<PAGE> 1
SCHEDULE 14A
(RULE 14(a)-101
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Molten Metal Technology, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
MOLTEN METAL TECHNOLOGY, INC.
400-2 TOTTEN POND ROAD
WALTHAM, MASSACHUSETTS 02154
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Molten Metal Technology, Inc.:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders of
Molten Metal Technology, Inc. (the "Company") will be held at the Wyndham Garden
Hotel, 420 Totten Pond Road, Waltham, Massachusetts, on Wednesday, July 16, 1997
at 10:00 A.M. (local time) for the following purposes:
(a) To elect directors of the Company;
(b) To consider and vote upon a proposal to ratify the selection by the
Board of Directors of the firm of Price Waterhouse LLP as independent
accountants of the Company for the fiscal year ending December 31,
1997; and
(c) To transact such other business as may properly come before the meeting
or any adjournments or postponements thereof.
The Board of Directors has fixed May 19, 1997 as the record date for the
determination of stockholders entitled to notice of, and to vote at, the 1997
Annual Meeting of Stockholders. Accordingly, only stockholders of record at the
close of business on May 19, 1997 will be entitled to notice of, and to vote at,
such meeting or any adjournment thereof.
By Order of the Board of Directors
ETHAN E. JACKS
Secretary
June 13, 1997
NOTE: THE BOARD OF DIRECTORS SOLICITS THE EXECUTION AND PROMPT
RETURN OF THE ACCOMPANYING PROXY. A RETURN ENVELOPE IS ENCLOSED.
<PAGE> 3
MOLTEN METAL TECHNOLOGY, INC.
------------------------------------
PROXY STATEMENT
------------------------------------
GENERAL INFORMATION
PROXY SOLICITATION
The enclosed proxy is solicited by the Board of Directors of Molten Metal
Technology, Inc. (the "Company") for use at the 1997 Annual Meeting of
Stockholders and at any adjournments or postponements thereof (the "Meeting").
The Meeting will be held at 10:00 A.M. (local time) on July 16, 1997 at the
Wyndham Garden Hotel, 420 Totten Pond Road, Waltham, Massachusetts.
The Company's principal executive office is located at 400-2 Totten Pond
Road, Waltham, Massachusetts 02154.
The cost of soliciting proxies by mail, telephone, telegraph or in person
will be borne by the Company. In addition to solicitation by mail, the Company
will reimburse brokerage houses and other nominees for their expenses incurred
in sending proxies and proxy material to the beneficial owners of shares held by
them.
REVOCABILITY AND VOTING OF PROXY
A form of proxy for use at the Meeting and a return envelope for the proxy
are enclosed. You may revoke your proxy at any time prior to its use by giving
written notice to the Secretary of the Company, by executing a revised proxy at
a later date or by attending the Meeting and voting in person. Proxies in the
form enclosed, unless previously revoked, will be voted at the Meeting in
accordance with the specifications made by you thereon or, in the absence of
such specifications, in favor of the election of the nominees for directors
listed herein, and in favor of the proposal to ratify the selection of Price
Waterhouse LLP as independent accountants for the fiscal year ending December
31, 1997, and, with respect to any other business which may properly come before
the Meeting, in the discretion of the named proxies. Shares represented by
executed proxies which abstain or are withheld from one or all matters to be
acted upon at the Meeting will be considered for the purpose of determining
whether a quorum is present at the Meeting but will not be considered in
determining whether the matter abstained or withheld from is approved by an
affirmative vote of the requisite percentage of the shares voting on such
matter. Similarly, broker non-votes (i.e., shares held by brokers or nominees as
to which (i) instructions have not been received from the beneficial owners or
the persons entitled to vote and (ii) the broker or nominee does not have
discretionary voting power on a particular matter) will be considered for the
purpose of determining whether a quorum is present, but will not be considered
in determining whether the matter is approved by an affirmative vote of the
requisite percentage of shares voting on such matter. Proxies submitted with
abstentions as to one or more proposals will be counted as present for purposes
of establishing a quorum for such proposals.
RECORD DATE AND VOTING RIGHTS
All holders of record of the common stock, par value $.01 per share, of the
Company (the "Common Stock") at the close of business on May 19, 1997 will be
eligible to vote at the Meeting. Each share is entitled to one vote. As of May
19, 1997, the Company had outstanding 23,599,664 shares of Common Stock. The
presence, in person or by proxy, of the holders of a majority of the issued and
outstanding Common Stock will constitute a quorum for the transaction of
business at the Meeting. This proxy statement and the enclosed proxy are first
being mailed or given to stockholders on or about June 13, 1997.
<PAGE> 4
SHARE OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth certain information as of May 19, 1997 with
respect to the beneficial ownership of the Common Stock by (i) each person known
to the Company to be the beneficial owner of more than 5% of the issued and
outstanding Common Stock as of May 19, 1997, one of whom is the Chief Executive
Officer of the Company, (ii) those persons who were, at December 31, 1996, the
other four most highly compensated officers of the Company, (iii) each director
of the Company, and (iv) all present executive officers and directors of the
Company as a group. As of May 19, 1997, 23,599,664 shares of Common Stock were
outstanding.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENTAGE OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP OUTSTANDING SHARES OF
OF BENEFICIAL OWNER OF COMMON STOCK(1) COMMON STOCK OWNED(1)
- ---------------------------------------------------- -------------------- ---------------------
<S> <C> <C>
William M. Haney, III(2)............................ 5,346,786 22.01%
400-2 Totten Pond Road
Waltham, MA 02154
John T. Preston(3).................................. 2,290,507 9.70%
238 Main Street
Cambridge, MA 02141
The Travelers Companies (4)......................... 1,913,917 8.11%
One Tower Square
Hartford, CT 06183
Christopher J. Nagel, Sc.D.(5)...................... 2,075,965 8.10%
400-2 Totten Pond Road
Waltham, MA 02154
Benjamin T. Downs(6)................................ 367,092 1.54%
400-2 Totten Pond Road
Waltham, MA 02154
Robert A. Swanson(7)................................ 267,915 1.12%
Peter A. Lewis(8)................................... 114,697 *
Victor E. Gatto, Jr.(9)............................. 65,779 *
Maurice F. Strong(10)............................... 54,916 *
G. Earl McConchie(11)............................... 53,599 *
James B. Anderson, Ph.D.(12)........................ 17,500 *
All officers and directors as a group (14
persons)(2)-(4), (6)-(13)......................... 10,918,716 40.20%
</TABLE>
- ---------------
* Less than 1%.
(1) The shares owned, and the shares included in the total number of shares
outstanding, have been adjusted, and the percentage owned has been
computed, in accordance with Rule 13d-3(d)(1) under the Securities Exchange
Act of 1934, as amended. Includes options with respect to shares of Common
Stock that can be exercised as of May 19, 1997 (or within 60 days after
such date). Except as set forth in these footnotes, such shares are
beneficially owned with sole investment and sole voting power.
(2) Includes 697,811 shares of Common Stock issuable upon exercise of
outstanding options exercisable as of May 19, 1997 (or within 60 days after
such date).
(3) Includes 6,250 shares of Common Stock issuable upon exercise of outstanding
options exercisable as of May 19, 1997 (or within 60 days after such date).
Also includes 500 shares held of record by Mr. Preston's children. Mr.
Preston disclaims beneficial ownership of such shares.
(4) Represents shares owned by The Travelers Insurance Company; The Travelers
Insurance Group, Inc.; PFS Services, Inc.; Associated Madison Companies,
Inc.; and the Travelers Group, Inc. Information is based upon a joint
Schedule 13G dated January 28, 1997 furnished to the Company by such
beneficial owners.
2
<PAGE> 5
(5) Includes 2,045,346 shares of Common Stock issuable upon exercise of
outstanding options exercisable as of May 19, 1997 (or within 60 days after
such date).
(6) Includes 210,878 shares of Common Stock issuable upon exercise of
outstanding options exercisable as of May 19, 1997 (or within 60 days after
such date).
(7) Includes 227,915 shares of Common Stock issuable upon exercise of
outstanding options exercisable as of May 19, 1997 (or within 60 days after
such date). Also includes 40,000 shares of Common Stock held of record by
the Swanson Family Fund, L. P., of which Mr. Swanson is a general partner
and a limited partner.
(8) Includes 20,000 shares of Common Stock issuable upon exercise of
outstanding options exercisable as of May 19, 1997 (or within 60 days after
such date). Also includes 25,000 shares of Common Stock held of record by
Mr. Lewis' wife. Mr. Lewis disclaims beneficial ownership of such shares.
(9) Includes 61,690 shares of Common Stock issuable upon exercise of
outstanding options exercisable as of May 19, 1997 (or within 60 days after
such date).
(10) Represents 54,916 shares of Common Stock issuable upon exercise of
outstanding options exercisable as of May 19, 1997 (or within 60 days after
such date). Excludes 12,000 shares owned by Strovest Holdings, Inc., of
which Mr. Strong is Chairman, and 209,000 shares owned by Environmental
Capital Corporation, a subsidiary of Strovest Holdings, Inc. Mr. Strong
disclaims beneficial ownership of such shares.
(11) Includes 12,446 shares of Common Stock issuable upon exercise of
outstanding options exercisable as of May 19, 1997 (or within 60 days after
such date).
(12) Represents 17,500 shares of Common Stock issuable upon exercise of
outstanding options exercisable as of May 19, 1997 (or within 60 days after
such date).
(13) Includes 3,559,399 shares of Common Stock issuable upon exercise of
outstanding options exercisable as of May 19, 1997 (or within 60 days after
such date).
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors and
executive officers and any persons holding more than 10% of the Common Stock are
required to report their ownership of the Common Stock and any changes in that
ownership to the Securities and Exchange Commission (the "SEC"). Specific due
dates for these reports have been established and the Company is required to
report in this Proxy Statement any failure to file by these due dates during
1996. Based on a review of the forms filed by the above persons, the Company
believes that all of these filing requirements were timely satisfied by its
directors, executive officers and 10% holders, with the exception of Mr. Haney,
who on one occasion was late in filing the appropriate form documenting one open
market purchase transaction, and Ian C. Yates, a former Vice President of the
Company, who on two occasions after departing from the Company was late in
reporting a total of five option exercise transactions. In making this
statement, the Company has relied upon the written representations of its
directors, officers and ten percent holders and copies of the reports that have
been filed with the SEC.
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION AS DIRECTORS
The Board of Directors is currently set at seven members, each of whom is
elected to hold office until the next annual meeting of stockholders, or special
meeting in lieu thereof, and until their respective successors are duly elected
and qualified. James B. Anderson has informed the Board that he will not stand
for reelection as a Director of the Company in order to pursue other interests.
The Board has nominated all of the remaining current members of the Board for
reelection. The Board of Directors intends to name a replacement for Dr.
Anderson and will reduce the size of the Board to six members in accordance with
the By-Laws of the Company until a suitable candidate is identified. The Board
of Directors also may increase the size of the Board beyond seven members if
more than one suitable candidate is identified.
3
<PAGE> 6
Unless authority to do so is withheld, the persons named in each proxy
(and/or their substitutes) will vote the shares represented thereby "FOR" the
election of the director nominees named below. If for any reason any nominee is
not a candidate (which is not now expected), a new nominee will be designated by
the Board to fill such vacancy, unless the Board of Directors reduces the number
of directors in accordance with the By-Laws of the Company. Each nominee for
director will be elected to the Board of Directors if such nominee receives
votes representing a plurality of the shares of Common Stock voted on his
nomination at the Meeting, in person or by proxy.
INFORMATION AS TO DIRECTORS AND EXECUTIVE OFFICERS
There is shown below for each director and executive officer, as reported
to the Company, the name, age and family relationship, if any, with any other
director or officer; the principal occupation and employment over at least the
last five years; the position, if any, with the Company; the period of service
as a director or officer of the Company; and certain other directorships held.
<TABLE>
<CAPTION>
DIRECTOR/OFFICER
NAME AGE OFFICE HELD SINCE
- ----------------------------------- --- -------------------------------- ----------------
<S> <C> <C> <C>
William M. Haney, III.............. 35 Chairman of the Board of 1989
Directors, President and Chief
Executive Officer
Christopher J. Nagel, Sc.D......... 39 Vice President of Process 1989
Fundamentals/Founding Scientist
and Director
Peter A. Lewis(1).................. 66 Director 1993
John T. Preston(1)(2).............. 47 Director 1989
Maurice F. Strong.................. 68 Director 1992
Robert A. Swanson.................. 49 Director 1992
Eugene Berman...................... 55 Vice President of Government and 1992
External Affairs
Benjamin T. Downs.................. 34 Executive Vice President of 1990
Finance and Administration and
Chief Financial Officer
William J. Garner.................. 58 Vice President of Design and 1996
Development
Victor E. Gatto, Jr................ 50 Vice President, Government and 1993
Nuclear Sales
Ethan E. Jacks..................... 43 Vice President and General 1991
Counsel
G. Earl McConchie.................. 46 Vice President of Sales and 1996
Marketing
Katharyn F. Santoro................ 43 Vice President of Human 1994
Resources
Charles W. Shaver.................. 38 Chief Operating Officer 1996
</TABLE>
- ---------------
(1) Currently a member of the Compensation Committee.
(2) Currently a member of the Audit Committee.
WILLIAM M. HANEY, III, has served as a Director of the Company since
December 1989 and as its Chairman of the Board, President and Chief Executive
Officer since June 1990. In 1989, Mr. Haney founded Energy BioSystems
Corporation, a developer of microbial systems for desulfurizing hydrocarbons,
and served as a member of its Board of Directors from 1989 to 1993. Mr. Haney
serves or has served as a member of the President's Circle of the National
Academy of Sciences, on boards for the United States Department of Commerce, the
Environmental Protection Agency, Harvard University and the World Resources
Institute relating to technology innovation and environmental issues, and on the
board of WGBH-Boston. Mr. Haney holds an A.B. degree from Harvard University.
4
<PAGE> 7
CHRISTOPHER J. NAGEL, SC.D., has served as a Director of the Company since
November 1989 and as Vice President of Process Fundamentals/Founding Scientist
since October 1996. From August 1994 until October 1996, Dr. Nagel served as
Executive Vice President of Science and Technology, and from 1990 until August
1994, Dr. Nagel served as Senior Vice President of Science and Technology. From
1986 until 1991, Dr. Nagel was a doctoral student in the School of Chemical
Engineering at Massachusetts Institute of Technology ("M.I.T."). Dr. Nagel holds
a Sc.D. in Chemical Engineering from M.I.T. and a B.S. in Chemical Engineering
from Michigan Technological University.
PETER A. LEWIS has served as a Director of the Company since June 1993. Mr.
Lewis was a general partner of Lazard Freres & Co. from 1969 until January 1993,
concentrating primarily in the area of domestic and international mergers and
acquisitions. Since January 1993, Mr. Lewis has been a limited partner of Lazard
Freres & Co. and has served as a limited managing director since 1995. From 1966
to 1969, Mr. Lewis served as Deputy Assistant Secretary in the United States
Department of Housing and Urban Affairs and Assistant Director of the United
States Bureau of the Budget. Mr. Lewis is also a director of Breed Technologies,
Inc., a manufacturer of automobile components, and certain privately held
companies. Mr. Lewis holds an M.B.A. from the Harvard Graduate School of
Business, an M.A. from the Harvard Asian Studies Program and an A.B. from
Harvard College.
JOHN T. PRESTON has served as a Director of the Company since December
1989. Mr. Preston has been the President of Quantum Energy Technologies
Corporation, a technology-based startup company working on products to improve
energy efficiency in lighting, combustion and other areas, since January 1996.
Prior to that, Mr. Preston was the Director of Technology Development at M.I.T.
from 1992 to the end of 1995, and the Director of the M.I.T. Technology
Licensing Office from 1986 to 1992. Mr. Preston has been a member of the Board
of Directors of Energy BioSystems Corporation since 1991 and is a member of the
Board of Directors of Clean Harbors, Inc., as well as several privately held
companies. Previously, Mr. Preston was a founder of Visual Communication Network
and Associate Director of the M.I.T. Industrial Liaison Program. Mr. Preston
holds an M.B.A. from Northwestern University and a B.S. in Physics from the
University of Wisconsin.
MAURICE F. STRONG has served as a Director of the Company since 1989 except
during the period of May 1990 to September 1992. Mr. Strong currently is the
Executive Coordinator for U.N. Reform, and has been the Chairman of Strovest
Holdings, Inc. since 1983. From December 1992 to December 1996, Mr. Strong was
Chairman of Ontario Hydro, a major Canadian utility, and was its Chief Executive
Officer from December 1992 to November 1995. From March 1990 to August 1992, Mr.
Strong was Under Secretary General of the United Nations, Secretary-General of
the 1992 U.N. Conference on Environment and Development, and Chairman of the
Earth Summit. Mr. Strong is currently Senior Adviser to the President of the
World Bank, Chairman of Quantum Energy Technologies Corporation, and a member of
the Board of Directors of several other companies. Mr. Strong also is Chairman
of the Earth Council Institute and the World Resources Institute and is
affiliated with numerous environmental, humanitarian and development
organizations.
ROBERT A. SWANSON has served as a Director of the Company since March 1992.
Mr. Swanson, a founder of Genentech and its Chief Executive Officer from 1976 to
1990, was its Chairman of the Board from 1990 to 1996. Currently, Mr. Swanson is
the Chairman of K&E Management, Ltd., a private investment management company.
Prior to forming Genentech, Mr. Swanson was a partner with Kleiner & Perkins, a
venture capital partnership, and from 1970 to 1974 he was an investment officer
with Citicorp Venture Capital Ltd. Mr. Swanson serves on the Board of Fellows of
the Faculty of Medicine at Harvard University, and is a member of the Biology
Visiting Committee of, and has served as a Trustee for, M.I.T. Mr. Swanson is a
member of the Royal Swedish Academy of Engineering Sciences. Mr. Swanson holds
an S.M. from M.I.T.'s Sloan School of Management and a B.S. in Chemistry from
M.I.T.
EUGENE BERMAN joined the company as Vice President of Regulatory and
Community Affairs of the Company in May 1992, and now serves as Vice President
of Government and External Affairs. Prior to joining the Company, Mr. Berman was
a contract partner responsible for environmental matters, with particular
emphasis on permitting and environmental compliance, in the law firm of Gaston &
Snow from May 1989 to September 1991 and a partner in the law firm of Mintz,
Levin, Cohn, Ferris, Glovsky & Popeo from October
5
<PAGE> 8
1991 to April 1992. Mr. Berman holds a J.D. from Georgetown University Law
Center and holds a B.S. in Chemical Engineering from the University of
Pennsylvania.
BENJAMIN T. DOWNS joined the Company in June 1990 and served as Vice
President of Finance and Administration and Treasurer of the Company from August
1990 until May 1995. Since May 1995, Mr. Downs has served as Executive Vice
President of Finance and Administration and Treasurer. Mr. Downs was the Vice
President of Finance and Administration of Energy BioSystems Corporation, a
developer of microbial systems for desulfurizing hydrocarbons, from December
1989 until December 1991. Mr. Downs was a founder of Nexus Development in 1989,
a communications software development firm that was sold to Microcom in 1989.
Prior to founding Nexus in 1989, Mr. Downs was employed by Intel Corporation
from 1984 to 1989 where his responsibilities included financial accounting,
budgeting and the development of the corporate financial forecasting system. Mr.
Downs holds an A.B. from Harvard University.
WILLIAM J. GARNER joined the Company in August 1996 as Vice President of
Design and Development. Mr. Garner was the Director, Process Research and
Development, of the Polyolefins Division of Union Carbide Corporation from
September 1990 to August 1996. He held a number of management positions at Union
Carbide from 1975, all associated with the development, design,
commercialization and licensing of Union Carbide's leading UNIPOL(R) polymers
technology. During Mr. Garner's tenure at Union Carbide, this technology was
extended to over 110 reactors worldwide and 12 million tons of annual capacity.
Mr. Garner holds a B.S. and M.S. in Chemical Engineering from Texas A&M
University and an M.S. in Industrial Hygiene from the University of Pittsburgh.
VICTOR E. GATTO, JR., ED.D., joined the Company as Director of Government
Affairs in February 1992, served as Vice President of Government and Nuclear
Business from September 1993 to March 1997, and currently serves as Vice
President of Government and Nuclear Sales. From 1991 to February 1992, Dr. Gatto
was an independent consultant assisting start-up companies with innovative
technologies in the areas of government, political and regulatory affairs at the
state and federal level. From 1990 to 1991, Dr. Gatto was Finance Director of
the Massachusetts Republican Party. From 1987 to 1990, Dr. Gatto was employed by
Davidson College. Dr. Gatto holds an Ed.D., an Ed.M. and an A.B. from Harvard
University.
ETHAN E. JACKS has served as Vice President and General Counsel since
November 1991 and as Secretary or Assistant Secretary of the Company since
August 1990. From 1990 to 1991, Mr. Jacks was a partner in the Corporate and
Finance Department of the law firm of McDermott, Will & Emery. Prior to joining
McDermott, Will & Emery, he was a partner in the Corporate and Finance
Department of Fine & Ambrogne from 1987 to 1990. Mr. Jacks holds a J.D. from
Georgetown University Law Center, an S.M. from the Sloan School of Management at
M.I.T. and a B.S. from M.I.T.
G. EARL MCCONCHIE joined the Company as Vice President of Chemicals and
Plastics Business in April 1996, and currently serves as Vice President of Sales
and Marketing. Since 1972, Mr. McConchie has held a number of management
positions at the Dow Chemical Company ("Dow"), one of the largest U.S. based
chemical companies. From 1992 to April 1996, Mr. McConchie served as the Global
Business Director and Global R&D Director of Dow's RCl, HCl and Incineration
Business, where he was responsible for business management and technology
development and implementation, involving 12 major manufacturing sites and
global business. Mr. McConchie holds a B.S. in Chemical Engineering from
Virginia Tech.
KATHARYN F. SANTORO joined the Company as Vice President of Human Resources
in January 1994. Ms. Santoro had previously been employed by Thinking Machines
Corporation, a supercomputer manufacturer, as Director of Human Resources since
1989 and prior to that was Director of Human Resources for Lotus Development
Corporation, a software company. Ms. Santoro holds a B.A. in Psychology from the
University of California, Santa Barbara and an M.Ed. in Counseling Psychology
from Boston College.
CHARLES SHAVER joined the Company as Vice President of Manufacturing in
August 1996, and is currently the Chief Operating Officer. Mr. Shaver joined MMT
after a most recent assignment as leader for the Epoxy Products Business Unit at
Dow Chemical. The Epoxy Products Business Unit of Dow represented $1.5 billion
in sales and over 20 manufacturing sites around the world, employing over 1,200
people. Mr. Shaver had been in a number of management and engineering leadership
roles across a wide variety of business and
6
<PAGE> 9
technologies within Dow Chemical from 1980 to 1996. Mr. Shaver hold a B.S. in
Chemical Engineering from Texas A&M University.
COMPENSATION OF DIRECTORS
Except for the option grants described below, Directors do not receive
compensation for services on the Board of Directors or any committee thereof.
The Company reimburses Directors for expenses incurred in connection with
attendance at meetings of the Board of Directors or committees thereof.
In September 1993, March 1994 and March 1996, the Board of Directors of the
Company amended the Company's Amended and Restated 1989 Long Term Incentive
Compensation Plan (the "1989 Plan") to provide for the automatic grant of stock
options (the "Formula Grants") to directors who are not officers or employees of
the Company ("Non-Employee Directors"). These amendments were approved by the
stockholders of the Company at the 1994 Annual Meeting of Stockholders and at
the 1996 Annual Meeting of Stockholders. A Formula Grant will be granted to any
Non-Employee Director who is elected to the Board of Directors, will be for
25,000 shares of Common Stock, will vest over 20 quarters and will be
exercisable at the fair market value as of the date of the Formula Grant. Each
Non-Employee Director will be eligible to receive an additional Formula Grant
upon his or her reelection to the Board of Directors each time the previous
Formula Grant has fully vested.
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
During fiscal 1996, the Audit Committee of the Board of Directors consisted
of Mr. John T. Preston and Dr. James B. Anderson. This committee met once in
fiscal 1996. The functions of the Audit Committee include: (1) making
recommendations to the Board of Directors with respect to the engagement of the
Company's independent accountants; (2) reviewing the audit plans developed by
the independent accountants for the annual audit of the Company's books and
records and the results of such audit; (3) reviewing the annual financial
statements; (4) reviewing the professional services provided by the independent
accountants and the accountants' independence; and (5) reviewing the adequacy of
the Company's system of internal controls and the responses to management
letters issued by the independent accountants. Mr. Peter L. Lewis will be taking
Dr. Anderson's place on the Audit Committee after the Meeting.
During fiscal 1996, the Compensation Committee of the Board of Directors
consisted of Messrs. Peter A. Lewis and John T. Preston. During the 1996 fiscal
year, this committee met twice and acted four other times by written consent.
The principal functions of the Compensation Committee are to review and approve
salary plans and bonus awards, as well as other forms of compensation, and to
administer the 1989 Plan and the Company's 1993 Employee Stock Purchase Plan
pursuant to the terms of such plans.
The Company does not have a nominating committee or committee performing a
similar function.
During fiscal 1996, the Board of Directors met six times and acted five
other times by written consent. Each director attended at least 75% of the Board
meetings and the meetings of Board committees on which he served.
In April 1997, the Board of Directors appointed a committee of three
outside directors to review matters concerning the Company's financial
statements for the year ended December 31, 1996 and the allegations in the
securities class action suits described in "Certain Transactions -- Legal
Proceedings" below. The committee has completed its review of matters affecting
the presentation of the Company's financial statements, including the
restatement of the Company's quarterly results of operations for the periods
ended June 30, 1996 and September 30, 1996 discussed in Note 17 to the financial
statements.
7
<PAGE> 10
EXECUTIVE COMPENSATION
Summary Compensation Table. The table below sets forth certain summary
compensation information for the three years ended December 31, 1996 with
respect to the Company's Chief Executive Officer and the four other most highly
compensated officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
------------------------------ STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS AWARDS OPTIONS PAYOUTS COMPENSATION
- --------------------------------- ---- --------- ------- ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
William M. Haney, III............ 1996 $335,000 $ -- 30,100 -- $18,140(2)
Chairman, Chief Executive 1995 $289,167(3) (4) -- 14,826 -- $26,777(5)
Officer and President 1994 $280,000 -- -- 108,000 -- $17,119(6)
Christopher J. Nagel, Sc.D....... 1996 $201,333 $11,250 -- 39,000 -- $69,022(7)
Vice President of Process 1995 $192,000 $21,600 -- 100 -- $24,724(8)
Fundamentals and Founding 1994 $182,801 $ 310 -- 54,000 -- $45,897(9)
Scientist
Benjamin T. Downs................ 1996 $190,833 $ -- -- 35,250 -- $ 146(10)
Executive Vice President of 1995 $135,993 $19,125 -- 7,600 -- $ 146(11)
Finance and Administration 1994 $143,310 $32,448 -- 43,400 -- $ 100(12)
and Chief Financial Officer
G. Earl McConchie(13)............ 1996 $163,457 $ 7,031 40,000 50,000 -- $68,587(14)
Vice President of Sales and
Marketing
Victor E. Gatto, Jr.............. 1996 $174,646 $ 6,750 -- 45,250 -- $ 949(15)
Vice President of Government 1995 $151,000 $55,000 -- 100 -- $ 569(16)
and Nuclear Sales 1994 $143,906 $15,310 -- 72,175 -- $ 348(17)
</TABLE>
- ---------------
(1) Salary includes amounts deferred pursuant to the Company's 401(k) Plan.
(2) Represents a payment of $17,876 to Mr. Haney to reimburse him for the cost
of a personal life insurance policy maintained by him and $264 in term life
insurance premiums on a group policy maintained by the Company.
(3) Includes $9,167 paid to Mr. Haney in 1996 for a salary increase that was
retroactive to 1995.
(4) Mr. Haney directed that his bonus for 1995, $100,800, be paid by the
Company to a charitable foundation designated by Mr. Haney.
(5) Represents a payment of $26,561 to Mr. Haney to reimburse him for the cost
of a personal life insurance policy maintained by him and $216 in term life
insurance premiums on a group policy maintained by the Company.
(6) Represents a payment of $16,903 to Mr. Haney to reimburse him for the cost
of a personal life insurance policy maintained by him and $216 in term life
insurance premiums on a group policy maintained by the Company.
(7) Represents a payment of $24,475 to Dr. Nagel to reimburse him for the cost
of a personal life insurance policy maintained by him, $198 in term life
insurance premiums on a group policy maintained by the Company and a
payment of $44,349 pursuant to a Technical Assignment Agreement between the
Company and Dr. Nagel dated May 31, 1990.
(8) Represents a payment of $24,526 to Dr. Nagel to reimburse him for the cost
of a personal life insurance policy maintained by him, and $198 in term
life insurance premiums on a group policy maintained by the Company.
(9) Represents a payment of $24,547 to Dr. Nagel to reimburse him for the cost
of a personal life insurance policy maintained by him, $187 in term life
insurance premiums on a group policy maintained by the Company and $21,163
in interest forgiven by the Company on a $400,000 note, which was paid in
full in December 1994.
(10) Represents $146 in term life insurance premiums on a group policy
maintained by the Company.
8
<PAGE> 11
(11) Represents $146 in term life insurance premiums on a group policy
maintained by the Company.
(12) Represents $100 in term life insurance premiums on a group policy
maintained by the Company.
(13) Mr. McConchie became an employee of the Company in April 1996.
(14) Represents $68,067 for reimbursement of relocation expenses, and $522 in
term life insurance premiums on a group policy maintained by the Company.
(15) Represents $749 in term life insurance premiums on a group policy
maintained by the Company, and $200 payment of a life-cycle account
maintained by the Company.
(16) Represents $369 in term life insurance premiums on a group policy
maintained by the Company, and $200 payment of a life-cycle account
maintained by the Company.
(17) Represents $348 in term life insurance premiums on a group policy
maintained by the Company.
Option Grants in Last Fiscal Year. The following table sets forth
information as to stock options granted for the year ended December 31, 1996 to
each of the individuals listed in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------------------- VALUE OF ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE TERM(3)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ------------------------
NAME GRANTED FISCAL YEAR ($/SHARE)(1) DATE(2) 5% 10%
- ------------------------- --------- ------------ ------------ ----------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
William M. Haney, III.... 100(4) 0.01% $37.25 January 25, 2006 $ 2,343 $ 5,937
60,000(5) 6.44% $31.75 May 7, 2006 $1,198,044 $3,036,079
Christopher J. Nagel,
Sc.D................... 100(4) 0.01% $37.25 January 25, 2006 $ 2,343 $ 5,937
8,900(6) 0.95% $35.75 March 1, 2006 $ 200,099 $ 507,089
30,000(5) 3.22% $31.75 May 7, 2006 $ 599,022 $ 1518,040
Benjamin T. Downs........ 100(4) 0.01% $37.25 January 25, 2006 $ 2,343 $ 5,937
5,150(6) 0.55% $35.75 March 1, 2006 $ 115,787 $ 293,428
30,000(5) 3.22% $31.75 May 7, 2006 $ 599,022 $1,518,040
G. Earl McConchie........ 50,000(7) 5.37% $34.75 April 15, 2006 $1,092,704 $2,769,128
Victor E. Gatto, Jr...... 100(4) 0.01% $37.25 January 25, 2006 $ 2,343 $ 5,937
15,150(6) 1.62% $35.75 March 1, 2006 $ 340,617 $ 863,191
30,000(5) 3.22% $31.75 May 7, 2006 $ 599,055 $1,518,040
</TABLE>
- ---------------
(1) The exercise price may be paid in cash or in shares of Common Stock valued
at fair market value on the exercise date.
(2) The term of each option may not exceed 10 years (except that with respect to
any optionee who owns more than 10% of the total combined voting power of
all classes of stock of the Company, the term may not exceed five years if
such option is an "incentive stock option").
(3) There is no assurance provided to any officer or any other holder of the
Company's securities that the actual stock price appreciation over the
10-year term will be at the assumed 5% and 10% levels or at any other
defined level. Unless the market price of the Common Stock does in fact
appreciate over the option term, no value will be realized from the option
grants made to the officers.
(4) These stock options, granted in January 1996, were granted to each employee
of the Company and were vested at time of grant.
(5) These stock options, granted in May 1996, vest over a 4 year period, with
10% vesting in May 1997, 15% vesting in May 1998, 25% vesting in May 1999,
and 50% vesting in May 2000.
9
<PAGE> 12
(6) These stock options, granted in March 1996, vest over a 5 year period with
20% vesting in each November 1997, November 1998, November 1999, November
2000 and November 2001.
(7) These stock options, granted in April 1996, vest over a 5 year period with
20% vesting in each April 1997, April 1998, April 1999, April 2000 and April
2001.
Option Exercises in Last Fiscal Year. The following table sets forth
information as to options exercised during the year ended December 31, 1996 and
as to unexercised options held at the end of such fiscal year by the individuals
listed in the Summary Compensation Table.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR END AT FISCAL YEAR END (1)
ACQUIRED ON VALUE ------------------------------ ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------- ----------- ---------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William M. Haney, III........ 86,000 $2,977,400 671,811 91,781 $ 6,474,424 $ --
Christopher J. Nagel,
Sc.D....................... -- $ -- 2,040,126 60,900 $20,206,349 $ --
Benjamin T. Downs............ 105,000 $2,243,100 198,348 98,842 $ 1,988,031 $317,322
G. Earl McConchie............ -- $ -- -- 50,000 $ -- $ --
Victor E. Gatto, Jr.......... 2,800 $ 92,470 46,827 101,923 $ 40,794 $ 95,200
</TABLE>
- ---------------
(1) Calculated on the basis of the closing price of the Common Stock on December
31, 1996 of $11.75 per share, as reported by the Nasdaq National Market,
minus the exercise price.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee is a former or current officer or
employee of the Company or any of its subsidiaries. Peter A. Lewis, a member of
the Compensation Committee, is a limited partner of Lazard Freres & Co.
("Lazard") and has served as a limited managing director of Lazard since 1995.
During 1996, Lazard was a lead underwriter of an offering of $143,750,000 of
convertible notes issued by the Company. The Company and John T. Preston, a
member of the Compensation Committee, are parties to a Consulting Agreement
pursuant to which Mr. Preston will provide advice on technology implementation,
business planning, and other projects assigned from time to time by senior
management of the Company. Pursuant to the Consulting Agreement, the Company
pays Mr. Preston a retainer of $3,334 per month. The Agreement has a one year
term, and renews automatically for successive one year terms unless terminated
by either party. To the Company's knowledge, there were no other relationships
involving members of the Committee requiring disclosure in this proxy statement.
The Company's Compensation Committee currently consists of Messrs. Lewis
and Preston.
EXECUTIVE EMPLOYMENT AGREEMENTS
William M. Haney, III, is employed under an Employment Agreement with the
Company effective as of June 30, 1990. Under the terms of the Employment
Agreement as amended to date, which includes confidentiality and non-competition
provisions, Mr. Haney currently receives an annual salary of $266,000, and is
eligible to receive an annual performance bonus. Mr. Haney also received 8,000
vested stock options in connection with a voluntary reduction of 20% of his base
salary for 1997 from $335,000 to $266,000. The agreement also provides for (i) a
non-qualified stock option for the purchase of 666,666 shares of Common Stock at
an exercise price of $.60 per share which was granted to Mr. Haney in October
1991, (ii) payments towards a personal life insurance policy and (iii) a
severance payment, payable in the event Mr. Haney's employment with the Company
is terminated without cause or is constructively terminated, equal to the
present value of the amount of compensation Mr. Haney would have otherwise
received from the Company during the three-year period following such
termination. In addition, the agreement provides for certain registration rights
in respect of the shares of Common Stock owned by Mr. Haney.
10
<PAGE> 13
G. Earl McConchie, the Company's Vice President of Sales and Marketing, and
the Company are parties to an Employment Agreement effective as of April 1996.
The Employment Agreement, which includes confidentiality and non-competition
provisions, provides that if Mr. McConchie's employment with the Company is
terminated without cause, the Company will be required to pay him severance at
his then current salary until the earlier of (i) Mr. McConchie finding
alternative employment with compensation equal to at least 50% of his base
salary or (ii) five years from the date of termination.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE OFFICER COMPENSATION
THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Compensation
Committee") is composed of two directors, Peter A. Lewis and John T. Preston,
neither of whom is an officer or employee of the Company. The Compensation
Committee is responsible for evaluating the performance of management,
determining policies for establishing compensation for executive officers of the
Company, determining the compensation for the Chief Executive Officer of the
Company and administering the 1989 Plan and the Company's 1993 Employee Stock
Purchase Plan.
COMPENSATION PHILOSOPHY
The Company's executive officers are compensated by salary, bonuses and
with stock option awards. The Company's compensation philosophy continues to be
to attract high caliber executive officers and provide them superior
compensation, including incentive stock option plans, which reward them in a
manner consistent with the success of the Company, and judge their performance
against high standards of achievement. The Company's executive compensation
practices have been influenced by the need to assemble a talented executive team
and maintain a high level of motivation and performance during the
commercialization stage of the Company's growth.
One of the goals of the Company's compensation programs is to control fixed
compensation costs by increasing base salaries in line with cost of living,
average wage increases and other economic indicators. The financial
opportunities to motivate and reward executive officers and unite executive
compensation with the interests of Company shareholders are delivered in the
form of variable compensation, specifically, bonuses and stock option grants.
This ensures that financial rewards to executives are greater only when the
Company is successful in achieving its goals.
STOCK OPTION AWARDS
The Compensation Committee continues to believe that stock options have
been and will continue to be an excellent vehicle for compensating and incenting
employees. To date, all full-time employees of the Company have received a stock
option award as part of their compensation. Because the option exercise price
for the employee is generally the fair market value of the stock on the date of
grant, employees recognize a gain only if the value of the stock increases.
Annual stock option grants are made to key employees as a long term
incentive, based on the attainment of corporate and individual goals. This
practice results in regular, recurring grants which are made simultaneously to
all key employees. Simultaneous grants assure that no individual ends up with a
price advantage on any given grant, while recurring grants average out the
effects of price fluctuations. The Company believes this method of distribution
consistently rewards employees for their ongoing contributions and maintains a
long term incentive and retention leverage for the Company. The amount of the
annual grant is targeted to be equivalent to comparable high technology
companies.
Stock option awards to new employees, including executive officers, as well
as additional option awards to existing employees, generally will vest in annual
increments of 20%. The Company believes that this type of vesting is appropriate
at this stage in the Company's development and is consistent with the practice
of other high technology companies.
11
<PAGE> 14
COMPENSATION FOR FISCAL 1996 FOR EXECUTIVE OFFICERS OTHER THAN CHIEF EXECUTIVE
OFFICER
The Company's executive compensation program is comprised of base pay,
short term cash incentives and long term incentives in the form of annual stock
option grants. Each executive officer is eligible to receive a bonus, payable in
early 1997, for the combined achievement of both corporate and individual goals
established at the beginning of 1996. In addition, as discussed above, executive
officers also will receive stock option grants on an annual basis. The actual
amount of the grant will be based on the individual's salary and comparable long
term compensation market data for each executive.
Base Compensation.
An executive officer's base compensation is established initially through
negotiation at the time the executive is first hired, and is subject to change
when such officer's base compensation is reviewed due to changes in
responsibility or other relevant factors. The base salaries of the Company's
executive officers, including Mr. Haney, also are evaluated annually with the
assistance of an independent outside consultant. The Compensation Committee has
given to Mr. Haney the discretion to negotiate and fix the base compensation of
all executive officers other than himself. Mr. Haney consults with the
Compensation Committee in this regard.
A total of two executive officers, other than Mr. Haney, received an
aggregate of approximately $27,820 in base salary increases in 1996 as a reward
for their contributions to the Company. In lieu of a salary increase, a total of
four executive officers received a merit increase in the form of stock options
described in the bonus section below, as a reward for their contributions to the
Company.
Bonuses
The Compensation Committee has given Mr. Haney the discretion to award
bonuses to executive officers other than himself although the Compensation
Committee approves any such bonuses which take the form of stock option awards.
A total of approximately $54,000 in cash bonuses and 16,198 fully vested stock
options, in lieu of a cash bonus and/or salary increase, was awarded to nine
executive officers (other than Mr. Haney) during 1996 for contributions made in
connection with the attainment of corporate and individual goals.
ADDITIONAL STOCK OPTION AWARDS
Consistent with the Company's philosophy to recognize and compensate its
executives with stock options, the Company awarded to a total of nine executive
officers (other than Mr. Haney) stock options for up to 240,739 shares in the
aggregate. Of this amount, 170,000 options were awarded as retention bonuses to
key executives. These retention options will vest over a four year period as
follows: 10% in the first year, 15% in the second year, 20% in the third year,
and the remaining 50% in the fourth year. The options were granted in May 1996
at $31.75 per share, the fair market value of the common stock on that date. The
remaining 70,739 stock options vest in annual increments of twenty percent (20%)
over the next five years. All options have an exercise price equal to the fair
market value of the Common stock at the date of grant.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
During 1996 Mr. Haney's base compensation was $335,000. In September 1996,
Mr. Haney's base compensation was evaluated by an independent outside consultant
and an appropriate salary increase was recommended. However, based on the
Company's performance in 1996, Mr. Haney and the Compensation Committee agreed
that Mr. Haney would not take the recommended salary increase and would receive
8,000 fully vested stock options in connection with a voluntary reduction of 20%
of his base salary for 1997 from $335,000 to $266,000. The options were granted
March 1, 1997 at $11 3/8 per share, the fair market value of the common stock on
that date.
Pursuant to Mr. Haney's Employment Agreement, Mr. Haney is entitled to an
annual bonus based upon satisfactory accomplishment of performance goals agreed
upon annually by Mr. Haney and the Compensation Committee. For 1996, Mr. Haney
and the Compensation Committee agreed that Mr. Haney's bonus would be tied to
the Company's achievement of corporate goals. Based on the Company's performance
with respect to such goals, Mr. Haney did not receive a bonus for 1996.
12
<PAGE> 15
Under the Company's long term incentive program, Mr. Haney was eligible for
an annual stock option grant. The Compensation Committee awarded him 20,300
stock options. The options were granted March 1, 1997 at $11 3/8 per share, the
fair market value of the Common Stock on that date, with a five year vesting
provision. The actual number of shares was based on market data of long term
compensation for CEOs in companies in comparable stages of development.
Mr. Haney also received a retention bonus offered to key executives of the
Company. In May 1996, the Compensation Committee awarded Mr. Haney 60,000 stock
options which will vest over a four year period as follows: 10% in the first
year, 15% in the second year, 25% in the third year, and the remaining 50% in
the fourth year. These stock options have an exercise price of $31.75 per share,
the fair market value of the Common Stock at the date of the grant.
CONCLUSION
The Compensation Committee believes that to date the Company's compensation
practices for its executive officers are appropriate for technology-based growth
companies at the stage of commercializing a new technology with expected broad
marketplace acceptance. The Company's use of a combination of cash and stock
options to provide salary increases and bonuses to executive officers is
consistent with the Company's objective to highly motivate the executive
officers to achieve the Company's goals, to link executive compensation to the
Company's performance and to unite executive compensation with the interests of
the Company's shareholders.
Peter A. Lewis
John T. Preston
CERTAIN TRANSACTIONS
In October 1996, the Company and Maurice F. Strong, a director of the
Company, entered into a Consulting Agreement pursuant to which Mr. Strong will
provide advice on the design and implementation of international sales and
marketing strategy for the Company's products and technology, and will assist in
negotiating transactions with international customers. Pursuant to the
Consulting Agreement, the Company granted to Mr. Strong a non-qualified option
to purchase 10,000 shares of Common Stock at an exercise price of $34.75 per
share, which was the closing price of the Common Stock on the date of grant. The
stock option vests in five annual installments of 2,000 shares, provided that
Mr. Strong is then being retained by the Company under the Consulting Agreement.
In addition, the Company will pay Mr. Strong a retainer of $5,000 per month. The
Agreement has a one year term, and renews automatically for successive one year
terms unless terminated by either party.
The Company and John T. Preston, a director of the Company, are parties to
a Consulting Agreement pursuant to which Mr. Preston will provide advice on
technology implementation, business planning, and other projects assigned from
time to time by senior management of the Company. Pursuant to the Consulting
Agreement, the Company pays Mr. Preston a retainer of $3,334 per month. The
Agreement has a one year term, and renews automatically for successive one year
terms unless terminated by either party.
Peter A. Lewis, a director of the Company, is a limited partner of Lazard
Freres & Co. ("Lazard") and has served as a limited managing director of Lazard
since 1995. During 1996, Lazard was a lead underwriter of an offering of
$143,750,000 of convertible notes issued by the Company.
In August 1996, December 1996 and January 1997, the Company loaned G. Earl
McConchie, an officer of the Company, a total of $60,000, bearing interest at
8.25% per year, payable on the earlier of (a) the sale of Mr. McConchie's house
in Texas, or (b) 30 days after Mr. McConchie's termination of employment with
the Company.
The Company may make loans to affiliates in the future, subject to approval
by the Company's Board of Directors.
13
<PAGE> 16
During 1996, the Company granted Mr. McConchie 40,000 shares of restricted
Common Stock as part of his employment agreement. 30,000 of these shares will be
restricted for a period of five years. Restrictions on the remaining 10,000
shares will lapse at a rate of 25% per quarter beginning March 31, 1997.
During 1996, the Company granted William J. Garner, an officer of the
Company, 10,000 shares of restricted Common Stock as part of his employment
agreement. The restrictions on these shares will lapse at a rate of 25% per
quarter beginning March 31, 1997. In addition, the Company provided Mr. Garner
with a $100,000 signing bonus as an incentive to join the Company and adjust to
a higher cost of living in Massachusetts. Should Mr. Garner terminate his
employment with the Company during his first year, he would be required to
refund the entire amount of the bonus.
In 1990, the Company purchased the rights to certain patents related to CEP
from Christopher J. Nagel, an officer and a director of the Company, and a
member of the Company's Technology Advisory Board for $1,500,000. Each of Dr.
Nagel and the Technology Advisory Board Member are entitled to one-half of the
aggregate purchase price. The purchase price is payable in annual payments of
25% of the Company's pre-tax profits, as defined in the purchase agreement,
however, the Company may elect to accelerate the payments. As of December 31,
1996, a total of $57,055 had been paid to Dr. Nagel pursuant to this agreement.
Legal Proceedings. In February and March 1997, purchasers of the Company's
common stock filed five purported class action suits against the Company and
certain of its present and former directors and executive officers in the United
States District Court for the District of Massachusetts. The first suit, filed
on February 12, 1997, and the fifth suit, filed on March 28, 1997, name the
Company and Messrs. William M. Haney, III, Christopher J. Nagel, Benjamin T.
Downs, Victor E. Gatto, Jr., Ian C. Yates, John T. Preston and Maurice F. Strong
as defendants. The other three suits, filed on February 13, February 20, and
February 27, 1997, each name the Company and Messrs. Haney, Nagel, Preston and
Strong as defendants. The complaints variously allege that the Company and the
individual defendants made false and misleading statements concerning the
development and commercialization of CEP and the availability of research and
development funding from the DOE, and disseminated financial statements not
prepared in accordance with generally accepted accounting principles, in
violation of Section 10(b) of the Securities Exchange Act of 1934 and state law.
The complaints variously assert that the alleged false or misleading statements
were made to inflate the price of the Company's common stock in order to
facilitate its March 1996 offering of convertible subordinated notes, to reduce
the number of shares contributed to M4 Environmental L.P. to match an investment
by M4's co-owner, to enhance the value of stock or options held by the
individual defendants, and to increase the price of stock sold by the individual
defendants. Each of the suits seeks compensatory damages for alleged losses
during the class periods (September 26, 1995 through October 21, 1996 in the
first suit, March 28, 1995 through October 18, 1996 in three of the suits, and
September 26, 1995 through October 20, 1996 in the fifth suit) as well as fees
and costs. The suits are at an early procedural stage. While the Company has not
yet filed answers to the complaints, the Company intends to deny liability.
However, the ultimate outcome of the litigation cannot be determined at present.
In April 1997, the Company and M4 Environmental, L.P. ("M4"), the Company's
joint venture with Lockheed Martin Corporation, received subpoenas from the
Office of the Inspector General ("OIG") of the Department of Energy which
request various Company and M4 information and records. The OIG has not informed
the Company or M4 of its reasons for requesting such information and records.
14
<PAGE> 17
STOCKHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the performance of the Company's Common Stock
to the NASDAQ Stock Market (U.S.) Index and to the Alex. Brown & Sons, Inc.
Environmental Industry Universe Index since February 11, 1993 through December
31, 1996. The graph assumes that the value of an investment in the Company's
Common Stock and each of the foregoing indices was $100 at February 11, 1993 and
that all dividends were reinvested.
[INSERT C/R/C PERFORMANCE GRAPH]
RATIFICATION OF INDEPENDENT ACCOUNTANTS
Based upon the recommendation of its Audit Committee, the Board of
Directors has selected the firm of Price Waterhouse LLP as the independent
accountants of the Company for the fiscal year ending December 31, 1997. Price
Waterhouse LLP has acted in such capacity for the Company since the 1992 fiscal
year. The Board will propose at the Meeting that the stockholders ratify this
selection.
Representatives of Price Waterhouse LLP are expected to be present at the
Meeting and will be afforded the opportunity to make a statement if they so
desire and to respond to appropriate questions.
The reports of Price Waterhouse LLP with respect to the Company's financial
statements as of December 31, 1996, 1995, 1994, 1993 and 1992 did not contain
any adverse opinions, nor were they qualified in any way.
On March 27, 1997, M4 Environmental L.P. ("M4"), a joint venture between
the Company and Lockheed Martin Corporation, engaged Price Waterhouse LLP to
audit M4's financial statements for the fiscal year ended December 31, 1996.
Price Waterhouse was engaged by M4 after Coopers & Lybrand L.L.P., the previous
accountants for M4, resigned as M4's accountants on March 6, 1997. Coopers &
Lybrand advised M4 that it had resigned as M4's accountants mainly because Price
Waterhouse proposed to refer to Coopers & Lybrand's report on M4's financial
statements in Price Waterhouse's audit of the Company's financial statements,
and Coopers & Lybrand did not want to consent to such association. In its
capacity as the Company's independent accountants, Price Waterhouse has not
expressed reliance on any audit report of
15
<PAGE> 18
Coopers & Lybrand relating to M4. Coopers & Lybrand's audit reports for M4 for
the period from inception (August 1994) through the date of resignation did not
contain any adverse opinions or disclaimer of opinions or qualifications or
modifications as to uncertainty, audit scope or accounting principles, and there
were no disagreements or reportable events (within the meaning of Item 304 of
Regulation S-K) between M4 and Coopers & Lybrand during such period. Prior to
the engagement of Price Waterhouse, M4 had not consulted with Price Waterhouse
regarding the application of accounting principles to a specified transaction or
the type of audit opinion that might be rendered on M4's financial statements.
The Company has consulted with Price Waterhouse, in Price Waterhouse's capacity
as the Company's independent accountants, on various occasions with respect to
transactions between the Company and M4.
The affirmative vote of the holders of a majority of the shares of Common
Stock present at the Meeting, in person or by proxy, is required to ratify the
appointment of Price Waterhouse LLP as the Company's accountants. If the
proposal to ratify the appointment of Price Waterhouse LLP is not approved, the
Board of Directors will select and appoint an independent accounting firm for
the fiscal year ending December 31, 1997 without further stockholder action. The
Board of Directors also retains the right to engage other accountants for the
fiscal year ending December 31, 1997 in its discretion.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE THE
SELECTION OF PRICE WATERHOUSE LLP AS THE INDEPENDENT ACCOUNTANTS OF THE COMPANY
FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997, AND PROXIES SOLICITED BY THE BOARD
WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON
THE PROXY.
MISCELLANEOUS
OTHER MATTERS
The Board of Directors does not know of any other matters that may be
presented at the Meeting, except for routine matters. If other business does
properly come before the Meeting, however, the persons named on the accompanying
proxy intend to vote on such matters in accordance with their best judgment.
ANNUAL REPORT ON FORM 10-K
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS) AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE FURNISHED UPON WRITTEN
REQUEST OF ANY STOCKHOLDER OF RECORD. REQUESTS FOR SUCH COPIES SHOULD BE
DIRECTED TO: BRIAN PAYEA, DIRECTOR OF INVESTOR RELATIONS, MOLTEN METAL
TECHNOLOGY, INC., 400-2 TOTTEN POND ROAD, WALTHAM, MASSACHUSETTS 02154.
1998 STOCKHOLDER PROPOSALS
In order for stockholder proposals to be presented at the Company's 1998
annual meeting of stockholders, such proposals must be received by the Secretary
of the Company at the Company's principal office in Waltham, Massachusetts not
later than January 1, 1998 for inclusion in the proxy statement for that
meeting, subject to the applicable rules of the Securities and Exchange
Commission. Delivery of such proposals should be by Certified Mail, Return
Receipt Requested.
The prompt return of your proxy will be appreciated and helpful in
obtaining the necessary vote. Therefore, whether or not you expect to attend the
meeting, please sign the proxy and return it in the enclosed envelope.
By Order of the Board of Directors
ETHAN E. JACKS
Secretary
Date: June 13, 1997
16
<PAGE> 19
DETACH HERE
MOLTEN METAL TECHNOLOGY, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE
P HELD JULY 16, 1997
R The undersigned hereby appoints William M. Haney, III and
Benjamin T. Downs, each with the power to act without the other and
O with full power of substitution, as Proxies to vote, as designated on
the reverse side, all stock of Molten Metal Technology, Inc. (the
X "Company") owned by the undersigned at the Annual Meeting of
Stockholders to be held at the Wyndham Garden Hotel, 420 Totten Pond
Y Road, Waltham, Massachusetts on Wednesday, July 16, 1997, at
10:00 a.m., local time, upon such business as may properly come before
the meeting, including the following set forth on the reverse side.
-------------
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
-------------
<PAGE> 20
<TABLE>
DETACH HERE
[X] Please mark
votes as in
this example.
The shares represented by this proxy will be voted as directed below. WHERE NO DIRECTION IS GIVEN, THE SHARES WILL BE VOTED FOR
MATTERS 1 AND 2.
<S> <C>
1. Election as Directors of the six nominees listed below
(except as indicated to the contrary below). FOR AGAINST ABSTAIN
NOMINEES: William M. Haney, III, Peter A. Lewis, 2. Approval of the selection of Price [ ] [ ] [ ]
Christopher J. Nagel, John T. Preston, Maurice F. Strong, Waterhouse LLP as the Company's
Robert A. Swanson. independent accountants for its
fiscal year ending December 31,
FOR WITHHELD 1997.
[ ] [ ]
3. In their discretion on any other matter that may
properly come before the meeting and any adjournmments
[ ] __________________________________________ thereof.
For all nominees except as noted above
MARK HERE MARK HERE
FOR ADDRESS [ ] IF YOU PLAN [ ]
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
This proxy may be revoked prior to the exercise of the
powers conferred by the proxy.
IMPORTANT: Please sign exactly as name appears to the left.
When signing on behalf of a corporation, partnership,
estate, trust or in other representative capacity, please
sign name and title. If executed by a corporation, the proxy
should be signed by a duly authorized officer. If executed
by a partnership, please sign in the partnership name by an
authorized person. For joint accounts, each joint owner
must sign.
Signature: __________________________________ Date:__________ Signature: __________________________________ Date: ___________
</TABLE>
