extraction Processing" or "CEP" means (i) the processes, methods
and means and equipment, apparatus and systems (including all intellectual and
intangible and tangible property associated therewith and including all aspects
of accepting feedstocks, reactions within a CEP Plant and handling of certain
Recovered Resources), now or hereafter owned by or licensed to MMT, directed to
the processing of feedstocks by introducing the feedstocks to a processing
vessel containing liquefied metal and (ii) all related applications thereof,
including but not limited to Quantum-CEP[Trademark], Cerex-CEP[Trademark],
Halo-CEP[Trademark] and Hyco-CEP[Trademark].
"CEP Contract" means an agreement or set of related agreements between MMT
and/or UHDE and a Customer with respect to the sale, design, construction or
licensing of one or more CEP Plants.
"CEP Core Technology" means any technical information, know-how, data,
applications, formulae, models, computations, applied technology, computer
simulations, designs, drawings and expertise necessary or useful in connection
with CEP or CEP Processing, including but not limited to reactor design, feed
and reactant introduction, and removal of certain Recovered Resources.
"CEP Plant" means the plant, equipment and other facilities necessary to
perform and operate Catalytic Extraction Processing on a commercial basis.
"CEP Processing" means the processing of Feedstocks using CEP.
"Customer" means, with respect to any CEP Plant, the owner, developer,
licensee, governmental entity or other Person (other than MMT or a wholly-owned
subsidiary of MMT) for whom such CEP Plant will be developed.
"Excluded Materials" means (i) any materials generated or stored in the
United States, (ii) any materials owned by, generated by, stored by or under the
jurisdiction or control of the United States Department of Defense, the United
States Department of Energy or the United States Enrichment Corporation or any
successor Person, and (iii) any materials which are excluded from this Agreement
pursuant to Section 4.5 hereof, unless in any case otherwise mutually agreed by
the parties.
"Feedstocks" means the full range of wastes and industrial by-products to
be processed at any CEP Plant. Unless otherwise expressly agreed to by MMT in
writing on a case-by-case basis, "Feedstocks" shall not include (i) any Excluded
Materials or (ii) IER.
"IER" means ion exchange resins that have become spent due to usage in
nuclear power plants.
"Minimum Requirements" has the meaning given such term in Section 6.3.
2
<PAGE> 3
"MMT Confidential Information" means any confidential or proprietary
information of any type of MMT. UHDE acknowledges that MMT Confidential
Information also may include confidential or proprietary information of MMT's
customers. Such information shall be deemed to be MMT Confidential Information
for all purposes of this Agreement.
"MMT Project Services" has the meaning given such term in Section 4.2.
"Person" means any natural person, corporation, partnership, limited
liability company, trust, governmental agency or other entity.
"Prospects List" has the meaning given such term in Section 8.3.
"Recovered Resources" means the commercially useful gas and other elements
and compounds produced by a CEP Plant.
"Steering Committee" has the meaning given such term in Section 8.1.
"Territory" means the entire world other than the United States of America
and its territories and possessions, except as may be mutually agreed in writing
by the parties.
"UHDE Confidential Information" means any confidential or proprietary
information of any type of UHDE. MMT acknowledges that UHDE Confidential
Information also may include confidential or proprietary information of UHDE's
customers. Such information shall be deemed to be UHDE Confidential Information
for all purposes of this Agreement.
"UHDE-Designated CEP Plant" means a CEP Plant where (i) the Customer has
retained UHDE for the purposes of designing and/or constructing such CEP Plant,
(ii) UHDE controls the selection of the provider of engineering services for
such CEP Plant, (iii) UHDE creates or sells a larger project which includes a
CEP Plant, or (iv) UHDE and MMT have mutually agreed, based on UHDE's
performance of the marketing and other services generally described in Sections
3.1, 3.2 and 6.2 with respect to such CEP Plant, that such CEP Plant should be
deemed to be an UHDE-Designated CEP Plant.
"UHDE Project Services" has the meaning given such term in Section 3.3.
ARTICLE 2. INTENT; PURPOSES
- -------------------------------
UHDE and MMT agree that, subject to the terms and conditions of this
Agreement, UHDE and MMT intend to cooperate to market, sell, design, construct
and license CEP Plants throughout the Territory (other than CEP Plants for the
processing of Excluded Materials). The parties intend to focus their cooperative
efforts on the recycling of a variety of Feedstocks, including but not limited
to, hazardous wastes, chemical weapons demilitarization, electronics industry
wastes, auto shredder residue, post-consumer electrical and electronic
equipment, biosolid sludge and incineration residue.
3
<PAGE> 4
ARTICLE 3. RIGHTS GRANTED; OBLIGATIONS OF UHDE
- --------------------------------------------------
3.1 GRANT. Upon the conditions set forth herein, MMT designates UHDE as a
non-exclusive representative to market CEP to customers in the Territory. UHDE
will use its best efforts to vigorously promote and market CEP and agrees to
treat CEP as the preferred technology for all waste processing or recycling
projects. To the maximum extent possible, UHDE will encourage potential
customers to use CEP for the processing of such customers' wastes.
3.2 MARKETING OBLIGATIONS OF UHDE. In addition to its other obligations
described herein, including but not limited to the marketing commitments
described in Article 6, UHDE agrees that it will perform the following services
hereunder: (i) identify potential markets for CEP Plants; (ii) identify
appropriate prospective customers for CEP both from among UHDE's existing
clients and from new prospects and introduce such customers to MMT; (iii)
actively participate, as mutually agreed by the parties, in discussions and
negotiations with potential CEP customers; (iv) assist MMT in preparing and
finalizing documentation with potential CEP customers; (v) encourage and promote
the use of CEP; (vi) at MMT's request, assist MMT in handling requests from UHDE
Customers (provided that UHDE will not make any additional commitments to such
customers without MMT's express written authorization); (vii) assist MMT in
ascertaining the creditworthiness of potential customers by supplying available
credit information to MMT; and (viii) render any other reasonable assistance and
services for MMT within the contemplation of this Agreement.
3.3 PROJECT SERVICES. In connection with the design, engineering,
procurement, construction, commissioning and start-up of any particular
UHDE-Designated CEP Plant, UHDE generally shall provide (i) the engineering,
procurement, construction and other implementation services to be performed for
such CEP Plant, including but not limited to site construction and erection and
design and construction of standard gas cleaning and heat recovery systems; (ii)
the engineering design services for site integration of such CEP Plant; (iii)
overall project management for such CEP Plant; and (iv) such other design and
engineering services as the parties may agree (collectively, "UHDE Project
Services"). The specific terms and scope of work of such UHDE Project Services
shall be set forth in separate mutually acceptable project agreements between
UHDE and MMT consistent with the provisions of this Agreement. The terms and
scope of such services may vary on a case-by-case basis as mutually agreed by
the parties. Notwithstanding the foregoing, MMT shall have the right, in its
discretion, to designate, approve the selection and approve the terms of
performance of all engineering, fabrication and construction subcontractors
related to the process and equipment for CEP Core Technology.
3.4 TRAINING OF UHDE PERSONNEL. All personnel employed by UHDE who will be
communicating with potential CEP Processing customers shall be sufficiently
knowledgeable (as determined by MMT in its reasonable judgment) with respect to
CEP Processing to ensure that such personnel are technically proficient with
respect to CEP and CEP Processing. MMT shall provide any training required
therefor, the cost of which shall be borne by MMT, provided that each party
shall bear its own out-of-pocket expenses.
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<PAGE> 5
3.5 UHDE TECHNICAL REPRESENTATIVE. UHDE will designate one suitably
qualified full-time UHDE employee to respond to technical inquiries regarding
CEP and the implementation of this Agreement. Such person shall be located in
MMT's Waltham, Massachusetts, USA office and MMT shall provide office space and
training, at MMT's expense, to such person as necessary. The period of
designation will be mutually agreed upon by the parties.
3.6 UHDE BUSINESS REPRESENTATIVE. In addition to the technical
representative, UHDE shall designate one full-time UHDE employee (the "UHDE
Business Representative") who shall work with the MMT Business Representative to
ensure achievement of the goals set forth in the Prospects List and to
coordinate communications between UHDE and MMT. The UHDE Business Representative
shall be co-located in Dortmund, Germany and Waltham, Massachusetts, USA,
provided that during the first year the UHDE Business Representative shall
primarily be located in Waltham, Massachusetts. Each of UHDE and MMT shall
provide office space and facilities for the UHDE Business Representative and the
MMT Business Representative at their respective headquarters at their own
respective expense.
ARTICLE 4. OBLIGATIONS OF MMT
- ---------------------------------
4.1 COOPERATION BY MMT. MMT shall cooperate with UHDE and provide
reasonable assistance to UHDE in connection with the marketing services referred
to in Sections 3.1 and 3.2 hereof.
4.2 DESIGN SERVICES AND TECHNICAL SUPPORT. MMT shall provide design
services and technical support with respect to UHDE-Designated CEP Plants
generally as described in this Section 4.2, with the specific terms and scope of
work to be set forth in separate mutually acceptable project agreements between
UHDE and MMT consistent with the provisions of this Agreement. MMT generally
will be responsible for (i) process design and chemistry for UHDE-Designated CEP
Plants, (ii) engineering and design and procurement of the CEP reactor system,
including reactor, induction coils, power supply, feed introduction system, gas
handling, product recovery, purification and handling, and related control
instrumentation, (iii) supply of spare parts for such systems, and (iv) operator
training, start-up and maintenance services (collectively, "MMT Project
Services"). The terms and scope of such services may vary on a case-by-case
basis as mutually agreed by the parties.
4.3 PROVISION OF TECHNICAL INFORMATION. During the term of this Agreement
and in order to assist UHDE in its efforts to market and solicit orders for CEP,
MMT will provide to UHDE information with respect to CEP reasonably requested in
writing by UHDE.
4.4 MMT BUSINESS REPRESENTATIVE. MMT shall designate one full-time MMT
employee (the "MMT Business Representative") who shall work with the UHDE
Business Representative to ensure achievement of the goals set forth in the
Prospects List and to coordinate communications between UHDE and MMT. The MMT
Business Representative shall be co-located in Waltham, Massachusetts, USA and
Dortmund, Germany, provided that during the first year the MMT Business
Representative shall primarily be located in Dortmund, Germany. Each of UHDE and
MMT shall provide office space and facilities for
5
<PAGE> 6
the UHDE Business Representative and the MMT Business Representative at their
respective headquarters at their own respective expense.
4.5 EXCLUSION OF MARKET SEGMENTS BY MMT. In the event that MMT, in its
discretion elects to grant exclusive rights to any market segment to another
Person, the Feedstocks or categories of Feedstocks included in such market
segment shall be deemed to be Excluded Materials for all purposes under this
Agreement.
ARTICLE 5. CEP CONTRACTS
All CEP Contracts, whether or not MMT is a party thereto, shall be subject
to approval by MMT and MMT shall be under no obligation to enter into or approve
a CEP Contract or otherwise deal with any potential Customer. Notwithstanding
anything in this Agreement to the contrary, UHDE expressly acknowledges that it
has no power or authority to accept any order for MMT, or to alter, enlarge or
limit agreements between MMT and Customers, or to make guarantees or warranties
concerning CEP Processing, or in general, to make any commitment for MMT or to
obligate MMT in any respect whatsoever. MMT shall not have the right to bind
UHDE except as permitted by this Agreement.
ARTICLE 6. MARKETING COMMITMENTS
- ---------------------------------
6.1 JOINT COMMITMENTS. UHDE and MMT shall devise and implement a
comprehensive joint marketing strategy pursuant to which UHDE shall advise its
existing and prospective customers as to the availability of CEP and the
advantages of CEP over competing technologies for processing Feedstocks. UHDE
and MMT shall confer from time to time concerning such marketing strategy. As
part of such strategy, UHDE shall prepare, and MMT shall review, comment on and
approve prior to dissemination, a standard information package to be distributed
to UHDE's clients. UHDE also shall provide MMT with copies of all
communications, press releases, proposals and marketing materials relating to
CEP prior to the distribution of any such communications, press releases,
proposals or materials. MMT shall have the right to review, comment on and
approve such communications, press releases, proposals and materials prior to
their distribution. UHDE agrees that it will not make any statements, or enter
into any agreement with or otherwise make any commitments to, any of UHDE's
clients if any of the foregoing would bind MMT or otherwise bring MMT into
privity with UHDE's clients.
6.2 Commitments of UHDE.
--------------------
(a) During the term of this Agreement, UHDE agrees to give the
highest priority to marketing, promoting and selling CEP Processing for all
waste processing or recycling projects being pursued by UHDE. In connection with
marketing to existing and prospective customers, UHDE will promote CEP as the
preferred technology for the processing of Feedstocks. MMT shall be entitled to
be informed of and directly participate in these efforts.
6
<PAGE> 7
(b)
*
(c) MMT shall be entitled to participate in all marketing
contacts made by UHDE to its existing and prospective customers relating to CEP.
To the extent reasonably possible, UHDE shall provide MMT with at least four (4)
days' prior written notice of any such meeting. In addition, UHDE shall keep MMT
informed of UHDE's sales activities with respect to CEP on a regular basis, but
in no event less frequently than monthly.
6.3 MINIMUM REQUIREMENTS. UHDE shall be required to meet the following
minimum requirements (the "Minimum Requirements") with respect to the execution
of CEP Contracts for UHDE-Designated CEP Plants with Customers:
Prior to February 1, 1997 One CEP Contract
From February 1, 1997 to January 31, 1998 Two CEP Contracts
From February 1, 1998 to January 31, 1999, and
during each subsequent twelve month period Three CEP Contracts
After the second anniversary of the date hereof, the Minimum Requirements may be
revised by mutual consent of UHDE and MMT.
6.4 THIRD PARTY COMMITMENTS OF MMT. UHDE acknowledges that pursuant to
existing agreements, MMT has obligations to Scientific Ecology Group, Inc. with
respect to the processing of IER, and Fluor Daniel, Inc. ("FD"). Potential
UHDE-Designated CEP Plants which will process IER will be discussed by UHDE and
MMT on a case-by-case basis. With respect to MMT's obligations to FD, UHDE
acknowledges that MMT is required to use the engineering services of FD for CEP
Plants owned by MMT or a wholly-owned subsidiary of MMT or where MMT controls
the selection of such services. In cases where MMT does not control the
selection of such services, MMT is required to promote FD to the entity
responsible for selecting the provider of such services. Accordingly, MMT only
will be able to work with UHDE on UHDE-Designated CEP Plants.
- -----------------
*Confidential treatment has been requested for this portion of Exhibit 10.1.
7
<PAGE> 8
ARTICLE 7. CONFIDENTIAL INFORMATION
- ------------------------------------
7.1 Confidentiality Obligations of MMT.
----------------------------------
(a) MMT agrees that it will use UHDE Confidential Information only in
connection with the activities contemplated by this Agreement, and it will not
disclose any UHDE Confidential Information to any Person except as expressly
permitted by this Section 7.1. The foregoing restriction shall not apply to the
disclosure or use of information which: (i) MMT can show was previously known to
it prior to receipt from UHDE; (ii) MMT can show was developed by employees or
agents of MMT independently of and without reference to any UHDE Confidential
Information; (iii) is now, or hereafter becomes, widely known or widely
available in the chemical or environment technology industry through no wrongful
act of MMT; or (iv) is subsequently disclosed to MMT by a third party not owing
an obligation of confidence to UHDE.
(b) MMT may disclose UHDE Confidential Information:
(1) to MMT's directors, officers and employees who have a
reasonable need to know the contents thereof and who are subject to a
written confidentiality agreement with MMT obligating them to keep
confidential the UHDE Confidential Information, subject to customary
exceptions similar to those set forth in paragraphs (a) above and
(b)(4) below;
(2) on a confidential basis to those Advisors of MMT who have a
reasonable need to know the contents thereof, so long as such
disclosure is made pursuant to the procedures referred to in Section
7.4(b);
(3) to existing and prospective customers, vendors and
institutional financing sources who have a reasonable need to know the
contents thereof in connection with the activities contemplated by
this Agreement if such disclosure is made pursuant to the procedures
referred to in Section 7.4(b); and
(4) to the extent required by applicable statute, rule or
regulation or any court of competent jurisdiction; provided that MMT
has made reasonable efforts to conduct its relevant business
activities in a manner such that the disclosure requirements of such
statute, rule or regulation or court of competent jurisdiction do not
apply, and provided further that UHDE is given notice and an adequate
opportunity to contest such disclosure or to use any means available
to minimize such disclosure.
7.2 Confidentiality Obligations of UHDE.
-----------------------------------
(a) UHDE agrees that it will use MMT Confidential Information
only in connection with the activities contemplated by this Agreement and the
Related Agreements, and it will not disclose any MMT Confidential Information to
any Person except as expressly permitted by this Section 7.2. The foregoing
restriction shall not apply to the disclosure or use of information which: (i)
UHDE can show was previously known to it prior to receipt
8
<PAGE> 9
from MMT; UHDE can show was developed by employees or agents of UHDE
independently of and without reference to any MMT Confidential Information;
(iii) is now, or hereafter becomes, widely known or widely available in the
chemical or environmental technology industry through no wrongful act of UHDE;
or (iv) is subsequently disclosed to UHDE by a third party not owing an
obligation of confidence to MMT.
(b) UHDE may disclose MMT Confidential Information:
(1) to its directors, officers and employees who have a
reasonable need to know the contents thereof and who are subject to a
written confidentiality agreement with UHDE obligating them to keep
confidential the MMT Confidential Information, subject to customary
exceptions similar to those set forth in paragraphs (a) above and
(b)(4) below;
(2) on a confidential basis to those Advisors of UHDE who have a
reasonable need to know the contents thereof, so long as such
disclosure is made pursuant to the procedures referred to in Section
7.4(b);
(3) to existing and prospective customers, vendors and
institutional financing sources who have a reasonable need to know the
contents thereof in connection with the activities contemplated by
this Agreement if such disclosure is made pursuant to the procedures
referred to in Section 7.4(b); and
(4) to the extent required by applicable statute, rule or
regulation or any court of competent jurisdiction; provided that UHDE
has made reasonable efforts to conduct its relevant business
activities in a manner such that the disclosure requirements of such
statute, rule or regulation or court of competent jurisdiction do not
apply, and provided further that MMT is given notice and an adequate
opportunity to contest such disclosure or to use any means available
to minimize such disclosure.
7.3 DISCLOSURE TO GOVERNMENT AUTHORITIES. UHDE and MMT shall promptly
establish and implement all procedural safeguards required or advisable in
connection with the performance of government contracts or other disclosure to
government authorities to protect the confidentiality and value of the UHDE
Confidential Information and the MMT Confidential Information.
7.4 Ongoing Confidentiality Program.
-------------------------------
(a) In order to ensure that MMT and UHDE comply with their
obligations in Sections 7.1 through 7.3, the Steering Committee together with
any advising attorneys shall meet as required to discuss issues relating to
confidentiality and disclosure and other matters addressed by this Article 7.
(b) With respect to any disclosure by MMT or UHDE to any of its
Advisors pursuant to Sections 7.l(b)(2) or Section 7.2(b)(2) or by MMT or UHDE
to any existing or prospective customers, vendors, or institutional financing
sources pursuant to Section 7.1(b)(3) or Section 7.2(b)(3), the Steering
Committee will institute procedures
9
<PAGE> 10
designed to maintain the confidentiality of UHDE Confidential Information and
MMT Confidential Information while facilitating the business activities
contemplated by this Agreement. These procedures shall include the preparation
of standard forms of confidentiality agreements to be used by UHDE and MMT in
connection with such disclosures.
7.5 THIRD PARTY INFORMATION. MMT and UHDE agree that nothing in this
Agreement shall be deemed to obligate either one of them to disclose UHDE
Confidential Information or MMT Confidential Information in violation of a
confidentiality obligation owed by the party possessing such information. In the
event that UHDE discloses UHDE Confidential Information to MMT, or MMT discloses
MMT Confidential Information to UHDE, in violation of a confidentiality
obligation owed to a third party by the disclosing party, the recipient shall,
without limiting its other obligations under this Article 7, upon request return
to the disclosing party all copies of such confidential information in any
tangible form.
7.6 TERM OF CONFIDENTIALITY OBLIGATIONS. The restrictions created by this
Article 7 shall continue for a period of ten (10) years after any termination of
this Agreement. Nothing in this Article 7 shall be interpreted as creating a
license in any party to use any intellectual property of any other party.
ARTICLE 8. STEERING COMMITTEE
- ---------------------------------
8.1 ESTABLISHMENT OF STEERING COMMITTEE. The parties shall establish a
steering committee (the "Steering Committee") for purposes of monitoring the
progress of the cooperative efforts being undertaken pursuant to this Agreement.
The Steering Committee shall consist of four (4) members designated by UHDE and
MMT, with two (2) members designated by each party. Each member shall serve at
the pleasure of the party that designated such member and may from time to time
be replaced by such party. Each party shall notify the other in writing of any
such replacement. Initially, the two UHDE members shall be Klaus Lesker and
Adrian Brandl and the two MMT members shall be David Hoey and Gerrit Nicholas.
8.2 RESPONSIBILITIES OF STEERING COMMITTEE. The Steering Committee shall
formulate a comprehensive and detailed strategy for identifying and satisfying
the requirements of potential Customers. Such strategy shall be embodied in the
Prospects List described in Section 8.3 hereof. In addition, the Steering
Committee shall be responsible for coordinating all activities related to the
implementation of this Agreement, including training activities, development of
sales and marketing tools and programs, and internal and third party
communications.
8.3 PROSPECTS LIST. As a basis for the cooperative effort for the
commercialization of CEP contemplated by this Agreement, a list of the project
prospects shall be prepared and regularly updated by the members of the Steering
Committee. Each of UHDE and MMT shall use their reasonable best efforts to
fulfill the objectives of the Prospects List.
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<PAGE> 11
8.4 MEETINGS. The Steering Committee shall meet as often as the members
deem necessary, but in no event less than once per calendar quarter. During the
first six (6) months after the execution of this Agreement, the parties
contemplate that the Steering Committee will meet at least once per month.
ARTICLE 9. INTELLECTUAL PROPERTY
- ------------------------------------
9.1 PREEXISTING INTELLECTUAL PROPERTY. Each of MMT and UHDE will retain
complete title and rights to all intellectual property respectively owned prior
to the date of this Agreement.
9.2 Improvements and Inventions.
---------------------------
(a) Subject to Section 9.1, all intellectual property, know-how,
improvements and inventions relating to CEP Core Technology and resulting from
the efforts of either of the parties, or jointly from the efforts of both
parties, under this Agreement, or any other agreement or undertaking between the
parties in connection herewith shall be the sole and exclusive property of MMT.
While the parties acknowledge that such intellectual property will be owned by
MMT, MMT will give due consideration, subject to the particular circumstances,
for UHDE to be involved in performance of engineering services where any such
intellectual property which was developed solely by UHDE, or jointly by UHDE and
MMT, is commercially deployed.
(b)
*
(c) UHDE shall promptly disclose to MMT any intellectual property
or inventions conceived by UHDE, whether alone or jointly with MMT, to which MMT
has rights under clause (a) or (b) above.
*
Each party agrees to give the other all reasonable assistance in obtaining
patent, copyright or other protection and in preparing and prosecuting any
patent application or copyright application filed by the other, and each party
will cause to be executed all assignments and other instruments and documents as
the other party may consider reasonably necessary or appropriate to carry out
the intent of this Section 9.2(c). Each party shall be responsible for its own
costs associated with obtaining and maintaining any such intellectual property
protection.
- -----------------
*Confidential treatment has been requested for portions of this Exhibit 10.1.
11
<PAGE> 12
(d) MMT shall be solely responsible for all decisions relating to
seeking or maintaining patent or copyright or other protection for any
intellectual property or invention conceived under clause (a) above, and shall
be responsible for obtaining and maintaining any such protection. If MMT is
unable, after reasonable effort, to secure UHDE's signature of any patent,
copyright or other protection relating to any such intellectual property or
invention for any reason whatsoever, UHDE hereby irrevocably designates and
appoints MMT and its duly authorized officers and agents as UHDE's
attorney-in-fact, to act for and in UHDE's behalf and stead to execute and file
any such application or applications and to do all other lawfully permitted acts
to further the prosecution and issuance of patent, copyright or other protection
thereon with the same legal force and effect as if executed by UHDE.
ARTICLE 10. WARRANTIES AND INDEMNIFICATION
- -------------------------------------------
10.1 PROJECT SERVICES. For Project Services, UHDE will provide warranties,
indemnities and other responsibilities in keeping with the scope and
responsibility of the assignment, as will be set forth in the applicable project
agreements. These terms will be based on the following guidelines:
(a)
*
(b) As to items provided by third parties, UHDE shall, for the
benefit of MMT and/or any Customer, obtain from all vendors, subcontractors and
contractors from which UHDE procures machinery, equipment, materials or services
for a project, warranties in a form customary for the relevant industry with
respect to such machinery, equipment, materials and services which shall be made
available to MMT and/or any Customer to the full extent of the terms thereof.
10.2. Indemnification.
---------------
*
- -----------------
*Confidential treatment has been requested for portions of this Exhibit 10.1.
12
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10.3 OBLIGATIONS OF MMT. To the extent that in connection with a project
for a particular UHDE-Designated CEP Plant MMT is providing services as a
subcontractor to UHDE, MMT will provide warranties, indemnities and other
responsibilities in keeping with the scope and responsibility of the assignment,
as will be set forth in the applicable project agreements. In addition, subject
to Section 16.11 hereof, in connection with any such services provided by MMT,
MMT shall indemnify and hold UHDE harmless from and against any and all losses,
claims, damages, fees (including attorneys' fees) or awards arising or resulting
from (i) the acts or omissions (including but not limited to negligent or
willful acts or omissions) on the part of MMT or its employees, agents or
representatives; or (ii) any violation of applicable law on the part of MMT.
ARTICLE 11. FORCE MAJEURE
- --------------------------
11.1 FORCE MAJEURE EVENT. If either party is rendered wholly or partly
unable to perform its obligations under this Agreement because of a Force
Majeure Event (as defined below), that party shall be excused from whatever
performance is affected by the Force Majeure Event to the extent so affected
provided that:
(a) the nonperforming party, as promptly as possible after it
becomes aware of the occurrence of the Force Majeure Event, gives the other
party telephonic notice describing the particulars of the occurrence and
confirms such notice in writing within ten (10) days thereafter;
(b) the suspension of performance is of no greater scope and of
no longer duration than is reasonably required by the Force Majeure Event;
(c) no obligation of either party which arose before the
occurrence causing the suspension of performance is excused as a result of the
occurrence; and
(d) the nonperforming party uses its best efforts to promptly
remedy its liability to perform.
11.2 FORCE MAJEURE EVENT. "Force Majeure Event" shall mean any act or event
that prevents a party from performing its obligations, or complying with any
conditions that it must comply with, under this Agreement if such act or event
is beyond the reasonable control of the party relying thereon as justification
for such nonperformance or noncompliance. Such acts or events include, without
limitation, acts of God, nuclear emergency, explosion, fire, epidemic,
landslide, lightning, earthquake, flood or similar cataclysmic occurrence, act
of the public enemy, war, blockade, insurrection, riot, civil disturbance, or
restriction or restraints imposed by law or by rule, regulation or order of
governmental authorities whether Federal, state or local. General economic
hardship involving a party shall not constitute Force Majeure Event.
ARTICLE 12. REPRESENTATIONS AND WARRANTIES
- -------------------------------------------
Each of UHDE and MMT represents and warrants to the other that: (i) it has
the corporate power and authority to enter into this Agreement and perform the
obligations required to be performed by it hereunder; (ii) that the execution
and delivery by it of this Agreement and
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<PAGE> 14
the performance by it of the obligations required to be performed by it
hereunder have been duly authorized by its Board of Directors or Managing Board,
as the case may be, and no consent of its stockholders is required; (iii) this
Agreement represents its valid and binding obligation, enforceable against it in
accordance with its terms; and (iv) the execution and delivery of this Agreement
by it and the performance by it of the obligations required to be performed by
it hereunder will not conflict with, violate or otherwise breach, or require a
consent under, any agreement or instrument to which it is a party or by which it
or its property is bound. The foregoing representations and warranties shall
survive the execution and delivery of this Agreement.
ARTICLE 13. TERMINATION
- ------------------------
13.1 TERM. This Agreement shall expire on the fourth (4th) anniversary of
the date hereof, provided, however, that the parties agree to meet not later
than six (6) months prior to such date to negotiate in good faith the possible
extension or renewal of this Agreement and the terms and conditions thereof.
13.2 Termination.
-----------
(a) This Agreement may be terminated by mutual agreement of the
parties and shall terminate pursuant to Section 13.1 if not renewed at the end
of the initial term or at the end of any applicable renewal period.
(b) Upon the Bankruptcy of UHDE or MMT, the non-bankrupt party
may elect within 90 days of the Bankruptcy to terminate this Agreement.
(c) Either party may terminate this Agreement in the event of the
continuance of a material breach by the other party of its obligations under
this Agreement or any project agreement after prior written notice thereof from
the non-breaching party and a reasonable opportunity (not to exceed 30 days) to
cure such breach.
(d) Unless otherwise agreed to in writing by MMT, this Agreement
shall automatically terminate upon written notice by MMT if on any anniversary
date UHDE has not met the Minimum Requirement for the preceding one-year period.
13.3 WAIVER OF TERMINATION CLAIMS. Termination of this Agreement by either
party will not impose upon that party any liability to the other party for
compensation, reimbursement or damage either on account of present or
prospective profits on sales or anticipated sales, or on account of
expenditures, investments or commitments made in connection therewith or in
connection of the business or goodwill of the other party, or on account of any
other cause or thing whatsoever, and any and all claims of such liability and
right to make such claims are hereby waived by the other party; provided,
however, that termination or expiration of this Agreement will not relieve
either party of its surviving obligations hereunder or under any outstanding
project agreement.
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13.4 NOT EXCLUSIVE. The rights and remedies provided to the parties in this
Article 13 shall not be exclusive and are in addition to any of the other rights
provided by this Agreement.
13.5 SURVIVAL OF CERTAIN PROVISIONS. The provisions of Section 16.1 and
Articles 7, 9 and 15 hereof shall survive any termination of this Agreement.
ARTICLE 14. COMPLIANCE WITH LAW
- --------------------------------
Each party will comply with all laws and regulations of any country in
which such party performs services under this Agreement. As required, such laws
and regulations shall be described or referenced in the relevant project
agreements. Each project agreement will require that either party, at the other
party's request, certify in writing that such party has complied with all
applicable laws and regulations of the country in which such party is performing
services under this Agreement, including but not limited to the U.S. Foreign
Corrupt Practices Act
ARTICLE 15. DISPUTE RESOLUTION
- -------------------------------
Although the parties encourage the prompt and equitable settlement of any
controversy, claim or dispute arising out of or relating to this Agreement, or
breach thereof, through amicable consultation and negotiation by their
respective management, any such controversy, claim or dispute shall, upon
written demand of either party at any time, be submitted to and resolved
exclusively by arbitration in accordance with the rules of J.A.M.S./Endispute in
effect on the date of this Agreement. Judgment upon the award rendered by the
arbitrator(s) in accordance with said rules may be entered and enforced in any
court of competent jurisdiction. The arbitration proceedings shall be held in
New York, New York. To the extent practicable the parties' obligation to perform
under this Agreement shall remain in effect during the resolution of any
disputes.
ARTICLE 16. GENERAL
- --------------------
16.1 EXPENSES. Except as expressly provided herein, each of MMT and UHDE
shall bear their own costs and expenses incurred in connection with the
negotiation and performance of this Agreement.
16.2 NOTICES. All notices, demands and other communications hereunder shall
be in writing or by written telecommunication, and shall be deemed to have been
duly given if delivered personally or if mailed by certified mail, return
receipt requested, postage prepaid, or if sent by overnight courier or sent by
written telecommunication, as follows:
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If to MMT:
Molten Metal Technology, Inc.
51 Sawyer Road
Waltham, Massachusetts 02154
United States of America
Attn: William M. Haney, III
President and Chief Executive Officer
Ethan E. Jacks, Esq.
Vice President and General Counsel
If to UHDE:
UHDE GmbH
Friedrich-Uhde-Strasse 15
41441 Dortmund
Germany
Attn: Adrian Brandl
Proposal Manager
Dirk Lichte
Assessor jur.
16.3 ENTIRE AGREEMENT. This Agreement contains the entire understanding of
the parties hereto, supersedes all prior agreements relating to the subject
matter hereof, including but not limited to that certain Letter of Intent
between the parties dated December 20, 1995, and shall not be amended except by
a written instrument hereafter signed by each of the parties hereto. No waiver
of any provision of this Agreement shall be effective unless evidenced by a
written instrument signed by the waiving party. UHDE and MMT further acknowledge
and agree that, in entering this Agreement, they have not in any way relied upon
any oral or written agreements, statements, promises, information, arrangements,
understandings, representations or warranties, express or implied, not
specifically set forth in this Agreement.
16.4 GOVERNING LAW. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, all rights and
remedies being governed by such laws, without regard to its conflict of laws
rules.
16.5 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, successors and
permitted assigns. Neither this Agreement nor the obligations of any party
hereunder shall be assignable or transferable by such party without the prior
written consent of the other party.
16.6 COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
16
<PAGE> 17
16.7 SEVERABILITY. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provision was omitted.
16.8 RELATIONSHIP OF PARTIES. UHDE and MMT have the relationship of
independent contractors and neither party shall be authorized to act as agent of
the other except as specifically provided herein.
16.9 IMPLIED RIGHTS OR REMEDIES. Except as otherwise expressly provided
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or to give any Person, except UHDE and MMT, any rights or remedies
under or by reason of this Agreement.
16.10 CONSTRUCTION. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be applied against any party.
16.11 LIMITATION OF LIABILITY. Unless otherwise agreed to in the applicable
project agreement, neither UHDE nor MMT shall be liable for any indirect or
consequential damages, including but not limited to loss of use or loss of
profits.
16.11 REMEDIES. In addition to all other rights and remedies provided in
this Agreement, each of UHDE and MMT shall, in the event of a breach by the
other party of its obligations under this Agreement, be entitled to such relief
as shall be determined by the arbitrators selected pursuant to Article 15,
including but not limited to money damages, equitable relief or both. Without
limiting the foregoing, each of UHDE and MMT (the "breaching party")
acknowledges that the other party (the "non-breaching party") will suffer
irreparable harm in the event of a breach of the breaching party's obligations
under Article 7 or Article 9, and that monetary damages will be inadequate to
compensate for such breach. Accordingly, in addition to its other rights or
remedies, the non-breaching party will be entitled to injunctive relief in order
to restrain any such breach by the breaching party or its agents or employees.
The prevailing party shall be entitled to recover its costs, including attorneys
fees, incurred in enforcing such Articles of this Agreement.
17
<PAGE> 18
IN WITNESS WHEREOF, the parties have executed this Agreement by their
duly authorized representatives as of the date first written above.
UHDE GMBH
By: /s/ Wolfgang Koepke
-----------------------
Name: Wolfgang Koepke
Title: Director
By: /s/ Klaus Lesker
-----------------------
Name: Klaus Lesker
Title: Manager
MOLTEN METAL TECHNOLOGY, INC.
By: /s/ Gerrit J. Nicholas
-----------------------
Name: Gerrit J. Nicholas
Title: Vice President
By: /s/ David Hoey
-----------------------
Name: David Hoey
Title: Vice President
18
<PAGE> 1
Exhibit 10.2*
PARTNERSHIP RESTRUCTURING AGREEMENT
This is a Partnership Restructuring Agreement, dated as of March 15, 1996
(as in effect from time to time, the "AGREEMENT"), between Molten Metal
Technology, Inc., a Delaware corporation ("MMT"), and Lockheed Martin
Corporation, a Maryland corporation ("LMC"), as successor by merger to Martin
Marietta Corporation, a Maryland corporation ("MMC"). In addition, M4
Environmental L.P., a Delaware limited partnership (the "PARTNERSHIP"), is
entering into this Agreement solely for the purposes of Article 5.
WHEREAS, MMC and MMT entered into a Master Agreement for Government Market
Development and Commercialization of CEP Technology, dated as of August 9, 1994
(as in effect from time to time, the "MASTER AGREEMENT"), pursuant to which they
formed the Partnership in order to effectively commercialize CEP by selling,
engineering, constructing and operating CEP Plants, and sublicensing CEP
technology to appropriate third parties to permit them to engineer, construct
and operate CEP Plants, to service the environmental remediation, waste
management, decontamination, decommissioning, chemical and biological
demilitarization, pollution prevention and waste minimization needs of the
Department of Energy or the Department of Defense;
WHEREAS, MMT and the Partnership have entered into an Agreement for
Additional Market Segment -- United States Enrichment Corporation, dated as of
December 13, 1994 (the "USEC AGREEMENT");
WHEREAS, pursuant to an Agreement and Plan of Reorganization, dated as of
August 29, 1994, between MMC and Lockheed Corporation, a Delaware corporation
("LOCKHEED"), MMC and Lockheed effected a business combination whereby MMC and
Lockheed became wholly-owned subsidiaries of LMC, a new publicly-held
corporation (the "LMC MERGER");
WHEREAS, subsequent to the LMC Merger, Lockheed and MMC merged with and
into LMC, with LMC as the surviving corporation;
WHEREAS, LMC directly or indirectly owns 100% of Lockheed Environmental
Systems & Technologies Co., a Nevada corporation ("LESAT"), which engages in
businesses that fall within the scope of LMC's non-competition obligations under
Section 5.3(d) of the Master Agreement;
- ------------------
*Confidential treatment has been requested for portions of this Exhibit 10.2.
<PAGE> 2
-2-
WHEREAS, the parties have been in discussions regarding
*
the most appropriate means of resolving the issues
raised by the LESAT acquisition, and have concluded that it is in the best
interests of all parties to contribute certain LESAT business operations to the
Partnership and to restructure their relationship in order to expand the
Partnership's resource base through additions of technology, capital and
staffing, and also to maximize the Partnership's opportunities for successfully
winning business by teaming with LMC's Energy and Environmental Sector
("LMC/EES") in the pursuit and execution of certain major contracts and
opportunities.
NOW, THEREFORE, the parties hereto agree as follows:
Article 1
---------
Defined Terms
-------------
In addition to the defined terms found elsewhere in this Agreement, as used
in this Agreement the following terms shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with, such Person. As used in
this definition, "CONTROL" (including, with its correlative meanings,
"CONTROLLED BY" and "UNDER COMMON CONTROL WITH") means the possession, directly
or indirectly, of power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of Voting Securities, by
contract or otherwise.
"Agreement" has the meaning set forth in the preamble.
"Additional Market Segments" has the meaning set forth in Section 7.2.
"Asset Acquisition Agreement" has the meaning set forth in Section 2.1.
"Bankruptcy" means, with respect to any Person, (i) the filing by such
Person of a voluntary petition seeking liquidation, reorganization, arrangement
or readjustment, in any form, of its debts under Title 11 of the United States
Code, or corresponding provisions of future laws (or any other federal or state
insolvency law), (ii) the filing by such Person of an answer consenting to or
acquiescing in any such petition, (iii) the
- ------------------
*Confidential treatment has been requested for portions of this Exhibit 10.2.
<PAGE> 3
-3-
making by such Person of any assignment for the benefit of its creditors or the
admission by such Person in writing of its inability to pay its debts as they
mature, (iv) the filing of an involuntary petition against such Person under
Title 11 of the United States Code (or corresponding provisions of future laws),
an application for the appointment of a receiver for the assets of such Person,
or an involuntary petition seeking liquidation, reorganization, arrangement or
readjustment of its debts under any other federal or state insolvency law,
provided that the same shall not have been vacated, set aside or stayed within a
60-day period after the occurrence of such event, or (v) the entry against such
Person of a final non-appealable order for relief under any bankruptcy,
insolvency or similar law now or hereafter in effect.
"Business Plan" means the Business Plan of the Partnership as currently in
effect, as such Business Plan may be amended from time to time by unanimous
consent of the Executive Committee.
"By-Law Amendment" has the meaning set forth in Section 3.3.
"Catalytic Extraction Processing" or "CEP" means the processes, methods and
systems (including all intellectual and intangible and tangible property
associated therewith and including all aspects of accepting Feedstocks,
reactions within a CEP Plant, and handling Recovered Resources), owned or used
by MMT, directed to the processing of Feedstocks by introducing the Feedstocks
to a processing vessel containing liquified metal.
"CEP Plant" means the plant, equipment and other facilities necessary to
perform, operate and maintain CEP on a commercial basis (or, in the case of any
so-called "demonstration" CEP Plant, on the basis generally provided in the
applicable demonstration program).
"Charter Amendment" has the meaning set forth in Section 3.3.
"Commercial Shortfall" has the meaning set forth in Section 10.3.
"Competing Activity" has the meaning set forth in Section 7.3.
"Competing Business" has the meaning set forth in Section 7.3.
"Designated Period" means (i) in the case of any termination of this
Agreement by LMC pursuant to Section 10.2 or 10.4, the * after the
effective date
- ------------------
*Confidential treatment has been requested for portions of this Exhibit 10.2.
<PAGE> 4
-4-
of such termination and (ii) in the case of any other termination of this
Agreement the * after the effective date of such termination.
"Dispute Resolution Agreement" has the meaning set forth in Section 3.5.
"DoD" means the United States Department of Defense and, where the context
so requires, any Successor Agency.
"DOE" means the United States Department of Energy and, where the context
so requires, any Successor Agency.
"EPA" means the United States Environmental Protection Agency and any
successor agency.
"Executive Committee" has the meaning set forth in Section 6.2.
"Feedstocks" means, with respect to any CEP Plant, the wastes, industrial
by-products and other materials to be processed by such CEP Plant.
"General Manager" has the meaning set forth in Section 6.5.
"General Partner" means M4 Environmental Management, Inc., a Delaware
corporation.
"GOCO" means a government-owned, contractor-operated facility and/or
activity, with respect to which the U.S. Government owns the property and
facilities, and a private-sector contractor provides the staff and performs the
management and/or operations functions for the facilities and associated
programs on a facility-wide or program-wide basis. Direction is provided by U.S.
Government employees, and, in general, all costs incurred by the contractor are
reimbursed by the U.S. Government. Various GOCO contract forms are possible,
including "M&O" (Management and Operating) contracts, "M&I" (Management &
Integration) contracts, and such Performance-Based Management Contract Vehicles
contemplated within the current DOE contract reform initiative contained in
"Making Contracting Work Better and Cost Less", REPORT OF THE CONTRACT REFORM
TEAM, United States Department of Energy, DOE/S/0107 (February 1994).
"GP Stockholder Agreement" has the meaning set forth in Section 3.3.
- ------------------
*Confidential treatment has been requested for portions of this Exhibit 10.2.
<PAGE> 5
-5-
"Hazardous" means, with respect to Feedstocks, Feedstocks that are defined
as "hazardous" within the meaning of RCRA.
"Inside Directors" has the meaning set forth in Section 6.2.
"Intellectual Property" means all patents, inventions, patent applications,
patent rights, trademarks, trademark registrations, trade names, brand names,
all other names and slogans embodying business or product goodwill (or both),
copyright registrations, copyrights (including those in computer programs,
software, including all source code and object code, development documentation,
programming tools, drawings, specifications and data), software, trade secrets,
know-how, mask works, industrial designs, formulae, processes and technical
information, including confidential and proprietary information, whether or not
subject to statutory registration or protection.
"LESAT" has the meaning set forth in the preamble.
"Limited Feedstocks" means, at any time, Feedstocks (other than Market
Feedstocks of the type referred to in clause (I) of the definition thereof) for
which the annual amount generated in the United States at such time is * , as
determined by MMT and confirmed in writing to the Partnership.
"Limited Guaranty" has the meaning set forth in Section 3.4.
"LMC" has the meaning set forth in the preamble.
"LMC Directors" means LMC's designees to the Executive Committee.
"LMC Merger" has the meaning set forth in the preamble.
"LMC Subsidiary" means Martin Marietta Environmental Holdings, Inc., a
Delaware corporation.
"Loan Agreement" means the Revolving Credit Agreement between LMC and the
Partnership entered into pursuant to the Asset Acquisition Agreement, as in
effect from time to time.
"Lockheed" has the meaning set forth in the preamble.
"Market" means the environmental remediation, waste management,
decontamination, decommissioning, chemical and biological demilitarization
(including
- ------------------
*Confidential treatment has been requested for portions of this Exhibit 10.2.
<PAGE> 6
-6-
disposal of unexploded ordnance), pollution prevention and waste minimization
needs of the DoD, DOE or USEC anywhere in the world with respect to Market
Feedstocks.
"Market Feedstocks" means USEC Feedstocks and any of the following
Feedstocks:
(I) any of the Feedstocks described in the following clauses (i)-(iv), to
the extent such Feedstocks are owned by, generated by or stored by DOE
or DoD, pursuant to the legal authority given to DoD or DOE under
applicable law as of the date of the Original Master Agreement:
(i) any Hazardous, Toxic or Radioactive Feedstocks;
(ii) any Mixed Feedstocks;
(iii) any Medical Waste; and
(iv) any Scrap Material for Recycling;
(II) any Superfund, Hazardous or Toxic Feedstocks, other than Limited
Feedstocks, which DoD or DOE specifically requests to be processed
through an existing CEP Plant of the Partnership, but only to the
extent such Superfund, Hazardous or Toxic Feedstocks represent a minor
portion of the Feedstocks processed at the applicable CEP Plant in any
year; and
(III) any Feedstocks for which: (a) the processing of such Feedstocks is
funded by U.S. governmental appropriations; (b) the processing of
such Feedstocks is pursuant to a designated program initiative for
which DoD or DOE is the responsible U.S. agency for implementation of
such initiative, such as the Soviet Nuclear Threat Reduction Act of
1991, 22 U.S.C.[Section]2551 note, the Cooperative Threat Reduction
("CTR") program, or a government-to-government Agreement for
Cooperation under the Peaceful Use of Atomic Energy program of the
Atomic Energy Act, 42 U.S.C.[Section]2153; and (c) the processing of
such Feedstocks is associated with environmental restoration, waste
management, decontamination and decommissioning, pollution
prevention, waste management or chemical or biological
demilitarization at sites and facilities within the former Soviet
Union.
Notwithstanding the foregoing, Market Feedstocks do not, however,
include any Municipal Waste or waste or other materials from commercial
nuclear power plants.
"Master Agreement" has the meaning set forth in the preamble.
<PAGE> 7
-7-
"Medical Waste" means, with respect to any Feedstocks, Feedstocks that
constitute "medical waste" as defined in 40 C.F.R. [Section]259.10.
"Mixed Feedstocks" means, with respect to Feedstocks, Feedstocks that
contain Radioactive materials in combination with Hazardous and/or Toxic
materials.
"MMC" has the meaning set forth in the preamble.
"MMT" has the meaning set forth in the preamble.
"MMT Directors" means MMT's designees to the Executive Committee.
"MMT License Agreement" has the meaning set forth in Section 3.2.
"MMT Subsidiary" means MMT Federal Holdings, Inc., a Delaware corporation.
"Municipal Waste" means solid waste, other than Hazardous, Toxic,
Radioactive or Mixed Feedstocks, that is typically generated by households,
retail facilities or business offices.
"OCI" has the meaning set forth in Article 8.
"Offer Trigger Date" has the meaning set forth in Section 5.2(b).
"Original Business Plan" means the business plan of the Partnership, dated
as of August 9, 1994.
"Original Master Agreement" means the Master Agreement, dated as of August
9, 1994, between MMC and MMT.
"Outside Directors" has the meaning set forth in Section 6.2.
"Partnership" has the meaning set forth in the preamble.
"Partnership Agreement" has the meaning set forth in Section 3.1.
"Person" means any individual, partnership, corporation, association,
trust, limited liability company, joint venture, unincorporated organization and
any government, governmental department or agency or political subdivision
thereof.
"Pit 9 Contract" means Subcontract No. C91-133136 effective August 26, 1994
between Lockheed Idaho Technologies Company and LESAT, as modified by
Modification No 1 effective November 15, 1994 and Modification No. 2 effective
February 20, 1995.
<PAGE> 8
-8-
"Radioactive" means, with respect to Feedstocks, Feedstocks that contain
disintegrating isotopes, either natural or man-made, that have been either added
to or enhanced in the material that make up such Feedstock.
"RCRA" means the Resource Conservation and Recovery Act (42 U.S.C.
[SECTION]6901 ET SEQ.), and the federal regulations implementing such Act.
"Recovered Resources" means the elements and compounds produced by a CEP
Plant (whether or not produced through the use of reactants) that are suitable
for use or sale.
"Recycling" means the return of resources recovered or produced from waste
or other similar materials for use or sale.
"Registration Rights Agreement" has the meaning set forth in Section 2.2.
"Related Agreements" means this Agreement, the Master Agreement, the Asset
Acquisition Agreement, the Loan Agreement, the Registration Rights Agreement,
the Partnership Agreement, the GP Stockholder Agreement, the MMT License
Agreement, the Certificate of Incorporation of the General Partner (as in effect
from time to time), the By-Laws of the General Partner (as in effect from time
to time), the Dispute Resolution Agreement and the Limited Guaranties, and any
other agreement between any of the Partnership, LMC, MMT, LESAT, the General
Partner, the LMC Subsidiary or the MMT Subsidiary relating to the Partnership
which specifies that it is a Related Agreement for purposes of this Agreement.
"Retech" means the division of LESAT operating assets purchased in 1995
from Retech, Inc., a California corporation.
"Retech Technology" means Retech's plasma systems.
"RFP" has the meaning set forth in Section 5.1.
"Scrap Materials for Recycling" means any bits and pieces of plastic, metal
or other parts (e.g., bars, turnings, rods, sheets, wire) or metal, plastic or
other pieces that may be combined together with bolts or soldering (e.g.
radiators, scrap automobiles, railroad box cars), which when worn or superfluous
can be recycled.
"Subsidiary" means a corporation, company or other entity:
(i) more than fifty percent (50%) of whose outstanding shares or
securities (representing the right to vote for the election of
directors or other managing authority) are, now or hereafter, owned or
controlled, directly or indirectly, by a party hereto, but such
corporation, company or other entity shall be deemed to be a
Subsidiary only so long as such ownership or control exists; or
<PAGE> 9
-9-
(ii) which does not have outstanding shares or securities, as may be the
case in a partnership, joint venture or unincorporated association,
but more than fifty percent (50%) of whose ownership interests
representing the right to make the decisions for such corporation,
company or other entity is now or hereafter, owned or controlled,
directly or indirectly, by a party hereto, but such corporation,
company or other entity shall be deemed to be a Subsidiary only so
long as such ownership or control exists.
"Successor Agency" has the meaning set forth in Section 7.1.
"Superfund" means, with respect to any Feedstocks, Feedstocks that are
being treated, remediated or cleaned up pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
[SECTION]9601 ET SEQ.
"Teamed Project" has the meaning set forth in Section 5.1.
"Toxic" means, with respect to Feedstocks, Feedstocks that are chemical
substances or mixtures that are regulated under Section 6 of TSCA, 15 U.S.C.
[SECTION]2605.
"Treatment" means, with respect to any material, any physical, mechanical,
thermal and/or chemical actions which, individually or in concert, alter the
chemical composition of such materials.
"TSCA" means the Toxic Substance Control Act, 15 U.S.C., [SECTION]2601 ET
SEQ., and the federal regulations implementing such Act.
"USEC" means the United States Enrichment Corporation and, where the
context so requires, any Successor Agency thereto.
"USEC Feedstocks" means any of the Feedstocks described in the following
clauses (i)-(iv), to the extent such Feedstocks are owned by, generated by or
stored by USEC from and after July 1, 1993, pursuant to legal authority given to
USEC under applicable law as of August 9, 1994:
(i) any Hazardous, Toxic or Radioactive Feedstocks;
(ii) any Mixed Feedstocks;
(iii) any Medical Waste; and
(iv) any Scrap Material for Recycling.
"Voting Securities" mean, with respect to any Person, all securities issued
by such Person having the ordinary power to vote in the election of directors of
such Person,
<PAGE> 10
-10-
other than securities having such power only upon the occurrence of a default or
any other extraordinary contingency.
Article 2
---------
Asset Contribution
------------------
2.1. ASSET ACQUISITION AGREEMENT. (a) LMC and MMT agree to enter into, and
to cause the Partnership to enter into, an Asset Acquisition Agreement in the
form of EXHIBIT A hereto (as in effect from time to time, the "ASSET ACQUISITION
AGREEMENT"), pursuant to which LMC will cause LESAT to contribute to the
Partnership certain assets and liabilities, and transfer to MMT certain assets,
relating to LESAT's Retech operations. In exchange for the assets transferred to
MMT by LESAT, MMT will issue to LESAT 307,735 shares of MMT's Common Stock, par
value $.01 per share (the "MMT STOCK"). MMT will transfer the assets acquired
from LESAT to the MMT Subsidiary, which will in turn transfer the applicable
Retech assets to the Partnership as a capital contribution.
(b)
*
-
The Partnership shall also have the right to make offers to
employ certain LESAT sales and marketing personnel it designates.
*
2.2. REGISTRATION RIGHTS AGREEMENT. In connection with the shares of MMT
Stock issued to LMC pursuant to the Asset Acquisition Agreement, LMC and MMT
agree to enter into a Registration Rights Agreement in the form of EXHIBIT B
hereto (as in effect from time to time, the "REGISTRATION RIGHTS AGREEMENT"). As
provided in the Registration Rights Agreement, MMT hereby agrees (i) to file a
registration statement with the Securities and Exchange Commission ("SEC")
within seven days after the Closing (as defined in the Asset Acquisition
Agreement), (ii) to cause the MMT Stock to be available for quotation through
the NASDAQ National Market System and (iii) in the
- ------------------
*Confidential treatment has been requested for portions of this Exhibit 10.2.
<PAGE> 11
-11-
event that the above-referenced registration statement is not declared effective
by the SEC within either (y) thirty (30) days after its filing date, if the
registration statement is not reviewed by the SEC, or (z) ninety (90) days after
its filing date, if the registration statement is reviewed by the SEC, if
requested by LMC at such time, to repurchase the MMT Stock for a cash purchase
price of $23.72 per share.
2.3. Satisfaction of Section 5.3(d).
------------------------------
*
-
Article 3
---------
Restructuring of the Partnership
--------------------------------
3.1. PARTNERSHIP AGREEMENT. LMC and MMT agree to cause the General Partner,
MMT Subsidiary, LMC Subsidiary and LESAT, as applicable, to enter into, and LMC
agrees to cause LESAT to enter into, an amendment and restatement of the
Partnership Agreement in the form of EXHIBIT C hereto (as in effect from time to
time, the "PARTNERSHIP AGREEMENT").
3.2. LICENSE AGREEMENT. MMT and LMC agree to enter into, and agree to cause
the Partnership to enter into, an amendment and restatement of the License
Agreement in the form of EXHIBIT D hereto (as in effect from time to time, the
"MMT LICENSE AGREEMENT").
3.3. GENERAL PARTNER AMENDMENTS. MMT and LMC agree to cause MMT Subsidiary
and LMC Subsidiary, respectively, to enter into the Amended and Restated GP
Stockholder Agreement in the form of EXHIBIT E-1 hereto (as in effect from time
to time, the "GP STOCKHOLDER AGREEMENT"), to amend the General Partner's
Certificate of Incorporation as set forth in EXHIBIT E-2 hereto (the "CHARTER
AMENDMENT") and to amend the General Partner's By-Laws as set forth in EXHIBIT
E-3 hereto (the "BY-LAW AMENDMENT").
3.4. LIMITED GUARANTIES. MMT and LMC agree to execute and deliver Amended
and Restated Limited Guaranties in the form of EXHIBITS F-1 and F-2 hereto (as
in effect from time to time, the "LIMITED GUARANTIES").
- ------------------
*Confidential treatment has been requested for portions of this Exhibit 10.2.
<PAGE> 12
-13-
3.5. DISPUTE Resolution Agreement. LMC and MMT agree to enter into, and to
cause, as applicable, the LMC Subsidiary, the MMT Subsidiary, the General
Partner, the Partnership and LESAT to enter into, an Amended and Restated
Dispute Resolution Agreement in the form of EXHIBIT G hereto (as in effect from
time to time, the "DISPUTE RESOLUTION AGREEMENT").
3.6. CONVERSION TO LLC STATUS. LMC and MMT acknowledge that they wish to
cause MMT Subsidiary and LMC Subsidiary to take all actions required to convert
the Partnership from a Delaware limited partnership to a Delaware limited
liability company, provided that there are no material adverse tax, accounting,
liability or operational consequences to the parties as a result of converting
to a limited liability company. This conversion would take place within 90 days
after the Closing referred to in Article 4. The documentation to be prepared in
connection with such conversion must be in mutually acceptable form, will be
consistent with the Related Agreements and will provide that the Executive
Committee will have final responsibility for approving all business matters
relating to the Partnership within the normal purview of corporate boards of
directors, including items under the Related Agreements which now require
separate approvals of one or more of the parties to this Agreement; PROVIDED
that those items set forth on SCHEDULE 3.6 would still require the approval of
LMC or MMT or its designated subsidiary, as applicable. In the event that LMC
and MMT elect not to cause the conversion of the Partnership to a Delaware
limited liability company, this Agreement and the other Related Agreements shall
remain in effect in the form provided for in this Agreement.
Article 4
---------
Closing
-------
The closing of the restructuring contemplated by Articles 2 and 3 will take
place at the time and place referred to in the Asset Acquisition Agreement.
Article 5
---------
Teaming; Pit Nine
-----------------
5.1. Teaming.
-------
(a) In the interest of serving the needs of both the Partnership and LMC
and their major customers, LMC (through LMC/EES) and the Partnership
agree to enter into teaming arrangements in response to certain DOE,
DoD and USEC government procurement opportunities requiring Treatment
or Recycling of Feedstocks or other waste, in particular for contracts
that require financial commitments in excess of a pre-determined
threshold. Any contract opportunity that becomes the subject of this
teaming
<PAGE> 13
-13-
arrangement is referred to below as a "TEAMED PROJECT". Any such
teaming arrangements will be on the basis contemplated by Section
5.1(c).
(b) For purposes of determining which DOE, DoD or USEC requests for
proposal ("RFP's") shall constitute Teamed Projects, LMC and the
Partnership will be guided by an analysis of the Partnership's current
Business Plan, with respect to which the parties have agreed that
* will be designated as Teamed Projects
for purposes of this Section 5.1. From these projects LMC and the
Partnership will extrapolate the characteristics necessary to
determine the threshold for future projects to become Teamed Projects.
These criteria will also take into account the Partnership's expected
growth and financial strength and operating experience.
(c) With respect to any Teamed Project, LMC will serve as the prime
contractor, with overall contract and customer interface
responsibility, and will provide general systems integration and
program management, and the systems engineering and integration lead.
The Partnership will be responsible for, and will provide (or
subcontract for) and manage, all waste processing technologies
necessary to perform the Teamed Project. For each RFP governed by this
teaming arrangement, LMC and the Partnership will form an RFP response
team staffed by both LMC and the Partnership, with one team leader
from LMC and a deputy team leader from the Partnership. LMC and the
Partnership, operating through this team, will promptly by joint
agreement resolve all issues relating to the RFP, including system
architecture, process design, facility design and construction,
business and finance plans, selection of teammates and other matters
necessary to respond effectively to the RFP. LMC and M4 will also
establish their respective economic participation with respect to the
applicable Teamed Project. If the necessary waste processing
technologies are not already owned or controlled by the Partnership,
it will obtain access to them for purpose of performing the applicable
Teamed Project.
(d) The parties by mutual agreement may elect to vary the arrangement
described above, on a case-by-case basis, depending upon the
particular circumstances of the applicable RFP. In addition, when in
the best interest of the Partnership and LMC/EES, as determined by
each of the Partnership and LMC in its discretion, the Executive
Committee and LMC can always, on a case-by-case basis, elect to enter
into a teaming arrangement for RFP's that are below the applicable
threshold or for procurement
- ------------------
*Confidential treatment has been requested for portions of this Exhibit 10.2.
<PAGE> 14
-14-
opportunities requiring waste processing anywhere in the world that
are outside of the Market.
(e) Any dispute relating to the roles of LMC and the Partnership with
respect to any proposed Teamed Project which cannot be resolved by the
respective management teams will be directed to the Chairman of the
Partnership and the President of LMC/EES. If the President of LMC/EES
and the Chairman of the Partnership fail to resolve such dispute, LMC
and the Partnership will not proceed with such Teamed Project, either
alone or with others.
(f) The provisions of this Section 5.1 shall not prohibit LMC and its
Subsidiaries from pursuing GOCO and similar opportunities or other
business opportunities, including but not limited to areas involving
environmental services, such as systems integration, remediation
management, environmental consulting, analytical labs and waste
characterization and transportation, in each case to the extent
permitted under Section 7.3.
5.2. Pit 9 Contract.
--------------
(a) LMC (either directly or through a Subsidiary) will continue to perform
the Pit 9 Contract generally within its current scope. LMC and the
Partnership will agree on terms whereby the Partnership will assume
(subject to obtaining any necessary customer approvals), by
sub-contract, operational responsibility at a defined time
(anticipated to be as soon as possible following the Limited Product
Test and Operations Readiness Review milestones under the Pit 9
Contract). LMC and the Partnership shall begin discussions with
respect to this subcontract in advance of such milestones. This
subcontract will provide that the Partnership will be appropriately
compensated and will accept appropriate contractual responsibilities.
(b) After the earlier of the completion of the Pit 9 Contract or the
occurrence of any material addition to or enhancement of the Pit 9
Contract (the "OFFER TRIGGER DATE"), the infrastructure relating to
the Pit 9 Contract and additional future business opportunities
generated by the Pit 9 Contract, including the assets and liabilities,
will be offered (subject to obtaining any necessary customer
approvals) by LMC to the Partnership
* pursuant to the procedures contemplated by
Section 7.3(d), except that LMC shall make such offer within fifteen
(15) days after the Offer Trigger Date, the Partnership shall have
fifteen (15)
- ------------------
*Confidential treatment has been requested for portions of this Exhibit 10.2.
<PAGE> 15
-15-
days after receipt of such offer to accept or reject such offer, and
LMC and the Partnership shall work diligently to close such
acquisition as soon as possible.
Article 6
---------
Governance
----------
6.1. PRINCIPAL BUSINESS. The Partnership's principal business will be to
own, operate and sub-license waste processing technologies that contribute to
the development of a long term, high margin business. The Partnership's primary
technology base will be CEP, used in accordance with the MMT License Agreement,
for the Market and, following the acquisition contemplated by the Asset
Acquisition Agreement, Retech Technology for use in the Market and other
opportunities in any other market anywhere in the world as determined by the
Executive Committee. The best technology available to the Partnership shall be
used for any particular Partnership project taking into account both qualitative
and quantitative factors as determined by the Executive Committee exercising its
business judgment.
6.2. Establishment.
-------------
(a) LMC (as successor under the Master Agreement to MMC) and MMT have
established an executive committee of the General Partner to implement
this Agreement and the Related Agreements (the "EXECUTIVE COMMITTEE").
The Executive Committee will oversee the development of the
Partnership and the General Partner. The Executive Committee shall
also serve as the Board of Directors of the General Partner. The
Executive Committee shall be staffed by an equal number of senior
representatives designated by LMC and MMT ("INSIDE DIRECTORS"), unless
LMC and MMT mutually agree to select additional members not affiliated
with LMC or MMT ("OUTSIDE DIRECTORS"). Unless LMC and MMT agree
otherwise, the Executive Committee shall consist of a total of eight
(8) members. Each Inside Director shall serve at the pleasure of the
party which designated such Inside Director and may from time to time
be replaced by such party. Any such replacement must be a member of
senior management of the designating party. All Outside Directors may
be replaced only with the mutual consent of LMC and MMT. Each party
shall notify the other party in writing of the persons designated by
it to serve on the Executive Committee as Inside Director and any
replacement for such person promptly following such designation or
replacement.
(b) The Chairman of the Executive Committee shall be a senior MMT
executive designated from time to time by MMT. The Chairman shall
preside at all meetings of the Executive Committee and shall have such
<PAGE> 16
-16-
other duties and responsibilities as are assigned from time to time by
the Executive Committee.
6.3. Authority and Duties.
--------------------
(a) The Executive Committee shall have the specific authority delegated to
it pursuant to this Agreement and the Related Agreements.
(b) DUTIES OF EXECUTIVE COMMITTEE. Without limiting the general duties and
authority of the Executive Committee as set forth in this Article 6,
the Executive Committee shall have responsibility for the evaluation
of the performance of the General Manager, the establishment and
monitoring of capital and operating budgets and other duties
traditionally associated with Boards of Directors of Delaware
corporations. The Executive Committee shall also review the Business
Plan at least annually, and revise it as appropriate to reflect the
business conditions and prospects for the Partnership. The Executive
Committee shall form a compensation committee, over which the Chairman
of the Executive Committee shall preside, to evaluate and set the
compensation of the General Manager and other senior management.
(c) FIDUCIARY DUTIES. Each member of the Executive Committee shall have
the fiduciary duties of loyalty and care (similar to fiduciary duties
of loyalty and care of directors of a business corporation governed by
the General Corporation Law of the State of Delaware) to the
Partnership and all of the Limited Partners.
6.4. MEETINGS. The Executive Committee will meet as often as the members
deem necessary, presently contemplated to be four times per year. Meetings may
be conducted in person or by telephone or in any other manner agreed to by the
Executive Committee. Either party may call a meeting of the Executive Committee
upon reasonable prior notice. No notice of a meeting shall be necessary when all
members of the Executive Committee are present. An equal number of Inside
Directors then designated by each party shall constitute a quorum. Meetings of
the Executive Committee may be attended by other representatives of LMC and MMT
and other persons related to the Partnership all as agreed to from time to time
by the Executive Committee. The Executive Committee will set up procedures
relating to the recording of minutes of its meetings. Actions of the Executive
Committee may also be taken without a meeting by unanimous written consent of
the Executive Committee in the manner permitted by Section 141(f) of the General
Corporation Law of the State of Delaware.
6.5. POSITION OF GENERAL MANAGEr. LMC designated the President of the
General Partner as the general manager of the Partnership (the "GENERAL
MANAGER") to manage activities related to the development and operation of the
Partnership. The General Manager was, immediately prior to becoming the General
Manager, an employee of MMC, and may be removed from office only with the prior
agreement of the MMT
<PAGE> 17
-17-
and LMC Directors, except that if either the MMT Directors or the LMC Directors
have objected to the Executive Committee on at least three separate occasions
about the General Manager's performance, providing information about the grounds
for such objections in reasonable detail, then upon the request of the objecting
party the LMC Directors and MMT Directors shall remove the General Manager and
select a mutually acceptable new General Manager. Upon the retirement or removal
of the General Manager, LMC may designate the replacement General Manager,
subject to the approval of the MMT Directors. LMC agrees that management of the
Partnership and the General Partner shall be the General Manager's only
responsibility and such General Manager's activities shall be directed solely
for the benefit of the Partnership and the General Partner.
6.6. DUTIES OF GENERAL MANAGER. The General Manager shall be the Chief
Executive Officer of the General Partner and shall be responsible for the
management, operations, direction and administration of the Partnership and the
General Partner and shall have such other duties and responsibilities related to
the development of the Partnership as the Executive Committee shall from time to
time direct. Subject to the provisions of this Agreement and the Related
Agreements, the General Manager shall have discretion in choosing the remainder
of the management team for the Partnership. The General Manager shall be
responsible for advising the Executive Committee on the status of the
Partnership on a regular basis or more frequently as requested by the Executive
Committee.
Article 7
---------
Exclusivity; Additional Market Segments
---------------------------------------
7.1. Exclusive Market Obligation of MMT.
----------------------------------
(a) MMT agrees that, during the term of this Agreement, except pursuant to
this Agreement and other Related Agreements it shall not either
directly or indirectly (whether through its Affiliates, as a
shareholder, partner, or consultant):
(i) except to the extent permitted under paragraphs (b), (c), (d) or
(e) below, own or operate any CEP Plant that processes any Market
Feedstocks; or
(ii) except to the extent permitted under paragraphs (b), (c), (d) or
(e) below, sell or license any CEP Plant pursuant to sale or
license terms which permit such CEP Plant to process any Market
Feedstocks.
(b) Notwithstanding the provisions of paragraph (a) above, under
relationships existing as of July 1, 1994
<PAGE> 18
* or their successors in interest, * and MMT (solely to the extent it
is acting together with * pursuant to either such relationship) may
own and operate CEP Plants located in the United States that process
Market Feedstocks generated in the United States, excluding, however,
Radioactive or Mixed Market Feedstocks, which may not be processed by
* or MMT pursuant to this paragraph (b). MMT shall determine annually
the quantity of any such Feedstocks so processed. As provided in the
MMT License Agreement, the Partnership and its sublicensees shall be
allowed to process, at CEP Plants owned by the Partnership or its
sublicensees and located in the United States, an amount of Hazardous,
Toxic or Superfund Feedstocks, other than Limited Feedstocks, that are
generated in the United States but which are not Market Feedstocks,
equal to the amount of such Market Feedstocks so processed by * or
MMT. Any CEP Plants developed by * or MMT, or their successors in
interest, beyond the scope of the relationships existing as of July 1,
1994 between MMT and * shall not qualify for the exemption provided by
this paragraph (b) but instead shall be subject to the provisions of
paragraph (c) below. MMT has previously disclosed in a writing
acknowledged by MMC the nature of MMT's relationships with * .
(c) Except for any agreement entered into with * or their Subsidiaries
consistent with the provisions of paragraph (b) above, no agreement
entered into after July 1, 1994 by MMT with any Person other than the
Partnership shall permit the applicable licensee to process any Market
Feedstocks at the CEP Plant to be developed pursuant to such
agreement. However, to provide some flexibility for unintended
processing of Market Feedstocks, LMC agrees that if any such licensee
processes Market Feedstocks, generated in the United States, at a CEP
Plant located in the United States and developed pursuant to such
agreement, in an amount * such action will not be considered a breach
of such agreement. Correspondingly, MMT agrees that, as provided in
the MMT License Agreement, if the Partnership processes Superfund,
Hazardous or Toxic Feedstocks generated in the United States, other
than Market Feedstocks or Limited Feedstocks, at any CEP Plant within
the United States in an amount * such action shall not be considered a
breach of the MMT License Agreement.
- ------------------
*Confidential treatment has been requested for portions of this Exhibit 10.2.
<PAGE> 19
-19-
(d) As provided in the MMT License Agreement, in the event that the
environmental remediation or other similar responsibility of any
governmental organization other than DoD, DOE or USEC, or any private
entity, is transferred to or assumed by DoD, DOE or USEC (such as the
DoD's Army Corps of Engineers assuming responsibility for remediation
of Superfund sites otherwise under the jurisdiction of the EPA or a
private entity), any Feedstocks nominally subject to or related to
such responsibility shall not constitute "Market Feedstocks" for
purposes of this Agreement and the Related Agreements. Accordingly,
the Partnership and its sublicensees shall not be entitled to process
any such Feedstocks and this Section 7.1 shall not prevent MMT and its
licensees from processing any such Feedstocks. Subject to any
restrictions imposed by MMT's current or future agreements with third
parties, in the event DoD, DOE or USEC is assigned or assumes
environmental remediation or similar responsibility from a government
agency with respect to all of such government agency's facilities or
otherwise assumes all of the environmental remediation or similar
responsibility of such government agency, MMT shall give the
Partnership a right of first offer, pursuant to terms and procedures
equivalent to those in Section 7.2, with respect to any such
Feedstocks.
(e) As provided in the MMT License Agreement, to the extent that the
environmental remediation or other similar responsibility currently
under the control of DoD, DOE or USEC is assigned to or assumed by any
other government agency (a "SUCCESSOR AGENCY"), then the Partnership
and its sublicensees shall be permitted to process the same type of
Feedstocks with respect to such Successor Agency as those which the
Partnership and its sublicensees could process with respect to DoD,
DOE or USEC, as applicable, prior to such transfer to the Successor
Agency, and MMT's restrictions under this Section 7.1 shall be
extended in the same manner to such Successor Agency. The Executive
Committee shall meet as required to discuss the effects of any change
contemplated by this paragraph (e), and shall agree upon any changes
required to this Agreement or the Related Agreements to reflect such
change.
(f) The provisions of this Section 7.1 shall not restrict MMT and its
licensees from owning, operating, selling, or licensing any CEP Plant
processing Market Feedstocks to the extent such CEP Plant is developed
by MMT or its licensees pursuant to Section 8(b).
7.2. Additional Market Segments.
--------------------------
(a) In addition to MMT's obligation under Section 7.1 with respect to DoD,
DOE or USEC facilities, MMT agrees that, during the term of this
Agreement, except pursuant to this Agreement and the Related
Agreements it shall not grant a license to any third party to operate
CEP
<PAGE> 20
-20-
Plants serving all facilities under the sole control of any other
United States federal government agency or authority (the "ADDITIONAL
MARKET SEGMENTS"), without first offering such opportunity to the
Partnership pursuant to this Section 7.2. An example of an Additional
Market Segment would be a proposed license to a third party for CEP
Plants serving all Department of Agriculture facilities.
(b) If MMT wishes to grant a license to a third party as provided in
paragraph (a) above, it shall provide notice to the Executive
Committee together with sufficient information to enable the Executive
Committee to decide whether it wishes to pursue such opportunity
through the Partnership. MMT shall not be required to have identified
any particular third party or to have received an offer prior to
implementing the procedures contemplated by this Section 7.2. The
Executive Committee shall make its decision as promptly as practicable
after receipt of such information, but in no event more than sixty
(60) days after receipt of MMT's first notice, and provide prompt
written notice of such decision to MMT.
If the Executive Committee decides that it does not wish to pursue
such opportunity through the Partnership, MMT shall thereafter be free
to pursue such opportunity on its own. If the Executive Committee
decides that it does wish to pursue such opportunity through the
Partnership, the Partnership and MMT shall negotiate in good faith for
thirty (30) days and if MMT and the Partnership are able to reach
agreement within such period on the terms pursuant to which MMT shall
permit the Partnership to pursue such opportunity, then MMT shall not
pursue such opportunity outside the Partnership. If, after such
decision, the Executive Committee decides not to pursue such
opportunity any further, it shall provide prompt notice thereof to
MMT, who shall thereafter be free to pursue such opportunity on its
own outside the Partnership.
(c) Notwithstanding the foregoing, if additional capital is required from
LMC in order for the Partnership to pursue any particular Additional
Market Segment, such decision to pursue the Additional Market Segment
shall be made by LMC as opposed to the Executive Committee.
(d) Any information disclosed by MMT to the Executive Committee pursuant
to this Section 7.2 shall be subject to Section 6.2 of the MMT License
Agreement.
<PAGE> 21
-21-
7.3. NON-COMPETITION OBLIGATION OF LMC. (a) LMC agrees that, during the
term of this Agreement and thereafter for the Designated Period,
except pursuant to this Agreement and the Related Agreements it shall
not
*
-
- ------------------
*Confidential treatment has been requested for portions of this Exhibit 10.2.
<PAGE> 22
-22-
*
-
- ------------------
*Confidential treatment has been requested for portions of this Exhibit 10.2.
<PAGE> 23
-23-
*
-
- ------------------
*Confidential treatment has been requested for portions of this Exhibit 10.2.
<PAGE> 24
*
-
Article 8
---------
OCI Issues
----------
(a) LMC and MMT acknowledge that insofar as LMC or its Affiliates have
existing or future contracts with certain facilities constituting part
of the Market, so-called "Organizational Conflict of Interest" ("OCI")
issues could arise in connection with the transactions contemplated by
this Agreement and the Related Agreements. The Executive Committee, or
a sub-committee created by the Executive Committee and charged with
overseeing such matters, shall meet regularly to discuss OCI issues,
to act proactively to insure that OCI issues will have as little
impact as possible on the Partnership's marketing and
commercialization efforts, and to address and minimize the effect of
any OCI issues that do arise.
(b) In the event that the Partnership intends to bid on or otherwise
pursue any particular contract for a CEP Plant serving the Market, LMC
will keep MMT informed about any possible OCI issues. LMC shall take
all reasonable actions required to resolve or mitigate the particular
OCI issues. MMT, if requested by LMC, shall assist LMC in resolving
OCI issues. If, despite such actions, the applicable contracting
officer determines that the Partnership will be precluded from bidding
on such CEP Plant because of OCI issues, MMT shall be permitted to
effectively bid for or accept the contract relating to such CEP Plant
and otherwise shall be free, without compensation to the Partnership,
to pursue such opportunity on its own or grant a license to a third
party with respect to such opportunity. LMC agrees to cooperate with
MMT and provide MMT as much advance notice as is reasonably possible
of any such preclusion in order to permit MMT to prepare to undertake
the applicable contract, including the contemporaneous preparation of
its own bid.
Article 9
---------
Acquisition of Voting Securities
--------------------------------
(a) LMC agrees with MMT that, until three (3) years after the termination
of this Agreement, without the prior written consent of MMT, it will
not
- ------------------
*Confidential treatment has been requested for portions of this Exhibit 10.2.
<PAGE> 25
-25-
directly or indirectly (through an Affiliate or otherwise) acquire
beneficial ownership of any Voting Securities of MMT or any of its
Subsidiaries, any securities convertible into or exchangeable for
Voting Securities of MMT or any of its Subsidiaries, or any other
right to acquire Voting Securities of MMT or any of its Subsidiaries,
without the consent of MMT if the effect of such acquisition would be
to increase the percentage of Voting Securities of MMT or such
Subsidiary then beneficially owned directly or indirectly by LMC and
its Affiliates to more than 4.9% of the Voting Securities of MMT or
such Subsidiary then issued and outstanding.
(b) MMT agrees with LMC that, until three (3) years after the termination
of this Agreement, without the prior written consent of LMC, it will
not directly or indirectly (through an Affiliate or otherwise) acquire
beneficial ownership of any Voting Securities of LMC or any of its
Subsidiaries, any securities convertible into or exchangeable for
Voting Securities of LMC or any of its Subsidiaries, or any other
right to acquire Voting Securities of LMC or any of its Subsidiaries,
without the consent of LMC if the effect of such acquisition would be
to increase the percentage of Voting Securities of LMC or such
Subsidiary then beneficially owned directly or indirectly by MMT and
its Affiliates to more than 4.9% of the Voting Securities of LMC or
such Subsidiary then issued and outstanding.
Article 10
----------
Termination
-----------
10.1. TERMINATION BY MUTUAL CONSENT. This Agreement, and the business
relationship contemplated by this Agreement and the Related Agreements, may be
terminated at any time by the mutual written consent of the parties.
10.2. BANKRUPTCY OF LMC OR MMT. Upon the Bankruptcy of LMC or MMT, the
non-bankrupt party may elect within ninety (90) days of the Bankruptcy to
terminate the business relationship contemplated by this Agreement and the
Related Agreements.
10.3. RIGHT TO TERMINATE BASED ON COMMERCIAL SHORTFALL.
*
-
- ------------------
*Confidential treatment has been requested for portions of this Exhibit 10.2.
<PAGE> 26
-26-
10.4. RIGHT TO TERMINATE BASED ON TECHNICAL PERFORMANCE. In the event that
a Performance Shortfall (as defined in the MMT License Agreement) occurs prior
to
*
10.5. SCHEDULED TERMINATION. This Agreement shall terminate on July 1,
2019, unless LMC and MMT agree prior to such date to renew this Agreement for an
additional term.
10.6. Effects of Termination.
----------------------
(a) In the event of any termination of this Agreement pursuant to any one
of Sections 10.1 to Section 10.5, (i) the parties' obligations under
the Dispute Resolution Agreement shall remain in effect, (ii) the
provisions of Articles 1, 6, 7.1(c) (other than the first sentence
thereof), 10, 11, 12, 13 and 14 shall survive any such termination and
the provisions of Sections 7.3(a) and 9 shall survive any such
termination for the limited term set forth in such Sections, (iii) any
provision of a Related Agreement which by its terms states that it
shall survive such a termination shall survive and (iv) such
termination shall not effect either party's rights with respect to any
breach or non-performance by the other party prior to such
termination.
(b) In the event of any termination of this Agreement pursuant to any one
of Sections 10.1 to 10.5, the Executive Committee will be responsible
for winding up the Partnership. The Executive Committee shall wind up
the Partnership in an orderly and prudent manner consistent with the
Partnership's then-existing obligations (including with respect to
developed CEP Plants), with the goals of fulfilling the Partnership's
contractual obligations, protecting customer goodwill, limiting any
residual liability to LMC, the LMC Subsidiary, the MMT Subsidiary and
MMT and, except as provided in Section 9.2 of the Partnership
- ------------------
*Confidential treatment has been requested for portions of this Exhibit 10.2.
<PAGE> 27
-27-
Agreement, effecting a division of assets consistent with the 50/50
ownership interests in the Partnership. MMT and LMC may elect to wind
up the relationship contemplated by this Agreement by causing the sale
by one partner of its interest in the Partnership or one or more CEP
Plants owned by the Partnership or sublicensed by the Partnership to
the other party.
Article 11
----------
*
-
Article 12
----------
Disclosure and Publicity
------------------------
LMC and MMT agree that the initial public disclosures concerning the
transactions contemplated by this Agreement shall require mutual prior approval.
Thereafter, the Partnership shall provide prior notice of material press
releases to each of MMT and LMC.
Article 13
----------
Representations and Warranties
------------------------------
(a) Each of LMC and MMT represents and warrants to the other that: (i) it
or its applicable Subsidiary, as the case may be, has the corporate
power and authority to enter into this Agreement and the Related
Agreements to which it or such Subsidiary is a party and perform the
obligations required to be performed by it or such Subsidiary
hereunder and thereunder; (ii) the execution and delivery by it or
such Subsidiary of this Agreement and the Related Agreements to which
it or such Subsidiary is a party and the
- ------------------
*Confidential treatment has been requested for portions of this Exhibit 10.2.
<PAGE> 28
-28-
performance by it of the obligations required to be performed by it or
such Subsidiary hereunder and thereunder have been duly authorized by
the Board of Directors of it or such Subsidiary and no consent of its
stockholders or those of such Subsidiary, as the case may be, is
required, (iii) this Agreement represents, and the Related Agreements
to which it or such Subsidiary, as the case may be, is a party when
executed and delivered by it or such Subsidiary will represent, the
valid and binding obligation of it or such Subsidiary, enforceable
against it or such Subsidiary, as the case may be, in accordance with
its terms; and (iv) the execution and delivery of this Agreement and
each of the Related Agreements to which it or such Subsidiary, as the
case may be, is a party by it or its applicable Subsidiary and the
performance by it or such Subsidiary of the obligations required to be
performed by them hereunder or thereunder will not conflict with,
violate or otherwise breach, or require a consent under, any agreement
or instrument to which it or such Subsidiary, as the case may be, is a
party or by which it or such Subsidiary, as the case may be, or their
property is bound. The foregoing representations and warranties shall
survive the execution and delivery of this Agreement and the Related
Agreements.
(b) In the Master Agreement, MMT has undertaken to
*
-
for the development, marketing and regulatory support of CEP
technology.
Article 14
----------
General
-------
14.1. EXPENSES. Except as expressly set forth in this Agreement, all
expenses of the preparation, execution and consummation of this Agreement and
the Related Agreements and of the transactions contemplated hereby, including,
without limitation, attorneys', accountants and outside advisers' fees and
disbursements, shall be borne by the party incurring such expenses.
14.2. NOTICES. All notices, demands and other communications hereunder
shall be in writing or by written telecommunication, and shall be deemed to have
been duly given if delivered personally or if mailed by certified mail, return
receipt requested, postage prepaid or if sent by overnight courier or sent by
written telecommunication, as follows:
- ------------------
*Confidential treatment has been requested for portions of this Exhibit 10.2.
<PAGE> 29
-29-
If to MMT:
Molten Metal Technology, Inc.
51 Sawyer Road
Waltham Massachusetts 02154
Attention: William M. Haney, III,
President and Chief Executive Officer
Ethan E. Jacks, Esq., Vice President
and General Counsel
with a copy sent contemporaneously to:
Bingham, Dana & Gould LLP
150 Federal Street
Boston, Massachusetts 02110
Attention: John R. Utzschneider, Esq.
If to LMC to:
Lockheed Martin Corporation
Energy and Environment Sector
1155 University Boulevard
Albuquerque, NM 87106-4320
Attention: President
with a copy sent contemporaneously to:
Richards, Layton & Finger
One Rodney Square
Wilmington, DE 19801
Attention: James G. Leyden, Jr., Esq.
14.3. ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules hereto) together with the Related Agreements contains the entire
understanding of the parties hereto and thereto, except as provided below
supersedes all prior agreements and understandings relating to the subject
matter hereof and thereof and shall not be amended except by a written
instrument hereafter signed by all of the parties hereto or thereto, as
applicable. This Agreement supersedes the provisions of Sections 3, 5, 6, 7, 8,
9, 10 and 11 of the Master Agreement. All other provisions of the Master
Agreement shall remain in full force and effect. No waiver of any provision of
this Agreement shall be effective
<PAGE> 30
-30-
unless evidenced by a written instrument signed by the waiving party. The
parties further acknowledge and agree that, in entering into this Agreement and
entering or causing their Subsidiaries to enter into the Related Agreements,
they have not in any way relied upon any oral or written agreements, statements,
promises, information, arrangements, understandings, representations or
warranties, express or implied, not specifically set forth in this Agreement or
the Related Agreements.
14.4. GOVERNING LAW, ETC. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware,
all rights and remedies being governed by such laws, without regard to its
conflict of laws rules, and, to the extent applicable, federal laws of the
United States of America. As provided in the Dispute Resolution Agreement, the
parties hereto have submitted to the exclusive jurisdiction of state and federal
courts located in Delaware.
14.5. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY RIGHTS THAT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY OF THE RELATED
AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR ACTIONS OF
ANY OF THEM RELATING THERETO.
14.6. WAIVER OF CERTAIN DAMAGES. EACH OF THE PARTIES HERETO TO THE FULLEST
EXTENT PERMITTED BY LAW IRREVOCABLY WAIVES ANY RIGHTS THAT THEY MAY HAVE TO
PUNITIVE, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES IN RESPECT OF ANY
LITIGATION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY RELATED
AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR ACTIONS
OF ANY OF THEM RELATING THERETO.
14.7. SECTIONS AND SECTION HEADINGS. The headings of sections and
subsections are for reference only and shall not limit or control the meaning
thereof.
14.8. ASSIGNS. This Agreement and the Related Agreements shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns. Neither this Agreement and the Related
Agreements nor the obligations of any party hereunder or thereunder shall be
assignable or transferable by such party without the prior written consent of
the other party hereto or thereto.
14.9. NO IMPLIED RIGHTS OR REMEDIES. Except as otherwise expressly provided
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or to give any Person, except LMC and MMT and their Affiliates party
hereto, any rights or remedies under or by reason of this Agreement.
14.10. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE> 31
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14.11. DISPUTE RESOLUTION. All disputes or claims arising under or in any
way relating to this Agreement shall be subject to the Dispute Resolution
Agreement.
14.12. CONSTRUCTION. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be applied against any party.
14.13. SEVERABILITY. The invalidity or unenforceability of any particular
provision of this Agreement or any Related Agreement shall not affect the other
provisions hereof or thereof, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provision was omitted.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed and delivered as a sealed
instrument as of the date and year first above written.
MOLTEN METAL TECHNOLOGY, INC.
By: /s/ William M. Haney, III
----------------------------
Name: William M. Haney, III
Title: President and Chief Executive Officer
LOCKHEED MARTIN CORPORATION
By: /s/ Al Narath
----------------------------
Name: Al Narath
Title: President & Chief Operating Officer
Energy & Environment Sector
M4 ENVIRONMENTAL L.P., solely for purposes of
Article 5
By: M4 Environmental Management,
Inc., as general partner
By: /s/ J. Robert Merriman
------------------------
Name: J. Robert Merriman
Title: President and Chief
Executive Officer
<PAGE> 32
EXHIBITS
--------
Exhibit A - Form of Asset Acquisition Agreement
Exhibit B - Form of Registration Rights Agreement
Exhibit C - Form of Amended and Restated Limited Partnership Agreement
Exhibit D - Form of Amended and Restated License Agreement
Exhibit E-1 - Form of Amended and Restated GP Stockholder Agreement
Exhibit E-2 - Form of Charter Amendment
Exhibit E-3 - Form of By-Law Amendment
Exhibit F-1 - Form of MMT Limited Guaranty
Exhibit F-2 - Form of LMC Limited Guaranty
Exhibit G - Form of Dispute Resolution Agreement
Schedule 3.6 - Matters Requiring Parent Approval
<PAGE> 33
Exhibit A to
------------
Partnership Restructuring Agreement
-----------------------------------
ASSET ACQUISITION AGREEMENT
---------------------------
THIS ASSET ACQUISITION AGREEMENT (this "AGREEMENT") is made and entered
into as of the 15th day of March, 1996, by and among LOCKHEED ENVIRONMENTAL
SYSTEMS & TECHNOLOGIES CO., a Nevada corporation ("LESAT"), and M4 ENVIRONMENTAL
L.P., a Delaware limited partnership ("M4"), and is joined in by LOCKHEED MARTIN
CORPORATION, a Maryland corporation ("LOCKHEED MARTIN"), MMT FEDERAL HOLDINGS,
INC., a Delaware corporation (the "MMT SUBSIDIARY"), and MOLTEN METAL
TECHNOLOGY, INC., a Delaware corporation ("MOLTEN METAL").
RECITALS
--------
A. LESAT is an environmental technology company and is a wholly owned
direct or indirect subsidiary of Lockheed Martin.
B. M4 is also an environmental technology company and is owned,
directly or indirectly, by Lockheed Martin (50%) and Molten Metal (50%).
C. Subject to the terms and conditions of this Agreement, M4 desires
to acquire and assume, and LESAT desires to contribute and transfer, certain
specified assets and liabilities of LESAT relating to the RETECH Business (as
such term is defined in Subsection 1(ad) hereof).
D. Subject to the terms and conditions of this Agreement, M4 desires
to issue the Partnership Interest (as such term is defined in Subsection 1(x)
hereof) to LESAT in exchange for the assets and liabilities contributed by
LESAT.
E. Subject to the terms and conditions of this Agreement, Molten Metal
desires to (i) acquire, and LESAT desires to transfer to Molten Metal, certain
intangible assets relating to the RETECH Business in exchange for the issuance
by Molten Metal to LESAT of the Molten Metal Stock (as such term is defined in
Subsection 1(v) hereof, (ii) contribute and transfer the assets acquired from
LESAT to the MMT Subsidiary, and (iii) cause the MMT Subsidiary to, and the MMT
Subsidiary desires to, contribute the assets acquired from LESAT to M4.
F. Each of Lockheed Martin, the MMT Subsidiary and Molten Metal is
joining in this Agreement for the purpose of accepting and agreeing to be bound
by the terms hereof and making the representations, warranties and covenants
applicable to it contained herein.
G. The parties hereto have prepared and delivered a separate volume of
schedules and exhibits to this Agreement. Any reference herein to a schedule or
exhibit is to the corresponding exhibit or schedule in such separate volume.
<PAGE> 34
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, in reliance upon the mutual representations, covenants and
agreements hereinafter set forth, and upon the terms and subject to the
conditions hereinafter set forth, the parties hereto do hereby agree as follows.
H. DEFINITIONS. As used herein, the following terms have the following
meanings. Other capitalized terms used in this Agreement but not defined in this
Section 1 shall have the meanings ascribed to them as set forth in Section 1(ai)
below.
1. "Accounts Receivable" shall mean (i) the accounts receivable
of LESAT relating to the RETECH Business specifically set forth on Schedule 1(a)
hereto, excluding any Accounts Receivable collected prior to the Closing and the
receivable from LESAT set forth on the attached pages of Schedule 1(a) hereto in
the amount of Two Million One Hundred Twenty Thousand Five Hundred Seventy-Four
Dollars ($2,120,574) (the "LESAT RECEIVABLE"), and (ii) the accounts
receivables, if any, generated in connection with the RETECH Business from the
date of Schedule 1(a) hereto prior to the Closing, each as shall be set forth on
an updated Schedule 1(a) to be delivered by LESAT to M4 following the Closing.
2. "Acquired Assets" shall mean the Accounts Receivable,
Contracts, Equipment, Inventory, Permits (to the extent transferable), and
Intellectual Property.
3. "Actual Net Expenditures" shall mean the actual expenditures
made by a person net of any resulting tax benefit and net of any refund or
reimbursement of any portion of such actual expenditures, including, without
limitation, reimbursement by way of insurance, third party indemnification
(other than pursuant to this Agreement) or the inclusion of such actual
expenditures as a cost under government contracts with respect to any matter.
4. "Adverse Consequences" shall mean all actions, suits,
proceedings, hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, assessments,
penalties, fines, costs, amounts paid in settlement, liabilities, taxes, liens,
losses, expenses and fees, including court costs and reasonable attorneys' fees
and expenses.
5. "Assignment and Assumption Agreement" shall mean the
Assignment and Assumption Agreement, dated the date of the Closing, in form and
content substantially similar to Exhibit 1(e) hereto, pursuant to which LESAT
shall contribute, assign, convey and transfer to M4, and M4 shall accept and
assume, all of LESAT's rights,
-2-
<PAGE> 35
duties and obligations under the Assumed Liabilities and all of LESAT's right,
title and interest in the LESAT Acquired Assets.
6. "Assumed Liabilities" shall mean
*
Notwithstanding the foregoing, "Assumed Liabilities" shall not
include any of the Excluded Liabilities.
7. "Closing Date" shall mean the date on which the Closing
occurs.
8. "Confidentiality Agreement" shall mean the Confidentiality
Agreement, dated as of May 3, 1995, among Lockheed Martin, M4 and Molten Metal.
9. "Contracts" shall mean (i) the contracts, agreements, purchase
orders, leases and other commitments specifically set forth on Schedule 1(i)
hereto (except to the extent set forth in the immediately following sentence),
and (ii) the contracts, agreements, purchase orders, leases and other
commitments, if any, entered into by LESAT from Friday, March 1, 1996 prior to
the Closing in connection with the RETECH Business, each as shall be set forth
on an updated Schedule 1(i) to be delivered by LESAT to M4 following the
Closing. With respect to the RETECH Purchase Agreement, LESAT shall retain, and
is not assigning to M4, the right to indemnification thereunder to the extent
that, pursuant to this Agreement, LESAT is retaining the liability with respect
to which the right to indemnification arises under the RETECH Purchase
Agreement.
10. "Environmental Law" shall mean any judgment, decree, order,
law, rule or regulation pertaining to environmental matters, including without
limitation, those arising under the Resource Conservation and Recovery Act
("RCRA"), the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 as amended ("CERCLA"), the Superfund Amendments and Reauthorization
Act of 1986 ("SARA"), the Federal Water Pollution Control Act, the Solid Waste
Disposal Act, as amended, the Federal Clean Water Act, the Federal Clean Air
Act, the Toxic Substances Control Act, or any state or local statute,
regulation, ordinance, order or decree relating to health, safety or the
environment.
- --------------------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
-3-
<PAGE> 36
11. "Equipment" shall mean (i) the furniture, fixtures,
machinery, equipment and other tangible personal property of LESAT specifically
set forth on Schedule 1(k) hereto and (ii) the tangible personal property, if
any, acquired by LESAT in connection with the RETECH Business from the date of
Schedule 1(k) prior to the Closing, in each case to the extent still owned by
LESAT at the Closing and as shall be set forth on an updated Schedule 1(k) to be
delivered by LESAT to M4 following the Closing.
12. "Excluded Liabilities" shall mean
*
13. "Existing Documents" shall mean the Master Agreement and the
Related Agreements referred to in the Master Agreement.
14. "GAAP" means generally accepted accounting principles which
are (a) consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, in effect for the fiscal year
ended December 31, 1995, and (b) such that a "big six" accounting firm would,
insofar as the use of accounting principles is pertinent, be in a position to
deliver an unqualified opinion as to financial statements prepared in conformity
with such principles.
15. "Income Taxes" means any Taxes based upon or related to net
income.
16. "Intellectual Property" shall mean (i) the trade names,
trademarks or service marks, copyrights, pending or issued registrations for any
of the foregoing, patents and patent applications (including, without
limitation, the Patents), unpatented inventions, and trade secrets and other
confidential or proprietary information of LESAT regularly used in and necessary
for the conduct of the RETECH Business, including the intellectual property
specifically set forth on Schedule 1(p) hereto and (ii) the intellectual
property of LESAT, if any, relating to the RETECH Business acquired by LESAT
from the date hereof prior to the Closing, as shall be set forth on an updated
Schedule 1(p) to be delivered by LESAT to M4 following the Closing, together
with the goodwill associated therewith.
- --------------------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
-4-
<PAGE> 37
17. "Inventory" shall mean (i) the raw materials,
work-in-process, manufacturing supplies, packaging materials, purchased products
and finished product inventories of LESAT specifically set forth on Schedule
1(q) hereto and (ii) such inventory items, if any, acquired by LESAT relating to
the RETECH Business from the date of Schedule 1(q) prior to the Closing, in each
case to the extent still owned by LESAT at the Closing and as shall be set forth
on an updated Schedule 1(q) to be delivered by LESAT to M4 following the
Closing.
18. "Knowledge" shall mean, whether or not capitalized, actual
knowledge without any independent investigation. Except where the context
otherwise requires, the knowledge of each of LESAT, Lockheed Martin, M4, the MMT
Subsidiary and Molten Metal shall be deemed to mean its knowledge after
consultation with its current corporate officers and directors (or functional
equivalents) and senior employees having appropriate functional responsibilities
as the context requires.
19. "Master Agreement" shall mean the Master Agreement for
Government Market Development and Commercialization of CEP Technology, dated as
of August 9, 1994 (as amended from time to time), between Lockheed Martin, as
successor in interest to Martin Marietta Corporation, a Maryland corporation,
and Molten Metal.
20. "Material Adverse Effect" shall mean, with respect to any
Person (or, in the case of the RETECH Business, with respect to the RETECH
Business), a material adverse effect on the business, financial condition or
results of operations taken as a whole of such Person or business.
21. "Molten Metal Documents" shall mean stock certificate(s)
representing the Molten Metal Stock, duly executed and sealed, and, if
appropriate, duly endorsed for transfer or accompanied by an appropriate stock
power.
22. "Molten Metal Stock" shall mean Three Hundred Seven Thousand
Seven Hundred Thirty-Five (307,735) shares of common stock of Molten Metal, par
value $.01 per share, as the number may be adjusted pursuant to Subsection 3(c)
hereof.
23. "Partnership Agreement" shall mean the Amended and Restated
Limited Partnership Agreement, dated as of the date of the Closing, of M4
entered into pursuant to the Partnership Restructuring Agreement.
24. "Partnership Interest" shall mean the limited partnership
equity interest as a limited partner in M4 issued to LESAT pursuant to the
Partnership Agreement.
-5-
<PAGE> 38
25. "Partnership Restructuring Agreement" shall mean the
Partnership Restructuring Agreement, dated as of March 15, 1996, among Lockheed
Martin and Molten Metal and, for certain purposes, M4.
26. "Permits" shall mean (i) the permits, approvals,
certificates, franchises, licenses and other authorizations of any federal,
state, local or foreign governmental or regulatory body of LESAT specifically
set forth on Schedule 1(z) hereto and (ii) such permits, if any, as shall be
obtained by LESAT from the date hereof prior to the Closing, in each case to the
extent still owned by LESAT at the Closing and as shall be set forth on an
updated Schedule 1(z) to be delivered by LESAT to M4 following the Closing.
27. "Person" shall mean any individual, partnership, corporation,
limited liability company, trust, association, joint venture and any government,
governmental department or agency or political subdivision hereof.
28. "Related Agreements" shall have the meaning set forth in the
Partnership Restructuring Agreement.
29. "Restructuring" shall mean the reorganization of the existing
business, operations and governance of M4, which shall be consummated by
amending and restating the Existing Documents as described in the Partnership
Restructuring Agreement, it being understood that the contemplated conversion of
M4 to a limited liability company is not a condition precedent to the Closing
and consummation of the transactions contemplated by this Agreement.
30. "RETECH Business" shall mean the business and research and
development efforts of the Retech division of LESAT, including the business of
developing, manufacturing and marketing high temperature furnaces, such as the
Plasma Arc Centrifugal Treatment Systems and PHP static hearth products, for
nuclear and hazardous waste treatment, as well as the business of developing,
marketing and manufacturing of or related to various metallurgical processes and
the manufacture of certain electrical power supply control equipment under the
"Macroamp" name.
31. "RETECH Purchase Agreement" shall mean the Asset Purchase
Agreement, dated as of March 14, 1995, by and among LESAT, Retech, Inc., a
California corporation now called Flight Rail Inc. ("RETECH"), Max P. Schlienger
and Joan Schlienger, pursuant to which LESAT acquired substantially all of the
assets and liabilities of Retech relating to the RETECH Business.
32. "RETECH Security Agreement" shall mean the Patent Collateral
Assignment and Security Agreement, dated the date of the Closing, in form and
content reasonably satisfactory to M4 and LESAT and complying with the
requirements of Section 6.11 of the RETECH Purchase Agreement, pursuant to which
Retech is granted a
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<PAGE> 39
security interest in the following patents and patent applications: (i) Patents
Nos. 4,770,109, 5,005,494, 5,136,137, 5,408,494 and 5,410,121 and (ii) Patent
Application Serial No. 218,791 filed March 28, 1994.
33. "Tax" means any federal, state, local, or foreign income,
gross receipts, franchise, estimated, alternative minimum, add-on minimum,
sales, use, transfer, registration, value added, excise, natural resources,
severance, stamp, occupation, premium, windfall profit, environmental, customs,
duties, real property, personal property, capital stock, intangibles, social
security, unemployment, disability, payroll, license, employee, or other tax or
levy, of any kind whatsoever, including any interest, penalties, or additions to
tax in respect of the foregoing.
34. "Working Capital Facility" shall mean the working capital
facility to be provided by Lockheed Martin to M4 in accordance with the
provisions of Subsection 6(l).
35. The following terms have the meanings assigned to such terms
in the indicated section of this Agreement:
Additional Investment Subsection 3(c)(i)
Adjustment Amount Subsection 3(c)(iv)
Agreement Preamble
Basket Amount Subsection 15(f)(iv)
CAP Plan Subsection 17(d)
CERCLA Subsection 1(j)
Closing Section 5
Closing Balance Sheet Subsection 3(c)(ii)
Closing Investment Amount Subsection 3(c)(iii)
Code Subsection 17(a)(i)
Contribution Value Subsection 3(a)
Due Diligence Document Subsection 15(l)(i)
Due Diligence Representatives Subsection 15(l)(ii)
Employee Benefit Plan Subsection 6(x)(i)
Eligible Individuals Subsection 17(c)
EPA Subsection 6(s)(ii)(A)
ERISA Subsection 17(a)(ii)
Excess Amount Subsection 15(f)(iii)(A)(2)
General Partner Subsection 17(b)(i)
Hazardous Substances Subsection 6(s)(ii)(B)
Indemnitee Subsection 15(g)
Indemnitor Subsection 15(f)(i)
Initial Investment Amount Subsection 3(c)(i)
Insurance Policies Subsection 6(u)
IP Agreements Subsection 6(v)(vii)
-7-
<PAGE> 40
January Balance Sheet Subsection 3(c)(i)
LESAT Preamble
LESAT 401(k) Plan Subsection 17(d)
LESAT Acquired Assets Subsection 2(d)(i)
LESAT Receivable Subsection 1(a)
Listed Equipment Subsection 6(t)
Lockheed Martin Preamble
M4 Preamble
M4 401(k) Plan Subsection 17(d)
MICP Plan Subsection 17(f)
MMT Acquired Assets Subsection 2(a)(i)
MMT Subsidiary Preamble
Molten Metal Preamble
RCRA Subsection 1(j)
Real Property Subsection 6(ae)
Representatives Subsection 15(c)
Retech Subsection 1(ae)
SARA Subsection 1(j)
Secondary Excess Amount Subsection 15(f)(iii)(B)(2)
Securities Act Subsection 6(f)
Single Event Subsection 15(d)(ii)(E)
Threshold Amount Subsection 15(f)(iii)(A)(2)
Transferred Employees Subsection 17(a)(iii)
WARN Subsection 17(b)(ii)
I. CONTRIBUTIONS TO M4.
-------------------
1. ACQUISITION BY MOLTEN METAL.
a. Upon the terms and subject to the conditions of this
Agreement, Molten Metal hereby agrees to purchase from LESAT, and LESAT hereby
agrees to sell to Molten Metal, (A) that portion of the Accounts Receivable
having a book value as of the Closing Date equal to one-half of the Contribution
Value (as defined in Section 3(a)), (B) to the extent that the book value of all
of such Accounts Receivable is less than one-half of the Contribution Value, an
undivided interest in the Intellectual Property having a book value as of the
Closing Date equal to such deficiency, and (C) to the extent that the book value
of all such Accounts Receivable and Intellectual Property is less than one-half
of the Contribution Value, an undivided interest in such other intangible
Acquired Assets (as Molten Metal and LESAT shall reasonably agree) having a book
value as of the Closing Date equal to such deficiency (with all of such assets
referred to as the "MMT ACQUIRED ASSETS"), in exchange for the issuance by
Molten Metal to LESAT of the Molten Metal Stock in accordance with the terms of
this Agreement.
b. The transfer of the MMT Acquired Assets shall be
evidenced by a bill of sale and assignment in form and content substantially
similar
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<PAGE> 41
to Exhibit 2(a) hereto, and the issuance of the Molten Metal Stock shall be
evidenced by the Molten Metal Documents and appropriate entries in Molten
Metal's books and records.
2. CONTRIBUTION BY MOLTEN METAL. Upon the terms and subject to
the conditions of this Agreement, Molten Metal hereby agrees to, at the Closing,
contribute, assign and convey to the MMT Subsidiary, and the MMT Subsidiary
hereby agrees to accept, as a capital contribution all of Molten Metal's right,
title and interest in and to the MMT Acquired Assets. Such transfer shall be
made pursuant to and evidenced by a bill of sale and assignment in form and
content substantially similar to Exhibit 2(b) hereto.
3. CONTRIBUTION BY THE MMT SUBSIDIARY.
a. Upon the terms and subject to the conditions of this
Agreement, the MMT Subsidiary hereby agrees to, and Molten Metal hereby agrees
to cause the MMT Subsidiary to, at the Closing, contribute, assign and convey to
M4, and M4 hereby agrees to accept, as a capital contribution all of the MMT
Subsidiary's right, title and interest in and to the MMT Acquired Assets. Such
transfer shall be made pursuant to and evidenced by a bill of sale and
assignment in form and content substantially similar to Exhibit 2(c) hereto.
b. At the Closing, M4 shall credit the capital account of
the MMT Subsidiary for this contribution in the amount set forth in the
Partnership Agreement.
4. CONTRIBUTION BY LESAT.
a. Upon the terms and subject to the conditions of this
Agreement, LESAT hereby agrees, at the Closing, to contribute, assign and convey
to M4, and M4 hereby agrees to accept from LESAT, as a capital contribution, all
of LESAT's right, title and interest in and to the Acquired Assets other than
the MMT Acquired Assets (with that portion of the Acquired Assets transferred by
LESAT directly to M4 being referred to as the "LESAT ACQUIRED ASSETS"). LESAT
shall not contribute, assign or convey, and M4 shall not receive, any right,
title or interest in or to any of LESAT's property or assets other than the
Acquired Assets.
b. Such contribution, assignment and conveyance shall be
evidenced by the Assignment and Assumption Agreement.
c. At the Closing, pursuant to the Partnership Agreement, M4
shall (A) issue the Partnership Interest to LESAT, and (B) establish a capital
account for LESAT in the amount set forth in the Partnership Agreement.
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<PAGE> 42
J. DETERMINATION OF CONTRIBUTION VALUE; ALLOCATION.
1.
*
2. The fair market value of the Acquired Assets determined under
Section 3(a) will be set forth on Schedule 3(b) to be attached hereto (including
revisions to reflect the adjustments contemplated by Subsection 3(c) below). All
parties hereto agree that Schedule 3(b), as revised to reflect Subsection 3(c),
represents the book value of the Acquired Assets to M4 as of the Closing Date.
3. INVESTMENT ADJUSTMENTS.
a.
*
b. Within forty-five (45) days after the Closing Date, LESAT
shall prepare and deliver to M4 an unaudited balance sheet of the RETECH
Business as of the close of business on the day immediately preceding the
Closing Date (the "CLOSING BALANCE SHEET"). The Closing Balance Sheet shall be
prepared on the same basis as the January Balance Sheet.
c. When LESAT delivers the Closing Balance Sheet, LESAT
shall also deliver a certificate (A) certifying that the Closing Balance Sheet
was prepared in accordance with paragraph (ii) above and (B) containing LESAT's
calculations, based on the same process as was used to determine the Initial
Investment Amount and on the Closing Balance Sheet, of the Additional Investment
as of the close of
- --------------------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
-10-
<PAGE> 43
business on the day immediately preceding the Closing Date (the "CLOSING
INVESTMENT AMOUNT").
d. Within thirty (30) days after the delivery of the Closing
Balance Sheet, LESAT and M4 representatives shall meet to resolve any issues
outstanding with respect to the calculation of the Closing Investment Amount.
After resolving such issues, the amount equal to the Closing Investment Amount
minus the Initial Investment Amount shall be hereinafter referred to as the
"ADJUSTMENT AMOUNT."
*
The parties hereto shall cooperate and provide the
appropriate documentation to effectuate the adjustment contemplated by the
immediately preceding sentence within five business days after the determination
of the Adjustment Amount.
- --------------------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
-11-
<PAGE> 44
K. ASSUMPTION OF LIABILITIES. Upon the terms and subject to the
conditions of this Agreement, M4 hereby covenants and agrees to (and at the
Closing shall) assume, perform, pay and be responsible for the Assumed
Liabilities. M4 shall not assume or be responsible for the Excluded Liabilities
or any other liabilities or obligations of LESAT other than the Assumed
Liabilities. Such assumption shall be evidenced by the Assignment and Assumption
Agreement.
L. CLOSING. Except as otherwise set forth herein and subject to the
conditions set forth in this Agreement, closing and settlement (the "CLOSING")
for the contributions, assignments, conveyances and distributions, the
assumption of the Assumed Liabilities, and the other transactions contemplated
herein to take place at the Closing, shall take place at the offices of
Richards, Layton & Finger, One Rodney Square, 920 King Street, Wilmington,
Delaware 19801, on April 25, 1996, at 10:00 a.m., or at such other time and
place as the parties hereto may mutually agree.
M. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESAT AND LOCKHEED
MARTIN. LESAT and Lockheed Martin represent, warrant and covenant to M4 and
Molten Metal as follows:
1. DUE ORGANIZATION AND AUTHORITY. (i) LESAT is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada, (ii) Lockheed Martin is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland, (iii)
LESAT is qualified to do business as a foreign corporation under the laws of
each state or other jurisdiction in which the failure to so qualify could
reasonably be expected to have a Material Adverse Effect on LESAT, and (iv) each
of LESAT and Lockheed Martin has full power and authority to execute and
deliver, and, assuming satisfaction of the conditions set forth in Subsection
11(l) to the extent required, will have full power and authority to consummate
all transactions contemplated by, with respect to, or in connection with, this
Agreement.
2. DUE AUTHORIZATION AND ENFORCEABILITY. Each of LESAT and
Lockheed Martin is duly authorized to execute and deliver this Agreement and all
other documents relating hereto to be executed and delivered by such party
before or at the Closing and, assuming satisfaction of the conditions set forth
in Subsection 11(l) to the extent required, will have full power and authority
to take any and all other action contemplated or required by this Agreement on
behalf of such party. This Agreement and all other documents referred to herein
to be executed and delivered by LESAT and Lockheed Martin to M4 or Molten Metal
at the Closing have or shall have been duly and validly executed and delivered
by LESAT and Lockheed Martin party thereto and, assuming due execution and
delivery by the other parties hereto or thereto, constitute or shall constitute
legal, valid, binding obligations of LESAT and Lockheed Martin party thereto,
enforceable against LESAT and Lockheed Martin in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy,
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<PAGE> 45
insolvency, fraudulent conveyance or other similar laws relating to or affecting
the enforcement of creditors' rights and remedies generally and by general
principles of equity, whether considered and applied by a court of law or
equity.
3. NO VIOLATION OF ARTICLES OF INCORPORATION, BY-LAWS, LAW,
ETC. The execution, delivery and performance of this Agreement by each of LESAT
and Lockheed Martin have not constituted and will not constitute a violation or
breach of (i) the Charter, Certificate or Articles of Incorporation, as the case
may be, or By-Laws of either LESAT or Lockheed Martin, (ii) assuming compliance
with any required government notifications or permits, any agreement to which
LESAT or Lockheed Martin is subject except to the extent that such violation or
breach could not reasonably be expected to have a Material Adverse Effect on
LESAT or Lockheed Martin, as the case may be, or (iii) assuming compliance with
any required government notifications or permits, to the knowledge of LESAT or
Lockheed Martin, as the case may be, any applicable law, rule, regulation,
judgment, order or decree of any government instrumentality or court, domestic
or foreign, having jurisdiction over LESAT or Lockheed Martin or their
respective properties (either real or personal).
4. BROKERS. Except for Donaldson, Lufkin & Jenrette (whose fees
will be paid by Lockheed Martin), no broker, finder, investment banker or
financial advisor has been retained on behalf of Lockheed Martin or LESAT in
connection with the transactions contemplated hereby which might be entitled to
payment from M4 or Molten Metal.
5. GOVERNMENT APPROVALS. To the knowledge of LESAT and Lockheed
Martin, the execution, delivery and performance of this Agreement and all other
documents referred to herein to be executed and delivered to M4 or Molten Metal
at the Closing do not require Lockheed Martin or LESAT to make any filing with
or obtain any consent or approval from any government instrumentality or court,
federal, state, local or foreign, except (i) as set forth on Schedule 6(e)
hereto, (ii) the filing required pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, and (iii) any filings that may be required by the
securities laws of the United States or state securities laws. With respect to
the required governmental filings, actions or consents, to the knowledge of
Lockheed Martin and LESAT, there are no facts relating to either of their
identity or circumstances, or those of M4 or Molten Metal, that could prevent or
materially delay the making of such filings or obtaining of such consents or
actions.
6. INVESTMENT PURPOSES. LESAT and Lockheed Martin understand
that the Partnership Interest is being issued to LESAT and the Molten Metal
Stock is being issued to LESAT in transactions not involving a public offering
for purposes of the Securities Act of 1933, as amended (the "SECURITIES ACT").
Each of LESAT and Lockheed Martin is an "accredited investor," as that term is
defined in Rule 501 of Regulation D promulgated pursuant to the Securities Act.
LESAT is obtaining the Partnership Interest primarily for its own account and
not for distribution or resale to
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others. LESAT will not sell or otherwise transfer the Partnership Interest or
the Molten Metal Stock unless such security is registered under the Securities
Act or unless an exemption from such registration is available. Notwithstanding
the foregoing, the parties acknowledge and agree that LESAT is permitted to
transfer the Partnership Interest and the Molten Metal Stock to Martin Marietta
Environmental Holdings, Inc., Lockheed Martin or any direct or indirect wholly
owned subsidiary of Lockheed Martin, and that any such transfer shall not be
deemed to breach the provisions of this Subsection 6(f).
7. TITLE AND LIENS RE: ACQUIRED ASSETS. Except as noted on
Schedule 6(g) attached hereto, as of the close of business on the date
immediately preceding the date hereof, LESAT had good title to all material
tangible items of the Acquired Assets regularly used in and necessary for the
conduct of the RETECH Business. The Acquired Assets as of the date of the
Closing will constitute all of the assets necessary to permit the continuation
of the RETECH Business in substantially the same manner as that business has
previously been conducted.
8. LITIGATION. Schedule 6(h) attached hereto sets forth all
actions, suits, hearings or other legal proceedings pending as of the date
immediately preceding the date of this Agreement before any court to which LESAT
is a party relating to the RETECH Business that individually or in the aggregate
could reasonably be expected to have a Material Adverse Effect on the RETECH
Business.
9. CONTRIBUTION OF LESAT ACQUIRED ASSETS. At the Closing, LESAT
shall contribute and transfer to M4 all of its right, title and interest in and
to the LESAT Acquired Assets, free and clear of all liens, encumbrances and
other rights of third parties, such that M4 will have free, clear and absolute
title to and ownership of the LESAT Acquired Assets, except for liens,
encumbrances and other rights of third parties described on Schedule 6(i) and
other non-material liens, encumbrances and other rights of third parties
incurred or created in connection with the operation of the RETECH Business in
accordance with the terms hereof from the date of this Agreement prior to the
Closing, all of which will be assumed by M4.
10. TRANSFER OF MMT ACQUIRED ASSETS. At the Closing, LESAT shall
transfer to Molten Metal all of its right, title and interest in and to the MMT
Acquired Assets, free and clear of all liens, encumbrances and other rights of
third parties to the Accounts Receivable and Intellectual Property constituting
part of the MMT Acquired Assets, such that Molten Metal will have free, clear
and absolute title to and ownership of the Accounts Receivable and Intellectual
Property constituting part of the MMT Acquired Assets, except for liens,
encumbrances and other rights of third parties described on Schedule 6(j) and
other non-material liens, encumbrances and other rights of third parties
incurred or created in connection with the operation of the RETECH Business in
accordance with the terms hereof from the date of this Agreement prior to the
Closing, all of which will be assumed by Molten Metal.
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<PAGE> 47
11. RESTRUCTURING. LESAT and Lockheed Martin shall use their
good faith reasonable efforts to cause the Restructuring to be consummated at or
prior to the date set for the Closing as described in the Partnership
Restructuring Agreement.
12. PROVISION OF WORKING CAPITAL FACILITY. Simultaneously with
the Closing, Lockheed Martin shall execute and deliver to M4 a revolving credit
agreement substantially in the form attached hereto as Exhibit 6(l).
13. ACCESS TO INFORMATION. During the period from the date of
this Agreement through the date of the Closing, LESAT shall give M4 and its
employees, accountants, attorneys and other authorized agents and
representatives reasonable access during reasonable hours to offices,
facilities, books and records of LESAT relating to the RETECH Business;
provided, however, (i) that M4 and its representatives shall schedule their
access and visits through a designated officer of LESAT and in such a way as to
avoid disrupting the normal business of LESAT; (ii) LESAT shall not be required
to take any action which could reasonably be expected to constitute a waiver of
any attorney-client privilege and work product doctrine; (iii) LESAT need not
supply M4 with any information which, in the reasonable judgment of LESAT, it is
under a legal obligation not to supply; and (iv) any information received by M4
and its representatives must be held in accordance with the Confidentiality
Agreement.
14. NON-CONTRAVENTION. Except as set forth in Schedule 6(n)
hereto, to the knowledge of LESAT and Lockheed Martin, neither the execution and
delivery of this Agreement by each of Lockheed Martin and LESAT nor the
performance by each of Lockheed Martin and LESAT of their obligations hereunder
will constitute a violation of or a default under, or result in the creation or
imposition of any lien or encumbrance upon any of the Acquired Assets pursuant
to, any agreement to which either Lockheed Martin or LESAT is a party or by
which either Lockheed Martin or LESAT or any of their properties (including,
without limitation, any of the Acquired Assets) is bound, except for any
violation, default or encumbrance that individually or in the aggregate could
not reasonably be expected to have a Material Adverse Effect on the RETECH
Business.
15. GOVERNMENTAL PERMITS. To the knowledge of LESAT and Lockheed
Martin, LESAT has and maintains, and Schedule 1(z) lists, all licenses, permits
and other authorizations from all governmental authorities required to be
maintained by it in connection with the conduct of the RETECH Business or in
connection with the ownership of the Acquired Assets, except for licenses,
permits or other authorizations where the failure of LESAT to have and maintain
any or all of such licenses, permits and authorizations individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect on
the RETECH Business.
16. FINANCIAL STATEMENTS. Lockheed Martin has delivered the
following financial statements to M4, and there are attached as Schedule 6(p)(i)
hereto: (i) a balance sheet for the RETECH Business as of December 31, 1995 and
income and cash
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flow statements for the 12-month period then ended and (ii) the January Balance
Sheet and an income statement for January 1996. Except as set forth on Schedule
6(p)(ii), to the knowledge of LESAT and Lockheed Martin, each of such financial
statements was prepared in accordance with GAAP consistently applied throughout
the period covered, each such balance sheet fairly presents the financial
condition of the RETECH Business as of its date, and each of such income and
cash flow statements fairly presents the results of operations and cash flows of
the RETECH Business for the period covered thereby.
17. ABSENCE OF CERTAIN CHANGES. Except as set forth on Schedule
6(q) or in the January Balance Sheet, since December 31, 1995, (i) LESAT has not
conducted the RETECH Business in a manner outside the ordinary course, and (ii)
there has been no change in the financial condition, results of operations,
assets, liabilities or business of the RETECH Business that individually or in
the aggregate could reasonably be expected to have a Material Adverse Effect on
the RETECH Business.
18. CONFORMITY TO LAW. Except as set forth on Schedule 6(r), to
the knowledge of LESAT, LESAT has complied in all material respects with, and is
in compliance in all material respects with, all laws, statutes, governmental
regulations and all judicial or administrative or tribunal orders, judgments,
writs, injunctions, decrees or similar commands applicable to the RETECH
Business or any of the Acquired Assets (including, without limitation, any
labor, environmental, occupational health, zoning or other law, regulation or
ordinance), except where the failure to comply individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect on the RETECH
Business. Except as set forth in Schedule 6(r) hereto, LESAT has not been
charged with or, to Lockheed Martin's or LESAT's knowledge, been under
investigation with respect to any violation of any provision of any national,
state or local law or administrative regulation in respect of the RETECH
Business or any of the Acquired Assets, except for any violation that
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect on the RETECH Business.
19. SAFETY, ZONING AND ENVIRONMENTAL MATTERS. To the knowledge
of LESAT, neither the facilities, offices or properties in or on which LESAT
carries on any aspect of the RETECH Business nor the activities carried on
therein are in violation in any material respect of any zoning, health or safety
law or regulation, including, without limitation, the Occupational Safety and
Health Act of 1970, as amended, and the Americans With Disabilities Act, except
for any violation that individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect on the RETECH Business. Except as set
forth in Schedule 6(s) hereto, to the knowledge of LESAT and except for any
items that individually or in the aggregate could not reasonably be expected to
have a Material Adverse Effect on the RETECH Business:
a. neither LESAT nor any operator of any of past or
present properties of LESAT is in violation, or
alleged violation, of any Environmental Laws in
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connection with the operation of the RETECH
Business;
b. insofar as it relates to the RETECH Business,
LESAT has not received notice from any third
party, including without limitation any federal,
state or local governmental authority, (A) that
LESAT or any predecessor in interest has been
identified by the United States Environmental
Protection Agency ("EPA") or any state regulatory
authority as a potentially responsible party under
CERCLA with respect to a site listed on the
National Priorities List, 40 C.F.R. Part 300
Appendix B (1986); (B) that any hazardous waste as
defined by 42 U.S.C. [Section] 6903(5), any
hazardous substances as defined by 42 U.S.C.
[Section] 9601(14), any pollutant or contaminant
as defined by 42 U.S.C. [Section] 9601(33) and any
toxic substance, oil or hazardous materials or
other chemicals or substances regulated by any
Environmental Laws ("HAZARDOUS SUBSTANCES") which
it has generated, transported or disposed of has
been found at any site at which a federal, state
or local agency or other third party has conducted
or has ordered that LESAT or any predecessor in
interest conduct a remedial investigation, removal
or other response action pursuant to any
Environmental Law; or (C) that it is or shall be a
named party to any claim, action, cause of action,
complaint (contingent or otherwise) or legal or
administrative proceeding arising out of any third
party's incurrence of costs, expenses, losses or
damages of any kind whatsoever in connection with
the release of Hazardous Substances;
c. insofar as it relates to the RETECH Business, (A)
no portion of the past or present real properties
owned, leased or operated by LESAT has been used
for the handling, manufacturing, processing,
storage or disposal of Hazardous Substances by
LESAT except in accordance with applicable
Environmental Laws, and no underground tank or
other underground storage receptacle for Hazardous
Substances is located on such real properties; (B)
in the course of any activities conducted by
LESAT, no Hazardous Substances have been generated
or are being used on
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such properties except in accordance with
applicable Environmental Laws; (C) there have been
no releases (I.E., any past or present releasing,
spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping,
disposing or dumping) by LESAT on, upon, into or
from such properties; (D) there have been no
releases on, upon, from or into any real property
in the vicinity of any real property presently or
formerly owned, leased or operated by LESAT which,
through soil or groundwater contamination, has
come to be located on, and which would have a
material adverse effect on the value of, any real
property presently or formerly owned, leased or
operated by LESAT; and (E) any Hazardous
Substances that have been generated by LESAT have
been transported offsite only by carriers having
an identification number issued by the EPA and
treated or disposed of only by treatment or
disposal facilities maintaining valid permits as
required under applicable Environmental Laws; and
d. insofar as it relates to the RETECH Business, none
of the real properties presently or formerly
owned, leased or operated by LESAT is or shall be
subject to any applicable environmental cleanup
responsibility law or environmental restrictive
transfer law or regulation by virtue of the
transactions set forth herein and contemplated
hereby.
20. EQUIPMENT. Schedule 1(k) hereto sets forth a complete and
accurate list of all tangible personal property owned at January 31, 1996 by
LESAT which is regularly used in and necessary for the conduct of the RETECH
Business and which cost more than $1,500 to acquire (the "LISTED EQUIPMENT"). To
the knowledge of LESAT, the Listed Equipment and all personal property leased by
LESAT regularly used in and necessary for the conduct of the RETECH Business
are, taken as a whole, in good condition and repair, reasonable wear and tear
excepted, for their present use in the RETECH Business.
21. INSURANCE. To the knowledge of LESAT, attached as Schedule
6(u) is a list of all insurance policies maintained by or for the benefit of
LESAT (collectively the "INSURANCE POLICIES") in connection with the RETECH
Business. To LESAT's knowledge, all the Insurance Policies are in full force and
effect, are valid, outstanding and enforceable policies and provide that they
will remain in full force and effect through the respective dates set forth on
Schedule 6(u).
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22. CONTRACTS. Except for the contracts, agreements and other
arrangements listed in Schedule 1(i), and any contracts, agreements or other
arrangements that have been fully performed and with respect to which LESAT has
no further obligations or liabilities, insofar as it relates to the RETECH
Business as of March 1, 1996, to the knowledge of LESAT and Lockheed Martin,
neither Lockheed Martin nor LESAT is a party to or otherwise bound by any:
a. distributor, sales representative or sales agency
(including any foreign agents or
representatives) agreement;
b. agreement for the sale or lease of any of its
assets requiring the payment of more than $10,000,
excluding sales of its products in the ordinary
course of its business, or agreement entered into
other than in the ordinary course of the operation
of the RETECH Business;
c. agreement requiring the payment by either Lockheed
Martin or LESAT of more than $10,000 for the
purchase or lease of any real estate, machinery,
equipment or other capital assets;
d. contract, agreement, legal commitment or proposal
for the sale of products or the performance of
services which would involve payment to either
Lockheed Martin or LESAT of more than $10,000;
e. personal property lease with an annual rent of
$10,000 or more or total remaining rental payments
of $10,000 or more;
f. real property lease or sublease (as lessee,
lessor, sublessee or sublessor);
g. license or other agreement relating to any of the
patents, trademarks, trade names or copyrights
referred to in Schedule 1(p) hereto or other
agreement relating to technology, know-how or
processes which LESAT has licensed from or to any
other Person or authorized for use by any other
Person or been authorized by any other Person for
use by LESAT which is regularly used in and
necessary for the
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conduct of the RETECH Business (with all of such
agreements listed on Schedule 1(i) referred to as
the "IP AGREEMENTS");
h. (x) employment agreement, (y) consulting
agreement, or (z) agreement providing for
severance payments or other additional rights or
benefits (whether or not optional) in the event of
the sale or other change in control of LESAT or
the sale or other transfer of any significant
portion of its assets;
i. joint venture or teaming agreement; or
j. contract or agreement that is material to the
RETECH Business.
Lockheed Martin and LESAT have delivered or caused to be delivered to
M4 (or made available for its review) correct and complete copies of each
contract, agreement or other arrangement listed in Schedule 1(i) hereto, as
amended to date. Except as set forth in Schedule 6(v) hereto, to the knowledge
of LESAT and Lockheed Martin, neither LESAT nor the other party or parties
thereto is in breach, or is considered to be in breach by the other party
thereto, of any term of any Contract, except for any breaches that individually
or in the aggregate could not reasonably be expected to have a Material Adverse
Effect on the RETECH Business.
23. RETECH PURCHASE AGREEMENT. Except as set forth on Schedule
6(w), LESAT has not amended or waived in writing or (to the knowledge of LESAT)
otherwise any provisions of the RETECH Purchase Agreement or made any claims for
indemnification thereunder.
24. EMPLOYEE BENEFIT PLANS.
a. Except for the arrangements set forth in Schedule
6(x), neither Lockheed Martin nor LESAT maintains,
contributes to, or participates in, nor has any of
either Lockheed Martin (insofar as it relates to
the RETECH Business) or LESAT at any time since
acquiring the RETECH Business maintained,
contributed to, or participated in, any pension,
profit-sharing, deferred compensation, bonus,
stock option, share appreciation right, severance,
group or individual health, dental, medical, life
insurance, survivor benefit, car allowance,
vacation, holiday, tuition refund or family or
sick leave plan or
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arrangement, whether formal or informal, for the
benefit of any employee of the RETECH Business.
Each of the arrangements set forth in Schedule
6(x) is hereafter referred as an "EMPLOYEE BENEFIT
PLAN." Lockheed Martin or LESAT has heretofore
delivered or made available to M4 or Molten Metal
true, correct and complete copies of the plan
document for or summaries of each Employee Benefit
Plan to the extent set forth on Schedule 6(x),
receipt of which are hereby acknowledged by M4.
b. Except as provided on Schedule 6(x), to the
knowledge of LESAT and Lockheed Martin:
(A) each Employee Benefit Plan has been
operated in compliance with applicable
law, except for any non-compliance that
singly or in the aggregate could not
reasonably be expected to have a
Material Adverse Effect on the RETECH
Business;
(B) since March 14, 1995 there have been no
claims against LESAT under any of the
Employee Benefit Plans other than claims
for benefits in the ordinary course of
business; and
(C) except with respect to the LESAT 401(k)
Plan, the CAP Plan and the MICP Plan (as
such terms are defined in Section 17
hereof), neither LESAT nor Lockheed
Martin has made a binding commitment to
modify any Employee Benefit Plan or to
adopt any arrangement or program which,
once established, would come within the
definition of Employee Benefit Plan.
20. COMPENSATION OF AND CONTRACTS WITH EMPLOYEES. Schedule 6(y)
hereto sets forth a complete and accurate list of each current employee of the
RETECH Business (identified by employee number), the date of hire and years of
service for each such employee and the total salary and bonus paid to each such
employee for the fiscal year ended December 31, 1995. Except as described on
Schedule 6(y), there have
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been no material changes in such compensation since December 31, 1995 other than
consistent with past practice.
26. LABOR RELATIONS.
a. Insofar as it relates to the RETECH Business,
except as set forth on Schedule 6(z), to the
knowledge of LESAT and Lockheed Martin, LESAT is
in compliance in all material respects with all
national, state and local laws respecting
employment and employment practices, terms and
conditions of employment, wages and hours and
nondiscrimination in employment, and is not
engaged in any unfair labor practice. Except as
set forth on Schedule 6(z), there is no charge
pending or, to the knowledge of either Lockheed
Martin or LESAT, threatened against LESAT relating
to the RETECH Business alleging unlawful
discrimination in employment practices before any
court or agency and there is no charge of or
proceeding with regard to any unfair labor
practice against LESAT relating to the RETECH
Business pending before the National Labor
Relations Board or any similar governmental
agency, in each case that could reasonably be
expected to have a Material Adverse Effect on the
RETECH Business. There is no labor strike,
dispute, slow-down or work stoppage actually
pending or to the knowledge of either Lockheed
Martin or LESAT threatened against or involving
the RETECH Business. Except as set forth on
Schedule 6(z), to the knowledge of LESAT, since
LESAT acquired the RETECH Business, no one has
petitioned, and no one is now petitioning, for
union representation of any employees of the
RETECH Business. No grievance or arbitration
proceeding arising out of or under any collective
bargaining agreement and relating to the RETECH
Business is pending against LESAT and, to the
knowledge of LESAT, no claim therefor has been
asserted. Except as set forth on Schedule 6(z),
none of the employees of LESAT is covered by any
collective bargaining agreement, and no collective
bargaining agreement is currently being negotiated
by either Lockheed Martin or LESAT (in each case,
only insofar as it relates to the RETECH
Business). Except as set forth on
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Schedule 6(z) hereto, LESAT has not experienced
any labor strike, dispute, slow-down or similar
work stoppage in the last three years relating to
the RETECH Business.
b. Except as set forth on Schedule 6(z), since March
14, 1995, no senior employee of the RETECH
Business has been transferred to or hired by any
other division or unit of Lockheed Martin or any
affiliate of Lockheed Martin. Except as set forth
on Schedule 6(z), since March 14, 1995, no senior
employee of Lockheed Martin or any affiliate of
Lockheed Martin (other than LESAT) has been hired
by LESAT in connection with the RETECH Business.
27. TRADEMARKS, PATENTS, ETC.
a. Schedule 1(p) hereto sets forth a complete and
accurate list of all material patents, trademarks,
trade names and copyrights owned by and registered
in the name of LESAT or any of its affiliates
regularly used in and necessary for the conduct of
the RETECH Business and all applications therefor.
To the knowledge of LESAT, the IP Agreements
represent the only agreements relating to the
Intellectual Property regularly used in and
necessary for the conduct of the RETECH Business
which LESAT has licensed or authorized for use by
others or which has been licensed or authorized
for use in the RETECH Business to LESAT or any of
its affiliates.
b. Except to the extent set forth in Schedule
6(aa)(ii) hereto, LESAT owns or has the sole and
exclusive right to use all Intellectual Property
regularly used in and necessary for the conduct of
the RETECH Business as presently conducted, and,
to the knowledge of LESAT, the consummation of the
transactions contemplated hereby will not alter or
impair any such right. Except as set forth in
Schedule 6(aa)(ii), to the knowledge of LESAT, no
royalties are paid or payable by LESAT on or with
respect to any of the Intellectual Property
pursuant to a written agreement, and upon the
consummation of the transactions contemplated
hereby, no additional
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royalties shall be payable with respect to such
Intellectual Property.
c. To the knowledge of either Lockheed Martin or
LESAT, insofar as it relates to the RETECH
Business, no Transferred Employee is subject to
written confidentiality restrictions in favor of
any third Person the breach of which could subject
LESAT to any material liability or which could
materially adversely affect LESAT's access to the
Intellectual Property previously used by it
regularly and necessary for the conduct of the
RETECH Business. No claims have been asserted or
are pending against LESAT by any Person regarding
use of any such Intellectual Property by LESAT, or
challenging or questioning the validity or
effectiveness of any license or agreement relating
to the Intellectual Property to which LESAT is a
party, and, to the knowledge of either Lockheed
Martin or LESAT, there is no valid basis for such
a claim. To the knowledge of either Lockheed
Martin or LESAT, the use by LESAT of the
Intellectual Property listed in Schedule 1(p) does
not infringe on the rights of any person and LESAT
has not received any claim or written notice from
any Person to such effect. To the knowledge of
either Lockheed Martin or LESAT, no third party is
infringing, violating or otherwise using, in an
unauthorized manner, any Intellectual Property of
LESAT relating to the RETECH Business.
d. Except as set forth on Schedule 6(aa)(ii), to the
knowledge of LESAT or Lockheed Martin, M4's
ability to use any of the Intellectual Property
set forth on any of the schedules referred to in
this Subsection 6(aa) will not be materially
adversely affected by the consummation of the
transactions contemplated hereby.
28. ACCOUNTS RECEIVABLE. To the knowledge of either Lockheed
Martin or LESAT, all Accounts Receivable are or will be valid obligations owing
to LESAT and will be paid in the ordinary course of business, net of the reserve
set forth in the January Balance Sheet (as appropriately updated to the date of
the Closing Date consistent with LESAT's past practices).
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<PAGE> 57
29. NO UNDISCLOSED LIABILITIEs. Except as set forth on any
Schedule hereto or as reflected or reserved against in the January Balance Sheet
and except for the Excluded Liabilities, to the knowledge of LESAT, LESAT has no
liabilities, indebtedness or obligations of any nature, whether accrued,
absolute, contingent or otherwise relating to the RETECH Business, which
pursuant to GAAP would be required to be reflected on a balance sheet of the
RETECH Business or a footnote thereto, except for liabilities reflected on the
January Balance Sheet, liabilities incurred since January 31, 1996 in the
ordinary course of business and liabilities which could not reasonably be
expected to have a Material Adverse Effect on the RETECH Business.
30. TAX MATTERS. Except as set forth in Schedule 6(ad), to the
knowledge of LESAT:
a. LIENS. There are no liens for Taxes (other than
current Taxes not yet due and payable) on any of
the Acquired Assets;
b. WITHHOLDING TAXES. LESAT has withheld and paid all
Taxes in the approximate amounts required to have
been withheld and paid in connection with amounts
paid to any employee, creditor, independent
contractor or other third party for activities
relating to the RETECH Business; and
c. PARACHUTE PAYMENTS. None of the Assumed
Liabilities represents an obligation to make any
payments, or an obligation that under certain
circumstances could obligate M4 to make any
payments, that will not be deductible under Code
Section 280G.
31. REAL PROPERTY. Attached as Schedule 6(ae) is a list of all
real property owned by LESAT or leased or subleased by LESAT regularly used in
and necessary for the conduct of the RETECH Business (the "REAL PROPERTY").
Neither LESAT nor Lockheed Martin has received any notice that any of the Real
Property is or will become subject to any condemnation or similar proceeding of
a substantial portion of a particular parcel of the Real Property or is in
violation in any material respect of any zoning or similar law.
32. UPDATING INFORMATION. LESAT or Lockheed Martin may elect at
any time to notify M4 and Molten Metal of any development causing any breach of
its representations, warranties or covenants in Subsections 6(a) - 6(ae) above
or may correct or update any disclosure schedule delivered hereunder. Any such
development,
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correction or update shall be treated as an undisclosed liability pursuant to
Subsection 15(d)(ii) hereof, subject, however, to the operation of Subsection
15(d)(ii)(B).
33. UPDATED SCHEDULES. LESAT shall, within forty-five (45) days
after the date of the Closing, provide to M4 updated Schedules 1(a), 1(f), 1(i),
1(k), 1(p), 1(q) and 1(z) hereto such that those schedules will set forth a
current description of the Acquired Assets as of the Closing.
34. INSPECTIONS. Each of LESAT and Lockheed Martin is an
informed, sophisticated business entity capable of understanding and evaluating
the merits and risks of its investment in M4 and Molten Metal. Each of LESAT and
Lockheed Martin has engaged such experts, counsel, consultants and advisors, has
undertaken such independent investigation, has made such independent evaluation
and has been provided with access to such documents and personnel of M4 and
Molten Metal, each as it has deemed necessary or appropriate in connection with
the transactions contemplated hereby based on its own independent investigation
and that neither M4 nor Molten Metal (and no one on their behalf) has made any
representation or warranty, express or implied, and neither LESAT nor Lockheed
Martin is relying on any representation or warranty, other than those expressly
set forth in this Agreement.
35. PARTNERSHIP INTEREST. At the Closing, Lockheed Martin shall
cause (i) the Partnership Interest to be issued to LESAT, and (ii) LESAT to be
admitted as a limited partner of M4.
36. CONVEYANCE OF ADDITIONAL ASSETS. If, subsequent to the
execution of this Agreement, LESAT determines that it retained an interest in an
asset regularly used in and necessary for the conduct of the RETECH Business,
LESAT shall promptly notify M4 of such asset and convey such asset to M4. If,
subsequent to the execution of this Agreement, M4 notifies LESAT that it
believes LESAT retained an interest in an asset regularly used in and necessary
for the conduct of the RETECH Business, LESAT shall, if it has retained an
interest in such an asset, promptly convey such asset to M4.
N. REPRESENTATIONS, WARRANTIES AND COVENANTS OF M4. M4 represents,
warrants and covenants to LESAT, Lockheed Martin and Molten Metal as follows:
1. ORGANIZATION AND STANDING. (i) M4 is a limited partnership
duly formed, validly existing and in good standing under the laws of the State
of Delaware, (ii) M4 is qualified to do business as a foreign limited
partnership under the laws of each state or other jurisdiction in which the
failure to so qualify could reasonably be expected to have a Material Adverse
Effect on M4, and (iii) M4 has full power and authority to execute and deliver,
and consummate all transactions contemplated by, with respect to, or in
connection with, this Agreement.
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2. DUE AUTHORIZATION AND ENFORCEABILITY. M4 is duly authorized
to execute and deliver this Agreement and all documents relating hereto to be
executed and delivered by it before or at the Closing and to take any and all
other action contemplated or required by this Agreement on behalf of it. Each of
the partners of M4 has consented in writing to M4 entering into this Agreement
specifically and consummating the Restructuring in general. This Agreement and
all other documents referred to herein to be executed and delivered by M4 to
LESAT, Lockheed Martin or Molten Metal at the Closing have or shall have been
duly and validly executed and delivered by M4 and, assuming due execution and
delivery by the other parties hereto or thereto, constitute or shall constitute
legal, valid, binding obligations of M4, enforceable against M4 in accordance
with their respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance or other similar laws
relating to or affecting the enforcement of creditors' rights and remedies
generally and by general principles of equity, whether considered and applied by
a court of law or equity.
3. NO VIOLATION OF PARTNERSHIP AGREEMENT, CERTIFICATE OF
PARTNERSHIP, LAW, ETC. The execution, delivery and performance of this Agreement
(including, without limitation, the issuance to LESAT of the Partnership
Interest) by M4 have not constituted and will not constitute a violation or
breach of (i) the Partnership Agreement (as defined in the Master Agreement) or
other constituting documents of M4, (ii) assuming compliance with any required
government notifications or permits, any agreement to which M4 is subject except
to the extent that such violation or breach could not reasonably be expected to
have a Material Adverse Effect on M4, or (iii) assuming compliance with any
required government notifications or permits, to the knowledge of M4, any
applicable law, rule, regulation, judgment, order or decree of any government
instrumentality or court, domestic or foreign, having jurisdiction over M4 or
its properties (either real or personal).
4. BROKERS. Except for Oppenheimer & Co. (whose fees were paid
by M4), no broker, finder, investment banker or financial advisor has been
retained on behalf of M4 in connection with the transactions contemplated hereby
which might be entitled to payment from LESAT or Lockheed Martin.
5. GOVERNMENT APPROVALS. To the knowledge of M4, the execution,
delivery and performance of this Agreement and all other documents referred to
herein to be executed and delivered to LESAT, Lockheed Martin or Molten Metal at
the Closing do not require M4 to make any filing with or obtain any consent or
approval from any government instrumentality or court, federal, state, local or
foreign, except for (i) the filing required pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 and (ii) any filings that may be required by
the securities laws of the United States or state securities laws. With respect
to the required governmental filings, actions or consents, to the knowledge of
M4, there are no facts relating to its identity or circumstances, or those of
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Lockheed Martin, LESAT or Molten Metal, that could prevent or materially delay
the making of such filings or obtaining of such consents or actions.
6. LITIGATION. There is no action, suit or proceeding pending
against, or to the knowledge of M4, threatened against M4 which challenges or
seeks to enjoin or otherwise alter the transactions contemplated by this
Agreement.
7. INSPECTIONS. M4 is an informed, sophisticated business
entity capable of understanding and evaluating the merits and risks of its
business and the RETECH Business. M4 has engaged such experts, counsel,
consultants and advisors, has undertaken such independent investigation, has
made such independent evaluation and has been provided with access to such
documents and personnel of LESAT, each as it has deemed necessary or appropriate
in connection with the transactions contemplated by this Agreement. M4
acknowledges that it is entering into this Agreement and the transactions
contemplated hereby based on its own independent investigation and that neither
Lockheed Martin nor LESAT (and no one on their behalf) has made any
representation or warranty, express or implied, and M4 is not relying on any
representation or warranty, other than those expressly set forth in this
Agreement. IT IS THEREFORE EXPRESSLY UNDERSTOOD AND AGREED THAT M4 ACCEPTS THE
CONDITION OF THE ACQUIRED ASSETS WITHOUT ANY REPRESENTATION, WARRANTY OR
GUARANTEES, EXPRESS OR IMPLIED, AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR OTHERWISE AS TO THE CONDITION, SIZE, EXTENT, QUANTITY, TYPE OR VALUE
OF SUCH PROPERTY, EXCEPT ONLY AS MAY BE OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT, AND LESAT AND LOCKHEED MARTIN HEREBY EXPRESSLY DISCLAIM ANY AND ALL
SUCH OTHER REPRESENTATIONS, WARRANTIES AND GUARANTEES.
8. CAPITAL STRUCTURE OF M4. M4 is authorized to issue the
following amounts and types of limited partnership equity interests: (i) one
percent general partner interest in M4, and (ii) ninety-nine percent limited
partner interests in M4. At the close of business on the business day next
preceding the date hereof, a one percent general partner interest in M4 and two
(2) forty-nine and one-half percent limited partner interests in M4 were issued
and outstanding, and all the issued and outstanding limited partnership equity
interests in M4 were and are duly authorized and validly issued. Other than with
respect to the Partnership Interest, there are no outstanding obligations,
options or rights of any kind entitling any persons to acquire a limited
partnership equity interest in M4 and there are no outstanding securities or
other instruments of any kind that are convertible into limited partnership
equity interests in M4.
9. STATUS OF PARTNERSHIP INTEREST. The Partnership Interest has
been duly authorized and, when issued as contemplated by this Agreement, will be
validly issued, fully paid and nonassessable, subject to Section 17-607 of the
Delaware Revised Uniform Limited Partnership Act. The Partnership Interest is
free and clear of all claims,
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liens, encumbrances and assessments whatsoever and is not subject to any other
rights of third parties, including, but not limited to, pre-emptive rights.
10. PARTNERSHIP INTEREST. At the Closing, M4 shall cause (i) the
Partnership Interest to be issued to LESAT, and (ii) LESAT to be admitted as a
limited partner of M4.
11. RESTRUCTURING. M4 shall use its good faith reasonable
efforts to cause the Restructuring to be consummated at or prior to the date set
for the Closing as described in the Partnership Restructuring Agreement.
12. WORKING CAPITAL FACILITY. At or prior to the Closing, M4
shall execute the Working Capital Facility and deliver it to Lockheed Martin.
13. RETECH SECURITY AGREEMENT. M4 acknowledges that LESAT is
obligated, pursuant to the RETECH Purchase Agreement, to ensure that the
acquiror of all or a substantial part of the RETECH Business grant a security
interest in certain patents and patent applications to Retech. Therefore, at or
prior to the Closing, M4 shall execute the RETECH Security Agreement and deliver
it to LESAT.
14. DUE DILIGENCE REPRESENTATIVES. The representatives of M4 set
forth in the definition of Due Diligence Representatives (as defined in
Subsection 15(l)) are the only employees, agents or other representatives of M4
that were involved in any material manner in the due diligence investigation
performed by M4 and the Due Diligence Representatives relating to this
Agreement, the Partnership Restructuring Agreement and the transactions
contemplated hereby or thereby.
O. REPRESENTATIONS, WARRANTIES AND COVENANTS OF MOLTEN METAL AND THE
MMT SUBSIDIARY. Molten Metal and the MMT Subsidiary represent, warrant and
covenant to M4, LESAT and Lockheed Martin as follows:
1. ORGANIZATION AND STANDING. (i) Each of Molten Metal and the
MMT Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, (ii) each of Molten Metal and
the MMT Subsidiary is qualified to do business as a foreign corporation under
the laws of each state or other jurisdiction in which the failure to so qualify
could reasonably be expected to have a Material Adverse Effect on Molten Metal
or the MMT Subsidiary, as the case may be, and (iii) each of Molten Metal and
the MMT Subsidiary has full power and authority to execute and deliver, and
consummate all transactions contemplated by, with respect to, or in connection
with, this Agreement.
2. DUE AUTHORIZATION AND ENFORCEABILITY. Each of Molten Metal
and the MMT Subsidiary is duly authorized to execute and deliver this Agreement
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and all documents relating hereto to be executed and delivered by it before or
at the Closing and to take any and all other action contemplated or required by
this Agreement on behalf of it. This Agreement and all other documents referred
to herein to be executed and delivered by Molten Metal and the MMT Subsidiary to
M4, LESAT or Lockheed Martin at the Closing have or shall have been duly and
validly executed and delivered by Molten Metal and the MMT Subsidiary party
thereto and, assuming due execution and delivery by the other parties hereto or
thereto, constitute or shall constitute legal, valid and binding obligations of
Molten Metal and the MMT Subsidiary party thereto, enforceable against Molten
Metal and the MMT Subsidiary in accordance with their respective terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance or other similar laws relating to or affecting the
enforcement of creditors' rights and remedies generally and by general
principles of equity, whether considered and applied by a court of law or
equity.
3. NO VIOLATION OF CERTIFICATE OF INCORPORATION, BY-LAWS, LAW,
ETC. The execution, delivery and performance of this Agreement (including,
without limitation, the issuance of the Molten Metal Stock to LESAT and the
acquisition by Molten Metal of the MMT Acquired Assets and their subsequent
contribution to the MMT Subsidiary and then M4) by each of Molten Metal and the
MMT Subsidiary have not constituted and will not constitute a violation or
breach of (i) the Certificate of Incorporation, By-Laws or other constituting
documents of Molten Metal or the MMT Subsidiary, (ii) assuming compliance with
any required government notifications or permits, any agreement to which Molten
Metal or the MMT Subsidiary is subject except to the extent that such violation
or breach could not reasonably be expected to have a Material Adverse Effect on
Molten Metal or the MMT Subsidiary, or (iii) assuming compliance with any
required government notifications or permits, to the knowledge of Molten Metal
and the MMT Subsidiary, any applicable law, rule, regulation, judgment, order or
decree of any government instrumentality or court, domestic or foreign, having
jurisdiction over Molten Metal, the MMT Subsidiary or either of their properties
(either real or personal).
4. BROKERS. No broker, finder, investment banker or financial
advisor has been retained on behalf of Molten Metal or the MMT Subsidiary in
connection with the transactions contemplated hereby which might be entitled to
payment from M4, LESAT or Lockheed Martin.
5. GOVERNMENT APPROVALS. To the knowledge of Molten Metal and
the MMT Subsidiary, the execution, delivery and performance of this Agreement
and all other documents referred to herein to be executed and delivered to M4,
LESAT or Lockheed Martin at the Closing do not require Molten Metal or the MMT
Subsidiary to make any filing with or obtain any consent or approval from any
government instrumentality or court, federal, state, local or foreign, except
for (i) the filing required pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and (ii) any filings that may be required by the
securities laws of the United States or state securities laws. With respect to
the required governmental filings, actions or consents, to the knowledge of
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Molten Metal and the MMT Subsidiary, there are no facts relating to their
identity or circumstances, or those of M4, Lockheed Martin or LESAT, that could
prevent or materially delay the making of such filings or obtaining of such
consents or actions.
6. LITIGATION. There is no action, suit or proceeding pending
against, or to the knowledge of Molten Metal and the MMT Subsidiary, threatened
against Molten Metal or the MMT Subsidiary which challenges or seeks to enjoin
or otherwise alter the transactions contemplated by this Agreement.
7. INSPECTIONS. Each of Molten Metal and the MMT Subsidiary is
an informed, sophisticated business entity capable of understanding and
evaluating the merits and risks of its business, its investment in M4 and the
RETECH Business. Each of Molten Metal and the MMT Subsidiary has engaged such
experts, counsel, consultants and advisors, has undertaken such independent
investigation, has made such independent evaluation and has been provided with
access to such documents and personnel of LESAT and M4, each as it has deemed
necessary or appropriate in connection with the transactions contemplated by
this Agreement. Each of Molten Metal and the MMT Subsidiary acknowledges that it
is entering into this Agreement and the transactions contemplated hereby based
on its own independent investigation and that neither Lockheed Martin nor LESAT
(and no one on their behalf) has made any representation or warranty, express or
implied, and neither Molten Metal nor the MMT Subsidiary is relying on any
representation or warranty, other than those expressly set forth in this
Agreement. IT IS THEREFORE EXPRESSLY UNDERSTOOD AND AGREED THAT MOLTEN METAL AND
THE MMT SUBSIDIARY ACCEPTS THE CONDITION OF THE ACQUIRED ASSETS WITHOUT ANY
REPRESENTATION, WARRANTY OR GUARANTEES, EXPRESS OR IMPLIED, AS TO
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE AS TO THE
CONDITION, SIZE, EXTENT, QUANTITY, TYPE OR VALUE OF SUCH PROPERTY, EXCEPT ONLY
AS MAY BE OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, AND LESAT AND LOCKHEED
MARTIN HEREBY EXPRESSLY DISCLAIM ANY AND ALL SUCH OTHER REPRESENTATIONS,
WARRANTIES AND GUARANTEES.
8. CAPITAL STRUCTURE OF MOLTEN METAL. The authorized capital
stock of Molten Metal consists of 40,000,000 shares of common stock, par value
$.01 per share, and 3,000 shares of preferred stock, par value $.01 per share.
At the close of business on the business day next preceding the date hereof,
22,901,890 shares of Molten Metal common stock and no shares of Molten Metal
preferred stock were issued and outstanding, and all the issued and outstanding
shares of Molten Metal capital stock were and are duly authorized, validly
issued, fully paid and nonassessable. There are no pre-emptive rights in respect
of any shares of Molten Metal capital stock. As of the date of this Agreement,
there are no outstanding obligations, options, warrants or rights of any kind
entitling any persons to acquire shares of Molten Metal capital stock, upon
exercise, conversion or otherwise, except as disclosed in Molten Metal's filings
with the Securities
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and Exchange Commission and for employee stock options granted in the ordinary
course of Molten Metal's business consistent with past practice.
9. STATUS OF MOLTEN METAL STOCK. At or prior to the Closing,
Molten Metal shall execute and deliver to Lockheed Martin the Registration
Rights Agreement (as defined in the Partnership Restructuring Agreement). The
Molten Metal Stock has been duly authorized and, when issued to LESAT in
accordance with the terms of this Agreement, will be validly issued and fully
paid and nonassessable. Upon the issuance of the Molten Metal Stock in
accordance with the terms of this Agreement, the Molten Metal Stock will be free
and clear of all claims, liens, encumbrances and assessments whatsoever and is
not subject to any other rights of third parties, including, but not limited to,
pre-emptive rights.
10. ISSUANCE OF MOLTEN METAL STOCK. At or prior to the Closing,
Molten Metal shall issue the Molten Metal Stock to LESAT, free and clear of all
liens, claims, encumbrances and other rights of third parties, such that LESAT
will have free, clear and absolute title to and ownership of the Molten Metal
Stock. To the extent there is a stock dividend or stock split of Molten Metal
capital stock between the date hereof and the Closing Date, the number of shares
of Molten Metal Stock shall be appropriately adjusted.
11. PARTNERSHIP INTEREST. At the Closing, Molten Metal shall
cause (i) the Partnership Interest to be issued to LESAT, and (ii) LESAT to be
admitted as a limited partner of M4.
12. CONTRIBUTION OF MMT ACQUIRED ASSETS. At the Closing, (i)
Molten Metal shall contribute and transfer to the MMT Subsidiary all of its
right, title and interest in and to the MMT Acquired Assets and (ii) the MMT
Subsidiary shall contribute and transfer to M4 all of its right, title and
interest in and to the MMT Acquired Assets, in each case free and clear of all
liens, encumbrances and other rights of third parties created by or as a result
of actions or inactions of Molten Metal or the MMT Subsidiary.
13. RESTRUCTURING. Each of Molten Metal and the MMT Subsidiary
shall use its good faith reasonable efforts to cause the Restructuring to be
consummated at or prior to the date set for the Closing as described in the
Partnership Restructuring Agreement.
14. DUE DILIGENCE REPRESENTATIVES. The representatives of Molten
Metal set forth in the definition of Due Diligence Representatives are the only
employees, agents or other representatives of Molten Metal or the MMT Subsidiary
that were involved in any material manner in the due diligence investigation
performed by Molten Metal, the MMT Subsidiary and the Due Diligence
Representatives relating to this Agreement, the Partnership Restructuring
Agreement and the transactions contemplated hereby or thereby.
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P. CONDUCT PRIOR TO THE CLOSING.
1. CONDUCT OF RETECH BUSINESS. Except as set forth on Schedule
6(q) hereto, from and after the date hereof to and including the date of the
Closing, LESAT will carry on the RETECH Business in a manner consistent with its
prior conduct and will not take any action other than in the ordinary course of
the RETECH Business in conformity with prior practice (except with M4's prior
approval, which shall not be unreasonably withheld), and will use its good faith
reasonable efforts to maintain and preserve the RETECH Business intact and to
maintain and preserve its relationships with suppliers and customers and others
(including employees and providers of services) having business relations with
it relating to the RETECH Business. Without limiting the generality of the
immediately preceding sentence, to the extent feasible, LESAT shall notify M4
before it enters into any contract, agreement or license relating to the RETECH
Business which contemplates the payment from one party to another of an amount
in excess of Fifty Thousand Dollars ($50,000).
2. CONSENTS. Each of the parties hereto shall (i) use its best
efforts to obtain all licenses, permits, authorizations, consents, approvals and
waivers of all governmental authorities and other third parties necessary in
connection with the consummation of the transactions contemplated by this
Agreement and the Partnership Restructuring Agreement prior to the scheduled
date of the Closing, (ii) make or cause to be made all filings and submissions
under laws and regulations applicable to it as may be required for the
consummation of the transactions contemplated by this Agreement and the
Partnership Restructuring Agreement, and (iii) cooperate with the other parties
to this Agreement in exchanging such information and assistance as any of them
may reasonably request in connection with foregoing, PROVIDED, HOWEVER, that (a)
no party hereto shall be required to disclose any information that could
reasonably by expected to constitute a waiver of any attorney-client privilege
and work product doctrine, (b) no party hereto need supply any other party
hereto with any information which, in the reasonable judgment of the furnishing
party, it is under a legal obligation not to supply, and (c) any information
received by a party hereto from another party hereto shall be held in accordance
with the Confidentiality Agreement.
3. NONASSIGNABLE CONTRACTS.
(i) To the extent that any Contract is not capable of being
transferred by LESAT to M4 pursuant to this Agreement without the consent,
approval or waiver of a third Person, and such consent is not obtained prior to
the Closing, or if such transfer or attempted transfer would constitute a breach
thereof or a violation of any law, rule or regulation, nothing in this Agreement
will constitute a transfer or an attempted transfer thereof. Notwithstanding
anything contained in this Agreement to the contrary, LESAT is not obligated to
transfer to M4 any of its rights and obligations in and
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to any of the Contracts referred to in this subparagraph (i) without first
having obtained the consents, approvals and waivers necessary for the transfer
of such a Contract.
(ii) In the event that such consents, approvals and waivers
referred to in subparagraph (i) above are not obtained by Lockheed Martin, LESAT
and M4 and the Closing occurs, then, in the case of any such Contract, Lockheed
Martin, LESAT, Molten Metal, the MMT Subsidiary and M4 shall continue to
cooperate and use their best efforts to obtain the necessary consents, approvals
and waivers (to the extent that it is reasonably likely that such efforts will
be successful) and unless and until any such consent is obtained LESAT will use
its best reasonable efforts, to the extent permitted by applicable law, the
terms of the Contract and the directions of the customer, to (a) cooperate in
any reasonable arrangement designed to provide to M4 the benefits and burdens of
any Contract referred to in subparagraph (i) above without incurring any
obligation to any other Person other than to provide such benefits to M4,
including without limitation the appointment of M4 as LESAT's agent for purposes
of such Contract, and (b) enforce, at M4's request for M4's account and at M4's
cost, any rights of LESAT arising from any such Contract (including without
limitation the right to elect to terminate such Contract in accordance with the
terms thereof upon the advice of M4).
(iii) No consent, approval or waiver of a third Person with
respect to the transfer of, or any novation with respect to, any Contract shall
cause an Excluded Liability to be deemed for purposes of this Agreement to have
become an Assumed Liability or vice-versa.
4. OTHER WASTE PROCESSING TECHNOLOGIES.
*
5. LESAT PERSONNEL. Lockheed Martin, LESAT and M4 will meet
within thirty (30) days after the date hereof to discuss which LESAT employees,
in addition to the Transferred Employees, should be employed by M4 as compared
to LESAT based on M4's expanded business purposes contemplated by the
Partnership Restructuring Agreement.
Q. CONDITIONS PRECEDENT TO M4'S OBLIGATIONS. The obligations of M4
hereunder are subject to the satisfaction of the following conditions on or
before the date of the Closing, the compliance with or occurrence of which may
be waived in whole or in part, but only in writing, by M4:
- --------------------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
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1. REPRESENTATIONS, WARRANTIES AND COVENANTS TRUE AT THE
CLOSING. The representations, warranties and covenants of LESAT and Lockheed
Martin and Molten Metal and the MMT Subsidiary contained in this Agreement shall
be true on and as of the date of the Closing with the same effect as if made on
and as of such date.
2. PERFORMANCE OF AGREEMENT AND CONDITIONS. Each of LESAT,
Lockheed Martin, Molten Metal and the MMT Subsidiary shall have performed,
complied with, obtained and satisfied all agreements and conditions required by
this Agreement to be performed, complied with, obtained or satisfied by them
prior to the Closing.
3. OPINION OF COUNSEL. LESAT and Lockheed Martin shall have
delivered to M4 an opinion of counsel to LESAT and Lockheed Martin dated the
date of the Closing in form and content substantially similar to Exhibit 10(c)
hereto.
4. OPINION OF COUNSEL. Molten Metal and the MMT Subsidiary
shall have delivered to M4 an opinion of counsel to Molten Metal and the MMT
Subsidiary dated the Closing Date in form and substance substantially similar to
Exhibit 10(d) hereto.
5. NO INJUNCTION. On the date of the Closing, there shall be no
effective injunction, writ, preliminary or temporary restraining order or any
other order of any nature issued by a court or other governmental body or agency
directing that the transactions provided for herein, or any of them, not be
consummated as herein provided.
6. DELIVERY OF DOCUMENTS. Each of LESAT, Lockheed Martin,
Molten Metal and the MMT Subsidiary shall have delivered the documents required
to be delivered by such party in accordance with Section 13 of this Agreement.
7. DELIVERY OF LESAT ACQUIRED ASSETS. M4 shall have received
documentation reasonably acceptable to M4 demonstrating that, at the Closing,
LESAT shall have transferred, assigned, contributed and delivered to M4 the
LESAT Acquired Assets in accordance with the terms hereof.
8. DELIVERY OF MMT ACQUIRED ASSETS. M4 shall have received
documentation reasonably acceptable to M4 demonstrating that, at the Closing,
the MMT Subsidiary shall have transferred, assigned, contributed and delivered
to M4 the MMT Acquired Assets in accordance with the terms hereof.
9. PROVISION OF WORKING CAPITAL FACILITY. At or prior to the
Closing, Lockheed Martin shall have executed the Working Capital Facility and
delivered it to M4.
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10. CONSUMMATION OF RESTRUCTURING. At or prior to the Closing,
the Restructuring shall have been consummated by the execution of the documents
contemplated by the Partnership Restructuring Agreement.
11. EXPIRATION OF WAITING PERIODS. All applicable waiting
periods (and any extensions thereof) under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 shall have expired or terminated.
12. GOVERNMENTAL APPROVALS. All governmental approvals
reasonably necessary for the consummation of the transactions contemplated by
this Agreement shall have been obtained or waived except to the extent that the
failure to obtain any such approval could not reasonably be expected to have a
Material Adverse Effect on the RETECH Business. In addition, M4 shall have
obtained (either as a result of the transfer of the Permits or otherwise) all
permits or licenses required to conduct the RETECH Business in compliance with
applicable law except to the extent that the failure to obtain any such permit
or license could not reasonably be expected to have a Material Adverse Effect on
the RETECH Business.
13. OTHER THIRD-PARTY CONSENTS. All other non-governmental,
third-party consents reasonably necessary for the consummation of the
transactions contemplated by this Agreement shall have been obtained or waived
except to the extent that the failure to obtain any such consent could not
reasonably be expected to have a Material Adverse Effect on the RETECH Business.
R. CONDITIONS PRECEDENT TO LESAT'S AND LOCKHEED MARTIN'S
OBLIGATIONS. The obligations hereunder of LESAT and Lockheed Martin shall be
subject to the satisfaction on or before the date of the Closing of the
following conditions, the compliance with or occurrence of which may be waived
in whole or in part, but only in writing, by LESAT and Lockheed Martin:
1. REPRESENTATIONS, WARRANTIES AND COVENANTS TRUE AT THE
CLOSING. The representations, warranties and covenants of M4, Molten Metal and
the MMT Subsidiary contained in this Agreement shall be true on and as of the
date of the Closing with the same effect as if made on and as of such date.
2. PERFORMANCE OF AGREEMENT AND CONDITIONS. Each of M4, Molten
Metal and the MMT Subsidiary shall have performed, complied with, obtained and
satisfied all agreements and conditions required by this Agreement to be
performed, complied with, obtained or satisfied by them prior to the Closing.
3. OPINION OF COUNSEL. M4 shall have delivered to LESAT and
Lockheed Martin an opinion of counsel to M4 dated the date of the Closing in
form and content substantially similar to Exhibit 11(c) hereto.
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4. OPINION OF COUNSEL. Molten Metal and the MMT Subsidiary
shall have delivered to LESAT and Lockheed Martin an opinion of counsel to
Molten Metal and the MMT Subsidiary dated the date of the Closing in form and
content substantially similar to Exhibit 10(d) hereto.
5. NO INJUNCTION. On the date of the Closing, there shall be no
effective injunction, writ, preliminary or temporary restraining order or any
other order of any nature issued by a court or other governmental body or agency
directing that the transactions provided for herein, or any of them, not be
consummated as herein provided.
6. DELIVERY OF DOCUMENTS. Each of M4, Molten Metal and the MMT
Subsidiary shall have delivered the documents required to be delivered by such
party in accordance with Section 13 of this Agreement.
7. ISSUANCE OF MOLTEN METAL STOCK. LESAT and Lockheed Martin
shall have received documentation reasonably acceptable to LESAT and Lockheed
Martin demonstrating that, at the Closing, Molten Metal shall have issued to
LESAT the Molten Metal Stock in accordance with the terms hereof.
8. CONSUMMATION OF RESTRUCTURING. At or prior to the Closing,
the Restructuring shall have been consummated by the execution of the documents
contemplated by the Partnership Restructuring Agreement.
9. ADMISSION OF LESAT AS PARTNER. The Partnership Interest
shall have been issued to LESAT in accordance with the terms hereof and LESAT
shall have been admitted as a limited partner of M4.
10. CONTRIBUTION OF MMT ACQUIRED ASSETS. LESAT and Lockheed
Martin shall have received documentation reasonably acceptable to LESAT and
Lockheed Martin demonstrating that, at the Closing, Molten Metal shall have
transferred, assigned, contributed and delivered to the MMT Subsidiary the MMT
Acquired Assets and the MMT Subsidiary shall have transferred, assigned,
contributed and delivered to M4 the MMT Acquired Assets, each in accordance with
the terms hereof.
11. REGISTRATION OF MOLTEN METAL STOCK. Molten Metal shall have
executed and delivered to Lockheed Martin the Registration Rights Agreement.
12. BOARD APPROVAL. To the extent required, the transactions
contemplated by this Agreement shall have been approved by the Board of
Directors of each of Lockheed Martin and LESAT or their duly authorized
representatives.
13. EXPIRATION OF WAITING PERIODS. All applicable waiting
periods (and any extensions thereof) under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 shall have expired or terminated.
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14. GOVERNMENTAL APPROVALS. All governmental approvals
reasonably necessary for the consummation of the transactions contemplated by
this Agreement shall have been obtained or waived except to the extent that the
failure to obtain any such approval could not reasonably be expected to have a
Material Adverse Effect on the RETECH Business.
15. OTHER THIRD-PARTY CONSENTS. All other non-governmental,
third-party consents reasonably necessary for the consummation of the
transactions contemplated by this Agreement shall have been obtained or waived
except to the extent that the failure to obtain any such consent could not
reasonably be expected to have a Material Adverse Effect on the RETECH Business.
16. RETECH OPINION OF COUNSEL. LESAT shall have received an
opinion of counsel satisfactory to Retech complying with the requirements of
Section 6.11 of the RETECH Purchase Agreement relating to the security interest
in the Patents.
S. CONDITIONS PRECEDENT TO MOLTEN METAL'S AND THE MMT SUBSIDIARY'S
OBLIGATIONS. The obligations hereunder of Molten Metal and the MMT Subsidiary
shall be subject to the satisfaction on or before the date of the Closing of the
following conditions, the compliance with or occurrence of which may be waived
in whole or in part, but only in writing, by Molten Metal or the MMT Subsidiary:
1. REPRESENTATIONS, WARRANTIES AND COVENANTS TRUE AT THE
CLOSING. The representations, warranties and covenants of LESAT and Lockheed
Martin and M4 contained in this Agreement shall be true on and as of the date of
the Closing with the same effect as if made on and as of such date.
2. PERFORMANCE OF AGREEMENT AND CONDITIONS. Each of M4, LESAT
and Lockheed Martin shall have performed, complied with, obtained and satisfied
all agreements and conditions required by this Agreement to be performed,
complied with, obtained or satisfied by them prior to the Closing.
3. OPINION OF COUNSEL. LESAT and Lockheed Martin shall have
delivered to Molten Metal an opinion of counsel to LESAT and Lockheed Martin
dated the date of the Closing in form and content substantially similar to
Exhibit 10(c) hereto.
4. NO INJUNCTION. On the date of the Closing, there shall be no
effective injunction, writ, preliminary or temporary restraining order or any
other order of any nature issued by a court or other governmental body or agency
directing that the transactions provided for herein, or any of them, not be
consummated as herein provided.
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5. DELIVERY OF DOCUMENTS. Each of M4, LESAT and Lockheed Martin
shall have delivered the documents required to be delivered by such party in
accordance with Section 13 of this Agreement.
6. CONTRIBUTION OF LESAT ACQUIRED ASSETS. Molten Metal shall
have received documentation reasonably acceptable to Molten Metal demonstrating
that, at the Closing, LESAT shall have transferred, assigned, contributed and
delivered to M4 the LESAT Acquired Assets and to Molten Metal the MMT Acquired
Assets, each in accordance with the terms hereof.
7. CONSUMMATION OF RESTRUCTURING. At or prior to the Closing,
the Restructuring shall have been consummated by the execution of the documents
contemplated by the Partnership Restructuring Agreement.
8. EXPIRATION OF WAITING PERIODS. All applicable waiting
periods (and any extensions thereof) under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 shall have expired or terminated.
9. GOVERNMENTAL APPROVALS. All governmental approvals
reasonably necessary for the consummation of the transactions contemplated by
this Agreement shall have been obtained or waived except to the extent that the
failure to obtain any such approval could not reasonably be expected to have a
Material Adverse Effect on the RETECH Business.
10. OTHER THIRD-PARTY CONSENTS. All other non-governmental,
third-party consents reasonably necessary for the consummation of the
transactions contemplated by this Agreement shall have been obtained or waived
except to the extent that the failure to obtain any such consent could not
reasonably be expected to have a Material Adverse Effect on the RETECH Business.
T. DOCUMENTS AT THE CLOSING. At the Closing, the following documents
shall be executed, acknowledged (where appropriate) and delivered by the
designated parties:
1. by M4:
a. the Assignment and Assumption Agreement;
b. the Working Capital Facility;
c. the RETECH Security Agreement;
d. the bill of sale and assignment referred to in
Subsection 2(c)(i) above;
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e. a certificate, dated the Closing Date, from a duly
authorized representative of M4 to the effect that (a) the representations,
warranties and covenants of M4 set forth herein are true and correct as though
made on and as of the Closing Date, (b) all conditions precedent to the
obligations of M4 hereunder have been satisfied or waived, and (c) M4 is not in
default under any of the terms or conditions of this Agreement;
f. the opinion of counsel referred to in Subsection 11(c)
above; and
g. all other documents as may be reasonably required by
another party hereto to achieve the purposes and intent of this Agreement.
2. by LESAT:
a. the Assignment and Assumption Agreement;
b. the bill of sale and assignment referred to in
Subsection 2(a)(ii) above;
c. a certificate, dated the Closing Date, from a duly
authorized representative of LESAT to the effect that (a) the representations,
warranties and covenants of LESAT set forth herein are true and correct as
though made on and as of the Closing Date, (b) all conditions precedent to the
obligations of LESAT hereunder have been satisfied or waived, and (c) LESAT is
not in default under any of the terms or conditions of this Agreement;
d. the opinion of counsel referred to in Subsections 10(c)
and 12(c) above; and
e. all other documents as may be reasonably required by
another party hereto to achieve the purposes and intent of this Agreement.
3. by Molten Metal:
a. the Molten Metal Documents;
b. the Registration Rights Agreement;
c. the bill of sale and assignment referred to in
Subsection 2(a)(ii) above;
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d. the bill of sale and assignment referred to in
Subsection 2(b) above;
e. a certificate, dated the Closing Date, from a duly
authorized representative of Molten Metal to the effect that (a) the
representations, warranties and covenants of Molten Metal set forth herein are
true and correct as though made on and as of the Closing Date, (b) all
conditions precedent to the obligations of Molten Metal hereunder have been
satisfied or waived, and (c) Molten Metal is not in default under any of the
terms or conditions of this Agreement;
f. the opinion of counsel referred to in Subsections 10(d)
and 11(d) above; and
g. all other documents as may be reasonably required by
another party hereto to achieve the purposes and intent of this Agreement.
4. by Lockheed Martin:
a. the Working Capital Facility;
b. the Registration Rights Agreement;
c. the opinion of counsel referred to Subsections 10(c)
and 12(c) above;
d. a certificate, dated the Closing Date, from a duly
authorized representative of Lockheed Martin to the effect that (a) the
representations, warranties and covenants of Lockheed Martin set forth herein
are true and correct as though made on and as of the Closing Date, (b) all
conditions precedent to the obligations of Lockheed Martin hereunder have been
satisfied or waived, and (c) Lockheed Martin is not in default under any of the
terms or conditions of this Agreement; and
e. all other documents as may be reasonably required by
another party hereto to achieve the purposes and intent of this Agreement.
5. by the MMT Subsidiary:
a. the bill of sale and assignment referred to in
Subsection 2(b) above;
b. the bill of sale and assignment referred to in
Subsection 2(c)(i) above;
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c. a certificate, dated the Closing Date, from a duly
authorized representative of the MMT Subsidiary to the effect that (a) the
representations, warranties and covenants of the MMT Subsidiary set forth herein
are true and correct as though made on and as of the Closing Date, (b) all
conditions precedent to the obligations of the MMT Subsidiary hereunder have
been satisfied or waived, and (c) the MMT Subsidiary is not in default under any
of the terms or conditions of this Agreement;
d. the opinion of counsel referred to in Subsections 10(d)
and 11(d) above; and
e. all other documents as may be reasonably required by
another party hereto to achieve the purposes and intent of this Agreement.
U. TERMINATION.
1. This Agreement shall be terminated, and the transactions
contemplated hereby abandoned, if the Closing shall not have occurred on or
before May 15, 1996 unless otherwise agreed by the parties hereto in writing. In
addition, this Agreement may be terminated at any time prior to the Closing:
a. by the mutual consent in writing of the parties hereto;
b. by LESAT or Lockheed Martin if there has been a
material breach on the part of M4 or Molten Metal of any representation,
warranty, covenant or other agreement of such party contained herein which
cannot be or has not been cured within ten (10) days after written notice by
LESAT and Lockheed Martin to M4 or Molten Metal, as the case may be, of such
breach (provided that LESAT and Lockheed Martin are not then in material breach
of any representation, warranty, covenant or other agreement of those parties
contained in this Agreement);
c. by M4 if there has been a material breach on the part
of Molten Metal, LESAT or Lockheed Martin of any representation, warranty,
covenant or other agreement of such party contained herein which cannot be or
has not been cured within ten (10) days after written notice by M4 to Molten
Metal, LESAT or Lockheed Martin, as the case may be, of such breach (provided
that M4 is not then in material breach of any representation, warranty, covenant
or other agreement of it contained in this Agreement); and
d. by Molten Metal if there has been a material breach on
the part of M4, LESAT or Lockheed Martin of any representation, warranty,
covenant or other agreement of such party contained herein which cannot be or
has not been cured within ten (10) days after written notice by Molten Metal to
M4, LESAT or Lockheed Martin, as the case may be, of such breach (provided that
Molten Metal is not then in
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material breach of any representation, warranty, covenant or other agreement of
it contained in this Agreement).
2. If this Agreement is terminated as provided above, all
rights and obligations of the parties hereunder shall terminate without any
liability of any party to any other party (except for any liability of any party
then in breach), provided, however, that confidentiality provisions of
Subsection 18(k) and payment of expenses provisions of Section 16 shall survive
termination hereof.
V. SURVIVAL; INDEMNIFICATION.
1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained herein shall survive the Closing and
remain in full force and effect until the third (3rd) anniversary of the
Closing.
2. SURVIVAL OF COVENANT PROVISIONS. Each covenant provision
contained herein shall survive the Closing and remain in full force and effect
in accordance with its terms until the obligations arising thereunder have been
fully performed and discharged.
3. M4'S OBLIGATION. M4 agrees to, and does hereby, indemnify
and hold harmless Molten Metal, LESAT and Lockheed Martin and, to the extent
actually indemnified by Molten Metal, LESAT or Lockheed Martin, each of their
respective officers, directors, partners, employees, agents, successors and
assigns (as a group, but separately for each business entity, the
"REPRESENTATIVES") from and against any and all Adverse Consequences that Molten
Metal, LESAT, Lockheed Martin or Representatives of any of them may suffer
resulting from, arising out of or in any way relating to (i) any material
misrepresentation in or material breach or non-fulfillment of any representation
or warranty of M4 or material non-fulfillment of any covenant, obligation or
agreement of M4 contained herein or in any Confidential treatment has been
requested for this portion of Exhibit 10.2.xhibit hereto or certificate or
document delivered hereunder or (ii) M4's failure to perform or in due course
pay, satisfy and discharge any Assumed Liability.
4. LESAT'S AND LOCKHEED MARTIN'S OBLIGATION.
a.
*
- --------------------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
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*
5. MOLTEN METAL'S OBLIGATION. Molten Metal agrees to, and does
hereby, indemnify and hold harmless M4, LESAT and Lockheed Martin and, to the
extent actually indemnified by M4, LESAT or Lockheed Martin, their respective
- --------------------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
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Representatives from and against any and all Adverse Consequences that M4,
LESAT, Lockheed Martin or their respective Representatives may suffer resulting
from, arising out of or in any way relating to any material misrepresentation in
or material breach or non-fulfillment of any representation or warranty of
Molten Metal or material non-fulfillment of any covenant, obligation or
agreement of Molten Metal contained herein or in any exhibit hereto or
certificate or document delivered hereunder.
6. LIMITATIONS.
a. No party shall be entitled to make any claim for
indemnification under this Section 15 with respect to the breach of any
particular representation, warranty or covenant after the date upon which such
representation, warranty or covenant ceases to survive; provided, however, that
if prior to the date upon which such representation, warranty or covenant ceases
to survive, the party from whom indemnification is sought (the "INDEMNITOR")
shall have received written notification of a claim for indemnity with respect
thereto, specifying in reasonable detail the basis for the claim and indemnity
with respect thereto, and such claim shall not have been finally resolved or
disposed of at such date, the obligation of the Indemnitor under this Section 15
with respect to such claim shall continue until that claim is finally resolved
or disposed of; provided, however, that this provision shall not toll the
running of applicable statutes of limitation.
*
- --------------------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
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*
- --------------------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
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*
7. NOTICE. No right to indemnification hereunder shall be
available to any party seeking indemnification (the "INDEMNITEE") unless the
Indemnitee shall have provided, promptly after acquiring knowledge of the
existence of a claim (or facts that might reasonably be expected to give rise to
a claim in the future), the Indemnitor a written notice describing in reasonable
detail the facts giving rise (or which might reasonably be expected to give rise
in the future) to the claim for indemnification hereunder and enclosing a copy
of any papers served upon the Indemnitee. In the case of the commencement of any
action or proceeding, "promptly" shall mean as soon as practicable, but in no
event later than ten (10) days after service of notice of the suit, commencement
of the action or proceeding or assertion of the claim. In the case of discovery
by the Indemnitee of any facts, loss or event giving rise (or which might
reasonably be expected to give rise in the future) to indemnity, "promptly"
shall mean as soon as practicable, but in no event later than thirty (30) days
after such discovery. The failure to give notice as required by this Subsection
15(g) shall not relieve the Indemnitor of any liability that it may have to the
Indemnitee except to the extent that the Indemnitor's ability to defend against
or mitigate Adverse Consequences associated with the event with respect to which
indemnification is sought is materially adversely affected by such failure. The
obligation to give notice as set forth in this Subsection 15(g) is in addition
to, and not in replacement of, the obligations and conditions set forth in the
other subsections of this Section 15.
8. PROCEDURE. In the event that indemnification is sought for
third party claims, the Indemnitor will have the right at any time to assume and
thereafter to conduct at its expense the defense of the third party claim with
counsel of recognized standing and competence of the Indemnitor's choice
(reasonably satisfactory to the Indemnitee); provided, however, that the
Indemnitor shall not consent to the entry of a judgment or enter into any
settlement with respect to the third party claim without the prior written
consent of the Indemnitee (which consent will not be unreasonably withheld)
- --------------------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
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unless (i) the judgment or settlement involves only the payment of monetary
damages and does not impose an injunction or other equitable relief upon the
Indemnitee and (ii) the Indemnitor pays or causes to be paid all amounts arising
out of the judgment or settlement concurrently with the effectiveness thereof.
If the Indemnitor assumes the defense of the third party claim it shall allow
the Indemnitee a reasonable opportunity to monitor the defense thereof at the
Indemnitee's expense with counsel of recognized standing and competence of the
Indemnitee's choice (reasonably satisfactory to the Indemnitor). If the
Indemnitor does not assume the defense of the action, then the Indemnitee may
defend the action in any manner it may reasonably deem appropriate; provided,
however, that it shall allow the Indemnitor a reasonable opportunity to monitor
the defense thereof at the Indemnitor's expense with counsel of recognized
standing and competence of the Indemnitor's choice (reasonably satisfactory to
the Indemnitee). The party conducting the defense of an action shall at all
times reasonably and diligently pursue the resolution thereof and shall at all
times act in good faith and with reasonable prudence to minimize the Adverse
Consequences as though these were for its own account.
9. SHARED DEFENSE. The Indemnitee may elect to share in the
defense of a third party claim which has been assumed by Indemnitor. In that
event, the Indemnitee shall so notify the Indemnitor in writing. Thereafter,
each shall participate at its expense on an equal basis in the defense,
management and control of such claim. In this event, the Indemnitee and the
Indemnitor shall each be responsible for one-half (1/2) the Adverse
Consequences; subject, in the case of LESAT and Lockheed Martin, to the
aggregate cap on liability set forth in Subsection 15(f)(v) above.
10. COOPERATION. A party seeking indemnification for a third
party claim shall make available to the Indemnitor and its counsel all books,
records and documents relating to the claim and shall offer and cause its
Representatives to offer reasonable assistance in the defense of the claim.
11. REMEDIES. The indemnification provisions set forth in this
Section 15 shall constitute the exclusive remedy for LESAT, Lockheed Martin, M4,
Molten Metal and their Representatives for any alleged breach or default by any
party to this Agreement under this Agreement or in connection with or relating
to the transactions contemplated by this Agreement, other than claims based upon
fraud.
12. DEFINITIONS. As used in this Section 15, the following terms
shall have the following meanings.
a. "DUE DILIGENCE DOCUMENT" shall mean any written
document furnished to or, pursuant to a specific oral or written request, made
available to any Due Diligence Representative at any time from and after July 1,
1995 to and including the date hereof in connection with the due diligence
investigation performed by M4, Molten Metal, the MMT Subsidiary and the Due
Diligence Representatives relating to this
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Agreement, the Partnership Restructuring Agreement and the transactions
contemplated hereby or thereby.
b. "DUE DILIGENCE REPRESENTATIVES" shall mean Dr. Robert
Merriman, Thomas Valunas, Harry Nesteruk, Phillip M. Kannan, Robert Craig, Pat
Patton, Hal Haselton as representatives of M4, and William Haney III, Ethan
Jacks, Dr. Victor Gatto, Dr. Christopher Nagel, Benjamin Downs, Joseph
Grabmeier, Brigitte Smith, Barbara McWeeney and Elliot Mark as representatives
of Molten Metal.
W. PAYMENT OF EXPENSES. Except as otherwise provided herein,
regardless of whether the transactions provided for herein are consummated, each
of the parties hereto shall pay all costs and expenses (including, without
limitation, all fees and expenses of their respective counsel) incurred by them
with respect to this Agreement and the transactions set forth herein and
contemplated hereby. M4 shall be responsible for any sales or transfer taxes
incurred (i) in connection with the transfer of the LESAT Acquired Assets by
LESAT to M4 and (ii) in connection with the transfer of the MMT Acquired Assets
by the MMT Subsidiary to M4, only to the extent not payable by Molten Metal
pursuant to clause (iii) below. MMT and the MMT Subsidiary shall be responsible
for any sales or transfer taxes incurred (i) in connection with the transfer by
LESAT to Molten Metal of the MMT Acquired Assets, (ii) in connection with the
transfer by Molten Metal to the MMT Subsidiary of the MMT Acquired Assets, and
(iii) in connection with the transfer of the MMT Acquired Assets by the MMT
Subsidiary to M4 but, with respect to this clause (iii), only to the extent that
such taxes are greater than would have been incurred if the MMT Acquired Assets
had been transferred directly from LESAT to M4. All other sales and transfer
taxes, and all recording, filing and other fees (including any penalties or
interest but not penalties or interest incurred with respect to sales and
transfer taxes covered by the preceding sentence), incurred in connection with
this Agreement and the transactions contemplated hereby will be borne by M4.
X. EMPLOYMENT AND EMPLOYEE BENEFIT MATTERS.
1. EMPLOYEE BENEFITS DEFINITIONS. The following terms shall
have the following meanings:
a. "CODE" means the Internal Revenue Code of 1986, as
amended.
b. "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
c. "TRANSFERRED EMPLOYEES" means the persons currently
employed by LESAT and listed on Schedule 17(a)(iii) hereto.
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2. EMPLOYEES AND OFFERS OF EMPLOYMENT.
a. M4 shall offer, or shall cause M4 Environmental
Management Inc., a Delaware corporation and general partner of M4 (the "GENERAL
PARTNER"), to offer, employment to commence on the date of the Closing to all
Transferred Employees and, except as provided in Subsection 17(e)(ii) and
Subsection 17(f) below, shall be a successor employer for all employment matters
with respect to Transferred Employees as of the date of the Closing. Each
Transferred Employee shall be offered a position similar to his or her position
immediately prior to the Closing Date, at the same job and salary or wage
levels, with bonus, incentive and retirement plans and other employee benefit
plans and arrangements which (at the minimum) shall be substantially comparable,
in the aggregate, to those provided to the Transferred Employees of the RETECH
Business immediately prior to the Closing Date. Each member of the senior
management of the RETECH Business (as reasonably determined by the President of
the General Partner and the Deputy General Manager of the RETECH Business, James
Crouch) shall be eligible to participate in the bonus and other incentive
programs of M4 or the General Partner, as the case may be, on a substantially
similar basis as current employees of M4 or the General Partner, as the case may
be, at similar levels with similar responsibilities. Such offers of employment
shall be for employment at will and shall be at the same respective locations as
those at which such Transferred Employees are employed immediately prior to the
date of the Closing.
b. LESAT shall provide any notices to Transferred
Employees which may be required under the Worker Adjustment Retraining and
Notification Act, 29 U.S.C. [Section] 2101 ET SEQ., ("WARN") with respect to
events which occur on or prior to the date of the Closing and M4 shall provide
any notices to Transferred Employees which may be required under WARN with
respect to events which occur after the date of the Closing or which become
events requiring notice after the date of the Closing.
c. LESAT will not take, and will cause each of its
affiliates not to take, any action which would impede, hinder, interfere or
otherwise compete with M4's or the General Partner's, as the case may be, effort
to hire any Transferred Employees.
3. WELFARE BENEFITS. Commencing as of the Closing Date, to the
extent that M4 or the General Partner, as the case may be, does not elect to
adopt life insurance, accidental death and dismemberment, long term disability,
and severance plans, and medical, vision and dental coverage plans with the same
benefit coverages as the plans offered to the Transferred Employees prior to the
Closing Date, M4 or the General Partner, as the case may be, shall provide the
Transferred Employees and dependents and beneficiaries thereof (the "ELIGIBLE
INDIVIDUALS") life insurance, accidental death and dismemberment, long term
disability, and severance coverage, and medical, vision and dental benefit
coverage (at the minimum) substantially comparable, in the aggregate, to the
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coverage provided to the Transferred Employees under the plans listed as
Employee Benefit Plans on Schedule 6(x). Any welfare plans offered to the
Transferred Employees shall not include any exclusion for a pre-existing
condition (other than conditions excluded as of the Closing Date as pre-existing
conditions under existing medical, vision and dental coverage of Transferred
Employees if identical medical, dental or vision plans are adopted) and shall
take into account for purposes of any annual co-payment, deductible and
limitation on benefits, the payments made under the comparable Employee Benefit
Plan in respect of the Eligible Individuals for otherwise eligible medical,
vision and dental services in the current calendar year. Nothing in this
paragraph shall be construed to require M4 or the General Partner, as the case
may be, to extend any such coverage subsequent to a Transferred Employee's
termination of employment (except for continuation coverage required under Title
I, Part 6, of ERISA), on account of retirement or otherwise.
4. 401(k) PLANS. On or prior to the Closing Date, M4 or the
General Partner shall designate a tax-qualified 401(k) plan (the "M4 401(k)
Plan") in which the Transferred Employees shall be eligible to participate
immediately upon the Closing. The M4 401(k) Plan shall credit, to the extent
applicable, for plan eligibility and vesting purposes service with LESAT prior
to the Closing Date. All contributions to the Lockheed Salaried Employee Savings
Plan Plus (the "LESAT 401(k)") and the Lockheed Capital Accumulation Plan (the
"CAP Plan") with respect to Transferred Employees shall be discontinued from and
after the Closing Date, but from and after that date each Transferred Employee
shall be fully vested in his or her account balance under the LESAT 401(k) Plan
and CAP Plan and shall be entitled to distribution of his or her account balance
to the extent authorized by, and subject to the limitations of, Section
401(k)(10) of the Code. M4 and the General Partner on the one hand and LESAT on
the other hand shall reasonably cooperate to facilitate the direct rollover of
distributions due the Transferred Employees from the LESAT 401(k) and CAP Plan
to the M4 401(k) Plan where elected by Transferred Employees.
5. LIABILITY.
a. Except as otherwise provided in Subsection
17(e)(ii) or Subsection 17(f) below or in
Subsection 15(d), effective upon the Closing, M4
shall have exclusive liability for all claims
relating to the terms and conditions of employment
of the Transferred Employees, regardless of
whether such claim arises or is incurred before or
after the Closing or whether such claim is brought
by or with respect to a Transferred Employee or a
beneficiary of a Transferred Employee, including
but not limited to the following: all claims for
worker's compensation, vacation, holiday,
severance or layoff benefits, medical, life or
disability benefits, sickness and other
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leave; compensation (including incentive and bonus
programs); claims for discrimination, wrongful
termination, breach of contract, and similar
employment related matters; and claims for any
nonqualified or other fringe benefits.
b. All of the liabilities referred to in Subsection
17(e)(i) above shall be considered Assumed
Liabilities for purposes of this Agreement, except
that any liabilities or obligations of any nature
of Retech that were not assumed by LESAT pursuant
to the RETECH Purchase Agreement shall not
constitute Assumed Liabilities for purposes of
this Agreement but as provided in the definition
thereof shall constitute an Excluded Liability for
purposes of this Agreement.
6. LIABILITY UNDER CERTAIN EMPLOYEE BENEFIT PLANS. LESAT and
Lockheed Martin shall have and retain exclusive liability and responsibility for
providing any and all benefits due and payable to or in respect of participants
and other beneficiaries under the LESAT 401(k), the CAP Plan and the Lockheed
Martin Management Incentive Compensation Plan (the "MICP PLAN") in accordance
with the terms of such Employee Benefit Plans and applicable law.
7. VACATION AND HOLIDAYS. As of the Closing Date, M4 or the
General Partner, as the case may be, shall adopt at its expense vacation and
holiday plans for Transferred Employees to succeed LESAT's vacation and holiday
plans applicable to the RETECH Business. These plans shall be (at the minimum)
identical (in the case of vacation plans) or substantially comparable, in the
aggregate (in the case of holiday plans), to the vacation and holiday plans
provided to the Transferred Employees immediately prior to the Closing Date and
shall be in place of what would have been provided to the Transferred Employees
under the current vacation and holiday plans had they remained employees of
LESAT, and LESAT shall have no liability or obligation to pay or provide any
vacation or holiday payments claimed on or after the Closing Date whether or not
due to vacation or holiday days earned before or after the Closing Date. Such
plans shall give credit to the Transferred Employees for their service with
LESAT as well as M4 or the General Partner, as the case may be.
8. ACCESS TO INFORMATION. Commencing with the date hereof and
continuing to the date of the Closing and thereafter, LESAT shall make
reasonably available to M4 or the General Partner, as the case may be, and its
agents, employees, accountants and other representatives such actuarial,
financial, personnel, and related information as may be reasonably requested by
M4 or the General Partner, as the case may be, or such representative with
respect to any Employee Benefit Plan or Transferred
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<PAGE> 85
Employee, including but not limited to benefit records, compensation and
employment histories, policies, interpretations and other records relating to
Employee Benefit Plans.
9. THIRD PARTY BENEFICIARIES. No provision of this Section 17
shall create any third party beneficiary rights in any employee or former
employee of LESAT (including any beneficiary or dependent thereof) including,
without limitation, any right to continued employment or employment in any
particular position by M4 or the General Partner, as the case may be, for any
specified period of time after the date of the Closing.
10. MODIFICATIONS TO PLANS. M4 or the General Partner, as the
case may be, shall not modify, amend or terminate any employee plans or
arrangements or welfare benefits established or maintained pursuant to this
Section 17, in whole or in part, for the period of one (1) year following the
Closing Date which would result in an adverse effect, taken as a whole, on the
beneficiaries of such plan or arrangement compared to the benefit requirements
of this Section 17. Nothing in this Agreement shall limit or restrict in any way
the rights of LESAT, Lockheed Martin, M4 or the General Partner to modify,
amend, terminate or establish employee plans or arrangements, in whole or in
part, at any time following one (1) year after the Closing Date.
Y. MISCELLANEOUS.
1. KNOWLEDGE.
(i) No knowledge shall be attributable, or deemed
attributable, to Lockheed Martin or LESAT solely by virtue of Lockheed Martin's
direct or indirect fifty percent (50%) ownership interest in M4.
(ii) No knowledge shall be attributable, or deemed
attributable, to Molten Metal or the MMT Subsidiary solely by virtue of Molten
Metal's direct or indirect fifty percent (50%) ownership interest in M4.
2. NOTICES. All notices to be given by any party to any other
party shall be given by the parties hereto in writing by telecopy, transmission
confirmed, or by hand delivery or overnight courier delivery, with a receipt
being obtained therefor, or by registered or certified mail, return receipt
requested, at the following addresses, or at such other addresses as to which
the parties hereto may be notified in accordance herewith from time to time. Any
such notice shall be deemed to have been given when received.
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<PAGE> 86
(i) If to M4:
M4 Environmental L.P.
151 Lafayette Drive, Corporate Center
Oak Ridge, TN 37830
Attn: Dr. J. Robert Merriman
Telecopy: 615/220-4178
Telephone: 615/220-4162
with a required copy to:
M4 Environmental L.P.
151 Lafayette Drive, Corporate Center
Oak Ridge, TN 37830
Attn: Phillip M. Kannan, Esquire
Telecopy: 615/220-4178
Telephone: 615/220-4162
(ii) If to LESAT:
Lockheed Environmental Systems
& Technologies Co.
c/o Lockheed Martin Corporation
1155 University Boulevard
Albuquerque, NM 87106-4320
Attn: Peter P. Ottmer, Esquire
Telecopy: 505/843-4040
Telephone: 505/843-4030
with a required copy to:
James G. Leyden, Jr., Esquire
Richards, Layton & Finger
One Rodney Square
P. O. Box 551
Wilmington, DE 19899
Telecopy: 302/658-6548
Telephone: 302/658-6541
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<PAGE> 87
(iii) If to Molten Metal:
Molten Metal Technology, Inc.
51 Sawyer Road
Waltham, MA 02154
Attn: Ethan E. Jacks, Esquire
Telecopy: 617/487-7870 or 7872
Telephone: 617/487-7660
with a required copy to:
Bingham, Dana & Gould LLP
150 Federal Street
Boston, MA 02110
Attn: John R. Utzschneider, Esquire
Telecopy: 617/951-8000
Telephone: 617/951-8736
(iv) If to Lockheed Martin:
Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, MD 20817
Attn: Stephen M. Piper, Esq.
Telecopy: 301/897-6333
Telephone: 301/897-6177
with a required copy to:
James G. Leyden, Jr., Esquire
Richards, Layton & Finger
One Rodney Square
P. O. Box 551
Wilmington, DE 19899
Telecopy: 302/658-6548
Telephone: 302/658-6541
3. ENTIRE AGREEMENT AND MODIFICATION. This Agreement, including
the exhibits and schedules attached hereto and the Partnership Restructuring
Agreement, is intended by the parties hereto as a final expression of their
agreement with respect to the subject matter hereof, and is intended as a
complete and exclusive statement of the terms and conditions of that agreement.
In furtherance of the foregoing, this Agreement supersedes and replaces any
previous or contemporaneous agreement or understanding with respect to the
subject matter hereof. This Agreement may not be modified, rescinded, or
terminated orally, and no modification, rescission, termination or
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<PAGE> 88
attempted waiver of any of the terms, provisions or conditions hereof (including
this subsection) shall be valid unless in writing and signed by the party
against which enforcement is sought except as set forth in Subsection 6(af)
above.
4. ASSIGNEES AND SUCCESSORS. Except as set forth herein, this
Agreement may not be assigned in whole or in part by any party hereto without
the prior written consent of the other parties hereto. This Agreement shall
apply to, shall be binding in all respects upon, and shall inure to the benefit
of, the respective successors, assigns and legal representatives of the parties
hereto.
5. ACTION TAKEN AT THE CLOSING. Except as otherwise indicated
by the stated date and/or time of a document, the execution and delivery of this
Agreement, all actions to be taken and transactions to occur in connection with
this Agreement at the Closing, and the consummation at the Closing of certain
acts and transactions to which reference is made in this Agreement, are to be
considered effected simultaneously as part of a number of interrelated
transactions, and all deliveries of documents and other acts at the Closing are
to be deemed to have been made in escrow until all transactions referred to in,
and relating to, this Agreement which are to take place at the Closing have been
completed.
6. SECTION HEADINGS, ETC. The headings of sections contained in
this Agreement are provided for convenience only. They form no part of this
Agreement and shall not affect its construction or interpretation. All
references to sections or subsections refer to the corresponding sections and
subsections of this Agreement. All words used herein shall be construed to be of
such gender or number as the circumstances require. This "Agreement" shall mean
this Agreement as a whole (including the schedules and exhibits hereto bound in
the separate volume) and as the same may, from time to time hereafter, be
amended, supplemented or modified. The words "herein," "hereby," "hereof,"
"hereto," "hereinabove," and "hereinbelow," and words of similar import, refer
to this Agreement as a whole and not to any particular section, subsection,
paragraph, clause or other subdivision hereof, unless otherwise specifically
noted.
7. TIME OF ESSENCE. With respect to all time periods and duties
set forth in this Agreement, time is of the essence.
8. GOVERNING LAW. This Agreement shall be governed by, and
construed under, the internal laws of the State of Delaware, all rights and
remedies being governed by such laws.
9. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original copy of this
Agreement and all of which, when taken together, shall be deemed to be but one
and the same agreement.
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<PAGE> 89
10. RECORDS.
a. LESAT and M4 shall jointly determine which of LESAT's
correspondence, files, books, records and any other documents of LESAT relating
to the RETECH Business shall be retained by it and not transferred to M4 and
which of such records shall be transferred to M4. Notwithstanding the
immediately prior sentence, LESAT shall have the exclusive right to retain its
minute books, stock books, stock transfer ledgers and financial and tax records.
b. To the extent that documents of LESAT relating to the
RETECH Business are transferred to M4 pursuant to Subsection 18(j)(i) above, M4,
as reasonably requested by LESAT or Lockheed Martin from time to time, will
permit LESAT, Lockheed Martin and their Representatives to review such documents
and make copies thereof at LESAT's cost. To the extent documents of LESAT
relating to the RETECH Business are retained by LESAT and not transferred to M4
pursuant to Subsection 18(j)(i) above, LESAT, as reasonably requested by M4 from
time to time, will permit M4 and its Representatives to review such documents
and make copies thereof at M4's cost.
11. CONFIDENTIALITY. Each party to this Agreement and their
representatives will hold in confidence all information obtained from each other
party hereto and their representatives, employees, attorneys and accountants. In
the event that the transactions contemplated by this Agreement are not
consummated, each party hereto and their representatives will return to each
other party hereto which furnished information all such information as the
furnishing party may request and will hold such information as confidential and
they will not use any of the information learned in confidence adversely to the
interests of the furnishing party.
12. FURTHER ASSURANCES. The parties hereto agree (i) to furnish
upon request to the other parties hereto such further information, (ii) to
execute and deliver to the other parties hereto such other documents, and (iii)
to do such other acts or things, all as the other parties hereto may at any time
reasonably request and all at the sole cost and expense of the requesting party,
for the purpose of carrying out the intent of this Agreement and the documents
referred to herein, including, without limitation, the exercise of the rights
under the RETECH Purchase Agreement retained by LESAT and obtained by M4.
13. PUBLICITY. Each of M4, Molten Metal, LESAT and Lockheed
Martin agree to cooperate with each other in the preparation of any and all
public statements regarding any or all of the transactions contemplated
hereunder. None of M4, Molten Metal, LESAT and Lockheed Martin shall make or
issue any report, statement, filing with the Securities and Exchange Commission
or press release or otherwise make any public statement with respect to this
Agreement and the transactions contemplated hereby without prior consultation
with and approval of the other parties hereto, except as
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<PAGE> 90
may be required by law or may be necessary in order to discharge its disclosure
obligations, in which case such party nevertheless shall advise the other
parties hereto and, to the extent reasonably possible, discuss the contents of
the disclosure before issuing any such report, statement or press release.
14. NO THIRD-PARTY RIGHTS. This Agreement is not intended to and
does not create any rights in favor of any person not a party hereto.
15. SEVERABILITY. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement shall remain in full force and effect. Any
provision of this Agreement held invalid or unenforceable only in application,
part or degree shall remain in full force and effect to the extent not held
invalid or unenforceable.
16. DISPUTE RESOLUTION. All disputes or claims arising under or
in any way relating to this Agreement shall be subject to the Dispute Resolution
Agreement (as defined in the Partnership Restructuring Agreement).
17. RELATED AGREEMENT. This Agreement shall be deemed to be a
Related Agreement (as defined in the Partnership Restructuring Agreement) within
the meaning of the Partnership Restructuring Agreement.
18. BULK SALES. To the extent permitted by applicable law, each
of M4, LESAT, Molten Metal, the MMT Subsidiary and Lockheed Martin hereby waive
compliance by M4, LESAT, the MMT Subsidiary and Molten Metal with all bulk sales
law and other similar law in any applicable jurisdiction with respect to the
transactions contemplated by this Agreement. Further, M4, the MMT Subsidiary and
Molten Metal acknowledge that Lockheed Martin and LESAT will not comply with the
bulk transfer laws of any jurisdiction in connection with the transactions
contemplated by this Agreement.
19. WAIVER OF JURY TRIAL. EACH OF M4, LESAT, MOLTEN METAL, THE
MMT SUBSIDIARY AND LOCKHEED MARTIN HEREBY IRREVOCABLY WAIVES ANY RIGHTS THAT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED UPON, OR ARISING
OUT OF, THIS AGREEMENT OR ANY OF THE RELATED AGREEMENTS OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS OR ACTIONS OF ANY OF THEM RELATING
THERETO.
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<PAGE> 91
20. WAIVER OF CERTAIN DAMAGES. EACH OF M4, LESAT, MOLTEN METAL,
THE MMT SUBSIDIARY AND LOCKHEED MARTIN, TO THE FULLEST EXTENT PERMITTED BY LAW,
IRREVOCABLY WAIVES ANY RIGHTS THAT IT MAY HAVE TO PUNITIVE, SPECIAL, EXEMPLARY
OR CONSEQUENTIAL DAMAGES IN RESPECT OF ANY LITIGATION BASED UPON, OR ARISING OUT
OF, THIS AGREEMENT OR ANY RELATED AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS OR ACTIONS OF ANY OF THEM RELATING THERETO.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 92
IN WITNESS WHEREOF, the undersigned, intending to be legally bound
hereby, have duly executed this Agreement as of the day and year first written
above.
LOCKHEED ENVIRONMENTAL SYSTEMS
& TECHNOLOGIES CO.
By:_______________________________________
Title:
M4 ENVIRONMENTAL L.P.
By: M4 Environmental Management Inc., as
General Partner
By:_______________________________________
Title:
LOCKHEED MARTIN CORPORATION
By:_______________________________________
Title:
MOLTEN METAL TECHNOLOGY, INC.
By:_______________________________________
Title:
MMT FEDERAL HOLDINGS, INC.
By:_______________________________________
Title:
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<PAGE> 93
Exhibit B to
------------
Partnership Restructuring Agreement
-----------------------------------
REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS AGREEMENT is made as of April 30, 1996, by and between Lockheed Martin
Corporation, a Maryland corporation ("LMC"), and Molten Metal Technology, Inc.,
a Delaware corporation (the "Company").
This Agreement is made pursuant to an Asset Acquisition Agreement, dated as
of March 15, 1996 (as in effect from time to time, the "Asset Agreement"), by
and among LMC, the Company, and M4 Environmental L.P., a Delaware limited
partnership ("M4"), whereunder LMC has caused its subsidiary, Lockheed
Environmental Systems & Technologies Co., a Nevada corporation ("LESAT"), to
contribute certain assets and liabilities to M4 and to transfer certain other
assets to the Company, and the Company has issued shares of its Common Stock to
LESAT in exchange for the applicable assets. LESAT has transferred the
applicable shares of Common Stock to LMC. Except as otherwise defined herein,
the capitalized terms used in this Agreement shall have the meanings ascribed to
them in the Asset Agreement.
In order to induce LMC to enter into the Asset Agreement and to consummate
the transactions contemplated thereby, the Company has agreed to provide the
registration rights set forth in this Agreement.
The parties hereto agree as follows:
1. Definitions.
"Asset Agreement" has the meaning specified in the preamble.
---------------
"Commission" means the Securities and Exchange Commission.
----------
"COMMON STOCK" means the Common Stock, $0.01 par value per share, of the
Company.
"COMPANY" has the meaning specified in the preamble.
"LESAT" has the meaning specified in the preamble.
"LMC" has the meaning specified in the preamble.
"M4" has the meaning specified in the preamble.
"PERSON" means an individual, partnership, corporation, limited liability
company, association, trust, joint venture, unincorporated organization, or any
government, governmental department or agency or political subdivision thereof.
<PAGE> 94
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"REGISTRABLE SECURITIES" means (i) any Common Stock issued to LESAT under
the Asset Agreement and (ii) any securities issued with respect to the
securities referred to in clause (i) by way of a stock dividend or stock split
or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. As to any particular Registrable
Securities, such securities will cease to be Registrable Securities when they
have been distributed to the public through a broker, dealer or market purchaser
in compliance with Rule 144 under the Securities Act (or any similar rule then
in force) or sold pursuant to an effective registration statement under the
Securities Act.
"REGISTRATION EXPENSES" has the meaning specified in [SECTION]4.
"REGISTRATION STATEMENT" has the meaning specified in [SECTION]2.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
2. REGISTRATION ON FORM S-3. Within seven (7) days after the Closing (as
defined in the Asset Agreement), the Company will prepare and file with the
Commission a registration statement on Form S-3 covering all of the Registrable
Securities issued to LESAT on the date hereof. If the Company issues additional
shares of Common Stock to LESAT pursuant to the Asset Agreement, MMT will
promptly thereafter file an additional registration statement on Form S-3
covering all of such additional Registrable Securities (collectively, the
"REGISTRATION STATEMENT"). The Registration Statement will permit delayed or
continuous offerings pursuant to Rule 415 under the Securities Act.
3. Registration Procedures; Share Repurchase.
-----------------------------------------
(a) The Company agrees to use reasonable efforts to effect the registration
of the Registrable Securities in accordance with the intended method of
disposition thereof, and pursuant thereto the Company will as expeditiously as
possible:
(i) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration
Statement effective until the second anniversary of the Closing, or such
time as all of the Registrable Securities covered by such registration
statement have been sold and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
the Registration Statement during such effective period in accordance with
the intended methods of disposition by LMC set forth in the Registration
Statement;
<PAGE> 95
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(ii) furnish to LMC such number of copies of the Registration
Statement, each amendment and supplement thereto, the prospectus included
in the Registration Statement (including each preliminary prospectus) and
such other documents as LMC may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by each such seller;
(iii) use reasonable efforts to register or qualify the Registrable
Securities under such other securities or blue sky laws of such states of
the United States as LMC reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable LMC to
consummate the disposition in such jurisdictions of the Registrable
Securities owned by LMC; PROVIDED that the Company will not be required (A)
to qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph (a)(iv), (B) to
subject itself to taxation in any such jurisdiction or (C) to consent to
general service of process in any such jurisdiction;
(iv) notify LMC, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus included in the Registration
Statement contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading, and, at the
request LMC, the Company will promptly prepare (and, when completed, give
notice to each seller of Registrable Securities) a supplement or amendment
to such prospectus so that, as thereafter delivered to the purchasers of
such Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make
the statements therein not misleading; PROVIDED that upon such notification
by the Company, LMC will not offer or sell Registrable Securities until the
Company has notified LMC that it has prepared a supplement or amendment to
such prospectus and delivered copies of such supplement or amendment to
such seller;
(v) cause all the Registrable Securities to be listed on each
securities exchange on which shares of Common Stock issued by the Company
are then listed;
(vi) in connection with any underwritten offering enter into such
customary agreements (including underwriting agreements in customary form)
and take all such other actions as LMC or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of
the Registrable Securities; and
(vii) in the event of the issuance of any stop order suspending the
effectiveness of the Registration Statement, or of any order suspending or
preventing the use of any related prospectus or suspending the
qualification of any Registrable Securities included in the Registration
Statement for sale in any jurisdiction, the Company will use reasonable
efforts promptly to obtain the withdrawal of such order.
<PAGE> 96
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(b) In the event that, despite the Company's compliance with paragraph (a)
above, the Registration Statement has not been declared effective by the
Commission within either (i) thirty (30) days after its filing date, if the
Registration Statement is not reviewed by the Commission, or (ii) ninety (90)
days after its filing date, if the Registration Statement is reviewed by the
Commission, LMC may, within ten (10) days after such date, request the Company
to repurchase the Registrable Securities. If so requested by LMC, MMT shall
within five days repurchase such Registrable Securities for a purchase price of
$23.72 per share (as appropriately adjusted from time to time to reflect any
stock splits, stock dividends or similar events), payable in cash.
4. Registration Expenses.
---------------------
All expenses incident to the Company's performance of or compliance with
this Agreement, including without limitation all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, and fees and disbursements of counsel
for the Company and all independent certified public accountants and other
Persons retained by the Company, the Company's internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit or
quarterly review, the expense of any liability insurance for the Company and its
board of directors and the expenses and fees for listing the securities to be
registered on each securities exchange on which similar securities issued by the
Company are then listed (all such expenses being herein called "REGISTRATION
EXPENSES"), will be borne by the Company.
5. Indemnification.
---------------
(a) The Company agrees to indemnify, to the extent permitted by law, LMC,
its officers and directors and each Person who controls LMC (within the meaning
of the Securities Act) against all losses, claims, damages and liabilities
caused by any untrue or alleged untrue statement of material fact contained in
the Registration Statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are (i) caused by or
contained in any information furnished to the Company by LMC for use therein,
(ii) caused by LMC's failure to deliver a copy of the Registration Statement or
prospectus or any amendments or supplements thereto after the Company has
furnished LMC with a sufficient number of copies of the same, or (iii) caused by
LMC's sale of Registrable Securities in violation of the proviso to
[SECTION]3(iv) hereof.
(b) In connection with the Registration Statement, LMC will furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, will indemnify the Company, its
directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages and
liabilities resulting from any untrue or alleged untrue statement of material
fact contained in the Registration Statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated
<PAGE> 97
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therein or necessary to make the statements therein not misleading, but only to
the extent that such untrue or alleged untrue statement or omission or alleged
omission is attributable to the information furnished by LMC to the Company in
writing expressly for use in such registration statement or prospectus or
supplement thereto.
(c) Any Person entitled to indemnification hereunder will (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the indemnifying party will not
be subject to any liability for any settlement made by the indemnified party
without its consent (but such consent will not be unreasonably withheld). An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim. Subject to the foregoing
terms and provisions of this [SECTION]5(c), each indemnifying party hereunder
will reimburse the person entitled to indemnification hereunder for all legal
and other expenses reasonably incurred in connection with investigating and
defending the action or claim for which such indemnified party seeks
indemnification, as such expenses are incurred.
(d) The indemnification provided for under this Agreement will remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and will survive the transfer of securities.
6. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may participate
in any offering hereunder which is underwritten unless such Person (i) agrees to
sell such Person's securities on the basis provided in any underwriting
arrangements approved by the Person or Persons entitled hereunder to approve
such arrangements (as provided in Section 3(vi)) and (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements;
PROVIDED, that no holder of Registrable Securities included in any underwritten
registration shall be required to make any representations or warranties to the
Company or the underwriters other than representations and warranties regarding
such holder and such holder's intended method of distribution.
<PAGE> 98
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7. Miscellaneous.
-------------
(a) NO INCONSISTENT AGREEMENTS. The Company will not hereafter enter into
any agreement with respect to its securities which is inconsistent with the
rights granted to the holders of Registrable Securities under this Agreement.
(b) ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The Company will not take
any action, or permit any change to occur, with respect to its securities which
would materially and adversely affect the ability of the holders of Registrable
Securities to include such Registrable Securities in a registration undertaken
pursuant to this Agreement or which would materially and adversely affect the
marketability of such Registrable Securities.
(c) NO IMPLIED RIGHTS OR REMEDIES. Except as otherwise expressly provided
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or to give any Person, other than the parties hereto and their
respective shareholders, any rights or remedies under or by reason of this
Agreement.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and thereto and their respective heirs,
successors and permitted assigns. Neither this Agreement nor the obligations of
any party hereunder shall be assignable or transferable by such party without
the prior written consent of the other party hereto. In the event of any
assignment by LMC of its rights under this Agreement not consented to by the
Company, the assignee will not be considered a holder of Registrable Securities
for purposes of this Agreement.
(e) SEVERABILITY. The invalidity or unenforceability of any particular
provision of this Agreement or any Related Agreement shall not affect the other
provisions hereof or thereof, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provision was omitted.
(f) COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(g) DISPUTE RESOLUTION. All disputes or claims arising under or in any way
relating to this Agreement shall be subject to the Dispute Resolution Agreement.
(h) SECTIONS AND SECTION HEADINGS. The headings of sections and subsections
are for reference only and shall not limit or control the meaning thereof.
(i) GOVERNING LAW, ETC. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Delaware, all rights
and remedies being governed by such laws, without regard to its conflict of laws
rules, and, to the extent applicable, federal laws of the United States of
America. As provided in the Dispute Resolution Agreement,
<PAGE> 99
-7-
the parties hereto have submitted to the exclusive jurisdiction of state and
federal courts located in Delaware.
(j) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY RIGHTS THAT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY OF THE RELATED
AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR ACTIONS OF
ANY OF THEM RELATING THERETO.
(k) WAIVER OF CERTAIN DAMAGES. EACH OF THE PARTIES HERETO TO THE FULLEST
EXTENT PERMITTED BY LAW IRREVOCABLY WAIVES ANY RIGHTS THAT THEY MAY HAVE TO
PUNITIVE, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES IN RESPECT OF ANY
LITIGATION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY RELATED
AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR ACTIONS OF
ANY OF THEM RELATING THERETO.
(l) NOTICES. All notices, demands and other communications hereunder shall
be in writing or by written telecommunication, and shall be deemed to have been
duly given if delivered personally or if mailed by certified mail, return
receipt requested, postage prepaid, or if sent by overnight courier, or sent by
written telecommunication, as follows:
If to the Company:
Molten Metal Technology, Inc.
51 Sawyer Road
Waltham, MA 02154
Attention: William M. Haney, III
Ethan E. Jacks, Esq.
With a copy to:
John R. Utzschneider, Esq.
Bingham, Dana & Gould LLP
150 Federal Street
Boston, MA 02110
<PAGE> 100
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If to LMC:
Lockheed Martin Corporation
Energy and Environment Sector
1155 University Boulevard
Albuquerque, NM 87106-4320
Attention: Peter P. Ottmer, Esq.
With a copy to:
James G. Leyden, Jr., Esq.
Richards, Layton & Finger
One Rodney Square
Wilmington, DE 19899
(m) ENTIRE AGREEMENT; AMENDMENTS; WAIVERS. This Agreement together with the
Related Agreements contains the entire understanding of the parties hereto and
thereto, supersedes all prior agreements and understandings relating to the
subject matter hereof and thereof and shall not be amended except by a written
instrument hereafter signed by all of the parties hereto. No waiver of any
provision of this Agreement shall be effective unless evidenced by a written
instrument signed by the waiving party. The parties further acknowledge and
agree that, in entering into this Agreement and entering or causing their
Subsidiaries to enter into the Related Agreements, they have not in any way
relied upon any oral or written agreements, statements, promises, information,
arrangements, understandings, representations or warranties, express or implied,
not specifically set forth in this Agreement or the Related Agreements.
(n) FURTHER ASSURANCES. The parties agree to take such reasonable steps and
execute such other and further documents as may be necessary or appropriate to
cause the terms and conditions contained herein to be carried into effect.
(o) PUBLIC STATEMENTS OR RELEASES. Each of the parties hereto agrees that
prior to the closing of the Asset Agreement no party to this Agreement will
make, issue or release any public announcement, statement or acknowledgment of
the existence of, or reveal the status of, this Agreement or the transactions
provided for herein, without first obtaining the consent of the other party
hereto. Nothing contained in this Section clause (o) shall prevent either party
from making such disclosures as such party may consider necessary to satisfy
such party's legal or contractual obligations.
(p) EXPENSES. Except as expressly set forth in this Agreement, all expenses
of the preparation, execution and consummation of this Agreement and the Related
Agreements and of the transactions contemplated hereby, including, without
limitation, attorneys', accountants and outside advisers' fees and
disbursements, shall be borne by the party incurring such expenses.
<PAGE> 101
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(q) CONSTRUCTION. The language used in this Agreement will be deemed to be
the language chosen by the parties to express their mutual intent, and no rule
of strict construction will be applied against any party.
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
LMC:
----
LOCKHEED MARTIN CORPORATION
By
---------------------------
Name:
Title:
COMPANY:
--------
MOLTEN METAL TECHNOLOGY, INC.
By
---------------------------
William M. Haney, III
President
<PAGE> 102
Exhibit C to
------------
Partnership Restructuring Agreement
-----------------------------------
M4 ENVIRONMENTAL L. P.
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
M4 Environmental Management Inc., a Delaware corporation, as general
partner (the "GENERAL PARTNER"), and the undersigned limited partners (each, a
"LIMITED PARTNER" and collectively, the "LIMITED PARTNERS"), entered into a
Limited Partnership Agreement, dated as of August 9, 1994 (the "ORIGINAL
AGREEMENT") in order to form M4 Environmental L.P. as a limited partnership (the
"PARTNERSHIP") under the Act for the purposes and on the terms and conditions
set forth in the Original Agreement. In connection with a Partnership
Restructuring Agreement, dated as of March 15, 1996 (as in effect from time to
time, the "RESTRUCTURING AGREEMENT"), between Lockheed Martin Corporation, a
Maryland corporation ("LMC"), and Molten Metal Technology, Inc., a Delaware
corporation ("MMT"), and for certain purposes, the Partnership, the General
Partner and the Limited Partners are entering into this Amended and Restated
Limited Partnership Agreement in order to amend and restate the Original
Agreement. In addition, Lockheed Environmental Systems & Technologies Co., a
Nevada corporation ("LESAT"), shall be deemed to be admitted as a Limited
Partner upon execution and delivery of this Agreement. Accordingly, in
consideration of the foregoing, and the mutual covenants set forth below, the
parties hereto agree to amend and restate the Original Agreement in its entirety
to read as follows:
Article 1
---------
Definitions
-----------
1.1. CERTAIN DEFINED TERMS. As used in this Agreement, the following
capitalized terms have the following meanings:
"ACT" means the Delaware Revised Uniform Limited Partnership Act, 6 Del. C.
[SECTION]17-101, ET SEQ., as amended and in effect from time to time, and any
successor statute.
"ADDITIONAL CAPITAL CONTRIBUTION" means any Capital Contribution
effected after the date of the Original Agreement by any Partner, including
without limitation, pursuant to Section 5.2 and Article 10.
<PAGE> 103
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"AFFILIATE" means, with respect to any Person, any other Person
controlling, controlled by or under common control with, such Person. As used in
this definition, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise with respect to any Person, and any other Person
controlling, controlled by or under common control with such Person.
"AGREEMENT" means this Amended and Restated Limited Partnership Agreement,
including all exhibits and schedules hereto, as amended, restated or
supplemented from time to time.
"ASSET ACQUISITION AGREEMENT" means the Asset Acquisition Agreement among
LMC, MMT and the Partnership entered into pursuant to the Restructuring
Agreement, as in effect from time to time.
"BUSINESS PLAN" has the meaning set forth in the Master Agreement.
"CAPITAL ACCOUNT" means a separate account maintained for each Partner in
the manner described in this paragraph. There shall be credited to each
Partner's Capital Account (i) its Capital Contributions; (ii) its allocable
share of Partnership profits, including any income or gain that is exempt from
federal income taxation; (iii) the amount of any Partnership liabilities that
are assumed by such Partner or that are secured by any Partnership property
distributed to such Partner; and (iv) any other items required by Treasury
Regulations [SECTION]1.704-1(b)(2)(iv). There shall be charged against each
Partner's Capital Account (i) distributions to it from the Partnership; (ii) its
allocable share of Partnership losses, including expenditures that are neither
deductible nor properly chargeable to Capital Accounts under Section
705(a)(2)(B) of the Code or are treated as such expenditures under Treasury
Regulations [SECTION]1.704-1(b)(2)(iv)(j); (iii) the amount of any liabilities
of such Partner that are assumed by the Partnership or that are secured by any
property contributed by such Partner to the Partnership; and (iv) any other
items required by Treasury Regulations [SECTION]1.704-1(b)(2)(iv). In connection
therewith, the General Partner may make adjustments consistent with Treasury
Regulations [SECTION]1.704-1(b)(2)(iv)(f) upon the occurrence of any event
described in subparagraph (5) of such Regulations. Any reference in this
Agreement to the Capital Account of a then Partner shall include the Capital
Account of any prior Partner in respect of the Partnership interest of such then
Partner. Upon the occurrences of any event described in Treasury Regulations
[SECTIONS]1.704-1(b)(2)(iv)(d) and (f), the Capital Accounts may be restated by
the General Partner as set forth therein. The licenses granted by MMT pursuant
to the MMT License Agreement shall not constitute a Capital Contribution by MMT
for purposes of this Agreement.
"CAPITAL CONTRIBUTION" means the amount of cash and the fair market
value of all property contributed to the Partnership by a Partner in its
capacity as such at any
<PAGE> 104
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point in time, including any Additional Capital Contributions. All such amounts
contributed shall be reflected on the books and records of the Partnership. Any
reference in this Agreement to the Capital Contribution of a then Partner shall
include a Capital Contribution previously made by any prior Partner in respect
of the Partnership interest of such then Partner.
"CATALYTIC EXTRACTION PROCESSING" or "CEP" means the processes, methods and
systems (including all intellectual and intangible and tangible property
associated therewith and including all aspects of accepting Feedstocks,
reactions within a CEP Plant, and handling Recovered Resources), owned or used
by MMT, directed to the processing of Feedstocks by introducing the Feedstocks
to a processing vessel containing at least one liquefied metal.
"CEP PLANT" means the plant, equipment and other facilities necessary to
perform, operate and maintain CEP on a commercial basis (or, in the case of any
so-called "demonstration" facility, on the basis generally provided in the
applicable demonstration program).
"CODE" means the Internal Revenue Code of 1986, as amended and in effect
from time to time.
"DOD" means the United States Department of Defense and, where the context
so requires, any Successor Agency.
"DOE" means the United States Department of Energy and, where the context
so requires, any Successor Agency.
"DISPUTE RESOLUTION AGREEMENT" means the Amended and Restated Dispute
Resolution Agreement, dated as of April 30, 1996, among LMC, MMT, the MMT
Subsidiary, the LMC Subsidiary, LESAT, the General Partner and the Partnership,
as in effect from time to time.
"EXECUTIVE COMMITTEE" means the Executive Committee of the General Partner
maintained pursuant to the Restructuring Agreement.
"EXHIBIT A" means EXHIBIT A-1 or A-2 to this Agreement, as applicable, as
amended and in effect from time to time.
"FEEDSTOCKS" means, with respect to any CEP Plant, the wastes, industrial
by-products and other materials to be processed by such CEP Plant.
"GENERAL PARTNER" means M4 Environmental Management Inc., a Delaware
corporation, and includes any Person who becomes an additional or successor
general partner of the Partnership pursuant to the provisions of this Agreement.
<PAGE> 105
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"GP STOCKHOLDER AGREEMENT" means the Stockholder Agreement, dated as of
August 9, 1994, among the MMT Subsidiary, the LMC Subsidiary and the General
Partner, as in effect from time to time.
"INTELLECTUAL PROPERTY" means has the meaning set forth in the MMT License
Agreement.
"LESAT" has the meaning set forth in the preamble.
"LIMITED GUARANTIES" means a Limited Guaranty delivered by MMT or LMC
pursuant to Section 3.4 of the Restructuring Agreement, as in effect from time
to time.
"LIMITED PARTNERS" means the MMT Subsidiary and the LMC Subsidiary, each in
its capacity as a limited partner of the Partnership, and includes any Person
admitted as an additional limited partner of the Partnership or a substituted
limited partner of the Partnership pursuant to the provisions of this Agreement.
"LMC" has the meaning set forth in the preamble.
"LMC SUBSIDIARY" means Martin Marietta Environmental Holdings, Inc., a
Delaware corporation.
"LOAN AGREEMENT" means the Revolving Credit Agreement between LMC and the
Partnership entered into pursuant to the Asset Acquisition Agreement, as in
effect from time to time.
"MARKET" has the meaning set forth in the Restructuring Agreement.
"MASTER AGREEMENT" means the Master Agreement for Government Market
Development and Commercialization of CEP Technology, dated as of August 9, 1994,
between LMC (as successor by merger to MMC) and MMT, as in effect from time to
time.
"MMC" means Martin Marietta Corporation, a Maryland corporation.
"MMT" has the meaning set forth in the preamble.
"MMT LICENSE AGREEMENT" means the Amended and Restated License Agreement,
dated as of April 30, 1996, among LMC, MMT and the Partnership, as in effect
from time to time.
"MMT SUBSIDIARY" means MMT Federal Holdings Inc., a Delaware corporation.
<PAGE> 106
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"NONRECOURSE DEBT" means debt of the Partnership or any partnership in
which the Partnership holds an interest, directly or indirectly through other
partnerships, as to which no partner of the applicable partnership is personally
liable, as determined under Section 752 of the Code and Treasury Regulations
[SECTION]1.752-1(a)(2) (or any successor regulation).
"NONRECOURSE DEDUCTIONS" has the meaning set forth in Treasury Regulations
[SECTION]1.704-2(c) (or any successor regulation). The amount of Nonrecourse
Deductions for a Partnership fiscal year equals the net increase, if any, in the
amount of Partnership Minimum Gain during that fiscal year, reduced (but not
below zero) by the aggregate distributions made during the year of proceeds of a
nonrecourse liability that are allocable to an increase in Partnership Minimum
Gain.
"ORIGINAL AGREEMENT" has the meaning set forth in the preamble.
"ORIGINAL PARTNERS" means the General Partner, the LMC Subsidiary and the
MMT Subsidiary.
"PARTNER" means any General Partner or Limited Partner.
"PARTNER NONRECOURSE DEDUCTIONS" means an item of loss, expense or
deduction attributable to a nonrecourse liability of the Partnership for which a
Partner bears the economic risk of loss within the meaning of Treasury
Regulations [SECTION]1.704-2(b)(4) (or any successor regulation).
"PARTNERSHIP MINIMUM GAIN" has the meaning set forth in Treasury
Regulations [SECTION]1.704-2(d) (or any successor regulation). The amount of
Partnership Minimum Gain equals the total amount of gain the Partnership would
realize for federal income tax purposes if it disposed of all assets subject to
Nonrecourse Debts for no consideration other than full satisfaction thereof.
"PARTNER MINIMUM GAIN" means an amount, with respect to each nonrecourse
liability of the Partnership for which a Partner bears the economic risk of loss
within the meaning of Treasury Regulations [SECTION]1.704-2(b)(4) (or any
successor regulation), equal to the Partnership Minimum Gain that would result
if such liability were treated as a Nonrecourse Debt, determined in accordance
with Treasury Regulations [SECTION]1.704-2(i)(3).
"PARTNERSHIP" has the meaning set forth in the preamble.
"PERCENTAGE INTEREST" means the percentage interest of a Partner in the
Partnership as set forth on EXHIBIT A.
"PERMITTED COSTS" means, in connection with any costs incurred by any
Person pursuant to this Agreement or any Related Agreement, the amount of such
costs determined on a basis consistent with such Person's cost accounting for
Federal
<PAGE> 107
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Acquisition Regulation ("FAR") purposes, and accordingly including labor at such
Person's federally audited and approved rates inclusive of allocation for
overhead, fringe benefits, general and administrative expenses and facilities
capital cost of money (if and to the extent allowable under FAR) plus third
party expenses consistent with FAR.
"PERSON" means any individual, partnership, corporation, association,
trust, limited liability company, joint venture, unincorporated organization and
any government, governmental department or agency or political subdivision
thereof.
"RECOVERED RESOURCES" means the element and compounds produced by a CEP
Plant (whether or not produced through the use of reactants) that are suitable
for use or sale.
"REGISTRATION RIGHTS AGREEMENT" has the meaning set forth in the
Restructuring Agreement.
"RELATED AGREEMENTS" means this Agreement, the Master Agreement, the
Restructuring Agreement, the Asset Acquisition Agreement, the Loan Agreement,
the Registration Rights Agreement, the GP Stockholder Agreement, the MMT License
Agreement, the Dispute Resolution Agreement, the Certificate of Incorporation of
the General Partner (as in effect from time to time) and By-Laws of the General
Partner (as in effect from time to time) and the Limited Guaranties, and any
other agreement between or among any of the Partnership, the General Partner,
LMC, MMT, LESAT, the LMC Subsidiary or the MMT Subsidiary relating to the
Partnership which specifies that it is a Related Agreement for purposes of this
Agreement.
"RESTRUCTURING AGREEMENT" has the meaning set forth in the preamble.
"SUBSIDIARY" has the meaning set forth in the Restructuring Agreement.
"SUCCESSOR AGENCY" has the meaning set forth in the Restructuring
Agreement.
"TREASURY REGULATIONS" means the regulations promulgated under the Code, as
amended and in effect from time to time.
"USEC" means the United States Enrichment Corporation and, where the
context so requires, any Successor Agency thereto.
<PAGE> 108
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1.2. Cross References to Terms Defined Elsewhere in Agreement.
--------------------------------------------------------
Term Section
---- -------
Indemnitees 13; 15
Liquidator 9.1
Losses 15
Project Guaranty 10.2
Project Guaranty Fee 10.2
Return of Capital 9.2
704(c) Difference 8.8
Third Party Claim 15
Unpermitted Deficit 8.4
Article 2
---------
Formation of Partnership. Etc.
------------------------------
2.1. FORMATION; NAME AND PRINCIPAL PLACE OF BUSINESS. Pursuant to the
Original Agreement, the Original Partners hereto formed the Partnership as a
limited partnership under the Act. Pursuant to the Original Agreement, the
Original Partners agreed, and the parties hereto hereby agree, that the rights,
duties and liabilities of the Partners shall be as provided in the Act, except
as otherwise provided herein. The name of the Partnership shall continue to be
"M4 Environmental L.P.". The principal place of business of the Partnership
shall be located in Oak Ridge, Tennessee. The General Partner may, at any time,
change the name or the principal place of business of the Partnership and shall
give notice thereof to the Limited Partners.
2.2. REGISTERED AGENT AND OFFICE. The registered agent for service of
process on the Partnership in the State of Delaware shall be The Corporation
Trust Company, Corporation Trust Center, Wilmington, New Castle County, Delaware
19801 and the registered office of the Partnership in the State of Delaware
shall be c/o The Corporation Trust Company at the same address. The General
Partner may at any time change the registered agent of the Partnership or the
location of such registered office and shall give notice thereof to the Limited
Partners.
2.3. CERTIFICATE OF LIMITED PARTNERSHIP. On August 8, 1994, the General
Partner executed and filed a Certificate of Limited Partnership of the
Partnership in accordance with the provisions of the Act and the Original
Agreement. The General Partner shall execute, file, record and publish as
appropriate such amendments, certificates, and other documents as are or become
necessary or advisable as determined by the General Partner.
2.4. TERM. The term of the Partnership shall continue until July 1, 2019,
unless the Partnership is sooner dissolved. The existence of the
<PAGE> 109
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Partnership as a separate legal entity shall continue until the cancellation of
the Partnership's Certificate of Limited Partnership.
Article 3
---------
Purposes
--------
The purposes of the Partnership are (i) directly or indirectly through
ownership of interests in other entities and subject to the scope of the
licenses granted to the Partnership pursuant to the MMT License Agreement, to
acquire, invest in, obtain permits for, engineer, construct, start-up, own,
hold, operate, renovate, improve, maintain, finance, refinance, manage, lease,
sub-license, sell, dispose of, and otherwise deal with plants, plant equipment
and other facilities necessary to perform, operate and maintain CEP on a
commercial basis, and to sublicense CEP technology on the basis permitted by the
MMT License Agreement; (ii) if a Competing Business (as defined in Section
7.3(d) of the Restructuring Agreement) or any assets of a Competing Business are
acquired by M4 pursuant to Section 7.3(d) of the Restructuring Agreement, to
engage anywhere in the world in any lawful act, business, purpose or activity
that such Competing Business engaged in, planned to engage in or was permitted
to engage in under its organizational documents and exercise all of the powers
and privileges that such Competing Business possessed or as may be necessary,
desirable, advisable, convenient or incidental to the promotion, conduct or
attainment of the business purposes or activities of such Competing Business;
and (iii) to engage in all related activities arising therefrom or relating
thereto or necessary, desirable, advisable, convenient, incidental or
appropriate in connection therewith as the General Partner may determine.
Article 4
---------
Powers, Duties, and Restrictions of the
---------------------------------------
Partnership and the General Partner
-----------------------------------
4.1. (a) POWERS. In furtherance of the purposes set forth in Article 3, the
Partnership, and the General Partner on behalf of the Partnership, shall have
the following powers: (i) to undertake any of the activities described in
Article 3; (ii) to make, perform, and enter into any contract, commitment,
activity, or agreement relating thereto; (iii) to open, maintain, and close bank
and money market accounts, to endorse, for deposit to any such account or
otherwise, checks payable or belonging to the Partnership from any other Person,
and to draw checks or other orders for the payment of money on any such account;
(iv) to hold, distribute, and exercise all rights (including voting rights),
powers, and privileges and other incidents of ownership with respect to
Partnership assets; (v) to borrow funds, issue evidences of indebtedness, and
refinance any such indebtedness in furtherance of any or all of the purposes of
the Partnership, to guarantee the obligations of others, and to
<PAGE> 110
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secure any such indebtedness or guarantee by mortgage, security interest,
pledge, or other lien on any property or other assets of the Partnership; (vi)
to employ or retain such agents, employees, managers, accountants, attorneys,
consultants and other Persons necessary or appropriate to carry out the business
and affairs of the Partnership, and to pay such fees, expenses, salaries, wages
and other compensation to such Persons as the General Partner shall determine;
(vii) to bring, defend, and compromise actions, in its own name, at law or in
equity; and (viii) to take all actions and do all things necessary or advisable
or incident to the carrying out of the purposes of the Partnership.
(b) CERTAIN RELATED AGREEMENTS. The Partnership, and the General
Partner on behalf of the Partnership, may enter into and perform the MMT License
Agreement, the Restructuring Agreement, the Loan Agreement and the Asset
Acquisition Agreement without any further act, vote or approval of any Partner
notwithstanding any other provision of this Agreement, the Act or other
applicable law, rule or regulation. The General Partner is hereby authorized to
enter into the MMT License Agreement, the Restructuring Agreement, the Loan
Agreement and the Asset Acquisition Agreement on behalf of the Partnership, but
such authorization shall not be deemed a restriction on the power of the General
Partner to enter into other agreements on behalf of the Partnership.
4.2. AUTHORITY AND DUTIES OF GENERAL PARTNER. The General Partner shall
have full charge of the management, conduct, control and operation of the
Partnership business in all respects and in all matters, including, but not
limited to, full power and authority: (i) to determine all matters relating to
the conduct, control and management of the Partnership business and its winding
up; (ii) to take all of the actions, in the name and on behalf of the
Partnership, set forth in or contemplated by Section 4.1 or incidental thereto;
(iii) to act as tax matters partner of the Partnership, as more fully described
in Section 12.5; (iv) to make any and all filings necessary or, in the General
Partner's sole discretion, appropriate under federal and state securities and
other laws; and (v) to assume and exercise all powers and responsibilities
granted to a general partner under the Act. The General Partner shall devote to
the affairs of the Partnership such time as it, in its absolute discretion,
deems necessary for the proper performance of its duties. All decisions to be
made or actions to be taken by the General Partner hereunder shall, if at any
time and from time to time there is more than one General Partner, be made or
taken by those General Partners owning a majority in Percentage Interest in the
Partnership then held by all of the General Partners.
4.3. OTHER INTERESTS. Subject to the limitations imposed upon LMC and the
LMC Subsidiary pursuant to Section 7.3 of the Restructuring Agreement and upon
MMT and the MMT Subsidiary pursuant to Sections 7.1 and 7.2 of the Restructuring
Agreement, each Partner may have other interests and may engage in any business,
trade, profession or employment whatsoever, whether or not such business, trade,
profession or employment is similar to or competing with
<PAGE> 111
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the business or purposes of the Partnership, and whether for such Limited
Partner's own account or in partnership with, as consultant to, or as employee,
officer, director, stockholder, or agent of, any other Person.
4.4. GENERAL PARTNER COMPENSATION. Subject to Section 4.5, the General
Partner shall not be entitled to any compensation for its services as General
Partner hereunder.
4.5. REIMBURSEMENT OF GENERAL PARTNER FOR EXPENSES OF MANAGING THE
PARTNERSHIP. The Partnership shall pay, or reimburse the General Partner, as the
case may be, for all expenses and costs incurred in connection with managing the
business of the Partnership including, without limitation, salaries of all the
General Partner's directors, officers and employees and all office expenses,
marketing expenses, and any and all other costs and expenses incurred by the
General Partner in connection with the Partnership.
4.6. EXECUTION OF INSTRUMENTS; RELIANCE BY THIRD PARTIES. Any and all
instruments executed pursuant to the powers contained herein may create
obligations extending beyond the date of any possible termination of this
Agreement. Notwithstanding any limitation contained in this Agreement, every
agreement relating to property owned by the Partnership and executed in
connection with the Partnership by the General Partner, on behalf and in the
name of the Partnership, shall be conclusive evidence in favor of every Person
relying thereon or claiming thereunder that, at the time of the delivery
thereof, this Agreement was in full force and effect, and that the execution and
delivery thereof was duly authorized hereunder and that such agreement is
binding upon the Partnership. Any Person dealing with the Partnership or with
the General Partner may rely upon a certificate given by the General Partner as
to its authority to sign documents on behalf of the Partnership or as to any
other fact germane to the Partnership or the activity of such Partner; and no
third party shall be obliged to see to the application of any money or property
delivered to a General Partner or to see that any provision of this Agreement
has been complied with.
4.7. LIMITED PARTNERS. No Limited Partner shall participate in or have any
vote with respect to or any control over the Partnership business, operations or
affairs in any manner whatsoever. The Limited Partners hereby irrevocably
consent to the exercise by the General Partner of the powers conferred by this
Agreement. No Limited Partner shall have any authority or right to act for or
bind the Partnership. A Limited Partner shall not be deemed to be participating
in the control of the business of the Partnership within the meaning of the Act
by virtue of its possessing or exercising any rights as set forth in this
Agreement, any Related Agreement or the Act. In furtherance of the foregoing a
Limited Partner, any Affiliate of a Limited Partner, any director, officer,
stockholder, employee, agent or representative of a Limited Partner or an
Affiliate thereof may also be an officer, director, member of the Executive
Committee or an employee or agent of the
<PAGE> 112
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Partnership or the General Partner. The existence of these relationships, and
the possession or exercise of such rights and acting in such capacities, shall
not cause, or result in, a Limited Partner to be deemed to be participating in
the control of the business of the Partnership within the meaning of the Act or
otherwise affect the liability of the Limited Partner or the Person so acting.
4.8. CERTAIN MATTERS REQUIRING UNANIMOUS APPROVAL. The following matters
shall require the unanimous approval of the Limited Partners:
(i) amending this Agreement;
(ii) increasing the amount of capital contributions or debt guarantees
above the thresholds provided for in this Agreement;
(iii) to admit any new Partner upon the issuance of new limited
partner interests in the Partnership;
(iv) permitting the transfer by a Partner of its limited partner
interest in the Partnership under Section 6.1(a) or Section
6.1(b) (but not a transfer under Section 6.1(e));
(v) to pursue an initial public offering in connection with the
Partnership or its assets;
(vi) acquiring property from any Person relating to acquisitions by
way of purchase of stock, partnership interests, membership
interests or other equity interests or purchase of assets of
businesses engaged in the environmental business;
(vii) to dissolve the Partnership pursuant to Section 9.1(a)(iv);
(viii) to sell all or substantially all of the assets of the
Partnership;
(ix) causing the Partnership to merge with or consolidate into another
limited partnership or other business entity (as defined in
Section 17-211(a) of the Act);
(x) commencing a voluntary proceeding seeking reorganization or other
relief with respect to the Partnership under any bankruptcy or
similar law; and
(xi) causing the Partnership to engage in any material transaction
between the Partnership and any Partner not contemplated by the
Restructuring Agreement, this Agreement or any other Related
Agreement, including the sale of any assets acquired by
<PAGE> 113
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the Partnership pursuant to the Asset Acquisition Agreement to
any Partner or its Affiliate.
Article 5
---------
Partners
--------
5.1 PARTNERS; CAPITAL. The Capital Contributions of the Partners made as of
the date of the Original Agreement are set forth on EXHIBIT A-1 hereto and after
the date of the Original Agreement shall be set forth on the books and records
of the Partnership. Pursuant to the Asset Acquisition Agreement, as of the date
of this Agreement LESAT is making a Capital Contribution to the Partnership of
the assets and liabilities referred to in the Asset Acquisition Agreement. In
addition, pursuant to the Asset Acquisition Agreement the MMT Subsidiary is
contributing certain assets to the Partnership. The Capital Contributions of the
Partners up to and including the date of this Agreement are set forth on EXHIBIT
A-2 hereto. Additional Partners may be admitted by the General Partner only with
the written consent of the General Partner. No interest shall be paid on any
Capital Contributions to the Partnership. No General Partner shall have any
personal liability for the repayment of the Capital Contribution of any Partner,
and no Partner shall have any obligation to fund any deficit in its Capital
Account. Each Partner hereby waives, for the term of the Partnership, any right
to partition the property of the Partnership or to commence an action seeking
dissolution of the Partnership under the Act.
5.2. ADDITIONAL CAPITAL CONTRIBUTIONS. No Limited Partner shall be liable
for Partnership obligations in excess of the capital contributed by it, plus its
share of profits remaining in the Partnership, if any, and such other amounts as
it may be liable for pursuant to the Act. The LMC Subsidiary shall be required
to make Additional Capital Contributions under the circumstances contemplated by
Article 10.
5.3. BORROWINGS AND LOANS. If any Partner shall lend any monies to the
Partnership, whether pursuant to Article 10 or otherwise, the amount of any such
loan shall not constitute an increase in the amount of such Partner's Capital
Contribution nor affect in any way such Partner's share of the profits, losses,
and distributions of the Partnership. The terms of such loans and the interest
rate(s) thereon shall be commercially reasonable terms and rates, as determined
by the General Partner in its sole discretion.
<PAGE> 114
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Article 6
---------
Transferability of Partner Interests
------------------------------------
6.1. Restrictions on Transfer.
------------------------
(a) No Limited Partner shall have the right to dispose of, sell, alienate,
assign, participate, subparticipate, encumber, or otherwise transfer all or any
part of its interest in the Partnership (other than assignments by operation of
law) unless prior to such transfer the transferee is approved in writing by the
General Partner (or by each General Partner, if at any time and from time to
time there is more than one), acting in its absolute discretion.
(b) The transferee of the Partnership interest of a Limited Partner may
become a substituted Limited Partner only upon the terms and conditions set
forth in this Article 6. The General Partner shall have the power, in its sole
discretion, to admit or to refuse to admit as substituted Limited Partners
transferees who acquire the interest, or any part thereof, of a Limited Partner
hereunder; PROVIDED, that if at any time and from time to time there is more
than one General Partner, the unanimous consent of the General Partners shall be
required to admit such transferees as substituted Limited Partners. Except as
otherwise provided in this Article 6, the failure or refusal of the General
Partner to admit an assignee as a substituted Limited Partner shall not affect
the right of such assignee to receive the share of distributions of the
Partnership to which its predecessor in interest would have been entitled;
however, the assignee of the assigned interest shall not be entitled to exercise
any rights of a Partner of the Partnership, including without limitation the
right to vote or consent with respect to any proposed action of the Partnership
as to which such vote or consent is required, unless and until the assignee is
admitted as a substituted Limited Partner. From and after the assignment of any
interest or portion thereof, the assignor shall not be entitled to exercise any
rights of a Partner of the Partnership in respect of the interest or portion
thereof assigned, including without limitation the right to vote or consent with
respect to any proposed action of the Partnership, regardless of whether its
assignee becomes a substituted Limited Partner. An assignee of a Limited
Partner's interest who does not become a substituted Limited Partner as provided
herein and who desires to make a further assignment of its interest shall be
subject to all of the provisions of this Article 6 to the same extent as any
Limited Partner desiring to make an assignment.
(c) In addition to the foregoing requirements, the admission of an assignee
as a substituted Limited Partner shall be conditioned upon the assignee's
written acceptance of the terms and provisions of this Agreement and its written
assumption of the obligations hereunder of its assignor. Whether or not a
transferee who acquired any interest in the Partnership has accepted in writing
the terms and provisions of this Agreement and assumed in writing the
obligations hereunder of its predecessor in interest, such transferee shall be
deemed, by the
<PAGE> 115
acquisition of such interest, to have agreed to be subject to and bound by all
the obligations of this Agreement with the same effect and to the same extent as
any predecessor in interest of such transferee.
(d) All costs incurred by the Partnership in connection with the admission
to the Partnership of a substituted Limited Partner pursuant to this Article 6
shall be borne by the transferor Limited Partner (and if not timely paid, by the
substituted Limited Partner), including, without limitation, costs of any
necessary amendment hereof, filing fees, if any, and reasonable attorneys' fees.
(e) Notwithstanding anything in this Agreement to the contrary, LESAT shall
be permitted to assign its entire limited partner interest in the Partnership to
LMC or a Subsidiary of LMC without any further act, vote or approval of any
Partner, and LMC or such Subsidiary shall be deemed admitted as a substituted
Limited Partner upon its execution and delivery of a counterpart of this
Agreement (if such assignee had not already been admitted as a Limited Partner).
6.2. ADDITIONAL RESTRICTIONS. Anything contained in the foregoing
provisions of this Article 6 expressed or implied to the contrary
notwithstanding:
(a) In no event shall a sale, transfer, assignment, exchange, or other
disposition of any Limited Partner's interest take place if such sale, transfer,
assignment, exchange, or other disposition could, in the opinion of tax counsel
to the Partnership, cause a termination of the Partnership within the meaning of
Section 708 of the Code.
(b) In no event shall all or any part of a Limited Partner's interest in
the Partnership be assigned or transferred to a minor or incompetent.
(c) The General Partner may, in addition to any other requirement that the
General Partner may impose, require as a condition of any sale, transfer,
assignment, exchange, or other disposition of any interest in the Partnership
that the transferor furnish to the Partnership an opinion of counsel
satisfactory (both as to such opinion and as to such counsel) to counsel to the
Partnership that such sale, transfer, assignment, exchange, or other disposition
complies with applicable federal and state securities laws.
(d) Any sale, transfer, assignment, exchange, or other disposition in
contravention of any of the provisions of this Article 6 shall be void and
ineffectual and shall not bind or be recognized by the Partnership.
6.3. CONTINUATION OF PARTNERSHIP. The liquidation, dissolution, bankruptcy,
insolvency, death, or incompetency of any Limited Partner shall not terminate
the business of the Partnership or dissolve the Partnership, which shall
continue to be conducted upon the terms of this Agreement by the other Partners
and by the personal representatives and successors in interest of such Limited
Partner.
<PAGE> 116
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6.4. TRANSFER OF INTEREST OF THE GENERAL PARTNER. The General Partner may
not sell, transfer, assign, pledge, encumber, mortgage or otherwise hypothecate
(hereinafter in this Section 6.4 collectively referred to as "assign" or
"assignment") the whole or any part of its interest as General Partner in the
Partnership without the unanimous written consent of the Limited Partners. An
assignee of all or part of the interest of the General Partner in the
Partnership shall be admitted to the Partnership as a general partner of the
Partnership only if the Limited Partners approve in writing the admission of
such assignee as an additional or successor general partner of the Partnership.
If such unanimous written consent is obtained, the admission shall be effective
upon the filing of an amendment to the Certificate of Limited Partnership of the
Partnership with the Secretary of State of the State of Delaware which indicates
that such Person has been admitted to the Partnership as a general partner of
the Partnership, and shall occur and for all purposes shall be deemed to have
occurred, immediately prior to the time the assignor ceases to be a general
partner of the Partnership. Such additional or successor General Partner is
hereby authorized to and shall continue the Partnership without dissolution.
Upon the filing of an amendment to the Certificate of Limited Partnership of the
Partnership with the Secretary of State of the State of Delaware which indicates
that the General Partner is no longer a general partner of the Partnership, the
General Partner shall at that time cease to be a general partner of the
Partnership.
Article 7
---------
Distributions
-------------
(a) DISTRIBUTIONS. If at any time and from time to time the General Partner
determines that the Partnership has cash that is not required for the operations
of the Partnership, the payment of liabilities or expenses of the Partnership,
or the setting aside of reserves to meet the anticipated cash needs of the
Partnership, the General Partner shall distribute all or any portion of that
excess cash to the Partners in proportion to their Percentage Interests, unless
the distribution is a liquidating distribution, which shall be made in the
manner set out in Section 9.2.
(b) RESTRICTED DISTRIBUTIONS. The Partnership, and the General Partner on
behalf of the Partnership, shall not make a distribution to any Partner on
account of its interest in the Partnership if and to the extent such
distribution would violate [SECTION]17-607 of the Act or other applicable law.
Article 8
---------
Allocations of Profits and Losses
---------------------------------
8.1. ALLOCATIONS OF PROFITS; GENERAL. Except as provided in Sections 8.4
through 8.8 below, and after application of Section 8.3 and Section 9.3, all net
profits and credits of the Partnership (for both accounting and tax purposes)
for each
<PAGE> 117
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fiscal year shall be allocated to the Partners from time to time (but no less
often than once annually and before making any distribution to the Partners) in
proportion to their Percentage Interests.
8.2. ALLOCATIONS OF LOSSES; GENERAL. Except as provided in Sections 8.4
through 8.8 and Section 9.3 below, and after application of Section 8.3, all net
losses of the Partnership for each fiscal year (for both accounting and tax
purposes), and all Nonrecourse Deductions, shall be allocated to the Partners
from time to time (but no less often than once annually and before making any
distribution to the Partners) in proportion to their Percentage Interests.
8.3 SPECIAL ALLOCATIONS. Except as provided in Sections 8.4 through 8.8
below, notwithstanding the provisions of Section 8.1 and 8.2, and before making
any allocations thereunder, items of Partnership gross expense, loss, and
deduction for each fiscal year (for both accounting and tax purposes) of the
Partnership shall be specially allocated to the Partners until the Partners'
Capital Accounts are in proportion to the Partners' respective Percentage
Interests (or in proportion to the aggregate amounts then allocable to the
Partners under this Section 8.3, if the total amount to be allocated is less).
8.4. LIMITATION. Notwithstanding anything otherwise provided in Sections
8.2 or 8.3, no Partner will be allocated any items of Partnership expense,
deduction or losses to the extent such allocation results in such Partner's
Capital Account having a deficit balance in excess of the sum of (i) such
Partner's obligation, if any, to restore deficits on the dissolution of the
Partnership and (ii) such Partner's deemed obligation to restore deficits
pursuant to Treasury Regulations [SECTIONS]1.704-2(g)(1) and 1.704-2(i)(5) (the
"UNPERMITTED DEFICIT"); any items of Partnership expense, deduction or losses
not allocable to a Partner under this sentence shall be allocated to the other
Partners. In the event any Partner's Capital Account is adjusted (by way of
distribution, allocation or otherwise) to create an Unpermitted Deficit, such
Partner shall, as soon as possible thereafter, be allocated items of Partnership
income to eliminate the Unpermitted Deficit. In addition to the foregoing, if at
the end of any fiscal year of the Partnership, there is a net decrease in
Partnership Minimum Gain, as compared to the end of the previous fiscal year,
prior to any other allocation of profits and losses for such year except that
provided in Section 8.5, each Partner shall be allocated (or if more than one
Partner has a share of such net decrease, all such Partners shall be allocated
ratably between them in accordance with their respective shares) items of
Partnership income for such year (and, if necessary, subsequent fiscal years)
equal to such Partner's share of the net decrease of Partnership Minimum Gain
determined in accordance with Treasury Regulation [SECTION]1.704-2(g).
Notwithstanding any provision in this Agreement to the contrary, no Partner
shall have any obligation to restore any deficit balance in such Partner's
Capital Account.
<PAGE> 118
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8.5. PARTNER NONRECOURSE DEDUCTIONS. Any Partner Nonrecourse Deductions for
any fiscal year or other period shall be allocated to the Partner who (in its
capacity, directly or indirectly, as lender, guarantor, or otherwise) bears the
economic risk of loss with respect to the loan to which such Partner Nonrecourse
Deductions are attributable in accordance with Treasury Regulations
[SECTION]1.704-2(i) or any successor regulation. If at the end of any
Partnership fiscal year there is a net decrease in Partner Minimum Gain
attributable to such loan as compared to the end of the previous fiscal year
(and, if necessary, subsequent fiscal years), such net decrease shall be charged
back to that Partner in the manner and to the extent required by Treasury
Regulations [SECTION]1.704-2(i)(4) or any successor regulation, pursuant to
procedures analogous to those set out in the penultimate sentence of Section
8.4.
8.6. CALCULATION OF PROFITS AND LOSSES. For all purposes hereof, the
Partnership's profits and losses shall be determined by taking into account all
of the Partnership's items of income and gain (including items not subject to
federal income tax) and all items of loss, expense, and deduction, in each case
determined under federal income tax principles.
8.7. GENERAL PARTNER'S 1% SHARE. Notwithstanding the foregoing provisions
of this Article 8, in no event shall there be allocated to the General Partner
hereunder less than 1% of the aggregate of the profits, losses or credits (or
any item thereof) to be allocated to the Partners hereunder. If the amounts of
profits, losses or credits (or of any item thereof) allocable to the General
Partner shall not otherwise equal or exceed such 1% share without giving effect
to this provision, then all such amounts otherwise allocable to the Limited
Partners hereunder shall be reduced in order to assure the General Partner of
such one percent share, and the next subsequent allocations to the Partners
shall be adjusted as appropriate (and consistent with this Section 8.7) in order
to compensate for any adjustment under this Section 8.7.
8.8. SECTION 704(C) AND CAPITAL ACCOUNT REVALUATION ALLOCATIONS. The
Partners agree that to the full extent possible with respect to the allocation
of depreciation, amortization or any other cost recovery deduction, loss and
gain for federal income tax purposes only, SECTION 704(c) of the Code shall
apply with respect to non-cash property contributed to the Partnership by any
Partner. Accordingly, (i) if the tax basis of any property contributed differs
from its agreed value for purposes of determining Capital Accounts (the "704(c)
DIFFERENCE"), on the sale of all or a portion of such property, any tax gain or
loss resulting, up to the dollar amount of the 704(c) Difference as adjusted by
any prior allocations under this clause (i) and prior allocations of
depreciation, amortization or other cost recovery deduction as provided under
clause (ii) below, shall be specially allocated to the contributing Partner; and
(ii), to the extent of the 704(c) Difference, any remaining tax depreciation,
amortization or other cost recovery
<PAGE> 119
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deductions with respect to such property shall, for each fiscal year, be
specially allocated to the other Partners, up to an amount equal to the amount
of depreciation, amortization or other cost recovery deductions with respect to
such property allocated to such other Partners for purposes of determining
Capital Accounts, and the balance of such tax depreciation, amortization or
other cost recovery deduction with respect to such property shall be allocated
to the contributing Partner, and the 704(c) Difference shall be reduced by an
amount equal to the difference between the amount of tax depreciation,
amortization or other cost recovery deduction with respect to such property for
such fiscal year so allocated to the Partners and the amount allocated to the
Partners for purposes of determining Capital Accounts. For purposes hereof, any
allocation of income, loss, gain or any item thereof to a Partner pursuant to
Section 704(c) of the Code shall affect only its tax basis in its Partnership
interest and shall not affect its Capital Account in the Partnership. In
addition to the foregoing, if Partnership assets are reflected in the Capital
Accounts of the Partners at a book value that differs from the adjusted tax
basis of the assets (E.G., because of a revaluation of the Partners' Capital
Accounts under Treasury Regulations [SECTION]1.704-1(b)(2)(iv)(f)), allocations
of depreciation, amortization, or other cost recovery deduction, income, gain or
loss with respect to such property shall be made among the Partners in a manner
consistent with the principles of Section 704(c) of the Code and this Section
8.8.
Article 9
---------
Dissolution and Winding Up
--------------------------
9.1. General. (a) The Partnership shall be dissolved and its affairs shall
be wound up upon:
(i) the expiration of the term of the Partnership as set forth in
Section 2.4 of this Agreement;
(ii)
*
-
(iii) an event of withdrawal of the General Partner (as defined in
[SECTION]17-402 of the Act), unless the business of the
Partnership is continued as provided in the Act (any additional
or successor General Partner of the Partnership is hereby
authorized to and shall continue the business of the Partnership
without dissolution); or
- --------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
- -
<PAGE> 120
-19-
(iv) the unanimous written consent of the Limited Partners pursuant to
Section 4.8(vii).
(b) Upon dissolution of the Partnership, the business of the Partnership
shall continue for the sole purpose of winding up its affairs. The winding up
process shall be carried out by the General Partner unless the dissolution is
caused by an event of withdrawal (as defined in [SECTION]17-402 of the Act) by
the sole remaining General Partner, in which case a liquidating trustee may be
appointed for the Partnership by vote of a majority in Percentage Interest of
the Limited Partners (the General Partner or such liquidating trustee is
referred to herein as the "LIQUIDATOR"). In winding up the Partnership's
affairs, every effort shall then be made to dispose of the assets of the
Partnership in an orderly manner, having regard to the liquidity, divisibility
and marketability of the Partnership's assets. If the Liquidator determines that
it would be imprudent to dispose of any non-cash assets of the Partnership, such
assets may be distributed in kind to the Partners, in lieu of cash,
proportionately to their rights to receive cash distributions hereunder;
PROVIDED, that the Liquidator shall in its sole discretion determine the
relative shares of the Partners of each kind of those assets that are to be
distributed in kind. The Liquidator shall not be entitled to be paid by the
Partnership any fee for services rendered in connection with the liquidation of
the Partnership, but shall be reimbursed by the Partnership for all third-party
costs and expenses incurred by it in connection therewith and shall be
indemnified by the Partnership with respect to any action brought against it in
connection therewith by applying, mutatis mutandis, the provisions of Article
13.
9.2. APPLICATION AND DISTRIBUTION OF PARTNERSHIP ASSETS. The assets of the
Partnership in winding up shall be applied or distributed as follows: FIRST, to
creditors of the Partnership, whether by payment or the making of reasonable
provision for the payment thereof, and including any contingent, conditional and
unmatured liabilities of the Partnership, taking into account the relative
priorities thereof, and SECOND, to the Partners in proportion to their
respective Percentage Interests. A reasonable reserve for contingent,
conditional and unmatured liabilities in connection with the winding up of the
business of the Partnership shall be retained by the Partnership until such
winding up is completed or such reserve is otherwise deemed no longer necessary
by the Liquidator. Subject to the provisions of [SECTION] 17-804(a)(1) of the
Act, if the Partnership is dissolved by mutual agreement, the LMC Subsidiary
shall have returned to it, prior to any distribution to the Partners pursuant to
clause SECOND above, any cash Capital Contribution that the LMC Subsidiary has
made to the Partnership but which has not yet been expended by the Partnership
(with any expenses of the Partnership being deemed to have been made out of cash
Capital Contributions prior to any cash on hand that does not represent a
Capital Contribution). Any such preferential return to the LMC Subsidiary of its
Capital Contributions is referred to herein as a "RETURN OF CAPITAL".
9.3. CAPITAL ACCOUNT ADJUSTMENTS. For purposes of determining a Partner's
Capital Account, if, on liquidation and dissolution, some or all of the assets
<PAGE> 121
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of the Partnership are distributed in kind, Partnership profits (or losses)
shall be increased by the profits (or losses) that would have been realized had
such assets been sold for their fair market value on the date of dissolution of
the Partnership, as determined by the Liquidator. Any such increase pursuant to
the preceding sentence, or any actual profit or loss realized if, on liquidation
or dissolution, some or all of the assets of the Partnership are sold, (i) shall
be allocated to the Partners in accordance with Article 8 hereof EXCEPT that the
special allocation procedure set forth in Section 8.3 shall be applied after
taking into account the effect of any Return on Capital on the Partners' Capital
Accounts, not only with respect to the items set forth therein, but also with
respect to any items of gross income and gain resulting from such hypothetical
or actual sale and (ii) shall increase (or decrease) the Partners' Capital
Account balances accordingly, it being the general intent that the adjustments
contemplated by this subsection shall have the effect, as nearly as possible, of
causing the Partners' Capital Account balances to be in proportion to their
Percentage Interests.
9.4. Termination of Partnership.
--------------------------
The Partnership shall terminate when all assets of the Partnership, after
payment of or due provision for all debts, liabilities and obligations of the
Partnership, shall have been distributed to the Partners in the manner provided
for in this Article 9, and the Certificate of Limited Partnership of the
Partnership shall have been canceled in the manner required by the Act.
Article 10
----------
Financing of the Partnership
----------------------------
10.1. OBLIGATION TO FUND OPERATING BUDGET. (a) The LMC Subsidiary agrees
that it shall fund the operations of the Partnership through August 1, 1999 on
the basis provided in this Section 10.1. The Executive Committee shall request
funding from the LMC Subsidiary from time to time (but no less often than
annually) to fund the operations of the Partnership, including any equity
required in order to obtain project financing for a CEP Plant. The LMC
Subsidiary shall provide the funds requested by the Executive Committee from
time to time, to the extent the Executive Committee considers such funding
reasonably necessary for the anticipated operations of the Partnership based on
the Business Plan. In no event, however, shall the LMC Subsidiary be obligated
pursuant to this Section 10.1 to provide more than $20,000,000 in any one fiscal
year or more than $75,000,000 in the aggregate from the date of the Original
Agreement through the term of this Agreement, in each case excluding any
Additional Capital Contribution made by the LMC Subsidiary, if any, in order to
finance its share of the purchase price to be paid by the Partnership pursuant
to the Asset Acquisition Agreement or similar agreement contemplated by Section
2.1 of the Restructuring Agreement. Any funding shall be
<PAGE> 122
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made within ten (10) business days after the funding request of the Executive
Committee by wire transfer to an account designated by the Partnership at least
two (2) business days prior to the due date.
(b) If the Partnership requires additional equity financing in excess of
the $20,000,000/$75,000,000 amounts referred to above, the Partners foresee that
such additional funding will be provided by the Partners in proportion to their
respective Percentage Interests, and if not funded by a particular Partner, such
additional equity financing will be dilutive and will reduce the non-funding
Partner's Percentage Interest on a basis to be determined by the General
Partner. The requirement for any such additional financing, including any equity
financing for capital expenses or acquisitions, will be discussed and resolved
on a case-by-case basis and must be agreed to by all the Partners.
(c) All funding provided pursuant to paragraph (a) above shall be treated
as Additional Capital Contributions by the LMC Subsidiary. Any Capital
Contribution made by the LMC Subsidiary on the date of the Original Agreement,
including the funding of the Partnership's obligation under the MMT License
Agreement, and any additional capital contribution to the General Partner, in
its capacity as a stockholder of the General Partner, on or after the date of
the Original Agreement by the LMC Subsidiary not matched by the MMT Subsidiary,
shall reduce the foregoing obligation of the LMC Subsidiary to make Additional
Capital Contributions by an equal amount.
10.2. OBLIGATION TO PROVIDE PROJECT GUARANTIES. (a) The Partners agree that
CEP Plants are to be financed by project and/or third-party financing to the
maximum extent reasonably possible. In the event that acceptable project and/or
third-party financing is not available for an identified CEP Plant on this basis
after reasonable efforts, and if the Executive Committee has approved that CEP
Plant, then subject to the conditions set forth in paragraph (b) below, the LMC
Subsidiary agrees that for such CEP Plant it will provide a guaranty (or if
requested by lenders obtain such a guaranty from LMC) of the third-party
financing obtained for such CEP Plant (each a "PROJECT GUARANTY"). Any such
Project Guaranty shall be an irrevocable unconditional guaranty of payment of
the applicable financing and shall be on commercial terms typically found in
project guarantees delivered by major corporations (including LMC) for project
financing provided by national institutional lenders.
(b) The obligations of the LMC Subsidiary to provide a Project Guaranty
with respect to any particular CEP Plant is subject to the following
<PAGE> 123
-22-
conditions:
*
-
(c) For each Project Guaranty provided by the LMC Subsidiary or LMC for any
CEP Plant, the LMC Subsidiary shall receive an annual fee (the "PROJECT GUARANTY
FEE") from the Partnership equal to 2% of the average amount of debt outstanding
during such year that was guaranteed by such Project Guaranty. The Project
Guaranty Fee payable with respect to any year shall be paid at the same time
that the Royalty Payments (as defined in the MMT License Agreement) for such
year are payable pursuant to the MMT License Agreement.
- --------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
<PAGE> 124
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Article 11
----------
Transactions With the Partnership; Operational Issues
-----------------------------------------------------
11.1. GENERAL. Except as otherwise provided in this Agreement, any Limited
Partner and any Affiliate of any Limited Partner may lend money to, act as
surety, guarantor or endorser for, guarantee or assume one or more specific
obligations of, provide collateral for, and transact other business with the
Partnership and, subject to applicable law, shall have the same rights and
obligations with respect thereto as a Person who is not a partner in the
Partnership. Any transactions between a Limited Partner or an Affiliate of a
Limited Partner shall be on the terms approved by the General Partner from time
to time or, if such transaction is contemplated by this Agreement, the Master
Agreement, the Restructuring Agreement, the Loan Agreement or the MMT License
Agreement, on the terms provided for in such Related Agreement. The exercise of
any such right by a Limited Partner shall not cause a Limited Partner to be
deemed to be participating in the control of the business of the Partnership.
11.2. STAFFING; COMPENSATION. The General Partner shall staff the
Partnership with management and other employees on the basis contemplated by the
Business Plan. The General Partner shall create appropriate compensation
packages for Partnership personnel, including an equity or equity-linked
incentive plan.
11.3. SUPPLEMENTARY ASSISTANCE; MARKETING. (a) The Partnership may request
the assistance from time to time of MMT or LMC personnel to supplement the
Partnership's own business activities, including without limitation the
Partnership's sales and marketing efforts and regulatory, permitting and
government regulation activities. The MMT Subsidiary and the LMC Subsidiary
shall cause MMT or LMC, as applicable, to furnish the appropriate personnel from
time to time to support the Partnership's activities. MMT or LMC shall be
compensated for such activities as provided in Section 11.4, excluding, however,
services provided by MMT or LMC which are of general support of the business of
the Partnership (as compared with project-specific activities) and would
normally fall within the classification of selling, general and administrative
costs or expenses.
(b) In connection with these sales and marketing efforts, the MMT
Subsidiary shall make available to the Partnership all existing contract
opportunities available to MMT for the Market. The General Partner shall cause
all marketing activities to be conducted in the name of the Partnership and in
such a manner as to emphasize the status of the Partnership as an entity
separate and apart from LMC and MMT. In addition, the General Partner will not
cause the Partnership to issue any material press releases until such press
releases have been reviewed by designees of the MMT Subsidiary and the LMC
Subsidiary as contemplated by Section 10 of the Master Agreement and Article 12
of the Restructuring Agreement.
<PAGE> 125
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11.4. GOODS AND SERVICES. (a) The Partnership shall be required to
purchase, and the MMT Subsidiary and the LMC Subsidiary shall be required to
furnish (to the extent available), goods and services from the LMC Subsidiary or
LMC, and the MMT Subsidiary or MMT, as applicable, where such goods and services
are essential to the Partnership and, because of their nature, cannot be readily
obtained from third parties or developed or produced internally by the
Partnership. These goods and services include, in the case of the MMT Subsidiary
or MMT, the goods and research and development and other services to be provided
by MMT to the Partnership and its sublicensees on the basis set forth in Article
9 of the MMT License Agreement.
(b) The Partnership shall reimburse MMT, LMC, the LMC Subsidiary or the MMT
Subsidiary, as applicable, for any goods and services provided to the
Partnership pursuant to this Article 11. Any such reimbursement to any Person
shall be (i) in the case of any goods and services provided in connection with a
contract that will not allow costs incurred under an arrangement of the type set
forth in clause (ii) below, an amount equal to the Permitted Costs incurred plus
a profit in an amount equal to * of the estimated costs for such goods and
services proposed by such Person and accepted by the Partnership, (ii) in the
case of any goods and services not required to be accounted for as provided in
clause (i) above, an amount equal to * of the Permitted Costs incurred, and
(iii) in the case of any goods sold by such Person pursuant to catalog or other
standardized prices, and notwithstanding the provisions of clauses (i) and (ii)
above, the standard price for such goods. The General Partner shall adopt and
implement procedures relating to billing, documentation and payment terms for
any such reimbursable costs.
11.5. SURPLUS CEP PLANTS. In the event that the Partnership intends to
decommission any CEP Plant developed by the Partnership (whether because such
CEP Plant has processed all appropriate Feedstocks from the applicable DOE, DoD,
USEC or other host facility or otherwise), then the MMT Subsidiary shall have
the option to purchase such CEP Plant (with permits and infrastructure) at a
price and on terms to be negotiated at such time.
- --------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
<PAGE> 126
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Article 12
----------
Books, Records and Accounting
-----------------------------
12.1. PARTNERSHIP BOOKS OF ACCOUNT. The Partnership shall cause to be
entered in appropriate books, kept at the Partnership's principal place of
business, all transactions of or relating to the Partnership. Each Partner shall
have access to and the right, at such Partner's sole cost and expense, to
inspect and copy such books and all other Partnership records during normal
business hours; PROVIDED that the inspecting Partner shall be responsible for
any out-of-pocket costs or expenses incurred by the Partnership in making such
books and records available for inspection. The General Partner shall not have
the right to keep confidential from the Limited Partners any information that
the General Partner would otherwise be permitted to keep confidential pursuant
to [SECTION]17-305(b) of the Act.
12.2. DEPOSITS OF PARTNERSHIP FUNDS. All funds of the Partnership shall be
deposited in the Partnership's name in such checking, money market, or other
account or accounts as the General Partner may from time to time designate;
withdrawals shall be made therefrom on such signature or signatures as the
General Partner shall determine.
12.3. FISCAL YEAR. The fiscal year of the Partnership shall be the calendar
year.
12.4 FINANCIAL STATEMENTS; REPORTS TO PARTNERS. The Partnership, at its
cost and expense, shall prepare and furnish to each of the Partners, within
ninety (90) days after the close of each taxable year, financial statements of
the Partnership, and all other information necessary to enable such Partner to
prepare its tax returns, including without limitation a statement showing the
balance in such Partner's Capital Account.
12.5. TAX MATTERS PARTNER. The General Partner shall be the tax matters
partner of the Partnership for purposes of the Code, and shall be entitled to
take such actions on behalf of the Partnership in any and all proceedings with
the Internal Revenue Service as it, in its absolute discretion, deems
appropriate without regard to whether such actions result in a settlement of tax
matters favorable to some Partners and adverse to other Partners. The tax
matters partner shall not be entitled to be paid by the Partnership any fee for
services rendered in connection with any tax proceeding, but shall be reimbursed
by the Partnership for all third-party costs and expenses incurred by it in
connection with any such proceeding and shall be indemnified by the Partnership
with respect to any action brought against it in connection with the settlement
of any such proceeding by applying, mutatis mutandis, the provisions of Article
13.
12.6. TAX ELECTIONS. The General Partner may, in its absolute discretion,
make all tax elections (including, but not limited to, elections relating to
<PAGE> 127
-26-
depreciation and elections pursuant to Section 754 of the Code) as it deems
appropriate. Notwithstanding anything contained in Article 8 of this Agreement,
any adjustments made pursuant to Section 754 of the Code shall affect only the
successor in interest to the transferring Partner. Each Partner will furnish the
Partnership with all information necessary to give effect to any such election
and will pay the costs of any election applicable as to it.
Article 13
----------
(a) EXCULPATION AND INDEMNIFICATION. The General Partner together with its
shareholders, directors, employees, and other agents, any officers, agents or
employees of the Partnership, including the General Manager (as defined in the
Restructuring Agreement) and any member of the Executive Committee
(collectively, the "INDEMNITEES") shall have no liability to the Partnership or
to any Partner for any loss suffered by the Partnership or such Partner that
arises out of any action or inaction of the General Partner (or any other
Indemnitee) if the General Partner or such other Indemnitee, in good faith,
determined that such course of conduct was in the best interests of the
Partnership and such course of conduct did not constitute gross negligence or
willful misconduct of the General Partner (or other Indemnitees). To the fullest
extent permitted by law, the General Partner (and such other Indemnitees) shall
be indemnified by the Partnership against any losses, judgments, liabilities,
expenses (including, without limitation, reasonable attorneys' fees and court
costs) and amounts paid in settlement of any claims sustained by it in
connection with the Partnership, provided that the same were not the result of
gross negligence or willful misconduct. Any Person claiming reimbursement of
expenses under this Article 13 shall be paid amounts to which he or it would be
entitled hereunder as such expenses are incurred upon presentation of
appropriate documentation to the Partnership, subject to providing a written
undertaking to repay any such amounts to which such Person ultimately turns out
not to be entitled under the standards herein set forth. The indemnification and
advancement of expenses provided by this Section shall continue as to an
Indemnitee who has ceased to be a General Partner (or otherwise an Indemnitee),
and shall inure to the benefit of the heirs, executors, administrators, and
successors of the General Partner (and the other Indemnitees). Any
indemnification pursuant to this Article 13 shall be solely out of the assets of
the Partnership and shall not be a personal obligation of any Partner, including
any Limited Partner.
(b) DUTIES OF INDEMNITEE. To the extent that, at law or in equity, an
Indemnitee has duties (including fiduciary duties) and liabilities relating
thereto to the Partnership or to the Partners, the General Partner and any other
Indemnitee acting in connection with the Partnership's business or affairs shall
not be liable to the Partnership or to any Partner for its good faith reliance
on the provisions of this Agreement and any Related Agreement. The provisions of
this Agreement and any Related Agreement, to the extent that they restrict the
duties and liabilities of an
<PAGE> 128
--27-
Indemnitee otherwise existing at law or in equity, are agreed by the Partners to
replace such other duties and liabilities of such Indemnitee.
Article 14
----------
Maintenance of Separate Business
--------------------------------
The Partnership shall at all times (a) to the extent the Partnership's
office is located in the offices of an Affiliate, pay fair market rent for its
executive office space located therein, (b) maintain the Partnership's books,
financial statements, accounting records and other partnership documents and
records separate from those of an Affiliate or any other Person, (c) not
commingle the Partnership's assets with those of any Affiliate or any other
Person, (d) maintain the Partnership's books of account, bank accounts and
payroll separate from those of any Affiliate, (e) act solely in its name and
through its own authorized agents, and in all respects hold itself out as a
legal entity separate and distinct from any other Person, (f) make investments
directly or by brokers engaged and paid by the Partnership or its agents
(provided that if any agent is an Affiliate of the Partnership it shall be
compensated at a fair market rate for its services), (g) manage the
Partnership's liabilities separately from those of any Affiliate and pay its own
liabilities, including all administrative expenses and compensation to
employees, consultants or agents, and all operating expenses, from its own
separate assets, except that an Affiliate may pay the organizational expenses of
the Partnership, and (h) pay from the Partnership's assets all obligations and
indebtedness of any kind incurred by the Partnership. The Partnership shall
abide by all partnership formalities, including the maintenance of current
records of Partnership affairs, and the Partnership shall cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Partnership.
The Partnership shall (i) pay all its liabilities, (ii) not assume the
liabilities of any Affiliate and (iii) not guarantee the liabilities of any
Affiliate. The General Partner shall make decisions with respect to the business
and daily operations of the Partnership independent of and not dictated by any
Affiliate.
Article 15
----------
Indemnification
---------------
The Partnership agrees to indemnify and hold MMT, LMC, the LMC Subsidiary
and the MMT Subsidiary and their directors, stockholders, officers and employees
(also referred to herein as "INDEMNITEES") harmless from and with respect to any
and all claims, liabilities, losses, damages, costs and expenses, including
without limitation the reasonable fees and disbursements of counsel
(collectively, the "LOSSES") relating to or arising directly or indirectly out
of any action, suit, proceeding or demand against an Indemnitee by any third
party related to the
<PAGE> 129
-28-
ownership, construction, start-up or operation of any CEP Plant or other
facility developed by the Partnership or any sublicensee of the Partnership (a
"THIRD PARTY CLAIM"), including any claim against an Indemnitee as a supplier of
goods or services to the Partnership or any claim against MMT in its capacity as
licensor to the Partnership pursuant to the MMT License Agreement.
Notwithstanding the foregoing, the Partnership shall not have to indemnify any
Indemnitee with respect to any Losses pursuant to this Article 15 to the extent
(x) such Losses are attributable to the gross negligence or willful misconduct
of such Indemnitee, (y) to the extent the applicable Third Party Claim is
subject to the indemnification obligations of MMT or the Partnership under
Sections 10.3 or 10.4 of the MMT License Agreement or (z) to the extent such
Losses are attributable to a breach by such Indemnitee of its obligations under
this Agreement or any of the Related Agreements or any other agreement entered
into pursuant to this Agreement or any Related Agreement (including without
limitation any warranty made by MMT in connection with sales of goods pursuant
to Section 9.5 of the MMT License Agreement). The Partnership shall have the
obligation to take all actions reasonably necessary to oppose or defend any
Third Party Claim. In the course of defending any such Third Party Claim, the
Partnership shall consult with the Indemnitees in connection with all material
issues relating to such defense and shall consult with the Indemnitees prior to
commencing the same and shall consider any recommendations by the Indemnitees
with respect to the conduct and settlement or compromise thereof and any
reasonable alternative resolutions of the Third Party Claim. In the event that
the Partnership does not undertake to oppose or defend any such action within
ninety (90) days after the Partnership becomes aware of such Third Party Claim,
the Indemnitees will have the right to undertake the defense of such claim. In
the event that an Indemnitee undertakes the defense of such claim, such
Indemnitee shall consult with the Partnership in connection with all material
issues relating to such opposition or defense and shall consult with the
Partnership prior to commencing the same and shall consider any recommendations
by the Partnership with respect to the conduct and settlement or compromise
thereof and any reasonable alternative resolutions of the Third Party Claim. If
the Indemnitees undertake to oppose or defend any Third Party Claim pursuant to
the procedure provided for in this Article 15, the Partnership shall bear all
costs of such defense. Any indemnification pursuant to this Article 15 shall be
solely out of the assets of the Partnership and shall not be a personal
obligation of any Partner, including any Limited Partner.
<PAGE> 130
-29-
Article 16
----------
*
-
Article 17
----------
General
-------
17.1. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the Related
Agreements contains the sole and entire agreement of the parties hereto and
thereto with respect to the subject matter hereof and thereof. This Agreement
may only be changed or terminated by a written agreement signed by all of the
parties hereto. No waiver of any provision of this Agreement shall be effective
unless evidenced by a written instrument signed by the waiving party. The LMC
Subsidiary, the General Partner, the MMT Subsidiary and LESAT further
acknowledge and agree that, in entering into this Agreement, they have not in
any way relied upon any oral or written agreements, statements, promises,
information, arrangements, understandings, representations or warranties,
express or implied, not specifically set forth in this Agreement or the Exhibits
hereto or the Related Agreements.
17.2. BINDING AGREEMENT. The covenants and agreements herein contained
shall inure to the benefit of and be binding upon the parties hereto and their
respective personal representatives, successors in interest and permitted
assigns.
17.3 DISPUTES. Any disputes arising under this Agreement shall be resolved
in accordance with the provisions of the Dispute Resolution Agreement.
- --------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
<PAGE> 131
-30-
17.4. NOTICES. Any and all notices contemplated by this Agreement shall be
deemed adequately given if in writing and delivered in hand, or upon receipt
when sent by telecopy confirmed by one of the other methods for providing notice
set forth herein, or one (1) business day after being sent, postage prepaid, by
nationally recognized overnight courier (E.G., Federal Express), or five (5)
days after being sent by certified or registered mail, return receipt requested,
postage prepaid, to the party or parties for whom such notices are intended. All
such notices to Limited Partners shall be addressed to the last address of
record on the Partnership books; all such notices to the Partnership or the
General Partner shall be addressed to the Partnership or the General Partner, as
applicable, at the address set forth in Section 2.1 or at such other address as
such entity may have designated by notice given in accordance with the terms of
this subsection.
17.5. CAPTIONS. Captions contained in this Agreement are inserted only as a
matter of convenience and in no way define, limit, extend or describe the scope
of this Agreement or the intent of any provisions hereof.
17.6. GOVERNING LAW, ETC. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware,
all rights and remedies being governed by such laws, without regard to its
conflict of laws rules. As provided in the Dispute Resolution Agreement, the
parties hereto have submitted to the exclusive jurisdiction of state and federal
courts located in Delaware.
17.7. WAIVER OF JURY TRIAL. EACH OF THE PARTNERS AND THE PARTNERSHIP HEREBY
IRREVOCABLY WAIVES ANY RIGHTS THAT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY OF THE
RELATED AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR
ACTIONS OF ANY OF THEM RELATING THERETO.
17.8. Waiver of Certain Damages. EACH OF THE PARTNERS AND THE PARTNERSHIP
TO THE FULLEST EXTENT PERMITTED BY LAW, IRREVOCABLY WAIVES ANY RIGHTS THAT THEY
MAY HAVE TO PUNITIVE, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES IN RESPECT OF
ANY LITIGATION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY RELATED
AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR ACTIONS OF
ANY OF THEM RELATING THERETO.
17.9. NO IMPLIED RIGHTS OR REMEDIES. Except as otherwise expressly provided
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or to give any Person, except the General Partner and the Limited
Partners, any rights or remedies under or by reason of this Agreement.
<PAGE> 132
-31-
17.10. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
17.11. CONSTRUCTION. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be applied against any party.
17.12. SEVERABILITY. The invalidity or unenforceability of any particular
provision of this Agreement or any Related Agreement shall not affect the other
provisions hereof or thereof, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provision was omitted.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of _____________ __, 1996.
General Partner:
----------------
M4 ENVIRONMENTAL MANAGEMENT INC.
By:
-------------------------------
Title:
Limited Partners:
----------------
MMT FEDERAL HOLDINGS INC.
By:
-------------------------------
Title:
MARTIN MARIETTA ENVIRONMENTAL
HOLDINGS, INC.
By:
-------------------------------
Title:
LOCKHEED ENVIRONMENTAL SYSTEMS &
TECHNOLOGIES CO.
By:
-------------------------------
Title:
----------------------------
<PAGE> 133
<TABLE>
Exhibit A-1
-----------
<CAPTION>
Percentage Capital
Partner Interest Contribution
------- -------- ------------
General Partner:
---------------
<S> <C> <C>
M4 Environmental Inc. 1.00% $ 76,500.00
c/o Martin Marietta Energy Systems
P.O. Box 2009
Bear Creek and Scarborough Roads
Oak Ridge, TN 37831-8014
Limited Partners:
----------------
MMT Federal Holdings Inc.
c/o Molten Metal Technology, Inc. 49.50% $ 0.00
51 Sawyer Road
Waltham, MA 02154
Martin Marietta Environmental 49.50% $7,573,500.00
Holdings, Inc.
c/o Martin Marietta Corporation
P.O. Box 2009
Bear Creek and Scarborough Roads
Oak Ridge, TN 37831-8014
</TABLE>
<PAGE> 134
<TABLE>
Exhibit A-2
-----------
<CAPTION>
Percentage Capital
Partners Interest Contribution
-------- -------- ------------
<S> <C> <C>
General Partner:
----------------
M4 Environmental Inc. 1.00% $ 440,000.00
c/o Martin Marietta Energy Systems
P.O. Box 2009
Bear Creek and Scarborough Roads
Oak Ridge, TN 37831-8014
Limited Partners:
-----------------
MMT Federal Holdings Inc. 49.50% $ 9,770,586.25(1)
c/o Molten Metal Technology, Inc.
51 Sawyer Road
Waltham, MA 02154
Martin Marietta Environmental Holdings, Inc. ____%(2) $43,560,000.00
c/o Martin Marietta Corporation
P.O. Box 2009
Bear Creek and Scarborough Roads
Oak Ridge, TN 37831-8014
Lockheed Martin Environmental ____%(2) $ 9,770,586.25(1)
Systems & Technologies Co.
1155 University Boulevard S.E.
Albuquerque, NM 87106-4320
---- --------------
100% $53,770,586.25
==== ==============
<FN>
- ----------
(1) The amount of the Capital Contribution will be one-half of the
Contribution Value referred to in the Asset Acquisition Agreement (as adjusted
pursuant to Section 3(c) of the Asset Acquisition Agreement).
(2) To be updated after Closing to reflect the adjustments contemplated by
Section 3(c) of the Asset Acquisition Agreement. Martin Marietta Environmental
Holdings, Inc. and LESAT in the aggregate hold (and will hold after such
adjustments) a 49.50% Percentage Interest.
</TABLE>
<PAGE> 135
Exhibit D to
------------
Partnership Restructuring Agreement
-----------------------------------
AMENDED AND RESTATED LICENSE AGREEMENT
This is an Amended and Restated License Agreement dated as of April 30,
1996 (as in effect from time to time, the "AGREEMENT"), by and among M4
Environmental L.P., a Delaware limited partnership (the "PARTNERSHIP"), Molten
Metal Technology, Inc., a Delaware corporation ("MMT"), and Lockheed Martin
Corporation, a Maryland corporation ("LMC"), as successor by merger to Martin
Marietta Corporation, a Maryland corporation ("MMC").
WHEREAS, MMT is an environmental technology company engaged in the
commercialization and continued development of its innovative, proprietary
processing technology known as Catalytic Extraction Processing or CEP;
WHEREAS, MMT and LMC (as successor by merger to MMC) have entered into a
Master Agreement for Government Market Development and Commercialization of CEP
Technology, dated as of August 9, 1994 (as in effect from time to time, the
"MASTER AGREEMENT"), pursuant to which MMT and MMC formed the Partnership in
order to effectively commercialize CEP by selling, engineering, constructing and
operating CEP Plants, and sublicensing CEP technology to appropriate third
parties to permit them to engineer, construct and operate CEP Plants, to serve
the environmental remediation, waste management, decontamination,
decommissioning, chemical and biological demilitarization, pollution prevention
and waste minimization needs of the Department of Energy or the Department of
Defense;
WHEREAS, MMT and LMC, and for certain purposes, the Partnership, have
entered into a Partnership Restructuring Agreement, dated as of March 15, 1996
(as in effect from time to time, the "RESTRUCTURING AGREEMENT"), pursuant to
which they agreed to restructure certain aspects of their business relationship;
and
WHEREAS, in the Restructuring Agreement LMC and MMT agreed to enter
into, and to cause the Partnership to enter into, this Agreement to amend and
restate the terms of the License Agreement, dated as of August 9, 1994 (the
"ORIGINAL AGREEMENT"), among MMT, MMC and the Partnership.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
set forth below and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, MMT, LMC and the Partnership agree
to amend and restate the Original Agreement in its entirety to read as follows:
<PAGE> 136
-2-
Article 1
---------
Defined Terms
-------------
In addition to the defined terms found elsewhere in this Agreement, as used
in this Agreement the following terms shall have the following meanings:
"Additional Market Segments" has the meaning set forth in Section 3.2.
"Advisors" means, with respect to any Person, any of such Person's
attorneys, accountants, lenders or consultants.
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with, such Person. As used in
this definition, "CONTROL" (including, with its correlative meanings,
"CONTROLLED BY" and "UNDER COMMON CONTROL WITH") means the possession, directly
or indirectly, of power to direct or cause the direction of management or
policies of a Person, whether through ownership of securities or partnership or
other ownership interests, by contract or otherwise.
"Agreement" has the meaning set forth in the preamble.
"Asset Acquisition Agreement" means the Asset Acquisition Agreement entered
into pursuant to the Restructuring Agreement, as in effect from time to time.
"Business Day" means any day other than a Saturday or Sunday or federal
holiday.
"Business Plan" has the meaning set forth in the Restructuring Agreement.
"Bankruptcy" means, with respect to any Person, (i) the filing by such
Person of a voluntary petition seeking liquidation, reorganization, arrangement
or readjustment, in any form, of its debts under Title 11 of the United States
Code, or corresponding provisions of future laws (or any other federal or state
insolvency law), (ii) the filing by such Person of an answer consenting to or
acquiescing in any such petition, (iii) the making by such Person of any
assignment for the benefit of its creditors or the admission by such Person in
writing of its inability to pay its debts as they mature, (iv) the filing of an
involuntary petition against such Person under Title 11 of the United States
Code (or corresponding provisions of future laws), an application for the
appointment of a receiver for the assets of such Person, or an involuntary
petition seeking liquidation, reorganization, arrangement or readjustment of its
debts under any other federal or state insolvency law, provided that the same
shall not have been vacated, set aside or stayed within a 60-day period after
the occurrence of such event, or (v) the entry against such Person of a final
non-appealable order for relief under any bankruptcy, insolvency or similar law
now or hereafter in effect.
<PAGE> 137
-3-
"Catalytic Extraction Processing" or "CEP" means the processes, methods and
systems (including all intellectual and intangible and tangible property
associated therewith and including all aspects of accepting Feedstocks,
reactions within a CEP Plant, and handling Recovered Resources), owned or used
by MMT, directed to the processing of Feedstocks by introducing the Feedstocks
to a processing vessel containing liquefied metal.
"CEP Plant" means the plant, equipment and other facilities necessary to
perform, operate and maintain CEP on a commercial basis (or, in the case of any
so-called "demonstration" CEP Plant, on the basis generally provided in the
applicable demonstration program).
"Commercial Operation" means, with respect to any CEP Plant, that such CEP
Plant has commenced processing Feedstocks on a commercial basis (or in the case
of any so-called "demonstration" CEP Plant, processing feedstocks pursuant to
the applicable demonstration program).
"Conceptual Design Package" means the specifications of the technical and
operational parameters and configuration of a particular CEP Plant more fully
described in Exhibit A to the Original Agreement.
"Dispute Resolution Agreement" means the Amended and Restated Dispute
Resolution Agreement dated as of the date hereof among MMT, LMC, LESAT, the MMT
Subsidiary, the LMC Subsidiary, the General Partner and the Partnership, as in
effect from time to time.
"DoD" means the United States Department of Defense and, where the context
so requires, any Successor Agency.
"DOE" means the United States Department of Energy and, where the context
so requires, any Successor Agency.
"Employee Non-Disclosure Agreement" has the meaning set forth in Section
6.7.
"EPA" means the United States Environmental Protection Agency and any
successor agency thereto.
"Executive Committee" means the executive committee formed pursuant to the
Master Agreement and continued pursuant to the Restructuring Agreement to govern
the Partnership and the General Partner.
"Existing Patents" means the patents listed on ANNEX A to the Original
Agreement.
<PAGE> 138
-4-
"Existing Patent Applications" means the patent applications listed on
ANNEX B to the Original Agreement.
"Existing Trademarks" means the Trademarks listed on ANNEX C to the
Original Agreement.
"Failure Notice" has the meaning set forth in Section 6.8.
"Fee Certificate" has the meaning set forth in Section 5.6.
"Feedstocks" means, with respect to any CEP Plant, the wastes, industrial
by-products and other materials to be processed by such CEP Plant.
"GAAP" means generally accepted accounting principles that are (i) the
principles promulgated or adopted by the Financial Accounting Standards Board
and its predecessors, as in effect for the fiscal period in question, (ii)
applied on a consistent basis and (iii) such that a "big six" accounting firm
would, insofar as the use of accounting principles is pertinent, be in a
position to deliver an unqualified opinion as to financial statements prepared
in conformity with such principles.
"General Manager" means the General Manager appointed from time to time
pursuant to the Restructuring Agreement.
"General Partner" means M4 Environmental Management Inc., a Delaware
corporation.
"Government Authority" means any federal, national, state, municipal,
local, territorial or other governmental department, commission, board, bureau,
agency, regulatory authority, instrumentality, judicial or administrative body,
domestic or foreign.
"Gross CEP Revenue" means, for any fiscal year, the total revenues of the
Partnership for such fiscal year generated from any activities related to CEP,
including any sublicensing as contemplated by Article 8, determined in
accordance with GAAP.
"Hazardous" means, with respect to Feedstocks, Feedstocks that are defined
as "hazardous" within the meaning of RCRA.
"Improvements" means any improvements, developments, updates, upgrades,
enhancements, additions, revisions, corrections, fixes and other modifications
to the MMT Licensed Property as it then exists that MMT, LMC or the Partnership
may acquire, discover, invent, originate, conceive or have a right to develop or
manufacture, whether or not the same is patentable, commercially useful or
reducible to writing or practice.
<PAGE> 139
-5-
"Infringements" has the meaning set forth in Section 10.1.
"Initiation Fee" has the meaning set forth in Section 5.1.
"Intellectual Property" means all patents, inventions, patent applications,
patent rights, trademarks, trademark registrations, trade names, brand names,
all other names and slogans embodying business or product goodwill (or both),
copyright registrations, copyrights (including those in computer programs,
software, including all source code and object code, development documentation,
programming tools, drawings, specifications and data), software, trade secrets,
know-how, mask works, industrial designs, formulae, processes and technical
information, including confidential and proprietary information, whether or not
subject to statutory registration or protection.
"LESAT" means Lockheed Environmental Systems & Technologies Co., a Nevada
corporation.
"Licensed Copyrights" means any and all copyright protection of MMT
covering any of the Licensed Software Programs, the Licensed Know-How or any
Improvements thereto.
"Licensed Know-How" means any information possessed by MMT or, subject to
Section 2.2, licensed to MMT, relating to CEP, whether or not considered
proprietary and whether or not subject to statutory registration or protection,
including, without limitation, inventions disclosed by the Existing Patent
Applications, invention records, research records and reports, development
reports, experimental and other engineering reports, pilot plant designs,
production plant designs, production specifications, raw material
specifications, quality control reports and specifications, drawings and
photographs, models, tools and parts, manufacturing and production techniques,
processes, methods and marketing surveys. If any information or material
qualifies for purposes of this Agreement both as Licensed Know-How and as any of
the Licensed Patents, Licensed Copyrights, Licensed Software Programs or
Licensed Trademarks for purposes of this Agreement, such information or material
shall not be treated as Licensed Know-How for purposes of this Agreement but
shall be treated, as applicable, as part of the Licensed Patents, Licensed
Copyrights, Licensed Software Programs or Licensed Trademarks for purposes of
this Agreement.
"Licensed Patent Applications" means the Existing Patent Applications and
any U.S. or foreign patent applications filed or acquired by or, subject to the
restrictions set forth in Section 2.2 relating to patent applications licensed
to MMT, licensed to MMT during the term of this Agreement, to the extent such
patent applications relate to CEP.
"Licensed Patents" means the Existing Patents and any U.S. or foreign
patents granted to, acquired by, or, subject to the restrictions set forth in
Section 2.2 relating to patents licensed to MMT, licensed to MMT during the term
of this Agreement, to the extent such patents relate to CEP.
<PAGE> 140
-6-
"Licensed Software Programs" means any computer programs the copyrights to
which are owned by or, subject to Section 2.2, licensed after the date of this
Agreement to MMT relating to CEP.
"Licensed Trademarks" means the Existing Trademarks and any Trademarks
developed or acquired by or, subject to Section 2.2, licensed to MMT during the
term of this Agreement, to the extent such Trademarks relate to CEP and do not
relate to MMT's corporate identity.
"Limited Feedstocks" means, at any time, Feedstocks (other than Market
Feedstocks of the type referred to in clause (I) of the definition thereof) for
which the annual amount generated in the United States at such time is *
, as determined by MMT and confirmed in writing to the Partnership.
"Limited Guaranties" means the Limited Guarantees delivered by LMC and MMT
pursuant to the Restructuring Agreement, as in effect from time to time.
"LMC" has the meaning set forth in the preamble.
"LMC Confidential Information" means any confidential or proprietary
information of LMC, including but not limited to any confidential or proprietary
portion of the Relevant LMC Technology.
"LMC Subsidiary" means Martin Marietta Environmental Holdings, Inc., a
Delaware corporation.
"Loan Agreement" means the Revolving Credit Agreement between LMC and the
Partnership entered into pursuant to the Asset Acquisition Agreement, as in
effect from time to time.
"Market" means the environmental remediation, waste management,
decontamination, decommissioning, chemical and biological demilitarization
(including disposal of unexploded ordnance), pollution prevention and waste
minimization needs of the DoD, DOE or USEC anywhere in the world with respect to
Market Feedstocks.
"Market Feedstocks" means USEC Feedstocks and any of the following
Feedstocks:
- -----------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
<PAGE> 141
(I) any of the Feedstocks described in the following clauses (i)-(iv),
to the extent such Feedstocks are owned by, generated by or stored by DOE
or DoD, pursuant to the legal authority given to DoD or DOE under
applicable law as of the date of the Original Agreement:
(i) any Hazardous, Toxic or Radioactive Feedstocks;
(ii) any Mixed Feedstocks;
(iii) any Medical Waste; and
(iv) any Scrap Material for Recycling;
(II) any Superfund, Hazardous or Toxic Feedstocks, other than Limited
Feedstocks, which DoD or DOE specifically requests to be processed through
an existing CEP Plant of the Partnership, but only to the extent such
Superfund, Hazardous or Toxic Feedstocks represent a minor portion of the
Feedstocks processed at the applicable CEP Plant in any year; and
(III) any Feedstocks for which: (a) the processing of such Feedstocks
is funded by U.S. governmental appropriations; (b) the processing of such
Feedstocks is pursuant to a designated program initiative for which DoD or
DOE is the responsible U.S. agency for implementation of such initiative,
such as the Soviet Nuclear Threat Reduction Act of 1991, 22 U.S.C.
[SECTION]2551 note, the Cooperative Threat Reduction ("CTR") program, or a
government-to-government Agreement for Cooperation under the Peaceful Use
of Atomic Energy program of the Atomic Energy Act, 42 U.S.C.
[SECTION]2153; and (c) the processing of such Feedstocks is associated
with environmental restoration, waste management, decontamination and
decommissioning, pollution prevention, waste management or chemical or
biological demilitarization at sites and facilities within the former
Soviet Union.
Notwithstanding the foregoing, Market Feedstocks do not, however,
include any Municipal Waste or waste or other materials from commercial
nuclear power plants.
"Master Agreement" has the meaning set forth in the preamble.
"Medical Waste" means, with respect to any Feedstocks, Feedstocks that
constitute "medical waste" as defined in 40 C.F.R. [SECTION]259.10.
"Mixed Feedstocks" means, with respect to Feedstocks, Feedstocks that
contain Radioactive Materials in combination with Hazardous and/or Toxic
materials.
"MMC" has the meaning set forth in the preamble.
<PAGE> 142
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"MMT" has the meaning set forth in the preamble.
"MMT Confidential Information" means any confidential or proprietary
information of MMT, including but not limited to any confidential or proprietary
portion of the MMT Licensed Property.
"MMT Infringement Claim" has the meaning set forth in Section 10.3.
"MMT Licensed Property" means the Licensed Patents, the Licensed Patent
Applications, the Licensed Trademarks, the Licensed Software Programs, the
Licensed Copyrights and the Licensed Know-How.
"MMT Subsidiary" means MMT Federal Holdings, Inc., a Delaware corporation.
"Municipal Waste" means solid waste, other than Hazardous, Toxic,
Radioactive or Mixed Feedstocks, that is typically generated by households,
retail facilities or business offices.
"Operations Fee" has the meaning set forth in Section 5.2.
"Original Agreement" has the meaning set forth in the preamble.
"Partnership" has the meaning set forth in the preamble.
"Partnership Agreement" means the Amended and Restated Limited Partnership
Agreement, dated as of April 30, 1996, among the LMC Subsidiary, the MMT
Subsidiary, LESAT and the General Partner, as in effect from time to time.
"Partnership Cash Flow" means, with respect to any period, the
Partnership's net income for such period, PLUS to the extent deducted in the
computation of net income, any amortization, depreciation or other non-cash
charges, with all of the foregoing determined in accordance with GAAP, LESS any
reasonable reserves approved by the Executive Committee.
"Partnership Confidential Information" means any confidential or
proprietary information of the Partnership.
"Partnership Infringement Claim" has the meaning set forth in Section 10.4.
"Partnership Services" has the meaning set forth in Section 6.8.
<PAGE> 143
-9-
"Performance Shortfall" means, with respect to any CEP Plant developed by
the Partnership or its sublicensees, that,
*
-
"Permitted Costs" means, in connection with any costs incurred by MMT
pursuant to this Agreement, the amount of such costs determined on a basis
consistent with MMT's cost accounting for Federal Acquisition Regulation ("FAR")
purposes, and accordingly including labor at MMT's federally audited and
approved rates inclusive of allocation for overhead, fringe benefits, general
and administrative expenses and facilities capital cost of money (if and to the
extent allowable under FAR) plus third party expenses consistent with FAR.
"Person" means any individual, partnership, corporation, association,
trust, limited liability company, joint venture, unincorporated organization and
any government, governmental department or agency or political subdivision
thereof.
"Plant Start-Up Fees" has the meaning set forth in Section 5.3.
"Quality Standard" has the meaning set forth in Section 6.8.
"Radioactive" means, with respect to Feedstocks, Feedstocks that contain
disintegrating isotopes, either natural or man-made, that have been either added
to or enhanced in the material that make up such Feedstock.
"RCRA" means the Resource Conservation and Recovery Act (42 U.S.C.
[SECTION]6901 ET SEQ.), and the federal regulations implementing such Act.
"Recovered Resources" means the elements and compounds produced by a CEP
Plant (whether or not produced through the use of reactants) that are suitable
for use or sale.
- -------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
<PAGE> 144
-10-
"Registration Rights Agreement" means the Registration Rights Agreement
entered into pursuant to the Restructuring Agreement, as in effect from time to
time.
"Related Agreements" means this Agreement, the Master Agreement, the
Restructuring Agreement, the Partnership Agreement, the Registration Rights
Agreement, the Asset Acquisition Agreement, the Loan Agreement, the Certificate
of Incorporation of the General Partner (as in effect from time to time) and the
By-Laws of the General Partner (as in effect from time to time), the Stockholder
Agreement, the Limited Guaranties and the Dispute Resolution Agreement, and any
other agreement between or among any of MMT, LMC, the LMC Subsidiary, the MMT
Subsidiary, the General Partner or the Partnership relating to the Partnership
which specifies that it is a Related Agreement for purposes of this Agreement.
"Related Technology" has the meaning set forth in Section 7.1.
"Relevant LMC Technology" has the meaning set forth in Section 7.2.
"Restructuring Agreement" has the meaning set forth in the preamble.
"Retech Technology" means the Intellectual Property acquired by the
Partnership pursuant to the Asset Acquisition Agreement.
"Royalty Payment" has the meaning set forth in Section 5.4.
"Scrap Materials for Recycling" means any bits and pieces of plastic, metal
or other parts (e.g., bars, turnings, rods, sheets, wire) or metal, plastic or
other pieces that may be combined together with bolts or soldering (e.g.
radiators, scrap automobiles, railroad box cars), which when worn or superfluous
can be recycled.
"Small CEP Plants" has the meaning set forth in Section 9.5.
"Stockholder Agreement" means the Amended and Restated Stockholder
Agreement, dated as of the date hereof, among the MMT Subsidiary, the LMC
Subsidiary and the General Partner, as in effect from time to time.
"Subsidiary" means a corporation, company or other entity:
(i) more than fifty percent (50%) of whose outstanding shares or
securities (representing the right to vote for the election of
directors or other managing authority) are, now or hereafter,
owned or controlled, directly or indirectly, by a party hereto,
but such corporation, company or other entity shall be deemed to
be a Subsidiary only so long as such ownership or control exists;
or
<PAGE> 145
-11-
(ii) which does not have outstanding shares or securities, as may be
the case in a partnership, joint venture or unincorporated
association, but more than fifty percent (50%) of whose ownership
interests representing the right to make the decisions for such
corporation, company or other entity is now or hereafter, owned
or controlled, directly or indirectly, by a party hereto, but
such corporation, company or other entity shall be deemed to be a
Subsidiary only so long as such ownership or control exists.
"Substantial Interest" means, with respect to any interest held by the
Partnership in any third Person:
(i) the ownership by the Partnership of at least twenty-five percent
(25%) of the equity interest in such third Person; and
(ii) the authority of the Partnership to appoint one or more members
to the Board of Directors of such third Person or, if such third
Person is not a corporation, its equivalent governing authority.
"Successor Agency" has the meaning set forth in Section 2.1.
"Superfund" means, with respect to any Feedstocks, Feedstocks that are
being treated, remediated or cleaned up pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
[SECTION]9601 et. seq.
"Technical Liaison" has the meaning set forth in Section 4.1.
"Toxic" means, with respect to Feedstocks, Feedstocks that are chemical
substances or mixtures that are regulated under Section 6 of TSCA, 15 U.S.C.
[SECTION]2605.
"Trademarks" shall mean:
(i) all of the trademarks, service marks, trade names, designs,
logos, indicia, corporate names (other than the corporate names
of MMT and its Subsidiaries), company names, business names,
fictitious names, trade styles, elements of package or trade
dress, and/or other source and/or other service identifiers and
general intangibles of like nature, used or associated with CEP,
which (A) are set forth on ANNEX C to the Original Agreement, or
(B) are in the future adopted, acquired, owned, held
and/or used by MMT in its business; and
(ii) all past, present or future federal, state, local and foreign
registrations or recordations of any of the foregoing enumerated
in clause (i), all renewals and extensions of such registrations
or
<PAGE> 146
-12-
recordations, all past, present and future applications for any
such registrations or recordations of any of the foregoing
enumerated in clause (i) (and any such registrations or
recordations thereof upon approval of such applications),
including such recordings, registrations or applications set
forth on ANNEX C to the Original Agreement.
"TSCA" means the Toxic Substance Control Act, 15 U.S.C. [SECTION]2601 ET
SEQ., and the federal regulations implementing such Act.
"USEC" means the United States Enrichment Corporation and, where the
context so requires, any Successor Agency thereto.
"USEC Feedstocks" means any of the Feedstocks described in the following
clauses (i)-(iv), to the extent such Feedstocks are owned by, generated by or
stored by USEC from and after July 1, 1993, pursuant to legal authority given to
USEC under applicable law as of August 9, 1994:
(i) any Hazardous, Toxic or Radioactive Feedstocks;
(ii) any Mixed Feedstocks;
(iii) any Medical Waste; and
(iv) any Scrap Material for Recycling.
Article 2
---------
Technology License; Certain Related Matters
-------------------------------------------
2.1. Grant of License.
----------------
(a) Subject to the terms and conditions of this Agreement, MMT hereby
grants to the Partnership:
(i) a non-transferable royalty-bearing exclusive license (including
the fact that MMT, its Affiliates and licensees are likewise
excluded except for those activities permitted under Sections 3.1
or 3.2)) under the MMT Licensed Property (other than the Licensed
Trademarks) to: (x) establish, own, permit, finance, design,
engineer, construct, start-up and operate CEP Plants anywhere in
the world that process Market Feedstocks; (y) establish, own,
permit, finance, design, engineer, construct, start-up and
operate CEP Plants in the United States that process Superfund,
Toxic or
<PAGE> 147
-13-
Hazardous Feedstocks, other than Market Feedstocks and Limited
Feedstocks, generated in the United States, to the extent the
amount of such Feedstocks processed at any such CEP Plant in any
year * ; and (z) establish, own, permit, finance, design,
engineer, construct, start-up and operate CEP Plants in the
United States that process, in the aggregate on a cumulative
basis, that number of tons of Hazardous, Toxic and Superfund
Feedstocks generated in the United States, other than Market
Feedstocks and Limited Feedstocks, equal to the number of tons of
Market Feedstocks processed, in the aggregate on a cumulative
basis, by * and MMT and their successors in interest pursuant to
Section 3.1(b) below;
(ii) a non-transferable royalty-bearing exclusive license (including
the fact that MMT, its Affiliates and licensees are likewise
excluded except for those activities permitted under Sections 3.1
or 3.2) to sublicense the MMT Licensed Property, subject to and
in accordance with the requirements of Article 8, to third
parties (including Affiliates and Subsidiaries of LMC and MMT) in
order to permit them to establish, own, permit, finance,
construct, start-up and operate CEP Plants located anywhere in
the world that process Market Feedstocks;
(iii) a non-transferable royalty-bearing non-exclusive license to use
the Licensed Trademarks in connection with activities permitted
under subparagraph (i) or subparagraph (ii) above; and
(iv) a non-transferable royalty-bearing non-exclusive license to use
the MMT Licensed Property for its own internal use in connection
with the activities contemplated by subparagraphs (i)-(iii)
above.
(b) In the event that the environmental remediation or other similar
responsibility of any governmental organization other than DOE, DoD or
USEC, or any private entity, is transferred to or assumed by DoD, DOE
or USEC (such as the DoD's Army Corps of Engineers assuming
responsibility for remediation of Superfund sites otherwise under the
jurisdiction of the EPA or a private entity), any Feedstocks nominally
subject to or related to such responsibility shall not constitute
"Market Feedstocks" for purposes of this Agreement and the Related
Agreements.
- --------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
<PAGE> 148
-14-
Accordingly, the Partnership and its sublicensees shall not be
entitled to process any such Feedstocks and Section 3.1 below shall
not prevent MMT and its licensees from processing any such Feedstocks.
However, subject to any restrictions imposed by MMT's current or
future agreements with third parties, in the event DoD, DOE or USEC is
assigned or assumes environmental remediation or similar
responsibility from a government agency with respect to all of such
government agency's facilities or otherwise assumes all of the
environmental remediation or similar responsibility of such government
agency, MMT shall give the Partnership a right of first offer,
pursuant to terms and procedures equivalent to those in Section 3.2,
with respect to any such Feedstocks.
(c) To the extent that the environmental remediation or similar
responsibility currently under the control of DOE, DoD or USEC is
assigned to or assumed by any other government agency (a "SUCCESSOR
AGENCY"), then the Partnership and its sublicensees
shall be permitted to process the same type of Feedstocks with respect
to such Successor Agency as those which the Partnership and its
sublicensees could process prior to such transfer to the Successor
Agency and MMT's restrictions under Section 3.1 shall be extended to
such Successor Agency.
(d) MMT further agrees to include within the licenses granted pursuant to
Section 2.1 all Intellectual Property acquired by MMT or, subject to
Section 2.2, licensed to MMT, after the date of this Agreement not
already then subject to such licenses by the terms hereof, if such
Intellectual Property is being commercialized by MMT for the Treatment
or Recycling (as such terms are defined in the Restructuring
Agreement) of Feedstocks or other wastes in a manner which (i)
competes directly with CEP or (ii) involves the Treatment or Recycling
of Feedstocks or other waste.
2.2. THIRD PARTY LIMITATIONS ON LICENSE GRANTS. The licenses granted by MMT
pursuant to Section 2.1 above, insofar as they relate to technology, property or
rights that are developed or acquired with or from any third party in the
future, may become subject to any applicable restrictions and consents relating
to such technology, property or rights under any license or similar agreement to
which MMT may in the future become a party. In the event that any such license
or other agreement imposes restrictions that may apply to the transactions
contemplated by this Agreement, MMT will make reasonable efforts to obtain
license rights as contemplated by this Agreement for the Partnership. If MMT is
unable to so obtain such rights, it will cooperate to make available to the
Partnership such rights as the third party is willing to grant to or for the
Partnership. As part of the foregoing, MMT shall use reasonable efforts to
assure that the Partnership enjoys license or other rights no less favorable
with respect to the applicable Intellectual Property acquired from such third
parties than other licensees of MMT generally.
<PAGE> 149
-15-
2.3. EXTENSION OF LICENSE TO SUBSIDIARIES. The licenses granted in Section
2.1 shall include the right of the Partnership to sublicense its Subsidiaries.
Any such sub-license shall be on terms and conditions satisfactory to each of
MMT, LMC and the Partnership.
2.4. COMMERCIAL AND TECHNICAL TARGETS AFTER 1998. MMT, LMC and the
Partnership shall meet from time to time as appropriate in 1998 to discuss and
implement appropriate commercial and technical goals for the Partnership after
1998 to replace the commercial and technical goals set forth in Sections 10.3
and 10.4 of the Restructuring Agreement, which are only in effect through 1998.
Article 3
---------
Exclusivity; Additional Market Segments
---------------------------------------
3.1. Exclusive Market Obligation of MMT.
----------------------------------
(a) MMT agrees that, during the term of this Agreement, except pursuant to
this Agreement and the Related Agreements it shall not either directly
or indirectly (whether through its Affiliates, as a shareholder,
partner, or consultant):
(i) except to the extent permitted under paragraphs (b), (c) or (d)
below, own or operate any CEP Plant that processes any Market
Feedstocks; or
(ii) except to the extent permitted under paragraphs (b), (c) or (d)
below, sell or license any CEP Plant pursuant to sale or license
terms which permit such CEP Plant to process any Market
Feedstocks.
(b) Notwithstanding the provisions of paragraph (a) above, under
relationships existing as of July 1, 1994 between MMT and
*
-
or their successors in interest,* and MMT (solely to the extent it
is acting together with * pursuant to either such relationship) may
own and operate CEP Plants located in the United States that process
Market Feedstocks generated in the United States, excluding, however,
Radioactive or Mixed Market Feedstocks,
- -------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
<PAGE> 150
which may not be processed by * or MMT pursuant to this paragraph (b).
MMT shall determine annually the quantity of any such Feedstocks so
processed. The Partnership and its sublicensees shall be allowed to
process, at CEP Plants owned by the Partnership or its sublicensees
and located in the United States, an amount of Hazardous, Toxic or
Superfund Feedstocks, other than Limited Feedstocks, that are
generated in the United States but which are not Market Feedstocks,
equal to the amount of such Market Feedstocks so processed by * or
MMT. Any CEP Plants developed by * or MMT, or their successors in
interest, beyond the scope of the relationships existing as of July 1,
1994 between MMT and * shall not qualify for the exemption provided by
this paragraph (b) but instead shall be subject to the provisions of
paragraph (c) below. MMT has previously disclosed in a writing
acknowledged by MMC the nature of MMT's relationships with * .
(c) Except for any agreement entered into with * or their Subsidiaries
consistent with the provisions of paragraph (b) above, no agreement
entered into after July 1, 1994 by MMT with any Person other than the
Partnership shall permit the applicable licensee to process any Market
Feedstocks at the CEP Plant to be developed pursuant to such
agreement. However, to provide some flexibility for unintended
processing of Market Feedstocks, LMC and the Partnership agree that if
any such licensee processes Market Feedstocks, generated in the United
States, at a CEP Plant located in the United States and developed
pursuant to such agreement, in an amount * , such action will not be
considered a breach of such agreement. Correspondingly, MMT agrees
that if the Partnership processes Superfund, Hazardous or Toxic
Feedstocks generated in the United States, other than Market
Feedstocks or Limited Feedstocks, at any CEP Plant within the United
States in an amount * , such action shall not be considered a breach
of this Agreement.
(d) The provisions of this Section 3.1 shall not restrict MMT and its
licensees from owning, operating, selling, or licensing any CEP Plant
processing Market Feedstocks to the extent such CEP Plant is developed
by MMT or its licensees pursuant to Section 8(b) of the Restructuring
Agreement.
- -------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
<PAGE> 151
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3.2. Additional Market Segments.
--------------------------
(a) In addition to MMT's obligation under Section 3.1 with respect to DoD,
DOE or USEC facilities, MMT agrees that, during the term of this
Agreement, except pursuant to this Agreement and the Related
Agreements it shall not grant a license to any third party to operate
CEP Plants serving all facilities under the sole control of any other
United States federal government agency or authority (the "ADDITIONAL
MARKET SEGMENTS"), without first offering such opportunity to the
Partnership pursuant to this Section 3.2. An example of an Additional
Market Segment would be a proposed license to a third party for CEP
Plants serving all Department of Agriculture facilities.
(b) If MMT wishes to grant a license to a third party as provided in
paragraph (a) above, it shall provide notice to the Executive
Committee together with sufficient information to enable the Executive
Committee to decide whether it wishes to pursue such opportunity
through the Partnership. MMT shall not be required to have identified
any particular third party or to have received an offer prior to
implementing the procedures contemplated by this Section 3.2. The
Executive Committee shall make its decision as promptly as practicable
after receipt of such information, but in no event more than sixty
(60) days after receipt of MMT's first notice, and provide prompt
written notice of such decision to MMT.
If the Executive Committee decides that it does not wish to pursue
such opportunity through the Partnership, MMT shall thereafter be free
to pursue such opportunity on its own. If the Executive Committee
decides that it does wish to pursue such opportunity through the
Partnership, the Partnership and MMT shall negotiate in good faith for
thirty (30) days and if MMT and the Partnership are able to reach
agreement within such period on the terms pursuant to which MMT shall
permit the Partnership to pursue such opportunity, then MMT shall not
pursue such opportunity outside the Partnership. If, after such
decision, the Executive Committee decides not to pursue such
opportunity any further, it shall provide prompt notice thereof to
MMT, who shall thereafter be free to pursue such opportunity on its
own outside the Partnership.
(c) Notwithstanding the foregoing, if additional capital is required from
LMC in order for the Partnership to pursue any particular Additional
Market Segment, such decision to pursue the Additional Market Segment
shall be made by LMC as opposed to the Executive Committee.
(d) Any information disclosed by MMT to the Executive Committee pursuant
to this Section 3.2 shall be subject to Section 6.2.
<PAGE> 152
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Article 4
---------
Technical Liaison; Access to Technology
---------------------------------------
4.1. TECHNICAL LIAISONS. MMT and the Partnership have designated one or
more employees to serve as technical liaison (the "TECHNICAL LIAISON") for them
under this Agreement and have notified the other party of the identity and
address of such Technical Liaison. The Technical Liaison will continue to be the
primary interface for all issues under this Agreement relating to technology,
including the access to MMT Licensed Property referred to in Section 4.2 below,
the ongoing program referred to in Section 6.7 relating to confidentiality
concerns, the treatment of Improvements, Related Technology and Relevant LMC
Technology pursuant to Article 7 and the sublicensing program referred to in
Article 8. However, no Technical Liaison shall be authorized to amend or waive
any provision of this Agreement or any Related Agreement. Each of MMT and the
Partnership may change its Technical Liaison at any time and from time to time
during the term of this Agreement by notifying the other party and its Technical
Liaison in writing. Each Technical Liaison may nominate a designee to act on its
behalf by giving a similar notification.
4.2. Access to Technology.
--------------------
(a) In order to ensure that the Partnership has sufficient access to and
familiarity with the MMT Licensed Property, the Technical Liaisons
shall meet from time to time to review and discuss the MMT Licensed
Property. The Technical Liaisons shall, as appropriate, cause
appropriate MMT and Partnership employees to attend such meetings. The
MMT Technical Liaison shall provide the Partnership Technical Liaison
with such writings, documents, instruments, programs (in object code
form), information, data, and recordations of or other tangible
embodiments or manifestations of any portion of the MMT Licensed
Property as is reasonably requested by the Partnership Technical
Liaison.
(b) All information furnished to the Partnership pursuant to paragraph (a)
above shall be subject to the confidentiality and other obligations of
Article 6 and shall be furnished or made available to the Partnership
in a manner consistent with the procedures contemplated by Article 6.
<PAGE> 153
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Article 5
---------
License Fees and Royalties; Interest; Reports
---------------------------------------------
5.1. Initiation Fee. Upon execution and delivery of the Original Agreement,
the Partnership paid MMT the amount of seven million, five hundred thousand
dollars ($7,500,000) (the "INITIATION FEE").
5.2. Operations Fees. The Partnership paid MMT the amount of $6,500,000
(the "OPERATIONS FEE") on the first anniversary of the date of the Original
Agreement.
5.3. PLANT START-UP FEES. The Partnership shall pay to MMT $2,000,000 for
each of the first, second and third CEP Plants developed by the Partnership or
any sublicensee of the Partnership, payable at the time such CEP Plant first
commences Commercial Operation ("Plant Start-Up Fees"). Each Plant Start-Up Fee
shall be paid on the date due (or, if not a Business Day, on the next succeeding
Business Day) by wire transfer in immediately available funds to an account
designated by MMT at least two (2) Business Days prior to the date of payment.
5.4. ONGOING ROYALTY. (a) Except as provided in paragraph (b) below, during
the term of this Agreement the Partnership shall pay to MMT with respect to any
fiscal year of the Partnership, within thirty (30) days after the final
preparation of audited financial statements of the Partnership for such fiscal
year, but in no event later than May 30 of the following year, royalty payments
(each a "ROYALTY PAYMENT") calculated as follows:
(i) with respect to any Gross CEP Revenue attributable to the processing
of USEC Feedstocks under a sublicense granted by the Partnership to
any Person in which it does not have an ownership interest, in the
amount of 15% of the royalty attributable to the processing of USEC
Feedstocks received from such sublicensee for such fiscal year;
(ii) with respect to any Gross CEP Revenue attributable to the processing
of USEC Feedstocks under a sublicense granted by the Partnership to
any Person in which it has an ownership interest (whether or not a
Substantial Interest), in the amount of 3.5% of the royalty
attributable to the processing of USEC Feedstocks received from such
sublicensee for such fiscal year; and
(iii) in all other cases, in the amount of 2% of the Gross CEP Revenue for
such fiscal year, excluding any Gross CEP Revenue subject to Section
5.5 below and excluding any Gross CEP Revenue attributable to the
processing of Feedstocks other than Market Feedstocks pursuant to
separate contractual arrangements between
<PAGE> 154
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the Partnership and MMT for Feedstock processing outside the scope of
this Agreement;
provided, however, that the Partnership shall not be required to pay
any portion of the Royalty Payment for any fiscal year to the extent
the Partnership does not have sufficient Partnership Cash Flow
remaining after making any payments required to be made prior to such
payment pursuant to Section 5.6(b). In the event that an amount equal
to 50% of Partnership Cash Flow for the applicable fiscal year is
insufficient, after making any payments required to be made prior to
such payment pursuant to Section 5.6(b), for any fiscal year to pay in
full the Royalty Payment due for such fiscal year, then the unpaid
portion of such Royalty Payment shall be deferred until such time as
the Partnership has generated sufficient Partnership Cash Flow to make
all such deferred payments, which the Partnership shall pay at such
time as provided in Section 5.6(b).
(b)
*
-
For purposes of this Section 5.4, "net cash flow" means, with
respect to any CEP Plant, the total revenues generated by such CEP
Plant less the operating costs of such CEP Plant, excluding non-cash
charges, corporate overhead and other expenses not directly related
to the operations of such CEP Plant,
*
(c)
*
- -------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
<PAGE> 155
-21-
*
5.5. USEC UP-FRONT FEES. The Partnership shall also pay MMT fifteen percent
(15%) of any initiation or up-front fee it receives with respect to any
sublicense for USEC Feedstocks granted to any Person in which the Partnership
has no ownership interest or has an ownership interest but not a Substantial
Interest. For purposes of applying the aforementioned 15% payment to any such
sublicense fee, MMT and the Partnership shall negotiate in good faith respecting
the anticipated quantities of USEC Feedstocks, as compared to other Market
Feedstocks, to be processed by the CEP Plants to be developed pursuant to the
applicable sublicense, and shall apply the following formula for purposes of
such allocation:
Where "x" denotes the quantity of USEC Feedstocks and "y" denotes the
quantity of all other Market Feedstocks covered by the applicable
sublicense and "z" denotes the total initiation fee paid by the
sublicensee, the Partnership shall pay MMT in accordance with the following
formula: (15% of zx)/(x+y).
5.6. Reports and Payments.
--------------------
(a) Within twenty (20) days after completion of the Partnership's audited
financial statements for any fiscal year, but in no event later than
May 30 of the following year, the Partnership shall deliver to MMT
copies of the audited financial statements for such fiscal year,
together with a certificate of the General Manager (the "FEE
CERTIFICATE") setting forth in reasonable detail (i) the Gross CEP
Revenues for such fiscal year, (ii) the Partnership Cash Flow for such
fiscal year, (iii) a calculation of the Royalty Payment due with
respect to such fiscal year and (iv) a calculation of the sum of all
accrued and unpaid Royalty Payments attributable to prior fiscal
years. The Partnership shall permit MMT and its authorized Advisors to
inspect, on a confidential basis, the books and records of the
Partnership in order to verify the accuracy of the Fee Certificate.
(b) At the time of delivery of the Fee Certificate, the Partnership shall
pay to MMT the following amounts, not to aggregate in excess of 50% of
the Partnership Cash Flow for the preceding fiscal year, and in the
following priorities:
(i) any accrued and unpaid Royalty Payments for any preceding fiscal
years (with the longest outstanding Royalty Payment being paid
first); and
(ii) the Royalty Payment due for such fiscal year.
- -------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
<PAGE> 156
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Any such payments shall be made by wire transfer of immediately
available funds to an account designated by MMT for such purpose
at least two (2) Business Days prior to the date of payment. Any
such payment and the acceptance thereof shall be without
prejudice to the rights of MMT or the Partnership under paragraph
(d) below.
(c) Any portion of any Royalty Payment not paid pursuant to paragraph
(b) above because of insufficient Partnership Cash Flow shall
continue to accrue until the delivery of a Fee Certificate for
the subsequent fiscal year, when it shall become payable pursuant
to the formula set forth in paragraph (b) above and the level of
Partnership Cash Flow for such fiscal year.
(d) If MMT disputes any amount or calculation set forth in a Fee
Certificate or the amount or timing of any payment made to MMT,
then MMT and the Partnership shall resolve such dispute pursuant
to the Dispute Resolution Agreement.
5.7. GUARANTY BY LMC. Pursuant to the Limited Guaranty executed and
delivered by LMC pursuant to the Restructuring Agreement, LMC shall
unconditionally guaranty to MMT the payment of the Plant Start-Up Fees.
5.8. MUTUAL TERMINATION. In the event of any termination by the mutual
agreement of the parties hereto of the business relationship contemplated by
this Agreement and the Related Agreements, then unless otherwise agreed at such
time no further fees shall become payable by the Partnership pursuant to this
Article 5.
Article 6
---------
Title to MMT Licensed Property;
-------------------------------
Confidentiality and Related Matters
-----------------------------------
6.1. TITLE TO MMT LICENSED PROPERTY. Title to all MMT Licensed Property
shall at all times remain and vest solely with MMT. Each of the Partnership and
LMC agrees that it will not claim or assert any right, title or interest in or
to any such MMT Licensed Property or, except for sublicensing effected in
accordance with Article 8, attempt to transfer any right, title or interest in
or to any MMT Licensed Property to any third parties, or challenge the validity
of or assert the invalidity of any Licensed Copyrights or Licensed Trademarks.
Nothing in this Section 6.1 shall effect the rights of LMC, MMT or the
Partnership to assert a claim under this Agreement for any breach by any other
party of any representation or warranty in this Agreement.
<PAGE> 157
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6.2. Confidentiality Obligations of Partnership and LMC.
--------------------------------------------------
(a) Each of the Partnership and LMC agrees that it will use MMT
Confidential Information only in connection with the activities
contemplated by this Agreement and the Related Agreements, and it will
not disclose any MMT Confidential Information to any Person except as
expressly permitted by this Section 6.2.
(b) Subject to the provisions of paragraph (d) below, the Partnership may
disclose MMT Confidential Information:
(i) to LMC;
(ii) to the General Partner's or the Partnership's officers and
employees who have a reasonable need to know the contents thereof
and who have signed an Employee Non-Disclosure Agreement;
(iii) on a confidential basis to those Advisors of the Partnership who
have a reasonable need to know the contents thereof, so long as
such disclosure is made pursuant to the procedures referred to in
Section 6.7(c);
(iv) to any other Person if the MMT Technical Liaison consents to such
disclosure and such disclosure is made pursuant to the procedures
referred to in Section 6.7(c);
(v) to any sublicensee pursuant to any sublicense granted by the
Partnership pursuant to Article 8;
(vi) to the extent required by applicable statute, rule or regulation
or any court of competent jurisdiction; PROVIDED that the
Partnership has made reasonable efforts to conduct its relevant
business activities in a manner such that the disclosure
requirements of such statute, rule or regulation or court of
competent jurisdiction do not apply, and PROVIDED FURTHER that
MMT (through the MMT Technical Liaison) is given notice and an
adequate opportunity to contest such disclosure or to use any
means available to minimize such disclosure (E.G., the
"confidential treatment" provisions of Rule 24b-2 promulgated
under the Securities Exchange Act of 1934, as amended); and
(vii) to the extent such MMT Confidential Information has become
generally available publicly through no fault of the Partnership,
LMC or their directors, officers, employees, Advisors or
sublicensees.
<PAGE> 158
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(c) Subject to the provisions of paragraph (d) below, LMC may
disclose MMT Confidential Information:
(i) to its directors, officers and employees, its Subsidiaries
and their directors, officers and employees, in each case to
the extent they have a reasonable need to know the contents
thereof and who have agreed in writing with MMT to be bound
by the provisions of this Article 6;
(ii) on a confidential basis to those Advisors of LMC who have a
reasonable need to know the contents thereof, so long as
such disclosure is made pursuant to the procedures referred
to in Section 6.7(c);
(iii) to the extent required by applicable statute, rule or
regulation or any court of competent jurisdiction; PROVIDED
that LMC has made reasonable efforts to conduct its relevant
business activities in a manner such that the disclosure
requirements of such statute, rule or regulation or court of
competent jurisdiction do not apply, and PROVIDED FURTHER
that MMT (through the MMT Technical Liaison) is given notice
and an adequate opportunity to contest such disclosure or to
use any means available to minimize such disclosure (E.G.,
the "confidential treatment" provisions of Rule 24b-2
promulgated under the Securities Exchange Act of 1934, as
amended); and
(iv) to the extent such MMT Confidential Information has become
generally available publicly through no fault of the
Partnership, LMC or their directors, officers, employees,
Advisors or sublicensees.
(d) To the extent required to address the Partnership's expanded
technology and market base (other than with CEP) beyond DoD, DOE
and USEC, and the possibility that MMT and the Partnership could
compete outside the Market, the Executive Committee will develop
procedures to ensure that MMT Confidential Information is
disclosed pursuant to paragraphs (b)(ii) and (c)(i) above only on
a "need to know basis", and in particular to prevent the
disclosure of MMT Confidential Information to Partnership
personnel (other than the Partnership's executive management or
their Advisors) who are responsible for developing, marketing, or
selling technologies which are competitive with MMT or CEP.
<PAGE> 159
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6.3. Confidentiality Obligations of Partnership and MMT.
(a) Each of the Partnership and MMT agrees that it will use LMC
Confidential Information only in connection with the activities
contemplated by this Agreement and the Related Agreements, and it will
not disclose any LMC Confidential Information to any Person except as
expressly permitted by this Section 6.3.
(b) The Partnership may disclose LMC Confidential Information:
(i) to MMT;
(ii) to the Partnership's officers and employees who have a reasonable
need to know the contents thereof and who have signed an Employee
Non-Disclosure Agreement;
(iii) on a confidential basis to those Advisors of the Partnership who
have a reasonable need to know the contents thereof, so long as
such disclosure is made pursuant to the procedures referred to in
Section 6.7(c);
(iv) to any other Person if LMC consents to such disclosure and such
disclosure is made pursuant to the procedures referred to in
Section 6.7(c);
(v) to any sublicensee pursuant to any sublicense granted by the
Partnership pursuant to Article 8;
(vi) to the extent required by applicable statute, rule or regulation
or any court of competent jurisdiction; PROVIDED that the
Partnership has made reasonable efforts to conduct its relevant
business activities in a manner such that the disclosure
requirements of such statute, rule or regulation or court of
competent jurisdiction do not apply, and PROVIDED FURTHER that
LMC is given notice and an adequate opportunity to contest such
disclosure or to use any means available to minimize such
disclosure (E.G., the "confidential treatment" provisions of Rule
24b-2 promulgated under the Securities Exchange Act of 1934, as
amended); and
(vii) to the extent such LMC Confidential Information has become
generally available publicly through no fault of the Partnership,
MMT or their directors, officers, employees, Advisors or
sublicensees.
(c) MMT may disclose LMC Confidential Information:
<PAGE> 160
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(i) to its directors, officers and employees, its Subsidiaries
and their directors, officers and employees, in each case to
the extent they have a reasonable need to know the contents
thereof and who have agreed in writing with LMC to be bound
by the provisions of this Article 6;
(ii) on a confidential basis to those Advisors of MMT who have a
reasonable need to know the contents thereof, so long as
such disclosure is made pursuant to the procedures referred
to in Section 6.7(c);
(iii) to the extent required by applicable statute, rule or
regulation or any court of competent jurisdiction; PROVIDED
that MMT has made reasonable efforts to conduct its relevant
business activities in a manner such that the disclosure
requirements of such statute, rule or regulation or court of
competent jurisdiction do not apply, and PROVIDED FURTHER
that LMC is given notice and an adequate opportunity to
contest such disclosure or to use any means available to
minimize such disclosure (E.G., the "confidential treatment"
provisions of Rule 24b-2 promulgated under the Securities
Exchange Act of 1934, as amended);
(iv) with respect to any LMC Confidential Information that also
constitutes Relevant LMC Technology, to third parties in
connection with the use or sublicense of such Relevant LMC
Technology as contemplated by Section 7.2, PROVIDED THAT
such third parties enter into a confidentiality agreement
with MMT in a form satisfactory to MMT and LMC; and
(v) to the extent such LMC Confidential Information has become
generally available publicly through no fault of the
Partnership, MMT or their directors, officers, employees,
Advisors or sublicensees.
6.4. Confidentiality Obligations of MMT and LMC.
------------------------------------------
(a) Each of MMT and LMC agrees that it will use Partnership Confidential
Information only in connection with the activities contemplated by
this Agreement and the Related Agreements, and it will not disclose
any Partnership Confidential Information to any Person except as
expressly permitted by this Section 6.4.
<PAGE> 161
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(b) Subject to the provisions of paragraph (d) below, MMT may disclose
Partnership Confidential Information:
(i) to LMC;
(ii) to MMT's officers and employees who have a reasonable need to
know the contents thereof and who have agreed in writing with the
Partnership to be bound by the provisions of this Article 6;
(iii) on a confidential basis to those Advisors of MMT who have a
reasonable need to know the contents thereof, so long as such
disclosure is made pursuant to the procedures referred to in
Section 6.7(c);
(iv) to the extent required by applicable statute, rule or regulation
or any court of competent jurisdiction; PROVIDED that MMT has
made reasonable efforts to conduct its relevant business
activities in a manner such that the disclosure requirements of
such statute, rule or regulation or court of competent
jurisdiction do not apply, and PROVIDED FURTHER that the
Partnership is given notice and an adequate opportunity to
contest such disclosure or to use any means available to minimize
such disclosure (E.G., the "confidential treatment" provisions of
Rule 24b-2 promulgated under the Securities Exchange Act of 1934,
as amended); and
(v) to the extent such Partnership Confidential Information has
become generally available publicly through no fault of MMT or
LMC or their directors, officers, employees, Advisors or
sublicensees.
(c) Subject to the provisions of paragraph (d) below, LMC may disclose
Partnership Confidential Information:
(i) to MMT;
(ii) to its directors, officers and employees, its Subsidiaries and
their directors, officers and employees, in each case to the
extent they have a reasonable need to know the contents thereof
and who have agreed in writing with the Partnership to be bound
by the provisions of this Article 6;
(iii) on a confidential basis to those Advisors of LMC who have a
reasonable need to know the contents thereof, so long as such
disclosure is made pursuant to the procedures referred to in
Section 6.7(c);
<PAGE> 162
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(iv) to the extent required by applicable statute, rule or regulation
or any court of competent jurisdiction; PROVIDED that LMC has
made reasonable efforts to conduct its relevant business
activities in a manner such that the disclosure requirements of
such statute, rule or regulation or court of competent
jurisdiction do not apply, and PROVIDED FURTHER that the
Partnership is given notice and an adequate opportunity to
contest such disclosure or to use any means available to minimize
such disclosure (E.G., the "confidential treatment" provisions of
Rule 24b-2 promulgated under the Securities Exchange Act of 1934,
as amended); and
(v) to the extent such Partnership Confidential Information has
become generally available publicly through no fault of MMT or
LMC or their directors, officers, employees, Advisors or
sublicensees.
(d) To the extent required to address the Partnership's expanded
technology and market base (other than CEP) beyond DoD, DOE and USEC,
and the possibility that MMT and the Partnership could compete outside
the Market, the Executive Committee will develop procedures to ensure
that Partnership Confidential Information (other than Partnership
Confidential Information relating to CEP) is disclosed to Partnership
personnel and the Executive Committee and their Advisors only on a
"need to know" basis and is not disclosed to MMT.
6.5. TREATMENT OF LICENSED SOFTWARE PROGRAMS. Any Licensed Software
Programs furnished by MMT to the Partnership shall be furnished in object code
form only (i.e., in magnetic or electronic binary form on software media, which
are readable and usable by machines, but not generally readable by humans
without reverse assembly, reverse compiling or reverse engineering). The
Partnership agrees that it will not attempt to modify, disassemble, decompile,
reverse-engineer or otherwise endeavor to discover or disclose the methods and
concepts embodied in the Licensed Software Programs. All Licensed Software
Programs shall be marked with such copyright, patent, proprietary legends,
restrictions or other notices as MMT may request, and the Partnership agrees not
to remove or destroy any such mark or notice on any of the Licensed Software
Programs.
6.6. DISCLOSURE TO GOVERNMENT AUTHORITIES. The Technical Liaisons shall
promptly establish and implement all procedural safeguards required or advisable
in connection with the performance of government contracts to protect the
confidentiality and value of the MMT Licensed Property and the assets of the
Partnership. Each of LMC, MMT and the Partnership agree to comply, and cause
their employees to comply, with such procedural safeguards.
<PAGE> 163
-29-
6.7. Ongoing Confidentiality Program; Patent Markings.
------------------------------------------------
(a) In order to ensure that each of the Partnership, LMC and MMT complies
with its obligations in Sections 6.1 through 6.6, the Technical
Liaisons shall meet from time to time as required to discuss issues
relating to confidentiality and disclosure and other matters addressed
by this Article 6.
(b) With respect to any disclosure by the Partnership to any of its
officers or employees permitted pursuant to Section 6.2(b)(ii) or
Section 6.3(b)(ii), the Partnership shall cause each of its officers
and employees to sign employee non-disclosure and invention agreements
in the form attached to the Original Agreement as EXHIBIT B or in such
other form as is approved from time to time by the MMT Technical
Liaison ("EMPLOYEE NON-DISCLOSURE AGREEMENTS").
(c) With respect to any disclosure by the Partnership, MMT or LMC to any
of its Advisors or by the Partnership to any prospective customers,
vendors, suppliers or other third Persons pursuant to Section
6.2(b)(iv) or (v) or Section 6.3(b)(iv) or (v), the Technical Liaison
will institute procedures designed to maintain the confidentiality of
MMT Confidential Information, the Partnership Confidential Information
and LMC Confidential Information while facilitating the Partnership's
business activities. These procedures shall include the preparation of
standard forms of confidentiality agreements to be used by the
Partnership in connection with its business.
(d) The Technical Liaisons will implement a program for the use of patent
markings by the Partnership as appropriate to fully protect the
Licensed Patents and Licensed Patent Applications in each applicable
country where they exist.
6.8. QUALITY CONTROL. The Partnership shall provide to MMT a reasonable
opportunity to inspect the CEP Plants using the MMT Licensed Property and the
services provided by the Partnership under the Licensed Trademarks
(collectively, the "PARTNERSHIP SERVICES"), upon MMT's reasonable request from
time to time, no more frequently than four times per year (or more often as is
required in the event that MMT determines in good faith that an emergency
condition exists), in order to enable MMT to maintain an appropriately high
level of quality commensurate with the valuable goodwill associated with the
Trademarks (the "QUALITY STANDARD"). If MMT reasonably determines that the
applicable CEP Plants or the Partnership Services being performed by the
Partnership do not meet the Quality Standard, MMT shall provide the Partnership
with written notice (the "FAILURE NOTICE") of such failure, specifying the
particular aspect of the applicable CEP Plants or the Partnership Services which
MMT claims does not meet the Quality Standard and the particular failure,
together with any supporting
<PAGE> 164
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documentation of such failure. If the Partnership shall not have met such
Quality Standard for such Partnership Services and does not (i) take appropriate
action to diligently commence to cure such failure within thirty (30) days after
receipt of the Failure Notice and (ii) cure such failure by causing such
Partnership Services to meet such Quality Standard and provide documentation of
such cure reasonably acceptable to MMT within sixty (60) days after the receipt
of the Failure Notice (or, if such failure is not reasonably susceptible to cure
within such 60-day period, within 120 days after the receipt of the Failure
Notice), MMT may pursue any available remedies pursuant to the Dispute
Resolution Agreement.
6.9. CORPORATE NAMES. The Partnership shall be entitled to refer to MMT and
LMC in its advertising and other promotional materials, subject to compliance
with guidelines, to be adopted by the Executive Committee, addressing the need
to maintain a separate corporate identity for the Partnership, to identify the
Partnership as a licensee of the MMT Licensed Property and similar concerns.
Article 7
---------
Improvements and Inventions
---------------------------
7.1. Improvements and Inventions.
---------------------------
(a) All Intellectual Property (including all Improvements) relating to CEP
or necessary or useful to any application of CEP conceived, created,
made, developed or reduced to practice by or for MMT or Partnership
personnel, or LMC personnel assigned to work on Partnership activities
("RELATED TECHNOLOGY"), will be owned by MMT and title to all such
Intellectual Property, including patents, patent applications and
copyrights filed or granted, patents issued with respect thereto will
be issued solely in MMT's name.
(b) LMC and the Partnership agree to give the MMT Technical Liaison prompt
notice of any Related Technology, using a standard form of invention
disclosure form to be approved from time to time by the Technical
Liaisons. LMC and the Partnership agree to give MMT all reasonable
assistance in obtaining patent, copyright or other protection and in
preparing and prosecuting any patent application or copyright
application filed by MMT for any Related Technology, and each of LMC
and the Partnership will cause to be executed all assignments and
other instruments and documents as MMT may consider necessary or
appropriate to carry out the intent of this Section 7.1. MMT shall be
solely responsible for all decisions relating to seeking or
maintaining patent or copyright or other protection for any
Improvement or Related Technology, and shall be responsible for all
expenses incurred in obtaining and maintaining any such protection.
<PAGE> 165
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(c) All Improvements and Related Technology, to the extent that they come
within the definition of MMT Licensed Property, will be subject to the
licenses granted by MMT pursuant to Section 2.1, and neither LMC nor
the Partnership shall be required to pay any royalties or other fees
for the license of such Improvements and Related Technology other than
those fees and royalties to be paid by the Partnership set forth in
Article 5. Subject to MMT's obligations under Article 3, MMT shall
have the unrestricted right to license any of the Improvements or
Related Technology to any third parties without notice or accounting
to LMC or the Partnership.
(d) The Technical Liaisons will formulate and prepare for the Executive
Committee guidelines relating to appropriate compensation to be paid
by the Partnership to LMC employees who generate patentable Related
Technology as contemplated by paragraphs (a) and (b) above. These
guidelines, which will in no event provide for compensation greater
than that payable under LMC's existing policies, shall be subject to
the approval and modification from time to time by the Executive
Committee.
7.2. LMC INTELLECTUAL PROPERTY. To the extent that management of LMC
involved with the business of the Partnership or any employees or management of
the Partnership become aware of any Intellectual Property owned or controlled by
LMC or its Subsidiaries that could be necessary or useful to the Partnership's
activities ("RELEVANT LMC TECHNOLOGY"), LMC shall provide information relating
to such Intellectual Property through the LMC Technical Liaison to the MMT
Technical Liaison. The Technical Liaisons shall meet from time to time to
discuss any such Relevant LMC Technology and its potential usefulness to the
Partnership. If requested by the MMT Technical Liaison and subject to any
limitations arising from third party rights (other than any rights of any
employees of LMC or its Affiliates), LMC shall grant to MMT and the Partnership
a royalty-free, non-exclusive, world-wide perpetual license, with rights to
sub-license, to all Relevant LMC Technology, for use by MMT and the Partnership
solely for use in connection with CEP Plants.
Article 8
---------
Sublicensing
------------
8.1. OBLIGATIONS TO SUBLICENSE. In order to commercialize CEP technology
in the Market, the Partnership shall create and implement a comprehensive
program to promote sublicensing of the MMT Licensed Property to appropriate
third parties in order to permit them to establish, own, permit, finance,
construct, start-up and operate CEP Plants located anywhere in the world that
process Market Feedstocks.
<PAGE> 166
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8.2. FORM OF SUBLICENSING AGREEMENTS. As part of the comprehensive
sublicensing program referred to in Section 8.1, the Technical Liaisons shall
develop various forms of sublicense agreements to be used by the Partnership.
With respect to any sublicense agreement to be used by the Partnership, MMT
shall have the right to approve the sublicensee to the extent that the past
practices of the sublicensee raise quality control issues, and MMT shall have
the right to approve those terms of the sublicense agreement relating to the MMT
Licensed Property, the confidentiality and other safeguards to be required and
any operating requirements designed to promote quality control.
Article 9
---------
Research and Development and Certain Related Issues
---------------------------------------------------
9.1. RESEARCH AND DEVELOPMENT. In order to leverage MMT's technical
expertise and MMT's CEP demonstration facilities, both MMT and the Partnership
shall participate in all government research opportunities relating to the
business of the Partnership, with MMT to perform all required research,
development and other technical services. The Partnership shall be responsible
for obtaining such research opportunities and shall enter into a teaming or
similar arrangement with MMT whereby MMT provides all required research,
development and technical services in connection with the performance of these
government research contracts. The Technical Liaisons or their designees for
such purpose (who may be sales and marketing personnel of the Partnership and
MMT) shall meet from time to time to evaluate the opportunities for government
research opportunities and the progress in this area made by the Partnership and
MMT. MMT agrees that all commercial opportunities generated by these research
contracts, to the extent they fall within the scope of the licenses granted in
Section 2.1, shall be for the benefit of the Partnership.
9.2. PRDA LICENSE. If MMT is required to grant a license of the MMT
Licensed Property to DOE or its designee in connection with MMT's existing
Program Research Development Announcement ("PRDA") contract with DOE, MMT shall
provide the economic benefits of such license grant and PRDA contract to the
Partnership.
9.3. ACCESS TO FALL RIVER FACILITY. MMT shall provide the Partnership with
priority access to MMT's recycling, research and development facility in Fall
River, Massachusetts and access to its technical staff as contemplated by this
Agreement.
9.4. TECHNICAL TRAINING. MMT shall provide the Partnership and its
sublicensees from time to time with ongoing training and technical support for
the operation of CEP to ensure that the Partnership's and such sublicensees' CEP
Plant operators are technically proficient. The Technical Liaisons or their
designees for such purpose will meet from time to time as required to coordinate
this training.
<PAGE> 167
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9.5. Component Sales.
---------------
(a) As an accommodation to the Partnership and its sublicensees, MMT shall
sell to the Partnership and its sublicensees essential CEP system
components, such as feed injection components, automated control
systems and containment components, as required by the Partnership and
its sublicensees in connection with the development and operation of
their CEP Plants. In addition, in connection with small CEP Plants
("SMALL CEP PLANTS") to be developed by the Partnership or its
sublicensees (I.E., CEP Plants which are designed to process * per
year of Radioactive Feedstocks or * per year of non-Radioactive
Feedstocks), MMT shall have the right to provide such Small CEP Plants
on a "turn key" or similar basis. As part of the ongoing quality
control program of MMT, the Partnership and its sublicensees shall be
required to purchase such CEP components and Small CEP Plants from
MMT. The essential CEP components to be purchased with respect to any
CEP Plant shall be specified in the applicable Conceptual Design
Package. The Partnership's obligation to purchase such components and
Small CEP Plants from MMT shall be conditioned upon MMT (or, if MMT
purchases such components from another supplier, such supplier)
offering reasonable warranty provisions acceptable to the Partnership
and LMC.
(b) The Technical Liaisons or their designees for such purpose shall meet
from time to time to coordinate the ordering and purchase of
components and Small CEP Plants so as to eliminate backlogs or
overorders. Any sales by MMT of such components and Small CEP Plants
shall be pursuant to purchase orders or other documentation developed
under the supervision of the Technical Liaisons.
9.6. CEP PLANT DEVELOPMENT. For any CEP Plant to be built by the
Partnership or its sublicensees, MMT shall perform, and the Partnership and any
such sublicensees shall be required to retain MMT to perform or have performed
at its direction, all research and development activities required to prepare a
conceptual design for such CEP Plant.
9.7. CONCEPTUAL DESIGN PACKAGE, ETC. MMT shall have the right and
obligation to produce the Conceptual Design Package for each CEP Plant, it being
understood that the Executive Committee shall authorize the final Conceptual
Design Package prior to execution. All services associated with engineering and
construction of
- -------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
<PAGE> 168
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such CEP Plant shall be performed by firms selected from time to time by the
Partnership.
9.8. REIMBURSEMENT FOR GOODS AND SERVICES. The Partnership shall reimburse
MMT for any goods and services provided by MMT pursuant to this Article 9. Any
such reimbursement shall be (i) in the case of any goods and services provided
in connection with a contract that will not allow costs incurred under an
arrangement of the type set forth in clause (ii) below, an amount equal to the
Permitted Costs incurred plus a profit in an amount equal to * (or, in the case
of Small CEP Plants, * or, in any case where the allowability of Permitted Costs
is subject to FAR, the maximum amount (but not more than *) permitted by FAR) of
the estimated costs for such goods and services proposed by MMT and accepted by
the Partnership, (ii) in the case of any goods and services not required to be
accounted for as provided in clause (i) above, an amount equal to * (or, in the
case of Small CEP Plants, * or, in any case where the allowability of Permitted
Costs is subject to FAR, the maximum amount (but not more than *) permitted by
FAR) of the Permitted Costs incurred, and (iii) in the case of any goods sold by
MMT pursuant to catalog or other standardized prices, and notwithstanding the
provisions of clauses (i) and (ii) above, the standard price for such goods. The
Executive Committee shall adopt and implement procedures relating to billing,
documentation and approval and payment terms for any such reimbursable costs.
9.9. CERTAIN TECHNOLOGY ISSUES. As provided in the Stockholder Agreement,
in the event that at any time prior to August 9, 1997 the Executive Committee is
deadlocked with respect to the application or deployment of any MMT Licensed
Property for the development of any CEP technology not contemplated by the
Business Plan, the members of the Executive Committee designated by MMT shall
control such decision.
Article 10
----------
Infringements
-------------
10.1. Detection of Infringements, Etc.
-------------------------------
(a) MMT and the Partnership shall use their respective reasonable efforts
to detect any infringement, misappropriation, violation, dilution or
unauthorized or improper use of the MMT Licensed Property or unfair
competition related to the Licensed Trademarks (collectively,
"INFRINGEMENTS", and individually an "INFRINGEMENT"). In the event
that
- -------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
<PAGE> 169
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either MMT or the Partnership shall become aware of any such
Infringement, or of any claim that the use of the MMT Licensed
Property infringes, misappropriates, violates or dilutes any
proprietary right or property of any third Person, or of any product
liability claim or action based on or arising out of the use of the
MMT Licensed Property by either MMT or the Partnership, such party
shall promptly give written notice thereof to the other parties.
(b) As part of the Technical Liaisons' regular meetings referred to in
Article 4, the Technical Liaisons shall discuss any issues related to
Infringement or the other matters referred to in paragraph (a) above.
10.2. Infringements of MMT Licensed Technology.
----------------------------------------
(a) In the event of any Infringement of the MMT Licensed Property arising
prior to * which is materially and adversely affecting the Market, MMT
shall undertake all actions reasonably required to redress, oppose,
prevent, or restrain such Infringement. In the event that MMT does not
take appropriate actions with a view to addressing such Infringement
within ninety (90) days of MMT becoming aware of such Infringement (as
evidenced by the written notice thereof given by MMT or the
Partnership to the other party as provided in Section 10.1 above), the
Partnership will have the right to commence such a legal action or
proceeding to the extent reasonably required to redress, oppose,
prevent, or restrain such Infringement. Either party bringing any such
legal action or proceeding shall consult with the other party prior to
commencing the same and shall consider any recommendations by the
other party with respect to the conduct and settlement or compromise
thereof and any reasonable alternative resolutions of the Infringement
matter. Each party shall cooperate as may be reasonably necessary or
appropriate in the prosecution, settlement or compromise of any such
legal action or proceeding commenced by the other party in respect of
any Infringement of the MMT Licensed Property, and agrees to be joined
as a party to any such action or proceeding if it is deemed to be
necessary or desirable by counsel retained by the other party for the
prosecution of such action or proceeding. If either party proceeds to
bring any legal action or proceeding pursuant to the procedure
provided for in this Section 10.2, MMT will bear all reasonable costs
of such action or proceeding and will be entitled to receive and
retain all proceeds
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* Confidential treatment has been requested for this portion of Exhibit 10.2.
<PAGE> 170
realized as a result of any settlement thereof or any judgment thereon
("PROCEEDS"). However, in the event that MMT receives any Proceeds,
and any portion of such Proceeds is directly attributable to
Infringement that adversely affected the Market, MMT shall remit to
the Partnership, after reimbursement of MMT's costs of such action or
proceeding, such portion of such Proceeds.
(b) In the event of any Infringement arising * and adversely affecting the
Market, either MMT or the Partnership shall be free to take all
actions deemed advisable to redress, oppose, prevent or restrain such
Infringement. In the event MMT or the Partnership takes any such
action, they will provide notice to the other party and keep the other
party reasonably informed through the Technical Liaisons as to the
status of any such actions.
10.3. MMT INFRINGEMENT CLAIMS. Except for any claim to be defended by the
Partnership pursuant to Section 10.4, in the event of any claim that any MMT
Licensed Property, or any equipment, material or process based on or utilizing
MMT Licensed Property (including without limitation any Conceptual Design
Package), infringes, misappropriates, violates or dilutes any proprietary right
or property of any third Person (each an "MMT INFRINGEMENT CLAIM"), then,
subject to Section 10.5 below MMT shall have the obligation to take all actions
reasonably necessary to oppose or defend such claims and to pay any judgment or
settlement amount awarded or obtained with respect to such MMT Infringement
Claim. In the course of opposing or defending any such MMT Infringement Claim,
MMT shall consult with the Partnership and LMC in connection with all material
issues relating to such opposition or defense and shall consult with the
Partnership and LMC prior to commencing the same and shall consider any
recommendations by the Partnership with respect to the conduct and settlement or
compromise thereof and any reasonable alternative resolutions of the MMT
Infringement Claim. In the event that MMT does not undertake to oppose or defend
any such action within ninety (90) days after MMT becomes aware of such MMT
Infringement Claim, the Partnership will have the right to undertake the
opposition or defense of such claim in MMT's name. In the event that the
Partnership undertakes the opposition or defense of such claim, the Partnership
shall consult with MMT in connection with all material issues relating to such
opposition or defense and shall consult with MMT prior to commencing the same
and shall consider any recommendations by MMT with respect to the conduct and
settlement or compromise thereof and any reasonable alternative resolutions of
the MMT Infringement Claim. The Partnership shall not settle any MMT
Infringement Claim without MMT's prior written consent. If the Partnership
undertakes
- -------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
<PAGE> 171
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to oppose or defend any MMT Infringement Claim pursuant to the procedures
provided for in this Section 10.3, MMT shall bear all costs of such action or
proceeding and shall pay any judgment or settlement amount awarded or obtained
with respect to such MMT Infringement Claim. In the event that the Partnership
does not undertake to oppose or defend any such action within 180 days after the
Partnership becomes aware of such MMT Infringement Claim, LMC shall have the
right to undertake the opposition or defense of such claim in MMT's name on the
same basis as is applicable to the Partnership pursuant to the preceding
sentences.
10.4. PARTNERSHIP INFRINGEMENT CLAIMS. In the event of any claim that any
combination by the Partnership of any non-infringing MMT Licensed Property, or
any non-infringing equipment, material or process based on or utilizing MMT
Licensed Property (including without limitation any Conceptual Design Package),
with any Intellectual Property not furnished by MMT or any claim that the use by
the Partnership of the MMT Licensed Property, or any equipment, material or
process based on or utilizing MMT Licensed Property (including without
limitation any Conceptual Design Package), in a manner not contemplated by this
Agreement infringes, misappropriates, violates or dilutes any proprietary right
or property of any third Person (each a "PARTNERSHIP INFRINGEMENT CLAIM"), then,
subject to Section 10.5 below, the Partnership shall have the obligation to take
all actions reasonably necessary to oppose or defend such claims and to pay any
judgment or settlement amount awarded or obtained with respect to such
Partnership Infringement Claim. In the course of opposing or defending any such
Partnership Infringement Claim, the Partnership shall consult with MMT and LMC
in connection with all material issues relating to such opposition or defense
and shall consult with MMT and LMC prior to commencing the same and shall
consider any recommendations by MMT and LMC with respect to the conduct and
settlement or compromise thereof and any reasonable alternative resolutions of
the Partnership Infringement Claim. In the event that the Partnership does not
undertake to oppose or defend any such action within ninety (90) days after the
Partnership becomes aware of such Partnership Infringement Claim, MMT will have
the right to undertake the opposition or defense of such claim in the
Partnership's name. In the event that MMT undertakes the opposition or defense
of such claim, MMT shall consult with the Partnership in connection with all
material issues relating to such opposition or defense and shall consult with
the Partnership prior to commencing the same and shall consider any
recommendations by the Partnership with respect to the conduct and settlement or
compromise thereof and any reasonable alternative resolutions of the Partnership
Infringement Claim. MMT shall not settle any Partnership Infringement Claim
without the Partnership's prior written consent. If MMT undertakes to oppose or
defend any Partnership Infringement Claim pursuant to the procedure provided for
in this Section 10.4, the Partnership shall bear all costs of such action or
proceeding and shall pay any judgment or settlement amount awarded or obtained
with respect to such Partnership Infringement Claim. In the event that MMT does
not undertake to oppose or defend any such action within 180 days after the
Partnership becomes aware of such Partnership Infringement Claim, LMC shall have
the right to undertake the opposition or
<PAGE> 172
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defense of such claim in the Partnership's name on the same basis as is
applicable to MMT pursuant to the preceding sentences.
10.5. MIXED CLAIMS. In the event of any claim of infringement,
misappropriation, violation or dilution of any proprietary right or property of
any third Person based solely on the MMT Licensed Property, or any equipment,
material or process based on or utilizing MMT Licensed Property (including
without limitation any Conceptual Design Package), such claim will be treated as
an MMT Infringement Claim and governed by the defense, indemnification and other
provisions of Section 10.3. In the event of any such claim based solely on the
combination by the Partnership of any non-infringing MMT Licensed Property, or
any non-infringing equipment, material or process based on or utilizing MMT
Licensed Property, with any Intellectual Property not furnished by MMT or any
such claim based solely on the use by the Partnership of the MMT Licensed
Property, or any equipment, material or process based on or utilizing MMT
Licensed Property, in a manner not contemplated by the applicable Conceptual
Design Package, such claim will be treated as a Partnership Infringement Claim
and governed by the defense, indemnification and other provisions of Section
10.4. In the event of any claim which combines elements of both an MMT
Infringement Claim and a Partnership Infringement Claim, MMT and the Partnership
shall defend such claim jointly, with the costs of such defense and any judgment
or settlement amount awarded or obtained to be shared between them based on the
damages attributable to the MMT Infringement Claim versus the damages
attributable to the Partnership Infringement Claim.
Article 11
----------
Representations and Warranties of the Partnership
-------------------------------------------------
The Partnership represents and warrants to MMT as follows:
11.1. POWER AND AUTHORITY. The Partnership has full power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby.
11.2. APPROVAL; BINDING EFFECT. The Partnership has obtained all necessary
authorizations and approvals required for the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Partnership and
constitutes the legal, valid and binding obligation of the Partnership,
enforceable against the Partnership in accordance with its terms.
11.3. NON-CONTRAVENTION; APPROVALS. Neither the execution and delivery of
this Agreement by the Partnership nor the consummation by the Partnership of the
transactions contemplated hereby constitutes a violation of, or conflicts with,
constitutes or creates a default under, or results in the creation or imposition
of any liens upon any
<PAGE> 173
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property of the Partnership pursuant to (a) the Restructuring Agreement; (b) any
agreement or commitment to which the Partnership is a party or by which the
Partnership or any of its properties is bound or to which the Partnership or any
of its properties is subject; or (c) any statute, regulation, rule, judgment,
order, decree, stipulation, injunction, charge or other restriction of any
government, governmental agency or court or other tribunal to which the
Partnership or any of its properties is subject. No consent, approval or
authorization of, or registration, qualification or filing by the Partnership
with, any governmental agency or authority is required for the execution and
delivery of this Agreement by the Partnership or for the consummation by the
Partnership of the transactions contemplated hereby and thereby.
11.4. ABSENCE OF LIENS. The Partnership shall keep all of the MMT Licensed
Property and all of its rights under this Agreement free and clear of any lien,
charge, security interest or other encumbrance.
Article 12
----------
Representations and Warranties of MMT
-------------------------------------
MMT represents and warrants to the Partnership as follows:
12.1. OWNERSHIP OF TECHNOLOGY AND TRADEMARKS. Except as previously
disclosed in writing to the Partnership and acknowledged in writing by the
Partnership, as of the date of this Agreement no claim had been made in writing
that the MMT Licensed Property or the use or practice thereof by MMT and its
Affiliates does or may violate the rights of any other Person. As of the date of
this Agreement, there had been no decision adverse to MMT's claim of ownership
rights in or exclusive rights to use and practice the MMT Licensed Property in
any jurisdiction or to keep and maintain all letters patent, copyright
registrations and Trademark registrations in full force and effect, and there
was no proceeding involving said rights threatened or pending in any court or
regulatory or governmental office or tribunal in any jurisdiction. As of the
date of this Agreement, to the knowledge of MMT none of the MMT Licensed
Property was involved in or the subject of any interference, opposition, or
cancellation proceedings, or any litigation before any court or regulatory or
governmental office or tribunal in any jurisdiction.
12.2. RIGHT TO GRANT LICENSE. MMT has the unencumbered and unrestricted
right to grant the licenses set forth in Section 2.1, and the execution,
delivery and performance of this Agreement by MMT does not conflict with or
contravene any contractual provision binding on MMT with respect to the MMT
Licensed Property.
12.3. POWER AND AUTHORITY. MMT has full power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
<PAGE> 174
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12.4. APPROVAL; BINDING EFFECT. MMT has obtained all necessary
authorizations and approvals required for the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by MMT and constitutes the legal,
valid and binding obligation of MMT, enforceable against MMT in accordance with
its terms.
12.5. NON-CONTRAVENTION; APPROVALS. Neither the execution and delivery of
this Agreement by MMT nor the consummation by MMT of the transactions
contemplated hereby constitutes a violation of, or conflicts with, constitutes
or creates a default under, or results in the creation or imposition of any
liens upon any property of MMT pursuant to (a) its charter or by-laws; (b) any
agreement or commitment to which MMT is a party or by which MMT or any of its
properties is bound or to which MMT or any of its properties is subject; or (c)
any statute, regulation, rule, judgment, order, decree, stipulation, injunction,
charge or other restriction of any government, governmental agency or court or
other tribunal to which MMT or any of its properties is subject. No consent,
approval or authorization of, or registration, qualification or filing by MMT
with, any governmental agency or authority is required for the execution and
delivery of this Agreement by MMT or for the consummation by MMT of the
transactions contemplated hereby and thereby.
Article 13
----------
Export Controls
---------------
The Partnership agrees that it will comply with all United States and
foreign laws regarding the import or export of any of the MMT Licensed Property
or any embodiment thereof.
Article 14
----------
Termination
-----------
14.1. EVENTS OF TERMINATION. Except as provided in Section 14.2 below, this
Agreement shall terminate upon the earliest to occur of:
(a) upon the mutual written consent at any time of the Partnership, MMT
and LMC;
<PAGE> 175
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(b) *
(c) the election of LMC within ninety (90) days after the occurrence of
any Bankruptcy of MMT, or the election of MMT within ninety (90) days
after the occurrence of any Bankruptcy of LMC; and
(d) July 1, 2019, unless MMT, LMC and the Partnership agree prior to such
date to renew this Agreement for an additional term.
14.2. Effects of Termination.
----------------------
(a) In the event of any termination of this Agreement pursuant to Section
14.1, (i) the licenses granted pursuant to Article 2 and Article 8
shall terminate except as provided in paragraph (b) below; (ii) the
provisions of Articles 1 and 5 (except with respect to Sections 5.3
and 5.4, insofar as they relate to CEP Plants remaining in operation
after such termination), Article 6, Sections 7.1 and 9.8, and Articles
10, 13, 14, 15 and 16 shall survive such termination, (iii) any
license granted pursuant to Section 7.2 shall not terminate but shall
remain perpetual, and (iv) such termination shall not effect any
party's rights with respect to any breach or non-performance by any
other party prior to such termination.
(b) In the event of any termination of this Agreement pursuant to Section
14.1, the licenses granted pursuant to Article 2 shall remain in
effect with respect to (i) all CEP Plants previously constructed by
the Partnership, (ii) any CEP Plants under contract which have not yet
commenced Commercial Operation, to the extent the Executive Committee,
pursuant to the procedures referred to in Section 10.6(b) of the
Restructuring Agreement, elects to complete the development of such
CEP Plants, and (iii) any sublicense in effect at the time of
termination. The licenses granted in Article 2 and any sublicense
granted pursuant to Article 8 shall remain in effect with respect to
any such CEP Plant for the life of such CEP Plant.
- -------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
<PAGE> 176
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Article 15
----------
*
Article 16
----------
General
-------
16.1. DISCLOSURE AND PUBLICITY. The Partnership agrees to provide prior
notice of any material press releases to each of MMT and LMC.
16.2. EXPENSES. Except as expressly set forth in this Agreement, all
expenses of the preparation, execution and consummation of this Agreement and
the Related Agreements and of the transactions contemplated hereby, including,
without limitation, attorneys', accountants and outside advisers' fees and
disbursements, shall be borne by the party incurring such expenses.
16.3. NOTICES. All notices, demands and other communications thereunder
shall be in writing or by written telecommunication, and shall be deemed to have
been duly given if delivered personally or if mailed by certified mail, return
receipt requested, postage prepaid or if sent by overnight courier or sent by
written telecommunication, as follows:
If to MMT:
Molten Metal Technology, Inc.
51 Sawyer Road
Waltham Massachusetts 02154
Attention: William M. Haney, III,
- -------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
<PAGE> 177
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President and Chief Executive
Officer
Ethan E. Jacks, Esq., Vice President
and General Counsel
with a copy sent contemporaneously to:
Bingham, Dana & Gould LLP
150 Federal Street
Boston, Massachusetts 02110
Attention: John R. Utzschneider, Esq.
If to the Partnership to:
c/o Martin Marietta Energy Systems
P.O. Box 2009
Bear Creek and Scarborough Roads
Oak Ridge, TN 37831-8024
Attention: President
with a copy sent contemporaneously to
MMT or LMC, as applicable:
If to LMC:
Lockheed Martin Corporation
Energy and Environment Sector
1155 University Boulevard
Albuquerque, NM 87106-4320
Attention: President
with a copy sent contemporaneously to:
Richards, Layton & Finger
One Rodney Square
Wilmington, DE 19801
Attention: James G. Leyden, Esq.
16.4. ENTIRE AGREEMENT. This Agreement (including the Exhibits and Annexes
hereto) and the Related Agreements contains the entire understanding of the
parties,
<PAGE> 178
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supersedes all prior agreements and understandings relating to the subject
matter hereof and shall not be amended or waived except by a written instrument
hereafter signed by all of the parties hereto. In particular, this Agreement
supersedes in its entirety the Original Agreement (except for the Annexes and
Exhibits thereto, which are incorporated herein by this reference). LMC, the
Partnership and MMT further acknowledge and agree that, in entering into this
Agreement and the Related Agreements, they have not in any way relied upon any
oral or written agreements, statements, promises, information, arrangements,
understandings, representations or warranties, express or implied, not
specifically set forth in this Agreement or the Related Agreements.
16.5. GOVERNING LAW, ETC. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware,
all rights and remedies being governed by such laws, without regard to its
conflict of laws rules. As provided in the Dispute Resolution Agreement, the
parties hereto have submitted to the exclusive jurisdiction of state and federal
courts located in Delaware.
16.6. WAIVER OF JURY TRIAL. EACH OF MMT, LMC AND THE PARTNERSHIP HEREBY
IRREVOCABLY WAIVES ANY RIGHTS THAT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY OF THE
RELATED AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR
ACTIONS OF ANY OF THEM RELATING THERETO.
16.7. WAIVER OF CERTAIN DAMAGES. EACH OF MMT, LMC AND THE PARTNERSHIP TO
THE FULLEST EXTENT PERMITTED BY LAW, IRREVOCABLY WAIVES ANY RIGHTS THAT THEY MAY
HAVE TO PUNITIVE, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES IN RESPECT OF ANY
LITIGATION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY RELATED
AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR ACTIONS OF
ANY OF THEM RELATING THERETO.
16.8. SECTIONS AND SUBSECTION HEADINGS. The headings of sections and
subsections are for reference only and shall not limit or control the meaning
thereof.
16.9. ASSIGNS. This Agreement and the Related Agreements shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns. Neither this Agreement and the Related
Agreements nor the obligations of any party hereunder or thereunder shall be
assignable or transferable by such party without the prior written consent of
the other parties hereto.
16.10. NO IMPLIED RIGHTS OR REMEDIES. Except as otherwise expressly
provided herein, nothing herein expressed or implied is intended or shall be
construed to confer
<PAGE> 179
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upon or to give any person, firm or corporation, except MMT, LMC and the
Partnership, any rights or remedies under or by reason of this Agreement.
16.11. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16.12. DISPUTE RESOLUTION. All disputes or claims arising under or in any
way relating to this Agreement shall be subject to the Dispute Resolution
Agreement.
16.13. CONSTRUCTION. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be applied against any party.
16.14. SEVERABILITY. The invalidity or unenforceability of any particular
provision of this Agreement or any Related Agreement shall not affect the other
provisions hereof or thereof, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provision was omitted.
<PAGE> 180
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IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties hereto have caused this Agreement to be duly executed and delivered as a
sealed instrument as of the date and year first above written.
MOLTEN METAL TECHNOLOGY, INC.
By:
-------------------------------------
William M. Haney
President and Chief Executive Officer
M4 ENVIRONMENTAL L.P.
By: M4 Environmental Inc.
as General Partner
By:
-----------------------------------
Name:
Title:
LOCKHEED MARTIN CORPORATION
By:
-------------------------------------
Name:
Title:
<PAGE> 181
Exhibit E-1 to
--------------
Partnership Restructuring Agreement
-----------------------------------
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
----------------------
THIS AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (the "Agreement") has been
made and entered into as of this 30th day of April, 1996, by and among M4
Environmental Management Inc., a Delaware corporation (the "Corporation"),
Martin Marietta Environmental Holdings, Inc., a Delaware corporation ("LMC
Sub"), and MMT Federal Holdings Inc., a Delaware corporation ("MMT Sub").
WHEREAS, the Corporation, LMC Sub and MMT Sub entered into a Stockholders
Agreement dated as of August 9, 1994 (the "Original Stockholders Agreement");
WHEREAS, the Corporation, LMC Sub and MMT Sub desire to enter into this
Agreement as contemplated by the Partnership Restructuring Agreement, dated as
of March 15, 1996 (the "Restructuring Agreement"), between Molten Metal
Technology Inc., a Delaware corporation, Lockheed Martin Corporation, a Maryland
corporation, and M4 Environmental L.P., a Delaware limited partnership (the
"Partnership") only for certain limited purposes;
WHEREAS, LMC Sub and MMT Sub have organized the Corporation to act as the
sole general partner of the Partnership;
WHEREAS, the parties hereto desire to provide for the governance of the
Corporation and to set forth in detail their respective rights and duties
relating to the Corporation with respect to the matters set forth herein, and to
amend and restate the Original Stockholders Agreement in its entirety.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants herein contained and other good and valuable consideration the receipt
of which is hereby acknowledged, the parties hereby amend and restate the
Original Stockholders Agreement in its entirety and hereby agree as follows:
1. EFFECTIVE DATE; TERM. This Agreement shall become effective as of the
date hereof and shall remain in effect until the termination of the
Restructuring Agreement, or the dissolution of the Corporation, whichever sooner
occurs.
2. STOCK SUBSCRIPTION. The Corporation has sold to each of LMC Sub and
MMT Sub, and each of LMC Sub and MMT Sub have purchased from the Corporation,
the number of shares of Class A or Class B Common Stock, $.01 par value, of the
Corporation (the "Shares") set forth opposite the name of such stockholder on
the signature page of this Agreement, at a purchase price of $1.00 per share
which was paid as of the date of the Original Stockholders Agreement. The
Corporation has delivered certificates for the Shares to the respective
purchasers thereof against payment to the Corporation therefor in cash. The
<PAGE> 182
Corporation has paid all expenses in connection with the preparation, issuance
and delivery of the Shares and the certificates therefor.
3. RESTRICTIONS ON TRANSFER. Neither the Shares nor any interest thereon
may be sold, transferred, pledged, assigned, hypothecated or otherwise disposed
of (each, a "Disposition") including, without limitation, by operation of law or
otherwise, except as specifically permitted in Section 4 hereof. Any purported
Disposition of any of the Shares in violation of this Section 3 shall be null
and void and of no force and effect as to the proposed transferee.
4. CERTAIN PERMITTED DISPOSITIONS. Prior to making any Disposition, the
stockholder desiring to make such Disposition (the "Seller") shall (a) notify
each of the other stockholders (the "Other Holders") and the Corporation in
writing and specify in such notice all of the terms and conditions of the
proposed Disposition, which terms and conditions may only involve a Disposition
of all of the Seller's shares in one transaction to one person; (b) for a period
of thirty (30) calendar days after receipt of such notice, the Other Holders
shall have the right in their sole discretion to object to such proposed
Disposition; and (c) in the event of such objection, no Disposition is
permitted.
5. LEGEND AND STOP TRANSFER ORDER. Each holder of the Shares hereby
consents (a) to the placement of an appropriate legend on each certificate
evidencing the Shares subject to this Agreement and on any share certificate
issued at any time in exchange or in substitution for any certificate bearing
such legend; (b) to the entry of a Stop Transfer Order in the Corporation's
stock books, or with the Corporation's stock transfer agent, prohibiting the
transfer of any of the Shares, except in compliance with this Agreement; and (c)
to the refusal by the Corporation to transfer any of the Shares, except in
compliance with this Agreement.
6. CERTAIN TECHNOLOGY ISSUES. In the event that at any time prior to
August 9, 1997 the Board of Directors of the Corporation (the "Board of
Directors") is deadlocked with respect to the application or deployment of any
MMT Licensed Property (as defined in the MMT License Agreement) for the
development of any CEP technology not contemplated by the Business Plan, the
members of the Board of Directors elected by MMT Sub shall recommend a course of
action in respect of such application or deployment and LMC Sub shall cause the
directors elected by it to vote in favor of such recommended course of action.
7. OBLIGATION TO FUND CORPORATION. LMC Sub agrees that it shall fund the
operations of the Corporation, in the Corporation's capacity as general partner
of the Partnership, through August 1, 1999 on the limited basis provided in this
Section 7. The Board of Directors shall request funding from LMC Sub from time
to time (but no less often than annually) to fund the operations of the
Corporation. LMC Sub shall provide the funds requested by the Board of Directors
from time to time, to the extent that the Board of Directors considers such
funding reasonably necessary for the anticipated operations of the Corporation
based on the Business Plan. In no event, however, shall LMC Sub be obligated to
provide more than $20 million in any one fiscal year to the Partnership pursuant
to the Partnership Agreement and the Corporation pursuant to this Agreement, or
more than $75 million in the aggregate from August 9, 1994 (the date of the
Original Stockholders Agreement) through the
-2-
<PAGE> 183
term of the Partnership Agreement and this Agreement to the Partnership and the
Corporation. Any funding shall be made within ten (10) business days after the
funding request of the Board of Directors by wire transfer to an account
designated by the Corporation at least two (2) business days prior to the due
date. LMC Sub shall have no obligation to provide any additional funding or
financing to the Partnership and the Corporation in excess of the $20
million/$75 million amounts referred to above without its written agreement to
do so. Any contribution made by LMC Sub to the Partnership or the Corporation,
regardless of whether made in its capacity as a limited partner of the
Partnership or as a stockholder of the Corporation not matched by MMT Sub, shall
reduce the foregoing obligation of LMC Sub to make contributions to the
Corporation and the Partnership by an equal amount. It is the intent of the
parties to this Agreement and the Related Agreements that the maximum obligation
of LMC Sub to contribute funds to the Partnership and the Corporation is
expressly limited to provide no more than $20 million in any one fiscal year to
the Partnership and the Corporation or more than $75 million from August 9, 1994
(the date of the Original Stockholders Agreement) through the term of the
Partnership Agreement and this Agreement. It is the intent of the parties to
this Agreement and the other Related Agreements that LMC Sub and MMT Sub shall
not have any personal liability for the debts, liabilities or obligations of the
Corporation or the Partnership. The $20 million/$75 million amounts referred to
above exclude any amount provided by the LMC Sub, if any, to consummate the
acquisition by the Partnership of Retech Technology pursuant to the Asset
Acquisition Agreement.
8. CERTAIN TRANSFERS OF LIMITED PARTNER INTERESTS. LMC Sub agrees that
the Corporation shall not consent to any transfer by LMC Sub of its limited
partner interest in the Partnership, without the prior consent of the Directors
elected by MMT Sub. MMT Sub agrees that the Corporation shall not consent to any
transfer by MMT Sub of its limited partner interest in the Partnership, without
the prior consent of the Directors elected by LMC Sub.
9. MISCELLANEOUS.
a. GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Delaware, all rights
and remedies being governed by such laws, without regard to its conflict of laws
or rules. As provided in the Dispute Resolution Agreement, the parties hereto
have submitted to the exclusive jurisdiction of state and federal courts located
in the State of Delaware.
b. DISPUTE RESOLUTION. All disputes or claims arising under or in
any way relating to this Agreement shall be subject to the Dispute Resolution
Agreement.
c. SEVERABILITY. If any provision of this Agreement shall be held to
be invalid, illegal or unenforceable, such invalidity, illegality or
unenforceability shall attach only to such provision and shall not in any manner
affect or render invalid or unenforceable any other severable provisions of this
Agreement, and this Agreement shall be carried out as if any such invalid or
unenforceable provision were not contained herein.
d. CERTAIN DEFINITIONS. (i) "Person" includes a natural person,
partnership, joint venture, corporation, limited liability company, trust or any
other association
-3-
<PAGE> 184
or entity; and (ii) capitalized terms used herein and not otherwise defined are
used as defined in the Restructuring Agreement.
e. RELATED AGREEMENT. This Agreement shall constitute a Related
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
500 Shares of Class A MARTIN MARIETTA
Common Stock ENVIRONMENTAL HOLDINGS, INC.
By: /s/ John F. Egan
---------------------------------
Title: President
500 Shares of Class B MMT FEDERAL HOLDINGS, INC.
Common Stock
By: /s/ Benjamin T. Downs
---------------------------------
Title: Executive Vice President
M4 ENVIRONMENTAL MANAGEMENT INC.
By: /s/ J. Robert Merriman
---------------------------------
Title: President
-4-
<PAGE> 185
Exhibit E-2 to
--------------
Partnership Restructuring Agreement
-----------------------------------
Amendment to General Partner's
------------------------------
Certificate of Incorporation
----------------------------
Article FOURTH of the General Partner's Certificate of Incorporation shall
be amended to change each reference from "three (3) directors" to "four (4)
directors".
Article SIXTH of the General Partner's Certificate of Incorporation shall
be amended in its entirety to read as follows:
"SIXTH: The Board of Directors shall consist of eight (8) members.
Unless and except to the extent that the by-laws of the corporation shall
so require, the election of directors of the corporation need not be by
written ballot. At all meetings of the Board of Directors, a quorum for the
transaction of business shall be the presence of an equal number of
directors elected by the holders of Class A Stock and Class B Stock (so
long as such directors present constitute at least one-third of the total
authorized number of directors)."
________________________________________
<PAGE> 186
Exhibit E-3 to
--------------
Partnership Restructuring Agreement
-----------------------------------
Amendments to General Partner's
-------------------------------
By-Laws
-------
Sections 2.1, 2.2, 4.1, 4.2 and 4.3 of the General Partner's By-Laws will
be amended to read as follows:
Section 2.1. NUMBER; QUALIFICATIONS. The Board of Directors shall
consist of eight (8) members. Directors need not be stockholders.
Section 2.2. ELECTION; RESIGNATION; REMOVAL; VACANCIES. The Board of
Directors shall initially consist of the persons named as directors by the
incorporator, and each director so elected shall hold office until the
first annual meeting of stockholders or until his successor is elected and
qualified. At the first annual meeting of stockholders and at each annual
meeting thereafter, the holders of Class A Common Stock, $.01 par value,
("Class A Stock") shall elect four (4) directors and the holders of Class B
Common Stock, $.01 par value, ("Class B Stock") shall elect four (4)
directors, each of whom shall hold office for a term of one year or until
his successor is elected and qualified. Any director may resign at any time
upon written notice to the corporation. Any vacancy occurring in the Board
of Directors for any cause may be filled by a majority vote of the
directors elected by the Class of Common Stock which elected the director
who is no longer serving, even though less than a quorum, and each director
so elected shall hold office until the expiration of the term of office of
the director whom he has replaced or until his successor is elected and
qualified.
Section 4.1. EXECUTIVE OFFICERS; ELECTION; QUALIFICATIONS; TERM OF
OFFICE; RESIGNATION; REMOVAL; VACANCIES. The Directors elected by the
holders of Class B Stock, even though less than a quorum (so long as such
directors number at least one-third of the total of the authorized number
of directors), shall elect a Chairman of the Board pursuant to the
procedures set forth in the Master Agreement for Government Market
Development and Commercialization of CEP Technology, dated as of August 9,
1994 (as amended from time to time, the "MASTER AGREEMENT") between
Lockheed Martin Corporation, a Maryland
<PAGE> 187
-2-
corporation (as successor by merger to Martin Marietta Corporation, a
Maryland corporation) ("LMC"), and Molten Metal Technology, Inc., a
Delaware corporation ("MMT), as amended by the Partnership Restructuring
Agreement, dated as of March 15, 1996 (the "RESTRUCTURING AGREEMENT"),
among LMC, MMT and the other party named therein. The Directors elected by
the holders of Class A Stock, even though less than a quorum (so long as
such directors number at least one-third of the total of the authorized
number of directors), shall elect a President pursuant to the procedures
set forth in the Restructuring Agreement. The Board of Directors shall
elect a Secretary, and it may, if it so determines, choose a Vice Chairman
of the Board from among its members. The Board of Directors may also choose
one or more Vice Presidents, one or more Assistant Secretaries, a Treasurer
and one or more Assistant Treasurers pursuant to the procedures set forth
in the Restructuring Agreement. Each such officer shall hold office until
the first meeting of the Board of Directors after the annual meeting of
stockholders next succeeding his election, and until his successor is
elected and qualified or until his earlier resignation or removal. Any
officer may resign at any time upon written notice to the corporation. The
Board of Directors may remove any officer with or without cause at any
time, in the case of the President pursuant to the procedures set forth in
the Restructuring Agreement, but such removal shall be without prejudice to
the contractual rights of such officer, if any, with the corporation. Any
number of offices may be held by the same person. Any vacancy occurring in
any office of the corporation by death, resignation, removal or otherwise
may be filled for the unexpired portion of the term by the Board of
Directors at any regular or special meeting.
Section 4.2. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the stockholders and of the Board of Directors,
except as may be otherwise required under the laws of the State of
Delaware. He shall also perform such other duties as may be assigned to him
by these By-laws or the Board of Directors. The Chairman of the Board shall
also have such other duties as are assigned to him by the Restructuring
Agreement.
Section 4.3. PRESIDENT. In the absence of the Chairman of the Board,
the President shall preside at all meetings of the stockholders and of the
Board of Directors. He shall be the Chief Executive Officer and may be the
Chief Operating Officer of the corporation, shall have general and active
management of the business of the corporation and shall have the general
powers and duties of supervision and management usually vested in the
office of President of a corporation. He shall see that all orders and
resolutions of the Board of Directors
<PAGE> 188
-3-
are carried into effect. He shall perform such other duties as may be
assigned to him by these By-laws or the Board of Directors and, in
particular, he shall act as the General Manager to the Partnership and
shall have the powers and be subject to the responsibilities as set forth
in the Restructuring Agreement, including, without limitation, the powers
and responsibilities set forth in Section 6.6 of the Restructuring
Agreement, and may be removed pursuant to the procedures set forth in the
Restructuring Agreement.
_____________________________________
<PAGE> 189
Exhibit F-1 to
--------------
Partnership Restructuring Agreement
-----------------------------------
GUARANTY
--------
THIS GUARANTY is made as of the 30th day of April, 1996 (this "GUARANTY")
by Lockheed Martin Corporation, a Maryland corporation (the "GUARANTOR"), in
favor of and for the benefit of Molten Metal Technology, Inc., a Delaware
corporation ("MMT"), and MMT Federal Holdings Inc., a Delaware corporation (the
"MMT SUBSIDIARY").
RECITALS:
WHEREAS, the Guarantor (as successor by merger to Martin Marietta
Corporation, a Maryland corporation ("MMC")) and MMT have entered into a Master
Agreement for Government Market Development and Commercialization of CEP
Technology, dated as of August 9, 1994 (the "MASTER AGREEMENT"). Initially
capitalized terms used herein and not otherwise defined are used as defined in
the Restructuring Agreement as referred to below.
WHEREAS, MMT and LMC and the Partnership (only for certain limited purposes
specified therein) have entered into a Partnership Restructuring Agreement,
dated as of March 15, 1996 (as in effect from time to time, the "RESTRUCTURING
AGREEMENT"), pursuant to which they agreed to restructure certain aspects of
their business relationship; and
WHEREAS, pursuant to Section 4.4 of the Master Agreement, the Guarantor has
elected to have Martin Marietta Environmental Holdings, Inc., a Delaware
corporation (the "LMC Subsidiary"), a wholly-owned subsidiary of the Guarantor,
serve as a limited partner of the Partnership and as a stockholder of the
General Partner in lieu of LMC.
WHEREAS, in accordance with the Master Agreement and the Restructuring
Agreement, the Guarantor has agreed to execute and deliver to MMT and the MMT
Subsidiary this Guaranty to guarantee the payment and performance of the
obligations of LMC Subsidiary under
*
WHEREAS, in accordance with Section 5.7 of the MMT License Agreement, the
Guarantor has also agreed to execute and deliver this Guaranty to guarantee the
obligations of the Partnership under Section 5.3 of the MMT License Agreement to
pay to MMT the Plant Start-Up
- -------------------------------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
<PAGE> 190
-2-
Fees (as defined in the MMT License Agreement) (collectively, the "LICENSE
AGREEMENT OBLIGATIONS").
NOW, THEREFORE, in consideration of value received, the sufficiency of
which is hereby acknowledged, the Guarantor does hereby agree as follows.
1. GUARANTOR GUARANTEE OF THE LMC SUBSIDIARY OBLIGATIONS UNDER
PARTNERSHIP AGREEMENT AND GP STOCKHOLDER AGREEMENT. The Guarantor hereby
unconditionally guarantees the prompt and complete payment and performance, when
due, of the LMC Subsidiary Obligations to the MMT Subsidiary. This Guaranty is
one of payment and not of collection.
2. GUARANTOR GUARANTEE OF LICENSE AGREEMENT OBLIGATIONS OF PARTNERSHIP
UNDER THE MMT LICENSE AGREEMENT. The Guarantor hereby guarantees the prompt and
complete payment and performance, when due, of the License Agreement Obligations
to MMT. This Guaranty is one of payment and not of collection.
3. WAIVER OF SURETYSHIP DEFENSES. MMT and the MMT Subsidiary may at any
time and from time to time without notice to or consent of the Guarantor and
without impairing or releasing the obligations of the Guarantor hereunder: (i)
make any change in the terms of any obligation or liability of the LMC
Subsidiary or the Partnership, (ii) take or fail to take any action of any kind
in respect of any security for any obligation or liability of the LMC Subsidiary
or the Partnership to MMT or the MMT Subsidiary, (iii) exercise or refrain from
exercising any rights against the LMC Subsidiary or the Partnership, or (iv)
compromise or subordinate any obligation or liability of the LMC Subsidiary or
the Partnership to MMT or the MMT Subsidiary including any security therefor.
The Guarantor hereby waives all suretyship defenses.
4. WAIVER OF NOTICES. The Guarantor hereby waives notice of acceptance of
this Guaranty, and waives presentment, demand for payment, protest, notice of
dishonor or non-payment of any such obligation or liability, suit or the taking
of other action by MMT or the MMT Subsidiary against the LMC Subsidiary, the
Partnership or the Guarantor.
5. TERMINATION OF LIMITED GUARANTY. This Guaranty shall continue in full
force and effect until all LMC Subsidiary Obligations and all License Agreement
Obligations have been paid or satisfied in full. Notwithstanding any provision
of this Guaranty or any Related Agreement to the contrary, upon the payment or
performance of any LMC Subsidiary Obligation or any License Agreement Obligation
by the Guarantor, the Partnership and/or the LMC Subsidiary, the Guarantor shall
be discharged, and its obligations hereunder shall cease and terminate, with
respect to any such Obligation that has been satisfied by payment or
performance, notwithstanding whether any payment is required to be disgorged or
returned by MMT, the MMT Subsidiary or the Partnership.
6. NO WAIVER OF SUBROGATION, INDEMNITY AND/OR CONTRIBUTION RIGHTS.
Notwithstanding any provision of this Guaranty to the contrary, no subrogation
rights, indemnity rights and/or contribution rights are being waived hereunder
by the Guarantor, except for any
<PAGE> 191
-3-
subrogation rights, indemnity rights and/or contribution rights of the Guarantor
with respect to the License Agreement Obligations to MMT, which are hereby
waived.
7. DISPUTE RESOLUTION. All disputes or claims arising under or in any way
relating to this Guaranty shall be subject to the Dispute Resolution Agreement.
8. GOVERNING LAW. This Guaranty shall be governed by, construed and
enforced in accordance with, the laws of the State of Delaware (without regard
to its conflict of laws rules), and all rights and remedies shall be governed by
such laws.
9. SEVERABILITY. If any provision of this Guaranty shall be held to be
invalid, illegal or unenforceable, such invalidity, illegality or
unenforceability shall attach only to such provision and shall not in any manner
affect or render invalid or unenforceable any other severable provisions of this
Guaranty, and this Guaranty shall be carried out as if any such invalid or
unenforceable provision were not contained herein.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby
has duly and validly executed this Guaranty as of the day and year first written
above.
GUARANTOR:
----------
LOCKHEED MARTIN CORPORATION
By:__________________________________
Title:
Accepted:
MMT:
- ----
MOLTEN METAL TECHNOLOGY, INC.
By:______________________________________
Title:
<PAGE> 192
Exhibit F-2 to
--------------
Partnership Restructuring Agreement
-----------------------------------
GUARANTY
--------
THIS GUARANTY is made as of the 30th day of April, 1996 (this "GUARANTY")
by Molten Metal Technology, Inc., a Delaware corporation (the "GUARANTOR"), in
favor of and for the benefit of Lockheed Martin Corporation, a Maryland
corporation ("LMC"), and Martin Marietta Environmental Holdings, Inc., a
Delaware corporation (the "LMC SUBSIDIARY").
RECITALS:
WHEREAS, the Guarantor and LMC (as successor by merger to Martin Marietta
Corporation, a Maryland corporation ("MMC")) have entered into a Master
Agreement for Government Market Development and Commercialization of CEP
Technology, dated as of August 9, 1994 (the "MASTER AGREEMENT"). Initially
capitalized terms used herein and not otherwise defined are used as defined in
the Restructuring Agreement referred to below.
WHEREAS, MMT and LMC and the Partnership (only for certain limited purposes
specified therein) have entered into a Partnership Restructuring Agreement,
dated as of March 15, 1996 (as in effect from time to time, the "RESTRUCTURING
AGREEMENT"), pursuant to which they agreed to restructure certain aspects of
their business relationship; and
WHEREAS, pursuant to Section 4.4 of the Master Agreement, the Guarantor has
elected to have MMT Federal Holdings Inc., a Delaware corporation and a
wholly-owned subsidiary of the Guarantor (the "MMT Subsidiary"), serve as a
limited partner of the Partnership and as a stockholder of the General Partner
in lieu of MMT.
WHEREAS, in accordance with the Master Agreement and the
Restructuring Agreement, the Guarantor has agreed to execute and deliver to LMC
this Guaranty to guarantee the payment and performance of the obligations of the
MMT Subsidiary under
*
-
- ---------------------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
<PAGE> 193
-2-
NOW, THEREFORE, in consideration of value received, the sufficiency of
which is hereby acknowledged, the Guarantor does hereby agree as follows.
1. GUARANTOR GUARANTEE OF THE MMT SUBSIDIARY OBLIGATIONS UNDER
PARTNERSHIP AGREEMENT AND GP STOCKHOLDER AGREEMENT. The Guarantor hereby
unconditionally guarantees the prompt and complete payment and performance, when
due, of the MMT Subsidiary Obligations to the LMC Subsidiary. This Guaranty is
one of payment and not of collection.
2. WAIVER OF SURETYSHIP DEFENSES. LMC and the LMC Subsidiary may at any
time and from time to time without notice to or consent of the Guarantor and
without impairing or releasing the obligations of the Guarantor hereunder: (i)
make any change in the terms of any obligation or liability of the MMT
Subsidiary, (ii) take or fail to take any action of any kind in respect of any
security for any obligation or liability of the MMT Subsidiary to the LMC
Subsidiary or the Partnership, (iii) exercise or refrain from exercising any
rights against the MMT Subsidiary, or (iv) compromise or subordinate any
obligation or liability of the MMT Subsidiary to the LMC Subsidiary or the
Partnership including any security therefor. The Guarantor hereby waives all
suretyship defenses.
3. WAIVER OF NOTICES. The Guarantor hereby waives notice of acceptance of
this Guaranty, and waives presentment, demand for payment, protest, notice of
dishonor or non-payment of any such obligation or liability, suit or the taking
of other action by LMC or the LMC Subsidiary against the MMT Subsidiary or the
Guarantor.
4. TERMINATION OF LIMITED GUARANTY. This Guaranty shall continue in full
force and effect until all MMT Subsidiary Obligations have been paid or
satisfied in full. Notwithstanding any provision of this Guaranty or any Related
Agreement to the contrary, upon the payment or performance of any MMT Subsidiary
Obligation by the Guarantor and/or the MMT Subsidiary, the Guarantor shall be
discharged, and its obligations hereunder shall cease and terminate, with
respect to any such Obligation that has been satisfied by payment or
performance, notwithstanding whether any payment is required to be disgorged or
returned by LMC, the LMC Subsidiary or the Partnership.
5. NO WAIVER OF SUBROGATION, INDEMNITY AND/OR CONTRIBUTION RIGHTS.
Notwithstanding any provision of this Guaranty to the contrary, no subrogation
rights, indemnity rights and/or contribution rights are being waived hereunder
by the Guarantor.
6. DISPUTE RESOLUTION. All disputes or claims arising under or in any way
relating to this Guaranty shall be subject to the Dispute Resolution Agreement.
7. GOVERNING LAW. This Guaranty shall be governed by, construed and
enforced in accordance with, the laws of the State of Delaware (without regard
to its conflict of laws rules), and all rights and remedies shall be governed by
such laws.
<PAGE> 194
-3-
8. SEVERABILITY. If any provision of this Guaranty shall be held to be
invalid, illegal or unenforceable, such invalidity, illegality or
unenforceability shall attach only to such provision and shall not in any manner
affect or render invalid or unenforceable any other severable provisions of this
Guaranty, and this Guaranty shall be carried out as if any such invalid or
unenforceable provision were not contained herein.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby
has duly and validly executed this Guaranty as of the day and year first written
above.
GUARANTOR:
----------
MOLTEN METAL TECHNOLOGY, INC.
By:___________________________________
Title:
Accepted:
LMC:
- ----
LOCKHEED MARTIN CORPORATION
By:______________________________
Title:
<PAGE> 195
Exhibit G to
------------
Partnership Restructuring Agreement
-----------------------------------
AMENDED AND RESTATED
DISPUTE RESOLUTION AGREEMENT
----------------------------
THIS AMENDED AND RESTATED DISPUTE RESOLUTION AGREEMENT is made and entered
into as of this 30th day of April, 1996 by and among Lockheed Martin
Corporation, a Maryland corporation ("LMC"), MMT Federal Holdings Inc., a
Delaware corporation (the "MMT SUBSIDIARY"), Martin Marietta Environmental
Holdings, Inc., a Delaware corporation (the "LMC SUBSIDIARY"), Lockheed
Environmental Systems & Technologies Co., a Nevada corporation ("LESAT"), M4
Environmental L.P., a Delaware limited partnership (the "Partnership"), M4
Environmental Management Inc., a Delaware corporation (the "GENERAL PARTNER"),
and Molten Metal Technology, Inc., a Delaware corporation ("MMT").
WHEREAS, LMC (as successor by merger to Martin Marietta Corporation, a
Maryland corporation ("MMC") and MMT are parties to a Master Agreement for
Government Market Development and Commercialization of CEP Technology, dated as
of August 9, 1994 (as in effect from time to time, the "MASTER AGREEMENT"),
pursuant to which they have agreed to form the Partnership in order to
effectively commercialize CEP by selling, engineering, constructing and
operating CEP Plants, and sublicensing CEP technology to appropriate third
parties to permit them to engineer, construct and operate CEP Plants, to service
the environmental remediation, waste management, decontamination,
decommissioning, chemical and biological demilitarization, pollution prevention
and waste minimization needs of the Department of Energy or the Department of
Defense; and
WHEREAS, MMT, LMC and the Partnership (only for certain limited purposes
specified therein) have entered into a Partnership Restructuring Agreement,
dated as of March 15, 1996 (as in effect from time to time, the "RESTRUCTURING
AGREEMENT"), pursuant to which they agreed to restructure certain aspects of
their business relationship; and
WHEREAS, in the Restructuring Agreement LMC and MMT agreed to enter into
this Agreement to amend and restate the terms of the Dispute Resolution
Agreement, dated as of August 9, 1994 (the "ORIGINAL AGREEMENT"), and to cause
the MMT Subsidiary, the LMC Subsidiary, LESAT, the Partnership and the General
Partner to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
set forth below and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree to amend
and restate the Original Agreement in its entirety to read as follows:
<PAGE> 196
-2-
1. DEFINED TERMS. Defined terms used in this Agreement without definition
have the meanings given to such terms in the Restructuring Agreement. In
addition, the following defined terms have the following meanings:
"Affiliate" means, with respect to any Person, any Person controlling,
controlled by or under common control with, such Person. As used in this
definition, the term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of Voting Securities, by contract or
otherwise with respect to any Person, and any other Person controlling,
controlled by or under common control with such Person.
"Agreement" means this Amended and Restated Dispute Resolution Agreement,
including the preamble and premises and any exhibits and schedules hereto, as in
effect from time to time.
"Asset Agreement" means the Asset Acquisition Agreement dated as of March
15, 1996, by and among LMC, MMT and the Partnership (for certain limited
purposes as specified therein).
"Covered Disputes" has the meaning set forth in Section 2.
"Delaware Superior Court" has the meaning set forth in Section 7.
"Designated Representatives" has the meaning set forth in Section 3.3.
"Master Agreement" has the meaning set forth in the preamble.
"Mediator" has the meaning set forth in Section 3.4.
"Notice Date" has the meaning set forth in Section 3.1.
"Noticed Dispute" has the meaning set forth in Section 3.1.
"Permitted Litigation" has the meaning set forth in Section 3.2.
"Person" means any individual, partnership, corporation, association,
trust, limited liability company, joint venture, unincorporated organization and
any government, governmental department or agency or political subdivision
thereof.
"Proceeding" has the meaning set forth in Section 7.
"Related Agreements" means this Agreement, the Master Agreement, the
Restructuring Agreement, the Asset Agreement, the Partnership Agreement, the
Registration Rights Agreement, the Loan Agreement, the GP Stockholder Agreement,
the MMT License Agreement, the Certificate of Incorporation of the General
Partner, the By-Laws of the General Partner, each of the Limited Guaranties, and
any other agreement between any of the Partnership, LMC, MMT,
<PAGE> 197
-3-
the General Partner, LESAT, the LMC Subsidiary or the MMT Subsidiary relating to
the Partnership which specifies that it is a Related Agreement for purposes of
this Agreement.
"Requesting Party" has the meaning set forth in Section 3.1.
"Settlement Information" has the meaning set forth in Section 3.5.1.
"Subsidiary" means a corporation, company or other entity:
(i) more than fifty percent (50%) of whose outstanding shares or
securities (representing the right to vote for the election of
directors or other managing authority) are, now or hereafter,
owned or controlled, directly or indirectly, by a party hereto,
but such corporation, company or other entity shall be deemed to
be a Subsidiary only so long as such ownership or control exists;
or
(ii) which does not have outstanding shares or securities, as may be
the case in a partnership, joint venture or unincorporated
association, but more than fifty percent (50%) of whose ownership
interests representing the right to make the decisions for such
corporation, company or other entity is now or hereafter, owned
or controlled, directly or indirectly, by a party hereto, but
such corporation, company or other entity shall be deemed to be a
Subsidiary only so long as such ownership or control exists.
"Summary Proceeding" has the meaning set forth in Section 7.
"Summary Proceeding Rules" has the meaning set forth in Section 7.
"Voting Securities" mean, with respect to any Person, all securities issued
by such Person having the ordinary power to vote in the election of directors of
such Person, other than securities having such power only upon the occurrence of
a default or any other extraordinary contingency.
2. COVERED DISPUTES. The dispute resolution procedures provided for in
this Agreement shall apply to all disputes which may arise among any of the
parties hereto or any of their Subsidiaries, whether denominated as claims for
breach of contract, claims sounding in tort, claims based on equitable
principles or otherwise, with regard to any aspect of the interpretation or
performance of any of the Related Agreements, or any aspect of or circumstance
relating to the negotiations, preparation, execution of any of the Related
Agreements or any aspect of the relationship contemplated by the Restructuring
Agreement. Such disputes subject to this Agreement are referred to herein as
"COVERED DISPUTES."
<PAGE> 198
-4-
3. DISPUTE RESOLUTION PROCEDURES.
3.1. NOTICE AND INVOCATION OF MEDIATION PROCEDURES. The procedures provided
for by this Agreement shall not apply to any Covered Dispute unless and until
either LMC, the Partnership or MMT (a "REQUESTING PARTY") shall have given
written notice invoking the mediation procedures contained herein to each other
party to the Covered Dispute. Such notice shall specify in reasonable detail the
dispute to which it is intended to apply. Such dispute is hereinafter referred
to as a "NOTICED DISPUTE." The effective date of delivery of such notice is
referred to herein as the "NOTICE DATE."
3.2. STAY OF LITIGATION UPON ELECTION OF MEDIATION; TOLLING. (a) Each of
the parties hereto agrees that it will not commence any litigation relating to
any Covered Dispute unless prior thereto such party has engaged in the mediation
procedures contemplated by this Section 3 with respect to such Covered Dispute,
except that any party shall be entitled to exercise any remedy in connection
with such Covered Dispute if such party reasonably believes that a statute of
limitations or repose or other similar statute or doctrine will bar its claim or
claims unless a judicial proceeding is commenced or that its rights cannot be
protected other than through immediate injunctive or equitable relief
(collectively, "PERMITTED LITIGATION").
(b) In the event that the Requesting Party delivers a notice of a
Noticed Dispute, each party hereto shall refrain from commencing any litigation
relating to the Noticed Dispute against any other party to this Agreement and
each of such other party's Subsidiaries, except for any Permitted Litigation.
Such stay shall remain in effect until the earlier of (i) sixty (60) days after
the Notice Date, (ii) completion of the dispute resolution process without
settlement of the Noticed Dispute, or (iii) written agreement by all parties to
discontinue the dispute resolution procedures. If any litigation (other than
Permitted Litigation) is pending at the time of the notice, the parties shall
each take appropriate steps, including all necessary filings with the court
having jurisdiction over such litigation to suspend such litigation for the
period of the stay provided for by this Section 3.2. During the pendency of the
stay of litigation provided for in this Section 3.2, all statutes of limitation
which may be applicable to the Noticed Dispute shall be tolled as between or
among the parties hereto and their respective Subsidiaries.
3.3. NEGOTIATION. Within five (5) days after the Notice Date, each party
to such Noticed Dispute shall designate in writing to the other parties the name
of one of its senior executive officers who shall be its "DESIGNATED
REPRESENTATIVE" in the dispute resolution proceedings. Designation by any party
of its Designated Representative shall constitute a representation by such party
that its Designated Representative has full power and authority to bind such
party to any compromise of the Noticed Dispute or any release of rights in
connection therewith. The Designated Representatives shall negotiate in good
faith for ten (10) days to resolve such Noticed Dispute.
3.4. THIRD PARTY MEDIATOR. In the event that the Designated
Representatives are unable to resolve the Noticed Dispute, then within twenty
(20) days after the Notice Date, the parties shall mutually appoint a neutral
third party mediator (the "MEDIATOR"). In selecting the Mediator, the parties
shall select someone with substantial experience in corporate and partnership
legal
<PAGE> 199
-5-
matters. If the parties are unable to agree upon the Mediator by the 20th day
following the Notice Date, any party may obtain the appointment of the Mediator
by Endispute/J.A.M.S. or its successor (or if such organization shall no longer
exist or shall refuse to act) by any court of competent jurisdiction. Thereafter
the parties to such Noticed Dispute shall use good faith efforts for thirty (30)
days to mediate the Noticed Dispute using the services of the Mediator. In the
event the parties have not resolved the Noticed Dispute within such thirty (30)
day period, the dispute resolution procedures shall be deemed completed, and any
litigation stay shall terminate.
3.5. CONFIDENTIALITY; USE IN LITIGATION.
3.5.1. All statements, disclosures, submissions, and other
communications made by a party in the course of mediation of a Noticed Dispute
(collectively, "SETTLEMENT INFORMATION") shall be confidential information and
shall not be disclosed to any Person other than the employees, officers, counsel
and consultants directly involved in the Noticed Dispute, and each party in
receipt of Settlement Information shall require all persons to whom it is
permitted to disclose Settlement Information to make a similar nondisclosure
commitment for the benefit of and enforceable by the party providing Settlement
Information. Such nondisclosure obligation shall remain in effect for a period
of six years from the date of disclosure.
3.5.2. Prior to commencing the mediation process, the parties shall
require the Mediator to sign a confidentiality agreement in which he or she
commits, for the benefit of and on a basis which is enforceable by each party
and its respective Affiliates, that he or she will hold the Settlement
Information confidential and not disclose it to any party other than the parties
and their respective Affiliates, counsel and advisors and agents involved in the
Noticed Dispute except under order of disclosure by a court of competent
jurisdiction or pursuant to a written authorization signed by the party or
parties providing the Settlement Information which is to be disclosed. Each
party agrees that it will not and it will not cause or permit any of its
Affiliates to seek a court order requiring testimony in any court or other
proceeding by the Mediator, with respect to any matter.
3.5.3. All Settlement Information shall be deemed to be statements
made in the furtherance of settlement negotiations and, as such, shall not be
admissible in any litigation or proceeding; PROVIDED, THAT, no party shall be
prevented from obtaining discovery concerning or offering evidence of facts
disclosed in Settlement Information from sources other than disclosures made in
mediation, to the extent otherwise permissible by law.
4. FEES AND EXPENSES OF MEDIATOR. The fees and expenses of the Mediator
shall be divided equally by LMC and MMT.
5. SCOPE OF OBLIGATION; SPECIFIC PERFORMANCE. The parties are agreeing to
utilize the settlement procedures outlined above in a good faith effort to
provide for a speedy and economical means of resolving disputes. However, the
parties agree that no party shall be in default or in breach hereof for failure
to adhere to any of the procedures outlined above except that (i) compliance
with the procedures hereof in full when and as required shall be a condition
<PAGE> 200
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precedent to the other party's obligation to continue its participation in the
negotiation and mediation procedures and (ii) either party may obtain an order
of specific performance in respect of the other party's obligation under
Sections 3.2, 3.5.1, 3.5.2, and 3.5.3 and an award of money damages in respect
of Section 4. In addition, nothing herein shall be construed to require any
party to agree to any particular settlement of a dispute. It is the intention of
the parties that this Agreement be purely procedural in nature. Its purpose is
to ensure that the possibilities of settlement are fully explored by the parties
with the aid of a neutral mediator before either party resorts to or continues
the prosecution of litigation.
*
7. SUMMARY PROCEEDING. (a) No Covered Dispute where the amount in
controversy as to at least one party, exclusive of interest and costs, exceeds
One Million Dollars ($1,000,000) (a "SUMMARY PROCEEDING"), shall be litigated
(whether before or after invocation and completion of the mediation procedures
set forth in Section 3) except in the Superior Court of the State of Delaware
(the "DELAWARE SUPERIOR COURT") as a summary proceeding pursuant to Rules
124-131 of the Delaware Superior Court, or any successor rules (the "SUMMARY
PROCEEDING RULES"). Each of the parties hereto hereby irrevocably and
unconditionally (i) submits to the jurisdiction of the Delaware Superior Court
for any Summary Proceeding, (ii) agrees not to commence any Summary Proceeding
except in the Delaware Superior Court; (iii) waives, and agrees not to plead or
to make, any objection to the venue of any Summary Proceeding in the Delaware
Superior Court, (iv) waives, and agrees not to plead or to make, any claim that
the Delaware Superior Court lacks personal jurisdiction over it, and (iv) waives
its right to remove any Summary Proceeding to the federal courts except where
such courts are vested with sole and exclusive jurisdiction by statute.
(b) In the event any action, suit or proceeding arising out of or
relating to any Covered Dispute where the amount in controversy as to at least
one party, exclusive of interest and costs, does not exceed One Million Dollars
($1,000,000) (a "PROCEEDING"), the parties to such Proceeding agree to make
application to the Delaware Superior Court to proceed under the Summary
Proceeding Rules. Until such time as such application is rejected, such
Proceeding shall be treated as a Summary Proceeding and all of the foregoing
provisions of this Section relating to Summary Proceedings shall apply to such
Proceeding.
- ----------------------------------
* Confidential treatment has been requested for this portion of Exhibit 10.2.
<PAGE> 201
-7-
(c) Each of the parties agrees, to the extent such party is not a
resident of the State of Delaware, to appoint irrevocably and to maintain an
agent in the State of Delaware, and to notify promptly each other party hereto
of the name and address of such agent.
8. MISCELLANEOUS.
8.1. ENTIRE AGREEMENT. This Agreement together with the Related Agreements
constitutes the entire agreement between the parties with respect to the subject
matter hereof and thereof and merges and replaces all prior negotiations,
discussions, offers, representations, warranties, covenants, and agreements of
the parties in respect of such subject matter.
8.2. AMENDMENT; WAIVER. This Agreement may be amended only by a written
instrument signed by all parties. The failure of any party to insist on one or
more occasions upon strict performance by the other party of any its obligations
hereunder shall not constitute a waiver, release, or amendment of such party's
right to insist upon strict performance of such obligation on future occasions.
8.3. NOTICES. Notices given to either of the parties pursuant to, or in
connection with, this Agreement shall be effective upon delivery and shall be
transmitted by manual delivery, certified or registered mail with return receipt
requested or express courier at the address set forth below in respect of each
party:
8.3.1. If to MMT, to:
Molten Metal Technology, Inc.
51 Sawyer Road
Waltham, Massachusetts 02154
Attention: William M. Haney, III, President
and Chief Executive Officer
Ethan E. Jacks, Esq., Vice President
and General Counsel
with a copy sent contemporaneously to:
Bingham, Dana & Gould LLP
150 Federal Street
Boston, Massachusetts 02154
Attention: John R. Utzschneider, Esq.
<PAGE> 202
-8-
8.3.2. If to LMC, to:
Lockheed Martin Corporation
Energy and Environmental Sector
1155 University Boulevard, S.E.
Albugquerque, New Mexico 87106-4320
Attention: Peter P. Ottmer, Esq.
Vice President and General Counsel
with a copy sent contemporaneously to:
Richards, Layton & Finger
One Rodney Square
Wilmington, DE 19801
Attention: James G. Leyden, Esq.
8.3.3. If to MMT Sub, c/o MMT at the address provided pursuant to
Section 8.3.1; and if to LMC Sub, c/o LMC at the address provided pursuant to
Section 8.3.2.
8.3.4. If to the General Partner or the Partnership, c/o MMT Sub and
LMC Sub at the address provided pursuant to Sections 8.3.1 and 8.3.2 above.
8.4. GOVERNING LAW, ETC. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware,
all rights and remedies being governed by such laws, without regard to its
conflict of laws rules.
8.5. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY RIGHTS THAT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY OF THE RELATED
AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR ACTIONS OR
ANY OF THEM RELATING THERETO.
8.6. WAIVER OF CERTAIN DAMAGES. EACH OF THE PARTIES HERETO TO THE FULLEST
EXTENT PERMITTED BY LAW IRREVOCABLY WAIVES ANY RIGHTS THAT IT MAY HAVE TO
PUNITIVE, EXEMPLARY, SPECIAL OR CONSEQUENTIAL DAMAGES IN RESPECT OF ANY
LITIGATION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY RELATED
AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR ACTIONS OF
ANY OF THEM RELATING THERETO.
8.7. SECTIONS AND SECTION HEADINGS. The headings of sections and
subsections are for reference only and shall not limit or control the meaning
thereof.
<PAGE> 203
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8.8. ASSIGNS. This Agreement and the Related Agreements shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns. Neither this Agreement and the Related
Agreements nor the obligations of any party hereunder or thereunder shall be
assignable or transferable by such party without the prior written consent of
the other party hereto.
8.9. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.10 CONSTRUCTION. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be applied against any party.
8.11 SEVERABILITY. The invalidity or unenforceability of any particular
provision of this Agreement or any Related Agreement shall not affect the other
provisions hereof or thereof, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provision was omitted.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first set forth above.
MOLTEN METAL TECHNOLOGY, INC.
By:_______________________________
Name: _________________________
Title:_________________________
LOCKHEED MARTIN CORPORATION
By:_______________________________
Name: _________________________
Title:_________________________
MARTIN MARIETTA ENVIRONMENTAL
HOLDINGS, INC.
By:_______________________________
Name: _________________________
Title:_________________________
<PAGE> 204
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LOCKHEED ENVIRONMENTAL
SYSTEMS & TECHNOLOGIES CO.
By:_______________________________
Name: _________________________
Title:_________________________
MMT FEDERAL HOLDINGS INC.
By:_______________________________
Name: _________________________
Title:_________________________
M4 ENVIRONMENTAL L.P.
By: M4 Environmental Management Inc.,
as General Partner
By:_______________________________
Name: _________________________
Title:________________________
M4 ENVIRONMENTAL MANAGEMENT INC.
By:_______________________________
Name: _________________________
Title:_________________________
<PAGE> 205
Schedule 3.6 to
Partnership Restructuring Agreement
-----------------------------------
(i) Amending the Limited Liability Company Agreement (the "LLC AGREEMENT") of
the successor to M4 Environmental L.P. (the "NEW LLC");
(ii) Increasing the amount of capital contributions or debt guarantees above
the thresholds provided for in the LLC Agreement;
(iii) To admit any new Member upon the issuance of new limited liability
company interests;
(iv) Permitting the transfer by a member of its limited liability company
interest;
(v) To pursue an initial public offering in connection with the New LLC or
its assets;
(vi) Acquiring property from any Person relating to acquisitions by way of
purchase of stock, partnership interests, membership interests or other
equity interests or purchase of assets of businesses engaged in the
environmental business;
(vii) To dissolve the New LLC;
(viii) To sell all or substantially all of the assets of the New LLC;
(ix) Causing the New LLC to merge with or consolidate into another business
entity;
(x) Commencing a voluntary proceeding seeking reorganization or other relief
with respect to the New LLC under any bankruptcy or similar law; and
(xi) Causing the New LLC to engage in any material transaction between the New
LLC and any member of the New LLC not contemplated by the Partnership
Restructuring Agreement and the Related Agreements, including the sale of
Retech assets to any member or its affiliate.
<PAGE> 1
Exhibit 10.3
MOLTEN METAL TECHNOLOGY, INC.
5 1/2% CONVERTIBLE SUBORDINATED NOTES DUE 2006
PURCHASE AGREEMENT
April 25, 1996
Lazard Freres & Co. LLC
Alex. Brown & Sons Incorporated
Oppenheimer & Co., Inc.
c/o Lazard Freres & Co. LLC
30 Rockefeller Plaza
New York, NY 10020
As Representative of the
Several Initial Purchasers
Ladies and Gentlemen:
1. INTRODUCTORY. Molten Metal Technology, Inc., a Delaware corporation (the
"Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell to the several initial purchasers named in Schedule I hereto (the
"Initial Purchasers") $125,000,000 principal amount ("Firm Securities") and also
proposes to grant to the Initial Purchasers an option, exercisable from time to
time, to purchase an aggregate of up to $18,750,000 principal amount ("Optional
Securities") of its 5 1/2% Convertible Subordinated Notes Due 2006 to be issued
under an indenture dated as of May 1, 1996 (the "Indenture"), between the
Company and The Bank of New York, as trustee (the "Trustee"). The Firm
Securities and the Optional Securities which the Initial Purchasers may elect to
purchase pursuant to Section 3 hereof are collectively referred to herein as the
"Offered Securities".
A portion of the Offered Securities will be offered and sold in accordance
with Regulation S (the "Regulation S Securities") and a portion of the Offered
Securities will be offered and sold to "qualified institutional buyers" (as
defined in Rule 144A under the Securities Act of 1933 (the "Act")) (the "144A
Securities") and to certain institutional accredited investors (the
<PAGE> 2
2
"Restricted Definitive Securities", and together with the 144A Securities, the
"Restricted Offered Securities") in reliance on exemptions from the registration
requirements of the Securities Act. Holders (including subsequent transferees)
of the Restricted Offered Securities will have the registration rights set forth
in the Registration Rights Agreement of even date herewith (the "Registration
Rights Agreement"), between the Company and the Initial Purchasers. Pursuant to
the Registration Rights Agreement, the Company has agreed to file with the
Securities and Exchange Commission (the "Commission"), a shelf registration
statement pursuant to Rule 415 under the Securities Act (the "Shelf Registration
Statement").
This Agreement, the Indenture and the Registration Rights Agreement are
referred to herein collectively as the "Operative Documents".
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to, and agrees with, each of the Initial Purchasers that:
(a) A confidential preliminary offering memorandum dated April 16,
1996 for the offer and sale of the Offered Securities outside the U.S. in
accordance with Regulation S (the "Preliminary Regulation S Offering
Memorandum"), a confidential preliminary offering memorandum dated April
16, 1996 for the offer and sale of the Offered Securities to "qualified
institutional buyers" and to certain institutional accredited investors
(the "Preliminary U.S. Offering Memorandum" and together with the
Preliminary Regulation S Offering Memorandum, the "Preliminary Offering
Memoranda"), and a confidential offering memorandum dated April 26, 1996
for the offer and sale of the Offered Securities (the "Offering
Memorandum") have been prepared by the Company. Such Preliminary Offering
Memoranda and Offering Memorandum, as supplemented as of the date of this
Agreement, and the Company's Annual Report are hereinafter collectively
referred to as the "Offering Documents". As of their respective dates and,
in the case of the Offering Memorandum, as of the date of this Agreement,
no Offering Document includes any untrue statement of a material fact or
omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The preceding sentence does not
<PAGE> 3
3
apply to statements in or omissions from an Offering Document based upon
written information furnished to the Company by the Initial Purchasers
specifically for use therein, it being understood and agreed that the only
such information is that described as such in Section 7(a).
(b) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own its properties and conduct its
business as described in the Offering Documents; and the Company is duly
qualified to do business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification except where the
failure to be so qualified would not have a material adverse effect on its
business and properties.
(c) The Company's only subsidiaries are MMT Federal Holdings, Inc. and
MMT International Holdings, Inc. Each subsidiary of the Company has been
duly incorporated and is an existing corporation in good standing under the
laws of the jurisdiction of its incorporation, with corporate power and
authority to own its properties and conduct its business as described in
the Offering Documents; and each subsidiary of the Company is duly
qualified to do business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification except where the
failure to be so qualified would not have a material adverse effect on its
business and properties; all of the issued and outstanding capital stock of
each subsidiary of the Company has been duly authorized and validly issued
and is fully paid and nonassessable; and, except as disclosed in the
Offering Memoranda, the capital stock of each subsidiary owned by the
Company, directly or through subsidiaries, is owned free from liens,
encumbrances and defects.
(d) To the Company's knowledge, M4 Environmental L.P. ("M4") has been
duly organized and is in good standing as a limited partnership under the
laws of the state of Delaware with power and authority to own its
properties and conduct its business as described in the
<PAGE> 4
4
Offering Documents, and is duly qualified to do business as a foreign
partnership in good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business requires such
qualification except where the failure to be so qualified would not have a
material adverse effect on its business and properties; to the Company's
knowledge, all of the partnership interests of M4 have been duly authorized
and validly issued and are beneficially owned by the Company and Lockheed
Martin Corporation in the respective amounts as set forth in the Offering
Documents.
(e) The Offered Securities have been duly authorized by the Company;
the Indenture has been duly authorized by the Company; and when the Offered
Securities are delivered and paid for pursuant to this Agreement on such
Closing Date (as defined below) and authenticated by the Trustee, the
Indenture will have been duly executed and delivered by the Company, such
Offered Securities will have been duly executed, authenticated, issued and
delivered by the Company; and the Offered Securities will conform in all
material respects to the description thereof contained in the Offering
Memorandum. The Indenture and such Offered Securities will constitute valid
and legally binding obligations of the Company and will be enforceable in
accordance with their terms, subject to (i) bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity.
(f) The Company has an authorized capitalization as set forth in the
Offering Documents, and when the Offered Securities are delivered and paid
for pursuant to this Agreement on each Closing Date, such Offered
Securities will be convertible into the shares of Common Stock, par value
$.01 per share ("Underlying Shares"), of the Company in accordance with the
terms of the Indenture; the Underlying Shares initially issuable upon
conversion of such Offered Securities have been duly authorized and
reserved for issuance upon such conversion and, when issued upon such
conversion in accordance with the terms of the Indenture, will be validly
issued, fully paid and nonassessable; the outstanding Underlying Shares
have been duly authorized and validly issued, are fully paid
<PAGE> 5
5
and nonassessable; the Underlying Shares conform to the description thereof
contained in the Offering Memorandum, and the stockholders of the Company
have no preemptive rights with respect to the Offered Securities or the
Underlying Shares.
(g) The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and conforms in all material respects
to the description thereof contained in the Offering Memorandum. The
Registration Rights Agreement constitutes a valid and legally binding
obligation of the Company and is enforceable in accordance with its terms,
subject to (i) bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or similar laws now or hereafter in effect relating to
creditors' rights generally, (ii) general principles of equity and (iii)
applicable federal and state securities laws and public policy that may
limit the application of indemnification provisions with respect to
securities law matters.
(h) No consent, approval, authorization or order of, or filing with,
any governmental agency or body or any court is required for the
consummation of the transactions contemplated by the Operative Documents or
in connection with the issuance and sale of the Offered Securities by the
Company, except as may be required under the Securities Act and the Rules
and Regulations of the Commission thereunder and state and foreign
securities laws, in each case with respect to the Registration Rights
Agreement and the transactions contemplated thereunder.
(i) The execution, delivery and performance by the Company of the
Operative Documents and the issuance and sale of the Offered Securities and
compliance with the terms and provisions of the Operative Documents and the
Offered Securities (in the case of M4, to the Company's knowledge) will not
result in a breach or violation of any of the terms and provisions of, or
constitute a default under (i) any material statute, rule, regulation or
order of any governmental agency or body or any court, domestic or foreign,
having jurisdiction over the Company or any subsidiary of the Company or M4
or any of their respective properties; or (ii) any material agreement or
instrument relating to borrowed money to which the Company or any such
<PAGE> 6
6
subsidiary or M4 is a party or by which the Company or any such subsidiary
is bound or to which any of the properties of the Company or any such
subsidiary is subject; or (iii) any other material agreement or instrument
to which the Company or any such subsidiary or M4 is a party or by which
the Company or any such subsidiary or M4 is bound or to which any of the
properties of the Company or any such subsidiary or M4 is subject; or (iv)
the charter or by-laws of the Company or any such subsidiary or the
partnership agreement of M4. The Company has full corporate power and
authority to authorize, issue and sell the Offered Securities as
contemplated by this Agreement.
(j) This Agreement has been duly authorized,
executed and delivered by the Company.
(k) Except as disclosed in the Offering Documents, the Company and its
subsidiaries and, to the Company's knowledge, M4 have good and marketable
title to all real properties and all other properties and assets owned by
them, in each case free from liens, encumbrances and defects that would
materially affect the value thereof or materially interfere with the use
made or to be made thereof by them; and except as disclosed in the Offering
Documents, the Company and its subsidiaries and, to the Company's
knowledge, M4 hold any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with
the use made or to be made thereof by them.
(l) The Company, its subsidiaries and, to the Company's knowledge, M4
possess adequate certificates, authorities or permits issued by appropriate
governmental agencies or bodies necessary to conduct the business now
operated by them and have not received any notice of proceedings relating
to the revocation or modification of any such certificate, authority or
permit that, if determined adversely to the Company or any of its
subsidiaries or M4, would individually or in the aggregate have a material
adverse effect on the Company and its subsidiaries taken as a whole or on
M4.
(m) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
might have a material adverse effect on the Company and its subsidiaries
<PAGE> 7
7
taken as a whole or, to the Company's knowledge, on M4.
(n) The Company and its subsidiaries and, to the Company's knowledge,
M4 own, possess or can acquire on reasonable terms adequate trademarks,
trade names and other rights to inventions, know-how, patents, copyrights,
confidential information and other intellectual property (collectively,
"intellectual property rights") necessary to conduct the business now
operated by them, or presently employed by them, and have not received any
notice of infringement of or conflict with asserted rights of others with
respect to any intellectual property rights that, if determined adversely
to the Company or any of its subsidiaries or M4, would individually or in
the aggregate have a material adverse effect on the Company and its
subsidiaries taken as a whole or on M4.
(o) Except as disclosed in the Offering Documents, neither the Company
nor any of its subsidiaries nor, to the Company's knowledge, M4 is in
violation of any statute, any rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to
the use, disposal or release of hazardous or toxic substances or relating
to the protection or restoration of the environment or human exposure to
hazardous or toxic substances (collectively, "environmental laws"), owns or
operates any real property contaminated with any substance that is subject
to any environmental laws, is liable for any off-site disposal or
contamination pursuant to any environmental laws, or is subject to any
claim relating to any environmental laws, which violation, contamination,
liability or claim would individually or in the aggregate have a material
adverse effect on the Company and its subsidiaries taken as a whole or on
M4; and the Company (in the case of M4, to the Company's knowledge) is not
aware of any pending investigation which might lead to such a claim.
(p) Except as disclosed in the Offering Documents, there are no
pending actions, suits or proceedings against or affecting the Company, any
of its subsidiaries or, to the Company's knowledge, M4 or any of their
respective properties that are reasonably likely to have, individually or
in the aggregate, a material adverse effect on the condition (financial or
<PAGE> 8
8
other), business, properties or results of operations of the Company and
its subsidiaries taken as a whole or on M4, or would materially and
adversely affect the ability of the Company to perform its obligations
under the Operative Documents; and no such actions, suits or proceedings
are, to the Company's knowledge, threatened.
(q) The financial statements with respect to the Company included in
the Offering Documents present fairly the financial position of the Company
and its consolidated subsidiaries as of the dates shown and their results
of operations and cash flows for the periods shown, and such financial
statements have been prepared in conformity with generally accepted
accounting principles in the United States applied on a consistent basis.
(r) Except as disclosed in the Offering Documents, since the date of
the latest audited consolidated financial statements of the Company
included in the Offering Documents there has been no material adverse
change, nor to the best of the Company's knowledge, after due inquiry, any
development or event involving a prospective material adverse change, in
the financial condition, business or prospects, properties or results of
operations of the Company and its subsidiaries taken as a whole, and,
except as disclosed in the Offering Documents, there has been no dividend
or distribution of any kind declared, paid or made by the Company on any
class of its capital stock.
(s) Except as disclosed in the Offering Documents, since December 31,
1995 to the Company's knowledge, there has been no material adverse change,
nor to the best of the Company's knowledge, after due inquiry, any
development or event involving a prospective material adverse change, in
the financial condition (other than the incurrence by M4 of approximately
$38 million in indebtedness in connection with a project financing),
business, properties or results of operations of M4.
(t) The Company is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds thereof
as described in the Offering Documents, will not be, an "investment
<PAGE> 9
9
company" or an entity "controlled" by an investment company as such terms
are defined in the Investment Company Act of 1940.
(u) No securities of the same class (within the meaning of Rule
144A(d)(3) under the Securities Act) as the Offered Securities are listed
on any national securities exchange registered under Section 6 of the
Exchange Act or quoted in a U.S. automated interdealer quotation system.
(v) The offer and sale of the Offered Securities in the manner
contemplated by this Agreement will be exempt from the registration
requirements of the Securities Act by reason of Section 4(2) thereof and
Regulation S ("Regulation S") thereunder; and, unless otherwise required as
a result of the registration statement to be filed pursuant to the
Registration Rights Agreement, it is not necessary to qualify an indenture
in respect of the Offered Securities under the United States Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").
(w) Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf (i) has, within the six-month period prior to
the date hereof, offered or sold in the United States or to any U.S. person
(as such terms are defined in Regulation S under the Securities Act) the
Offered Securities, or any security of the same class or series as the
Offered Securities or (ii) has offered or will offer or sell the Offered
Securities (A) in the United States by means of any form of general
solicitation or general advertising within the meaning of Rule 502(c) under
the Securities Act or (B) with respect to any such securities sold in
reliance on Rule 903 of Regulation S under the Securities Act, by means of
any directed selling efforts within the meaning of Rule 902(b) of
Regulation S. The Company, its affiliates and any person acting on its or
their behalf (other than the Initial Purchasers) have complied and will
comply with the offering restrictions requirement of Regulation S. The
Company has not entered and will not enter into any contractual arrangement
with respect to the distribution of the Offered Securities except for this
Agreement.
(x) The Company is subject to Section 13 or 15(d)
<PAGE> 10
10
of the Exchange Act.
3. PURCHASE, SALE AND DELIVERY OF OFFERED SECURITIES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the Initial
Purchasers, and the Initial Purchasers agree, severally and not jointly, to
purchase from the Company, at a purchase price of 97% of the principal amount
thereof plus accrued interest from May 1, 1996 to the First Closing Date (as
hereinafter defined), the respective principal amounts of Firm Securities set
forth opposite the names of the several Initial Purchasers in Schedule I hereto.
The Company will deliver against payment of the purchase price the Firm
Securities to be purchased by the Initial Purchasers hereunder and to be offered
and sold by the Initial Purchasers in reliance on Regulation S (the "Firm
Regulation S Securities") in the form of definitive securities registered in
such names as Lazard Freres & Co. LLC shall specify. The Company will deliver
against payments of the purchase price the Firm Securities to be purchased by
the Initial Purchasers hereunder and to be offered and sold by the Initial
Purchasers in reliance on Rule 144A under the Securities Act (the "144A
Securities") in the form of one or more permanent global securities in
definitive form (collectively, the "Restricted Global Security") deposited with
the Trustee as custodian for The Depository Trust Company ("DTC") and registered
in the name of Cede & Co., as nominee for DTC. The Company will deliver against
payment of the purchase price the Firm Securities to be purchased by the Initial
Purchasers and to be offered and sold by the Initial Purchasers to certain
institutional accredited investors (as provided in Section 4) in the form of
definitive securities registered in such names as Lazard Freres & Co LLC shall
specify (the "Restricted Definitive Securities", and together with the 144A
Securities, the "Restricted Securities"). The Regulation S Securities and the
Restricted Securities shall be assigned separate CUSIP numbers. The Offered
Securities shall include the legend regarding restrictions on transfer set forth
under "Transfer Restrictions" in the Offering Memorandum.
Payment of the purchase price for the Offered Securities shall be made by
the Initial Purchasers in New York Clearing House or next day funds by wire
transfer to an account previously designated to Lazard Freres & Co. LLC by the
Company at a bank acceptable to Lazard Freres & Co. LLC
<PAGE> 11
11
or by certified or official bank check or checks payable to the order of the
Company at the office of Cravath, Swaine & Moore at 9:00 a.m. (New York time),
on May 1, 1996, or at such other time not later than seven full business days
thereafter and date as Lazard Freres & Co. LLC and the Company determine, such
time being herein referred to as the "First Closing Date", against delivery of
the Offered Securities as set forth above. The Regulation S Securities, the
Restricted Global Security and the Restricted Definitive Securities will be made
available for checking at the above offices of Cravath, Swaine & Moore at least
24 hours prior to the First Closing Date.
In addition, upon written notice from Lazard Freres & Co. LLC given to the
Company from time to time not more than 30 days subsequent to the First Closing
Date, the Initial Purchasers may purchase all or less than all of the Optional
Securities at the purchase price per principal amount of Offered Securities
(including any accrued interest thereon to the related Optional Closing Date) to
be paid for the Firm Securities. The Company agrees to sell to the Initial
Purchasers the number of Optional Securities specified in such notice and the
Initial Purchasers agree, severally and not jointly, to purchase such Optional
Securities. Such Optional Securities shall be purchased from the Company for the
account of each Initial Purchaser in the same proportions as the principal
amount of Firm Securities set forth opposite such Initial Purchaser's name bears
to the total principal amount of Firm Securities (subject to adjustment by
Lazard Freres & Co LLC to eliminate fractions) and may be purchased by the
Initial Purchasers only for the purpose of covering over-allotments made in
connection with the sale of the Firm Securities. No Optional Securities shall be
sold or delivered unless the Firm Securities previously have been, or
simultaneously are, sold and delivered. The right to purchase the Optional
Securities or any portion thereof may be exercised from time to time and to the
extent not previously exercised may be surrendered and terminated at any time
upon notice by Lazard Freres & Co. LLC to the Company.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as the "Optional Closing Date", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by Lazard
Freres & Co. LLC, but shall not be later than seven full business days after
written notice of
<PAGE> 12
12
election to purchase Optional Securities is given.
Payment for the Optional Securities being purchased on each Optional
Closing Date and to be offered and sold by the Initial Purchasers in reliance on
Regulation S (the "Optional Regulation S Securities") and the Optional
Securities being purchased on such Optional Closing Date by the Initial
Purchasers hereunder and to be offered and sold by the Initial Purchasers in
reliance on Rule 144A under the Securities Act (the "Optional 144A Securities")
shall be made by the Initial Purchasers in New York Clearing House or next day
funds by wire transfer to an account previously designated to Lazard Freres &
Co. LLC by the Company at a bank acceptable to Lazard Freres & Co. LLC or by
certified or official bank check or checks payable to the order of the Company
at the office of Cravath, Swaine & Moore, against delivery to the Trustee of (i)
the Regulation S Securities being purchased on such Optional Closing Date
registered in the names and denominations as Lazard Freres & Co. LLC shall
specify and (ii) the Restricted Global Securities representing all of the
Optional Rule 144A Securities being purchased on such Optional Closing Date.
4. REPRESENTATIONS BY INITIAL PURCHASERS; RESALE BY INITIAL PURCHASERS. (a)
Each of the Initial Purchasers severally represents and warrants to the Company
that it is an "accredited investor" within the meaning of Regulation D under the
Securities Act.
(b) Each Initial Purchaser severally acknowledges that the Offered
Securities have not been registered under the Securities Act and may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except in accordance with Regulation S or pursuant to an
exemption from the registration requirements of the Securities Act. Each Initial
Purchaser severally represents and agrees that it has offered and sold the
Offered Securities and will offer and sell the Offered Securities as part of the
distribution, at any time, and otherwise, until 40 days after the later of the
commencement of the offering and the latest Closing Date, in each case only in
accordance with Rule 903 or Rule 144A under the Securities Act ("Rule 144A"), or
to a limited number of Institutional Accredited Investors (as hereinafter
defined) in accordance with subsection (c). Accordingly, neither such Initial
Purchaser nor its affiliates, nor any persons acting on its or their behalf,
have engaged or will engage in any directed
<PAGE> 13
13
selling efforts with respect to the Offered Securities, and such Initial
Purchasers, its affiliates and all persons acting on its or their behalf have
complied and will comply with the offering restrictions requirement of
Regulation S. Each Initial Purchaser severally agrees that, at or prior to
confirmation of sale of the Offered Securities, other than a sale pursuant to
Rule 144A or a sale to an Institutional Accredited Investor in accordance with
subsection (c), it will have sent to each distributor, dealer or person
receiving a selling concession, fee or other remuneration that purchases the
Offered Securities from such Initial Purchaser during the restricted period a
confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the 'Securities Act') and may not be offered or
sold within the United States or to, or for the account or benefit of, U.S.
persons (i) as part of their distribution at any time or (ii) otherwise
until 40 days after the later of the date of the commencement of the
offering and the closing date, except in either case in accordance with
Regulation S (or Rule 144A if available) under the Securities Act. Terms
used above have the meanings given to them by Regulation S."
Unless otherwise defined herein, terms used in this subsection (b) have the
meanings given to them by Regulation S.
(c) Each Initial Purchaser may offer and sell Offered Securities in
definitive, fully registered form to a limited number of institutions, each of
which is reasonably believed by it to be an "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act (each, an
"Institutional Accredited Investor"); PROVIDED, HOWEVER, that each such
Institutional Accredited Investor executes and delivers to it and the Company,
prior to the consummation of any sale of Offered Securities to such
Institutional Accredited Investor, an Initial Purchaser's Letter in
substantially the form attached as Exhibit A to the Offering Memorandum (an
"Initial Purchaser's Letter").
(d) Each Initial Purchaser severally agrees, with respect to resales made
in reliance on Rule 144A of any of the Offered Securities, to deliver either
with the confirmation of such resale or otherwise prior to settlement
<PAGE> 14
14
of such resale a notice to the effect that the resale of such Offered Securities
has been made in reliance upon the exemption from the registration requirements
of the Securities Act provided by Rule 144A.
(e) Each Initial Purchaser severally represents, warrants and agrees that
(i) it has not offered or sold and prior to the expiration of the period six
months after the date of issue of the Offered Securities, and will not offer to
sell in the United Kingdom, by means of any document, any Offered Securities to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Public Offers of Securities Regulations 1995 and
the Financial Services Act 1986 with respect to anything done by it in relation
to the Offered Securities in, from or otherwise involving the United Kingdom and
(iii) it has only issued or passed on, and will only issue or pass on to any
person, in the United Kingdom, any document received by it in connection with
the issue of the Offered Securities to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1995 or is a person to whom such document may otherwise
lawfully be issued or passed on.
<PAGE> 15
15
5. CERTAIN AGREEMENTS OF THE COMPANY. The Company agrees with the Initial
Purchasers that:
(a) The Company will advise Lazard Freres & Co. LLC promptly of any
proposal to amend or supplement the Offering Documents and will not effect such
amendment or supplementation without its consent, which consent shall not be
unreasonably withheld. If, at any time prior to the completion of the initial
resale of the Offered Securities by the Initial Purchasers, any event occurs as
a result of which the Offering Documents as then amended or supplemented would
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, the Company promptly
will notify Lazard Freres & Co. LLC of such event and promptly will prepare, at
its own expense, an amendment or supplement which will correct such statement or
omission.
(b) The Company will furnish to Lazard Freres & Co. LLC copies of the
Preliminary Offering Memoranda, the Offering Documents and all amendments and
supplements to such documents, in each case as soon as available and in such
quantities as Lazard Freres & Co. LLC reasonably request, and the Company will
furnish to Lazard Freres & Co. LLC on the date hereof three copies of the
Offering Memorandum signed by a duly authorized officer of the Company, one of
each of which will include the independent accountants' reports therein manually
signed by such independent accountants. At any time when the Company is not
subject to Section 13 or 15(d) of the Exchange Act or is not in compliance with
its obligations thereunder, the Company will promptly furnish or cause to be
furnished to Lazard Freres & Co. LLC and, upon request, to each of the other
Initial Purchasers and, upon request of holders and prospective purchasers of
the Offered Securities, to such holders and purchasers, a reasonable number of
copies of the information required to be delivered to holders and prospective
purchasers of the Offered Securities pursuant to Rule 144A(d)(4) under the
Securities Act (or any successor provision thereto) in order to permit
compliance with Rule 144A in connection with resales by such holders of the
Offered Securities. The Company will pay the expenses of printing and
distributing to the Initial Purchasers all such documents.
(c) The Company will arrange, in cooperation with the Initial Purchasers
and their counsel, for the
<PAGE> 16
16
qualification of the Offered Securities for sale and the determination of their
eligibility for investment under the laws of such jurisdictions in the United
States as Lazard Freres & Co. LLC designate and will continue such
qualifications in effect so long as required for the resale of the Offered
Securities by the Initial Purchasers; PROVIDED, HOWEVER, that the Company will
not be required to qualify as a foreign corporation or to take any action which
would subject it to general service of process or to taxation in any such
jurisdiction where it is not then so subject.
(d) During the period of five years after the latest Closing Date, the
Company will furnish to Lazard Freres & Co. LLC and, upon request, to each of
the other Initial Purchasers as soon as practicable after the end of each fiscal
year, a copy of its annual report to stockholders for such year; and the Company
will furnish to Lazard Freres & Co. LLC and, upon request, to each of the other
Initial Purchasers (i) as soon as available, a copy of each report and any
definitive proxy statement of the Company filed with the Commission under the
Exchange Act or mailed to stockholders and (ii) from time to time, such other
publicly available information concerning the Company as Lazard Freres & Co. LLC
may reasonably request.
(e) During the period of three years after the later of the First Closing
Date and the last Optional Closing Date, the Company will furnish to Lazard
Freres & Co. LLC and, upon request, to each of the other Initial Purchasers and
any holder of Offered Securities a copy of the restrictions on transfer
applicable to the Offered Securities.
(f) During the period of three years after the later of the First Closing
Date and the last Optional Closing Date, the Company will not, and will not
permit any of its affiliates (as defined in Rule 144 under the Securities Act)
to, resell any of the Offered Securities that have been reacquired by any of
them.
(g) During the period of three years after the later of the First Closing
Date and the last Optional Closing Date, the Company will not be or become an
open-end investment company, unit investment trust or face-amount certificate
company that is or is required to be registered under Section 8 of the
Investment Company Act and is not, and will not be or become, a closed-end
investment company
<PAGE> 17
17
required to be registered, but not registered, under the Investment Company Act.
(h) The Company will pay all expenses incidental to the performance of the
Company's obligations (as applicable) under the Operative Documents, including
(i) the fees and expenses of the Trustee and its professional advisers; (ii) all
expenses in connection with the execution, issue, authentication, packaging and
initial delivery of the Offered Securities, the preparation and printing of this
Agreement, Operative Documents, the Offered Securities, the Offering Documents
and amendments and supplements thereto, and any other document relating to the
issuance, offer, sale and delivery of the Offered Securities (other than your
legal (except as provided in the next sentence), accounting, travel or other
fees and expenses); (iii) the cost of qualifying the Offered Securities for
trading in the Private Offerings, Resale and Trading through Automated Linkages
(PORTAL) market and any expenses incidental thereto; and (iv) the cost of any
advertising approved by the Company in connection with the issue of the Offered
Securities (other than a "tombstone" advertisement, if any). The Company will
also pay or reimburse the Initial Purchasers for any reasonable expenses
(including the reasonable fees and disbursements of counsel) incurred in
connection with qualification of the Offered Securities for sale under the laws
of such jurisdictions in the United States as the Initial Purchasers designate
and the printing of memoranda relating thereto, for any fees charged by
investment rating agencies for the rating of the Offered Securities, and for
expenses incurred in distributing the Offering Documents (including any
amendments and supplements thereto). On each Closing Date, in the event that the
Company requests that it be paid in same day funds, the Company will pay to the
Initial Purchasers an amount equal to the additional costs of effecting payment
of the aggregate purchase price of the Offered Securities purchased by the
Initial Purchasers on such Closing Date in same-day funds as compared with
payment in New York Clearing House (next-day) funds.
(i) In connection with the offering, until Lazard Freres & Co. LLC shall
have notified the Company of the completion of the resale of the Offered
Securities, neither the Company nor any of its affiliates has or will, either
alone or with one or more other persons, bid for or purchase for any account in
which it or any of its affiliates has a beneficial interest any Offered
Securities or attempt to
<PAGE> 18
18
induce any person to purchase any Offered Securities; and neither it nor any of
its affiliates will make bids or purchases for the purpose of creating actual,
or apparent, active trading in, or of raising the price of, the Offered
Securities.
(j) For a period of 90 days after the date of the Offering Memorandum,
neither the Company nor any of its subsidiaries will offer, sell, contract to
sell, pledge or otherwise dispose of, directly or indirectly, any debt
securities of the Company which mature more than one year from the date of the
Offering Memorandum and which are substantially similar to the Offered
Securities or any shares of Common Stock or securities convertible into or
exercisable or exchangeable for shares of Common Stock or publicly disclose the
intention to make any such offer, sale, pledge or disposal, without the prior
written consent of Lazard Freres & Co. LLC except (w) issuances of Common Stock
pursuant to the conversion or exchange of convertible or exchangeable securities
or the exercise of warrants or options, in each case outstanding on the date
hereof (x) grants of employee stock options or restricted stock pursuant to the
terms of a plan in effect on the date hereof (y) issuance of Common Stock,
subject to restrictions on resale satisfactory to Lazard Freres & Co. LLC, to a
company in a transaction determined by the Company's Board of Directors to
provide a strategic advantage to the Company and (z) the issuance of Common
Stock pursuant to any of the transactions described under "Description of
Capital Stock-Registration Rights" in the Offering Memorandum. Neither the
Company nor any of its subsidiaries will at any time offer, sell, contract to
sell, pledge or otherwise dispose of, directly or indirectly, any securities
under circumstances where such offer, sale, pledge, contract or disposition
would cause the exemption afforded by Section 4(2) of the Securities Act or the
safe harbor of Regulation S thereunder to cease to be applicable to the offer
and sale of the Offered Securities.
(k) The Company will use its best efforts to cause the Offered Securities
to be eligible for the PORTAL trading system of the National Association of
Securities Dealers, Inc.
(l) The Company will cause each Restricted Security to bear the legend set
forth in the form of Note included in Article 2 of the Indenture until such
legend shall no longer be necessary or advisable because the
<PAGE> 19
19
Restricted Securities are no longer subject to the restrictions on transfer
described therein.
(m) The Company will comply with the Registration Rights Agreement and all
agreements set forth in the representation letter of the Company to DTC relating
to the approval of the Offered Securities for "book-entry" transfer.
6. CONDITIONS OF THE OBLIGATIONS OF THE INITIAL PURCHASERS. The obligations
of the several Initial Purchasers to purchase and pay for the Firm Securities on
the First Closing Date and the Optional Securities on the Optional Closing Date
will be subject (i) to the provisions of Section 9 herein, (ii) in the case of
representations and warranties qualified as to materiality, to the accuracy of
and compliance with such representations and warranties in all respects, and in
the case of representations and warranties not qualified as to materiality, to
the accuracy of and compliance with such representations and warranties in all
material respects taken as a whole, on the part of the Company herein, (iii) to
the accuracy of the statements of Company officers made in any certificate
furnished pursuant to the provisions hereof, (iv) to the performance by the
Company of their obligations hereunder and (v) to the following additional
conditions precedent:
(a) The Initial Purchasers shall have received two letters, the first
dated the date of this Agreement and the other dated such Closing Date, of
Price Waterhouse LLP confirming that they are independent public
accountants within the meaning of the Securities Act and the applicable
published rules and regulations thereunder ("Rules and Regulations") and to
the effect that:
(i) except as specifically set forth in such letter, in their
opinion the financial statements and schedules examined by them and
included in the Offering Documents comply as to form in all material
respects with the applicable accounting requirements of the Securities
Act and the related published Rules and Regulations that would apply
to the Offering Documents if the Offering Documents were prospectuses
included in a registration statement on Form S-1 under the Securities
Act;
<PAGE> 20
20
(ii) on the basis of procedures (but not an audit in accordance
with generally accepted auditing standards) consisting of: (A) reading
the minutes of meetings of the Board of Directors of the Company and
its consolidated subsidiaries since December 31, 1995 as set forth in
the minute books through a specified date not more than five business
days prior to the date of delivery of such letter; (B) reading the
unaudited interim financial data for the period from the date of the
latest balance sheet included in the Offering Memoranda to the date of
the latest available interim financial data; and (C) making inquiries
of certain officials of the Company who have responsibility for
financial and accounting matters regarding the specific items for
which representations are requested below; nothing has come to their
attention as a result of the foregoing procedures that caused them to
believe that: (x) at the date of the latest available interim
financial data and at a specified date not more than five business
days prior to the date of delivery of such letter, there was any
change in the capital stock, increase in long-term debt or any
decreases in consolidated net current assets (working capital) or
shareholders' equity of the Company and subsidiaries consolidated as
compared with amounts shown in the latest balance sheet included in
the Offering Memoranda or (y) for the periods from January 1, 1996 to
the date of the latest available financial data and to a specified
date not more than five business days prior to delivery of such
letter, there were any decreases, as compared with the fourth quarter
of 1995, in consolidated revenues, income from operations or in the
total or per-share amounts of net income, except in all instances for
changes, increases or decreases which the Offering Memoranda disclose
have occurred or may occur, or they shall state any specific changes,
increases or decreases;
(iii) on the basis of an examination of the financial statements
included in the Offering Documents and inquiries of officials of the
Company who have responsibility for financial and accounting matters,
in their opinion the assumptions of the management of the Company
provide a reasonable basis for presenting the
<PAGE> 21
21
effects of the offer and sale of the Offered Securities in the as
adjusted columns in the tables under the sections "Capitalization" and
"Summary--Summary Financial Information" in the Offering Documents,
and the as adjusted columns under the sections "Capitalization" and
"Summary--Summary Financial Information" give appropriate effect to
those assumptions and the adjustments have been properly applied to
the historical amounts in the compilation of those columns; and
(iv) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
contained in the Offering Documents (in each case to the extent that
such dollar amounts, percentages and other financial information are
derived from the general accounting records of the Company and its
subsidiaries subject to the internal controls of the Company's
accounting system or are derived directly from such records by
analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with
such results, except as otherwise specifically set forth in such
letter.
(b) The Initial Purchasers shall have received an opinion, dated such
Closing Date, of Bingham, Dana & Gould LLP, counsel for the Company,
substantially as set forth in Exhibit A hereto.
(c) The Initial Purchasers shall have received from Ethan E. Jacks,
General Counsel of the Company, to the effect that:
(i) The execution, delivery and performance by the Company of the
Operative Documents and the issuance and sale of the Offered
Securities and compliance with the terms and provisions of the
Operative Documents and the Offered Securities will not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, or any agreement or instrument to which
the Company or any such subsidiary is a party or by which the Company
or any such
<PAGE> 22
22
subsidiary is bound or to which any of the properties of the Company
or any such subsidiary is subject.
(ii) There are no pending actions, suits or proceedings against
or affecting the Company or any of its subsidiaries or any of their
respective properties that if determined adversely would have,
individually or in the aggregate, a material adverse effect on the
financial condition, properties, results of operations, business or
prospects of the Company and its subsidiaries taken as a whole, or
would materially and adversely affect the ability of the Company to
perform their obligations under the Operative Documents or which are
otherwise material in the context of the sale of the Offered
Securities.
(d) The Initial Purchasers shall have received an opinion, dated such
Closing Date, of Hamilton, Brook, Smith & Reynolds, patent counsel for the
Company, to the effect that:
(i) the statements in the Offering Memorandum under the captions
"Risk Factors--Unpredictability of Patent Protection and Proprietary
Technology," and "Business--Intellectual Property and Proprietary
Technology," insofar as they relate to provisions of statutes,
regulations, contracts, agreements, patents, patent applications or
matters of United States patent law are accurate and correct in all
material respects;
(ii) the applications filed by such counsel on behalf of the
Company with the United States Patent and Trademark Office have been
duly and adequately filed;
(iii) the Company owns of record all right, title and interest in
and to the patents and patent applications described in the Offering
Memorandum free and clear of any adverse claim known by such counsel
of any third party. To such counsel's knowledge, the Company has not
infringed, is not infringing and has not received any notice of
infringement of any patents of any other person (other than a
threatened litigation
<PAGE> 23
23
or action for which the Company has received an opinion of counsel to
the effect that the chances that such threatened litigation or action
could be determined adversely to the Company are remote) which might
have a material and adverse effect on the properties, business,
financial condition or results of operations of the Company; and
(iv) to such counsel's knowledge, there is no litigation or
governmental or other proceeding relating to the intellectual property
rights, before any court or before or by any public body or board
(other than the United States Patent and Trademark Office) pending to
which the Company is a party or threatened against the Company (other
than a threatened litigation or action for which the Company has
received an opinion of counsel to the effect that the chances that
such threatened litigation or action could be determined adversely to
the Company are remote) which might materially and adversely affect
the properties, business, financial condition or results of operations
of the Company; to the counsel's knowledge, the Company has not given
notice to any third party of any claim of infringement of its patents.
(e) The Initial Purchasers shall have received from Cravath, Swaine &
Moore, counsel for the Initial Purchasers, such opinion or opinions, dated
such Closing Date, with respect to such matters as Lazard Freres & Co. LLC
may require, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon
such matters.
(f) The Initial Purchasers shall have received a certificate dated
such Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall state
that:
(i) The representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
such Closing Date with the same effect as if made on such Closing Date
and the Company has complied in all material respects with all
agreements and
<PAGE> 24
24
satisfied in all material respects all conditions on its part to be
performed or satisfied hereunder at or prior to such Closing Date.
(ii) Since the date of this Agreement, there has been no material
adverse change in the financial condition, results of operations,
business or prospects of the Company and its subsidiaries which would
result in a material adverse change to the Company or its subsidiaries
considered as a whole or M4.
(g) At the First Closing Date, the Company shall have furnished to the
Initial Purchasers a letter substantially in the form of Exhibit B hereto.
(h) Subsequent to the execution and delivery of this Agreement and
prior to the First Closing Date, there shall not have been any downgrading,
nor shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not indicate
the direction of the possible change, in the rating accorded any of the
Company's securities (including the Offered Securities) by any "nationally
recognized statistical rating organization," as such term is defined for
purposes of Rule 436(g)(2) under the Act.
The Company will furnish the Initial Purchasers with such conformed copies
of such opinions, certificates, letters and documents as Lazard Freres & Co. LLC
reasonably requests. Lazard Freres & Co. LLC may in its sole discretion waive
compliance with any conditions to the obligations of the Initial Purchasers
hereunder, whether in respect of such Closing Date or otherwise.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company will indemnify and
hold harmless each Initial Purchaser and each person, if any, who controls such
Initial Purchaser within the meaning of either Section 15 of the Act or Section
20 of the Exchange Act, from and against any and all losses, claims, damages and
liabilities (or actions in respect thereof) (including, without limiting the
foregoing, the reasonable legal and other expenses incurred in connection with
investigating or defending any action, suit or proceeding or any claim asserted,
as such expenses are incurred) arising out of or based on any untrue statement
or alleged untrue statement of a material fact contained in the
<PAGE> 25
25
Offering Documents or any with respect to the Offered Securities, or caused by
any omission or alleged omission to state therein a material fact necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages, liabilities or expenses are caused by any such untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with the information furnished to the Company by the Initial
Purchasers in (i) the first paragraph of page 4 of the Offering Memoranda
concerning over-allotment and stabilization by the Initial Purchasers and (ii)
the second paragraph of the text under the caption "Plan of Distribution" in the
Offering Memorandum; and PROVIDED, HOWEVER, that the Company shall not be liable
to any Initial Purchaser under the indemnity agreement in this Section 7(a) with
respect to any Preliminary Offering Memorandum to the extent that any such loss,
claim, damage or liability of such Initial Purchaser results from the fact that
such Initial Purchaser sold Offered Securities to a person as to whom there was
not sent or given, at or prior to the written confirmation of such sale, a copy
of the Offering Memorandum or of the Offering Memorandum as then amended or
supplemented in any case where such delivery is required by law if the loss,
claim, damage or liability of such Initial Purchaser results from an untrue
statement or omission of a material fact contained in the Preliminary Offering
Memorandum which was corrected in the Offering Memorandum or in the Offering
Memorandum as then amended or supplemented. This indemnity agreement will be in
addition to any liability which the Company may otherwise have to the persons
referred to above in this Section 7(a).
(b) Each Initial Purchaser agrees, severally and not jointly, to indemnify
and hold harmless the Company and each person, if any, who controls the Company
within the meaning of either Section 15 of the Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages and liabilities (or
actions in respect thereof) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Offering Documents or caused by
any omission or alleged omission to state therein a material fact necessary to
make the statements therein not misleading, but only with reference to the
information furnished to the Company by the Initial Purchasers specified in
Section 7(a). This indemnity agreement will be in addition to any liability
which any Initial Purchaser may otherwise have to the persons referred to above
in this Section 7(b).
<PAGE> 26
26
(c) In case any action or proceeding (including any governmental or
regulatory investigation or proceeding) shall be instituted involving any person
in respect of which indemnity may be sought pursuant to either of the two
preceding paragraphs, such person (hereinafter called the indemnified party)
shall promptly notify the person against whom such indemnity may be sought
(hereinafter called the indemnifying party) in writing; however, the omission to
so notify the indemnifying party shall relieve the indemnifying party from
liability only to the extent prejudiced thereby. The indemnifying party, upon
request of the indemnified party, shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others that the indemnifying party may
designate and shall pay the fees and disbursements of such counsel related to
such proceeding. In any such action or proceeding any indemnified party shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for (a)
the reasonable fees and expenses of more than one separate firm (in addition to
any local counsel) for the Initial Purchasers and all persons, if any, who
control any such Initial Purchaser within the meaning of either Section 15 of
the Act or Section 20 of the Exchange Act, and (b) the reasonable fees and
expenses of more than one separate firm (in addition to any local counsel) for
the Company and each person, if any, who controls the Company within the meaning
of either such Section, and that all fees and expenses to be paid pursuant to
each of clauses (a) and (b) of this sentence shall be reimbursed as they are
incurred. In the case of any such separate firm for the Initial Purchasers and
such control persons of the Initial Purchasers, such firm shall be designated in
writing by Lazard Freres & Co. LLC. In the case of any such separate firm for
the Company, and such directors, officers and control persons of the Company,
such firm shall be designated in writing by the Company.
<PAGE> 27
27
(d) If the indemnification provided for in this Section 7 is insufficient
or unavailable to an indemnified party in respect of any losses, claims, damages
or liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand and the Initial Purchasers on the other from the offering of the
Offered Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Initial Purchasers on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Initial Purchasers on the other shall be deemed to be in the
same proportions as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total offering discount and
commissions received by the Initial Purchasers. The relative fault of the
Company on the one hand and the Initial Purchasers on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the Initial
Purchasers and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
(e) The Company and each of the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to Section 7(d) were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to in Section 7(d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the
<PAGE> 28
28
provisions of Section 7(d), in no event shall any such Initial Purchaser be
required to contribute any amount in excess of the amount by which the total
price at which the Offered Securities purchased and resold it exceeds the amount
of any damages which such Initial Purchaser otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
8. DEFAULT OF INITIAL PURCHASERS. If any one or more of the Initial
Purchasers default in their obligations to purchase Offered Securities hereunder
on either the First Closing Date or any Optional Closing Date and the principal
amount of Offered Securities which such defaulting Initial Purchaser or Initial
Purchasers agreed but failed to purchase does not exceed 10% of the aggregate
principal amount of Offered Securities to be purchased on such Closing Date by
all Initial Purchasers, each nondefaulting Initial Purchaser shall be obligated
severally, in proportion to its respective commitments hereunder, to purchase
the Offered Securities which such defaulting Initial Purchaser agreed but failed
or refused to purchase on such date; PROVIDED that in no event shall the
principal amount of Offered Securities that any Initial Purchaser has agreed to
purchase pursuant to Section 3 be increased pursuant to this Section 8 by an
amount in excess of one-ninth of such principal amount of Offered Securities
without the written consent of such Initial Purchaser. If any Initial Purchaser
or Initial Purchasers so default and the aggregate principal amount of Offered
Securities with respect to which such default or defaults occur is more than 10%
of the total principal amount of Offered Securities which the Initial Purchaser
or Initial Purchasers are so obligated to purchase on such date and arrangements
satisfactory to Lazard Freres & Co. LLC and satisfactory to the Company for the
purchase of such Offered Securities by other persons are not made within 36
hours after such default, this Agreement may be terminated by Lazard Freres &
Co. LLC or by the Company without liability on the part of any nondefaulting
Initial Purchaser or the Company, except for the expenses to be paid or
reimbursed by the Company pursuant to Section 9 provided that if such default
occurs with respect to Optional Securities after the First Closing Date, this
Agreement shall not terminate as to the Firm Securities or any Optional
Securities purchased prior to such termination. As
<PAGE> 29
29
used in this Agreement, the term "Initial Purchaser" includes any person
substituted for a Initial Purchaser under this Section. Nothing herein will
relieve a defaulting Initial Purchaser from liability for its default.
9. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the Initial Purchasers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of the Initial Purchasers, the Company or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Offered Securities. If this Agreement is
terminated pursuant a Section 8 or if for any reason the purchase of the Offered
Securities by the Initial Purchasers is not consummated, the Company shall
remain responsible for the expenses to be paid or reimbursed by it pursuant to
Section 5 and the respective obligations of the Company and the Initial
Purchasers pursuant to Section 7 shall remain in effect and if any Offered
Securities have been purchased hereunder the representations and warranties in
Section 2 and all obligations under Section 5 shall also remain in effect. If
the purchase of the Offered Securities by the Initial Purchasers is not
consummated for any reason other than solely because of the termination of this
Agreement pursuant to Section 8 or the occurrence of any event specified in
clause (ii) or (iii) of Section 9, the Company will reimburse the Initial
Purchasers for all out-of-pocket expenses (including fees and disbursements of
counsel) reasonably incurred by the Initial Purchasers in connection with the
offering of the Offered Securities.
10. TERMINATION. This Agreement may be terminated for any reason at any
time prior to delivery and payment for the Securities by the Initial Purchasers
upon the giving of written notice of such termination to the Company, if prior
to such time (i) there has been, since the date of this Agreement, any material
adverse change in the financial condition, earnings, business or prospects of
the Company and its subsidiaries considered as a whole or M4, whether or not
arising in the ordinary course of business, or (ii) there has occurred any
outbreak or escalation of hostilities or other calamity or crisis or material
change in existing national or international financial, political,
<PAGE> 30
30
economic or securities market conditions, the effect of which is such as to make
it, in the judgment of Lazard Freres & Co. LLC, impracticable or unadvisable to
market the Offered Securities in the manner contemplated in the Offering
Documents or enforce contracts for the sale of the Offered Securities or (iii)
trading in the Common Stock of the Company has been suspended by the Commission
or the Nasdaq/NMS or, trading generally on any of the American Stock Exchange,
the NASDAQ/NMS or the New York Stock Exchange has been suspended, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by any of such exchanges or by order of the
Commission or any other governmental authority, or if a banking moratorium has
been declared by either Federal or New York authorities. In the event of any
such termination, the provisions of subsection (h) of Section 5 and Sections 7,
8, and 13 shall remain in effect.
11. NOTICES. All communications hereunder will be in writing and, if sent
to the Initial Purchasers will be mailed, delivered or telegraphed and confirmed
to the Initial Purchasers, c/o Lazard Freres & Co. LLC, 30 Rockefeller Plaza,
New York, NY 10020, Attention: Syndicate Department, or, if sent to the Company,
will be mailed, delivered or telegraphed and confirmed to it at Molten Metal
Technology, Inc., if prior to May 6, 1996, 51 Sawyer Road, Waltham, MA 02154,
and, on or after such date 400-2 Totten Pond Road, Waltham, MA 02154, Attention:
Chief Financial Officer and General Counsel; PROVIDED, HOWEVER, that any notice
to the Initial Purchasers pursuant to Section 7 will be mailed, delivered or
telegraphed and confirmed of Lazard Freres & Co. LLC.
12. SUCCESSORS. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the controlling
persons referred to in Section 7, and no other person will have any right or
obligation hereunder, except that holders of Offered Securities shall be
entitled to enforce the agreements for their benefit contained in the second and
third sentences of Section 5(b) hereof against the Company as if such holders
were parties thereto.
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
<PAGE> 31
31
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
The Company hereby submits to the nonexclusive jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any suit
or proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
<PAGE> 32
32
If the foregoing is in accordance with Initial Purchasers' understanding of
our agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between the Company and you in
accordance with its terms.
Very truly yours,
MOLTEN METAL TECHNOLOGY, INC.
by /s/ Benjamin T. Downs
-----------------------
Name: Benjamin T. Downs
Title: Executive Vice
President
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written.
LAZARD FRERES & CO. LLC
ALEX. BROWN & SONS INCORPORATED
OPPENHEIMER & CO., INC.
LAZARD FRERES & CO. LLC,
by /s/ James L. Kempner
------------------------
Name: James L. Kempner
Title: Managing Director
[Acting on behalf of itself
and as the Representative of
the several Initial Purchasers]
<PAGE> 33
<TABLE>
SCHEDULE A
<CAPTION>
Principal Amount
Purchaser of Firm Securities
- --------- ------------------
<S> <C>
Lazard Freres & Co. LLC . . . . . . . $ 62,500,000
Alex. Brown & Sons Incorporated . . . . $ 31,250,000
Oppenheimer & Co., Inc. . . . . . . . . $ 31,250,000
------------
Total . . . . . . . . . . $125,000,000
============
</TABLE>
<PAGE> 34
EXHIBIT B
[Letterhead of officer or director
of Molten Metal Technology, Inc.]
Molten Metal Technology, Inc.
-----------------------------
Offering of 5 1/2% Convertible
------------------------------
Subordinated Notes Due 2006
---------------------------
April , 1996
Lazard Freres & Co. LLC
Lazard Capital Markets
Alex. Brown & Sons Incorporated
Oppenheimer & Co., Inc.
c/o Lazard Freres & Co. LLC
30 Rockefeller Plaza
New York, New York 10020
Dear Sirs:
This letter is being delivered to you in accordance with the proposed
Purchase Agreement (the "Purchase Agreement") between Molten Metal Technology,
Inc. (the "Company") and Lazard Freres & Co. LLC, Lazard Capital Markets, Alex.
Brown & Sons Incorporated and Oppenheimer & Co., Inc., relating to an offering
of % Convertible Subordinated Notes (the "Notes"), of the Company. The Notes are
convertible, at the option of holder thereof, at any time after 90 days
following the date of original issuance and prior to maturity, unless previously
redeemed, into shares of Common Stock, par value $.01 per share, of the Company
(the "Common Stock").
In order to induce you to enter into the Purchase Agreement, the
undersigned agrees not to offer, sell or contract to sell, or otherwise dispose
of, directly or indirectly, or announce an offering of, any shares of Common
Stock of the Company beneficially owned by the undersigned or any securities
representing, convertible into, or exchangeable or exercisable for, Common Stock
for a period of 90 days following the First Closing Date (as defined in the
Purchase Agreement) without the express written consent of Lazard Freres & Co.
LLC, other than shares of Common Stock disposed of as bona fide gifts.
<PAGE> 35
2
If for any reason the Purchase Agreement shall be terminated prior to the
First Closing Date, the agreement set forth above shall likewise be terminated.
Very truly yours,
[Signature of officer
or director]
[Name and address of
officer or director]
<PAGE> 1
Exhibit 10.4
================================================================================
MOLTEN METAL TECHNOLOGY, INC.
as Company
----------------------------
5-1/2% Convertible Subordinated Notes Due 2006
----------------------------
INDENTURE
Dated as of May 1, 1996
----------------------------
THE BANK OF NEW YORK
as Trustee
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions and Incorporation by Reference
------------------------------------------
SECTION 1.01. Definitions......................... 1
SECTION 1.02. Other Definitions................... 8
SECTION 1.03. Incorporation by Reference of
Trust Indenture Act............... 8
SECTION 1.04. Rules of Construction............... 9
ARTICLE II
The Securities
--------------
SECTION 2.01. Form and Dating..................... 9
SECTION 2.02. Execution and Authentication........ 12
SECTION 2.03. Registrar, Paying Agent and
Conversion Agent.................. 13
SECTION 2.04. Paying Agent To Hold Money in
Trust............................. 13
SECTION 2.05. Noteholder Lists.................... 14
SECTION 2.06. Transfer and Exchange............... 14
SECTION 2.07. Replacement Securities.............. 19
SECTION 2.08. Outstanding Securities.............. 19
SECTION 2.09 Treasury Securities................. 20
SECTION 2.10. Temporary Securities................ 20
SECTION 2.11. Cancellation........................ 21
SECTION 2.12. Defaulted Interest.................. 21
SECTION 2.13. CUSIP Numbers....................... 21
ARTICLE III
Redemption
----------
SECTION 3.01. Notices to Trustee.................. 22
SECTION 3.02. Selection of Securities To Be
Redeemed.......................... 22
SECTION 3.03. Notice of Redemption................ 23
SECTION 3.04. Effect of Notice of Redemption...... 24
-1-
<PAGE> 3
Page
----
SECTION 3.05. Deposit of Redemption Price......... 24
SECTION 3.06. Securities Redeemed in Part......... 24
SECTION 3.07. Optional Redemption................. 24
SECTION 3.08. Designated Event Offer.............. 24
ARTICLE IV
Covenants
---------
SECTION 4.01. Payment of Securities............... 27
SECTION 4.02. SEC Reports......................... 27
SECTION 4.03. Compliance Certificate.............. 28
SECTION 4.04. Stay, Extension and Usury Laws...... 29
SECTION 4.05. Corporate Existence................. 29
SECTION 4.06. Taxes............................... 29
SECTION 4.07. Designated Event.................... 29
SECTION 4.08. Additional Amounts.................. 30
ARTICLE V
Conversion
----------
SECTION 5.01. Conversion Privilege................ 33
SECTION 5.02. Conversion Procedure................ 34
SECTION 5.03. Fractional Shares................... 35
SECTION 5.04. Taxes on Conversion................. 35
SECTION 5.05. Company To Provide Stock............ 35
SECTION 5.06. Adjustment of Conversion Price...... 36
SECTION 5.07. No Adjustment....................... 40
SECTION 5.08. Other Adjustments................... 40
SECTION 5.09. Adjustments for Tax Purposes........ 41
SECTION 5.10. Adjustments by the Company.......... 41
SECTION 5.11. Notice of Adjustment................ 41
SECTION 5.12 Notice of Certain Transactions...... 41
SECTION 5.13. Effect of Reclassifications,
Consolidations, Mergers or Sales
on Conversion Privilege........... 42
SECTION 5.14. Trustee's Disclaimer................ 43
ARTICLE VI
Subordination
-------------
SECTION 6.01. Agreement To Subordinate............ 43
SECTION 6.02. No Payment on Securities if Senior
Debt in Default................... 44
-2-
<PAGE> 4
Page
----
SECTION 6.03. Distribution on Acceleration of
Securities; Dissolution and
Reorganization; Subrogation of
Securities........................ 43
SECTION 6.04. Reliance by Senior Debt on
Subordination Provisions.......... 49
SECTION 6.05. No Waiver of Subordination
Provisions........................ 49
SECTION 6.06. Trustee's Relation to Senior
Debt.............................. 50
SECTION 6.07. Other Provisions Subject Hereto..... 50
ARTICLE VII
Consolidation, Merger, Conveyance, Transfer or Lease
----------------------------------------------------
SECTION 7.01. Company May Consolidate, Etc.,
Only on Certain Terms............. 51
SECTION 7.02. Successor Corporation
Substituted....................... 52
ARTICLE VIII
Defaults and Remedies
---------------------
SECTION 8.01. Events of Default................... 52
SECTION 8.02. Acceleration........................ 54
SECTION 8.03. Other Remedies...................... 54
SECTION 8.04. Waiver of Past Defaults............. 55
SECTION 8.05. Control by Majority................. 55
SECTION 8.06. Limitation of Suits................. 55
SECTION 8.07. Rights of Noteholders to Receive
Payment........................... 56
SECTION 8.08. Collection Suit by Trustee.......... 56
SECTION 8.09. Trustee May File Proofs of
Claim............................. 56
SECTION 8.10. Priorities.......................... 56
SECTION 8.11. Undertaking for Costs............... 57
ARTICLE IX
Trustee
-------
SECTION 9.01. Duties of Trustee................... 57
SECTION 9.02. Rights of Trustee................... 58
SECTION 9.03. Individual Rights of Trustee........ 59
-3-
<PAGE> 5
Page
----
SECTION 9.04. Trustee's Disclaimer................ 59
SECTION 9.05. Notice of Defaults.................. 60
SECTION 9.06. Reports by Trustee to
Noteholders....................... 60
SECTION 9.07. Compensation and Indemnity.......... 60
SECTION 9.08. Replacement of Trustee.............. 61
SECTION 9.09. Successor Trustee by Merger, Etc.... 62
SECTION 9.10. Eligibility; Disqualification....... 62
SECTION 9.11. Preferential Collection of Claims
Against Company................... 63
SECTION 9.12. Sections Applicable to Registrar,
Paying Agent and Conversion
Agent............................. 63
ARTICLE X
Discharge of Indenture
----------------------
SECTION 10.01. Termination of Company's
Obligations....................... 63
SECTION 10.02. Repayment to Company................ 63
ARTICLE XI
Amendments, Supplements and Waivers
-----------------------------------
SECTION 11.01. Without Consent of Noteholders...... 64
SECTION 11.02. With Consent of Noteholders......... 64
SECTION 11.03. Compliance with Trust Indenture
Act............................... 66
SECTION 11.04. Revocation and Effect of
Consents.......................... 66
SECTION 11.05. Notation on or Exchange
of Securities..................... 67
SECTION 11.06. Trustee Protected................... 67
ARTICLE XII
Miscellaneous
-------------
SECTION 12.01. Trust Indenture Act Controls........ 67
SECTION 12.02. Notices............................. 67
SECTION 12.03. Communications by Noteholders with
Other Noteholders................. 68
SECTION 12.04. Certificate and Opinion as to
Conditions Precedent.............. 68
-4-
<PAGE> 6
Page
----
SECTION 12.05. Statements Required in Certificate
or Opinion........................ 68
SECTION 12.06. Rules by Trustee and Agents......... 69
SECTION 12.07. Legal Holidays...................... 69
SECTION 12.08. No Recourse Against Others.......... 69
SECTION 12.09. Counterparts........................ 69
SECTION 12.10. Variable Provisions................. 69
SECTION 12.11. GOVERNING LAW....................... 70
SECTION 12.12 No Adverse Interpretation of Other
Agreements........................ 70
SECTION 12.13. Successors.......................... 70
SECTION 12.14. Severability........................ 70
SECTION 12.15. Table of Contents,
Headings, Etc..................... 70
SIGNATURES ...................................... 71
-5-
<PAGE> 7
Page
----
EXHIBIT A FORM OF CONVERTIBLE SUBORDINATED
NOTE
EXHIBIT B FORM OF INVESTMENT LETTER FOR
INSTITUTIONAL ACCREDITED INVESTORS
EXHIBIT C FORM OF TRANSFER CERTIFICATE FROM
REGULATION S SECURITY TO REGULATION S
SECURITY DURING THE RESTRICTED PERIOD
EXHIBIT D FORM OF TRANSFER CERTIFICATE FROM GLOBAL
SECURITY/RESTRICTED ACCREDITED INVESTOR
SECURITY TO REGULATION S SECURITY
-6-
<PAGE> 8
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- ------- ---------
310(a)(1)...................................... 9.10
(a)(2)...................................... 9.10
(a)(3)...................................... NA
(a)(4)...................................... NA
(b)......................................... 9.08; 9.10
(c)......................................... NA
311(a)......................................... 9.11
(b)......................................... 9.11
(c)......................................... NA
312(a)......................................... 2.05
(b)......................................... 12.03
(c)......................................... 12.03
313(a)......................................... 9.06
(b)(1)...................................... NA
(b)(2)...................................... 9.06
(c)......................................... 9.06;
(d)......................................... 9.06
314(a)......................................... 4.02; 4.03
(b)......................................... NA
(c)(1)...................................... 12.04
(c)(2)...................................... 12.04
(c)(3)...................................... NA
(d)......................................... NA
(e)......................................... 12.05
(f)......................................... NA
315(a)......................................... 9.01(b)
(b)......................................... 9.05
(c)......................................... 9.01(a)
(d)......................................... 9.01(c)
(e)......................................... 8.11
316(a)last sentence............................ 2.09
(a)(1)(A)................................... 6.05
(a)(1)(B)................................... 6.04
(a)(2)...................................... NA
(b)......................................... 6.07
(c)......................................... 11.04
317(a)(1)...................................... 8.08
(a)(2)...................................... 8.09
(b)......................................... 2.04
318(a)......................................... NA
NA means not applicable
- ---------
*This Cross-Reference Table is not part of the Indenture.
<PAGE> 9
INDENTURE dated as of May 1, 1996 between Molten Metal
Technology, Inc., a Delaware corporation (the "Company") and
The Bank of New York, a New York banking corporation, as
trustee (the "Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Noteholders of the Company's 5-1/2% Convertible
Subordinated Notes Due 2006 (the "Securities"):
ARTICLE I
Definitions and Incorporation by Reference
------------------------------------------
SECTION 1.01. DEFINITIONS. "AFFILIATE" of any specified person means any
other person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified person. For the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control with"), as used with
respect to any person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
person, whether through the ownership of voting securities or by agreement or
otherwise; PROVIDED, HOWEVER, that beneficial ownership of 10% or more of the
voting securities of a person shall be deemed to be control.
"AGENT" means any Registrar, Paying Agent, Conversion Agent or
co-registrar.
"BOARD OF DIRECTORS" means the Board of Directors of the Company or any
authorized committee of the Board.
"BOARD RESOLUTION" means a duly authorized resolution of the Board of
Directors.
"BUSINESS DAY" means any day that is not a Legal Holiday.
"CAPITAL STOCK" means, with respect to any Person, 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.
<PAGE> 10
2
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
<PAGE> 11
3
transaction, at least a majority of the aggregate voting power of the Voting
Stock of the surviving corporation.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" means the common stock of the Company as the same exists at
the date of the execution of this Indenture or as such stock may be constituted
from time to time.
"COMPANY" means the party named as such above until a successor replaces it
in accordance with Article VII and thereafter means the successor.
"DAILY MARKET PRICE" means the price of a share of Common Stock on the
relevant date, determined (a) on the basis of the last reported sale price
regular way of the Common Stock as reported on the NASDAQ Stock Market's
National Market (the "NNM"), or if the Common Stock is not then listed on the
NNM, as reported on such national securities exchange upon which the Common
Stock is listed, or (b) if there is no such reported sale on the day in
question, on the basis of the average of the closing bid and asked quotations
regular way as so reported, or (c) if the Common Stock is not listed on the NNM
or on any national securities exchange, on the basis of the average of the high
bid and low asked quotations regular way on the day in question in the
over-the-counter market as reported by the National Association of Securities
Dealers Automated Quotation System, or if not so quoted, as reported by National
Quotation Bureau, Incorporated, or a similar organization.
"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.
"DEPOSITARY" means The Depository Trust Company, its nominees and their
respective successors.
"DESIGNATED EVENT" means the occurrence of a Change of Control or a
Termination of Trading.
"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 a tender offer or
<PAGE> 12
4
other negotiated transaction over (b) the Daily Market Price of such acquired
shares on the Trading Day immediately after giving effect to the completion of
such tender offer or other negotiated transaction.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"INDENTURE" means this Indenture, as amended from time to time.
"INITIAL PURCHASERS" means Lazard Freres & Co. LLC, Alex. Brown & Sons
Incorporated and Oppenheimer & Co., Inc.
"ISSUANCE DATE" means the date on which the Securities are first
authenticated and issued.
"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).
"NOTEHOLDER" or "HOLDER" means a person in whose name a Security is
registered.
"OFFERING MEMORANDUM" means the offering memorandum relating to the
Securities dated April 26, 1996.
"OFFICERS' CERTIFICATE" means a certificate signed by two Officers, one of
whom must be the Chairman of the Board, the President, the Treasurer or a
Vice-President of the Company.
"OPINION OF COUNSEL" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"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.
"PERSON" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political
<PAGE> 13
5
subdivision thereof.
"PRINCIPAL" of a debt security means the principal of the security plus the
premium, if any, on the security.
"REGISTRATION AGREEMENT" means the Registration Agreement relating to the
Securities dated April 25, 1996, between the Company and the Initial Purchasers.
"REPRESENTATIVE" means the trustee, agent or representative (if any) for an
issue of Senior Debt.
"RESTRICTED PERIOD" means the date 40 days after the later of (i) the date
on which the Regulation S Securities are first offered to persons in reliance on
Regulation S and (ii) the latest closing date with respect to the Regulation S
Securities.
"SEC" means the Securities and Exchange Commission.
"SECURITIES" means the Securities described above issued, authenticated and
delivered under this Indenture.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"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 this 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 this 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
<PAGE> 14
6
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
Securities or to other indebtedness which is pari passu with, or subordinated
to, the Securities, 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.
"SHELF REGISTRATION STATEMENT" shall have the meaning set forth in the
Registration Agreement.
"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.
"TAX LAW CHANGE" means 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 became
effective on or after April 26, 1996.
A "TERMINATION OF TRADING" shall have occurred if the Common Stock (or
other common stock into which the
<PAGE> 15
7
Securities 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.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
[Sections]77aaa-77bbbb) as in effect on the date of execution of this Indenture,
except as provided in Section 11.03.
"TRADING DAY" shall mean (A) if the applicable security is listed or
admitted for trading on the New York Stock Exchange or another national
securities exchange, a day on which the New York Exchange or another national
securities exchange is open for business, (B) if the applicable security is
quoted on The Nasdaq National Market, a day on which trades may be made thereon
or (c) if the applicable security is not so listed, admitted for trading or
quoted, any day other than a Saturday or Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law or
executive order to close.
"TRUSTEE" means the party named as such above until a successor replaces it
in accordance with the applicable provisions of this Indenture and thereafter
means the successor.
"TRUST OFFICER", when used with respect to the Trustee, means the chairman
or any vice chairman of the board of directors, the chairman or any vice
chairman of the executive committee of the board of directors, the chairman of
the trust committee, the president, any senior vice president, any vice
president, any assistant vice president, the secretary, any assistant secretary,
the treasurer, any assistant treasurer, any senior trust officer, any trust
officer, the controller, any assistant controller, or any other officer of the
Trustee customarily performing functions similar to those performed by the
persons who at the time are such officers, respectively, and also means, with
respect to a particular corporate trust matter, any officer to whom such
corporate trust matter is referred because of his knowledge of and familiarity
with the particular subject.
"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
<PAGE> 16
8
contingency) to vote in the election of directors, managers or trustees thereof.
<PAGE> 17
SECTION 1.02. Other Definitions.
------------------
Defined in
Term Section
- ---- ----------
"Additional Amounts".............................. 4.08
"Agent Members"................................... 2.01
"Bankruptcy Law" ................................. 8.01
"Commencement Date" .............................. 3.08
"Company Notice".................................. 3.08
"Conversion Agent"................................ 2.03
"Conversion Date"................................. 5.02
"Conversion Price"................................ 5.01
"Conversion Shares"............................... 5.06
"Custodian" ...................................... 8.01
"Designated Event Offer" ......................... 4.07
"Designated Event Payment" ....................... 4.07
"Designated Event Payment Date" .................. 3.08
"Distribution Date"............................... 5.06
"Distribution Record Date"........................ 5.06
"Event of Default" ............................... 8.01
"Global Security"................................. 2.01
"Legal Holiday" .................................. 12.07
"Offer Amount" ................................... 3.08
"Officer" ........................................ 12.10
"Paying Agent" ................................... 2.03
"Payment Blockage Notice"......................... 6.02
"Payment Blockage Period"......................... 6.02
"Payment Default"................................. 8.01
"Purchase Agreement".............................. 2.01
"Purchase Date"................................... 5.06
"QIBs"............................................ 2.01
"Registrar" ...................................... 2.03
"Regulation S".................................... 2.01
"Regulation S Securities"......................... 2.01
"Restricted Accredited Investor Securities"....... 2.01
"Restricted Certificated 144A Securities"......... 2.01
"Restricted Securities"........................... 2.01
"Rights".......................................... 5.06
"Rule 144A"....................................... 2.01
"Tender Period" .................................. 3.08
"United States"................................... 4.08
"United States Alien"............................. 4.08
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST
<PAGE> 18
10
INDENTURE ACT. Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"INDENTURE SECURITIES" means the Securities;
"INDENTURE SECURITY HOLDER" means a Noteholder;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee; and
"OBLIGOR" on the Securities means the Company or any other obligor on the
Securities.
All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule under the TIA have
the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION. Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles as of the
date hereof consistently applied;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and
words in the plural include the singular; and
(e) provisions apply to successive events and
transactions.
<PAGE> 19
11
ARTICLE II
The Securities
--------------
SECTION 2.01. FORM AND DATING. The Securities and the Trustee's certificate
of authentication shall be substantially in the form of Exhibit A which is
hereby incorporated in and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Company). The Company shall furnish any such legend not contained in
Exhibit A to the Trustee in writing. Each Security shall be dated the date of
its authentication. The terms and provisions of the Securities set forth in
Exhibit A are part of the terms of this Indenture and to the extent applicable,
the Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
(a) GLOBAL SECURITIES. The Securities are being offered and sold by the
Company pursuant to a Purchase Agreement relating to the Securities, dated April
25, 1996, between the Company and the Initial Purchasers (the "Purchase
Agreement").
Securities offered and sold to Qualified Institutional Buyers ("QIBs") in
reliance on Rule 144A under the Securities Act ("Rule 144A"), as provided in the
Purchase Agreement, shall be issued in the form of one or more global Securities
in fully registered form without interest coupons with the Global Securities
Legend and Restricted Securities Legend set forth in Exhibit A hereto (each, a
"Global Security"), which shall be deposited on behalf of the purchasers of the
Securities represented thereby with the Trustee, at its New York office, as
custodian for the Depositary, and registered in the name of the Depositary or a
nominee of the Depositary, duly executed by the Company and authenticated by the
Trustee as hereinafter provided. The aggregate principal amount of the Global
Security may from time to time be increased or decreased by adjustments made on
the records of the Trustee and the Depositary or its nominee as hereinafter
provided.
(b) BOOK-ENTRY PROVISIONS. This Section 2.01(b) shall apply only to a
Global Security deposited with or on behalf of the Depositary.
<PAGE> 20
12
The Company shall execute and the Trustee shall, in accordance with this
Section 2.01(b), authenticate and deliver initially one or more Global
Securities that (a) shall be registered in the name of Cede & Co. or other
nominee of such Depositary and (b) shall be delivered by the Trustee to such
Depositary or pursuant to such Depositary's instructions or held by the Trustee
as custodian for the Depositary pursuant to a FAST Balance Certificate Agreement
between the Depositary and the Trustee.
Members of, or participants in, the Depositary ("Agent Members") shall have
no rights under this Indenture with respect to any Global Security held on their
behalf by the Depositary or by the Trustee as the custodian of the Depositary or
under such Global Security, and the Depositary may be treated by the Company,
the Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depositary or impair, as between the
Depositary and its Agent Members, the operation of customary practices of such
Depositary governing the exercise of the rights of a holder of a beneficial
interest in any Global Security.
(c) CERTIFICATED SECURITIES. (i) Any person having a beneficial interest in
a Global Security may, upon request to the Trustee, exchange such beneficial
interest for certificated Securities ("Restricted Certificated 144A
Securities"), which Securities shall bear the Restricted Securities Legend set
forth in Exhibit A hereof unless removed in accordance with this Section 2.01(c)
or Section 2.06(b) hereof. Upon any such exchange, the Trustee is required to
register such Restricted Certificated 144A Securities in the name of, and cause
the same to be delivered to, such person or persons (or the nominee of any
thereof). Owners of beneficial interests in a Global Security will also receive
certificated Securities as provided in Section 2.10. If any Person having a
beneficial interest in a Global Security shall request that the Trustee exchange
such interest for a Restricted Certificated 144A Security, the Depositary shall
surrender such Global Security to the Trustee who shall make a notation on
Schedule A thereof to reduce the principal amount of such Global Security by an
amount equal to the portion of such
<PAGE> 21
13
Global Security so exchanged;
(ii) Securities offered and sold in reliance on Regulation S
under the Securities Act ("Regulation S"), as provided in the Purchase
Agreement, shall be represented by physical certificates issued in
definitive, fully registered form bearing the Regulation S Legend set forth
in Exhibit A hereto ("Regulation S Securities"). Regulation S Securities
shall bear the Regulation S Securities legend set forth in Exhibit A unless
removed in accordance with this Section 2.01(c) or Section 2.06(b) hereof;
(iii) Purchasers of Securities who are not QIBs and did not
purchase Securities in reliance on Regulation S and who provide a
certificate in the form of Exhibit B hereto will receive certificated
Securities in fully registered form bearing the Restricted Securities
Legend set forth in Exhibit A hereto ("Restricted Accredited Investor
Securities", and together with the Restricted Certificated 144A Securities
and the Global Securities, the "Restricted Securities"). Restricted
Accredited Investor Securities shall bear the Restricted Securities Legend
set forth on Exhibit A unless removed in accordance with this 2.01(c) or
Section 2.06(b) hereof.
After a transfer of any Restricted Securities pursuant to the terms of the
Registration Agreement and during the period of the effectiveness of a Shelf
Registration Statement with respect to the Restricted Securities, all
requirements pertaining to legends on such Restricted Security will cease to
apply, and a Security without legends will be available to the holder of such
Restricted Securities.
After a transfer of any Regulation S Securities after the Restricted
Period, all requirements pertaining to legends on such Regulation S Securities
will cease to apply and a Security without legends will be available to the
holder of such Regulation S Securities. Prior to removing any such legends, the
Company and the Trustee may require satisfactory evidence that such legends may
be removed as provided in Section 2.06(b).
SECTION 2.02. EXECUTION AND AUTHENTICATION. Two Officers shall sign the
Securities for the Company by manual
<PAGE> 22
14
or facsimile signature. The Company's seal shall be reproduced on the
Securities.
If an Officer whose signature is on a Security no longer holds that office
at the time the Security is authenticated, the Security shall nevertheless be
valid.
A Security shall not be valid until authenticated by the manual signature
of an authorized signatory of the Trustee. The signature shall be conclusive
evidence that the Security has been authenticated under this Indenture.
Upon a written order of the Company signed by two Officers, the Trustee
shall authenticate the Securities for original issue up to an aggregate
principal amount of $125,000,000 (plus up to $18,750,000 aggregate principal
amount of Securities that may be sold by the Company pursuant to the
over-allotment option granted to the Initial Purchasers pursuant to the Purchase
Agreement). The aggregate principal amount of Securities outstanding at any time
shall not exceed such amount except as provided in Section 2.07.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
SECTION 2.03. REGISTRAR, PAYING AGENT AND CONVERSION AGENT. The Company
shall maintain in the Borough of Manhattan, City of New York, State of New York
(i) an office or agency where Securities may be presented for registration of
transfer or for exchange ("Registrar"), (ii) an office or agency where
Securities may be presented for payment ("Paying Agent") and (iii) an office or
agency where Securities may be presented for conversion ("Conversion Agent").
The Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may appoint the Registrar, the Paying Agent and the
Conversion Agent and may appoint one or more co-registrars, one or more
additional paying agents and one or more additional conversion agents in such
other locations as it shall determine. The term "Paying Agent" includes any
additional paying agent and the term "Conversion Agent"
<PAGE> 23
15
includes any additional conversion agent. The Company may change any Paying
Agent, Registrar, co-registrar or Conversion Agent without prior notice to any
Noteholder. The Company shall notify the Trustee of the name and address of any
Agent not a party to this Indenture. If the Company fails to appoint or maintain
another entity as Registrar, Paying Agent or Conversion Agent, the Trustee shall
act as such. The Company or any of its Affiliates may act as Paying Agent,
Registrar, co-registrar or Conversion Agent.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. The Company shall
require each Paying Agent other than the Trustee to agree in writing that the
Paying Agent will hold in trust for the benefit of Noteholders or the Trustee
all money held by the Paying Agent for the payment of principal or interest on
the Securities, and will notify the Trustee of any default by the Company in
making any such payment. While any such default continues, the Trustee may
require a Paying Agent to pay all money held by it to the Trustee. The Company
at any time may require a Paying Agent to pay all money held by it to the
Trustee and to account for any money disbursed by it. Upon payment over to the
Trustee, the Paying Agent (if other than the Company or an Affiliate of the
Company) shall have no further liability for the money. If the Company or an
Affiliate of the Company acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Noteholders all money held by it as
Paying Agent.
SECTION 2.05. NOTEHOLDER LISTS. The Trustee shall preserve in as current a
form as is reasonably practicable the most recent list available to it of the
names and addresses of Noteholders. If the Trustee is not the Registrar, the
Company shall furnish to the Trustee on or before each interest payment date and
at such other times as the Trustee may request in writing a list in such form
and as of such date as the Trustee may reasonably require of the names and
addresses of Noteholders.
SECTION 2.06. TRANSFER AND EXCHANGE. Where Securities are presented to the
Registrar or a co-registrar with a request to register a transfer or to exchange
them for an equal principal amount of Securities of other denominations, the
Registrar shall register the transfer or make the exchange if its requirements
for such transactions are met. To permit registrations of transfers and
exchanges, the Company shall issue and the Trustee shall authenticate Securities
at the Registrar's request. No
<PAGE> 24
16
service charge shall be made for any registration of transfer or exchange
(except as otherwise expressly permitted herein), but the Company may require
payment of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer tax or
similar governmental charge payable upon exchanges pursuant to Sections 2.10,
3.06 or 11.05 hereof).
In the event of a partial redemption, the Company shall not be required (i)
to issue, register the transfer of, or exchange Securities during a period
beginning at the opening of business 15 days before the day of any selection of
Securities for redemption under Section 3.02 hereof and ending at the close of
business on the day of selection, or (ii) to exchange or register the transfer
of any Security so selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part.
(a) Notwithstanding any provision to the contrary herein, so long as a
Global Security remains outstanding and is held by or on behalf of the
Depositary, transfers of a Global Security, in whole or in part, or of any
beneficial interest therein, shall only be made in accordance with Section
2.01(b) and this Section 2.06(a); PROVIDED, HOWEVER, that beneficial interests
in a Global Security may be transferred to persons who take delivery thereof in
the form of a beneficial interest in the same Global Security in accordance with
the transfer restrictions set forth in the Restricted Securities Legend.
(i) Except for transfers or exchanges made in accordance with this
Section 2.06(a), transfers of a Global Security shall be limited to
transfers of such Global Security in whole, but not in part, to nominees of
the Depositary or to a successor of the Depositary or such successor's
nominee.
(ii) RESTRICTED ACCREDITED INVESTOR SECURITY TO GLOBAL SECURITY OR
RESTRICTED CERTIFICATED 144A SECURITY. If a holder of a Restricted
Accredited Investor Security wishes at any time to transfer such Restricted
Accredited Investor Security to a person who may take delivery thereof in
the form of either (A) a beneficial interest in a Global Security or (B) a
Restricted Certificated 144A Security (in each case as indicated by the
transferor checking box 2 on the Certificate of Transfer on the reverse of
the
<PAGE> 25
17
Restricted Accredited Investor Security), such holder may, subject to the
restrictions on transfer set forth herein and in such Restricted Accredited
Investor Security, cause the exchange of such Restricted Accredited
Investor Security for either (A) a beneficial interest in a Global Security
or (B) a Restricted Certificated 144A Security, as the transferee shall
determine. Upon receipt by the Trustee, as Registrar, at its office in The
City of New York of (1) such Restricted Accredited Investor Security, duly
endorsed as provided herein, and (2) instructions from such holder
directing the Trustee, as Registrar, to transfer such Restricted Accredited
Investor Security to a person who will receive either (A) a beneficial
interest in a Global Security or (B) a Restricted Certificated 144A
Security, as the transferee shall determine, of the same aggregate
principal amount as the Restricted Accredited Investor Security to be
exchanged, such instructions to contain the name of the transferee and the
authorized denomination or denominations of the Securities to be so issued
and appropriate delivery instructions therefor, the Trustee, as Registrar,
shall cancel or cause to be cancelled such Restricted Accredited Investor
Security and concurrently therewith, (i) the Trustee shall make a notation
on Schedule A of the Global Security to increase the principal amount of
such Global Security by an amount equal to the portion of such Restricted
Accredited Investor Security so exchanged, or (ii) the Company shall
execute, and the Trustee shall authenticate and make available for
delivery, one or more Restricted Certificated 144A Securities of the same
aggregate principal amount equal to the Restricted Accredited Investor
Security so exchanged, as the case may be.
(iii) REGULATION S SECURITY TO REGULATION S SECURITY. If a holder of a
Regulation S Security wishes at any time to transfer such Regulation S
Security, such holder may, subject to the restrictions on transfer set
forth herein and in such Regulation S Security, cause the exchange of such
Regulation S Security for one or more Regulation S Securities of any
authorized denomination or denominations and of the same aggregate
principal amount. Upon receipt by the Trustee, as Registrar, at its office
in the City of New York of (1) such Regulation S Security, (2) instructions
from such holder directing the
<PAGE> 26
18
Trustee, as Registrar, to authenticate and deliver one or more Regulation S
Securities of the same aggregate principal amount as the Regulation S
Security so exchanged, such instruction to contain the name of the
transferee and the authorized denomination or denominations of the
Regulation S Security to be so issued and appropriate delivery
instructions, (3) if such transfer is prior to the expiration of the
Restricted Period, a certificate in the form of Exhibit C hereto given by
the person acquiring the Regulation S Securities for which such interest is
being exchanged to the effect set forth therein, and (4) such other
certifications, legal opinions or other information as the Company may
reasonably require to confirm that such transfer is being made pursuant to
an exemption from, or in a transaction not subject to, the registration
requirements under the Securities Act, then the Trustee, as Registrar,
shall cancel or cause to be cancelled such Regulation S Security and
concurrently therewith, the Company shall execute, and the Trustee shall
authenticate and make available for delivery, one or more Regulation S
Securities of the same aggregate principal amount, in accordance with the
instructions referred to above.
(iv) REGULATION S SECURITY TO GLOBAL SECURITY. If a holder of a
Regulation S Security wishes at any time to transfer such Regulation S
Security to a person who may take delivery thereof in the form of a
beneficial interest in a Global Security (as indicated by the transferor
checking box 2 on the Certificate of Transfer on the reverse of the
Regulation S Security to be exchanged), such holder may, subject to the
restrictions on transfer set forth herein and in such Regulation S
Security, cause the exchange of such Regulation S Security for a beneficial
interest in a Global Security. Upon receipt by the Trustee, as Registrar,
at its office in The City of New York of (1) such Regulation S Security,
duly endorsed as provided herein, and (2) instructions from such holder
directing the Trustee, as Registrar, to transfer such Regulation S Security
to a person who will receive a beneficial interest in a Global Security of
the same aggregate principal amount as the Regulation S Security to be
exchanged, such instructions to contain the name of the transferee and the
authorized denomination or denominations of the Securities to be so issued
and appropriate delivery instructions therefor, then the
<PAGE> 27
19
Trustee, as Registrar, shall cancel or cause to be cancelled such
Regulation S Security and concurrently therewith, the Trustee shall make a
notation on Schedule A of the Global Security to increase the principal
amount of such Global Security by an amount equal to the portion of such
Regulation S Security so exchanged.
(v) GLOBAL SECURITY/RESTRICTED CERTIFICATED 144A SECURITY TO
REGULATION S SECURITY. If the holder of (i) a beneficial interest in a
Global Security or (ii) a Restricted Certificated 144A Security wishes at
any time, upon request to the Trustee, to transfer such beneficial interest
in such Global Security or such Restricted Certificated 144A Security, as
the case may be, in accordance with Regulation S, such holder may, subject
to the restrictions on transfer set forth herein and in such Security,
cause the exchange of such beneficial interest in such Global Security or
such Restricted Certificated 144A Security for a Regulation S Security (as
indicated by the transferor checking box 3 on the Certificate of Transfer
on the reverse of such Security) upon receipt by the Trustee, as Registrar,
at its office in the City of New York of (1) in the case of a holder of a
Restricted Certificated 144A Security, such Restricted Certificated 144A
Security, duly endorsed as provided herein, (2) instructions from such
holder directing the Trustee, as Registrar, to transfer such beneficial
interest in such Global Security or such Restricted Certificated 144A
Security to a person who will receive a Regulation S Security in an equal
aggregate principal amount, such instructions to contain the name of the
transferee and the authorized denomination or denominations of the
Securities to be so issued and appropriate delivery instructions therefor
and (3) the transferor shall deliver to the Trustee a certificate in
substantially the form set forth in Exhibit D hereto. If any person having
a beneficial interest in a Global Security shall request such a transfer
and satisfy such conditions, the Trustee shall make a notation on Schedule
A of such Global Security to reduce the principal amount thereof by an
amount equal to the portion thereof to be transferred, and concurrently
therewith, the Company shall execute, and the Trustee shall authenticate
and make available for delivery, one or more Regulation S Securities of the
same aggregate principal amount. If any registered
<PAGE> 28
19
owner of a Restricted Certificated 144A Security shall request such a
transfer and satisfy such conditions, the Trustee shall cancel such
Restricted Certificated 144A Security and concurrently therewith, the
Company shall execute, and the Trustee shall authenticate and make
available for delivery, one or more Regulation S Securities of the same
aggregate principal amount.
(b) (i) Except in connection with a Shelf Registration Statement
contemplated by and in accordance with the terms of the Registration Agreement,
if Restricted Securities are issued upon the transfer, exchange or replacement
of Securities bearing the Restricted Securities Legend or the Regulation S
Securities Legend, as the case may be, set forth in Exhibit A hereto, or if a
request is made to remove the Restricted Securities Legend on Restricted
Securities, the Restricted Securities so issued shall bear the Restricted
Securities Legend, or the Restricted Securities Legend shall not be removed, as
the case may be, unless there is delivered to the Company such satisfactory
evidence, which may include an Opinion of Counsel, as may be reasonably required
by the Company, that neither the legend nor the restrictions on transfer set
forth therein are required to ensure that transfers thereof comply with the
provisions of Rule 144A, Rule 144 or Regulation S under the Securities Act, as
the case may be, or, with respect to such Restricted Securities, that such
Securities are not "restricted" within the meaning of Rule 144 under the
Securities Act. Upon provision of such satisfactory evidence, the Trustee, at
the direction of the Company, shall authenticate and make available for delivery
Securities that do not bear the Restricted Securities Legend.
(ii) If (a) Regulation S Securities or an interest in a Global
Security or a Restricted Certificated 144A Security are issued upon
transfer, exchange or replacement of Regulation S Securities bearing the
Regulation S Securities Legend set forth in Exhibit A hereto, or (b) if a
request is made to remove such Regulation S Securities Legend on any
Regulation S Securities, then (x) the Regulation S Securities so issued
shall bear the Regulation S Securities Legend and the Global Security or
the Restricted Certificated 144A Security so issued shall be subject to, or
bear, the Restricted Securities Legend, as the case may be, or (y) the
Regulation S Securities Legend
<PAGE> 29
21
shall not be removed, unless there is delivered to the Company such
satisfactory evidence, which may include an Opinion of Counsel as may be
reasonably required by the Company, that neither the legend nor the
restrictions on transfer set forth therein are required to ensure that
transfers thereof comply with the provisions of Rule 144A, Rule 144 or
Regulation S under the Securities Act. Upon provision of such satisfactory
evidence, the Trustee, at the direction of the Company, shall authenticate
and make available for delivery Securities that do not bear the Regulation
S Securities Legend.
(c) The Trustee shall have no responsibility for any actions taken or not
taken by the Depositary.
(d) Each holder agrees to indemnify the Company and the Trustee against any
liability that may result from the transfer, exchange or assignment of such
holder's Security in violation of any provision of this Indenture and/or
applicable United States federal or state securities law.
SECTION 2.07. REPLACEMENT SECURITIES. If the holder of a Security claims
that the Security has been lost, destroyed or wrongfully taken or if such
Security is mutilated and is surrendered to the Trustee, the Company shall issue
and the Trustee shall authenticate a replacement Security if the Trustee's and
the Company's requirements are met. If required by the Trustee or the Company,
an indemnity bond must be sufficient in the judgment of both to protect the
Company, the Trustee, any Agent or any authenticating agent from any loss which
any of them may suffer if a Security is replaced. The Company may charge for its
expenses in replacing a Security.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, or is about to be purchased by the
Company pursuant to Article III hereof, the Company in its discretion may,
instead of issuing a new Security, pay or purchase such Security, as the case
may be.
Every replacement Security is an additional obligation of the Company.
SECTION 2.08. OUTSTANDING SECURITIES. The Securities outstanding at any
time are all the Securities
<PAGE> 30
22
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation, and those described in this Section as not outstanding.
If a Security is replaced, paid or purchased pursuant to Section 2.07
hereof, it ceases to be outstanding unless the Trustee receives proof
satisfactory to it that the replaced, paid or purchased Security is held by a
bona fide purchaser.
If Securities are considered paid under Section 4.01 hereof, they cease to
be outstanding and interest on them ceases to accrue.
A Security does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Security.
SECTION 2.09. TREASURY SECURITIES. In determining whether the Noteholders
of the required principal amount of Securities have concurred in any direction,
waiver or consent, Securities owned by the Company or an Affiliate of the
Company shall be considered as though they are not outstanding, except that for
the purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Securities which a Trust Officer of
the Trustee actually knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY SECURITIES. (a) Until definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Securities in
exchange for temporary Securities.
(b) A Global Security deposited with the Depositary or with the Trustee as
custodian for the Depositary pursuant to Section 2.01 shall be transferred to
the beneficial owners thereof in the form of certificated Securities in
compliance with Section 2.01(c) if (i) the Company notifies the Trustee in
writing that the Depositary is no longer willing or able to continue to act as a
depositary and the Company is unable to locate a qualified successor for 90
days, or (ii) the Company, at its option,
<PAGE> 31
23
notifies the Trustee in writing that it elects to cause the issuance of
certificated Securities.
(c) Any Global Security that is transferable to the beneficial owners
thereof in the form of certificated Securities pursuant to Section 2.01(c) or
this Section 2.10 shall be surrendered by the Depositary to the Trustee located
in The City of New York, to be so transferred, in whole or from time to time in
part, without charge, and the Trustee shall authenticate and make available for
delivery, upon such transfer of each portion of such Global Security, an equal
aggregate principal amount of Securities of authorized denominations in the form
of certificated Securities. Any portion of a Global Security transferred
pursuant to this Section shall be executed, authenticated and delivered only in
denominations of $5,000 and any integral multiple thereof and registered in such
names as the Depositary shall direct. Any Securities in the form of certificated
Securities delivered in exchange for an interest in the Global Security shall,
except as otherwise provided by Section 2.06(b) bear the Restricted Securities
Legend set forth in Exhibit A hereto.
(d) The registered holder of a Global Security may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a holder is
entitled to take under this Indenture or the Securities.
(e) In the event of the occurrence of either of the events specified in
Section 2.10(b), the Company will promptly make available to the Trustee a
reasonable supply of certificated Securities in definitive, fully registered
form without interest coupons.
SECTION 2.11. CANCELLATION. The Company at any time may deliver Securities
to the Trustee for cancellation. The Registrar, Paying Agent and Conversion
Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, redemption, conversion, exchange or payment. The
Trustee shall promptly cancel all Securities surrendered for registration of
transfer, redemption, conversion, exchange, payment, replacement or cancellation
and shall return all cancelled Securities to the Company. The Company may not
issue new Securities to replace Securities that it has paid or that have been
delivered to the Trustee for cancellation or that any holder has converted
pursuant to Article V.
<PAGE> 32
24
SECTION 2.12. DEFAULTED INTEREST. If the Company fails to make a payment of
interest on the Securities, it shall pay such defaulted interest plus any
interest payable on the defaulted interest, in any lawful manner. It may pay
such defaulted interest, plus any such interest payable on it, to the persons
who are Noteholders on a subsequent special record date. The Company shall fix
any such record date and payment date. At least 15 days before any such record
date, the Company shall mail to Noteholders a notice that states the record
date, payment date, and amount of such interest to be paid.
SECTION 2.13. CUSIP NUMBERS. The Company in issuing Securities may use
"CUSIP" numbers (if then generally in use) in addition to serial numbers; if so,
the Trustee shall use such "CUSIP" numbers in addition to serial numbers in
notices of redemption and repurchase as a convenience to holders; PROVIDED,
HOWEVER, that any such notice may state that no representation is made as to the
correctness of such CUSIP number either as printed on the Securities or as
contained in any notice of a redemption or repurchase and that reliance may be
placed only on the serial or other identification numbers printed on the
Securities, and any such redemption or repurchase shall not be affected by any
defect in or omission of such CUSIP number. The Company shall promptly notify
the Trustee of any change in the CUSIP number.
ARTICLE III
Redemption
----------
SECTION 3.01. NOTICES TO TRUSTEE. If the Company elects to redeem
Securities pursuant to the optional redemption provision of Section 3.07 hereof,
it shall notify the Trustee of the redemption date and the principal amount of
Securities to be redeemed. The Company shall give each notice provided for in
this Section 3.01 at least 45 days before the redemption date.
SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED. If less than all the
Securities are to be redeemed, the Trustee shall select the Securities to be
redeemed on a pro rata basis, by lot or by such method as the Trustee shall deem
fair and appropriate. The Trustee shall make the selection not more than 60 days
and not less
<PAGE> 33
25
than 30 days before the redemption date from Securities outstanding not
previously called for redemption. The Trustee may select for redemption portions
of the principal of Securities that have denominations larger than $5,000.
Securities and portions of them it selects shall be in amounts of $5,000 or
integral multiples thereof. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly of the Securities or
portions of Securities to be called for redemption.
If any Security selected for partial redemption is converted in part after
such selection, the converted portion of such Security shall be deemed (so far
as may be) to be the portion to be selected for redemption. The Securities (or
portions thereof) so selected shall be deemed duly selected for redemption for
all purposes hereof, notwithstanding that any such Security is converted in
whole or in part before the mailing of the notice of redemption. Upon any
redemption of less than all the Securities, the Company and the Trustee may
treat as outstanding any Securities surrendered for conversion during the period
15 days next preceding the mailing of a notice of redemption and need not treat
as outstanding any Security authenticated and delivered during such period in
exchange for the unconverted portion of any Security converted in part during
such period.
SECTION 3.03. NOTICE OF REDEMPTION. At least 30 days but not more than 60
days before a redemption date, the Company shall mail a notice of redemption to
each holder whose Securities are to be redeemed at such holder's registered
address.
The notice shall identify the Securities (including CUSIP number) to be
redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Security is being redeemed in part, (i) the portion of the
principal amount of such Security to be redeemed (ii) the last date on
which exchanges or registration of transfers of Securities may be made
pursuant to Section 2.06 hereof and that, after the redemption date, upon
cancellation of such
<PAGE> 34
26
Security, a new Security or Securities in principal amount equal to the
unredeemed portion will be issued in the name of the holder thereof;
(d) the name and address of the Paying Agent;
(e) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price plus accrued interest;
(f) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment pursuant
to the terms of this Indenture, interest on Securities called for
redemption ceases to accrue on and after the redemption date; and
(g) the paragraph of the Securities pursuant to
which the Securities called for redemption are being
redeemed.
Such notice shall also state the current Conversion Price and the date on
which the right to convert such Securities or portions thereof into Common Stock
of the Company will expire.
At the Company's request, the Trustee shall give notice of redemption in
the Company's name and at its expense.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is
mailed, Securities called for redemption become due and payable on the
redemption date at the price set forth in the Security.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. On or before the redemption
date, the Company shall deposit with the Trustee or with the Paying Agent money
sufficient to pay the redemption price of and accrued interest up to but not
including the redemption date on all Securities to be redeemed on that date
(subject to the right of holders of record on the relevant record date to
receive interest due on an interest payment date) unless theretofore converted
into Common Stock pursuant to the provisions hereof. The Trustee or the Paying
Agent shall return to the Company any money not required for that purpose.
SECTION 3.06. SECURITIES REDEEMED IN PART. Upon
<PAGE> 35
cancellation of a Security that is redeemed in part, the Company shall issue and
the Trustee shall authenticate for the holder at the expense of the Company a
new Security equal in principal amount to the unredeemed portion of the Security
surrendered.
SECTION 3.07. OPTIONAL REDEMPTION. The Company may redeem all or any
portion of the Securities, upon the terms and at the redemption prices set forth
in each of the Securities. Any redemption pursuant to this Section 3.07 shall be
made pursuant to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. DESIGNATED EVENT OFFER. (a) In the event that, pursuant to
Section 4.07 hereof, the Company shall commence a Designated Event Offer, the
Company shall follow the procedures in this Section 3.08.
(b) The Designated Event Offer shall remain open for 30 calendar days
following the date of the Company Notice provided pursuant to Section 3.08(e)
(the "Commencement Date"), except to the extent that a longer period is required
by applicable law (the "Tender Period"). On the date that is 45 days after the
date of the Company Notice (the "Designated Event Payment Date"), the Company
shall purchase the principal amount of Securities required to be purchased
pursuant to Section 4.07 hereof (the "Offer Amount").
(c) If the Designated Event Payment Date is on or after an interest payment
record date and on or before the related interest payment date, any accrued
interest will be paid to the person in whose name a Security is registered at
the close of business on such record date, and no additional interest will be
payable to Noteholders who tender Securities pursuant to the Designated Event
Offer.
(d) The Company shall provide the Trustee with notice of the Designated
Event Offer at least 10 Business Days before the Commencement Date.
<PAGE> 36
28
(e) Within 30 days after the occurrence of a Designated Event and on or
before the Commencement Date, the Company or the Trustee (at the expense of the
Company) shall send, by first class mail, a notice (the "Company Notice") to
each of the Noteholders, which shall govern the terms of the Designated Event
Offer and shall state:
(i) that the Designated Event Offer is being made pursuant to this
Section 3.08 and Section 4.07 hereof and that all Securities tendered will
be accepted for payment;
(ii) the Offer Amount, the purchase price (as determined in accordance
with Section 4.07 hereof) the length of time the Designated Event Offer
will remain open and the Designated Event Payment Date;
(iii) that any Security or portion thereof not
tendered or accepted for payment will continue to
accrue interest;
(iv) that, unless the Company defaults in the payment of the
Designated Event Payment, any Security or portion thereof accepted for
payment pursuant to the Designated Event Offer shall cease to accrue
interest after the Designated Event Payment Date;
(v) that Noteholders electing to have a Security or portion thereof
purchased pursuant to any Designated Event Offer will be required to
surrender the Security, with the form entitled "Option of Noteholder To
Elect Purchase" on the reverse of the Security completed, to the Paying
Agent at the address specified in the Company Notice prior to the close of
business on the 30th day after the Commencement Date;
(vi) that, unless the Company defaults in the payment of the
Designated Event Payment, an election pursuant to Clause (v) above shall be
irrevocable, and that the right of the holder to convert the Securities
with respect to which the repurchase right is being exercised shall expire
upon submission of such Securities; and
(vii) that Noteholders whose Securities are being purchased only in
part will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered, which unpurchased
portion
<PAGE> 37
29
must be equal to $5,000 in principal amount or an integral multiple
thereof.
In addition, the notice shall contain all instructions and materials that
the Company shall reasonably deem necessary to enable such Noteholders to tender
Securities pursuant to the Designated Event Offer.
(f) At least one Business Day prior to the Designated Event Payment Date,
the Company shall irrevocably deposit with the Trustee or a Paying Agent in
immediately available funds an amount equal to the Offer Amount plus accrued
interest on such Securities to be held for payment in accordance with the terms
of this Section 3.08. On the Designated Event Payment Date, the Company shall,
to the extent lawful, (i) accept for payment the Securities or portions thereof
tendered pursuant to the Designated Event Offer, (ii) deliver or cause to be
delivered to the Trustee Securities so accepted and (iii) deliver to the Trustee
an Officers' Certificate stating such Securities or portions thereof have been
accepted for payment by the Company in accordance with the terms of this Section
3.08. The Paying Agent shall promptly (but in any case not later than ten (10)
calendar days after the Designated Event Payment Date) mail or deliver to each
tendering Noteholder an amount equal to the purchase price of the Securities
tendered by such Noteholder plus accrued interest thereon, and the Trustee shall
promptly authenticate and mail or deliver to such Noteholders a new Security
equal in principal amount to any unpurchased portion of the Security
surrendered, if any; PROVIDED, HOWEVER, that each new Security shall be in a
principal amount of $5,000 or an integral multiple thereof. Any Securities not
so accepted shall be promptly mailed or delivered by or on behalf of the Company
to the holder thereof. The Company will publicly announce the results of the
Designated Event Offer on, or as soon as practicable after, the Designated Event
Payment Date.
(g) 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 Securities in connection with a Designated Event.
<PAGE> 38
30
ARTICLE IV
Covenants
---------
SECTION 4.01. PAYMENT OF SECURITIES. The Company shall pay the principal
of, interest and Additional Amounts, if any, on the Securities on the dates and
in the manner provided in the Securities. Principal, interest and Additional
Amounts, if any, shall be considered paid on the date due if the Paying Agent
(other than the Company or an Affiliate of the Company) holds on that date money
designated for and sufficient to pay all principal, interest and Additional
Amounts, if any, then due and such Paying Agent is not prohibited from paying
such money to the Noteholders on that date pursuant to the terms of this
Indenture. To the extent lawful, the Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace period) at the
rate borne by the Securities, compounded semiannually.
SECTION 4.02. SEC REPORTS. Whether or not required by the rules and
regulations of the SEC, so long as any Securities are outstanding, the Company
will file with the SEC and furnish to the Trustee and, if requested, to the
holders of Securities all quarterly and annual financial information required to
be contained in a filing with the SEC 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 annual information only, a report thereon by
the Company's certified independent accountants.
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.03. COMPLIANCE CERTIFICATE. The Company shall deliver to the
Trustee, within 120 days after the end of each fiscal year of the Company, an
Officers' Certificate stating that a review of the activities of the Company and
its Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing
<PAGE> 39
31
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under, and complied with the covenants
and conditions contained in, this Indenture, and further stating, as to each
such Officer signing such certificate, that to the best of his knowledge the
Company has kept, observed, performed and fulfilled each and every covenant, and
complied with the covenants and conditions contained in this Indenture and is
not in default in the performance or observance of any of the terms, provisions
and conditions hereof (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he may have
knowledge) and that to the best of his knowledge no event has occurred and
remains in existence by reason of which payments on account of the principal or
of interest, if any, on the Securities are prohibited.
One of the Officers signing such Officers' Certificate shall be either the
Company's principal executive officer, principal financial officer or principal
accounting officer.
The Company will, so long as any of the Securities are outstanding, deliver
to the Trustee, forthwith upon becoming aware of any Default or Event of Default
an Officers' Certificate specifying such Default or Event of Default.
Immediately upon the occurrence of any event giving rise to an increase in
the interest rate on the Securities in accordance with Section 11 of the form
thereof or the termination of any such increase, the Company shall give the
Trustee notice of such increase or termination, of the interest rate borne by
the Securities after giving effect to such increase or termination and of the
event giving rise to such increase or termination (such notice to be contained
in an Officers' Certificate), and prior to receipt of such Officers' Certificate
the Trustee shall be entitled to assume that no such increase or termination has
occurred, as the case may be.
SECTION 4.04. STAY, EXTENSION AND USURY LAWS. The Company covenants (to the
extent that it may lawfully do so) that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time hereafter
in force, which may affect the covenants or the performance of this Indenture;
and the
<PAGE> 40
32
Company (to the extent it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not, by resort
to any such law, hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law has been enacted.
SECTION 4.05. CORPORATE EXISTENCE. Subject to Article VII hereof, the
Company will do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and the corporate rights (charter
and statutory), corporate licenses and corporate franchises of the Company;
PROVIDED, HOWEVER, that the Company shall not be required to preserve any such
right, license or franchise, if the Board of Directors of the Company shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and that the loss thereof is not adverse in any
material respect to the Noteholders.
SECTION 4.06. TAXES. The Company shall, and shall cause each of its
Subsidiaries to, pay prior to delinquency all taxes, assessments and
governmental levies, except as contested in good faith and by appropriate
proceedings.
SECTION 4.07. DESIGNATED EVENT. (a) Upon the occurrence of a Designated
Event, each holder of Securities shall have the right, in accordance with this
Section 4.07 and Section 3.08 hereof, to require the Company to repurchase all
or any part (equal to $5,000 or an integral multiple thereof) of such holder's
Securities pursuant to the terms of Section 3.08 (the "Designated Event Offer")
at a purchase price equal to 100% of the principal amount thereof, plus accrued
and unpaid interest thereon to the Designated Event Payment Date (the
"Designated Event Payment").
(b) Within 30 days following any Designated Event, the Company shall mail
to each holder the Company Notice provided by Section 3.08(e).
SECTION 4.08. ADDITIONAL AMOUNTS. The Company will pay to the holder of any
Security who is a United States Alien (as defined below) such additional amounts
("Additional Amounts") as may be necessary in order that every net payment of
the principal of, premium, if any, and
<PAGE> 41
33
interest on such Security, 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 Security 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 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 Code, a controlled foreign corporation or
a passive foreign investment company for United States tax purposes or a
corporation which accumulates earnings to avoid United States federal
income tax, (iii) such holder or 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 Security subject to
United States federal income tax or (iv) such holder's status as a bank
whose receipt of interest on such Security is described in Section
881(c)(3)(A) of the Code;
(b) any tax, assessment or other governmental charge which would not
have been so imposed but for the presentation by the holder of such
Security for payment on a date more than 15 days after the date on which
such payment became due and payable or the date
<PAGE> 42
34
on which payment thereof is duly provided for, whichever occurs later;
(c) any estate, inheritance, gift, sales, transfer, 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 Security if compliance is
required by statute or by regulation, ruling or 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,
premium, if any, or interest on such Security;
(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, premium,
if any, or interest on such Security, 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 a beneficial owner of such Security 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 to the payment of Additional
Amounts had the beneficial owner, beneficiary, settlor or member directly
received its beneficial or distributive share of payments on such Security;
or
<PAGE> 43
35
(i) any combination of items (a), (b), (c), (d), (e), (f), (g) and
(h).
For purposes of this Section, "United States" means the United States of
America (including the States and the District of Columbia), its territories,
its possessions and other areas subject to its jurisdiction (its "possessions"
including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake
Island and the Northern Mariana Islands), and "United States Alien" is a Person
that is, for United States federal income tax purposes, (a) a foreign
corporation, (b) a nonresident alien individual, (c) an estate or trust that is
not an estate or trust that is subject to United States federal income taxation
regardless of the source of its income, or (d) a foreign partnership one or more
of the members of which is, for United States 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 United States federal income taxation
regardless of the source of its income or a foreign partnership as otherwise
defined in this clause (d).
Whenever in this Indenture or any Security there is mentioned, in any
context, the payment of the principal of or interest on, or in respect of, any
Security, such mention shall be deemed to include mention of the payment of
Additional Amounts provided for in this Section to the extent that, in such
context, Additional Amounts are, were or would be payable in respect thereof
pursuant to the provisions of this Section and express mention of the payment of
Additional Amounts (if applicable) in any provisions hereof shall not be
construed as excluding Additional Amounts in those provisions hereof where such
express mention is not made.
At least 10 days prior to November 1, 1996 or an earlier redemption date or
repurchase date (and at least 10 days prior to each date of payment of principal
or interest after November 1, 1996 or such earlier redemption date or repurchase
date, if there has been any change with respect to the matters set forth in the
below mentioned Officers' Certificate), the Company will furnish the Trustee and
the Paying Agent, if other than the Trustee, with an Officers' Certificate
instructing the Trustee and such Paying Agent whether such payment of principal
of premium or interest on the Securities shall be made to holders of
<PAGE> 44
36
Securities who are United States Aliens without withholding for or on account of
any tax, assessment or other governmental charge described above. If any such
withholding shall be required, then such Officers' Certificate shall specify by
country the amount, if any, required to be withheld on such payments to such
holders and the Company will pay to the Trustee or the Paying Agent the
Additional Amounts required by this Section to be paid in the event of any such
withholding. The Company covenants to indemnify the Trustee and any Paying Agent
for, and to hold them harmless against, any loss, liability or expense arising
out of or in connection with actions taken or omitted by any of them in reliance
on any Officers' Certificate furnished pursuant to this Section, except to the
extent such loss, liability or expense is attributable to the Trustee's
negligence or bad faith.
ARTICLE V
Conversion
----------
SECTION 5.01. CONVERSION PRIVILEGE. A holder of a Security may convert the
principal amount thereof (or any portion thereof that is an integral multiple of
$5,000) into fully paid and nonassessable shares of Common Stock of the Company
at any time after 90 days following the date of original issuance thereof and
prior to the close of business (New York time) on the date of the Security's
maturity at the Conversion Price then in effect, except that, with respect to
any Security called for redemption, such conversion right shall terminate at the
close of business on the Business Day immediately preceding the redemption date,
and except that if a Security is submitted pursuant to the exercise of a
repurchase right pursuant to Section 3.08 and Section 4.07 hereof, the right to
convert such Security will expire upon submission (unless the Company shall
default in making the redemption payment on the Designated Event Payment, as the
case may be when it becomes due, in which case the conversion right shall
terminate on the date such default is cured). The number of shares of Common
Stock issuable upon conversion of a Security is determined by dividing the
principal amount of the Security converted by the conversion price in effect on
the Conversion Date (the "Conversion Price").
The initial Conversion Price is stated in Section 10 of the Securities and
is subject to adjustment as
<PAGE> 45
37
provided in this Article V.
Provisions of this Indenture that apply to conversion of all of a Security
also apply to conversion of a portion of it. A holder of Securities is not
entitled to any rights of a holder of Common Stock until such holder of
Securities has converted such Securities into Common Stock, and only to the
extent that such Securities are deemed to have been converted into Common Stock
under this Article V.
SECTION 5.02. CONVERSION PROCEDURE. To convert a Security, a holder must
satisfy the requirements in Section 10 of the Securities. The date on which the
holder satisfies all of those requirements is the conversion date (the
"Conversion Date"). As soon as practicable after the Conversion Date, the
Company shall deliver to the holder through the Conversion Agent a certificate
for the number of whole shares of Common Stock issuable upon the conversion and
a check for any fractional share determined pursuant to Section 5.03. The person
in whose name the certificate is registered shall become the stockholder of
record on the Conversion Date and, as of such date, such person's rights as a
Noteholder shall cease; PROVIDED, HOWEVER, that no surrender of a Security on
any date when the stock transfer books of the Company shall be closed shall be
effective to constitute the person entitled to receive the shares of Common
Stock upon such conversion as the stockholder of record of such shares of Common
Stock on such date, but such surrender shall be effective to constitute the
person entitled to receive such shares of Common Stock as the stockholder of
record thereof for all purposes at the close of business on the next succeeding
day on which such stock transfer books are open; PROVIDED FURTHER, HOWEVER, that
such conversion shall be at the Conversion Price in effect on the date that such
Security shall have been surrendered for conversion, as if the stock transfer
books of the Company had not been closed.
No payment or adjustment will be made for accrued and unpaid interest on a
converted Security or for dividends or distributions on shares of Common Stock
issued upon conversion of a Security, but if any holder surrenders a Security
for conversion after the close of business on the record date for the payment of
an installment of interest and prior to the opening of business on the next
interest payment date, then, notwithstanding such conversion, the interest
payable on such interest payment date shall be paid to the holder of such
Security on such record date. In such
<PAGE> 46
38
event, such Security, when surrendered for conversion, must be accompanied by
payment in funds acceptable to the Company of an amount equal to the interest
payable on such interest payment date on the portion so converted.
If a holder converts more than one Security at the same time, the number of
whole shares of Common Stock issuable upon the conversion shall be based on the
total principal amount of Securities converted.
Upon surrender of a Security that is converted in part, the Trustee shall
authenticate for the holder a new Security equal in principal amount to the
unconverted portion of the Security surrendered.
SECTION 5.03. FRACTIONAL SHARES. The Company will not issue fractional
shares of Common Stock upon conversion of a Security. In lieu thereof, the
Company will pay an amount in cash based upon the Daily Market Price of the
Common Stock on the trading day prior to the date of conversion.
SECTION 5.04. TAXES ON CONVERSION. The issuance of certificates for shares
of Common Stock upon the conversion of any Security shall be made without charge
to the converting Noteholder for such certificates or for any tax in respect of
the issuance of such certificates, and such certificates shall be issued in the
respective names of, or in such names as may be directed by, the holder or
holders of the converted Security; PROVIDED, HOWEVER, that in the event that
certificates for shares of Common Stock are to be issued in a name other than
the name of the holder of the Security converted, such Security, when
surrendered for conversion, shall be accompanied by an instrument of transfer,
in form satisfactory to the Company, duly executed by the registered holder
thereof or his duly authorized attorney; and PROVIDED FURTHER, HOWEVER, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any such certificates in a
name other than that of the holder of the converted Security, and the Company
shall not be required to issue or deliver such certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid or is not applicable.
<PAGE> 47
39
SECTION 5.05. COMPANY TO PROVIDE STOCK. The Company shall at all times
reserve and keep available, free from preemptive rights, out of its authorized
but unissued Common Stock, solely for the purpose of issuance upon conversion of
Securities as herein provided, a sufficient number of shares of Common Stock to
permit the conversion of all outstanding Securities for shares of Common Stock.
All shares of Common Stock which may be issued upon conversion of the
Securities shall be duly authorized, validly issued, fully paid and
nonassessable when so issued.
SECTION 5.06. ADJUSTMENT OF CONVERSION PRICE. The Conversion Price shall be
subject to adjustment from time to time as follows:
(a) In case the Company shall (1) pay a dividend in shares of Common Stock
to holders of Common Stock, (2) make a distribution in shares of Common Stock to
holders of Common Stock, (3) subdivide its outstanding shares of Common Stock
into a greater number of shares of Common Stock or (4) combine its outstanding
shares of Common Stock into a smaller number of shares of Common Stock, the
Conversion Price in effect immediately prior to such action shall be adjusted so
that the holder of any Security thereafter surrendered for conversion shall be
entitled to receive the number of shares of Common Stock which he would have
owned immediately following such action had such Securities been converted
immediately prior thereto. Any adjustment made pursuant to this subsection (a)
shall become effective immediately after the record date in the case of a
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision or combination.
(b) In case the Company shall issue rights or warrants to all holders of
Common Stock entitling them (for a period commencing no earlier than the record
date for the determination of holders of Common Stock entitled to receive such
rights or warrants and expiring not more than 45 days after such record date) to
subscribe for or purchase shares of Common Stock (or securities convertible into
Common Stock) at a price per share less than the current market price (as
determined pursuant to subsection (f) below) of the Common Stock on such record
date, the Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately prior
to such record date by a fraction of which
<PAGE> 48
40
the numerator shall be the number of shares of Common Stock outstanding on such
record date, plus the number of shares of Common Stock which the aggregate
offering price of the offered shares of Common Stock (or the aggregate
conversion price of the convertible securities so offered) would purchase at
such current market price, and of which the denominator shall be the number of
shares of Common Stock outstanding on such record date plus the number of
additional shares of Common Stock offered (or into which the convertible
securities so offered are convertible). Such adjustments shall become effective
immediately after such record date. To the extent that shares of Common Stock
are not delivered pursuant to such rights or warrants, upon the expiration or
termination of such rights or warrants the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect had the
adjustments made upon the issuance of such rights or warrants been made on the
basis of delivery of only the number of shares of Common Stock actually
delivered. If such rights or warrants are not so issued, the Conversion Price
shall again be adjusted to be the Conversion Price which would then be in effect
if such date fixed for the determination of stockholders entitled to receive
such rights or warrants had not been fixed.
(c) In case the Company shall distribute to all holders of Common Stock
shares of any class of Capital Stock of the Company other than Common Stock,
evidences of indebtedness or other assets (other than cash), or shall distribute
to all holders of Common Stock rights or warrants to subscribe for securities
(other than those securities referred to in subsection (b) above), then in each
such case the Conversion Price shall be adjusted so that the same shall equal
the price determined by multiplying the Conversion Price in effect immediately
prior to the date of such distribution by a fraction of which the numerator
shall be the current market price (determined as provided in subsection (f)
below) of the Common Stock on the record date mentioned below less the then fair
market value (as determined by the Board of Directors, whose determination shall
be conclusive evidence of such fair market value and described in a Board
Resolution) of the portion of the assets so distributed or of such subscription
rights or warrants applicable to one share of Common Stock, and of which the
denominator shall be such current market price of the Common Stock. Such
adjustment shall become effective immediately after the record date for the
determination of the holders of Common Stock entitled to receive such
<PAGE> 49
41
distribution. Notwithstanding the foregoing, in the event that the Company shall
distribute rights or warrants to subscribe for additional shares of the
Company's Capital Stock (other than the Common Stock referred to in subsection
(b) above) ("Rights") pro rata to holders of Common Stock, the Company may, in
lieu of making any adjustment pursuant to this Section 5.06, make proper
provision so that each holder of a Security who converts such Security (or any
portion thereof) after the record date for such distribution and prior to the
expiration or redemption of the Rights shall be entitled to receive upon such
conversion, in addition to the shares of Common Stock issuable upon such
conversion (the "Conversion Shares"), a number of Rights to be determined as
follows: (i) if such conversion occurs on or prior to the date for the
distribution to the holders of Rights of separate certificates evidencing such
Rights (the "Distribution Date"), the same number of Rights to which a holder of
a number of shares of Common Stock equal to the number of Conversion Shares is
entitled at the time of such conversion in accordance with the terms and
provisions of and applicable to the Rights; and (ii) if such conversion occurs
after the Distribution Date, the same number of Rights to which a holder of the
number of shares of Common Stock into which the principal amount of the Security
so converted was convertible immediately prior to the Distribution Date would
have been entitled on the Distribution Date in accordance with the terms and
provisions of and applicable to the Rights.
(d) In case the Company shall, by dividend or otherwise, at any time
distribute to all holders of its Common Stock cash (including any distributions
of cash out of current or retained earnings of the Company) in an aggregate
amount that, together with the sum of (x) the aggregate amount of any other
distributions to all holders of its Common Stock made in cash plus (y) all
Excess Payments, in each case made within the 12 months preceding the date fixed
for determining the stockholders entitled to such distribution (the
"Distribution Record Date") and in respect of which no Conversion Price
adjustment pursuant to paragraph (e) of this Section or this paragraph (d) has
been made, exceeds 10% of the product of the current market price per share
(determined as provided in paragraph (f) of this Section) of the Common Stock on
the Distribution Record Date times the number of shares of Common Stock
outstanding on the Distribution Record Date (excluding shares held in the
treasury of the Company), the Conversion Price shall be reduced so that the same
shall equal the price determined by
<PAGE> 50
42
multiplying such Conversion Price in effect immediately prior to the
effectiveness of the Conversion Price reduction contemplated by this paragraph
(d) by a fraction of which the numerator shall be (x) the current market price
per share (determined as provided in paragraph (f) of this Section) of the
Common Stock on the Distribution Record Date less (y) the amount determined by
dividing the aggregate amount of such cash and other consideration (including
any Excess Payments) so distributed in excess of the 10% referred to above by
the shares of Common Stock outstanding on the Distribution Record Date, and the
denominator shall be such current market price per share (determined as provided
in paragraph (f) of this Section) of the Common Stock on the Distribution Record
Date, such reduction to become effective immediately prior to the opening of
business on the day following the Distribution Record Date.
(e) In case a tender offer or other negotiated transaction made by the
Company or any Subsidiary of the Company for all or any portion of the Common
Stock shall be consummated, if an Excess Payment is made in respect of such
tender offer or other negotiated transaction and the amount of such Excess
Payment, together with the sum of (x) the aggregate amount of all Excess
Payments plus (y) the aggregate amount of all distributions to all holders of
the Common Stock made in cash (specifically including distributions of cash out
of retained earnings), in each case made within the 12 months preceding the date
of payment of such current negotiated transaction consideration or expiration of
such current tender offer, as the case may be (the "Purchase Date"), and as to
which no adjustment pursuant to paragraph (c) or paragraph (d) of this Section
or this paragraph (e) has been made, exceeds 10% of the product of the current
market price per share (determined as provided in paragraph (f) of this Section)
of the Common Stock on the Purchase Date times the number of shares of Common
Stock outstanding (including any tendered shares but excluding any shares held
in the treasury of the Company) on the Purchase Date, the Conversion Price shall
be reduced so that the same shall equal the price determined by multiplying such
Conversion Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this paragraph (e) by a fraction of
which the numerator shall be (x) the current market price per share (determined
as provided in paragraph (f) of this Section) of the Common Stock on the
Purchase Date less (y) the amount determined by dividing the aggregate amount of
such Excess Payments and such cash distributions, if any,
<PAGE> 51
43
in excess of the 10% amount referred to above by the shares of Common Stock
outstanding on the Purchase Date, and the denominator shall be such current
market price per share (determined as provided in paragraph (f) of this Section)
of the Common Stock on the Purchase Date, such reduction to become effective
immediately prior to the opening of business on the day following the Purchase
Date.
(f) The current market price per share of Common Stock on any date shall be
deemed to be the average of the Daily Market Prices for the shorter of (i) 30
consecutive Trading Days ending on the last full trading day on the exchange or
market referred to in determining such Daily Market Prices prior to the time of
determination or (ii) the period commencing on the date next succeeding the
first public announcement of the issuance of such rights or such warrants or
such other distribution or such Excess Payment through such last full trading
day on the exchange or market referred to in determining such Daily Market
Prices prior to the time of determination.
(g) In any case in which this Section 5.06 shall require that an adjustment
be made immediately following a record date for an event, the Company may elect
to defer, until such event, issuing to the holder of any Security converted
after such record date the shares of Common Stock and other Capital Stock of the
Company issuable upon such conversion over and above the shares of Common Stock
and other Capital Stock of the Company issuable upon such conversion only on the
basis of the Conversion Price prior to adjustment; and, in lieu of the shares
the issuance of which is so deferred, the Company shall issue or cause its
transfer agents to issue due bills or other appropriate evidence of the right to
receive such shares.
SECTION 5.07. NO ADJUSTMENT. No adjustment in the Conversion Price shall be
required until cumulative adjustments amount to 1% or more of the Conversion
Price as last adjusted; PROVIDED, HOWEVER, that any adjustments which by reason
of this Section 5.07 are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Article V shall be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be. No adjustment need be made for rights to purchase
Common Stock pursuant to a Company plan for reinvestment of dividends or
interest. No adjustment need be made for a change in the par value or no par
value of the Common Stock.
<PAGE> 52
44
SECTION 5.08. OTHER ADJUSTMENTS. (a) In the event that, as a result of an
adjustment made pursuant to Section 5.06 above, the holder of any Security
thereafter surrendered for conversion shall become entitled to receive any
shares of Capital Stock of the Company other than shares of its Common Stock,
thereafter the Conversion Price of such other shares so receivable upon
conversion of any Securities shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as practicable to the provisions with
respect to Common Stock contained in this Article V.
(b) In the event that shares of Common Stock are not delivered after the
expiration of any of the rights or warrants referred to in Section 5.06(b) and
Section 5.06(c) hereof, the Conversion Price shall be readjusted to the
Conversion Price which would otherwise be in effect had the adjustment made upon
the issuance of such rights or warrants been made on the basis of delivery of
only the number of shares of Common Stock actually delivered.
SECTION 5.09. ADJUSTMENTS FOR TAX PURPOSES. The Company may, at its option,
make such reductions in the Conversion Price, in addition to those required by
Section 5.06 above, as it determines to be advisable in order that any stock
dividend, subdivision of shares, distribution of 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 the
recipients thereof.
SECTION 5.10. ADJUSTMENTS BY THE COMPANY. The Company from time to time
may, to the extent permitted by law, reduce the Conversion Price by any amount
for any period of at least 20 days, in which case the Company shall give at
least 15 days' notice of such reduction in accordance with Section 5.11, if the
Board of Directors has made a determination that such reduction would be in the
best interests of the Company, which determination shall be conclusive.
SECTION 5.11. NOTICE OF ADJUSTMENT. Whenever the Conversion Price is
adjusted, the Company shall promptly mail to Noteholders at the addresses
appearing on the Registrar's books a notice of the adjustment and file with the
Trustee an Officers' Certificate briefly stating the facts requiring the
adjustment and the manner of computing
<PAGE> 53
45
it. The certificate shall be conclusive evidence of the correctness of such
adjustment.
SECTION 5.12. NOTICE OF CERTAIN TRANSACTIONS. In the event that:
(1) the Company takes any action which would require an adjustment in the
Conversion Price;
(2) the Company takes any action that would require a supplemental
indenture pursuant to Section 5.13; or
(3) there is a dissolution or liquidation of the Company;
a holder of a Security may wish to convert such Security into shares of Common
Stock prior to the record date for or the effective date of the transaction so
that he may receive the rights, warrants, securities or assets which a holder of
shares of Common Stock on that date may receive. Therefore, the Company shall
mail to Noteholders at the addresses appearing on the Registrar's books and the
Trustee a notice stating the proposed record or effective date, as the case may
be. The Company shall mail the notice at least 15 days before such date;
however, failure to mail such notice or any defect therein shall not affect the
validity of any transaction referred to in clause (1), (2) or (3) of this
Section 5.12.
<PAGE> 54
46
SECTION 5.13. EFFECT OF RECLASSIFICATIONS, CONSOLIDATIONS, MERGERS OR SALES
ON CONVERSION PRIVILEGE. If any of the following shall occur, namely: (i) any
reclassification or change of outstanding shares of Common Stock issuable upon
conversion of Securities (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), (ii) any consolidation or merger to which the Company is a
party other than a merger in which the Company is the continuing corporation and
which does not result in any reclassification of, or change (other than a change
in name, or par value, or from par value to no par value, or from no par value
to par value or as a result of a subdivision or combination) in, outstanding
shares of Common Stock or (iii) any sale or conveyance of all or substantially
all of the property or business of the Company as an entirety, then the Company,
or such successor or purchasing corporation, as the case may be, shall, as a
condition precedent to such reclassification, change, consolidation, merger,
sale or conveyance, execute and deliver to the Trustee a supplemental indenture
in form satisfactory to the Trustee providing that the holder of each Security
then outstanding shall have the right to convert such Security into the kind and
amount of shares of stock and other securities and property (including cash)
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance by a holder of the number of shares of Common Stock deliverable upon
conversion of such Security immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance. Such supplemental indenture shall
provide for adjustments of the Conversion Price which shall be as nearly
equivalent as may be practicable to the adjustments of the Conversion Price
provided for in this Article V. The foregoing, however, shall not in any way
affect the right a holder of a Security may otherwise have, pursuant to clause
(ii) of the last sentence of subsection (c) of Section 5.06, to receive Rights
upon conversion of a Security. If, in the case of any such consolidation,
merger, sale or conveyance, the stock or other securities and property
(including cash) receivable thereupon by a holder of Common Stock includes
shares of stock or other securities and property of a corporation other than the
successor or purchasing corporation, as the case may be, in such consolidation,
merger, sale or conveyance, then such supplemental indenture shall also be
executed by such other corporation and shall contain such additional provisions
to protect the interests of the holders of the Securities as the Board of
Directors
<PAGE> 55
47
of the Company shall reasonably consider necessary by reason of the foregoing.
The provision of this Section 5.13 shall similarly apply to successive
consolidations, mergers, sales or conveyances.
In the event the Company shall execute a supplemental indenture pursuant to
this Section 5.13, the Company shall promptly file with the Trustee an Officers'
Certificate briefly stating the reasons therefor, the kind or amount of shares
of stock or securities or property (including cash) receivable by holders of the
Securities upon the conversion of their Securities after any such
reclassification, change, consolidation, merger, sale or conveyance and any
adjustment to be made with respect thereto. Neither the Trustee nor any
Conversion Agent shall have any duty whatsoever to determine whether a
supplemental indenture under this Section 5.13 is required or what the
provisions of such supplemental indenture should be.
SECTION 5.14. TRUSTEE'S DISCLAIMER. The Trustee has no duty to determine
when an adjustment under this Article V should be made, how it should be made or
what such adjustment should be, but may accept as conclusive evidence of the
correctness of any such adjustment, and shall be protected in relying upon the
Officers' Certificate with respect thereto which the Company is obligated to
file with the Trustee pursuant to Section 5.11. The Trustee makes no
representation as to the validity or value of any securities or assets issued
upon conversion of Securities, and the Trustee shall not be responsible for the
Company's failure to comply with any provisions of this Article V.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 5.13, but may accept as conclusive evidence of the
correctness thereof, and shall be protected in relying upon, the Officers'
Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 5.13.
<PAGE> 56
48
ARTICLE VI
Subordination
-------------
SECTION 6.01. AGREEMENT TO SUBORDINATE. The Company, for itself and its
successors, and each Noteholder, by his acceptance of Securities, agree that the
payment of the principal of or interest, Additional Amounts, if any, or any
other amounts due on the Securities is subordinated in right of payment, to the
extent and in the manner stated in this Article VI, to the prior payment in full
of all existing and future Senior Debt.
SECTION 6.02. NO PAYMENT ON SECURITIES IF SENIOR DEBT IN DEFAULT. Anything
in this Indenture to the contrary notwithstanding, no payment on account of
principal, premium, if any, or interest on, or redemption, repurchase or other
amounts due on the Securities, and no redemption, purchase, or other acquisition
of the Securities, shall be made by or on behalf of the Company (i) unless full
payment of amounts then due for principal, premium, if any, and interest or
other amounts then due on all Senior Debt has been made or duly provided for
pursuant to the terms of the instrument governing such Senior Debt or (ii) there
shall have occurred an event of default (other than a default in the payment of
principal, premium, if any, sinking funds or interest or other amounts) with
respect to any Senior Debt, as defined therein or in the instrument under which
the same is outstanding, permitting the holders thereof to accelerate the
maturity thereof and written notice of such occurrence shall have been given to
the Company and to the Trustee under this Indenture by any holder or holders of
such Senior Debt and such event of default shall not have been cured or waived
or shall not have ceased to exist.
In the event that, notwithstanding the provisions of this Section 6.02,
payments are made by or on behalf of the Company in contravention of the
provisions of this Section 6.02, such payments shall be held by the Trustee, any
Paying Agent or the holders, as applicable, in trust for the benefit of, and
shall be paid over to and delivered to, the Representative of the holders of
Senior Debt or the trustee under the indenture or other agreement (if any),
pursuant to which any instruments evidencing any Senior Debt may have been
issued for application to the payment of all Senior Debt ratably according to
the aggregate amounts remaining unpaid to the extent necessary to pay all Senior
Debt in full in accordance with the terms of such Senior
<PAGE> 57
49
Debt, after giving effect to any concurrent payment or distribution to or for
the holders of Senior Debt.
The Company shall give prompt written notice to the Trustee and any Paying
Agent of any default or event of default under any Senior Debt or under any
agreement pursuant to which any Senior Debt may have been issued.
SECTION 6.03. DISTRIBUTION ON ACCELERATION OF SECURITIES; DISSOLUTION AND
REORGANIZATION; SUBROGATION OF SECURITIES. (a) If the Securities are declared
due and payable because of the occurrence of an Event of Default, the Company
shall give prompt written notice to the holders of all Senior Debt or to the
trustee(s) or other Representative for such Senior Debt of such acceleration.
The Company may not pay the principal of, interest, Additional Amounts or any
other amounts due on the Securities until five days after such holders or
trustee(s) of Senior Debt receive such notice and, thereafter, the Company may
pay the principal of, interest, Additional Amounts or any other amounts due on
the Securities only if the provisions of this Article VI permit such payment.
(b) Upon (i) any acceleration of the principal amount due on the Securities
because of an Event of Default or (ii) any distribution of assets of the Company
upon any dissolution, winding up, liquidation or reorganization of the Company
(whether in bankruptcy, insolvency or receivership proceedings or upon an
assignment for the benefit of creditors or any other dissolution, winding up,
liquidation or reorganization of the Company):
(1) the holders of all Senior Debt shall first be entitled to
receive payment in full of the principal thereof, the interest thereon and any
other amounts due thereon before the Noteholders are entitled to receive payment
on account of the principal of or interest on or any other amounts due on the
Securities;
(2) any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities (other than
securities of the Company as reorganized or readjusted or securities of the
Company or any other corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinate, at least to the extent
provided in this Article with respect to the Securities, to the payment in full
without diminution or modification by such plan of all
<PAGE> 58
50
Senior Debt), to which the holders or the Trustee would be entitled except for
the provisions of this Article, shall be paid by the liquidating trustee or
agent or other person making such a payment or distribution, directly to the
holders of Senior Debt (or their Representatives(s) or trustee(s) acting on
their behalf), ratably according to the aggregate amounts remaining unpaid on
account of the principal of, interest, Additional Amounts and other amounts due
on the Senior Debt held or represented by each, to the extent necessary to make
payment in full of all Senior Debt remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such Senior Debt; and
(3) in the event that, notwithstanding the foregoing, any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities (other than securities of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in this Article with respect to the
Securities, to the payment in full without diminution or modification by such
plan of Senior Debt), shall be received by the Trustee or the Noteholders before
all Senior Debt is paid in full, such payment or distribution shall be held in
trust for the benefit of, and be paid over to upon request by a holder of the
Senior Debt, the holders of the Senior Debt remaining unpaid (or their
Representatives) or trustee(s) acting on their behalf, ratably as aforesaid, for
application to the payment of such Senior Debt until all such Senior Debt shall
have been paid in full, after giving effect to any concurrent payment or
distribution to the holders of such Senior Debt.
Subject to the payment in full of all Senior Debt, the Noteholders shall be
subrogated to the rights of the holders of Senior Debt to receive payments or
distributions of cash, property or securities of the Company applicable to the
Senior Debt until the principal of and interest on the Securities shall be paid
in full and, for purposes of such subrogation, no such payments or distributions
to the holders of Senior Debt of cash, property or securities which otherwise
would have been payable or distributable to Noteholders shall, as between the
Company, its creditors other than the holders of Senior Debt, and the
Noteholders, be deemed to be a payment by the Company to or on account of the
Senior Debt, it being understood that the provisions of this
<PAGE> 59
51
Article are and are intended solely for the purpose of defining the relative
rights of the Noteholders, on the one hand, and the holders of Senior Debt, on
the other hand.
Nothing contained in this Article or elsewhere in this Indenture or in the
Securities is intended to or shall (i) impair, as between the Company and its
creditors other than the holders of Senior Debt, the obligation of the Company,
which is absolute and unconditional, to pay to the Noteholders the principal of,
interest and Additional Amounts, if any, on the Securities as and when the same
shall become due and payable in accordance with the terms of the Securities,
(ii) affect the relative rights of the Noteholders and creditors of the Company
other than holders of Senior Debt or, as between the Company and the Trustee,
the obligations of the Company to the Trustee, or (iii) prevent the Trustee or
the holders from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article of the holders of Senior Debt in respect of cash, property and
securities of the Company received upon the exercise of any such remedy.
Upon distribution of assets of the Company referred to in this Article, the
Trustee, subject to the provisions of Section 9.01 hereof, and the Noteholders
shall be entitled to rely upon a certificate of the liquidating trustee or agent
or other person making any distribution to the Trustee or to the Noteholders for
the purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Debt and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article.
The Trustee, however, shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt. Nothing contained in this Article or elsewhere in this
Indenture, or in any of the Securities, shall prevent the good faith application
by the Trustee of any moneys which were deposited with it hereunder, prior to
its receipt of written notice of facts which would prohibit such application,
for the purpose of the payment of or on account of the principal of interest or
Additional Amounts, if any, on the Securities unless, prior to the date on which
such application is made by the Trustee, the Trustee shall be charged with
actual notice under Section 6.03(d) hereof of the facts which would prohibit the
making of such application.
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52
(c) The provisions of this Article shall not be applicable to any cash,
properties or securities received by the Trustee or by any holder when received
as a holder of Senior Debt and nothing in Section 9.11 hereof or elsewhere in
this Indenture shall deprive the Trustee or such holder of any of its rights as
such holder.
(d) The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment of money to
or by the Trustee in respect of the Securities pursuant to the provisions of
this Article. The Trustee, subject to the provisions of Section 9.01 hereof,
shall be entitled to assume that no such fact exists unless the Company or any
holder of Senior Debt or any trustee therefor has given notice thereof to the
Trustee. Notwithstanding the provisions of this Article or any other provisions
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any fact which would prohibit the making of any payment of moneys
to or by the Trustee in respect of the Securities pursuant to the provisions in
this Article, unless and until three Business Days after the Trustee shall have
received written notice thereof from the Company or any holder or holders of
Senior Debt or from any trustee therefor; and, prior to the receipt of any such
written notice, the Trustee, subject to the provisions of Section 9.01 hereof,
shall be entitled in all respects conclusively to assume that no such facts
exist; PROVIDED, HOWEVER, that if on a date not less than three Business Days
immediately preceding the date upon which, by the terms hereof, any such moneys
may become payable for any purpose (including, without limitation, the principal
of or interest on any Security), the Trustee shall not have received with
respect to such moneys the notice provided for in this Section 6.03(d), then
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such moneys and to apply the same to
the purpose for which they were received, and shall not be affected by any
notice to the contrary which may be received by it on or after such prior date.
The Trustee shall be entitled to conclusively rely on the delivery to it of
a written notice by a person representing himself to be a holder of Senior Debt
(or a trustee on behalf of such holder) to establish that such notice has been
given by a holder of Senior Debt (or a trustee on behalf of any such holder or
holders). In the event that the Trustee determines in good faith that further
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53
evidence is required with respect to the right of any person as a holder of
Senior Debt to participate in any payment or distribution pursuant to this
Article, the Trustee may request such person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Debt held by
such person, the extent to which such person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
person under this Article, and, if such evidence is not furnished, the Trustee
may defer any payment to such person pending judicial determination as to the
right of such person to receive such payment; nor shall the Trustee be charged
with knowledge of the curing or waiving of any default of the character
specified in Section 6.02 hereof or that any event or any condition preventing
any payment in respect of the Securities shall have ceased to exist, unless and
until the Trustee shall have received written notice to such effect.
(e) The provisions of this Section 6.03 applicable to the Trustee shall
(unless the context requires otherwise) also apply to any Paying Agent for the
Company.
SECTION 6.04. RELIANCE BY SENIOR DEBT ON SUBORDINATION PROVISIONS. Each
Noteholder by his acceptance thereof acknowledges and agrees that the foregoing
subordination provisions are, and are intended to be, an inducement and a
consideration for each holder of any Senior Debt, whether such Senior Debt was
created or acquired before or after the issuance of the Securities, to acquire
and continue to hold, or to continue to hold, such Senior Debt, and such holder
of Senior Debt shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Debt. Notice of any default in the payment of any Senior Debt, except as
expressly stated in this Article, and notice of acceptance of the provisions
hereof are hereby expressly waived. Except as otherwise expressly provided
herein, no waiver, forbearance or release by any holder of Senior Debt under
such Senior Debt or under this Article shall constitute a release of any of the
obligations or liabilities of the Trustee or holders of the Securities provided
in this Article.
SECTION 6.05. NO WAIVER OF SUBORDINATION PROVISIONS. Except as otherwise
expressly provided herein, no right of any present or future holder of any
Senior Debt to enforce subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or
<PAGE> 62
54
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company with the
terms, provisions and covenants of this Indenture, regardless of any knowledge
thereof any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Debt may, at any time and from time to time, without the
consent of, or notice to, the Trustee or the holders of the Securities, without
incurring responsibility to the holders of the Securities and without impairing
or releasing the subordination provided in this Article VI or the obligations
hereunder of the holders of the Securities to the holders of Senior Debt, do any
one or more of the following: (i) change the manner, place or terms of payment
of, or renew or alter, Senior Debt, or otherwise amend or supplement in any
manner Senior Debt or any instrument evidencing the same or any agreement under
which Senior Debt is outstanding; (ii) sell, exchange, release or otherwise
dispose of any property pledged, mortgaged or otherwise securing Senior Debt;
(iii) release any person liable in any manner for the collection of Senior Debt;
and (iv) exercise or refrain from exercising any rights against the Company or
any other person.
SECTION 6.06. TRUSTEE'S RELATION TO SENIOR DEBT. The Trustee in its
individual capacity shall be entitled to all the rights set forth in this
Article in respect of any Senior Debt at any time held by it, to the same extent
as any holder of Senior Debt, and nothing in Section 9.11 hereof or elsewhere in
this Indenture shall deprive the Trustee of any of its rights as such holder.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants and obligations, as are
specifically set forth in this Article, and no implied covenants or obligations
with respect to the holders of Senior Debt shall be read into this Indenture
against the Trustee. The Trustee shall not owe any fiduciary duty to the holders
of Senior Debt but shall have only such obligations to such holders as are
expressly set forth in this Article.
Each Noteholder by his acceptance thereof authorizes and directs the
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate
<PAGE> 63
55
the subordination provided in this Article and appoints the Trustee his
attorney-in-fact for any and all such purposes, including, in the event of any
dissolution, winding up or liquidation or reorganization under any applicable
bankruptcy law of the Company (whether in bankruptcy, insolvency or receivership
proceedings or otherwise), the timely filing of a claim for the unpaid balance
of such Noteholder's Securities in the form required in such proceedings and the
causing of such claim to be approved. If the Trustee does not file a claim or
proof of debt in the form required in such proceedings prior to 30 days before
the expiration of the time to file such claims or proofs, then any holder or
holders of Senior Debt or their representative or representatives shall have the
right to demand, sue for, collect, receive and receipt for the payments and
distributions in respect of the Securities which are required to be paid or
delivered to the holders of Senior Debt as provided in this Article and to file
and prove all claims therefor and to take all such other action in the name of
the holders or otherwise, as such holders of Senior Debt or representative
thereof may determine to be necessary or appropriate for the enforcement of the
provisions of this Article.
SECTION 6.07. OTHER PROVISIONS SUBJECT HERETO. Expect as expressly stated
in this Article, notwithstanding anything contained in this Indenture to the
contrary, all the provisions of this Indenture and the Securities are subject to
the provisions of this Article. However, nothing in this Article shall apply to
or adversely affect the claims of, or payment to, the Trustee pursuant to
Section 9.07. Notwithstanding the foregoing, the failure to make a payment on
account of principal of, interest or Additional Amounts, if any, on the
Securities by reason of any provision of this Article VI shall not be construed
as preventing the occurrence of an Event of Default under Section 8.01.
ARTICLE VII
Consolidation, Merger, Conveyance,
----------------------------------
Transfer or Lease
-----------------
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56
SECTION 7.01. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. 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:
(a) the Company is the surviving or continuing corporation or 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 thereof or the District of Columbia;
(b) 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 Securities and this Indenture;
(c) 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 Securities and this Indenture;
(d) immediately after such transaction no Default
or Event of Default exists; and
(e) 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 this Indenture and
that all conditions precedent in this Indenture relating to such
transaction have been satisfied.
SECTION 7.02. SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation or
merger, or any sale, assignment, transfer, lease, conveyance or other
disposition of all or substantially all of the assets of the Company in
accordance
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57
with Section 7.01 hereof, the successor corporation formed by such consolidation
or into or with which the Company is merged or to which such sale, assignment,
transfer, lease, conveyance or other disposition is made shall succeed to, and
be substituted for and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor Person has been named
as the Company herein; provided, however, that the predecessor Company in the
case of a sale, assignment, transfer, lease, conveyance or other disposition
shall not be released from the obligations under this Indenture and the
Securities.
ARTICLE VIII
Defaults and Remedies
---------------------
SECTION 8.01. EVENTS OF DEFAULT. An "Event of Default" occurs if:
(a) the Company defaults in the payment of interest, Additional
Amounts or any other amounts (other than the principal thereof) on any
Security when the same becomes due and payable, whether or not such
payments shall be prohibited by Article VI, and the Default continues for a
period of 30 days after the date due and payable;
(b) the Company defaults in the payment of the principal of any
Security when the same becomes due and payable at maturity, upon
redemption, upon required repurchase or otherwise, whether or not such
payment shall be prohibited by Article VI;
(c) the Company fails to observe or perform any covenant or agreement
contained in Section 4.07 hereof, whether or not such purchase shall be
prohibited by Article VI;
(d) the Company fails to observe or perform any other covenant or
agreement contained in this Indenture or the Securities, required by it to
be performed, and the Default continues for a period of 60 days after the
receipt of written notice from the Trustee to the Company or from the
holders of 25% in aggregate principal amount of the then outstanding
Securities to the Company and the Trustee stating that such notice is a
"Notice of Default";
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(e) there is a 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
Subsidiary of the Company (or the payment of which is guaranteed by the
Company or any Subsidiary of the Company), whether such indebtedness or
guarantee now exists or is created after the Issuance Date, which default
(i) is caused by a failure to pay when due principal of or interest on such
indebtedness within the grace period provided for in such indebtedness
(which failure continues beyond any applicable grace period) (a "Payment
Default") or (ii) 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;
(f) 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 liability) aggregating in excess of $5 million,
which judgments are not stayed within 60 days after their entry;
(g) the Company or any Material Subsidiary pursuant to or within the
meaning of any Bankruptcy Law: (i) commences a voluntary case, (ii)
consents to the entry of an order for relief against it in an involuntary
case in which it is the debtor, (iii) consents to the appointment of a
Custodian of it or for all or substantially all of its property, (iv) makes
a general assignment for the benefit of its creditors, or (v) makes the
admission in writing that it generally is unable to pay its debts as the
same become due; or
(h) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that: (i) is for relief against the Company or any
Material Subsidiary of the Company in an involuntary case, (ii) appoints a
Custodian of the Company or any Material Subsidiary of the Company or for
all or substantially all of its property, and the order or decree remains
unstayed and in effect for 60 days, or
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59
(iii) orders the liquidation of the Company or any Material Subsidiary of
the Company, and the order or decree remains unstayed and in effect for 60
days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar federal
or state law for the relief of debtors. The term "Custodian" means any receiver,
trustee, assignee, liquidator or similar official under any Bankruptcy Law.
SECTION 8.02. ACCELERATION. If any Event of Default (other than an Event of
Default specified in clauses (g) and (h) of Section 8.01 hereof) occurs and is
continuing, the Trustee by notice to the Company, or the Noteholders of at least
25% in principal amount of the then outstanding Securities by notice to the
Company and the Trustee, may declare all the Securities to be due and payable.
Upon such declaration, the principal of, premium, if any, accrued and unpaid
interest and Additional Amounts, if any, on the Securities shall be due and
payable immediately. If an Event of Default specified in clause (g) or (h) of
Section 8.01 hereof occurs, such an amount shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Noteholder. The Noteholders of a majority in aggregate
principal amount of the then outstanding Securities by notice to the Trustee may
rescind an acceleration and its consequences if all existing Events of Default
have been cured or waived except nonpayment of principal or interest that has
become due solely because of the acceleration.
SECTION 8.03. OTHER REMEDIES. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal or interest on the Securities or to enforce the performance of any
provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Noteholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 8.04. WAIVER OF PAST DEFAULTS. The Noteholders of a majority in
aggregate principal amount of
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the then outstanding Securities by notice to the Trustee may on behalf of all
the holders waive an existing Default or Event of Default and its consequences
except a continuing Default or Event of Default in the payment of any Designated
Event Offer Amount or the principal of, or premium, if any, or interest on, any
Security (except a rescission of acceleration of the Securities by the Holders
of at least a majority in aggregate principal amount of the then outstanding
Securities and a waiver of a payment default that resulted from such
acceleration). When a Default or Event of Default is waived, it is cured and
ceases; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
SECTION 8.05. CONTROL BY MAJORITY. The Noteholders of a majority in
principal amount of the then outstanding Securities may direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on it. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture, is
unduly prejudicial to the rights of other Noteholders, or would involve the
Trustee in personal liability.
SECTION 8.06. LIMITATION ON SUITS. A Noteholder may pursue a remedy with
respect to this Indenture or the Securities only if:
(a) the Noteholder gives to the Trustee notice of
a continuing Event of Default;
(b) the Noteholders of at least 25% in principal amount of the then
outstanding Securities make a request to the Trustee to pursue the remedy;
(c) such Noteholder or Noteholders offer to the
Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(e) during such 60-day period the Noteholders of a majority in
principal amount of the then outstanding Securities do not give the Trustee
a direction inconsistent with the request.
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61
A Noteholder may not use this Indenture to prejudice the rights of another
Noteholder or to obtain a preference or priority over another Noteholder.
SECTION 8.07. RIGHTS OF NOTEHOLDERS TO RECEIVE PAYMENT. Notwithstanding any
other provision of this Indenture, the right of any Noteholder to convert such
Noteholder's Security and to receive payment of principal, interest and
Additional Amounts, if any, on such Noteholder's Security, on or after the
respective due dates expressed in such Security, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Noteholder made pursuant to this
Section.
SECTION 8.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default specified
in Section 8.01(a) or (b) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
for the whole amount of principal, interest and Additional Amounts, if any,
remaining unpaid on the Securities and interest on overdue principal and
interest and such further amount as shall be sufficient to cover the costs and,
to the extent lawful, expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
SECTION 8.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee may file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee and the Noteholders allowed in any
judicial proceedings relative to the Company, its creditors or its property.
Nothing contained herein shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Noteholder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Noteholder thereof, or to authorize the Trustee to vote in
respect of the claim of any Noteholder in any such proceeding.
SECTION 8.10. PRIORITIES. If the Trustee collects any money pursuant to
this Article, it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under
Section 9.07 hereof;
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62
SECOND: to the holders of Senior Debt to the
extent required by Article VI;
THIRD: to Noteholders for amounts due and unpaid on the Securities for
principal, interest and Additional Amounts, if any, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Securities for principal, interest and Additional Amounts,
if any, respectively; and
FOURTH: to the Company.
Except as otherwise provided in Section 2.12 hereof, the Trustee may fix a
record date and payment date for any payment to Noteholders made pursuant to
this Section.
SECTION 8.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as a Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a holder pursuant to Section 8.07 hereof, or a
suit by Noteholders of more than 25% in principal amount of the then outstanding
Securities.
ARTICLE IX
Trustee
-------
SECTION 9.01. DUTIES OF TRUSTEE. (a) If an Event of Default has occurred
and is continuing, the Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default: (i) the
Trustee need perform only those duties that are specifically set forth in this
Indenture and no others and (ii) in the absence of bad faith on its part, the
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63
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this Indenture.
However, in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the Trustee
shall examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act, or its own wilful misconduct, except
that: (i) this paragraph does not limit the effect of paragraph (b) of this
Section 9.01; (ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts and (iii) the Trustee shall not be
liable with respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 8.05 hereof.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 9.01. No
provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
(e) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 9.02. RIGHTS OF TRUSTEE. (a) The Trustee may rely on any document
reasonably believed by it to be genuine and to have been signed or presented by
the proper person. The Trustee need not investigate any fact or matter stated in
the document.
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(b) Before the Trustee acts or refrains from acting, it (unless other
evidence be herein specifically prescribed) may require an Officers' Certificate
or an Opinion of Counsel, or both. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such Officers'
Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and nominees and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action that it takes or omits
to take in good faith, without negligence or wilful misconduct, and that it
reasonably believes to be authorized or within its rights or powers.
(e) The Trustee shall not be charged with knowledge of any Event of Default
under subsection (c), (d), (e) or (f) of Section 8.01 or of the identity of any
Material Subsidiary unless either (1) a Trust Officer assigned to its corporate
trust department shall have actual knowledge thereof, or (2) the Trustee shall
have received notice thereof in accordance with Section 12.02 hereof from the
Company or any holder.
(f) The Trustee may consult with counsel of its selection and the advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon.
(g) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
SECTION 9.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual
or any other capacity may become the owner or pledgee of Securities and may
otherwise deal with the Company or an Affiliate of the Company with the same
rights it would have if it were not Trustee. Any Agent may do the same with like
rights. However, the Trustee is subject to Sections 9.10 and 9.11 hereof.
<PAGE> 73
65
SECTION 9.04. TRUSTEE'S DISCLAIMER. The Trustee makes no representation as
to the validity or adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use of the proceeds from any Securities
authenticated and delivered by the Trustee in conformity with the provisions of
this Indenture, and it shall not be responsible for any statement of the Company
in the Indenture or any statement in the Securities other than its
authentication.
SECTION 9.05. NOTICE OF DEFAULTS. If a Default or Event of Default occurs
and is continuing and if it is actually known to the Trustee, the Trustee shall
mail to Noteholders a notice of the Default or Event of Default within 90 days
after it occurs. Except in the case of a Default or Event of Default in payment
on any Security, the Trustee may withhold the notice if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Noteholders.
SECTION 9.06. REPORTS BY TRUSTEE TO NOTEHOLDERS. Within 60 days after the
reporting date stated in Section 12.10, the Trustee shall mail to Noteholders a
brief report dated as of such reporting date that complies with TIA ss. 313(a)
if and to the extent required by such ss. 313(a). The Trustee also shall comply
with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all reports as
required by TIA ss. 313(c).
A copy of each report at the time of its mailing to Noteholders shall be
filed with the SEC and each stock exchange on which the Securities are listed.
The Company shall promptly notify the Trustee when the Securities are listed on
any stock exchange.
SECTION 9.07. COMPENSATION AND INDEMNITY. The Company shall pay to the
Trustee from time to time such compensation for its services hereunder as shall
be agreed to in writing between the Company and the Trustee. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee upon request for all
reasonable and duly documented disbursements, expenses and advances incurred or
made by it. Such disbursements and expenses may include the reasonable and duly
documented disbursements, compensation and expenses of the Trustee's agents and
<PAGE> 74
66
counsel.
The Company shall indemnify each of the Trustee or any predecessor Trustee
and its officers, directors, employees and all other agents against any and all
loss, damage, claim, expense, including taxes (other than taxes based on the
income of the Trustee) or liability incurred by it except as set forth in the
next paragraph. The Trustee shall notify the Company promptly of any claim for
which it may seek indemnity. The Company shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable and duly documented fees, disbursements and
expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee through negligence or bad faith.
To secure the Company's payment obligations in this Section, the Trustee
shall have a lien prior to the Securities on all money or property held or
collected by the Trustee, except money or property held in trust to pay
principal and interest on particular Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 8.01(g) or (h) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The provisions of this Section 9.07 shall survive the termination of this
Indenture, as provided by Section 10.01 hereof.
SECTION 9.08. REPLACEMENT OF TRUSTEE. A resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective only upon
the successor Trustee's acceptance of appointment as provided in this Section.
<PAGE> 75
67
The Trustee may resign by so notifying the Company. The Noteholders of a
majority in principal amount of the then outstanding Securities may remove the
Trustee by so notifying the Trustee and the Company. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 9.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA ss. 310(b);
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of
the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the
Noteholders of a majority in principal amount of the then outstanding Securities
may appoint a successor Trustee to replace the successor Trustee appointed by
the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Noteholders of at least 10% in principal amount of the then outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 9.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA [Section] 310(b), any
Noteholder who has been a bona fide holder of a Security for at least six months
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or removal
of the retiring Trustee shall become effective, the Company shall promptly pay
all amounts due and payable to the retiring Trustee pursuant to Section 9.07
hereof and the successor Trustee shall have all the rights, powers and duties of
the
<PAGE> 76
68
Trustee under this Indenture. The successor Trustee shall mail a notice of its
succession to Noteholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 9.07 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 9.08, the Company's obligations under Section 9.07
hereof shall continue for the benefit of the retiring trustee with respect to
expenses and liabilities incurred by it prior to such replacement.
SECTION 9.09. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee
consolidates, merges or converts into, or transfers all or substantially all of
its corporate trust business to, another corporation, the successor corporation
without any further act shall be the successor Trustee.
SECTION 9.10. ELIGIBILITY; DISQUALIFICATION. This Indenture shall always
have a Trustee who satisfies the requirements of TIA ss. 310(a)(1) and (5). The
Trustee shall always have a combined capital and surplus as stated in Section
12.10 hereof. The Trustee is subject to TIA ss. 310(b).
SECTION 9.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The
Trustee is subject to TIA ss. 311(a), excluding any creditor relationship listed
in TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject
to TIA ss. 311(a) to the extent indicated therein.
SECTION 9.12. SECTIONS APPLICABLE TO REGISTRAR, PAYING AGENT AND CONVERSION
AGENT. The term "Trustee" as used in Sections 9.01, 9.02, 9.03, 9.04 and 9.07
hereof shall (unless the context requires otherwise) be construed as extending
to and including the Trustee acting in its capacity, if any, as Registrar,
Paying Agent and Conversion Agent.
<PAGE> 77
69
ARTICLE X
Discharge of Indenture
----------------------
SECTION 10.01. TERMINATION OF COMPANY'S OBLIGATIONS. This Indenture shall
cease to be of further effect (except that the Company's obligations under
Sections 9.07 and 10.02 hereof shall survive) when all outstanding Securities
theretofore authenticated and issued have been delivered to the Trustee for
cancellation and the Company has paid all sums payable hereunder.
Thereupon, the Trustee upon written request of the Company, shall
acknowledge in writing the discharge of the Company's obligations under this
Indenture, except for those surviving obligations specified above.
SECTION 10.02. REPAYMENT TO COMPANY. The Trustee and the Paying Agent shall
promptly pay to the Company upon request any excess money or securities held by
them at any time.
The Trustee and the Paying Agent shall pay to the Company upon written
request any money held by them for the payment of principal, interest or
Additional Amounts, if any, that remains unclaimed for two years after the date
upon which such payment shall have become due; PROVIDED, HOWEVER, that the
Company shall have first caused notice of such payment to the Company to be
mailed to each Noteholder entitled thereto no less than 30 days prior to such
payment. After payment to the Company, the Trustee and the Paying Agent shall
have no further liability with respect to such money and Noteholders entitled to
the money must look to the Company for payment as general creditors unless any
applicable abandoned property law designates another person.
ARTICLE XI
Amendments, Supplements and Waivers
-----------------------------------
SECTION 11.01. WITHOUT CONSENT OF NOTEHOLDERS. The Company and the Trustee
may amend or supplement this Indenture or the Securities without the consent of
any Noteholder:
(a) to cure any ambiguity, defect or inconsistency;
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70
(b) to comply with Sections 5.13 and 7.01 hereof;
(c) to provide for uncertificated Securities in addition to
certificated Securities;
(d) to make any change that does not adversely affect the legal rights
hereunder of any Noteholder;
(e) to qualify this Indenture under the TIA or to comply with the
requirements of the SEC in order to maintain the qualification of the
Indenture under the TIA; or
(f) to make any change that provides any additional rights or
benefits to the holders of Securities.
An amendment under this Section may not make any change that adversely
affects the rights under Article VI of any holder of Senior Debt then
outstanding unless the holders of such Senior Debt (or any group or
representative thereof authorized to give a consent) consent to such change.
SECTION 11.02. WITH CONSENT OF NOTEHOLDERS. Subject to Section 8.07 hereof,
the Company and the Trustee may amend or supplement this Indenture or the
Securities with the written consent (including consents obtained in connection
with any tender offer or exchange offer for Securities) of the Noteholders of at
least a majority in principal amount of the then outstanding Securities. Subject
to Sections 8.04 and 8.07 hereof, the Noteholders of a majority in principal
amount of the Securities then outstanding may also by their written consent
(including consents obtained in connection with any tender offer or exchange
offer for Securities) waive any existing Default or Event of Default as provided
in Section 8.04 or waive compliance in a particular instance by the Company with
any provision of this Indenture or the Securities. However, without the consent
of each Noteholder affected, an amendment, supplement or waiver under this
Section may not (with respect to any Securities held by a nonconsenting
Noteholder):
(a) reduce the amount of Securities whose Noteholders must consent
to an amendment, supplement or waiver;
<PAGE> 79
71
(b) reduce the rate of or change the time for payment of interest on
any Security;
(c) reduce the principal of or change the fixed maturity of any
Security or alter the redemption provisions with respect thereto;
(d) make any Security payable in money other than that stated in the
Security;
(e) make any change in Section 8.04, 8.07 or 11.02 hereof (this
sentence);
(f) waive a default in the payment of the Designated Event Payment
or the principal of, or interest on, any Security (other than as provided
in Section 8.04);
(g) waive a redemption payment payable on any Security;
(h) impair the right of Noteholders to convert Securities into Common
Stock of the Company or adversely affect the rights of any Noteholders
under Section 4.07 or 4.08; or
(i) modify Articles V or VI hereof in a manner adverse to the
Noteholders.
To secure a consent of the Noteholders under this Section 11.02, it shall
not be necessary for the Noteholders to approve the particular form of any
proposed amendment, supplement or waiver, but it shall be sufficient if such
consent approves the substance thereof.
An amendment under this Section may not make any change that adversely
affects the rights under Article VI of any holder of Senior Debt then
outstanding unless the holders of such Senior Debt (or any group or
representative thereof authorized to give a consent) consent to such change.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to Noteholders a notice briefly describing the
amendment or waiver.
<PAGE> 80
72
SECTION 11.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment to this
Indenture or the Securities shall be set forth in a supplemental indenture that
complies with the TIA as then in effect.
SECTION 11.04. REVOCATION AND EFFECT OF CONSENTS. Until an amendment,
supplement or waiver becomes effective, a consent to it by a Noteholder of a
Security is a continuing consent by the Noteholder and every subsequent
Noteholder of a Security or portion of a Security that evidences the same debt
as the consenting Noteholder's Security, even if notation of the consent is not
made on any Security. However, any such Noteholder or subsequent Noteholder may
revoke the consent as to such Noteholder's Security or portion of a Security if
the Trustee receives the notice of revocation before the date on which the
Trustee receives an Officers' Certificate certifying that the Noteholders of the
requisite principal amount of Securities have consented to the amendment,
supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Noteholders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the
provisions of the immediately preceding paragraph, those persons who were
Noteholders at such record date (or their duly designated proxies), and only
those persons, shall be entitled to consent to such amendment, supplement or
waiver or to revoke any consent previously given, whether or not such persons
continue to be Noteholders after such record date. No consent shall be valid or
effective for more than 90 days after such record date unless consents from
Noteholders of the principal amount of Securities required hereunder for such
amendment or waiver to be effective shall have also been given and not revoked
within such 90-day period.
After an amendment, supplement or waiver becomes effective it shall bind
every Noteholder, unless it is of the type described in any of clauses (a)
through (i) of Section 11.02 hereof. In such case, the amendment or waiver shall
bind each Noteholder who has consented to it and every subsequent Noteholder
that evidences the same debt as the consenting Noteholder's Security.
SECTION 11.05. NOTATION ON OR EXCHANGE OF SECURITIES. The Trustee may place
an appropriate notation
<PAGE> 81
73
about an amendment or waiver on any Security thereafter
authenticated. The Company in exchange for all Securities may issue and the
Trustee shall authenticate new Securities that reflect the amendment or waiver.
SECTION 11.06. TRUSTEE PROTECTED. The Trustee shall sign all supplemental
indentures, except that the Trustee may, but need not, sign any supplemental
indenture that adversely affects its rights. In executing, or accepting the
additional trusts created by, any supplemental indenture permitted by this
Article or the modification thereby of the trusts created by this Indenture, the
Trustee shall be entitled to receive, and shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture.
ARTICLE XII
Miscellaneous
-------------
SECTION 12.01. TRUST INDENTURE ACT CONTROLS. If any provision of this
Indenture limits, qualifies, or conflicts with another provision which is
automatically deemed to be incorporated in this Indenture by the TIA, the
incorporated provision shall control.
SECTION 12.02. NOTICES. Any notice or communication by the Company or the
Trustee to the other is duly given if in writing and delivered in person or
mailed by first-class mail to the other's address stated in Section 12.10
hereof. The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication to a Noteholder shall be mailed by first-class
mail to his address shown on the register kept by the Registrar. Failure to mail
a notice or communication to a Noteholder or any defect in it shall not affect
its sufficiency with respect to other Noteholders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Noteholders, it shall
mail a copy to the Trustee and each
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74
Agent at the same time.
All other notices or communications shall be in writing.
In case by reason of the suspension of regular mail service, or by reason
of any other cause, it shall be impossible to mail any notice as required by the
Indenture, then such method of notification as shall be made with the approval
of the Trustee shall constitute a sufficient mailing of such notice.
SECTION 12.03. COMMUNICATION BY NOTEHOLDERS WITH OTHER NOTEHOLDERS.
Noteholders may communicate pursuant to TIA ss. 312(b) with other Noteholders
with respect to their rights under this Indenture or the Securities. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA ss. 312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any
request or application by the Company to the Trustee to take any action under
this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than pursuant to Section 4.03) shall
include:
(a) a statement that the person signing such certificate or rendering
such opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
<PAGE> 83
75
(c) a statement that, in the opinion of such person, such person has
made such examination or investigation as is necessary to enable such
person to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS. The Trustee may make reasonable
rules for action by, or a meeting of, Noteholders. The Registrar or Paying Agent
may make reasonable rules and set reasonable requirements for its functions.
SECTION 12.07. LEGAL HOLIDAYS. A "Legal Holiday" is a Saturday, a Sunday or
a day on which banking institutions in the State of New York are not required to
be open. If a payment date is a Legal Holiday at a place of payment, payment may
be made at that place on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue for the intervening period. If any other operative
date for purposes of this Indenture shall occur on a Legal Holiday then for all
purposes the next succeeding day that is not a Legal Holiday shall be such
operative date.
SECTION 12.08. NO RECOURSE AGAINST OTHERS. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Noteholder by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration for the issue of
the Securities.
SECTION 12.09. COUNTERPARTS. This Indenture may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
SECTION 12.10. VARIABLE PROVISIONS. "Officer" means the Chairman of the
Board, the President, any Vice-President, the Treasurer, the Secretary, any
Assistant Treasurer or any Assistant Secretary of the Company.
<PAGE> 84
76
The Company initially appoints the Trustee as Paying Agent, Registrar,
Conversion Agent and authenticating agent and the Trustee hereby accepts such
appointments.
The first certificate pursuant to Section 4.03 hereof shall be for the
fiscal year ending on December 31, 1996.
The reporting date for Section 9.06 hereof is April 15 of each year. The
first reporting date is April 15, 1997.
The Trustee shall always have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition.
The Company's address is: Molten Metal Technology, Inc.
51 Sawyer Road
Waltham, MA 02154
Telephone number: (617)487-9700
Telefax number: (617)487-7870
The Trustee's address is: The Bank of New York
101 Barclay Street
Floor 21 West
New York, NY 10286
Attention: Corporate Trust
Trustee Administration
Telephone Number (212) 815-5359
Telefax Number (212) 815-5915
SECTION 12.11. GOVERNING LAW. THE INTERNAL LAWS OF THE STATE OF NEW YORK
SHALL GOVERN THIS INDENTURE AND THE SECURITIES, WITHOUT REGARD TO THE CONFLICT
OF LAWS PROVISIONS THEREOF.
SECTION 12.12. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or an Affiliate. Any such indenture, loan or debt agreement may
not be used to interpret this Indenture.
SECTION 12.13. SUCCESSORS. All agreements of the Company in this Indenture
and the Securities shall bind its successor. All agreements of the Trustee in
this Indenture shall bind its successor.
<PAGE> 85
77
SECTION 12.14. SEVERABILITY. In case any provision in this Indenture or in
the Securities shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 12.15. TABLE OF CONTENTS, HEADINGS, ETC. The Table of Contents,
Cross-Reference Table, and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.
<PAGE> 86
78
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
MOLTEN METAL TECHNOLOGY,
INC., as Company,
by /s/ Benjamin T. Downs
-----------------------
Name: Benjamin T. Downs
Title: Executive Vice
President
THE BANK OF NEW YORK, as
Trustee,
by /s/ Mary Jane Morrissey
-------------------------
Name: Mary Jane Morrissey
Title: Vice President
<PAGE> 87
EXHIBIT A
[FORM OF FACE OF NOTE]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. EACH PURCHASER OF
THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION
FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS,
ACKNOWLEDGES AND AGREES FOR THE BENEFIT OF THE COMPANY THAT: (I) IT HAS ACQUIRED
A "RESTRICTED" SECURITY WHICH HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT;
(II) IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE
DATE WHICH IS THREE YEARS (OR SUCH SHORTER PERIOD AS SHALL BE PERMITTED AS A
RESULT OF AN AMENDMENT TO THE RULES OF THE SECURITIES ACT IN RESPECT THEREOF)
AFTER THE DATE OF ORIGINAL ISSUANCE HEREOF (OR, IN
<PAGE> 88
2
THE EVENT THAT THIS SECURITY WAS EVER OWNED BY THE COMPANY OR AN AFFILIATE OF
THE COMPANY, THREE YEARS AFTER THE LAST DATE OF SUCH OWNERSHIP) OR PRIOR TO
THREE MONTHS AFTER THE LAST DATE ON WHICH IT WAS AN AFFILIATE (AS DEFINED IN
RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY (THE "RESALE RESTRICTION
TERMINATION DATE") EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON
WHO THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (D) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
REGULATION S UNDER THE SECURITIES ACT, (E) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND,
IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY APPLICABLE JURISDICTION; AND (III) IT WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS SECURITY
OF THE RESALE RESTRICTIONS SET FORTH IN (II) ABOVE. ANY OFFER, SALE OR OTHER
DISPOSITION PURSUANT TO THE FOREGOING CLAUSES (II)(D) or (E) IS SUBJECT TO THE
RIGHT OF THE ISSUER OF THIS SECURITY AND THE TRUSTEE OR THE TRANSFER AGENT TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS OR OTHER
INFORMATION ACCEPTABLE TO THEM IN FORM AND SUBSTANCE. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.
[Regulation S Securities Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, PRIOR TO THE EXPIRATION OF
THE RESTRICTED PERIOD (AS DEFINED IN THE INDENTURE RELATING TO THIS SECURITY
(THE "INDENTURE")), MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (A)(1) TO THE COMPANY, (2) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
RULE 903 OR RULE 904 OF REGULATION S AND, IN SUCH CASE, THE TRANSFEREE SHALL
CERTIFY TO THE COMPANY THAT SUCH TRANSFEREE IS A NON-U.S. PERSON (WITHIN THE
MEANING OF REGULATION S) AND THAT SUCH TRANSFEREE IS ACQUIRING SUCH SECURITY IN
AN OFFSHORE TRANSACTION OR (3) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") IN A TRANSACTION MEETING THE REQUIREMENTS OF
<PAGE> 89
3
RULE 144A, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES OF THE UNITED STATES. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER EXPIRATION OF THE RESTRICTED PERIOD (AS DEFINED IN THE INDENTURE)
AND UPON SATISFACTION OF THE REQUIREMENTS IN THE INDENTURE.
<PAGE> 90
4
No. $
--------------- ---------------
CUSIP No. [680712AA3] ***
[U60928AA3] ****
MOLTEN METAL TECHNOLOGY, INC.
5 1/2% CONVERTIBLE SUBORDINATED NOTE
DUE 2006
MOLTEN METAL TECHNOLOGY, INC.
Molten Metal Technology, Inc., a Delaware corporation (the "Company")
promises to pay to
-------------------------------------------------------------
- -------------------------------------------------------------------------------
or registered assigns, the principal sum [indicated on Schedule A hereof] * [of
Dollars] ** on May 1, 2006.
- ------------
Interest Payment Dates: May 1 and November 1,
commencing November 1, 1996
Record Dates: April 15 and October 15
Reference is hereby made to the further provisions of this Convertible Note
set forth on the reverse hereof which further provisions shall for all purposes
have the same effect as if set forth at this place.
IN WITNESS WHEREOF, Molten Metal Technology, Inc. has caused this
Convertible Note to be signed manually or by facsimile by its duly authorized
officers and a facsimile of its corporate seal to be affixed hereto or imprinted
hereon.
MOLTEN METAL TECHNOLOGY, INC.,
by
--------------------------
[SEAL] by
--------------------------
---------------------------
* Applicable to Global Securities only.
<PAGE> 91
5
** Applicable to certificated Securities only.
*** Applicable to Restricted Securities only.
**** Applicable to Regulation S Securities only.
<PAGE> 92
6
Dated:
------------------
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of the 5 1/2%
Convertible Subordinated
Notes Due 2006 described in
the within-mentioned
Indenture.
The Bank of New York, as
Trustee,
by
------------------------
Authorized Signatory
<PAGE> 93
7
MOLTEN METAL TECHNOLOGY, INC.
5 1/2% Convertible Subordinated Note Due 2006
1. INTEREST. MOLTEN METAL TECHNOLOGY, INC., a Delaware corporation (the
"Company"), is the issuer of this 5 1/2% Convertible Subordinated Note Due 2006
(the "Convertible Note"). The Company promises to pay interest on the
Convertible Notes at the rate per annum shown above subject to Section 11
hereof, in cash semiannually on each May 1 and November 1, commencing on
November 1, 1996, to holders of record on the immediately preceding April 15 and
October 15.
Interest on the Convertible 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.
Interest will be computed on the basis of a 360-day year of 12 30-day months. To
the extent lawful, the Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest (without regard to any applicable grace period) at the rate borne by
the Convertible Notes, compounded semi- annually.
2. METHOD OF PAYMENT. The Company will pay interest on the Convertible
Notes (except defaulted interest) to the persons who are registered holders of
the Convertible Notes at the close of business on the record date for the next
interest payment date even though Convertible Notes are cancelled after the
record date and on or before the interest payment date. The Noteholder hereof
must surrender Convertible Notes to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. The Company may pay principal by check payable in such money or
by wire transfer to an account maintained by the holder with a bank in New York
City (if the holder of the Convertible
<PAGE> 94
8
Notes holds an aggregate principal amount of Convertible Notes in excess of
$5,000,000). The Company may pay interest by mailing an interest check to a
holder's registered address or, upon application by the holder hereof to the
Registrar, not later than the applicable record date, by wire transfer to an
account maintained by the holder with a bank in New York City (if the holder of
the Convertible Notes holds an aggregate principal amount of Convertible Notes
in excess of $5,000,000).
3. PAYING AGENT AND REGISTRAR. The Trustee will act as Paying Agent,
Registrar and Conversion Agent. The Company may change any Paying Agent,
Registrar, co-registrar or Conversion Agent without prior notice. The Company or
any of its Affiliates may act in any such capacity.
4. INDENTURE. The Company issued the Convertible Notes under an indenture,
dated as of May 1, 1996 (the "Indenture"), between the Company and The Bank of
New York, as Trustee. The terms of the Convertible Notes include those stated in
the Indenture and those made part of the Indenture by the Trust Indenture Act of
1939 (15 U.S. Code ss.ss. 77aaa-77bbbb) as in effect on the date of the
Indenture. The Convertible Notes are subject to, and qualified by, all such
terms, certain of which are summarized hereon, and Noteholders are referred to
the Indenture and such Act for a statement of such terms. The Convertible Notes
are unsecured obligations of the Company limited to (except as otherwise
provided in the Indenture) up to an aggregate principal amount of $125,000,000
(plus up to $18,750,000 aggregate principal amount of Convertible Notes that may
be sold by the Company pursuant to the over-allotment option granted pursuant to
the Purchase Agreement), and are subordinated in right of payment to all
existing and future Senior Debt of the Company as provided in the Indenture. Any
holder of this Convertible Note shall be deemed to have agreed to and be bound
by all the terms and conditions contained in the Indenture applicable to a
holder of a Convertible Note.
<TABLE>
5. OPTIONAL REDEMPTION. The Convertible Notes are not subject to redemption
at the Company's option prior to May 1, 1999. On such date and thereafter, the
Convertible Notes will be subject to redemption at the option of the Company, in
whole or in part (in any integral multiple of $5,000), upon not less than 30 nor
more than 60 days prior notice by mail at the following redemption prices
(expressed as percentages of the principal amount set forth below), if redeemed
during the 12-month period beginning May 1 of the years indicated:
<CAPTION>
Redemption
Year Price
- ---- ----------
<C> <C>
1999........................................... 102.75%
2000........................................... 102.29
</TABLE>
<PAGE> 95
9
<TABLE>
<C> <C>
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 up to but not including 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). On or after the redemption date, interest will cease to
accrue on the Convertible Notes, or portion thereof, called for redemption.
If as a result of a Tax Law Change, the Company has or will become
obligated to pay to the Holder of this Convertible Note, Additional Amounts, and
such obligation cannot be avoided by the Company taking reasonable measures
available to it, then the Company may, at its option, redeem this Convertible
Note as a whole, but not in part, upon not less than 30 nor more than 60 days'
notice to the holder of this Convertible Note prior to the redemption date, at a
redemption price equal to 100% of the principal amount plus interest accrued to
the redemption date, and any Additional Amounts then payable; PROVIDED, HOWEVER,
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 were a payment in respect of the Convertible Notes then due.
Prior to the giving of any notice of redemption pursuant to this paragraph, the
Company shall deliver to the Trustee (a) an Officers' 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 (b) 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 Tax Law
Change. The Company's right to redeem this Convertible Note shall continue as
long as the Company is obligated to pay such Additional Amounts, notwithstanding
that the Company shall have made payments of such Additional Amounts.
6. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each holder of the
Convertible Notes to be redeemed at his address of record. The Convertible Notes
in denominations larger than $5,000 may be redeemed in part but only in integral
multiples of $5,000.
<PAGE> 96
10
In the event of a redemption of less than all of the Convertible Notes, the
Convertible Notes will be chosen for redemption by the Trustee in accordance
with the Indenture. Unless the Company defaults in making such redemption
payment, or the Paying Agent is prohibited from making such payment pursuant to
the Indenture, interest ceases to accrue on the Convertible Notes or portions of
them called for redemption on and after the redemption date.
If this Convertible Note is redeemed subsequent to a record date with
respect to any interest payment date specified above and on or prior to such
interest payment date, then any accrued interest will be paid to the person in
whose name this Convertible Note is registered at the close of business on such
record date.
7. MANDATORY REDEMPTION. The Company will not be required to make mandatory
redemption payments with respect to the Convertible Notes. There are no sinking
fund payments with respect to the Convertible Notes.
8. REPURCHASE AT OPTION OF HOLDER. If there is a Designated Event, the
Company shall be required to offer to purchase on the Designated Event Payment
Date all outstanding Convertible Notes at a purchase price equal to 100% of the
principal amount thereof on the date of purchase, plus accrued and unpaid
interest to the Designated Event Payment Date. Holders of Convertible Notes that
are subject to an offer to purchase will receive a Designated Event Offer from
the Company prior to any related Designated Event Payment Date and may elect to
have such Convertible Notes or portions thereof in authorized denominations
purchased by completing the form entitled "Option of Noteholder To Elect
Purchase" appearing below.
9. SUBORDINATION. The payment of the principal of, interest on or any other
amounts due on the Convertible Notes is subordinated in right of payment to all
existing and future Senior Debt of the Company, as described in the Indenture.
Each Noteholder, by accepting a Convertible Note, agrees to such subordination
and authorizes and directs the Trustee on its behalf to take such action as may
be necessary or appropriate to effectuate the subordination so provided and
appoints the Trustee as its attorney-in-fact for such purpose.
10. CONVERSION. The holder of any Convertible Note has the right,
exercisable at any time after 90 days
<PAGE> 97
11
following the date of original issuance thereof and prior to the close of
business (New York time) on the date of the Convertible Note's 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 initial Conversion Price
of $38.75 per share, subject to adjustment under certain circumstances, except
(i) that if a Convertible 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 (ii) if a Convertible Note is
submitted for repurchase in connection with a Designated Event, the conversion
right will terminate with respect to the portion submitted for repurchase upon
such submission.
To convert a Convertible Note, a holder must (1) complete and sign a notice
of election to convert substantially in the form set forth below, (2) surrender
the Convertible Note to a Conversion Agent, (3) furnish appropriate endorsements
or transfer documents if required by the Registrar or Conversion Agent and (4)
pay any transfer or similar tax, if required. Upon conversion, no adjustment or
payment will be made for interest or dividends, but if any Noteholder surrenders
a Convertible Note for conversion after the close of business on the record date
for the payment of an installment of interest and prior to the opening of
business on the next interest payment date, then, notwithstanding such
conversion, the interest payable on such interest payment date will be paid to
the registered holder of such Convertible Note on such record date. In such
event, such Convertible Note, when surrendered for conversion, must be
accompanied by payment in funds acceptable to the Company of an amount equal to
the interest payable on such interest payment date on the portion so converted.
The number of shares of Common Stock issuable upon conversion of a Convertible
Note is determined by dividing the principal amount of the Convertible Note
converted by the Conversion Price in effect on the Conversion Date. No
fractional shares will be issued upon conversion but a cash adjustment will be
made for any fractional interest.
11. REGISTRATION RIGHTS. The holder of this Convertible Note (other than a
holder who purchased this Convertible Note in reliance on Regulation S under the
Securities Act) is entitled to the benefits of a Registration Agreement, dated
April 25, 1996, between the Company and the Initial Purchasers (the
"Registration
<PAGE> 98
12
Agreement"). Pursuant to the Registration Agreement the Company
has agreed for the benefit of the holders of the Convertible Notes, that (i) it
will, at its cost, within 120 days after the closing of the sale of the
Convertible Notes (the "Closing"), file a shelf registration statement (the
"Shelf Registration Statement") with the Securities and Exchange Commission (the
"Commission") with respect to resales of the Convertible Notes and the Common
Stock issuable upon conversion thereof, (ii) within 180 days after the Closing,
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 (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 holding period) or such earlier date as of which all the Convertible
Notes or the Common Stock issuable upon conversion thereof 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
Convertible 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 Convertible Notes will revert to the
interest rate originally borne by the Convertible Notes plus any increase in
such interest rate pursuant to the 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 Convertible Notes (which
interest rate will be the original interest rate on the Convertible 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 Convertible Notes
will revert to the interest rate originally borne by the Convertible 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
<PAGE> 99
13
longer effective and on each date thereafter that is the successive 30th day
subsequent to such time and until the earlier of (i) the date that the Shelf
Registration Statement is again deemed effective or (ii) the date that is the
third anniversary of the Closing (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 holding period) or (iii) the date as of which all of the
Convertible Notes and/or the Common Stock issuable upon conversion thereof are
sold pursuant to the Shelf Registration Statement, the per annum interest rate
on the Convertible 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.
Pursuant to the Registration Agreement, the Company may 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 twelve month period under certain circumstances. The
holders of Convertible Notes will not be entitled to additional interest as set
forth in the preceding paragraph solely because of such suspension.
12. DENOMINATIONS, TRANSFER, EXCHANGE. The Convertible Notes are in
registered form, without coupons, in denominations of $5,000 and integral
multiples of $5,000. The transfer of Convertible Notes may be registered, and
Convertible Notes may be exchanged, as provided in the Indenture. The Registrar
may require a Noteholder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not exchange or register
the transfer of any Convertible Note or portion of a Convertible Note selected
for redemption (except the unredeemed portion of any Convertible Note being
redeemed in part). Also, it need not exchange or register the transfer of any
Convertible Note for a period of 15 days before a selection of Convertible Notes
to be redeemed.
13. PERSONS DEEMED OWNERS. Except as provided in paragraph 2 of this
Convertible Note, the registered Noteholder of a Convertible Note may be treated
as its owner for all purposes.
14. UNCLAIMED MONEY. If money for the payment of
<PAGE> 100
14
principal or interest remains unclaimed for two years, the Trustee and the
Paying Agent shall pay the money back to the Company at its written request.
After that, Noteholders of Convertible Notes entitled to the money must look to
the Company for payment unless an abandoned property law designates another
person and all liability of the Trustee and such Paying Agent with respect to
such money shall cease.
15. DEFAULTS AND REMEDIES. The Convertible Notes shall have the Events of
Default as set forth in Section 8.01 of the Indenture. Subject to certain
limitations in the Indenture, if an Event of Default occurs and is continuing,
the Trustee by notice to the Company or the Noteholders of at least 25% in
aggregate principal amount of the then outstanding Convertible Notes by notice
to the Company and the Trustee may declare all the Convertible Notes to be due
and payable immediately, except that in the case of an Event of Default arising
from certain events of bankruptcy or insolvency, all unpaid principal and
interest accrued on the Convertible Notes shall become due and payable
immediately without further action or notice. Upon acceleration as described in
either of the preceding sentences, the subordination provisions of the Indenture
preclude any payment being made to Noteholders for at least 5 days except as
otherwise provided in the Indenture.
The Noteholders of a majority in principal amount of the Convertible Notes
then outstanding by written notice to the Trustee may rescind an acceleration
and its consequences if all existing Events of Default have been cured or waived
except nonpayment of principal or interest that has become due solely because of
the acceleration. Noteholders may not enforce the Indenture or the Convertible
Notes except as provided in the Indenture. Subject to certain limitations,
Noteholders of a majority in principal amount of the then outstanding
Convertible Notes issued under the Indenture may direct the Trustee in its
exercise of any trust or power. The Company must furnish compliance certificates
to the Trustee annually. The above description of Events of Default and remedies
is qualified by reference to, and subject in its entirety by, the more complete
description thereof contained in the Indenture.
16. AMENDMENTS, SUPPLEMENTS AND WAIVERS. Subject to certain exceptions, the
Indenture or the Convertible Notes may be amended or supplemented with the
consent of the Noteholders of at least a majority in principal amount of
<PAGE> 101
15
the then outstanding Convertible Notes (including consents obtained in
connection with a tender offer or exchange offer for Convertible Notes), and any
existing default may be waived with the consent of the Noteholders of a majority
in principal amount of the then outstanding Convertible Notes including consents
obtained in connection with a tender offer or exchange offer for Convertible
Notes. Without the consent of any Noteholder, the Indenture or the Convertible
Notes may be amended, among other things, to cure any ambiguity, defect or
inconsistency, to provide for assumption of the Company's obligations to
Noteholders, to make any change that does not adversely affect the rights of any
Noteholder, to qualify the Indenture under the TIA, and to comply with the
requirements of the SEC in order to maintain the qualification of the Indenture
under the TIA.
17. TRUSTEE DEALINGS WITH THE COMPANY. The Trustee, in its individual or
any other capacity, may become the owner or pledgee of Convertible Notes and may
otherwise deal with the Company or an Affiliate with the same rights it would
have if it were not Trustee, subject to certain limitations provided for in the
Indenture and in the TIA. Any Agent may do the same with like rights.
18. NO RECOURSE AGAINST OTHERS. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Convertible Notes or the Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. Each Noteholder, by accepting a Convertible Note, waives and releases
all such liability. The waiver and release are part of the consideration for the
issue of the Convertible Notes.
19. GOVERNING LAW. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN
THE INDENTURE AND THE CONVERTIBLE NOTES WITHOUT REGARD TO CONFLICT OF LAW
PROVISIONS THEREOF.
20. AUTHENTICATION. The Convertible Notes shall not be valid until
authenticated by the manual signature of an authorized signatory of the Trustee
or an authenticating agent.
21. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Noteholder or an assignee, such as: TEN COM (for tenants in common), TEN ENT
(for tenants by the entireties), JT TEN (for joint tenants with right of
<PAGE> 102
16
survivorship and not as tenants in common), CUST (for Custodian), and U/G/M/A
(for Uniform Gifts to Minors Act).
The Company will furnish to any Noteholder of the Convertible Notes upon
written request and without charge a copy of the Indenture. Request may be made
to:
Molten Metal Technology, Inc.
Investor Relations Department
400-2 Totten Pond Road
Waltham, MA 02154
22. DEFINITIONS. Capitalized terms not defined in this Convertible Note
have the meaning given to them in the Indenture.
<PAGE> 103
17
[TO BE ATTACHED TO RESTRICTED SECURITIES]
ASSIGNMENT FORM
To assign this Convertible Note, fill in the form below:
(I) or (we) assign and transfer this Convertible Note to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
--------------------------------------------------------
agent to transfer this Convertible Note on the books of the Company. The agent
may substitute another to act for him.
Your Signature:
----------------------------------------------------------
(Sign exactly as your name appears on
the other side of this Convertible Note)
Date:
----------------------
Signature Guarantee:
------------------------------------
<PAGE> 104
18
In connection with any transfer of any of the Convertible Notes evidenced by
this certificate occurring prior to the date that is three years (or such
shorter period as shall be permitted as a result of an amendment to the rules of
the Securities Act in respect thereof) after the later of the date of original
issuance of such Convertible Notes and the last date, if any, on which such
Convertible Notes were owned by the Company or any Affiliate of the Company, the
undersigned confirms that such Convertible Notes are being transferred:
CHECK ONE BOX BELOW
(1) / / to the Company; or
(2) / / pursuant to and in compliance with Rule 144A
under the Securities Act of 1933; or
(3) / / pursuant to and in compliance with Regulation S under the
Securities Act of 1933; or
(4) / / pursuant to another available exemption from the registration
requirements of the Securities Act of 1933.
<PAGE> 105
19
Unless one of the boxes is checked, the Trustee will refuse to register any
of the Convertible Notes evidenced by this certificate in the name of any
person other than the registered holder thereof; PROVIDED, HOWEVER, that if
box (3) or (4) is checked, the Trustee may require, prior to registering
any such transfer of the Convertible Notes such legal opinions,
certifications and other information as the Company has reasonably
requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided
by Rule 144 under such Act.
------------------------
Signature
Signature Guarantee:
- --------------------- ------------------------
Signature must be guaranteed Signature
- ------------------------------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
<PAGE> 106
20
The undersigned represents and warrants that it is purchasing this
Convertible Note for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information
regarding the Company as the undersigned has requested pursuant to Rule 144A or
has determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated:
----------------- -----------------------------
NOTICE: To be executed by
an executive officer
<PAGE> 107
21
[TO BE ATTACHED TO REGULATION S SECURITIES]
ASSIGNMENT FORM
To assign this Convertible Note, fill in the form below:
(I) or (we) assign and transfer this Convertible Note to
- ------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. no.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
------------------------------------------------------
agent to transfer this Convertible Note on the books of the Company. The agent
may substitute another to act for him.
Your Signature:
----------------------------------------------------------
(Sign exactly as your name appears on
the other side of this Convertible Note)
Date:
----------------------------
Signature Guarantee:
-------------------------------------
<PAGE> 108
22
In connection with any transfer of any of the Convertible Notes evidenced by
this certificate occurring prior to the expiration of the "40-day restricted
period" (as defined in Rule 903(c)(3) of Regulation S), the undersigned confirms
that such Convertible Notes are being transferred:
CHECK ONE BOX BELOW
(1) / / to the Company; or
(2) / / pursuant to and in compliance with Rule 144A
under the Securities Act of 1933; or
(3) / / pursuant to and in compliance with Regulation S under the
Securities Act of 1933; or
(4) / / pursuant to another available exemption from the registration
requirements of the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any
of the Convertible Notes evidenced by this certificate in the name of any
person other than the registered holder thereof; PROVIDED, HOWEVER, that if
box (3) or (4) is checked, the Trustee may require, prior to registering
any such transfer of the Convertible Notes such legal opinions,
certifications and other information as the Company has reasonably
requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided
by Rule 144 under such Act.
------------------------
Signature
Signature Guarantee:
- --------------------- --------------------------
Signature must be guaranteed Signature
- -------------------------------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
<PAGE> 109
23
The undersigned represents and warrants that it is purchasing this
Convertible Note for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information
regarding the Company as the undersigned has requested pursuant to Rule 144A or
has determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated:
------------------ -----------------------------
NOTICE: To be executed by
an executive officer
<PAGE> 110
24
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE A
The initial principal amount at maturity of this Global Security shall be
$_______. The following increases or decreases in the principal amount of this
Global Security have been made:
================================================================================
Amount of
increase
in Principal Signature
Principal Amount of Amount of of
Amount of decrease this authorized
this in Global signatory
Date Global Principal Security of Trustee
Made Security Amount of following or
including this such Securities
upon Global decrease Custodian
exercise Security or increase
of the
over-allotment
option
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
<PAGE> 111
25
OPTION OF NOTEHOLDER TO ELECT PURCHASE
If you want to elect to have this Convertible Note or a portion thereof
repurchased by the Company pursuant to Section 3.08 or 4.07 of the Indenture,
check the box: / /
If the purchase is in part, indicate the portion (in denominations of
$5,000 or any integral multiple thereof) to be purchased:
--------------------
Your Signature:
---------------------------------------------------------
(Sign exactly as your name appears on
the other side of this Convertible Note)
Date:
------------------------
Signature Guarantee:
---------------------------------------------------
<PAGE> 112
26
ELECTION TO CONVERT
To Molten Metal Technology, Inc.:
The undersigned owner of this Convertible Note hereby irrevocably exercises
the option to convert this Convertible Note, or the portion below designated,
into Common Stock of Molten Metal Technology, Inc. in accordance with the terms
of the Indenture referred to in this Convertible Note, and directs that the
shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
Any Noteholder, upon the exercise of its conversion rights in accordance
with the terms of the Indenture and the Convertible Note, agrees to be bound by
the terms of the Registration Agreement relating to the Common Stock issuable
upon conversion of the Convertible Note.
Date:
in whole
---
Portions of Convertible Note to be converted
($5,000 or integral multiples thereof):
$----------------
---------------------------------------------
Signature (for conversion only)
Please Print or Typewrite
Name and Address, Including
Zip Code, and Social Security
or Other Identifying Number
---------------------------------------------
---------------------------------------------
---------------------------------------------
Signature Guarantee:
------------------------
<PAGE> 113
EXHIBIT B
FORM OF INVESTMENT LETTER
FOR INSTITUTIONAL ACCREDITED INVESTORS
Molten Metal Technology, Inc.
51 Sawyer Road
Waltham, MA 02154
Lazard Freres & Co. LLC,
Alex. Brown & Sons Incorporated, and
Oppenheimer & Co., Inc.,
as the Initial Purchasers
c/o Lazard Freres & Co. LLC
30 Rockefeller Plaza
New York, NY 10020
Ladies and Gentlemen:
In connection with our proposed purchase of $ aggregate principal
amount of 5 1/2 % Convertible Subordinated Notes Due 2006 (the "Securities") of
Molten Metal Technology, Inc., a Delaware company (the "Company"), we confirm
that:
1. We understand that the Securities and the Common Stock issuable upon
conversion thereof have not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), and may not be sold except as permitted in the
following sentence. We understand and agree, on our own behalf and on behalf of
any accounts for which we are acting as hereinafter stated, (x) that such
Securities are being offered only in a transaction not involving any public
offering within the meaning of the Securities Act, (y) that if we should resell,
pledge or otherwise transfer such Securities and the Common Stock issuable upon
conversion thereof within three years after the date of the original issuance of
the Securities or within three months after we cease to be an affiliate (within
the meaning of Rule 144 under the Securities Act) of the Company, such
Securities and the Common Stock issuable upon conversion thereof may be resold,
pledged or transferred only (i) to the Company, (ii) so long as Securities and
the Common Stock issuable upon conversion thereof are eligible for resale
pursuant to Rule 144A under the Securities Act ("Rule 144A"), to a person whom
we reasonably believe is a "qualified institutional buyer" (as indicated by the
box checked by the transferor on the Certificate of Transfer on the reverse of
the certificate for the Security), (iii) in an offshore transaction in
accordance with Regulation S under the Securities Act (as indicated by the box
checked by the transferor on the Certificate of Transfer on the reverse of the
certificate for the Security), (iv) pursuant to an exemption from registration
under the Securities Act provided by Rule 144 (if applicable) under the
Securities Act, or (v) pursuant to an effective registration statement under the
Securities Act, in each case in accordance with any applicable securities laws
of any state of the United States, and we will notify any purchaser of the
Securities or the Common Stock issuable upon conversion thereof from us of the
above resale restriction, if then applicable. We further understand that, in
connection with any transfer of the Securities or the Common Stock issuable upon
conversion thereof by us, the Company and the Trustee (or, in the case of Common
Stock, the Transfer Agent) may request, and if so requested we will furnish,
such certificates, legal opinions and other information as they may reasonably
require to confirm that any such transfer complies with the foregoing
restrictions.
2. With respect to the transactions contemplated by the Offering
Memorandum, we have such
<PAGE> 114
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of our investment in the Securities, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment and can afford the complete loss of such investment.
3. We understand that the minimum principal amount of Securities that may
be purchased by an institutional accredited investor is $250,000.
4. We understand that the Company and the Initial Purchasers, and others
will rely upon the truth and accuracy of the foregoing acknowledgments,
representations and agreements and we agree that if any of the acknowledgements,
representations and warranties deemed to have been made by us by our purchase of
Securities, for our own account or for one or more accounts as to each of which
we exercise sole investment discretion, are no longer accurate, we shall
promptly notify the Company and the Initial Purchasers.
5. We are acquiring the Securities purchased by us for investment purposes,
and not for distribution, for our own account or for one or more accounts as to
each of which we exercise sole investment discretion and we are or such account
is an institutional "accredited investor" (as defined in Rule 501(a)(1), (2),
(3) or (7) of Regulation D under the Securities Act).
6. You are entitled to rely upon this letter and you are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
-----------------------------------
(Name of Purchaser)
By:
--------------------------------
Date:
------------------------------
<PAGE> 115
1
EXHIBIT C
FORM OF TRANSFER CERTIFICATE FROM
REGULATION S SECURITY TO REGULATION S
SECURITY DURING THE RESTRICTED PERIOD
The Bank of New York, as Trustee
101 Barclay Street
Floor 21 West
New York, NY 10286
Attention: Corporate Trust Trustee Administration
Re: Molten Metal Technology, Inc.
5 1/2% Convertible Subordinated Notes
Due 2006 (the "Securities")
-------------------------------------
Reference is hereby made to the Indenture dated as of May 1, 1996 (the
"Indenture"), between Molten Metal Technology, Inc. (the "Company") and The Bank
of New York, as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to the proposed transfer of U.S. $_________ aggregate
principal amount of Securities which are held by [name of transferor].
In connection with such request and in respect of such Securities, [name of
transferee] (the "Transferee") does hereby certify that (a) upon such exchange,
it will be the beneficial owner of such Securities, (b) it is not a U.S. person
(as defined in Regulation S under the Securities Act) and is located outside the
United States (within the meaning of Regulation S) and acquired, or has agreed
to acquire and upon such exchange will have acquired, such Securities outside
the United States, (c) it is not an "affiliate" of the Issuer (as defined in
Rule 144 under the Securities Act) or a person acting on behalf of such an
affiliate and (d) it is not in the business of buying and selling securities or,
if it is in such business, it did not acquire such Securities from the issuer or
any affiliate thereof in the initial distribution of the Securities. In
addition, the Transferee hereby agrees that, in accordance
<PAGE> 116
2
with Regulation S, it will not, on or before the 40th day after the Issuance
Date, offer, sell, pledge or otherwise transfer the Securities issued in such
exchange except (a) to the Company, (b) to a person who it reasonably believes
(or it and anyone acting on its behalf reasonably believes) is a qualified
institutional buyer within the meaning of Rule 144A under the Securities Act in
a transaction meeting the requirements of Rule 144A or (c) in an offshore
transaction meeting the requirements of Rule 903 or Rule 904 under the
Securities Act, and in each case in accordance with any applicable securities
laws of any state of the United States.
This certificate and the statements contained herein are made for the
benefit of the Company and the Initial Purchasers.
Date: [Insert Name of Transferee]
By:
---------------------------
Name:
Title:
(If the Transferee is a corporation, partnership or
fiduciary, the title of the Person signing on behalf of such
Transferee must be stated.)
<PAGE> 117
3
EXHIBIT D
FORM OF TRANSFER CERTIFICATE FROM
GLOBAL SECURITY/RESTRICTED
CERTIFICATED 144A SECURITY
TO REGULATION S SECURITY
The Bank of New York, as Depositary
101 Barclay Street
Floor 21 West
New York, NY 10286
Attention: Corporate Trust Trustee Administration
Re: Molten Metal Technology, Inc.
5 1/2% Convertible Subordinated Notes
Due 2006 (the "Securities")
-------------------------------------
Reference is hereby made to the Indenture dated as of May 1, 1996 (the
"Indenture"), between Molten Metal Technology, Inc. (the "Company"), and The
Bank of New York, as Trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.
This letter relates to the proposed transfer of U.S. $___________ aggregate
principal amount of Securities which are [evidenced by the Global Security
(CUSIP No. 680712AA3) and held by you on behalf of The Depository Trust Company
who in turn is holding an interest therein on behalf of the undersigned] * [held
by [name of transferor]] ** (the "Transferor"). The Transferor has requested a
transfer of such [beneficial interest in the]* Securities in accordance with
Regulation S under the Securities Act.
- ------------------------
*For Global Security only.
** For Restricted Certificated 144A Security only.
<PAGE> 118
4
In connection with such request and in respect of such Securities, the
Transferor does hereby certify that such transfer has been effected pursuant to
and in accordance with Rule 903 or Rule 904 under the Securities Act, and
accordingly the Transferor does hereby further certify that:
(1) the offer of the Securities was not made to a person in the United
States or to or for the account or benefit of a U.S. person;
(2) either:
(A) at the time the buy order was originated, the transferee was
outside the United States or the Transferor and any person acting on
its behalf reasonably believed that the transferee was outside the
United States, or
(B) the transaction was executed in, on or through the facilities
of a designated offshore securities market and neither the Transferor
nor any person acting on its behalf knows that the transaction was
pre-arranged with a buyer in the United States;
(3) no direct selling efforts have been made in contravention of the
requirements of Rule 903(b) or 904(b) of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
<PAGE> 119
5
This certificate and the statements contained herein are made for the
benefit of the Company and the Initial Purchasers. Terms used in this
certificate and not otherwise defined in the Indenture have the meanings set
forth in Regulation S under the Securities Act.
Dated: [Insert Name of Transferor]
By:
----------------------------------
Name:
Title:
(If the transferor is a corporation,
partnership or fiduciary, the title of the
Person signing on behalf of such
transferor must be stated.)
<PAGE> 1
EXHIBIT 11
MOLTEN METAL TECHNOLOGY, INC.
<TABLE>
Computation of Primary and Fully Diluted Net Income (Loss) Per Share
<CAPTION>
QUARTER ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
-------------------------- --------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
PRIMARY NET INCOME (LOSS) PER SHARE:
Net income (loss) $ 2,084,135 $ (367,710) $ 2,299,563 $(3,371,502)
=========== =========== =========== ===========
Weighted average common shares outstanding 23,336,091 22,250,060 23,098,323 22,225,888
Incremental shares from use of treasury stock method for
stock options and warrants (i) 4,407,711 -- 4,520,827 --
----------- ----------- ----------- -----------
Common and common equivalent shares, where applicable 27,743,802 22,250,060 27,619,150 22,225,888
=========== =========== =========== ===========
Net income (loss) per share $ 0.08 $ (0.02) $ 0.08 $ (0.15)
=========== =========== =========== ===========
NET INCOME (LOSS) PER SHARE ASSUMING FULL DILUTION:
Net income (loss) $ 2,084,135 $ (367,710) $ 2,299,563 (3,371,502)
=========== =========== =========== ===========
Weighted average common shares outstanding 23,336,091 22,250,060 23,098,323 22,225,888
Incremental shares from use of treasury stock method for
stock options and warrants (i) 4,407,711 -- 4,520,827 --
----------- ----------- ----------- -----------
Common and common equivalent shares, where applicable 27,743,802 22,250,060 27,619,150 22,225,888
=========== =========== =========== ===========
Net income (loss) per share $ 0.08 $ (0.02) $ 0.08 $ (0.15)
=========== =========== =========== ===========
<FN>
(i) For the periods ended June 30, 1995, the incremental shares from the use of the treasury stock method for stock options and
warrants have been excluded from the computation since their effect is anti-dilutive.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
FDS FOR 2ND QUARTER 1996 10-Q
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 66,595,865
<SECURITIES> 129,686,444
<RECEIVABLES> 33,560,531
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 235,435,705
<PP&E> 57,268,093
<DEPRECIATION> 11,873,354
<TOTAL-ASSETS> 310,010,547
<CURRENT-LIABILITIES> 13,347,614
<BONDS> 166,539,092
<COMMON> 234,675
0
0
<OTHER-SE> 123,898,260
<TOTAL-LIABILITY-AND-EQUITY> 310,010,547
<SALES> 0
<TOTAL-REVENUES> 42,820,260
<CGS> 0
<TOTAL-COSTS> 30,718,193
<OTHER-EXPENSES> 13,956,219
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,107,699
<INCOME-PRETAX> 2,299,563
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,299,563
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,299,563
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
