As filed with the Securities and Exchange Commission on May 9, 1996
Registration No. 33-80135
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
APPLIED SCIENCE AND TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2962110
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
RICHARD S. POST, PH.D., PRESIDENT
APPLIED SCIENCE AND TECHNOLOGY, INC.
35 CABOT ROAD
WOBURN, MASSACHUSETTS 01801-1053
(617) 933-5560
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices and
name, address and telephone number of agent for service)
COPIES TO:
NEIL H. ARONSON, ESQUIRE
EDWARD P. GONZALES, ESQUIRE
O'CONNOR, BROUDE & ARONSON
950 WINTER STREET, SUITE 2300
WALTHAM, MASSACHUSETTS 02154
(617) 890-6600
Approximate date of commencement of proposed sale to the public: From
time to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: |_|
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: |X|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of Each Class Maximum Maximum Amount of
of Securities to Be Amount to Offering Price Aggregate Registration
Registered Be Registered per Share (1) Offering Price (1) Fee(2)
- ---------- ------------- ------------- ------------------ ------
<S> <C> <C> <C> <C>
Common Stock,
$.01 par value
per share (the
"Common
Stock") (3) ........ 34,126 $9.60 $327,609.60 $112.97(4)
</TABLE>
(1) The offering price per share and maximum offering price is the actual
exercise price of the redeemable warrants under which the shares of
Common Stock are underlying.
(2) The registration fee submitted with this registration statement is for
the registration of 34,126 shares of Common Stock underlying redeemable
warrants that were issued by the Registrant in connection with a
private placement that the Company completed in September 1992.
Pursuant to Rule 429 under the Securities Act of 1933, as amended (the
"Act"), the registration fee for the other securities to be registered
under this registration statement were paid previously as part of the
registration fee submitted with a Registration Statement on Form SB-2,
Registration No. 33-69098-B, declared effective on November 9, 1993,
which included (i) a fee in the amount of $5,194.28 to cover 977,500
shares of Common Stock underlying 1,955,000 redeemable warrants (the
"Warrants"), (ii) an aggregate fee in the amount of $1,471.67 to cover
255,000 shares of Common Stock underlying the warrants issued to the
representative of the underwriters of the initial public offering (the
"Representative's IPO Warrants") and underlying the Warrants underlying
the Representative's IPO Warrants, and (iii) a fee in the amount of
$8.50 to cover 170,000 Warrants underlying the Representative's IPO
Warrants.
(3) Pursuant to Rule 416 also registered hereunder are such additional
indeterminate number of shares of Common Stock that may become issuable
pursuant to antidilution adjustments, stock splits, stock dividends and
similar adjustments.
(4) The registration fee was previously paid to the Commission on December
7, 1995.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
Pursuant to Rule 429 under the Act the combined prospectus contained in
this registration statement also relates to a Registration Statement on Form
SB-2, Registration No. 33-69098-B, which was declared effective on November 9,
1993.
-2-
APPLIED SCIENCE AND TECHNOLOGY, INC.
CROSS-REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS
OF INFORMATION REQUIRED BY PART I OF FORM S-3
<TABLE>
<CAPTION>
Registration Statement Location or Heading
Item and Caption in Prospectus
<S> <C> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus................... Outside Front Cover Page
2. Inside Front and Outside Back
Cover Pages of Prospectus................................ Inside Front Cover Page; Outside Back Cover
Page
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges....................... The Company; Risk Factors
4. Use of Proceeds.......................................... Use of Proceeds
5. Determination of Offering Price.......................... Outside Front Cover Page; Plan of
Distribution
6. Dilution................................................. Not Applicable
7. Selling Security Holders................................. Selling Securityholders
8. Plan of Distribution..................................... Outside Front Cover Page; Plan of Distribution
9. Description of Securities to be Registered............... Outside Front Cover Page
10. Interests of Named Experts and Counsel................... Legal Matters
11. Material Changes......................................... Recent Developments
12. Incorporation of Certain Information by Reference........ Incorporation of Certain Information by
Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities........... Not Applicable
</TABLE>
-3-
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
-4-
SUBJECT TO COMPLETION, DATED MAY 9, 1996
PROSPECTUS
APPLIED SCIENCE AND TECHNOLOGY, INC.
1,266,626 SHARES OF COMMON STOCK, $.01 PAR VALUE PER SHARE, AND 170,000 WARRANTS
This Prospectus relates to 1,266,626 shares of Common Stock, $.01 par
value per share (the "Common Stock"), of Applied Science and Technology, Inc., a
Delaware corporation (the "Company"), registered for issuance by the Company as
follows: (i) 977,500 shares of Common Stock issuable upon exercise of the
redeemable warrants (the "IPO Warrants") issued by the Company to investors (the
"Holders") in its initial public offering in November 1993 (the "IPO"); (ii)
170,000 shares of Common Stock issuable upon exercise of the redeemable warrants
(the "Representative's Warrants") issued to Josephthal Lyon & Ross Incorporated,
the representative of the underwriters of the IPO (the "Representative"); (iii)
85,000 shares of Common Stock issuable upon exercise of IPO Warrants underlying
the Representative's Warrants (the "Representative's IPO Warrants"); and (iv)
34,126 shares of Common Stock issuable upon exercise of redeemable warrants (the
"Investor Warrants") issued to certain investors (the "Investors") in the
Company's private placement completed in September 1992 (the "Private
Placement"). THE COMPANY INTENDS TO REDEEM THE IPO WARRANTS UPON THE
EFFECTIVENESS OF THIS PROSPECTUS OR AS SOON AS PRACTICABLE THEREAFTER, IN
ACCORDANCE WITH THE PROVISIONS OF THE WARRANT AGREEMENT, DATED AS OF NOVEMBER
10, 1993, BY AND BETWEEN THE COMPANY AND CONTINENTAL STOCK TRANSFER AND TRUST
COMPANY. This Prospectus also relates to 170,000 Representative's IPO Warrants
issuable by the Company upon exercise of the Representative's Warrants. See
"Selling Securityholders." The Holders, Representative, and Investors are
sometimes hereinafter referred to collectively as the "Selling Securityholders,"
and the IPO Warrants, Representative's Warrants, Representative's IPO Warrants,
and Investor Warrants are sometimes hereinafter referred to collectively as the
"Warrants."
This offering (the "Offering") is not being underwritten. The shares of
Common Stock and IPO Warrants being offered hereunder may be sold by the Company
from time to time to the Selling Securityholders at the exercise prices of the
Warrants. Although the shares of Common Stock and Representative's IPO Warrants
being offered hereunder have not been specifically registered for resale by the
Selling Securityholders, once registered such securities may be resold by the
Selling Securityholders and/or their registered representatives from time to
time at prices to be determined at the time of such sales. No minimum required
purchase exists and no arrangement has been made to have funds received by such
Selling Securityholders and/or their registered representatives placed in an
escrow, trust or similar account or arrangement, unless the proceeds come from a
purchaser residing in a state in which the sale of those securities has not yet
been qualified. See "Selling Securityholders" and "Plan of Distribution."
The Company's Common Stock and IPO Warrants are traded on the NASDAQ
National Market System Stock Market ("NASDAQ/NMS") under the symbols "ASTX" and
"ASTXW," respectively. The shares of Common Stock and IPO Warrants to be offered
for resale pursuant to this Prospectus may be offered for resale on NASDAQ/NMS
or in privately negotiated transactions. On May 1, 1996, the closing bid price
of the Company's Common Stock and IPO Warrants on NASDAQ/NMS was $22.25 per
share and $3.63 per IPO Warrant.
__________
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK TO THE
PURCHASERS OF SUCH SECURITIES. SEE "RISK FACTORS" ON PAGES 7-14 OF THIS
PROSPECTUS.
__________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions Company (2)
------ ----------- -----------
<S> <C> <C> <C>
Per Share (Underlying IPOWarrants)(1) ... $15.05 $735,568.75 $15,255,057.25
Per Unit (Underlying
Representative's Warrants)............. $15.7325 $ -0- $ 2,674,525.00
Per Share (Underlying Investor Warrants) $ 9.60 $ -0- $ 327,609.60
-------- ----------- --------------
Total . ................................. $40.3825 $735,568.75 $18,257,191.85
</TABLE>
__________
(1) Pursuant to the terms of a Warrant Agreement, dated November 10, 1993,
the Company will be responsible for a fee to the Representative equal
to five percent (5%) of the aggregate proceeds derived upon exercise of
the IPO Warrants issued to the Holders, payable under certain
circumstances.
(2) Offering expenses estimated at $17,000.00 are payable by the Company.
__________
THE DATE OF THIS PROSPECTUS IS MAY __, 1996.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copies thereof may be
obtained, at prescribed rates, at the public reference facilities maintained by
the Commission at the Public Reference Section, Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's Regional Office located at
7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can be obtained at prescribed rates by writing to the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Company's Common Stock and IPO Warrants are listed for trading on
NASDAQ/NMS. Reports and other information concerning the Company can be
inspected at the offices of The NASDAQ Stock Market located at 1735 K Street,
N.W., Washington, D.C. 20006.
The Company has filed a Registration Statement on Form S-3 under the
Securities Act of 1933, as amended (the "Securities Act"), covering the Common
Stock and Representative's IPO Warrants included in this Prospectus. This
Prospectus does not contain all the information set forth in or annexed as
exhibits to the Registration Statement filed by the Company with the Commission
and reference is made to such Registration Statement and the exhibits thereto
for the complete text thereof. For further information with respect to the
Company and the securities offered hereby, reference is made to the Registration
Statement, including the exhibits filed as part thereof, copies of which may be
obtained at prescribed rates upon request to the Commission in Washington, D.C.
Any statements contained herein concerning the provisions of any documents are
not necessarily complete, and, in each instance, such statements are qualified
in their entirety by reference to such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission.
NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY THE COMPANY TO
SELL ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL FOR THE COMPANY TO MAKE SUCH OFFER IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCE, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
-2-
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which have been previously filed by the
Company with the Commission under the Exchange Act, are incorporated by
reference in this Prospectus:
(1) Annual Report on Form 10-K for the fiscal year ended July 1, 1995
("Fiscal 1995");
(2) Quarterly Report on Form 10-Q for the fiscal quarter ended September 30,
1995;
(3) Quarterly Report on Form 10-Q for the fiscal quarter ended December 30,
1995;
(4) Quarterly Report on Form 10-Q for the fiscal quarter ended March 30,
1996;
(5) Current Report on Form 8-K, dated October 25, 1995, and filed on October
26, 1995;
(6) Current Report on Form 8-K, dated November 22, 1995, and filed on
November 23, 1995;
(7) Current Report on Form 8-K, dated December 15, 1995, and filed on
December 18, 1995;
(8) Current Report on Form 8-K, dated December 29, 1995, and filed on
January 12, 1996, as amended by a Current Report on Form 8-K/A, dated
March 14, 1996, and filed March 15, 1996; and
(9) Description of the Company's Common Stock in the Company's Form 8-A
Registration Statement, declared effective on November 9, 1993.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the Offering described herein shall be deemed to be
incorporated by reference into this Prospectus from the respective dates those
documents are filed.
Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of the Registration Statement and this Prospectus to the
extent that a statement contained herein or in any subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of the
Registration Statement or this Prospectus.
-3-
The Company will provide, without charge, to each person who receives
this Prospectus, upon the written or oral request of any such person, a copy of
any or all of the documents which have been incorporated herein by reference,
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference). Requests should be directed in writing to Mr. John
M. Tarrh, Senior Vice President, Applied Science and Technology, Inc., 35 Cabot
Road, Woburn, Massachusetts 01801-1053, or by telephone at (617) 933-5560.
RECENT DEVELOPMENTS
No material changes in the Company's affairs have occurred since the
end of Fiscal 1995, which have not been described in an Annual Report on Form
10-K, a Quarterly Report on Form 10- Q or a Current Report on Form 8-K filed by
the Company under the Exchange Act.
-4-
THE COMPANY
THE BUSINESS
Applied Science and Technology, Inc. (the "Company") designs,
manufactures and markets proprietary systems and components used to produce
certain advanced materials such as semiconductors and diamond. The Company's
systems and components typically use microwave plasma production techniques in
which gases are heated to form a plasma that chemically interacts with a
substrate material. Based on its estimates, management believes that the size of
the markets in which the Company currently participates is approximately $600
million and that the Company is a leading worldwide supplier of microwave plasma
equipment to such markets. This equipment is used today primarily for
manufacturing the latest generation of advanced semiconductors. It is also used
for creating diamond for use in coatings and other processes, and for advanced
materials research.
The Company provides patented and proprietary components, as well as
engineering and scientific expertise, to semiconductor capital equipment
manufacturers ("SCEMs") for use in semiconductor manufacturing processes
including photoresist stripping, passivation, etching and thin film deposition.
The Company's major customers include Applied Materials, Inc. ("Applied
Materials"), GaSonics International, Inc. ("GaSonics"), and Lam Research, Inc.
("Lam Research"). Their customers (IBM, Intel, Motorola) use the Company's
equipment to manufacture the latest generation of advanced memory devices and
microprocessors, such as Pentium and Power PC chips.
Customers also use the Company's patented, patent pending and
proprietary chemical vapor deposition ("CVD") diamond production components and
systems in the development and manufacture of tool coatings, optics and optical
coatings, thermal management substrates for laser diodes used in
telecommunications, and high performance electronics. Diamond is considered an
ideal material for a wide variety of uses because of its extreme hardness,
excellent thermal conductivity, and other unique properties. The Company is
focused in this market on commercializing the use of CVD diamond by developing
systems to manufacture CVD diamond at higher production rates, resulting in a
lower cost per carat.
The Company sells its products to commercial, university and government
laboratory research customers, who provide information for the Company about new
applications for the Company's technologies in existing and emerging markets.
The Company manufactures microwave components and systems for industrial
applications, including equipment used in processing rubber and a variety of
other materials. The Company performs funded research and development with the
U.S. government and commercial customers when the Company believes that such
research and development will lead to long term product revenue streams rather
than a short term boost in revenues and earnings.
-5-
Management's expansion strategy is to continue to develop, manufacture
and market systems, components and process technologies that meet its customers'
needs for new applications of plasma processing for existing CVD diamond,
semiconductor and medical equipment markets as well as for potential new
markets. These markets include semiconductor and medical equipment component
manufacturing, electro-optics and high temperature superconducting materials.
The Company's plan is to seek to significantly expand revenues through
anticipated internal growth as well as through potential acquisitions, such as
the recent acquisitions of Ehrhorn Technological Operations, Inc. ("ETO") and
Newton Engineering Service, Inc. ("Newton Engineering"). No assurance can be
given that the Company will be able to successfully identify possible
acquisition candidates, complete such acquisitions, and successfully integrate
these businesses into the Company's operations. See "Risk Factors -- Risks
Associated with Acquisitions."
In November and December 1995, the Company acquired Newton Engineering
and ETO, respectively. ETO is a manufacturer of high performance radio frequency
power amplifiers for the semiconductor, medical, industrial and communications
markets. Newton Engineering is a supplier of specialty transformers and
inductors used by the Company and other industrial customers.
The Company was incorporated in Delaware on January 12, 1987. As used
in this Prospectus, unless otherwise indicated, the "Company" refers to Applied
Science and Technology, Inc., a Delaware corporation and the Company's wholly
owned subsidiaries, ETO, a Nevada corporation, Newton Engineering, a
Massachusetts corporation , ASTeX/Gerling Laboratories, Inc., a California
corporation, and Applied Science and Technology, GmbH, a German corporation. The
Company's corporate offices are located at 35 Cabot Road, Woburn, Massachusetts
01801 and its telephone number is (617) 933-5560.
-6-
RISK FACTORS
In addition to the information contained in this Prospectus, the
following information should be considered carefully by potential purchasers in
evaluating the Company, its business and the securities offered hereby. This
Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results and timing of certain events could
differ materially from those anticipated by such forward-looking statements as a
result of certain factors discussed in this Prospectus, including the risk
factors set forth below.
COMPETITION; RISK OF TECHNOLOGICAL OBSOLESCENCE; UNCERTAINTY OF MARKET
ACCEPTANCE OF NEW PRODUCTS AND APPLICATIONS
The advanced materials field, and particularly the CVD diamond field,
are undergoing rapid and significant technological change. The Company expects
plasma processing and CVD diamond technology to continue to develop rapidly. The
Company's success will depend upon its ability to maintain a competitive
position for its products in the marketplace. To do so, the Company must develop
and enhance its technology and products to keep pace with rapid technological
changes in production equipment and advanced materials processes. Many companies
and academic institutions have developed and are capable of developing competing
products based on technologies similar to the Company's or on other
technologies. Many of these competitors are well-established, and several have
or may acquire substantially greater financial, technical, manufacturing,
marketing and other resources than the Company, and many have established
success in the development, sale and service of competitive products. No
assurance can be given that these or other firms will not develop new or
enhanced products that are more effective than any that have been developed or
may be developed by the Company. No assurance can be given that planned future
products will realize market acceptance or will meet technical demands of
current and potential customers.
The Company believes that its ability to compete depends on elements
both within and outside its control, including, but not limited to, the success
and timing of new product development and new product introductions by the
Company and its competitors, product performance and price, distribution and
customer support. No assurance can be given that the Company will be able to
compete successfully with respect to these factors. Although the Company
believes that it may have certain technological and other advantages over its
competitors, maintaining such advantages will require continued investment by
the Company in research and development, sales and marketing and customer
service and support. No assurance can be given that the Company will have
sufficient resources to make such investments or that the Company will be able
to achieve the technological advances necessary to maintain such competitive
advantages. In addition, as the Company enters new markets, distribution
channels, technical requirements and levels and bases of competition may be
different than those in the Company's current markets and no assurance can be
given that the Company will be able to compete favorably.
-7-
DEPENDENCE ON SIGNIFICANT CUSTOMERS AND CONTRACTS
Applied Materials accounted for approximately 41% of the Company's
total revenue in Fiscal 1995. GaSonics, U.S. government agencies (including the
Advanced Research Projects Agency ("ARPA")) and the Company's Japanese
distributor each accounted for approximately 9%, 6% and 5%, respectively, of the
Company's total revenue in Fiscal 1995. Management considers the Company's
relationship with each of its significant customers to be satisfactory and,
although no assurance can be given, anticipates that each of these entities will
continue to account for a significant portion of the Company's total revenue in
the current fiscal year. The supply agreements with Applied Materials and
GaSonics, as well as certain government contracts, typically provide for
cancellation or modification (for example, reduction of the amount of a purchase
order) of the agreements with little or no penalty. A substantial reduction in
orders from the Company's significant customers, the loss of these customers or
the inability to attract orders from new customers would have a material adverse
effect on the Company's operations and financial condition.
NO ASSURANCE OF FUTURE PROFITABILITY
For the years ended June 30, 1993 ("Fiscal 1993"), July 2, 1994
("Fiscal 1994"), and Fiscal 1995, the Company had net earnings of $149,292,
$518,041 and $1,127,748, respectively. The results for Fiscal 1993, Fiscal 1994
and Fiscal 1995 may not necessarily be indicative of future results and no
assurance can be given that the Company will operate profitably in the future.
For the nine months ended March 30, 1996, the Company incurred a net loss of
$1,370,598, primarily as a result of the acquisition of ETO. The Company expects
to report a loss for the current fiscal year, primarily as a result of the
substantial non-recurring expense incurred in connection with the acquisition of
ETO.
RISKS RELATING TO GROWTH AND EXPANSION
Rapid growth of the Company's business, which the Company intends to
pursue aggressively through anticipated internal growth and possible
acquisitions, but of which no assurance of success can be given, may
significantly strain the Company's management, operational and technical
resources. If the Company is successful in obtaining rapid market penetration of
its products, the Company will be required to deliver increasing volumes of
highly complex products and components to its customers on a timely basis at a
reasonable cost to the Company. No assurance can be given that the Company's
efforts to expand its manufacturing and quality assurance activities will be
successful or that the Company will be able to satisfy increased commercial
scale production on a timely and cost-effective basis. The Company's success
will also depend, in part, upon its ability to provide its customers with
engineering, manufacturing, marketing and other support. In addition to the
levels of support currently provided, including the ability to modify its
technology and products to meet end-user requirements, the Company will also be
required to continue to improve its operational, management and financial
systems and controls. Failure to manage growth could have a material adverse
effect on the business of the Company.
-8-
RISKS ASSOCIATED WITH ACQUISITIONS
In the normal course of business, the Company evaluates potential
acquisitions of businesses, products and technologies that would complement or
expand the Company's business. The Company also evaluates potential joint
ventures or other collaborative projects. In November and December 1995 the
Company acquired Newton Engineering and ETO, respectively, and has been
operating such companies as wholly owned subsidiaries of the Company (the
"Acquisitions"). No assurance can be given that the Company will be able to
successfully integrate the Acquisitions into its operations, or successfully
negotiate, finance or integrate any other such acquired businesses, products or
technologies or successfully engage in any joint ventures or collaborations.
Furthermore, the integration of the Acquisitions or of any other acquired
business may cause a diversion of management time and resources. No assurance
can be given that the Company will enter into any additional acquisitions, joint
ventures or other collaborative projects in the future, and no assurance can be
given that the Acquisitions or any other acquisition, joint venture or
collaborative project, when consummated, will not materially adversely affect
the Company.
LIQUIDITY AND CAPITAL RESOURCES
The expansion of the Company's current business involves significant
financial risk and capital investment. No assurance can be given that financing
will be available in the future to meet the needs of the Company for additional
investment capital.
PATENTS AND PROPRIETARY INFORMATION
The Company's patent and trade secret rights are of material importance
to the Company and its future prospects because the Company relies on these
rights to protect proprietary technology. Generally, the Company's patents have
been directed to gas and plasma generator technology, microwave heating and
rubber curing. The Company currently owns ten U.S. patents and one Canadian
patent, has six patent applications pending in the U.S., and has several other
U.S. and foreign patent applications in various stages of preparation and
filing. The earliest of the issued patents considered material by the Company
expires in 2004. As a qualifying small business, the Company has retained
commercial ownership rights to proprietary technology developed under various
U.S. government contracts and grants, including SBIR contracts. No assurance can
be given as to the issuance of additional patents or, if so issued, as to their
scope and validity. Patents granted may not provide meaningful protection from
competitors. Even if a competitor's products were to infringe patents owned by
the Company, it would be costly for the Company to enforce its rights in an
infringement action and would divert funds and other resources from the
Company's operations. Furthermore, no assurance can be given that the Company's
products or processes will not infringe any patents or other intellectual
property rights of third parties. If the Company's products or processes do
infringe the rights of third parties, no assurance can be given that the Company
can obtain a license from the intellectual property owner on commercially
reasonable terms or at all.
-9-
The Company relies on trade secrets that it seeks to protect, in part,
through confidentiality agreements with employees, consultants and its customers
and potential customers. No assurance can be given that these agreements will
not be breached, that the Company will have adequate remedies for any breach or
that the Company's trade secrets will not otherwise become known to or
independently developed by competitors. As the Company intends to enforce its
patents, trademarks and copyrights and protect its trade secrets, it may be
involved from time to time in litigation to determine the enforceability, scope
and validity of these rights. Any such litigation could result in substantial
cost to the Company and diversion of effort by the Company's management and
technical personnel.
ATTRACTION AND RETENTION OF KEY PERSONNEL AND DEPENDENCE UPON FOUNDERS
The success of the Company will depend, in large part, upon its ability
to attract, recruit and retain highly qualified scientists, as well as highly
skilled and experienced management and technical personnel. No assurance can be
given that the Company will be able to hire and retain such personnel. The
Company is dependent in particular upon the services of Richard S. Post, its
President, and John M. Tarrh and Donald K. Smith, its Senior Vice Presidents,
all of whom are co-founders of the Company. Although the Company maintains key
person life insurance of $2 million on its President and $1 million on each of
its Senior Vice Presidents and is the sole beneficiary of these policies, the
loss of any of their services would have a material adverse effect on the
Company. In addition, the Company believes that its success will depend in large
part on its ability to continue to attract and retain qualified management,
scientific and marketing personnel. Competition for such personnel is intense,
and no assurance can be given that the personnel the Company may need will be
available in the future.
DEPENDENCE UPON FOREIGN SALES AND FOREIGN SUPPLIERS
During Fiscal 1994 and Fiscal 1995, sales to foreign customers
accounted for approximately 14.4% and 15.1%, respectively, of the Company's
total revenue. In addition, the Company relies on foreign suppliers for certain
components. The Company is subject to risks associated with foreign customers
and suppliers in general, including political instability, embargoes, shipping
delays, custom duties, import and export quotas and other trade restrictions,
all of which could have a material adverse effect on the Company's operations,
or could have a significant adverse impact on the Company's ability to deliver
its products on a competitive and timely basis. The Company may experience
difficulties in collecting accounts receivable and in obtaining or enforcing
judgments with respect to receivables outside the U.S. The Company's foreign
sales are typically made in U.S. dollars. A strengthening in the dollar relative
to the currencies of those countries where the Company does business would
increase the prices of its products as stated in those currencies, and may
adversely affect the Company's sales in those countries. To the extent the
Company lowers its prices to reflect a change in exchange rates, the
profitability of the Company's business in those markets may be adversely
affected. In the past, there have been significant fluctuations in the exchange
rates between the dollar and the currencies in those countries in which the
Company does business.
-10-
POTENTIAL DILUTIVE EFFECT OF WARRANTS AND OPTIONS
In addition to the IPO Warrants, Representative's Warrants, the
Representative's IPO Warrants issuable upon exercise of the Representative's
Warrants and Investor Warrants referred to herein, the Company has options
outstanding to purchase 490,980 shares of Common Stock at a weighted average
exercise price of $11.00 per share. Holders of Warrants and options may be given
an opportunity to benefit from a rise in the market price of the Common Stock.
So long as any of these Warrants and options remain outstanding, the terms upon
which the Company could obtain additional capital may be adversely affected. The
holders of these Warrants and options can be expected to exercise them at a time
when the market price of the Common Stock is in excess of the exercise price of
the Warrants or options, and such exercise and the subsequent sale of Common
Stock could reduce the market price for the Common Stock and result in dilution
to the then outstanding shares of Common Stock.
SIGNIFICANT INFLUENCE BY MANAGEMENT
Certain of the Company's executive officers and directors and their
affiliates control the vote of approximately 23.8% of the outstanding shares of
Common Stock prior to the exercise of any outstanding options and warrants. As a
result, such persons may be able to significantly influence all matters
requiring approval by the stockholders of the Company, including the election of
directors.
NO ACTIVE PUBLIC MARKET; ARBITRARY DETERMINATION OF EXERCISE PRICES; POSSIBLE
VOLATILITY OF TRADING PRICES FOR COMMON STOCK
Although the Common Stock and IPO Warrants are quoted on NASDAQ/NMS, no
assurance can be given that an active public market in such securities will be
sustained. The exercise price of each of the IPO Warrants, Representative's
Warrants, and Representative's IPO Warrants, and of the Investor Warrants, was
arbitrarily determined by negotiation between the Company and the
Representative, and the investors in the Private Placement, respectively. Such
exercise prices do not necessarily bear any relationship to the Company's
assets, book value, total revenue or other established criteria of value, and
should not be considered indicative of the actual value of the Common Stock. The
trading prices of the Common Stock could be subject to wide fluctuations in
response to the Company's operating results, announcements by the Company or
others of developments affecting the Company or its competitors or customers and
other events or factors. In addition, the stock market has experienced extreme
price and volume fluctuations in recent years, particularly in the securities of
smaller technology companies. These fluctuations have had a substantial effect
on the market prices for many companies, often unrelated to the operating
performances of the specific companies, and similar events in the future may
adversely affect the market prices of the Common Stock.
-11-
ANTI-TAKEOVER MEASURES; POSSIBLE ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER
PROVISIONS; POSSIBLE ISSUANCE OF PREFERRED STOCK
The Company, as a Delaware corporation, is subject to the General
Corporation Law of the State of Delaware, including Section 203, an
anti-takeover law enacted in 1988. In general, the law restricts the ability of
a public Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder. As a result,
potential acquirors of the Company may be discouraged from attempting to effect
an acquisition transaction with the Company, thereby possibly depriving holders
of the Company's securities of certain opportunities to sell or otherwise
dispose of such securities at above-market prices pursuant to such transactions.
As a result of the application of Section 203 and certain provisions in the
Company's Certificate of Incorporation and By-laws, as amended, potential
acquirors of the Company may find it more difficult or be discouraged from
attempting to effect an acquisition transaction with the Company, thereby
possibly depriving holders of the Company's securities of certain opportunities
to sell or otherwise dispose of such securities at above-market prices pursuant
to such transactions.
The Company is authorized to issue up to 1,000,000 shares of Preferred
Stock, $.01 par value per share. The issuance of any Preferred Stock could
affect the rights of the holders of Common Stock, and therefore, reduce the
value of the Common Stock. In particular, specific rights granted to future
holders of Preferred Stock could be used to restrict the Company's ability to
merge with or sell its assets to a third party, thereby preserving control of
the Company by present owners and preventing holders of Common Stock from
realizing a premium on their shares and may adversely affect the voting power of
holders of the Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
As of May 1, 1996 the Company had 4,431,195 shares of Common Stock
outstanding, of which 3,075,787 shares are freely tradeable and 1,101,703 shares
which are owned by certain of the Company's executive officers and directors are
currently eligible for sale under Rule 144 ("Rule 144") of the Securities Act of
1933, as amended (the "Securities Act"). The 1,101,703 shares of Common Stock
owned by certain of the Company's executive officers and directors are subject
to the volume trading limitations under Rule 144.
Ordinarily, under Rule 144, a person holding restricted securities for
a period of two years may, every three months, sell in ordinary brokerage
transactions or in transactions directly with a market maker an amount equal to
the greater of one percent of the Company's then outstanding Common Stock or the
average weekly trading volume during the four calendar weeks prior to such sale.
Rule 144 also permits sales by a person who is not an affiliate of the Company
and who has satisfied a three-year holding period to sell without any quantity
limitation. Future sales under Rule 144 or Rule 701 may have a depressive effect
on the market price of the Common Stock should a public market develop for such
stock.
-12-
The Company has reserved an aggregate of 716,279 shares of Common Stock
for issuance to employees, officers, directors and consultants pursuant to its
1987 Stock Option Plan, 1993 Stock Option Plan and 1994 Formula Stock Option
Plan (the "Plans"). To date, options to purchase 789,667 shares have been
granted under the Plans, of which 159,630 have been exercised and 139,237 have
been cancelled. The Company has also reserved for issuance (i) 977,500 shares of
Common Stock underlying the IPO Warrants; (ii) 255,000 shares of Common Stock
underlying the Representative's Warrants and the Representative's IPO Warrants
underlying the Representative's Warrants; and (iii) 34,126 shares of Common
Stock underlying the Investor Warrants. All shares underlying the Company's
Plans are registered and, upon exercise, are freely tradeable subject to volume
trading limitations under Rule 144. The existence of outstanding options and
Warrants may affect the price at which the Company's Common Stock may be sold.
In addition, the exercise of any such options or Warrants may further dilute the
net tangible book value of the Common Stock, and the holders of such options and
Warrants may exercise them at a time when the Company would otherwise be able to
obtain additional equity capital on terms more favorable to the Company.
LIMITATION ON OFFICERS' AND DIRECTORS' LIABILITIES UNDER DELAWARE LAW.
Pursuant to the Company's Certificate of Incorporation, as amended, as
authorized under applicable Delaware law, directors of the Company are not
liable for monetary damages for breach of fiduciary duty, except in connection
with a breach of the duty of loyalty, for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, for dividend
payments or stock repurchases illegal under Delaware law or for any transaction
in which a director has derived an improper personal benefit. In addition, the
Company's bylaws provide that the Company must indemnify its officers and
directors to the fullest extent permitted by Delaware law for all expenses
incurred in the settlement of any actions against such persons in connection
with their having served as officers or directors of the Company.
POSSIBLE RESTRICTIONS ON MARKET MAKING ACTIVITIES IN THE COMPANY'S SECURITIES.
The Representative, Josephthal, Lyon & Ross Incorporated
("Josephthal"), currently makes a market in the Company's securities. Rule 10b-6
under the Exchange Act, will prohibit Josephthal from engaging in any
market-making activities with regard to the Company's securities for the period
from nine business days (or such other applicable period as Rule 10b-6 may
provide) prior to any solicitation by Josephthal of the exercise of IPO Warrants
until the later of the termination of such solicitation activity or the
termination (by waiver or otherwise) of any right that Josephthal may have to
receive a fee for the exercise of IPO Warrants following such solicitation. As a
result, Josephthal may be unable to provide a market for the Company's
securities during certain periods while the IPO Warrants are exercisable. Any
temporary cessation of such market-making activities could have an adverse
effect on the market prices of the Company's securities. In addition, under
applicable rules and regulations under the Exchange Act, any person engaged in
the distribution of the Selling Securityholder securities may not simultaneously
engage in market making activities with respect to any securities of the Company
for a period of at least two (and possibly nine) business days prior to the
commencement of such distribution. Accordingly, in the event such a firm is
engaged in a distribution of the Selling Securityholder securities, such firm
will not be able to make a market in the Company's securities during the
applicable restrictive period. Any temporary cessation of such
-13-
market making activities could have an adverse effect on the market price of the
Company's securities.
CURRENT PROSPECTUS AND STATE REGISTRATION REQUIRED TO EXERCISE WARRANTS
Holders of the Warrants will not be able to exercise them unless at the
time of exercise a current prospectus under the Securities Act, covering the
shares of Common Stock issuable upon exercise of the Warrants is effective and
such shares have been qualified or are exempt from qualification under the
applicable securities or "blue sky" laws of the states in which the various
holders of the Warrants then reside. Although the Company has undertaken to use
reasonable efforts to maintain the effectiveness of a current prospectus
covering the Common Stock underlying the Warrants, no assurance can be given
that the Company will be able to do so. The value of the Warrants may be greatly
reduced if a current prospectus covering the Common Stock issuable upon the
exercise of the Warrants is not kept effective or if such Common Stock is not
qualified or exempt from qualification in the states in which the holders of the
Warrants then reside.
NO DIVIDENDS
The Company has not paid dividends to its stockholders since its
inception and does not plan to pay dividends in the foreseeable future. The
Company's current credit and term loan facility arrangements restrict the
Company's ability to declare cash dividends without the bank's prior written
consent. The Company intends to reinvest earnings, if any, in the development
and expansion of its business. Any declaration of dividends will be at the
election of the Board of Directors and will depend upon the earnings, capital
requirements and financial position of the Company, general economic conditions,
bank lending requirements, and other pertinent factors.
-14-
USE OF PROCEEDS
The Company would receive approximately $18,240,000 in net proceeds if
all of the IPO Warrants, Representative's Warrants, Representative's IPO
Warrants and Investor Warrants were exercised. See "Plan of Distribution." The
Company currently intends to use the net proceeds from such exercises to
purchase inventory, finance account receivables, fund research and development,
expand facilities, fund acquisitions, and for other working capital and general
corporate purposes. Depending on the Company's circumstances at the time any or
all of the net proceeds from such exercises become available, if at all, the
Company reserves the right to use such net proceeds for purposes other than
those set forth above.
SELLING SECURITYHOLDERS
The shares of Common Stock and Representative's IPO Warrants are being
registered to permit the issuance by the Company of such securities upon the
exercise of warrants that were issued in the IPO and in the Private Placement.
Such securities are being registered at the expense of the Company, pursuant to
the terms of the underwriting and Private Placement agreements, exclusive of
fees and expenses of the Selling Securityholders' attorneys or other
representatives and selling or brokerage commissions, if any, as the result of
the subsequent resale of such securities. The period of sale of such securities
by the Company may occur over an extended period of time. Many of the holders of
the Representative's Warrants and Representative's IPO Warrants served as
underwriters in the Company's IPO in November 1993.
Although the shares of Common Stock and Representative's IPO Warrants
covered by this Prospectus have not been specifically registered for resale by
the Selling Securityholders, once registered such securities may be resold by
the Selling Securityholders and/or their registered representatives from time to
time at prices to be determined at the time of such sale. The Selling
Securityholders are not restricted as to the price or prices at which they may
resell their securities and sales of such securities at less than the market
price may depress the market price of the Company's Common Stock and IPO
Warrants. It is anticipated that the resale of the securities being offered
hereby when made, will be made through customary channels either through
broker-dealers acting as agents or brokers for the seller, or through
broker-dealers acting as principals, who may then resell the shares in the
over-the-counter market, or at private sales in the over-the-counter market or
otherwise, at negotiated prices related to prevailing market prices at the time
of the sales, or by a combination of such methods. Thus, the period for resale
of such securities by the Selling Securityholders may occur over an extended
period of time.
-15-
The following table sets forth, as of May 1, 1996, the number of
securities beneficially owned prior to the Offering, the number of securities
offered hereby, and the number of securities beneficially owned after the
Offering (assuming sale of all securities being offered hereby) by the Selling
Securityholders.
<TABLE>
<CAPTION>
Securities Securities
Material Owned Beneficially
Relationship Beneficially Securities Owned After Percentage
Selling with the Prior to Being Completion of After
Securityholder(1) Company Offering Offered Offering Offering
- ----------------- ------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
IPO Warrant Holders (1) 977,500 Shares 977,000 Shares 0 *
Josephthal Lyon (2) 215,377 Shares 215,377 Shares 0 *
& Ross Incorporated 170,000 Rep. 170,000 Rep. 0 *
IPO Warrants IPO Warrants
Investors (3) 34,126 Shares 34,126 Shares 0 *
</TABLE>
____________
* Less than one percent.
(1) The Holders own the redeemable warrants (the "IPO Warrants") which were
issued in the Company's initial public offering in November 1993 (the
"IPO"). Two IPO Warrants entitle the Holder to purchase one share of
Common Stock at an exercise price of $15.05 per share.
(2) Josephthal Lyon & Ross Incorporated ("JLR") was the representative of
the underwriters in the Company's IPO. Certain of these warrants have
subsequently been transferred by JLR to its employees and other members
of the underwriting group which participated in the Company's IPO.
(3) The Investors purchased warrants from the Company in the Company's
private placement completed in September 1992. Each warrant entitles
the Investor to purchase one share of Common Stock at an exercise price
of $9.60 per share.
-16-
PLAN OF DISTRIBUTION
The shares of Common Stock and IPO Warrants covered hereby and
underlying the Warrants may be offered and sold from time to time after exercise
of such Warrants by their respective holders. To exercise an IPO Warrant the
holder must pay the exercise price of $15.05 to the Company and transfer two IPO
Warrants to the Company in exchange for one share of Common Stock. To exercise
the Representative's Warrants, the holder must pay the exercise price of
$15.5875 per share of Common Stock and $.145 per Representative's IPO Warrant
underlying such Representative's Warrant, and transfer one Representative's
Warrant to the Company in exchange for one share of Common Stock and one
Representative's IPO Warrant. The Representative's IPO Warrants issuable upon
exercise of the Representative's Warrants are then exercisable on the same terms
as the IPO Warrants described above. To exercise the Investor Warrants, the
Holder must pay the exercise price of $9.60 to the Company and transfer one
Investor Warrant to the Company in exchange for one share of Common Stock.
The shares of Common Stock and Representative's IPO Warrants covered by
this Prospectus and issued by the Company may be subsequently offered and resold
from time to time by the Selling Securityholders, or by pledgees, donees,
transferees or other successors in interest, in one or more transactions on
NASDAQ/NMS, or otherwise at prices and at terms then prevailing or at prices
related to the then current market price, or in negotiated transactions. The
Selling Securityholders will act independently of the Company in making
decisions with respect to such offers and resales. The shares of Common Stock
and Representative's IPO Warrants may be resold by one or more of the following:
(a) a block trade in which the broker or dealer so engaged will attempt to sell
the shares of Common Stock or Representative's IPO Warrants as agent but may
position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker or dealer as principal and resale by such
broker or dealer for its account pursuant to this prospectus; and (c) ordinary
brokerage transactions and transactions in which the broker solicits purchasers.
Thus, the period of distribution of such shares of Common Stock and
Representative's IPO Warrants may occur over an extended period of time. The
Company is paying all of the other expenses of registering the securities
offered hereby under the Securities Act estimated to be $17,000 for filing,
legal, accounting and miscellaneous fees and expenses, and has agreed to
indemnify the Selling Securityholders against certain liabilities, including
liabilities under the Securities Act. In effecting sales, broker-dealers engaged
by the Selling Securityholders may arrange for other broker-dealers to
participate. Usual and customary or specifically negotiated brokerage fees or
commissions may be paid by the Selling Securityholders in connection with such
sales. The Company will not receive any proceeds from any sales of the Common
Stock and IPO Warrants by the Selling Securityholders, but will receive the
proceeds generated upon exercise of any of the Warrants.
In offering the securities, the Selling Securityholders and any
broker-dealers and any other participating broker-dealers who execute sales for
the Selling Securityholders may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales, and any profits
realized by the Selling Securityholders and the compensation of such
broker-dealer may be deemed to be underwriting discounts and commissions. In
addition, any shares covered by this Prospectus
-17-
which qualify for sale pursuant to Rule 144 or Rule 701 or any other exemption
may be sold under Rule 144 or Rule 701 or any other exemption rather than
pursuant to this Prospectus.
The Company has advised the Selling Securityholders that during such
time as they may be engaged in a distribution of securities included herein they
are required to comply with Rules 10b-6 and 10b-7 under the Exchange Act (as
those Rules are described in more detail below) and, in connection therewith,
that they may not engage in any stabilization activity, except as permitted
under the Exchange Act, are required to furnish each broker-dealer through which
Common Stock and IPO Warrants included herein may be offered copies of this
Prospectus, and may not bid for or purchase any securities of the Company or
attempt to induce any person to purchase any securities except as permitted
under the Exchange Act.
Rule 10b-6 under the Exchange Act prohibits, with certain exceptions,
participants in a distribution from bidding for or purchasing, for an account in
which the participant has a beneficial interest, any of the securities that are
the subject of the distribution. Rule 10b-7 governs bids and purchases made in
order to stabilize the price of a security in connection with a distribution of
the security.
TRANSFER AGENT
The transfer agent for the Company's Common Stock and IPO Warrants is
Continental Stock Transfer and Trust Company of 2 Broadway, New York, New York
10004.
LEGAL MATTERS
Certain legal matters relating to the Common Stock offered hereby will
be passed upon for the Company by O'Connor, Broude & Aronson, 950 Winter Street,
Waltham, Massachusetts 02154. Certain attorneys in the firm of O'Connor, Broude
& Aronson own an aggregate of 1,181 shares of the Company's Common Stock and
2,600 Warrants to purchase an aggregate of 1,300 shares of Common Stock.
EXPERTS
The consolidated financial statements of the Company appearing in the
Company's Annual Report on Form 10-K for the year ended July 1, 1995 have been
audited by KPMG Peat Marwick LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
-18-
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
Delaware General Corporation Law, Section 102(b)(7), enables a
corporation in its original certificate of incorporation or an amendment thereto
validly approved by stockholders to eliminate or limit personal liability of
members of its Board of Directors for violations of a director's fiduciary duty
of care. The elimination or limitation, however, shall not apply where there has
been a breach of the duty of loyalty, failure to act in good faith, engaging in
intentional misconduct or knowingly violating a law, paying a dividend or
approving a stock repurchase which is deemed illegal or obtaining an improper
personal benefit. Article 8 of the Company's Certificate of Incorporation, as
amended, provides the following:
A director of this Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware General Corporation Law, or (iv) for
any transaction from which the Director derived an improper personal
benefit.
Article 12 of the Company's Certificate of Incorporation, as amended,
provides the following:
A. Right to Indemnification.
Each person who was or is made a party or is threatened to be
made a party to or is involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative
("proceeding"), by reason of the fact that he or she, or a person for
whom he or she is the legal representative, is or was a director or
officer of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans,
whether the basis of such proceeding is alleged action in an official
capacity as a director, officer, employee or agent or in any other
capacity while serving as a director, officer, employee or agent, shall
be indemnified and held harmless by the Corporation to the fullest
extent authorized by the General Corporation Law of the State of
Delaware, as the same now exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than
said law permitted the Corporation to provide prior to such amendment),
against all expenses, liability and loss (including attorney's fees,
judgments,
-19-
<PAGE>
fines, liability under federal tax laws or the Employee Retirement
Income Security Act of 1974, as amended from time to time, with respect
to employee benefit plans, and amounts to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith;
provided, however, that the Corporation shall indemnify any such person
seeking indemnity in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification referred to in the preceding sentence shall be a
contract right and shall include the right to be paid, by the
Corporation, expenses incurred in defending any such proceeding, in
advance of its final disposition; provided, however, that the payment
of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in
which service was or is rendered by such person while a director or
officer, including, without limitation, service to any employee benefit
plan) in advance of the final disposition of such proceeding, shall be
made only upon delivery to the Corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced if
it should be determined ultimately that such director or officer is not
entitled to be indemnified under this Article 12 or otherwise.
B. Right of Claimant to Bring Suit.
If a claim under Part A of this Article 12 is not paid in full
by the Corporation within ninety days after a written claim has been
received by the Corporation, the claimant may at any time thereafter
bring suit against the Corporation to recover the unpaid amount of the
claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It
shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in
advance of its final disposition where the required undertaking has
been tendered to the Corporation) that the Claimant has not met the
standards of conduct which make it permissible under the General
Corporation Law of the State of Delaware for the Corporation to
indemnify the claimant for the amount claimed, but the burden of
providing such defense shall be on the Corporation. Neither the failure
of the Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is
proper in the circumstance because he or she has met the applicable
standard of conduct set forth in said law, nor an actual determination
by the Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) that the claimant had not met such
applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant had not met the applicable
standard of conduct.
C. Non-Exclusivity of Rights.
The rights conferred on any person by Parts A and B of this
Article 12 shall not be exclusive of any other right which such person
may have or hereafter acquire under any
-20-
statute, provision of this Certificate of Incorporation, by-law,
agreement, vote of stockholders or disinterested directors or
otherwise.
D. Insurance.
The Corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, including any
employee benefit plan, against any liability asserted against any such
person and incurred by such person in any such capacity, or arising out
of such person's status as such, whether or not the Corporation would
have the power to indemnify such person against such liability under
the General Corporation Law of the State of Delaware.
Delaware General Corporation Law, Section 145, permits a corporation
organized under Delaware law to indemnify directors and officers with respect to
any matter in which the director or officer acted in good faith and in a manner
he reasonably believed to be not opposed to the best interests of the Company,
and, with respect to any criminal action, had reasonable cause to believe his
conduct was lawful. Article VII of the Bylaws of the Company, as amended,
provides as follows:
Reference is made to Section 145 and any other relevant
provisions of the General Corporation Law of the State of Delaware.
Particular reference is made to the class of persons, hereinafter
called "Indemnitees," who may be indemnified by a Delaware corporation
pursuant to the provisions of such Section 145, namely, any person, or
the heirs, executors, or administrators of such person, who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, by reason of the fact that such
person is or was a director, officer, employee, or agent of such
corporation or is or was serving at the request of such corporation as
a director, officer, employee, or agent of such corporation or is or
was serving at the request of such corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust, or other enterprise. The Corporation shall, and is hereby
obligated to, indemnify the Indemnitees, and each of them, in each and
every situation where the Corporation is obligated to make such
indemnification pursuant to the aforesaid statutory provisions. The
Corporation shall indemnify the Indemnitees, and each of them, in each
and every situation where, under the aforesaid statutory provisions,
the Corporation is not obligated, but is nevertheless permitted or
empowered, to make such indemnification, it being understood that,
before making such indemnification, with respect to any situation
covered under this sentence, (i) the Corporation shall promptly make or
cause to be made, by any of the methods referred to in Subsection (d)
of such Section 145, a determination as to whether each Indemnitee
acted in good faith and in a manner he reasonably believed to be in, or
not opposed to, the best interests of the Corporation, and, in the case
of any criminal
-21-
action or proceeding, had no reasonable cause to believe that his
conduct was unlawful, and (ii) that no such indemnification shall be
made unless it is determined that such Indemnitee acted in good faith
and in a manner he reasonably believed to be in, or not opposed to, the
best interests of the Corporation, and, in the case of any criminal
action or proceeding, had no reasonable cause to believe that his
conduct was unlawful.
-22-
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No dealer, salesman or any other person has been authorized in connection with
this Offering to give any information or to make any representations other than
those contained in this Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy any of the securities offered hereby in any jurisdiction in
which such offer or solicitation is not authorized or in which the person making
such offer or solicitation is not qualified to do so or to any person to whom it
is unlawful to make such an offer or solicitation. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create an
implication that there has been no change in the circumstances of the Company or
the facts herein set forth since the date hereof.
__________
TABLE OF CONTENTS
PAGE
----
Available Information ........................................................2
Incorporation of Certain Information by Reference ............................3
Recent Developments ..........................................................4
The Company ..................................................................5
Risk Factors ................... .............................................7
Use of Proceeds ............... .............................................15
Selling Securityholders .....................................................15
Plan of Distribution ........ ...............................................17
Transfer Agent ..............................................................18
Legal Matters ...............................................................18
Experts .....................................................................18
Indemnification .............................................................19
__________
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================================================================================
1,266,626 SHARES
OF COMMON STOCK,
$.01 PAR VALUE PER SHARE, AND
170,000 WARRANTS
APPLIED SCIENCE AND TECHNOLOGY, INC.
__________
PROSPECTUS
__________
, 1996
================================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemization of all expenses (subject to future
contingencies) incurred or expected to be incurred by the Company in connection
with the issuance and distribution of the securities being offered hereby other
than underwriting discounts and commissions (items marked with an asterisk (*)
represent estimated expenses):
Registration Fee (SEC).......................................... $ 431.59
Registration Fee (NASD)......................................... $ 625.16
Transfer Agent's Fees*.......................................... $ 500.00
Printing Costs*................................................. $ 1,000.00
Legal Fees*..................................................... $ 13,000.00
Accounting Fees*................................................ $ 1,200.00
Miscellaneous*.................................................. $ 243.25
-----------
TOTAL*...................................................... $ 17,000.00
===========
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
See "Indemnification" contained in Part I hereof, which is incorporated
by reference.
ITEM 16. EXHIBITS
(a) The following is a list of exhibits filed herewith as part of this
Registration Statement:
Exhibit
No. Title
---- -----
5 Opinion letter of O'Connor, Broude & Aronson as to legality of shares
being registered.
23a Consent of KPMG Peat Marwick LLP.
23b Consent of O'Connor, Broude & Aronson (contained in Opinion filed as
Exhibit 5).
II-1
(b) The following exhibits were filed as part of the Company's Form
SB-2 Registration Statement (No. 33-69098-B) declared effective by the
Commission on November 10, 1993 and are incorporated herein by reference:
Exhibit
No. Title
---- -----
3a Certificate of Incorporation, as amended, dated July 1, 1992.
3b Certificate of Amendment of Certificate of Incorporation, dated
September 1, 1993.
3c Bylaws, as amended.
4a Specimen Common Stock Certificate.
4b Form of Warrant Agreement, including Form of Warrant Certificate.
4c Form of Representative's Warrant Agreement, including Form of
Representative's Warrant Certificate.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) For the purpose of determining any liability under the
Securities Act, to treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of the securities at that
time as the initial bona fide offering.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold at the
termination of the Offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securitiesoffered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II-2
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Woburn, Commonwealth of
Massachusetts, on May 8, 1996.
APPLIED SCIENCE AND TECHNOLOGY, INC.
By:/s/ Richard S. Post
-------------------------------
Richard S. Post
President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to this Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Capacity Date
- ---- -------- ----
<S> <C> <C>
/s/ Richard S. Post Chairman of the Board, May 8, 1996
- ---------------------- Chief Executive Officer
Richard S. Post and President (principal
executive officer)
/s/ John M. Tarrh Chief Financial Officer, May 8, 1996
- ---------------------- Senior Vice President of
John M. Tarrh Finance and Director
(principal financial
and accounting officer)
/s/ Donald K. Smith Senior Vice President of May 8, 1996
- ---------------------- Advanced Technology
Donald K. Smith and Director
/s/ Robert R. Anderson Director May 8, 1996
- ----------------------
Robert R. Anderson
/s/ Michel de Beaumont Director May 8, 1996
- ----------------------
Michel de Beaumont
/s/ John R. Bertucci Director May 8, 1996
- ----------------------
John R. Bertucci
/s/ Hans Jochen-Kahl Director May 8, 1996
- ----------------------
Hans Jochen-Kahl
</TABLE>
II-4
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED PAGE
NO. TITLE NUMBER
---- ----- ------
<S> <C> <C>
5 Opinion letter of O'Connor, Broude &
Aronson as to legality of shares being
registered.
23a Consent of KPMG Peat Marwick LLP.
23b Consent of O'Connor, Broude & Aronson
(contained in Opinion filed as Exhibit 5).
</TABLE>
May 9, 1996
Board of Directors
Applied Science and Technology, Inc.
35 Cabot Road
Woburn, Massachusetts 01801-1003
Ladies and Gentlemen:
This firm has represented Applied Science and Technology, Inc., a
Delaware corporation (hereinafter called the "Corporation"), in connection with
the filing of the Registration Statement described below.
In our capacity as counsel to the Corporation, we are familiar with the
Certificate of Incorporation, as amended, and the By-Laws of the Corporation. We
are also familiar with the corporate proceedings taken by the Corporation in
connection with the preparation and filing of a Registration Statement on Form
S-3 (the "Registration Statement") covering the registration of 1,266,626 shares
of common stock, $.01 par value per share (the "Common Stock").
Based upon the foregoing, we are of the opinion that:
1. The Corporation is duly organized and validly existing under
the laws of the State of Delaware.
2. The 1,266,626 shares of Common Stock to be registered have
been duly authorized, and, when issued and paid for in
accordance with their terms, will be legally issued, fully
paid and non-assessable.
<PAGE>
Board of Directors
Applied Science and Technology, Inc.
May 8, 1996
Page 2
This opinion is provided solely for the benefit of the addressee hereof
and is not to be relied upon by any other person or party, without prior
notification to, and the consent of, this firm. Nevertheless, we hereby consent
to the use of this opinion and to all references to our firm in or made part of
the Registration Statement and any amendments thereto.
Very truly yours,
O'CONNOR, BROUDE & ARONSON
By: /s/ Neil H. Aronson
------------------------
Neil H. Aronson
NHA:EPG:anr
c: Richard S. Post, Ph.D., President
ACCOUNTANT'S CONSENT
The Board of Directors
Applied Science and Technology, Inc.:
We consent to the use of our report dated July 28, 1995, relating to the
consolidated financial statements of Applied Science and Technology, Inc., as of
December 31, 1995 and 1994 incorporated herein by reference and to the reference
to our firm under the heading "Experts" in the registration statement.
/s/ KPMG Peat Marwick LLP
Boston, Massachusetts
May 8, 1996
