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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended April 28, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to _____________
Commission file number 20-8969
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NOVAMETRIX MEDICAL SYSTEMS INC.
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(Name of small business issuer in its charter)
Delaware 06-0977422
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Barnes Industrial Park Road
Wallingford, Connecticut 06492
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(Address of principal executive offices) (Zip Code)
203-265-7701
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(Issuer's telephone number, including area code)
Securities registered under Section 12(b) of the Exchange Act:
Name of each exchange
Title of each class on which registered
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None None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock,
$.01 par value Class A Warrants Class B Warrants
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(Title of class) (Title of class) (Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
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Check if there is no disclosure of delinquent filers pursuant
to Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ ]
Page 1 of pages
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Exhibit Index at page .
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State issuer's revenues for its most recent fiscal year.
$25,274,168
State the aggregate market value of the voting stock held by
non-affiliates, computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date
within 60 days prior to the date of filing.
Aggregate market value
as of June 28, 1996 ..............$36,492,548
State the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $.01 par value,
as of June 28, 1996 ................6,647,512 shares
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the documents, all or portions of which are
incorporated by reference herein, and the Part of the Form 10-KSB into which
the document is incorporated:
None.
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ITEM 1. BUSINESS.
GENERAL
Organized in 1978, the Company is engaged in the business of
designing, developing, manufacturing and marketing monitors and sensors which
provide continuous and non-invasive measurements of a patient's blood gas
levels (oxygen and carbon dioxide) and respiratory mechanics (lung pressure,
flow and volume). The Company's current product line consists of the
following:
o Capnographs -- monitors which measure the level of exhaled
carbon dioxide.
o Pulse Oximeters -- monitors which measure arterial blood
oxygen saturation levels and pulse rates.
o Transcutaneous Blood Gas Monitors -- monitors which measure
oxygen and carbon dioxide levels through the skin.
o Respiratory Mechanics Monitor -- a monitor which measures
pressure, flow and volume in a patient's airway and lungs.
o Reusable and disposable sensors and adapters, related
accessories and replacement parts.
BLOOD GAS MONITORS
Levels of oxygen and carbon dioxide in the blood are important
indicators of the condition of critically ill or injured patients. These
levels are particularly important to doctors, nurses, therapists and other
clinicians during anesthesia in the operating room, the assessment of a patient
in the emergency room, the monitoring of a patient in the intensive care unit
and recovery room and throughout respiratory care applications. Healthy people
have a normal range of oxygen and carbon dioxide levels in their blood, lungs
and other tissue. Also, depending on a person's size and age, there is a range
of normal airway and lung pressure, flow and volume levels. By continuously
monitoring these ranges, a change in a patient's status can be detected at an
early stage and modified before serious deterioration in a patient's condition
occurs. In addition, if a patient's blood gas levels or respiratory mechanics
are outside their normal ranges, continuous monitoring provides healthcare
professionals with important information concerning the progress of the medical
treatment undertaken to bring them back within normal ranges.
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Previously, the only methods of determining the body's oxygen and
carbon dioxide levels involved invasive techniques of withdrawing blood samples
from a patient's artery and waiting for laboratory analysis of the samples.
The Company's products offer healthcare providers the alternative of
non-invasive, continuous and immediate measurement of oxygen and carbon
dioxide. The Company's blood gas monitoring products utilize three different
technologies, each of which is suitable for different applications.
CAPNOGRAPH MONITORS. The Company's capnographs (or end-tidal carbon
dioxide monitors) provide a continuous, non-invasive measurement and display of
the amount of carbon dioxide in each breath exhaled by the patient.
Clinically, end-tidal carbon dioxide levels have been correlated to a patient's
arterial blood carbon dioxide levels. Measurement of these levels provides a
simple, non-invasive method of estimating the carbon dioxide levels of the
patient. Applications for capnographs include (i) intubation verification, the
verification of the introduction of an airway tube into the trachea (air tube)
rather than the esophagus (food tube) and the verification of an open and
unobstructed airway; (ii) extubation detection, the disclosure of the
accidental dislodging from the trachea of an airway tube; (iii) ventilation
management through the disclosure of ventilator malfunctions and the proper
adjustment of mechanical ventilation to match a patient's condition and needs;
and (iv) verification of the effectiveness of cardio-pulmonary resuscitation
(CPR).
The Company's capnographs utilize a form of infrared spectrometry (a
method of analyzing gas content by measuring the amount of infrared energy
absorbed) developed by the Company to measure levels of expired carbon dioxide
throughout the patient's respiratory cycle. These monitors provide both a
graphical and digital display of carbon dioxide levels and respiratory rate.
The reliability and accuracy of capnography have made its use a rapid indicator
of proper and continuous intubation, obstructions in the airway and pulmonary
efficiency in eliminating carbon dioxide. In addition, end-tidal carbon
dioxide and respiratory rate measurements facilitate proper and cost efficient
ventilator use. In recognition of its accurate measurement of clinically
significant facts, as well as the added degree of safety that it affords
patients, capnography has been recommended for use in the operating room by the
American Society of Anesthesiologists and in the intensive care unit by the
Society of Critical Care Medicine.
The Company has two bedside capnographs which are portable devices:
the CAPNOGARD(TM), a lightweight capnograph
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(measuring approximately 3" high, 9" wide and 8" deep, and weighing 8 pounds),
and the CO2SMO(TM), a combined capnograph and pulse oximeter which is the same
size as the CAPNOGARD(TM). These "mainstream" (on the airway) capnographs are
designed to take measurements at the patient's airway through infrared
measurement as compared to "sidestream" measurements of exhaled breath which
involves the drawing of samples through tubes connected to bedside monitors and
are susceptible to moisture and other secretion contaminants. Both models
utilize a new generation, durable and solid-state sensor developed by the
Company. These monitors also permit sampling on non-intubated patients. The
CAPNOGARD(TM) has a list sales price of approximately $7,500 and the CO2SMO(TM)
has a list sales price of approximately $9,500.
PULSE OXIMETERS. The Company's pulse oximeters provide a continuous
and non-invasive measurement and display of pulse rate and arterial blood
oxygen saturation through the detection and measurement of infrared light
absorbed by hemoglobin in the blood. Reusable finger and multi-position
sensors (Y-Sensor(TM)) are available for adult, pediatric and neonatal
applications and eliminate the use of costly disposable sensors. Pulse
oximeters have been clinically demonstrated as safe, accurate and
cost-effective for the determination and trending of levels of blood oxygen
saturation and pulse rates. Applications for these monitors are widespread
since the level of oxygen in a patient's blood can be as important a vital sign
of a patient's condition as the patient's temperature, blood pressure,
respiratory rate and electrocardiogram. Pulse oximetry is used in many
departments of the hospital, including the operating room by anesthesiologists,
emergency rooms and intensive care units by nurses and respiratory therapists
and neonatal intensive care units by neonatologists. Additional applications
include inter- and intra-hospital transport situations and clinical
applications in surgical centers, doctors' offices and clinics during
outpatient procedures.
The Company has a family of pulse oximeters designed to meet the
individual needs of clinicians in a variety of settings. Each oximeter
utilizes the Company's reusable Superbright(TM) sensors, which provide safe and
accurate results on all types of patients, including neonates (an infant less
than 28 days old) and poorly perfused patients (patients with insufficient
blood flow). The Company's full-featured oximeter, the OXYPLETH(TM) provides
high visibility of the plethysmographic waveform (a graphic display of arterial
pulse, also known as a plethysmogram) through the use of digital technology
combined with advanced software developed by the Company. The Model 515B (and
Model 515C with plethysmogram) pulse oximeters utilize the
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same basic technology and software as our more expensive model to provide the
same oxygen saturation and pulse rate information but with fewer available
added features.
This family of pulse oximeters also includes a battery operated
handheld pulse oximeter, the SP02TX(TM). Measuring approximately 6" high, 4"
wide and 1 1/2" deep and weighing less than 1 pound, this monitor's lightweight
design and portability permits wide applications such as use in emergency
transport situations, doctors' offices, clinics during outpatient procedures
and performance of spot checks on patients in all areas of the hospital.
The Oxypleth has a list sales price of approximately $3,000. The
Model 515B, Model 515C and SP02TX(TM) have list sales prices of approximately
$2,000, $2,200 and $1,000, respectively.
TRANSCUTANEOUS BLOOD GAS MONITORS. The Company's transcutaneous
(through the skin) blood gas monitor provides continuous and non-invasive
measurements of oxygen and carbon dioxide levels in the skin tissue of
patients. This monitor utilizes dual parameter sensors attached to the
patient's skin surface to measure the amount of oxygen and carbon dioxide
diffusing through the skin. Based upon the magnitude of the diffusion of the
blood gas molecules, the monitor converts the sensor readings into a value
corresponding to the oxygen or carbon dioxide at the patient's skin surface and
displays the information on the monitor. Premature and other critically ill
newborn infants are the primary patients who benefit from the use of
transcutaneous monitoring. In view of their limited blood supply, frequent
invasive blood sampling has been recognized as traumatic and unsatisfactory for
these patients. The Company intends to continue to develop and enhance its
transcutaneous blood gas monitor for neonatal and adult use in intensive care
and vascular medicine applications.
The Company's Model 840 transcutaneous monitor utilizes a simple
menu-driven system which takes the user through automatic calibration
procedures, histogram (graphical representation of data collected over time)
and printout options. This monitor, which features a bright, easy-to-read,
vacuum fluorescent digital display ("VFD") has a list sales price of
approximately $6,500 to $8,500 depending on its configuration.
RESPIRATORY MECHANICS MONITOR
The Company's respiratory mechanics monitor, the VenTrak(TM) Model
1550, provides continuous and non-invasive measurements of the pressure, flow
and volume in a patient's
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airway, as well as measurements of other pulmonary mechanics parameters.
Optimal carbon dioxide elimination and arterial oxygenation during mechanical
ventilation require the clinical management of the pressure, flow and volume of
airway gases being administered. Applications for this monitor include the
clinical management of the proper pressure and flow of airway gases being
delivered to a ventilated patient's lungs, allowing therapists to wean a
patient from expensive mechanical ventilation to spontaneous breathing at the
clinically appropriate and most cost-effective time. The Model 1550, when
combined with Novametrix's capnography and airway flow monitoring technologies,
provides continuous measurements of pulmonary dead space and carbon dioxide
production (SBCO2 - single breath CO2). The Company believes that deadspace
and CO2 production are parameters that have, heretofore, been unavailable in a
bedside monitor. The real-time knowledge of pulmonary deadspace, the portion
of a patient's lungs which do not participate in gas exchange, concurrently
with CO2 production, the volume of CO2 exhaled by the patient, and the impact
of each parameter by ventilator changes, provides the bedside clinician with
very important feedback to optimize the patient's care. Thus, use of the Model
1550 enhances patient care by minimizing the trauma, length of stay and the
costs associated with mechanical ventilation.
Respiratory therapy and critical care departments with patients
requiring mechanical ventilation represent the primary users of the Company's
respiratory mechanics monitor.
The VenTrak(TM) monitor (excluding the capnograph) has a list sales
price of approximately $9,400 to $13,000 depending on its configuration.
The Company also maintains the exclusive rights for the commercial
manufacture and marketing of a family of disposable airway flow sensors. This
patented technology provides the Company with lower manufacturing costs than
previous types of flow sensors and improves the accuracy of information
currently obtainable from these monitors.
SALES, MARKETING AND CUSTOMERS
The Company markets its products domestically and internationally
directly through salespersons and outside distributors to its customers, most
of which are hospitals. All of the Company's blood gas and respiratory
mechanics products are marketed primarily to hospitals for use in operating
rooms, emergency rooms, intensive care units, respiratory therapy departments,
transport situations and in
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other departments where critically ill or injured patients require monitoring.
The Company expects to further increase its marketing efforts to physician
groups and other healthcare facilities such as nursing homes, surgical centers
and outpatient clinics through the use of manufacturers' representatives
experienced in these marketplaces.
The Company also markets its products directly to original equipment
manufacturers (OEM's) which incorporate certain of the Company's products and
technologies in the manufacture of their own multi-parameter systems,
ventilators and other non-competing products. Generally, the Company sells its
products to OEM customers pursuant to long-term contracts which, in certain
cases, provide for the purchase of minimum quantities of products at specified
prices. The Company assembles the products to be sold to OEM customers and,
generally, also agrees to provide maintenance and replacement parts. The
Company continues to seek new agreements with other OEM customers and
additional agreements for other products with its current customers. To fully
support this effort, the Company hired an OEM Sales and Marketing Manager
during Fiscal 1996. There can be no assurance however that the Company will be
successful in obtaining other long-term OEM contracts.
The Company employs a 17-person direct United States sales force and
also utilizes six outside distributors in the United States to sell its
products. Typically, these distributors sell other medical instruments and
products, but do not sell products which compete directly with those offered by
the Company.
Internationally, the Company currently employs six sales and marketing
managers and has approximately 85 outside international distributors. The
Company markets its products in over 75 countries worldwide. The Company's
international net sales of products and services constituted 45%, 39% and 35%
of the Company's total net sales during Fiscal 1996, 1995 and 1994,
respectively. The Company is engaged in continuing efforts to improve and
expand the international distribution of its products and expects international
sales to continue to constitute a significant portion of the Company's total
net sales.
Many of the countries into which the Company sells its products
require governmental approval for the sale of the Company's medical
instruments. In most countries which require approval, the approval process is
shorter than that in the United States and, generally, the Company shares the
costs associated with the approval process with its international distributors.
The Company believes it has all
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necessary approvals to sell the products which it currently distributes
internationally.
All of the Company's international sales are denominated in United
States dollars. However, the volume of export sales of the Company's products
may be affected by fluctuations in the rate of exchange of the United States
dollar for the currency of the country in which sales are made. The Company
believes that prior fluctuations in the strength of the United States dollar
have had a minimal impact on international sales of its products.
No customer accounted for more than 10% of the Company's net sales in
Fiscal 1996, 1995 or 1994.
Advertising of the Company's products consists primarily of displays
at medical meetings and trade shows. The Company also advertises in trade
journals and periodicals and cooperates in the publication of technical papers
written by medical authorities in areas relating to the Company's products.
RESEARCH AND DEVELOPMENT
The Company's research and development activities are devoted to the
design and development of new monitor and sensor technologies and to the
development and enhancement of its existing products. The Company anticipates
offering new products in the future, however there can be no assurance that the
Company will introduce new products in successive fiscal years. With the
advent of managed care and continuing healthcare cost containment efforts,
these research and development activities are focused on providing technology
and related products which measure and record medically necessary information
in a safe and cost-effective manner.
The Company's research and development activities presently are, and
during the foreseeable future are expected to be, devoted primarily to the
development and enhancement of the Company's existing products and technologies
and to the design and development of new products. For Fiscal 1996, 1995 and
1994, the Company incurred aggregate expenses of approximately $7,087,000 for
these activities. Approximately $2,714,000 was attributable to Fiscal 1996,
approximately $2,419,000 to Fiscal 1995 and approximately $1,954,000 to Fiscal
1994. All of the Company's research and development activities are sponsored
by the Company.
The Company's Cascadia Technology Division, located in Redmond,
Washington, is principally engaged in research and
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development. The research and development portion of expenses related to this
division are included in the amounts stated in the preceding paragraph.
PRODUCTION AND SERVICE
Substantially all of the components in the Company's products are
manufactured by others and then assembled by the Company. The Company's
assembly operations require a variety of electronic and mechanical components
and supplies, as well as specialized equipment which the Company owns or
leases.
The Company does not have any long-term contracts with any of its
suppliers and believes that the needed components and supplies are available
from alternate sources. The Company has not experienced any interruption of
production or deliveries of components, supplies or equipment. However, there
can be no assurance that the Company will continue to receive timely service or
that the Company would be able to find readily a substitute manufacturer if one
were needed on short notice. Interruption of the Company's sources of supply
or quality problems with the supplied components could have a material adverse
effect on the Company's business and financial position.
The Company provides maintenance service for its products through
service technicians who are employees of the Company and through independent
service representatives. The Company's products utilize modular components
which have been designed for maximum maintenance accessibility and ease of
removal for repair or replacement. The Company warrants its products against
defects in material and workmanship, including parts and labor, for one year or
more, except for certain non-capital items which the Company warrants for
shorter periods. The Company also offers extended warranty programs that may
be purchased by its customers. Historically, the Company's annual warranty
expenses have been immaterial.
BACKLOG
Except for orders pursuant to long-term OEM agreements, the Company
ships its products on a current basis and substantially all of the product
backlog at April 28, 1996 is expected to be shipped within its normal operating
cycle. As such, the Company does not consider its backlog to be a meaningful
indicator of future sales.
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PATENTS, TRADEMARKS AND PROPRIETARY RIGHTS
The Company holds 23 U.S. patents and has pending applications for
five additional U.S. patents. The Company's patents primarily cover its
capnography and flow technologies which the Company believes provide it with a
competitive advantage in the marketplace. Although the Company holds patents
and has patents pending related to certain of the Company's products, the
Company does not believe that its business as a whole is or will be materially
dependent upon patent protection of these products. However, the Company will
continue to seek patents as it deems advisable to protect its research and
development and the market for its products.
Due to extensive patent coverage in the medical electronics
instruments industry and the rapid rate of issuance of new patents, certain
components of the Company's products may involve infringement of existing
patents. The Company believes that any risks presently being assumed with
respect to any possible patent infringement are reasonable business risks
similar to those being assumed by other companies in the industry.
The Company is the owner of approximately 25 trademarks in the United
States including, Novametrix(R), CAPNOGARD(TM), CO2SMO(TM), Y-Sensor(TM),
SPO2TX(TM), OXYPLETH(TM), SuperBright(TM), VenTrak(TM) and PNEUMOGARD(R).
The Company relies on trade secrets and proprietary know-how, which it
will seek to protect, in part, by confidentiality agreements with certain of
its employees, suppliers and customers. However, there can be no assurance
that the Company's confidentiality agreements, when in place, will not be
breached or that the Company would have adequate remedies for any breach.
There can be no assurance that the Company's trade secrets or proprietary
know-how will not otherwise become known or be independently discovered by
competitors.
COMPETITION
The electronic medical instrumentation industry is extremely
competitive. The Company considers the most significant competitive factors in
its industry to be product capability and performance (including reliability
and ease of use), price and terms of purchase, availability of prompt and
effective maintenance, and an ability to introduce new and improved products
with regularity. The Company believes that it competes effectively in each of
these areas.
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While continuous, non-invasive blood gas monitors are presently
available from several of the Company's competitors, the Company believes that
its continuous, non-invasive blood gas monitors provide advantages over
currently available competing products in terms of accuracy, reliability and
versatility. The Company believes its respiratory mechanics monitors also
compare favorably with competitive models in terms of accuracy of measurement
and reliability of service. Additionally, the Company feels that what it
believes to be the technological superiority in size, performance, reliability
and durability of its products provides it with a competitive advantage.
The electronic medical instrumentation industry is characterized by
rapid technological changes and advances. Although the Company believes that
its products are technologically current, the development of new technologies
or refinements of existing ones could at any time make the Company's existing
products technologically or economically obsolete. Although the Company is not
aware of any pending technological developments that would be likely to
materially and adversely affect its business or financial position, there can
be no assurance that such developments will not occur at any time.
Although all of the Company's competitors do not market all of the
products which the Company markets, the Company estimates that it competes with
at least ten competitors. Such competitors vary in size from those which are
smaller than the Company to divisions or subsidiaries of multinational
corporations. There can be no assurance that the Company will be able to
compete successfully with its competitors, some of which also have extensive
production facilities, well-established marketing and service organizations and
recognized reputations in the electronic medical instrumentation industry and
also have far greater financial resources than the Company has or will have in
the foreseeable future.
PRODUCT LIABILITY AND INSURANCE COVERAGE
From time to time, the Company is subject to product liability claims,
suits and complaints incidental to its business. These claims, suits and
complaints are covered by insurance policies maintained by the Company, subject
to certain policy limits. In addition, certain of the Company's OEM agreements
require the Company to maintain certain levels of product liability insurance.
The Company currently maintains product liability insurance in the amount of
$5,000,000 with a $50,000 per occurrence deductible up to an aggregate annual
deductible of $250,000. The Company is not aware of any pending claims, suits
or
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complaints, the disposition of which, in the opinion of management, would have
a material adverse effect upon the Company's financial position, results of
operations or liquidity. The Company, however, could be materially adversely
affected by successful product liability claims, and there can be no assurance
that the Company will have sufficient resources to satisfy any liability
resulting from claims not covered by existing insurance policies.
REGULATION
The Company's products are subject to regulation in the United States
and in many of the foreign countries where the Company markets or seeks to
market its products.
Certain of the Company's products are "devices" within the meaning of
a 1976 amendment to the Federal Food, Drug and Cosmetics Act. Under the
amendment, a manufacturer must obtain approval by the United States Food and
Drug Administration ("FDA") of certain new devices before they can be marketed
in the United States. The approval process requires that the safety and
efficacy of such devices be demonstrated by the manufacturer to the FDA and for
ISO 9001. Under certain circumstances, the cost of obtaining such
pre-marketing approval may be high and the process lengthy, and no assurance
can be given that approval will be obtained. All of the products currently
marketed domestically by the Company requiring pre-marketing approval from the
FDA have been so approved.
In the future, certain other classes of medical devices may be
required to comply with industry-wide performance standards with respect to
safety and efficacy when these standards are promulgated by the FDA. The FDA
has not yet developed industry-wide performance standards with respect to the
safety and effectiveness of those products manufactured by the Company which
would be subject to such standards. When and if these standards are adopted,
the Company will be required to submit data demonstrating compliance with the
standards (during which period the Company may be permitted to continue to
market products which have previously been approved by the FDA).
There can be no assurance that the Company's products will comply with
the applicable industry-wide performance standards when and if adopted or that
the Company will receive the requisite approvals to market any of its future
products. Any failure to receive approvals or non-compliance with performance
standards would have a material adverse effect on the Company's business and
financial position.
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Underwriters' Laboratories, Inc. ("UL") has established safety
standards for patient-connective electrical apparatus. These standards, or
their equivalent, have been adopted as purchase specifications by many
hospitals. The Company has obtained UL or equivalent approval with respect to
certain of its products and has applied or intends to apply for approval with
respect to all its other products to which these standards apply. In addition,
state and municipal testing agencies have imposed similar standards with which
the Company's products sold in particular areas may be required to comply. The
Company does not believe that compliance with these state and municipal
standards will involve significant expense.
Various countries in which the Company markets its products have
regulatory agencies which perform functions comparable to those of the FDA.
Compliance to international standards is a growing factor in conducting
business in such markets. Novametrix is in the process of obtaining ISO 9001
certification. The Company also labels its products, as permitted, with the CE
mark to meet recently enacted European requirements. To date, foreign
regulations have not adversely affected the Company's business, however there
can be no assurance that any such regulations will not have a material adverse
effect on the Company's business and financial condition in the future.
In the United States, the move toward managed care has already had a
major impact on the healthcare industry by accelerating the trend toward
shorter hospital stays and the use of outpatient facilities rather than
hospitalization and lowering annual cost increases for healthcare spending.
Additional cost saving changes could further impact hospitals, clinics and
other healthcare providers, which form the Company's customer base. These
possible changes could potentially reduce or further delay capital expenditures
by these providers, and could change the users and markets for the Company's
products. However, the acute care portion of a hospital (including the
operating room and intensive care unit) which is a significant market for the
Company's products should not be greatly affected by the trend toward the use
of outpatient facilities as such outpatient facilities generally care for
patients who are not critically ill. In addition, the trend toward managed
competition may improve sales of certain of the Company's non-disposable
products which provide substantial cost savings compared to similar disposable
products sold by its competitors, and may also improve sales of other Company
products that improve patient throughput and thereby result in shorter hospital
stays.
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Although the trend toward managed competition may have a positive
impact on the Company's business by providing increased coverage for medical
procedures utilizing the Company's products, thereby increasing demand for the
Company's products, it is not possible at this time to predict what, if any,
further changes in healthcare will occur.
EMPLOYEES
As of April 28, 1996, the Company had a total of 181 full-time
employees, consisting of 73 production personnel, 36 research and development
personnel, 57 sales, marketing and service personnel and 15 administrative,
managerial and financial personnel. None of the Company's employees is covered
by a collective bargaining agreement. The Company considers its relationship
with its employees to be satisfactory.
EXECUTIVE OFFICERS AND DIRECTORS OF THE REGISTRANT
Certain information with respect to the executive officers and
directors of the Registrant is set forth below:
<TABLE>
<CAPTION>
Positions
Name with the Company Age
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<S> <C> <C>
William J. Lacourciere Chairman of the Board, 56
President, Chief Executive Officer
and Director (Class C)
Joseph A. Vincent Vice President 44
Finance, Chief Financial Officer,
Treasurer, Secretary and Director
(Class A)
Leslie E. Mace Vice President 50
Engineering
Thomas M. Haythe Director (Class C) 56
Michael J. Needham Director (Class A) 55
Photios T. Paulson Director (Class B) 57
Steven J. Shulman Director (Class B) 44
</TABLE>
William J. Lacourciere has been Chairman of the Board of the Company
since September 1991, Chief Executive Officer since February 1991, President
since August 1986 and a director since October 1982. He served as Chief
Operating
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Officer from March 1983 to February 1991. Mr. Lacourciere served as Executive
Vice President from March 1983 to August 1986. From October 1982 to March
1983, he served as Executive Vice President Marketing. From April 1980 to
October 1982, Mr. Lacourciere served as Vice President Domestic Sales.
Joseph A. Vincent, CMA has been Vice President Finance of the Company
since August 1991, Treasurer since February 1991 and Chief Financial Officer
and Secretary since April 1990. He served as Controller from September 1984 to
April 1990. Mr. Vincent held various positions with Picker International, Inc.
(a manufacturer of medical diagnostic instruments and supplies) from August
1974 until he joined the Company in August 1983. Mr. Vincent has been a
director of the Company since February 1994.
Leslie E. Mace has been Vice President Engineering of the Company and
General Manager of the Company's Cascadia Division in Redmond, Washington since
March 1991. He served as Vice President of the Company's Cascadia Division
from May 1989 to March 1991. Mr. Mace served as Vice President, Chief
Operating Officer and Engineering Manager of Cascadia Technology Corporation, a
Washington corporation (research and development company), from prior to 1988
to April 1989.
Thomas M. Haythe has been a director of the Company since March 1978.
He has been a partner at the law firm of Haythe & Curley since prior to 1989.
Mr. Haythe also serves as a director of Isomedix Inc., a provider of commercial
sterilization services, Guest Supply, Inc., a provider of hotel guest room
amenities and accessories, Westerbeke Corporation, a manufacturer of marine
engine products, Ramsay Health Care, Inc., a provider of psychiatric healthcare
services, and Ramsay Managed Care, Inc., a provider of managed mental
healthcare services.
Michael J. Needham has been a director of the Company since August
1990, and was previously a director of the Company from January 1980 to
November 1989. Mr. Needham has served as Chairman and Chief Executive Officer
of SimEx Inc., a designer of entertainment attractions, since March 1991. Mr.
Needham previously served as President of Helix Investments Limited, a venture
capital fund, from prior to 1989 until February 1991.
Photios T. Paulson has been a director of the Company since July 1992.
Mr. Paulson has served as Vice President of bioAlliance, SA, a privately-held
French holding company, since January 1995, Chairman of bioMerieux Vitek Inc.,
a manufacturer of clinical diagnostic systems, since July 1991 and as Senior
Adviser-Health Care Industry and International
<PAGE> 17
17
Investment Banking for Prudential Securities Inc. since prior to 1989.
Steven J. Shulman has been a director of the Company since November
1993. Mr. Shulman has served as President, Pharmacy & Disease Management Group
of Value Health, Inc., a provider of specialty managed care programs since
November 1995, and as a director of Value Health, Inc. since April 1991. Mr.
Shulman previously served as Executive Vice President from April 1991 until
September 1993, and Senior Vice President from prior to 1989 until September
1993 of Value Health, Inc. From October 1990 through April 1991 he also served
as the acting President and Chief Executive Officer of American
PsychManagement, Inc. a wholly-owned subsidiary of Value Health, Inc. Prior to
1989, Mr. Shulman held various managerial positions at CIGNA Healthplan, Inc.,
a provider of group life and health insurance, including managed care products.
Mr. Shulman is also a director of Ramsay Health Care, Inc., a provider of
psychiatric healthcare services.
Steven J. Shulman resigned as a Class A Director of the Company
effective May 20, 1996 and was elected as a Class B Director of the Company
effective May 20, 1996, to serve until the next election of Class B Directors
and until his successor has been duly elected and qualified.
ITEM 2. PROPERTIES.
The Company's main plant and executive offices are currently located
at One Barnes Industrial Park Road, Wallingford, Connecticut, where the Company
occupies 30,000 square feet of office space under an extension to a five- year
lease which expires in July 1996 and provided for minimum annual rental
payments of $150,000. The Company will continue to occupy the space on a
month-to-month basis until it relocates to a new building under construction at
56 Carpenter Lane, Wallingford, Connecticut. The new facilities are scheduled
to be completed during August 1996, are comprised of approximately 53,000
square feet of office and production space, and will be occupied under a twelve
year lease expiring August 2008. The lease provides for minimum annual rental
payments of $408,425, contains one five-year renewal option, and an option to
purchase after the commencement of the sixth year of the lease. In addition,
the lease requires the Company to pay for repairs, property taxes and insurance
related to this facility. The Company also rents approximately 6,000 square
feet of warehouse space at an adjacent site in Wallingford, Connecticut on a
month-to-month basis, with monthly payments of $2,000. The Company expects
that such space will not be required upon the relocation to its new facilities.
In addition, the Company leases a building in Redmond, Washington
under a three-year lease expiring March 1997, comprising approximately 7,000
square feet of space utilized for research and development and manufacturing
support. The lease provides for minimum annual rental payments of
<PAGE> 18
18
approximately $53,000 per year, plus taxes, insurance and other expenses.
The Company believes that its facilities are well maintained, in good
operating condition and are adequate for its current needs.
ITEM 3. LEGAL PROCEEDINGS.
From time to time, the Company is a party to various legal proceedings
incidental to its business. The Company believes that none of these legal
proceedings will have a material adverse effect on the Company's consolidated
financial position, results of operations or liquidity.
See also "Patents, Trademarks and Proprietary Rights" and "Products
Liability and Insurance Coverage" under "Item 1. Business."
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
No matters were submitted to a vote of security holders during the
fourth quarter of Fiscal 1996.
<PAGE> 19
19
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Common Stock trades on the Nasdaq Stock Market under the
symbol "NMTX". The following table sets forth the range of high and low sales
prices per share for the Common Stock for Fiscal 1995 and 1996.
<TABLE>
<CAPTION>
High Sale Low Sale
--------- --------
<S> <C> <C>
FISCAL 1995
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5 5/8 $4
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3/8 5 1/8
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 5/8 3 7/8
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3/8 4
FISCAL 1996
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6 1/4 $5
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1/2 4 5/8
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4 5/8
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3/4 5 1/2
</TABLE>
On July 19, 1996, the last sale price of the Common Stock as reported
on the Nasdaq Stock Market was $5 3/4.
As of July 19, 1996, there were approximately 894 record holders of
the Common Stock. No dividends have been declared on the Common Stock since
the Company was organized. In addition, a loan agreement and a securities
purchase agreement to which the Company is a party and the Company's
Certificate of Designation of Series B Preferred Stock contain, among other
provisions, various covenants restricting the Company's ability to pay cash
dividends to holders of the Common Stock.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
RESULTS OF OPERATIONS
YEAR ENDED APRIL 28, 1996 COMPARED TO YEAR ENDED APRIL 30, 1995
Net sales increased by approximately $1.2 million or 5% to
approximately $25.3 million for the fiscal year ended April 28, 1996 as
compared to net sales of approximately $24.0 million for the fiscal year ended
April 30, 1995. International sales grew by 17% for Fiscal 1996 while sales to
OEM (Original Equipment Manufacturers) customers
<PAGE> 20
20
increased by 24% as the Company expanded its OEM customer base. While product
sales to our domestic hospital markets were approximately 6% higher for Fiscal
1996, overall domestic sales decreased by approximately 8% due to reduced sales
of the Company's products in the non-hospital markets. The Company anticipates
improvement in both hospital and non- hospital sales in the next fiscal year as
a result of strategic distribution enhancements recently implemented as part of
the Company's Fiscal 1997 business plan.
Cost of sales as a percentage of net sales improved to 43% for Fiscal
1996 from 44% for the prior fiscal year primarily due to favorable product mix.
Improved margins on international sales were partially offset by relatively
modest percentage increases in domestic hospital product cost of sales. The
Company is continuing its efforts to reduce costs as a percentage of net sales
and expects new product development programs, product quality enhancements and
other cost reduction efforts to contribute to these efforts.
Research and Product Development ("R&D") expenses increased by 12% or
approximately $295,000 to $2,714,000 during Fiscal 1996 as compared to
$2,419,000 for Fiscal 1995. The increase resulted primarily from higher levels
of salaries and related fringe benefits and outside professional services
incurred in conjunction with the Company's expanded product development
efforts, which were partially offset by reductions in engineering supplies and
materials. The Company expects its R&D spending to continue to approximate 10%
of net sales for Fiscal 1997.
Selling, General and Administrative ("S,G&A") expenses increased by
approximately 2% to $9,137,000 for Fiscal 1996 as compared to $8,978,000 for
Fiscal 1995. Increased selling expenses associated with higher levels of
sales, particularly in the international area, were partially offset by reduced
marketing expenses. Increased salaries and related fringe benefits in the
marketing area were offset by decreased outside professional services. General
and Administrative expenses increased nearly 8% during Fiscal 1996 primarily as
a result of increased legal, external reporting and recruitment expenses.
Interest expense during Fiscal 1996 decreased by 23% as a result of
lower debt levels primarily associated with the Company's public offering
consummated during the first quarter of Fiscal 1995 (June 1994), and scheduled
principal payments.
Current income tax expense of $40,000 for Fiscal 1996 was unchanged
from Fiscal 1995 and was calculated on an
<PAGE> 21
21
alternative minimum tax basis after utilizing a portion of the Company's net
operating loss carryforwards. In 1995 and prior years, the Company maintained
a valuation allowance for the total amount of net deferred tax assets related
to tax credit carryforwards, net operating loss carryforwards and temporary
timing differences since management believed that it was uncertain whether the
tax benefits associated with these assets would ultimately be realized.
Because of the continued improvement in the performance of the Company in 1996,
management believes that it is more likely than not that a portion of these
benefits will be realized and, in accordance with the provisions of Statement
of Financial Accounting Standards No. 109, has reduced the valuation allowance
and recognized a benefit of $1,020,000 in the 1996 financial statements.
Management will continue to evaluate whether further reductions in the
valuation allowance are warranted based on future operating performance and
other relevant factors.
YEAR ENDED APRIL 30, 1995 COMPARED TO YEAR ENDED MAY 1, 1994
Net sales increased by 16% to approximately $24.0 million in Fiscal
1995 compared to net sales of approximately $20.8 million in Fiscal 1994.
International revenue growth of 28% was the largest single contributing factor.
Sales of sensors and electronics to OEM customers who utilize our technology in
their systems, were responsible for approximately $1.4 million of the growth in
overall sales revenues. Sales to domestic markets were 2 percent lower than
sales to these markets recorded in Fiscal 1994. The Company expected continued
improvement in international and OEM sales levels in Fiscal 1996, and domestic
sales were also expected to strengthen as the result of strategic changes
implemented in the domestic sales effort.
Cost of sales as a percentage of net sales increased from 43% to 44%
when comparing Fiscal 1995 to Fiscal 1994, primarily due to the higher
international content of net sales reported. On-going quality and cost
reduction efforts, with significant contributions from both the manufacturing
and new product development areas, were expected to minimize any potential
impact on margins due to the continued growth of international sales as a
percentage of overall revenues.
R&D expenses increased by 24% to approximately $2,419,000 compared to
$1,954,000 reported in Fiscal 1994. This increase of almost $465,000 resulted
primarily from higher levels of salaries and related fringe benefit costs,
supplies, and outside services associated with increased product development
efforts. Costs associated with
<PAGE> 22
22
providing new OEM customers with technical development assistance, and
increased depreciation expense associated with higher levels of assets, also
contributed to the year-to-year increase.
S,G&A expenses increased by 5% when comparing Fiscal 1995 expenses to
Fiscal 1994 expenses. Selling, marketing and service related administrative
costs accounted for 3% of the overall S,G&A increase as the result of increased
international selling expenses associated with the higher levels of sales
activities abroad, partially offset by a reduction in domestic selling and
marketing expenses. General and Administrative expenses accounted for the
remaining 2% due to increased accounting and reporting fees, and higher
insurance costs. The Company expected to commit additional resources toward
enhancing domestic hospital and non-hospital revenues in Fiscal 1996, as well
as supporting the increases in international sales activities.
Interest expense in Fiscal 1995 decreased by 46% compared to Fiscal
1994 due to significantly lower debt levels as the result of the public
offering consummated in June 1994. Scheduled principal payments during Fiscal
1995 also contributed to the lower debt levels, and were expected to continue
to have a positive impact on interest expenses in Fiscal 1996.
Other expense (income), net, exclusive of the favorable $140,000
settlement of a contractual dispute in Fiscal 1994, increased by approximately
$9,000 compared to Fiscal 1994.
Income tax expense of $40,000 for Fiscal 1995 resulted from higher
taxable income levels compared to the prior year and was calculated on an
alternative minimum tax method after the utilization of a portion of the
Company's net operating loss carryforwards.
LIQUIDITY AND SOURCES OF CAPITAL
The Company requires sufficient liquidity to source its working
capital needs which are primarily inventory, accounts receivable and debt
service. Cash flow from operations is the principal source of the Company's
working capital. The Company also has available borrowing under its revolving
credit facility to cover periodic fluctuations in its working capital
requirements and further, believes that additional funds, if required, could be
obtained from various sources on commercially reasonable terms. In addition,
the Company has approximately $5,600,000 of additional net proceeds that may be
realized upon the exercise of both Class A and Class B Warrants issued in June
<PAGE> 23
23
1994, which are redeemable by the Company under specified conditions.
At April 28, 1996, the Company had working capital of approximately
$8,364,000 and a current ratio of 3.1 to 1 compared to approximately $6,400,000
and 2.5 to 1, respectively, at April 30, 1995. Approximately $300,000 of the
increase in working capital pertains to the current portion of deferred income
taxes while the balance is primarily related to increased levels of inventory
and accounts receivable.
The Company's operating activities provided net cash of approximately
$1,000,000 during Fiscal 1996 as compared to approximately $1,900,000 during
Fiscal 1995. Increases in net income of approximately $456,000 before
depreciation, amortization and deferred income tax benefits of $1,020,000, were
offset by increases in inventory and accounts receivable and decreases in
accounts payable and accrued expenses.
As of April 28, 1996, the Company had additional borrowing capacity of
approximately $1,525,000 under its revolving credit facility. In addition, the
warrants associated with the public offering are callable by the Company, 50%
after December 8, 1995 and 50% after December 8, 1996, in each case if the
common stock price of the Company exceeds specified levels. The Company
believes that cash from operations will be sufficient to fund cash requirements
for Fiscal 1997.
IMPACT OF INFLATION
The rate of inflation continues to have a marginal impact on the
operations of the Company. While management routinely assesses the possible
effects of inflation with respect to the Company's future business plans, the
rate of inflation is not expected to have a material impact upon the growth of
the Company during Fiscal 1997.
<PAGE> 24
24
ITEM 7. FINANCIAL STATEMENTS.
For information concerning this Item, see "Item 13. Exhibits
and Reports on Form 8-K."
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
<PAGE> 25
25
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Information with respect to the Company's executive officers and
directors is contained in Part I under "Item 1. Business - Executive Officers
and Directors of the Registrant" and is incorporated herein by reference.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's Common Stock, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
Common Stock. Officers, directors and greater than ten percent stockholders
are required by Securities and Exchange Commission regulations to furnish the
Company with copies of all Section 16(a) reports they file.
The Company notes that during the fiscal year ended April 28, 1996 Mr.
Paulson failed to report two purchase transactions, which transactions were
reported to the Commission on Form 5, and Mr. Needham failed to report one
purchase transaction, which transaction was reported to the Commission on Form
5. To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and representations from certain persons that
no other reports were required, except as provided above, all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten
percent beneficial owners have been complied with.
ITEM 10. EXECUTIVE COMPENSATION.
The following table sets forth information for the fiscal years ended
April 28, 1996, April 30, 1995 and May 1, 1994 concerning the compensation of
the Company's Chief Executive Officer and other executive officers of the
Company whose total annual salary and bonus exceeded $100,000 during the fiscal
year ended April 28, 1996.
<PAGE> 26
26
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
------------------------- ------------------
Name and Fiscal All Other
Principal Position Year Salary Bonus Stock Options (#) Compensation (1)
------------------ ---- ------ ----- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
William J. Lacourciere 1996 $200,000 $15,000 0 $4,511
Chairman of the Board, 1995 200,000 25,000 30,000 4,478
President and Chief 1994 166,346 0 0 3,126
Executive Officer
Joseph A. Vincent 1996 104,904 10,000 0 3,141
Chief Financial Officer, 1995 100,000 15,000 20,000 2,651
Vice President 1994 100,000 0 0 1,916
Finance, Treasurer and
Secretary
</TABLE>
- ----------------
(1) Includes contributions made by the Company on behalf of the named
executive officers to the ESOP, the Company's 401(k) Plan and a term life
insurance plan.
The Company did not grant any stock options to the executive officers
named in the Summary Compensation Table during the fiscal year ended April 28,
1996.
The following table sets forth the number of options held by the
executive officers named in the Summary Compensation Table at April 28, 1996.
None of the executive officers named in the Summary Compensation Table
exercised any stock options during the fiscal year ended April 28, 1996.
AGGREGATED OPTIONS EXERCISES IN THE FISCAL YEAR
ENDED APRIL 28, 1996 AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of In-the Money
Underlying Options at
April 28, 1996 Options at April 28, 1996(1)
--------------------- -----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
William J. Lacourciere 10,000 20,000 $ 15,000 $30,000
Joseph A. Vincent 51,667 13,333 186,250 20,000
</TABLE>
- ---------------
(1) In-the-money options are those where the fair market value of the
underlying Common Stock exceeds the exercise price thereof. The value of
in-the-money options is determined in accordance with regulations of the
Securities and Exchange Commission by subtracting the
<PAGE> 27
27
aggregate exercise price of the options from the aggregate year-end
market value of the underlying Common Stock.
COMPENSATION OF DIRECTORS
The Company has a policy of paying its directors who are not employees
of the Company an annual fee of $2,500 plus $1,250 for each meeting of the
Board of Directors of the Company attended.
OTHER INFORMATION CONCERNING
DIRECTORS, OFFICERS AND STOCKHOLDERS
The Company has entered into an employment agreement with Mr.
Lacourciere. The term of the employment agreement commenced as of June 1, 1988
and is automatically extended on an annual basis, unless a notice of
non-extension is given by either party. The current term of the agreement, as
so extended, expires on December 31, 1996. The employment agreement provides
for an annual salary of $200,000, subject to increases based on increases in
the Consumer Price Index and additional increases at the discretion of the
Board of Directors. The agreement also provides, in the event of the
termination of Mr. Lacourciere's employment by the Company other than for
cause, for a cash payment to Mr. Lacourciere equal to three times his average
annual cash compensation during the five most recent taxable years of the
Company ending before the date of such termination, less $1,000. In the event
Mr. Lacourciere's employment with the Company is terminated at this time, such
termination payment would be approximately $561,000. In the event of the
occurrence of certain change of control events involving the Company without
the approval of the Board of Directors, Mr. Lacourciere may terminate his
employment agreement with the Company during the one-year period following any
such change of control event and such termination of employment would entitle
him to the same termination payment. In the event the Board of Directors
approves the change of control event, Mr. Lacourciere may terminate his
employment agreement with the Company during the one-year period following any
such change of control event; however, Mr. Lacourciere will not be entitled to
a termination payment.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The stockholders (including any "group," as that term is used
in Section 13(d)(3) of the Securities Exchange
<PAGE> 28
28
Act of 1934) who, to the knowledge of the Board of Directors of the Company,
owned beneficially more than five percent of any class of the outstanding
voting securities of the Company as of July 1, 1996, and their respective
shareholdings as of such date (according to information furnished by them to
the Company), are set forth in the following table. Except as indicated in the
footnotes to the table, all of such shares are owned with sole voting and
investment power.
<TABLE>
<CAPTION>
TITLE OF SHARES PERCENT
NAME AND ADDRESS CLASS BENEFICIALLY OWNED OF CLASS
---------------- -------- ------------------ --------
<S> <C> <C> <C>
Paul A. Cote Group Common 847,055 (1) 12.4%
512 Webster Road
Lewiston, Maine 04240
First Fidelity Incorporated . . . . . Common 716,182 (2) 9.7%
55 Broad Street Series B
Newark, New Jersey 07102 Preferred 40,000 (2) 100%
William J. Lacourciere . . . . . . . Common 417,490 (3) 6.0%
One Barnes Industrial Park Road
Wallingford, Connecticut 06492
</TABLE>
- -----------------------
(1) Information as to the Paul A. Cote Group (the "Cote Group"), is based
upon reports on Schedule 13D filed with the Commission by the Cote
Group. Such reports indicate that the Cote Group beneficially owns an
aggregate of 847,055 shares, which includes 196,900 shares issuable on
the exercise of currently exercisable warrants.
(2) Consists of (i) 444,444 shares issuable upon the conversion of 40,000
shares of Series B Preferred Stock and (ii) 271,738 shares issuable
upon the exercise of currently exercisable warrants held by First
Fidelity Incorporated ("First Fidelity"), a wholly owned subsidiary of
First Fidelity Bancorporation, which warrants will expire on May 23,
2000. The Series B Preferred Stock and warrants were formerly held by
First Fidelity Bank, Connecticut ("FFB-CT"), formerly known as Union
Trust Company prior to its acquisition by First Fidelity
Bancorporation. Information as to the holdings of First Fidelity is
based upon a report on Schedule 13D filed with the Commission by
FFB-CT and Northeast Bancorp, Inc., its parent corporation prior to
the acquisition of FFB-CT by First Fidelity Bancorporation. First
Fidelity Bancorporation may be deemed to be the indirect beneficial
owner of the shares held by First Fidelity by virtue of its ownership
of all of the stock of First Fidelity.
(3) Includes (i) 304,078 shares issuable upon the exercise of currently
exercisable warrants held by Mr. Lacourciere, the Chairman of the
Board, President and Chief Executive Officer and a director of the
Company, which warrants will expire on December 28, 1999, (ii) 5,887
shares held for the account of Mr. Lacourciere under the Employee
Stock Ownership Plan of the Company (the "ESOP"), (iii) 1,000 shares
issuable upon the exercise of Class A warrants and 1,000 shares
issuable upon the exercise of Class B warrants held by Mr.
Lacourciere, which warrants are currently exercisable and will expire
on December 8, 1997 and December 8, 1999, respectively, and
<PAGE> 29
29
(iv) 20,000 shares issuable upon the exercise of currently exercisable
options held by Mr. Lacourciere.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of July 1, 1996, the number of
shares of the outstanding voting securities of the Company beneficially owned
by each of the Company's directors and each executive officer named in the
Summary Compensation Table, and all directors and executive officers as a
group, according to information furnished by such persons to the Company.
<TABLE>
<CAPTION>
TITLE OF SHARES PERCENT
NAME AND ADDRESS CLASS BENEFICIALLY OWNED OF CLASS
---------------- -------- ------------------ --------
<S> <C> <C> <C>
Thomas M. Haythe . . . . . . . . . . . Common 115,540 (1) 1.7%
Director of the Company
William J. Lacourciere . . . . . . . . Common 417,490 (2) 6.0%
Chairman of the Board,
President and Chief Executive
Officer of the Company and
Director of the Company
Michael J. Needham . . . . . . . . . . Common 26,588 (3) *
Director of the Company
Photios T. Paulson . . . . . . . . . . Common 14,500 (4) *
Director of the Company
Steven J. Shulman . . . . . . . . . . . Common 5,000 *
Director of the Company
Joseph A. Vincent . . . . . . . . . . . Common 64,450 (5) *
Vice President Finance, Chief
Financial Officer, Treasurer
and Secretary of the Company
and Director of the Company
All directors and executive Common 678,245 (1)(2) 9.5%
officers as a group (3)(4)
(seven persons) (5)(6)
</TABLE>
- -----------------------
* Less than one percent.
(1) Includes (i) 14,844 shares issuable upon the exercise of currently
exercisable warrants held by Mr. Haythe, which warrants will expire on
December 31, 1997, (ii) 10,744 shares issuable upon the exercise of
currently exercisable warrants held by Mr. Haythe, which warrants will
expire on March 10, 1999, (iii) 10,878 shares issuable upon the
exercise of currently exercisable warrants held by Mr. Haythe, which
warrants will expire on April 11, 2000, (iv) 15,995 shares issuable
upon the exercise of currently exercisable warrants held by Mr.
Haythe, which warrants will
<PAGE> 30
30
expire on November 30, 2000 and (v) 7,234 shares issuable upon the
exercise of currently exercisable warrants held by Mr. Haythe, which
warrants will expire on November 30, 2000.
(2) Includes (i) 304,078 shares issuable upon the exercise of currently
exercisable warrants held by Mr. Lacourciere, which warrants will
expire on December 28, 1999, (ii) 5,887 shares held for the account of
Mr. Lacourciere under the ESOP, (iii) 1,000 shares issuable upon the
exercise of Class A warrants and 1,000 shares issuable upon the
exercise of Class B warrants held by Mr. Lacourciere, which warrants
are currently exercisable and will expire on December 8, 1997 and
December 8, 1999, respectively, and (iv) 20,000 shares issuable upon
the exercise of currently exercisable stock options held by Mr.
Lacourciere.
(3) Includes (i) 14,844 shares issuable upon the exercise of currently
exercisable warrants held by Mr. Needham, which warrants will expire
on December 31, 1997, and (ii) 10,744 shares issuable upon the
exercise of currently exercisable warrants held by Mr. Needham, which
warrants will expire on March 10, 1999.
(4) Includes 10,000 shares issuable upon the exercise of currently
exercisable warrants held by Mr. Paulson, which warrants will expire
on November 30, 2002.
(5) Includes (i) 3,158 shares held for the account of Mr. Vincent under
the ESOP, (ii) 200 shares issuable upon the exercise of Class A
warrants and 200 shares issuable upon the exercise of Class B warrants
held by Mr. Vincent, which warrants are currently exercisable and will
expire on December 8, 1997 and December 8, 1999, respectively, and
(iii) 58,334 shares issuable upon the exercise of currently
exercisable stock options held by Mr. Vincent.
(6) Includes (i) 1,475 shares held for the account of Leslie E. Mace, Vice
President Engineering of the Company, under the ESOP, (ii) 24,535
shares issuable upon the exercise of currently exercisable warrants
held by Mr. Mace, which warrants will expire on March 22, 2000, and
(iii) 8,667 shares issuable upon the exercise of currently exercisable
stock options held by Mr. Mace.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Thomas M. Haythe, General Counsel and a director of the Company, is a
member of the law firm of Haythe & Curley, the Company's general counsel. It
is expected that Haythe & Curley will continue to render legal services to the
Company in the future.
<PAGE> 31
31
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
Information with respect to this Item regarding
financial statements is contained on pages F-2 to F-18 of this Annual Report on
Form 10-KSB.
Information with respect to this Item regarding
Exhibits required to be filed pursuant to Item 601 of Regulation SB is
contained in the attached Index to Exhibits, which Exhibits are incorporated
herein by reference. Exhibits 10(a), 10(b), 10(s), 10(t), 10(u) and 10(y) are
the management contracts and compensatory plans or arrangements required to be
filed as part of this Annual Report on Form 10-KSB.
(b) Reports on Form 8-K:
None.
<PAGE> 32
32
POWER OF ATTORNEY
The registrant and each person whose signature appears below
hereby appoint William J. Lacourciere and Joseph A. Vincent as
attorneys-in-fact with full power of substitution, severally, to execute in the
name and on behalf of the registrant and each such person, individually and in
each capacity stated below, one or more amendments to the annual report which
amendments may make such changes in the report as the attorney-in-fact acting
deems appropriate and to file any such amendment to the report with the
Securities and Exchange Commission.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: July 26, 1996
NOVAMETRIX MEDICAL SYSTEMS INC.
By /s/William J. Lacourciere
-------------------------------------
William J. Lacourciere
Chairman of the Board,
President, Chief Executive
Officer and Director
In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Dated: July 26, 1996
By /s/William J. Lacourciere
-------------------------------------
William J. Lacourciere
Chairman of the Board,
President, Chief Executive
Officer and Director
<PAGE> 33
33
Dated: July 26, 1996
By /s/Joseph A. Vincent
-------------------------------------
Joseph A. Vincent, CMA
Vice President Finance,
Principal Financial and
Accounting Officer and
Director
Dated: July 26, 1996
By /s/Thomas M. Haythe
-------------------------------------
Thomas M. Haythe
Director
Dated: July 26, 1996
By /s/Michael J. Needham
-------------------------------------
Michael J. Needham
Director
Dated: July 26, 1996
By /s/Photios T. Paulson
-------------------------------------
Photios T. Paulson
Director
Dated: July 26, 1996
By /s/Steven J. Shulman
-------------------------------------
Steven J. Shulman
Director
<PAGE> 34
Annual Report on Form 10-KSB
Item 7 -- Financial Statements
List of Financial Statements
Year ended April 28, 1996
Novametrix Medical Systems Inc. and Subsidiaries
Wallingford, Connecticut
<PAGE> 35
Form 10-KSB -- Item 7
Novametrix Medical Systems Inc. and Subsidiaries
Index to Financial Statements
The report of Ernst & Young LLP, independent auditors, dated June 14, 1996, and
the following consolidated financial statements of Novametrix Medical Systems
Inc. and subsidiaries are included in Item 7:
Consolidated Balance Sheets -- April 28, 1996 and April 30, 1995
Consolidated Statements of Income -- Years ended April 28, 1996, April 30,
1995 and May 1, 1994
Consolidated Statements of Shareholders' Equity -- Years ended April 28,
1996, April 30, 1995 and May 1, 1994
Consolidated Statements of Cash Flows -- Years ended April 28, 1996, April
30, 1995 and May 1, 1994
Notes to Consolidated Financial Statements -- April 28, 1996
F-1
<PAGE> 36
Report of Independent Auditors
Board of Directors
Novametrix Medical Systems Inc.
We have audited the accompanying consolidated balance sheets of Novametrix
Medical Systems Inc. as of April 28, 1996 and April 30, 1995, and the related
consolidated statements of income, shareholders' equity, and cash flows for the
years ended April 28, 1996, April 30, 1995 and May 1, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Novametrix Medical
Systems Inc. at April 28, 1996 and April 30, 1995, and the consolidated results
of its operations and its cash flows for the years ended April 28, 1996, April
30, 1995 and May 1, 1994, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
Hartford, Connecticut
June 14, 1996
F-2
<PAGE> 37
Novametrix Medical Systems Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
APRIL 28, 1996 APRIL 30, 1995
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 283,003 $ 272,033
Accounts receivable, less allowance for losses of $250,000 5,934,528 5,247,171
Inventories:
Finished products 1,357,610 1,247,541
Work in process 1,136,200 1,088,864
Materials 3,181,670 2,595,455
----------------- -----------------
5,675,480 4,931,860
Deferred income taxes, net 300,540
Prepaid expenses and other current assets 131,843 106,440
----------------- -----------------
Total current assets 12,325,394 10,557,504
Equipment, less accumulated depreciation of $5,019,466 in
1996 and $4,603,479 in 1995 1,223,988 1,133,413
License, technology, patent and other costs, less accumulated
amortization of $3,177,539 in 1996 and $2,691,005 in 1995 4,554,520 4,915,064
Deferred income taxes, net 719,460
----------------- -----------------
$ 18,823,362 $ 16,605,981
================= =================
</TABLE>
F-3
<PAGE> 38
<TABLE>
<CAPTION>
APRIL 28, 1996 APRIL 30, 1995
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 1,225,000 $ 925,000
Accounts payable 1,243,490 1,662,950
Accrued expenses 1,492,990 1,557,798
----------------- -----------------
Total current liabilities 3,961,480 4,145,748
Long-term debt, less current portion 1,333,333 2,308,333
Redeemable Preferred Stock, at redemption and liquidation
value 1,000,000 1,000,000
Shareholders' equity:
Preferred Stock, $1 par value, authorized 1,000,000 shares: issued and
outstanding - 40,000 shares at April 28, 1996 and 100,000 shares at April
30, 1995 (less 40,000 shares redeemable), at liquidation value 1,500,000
Common Stock, $.01 par value, authorized 20,000,000 shares 69,860 61,365
Additional paid-in capital 28,054,794 26,239,685
Retained-earnings deficit (13,109,067) (16,162,112)
Treasury stock (2,487,038) (2,487,038)
----------------- -----------------
12,528,549 9,151,900
----------------- -----------------
$ 18,823,362 $ 16,605,981
================= =================
</TABLE>
See accompanying notes.
F-4
<PAGE> 39
Novametrix Medical Systems Inc.
Consolidated Statements of Income
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------------------------------
APRIL 28, 1996 APRIL 30, 1995 MAY 1, 1994
-------------- -------------- -------------
<S> <C> <C> <C>
Revenues:
Net sales $ 25,260,180 $ 24,032,101 $ 20,788,496
Interest 13,988 11,303
--------------- --------------- ---------------
25,274,168 24,043,404 20,788,496
Costs and expenses:
Cost of products sold 10,929,686 10,555,530 8,943,945
Research and product development 2,714,485 2,418,652 1,954,308
Selling, general and administrative 9,136,806 8,978,052 8,514,359
Interest 286,775 372,867 696,396
Other expense (income), net 69,621 73,936 (75,232)
--------------- --------------- ----------------
23,137,373 22,399,037 20,033,776
--------------- --------------- ----------------
Income before income taxes 2,136,795 1,644,367 754,720
Income tax provision (benefit) (980,000) 40,000
--------------- --------------- ---------------
Net income $ 3,116,795 $ 1,604,367 $ 754,720
=============== =============== ================
Earnings per common share (primary and
fully diluted) $ .39 $ .21 $ .11
===== ====== ======
</TABLE>
See accompanying notes.
F-5
<PAGE> 40
Novametrix Medical Systems Inc.
Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>
COMMON STOCK PREFERRED STOCK
----------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Year ended May 1, 1994:
Balance at May 2, 1993 4,773,309 $47,733 60,000 $ 1,500,000
Issuance of stock 109,397 1,094
Stock issuance costs
Dividends on Preferred Stock ($.75 a share)
Reduction of deferred ESOP contributions
Net income
--------- ------- ------- -----------
Balance at May 1, 1994 4,882,706 48,827 60,000 1,500,000
Year ended April 30, 1995:
Issuance of stock 1,253,827 12,538
Stock issuance costs
Dividends on Preferred Stock ($.75 a share)
Reduction of deferred ESOP contributions
Net income
--------- ------- ------- -----------
Balance at April 30, 1995 6,136,533 61,365 60,000 1,500,000
Year ended April 28, 1996:
Issuance of stock 182,765 1,828
Stock issuance costs
Conversion of Preferred Stock 666,666 6,667 (60,000) (1,500,000)
Dividends on Preferred Stock ($.75 a share)
Net income
--------- ------- ------- -----------
Balance at April 28, 1996 6,985,964 $69,860 -- $ --
========= ======= ======= ===========
</TABLE>
See accompanying notes.
F-6
<PAGE> 41
Novametrix Medical Systems Inc.
Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>
ADDITIONAL RETAINED-
PAID-IN EARNINGS DEFERRED ESOP
CAPITAL DEFICIT CONTRIBUTIONS
--------------- ---------------- --------------
<S> <C> <C> <C>
Year ended May 1, 1994:
Balance at May 2, 1993 $ 21,895,304 $ (18,371,199) $ (200,000)
Issuance of stock 156,001
Stock issuance costs (38,339)
Dividends on Preferred Stock ($.75 a share) (75,000)
Reduction of deferred ESOP contributions 100,000
Net income 754,720
--------------- ---------------- -------------
Balance at May 1, 1994 22,012,966 (17,691,479) (100,000)
Year ended April 30, 1995:
Issuance of stock 5,291,754
Stock issuance costs (1,065,035)
Dividends on Preferred Stock ($.75 a share) (75,000)
Reduction of deferred ESOP contributions 100,000
Net income 1,604,367
--------------- ---------------- -------------
Balance at April 30, 1995 26,239,685 (16,162,112) -
Year ended April 28, 1996:
Issuance of stock 343,926
Stock issuance costs (22,150)
Conversion of Preferred Stock 1,493,333
Dividends on Preferred Stock ($.75 a share) (63,750)
Net income 3,116,795
--------------- ---------------- -------------
Balance at April 28, 1996 $ 28,054,794 $ (13,109,067) $ -
=============== ================ =============
</TABLE>
<TABLE>
<CAPTION>
TREASURY STOCK
SHARES AMOUNT TOTAL
------------ --------------- -----------------
<S> <C> <C> <C>
Year ended May 1, 1994:
Balance at May 2, 1993 (338,452) $ (2,487,038) $ 2,384,800
Issuance of stock 157,095
Stock issuance costs (38,339)
Dividends on Preferred Stock ($.75 a share) (75,000)
Reduction of deferred ESOP contributions 100,000
Net income 754,720
----------- --------------- -----------------
Balance at May 1, 1994 (338,452) (2,487,038) 3,283,276
Year ended April 30, 1995:
Issuance of stock 5,304,292
Stock issuance costs (1,065,035)
Dividends on Preferred Stock ($.75 a share) (75,000)
Reduction of deferred ESOP contributions 100,000
Net income 1,604,367
----------- --------------- -----------------
Balance at April 30, 1995 (338,452) (2,487,038) 9,151,900
Year ended April 28, 1996:
Issuance of stock 345,754
Stock issuance costs (22,150)
Conversion of Preferred Stock -
Dividends on Preferred Stock ($.75 a share) (63,750)
Net income 3,116,795
----------- --------------- -----------------
Balance at April 28, 1996 (338,452) $ (2,487,038) $ 12,528,549
=========== =============== =================
</TABLE>
See accompanying notes.
F-6
<PAGE> 42
Novametrix Medical Systems Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------------------------
APRIL 28, 1996 APRIL 30, 1995 MAY 1, 1994
-------------- -------------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 3,116,795 $ 1,604,367 $ 754,720
Adjustments to reconcile net income to net
cash provided by operating activities:
Deferred income tax benefit (1,020,000)
Depreciation 428,186 495,389 554,625
Amortization 512,414 481,237 444,750
Changes in operating assets and liabilities:
Increase in accounts receivable (687,357) (911,337) (72,919)
Increase in inventories (743,620) (352,851) (47,466)
(Increase) decrease in prepaid expenses
and other current assets (25,403) 281,043 (282,525)
(Decrease) increase in accounts payable (419,460) 417,691 234,204
(Decrease) increase in accrued expenses (139,808) (92,446) 7,414
----------- ----------- -----------
Net cash provided by operating activities 1,021,747 1,923,093 1,592,803
INVESTING ACTIVITIES
Purchases of equipment (518,761) (613,803) (431,572)
Purchases of licenses, technology, patents
and other (151,870) (710,826) (117,428)
----------- ---------- ---------
Net cash used by investing activities (670,631) (1,324,629) (549,000)
FINANCING ACTIVITIES
Proceeds from borrowings 2,500,000
Principal payments on borrowings (600,000) (6,460,007) (1,299,996)
Principal payment on customer advance (654,400)
Proceeds from sales of Common Stock, less
issuance costs 323,604 4,095,094 118,756
Dividends on Preferred Stock (63,750) (75,000) (75,000)
----------- ----------- -----------
Net cash used by financing activities (340,146) (594,313) (1,256,240)
----------- ----------- -----------
Increase (decrease) in cash and cash equivalents 10,970 4,151 (212,437)
Cash and cash equivalents at beginning of year 272,033 267,882 480,319
----------- ----------- -----------
Cash and cash equivalents at end of year $ 283,003 $ 272,033 $ 267,882
=========== =========== ===========
</TABLE>
See accompanying notes.
F-7
<PAGE> 43
Novametrix Medical Systems Inc.
Notes to Consolidated Financial Statements
April 28, 1996
1. ACCOUNTING POLICIES
NATURE OF BUSINESS
Novametrix Medical Systems develops, manufactures and markets non-invasive
critical care monitors, sensors and accessories which are distributed worldwide
and provide continuous patient monitoring capabilities. The Company's current
product offering and future development plans utilize leading-edge technologies.
The Company markets its products domestically and internationally directly
through salespersons and outside distributors to its customers, most of which
are hospitals.
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Novametrix Medical
Systems Inc. and its wholly-owned subsidiaries (collectively, the "Company").
All significant intercompany accounts and transactions are eliminated in
consolidation.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. While management believes that the estimates and
assumptions used in the preparation of the financial statements are appropriate,
actual results could differ from these estimates.
REVENUE RECOGNITION AND PRODUCT WARRANTY COSTS
Revenues from sales are recognized when products are shipped. The Company
generally warrants its products against defects for up to one year; costs
related thereto are recognized as incurred and are not material to the Company's
financial statements.
INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out method) or
market.
EQUIPMENT
Equipment is stated at cost, less accumulated depreciation. Depreciation is
computed over the estimated useful lives of the assets using the straight-line
method.
F-8
<PAGE> 44
Novametrix Medical Systems Inc.
Notes to Consolidated Financial Statements (continued)
1. ACCOUNTING POLICIES (CONTINUED)
CASH EQUIVALENTS
All highly liquid investments with a maturity of three months or less when
purchased are considered cash equivalents.
LICENSE, TECHNOLOGY, PATENT AND OTHER COSTS
License, technology, patent and other costs are stated at cost, less accumulated
amortization. Amortization is computed by the straight-line method over periods
ranging from 3 to 17 years. The Company reviews license, technology, patent and
other costs for impairment whenever events or changes in circumstances indicate
that the carrying amount of the assets may not be recoverable. If such
impairment indicators are present, the Company recognizes a loss on the basis of
whether these amounts are fully recoverable from projected discounted cash flows
of the related product.
FINANCIAL INSTRUMENTS
The carrying value of cash and cash equivalents, accounts receivable, accounts
payable and long-term debt approximates their fair value based on anticipated
cash flows and current market conditions.
INCOME TAXES
Deferred income taxes are provided for temporary differences between the tax and
financial reporting bases of the Company's assets and liabilities based on
enacted tax rates applicable to the periods in which the differences are
expected to reverse.
EMPLOYEE STOCK OWNERSHIP PLAN ("ESOP")
The Company has a noncontributory ESOP which covers substantially all employees.
The Company was required to contribute sufficient cash to the ESOP trust for it
to repay the ESOP note payable (the "ESOP guarantee") plus interest thereon and
specified expenses. Expense attributable to the ESOP is recognized based on the
required contributions and amounted to $14,068 in 1996, $122,018 in 1995 and
$121,536 in 1994. Actual interest incurred on ESOP debt was $2,407 in 1996,
$8,733 in 1995 and $12,932 in 1994.
F-9
<PAGE> 45
Novametrix Medical Systems Inc.
Notes to Consolidated Financial Statements (continued)
1. ACCOUNTING POLICIES (CONTINUED)
ESOP shares are allocated annually to eligible employees based on compensation.
At April 28, 1996, 138,705 shares held by the ESOP have been allocated to
eligible employees. ESOP shares not yet distributed to participants are treated
as outstanding for the purpose of computing earnings per share.
PER SHARE AMOUNTS
Earnings per common share amounts were computed by dividing net income by the
weighted-average number of shares of Common Stock and dilutive common stock
equivalents outstanding during the year. Common stock equivalents consist of the
Company's Preferred Stock, stock options, warrants and shares subscribed under
the Company's employee stock purchase plan. The computations of dilutive common
stock equivalents are based on the if-converted method for the Preferred Stock
and on the treasury stock method for the other common stock equivalents using
the average market price for the primary earnings per share computations and the
higher of average or year-end market price for the fully diluted earnings per
share computations. The weighted-average number of common shares and equivalents
for the primary and fully diluted earnings per share computations are 8,076,717
and 8,173,330, respectively, for 1996, 7,649,946 and 7,768,843, respectively,
for 1995 and 6,596,111 and 6,629,430, respectively, for 1994.
2. DEBT
Long-term debt consists of:
<TABLE>
<CAPTION>
APRIL 28, 1996 APRIL 30, 1995
-------------- --------------
<S> <C> <C>
Term loan to bank $ 1,583,333 $ 2,083,333
Note payable to bank under revolving credit agreement 975,000 1,075,000
ESOP guarantee 75,000
-------------- --------------
2,558,333 3,233,333
Less current portion 1,225,000 925,000
-------------- --------------
$ 1,333,333 $ 2,308,333
============== ==============
</TABLE>
F-10
<PAGE> 46
Novametrix Medical Systems Inc.
Notes to Consolidated Financial Statements (continued)
2. DEBT (CONTINUED)
The Company's term loan to bank is payable in monthly installments of $41,667,
plus interest at the bank's base rate plus 1/2% (8.75% at April 28, 1996)
through June 1, 1999.
The Company's revolving credit agreement limits borrowing to a maximum of
$2,500,000 or 75% of the Company's eligible accounts receivable, as defined. The
agreement expires on August 31, 1997 and bears interest at the London Interbank
Offering Rate ("LIBOR") plus 2.5% (7.93% at April 28, 1996).
Under the terms of the revolving credit agreement and term loan, the Company is
required to maintain certain financial ratios and minimum levels of working
capital and net worth, and is restricted, among other things, from the payment
of dividends on Common Stock, new borrowing, capital expenditures and mergers.
The Company's ESOP guarantee, payable in quarterly installments of $25,000 plus
interest at 83% of the bank's lending rate, as defined, was repaid in full
during January 1996 as scheduled.
Aggregate annual maturities of long-term debt at April 28, 1996 are as follows:
1997--$1,225,000; 1998--$750,000; 1999--$500,000 and 2000--$83,333.
Substantially all tangible assets are pledged as collateral for the notes
payable to bank; substantially all cash and cash equivalents are on deposit with
the bank.
The Company paid interest of $292,328 in 1996, $374,971 in 1995 and $659,794 in
1994.
3. CAPITAL STOCK
The Preferred Stock is issuable in one or more series. The Board of Directors of
the Company is authorized to establish, among other things, the rate of
dividends payable, redemption rights and voting rights prior to issuance.
The Company has authorized 1,000,000 shares of $1.00 par value Preferred Stock
of which 50,000 shares are designated as Series A (none issued) and 120,000
shares are designated as Series B. The Preferred Stock, Series B carries a
liquidation preference of $25.00 per share (together with all accrued but unpaid
dividends) and an annual cumulative dividend of $.75 a share payable quarterly
in arrears. (The dividend is increased to $2.25 if certain covenants are not
met.)
F-11
<PAGE> 47
Novametrix Medical Systems Inc.
Notes to Consolidated Financial Statements (continued)
3. CAPITAL STOCK (CONTINUED)
On December 8, 1995, 60,000 shares of Preferred Stock, Series B were converted
into 666,666 shares of Common Stock. At April 28, 1996, 40,000 shares remain
outstanding and are held by the Company's primary lender, redeemable by the
Company under certain circumstances, convertible into 444,444 shares of the
Company's Common Stock and stated at their redemption and liquidation value as
"Redeemable Preferred Stock."
At April 28, 1996 there are 3,767,603 preferred share purchase rights
outstanding. Each right entitles the registered holder to purchase one
one-hundredth of a share of Preferred Stock, Series A, for $25.00 upon the
occurrence of certain specified "takeover" events. The rights are redeemable and
exchangeable only in certain specified circumstances. As of April 28, 1996, no
takeover events had occurred and no rights were exercisable.
On June 16, 1994, the Company completed a public offering for 550,000 "units"
with each unit consisting of two shares of Common Stock, and one redeemable
Class A Warrant and one redeemable Class B Warrant. The units were subsequently
split into their component parts on December 8, 1994. Each Class A Warrant is
exercisable into one share of Common Stock at an exercise price of $4.95. Each
Class B Warrant is exercisable into one share of Common Stock at an exercise
price of $5.85.
During fiscal 1995, 26,821 shares of common stock were issued in settlement of
$144,163 of technology purchase costs previously accrued.
F-12
<PAGE> 48
Novametrix Medical Systems Inc.
Notes to Consolidated Financial Statements (continued)
4. STOCK OPTIONS, STOCK PURCHASE PLAN AND WARRANTS
Activity relating to the Company's stock option plans follows:
<TABLE>
<CAPTION>
1979 PLAN 1990 PLAN 1994 PLAN TOTAL
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Year ended May 1, 1994:
Outstanding options at May 2, 1993: 245,586 95,000 340,586
Exercised ($1.00 to $2.00 per share) (40,101) (6,600) (46,701)
Cancelled (11,000) (11,000)
----------- ----------- ----------- -----------
Total shares under option at May 1, 1994 194,485 88,400 282,885
Year ended April 30, 1995:
Granted 103,000 122,000 225,000
Exercised ($1.00 to $2.00 per share) (64,018) (10,000) (74,018)
Cancelled (20,500) (20,500)
----------- ----------- ----------- -----------
Total shares under option at April 30, 1995 109,967 181,400 122,000 413,367
Year ended April 28, 1996:
Granted 55,000 55,000
Exercised ($1.00 to $4.375 per share) (20,967) (19,566) (3,266) (43,799)
Cancelled (7,500) (3,334) (10,834)
----------- ----------- ------ -----------
Total shares under option at April 28, 1996 81,500 161,834 170,400 413,734
=========== =========== =========== ===========
</TABLE>
Additional data relating to the stock option plans at year-end follows:
<TABLE>
<CAPTION>
APRIL 28, 1996 APRIL 30, 1995 MAY 1, 1994
-------------- -------------- -----------
<S> <C> <C> <C>
Range of option prices $1.00 TO $5.00 $1.00 to $4.375 $1.00 to $8.00
Number of shares as to which options
were exercisable 212,067 171,700 228,552
</TABLE>
At April 28, 1996, options for 126,667 shares have been authorized but not yet
granted under the 1990 and 1994 stock option plans.
F-13
<PAGE> 49
Novametrix Medical Systems Inc.
Notes to Consolidated Financial Statements (continued)
4. STOCK OPTIONS, STOCK PURCHASE PLAN AND WARRANTS (CONTINUED)
The Company has an employee stock purchase plan expiring on December 31, 2002
for which 150,000 shares of Common Stock have been reserved. As of April 28,
1996, 45,985 shares of Common Stock had been issued under this plan.
The Company has redeemable Class A and Class B Warrants outstanding covering an
aggregate of 1,099,880 shares from the public offering completed on June 16,
1994 (see Note 3) and warrants for 55,000 units issued to the principal
underwriter (with each unit consisting of two shares of Common Stock, one Class
A Warrant and one Class B Warrant). The Company has also granted warrants to a
group of officers and directors, its general counsel, principal lender, key
employees and an investment firm to purchase shares of the Company's Common
Stock. Data relating to warrants outstanding at April 28, 1996 follows:
<TABLE>
<CAPTION>
YEAR RANGE OF NUMBER OF SHARES COVERED BY
WARRANTS GRANTED EXERCISE PRICES OUTSTANDING WARRANTS
---------------- --------------- ---------------------------
<S> <C> <C>
1988 $2.625 to $5.58 78,763
1989 $2.625 to $3.49 42,976
1990 $.89 to $1.81 613,694
1991 $1.84 163,043
1992 $.93 to $2.25 195,979
1993 $2.625 10,000
1994 $4.50 50,000
1995 $4.125 to $5.85 1,393,059
-------------
2,547,514
=============
</TABLE>
The warrants were granted at prices which equaled or exceeded the market price
of the Company's Common Stock at the date of grant. The warrants expire at
various dates from December 8, 1997 through June 20, 2004, and are all currently
exercisable. During 1996, an aggregate of 124,473 shares were exercised at
prices ranging from $.89 to $4.95 per share.
At April 28, 1996, there were 3,636,374 shares of Common Stock reserved for
issuance for: 1) the exercise of options and warrants; 2) purchases through the
Company's employee stock purchase plan; and 3) the conversion of Preferred
Stock.
F-14
<PAGE> 50
Novametrix Medical Systems Inc.
Notes to Consolidated Financial Statements (continued)
5. CONTINGENCIES
The Company is a party to various legal proceedings incidental to its business.
Management believes that none of these legal proceedings will have a material
adverse effect on the Company's consolidated financial position, results of
operations or liquidity.
During 1994, the Company reached a favorable settlement of an outstanding
contractual dispute, which resulted in the reversal of approximately $140,000
($.02 per share) of expenses previously accrued. Such amount is included in
other expense (income), net.
6. BUSINESS AND SIGNIFICANT CUSTOMERS
The Company considers that its products comprise a single business segment
within the medical instruments industry. The Company had export sales as
follows:
<TABLE>
<CAPTION>
WESTERN HEMISPHERE
EUROPE (OTHER THAN THE U.S.) ASIA OTHER TOTAL
------ --------------------- ---- ----- -----
<S> <C> <C> <C> <C> <C>
1996 $ 4,498,005 $ 2,949,055 $ 3,076,383 $ 814,325 $ 11,337,768
1995 4,183,032 2,083,169 2,428,293 593,821 9,288,315
1994 3,321,319 1,720,458 1,689,934 498,608 7,230,319
</TABLE>
No one customer accounted for more than 10% of net sales in 1996, 1995 or 1994.
7. LEASES
In connection with a planned move in fiscal 1997, the Company entered into a
noncancellable long-term operating lease for its plant and office facilities
which expires in 2008. The lease requires the Company to pay for related
property taxes and insurance, contains a renewal option for five years and
stipulates a general inflation escalation clause. In addition, the Company
leases certain equipment under various noncancellable long-term operating
leases. Future minimum annual lease payments for these long-term operating
leases for the next five years and thereafter are:
F-15
<PAGE> 51
Novametrix Medical Systems Inc.
Notes to Consolidated Financial Statements (continued)
7. LEASES (CONTINUED)
<TABLE>
<S> <C>
1997 $ 447,520
1998 424,534
1999 408,425
2000 408,425
2001 408,425
Thereafter 2,858,975
--------------
$ 4,956,304
==============
</TABLE>
Total rental expense under operating leases was $398,076 in 1996, $376,059 in
1995 and $425,825 in 1994.
8. INCOME TAXES
The components of the Company's deferred income tax accounts follow:
<TABLE>
<CAPTION>
APRIL 28, 1996 APRIL 30, 1995 MAY 1, 1994
-------------- -------------- -----------
<S> <C> <C> <C>
Deferred tax assets:
Tax credits $ 639,756 $ 526,671 $ 522,685
Net operating loss carryforwards 4,413,335 5,255,267 6,480,015
Inventories - valuation allowance
and other 687,064 665,629 567,691
Other 166,528 227,051 172,036
---------------- --------------- ---------------
Total deferred tax assets 5,906,683 6,674,618 7,742,427
Valuation allowance for deferred
tax assets (4,872,987) (6,652,586) (7,732,477)
---------------- --------------- ---------------
1,033,696 22,032 9,950
Deferred tax liabilities 13,696 22,032 9,950
---------------- --------------- ---------------
Net deferred tax asset $ 1,020,000 $ - $ -
================ =============== ================
</TABLE>
F-16
<PAGE> 52
Novametrix Medical Systems Inc.
Notes to Consolidated Financial Statements (continued)
8. INCOME TAXES (CONTINUED)
The provision (benefit) for income taxes consists of the following:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
1996 1995 1994
--------------- ----------- --------
<S> <C> <C> <C>
Current tax expense $ 40,000 $ 40,000
Deferred tax (benefit) (1,020,000)
--------------- ----------- --------
Income tax expense (benefit) $ (980,000) $ 40,000 $ -
=============== =========== =====
</TABLE>
The provision for income taxes at the Company's tax rate differed from the
provision for income taxes at the statutory rate as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---------------- ------------- -------------
<S> <C> <C> <C>
Computed tax expense at expected statutory
rate $ 727,000 $ 559,000 $ 256,000
State taxes, net of federal effect 3,000 2,000 2,000
Alternative minimum tax 37,000 40,000
Permanent items -- net effect 2,000 3,000 13,000
Utilization of net operating loss carryforwards (729,000) (564,000) (271,000)
Reduction in valuation allowance (1,020,000)
---------------- --------------- ------------
$ (980,000) $ 40,000 $ -
================ ============= =============
</TABLE>
At April 28, 1996 the Company had net operating loss carryovers for federal
income tax reporting purposes of approximately $12,875,000 of which $8,300,000
expires in 2005, $4,200,000 expires in 2006 and $375,000 expires in 2007. The
Company has unused research and other tax credits of approximately $640,000 at
April 28, 1996 which expire in varying amounts between 1997 and 2010. Such
credits will be reflected in operations when realized. The Company also has
approximately $352,000 in state net operating loss carryforwards of which
$282,000 expires in 1997 and $70,000 expires in 1999.
F-17
<PAGE> 53
Novametrix Medical Systems Inc.
Notes to Consolidated Financial Statements (continued)
8. INCOME TAXES (CONTINUED)
SFAS No. 109 requires the reduction of the deferred tax asset by a valuation
allowance if, based on the weight of available evidence, it is more likely than
not that a portion or all of the deferred tax asset will not be realized. During
1996, the Company reduced its valuation allowance by $1,020,000 due to the
Company's continued improvement in earnings and increased probability of future
taxable income. Based on the weight of available evidence, in the opinion of the
Company's management, the Company will more likely than not generate sufficient
taxable income to fully utilize the net deferred tax asset recorded on the
balance sheet at April 28, 1996.
The amount of the net operating loss carryovers and credits for federal income
tax purposes which may be used in any future year may be limited under the
provisions of the Tax Reform Act of 1986. Also, a portion of the net operating
loss carryforward for federal income tax reporting purposes is attributable to
stock options, the tax benefit of which will be reflected as an adjustment to
additional paid-in capital when realized.
Income taxes paid in 1996, 1995 and 1994 were not significant.
9. RECENT ACCOUNTING PRONOUNCEMENTS
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." The Statement establishes the financial accounting and reporting
standards for stock based compensation plans, including stock purchase plans,
stock options and restricted stock. These plans allow for certain associates to
receive shares of the Company's stock. The Statement requires that these
transactions be accounted for based on the fair value of the consideration
received, or continue to be accounted for based on the method as prescribed by
APB Opinion No. 25, "Accounting for Stock Issued to Employees." The Company will
adopt this Statement in fiscal 1997 and plans to continue accounting for these
transactions in accordance with APB Opinion No. 25, however, proforma
disclosures of net income and earnings per share, using the fair value based
method described in Statement No. 123 will be disclosed in fiscal 1997.
F-18
<PAGE> 54
Index to Exhibits*
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
3(a) Certificate of Incorporation of the Company, as amended (incorporated by
reference to Exhibit 3(a) and 3(e) to the Company's Registration Statement on
Form SB-2 dated June 8, 1994). --
3(b) Certificate of Designation of Series A Preferred Stock of the Company filed
with the Secretary of State of the State of Delaware on March 17, 1989
(incorporated by reference to Exhibit 3(b) to the Company's Registration
Statement on Form SB-2 dated June 8, 1994). --
3(c) Certificate of Designation of Series B Preferred Stock of the Company filed
with the Secretary of State of the State of Delaware on August 29, 1991
(incorporated by reference to Exhibit 1 to the Company's Current Report on
Form 8-K dated August 29, 1992). --
3(d) By-Laws of the Company, as amended to date. E-7
10(a) Employment Agreement dated as of June 1, 1988 between the Company and William
J. Lacourciere, as amended (incorporated by reference to Exhibit 10(a) to the
Company's Registration Statement on Form SB-2 dated June 8, 1994). --
10(b) Amendment dated as of August 1, 1988 to the Employment Agreement between the
Company and William J. Lacourciere (incorporated by reference to Exhibit
10(b) to the Company's Registration Statement on Form SB-2 dated June 8,
1994). --
10(c) Warrant Certificate of the Company, the warrants evidenced thereby
exercisable commencing on December 29, 1989, together with Schedule of
substantially identical warrants. E-35
</TABLE>
__________________________________
* Copies of exhibits filed with this Annual Report on Form
10-KSB or incorporated by reference herein do not accompany copies hereof for
distribution to stockholders of the Company. The Company will furnish a copy
of any of such exhibits to any stockholder requesting the same for a nominal
charge to cover duplicating costs.
E-1
<PAGE> 55
<TABLE>
<S> <C> <C>
10(d) Warrant Certificate of the Company, the warrants evidenced thereby
exercisable commencing on May 23, 1990. E-56
10(e) Warrant Certificate of the Company, the warrants evidenced thereby
exercisable commencing on September 15, 1988, together with Schedule of
substantially identical warrants (incorporated by reference to Exhibit 10(e)
to the Company's Registration Statement on Form SB-2 dated June 8, 1994). --
10(f) First Amendment to Warrant Certificate of the Company dated as of
September 19, 1989, together with Schedule of substantially identical
amendments. E-77
10(g) Warrant Certificate of the Company, the warrants evidenced thereby
exercisable commencing on May 1, 1989, together with Schedule of
substantially identical warrants (incorporated by reference to Exhibit 10(g)
to the Company's Registration Statement on Form SB-2 dated June 8, 1994). --
10(h) First Amendment to Warrant Certificate of the Company dated as of
September 19, 1989, together with Schedule of substantially identical
amendments. E-80
10(i) Warrant Certificate of the Company, the warrants evidenced thereby
exercisable commencing on January 2, 1991 (incorporated by reference to
Exhibit 10(dd) to the Company's Registration Statement on Form S-1 dated
December 30, 1991). --
10(j) Form of Warrant Certificate of the Company, the warrants evidenced thereby
exercisable commencing on December 2, 1991 (incorporated by reference to
Exhibit 10(ee) to the Company's Registration Statement on Form S-1 dated
December 30, 1991). --
</TABLE>
E-2
<PAGE> 56
Index to Exhibits
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
10(k) Rights Agreement dated as of March 14, 1989 between the Company and The
Connecticut Bank and Trust Company, N.A., as Rights Agent ("CBT"), which
includes the form of Certificate of Designation setting forth the terms of
the Series A Preferred Stock, $1.00 par value, as Exhibit A, the form of
Right Certificate as Exhibit B and the Summary of Rights to Purchase
Preferred Shares as Exhibit C (incorporated by reference to Exhibit 10(l) to
the Company's Registration Statement on Form SB-2 dated June 8, 1994). --
10(l) Amendment to Rights Agreement dated as of October 30, 1990 among the Company,
CBT and Mellon Bank, N.A. (incorporated by reference to Exhibit 10(o) to the
Company's Annual Report on Form 10-K for the year ended April 28, 1991). --
10(m) Amendment to Rights Agreement dated as of August 29, 1991 between the Company
and Mellon Bank, N.A. (incorporated by reference to Exhibit 10(p) to the
Company's Registration Statement on Form S-1 dated December 30, 1991). --
10(n) Asset Purchase Agreement dated as of April 30, 1989 among Cascadia Technology
Corporation, a Washington corporation ("Cascadia"), Daniel W. Knodle, Leslie
E. Mace, Lawrence L. Labuda, William G. McCoy, NTC and the Company
(incorporated by reference to Exhibit 10(o) to the Company's Registration
Statement on Form SB-2 dated June 8, 1994). --
10(o) Lease dated August 1990 between CPM Associates and Novametrix Realty Corp.
(incorporated by reference to Exhibit 10(w) to the Company's Annual Report on
Form 10-K for the year ended April 28, 1991). --
</TABLE>
E-3
<PAGE> 57
Index to Exhibits
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
10(p) Securities Purchase Agreement dated as of August 29, 1991 among the Company,
William W. Nicholson, Auric Partners Limited, a Michigan limited partnership,
and Union Trust Company (incorporated by reference to Exhibit 2 to the
Company's Current Report on Form 8-K dated August 29, 1991). --
10(q) Third Amended and Restated Loan and Security Agreement dated as of August 29,
1991 among the Company, NTC Technology Inc., a Delaware corporation ("NTC"),
and Union Trust Company (incorporated by reference to Exhibit 3 to the
Company's Current Report on Form 8-K dated August 29, 1991). --
10(r) First Amendment to Third Amended and Restated Loan and Security Agreement
dated as of April 29, 1993 among the Company, NTC and Union Trust Company
(incorporated by reference to Exhibit 5(a) to the Company's Current Report on
Form 8-K dated April 28, 1993). --
10(s) 1979 Stock Option Plan, as amended (incorporated by reference to Exhibit
10(ee) to the Company's Annual Report on Form 10-K for the year ended May 2,
1993). --
10(t) 1990 Stock Option Plan (incorporated by reference to Exhibit 10(ff) to the
Company's Annual Report on Form 10-K for the year ended May 2, 1993). --
10(u) 1992 Employee Stock Purchase Plan (incorporated by reference to Exhibit
10(gg) to the Company's Annual Report on Form 10-K for the year ended May 2,
1993) (incorporated by reference to Exhibit 10(y) to the Company's
Registration Statement on Form SB-2 dated June 8, 1994). --
10(v) Form of Letter Agreement between the Company and Keane Securities Co., Inc.
("Keane") pursuant to which Keane will act as finder for the Company
(incorporated by reference to Exhibit 10(z) to the Company's Registration
Statement on Form SB-2 dated June 8, 1994). --
</TABLE>
E-4
<PAGE> 58
Index to Exhibits
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
10(w) Fourth Amended and Restated Loan and Security Agreement dated as of June 16,
1994 among the Company, NTC and Union Trust Company (incorporated by
reference to Exhibit 10A to the Company's Quarterly Report on Form 10-QSB for
the three month period ended July 31, 1994). --
10(x) Amendment to Securities Purchase Agreement dated as of June 16, 1994 among
the Company, William W. Nicholson, Auric Partners Limited and Union Trust
Company (incorporated by reference to Exhibit 10B to the Company's Quarterly
Report on Form 10-QSB for the three month period ended July 31, 1994).
10(y) 1994 Stock Option Plan (incorporated by reference to Exhibit 4(i) to the
Company's Registration Statement on Form S-8, dated August 3, 1994). --
10(z) Form of Representative Warrant Agreement, certificate included (incorporated
by reference to Exhibit 4(a) to the Company's Registration Statement on Form
SB-2 dated June 8, 1994). --
10(aa) Form of Warrant Agreement, certificate included (incorporated by reference to
Exhibit 4(b) to the Company's Registration Statement on Form SB-2 dated June
8, 1994).
10(bb) Amendment No. 1 to Fourth Amended and Restated Loan and Security Agreement
dated as of July 26, 1995 among the Company, NTC and First Fidelity Bank,
formerly Union Trust Company (incorporated by reference to Exhibit 10(ff) to
the Company's Annual Report on Form 10-KSB for the year ended April 30,
1995). --
10(cc) Amendment No. 3 to Rights Agreement dated as of November 28, 1995 between the
Company and Mellon Bank, N.A. E-83
10(dd) Lease dated January 4, 1996 between Nova Associates, L.L.C. and the Company. E-88
11 Statement Re Computation of Per Share Earnings. E-152
</TABLE>
E-5
<PAGE> 59
Index to Exhibits
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
21 Subsidiaries of the Company. E-153
23 Consent of Ernst & Young LLP, Independent Auditors. E-154
24 Power of Attorney (See "Power of Attorney" in Form 10-KSB). --
27 Financial Data Schedule. E-155
</TABLE>
E-6
<PAGE> 1
EXHIBIT 3(d)
AMENDMENT
TO
BY-LAWS
OF
NOVAMETRIX MEDICAL SYSTEMS INC.
Effective May 9, 1996
Article XV is amended by adding the following Section 10 at the
end of Article III thereof:
"SECTION 10. Notice of Business. No business may be transacted
at an annual or special meeting of stockholders, other than
business that is either (a) specified in the notice of meeting
(or any supplement thereto) given by or at the direction of the
Board of Directors (or any duly authorized committee thereof),
(b) otherwise properly brought before the meeting by or at the
direction of the Board of Directors (or any duly authorized
committee thereof) or (c) otherwise properly brought before the
meeting by any stockholder of the Corporation (i) who is a
stockholder of record on the date of the giving of the notice
provided for in this Section 10 and on the record date for the
determination of stockholders entitled to vote at such meeting
and (ii) who complies with the notice procedures set forth in
this Section 10.
E-7
<PAGE> 2
In addition to any other applicable requirements, for business
to be properly brought before any meeting by a stockholder, such
stockholder must have given timely notice thereof in proper written
form to the Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive offices
of the Corporation not less than twenty-five (25) days nor more than
forty-five (45) days prior to the date of such meeting of
stockholders.
To be in proper written form, a stockholder's notice to the
Secretary must set forth as to each matter such stockholder proposes
to bring before the meeting (i) a brief description of the business
desired to be brought before the meeting and the reasons for
conducting such business at the meeting, (ii) the name and record
address of such stockholder, (iii) the class or series and number of
shares of capital stock of the Corporation which are owned
beneficially or of record by such stockholder, (iv) a description of
any arrangements or understandings between such stockholder and any
other person or persons (including their names) in connection with the
proposal of such business by
E-8
<PAGE> 3
such stockholder and any material interest of such stockholder in such
business and (v) a representation that such stockholder intends to
appear in person or by proxy at the meeting to bring such business
before the meeting.
No business shall be conducted at the meeting of stockholders
except business brought before the meeting in accordance with the
procedures set forth in this Section 10; provided, however, that, once
business has been properly brought before the meeting in accordance
with such procedures, nothing in this Section 10 shall be deemed to
preclude discussion by any stockholder of any such business. If the
Chairman of a meeting determines that business was not properly
brought before that meeting in accordance with the foregoing
procedures, the Chairman shall declare to the meeting that the
business was not properly brought before the meeting and such business
shall not be transacted."
E-9
<PAGE> 4
AMENDMENT
TO
BY-LAWS
OF
NOVAMETRIX MEDICAL SYSTEMS INC.
Effective November 28, 1995
Section 8 of Article IV is amended by inserting a new paragraph
at the end thereof which shall read in its entirety as follows:
"At all meetings of any Committee of the Board of
Directors, the presence of fifty percent (50%) of the Directors
constituting the Committee shall constitute a quorum for the
transaction of business. If a quorum shall not be present at
any meeting of any Committee, the Director or Directors present
thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum
shall be present."
E-10
<PAGE> 5
NOVAMETRIX MEDICAL SYSTEMS INC.
BY-LAWS
ARTICLE I
Offices
The registered office of the Corporation shall be in the City of
Dover, County of Kent, State of Delaware.
The Corporation may also have offices at such other places, both
within and without the State of Delaware, as may from time to time be
designated by the Board of Directors.
ARTICLE II
Books
The books and records of the Corporation may be kept (except as
otherwise provided by the laws of the State of Delaware) outside of the State
of Delaware and at such place or places as may from time to time be designated
by the Board of Directors.
ARTICLE III
Stockholders
Section 1. Annual Meetings. The annual meeting of the
Stockholders of the Corporation for the election of Directors and the
transaction of such other business as may properly come before said meeting
shall be held at the principal business office of the Corporation or at such
other place or places either within or without the State of
E-11
<PAGE> 6
Delaware as may be designated by the Board of Directors and stated in the
notice of the meeting, on the third Tuesday of September in each year, if not a
legal holiday, and, if a legal holiday, then on the next day not a legal
holiday, or on such other date as shall be determined by the Board of
Directors, at 10:30 o'clock in the forenoon.
Section 2. Special Meetings. Special meetings of the
Stockholders of the Corporation shall be held whenever called in the manner
required by the laws of the State of Delaware for purposes as to which there
are special statutory provisions, and for other purposes whenever called by
resolution of the Board of Directors, or by the Chairman of the Board or by the
President, or, if approved by a resolution of the Board of Directors, by the
holders of a majority of the outstanding shares of capital stock of the
Corporation entitled to vote on matters that are to be voted on at such
meeting. Any such special meeting of Stockholders may be held at the principal
business office of the Corporation or at such other place or places, either
within or without the State of Delaware, as may be specified in the notice
thereof. Business transacted at any special meeting of Stockholders of the
Corporation shall be limited to the purposes stated in the notice thereof.
Section 3. Notice. Except as otherwise expressly required by
the laws of the State of Delaware or the Certificate of Incorporation, written
notice of each meeting
E-12
<PAGE> 7
of Stockholders stating the day, hour and place, and in general terms the
business to be transacted thereat, shall be delivered personally or mailed to
each Stockholder entitled to vote thereat not less than ten (10) and not more
than sixty (60) days before the meeting, but at any meeting at which all
Stockholders shall be present, or of which all Stockholders not present have
waived notice in writing, the giving of notice as above described may be
dispensed with. If mailed, said notice shall be directed to each Stockholder
at his address as the same appears on the stock ledger of the Corporation
unless he shall have filed with the Secretary of the Corporation a written
request that notices intended for him be mailed to some other address, in which
case it shall be mailed to the address designated in said request.
Section 4. List of Stockholders. The officer of the
Corporation who shall have charge of the stock ledger of the Corporation shall
prepare and make, at least ten (10) days before every meeting of Stockholders,
a complete list of the Stockholders entitled to vote at said meeting, arranged
in alphabetical order and showing the address of each Stockholder and the
number of shares registered in the name of each Stockholder. Such list shall
be open to the examination of any Stockholder, for any purpose germane to the
meeting, during ordinary business hours for a period of at least ten (10) days
prior to the meeting, either at a
E-13
<PAGE> 8
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any Stockholder who is present.
Section 5. Quorum. At any meeting of the Stockholders of the
Corporation, except as otherwise expressly provided by the laws of the State of
Delaware or the Certificate of Incorporation, there must be present, either in
person or by proxy, in order to constitute a quorum, Stockholders owning a
majority of the issued and outstanding shares of the capital stock of the
Corporation entitled to vote at such meeting. At any meeting of Stockholders
at which a quorum is not present, the holders of, or proxies for, a majority
of the stock which is represented at such meeting, shall have power to adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
noticed. However, if the adjournment is for more than thirty (30) days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice
E-14
<PAGE> 9
of the adjourned meeting shall be given to each Stockholder of record entitled
to vote at the meeting.
Section 6. Organization. The Chairman of the Board of
Directors, or in his absence the President, or in his absence any Director,
officer or Stockholder designated by the Board of Directors, or if the Board of
Directors does not designate any such person, by the Stockholders, shall call
to order meetings of the Stockholders and shall act as chairman of such
meetings.
The Secretary of the Corporation shall act as secretary of all
meetings of the Stockholders, but in the absence of the Secretary the presiding
officer may appoint any other person to act as secretary of any meeting.
Section 7. Voting. Except as otherwise expressly provided by
the laws of the State of Delaware, or in the Certificate of Incorporation each
Stockholder of record of the Corporation shall, at every meeting of the
Stockholders of the Corporation, be entitled to one (1) vote for each share of
stock standing in his name on the books of the Corporation on any matter on
which he is entitled to vote. Such votes may be cast either in person or by
proxy, appointed by an instrument in writing, subscribed by such Stockholder or
by his duly authorized attorney, and filed with the Secretary before being
voted on, but no proxy shall be voted after three (3) years from its date,
unless said proxy provides for a longer period. Any and every reference
E-15
<PAGE> 10
in these By-Laws to a majority or other proportion of capital stock shall refer
to such majority or other proportion of the votes of such stock.
All elections of Directors shall be by ballot. The vote on any
other matter at a meeting of Stockholders need not be by ballot unless
demanded, in person or by proxy, by the holders of a majority of the capital
stock of the Corporation represented in person or by proxy at such meeting and
entitled to vote thereat.
Except as otherwise expressly provided by the laws of the State
of Delaware or the Certificate of Incorporation, when a quorum is present at
any meeting of Stockholders, the vote, in person or by proxy, of the holders of
a majority of the capital stock of the Corporation represented in person or by
proxy at such meeting and entitled to vote thereat shall decide any question
brought before such meeting.
Section 8. Consent. Except as otherwise provided in the
Certificate of Incorporation or unless otherwise approved by a vote of not less
than a majority of the Directors then holding office (or, in the event that the
Corporation at the time has a Related Person [as defined in the Certificate of
Incorporation], then by a vote of not less than a majority of the Continuing
Directors [as defined in the Certificate of Incorporation]), no action shall be
taken by the Stockholders except at an annual or special
E-16
<PAGE> 11
meeting of Stockholders actually held, pursuant to Section 1 or 2 of this
Article, upon prior notice and pursuant to a vote. Except as otherwise
provided hereinabove, no action shall be taken by the Stockholders by written
consent.
Section 9. Judges. At every meeting of Stockholders at which a
vote by ballot is taken, the polls shall be opened and closed, the proxies and
ballots shall be received and taken in charge, and all questions touching the
qualifications of votes, the validity of proxies and the acceptance or
rejection of votes shall be decided by two (2) judges. Such judges shall be
appointed by the Board of Directors before such meeting, or, if no such
appointment shall have been made, by the chairman of such meeting. If for any
reason any of the judges previously appointed shall fail to attend or refuse or
be unable to serve, judges in place of any so failing to attend, or refusing or
unable to serve, shall be appointed in like manner.
ARTICLE IV
Directors
Section 1. Number, Election and Term of Office. The business
and affairs of the Corporation shall be managed by the Board of Directors. The
number of Directors which shall constitute the whole Board shall be not less
than three (3) nor more than nine (9). Within such limits, the number of
Directors may be fixed from time to time by vote of the Board of Directors, at
any regular or special
E-17
<PAGE> 12
meeting, subject to the provisions of the Certificate of Incorporation.
Directors need not be Stockholders. Directors shall be elected at the annual
meeting of the Stockholders except as provided in Section 2 of this Article, to
serve for terms in accordance with the Certificate of Incorporation and until
their respective successors are duly elected and have qualified.
In addition to the powers by these By-Laws expressly conferred
upon them, the Board may exercise all such powers of the Corporation as are not
by the laws of the State of Delaware, the Certificate of Incorporation or these
By-Laws required to be exercised or done by the Stockholders.
Section 2. Vacancies and Newly Created Directorships. Except
as hereinafter provided and subject to the provisions of the Certificate of
Incorporation, any vacancy in the office of a Director occurring for any reason
other than the removal of a Director pursuant to Section 3 of this Article, and
any newly created Directorship resulting from any increase in the number of
Directors, may be filled by a majority of the remaining members of the Board of
Directors, though less than a quorum, or by the sole remaining Director. In
the event that any vacancy in the office of a Director occurs as a result of
the removal of a Director pursuant to Section 3 of this Article, or in the
event that vacancies occur contemporaneously in the
E-18
<PAGE> 13
offices of all of the Directors, such vacancy or vacancies shall be filled by a
vote of the Stockholders at the next annual or special meeting of Stockholders.
Directors chosen or elected as aforesaid shall hold office for a term in
accordance with the Certificate of Incorporation and until their respective
successors are duly elected and qualified or until their earlier resignation or
removal.
Section 3. Removals. At any meeting of Stockholders of the
Corporation called for the purpose, the Stockholders may remove from office,
with cause, any or all of the Directors.
Section 4. Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such time and place, either within or
without the State of Delaware, as shall from time to time be determined by
resolution of the Board.
Section 5. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board of Directors, the
President or any two Directors on notice given to each Director, and such
meetings shall be held at the principal business office of the Corporation or
at such other place or places, either within or without the State of Delaware,
as shall be specified in the notices thereof.
Section 6. Annual Meetings. The first meeting of each newly
elected Board of Directors shall be held as soon
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as practicable after each annual election of Directors and on the same day, at
the same place at which regular meetings of the Board of Directors are held, or
at such other time and place as may be provided by resolution of the Board.
Such meeting may be held at any other time or place which shall be specified in
a notice given, as hereinafter provided, for special meetings of the Board of
Directors.
Section 7. Notice. Notice of any meeting of the Board of
Directors requiring notice shall be given to each Director by mailing the same,
addressed to him at his residence or usual place of business, at least
forty-eight (48) hours, or shall be sent to him at such place by facsimile
transmission, courier, telegraph, cable or wireless, or shall be delivered
personally or by telephone, at least twelve (12) hours, before the time fixed
for the meeting. At any meeting at which every Director shall be present or at
which all Directors not present shall waive notice in writing, any and all
business may be transacted even though no notice shall have been given.
Section 8. Quorum. At all meetings of the Board of Directors,
the presence of a majority or more of the Directors constituting the Board
shall constitute a quorum for the transaction of business. If a quorum shall
not be present at any meeting of the Board of Directors, the Directors present
thereat may adjourn the meeting from time
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to time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 9. Voting. Except as may be otherwise specifically
provided by the laws of the State of Delaware, the Certificate of Incorporation
or these By-Laws, the affirmative vote of a majority of the Directors present
at the time of such vote shall be the act of the Board of Directors if a quorum
is present.
Section 10. Consent. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, any action required or permitted
to be taken at any meeting of the Board of Directors may be taken without a
meeting, if all members of the Board consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board.
Section 11. Telephonic Meetings. Unless otherwise restricted
by the Certificate of Incorporation or these By-Laws, members of the Board of
Directors may participate in a meeting of the Board by means of conference
telephone or similar communications equipment by means of which all persons
participating in such meeting can hear each other, and participation in a
meeting pursuant to this Section 11 shall constitute presence in person at such
meeting.
Section 12. Compensation of Directors. Directors, as such,
shall not receive any stated salary for
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their services, but, by resolution of the Board, a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board; provided that nothing herein contained shall be construed
to preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefor.
Section 13. Resignations. Any Director of the Corporation may
resign at any time by giving written notice to the Board of Directors or to the
Chairman of the Board of Directors, the President or the Secretary of the
Corporation. Any such resignation shall take effect at the time specified
therein, or, if the time be not specified, upon receipt thereof; and unless
otherwise specified therein, acceptance of such resignation shall not be
necessary to make it effective.
ARTICLE V
Officers
Section 1. Number, Election and Term of Office. The officers
of the Corporation shall be a Chairman of the Board of Directors, a President,
one or more Executive Vice Presidents, one or more Vice Presidents, a Secretary
and a Treasurer, and may at the discretion of the Board of Directors include
one or more Assistant Treasurers and Assistant Secretaries. The officers of
the Corporation shall be elected annually by the Board of Directors at its
meeting held immediately after the annual meeting of the
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Stockholders, and shall hold their respective offices until their successors
are duly elected and have qualified. Any number of offices may be held by the
same person. The Board of Directors may from time to time appoint such other
officers and agents as the interest of the Corporation may require and may fix
their duties and terms of office.
Section 2. Chairman of the Board of Directors. The Board of
Directors shall designate one of their number to act as Chairman of the Board
of Directors. The Chairman of the Board of Directors shall be the chief
executive officer of the Corporation and shall have general and active
management of the business of the Corporation, and shall see that all orders
and resolutions of the Board are carried into effect. He shall ensure that the
books, reports, statements, certificates and other records of the Corporation
are kept, made or filed in accordance with the laws of the State of Delaware.
He shall preside at all meetings of the Board of Directors and at all meetings
of the Stockholders. He shall cause to be called regular and special meetings
of the Stockholders and of the Board of Directors in accordance with these
By-Laws. He may sign, execute and deliver in the name of the Corporation all
deeds, mortgages, bonds, contracts or other instruments authorized by the Board
of Directors, except in cases where the signing, execution or delivery thereof
shall be expressly delegated by the Board of Directors or by these
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By-Laws to some other officer or agent of the Corporation or where any of them
shall be required by law otherwise to be signed, executed or delivered. He may
sign, with the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary, certificates of stock of the Corporation. In addition to
the powers and duties expressly conferred upon him by these By-Laws, he shall,
except as otherwise specifically provided by the laws of the State of Delaware,
have such other powers and duties as shall from time to time be assigned to him
by the Board of Directors.
Section 3. President. Except as otherwise provided by the
Board of Directors, the President shall be the chief operating officer of the
Corporation. He may sign, execute and deliver in the name of the Corporation
all deeds, mortgages, bonds, contracts or other instruments authorized by the
Board of Directors, except in cases where the signing, execution or delivery
thereof shall be expressly delegated by the Board of Directors or by these
By-Laws to some other officer or agent of the Corporation or where any of them
shall be required by law otherwise to be signed, executed or delivered. He may
sign, with the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary, certificates of stock of the Corporation. He shall
appoint and remove, employ and discharge, and fix the compensation of all
servants, agents, employees and clerks of the Corporation other than the duly
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elected or appointed officers, subject to the approval of the Board of
Directors. He shall have such other powers and duties as from time to time may
be assigned to him by the Chairman of the Board of Directors or by the Board of
Directors, or as may be provided in these By-Laws. He shall, during the
absence or incapacity of the Chairman of the Board of Directors, assume his
powers and perform his duties.
Section 4. Executive Vice President. The Executive Vice
President shall have such powers and duties as may be assigned to him by the
Board of Directors, the Chairman of the Board of Directors or the President, or
as may be provided in these By-Laws. The Executive Vice President shall,
during the absence or incapacity of the President, assume his powers and
perform his duties.
Section 5. Vice Presidents. The Vice Presidents shall have
such powers and duties as may be assigned to them by the Board of Directors,
the Chairman of the Board of Directors or the President, or as may be provided
in these By-Laws. Any Vice President shall, during the absence or incapacity
of the Executive Vice President, assume his powers and perform his duties.
Section 6. Secretary. The Secretary may sign all certificates
of stock of the Corporation. He shall record all the proceedings of the
meetings of the Board of Directors and of the Stockholders of the Corporation
in
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books to be kept for that purpose. He shall have custody of the seal of the
Corporation and may affix the same to any instrument requiring such seal when
authorized by the Board of Directors, and when so affixed he may attest the
same by his signature. He shall keep the transfer books, in which all transfer
of the capital stock of the Corporation shall be registered, and the stock
books, which shall contain the names and addresses of all holders of the
capital stock of the Corporation and the number of shares held by each; and he
shall keep such stock and transfer books open daily during business hours to
the inspection of every Stockholder and for transfer of stock. He shall notify
the Directors and Stockholders of their respective meetings as required by law
or by these By-Laws, and shall perform such other duties as may be required by
law or by these By-Laws, or which may be assigned to him from time to time by
the Board of Directors.
Section 7. Assistant Secretaries. The Assistant Secretaries
shall, during the absence or incapacity of the Secretary, assume and perform
all functions and duties which the Secretary might lawfully do if present and
not under any incapacity.
Section 8. Treasurer. The Treasurer shall have charge of the
funds and securities of the Corporation. He may sign all certificates of
stock. He shall keep full and accurate accounts of all receipts and
disbursements of the
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Corporation in books belonging to the Corporation and shall deposit all monies
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors. He shall
disburse the funds of the Corporation as may be ordered by the Board, and shall
render to the Chairman of the Board of Directors, the President, any Vice
President or the Directors, whenever they may require it, an account of all his
transactions as Treasurer and an account of the business and financial position
of the Corporation.
Section 9. Assistant Treasurers. The Assistant Treasurers
shall, during the absence or incapacity of the Treasurer, assume and perform
all functions and duties which the Treasurer might lawfully do if present and
not under any incapacity.
Section 10. Treasurer's Bond. The Treasurer and Assistant
Treasurers shall, if required so to do by the Board of Directors, each give a
bond (which shall be renewed every six (6) years) in such sum and with such
surety or sureties as the Board of Directors may require.
Section 11. Transfer of Duties. The Board of Directors in its
absolute discretion may transfer the power and duties, in whole or in part, of
any officer to any other officer, or persons, notwithstanding the provisions of
these By-Laws, except as otherwise provided by the laws of the State of
Delaware.
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Section 12. Vacancies. If the office of Chairman of the Board
of Directors, President, Executive Vice President, Vice President, Secretary or
Treasurer, or of any other officer or agent becomes vacant for any reason, the
Board of Directors may choose a successor to hold office for the unexpired
term.
Section 13. Removals. At any meeting of the Board of Directors
called for the purpose, any officer or agent of the Corporation may be removed
from office, with or without cause, by the affirmative vote of a majority of
the entire Board of Directors.
Section 14. Compensation of Officers. The officers shall
receive such salary or compensation as may be determined by the Board of
Directors.
Section 15. Resignations. Any officer or agent of the
Corporation may resign at any time by giving written notice to the Board of
Directors, the Chairman of the Board of Directors, or to the President, any
Executive Vice President or the Secretary of the Corporation. Any such
resignation shall take effect at the time specified therein or, if the time be
not specified, upon receipt thereof; and unless otherwise specified therein,
acceptance of such resignation shall not be necessary to make it effective.
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ARTICLE VI
Contracts, Checks and Notes
Section 1. Contracts. Unless the Board of Directors shall
otherwise specifically direct, all contracts of the Corporation shall be
executed in the name of the Corporation by the Chairman of the Board of
Directors, the President, an Executive Vice President or a Vice President, and
the corporate seal may be thereunto affixed and attested by the Secretary or an
Assistant Secretary.
Section 2. Checks and Notes. All checks, drafts, bills of
exchange and promissory notes and other negotiable instruments of the
Corporation shall be signed by such officers or agents of the Corporation as
may be designated by the Board of Directors.
ARTICLE VII
Stock
Section 1. Certificates of Stock. The certificates for shares
of the stock of the Corporation shall be in such form, not inconsistent with
the Certificate of Incorporation, as shall be prepared or approved by the Board
of Directors. Every holder of stock in the Corporation shall be entitled to
have a certificate signed by, or in the name of the Corporation by, the
Chairman of the Board of Directors, the President, an Executive Vice President
or a Vice President, and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant
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Secretary certifying the number of shares owned by him and the date of issue;
and no certificate shall be valid unless so signed. All certificates shall be
consecutively numbered and shall be entered in the books of the Corporation as
they are issued.
Where a certificate is countersigned (1) by a transfer agent
other than the Corporation or its employee, or, (2) by a registrar other than
the Corporation or its employee, any other signature on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
All certificates surrendered to the Corporation shall be
cancelled and, except in the case of lost or destroyed certificates, no new
certificates shall be issued until the former certificates for the same number
of shares of the same class of stock shall have been surrendered and cancelled.
Section 2. Transfer of Stock. Upon surrender to the
Corporation or the transfer agent of the Corporation of a certificate for
shares duly endorsed or accompanied by proper evidence of succession,
assignment or authority to
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transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
ARTICLE VIII
Registered Stockholders
The Corporation shall be entitled to treat the holder of record
of any share or shares of stock as the holder in fact thereof and, accordingly,
shall not be bound to recognize any equitable or other claim to, or interest
in, such share or shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as expressly provided by the
laws of the State of Delaware or the Certificate of Incorporation.
ARTICLE IX
Lost or Destroyed Certificates
Any person claiming a certificate of stock to be lost or
destroyed, shall make an affidavit or affirmation of the fact and advertise the
same in such manner as the Board of Directors may require, and the Board of
Directors may, in its discretion, require the owner of the lost or destroyed
certificate, or his legal representative, to give the Corporation a bond in a
sum sufficient, in the opinion of the Board of Directors, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss of any such certificate. A new certificate of the same tenor and
for the same number of shares as the one
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alleged to be lost or destroyed may be issued without requiring any bond when,
in the judgment of the Directors, it is proper so to do.
ARTICLE X
Fixing of Record Date
In order that the Corporation may determine the Stockholders
entitled to notice of or to vote at any meeting of Stockholders or any
adjournment thereof, or, upon waiver of a meeting by a vote of the majority of
Directors, to express consent to corporate action in writing without a meeting,
or to receive payment of any dividend or other distribution or allotment of any
rights, or to exercise any rights in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be more than
sixty (60) nor less than ten (10) days before the date of such meeting, nor
more than sixty (60) days prior to any other action. A determination of
Stockholders of record entitled to notice of or to vote at a meeting of
Stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned
meeting.
ARTICLE XI
Dividends
Subject to the provisions of the Certificate of Incorporation,
dividends upon the capital stock of the
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Corporation may be declared by the Board of Directors at any regular or special
meeting. Dividends may be paid in cash, in property, or in shares of the
capital stock of the Corporation, subject to the provisions of the Certificate
of Incorporation.
Before payment of any dividend, there may be set aside out of
any funds of the Corporation available for dividends such sums as the Directors
from time to time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing
or maintaining any property of the Corporation, or for such other purpose as
the Directors shall think conducive to the interest of the Corporation, and the
Directors may modify or abolish any such reserve in the manner in which it was
created.
ARTICLE XII
Waiver of Notice
Whenever any notice whatever is required to be given by statute
or under the provisions of the Certificate of Incorporation or these By-Laws, a
waiver thereof in writing signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be equivalent
thereto.
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ARTICLE XIII
Seal
The corporate seal of the Corporation shall have inscribed
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware."
ARTICLE XIV
Fiscal Year
The fiscal year of the Corporation shall be determined by the
Board of Directors.
ARTICLE XV
Amendments
Subject to the provisions of the Certificate of Incorporation,
these By-Laws may be altered, amended or repealed or new By-Laws may be adopted
by the Stockholders or by the Board of Directors, at any annual meeting of
Stockholders or regular meeting of the Board of Directors or at any special
meeting of the Stockholders or the Board of Directors if notice of such
alteration, amendment or repeal of the By-Laws or of adoption of new By-Laws be
contained in the notice of such special meeting. Any amendment of these
By-Laws by the Stockholders of the Corporation shall be made by a vote of not
less than eighty percent (80%) of the capital stock of the Corporation.
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EXHIBIT 10(c)
THIS WARRANT CERTIFICATE AND THE WARRANTS EVIDENCED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES
ACT") BUT HAVE BEEN ISSUED PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION AND
MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNTIL EITHER (i) THE HOLDER THEREOF SHALL HAVE RECEIVED AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION THEREOF UNDER THE
SECURITIES ACT IS NOT REQUIRED OR (ii) A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT WITH RESPECT THERETO SHALL HAVE BECOME EFFECTIVE.
No. W-17 300,000 Warrants
WARRANT CERTIFICATE
Warrants to subscribe for and purchase shares
of Common Stock, par value $.01, of
NOVAMETRIX MEDICAL SYSTEMS INC.
THIS CERTIFIES that, for value received, LOUIS P. PELLEGRINO, or
registered successors and assigns, is the owner of the number of warrants (the
"Warrants") set forth above, each of which entitles the owner thereof to
purchase from NOVAMETRIX MEDICAL SYSTEMS INC., a Delaware corporation (herein
called the "Company"), at any time during the period from 9:00 A.M. (New York
Time) on December 29, 1989 through 5:00 P.M. (New York Time) on December 28,
1999, one share of Common Stock, par value $.01, of the Company (individually,
a "Common Share" and collectively, the "Common Shares"), at an initial exercise
price of $1.00 per share, subject to adjustment from time to time pursuant to
the provisions of Section 2. For purposes of this Warrant Certificate, the
term "Common Shares" shall mean the class of capital stock of the Company
designated common stock, par value $.01, as constituted on the date hereof, and
any other class of capital stock of the Company resulting from successive
changes or reclassifications of the Common Shares.
1. Exercise of Warrants. The Warrants evidenced hereby
may be exercised by the registered holder hereof, in whole or in part, by the
surrender of this Warrant Certificate, duly endorsed (unless endorsement is
waived by the Company), at the principal office of the Company (or at such
other office or agency of the Company as it may
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designate by notice in writing to the registered holder hereof at such holder's
last address appearing on the books of the Company) and upon payment to the
Company by certified or official bank check or checks payable to the order of
the Company of the purchase price of the Common Shares purchased. The Company
agrees that the Common Shares so purchased shall be deemed to be issued to the
registered holder hereof on the date on which this Warrant Certificate shall
have been surrendered and payment made for such Common Shares as aforesaid;
provided, however, that no such surrender and payment on any date when the
stock transfer books of the Company shall be closed shall be effective to
constitute the person entitled to receive such Common Shares as the record
holder thereof on such date, but such surrender and payment shall be effective
to constitute the person entitled to receive such Common Shares as the record
holder thereof for all purposes immediately after the opening of business on
the next succeeding day on which such stock transfer books are open. The
certificate(s) for such Common Shares shall be delivered to the registered
holder hereof within a reasonable time, not exceeding ten days, after Warrants
evidenced hereby shall have been so exercised and a new Warrant Certificate
evidencing the number of Warrants, if any, remaining unexercised shall also be
issued to the registered holder within such time unless such Warrants shall
have expired. No fractional Common Shares of the Company, or scrips for any
such fractional shares, shall be issued upon the exercise of any Warrants.
2. Adjustment in Exercise Price and Number of Shares.
The initial exercise price of $1.00 per share shall be subject to adjustment
from time to time as hereinafter provided (such price, as last adjusted, being
hereinafter called the "Exercise Price"). Upon each adjustment of the Exercise
Price, the holder of this Warrant shall thereafter be entitled to purchase at
the Exercise Price resulting from such adjustment, the number of shares
obtained by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of shares purchasable pursuant hereto immediately
prior to such adjustment and dividing the product thereof by the Exercise Price
resulting from such adjustment.
(a) Adjustment of Warrant Exercise Price upon Issue of
Common Shares. If and whenever after the date hereof the Company shall issue
or sell any Common Shares for a consideration per share less than the Exercise
Price in effect immediately prior to the time of such issue or sale, or the
Company shall issue or sell any Common Shares for a consideration per share
less than the Market Price (as hereinafter defined) of the Common Shares at the
time of
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such issue or sale, then, forthwith upon such issue or sale, the Exercise Price
shall be reduced (but not increased, except as otherwise specifically provided
in Section 2(a)(C)) to the lower of the prices (calculated to the nearest cent)
determined as follows:
(x) by dividing (i) an amount equal to the sum of (A) the
aggregate number of Common Shares outstanding immediately prior to
such issue or sale multiplied by the then existing Exercise Price, and
(B) the consideration, if any, received by the Company upon such issue
or sale, by (ii) the aggregate number of Common Shares outstanding
immediately after such issue or sale; and
(y) by multiplying the Exercise Price in effect
immediately prior to the time of such issue or sale by a fraction, the
numerator of which shall be the sum of (i) the aggregate number of
Common Shares outstanding immediately prior to such issue or sale
multiplied by the Market Price of the Common Shares immediately prior
to such issue or sale plus (ii) the consideration received by the
Company upon such issue or sale, and the denominator of which shall be
the product of (iii) the aggregate number of Common Shares outstanding
immediately after such issue or sale, multiplied by (iv) the Market
Price of the Common Shares immediately prior to such issue or sale.
No adjustment of the Exercise Price, however, shall be made in an amount less
than $.01 per share, but any such lesser adjustment shall be carried forward
and shall be made upon the earlier of (i) the third anniversary of the issuance
or deemed issuance of the securities requiring SUCH ADJUSTMENT hereunder, and
(ii) the time of and together with the next subsequent adjustment.
For purposes of this Section 2(a), the following paragraphs (A)
to (I), inclusive, shall be applicable:
(A) Issuance of Rights or Options. In case at any time
after the date hereof the Company shall in any manner grant (whether
directly or by assumption in a merger or otherwise) any rights to
subscribe for or to purchase, or any options for the purchase of
Common Shares or any stock or securities convertible into or
exchangeable for Common Shares (such convertible or exchangeable stock
or securities being herein called "Convertible Securities"), whether
or not such rights or options or the right to convert or exchange any
such Convertible Securities are immediately exercisable, and
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the price per share for which Common Shares are issuable upon the
exercise of such rights or options or upon conversion or exchange of
such Convertible Securities (determined by dividing (i) the total
amount, if any, received or receivable by the Company as consideration
for the granting of such rights or options, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company
upon the exercise of such rights or options, or plus, in the case of
such rights or options which relate to Convertible Securities, the
minimum aggregate amount of additional consideration, if any, payable
upon the issue or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (ii) the total maximum number of
Common Shares issuable upon the exercise of such rights or options or
upon the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such rights or options) shall be less
than the Exercise Price in effect immediately prior to the time of the
granting of such rights or options or less than the Market Price of
the Common Shares determined as of the date of granting such rights or
options, as the case may be, then the total maximum number of Common
Shares issuable upon the exercise of such rights or options or upon
conversion or exchange of all such Convertible Securities issuable
upon the exercise of such rights or options shall be deemed to be
outstanding as of the date of the granting of such rights or options
and to have been issued for such price per share, with the effect on
the Exercise Price specified in Section 2(a). Except as provided in
subparagraph (C), no further adjustment of the Exercise Price shall be
made upon the actual issue of such Common Shares or of such
Convertible Securities upon exercise of such rights or options or upon
the actual issue of such Common Shares upon conversion or exchange of
such Convertible Securities.
(B) Issuance of Convertible Securities. In case at any
time after the date hereof the Company shall in any manner issue
(whether directly or by assumption in a merger or otherwise) or sell
any Convertible Securities, whether or not the right to exchange or
convert thereunder is immediately exercisable, and the price per share
for which Common Shares are issuable upon such conversion or exchange
(determined by dividing (i) the total amount, if any, received or
receivable by the Company as consideration for the issue or sale of
such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (ii) the total maximum number of
Common Shares issuable
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upon the conversion or exchange of all such Convertible Securities)
shall be less than the Exercise Price in effect immediately prior to
the time of such issue or sale, or less than the Market Price of the
Common Shares determined as of the date of such issue or sale of such
Convertible Securities, as the case may be, then the total maximum
number of Common Shares issuable upon conversion or exchange of all
such Convertible Securities shall be deemed to be outstanding as of
the date of the issue or sale of such Convertible Securities and to
have been issued for such price per share, with the effect on the
Exercise Price specified in Section 2(a); provided, however, that (a)
except as otherwise provided in subparagraph (C), no further
adjustment of the Exercise Price shall be made upon the actual issue
of such Common Shares upon conversion or exchange of such Convertible
Securities, and (b) if any such issue or sale of such Convertible
Securities is made upon exercise of any rights to subscribe for or to
purchase or any option to purchase any such Convertible Securities for
which adjustments of the Exercise Price have been or are to be made
pursuant to the provisions of subparagraph (A), no further adjustment
of the Exercise Price shall be made by reason of such issue or sale.
(C) Change in Option Price or Conversion Rate. Upon the
happening of any of the following events, namely, if the purchase
price provided for in any right or option referred to in subparagraph
(A), the additional consideration, if any, payable upon the conversion
or exchange of any Convertible Securities referred to in subparagraphs
(A) or (B), or the rate at which any Convertible Securities referred
to in subparagraphs (A) or (B) are convertible into or exchangeable
for Common Shares shall change (other than under or by reason of
provisions designed to protect against dilution), the Exercise Price
then in effect hereunder shall forthwith be readjusted (increased or
decreased, as the case may be) to the Exercise Price which would have
been in effect at such time had such rights, options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at
the time initially granted, issued or sold. On the expiration of any
such option or right referred to in subparagraph (A), or the
termination of any such right to convert or exchange any such
Convertible Securities referred to in subparagraphs (A) or (B), the
Exercise Price then in effect hereunder shall forthwith be readjusted
(increased or decreased, as the case may
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be) to the Exercise Price which would have been in effect at the time
of such expiration or termination had such right, option or
Convertible Securities, to the extent outstanding immediately prior to
such expiration or termination, never been granted, issued or sold,
and the Common Shares issuable thereunder shall no longer be deemed to
be outstanding. If the purchase price provided for in any such right
or option referred to in subparagraph (A) or the rate at which any
Convertible Securities referred to in subparagraphs (A) or (B) are
convertible into or exchangeable for Common Shares shall be reduced at
any time under or by reason of provisions with respect thereto
designed to protect against dilution, then in case of the delivery of
Common Shares upon the exercise of any such right or option or upon
conversion or exchange of any such Convertible Securities, the
Exercise Price then in effect hereunder shall, if not already
adjusted, forthwith be adjusted to such amount as would have obtained
had such right, option or Convertible Securities never been issued as
to such Common Shares and had adjustments been made upon the issuance
of the Common Shares delivered as aforesaid, but only if as a result
of such adjustment the Exercise Price then in effect hereunder is
thereby reduced.
(D) Stock Dividends. In case at any time the Company
shall declare a dividend or make any other distribution upon any class
or series of stock of the Company payable in Common Shares or
Convertible Securities, any Common Shares or Convertible Securities,
as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration with the effect on the Exercise Price specified in
Section 2(a).
(E) Consideration for Stock. In case at any time Common
Shares or Convertible Securities or any rights or options to purchase
any such Common Shares or Convertible Securities shall be issued or
sold for cash, the consideration therefor shall be deemed to be the
amount received by the Company therefor, after deduction therefrom of
any expenses incurred or any underwriting commissions or concessions
paid or allowed by the Company in connection therewith. In case at
any time any Common Shares, Convertible Securities or any rights or
options to purchase any such Common Shares or Convertible Securities
shall be issued or sold for consideration other than cash, the amount
of the consideration other than cash received by the Company shall be
deemed to be the fair value of such
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<PAGE> 7
consideration, as determined reasonably and in good faith by the Board
of Directors of the Company, after deduction of any expenses incurred
or any underwriting commissions or concessions paid or allowed by the
Company in connection therewith. In case at any time any Common
Shares, Convertible Securities or any rights or options to purchase
any Common Shares or Convertible Securities shall be issued in
connection with any merger or consolidation in which the Company is
the surviving corporation, the amount of consideration received
therefor shall be deemed to be the fair value, as determined
reasonably and in good faith by the Board of Directors of the Company,
of such portion of the assets and business of the nonsurviving
corporation as such Board of Directors may determine to be
attributable to such Common Shares, Convertible Securities, rights or
options, as the case may be. In case at any time any rights or
options to purchase any shares of Common Stock or Convertible
Securities shall be issued in connection with the issue and sale of
other securities of the Company, together comprising one integral
transaction in which no consideration is allocated to such rights or
options by the parties thereto, such rights or options shall be deemed
to have been issued without consideration. In the event of any
consolidation or merger of the Company in which stock or securities of
another corporation are issued in exchange for Common Stock of the
Company or in the event of any sale of all or substantially all of the
assets of the Company for stock or other securities of any
corporation, the Company shall be deemed to have issued a number of
shares of its Common Stock for stock or securities of the other
corporation computed on the basis of the actual exchange ratio on
which the transaction was predicted and for a consideration equal to
the fair market value on the date of such transaction of such stock or
securities of the other corporation, and if any such calculation
results in adjustment of the Exercise Price, the determination of the
number of shares of Common Stock receivable upon exercise of this
warrant Certificate immediately prior to such merger, consolidation or
sale, for purposes of Section 2(c), shall be made after giving effect
to such adjustment of the Exercise Price.
(F) Record Date. In case the Company shall take a record
of the holders of its Common Shares for the purpose of entitling them
(i) to receive a dividend or other distribution payable in Common
Shares or Convertible Securities, or (ii) to subscribe for or purchase
Common Shares or Convertible Securities, then
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<PAGE> 8
such record date shall be deemed to be the date of the issue or sale
of the Common Shares or Convertible Securities deemed to have been
issued or sold as a result of the declaration of such dividend or the
making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
(G) Treasury Shares. The number of Common Shares
outstanding at any given time shall not include shares owned or held
by or for the account of the Company, and the disposition of any such
shares shall be considered an issue or sale of Common Shares for the
purposes of Section 2(a).
(H) Definition of Market Price. The term "Market Price"
shall mean, for any day, the last sale price for the Common Shares on
the principal securities exchange on which the Common Shares are
listed or admitted to trading, or, if not so listed or admitted to
trading on any securities exchange, the last sale price for the Common
Shares on the National Association of Securities Dealers National
Market System, or, if the Common Shares shall not be listed on such
system, the closing bid price in the over-the-counter market, in each
such case, unless otherwise provided herein, averaged over a period of
20 consecutive business days prior to the day as of which Market Price
is being determined. If at any time the Common Shares are not listed
on any such exchange or such system or quoted in the over-the-counter
market, the Market Price of the Common Shares shall be deemed to be
the higher of (i) the book value thereof, as determined in accordance
with generally accepted accounting principles consistent with those
then being applied by the Company, by any firm of independent
certified public accountants (which may be the regular auditors of the
Company) of recognized national standing selected by the Board of
Directors of the Company, as of the last day of the month ending
within 31 days preceding the date as of which the determination is to
be made, and (ii) the fair value thereof, as determined in good faith
by an independent brokerage firm, Standard & Poor's Corporation or
Moody's Investors Service, as of a date which is within 15 days
preceding the date as of which the determination is to be made.
(I) Certain Acquisitions. Anything herein to the
contrary notwithstanding, in case at any time after the date hereof
the Company shall issue any Common Shares or Convertible Securities,
or any rights or options to purchase any Common Shares or Convertible
Securities, in
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<PAGE> 9
connection with the acquisition by the Company of the stock or assets
of any other corporation or the merger of any other corporation with
and into the Company under circumstances where on the date of the
issuance of such Common Shares or Convertible Securities, or such
rights or options, the consideration received for such Common Shares
or deemed to have been received for the Common Shares into which such
Convertible Securities are convertible or for which such rights or
options are exercisable is less than of the Market Price of the Common
Shares, but on the date the number of Common Shares or Convertible
Securities, or in the case of Convertible Securities other than stock,
the aggregate principal amount of Convertible Securities, or the
number of such rights or options was determined (as set forth in a
binding agreement between the Company and the other party to the
transaction) the consideration received for such Common Shares or
deemed to have been received for the Common Shares into which such
Convertible Securities are convertible or for which such rights or
options are exercisable would not have been less than the Market Price
of the Common Shares, such Common Shares shall not be deemed to have
been issued for less than the Market Price of the Common Shares.
(b) Subdivision or Combination of Stock. In case the
Company shall at any time subdivide its outstanding Common Shares into a
greater number of shares, the Exercise Price in effect immediately prior to
such subdivision shall be proportionately reduced, and conversely, in case the
outstanding Common Shares of the Company shall be combined into a smaller
number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased.
(c) Reorganization, Reclassification, Consolidation,
Merger. If any capital reorganization, reclassification of the capital stock
of the Company, consolidation or merger of the Company with another
corporation, or sale, transfer or other disposition of all or substantially all
of the Company's properties to another corporation shall be effected, then, as
a condition of such reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition, lawful and adequate provision shall be
made whereby each holder of Warrants shall thereafter have the right to
purchase and receive upon the basis and upon the terms and conditions herein
specified and in lieu of the Common Shares immediately theretofore issuable
upon exercise of the Warrants, such shares of stock, securities or properties
as may be issuable or payable with respect to or in exchange for a number of
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<PAGE> 10
outstanding Common Shares equal to the number of Common Shares immediately
theretofore issuable upon exercise of the Warrants, had such reorganization,
reclassification, consolidation, merger, sale, transfer or other disposition
not taken place, and in any such case appropriate provision shall be made with
respect to the rights and interests of each holder of Warrants to the end that
the provisions hereof (including, without limitation, provision for adjustment
of the Exercise Price) shall thereafter be applicable, as nearly equivalent as
may be practicable in relation to any shares of stock, securities or properties
thereafter deliverable upon the exercise thereof. The Company shall not effect
any such consolidation, merger, sale, transfer or other disposition, unless
prior to or simultaneously with the consummation thereof the successor
corporation, if other than the Company, resulting from such consolidation or
merger, or the corporation purchasing or otherwise acquiring such properties
shall assume, by written instrument executed and mailed or delivered to the
holders of Warrants at the last address of such holders appearing on the books
of the Company, the obligation to deliver to such holders such shares of stock,
securities or properties, in accordance with the foregoing provisions, as such
holders may be entitled to acquire. The above provisions of this subparagraph
2(c) shall similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales, transfers, or other dispositions.
(d) Liquidating and Other Dividends. (A) In case at any
time the Company shall distribute pro rata to all holders of its Common Shares
evidences of its indebtedness or assets (excluding cash dividends or cash
distributions paid out of retained earnings or retained surplus) then,
forthwith upon such distribution, the Exercise Price shall be reduced by the
fair market value of the evidences of indebtedness or assets so distributed
applicable to one Common Share (as conclusively determined by an investment
banking firm designated by a majority in interest of the holders of warrants;
it being understood that the fees of such investment banking firm shall be
borne by the Company).
(B) In case at any time the Company shall declare a cash
dividend upon the Common Shares or make a cash distribution to all holders of
its Common Shares (whether or not paid out of retained earnings or retained
surplus), the Company shall pay over to each holder of the Warrants the cash
and other property which such holder would have received (together with all
distributions thereon) if such holder had exercised the Warrants held by it on
the record date fixed in connection with such cash dividend or cash
distribution.
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(e) Notice of Determination. Except as otherwise
provided herein, upon any adjustment of the Exercise Price, then and in each
such case the Company shall promptly obtain the opinion of a firm of
independent certified public accountants (which may be the regular auditors of
the Company) of recognized national standing selected by the Company's Board of
Directors, which opinion shall state the Exercise Price resulting from such
adjustment and the increase or decrease, if any, in the number of Common Shares
issuable upon exercise of the Warrants held by each holder of Warrants, setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based. The Company shall promptly mail a copy of such
accountants' opinion to each holder of Warrants.
(f) Intent of Provisions. If any event occurs as to
which, in the opinion of the Board of Directors of the Company, the other
provisions of this Section 2 are not strictly applicable or if strictly
applicable, would not fairly protect the rights of the holders of the Warrants
in accordance with the essential intent and principles of such provisions, then
such Board of Directors shall appoint a firm of independent certified public
accountants (which may be the regular auditors of the Company) of recognized
national standing, which shall give their opinion upon the adjustment, if any,
on a basis consistent with such essential intent and principles, necessary to
preserve, without dilution, the rights of the holders of the Warrants. Upon
receipt of such opinion by the Board of Directors of the Company, the Company
shall forthwith make the adjustments described therein; provided, however, that
no such adjustment pursuant to this Section 2(f) shall have the effect of
increasing the Exercise Price as otherwise determined pursuant to the other
provisions of this Section 2 except in the event of a combination of shares of
the type contemplated in Section 2(b) and then in no event to an amount larger
than the Exercise Price as adjusted pursuant to Section 2(b).
3. Other Notices. If at any time prior to the
expiration of the Warrants evidenced hereby:
(a) The Company shall declare any dividend on the Common
Shares payable in shares of capital stock of the Company, cash or
other property; or
(b) The Company shall authorize the issue of any options,
warrants or rights pro rata to all holders of Common Shares entitling
them to subscribe for or purchase any shares of stock of the Company
or to receive any other rights; or
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(c) The Company shall authorize the distribution pro rata
to all holders of Common Shares of evidences of its indebtedness or
assets (excluding cash dividends or cash distributions paid out of
retained earnings or retained surplus); or
(d) There shall occur any reclassification of the Common
Shares, or any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which the
Company is the continuing corporation and which does not result in any
reclassification of the Common Shares) or a sale or transfer to
another corporation of all or substantially all of the properties of
the Company; or
(e) There shall occur the voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company;
then, and in each of such cases, the Company shall deliver to the registered
holder hereof at the last address of such holder appearing on the books of the
Company, as promptly as practicable but in any event at least 15 days prior to
the applicable record date (or determination date) mentioned below, a notice
stating, to the extent such information is available, (i) the date on which a
record is to be taken for the purpose of such dividend, distribution or rights,
or, if a record is not to be taken, the date as of which the holders of Common
Shares of record to be entitled to such dividend, distribution or rights are to
be determined, or (ii) the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution or winding up is expected to
become effective and the date as of which it is expected that holders of Common
Shares of record shall be entitled to exchange their Common Shares for
securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or winding up.
4. Representations and Warranties of the Company. The
Company represents and warrants to and covenants with the registered holder
hereof as follows:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of Delaware, is duly qualified and
in good standing under the laws of any foreign jurisdiction where the failure
to be so qualified would have a material adverse effect on its ability to
perform its obligations under the Warrants evidenced by this Warrant
Certificate and it has full corporate power and authority to issue the Warrants
and to
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carry out the provisions of the Warrants evidenced by this Warrant Certificate.
(b) The issuance, execution and delivery of this Warrant
Certificate has been duly authorized by all necessary corporate action on the
part of the Company and each of the Warrants evidenced by this Warrant
Certificate constitutes the valid and legally binding obligation of the
Company, enforceable against it in accordance with the terms hereof, except as
such enforceability may be limited by bankruptcy, insolvency or other laws
affecting generally the enforceability of creditors' rights, by general
principles of equity and by limitations on the availability of equitable
remedies.
(c) Neither the execution and delivery of the Warrants
evidenced by this Warrant Certificate by the Company, nor compliance by the
Company with the provisions hereof, violates any provision of its Certificate
of Incorporation or By-Laws, as amended, or any law, statute, ordinance,
regulation, order, judgment or decree of any court or governmental agency, or
conflicts with or will result in any breach of the terms of or constitute a
default under or result in the termination of or the creation of any lien
pursuant to the terms of any agreement or instrument to which the Company is a
party or by which it or any of its properties is bound.
5. Company to Provide Stock. The Company covenants and
agrees that all shares of capital stock of the Company which may be issued upon
the exercise of the Warrants evidenced hereby will be duly authorized, validly
issued and fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof to the registered holder hereof. The
Company further covenants and agrees that during the period within which the
Warrants evidenced hereby may be exercised, the Company will at all times
reserve such number of shares of its capital stock as may be sufficient to
permit the exercise in full of the Warrants evidenced hereby.
6. Registered Holder. The registered holder of this
Warrant Certificate shall be deemed the owner hereof and of the Warrants
evidenced hereby for all purposes. The registered holder of this Warrant
Certificate shall not be entitled by virtue of ownership of this Warrant
Certificate to any rights whatsoever as a shareholder of the Company.
7. Transfer. This warrant Certificate and the Warrants
evidenced hereby may be sold, transferred, pledged, hypothecated or otherwise
disposed of; provided that this
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<PAGE> 14
Warrant Certificate and the Warrants evidenced hereby may not be sold,
transferred, pledged, hypothecated or otherwise disposed of unless, in the
opinion of counsel reasonably satisfactory to the Company, such transfer would
not result in a violation of the provisions of the United States Securities Act
of 1933 (the "Securities Act"). Any transfer of this Warrant Certificate and
the Warrants evidenced hereby, in whole or in part, shall be effected upon
surrender of this Warrant Certificate, duly endorsed (unless endorsement is
waived by the Company), at the principal office or agency of the Company
referred to in Section 1. If all of the Warrants evidenced hereby are being
sold, transferred, pledged, hypothecated or otherwise disposed of, the Company
shall issue a new Warrant Certificate registered in the name of the appropriate
transferee(s). If less than all of the Warrants evidenced hereby are being
sold, transferred, pledged, hypothecated or otherwise disposed of, the Company
shall issue new Warrant Certificates, in each case in the appropriate number of
Warrants, registered in the name of the registered holder hereof and the
transferee(s), as applicable. Any Common Shares of the Company issued upon any
exercise hereof may not be sold, transferred, pledged, hypothecated or
otherwise disposed of unless, in the opinion of counsel reasonably satisfactory
to the Company, such transfer would not result in a violation of the Securities
Act. Each taker and holder of this Warrant Certificate, the Warrants evidenced
hereby and any shares of capital stock of the Company issued upon exercise of
any such Warrants, by taking or holding the same, consents to and agrees to be
bound by the provisions of this Section 7.
8. Company to Provide Reports, Etc. While this Warrant
Certificate remains outstanding, the Company will mail to the person in whose
name this Warrant Certificate is registered copies of all reports and
correspondence which the Company mails to its stockholders.
9. Registration
(a) Registration Rights of Holder. If the Company shall
receive a written request from the registered holders of at least 75 percent of
the shares of Registrable Stock (as hereinafter defined) outstanding at the
time of such request for the registration of such shares of Registrable Stock,
the Company will promptly notify all registered holders of Warrants and will
cause such shares of Registrable Stock as are specified in such written request
and any other written requests received from such registered holders within ten
days of notice from the Company to such registered holders of such request to
be registered as
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promptly as practicable so as to permit the sale or other distribution of such
shares by the registered holders thereof. In connection therewith the Company
shall prepare and file on an appropriate form a registration statement under
the Securities Act, and the rules and regulations thereunder, covering such
shares of Registrable Stock to effect such registration. Notwithstanding the
foregoing, (i) the Company shall not be required to file more than one such
registration statement pursuant to this Section 9(a), (ii) the Company shall
not be obligated to effect any registration pursuant to this Section 9(a) if it
has effected a registration of any Common Shares (other than a registration
specified in clause (i) of Section 9(b)) during the six-month period
immediately preceding such request, and (iii) the request for a registration
pursuant to this Section 9(a) may only be made during the first 60 days of the
Company's fiscal year, provided that, if such registration can be duly effected
without the delivery of audited financial statements of the Company, such
request may be made during the remainder of such fiscal year. For purposes of
this Section 9, "Registrable Stock" shall include all Common Shares issued or
issuable by the Company to the registered holders from time to time of Warrants
upon exercise of such Warrants. In the case of any registration pursuant to
this Section 9(a) which involves an underwritten public offering, the managing
underwriter or underwriters of such offering shall be selected by a majority of
the registered holders of Registrable Stock, and shall be acceptable to the
Company (which acceptance shall not unreasonably be withheld). In addition,
the Company shall not be required to file any such registration statement at
any time when the Company is contemplating an underwritten public offering of
any of its securities and the registration of the registered holder's Common
Shares would, in the good faith judgment of the Company's investment banker,
interfere with the orderly sale of such securities by the Company; provided,
however, that the Company shall not be able to delay, pursuant to this
sentence, any such filing for a period greater than 180 days.
(b) Piggyback Registration. If the Company shall at any
time determine to proceed with the actual preparation and filing of a
registration statement under the Securities Act, and the rules and regulations
thereunder, in connection with an offering of Common Shares for cash, the
Company shall give written notice as promptly as practicable of such
determination to each registered holder of Warrants and will include in such
registration statement such number of shares of Registrable Stock as each such
registered holder shall request within ten days after receipt of such notice
from the Company, upon the same terms (including the method of
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distribution) as such offering is being made; provided, however, that (i) the
Company shall not be required to include such Registrable Stock in any
registration statement relating solely to Common Shares or other securities to
be issued pursuant to any employee benefit plan of the Company; and (ii) in the
event that the inclusion of all of the Registrable Stock requested by the
registered holder for inclusion pursuant to this Section 9(b) would, in the
good faith judgment of the managing underwriter of such offering, interfere
with the orderly sale and distribution of the shares of capital stock offered
by the Company, the number of shares of Registrable Stock otherwise to be
included in the underwritten public offering may be reduced to the extent
deemed necessary by such managing underwriter acting in good faith (or the sale
of such shares shall be subject to such other conditions as the managing
underwriter deems appropriate). The Company may, without the written consent
of the registered holder, withdraw such registration statement and abandon the
proposed offering in which the registered holder had requested to participate.
(c) Blue-Sky Laws. The Company shall use all reasonable
efforts to effect such registrations, qualifications or exemptions under Blue
Sky or other state securities laws as may be necessary to permit or facilitate
the sale or other distribution of the Common Shares for which registration is
effected pursuant to Section 9(a) or Section 9(b), but the Company shall not be
obligated to qualify the securities in any jurisdiction where such
qualifications would (i) require the Company to qualify generally to do
business as a foreign corporation in such jurisdiction, (ii) subject the
Company to taxation in such jurisdiction or (iii) otherwise subject the Company
to consent to general service of process in such jurisdiction.
(d) Minimum Registration. Notwithstanding anything
contained herein to the contrary, the Company shall not be required pursuant to
Section 9(a) or Section 9(b) to register on behalf of the registered holder and
the other holders of Warrants or the Common Shares issuable upon conversion of
Warrants in any one registration statement less than 25,000 Common Shares (or
such lesser number of shares which shall constitute all the shares which (i)
are held by a registered holder and (ii) are still issuable upon exercise of
the Warrants). Such number shall be appropriately adjusted for stock splits,
stock dividends, combinations of shares, reclassifications or other similar
events.
(e) Expenses. To the extent permissible in accordance
with the requirements of applicable Blue Sky laws
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and related rules and regulations, and in accordance with the rules of the
National Association of Securities Dealers, Inc., the Company will pay all
expenses necessary to effect under the Securities Act any registration
statements, amendments or supplements filed pursuant to Section 9(a) or Section
9(b) (other than underwriters' discounts and commissions and brokerage
commissions and fees, if any, payable with respect to Registrable Shares sold
by a registered holder and other than legal and other fees and expenses
incurred by a registered holder), including, without limitation, printing
expenses, fees of the Securities and Exchange Commission and the National
Association of Securities Dealers, Inc., expenses of compliance with Blue Sky
or other state securities laws, and accounting and legal fees and expenses.
(f) Indemnification of the Holder By the Company. In the
event of any registration pursuant to this Section 9, the Company will
indemnify and hold harmless the registered holder and each person, if any, who
controls the registered holder within the meaning of the Securities Act,
against any losses, claims, damages, expenses (including reasonable attorneys'
fees), or liabilities (or actions in respect thereof) under the Securities Act
or otherwise, which arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any such
registration statement, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading; and will reimburse the registered holder and each such
controlling person for any legal or other expenses reasonably incurred by the
registered holder or such controlling person in connection with investigating
or defending any such loss, claim, damage, liability or action: provided,
however, that the Company will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in said registration statement, said preliminary prospectus, said
prospectus, or any said amendment or supplement, in reliance upon and in
conformity with written information furnished by the registered holder
specifically for use in the preparation thereof and will reimburse any legal or
other expenses reasonably incurred by the registered holder or any person who
controls the registered holder in connection with investigating or defending
any such loss, claim, damage, liability or action.
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(g) Indemnification of the Company By the Holder. The
registered holder shall indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed any such registration
statement, and each person, if any, who controls the Company within the meaning
of the Securities Act, against any losses, claims, damages or liabilities to
which the Company or any such director, officer, or controlling person may
become subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue or alleged untrue statement of any material fact
contained in said registration statement, said preliminary prospectus, said
prospectus, or said amendment or supplement thereto, or arise out of or are
based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in said registration statement, said preliminary prospectus, said
prospectus, or said amendment or supplement, in reliance upon and in conformity
with written information furnished by the registered holder specifically for
use in the preparation thereof and will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action.
(h) Notice of Claim. Promptly after receipt by an
indemnified party under this Section 9 of notice of the commencement of any
action, such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 9, notify the
indemnifying party of the commencement thereof.
(i) Defense of Claim. In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate in
the defense thereof, with counsel reasonably satisfactory to such indemnified
party. Notwithstanding the foregoing, the indemnified party may retain its own
counsel, who shall be reasonably satisfactory to the indemnifying party. The
reasonable fees and expenses of such counsel shall be borne by the indemnifying
party.
(j) Obligations to Underwriter. With respect to any
underwritten offering, the registered holder and the Company shall, in addition
to the foregoing, provide the
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underwriter of such offering with customary representations and warranties, and
indemnification, in each instance as shall be reasonably requested by the
underwriter, provided, however, that any such agreement to indemnify an
underwriter with respect to any preliminary prospectus shall not inure to the
benefit of any such underwriter to the extent that any loss, claim, damage or
liability of any such underwriter results solely from an untrue statement of
material fact contained in, or the omission of a material fact from, such
preliminary prospectus which untrue statement or omission was corrected in the
final prospectus, if such underwriter failed to send or give a copy of the
final prospectus to the person asserting such loss, claim, damage or liability
at or prior to the written confirmation of the sale of Common Shares, including
Registrable Shares, to such person.
IN WITNESS WHEREOF, NOVAMETRIX MEDICAL SYSTEMS INC. has caused
this Warrant Certificate to be signed by a duly authorized officer and this
Warrant Certificate to be dated December 29, 1989.
NOVAMETRIX MEDICAL SYSTEMS INC.
By /s/ William J. Lacourciere
-------------------------------------
Attest:
- ----------------------------------------
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FORM OF EXERCISE
(to be executed by the registered holder hereof)
The undersigned hereby exercises Warrants to subscribe for and
purchase shares of common stock, par value $.01 ("Common Shares'), of
NOVAMETRIX MEDICAL SYSTEMS INC. evidenced by the within Warrant Certificate and
herewith makes payment of the purchase price in full. Kindly issue
certificates for the Common Shares in accordance with the instructions given
below. The certificate for the unexercised balance, if any, of the Warrants
evidenced by the within warrant Certificate will be registered in the name of
the undersigned.
Dated:
---------------------------------------
----------------------------------
Instructions for registration of shares
- ---------------------------------------
Name (please print)
Social Security or Other Identifying
Number:
--------------------------------
Address:
- ---------------------------------------
Street
- ---------------------------------------
City, State and Zip Code
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<PAGE> 21
Schedule to Exhibit 10(c)
<TABLE>
<CAPTION> Warrant
Name Certificate Number of Warrants
---------------------------------------- ----------- ------------------
<S> <C> <C>
William J. Lacourciere No. W-18 300,000
</TABLE>
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<PAGE> 1
EXHIBIT 10(d)
THIS WARRANT CERTIFICATE AND THE WARRANTS EVIDENCED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES
ACT") BUT HAVE BEEN ISSUED PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION AND
MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNTIL EITHER (i) THE HOLDER THEREOF SHALL HAVE RECEIVED AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION THEREOF UNDER THE
SECURITIES ACT IS NOT REQUIRED OR (ii) A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT WITH RESPECT THERETO SHALL HAVE BECOME EFFECTIVE.
No. W-20 150,000 Warrants
WARRANT CERTIFICATE
Warrants to subscribe for and purchase shares
of Common Stock, par value $.01, of
NOVAMETRIX MEDICAL SYSTEMS INC.
THIS CERTIFIES that, for value received, UNION TRUST COMPANY, a
Connecticut banking corporation, or registered successors and assigns, is the
owner of the number of warrants (the "Warrants") set forth above, each of which
entitles the owner thereof to purchase from NOVAMETRIX MEDICAL SYSTEMS INC., a
Delaware corporation (herein called the "Company"), at any time during the
period from 9:00 A.M. (New York Time) on May 23, 1990 through 5:00 P.M. (New
York Time) on May 23, 2000, one share of Common Stock, par value $.01, of the
Company (individually, a "Common Share" and collectively, the "Common Shares"),
at an initial exercise price of $2.00 per share, subject to adjustment from
time to time pursuant to the provisions of Section 2. For purposes of this
Warrant Certificate, the term "Common Shares" shall mean the class of capital
stock of the Company designated common stock, par value $.01, as constituted on
the date hereof, and any other class of capital stock of the Company resulting
from successive changes or reclassifications of the Common Shares.
1. Exercise of Warrants. The Warrants evidenced hereby
may be exercised by the registered holder hereof, in whole or in part, by the
surrender of this Warrant Certificate, duly endorsed (unless endorsement is
waived by
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<PAGE> 2
the Company), at the principal office of the Company (or at such other office
or agency of the Company as it may designate by notice in writing to the
registered holder hereof at such holder's last address appearing on the books
of the Company) and upon payment to the Company by certified or official bank
check or checks payable to the order of the Company of the purchase price of
the Common Shares purchased. The Company agrees that the Common Shares so
purchased shall be deemed to be issued to the registered holder hereof on the
date on which this Warrant Certificate shall have been surrendered and payment
made for such Common Shares as aforesaid; provided, however, that no such
surrender and payment on any date when the stock transfer books of the Company
shall be closed shall be effective to constitute the person entitled to receive
such Common Shares as the record holder thereof on such date, but such
surrender and payment shall be effective to constitute the person entitled to
receive such Common Shares as the record holder thereof for all purposes
immediately after the opening of business on the next succeeding day on which
such stock transfer books are open. The certificate(s) for such Common Shares
shall be delivered to the registered holder hereof within a reasonable time,
not exceeding ten days, after Warrants evidenced hereby shall have been so
exercised and a new Warrant Certificate evidencing the number of Warrants, if
any, remaining unexercised shall also be issued to the registered holder within
such time unless such Warrants shall have expired. No fractional Common Shares
of the Company, or scrips for any such fractional shares, shall be issued upon
the exercise of any Warrants.
2. Adjustment in Exercise Price and Number of Shares.
The initial exercise price of $2.00 per share shall be subject to adjustment
from time to time as hereinafter provided (such price, as last adjusted, being
hereinafter called the "Exercise Price"). Upon each adjustment of the Exercise
Price, the holder of this Warrant shall thereafter be entitled to purchase at
the Exercise Price resulting from such adjustment, the number of shares
obtained by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of shares purchasable pursuant hereto immediately
prior to such adjustment and dividing the product thereof by the Exercise Price
resulting from such adjustment.
(a) Adjustment of Warrant Exercise Price upon Issue of
Common Shares. If and whenever after the date hereof the Company shall issue
or sell any Common Shares for a consideration per share less than the Exercise
Price in effect immediately prior to the time of such issue or sale, or the
Company shall issue or sell any Common Shares for a
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<PAGE> 3
consideration per share less than the Market Price (as hereinafter defined) of
the Common Shares at the time of such issue or sale, then, forthwith upon such
issue or sale, the Exercise Price shall be reduced (but not increased, except
as otherwise specifically provided in Section 2(a)(C)) to the lower of the
prices (calculated to the nearest cent) determined as follows:
(x) by dividing (i) an amount equal to the sum of (A) the
aggregate number of Common Shares outstanding immediately prior to
such issue or sale multiplied by the then existing Exercise Price, and
(B) the consideration, if any, received by the Company upon such issue
or sale, by (ii) the aggregate number of Common Shares outstanding
immediately after such issue or sale; and
(y) by multiplying the Exercise Price in effect
immediately prior to the time of such issue or sale by a fraction, the
numerator of which shall be the sum of (i) the aggregate number of
Common Shares outstanding immediately prior to such issue or sale
multiplied by the Market Price of the Common Shares immediately prior
to such issue or sale plus (ii) the consideration received by the
Company upon such issue or sale, and the denominator of which shall be
the product of (iii) the aggregate number of Common Shares outstanding
immediately after such issue or sale, multiplied by (iv) the Market
Price of the Common Shares immediately prior to such issue or sale.
No adjustment of the Exercise Price, however, shall be made in an amount less
than $.01 per share, but any such lesser adjustment shall be carried forward
and shall be made upon the earlier of (i) the third anniversary of the issuance
or deemed issuance of the securities requiring such adjustment hereunder, and
(ii) the time of and together with the next subsequent adjustment.
For purposes of this Section 2(a), the following paragraphs (A)
to (I), inclusive, shall be applicable:
(A) Issuance of Rights or Options. In case at any time
after the date hereof the Company shall in any manner grant (whether
directly or by assumption in a merger or otherwise) any rights to
subscribe for or to purchase, or any options for the purchase of
Common Shares or any stock or securities convertible into or
exchangeable for Common Shares (such convertible or exchangeable stock
or securities being herein called "Convertible Securities"), whether
or not such rights or
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<PAGE> 4
options or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for
which Common Shares are issuable upon the exercise of such rights or
options or upon conversion or exchange of such Convertible Securities
(determined by dividing (i) the total amount, if any, received or
receivable by the Company as consideration for the granting of such
rights or options, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise of
such rights or options, or plus, in the case of such rights or options
which relate to Convertible Securities, the minimum aggregate amount
of additional consideration, if any, payable upon the issue or sale of
such Convertible Securities and upon the conversion or exchange
thereof, by (ii) the total maximum number of Common Shares issuable
upon the exercise of such rights or options or upon the conversion or
exchange of all such Convertible Securities issuable upon the exercise
of such rights or options) shall be less than the Exercise Price in
effect immediately prior to the time of the granting of such rights or
options or less than the Market Price of the Common Shares determined
as of the date of granting such rights or options, as the case may be,
then the total maximum number of Common Shares issuable upon the
exercise of such rights or options or upon conversion or exchange of
all such Convertible Securities issuable upon the exercise of such
rights or options shall be deemed to be outstanding as of the date of
the granting of such rights or options and to have been issued for
such price per share, with the effect on the Exercise Price specified
in Section 2(a). Except as provided in subparagraph (C), no further
adjustment of the Exercise Price shall be made upon the actual issue
of such Common Shares or of such Convertible Securities upon exercise
of such rights or options or upon the actual issue of such Common
Shares upon conversion or exchange of such Convertible Securities.
(B) Issuance of Convertible Securities. In case at any
time after the date hereof the Company shall in any manner issue
(whether directly or by assumption in a merger or otherwise) or sell
any Convertible Securities, whether or not the right to exchange or
convert thereunder is immediately exercisable, and the price per share
for which Common Shares are issuable upon such conversion or exchange
(determined by dividing (i) the total amount, if any, received or
receivable by the Company as consideration for the issue or sale of
such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to
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<PAGE> 5
the Company upon the conversion or exchange thereof, by (ii) the total
maximum number of Common Shares issuable upon the conversion or
exchange of all such Convertible Securities) shall be less than the
Exercise Price in effect immediately prior to the time of such issue
or sale, or less than the Market Price of the Common Shares determined
as of the date of such issue or sale of such Convertible Securities,
as the case may be, then the total maximum number of Common Shares
issuable upon conversion or exchange of all such Convertible
Securities shall be deemed to be outstanding as of the date of the
issue or sale of such Convertible Securities and to have been issued
for such price per share, with the effect on the Exercise Price
specified in Section 2(a); provided, however, that (a) except as
otherwise provided in subparagraph (C), no further adjustment of the
Exercise Price shall be made upon the actual issue of such Common
Shares upon conversion or exchange of such Convertible Securities, and
(b) if any such issue or sale of such Convertible Securities is made
upon exercise of any rights to subscribe for or to purchase or any
option to purchase any such Convertible Securities for which
adjustments of the Exercise Price have been or are to be made pursuant
to the provisions of subparagraph (A), no further adjustment of the
Exercise Price shall be made by reason of such issue or sale.
(C) Change in Option Price or Conversion Rate. Upon the
happening of any of the following events, namely, if the purchase
price provided for in any right or option referred to in subparagraph
(A), the additional consideration, if any, payable upon the conversion
or exchange of any Convertible Securities referred to in subparagraphs
(A) or (B), or the rate at which any Convertible Securities referred
to in subparagraphs (A) or (B) are convertible into or exchangeable
for Common Shares shall change (other than under or by reason of
provisions designed to protect against dilution), the Exercise Price
then in effect hereunder shall forthwith be readjusted (increased or
decreased, as the case may be) to the Exercise Price which would have
been in effect at such time had such rights, options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at
the time initially granted, issued or sold. On the expiration of any
such option or right referred to in subparagraph (A), or the
termination of any such right to convert or exchange any such
Convertible Securities referred to in subparagraphs (A) or (B), the
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<PAGE> 6
Exercise Price then in effect hereunder shall forthwith be readjusted
(increased or decreased, as the case may be) to the Exercise Price
which would have been in effect at the time of such expiration or
termination had such right, option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or
termination, never been granted, issued or sold, and the Common Shares
issuable thereunder shall no longer be deemed to be outstanding. If
the purchase price provided for in any such right or option referred
to in subparagraph (A) or the rate at which any Convertible Securities
referred to in subparagraphs (A) or (B) are convertible into or
exchangeable for Common Shares shall be reduced at any time under or
by reason of provisions with respect thereto designed to protect
against dilution, then in case of the delivery of Common Shares upon
the exercise of any such right or option or upon conversion or
exchange of any such Convertible Securities, the Exercise Price then
in effect hereunder shall, if not already adjusted, forthwith be
adjusted to such amount as would have obtained had such right, option
or Convertible Securities never been issued as to such Common Shares
and had adjustments been made upon the issuance of the Common Shares
delivered as aforesaid, but only if as a result of such adjustment the
Exercise Price then in effect hereunder is thereby reduced.
(D) Stock Dividends. In case at any time the Company
shall declare a dividend or make any other distribution upon any class
or series of stock of the Company payable in Common Shares or
Convertible Securities, any Common Shares or Convertible Securities,
as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration with the effect on the Exercise Price specified in
Section 2(a).
(E) Consideration for Stock. In case at any time Common
Shares or Convertible Securities or any rights or options to purchase
any such Common Shares or Convertible Securities shall be issued or
sold for cash, the consideration therefor shall be deemed to be the
amount received by the Company therefor, after deduction therefrom of
any expenses incurred or any underwriting commissions or concessions
paid or allowed by the Company in connection therewith. In case at
any time any Common Shares, Convertible Securities or any rights or
options to purchase any such Common Shares or Covertible Securities
shall be issued or sold for consideration other than cash, the amount
of the
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<PAGE> 7
consideration other than cash received by the Company shall be deemed
to be the fair value of such consideration, as determined reasonably
and in good faith by the Board of Directors of the Company, after
deduction of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Company in connection therewith.
In case at any time any Common Shares, Convertible Securities or any
rights or options to purchase any Common Shares or Convertible
Securities shall be issued in connection with any merger or
consolidation in which the Company is the surviving corporation, the
amount of consideration received therefor shall be deemed to be the
fair value, as determined reasonably and in good faith by the Board of
Directors of the Company, of such portion of the assets and business
of the nonsurviving corporation as such Board of Directors may
determine to be attributable to such Common Shares, Convertible
Securities, rights or options, as the case may be. In case at any
time any rights or options to purchase any shares of Common Stock or
Convertible Securities shall be issued in connection with the issue
and sale of other securities of the Company, together comprising one
integral transaction in which no consideration is allocated to such
rights or options by the parties thereto, such rights or options shall
be deemed to have been issued without consideration. In the event of
any consolidation or merger of the Company in which stock or
securities of another corporation are issued in exchange for Common
Stock of the Company or in the event of any sale of all or
substantially all of the assets of the Company for stock or other
securities of any corporation, the Company shall be deemed to have
issued a number of shares of its Common Stock for stock or securities
of the other corporation computed on the basis of the actual exchange
ratio on which the transaction was predicated and for a consideration
equal to the fair market value on the date of such transaction of such
stock or securities of the other corporation, and if any such
calculation results in adjustment of the Exercise Price, the
determination of the number of shares of Common Stock receivable upon
exercise of this Warrant Certificate immediately prior to such merger,
consolidation or sale, for purposes of Section 2(c), shall be made
after giving effect to such adjustment of the Exercise Price.
(F) Record Date. In case the Company shall take a record
of the holders of its Common Shares for the purpose of entitling them
(i) to receive a dividend or other distribution payable in Common
Shares or
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<PAGE> 8
Convertible Securities, or (ii) to subscribe for or purchase Common
Shares or Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the Common Shares or
Convertible Securities deemed to have been issued or sold as a result
of the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription
or purchase, as the case may be.
(G) Treasury Shares. The number of Common Shares
outstanding at any given time shall not include shares owned or held
by or for the account of the Company, and the disposition of any such
shares shall be considered an issue or sale of Common Shares for the
purposes of Section 2(a).
(H) Definition of Market Price. The term "Market Price"
shall mean, for any day, the last sale price for the Common Shares on
the principal securities exchange on which the Common Shares are
listed or admitted to trading, or, if not so listed or admitted to
trading on any securities exchange, the last sale price for the Common
Shares on the National Association of Securities Dealers National
Market System, or, if the Common Shares shall not be listed on such
system, the closing bid price in the over-the-counter market, in each
such case, unless otherwise provided herein, averaged over a period of
20 consecutive business days prior to the day as of which Market Price
is being determined. If at any time the Common Shares are not listed
on any such exchange or such system or quoted in the over-the-counter
market, the Market Price of the Common Shares shall be deemed to be
the higher of (i) the book value thereof, as determined in accordance
with generally accepted accounting principles consistent with those
then being applied by the Company, by any firm of independent
certified public accountants (which may be the regular auditors of the
Company) of recognized national standing selected by the Board of
Directors of the Company, as of the last day of the month ending
within 31 days preceding the date as of which the determination is to
be made, and (ii) the fair value thereof, as determined in good faith
by an independent brokerage firm, Standard & Poor's Corporation or
Moody's Investors Service, as of a date which is within 15 days
preceding the date as of which the determination is to be made.
(I) Certain Acquisitions. Anything herein to the
contrary notwithstanding, in case at any time after the date hereof the Company
shall issue any Common Shares or
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<PAGE> 9
Convertible Securities, or any rights or options to purchase any Common Shares
or Convertible Securities, in connection with the acquisition by the Company of
the stock or assets of any other corporation or the merger of any other
corporation with and into the Company under circumstances where on the date of
the issuance of such Common Shares or Convertible Securities, or such rights or
options, the consideration received for such Common Shares or deemed to have
been received for the Common Shares into which such Convertible Securities are
convertible or for which such rights or options are exercisable is less than of
the Market Price of the Common Shares, but on the date the number of Common
Shares or Convertible Securities, or in the case of Convertible Securities
other than stock, the aggregate principal amount of Convertible Securities, or
the number of such rights or options was determined (as set forth in a binding
agreement between the Company and the other party to the transaction) the
consideration received for such Common Shares or deemed to have been received
for the Common Shares into which such Convertible Securities are convertible or
for which such rights or options are exercisable would not have been less than
the Market Price of the Common Shares, such Common Shares shall not be deemed
to have been issued for less than the Market Price of the Common Shares.
(b) Subdivision or Combination of Stock. In case the
Company shall at any time subdivide its outstanding Common Shares into a
greater number of shares, the Exercise Price in effect immediately prior to
such subdivision shall be proportionately reduced, and conversely, in case the
outstanding Common Shares of the Company shall be combined into a smaller
number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased.
(c) Reorganization, Reclassification, Consolidation,
Merger. If any capital reorganization, reclassification of the capital stock
of the Company, consolidation or merger of the Company with another
corporation, or sale, transfer or other disposition of all or substantially all
of the Company's properties to another corporation shall be effected, then, as
a condition of such reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition, lawful and adequate provision shall be
made whereby each holder of Warrants shall thereafter have the right to
purchase and receive upon the basis and upon the terms and conditions herein
specified and in lieu of the Common Shares immediately theretofore issuable
upon exercise of the Warrants, such shares of stock, securities or properties
as may be issuable or payable with respect to or in exchange for a number of
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<PAGE> 10
outstanding Common Shares equal to the number of Common Shares immediately
theretofore issuable upon exercise of the Warrants, had such reorganization,
reclassification, consolidation, merger, sale, transfer or other disposition
not taken place, and in any such case appropriate provision shall be made with
respect to the rights and interests of each holder of Warrants to the end that
the provisions hereof (including, without limitation, provision for adjustment
of the Exercise Price) shall thereafter be applicable, as nearly equivalent as
may be practicable in relation to any shares of stock, securities or properties
thereafter deliverable upon the exercise thereof. The Company shall not effect
any such consolidation, merger, sale, transfer or other disposition, unless
prior to or simultaneously with the consummation thereof the successor
corporation, if other than the Company, resulting from such consolidation or
merger, or the corporation purchasing or otherwise acquiring such properties
shall assume, by written instrument executed and mailed or delivered to the
holders of Warrants at the last address of such holders appearing on the books
of the Company, the obligation to deliver to such holders such shares of stock,
securities or properties, in accordance with the foregoing provisions, as such
holders may be entitled to acquire. The above provisions of this subparagraph
2(c) shall similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales, transfers, or other dispositions.
(d) Liquidating and Other Dividends. (A) In case at any
time the Company shall distribute pro rata to all holders of its Common Shares
evidences of its indebtedness or assets (excluding cash dividends or cash
distributions paid out of retained earnings or retained surplus) then,
forthwith upon such distribution, the Exercise Price shall be reduced by the
fair market value of the evidences of indebtedness or assets so distributed
applicable to one Common Share (as conclusively determined by an investment
banking firm designated by a majority in interest of the holders of Warrants;
it being understood that the fees of such investment banking firm shall be
borne by the Company).
(B) In case at any time the Company shall declare a cash
dividend upon the Common Shares or make a cash distribution to all holders of
its Common Shares (whether or not paid out of retained earnings or retained
surplus), the Company shall pay over to each holder of the Warrants the cash
and other property which such holder would have received (together with all
distributions thereon) if such holder had exercised the Warrants held by it on
the record date fixed in connection with such cash dividend or cash
distribution.
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(e) Notice of Determination. Except as otherwise
provided herein, upon any adjustment of the Exercise Price, then and in each
such case the Company shall promptly obtain the opinion of a firm of
independent certified public accountants (which may be the regular auditors of
the Company) of recognized national standing selected by the Company's Board of
Directors, which opinion shall state the Exercise Price resulting from such
adjustment and the increase or decrease, if any, in the number of Common Shares
issuable upon exercise of the Warrants held by each holder of Warrants, setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based. The Company shall promptly mail a copy of such
accountants' opinion to each holder of Warrants.
(f) Intent of Provisions. If any event occurs as to
which, in the opinion of the Board of Directors of the Company, the other
provisions of this Section 2 are not strictly applicable or if strictly
applicable, would not fairly protect the rights of the holders of the Warrants
in accordance with the essential intent and principles of such provisions, then
such Board of Directors shall appoint a firm of independent certified public
accountants (which may be the regular auditors of the Company) of recognized
national standing, which shall give their opinion upon the adjustment, if any,
on a basis consistent with such essential intent and principles, necessary to
preserve, without dilution, the rights of the holders of the Warrants. Upon
receipt of such opinion by the Board of Directors of the Company, the Company
shall forthwith make the adjustments described therein; provided, however, that
no such adjustment pursuant to this Section 2(f) shall have the effect of
increasing the Exercise Price as otherwise determined pursuant to the other
provisions of this Section 2 except in the event of a combination of shares of
the type contemplated in Section 2(b) and then in no event to an amount larger
than the Exercise Price as adjusted pursuant to Section 2(b).
3. Other Notices. If at any time prior to the
expiration of the Warrants evidenced hereby:
(a) The Company shall declare any dividend on the Common
Shares payable in shares of capital stock of the Company, cash or
other property; or
(b) The Company shall authorize the issue of any options,
warrants or rights pro rata to all holders of Common Shares entitling
them to subscribe for or pur- chase any shares of stock of the Company
or to receive any other rights; or
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<PAGE> 12
(c) The Company shall authorize the distribution pro rata
to all holders of Common Shares of evidences of its indebtedness or
assets (excluding cash divi- dends or cash distributions paid out of
retained earnings or retained surplus); or
(d) There shall occur any reclassification of the Common
Shares, or any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which the
Company is the continuing corporation and which does not result in any
reclassification of the Common Shares) or a sale or transfer to
another corporation of all or substantially all of the properties of
the Company; or
(e) There shall occur the voluntary or involun- tary
liquidation, dissolution or winding up of the affairs of the Company;
or
(f) The Company shall fix a record date with respect to
any action to be taken by a vote of the holders of Common Shares;
then, and in each of such cases, the Company shall deliver to the registered
holder hereof at the last address of such holder appearing on the books of the
Company, as promptly as practicable but in any event (except in the case of the
fixing of a record date referred to in subsection (f) above) at least 15 days
prior to the applicable record date (or determination date) mentioned below, a
notice stating, to the extent such information is available, (i) the date on
which a record is to be taken for the purpose of such dividend, distribution or
rights, or, if a record is not to be taken, the date as of which the holders of
Common Shares of record to be entitled to such dividend, distribution or rights
are to be determined, (ii) the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or winding up
is expected to become effective and the date as of which it is expected that
holders of Common Shares of record shall be entitled to exchange their Common
Shares for securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or winding up,
or (iii) the date on which a record is to be taken for the purpose of such
shareholder action. In addition, the Company shall deliver to the registered
holder hereof at such address, as promptly as practicable, notice of any change
in any date referred to in clause (ii) of the preceding sentence.
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4. Representations and Warranties of the Company. The
Company represents and warrants to and covenants with the registered holder
hereof as follows:
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of Delaware, is duly
qualified and in good standing under the laws of any foreign jurisdiction where
the failure to be so qualified would have a material adverse effect on its
ability to perform its obligations under the Warrants evidenced by this Warrant
Certificate and it has full corporate power and authority to issue the Warrants
and to carry out the provisions of the Warrants evidenced by this Warrant
Certificate.
(b) The issuance, execution and delivery of this
Warrant Certificate has been duly authorized by all necessary corporate action
on the part of the Company and each of the Warrants evidenced by this Warrant
Certificate constitutes the valid and legally binding obligation of the
Company, enforceable against it in accordance with the terms hereof, except as
such enforceability may be limited by bankruptcy, insolvency or other laws
affecting generally the enforceability of creditors' rights, by general
principles of equity and by limitations on the availability of equitable
remedies.
(c) Neither the execution and delivery of the
Warrants evidenced by this Warrant Certificate by the Company, nor compliance
by the Company with the provisions hereof, violates any provision of its
Certificate of Incorporation or By-Laws, as amended, or any law, statute,
ordinance, regulation, order, judgment or decree of any court or governmental
agency, or conflicts with or will result in any breach of the terms of or
constitute a default under or result in the termination of or the creation of
any lien pursuant to the terms of any agreement or instrument to which the
Company is a party or by which it or any of its properties is bound.
5. Company to Provide Stock. The Company covenants and
agrees that all shares of capital stock of the Company which may be issued upon
the exercise of the Warrants evidenced hereby will be duly authorized, validly
issued and fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof to the registered holder hereof. The
Company further covenants and agrees that during the period within which the
Warrants evidenced hereby may be exercised, the Company will at all times
reserve such number of shares of its capital
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<PAGE> 14
stock as may be sufficient to permit the exercise in full of the Warrants
evidenced hereby.
6. Registered Holder. The registered holder of this
Warrant Certificate shall be deemed the owner hereof and of the Warrants
evidenced hereby for all purposes. The registered holder of this Warrant
Certificate shall not be entitled by virtue of ownership of this Warrant
Certificate to any rights whatsoever as a shareholder of the Company.
7. Transfer. This Warrant Certificate and the Warrants
evidenced hereby may be sold, transferred, pledged, hypothecated or otherwise
disposed of; provided that this Warrant Certificate and the Warrants evidenced
hereby may not be sold, transferred, pledged, hypothecated or otherwise
disposed of unless, in the opinion of counsel reasonably satisfactory to the
Company, such transfer would not result in a violation of the provisions of the
United States Securities Act of 1933 (the "Securities Act"). Any transfer of
this Warrant Certificate and the Warrants evidenced hereby, in whole or in
part, shall be effected upon surrender of this Warrant Certificate, duly
endorsed (unless endorsement is waived by the Company), at the principal office
or agency of the Company referred to in Section 1. If all of the Warrants
evidenced hereby are being sold, transferred, pledged, hypothecated or
otherwise disposed of, the Company shall issue a new Warrant Certificate
registered in the name of the appropriate transferee(s). If less than all of
the Warrants evidenced hereby are being sold, transferred, pledged,
hypothecated or otherwise disposed of, the Company shall issue new Warrant
Certificates, in each case in the appropriate number of Warrants, registered in
the name of the registered holder hereof and the transferee(s), as applicable.
Any Common Shares of the Company issued upon any exercise hereof may not be
sold, transferred, pledged, hypothecated or otherwise disposed of unless, in
the opinion of counsel reasonably satisfactory to the Company, such transfer
would not result in a violation of the Securities Act. Each taker and holder
of this Warrant Certificate, the Warrants evidenced hereby and any shares of
capital stock of the Company issued upon exercise of any such Warrants, by
taking or holding the same, consents to and agrees to be bound by the
provisions of this Section 7.
8. Company to Provide Reports, Etc. While this Warrant
Certificate remains outstanding, the Company will mail to the person in whose
name this Warrant Certificate is registered copies of all reports and
correspondence which the Company mails to its stockholders.
E-69
<PAGE> 15
9. Registration
(a) Registration Rights of Holder. If the Company shall
receive a written request from the registered holders of at least 75 percent of
the shares of Registrable Stock (as hereinafter defined) outstanding at the
time of such request for the registration of such shares of Registrable Stock,
the Company will promptly notify all registered holders of Warrants and will
cause such shares of Registrable Stock as are specified in such written request
and any other written requests received from such registered holders within ten
days of notice from the Company to such registered holders of such request to
be registered as promptly as practicable so as to permit the sale or other
distribution of such shares by the registered holders thereof. In connection
therewith the Company shall prepare and file on an appropriate form a
registration statement under the Securities Act, and the rules and regulations
thereunder, covering such shares of Registrable Stock to effect such
registration. Notwithstanding the foregoing, (i) the Company shall not be
required to file more than one such registration statement pursuant to this
Section 9(a), (ii) the Company shall not be obligated to effect any
registration pursuant to this Section 9(a) if it has effected a registration of
any Common Shares (other than a registration specified in clause (i) of Section
9(b)) during the six-month period immediately preceding such request, and (iii)
the request for a registration pursuant to this Section 9(a) may only be made
during the first 60 days of the Company's fiscal year, provided that, if such
registration can be duly effected without the delivery of audited financial
statements of the Company, such request may be made during the remainder of
such fiscal year. For purposes of this Section 9, "Registrable Stock" shall
include all Common Shares issued or issuable by the Company to the registered
holders from time to time of Warrants upon exercise of such Warrants. In the
case of any registration pursuant to this Section 9(a) which involves an
underwritten public offering, the managing underwriter or underwriters of such
offering shall be selected by a majority of the registered holders of
Registrable Stock, and shall be acceptable to the Company (which acceptance
shall not unreasonably be withheld). In addition, the Company shall not be
required to file any such registration statement at any time when the Company
is contemplating an underwritten public offering of any of its securities and
the registration of the registered holder's Common Shares would, in the good
faith judgment of the Company's investment banker, interfere with the orderly
sale of such securities by the Company; provided, however, that the Company
shall not be able to delay, pursuant to this sentence, any such
E-70
<PAGE> 16
filing for a period greater than 180 days. The Company agrees that it shall
not effect a public offering of its equity securities for a period of 90 days
following the effective date of any registration statement filed pursuant to
this Section 9(a).
(b) Piggyback Registration. If the Company shall at any
time determine to proceed with the actual preparation and filing of a
registration statement under the Securities Act, and the rules and regulations
thereunder, in connection with an offering of Common Shares for cash, the
Company shall give written notice as promptly as practicable of such
determination to each registered holder of Warrants and will include in such
registration statement such number of shares of Registrable Stock as each such
registered holder shall request within ten days after receipt of such notice
from the Company, upon the same terms (including the method of distribution) as
such offering is being made; provided, however, that (i) the Company shall not
be required to include such Registrable Stock in any registration statement
relating solely to Common Shares or other securities to be issued pursuant to
any employee benefit plan of the Company; and (ii) in the event that the
inclusion of all of the Registrable Stock requested by the registered holder
for inclusion pursuant to this Section 9(b) would, in the good faith judgment
of the managing underwriter of such offering, interfere with the orderly sale
and distribution of the shares of capital stock offered by the Company, the
number of shares of Registrable Stock otherwise to be included in the
underwritten public offering may be reduced to the extent deemed necessary by
such managing underwriter acting in good faith (or the sale of such shares
shall be subject to such other conditions as the managing underwriter deems
appropriate). In the event of such a reduction, the Company will include in
such registration: (i) first, the securities which the Company proposes to
sell and (ii) second, a pro rata portion of the Registrable Stock requested to
be included in such registration by the registered holder, and a pro rata
portion of the Common Shares (the "Stockholder Shares") held by other
stockholders of the Company, entitled to participate in such registration,
requested by such stockholders to be included in such registration. In each
case such pro rata portion shall be determined on the basis of the number of
shares of Registrable Stock or Stockholder Shares requested by such holder or
stockholder, as the case may be, to be included in such registration, and the
total number of shares of Registrable Stock and Stockholder Shares requested by
all such holders and stockholders to be included in such registration. The
Company may, without the written consent of the registered holder, withdraw
such registration
E-71
<PAGE> 17
statement and abandon the proposed offering in which the registered holder had
requested to participate.
(c) Blue Sky Laws. The Company shall use all reasonable
efforts to effect such registrations, qualifications or exemptions under Blue
Sky or other state securities laws as may be necessary to permit or facilitate
the sale or other distribution of the Common Shares for which registration is
effected pursuant to Section 9(a) or Section 9(b), but the Company shall not be
obligated to qualify the securities in any jurisdiction where such
qualifications would (i) require the Company to qualify generally to do
business as a foreign corporation in such jurisdiction, (ii) subject the
Company to taxation in such jurisdiction or (iii) otherwise subject the Company
to consent to general service of process in such jurisdiction.
(d) Minimum Registration. Notwithstanding anything
contained herein to the contrary, the Company shall not be required pursuant to
Section 9(a) or Section 9(b) to register on behalf of the registered holder and
the other holders of Warrants or the Common Shares issuable upon conversion of
Warrants in any one registration statement less than 25,000 Common Shares (or
such lesser number of shares which shall constitute all the shares which (i)
are held by a registered holder and (ii) are still issuable upon exercise of
the Warrants), unless such holders shall have requested the registration
pursuant to Section 9(b) of at least 25,000 Common Shares and the number of
such shares otherwise to be included shall have been reduced solely as a result
of the operation of the provisions of clause (ii) of the proviso contained in
the first sentence of Section 9(b). Such number shall be appropriately
adjusted for stock splits, stock dividends, combinations of shares,
reclassifications or other similar events.
(e) Expenses. To the extent permissible in accordance
with the requirements of applicable Blue Sky laws and related rules and
regulations, and in accordance with the rules of the National Association of
Securities Dealers, Inc., the Company will pay all expenses necessary to effect
under the Securities Act any registration statements, amendments or supplements
filed pursuant to Section 9(a) or Section 9(b) (other than underwriters'
discounts and commissions and brokerage commissions and fees, if any, payable
with respect to Registrable Shares sold by a registered holder and other than
legal and other fees and expenses incurred by a registered holder), including,
without limitation, printing expenses, fees of the Securities and Exchange
Commission and the National Association of Securities Dealers, Inc., expenses
of
E-72
<PAGE> 18
compliance with Blue Sky or other state securities laws, and accounting and
legal fees and expenses.
(f) Indemnification of the Holder By the Company. In the
event of any registration pursuant to this Section 9, the Company will
indemnify and hold harmless the registered holder and each person, if any, who
controls the registered holder within the meaning of the Securities Act,
against any losses, claims, damages, expenses (including reasonable attorneys'
fees), or liabilities (or actions in respect thereof) under the Securities Act
or otherwise, which arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any such
registration statement, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading; and will reimburse the registered holder and each such
controlling person for any legal or other expenses reasonably incurred by the
registered holder or such controlling person in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in said registration statement, said preliminary prospectus, said
prospectus, or any said amendment or supplement, in reliance upon and in
conformity with written information furnished by the registered holder
specifically for use in the preparation thereof.
(g) Indemnification of the Company By the Holder. The
registered holder shall indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed any such registration
statement, and each person, if any, who controls the Company within the meaning
of the Securities Act, against any losses, claims, damages or liabilities to
which the Company or any such director, officer, or controlling person may
become subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue or alleged untrue statement of any material fact
contained in said registration statement, said preliminary prospectus, said
prospectus, or said amendment or supplement thereto, or arise out of or are
based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the
E-73
<PAGE> 19
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in said registration statement, said preliminary
prospectus, said prospectus, or said amendment or supplement, in reliance upon
and in conformity with written information furnished by the registered holder
specifically for use in the preparation thereof and will reimburse any legal or
other expenses reasonably incurred by the Company or any such director,
officer, or controlling person in connection with investigating or defending
any such loss, claim, damage, liability or action.
(h) Notice of Claim. Promptly after receipt by an
indemnified party under this Section 9 of notice of the commencement of any
action, such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 9, notify the
indemnifying party of the commencement thereof.
(i) Defense of Claim. In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate in
the defense thereof, with counsel reasonably satisfactory to such indemnified
party. Notwithstanding the foregoing, the indemnified party may retain its own
counsel, who shall be reasonably satisfactory to the indemnifying party. The
reasonable fees and expenses of such counsel shall be borne by the indemnifying
party.
(j) Obligations to Underwriter. With respect to any
underwritten offering, the registered holder and the Company shall, in addition
to the foregoing, provide the underwriter of such offering with customary
representations and warranties, and indemnification, in each instance as shall
be reasonably requested by the underwriter, provided, however, that any such
agreement to indemnify an underwriter with respect to any preliminary
prospectus shall not inure to the benefit of any such underwriter to the extent
that any loss, claim, damage or liability of any such underwriter results
solely from an untrue statement of material fact contained in, or the omission
of a material fact from, such preliminary prospectus which untrue statement or
omission was corrected in the final prospectus, if such underwriter failed to
send or give a copy of the final prospectus to the person asserting such loss,
claim, damage or liability at or prior to the written confirmation of the sale
of Common Shares, including Registrable Stock, to such person.
IN WITNESS WHEREOF, NOVAMETRIX MEDICAL SYSTEMS INC. has caused
this Warrant Certificate to be signed by a
E-74
<PAGE> 20
duly authorized officer and this Warrant Certificate to be dated May 23, 1990.
NOVAMETRIX MEDICAL SYSTEMS INC.
By /s/ William J. Lacourciere
-------------------------------------
Attest:
- -------------------------------------
E-75
<PAGE> 21
FORM OF EXERCISE
(to be executed by the registered holder hereof)
The undersigned hereby exercises ______ Warrants to subscribe
for and purchase shares of common stock, par value $.01 ("Common Shares"), of
NOVAMETRIX MEDICAL SYSTEMS INC. evidenced by the within Warrant Certificate and
herewith makes payment of the purchase price in full. Kindly issue
certificates for the Common Shares in accordance with the instructions given
below. The certificate for the unexercised balance, if any, of the Warrants
evidenced by the within Warrant Certificate will be registered in the name of
the undersigned.
Dated:
-----------------------------
---------------------------------------
Instructions for registration of shares
- ---------------------------------------
Name (please print)
Social Security or Other Identifying
Number:
--------------------------------
Address:
- ---------------------------------------
Street
- ---------------------------------------
City, State and Zip Code
E-76
<PAGE> 1
EXHIBIT 10 (f)
NO. W-1 (First Amendment) 92,631 Warrants
FIRST AMENDMENT TO
WARRANT CERTIFICATE NO. W-1
Warrants to subscribe for and purchase shares
of Common Stock, par value $.01, of
NOVAMETRIX MEDICAL SYSTEMS INC.
The first paragraph of the above-referenced Warrant Certificate
is hereby amended and restated in full to read as follows:
"THIS CERTIFIES that, for value received, Louis P.
Pellegrino, or registered successors and assigns, is the owner
of the number of warrants (the "Warrants") set forth above, each
of which entitles the owner thereof to purchase from NOVAMETRIX
MEDICAL SYSTEMS INC., a Delaware corporation (herein called the
"Company"), at any time during the period from 9:00 A.M. (New
York Time) on September 15, 1988 through 5:00 P.M. (New York
Time) on December 31, 1997, one share of Common Stock, par value
$.01, of the Company (individually, a "Common Share" and
collectively, the "Common Shares"), at an initial exercise price
of $3.75 per share, subject to adjustment from time to time
pursuant to the provisions of Section 2. For purposes of this
Warrant Certificate, the term "Common Shares" shall mean the
class of capital stock of the Company designated common stock,
par value $.01, as constituted on the date hereof, and any other
class of capital stock of the Company resulting from successive
changes or reclassifications of the Common Shares."
Except as hereby amended the Warrant Certificate shall remain in
full force and effect.
E-77
<PAGE> 2
IN WITNESS WHEREOF, NOVAMETRIX MEDICAL SYSTEMS INC. has caused
this First Amendment to Warrant Certificate No. W-1 to be signed by a duly
authorized officer and this First Amendment to Warrant Certificate No. W-1 to
be dated as of September 19, 1989.
NOVAMETRIX MEDICAL SYSTEMS INC.
By /s/ Louis P. Pellegrino
-------------------------------------
Chairman
By /s/ John A. Ramadei
-------------------------------------
Vice President
E-78
<PAGE> 3
Schedule to Exhibit 10(f)
<TABLE>
<CAPTION>
First
Amendment to Number
Warrant of
Name Certificate Warrants
- ---- ------------ --------
<S> <C> <C>
William J. Lacourciere No. W-2 92,631
Thomas M. Haythe No. W-3 13,815
Michael J. Needham No. W-4 13,815
Sorrell M. Mathes No. W-5 9,605
Donald R. Gordon No. W-7 7,500
</TABLE>
E-79
<PAGE> 1
EXHIBIT 10(h)
NO. W-11 (First Amendment) 50,000 Warrants
FIRST AMENDMENT TO
WARRANT CERTIFICATE NO. W-11
Warrants to subscribe for and purchase shares
of Common Stock, par value $.01, of
NOVAMETRIX MEDICAL SYSTEMS INC.
The first paragraph of the above-referenced Warrant
Certificate is hereby amended and restated in full to read as follows:
"THIS CERTIFIES that, for value received, Louis P.
Pellegrino, or registered successors and assigns, is the owner
of the number of warrants (the "Warrants") set forth above,
each of which entitles the owner thereof to purchase from
NOVAMETRIX MEDICAL SYSTEMS INC., a Delaware corporation
(herein called the "Company"), at any time during the period
from 9:00 A.M. (New York Time) on May 1, 1989 through 5:00
P.M. (New York Time) on March 10, 1999, one share of Common
Stock, par value $.01, of the Company (individually, a "Common
Share" and collectively, the "Common Shares"), at an initial
exercise price of $3.75 per share, subject to adjustment from
time to time pursuant to the provisions of Section 2. For
purposes of this Warrant Certificate, the term "Common Shares"
shall mean the class of capital stock of the Company
designated common stock, par value $.01, as constituted on the
date hereof, and any other class of capital stock of the
Company resulting from successive changes or reclassifications
of the Common Shares."
Except as hereby amended the Warrant Certificate shall remain
in full force and effect.
E-80
<PAGE> 2
IN WITNESS WHEREOF, NOVAMETRIX MEDICAL SYSTEMS INC. has caused
this First Amendment to Warrant Certificate No. W-11 to be signed by a duly
authorized officer and this First Amendment to Warrant Certificate No. W-11 to
be dated as of September 19, 1989.
NOVAMETRIX MEDICAL SYSTEMS INC.
By /s/ Louis P. Pellegrino
-------------------------------------
Chairman
By /s/ John A. Ramadei
-------------------------------------
Vice President
E-81
<PAGE> 3
Schedule to Exhibit 10(h)
<TABLE>
<CAPTION>
First
Amendment to Number
Warrant of
Name Certificate Warrants
- ---- ----------- --------
<S> <C> <C>
Donald R. Gordon No. W-12 10,000
Thomas M. Haythe No. W-13 10,000
William J. Lacourciere No. W-14 100,000
Michael J. Needham No. W-15 10,000
Sorrell M. Mathes No. W-16 10,000
</TABLE>
E-82
<PAGE> 1
Exhibit 10(cc)
AMENDMENT NO. 3 TO RIGHTS AGREEMENT
AMENDMENT NO. 3, dated as of November 28, 1995, by Novametrix
Medical Systems Inc., a Delaware corporation (the "Company"), to the Rights
Agreement, dated as of March 14, 1989, between the Company and The Connecticut
Bank and Trust Company, National Association, the initial rights agent ("CBT"),
as amended by an Amendment, dated as of October 30, 1990, among the Company,
CBT and Mellon Bank, N.A., the successor rights agent (the "Rights Agent"), and
an Amendment, dated as of August 29, 1991, between the Company and the Rights
Agent (as so amended, the "Rights Agreement").
WHEREAS, pursuant to Section 27 of the Rights Agreement, the
Company may from time to time supplement or amend the Rights Agreement;
WHEREAS, the Company desires to amend to the Rights Agreement
as set forth herein; and
WHEREAS, the execution and delivery of this Amendment by the
Company have been in all respects duly authorized by the Board of Directors of
the Company.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
10. Section 1(a) of the Rights Agreement is hereby amend
to read in its entirety as follows:
"(a) "Acquiring Person" shall mean any Person (as
such term is hereinafter defined) who or which, together with
all Affiliates and Associates (as such terms are hereinafter
defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 20% or more of the Common
Shares of the Company then outstanding, but shall not include
the Company, any Subsidiary (as such term is hereinafter
defined) of the Company, any employee benefit plan of the
Company or any Subsidiary of the Company, or any Person
holding Common Shares for or pursuant to the terms of any such
plan. Notwithstanding the foregoing, subject to the proviso
in this sentence, no Person shall become an "Acquiring Person"
solely as the result of (x) an acquisition after the date
hereof of Common Shares by the Company which, by reducing
E-83
<PAGE> 2
the number of Common Shares outstanding, increases the
proportionate number of shares beneficially owned by such
Person to 20% or more of the Common Shares of the Company then
outstanding or (y) the acquisition of Beneficial Ownership of
20% or more of the Common Shares of the Company then
outstanding in the good faith belief that such acquisition
would not (A) cause such Beneficial Ownership to exceed 20% of
the Common Shares then outstanding and such Person relied in
good faith in computing the percentage of its Beneficial
Ownership on publicly filed reports or documents of the Company
which are inaccurate or out-of-date or (B) otherwise cause a
Distribution Date to occur; provided, however, that if such
Person does not reduce its percentage of Beneficial Ownership
of Common Shares to below 20% by 5:00 P.M. New York City time
on the tenth Business Day after notice (the date of notice
being the first day), including by telephone or facsimile, from
the Company to such Person (requesting such Person to reduce
its Beneficial Ownership of Common Shares to less than 20%),
such Person shall, at the end of such ten Business Day period,
become an Acquiring Person (and this sentence shall no longer
apply to such Person). For purposes of this definition, the
determination whether any Person acted in "good faith" shall be
conclusively determined, and any notices hereunder must be
specifically authorized, by the Board of Directors of the
Company, acting by a vote of those directors of the Company
whose approval would be required to redeem the Rights under
Section 23."
11. Section 1(c)(i) of the Rights Agreement is hereby
amended to read in its entirety as follows:
"(i) which such Person or any of such Person's
Affiliates or Associates is deemed to "beneficially own"
within the meaning of Rule 13d-3 under the Exchange Act, as in
effect on the date of this Agreement;"
12. Section 11(a)(ii) of the Rights Agreement is amended
to read in its entirety as follows:
"Subject to Section 24 of this Agreement, in the
event any Person shall become an Acquiring Person, each holder
of a Right shall thereafter have a right to receive, upon
exercise thereof at a price equal to the then current Purchase
Price
E-84
<PAGE> 3
multiplied by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable, in accordance
with the terms of this Agreement and in lieu of Preferred
Shares, such number of Common Shares of the Company as shall
equal the result obtained by (x) multiplying the then current
Purchase Price by the number of one one-hundredths of a
Preferred Share for which a Right is then exercisable and
dividing that product by (y) 50% of the then current per share
market price of the Company's Common Shares (determined
pursuant to Section 11(d) hereof) on the date such Person
became an Acquiring Person. In the event that any Person
shall become an Acquiring Person and the Rights shall then be
outstanding, the Company shall not take any action which would
eliminate or diminish the benefits intended to be afforded by
the Rights.
"From and after the occurrence of the event described
above, any Rights that are or were acquired or beneficially
owned by such Acquiring Person (or any Associate or Affiliate
of such Acquiring Person) shall be void and any holder of such
Rights shall thereafter have no right to exercise such Rights
under any provision of this Agreement. No Right Certificate
shall be issued pursuant to Section 3 that represents Rights
beneficially owned by an Acquiring Person whose Rights would
be void pursuant to the preceding sentence or any Associate or
Affiliate thereof; no Right Certificate shall be issued at any
time upon the transfer of any Rights to an Acquiring Person
whose Rights would be void pursuant to the preceding sentence
or any Associate or Affiliate thereof or to any nominee of
such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an
Acquiring Person whose Rights would be void pursuant to the
preceding sentence shall be cancelled."
13. The validity, interpretation and construction of this
Amendment shall be governed by the substantive laws of the State of
Delaware.
14. The Rights Agreement, as amended hereby, is hereby
ratified, confirmed and continued in full force and effect.
* * *
E-85
<PAGE> 4
IN WITNESS WHEREOF, the Company has caused this Amendment to
be executed as of the date first above written.
ATTEST: NOVAMETRIX MEDICAL SYSTEMS INC.
By: By:
----------------------------------- ------------------------------
Name: Name:
Title: Title:
E-86
<PAGE> 5
Mellon Bank, N.A. hereby acknowledges receipt of this
Amendment made pursuant to Section 27 of the Rights Agreement.
ATTEST: MELLON BANK, N.A.
By: By:
-------------------------------- ----------------------------------
Name: Name:
Title: Title:
E-87
<PAGE> 1
EXHIBIT 10(dd)
LEASE
THIS LEASE made as of this _____ day of November, 1995,
between NOVA ASSOCIATES, LLC, a Connecticut limited liability company having
its principal office c/o The Casle Corporation, 200 Fisher Drive, Avon,
Connecticut 06001 (herein the "Landlord") and NOVAMETRIX MEDICAL SYSTEMS INC.,
a Delaware corporation having its headquarters at One Barnes Industrial Park
Road, Wallingford, Connecticut (herein the "Tenant").
W I T N E S S E T H T H A T :
ARTICLE 1
PREMISES
The Landlord hereby leases to the Tenant and the Tenant hereby
takes from Landlord a certain piece or parcel of land known as Carpenter Lane,
Wallingford, Connecticut, more particularly bounded and described in Exhibit A,
attached hereto and made a part hereof, together with any and all buildings,
structures, improvements, appurtenances, rights, privileges and easements now
or hereafter benefiting, belonging or pertaining thereto including, without
limitation, a 52,700 square foot office/warehouse/light
manufacturing/laboratory building (the "Building") and other Improvements (as
defined in Section 4.1 of this Lease) to be constructed on said land as
described on Exhibit B annexed hereto, together with the exclusive benefit of
all rights, appurtenances, privileges, easements, rights of ingress or egress,
licenses or hereditaments now or hereafter belonging or appertaining to any of
the foregoing (the "Premises").
ARTICLE 2
TERM
Section 2.1 Commencement Date. Landlord shall notify Tenant
that Landlord is prepared to deliver possession of the Premises after both of
the following have occurred:
E-88
<PAGE> 2
(a) Landlord has received an unconditional certificate of
occupancy for the Building from the Town of Wallingford; and
(b) Except for punch list items that shall not interfere
with the use and operation of the Premises for the purposes intended by this
Lease, Landlord has achieved Substantial Completion (as defined in Section 4.1
of this Lease) of the construction of the Improvements as defined in Section
4.1 of this Lease.
Upon receipt of such notice, Landlord and Tenant shall inspect
the Premises, identify any portions of the work not then complete in accordance
with the Plans and Specifications (as defined in Section 4.1 of this Lease),
and establish a reasonable schedule to complete said items of work. Not later
that ten (10) days after such inspection, Landlord and Tenant shall enter into
a written agreement in recordable form (the "Commencement Date Agreement")
which Commencement Date Agreement shall set forth the commencement date of this
Lease as of the date which is the first day of the month following the month in
which the conditions set forth in Sections 2.1(a) and (b)have been satisfied
("Commencement Date"); provided however that the Commencement Date shall in no
event be earlier than August 1, 1996. In the event Tenant occupies the
Premises for the period between Date of Substantial Completion and the
Commencement Date for purposes other than moving its furniture and fixtures in,
Tenant shall pay Landlord rental on a per diem basis for the period of
occupancy.
Section 2.2 Initial Term. The initial term of this Lease is
for a period of twelve (12) years commencing on the Commencement Date (the
Initial Term").
Section 2.3 Renewal Term. At the expiration of the Initial
Term of this Lease, if this Lease shall then be in full force and effect and
the Tenant is not in default in any material respect thereof beyond any
applicable grace period provided herein, Tenant shall have the option to renew
this Lease for one additional five (5) year term ("Renewal Term") on the same
terms and conditions as are contained herein ("Option to Renew"). The Tenant
shall give Landlord written notice of its election to exercise the Option to
Renew this Lease not less than nine (9) months prior to the expiration of the
Initial Term hereof.
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ARTICLE 3
RENT
Section 3.1 Basic Rent. Subject to Section 4.1 hereof,
beginning on the Commencement Date of this Lease, Tenant covenants and agrees
to pay, without demand, rent in monthly installments, in amounts determined in
accordance with the provisions herein ("Basic Rent"). If by reason of any of
the provisions of this Lease, the Basic Rent shall commence on any other than
the first day of a calendar month, or shall terminate on any other than the
last day of a calendar month, the Basic Rent for such calendar month shall be
prorated. The annual Basic Rent during the Initial Term shall be FOUR HUNDRED
EIGHT THOUSAND FOUR HUNDRED TWENTY-FIVE AND 04/100 ($408,425.04) DOLLARS due
and payable in equal monthly installments of THIRTY-FOUR THOUSAND THIRTY-FIVE
AND 42/100 ($34,035.42) DOLLARS.
Section 3.2 Basic Rent Adjustments. Commencing on the sixth,
eleventh and, assuming an extension of the Initial Term pursuant to Section 2.3
of this Lease, the fifteenth anniversary dates of the Commencement Date, annual
Basic Rent shall be increased by using the following CPI Increase Formula:
using the Index (as hereinafter defined) applicable on the first day of the
month in which this Lease commences or on the last adjustment date, as the case
may be, as the denominator and the difference obtained by subtracting from the
Index number for the first month of the sixth, eleventh or fifteenth lease
years, as the case may be, the Index applicable on the first day of the month
in which this Lease commences, or on the last adjustment date, as the case may
be, as the numerator, then multiply said resulting fraction (expressed as a
decimal) times the Basic Annual Rent in effect immediately prior to the sixth,
eleventh or fifteenth anniversary dates of the commencement Date, as
applicable, and then multiply the product thereof by 25%, which resulting
amount when added to the Basic Annual Rent in effect immediately prior to the
sixth, eleventh or fifteenth anniversary dates of the Commencement Date, as
applicable, shall be the adjusted annual Basic Rent for the applicable period.
As used in this Section 3.2, "Index" shall mean the "All
Items" portion of the "Consumer Price Index for All Urban Consumers: U.S. City
Average (1982-84=100), as compiled by the Bureau of Labor Statistics, United
States Department of Labor. If such Price Index should in the future be
compiled on a different basis, appropriate adjustments will be made for
purposes of computations. If the United States Department of Labor no longer
compiles and
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publishes such Index, any comparable index published by any other branch or
department of the federal government shall be used for the purpose of computing
the adjustments herein provided for, and if no such index is compiled and
published by any branch or department of the federal government, the statistics
reflecting the cost of living changes, as compiled by any institution,
organization or individual generally recognized as an authority by financial
and insurance institutions shall be used as a basis for such adjustments.
Section 3.3 Payment. Basic Rent and any additional amounts
due hereunder shall be paid in monthly installments, due and payable on the
first day of each and every month in advance at the address of Landlord
provided herein. All installments of Basic Rent paid after the tenth day of
the month shall bear interest at the rate of two percent per annum over the
prime rate then published in the Wall Street Journal (New York Edition).
Section 3.4 Additional Rent. Any and all payments payable by
the Tenant under this Lease other than Basic Rent shall be deemed Additional
Rent and the Landlord reserves the same rights and remedies against the Tenant
for default in making any such payments as the Landlord shall have for default
in the payment of Rent; including, but not limited to, the right to seek any
recover such payments as rent under any applicable provisions of the United
States Bankruptcy Code.
ARTICLE 4
CONSTRUCTION OF PREMISES
Section 4.1 Construction by Landlord. Landlord shall, at its
sole cost and expense, construct the Building on the Premises, which Building
upon completion of construction shall contain approximately 52,700 square feet
and, as part of its construction, Landlord shall landscape all grounds and
complete all parking, sidewalk and curb areas and shall perform such other
work, and do all such other acts and things, contemplated by the Plans and
Specifications. The work to be performed and completed by Landlord shall be
substantially in accordance with the plans, specifications and building
narrative referred to in Exhibit B attached hereto and made a part hereof,
subject to any changes, revisions, and additions to such plans and
specifications which may be agreed to by Landlord and Tenant in writing, which
work shall include all construction necessary to allow occupancy by the Tenant
for the purposes
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intended as set forth in this Lease (such plans, specifications and building
narrative are collectively referred to herein as the "Plans and
Specifications"). Tenant shall be deemed to have approved any drawings
submitted to it by Landlord if Landlord does not receive written objection
thereto within fifteen (15) business days after submission to Tenant. Landlord
shall satisfy all the conditions set forth in Section 2.1(a) and Section 2.1(b)
on or before August 1, 1996, provided, however, that if (i) all of such
conditions are not satisfied by August 1, 1996 subject to Unavoidable Delays
(as hereinafter defined) Landlord shall reimburse Tenant for one-half of the
amount in excess of the current rental due during the months of August,
September and October, 1996 and 100% of the said excess rental after October
31, 1996 to be paid by Tenant to its current landlord as a holdover rent for
the period of such delay, (ii) all of such conditions are not satisfied by
August 1, 1996 subject to Unavoidable Delays (as hereinafter defined), Tenant
shall be given a rent credit of one day for each day after August 1, 1996 that
all of such conditions are not satisfied and for each day after August 1, 1996
that the Commencement Date actually occurs, which rent credit shall be applied
to the rent due and payable from and after the Commencement Date and (iii) all
of such conditions are not satisfied by February 1, 1997 Tenant shall have the
right to terminate this Lease by giving written notice thereof to Landlord, and
in such event Tenant and Landlord shall be released of all obligations to each
other. "Unavoidable Delays" shall mean, in respect of Landlord's failure to
satisfy all of the conditions specified in Section 2.1(a) and (b) hereof for
the purposes of determining any rent credit to Tenant, a delay arising out of
any strike, lockout, labor dispute, inability to obtain labor or materials,
Tenant's negligence, adverse weather conditions not reasonably anticipatable,
changes in the work authorized by Tenant or other delay outside the reasonable
control of Landlord. "Substantial Completion" means the date on which all of
the following have occurred:
(a) Landlord's work described herein has been
substantially completed in compliance with the provisions of Section 4.1 and
4.2 hereof;
(b) all permits, fire underwriter's certificates and
certificates of occupancy required for the use and occupancy of the Premises
have been issued by the appropriate governmental authority;
(c) all facilities, systems and utilities servicing the
Premises are in good working order so as to
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permit the Premises to be used and occupied for its intended purposes;
(d) the warranties and representations of Landlord set
forth in this Lease shall be true and correct;
(e) a certificate of substantial completion shall have
been issued by the Landlord's architect.
Section 4.2 Change Orders during Construction.
Notwithstanding the foregoing, Tenant shall have the right to cause the
Landlord to make reasonable changes to such Plans and Specifications, without
approval by Landlord, as long as such changes do not result in material delays
or increased costs, it being understood and agreed that if any changes to the
Plans and Specifications are required to comply with building, zoning and other
applicable laws or any of the other requirements set forth in Section 4.2
hereof, the Landlord shall be solely responsible for the cost of all such
revisions to the Plans and Specifications and the cost of all work and related
expenses resulting therefrom. Tenant shall further have the right to cause the
Landlord to make reasonable changes to such Plans and Specifications with the
approval of Landlord should these changes cause an increase in the project
costs. Tenant at its option shall compensate Landlord for such increased costs
by either paying Landlord upon submission of an invoice for the work completed
or amending the annual Basic Rent due under this Lease by the product of the
cost of the change order times .1075. Landlord shall not finance more than
$50,000 in change order costs pursuant to this Section 4.2.
Section 4.3 Compliance with Laws. The Improvements shall be
accomplished by Landlord and its contractors promptly and with due diligence in
accordance with the Plans and Specifications and the construction schedule
attached hereto as Exhibit C in a skillful and workmanlike manner using only
new, first class materials as defined in the Plans and Specifications, and in
compliance with the building and zoning laws of the municipality or other
governmental unit wherein the Premises are located and with all applicable
federal, state and local laws, rules, orders, and regulations (including,
without limitation, the Americans with Disabilities Act) the Permitted
Exceptions (as hereinafter defined, the Covenants (as hereinafter defined) and
all other applicable covenants, conditions and other encumbrances of any kind
affecting the Premises) and in accordance with the orders, rules, and
regulations of any company or association insuring the Premises such that the
Premises may be occupied for the
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purposes intended as set forth in this Lease. All building permits, temporary
and permanent certificates of occupancy and other governmental approvals
required to construct and renovate the Premises and to permit occupancy as an
office/ warehouse/manufacturing/laboratory building shall be obtained by
Landlord at the sole cost and expense of Landlord.
Section 4.4 Warranties. Except as noted herein to the
contrary, Landlord shall correct at its own cost and expense within thirty (30)
days, or such longer period as reasonably necessary while proceeding with due
diligence, (i) any defects due to faulty workmanship or materials or design
which shall appear in the Building or at the Premises within one (1) year after
the Commencement Date of this Lease, provided that written notice of such
defect shall first be given by Tenant to Landlord during said one (1) year
period and (ii) any portion of the work performed by Landlord that shall not
have been performed in compliance with all the legal and insurance
requirements, Permitted Exceptions, or the Covenants, in effect at the time the
work was performed as specified in a written notice given by Tenant to Landlord
at any time after any such work shall have been performed.
Section 4.5 Access by Tenant. During the course of the
construction by Landlord, Tenant and its workmen shall have access to the
Premises for the purposes of inspecting the work, taking measurements, marking
plans, installing trade fixtures and equipment, erecting temporary or permanent
signs, and doing such other work as may be appropriate or desirable without
being deemed thereby to have taken possession or obligated itself to pay rent
or other charges. Tenant agrees that: (i) it shall not unreasonably interfere
with Landlord's construction of the Premises; (ii) all such work done by Tenant
prior to the Commencement Date shall be done only with such labor as will not
result in work stoppage; (iii) Landlord shall have no liability to Tenant for
damage to any property of Tenant stored on the Premises unless caused by
Landlord's negligence; and (iv) Tenant shall pay the cost of repair should any
work done on the Premises by Tenant or its workmen during the course of
construction damage the Improvements being performed by Landlord.
Section 4.6 Mechanic's Liens. Landlord and Tenant shall not
permit any mechanic's lien to be filed against the Premises by reason of work,
labor, services or materials supplied or claimed to have been supplied to
Landlord or Tenant. Should any such lien be filed against the Premises, the
party against whom the lien was filed (the
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"lienee") shall cause lien to be discharged of record. If the lienee fails to
discharge the lien, the other party may at its option, take whatever action is
required to discharge such lien. Any costs including reasonable attorneys'
fees incurred by either party in connection with the discharge of a lien filed
against the lienee shall, in the case of Landlord incurring such costs, be
deemed to be additional rent hereunder and in the case of either Landlord or
Tenant incurring such costs shall be due upon demand together with all
reasonable, necessary incidental costs and expenses incurred in connection
therewith.
ARTICLE 5
USE OF PREMISES AND COMPLIANCE WITH LAWS
Section 5.1 Use of Premises. The Tenant covenants and agrees
that during the term of this Lease, the Premises shall be used only and
exclusively for office/warehouse/research & development purposes or for any
other legal purpose not inconsistent with the character and location of the
Premises and the Medway Business Park Covenants (the "Covenants"), a copy of
which are attached hereto as Exhibit D. Tenant will not use and will not
permit anyone to use the Premises for any other purpose without the prior
written consent of Landlord.
Section 5.2 Signs. Tenant shall have an allowance of $2,500
from Landlord to reimburse it for the costs to install and erect a sign on the
exterior of the building. Thereafter, the Tenant may install and erect indoor
and outdoor signs at the Premises, subject to approval of any applicable
municipal authorities and the Medway Business Park if required. Tenant shall
be responsible for the maintenance of any such signs and any damage resulting
from installation or maintenance of such signs. Tenant's signs may be of any
type, design, color and size Tenant desires so long as Tenant obtains all
necessary governmental approvals for such signs and the signs are in keeping
with the character of the building and are in conformity with applicable laws
and Covenants.
Section 5.3 Compliance with Laws. After the Commencement
Date and at all times during the term of this Lease, Tenant shall comply with
all applicable laws, ordinances, Covenants and regulations and with the
directions of all public officials now or hereafter having jurisdiction with
respect to the use and occupancy thereof, foreseen and unforeseen, ordinary and
extraordinary. Tenant shall likewise observe and comply with the requirements
of
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public liability, fire and other policies of insurance at any time in force
with respect to the Premises.
ARTICLE 6
TAXES & ASSESSMENTS
Section 6.1 Assessments and Utility Charges. Beginning on
the Commencement Date of this Lease, Tenant covenants and agrees to pay or
cause to be paid, as additional rent, all taxes and charges on account of the
use, occupancy or operation of the Premises during the term of this Lease
including but not limited to sales, use, personal and real property taxes, all
occupation and license fees, sewer and utility assessments, and gas, telephone,
electric power, sewer, water and utility charges assessed or charged on or
against the Premises or on account of Tenant's use or occupancy thereof, or the
business conducted therein, it being understood and agreed that the foregoing
shall exclude gift, inheritance, estate, franchise, income profits, capital or
similar tax imposed on the Landlord and any amount attributable to the cost or
deferred cost of construction of the Improvements or any off-site improvements
to service the Premises.
Section 6.2 Additional Tax. If at any time during the term
of this Lease or any renewal thereof, the methods of taxation prevailing at the
Commencement Date shall be altered so that in lieu of or as a substitute for
the whole or any part of the real estate taxes now levied, assessed or imposed
on the real estate and the improvements thereon, there shall be levied,
assessed and imposed, a tax, assessment, levy, imposition or charge wholly or
partially as a capital levy or otherwise then all such taxes, assessments,
levies, impositions or charges or the part thereof so measured or based, shall
be deemed to be real estate taxes for the purposes hereof, but only to the
extent such real estate taxes would be payable as if the Premises was the only
property of Landlord subject to such real estate taxes; provided further,
however, that Tenant shall not in any year be obligated to pay any greater
amount pursuant to this Section 6.2 than would have been payable to Landlord by
way of such substituted tax had the rent payable by Tenant under Section 3.1
been the sole taxable income of Landlord for the year in question against which
Landlord had been allowed the deductions, credits or exemptions applicable
solely to such income. Nothing herein shall be construed to require Tenant to
pay any income taxes of Landlord.
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Landlord hereby represents and warrants to, and covenants
with, Tenant that there are currently no local improvement districts, special
assessments or state or local impact fees that are assessed against, encumber
or affect the Premises other than those listed in the Permitted Exceptions to
title set forth in Exhibit E hereof and there are no agreements relating to
such improvements districts, special assessments of state or local impact fees
to which Landlord or any affiliate or predecessor of Landlord is a party.
Taxes and assessments payable by Tenant hereunder shall be
payable by Tenant to Landlord within ten (10) days after receipt of written
notice of payment thereof from Landlord, which demand shall not be made by
Landlord more than 15 days prior to the due date of the corresponding payment.
Section 6.3 Appeals from Assessments. Notwithstanding the
provisions of this Paragraph, Tenant shall not be required to pay and shall not
be in default for refusing to pay when due any tax, charge, imposition or
assessment against the Premises so long as Tenant shall in good faith contest
the amount or validity thereof before any assessing or reviewing body or court
having jurisdiction to hear such contest; provided, however, Tenant agrees to
pay any such tax, charge, imposition or assessment together with any interest,
costs and penalties thereon, before the time when the Premises may be forfeited
or sold for the nonpayment thereof. Tenant shall have the right to institute,
at its expense, tax certiorari or other proceedings to contest the assessed
valuation of the Premises or any portion thereof and/or otherwise to contest
the amount of any real estate taxes with respect to any or all of the same on
behalf of and in the name of Landlord.
Section 6.4 Proof of Payments. Tenant shall use reasonable
efforts to file all statements or reports which may be required under
applicable law of which Tenant is aware in connection with any tax, charge,
fee, rate, imposition or assessment referred to in this Paragraph and required
to be paid by Tenant. Upon request, Tenant shall furnish to Landlord official
receipts or other proof reasonably satisfactory to the Landlord of the payment
of all such taxes, charges, impositions, and assessments.
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ARTICLE 7
INSURANCE
Section 7.1 Extended Coverage. From and after the
Commencement Date, Tenant shall at all times during the term of this Lease, at
its sole cost and expense, maintain an insurance policy for building coverage,
which policy shall be on an "All Risk" basis, so called. The Building is to be
insured subject to a replacement cost endorsement and an Agreed Amount
endorsement in an amount not less than replacement cost of the Building with a
deductible not greater than $1,000. Landlord shall provide Tenant with its
reasonable estimate as to the replacement cost of the Building on an annual
basis which estimate shall be used to procure the insurance.
Section 7.2 Public Liability Insurance. Tenant shall at all
times during the term of this Lease, at its sole cost and expense, maintain
public liability insurance which shall include coverage for claims for bodily
injury, death or property damage occurring in, upon or about the Premises and
shall have limits of not less than either (i) Personal Injury Liability of
$2,000,000 for each occurrence and $2,000,000 aggregate, and Property Damage
Liability of $1,000,000 for each occurrence and $1,000,000 aggregate or (ii)
Combined Personal Injury and Property Damage Liability of $2,000,000 for each
occurrence and $2,000,000 aggregate.
Section 7.3 Rental Loss Insurance. Tenant shall at all times
during the term of this Lease, at its sole cost and expense, maintain a rental
loss insurance policy which shall include coverage in the amount of one (1)
year's annual Basic Rent due under this Lease. In the event that Landlord
shall collect insurance proceeds under the rental loss insurance carried by
Tenant, then Tenant shall receive an abatement of Basic Rent due in an amount
equal to the amount collected by Landlord pursuant to the rental loss insurance
policy.
Section 7.4 Insureds. All policies of property insurance
shall include as additional insured any mortgagee and Landlord as their
respective interests may appear, notwithstanding any act of negligence on their
part which might otherwise result in forfeiture of said insurance. All
policies of liability insurance shall include the Landlord as an additional
insured. Tenant shall deliver completed certificates of insurance evidencing
such coverage prior to the commencement of this Lease and not less than ten
(10) days prior to the expiration of the existing policy. Tenant
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shall have no obligation to pay for any insurance other than as set forth
herein.
Section 7.5 Waiver. Anything in this Lease to the contrary
notwithstanding, Landlord and Tenant each hereby waive any and all rights of
recovery, claim, action or cause of action against the other, its agents,
officers or employees, for any loss or damage that may occur to the Premises,
or any improvements thereto, by reason of fire, the elements or any other cause
which could be insured against under the terms of standard fire and extended
coverage insurance policies referred to in this Article 7, regardless of cause
or origin, including the negligence of the other party hereto, its agents,
officers or employees.
Section 7.6 Cancellation. All such policies of insurance
shall provide that such policy shall not be canceled or coverage reduced
without less than thirty (30) days written notice to Landlord.
ARTICLE 8
RIGHT TO CURE DEFAULTS
Section 8.1 Landlord's Right to Cure Tenant's Default. In
addition to any other rights or remedies of Landlord under this Lease or
otherwise, if Tenant shall be in default hereunder, which default shall
continue for thirty (30) days after written notice thereof from Landlord, then
Landlord shall have the right, but not the obligation, to cure such default, in
which event Tenant shall pay to Landlord upon demand, as additional rent, all
reasonable sums paid by Landlord plus all reasonable necessary incidental costs
and expenses incurred in connection with the curing of such default. Tenant
covenants and agrees to pay such sums when due and Landlord shall have the same
rights and remedies in the event of the nonpayment thereof by Tenant as in the
case of default by Tenant in the payment of rent. Notwithstanding the
foregoing, if the default cannot be cured within a period of thirty (30) days,
then as long as Tenant shall commence the curing thereof within thirty (30)
days of notice from Landlord and with reasonable diligence cure the same,
Landlord shall not have the aforesaid right. If in the Landlord's reasonable
judgment an emergency shall exist, the aforesaid thirty (30) days notice shall
be shortened to such reduced period, following notice, as shall be reasonable
in the circumstances, prior to Landlord curing such default and may in such an
event be given by telegram or other substitute means of writing.
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ARTICLE 9
REPAIRS AND MAINTENANCE
Section 9.1 Care of Premises; Repairs by Tenant. Except as
otherwise provided in Section 9.4 hereof to be Landlord's responsibility,
throughout the term of this Lease, Tenant shall, at Tenant's sole cost and
expense, maintain, protect and preserve the Premises and the fixtures and
appurtenances therein in good order and condition and make all repairs to the
Premises, other than structural repairs, as and when needed, including but not
restricted to, for example all repairs to drains, roofing, paving, air
conditioning, heating, plumbing, equipment, floor coverings, electrical
installations and landscaping. When used in this Lease, the term "repairs"
shall include replacements or renewals when necessary.
Section 9.2 Repair Work. All repairs shall be done in a good
and workmanlike manner in compliance with all applicable laws, rules and
regulations. If the Tenant fails, after thirty (30) days' written notice, to
proceed with due diligence to make repairs required to be made by the Tenant,
the Landlord may make such repairs, and the reasonable expenses thereof
incurred by Landlord shall be collectable as additional rent hereunder. Upon
expiration of the term hereof Tenant shall deliver to Landlord the Building in
good order and condition reasonable wear and tear excepted and damage by fire
or the elements excepted.
Section 9.3 Landlord's Liability. The Landlord shall not be
liable for any damage or injury to any property of Tenant or of any other
person from water, rain, snow, ice, sewerage, soot, gas, petroleum or
electricity which may leak into or issue or flow from any part of the Premises,
or from the bursting, breaking, obstruction, leaking or any defect of any of
the pipes or plumbing appliances or from electric wiring or other fixtures on
the Premises or from the condition of the Premises, the property adjacent
thereto or from the street or subsurface except to the extent arising out of
Landlord's negligence or willful misconduct.
Section 9.4 Landlord Responsibilities. Landlord, at its sole
cost and expense, shall be responsible for (i) all structural repairs and
replacements in respect of the Building or the Premises, including, without
limitation, structural repairs and replacements in respect of the building
frame, roof, foundation, exterior walls, columns and floor slabs and (ii)
capital repairs or replacements in respect of any part of the Building or the
Premises (including, without limitation, the heating, ventilating,
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air conditioning, plumbing, electrical and other systems, which have a useful
life which extends beyond the then scheduled expiration of the term of the
Lease in which case Tenant shall reimburse Landlord for the portion of the
capital improvement cost allocable to the remainder of the term of the Lease).
ARTICLE 10
TENANT ALTERATIONS
Section 10.1 Tenant Alterations. Tenant shall have the
right, at its sole cost and expense, to make alterations, additions or changes
in and to the Premises without affecting the rental due under this Lease
subject, however, in all cases to the following:
(a) The conditions under which the alterations are to be
performed shall be governed by the provisions of this Article;
(b) No alterations of any kind which would impair the
market value or usefulness of the Premises for the purposes for which the same
are to be used, as set forth in this Lease, shall be made without in each case
the prior written consent of Landlord;
(c) No building now or hereafter located on the Premises
shall be demolished or removed and no substantial change in the structure
thereof shall be made without in each case the prior written consent of
Landlord;
(d) No alterations involving an estimated cost of more
than $50,000 shall be undertaken unless plans and specifications are submitted
to and approved by Landlord, said approval being limited to a review of the
compliance of the design with current building codes and compatibility with the
building design.
Section 10.2 Work Performed by Tenant. With respect to any
repairs, construction, restoration, replacements or alterations performed in or
on the Premises by Tenant during the term hereof as provided in this Lease,
Tenant agrees that:
(a) No work shall be undertaken until Tenant shall have
procured and paid for all required municipal and all other governmental permits
and authorizations of the applicable municipal departments and other
governmental units. Landlord agrees to join in the application for any
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such permits and authorizations whenever such action is necessary;
(b) All work shall be done promptly and in good and
workmanlike manner and in compliance with the building and zoning laws of the
municipality or other governmental unit wherein the Premises are located and
with all laws, ordinances, orders, rules and regulations of all federal, state
and municipal governments and departments and in accordance with the orders,
rules and regulations of any company or association insuring the Premises.
(c) Tenant shall not permit any mechanic's liens to be
filed against the Premises as provided in Section 4.5 hereof.
Section 10.3 Title to Alterations. All such alterations,
additions, fixtures and improvements made pursuant to this Article 10 shall
become, be and remain the property of Tenant for the term of this Lease, but
shall become the property of, and surrendered to, Landlord at the end or other
termination of this Lease, provided however that movable furniture, movable
personal property and movable trade or other fixtures put in at the expense of
the Tenant may be removed by the Tenant. In the event of any such removal by
Tenant, Tenant will remove such alterations, additions, fixtures and
improvement at Tenant's sole cost and will restore the Premises to the
condition in which they were before such work, reasonable wear and tear
excepted.
ARTICLE 11
NET LEASE
This is an absolutely net lease and Landlord shall not be
required to provide any services or do any act or thing with respect to the
Premises or the appurtenances thereto except as may be specifically provided
herein and the rent reserved herein shall be paid to Landlord without any claim
on the part of Tenant for diminution, set-off or abatement and nothing shall
suspend, abate or reduce the rent to be paid hereunder except as may be
specifically provided in this Lease.
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ARTICLE 12
EMINENT DOMAIN
Section 12.1 Entire Premises. If at any time during the term
of this Lease, the entire Premises are condemned or taken for public purposes
by and public or quasi-public authorities, and if the Lease is in full force
and effect at that time, Tenant shall have at the time the Premises are so
condemned or taken by Eminent Domain, the right to exercise its Option to
Purchase as defined in Article 20 of this Lease in accordance with the
provisions thereof (and the closing thereof shall take place prior to title
vesting in the condemning authority), and to collect any proceeds paid by any
governmental authority in connection with the condemnation. In the event that
Tenant does not exercise its Option to Purchase, then Landlord and Tenant shall
be released of their respective obligations hereunder and the term of this
Lease shall terminate as of the date title vests in the condemning authority.
Section 12.2 Portion of the Premises. In the event only a
portion of the Premises are condemned or taken for public purposes and such
taking does not result in loss of 50% or more of the area of the Building or
adversely affect the reasonable conduct of Tenant's business thereon including
all ingress and egress and necessary parking related thereto, then this Lease
shall continue in effect and the parties shall equitably adjust the rent due
under this Lease. In the event the taking does result in loss of 50% or more
of the area of the Building or adversely affect the reasonable conduct of
Tenant's business thereon, then Tenant at its option may terminate this Lease
as of the date of the taking or exercise its Option to Purchase. If any part
of the Premises shall be so taken and this Lease shall not be terminated, then
this Lease shall continue in full force and effect, except that Basic Rent and
all Additional Rent shall be equitably apportioned and Landlord shall upon
receipt of any award in condemnation make all necessary repairs and alterations
to restore the Premises to as near its former condition as possible.
Section 12.3 Claims. Either party hereto shall be free to
press any claim it might have against the condemning authority in connection
with any total or partial taking or in connection with any deed being given in
lieu thereof and the parties shall cooperate with the other in pursuing any
such claim.
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ARTICLE 13
DESTRUCTION OF PREMISES
Section 13.1 Notice. If the Premises are damaged by fire or
other casualty, the Tenant shall promptly notify Landlord thereof. Tenant
shall promptly process the necessary claims under applicable insurance
policies.
Section 13.2 Restoration Work. If the damage involves a loss
of less than or equal to $50,000, all insurance proceeds shall be paid by
Landlord to Tenant upon receipt of a written statement by Tenant stating that
Tenant will undertake the restoration work.
If damage by fire or other casualty occurs in excess of
$50,000 and this Lease has not been terminated pursuant to the provisions
hereof, all insurance proceeds shall be paid to Landlord from time to time
during the course of restoration work upon receipt of a written request by
Landlord stating that Landlord has undertaken the restoration work which
restoration work Landlord agrees to perform and a certificate from Landlord
indicating: (i) the amount of the progress payment requested; (ii) a
description of the work completed to date; (iii) lien waivers from all persons
and firms who have provided labor and materials to the Premises through the
date of such requested payment; and (iv) the additional costs necessary to
complete the restoration work. At no time shall the balance of the insurance
proceeds held by Landlord be reduced below the amount required to complete the
restoration work, it being understood that so long as the Tenant has procured
the insurance policies in the amounts specified in this Lease Landlord shall be
required to pay any shortfall of funds needed to complete the restoration.
During the progress of the restoration work, rent under this Lease will
continue to be payable subject to a rent abatement for any area of the Premises
that is untenantable to the extent that proceeds have been received under the
applicable rental loss insurance policy. If the insurance proceeds exceed the
entire cost of the restoration work, such sum shall be paid by Landlord to
Tenant upon completion of such restoration work.
Section 13.3 Total Destruction. If the Premises are
substantially damaged or totally destroyed by fire or other casualty, or if the
proceeds of any applicable insurance policy covering the Premises are
inadequate to permit the repair of the Premises, or if the Building shall be
damaged to the extent of 75% or more of the cost of replacement thereof, or if
the Building shall be damaged to
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the extent of 25% or more of the cost of replacement thereof at any time during
the last year of the Initial Term (assuming Tenant shall not have exercised the
Renewal Option) or any Renewal Term, if applicable, or if in the reasonable
judgment of Landlord or Tenant reconstruction or rehabilitation of the damaged
Premises is not economically feasible, then either Landlord or Tenant may at
its option terminate this Lease by written notice within thirty (30) days of
the fire or occurrence. Upon such termination, Tenant shall vacate the
Premises and surrender the Premises to Landlord and Tenant shall cease to be
liable for rent as of the day following the fire or occurrence and Landlord
shall return any unearned rental prepaid by Tenant to Landlord.
Notwithstanding the foregoing, Landlord does not have the right to terminate
this Lease if Tenant exercises its Option to Purchase in accordance with
Article 20 of this Lease, in which case all insurance proceeds shall be payable
to Tenant. In all other cases all casualty insurance proceeds shall be payable
to Landlord.
Section 13.4 General Provisions. Tenant will not be entitled
to any damages or compensation from Landlord of any kind, whether for
inconvenience, loss of business, annoyance or otherwise, arising out of any
damage, destruction, repair or restoration of the Premises or any delay in
making any such repair or restoration or in adjusting any insurance claims.
Notwithstanding the provisions of this Article 13, the
Landlord shall not be required to pay out any insurance proceeds to Tenant, if
and for so long as Tenant is in default in the payment of rental required under
this Lease or if Landlord has received notice of any other monetary default on
Tenant's part hereunder and such default is continuing beyond any applicable
grace period provided herein.
Section 13.5 Tenant Election to Proceed. Notwithstanding
anything to the contrary provided in Section 13, if Landlord shall give the
notice of termination to Tenant in the circumstances set forth in this Section
13, Tenant shall have the right to give Landlord written notice within the
thirty (30) day period following Tenant's receipt of such notice, stating that
Tenant elects to cause this lease to continue in force and effect
notwithstanding the giving of such notice by Landlord, in which event:
(i) this Lease shall not cease and expire as
provided in this Section 13;
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(ii) Tenant shall proceed promptly and with due
diligence, and at its sole cost and expense, to repair and restore the
Premises; and
(iii) Landlord shall assign to Tenant all of
Landlord's interest in and to the proceeds of insurance in respect of such fire
and casualty.
ARTICLE 14
INDEMNITY
Section 14.1 Tenant's Indemnification. Tenant will indemnify
Landlord and its partners, employees and agents and save and hold them harmless
from and against all claims, actions, causes of action, costs or expenses,
including attorney's fees, of whatsoever kind and nature and by whosoever made
arising from the negligent acts or omissions of Tenant, its agents, employees,
invitees or contractors.
Section 14.2 Landlord's Indemnification. Landlord will
indemnify Tenant and save and hold harmless Tenant from and against any loss,
claim, damage, expense, including reasonable attorney's fees, or injury caused
by or attributable to the negligent or intentional acts or omissions of
Landlord, its partners, agents, employees, invitees or contractors.
Section 14.3 Waiver of Subrogation. Landlord and Tenant each
hereby waives such causes of action either may have or acquire against the
other which are occasioned by the negligence of either of them or their
employees or agents resulting in the destruction of or damage to real or
personal property belonging to the other and located on the Premises and to the
extent of any proceeds of insurance actually received by such party. Landlord
and Tenant further agree (to the extent no additional premium is charged
therefor) to cause any insurance policy covering destruction of or damage to
such real or personal property to contain a waiver of subrogation clause or
endorsement under which the insurance company waives its right of subrogation
against either party to this Lease in case of destruction of or damage to the
aforementioned real or personal property.
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ARTICLE 15
DEFAULT AND TERMINATION
Section 15.1 Default. Tenant shall be deemed in default if
any one or more of the following events shall occur and be continuing:
(a) Tenant defaults in paying the Basic Rent, the
additional rent or any other payment required to be made by Tenant under this
Lease when due and said rent remains unpaid for a period of ten (10) days after
written notice thereof is given by Landlord to Tenant; or
(b) Tenant defaults in the observance or performance of
any other covenant, obligation or agreement under this Lease and such default
continues for thirty (30) days after written notice from Landlord to Tenant
requesting that such default be cured, provided that Tenant shall not be
considered to be in default if within said thirty (30) day period Tenant has
commenced and is diligently proceeding to cure the matter complained of in
Landlord's notice; or
(c) Tenant make an assignment for the benefit of
creditors, or a petition in bankruptcy or insolvency or for reorganization of
Tenant or for the appointment of a receiver or trustee for all or a portion of
Tenant's property is filed by or against Tenant in any court pursuant to any
statute and Tenant fails to secure discharge or provide other adequate
assurance for the future performance of the Tenant's obligations under this
Lease thereof within ninety (90) days thereafter.
In the event of default by Tenant as provided herein,
Landlord, in addition to all other remedies which it may have in law or equity,
at its option, may terminate this Lease forthwith and re-enter and take
possession of the Premises pursuant to applicable summary process.
Section 15.2 Re-entry. Should Landlord re-enter the Premises
upon any such event of default as provided in this Article 15, Landlord may
remove all or any portion of the Landlord's equipment, machinery or apparatus
therein which Landlord elects to do and, at its option, may relet the Premises
or any part thereof from time to time for all or any part of the unexpired part
of the term hereof.
Section 15.3 Damages. If any of the events of default set
forth in Section 15.1 occur and this Lease is terminated, whether by suit or
summary proceeding, reentry under this Lease or otherwise, Tenant shall
continue to be
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liable to pay the monthly installments of Basic Rent and any additional rent
accruing after such termination as and when due as provided in this Lease less
the proceeds received by Landlord under any reletting entered into after such
termination. In addition to any unpaid installments of Basic Rent which remain
unpaid, Tenant shall further be liable to Landlord for all reasonable costs and
expenses incurred by Landlord as a result of Tenant's default including but not
limited to reasonable attorneys' fees, real estate commissions, property
management fees, construction costs to make the Premises ready for a new
tenant, and maintenance costs. Subject to the following sentence, the failure
of the Landlord to relet the Premises or any part thereof shall not release or
affect the Tenant's liability for damages. While the Tenant remains in default
hereunder, Landlord agrees to undertake such reasonable measures as in its sole
discretion are designed to seek alternative tenants or other rental
arrangements for the Premises.
Section 15.4 Cumulative Remedies. The remedies to which the
Landlord may resort under the terms of this Lease are cumulative and are not
intended to be exclusive of any other remedies or means or redress to which it
may be lawfully entitled in case of any breach or threatened breach by Tenant
of any provisions of this Lease. Failure by Landlord to insist in any case
upon the strict performance of any of the provisions of this Lease, or to
exercise any option herein contained, shall not be construed as a waiver of a
future breach of the same covenant, agreement, or condition. Acceptance of
rent by Landlord will not operate as a waiver of any default by Tenant in the
performance of any of Tenant's obligations under this Lease regardless of any
knowledge by Landlord of such default at the time of acceptance of such rent.
Section 15.5 Landlord Default. If:
(a) Landlord shall default in performing any term,
covenant, or condition of this Lease on the part of Landlord to be performed
hereunder; and
(b) such default shall continue for a period of thirty
(30) days after written notice by Tenant (or, if such default cannot reasonably
be cured and remedied within such thirty (30) day period, if Landlord shall
fail to commence the work, or initiate the action, required to cure and remedy
such default promptly within such thirty (30) day period and thereafter
prosecute such work or action in good faith continuously and diligently to
completion).
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Tenant may, at its option (but shall not be obligated to do so) and for the
account of Landlord, expend such sum as may be necessary or desirable to
perform and fulfill such term, covenant or condition and, in such case,
Landlord shall pay to Tenant, upon demand, all reasonable sums paid by Tenant
plus all reasonable incidental costs and expenses including any interest
thereon incurred in connection with the curing of such default.
ARTICLE 16
LANDLORD ACCESS
Landlord, through its agents and employees, shall have the
right, upon reasonable notice, to enter the Premises during usual business
hours for the purpose of (i) inspecting the same; (ii) making any necessary
repairs and performing any work that may be necessary by reason of the Tenant's
failure to make any such repairs or perform any such work or to commence the
same after written notice from the Landlord; (iii) showing the Premises to
prospective buyers or, during the last nine (9) months of the term of this
Lease, showing the Premises to prospective tenants; (iv) performing work that
may be necessary or desirable to comply with Environmental Laws as defined in
Section 24 hereof. Landlord shall perform any such work in such manner as to
not unreasonably interfere with the Tenant's use and occupancy of the Premises.
Such work may include environmental testing, environmental monitoring, soil
and/or ground water remediation and soil removal from the Premises. No notice
shall be necessary in the case of emergency. Nothing herein shall be deemed or
construed as a duty upon the part of the Landlord to do any such repairs upon
the Tenant's default in failing to perform the same.
ARTICLE 17
ASSIGNMENT AND SUBLETTING
Section 17.1 Assignment and Subletting. Tenant shall neither
assign this Lease in whole or in part nor sublease all or part of the Premises
without the prior written consent of Landlord which consent shall not be
unreasonably withheld or delayed. Provided that Tenant is not then in default
under the terms hereof, Tenant shall have the right without the consent of
Landlord to sublease or assign to any Affiliate, Subsidiary, Parent Company or
Successor of Tenant. For purposes of this Section 17.1 the terms below shall
have the following meanings:
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(a) "Affiliate" shall mean any corporation which directly
or indirectly controls or is controlled by or is under common control with
Tenant. For this purpose, "control" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities or otherwise.
(b) "Parent Company" shall mean any corporation that
shall, at the time, own directly or indirectly, not less than fifty-one percent
(51%) of the outstanding stock of tenant.
(c) "Subsidiary" shall mean any corporation not less than
fifty-one percent (51%) of whose outstanding stock shall, at the time, be owned
by Tenant.
(d) "Successor" shall mean (i) a corporation in which or
with which Tenant, its corporate successors or assigns, is merged or
consolidated, in accordance with applicable statutory provisions for merger or
consolidation of corporations, provided that by operation of law or by
effective provisions contained in the instruments of merger or consolidation,
the liabilities of the corporations participating in such merger or
consolidation are assumed by the corporation surviving such merger or created
by such consolidation, or (ii) a corporation acquiring this Lease and the term
hereby demised and a substantial portion of the property and assets or stock of
Tenant, its corporate successors or assigns.
Section 17.2 Continuing Liability. Tenant covenants that,
notwithstanding any assignment or sublease, whether or not in violation of the
provisions of this Lease, and notwithstanding the acceptance of Basic Rent
and/or Additional Rent by Landlord from an assignee, subtenant, or any other
Person, Tenant shall remain fully and primarily and jointly and severally
liable for the payment of all Basic Rent and/or Additional Rent due and to
become due under this Lease and for the performance and observance of all of
the covenants, agreements, terms, provisions and conditions of this Lease on
the part of Tenant to be performed or observed. After any assignment,
subletting, or other transfer permitted under this Article 17, Tenant's
liabilities and obligations under this Lease shall not be discharged, released
or impaired in any respect by an agreement or stipulation made by Landlord
extending the term, or modifying any obligations contained in this Lease, or by
any waiver or failure of Landlord to enforce any of Tenant's obligations under
this Lease, and Tenant shall continue to be liable hereunder. If any such
agreement or
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modification operates to increase the obligations of tenant under this Lease,
the liability of Tenant shall continue to be no greater than as if such
agreement or modification had not been made. To the extent that any Basic Rent
received pursuant to an assignment or subletting exceeds Basic Rent under this
Lease after deducting costs expended or incurred in relation to the assignment
or subletting, one-half the remaining excess amount will be paid to Landlord.
Section 17.3 Option to Purchase Assignment. The Option to
Purchase described in Section 20 of this Lease may not be assigned independent
of this Lease.
Section 17.4 Leasehold Mortgage. Tenant shall have the
right, without obtaining Landlord's consent, to subject all or any portion of
its leasehold interest under this Lease to one or more mortgages, deeds of
trust, collateral assignments or similar agreements.
ARTICLE 18
SUBORDINATION TO MORTGAGE
Section 18.1 Subordination. Subject to Landlord's complying
with its obligations under this Article 18, the Tenant agrees that this Lease
shall be and hereby is automatically subordinate to any present or future
mortgage on the Premises. The Tenant agrees, if so requested in writing by the
Landlord, to sign any documents required to evidence such waiver and surrender
of any and all right of prior lien which the Tenant has, might have, or ought
to have by virtue of this Lease over any mortgage or mortgages which now are or
which shall hereafter be placed upon the Premises, or any part thereof.
Subject to Landlord's complying with its obligations under this Article 18, the
Tenant agrees that such mortgage or mortgages shall take precedence over this
Lease and shall be entitled to the same rights and benefits, both at law and in
equity, as said mortgage or mortgages would have had if executed, delivered and
recorded prior to the lien of this Lease. As a condition to Tenant's
subordination of its rights under this Lease to any existing or future holder
of any mortgage or ground lease affecting the Premises, Landlord shall have
obtained from such holder a nondisturbance agreement in favor of Tenant from
any such mortgagee in form and substance reasonably satisfactory to Tenant.
Landlord hereby represents and warrants to, and covenants with, Tenant that
there are no mortgages, ground leases or similar liens affecting the Premises
as of the date hereof.
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Section 18.2 Non-Disturbance and Attornment. If any holder
of a mortgage shall succeed to the rights of Landlord under this Lease, whether
through possession or foreclosure action or delivery of a new lease or deed,
then at the request of such successor (herein called Successor Landlord") and
upon such Successor Landlord's written agreement to not disturb Tenant in its
possession and to accept Tenant's attornment, Tenant shall attorn to and
recognize such Successor Landlord as Tenant's Landlord under this Lease. Upon
request of any such Successor Landlord, Tenant agrees that Tenant shall upon
ten (10) days prior written notice execute and deliver any reasonable
instrument that such Successor Landlord may reasonably request to evidence such
attornment. Upon such attornment this Lease shall continue in full force and
effect as a direct lease between the Successor Landlord and Tenant upon all of
the terms, conditions, and covenants as are set forth in this Lease except that
the Successor Landlord shall not (a) be liable for any previous act or omission
of Landlord under this Lease; (b) be subject to any offset not expressly
provided for in this Lease which theretofore shall have accrued to Tenant
against Landlord; or (c) by any previous prepayment of more than one (1)
month's rent or additional rent, unless such prepayment shall have been
expressly approved in writing by the holder of such mortgage.
Section 18.3 Statement of Lease Status. Tenant shall from
time to time upon written request by Landlord, execute and deliver to Landlord
within ten (10) days of such written request, a written declaration in
recordable form:
(1) ratifying this Lease;
(2) expressing the commencement and termination dates
thereof;
(3) certifying that this Lease is in full force and
effect and has not been assigned, modified,
supplemented or amended (except by writings as shall
be stated;
(4) that all conditions under this Lease to be performed
by Landlord have been satisfied, or stating those
alleged to remain unsatisfied;
(5) that there are no defenses or offsets against the
enforcement of this Lease by Landlord, or stating
those claimed by Tenant;
(6) the date to which rent has been paid;
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(7) those elements necessary to record a statutory notice
of lease.
Landlord's mortgage lenders and/or purchasers shall be entitled to rely upon
the same.
Section 18.4 Waiver of Lien. Landlord shall, upon request of
Tenant, execute and deliver in favor of Tenant and any lender providing
financing to Tenant a waiver of lien with respect to any furniture, fixtures or
equipment at the Premises belonging to Tenant and a notice to such lender of
any default hereunder and right to cure such default on terms and conditions
reasonably satisfactory to Landlord and Tenant.
ARTICLE 19
LANDLORD'S TITLE
Landlord represents and warrants to the Tenant the following:
(i) that Landlord has the right and authority to enter
into this Lease for the full term hereof, including the
Renewal Term; and
(ii) that Landlord is the owner in fee simple of the
Premises, free and clear of all liens and encumbrances
whatsoever except those matters set forth in the title
insurance policy issued to Landlord insuring its interest as
owner of the Premises (the "Title Policy"), which Title Policy
is attached hereto as Exhibit E.
ARTICLE 20
OPTION TO PURCHASE
Section 20.1 Option to Purchase. Provided Tenant is not in
material default under this Lease and this Lease has not been previously
terminated in accordance with the terms hereof, Landlord, in consideration of
the covenants and agreements contained herein and the sum of Ten Dollars
($10.00) and other good and valuable consideration, the receipt of which are
hereby acknowledged, hereby grants, sells, and conveys to Tenant, and Tenant
hereby accepts from Landlord, an exclusive and irrevocable right and option to
purchase (the "Option") the Premises from Landlord in the manner set forth
below. The Option may be exercised by
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Tenant by delivery of a written notice (the "Exercise Notice") of exercise to
Landlord on or at any time after (i) the commencement of the sixth year of this
Lease, (ii) upon destruction of the Premises as set forth in Article 13 of this
Lease, or (iii) upon a taking of the Premises by eminent domain or condemnation
as set forth in Article 12 of this Lease. Subject to the terms and conditions
hereof, the closing on the purchase and sale of the Premises shall take place
on a date not less than sixty (60), but not more than ninety (90) days, after
receipt of the Exercise Notice by the Landlord. The Exercise Notice shall
specify a date and time and place of closing in Connecticut.
Section 20.2 Purchase Price. In the event Tenant exercises
its Option to purchase, the purchase price shall be computed by dividing the
annual Basic rent then in effect as adjusted pursuant to Section 3.2 hereof,
which Basic Rent shall not include any amounts of additional rent, in effect at
the time of the exercise of the option by ten- and-three-quarters one
hundredths (or .1075).
Section 20.3 Title. At the transfer of title to the
Premises, Landlord shall deliver to Tenant a good and sufficient Warranty Deed
(accompanied by the necessary amount of Connecticut Real Estate Conveyance
Taxes payable to the Town of Wallingford and appropriate Connecticut tax
payable to the State Commissioner of Revenue Services) together with
appropriate forms in usual Connecticut form with respect to the Premises,
transferring good, clear and marketable fee simple title to the Premises free
and clear of all liens, encumbrances, restrictions, and easements, other than
the permitted exceptions (the "Permitted Exceptions") set forth in Exhibit E
attached hereto.
If Landlord shall be unable to convey good, clear and
marketable title subject to Permitted Exceptions as provided in this Article
20, then Landlord upon receipt of notice of such defect from Tenant, shall have
thirty (30) days in which to remedy such defects in title as are susceptible of
being remedied prior to closing. If Landlord cannot remedy such defects in
title in that time, Tenant shall have the election to (i) complete the purchase
and accept such title as Landlord is able to convey without reduction of the
purchase price (unless such defects are encumbrances or liens for an
ascertainable amount, in which case such amount may be deducted from the
purchase price) or (ii) to rescind the Exercise Notice, in which event, Tenant
shall have no obligation to purchase the Premises pursuant to the Option. Any
such recission of the Exercise Notice shall not in and of itself terminate the
Option, and Tenant
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shall continue to have the right thereafter to exercise the Option on the terms
set forth herein.
ARTICLE 21
OPTION TO EXPAND
Section 21.1 Notice of Intent to Expand. At any time during
the term of this Lease, Tenant may at its sole option notify Landlord of its
desire to expand the Building on the Premises by any size up to an additional
50,000 square feet. Within the notice, the Tenant shall define the size,
configuration and program requirements for any such addition.
Section 21.2 Expansion Proposal. Not later than sixty (60)
days after receipt of said notice, Landlord shall prepare a Proposal wherein
the terms and conditions of the modification of this Lease to accommodate the
proposed expansion shall be set forth, including term of the lease and the
rental rate. Said Proposal shall provide that (i) the expiration of the term
of the Lease would be greater than or equal to seven years from the completion
of the proposed addition, (ii) the financial condition of Tenant is at least
comparable to its condition at the commencement of this Lease, (iii) the rental
would be revised by an amount not less than the product of the costs incurred
in connection with the construction and development of the addition times a
capitalization rate generally prevailing in the market for projects of
comparable size and credit quality then in effect, and (iv) other teens and
conditions generally prevailing in the market for projects of comparable size
and credit quality then in effect.
Section 21.3 Tenant Election. Not later than sixty (60) days
after presentation of Landlord's Proposal, Tenant shall notify of its election
to:
(i) accept Landlord's Proposal for construction and
development of the Addition in which case Landlord and Tenant
shall execute a mutually acceptable modification of this lease
to incorporate the terms and conditions of Landlord's
Proposal;
(ii) proceed with the construction and development of the
Addition on its own in which case the work conducted by Tenant
at Tenant's cost shall be done pursuant to the provisions of
Article 10 hereof
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and no further modification to this Lease shall be necessary;
or
(iii) cancel the notice of its desire to construct the
Addition.
ARTICLE 22
NOTICES
All notices provided for herein shall be in writing and shall
be determined to have been given when delivered personally or when deposited in
the United States mail, certified, postage prepaid, addressed as follows:
If to Landlord: Nova Associates LLC
c/o The Casle Corporation
200 Fisher Drive
Avon, Connecticut 06001
If to Tenant: Novametrix Medical Systems
P.O. Box 690
Wallingford, Connecticut 06492
Attn: William J. Lacourciere
The parties will immediately advise each other in writing of any change of
address.
ARTICLE 23
QUIET ENJOYMENT
Provided that Tenant pays the rent under this Lease and
performs all of Tenant's obligations and commitments under this Lease, Tenant
may peaceably and quietly hold and enjoy the Premises for the full term of this
Lease without interruption or disturbance from Landlord or any party claiming
through Landlord.
ARTICLE 24
TENANT'S COMPLIANCE WITH ENVIRONMENTAL LAWS
Section 24.1 Compliance. (a) During the term of this Lease
and any modifications or extensions of this Lease, Tenant shall not cause any
discharge, spillage, uncontrolled loss, release, emission, seepage or
filtration (herein collectively referred to as a "Release") of any
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Hazardous Materials (as hereinafter defined) into, over or onto the Premises.
Any such Release of Hazardous Materials shall be remediated and/or removed by
Tenant in accordance with procedures satisfactory to the Connecticut Department
of Environmental Protection ("DEP"), and in compliance with all current and
future laws, government orders, rules, directives, guidelines, standards,
permits or regulations ("Environmental Laws"). No removal or remedial action
shall be undertaken except after reasonable advance written notice to and
approval by Landlord unless otherwise required by the DEP or other governing
regulatory authority.
(b) Tenant shall comply with and shall cause each of its
employees, agents, invitees and occupants of the Premises to comply with all
applicable Environmental Laws. Tenant shall do nothing to cause or permit
anything to be done on the Premises which would cause the Premises to become an
"Establishment" within the meaning of Connecticut General Statutes 22a-134(3)
as amended from time to time without the consent of Landlord, such consent not
to be unreasonably withheld or delayed. Tenant shall immediately provide
Landlord with copies of any notifications to the DEP or any other federal,
state or local governmental regulatory agency submitted or required to be
submitted by Tenant, or received by Tenant, respecting the Premises. Tenant
shall immediately notify Landlord of the contents of any oral report Tenant is
required to make or makes to the Connecticut State Police, DEP, the Connecticut
Department of Health or any other federal, state or local agency with respect
to any Release by Tenant of Hazardous Materials.
Section 24.2 Indemnification of Landlord. If any federal,
state or local authority or any third-party alleges that Tenant has failed to
comply with the terms of this Section or any applicable Environmental Laws, or
if there was or is a Release on the Premises caused in whole or in part by
Tenant, or a violation of the terms of this Section, then Tenant shall
indemnify and hold Landlord, Landlord's mortgagees and Landlord's managing
agents harmless against any claims, damages, judgments, penalties, fines,
expenses, losses and costs, cleanup and removal costs, and direct and indirect
damages arising therefrom, including reasonable attorneys' and consultants'
fees, of whatever kind or nature, known or unknown, in any way suffered,
incurred or paid by the Landlord. This indemnification shall survive the
termination of this Lease. Tenant shall, at its expense, upon the reasonable
request of Landlord, conduct such investigations, studies, sampling and testing
related to Hazardous Materials that are or may be affecting the Premises to the
extent resulting from Tenant's acts or activities.
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Section 24.3 Definition of Hazardous Materials. As used
herein, Hazardous Materials shall mean any petroleum products, asbestos, lead,
radon, radioactive isotopes or materials, polychlorinated biphenyls or any
other toxic, dangerous or hazardous chemicals, biological materials, materials,
substances, pollutants and wastes, or any chemical, material or substance
exposure to which is now or hereafter prohibited, limited or regulated by any
federal, state county, regional or local laws, rules, regulations and
ordinances.
Section 24.4 Environmental Conditions. (a) Landlord hereby
represents and warrants to, and covenants with, Tenant that to the best of
Landlord's knowledge:
(i) there has been no Release of Hazardous Materials at,
on or under the Premises as of the date of this Lease:
(ii) other than generation in compliance with all
applicable Environmental Laws no generation, treatment,
storage, recycling, transportation or disposal of any
Hazardous Materials has occurred at or on the Premises;
(iii) no polychlorinated biphenyls, radioactive material,
urea formaldehyde, lead, asbestos, asbestos, containing
material or underground storage tank (active or abandoned) is
or has been present at the Premises;
(iv) there has been no environmental investigation, study,
audit, test, review or other analysis conducted in respect of
the Premises of which the Landlord has knowledge.
(b) Landlord agrees to indemnify, defend and hold Tenant
harmless from and against any and all damages, claims, losses, costs and
expenses (including without limitation reasonable attorneys' fees and
disbursements) caused by or asserted in connection with the presence or alleged
presence of Hazardous Materials or violations of Environmental Laws in, on or
about the Premises that existed as of the date of this Lease or, if caused by
Landlord, its employees, or its agents.
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ARTICLE 25
END OF TERM
At the end of this Lease, Tenant will surrender the Premises
in good order and condition, ordinary wear and tear and damage by fire or other
casualty excepted. Tenant may remove from the Premises any trade fixtures,
equipment, and movable furniture placed in the Premises by Tenant, whether or
not such trade fixtures or equipment are fastened to the building. Tenant will
fully repair any damage occasioned by the removal of any trade fixtures,
equipment and furniture, alterations, additions, and improvements not so
removed will conclusively be deemed to have been abandoned by Tenant and may be
removed and stored off of the Premises by Landlord without notice to Tenant or
to any other person. Tenant will pay Landlord all expenses incurred in
connection with Landlord's removal of such property including, without
limitation, the cost of repairing any damage to the Premises caused by removal
and storage of such property. Tenant's obligation to observe and perform this
covenant will survive the expiration or earlier termination of this Lease.
ARTICLE 26
MISCELLANEOUS PROVISIONS
Section 26.1 Real Estate Broker. The parties represent and
warrant to each other that no broker or finder other than The Excelsior Group
and Calcagni Associates (collectively the "Broker") in any way involved in this
transaction. Landlord shall pay all commissions due to the brokers listed in
this Section 25.1. In the event of a breach of the foregoing covenant,
warranty and representation, the breaching party shall indemnify and save
harmless the other party and its agents against and from:
(a) any and all claims for a brokerage commission or
commissions arising out of any alleged dealings, conversations, or negotiations
had by the breaching party, or by any other person acting on behalf of the
breaching party, with any broker other than the Broker, or any failure on the
part of Landlord to pay such commission; and
(b) all costs, expenses and liabilities incurred in, or
in connection with, any such claim, action or proceeding brought thereon.
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Section 26.2 Captions. The captions and headings of the
Lease are for convenience only and are not to be construed as part of this
Lease or in any way defining or limiting the scope or intent of the provisions
thereof.
Section 26.3 Severability. If any term or provision of this
Lease shall to any extent be held invalid or unenforceable, the remaining terms
shall not be affected thereby and they will be valid and enforced to the
fullest extent permitted by law.
Section 26.4 Successors and Assigns. This Lease shall bind
and inure to the benefit of the parties and their respective heirs, legal
representatives, successors, and assigns.
Section 26.5 Counterparts. This Lease may be executed in
several counterparts, each of which shall constitute an original but all
together one Lease.
Section 26.6 Consent or Approval. Wherever in this Lease the
consent or approval of one party is required to an act of the other party such
consent or approval shall not be unreasonably withheld or unduly delayed.
Section 26.7 Entire Agreement. This Lease together with any
exhibits attached hereto contains the entire agreement between Landlord and
Tenant with respect to the Premises. No agreement between Landlord and Tenant
will be effective to change, modify, waive, release, discharge, terminate or
effect an abandonment of this Lease unless such agreement is in writing and is
signed by authorized officers or partners of Landlord and Tenant.
Section 26.8 Notice of Lease and Option to Purchase.
Simultaneous with the execution of this Lease, the parties hereto will execute
a so-called Notice of Lease and Option to Purchase in recordable form and
complying with applicable law.
Section 26.9 Governing Law. This Lease shall be governed by
the law of the State of Connecticut.
Section 26.10 Power to Execute. The persons signing this
Lease on behalf of Landlord and Tenant certify that they have full authority to
execute the same on behalf of the entity they are signing for and that this
Lease has been duly authorized, executed and delivered and is binding in
accordance with its terms.
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Section 26.11 Commercial Transaction. TENANT ACKNOWLEDGES
THAT THIS LEASE IS A COMMERCIAL TRANSACTION AS THAT TERM IS DEFINED IN
CONNECTICUT GENERAL STATUTES 52-278A. IN THE EVENT THAT LEGAL ACTION IS
BROUGHT BY LANDLORD AGAINST TENANT, IN CONNECTION WITH THIS LEASE, TENANT
WAIVES ANY RIGHTS TO NOTICE AND A HEARING UNDER CONNECTICUT GENERAL STATUTES
52-278G AND TENANT ACKNOWLEDGES THAT LANDLORD MAY SECURE ANY PREJUDGMENT REMEDY
AGAINST TENANT WITHOUT A COURT ORDER.
IN WITNESS WHEREOF, the parties hereto have hereunto set their
hands and seals as of the date first above written.
Witnesses: LANDLORD:
NOVA ASSOCIATES LLC
- ----------------------
By /s/ David W. Sessions
- ---------------------- ---------------------------
David W. Sessions
Its Managing Partner
TENANT:
NOVAMETRIX MEDICAL SYSTEMS INC.
By /s/ William J. Lacourciere
---------------------------
William J. Lacourciere
Its President
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STATE OF CONNECTICUT )
) ss.:
COUNTY OF NEW HAVEN )
The foregoing instrument was acknowledged before me this 4th
day of January, 1996 by David W. Sessions, President of NOVA ASSOCIATES LLC, a
Connecticut Limited Liability Company, on behalf of said Limited Liability
Company.
/s/ Lorraine M. Tagliatela
------------------------------------
Commissioner of the Superior Court
Notary Public
My Commission Expires:
LORRAINE M. TAGLIATELA
NOTARY PUBLIC
MY COMMISSION EXPIRES JAN. 31, 2000
STATE OF CONNECTICUT )
) ss.:
COUNTY OF NEW HAVEN )
The foregoing instrument was acknowledged before me this 4th
day of January, 1996 by William J. Lacourciere, President of NOVAMETRIX
MEDICAL SYSTEMS INC., a Delaware corporation, on behalf of said corporation.
/s/ Lorraine M. Tagliatela
------------------------------------
Commissioner of the Superior Court
Notary Public
My Commission Expires:
LORRAINE M. TAGLIATELA
NOTARY PUBLIC
MY COMMISSION EXPIRES JAN. 31, 2000
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EXHIBIT A
Land Description
Beginning at a point on the northerly line of Carpenter Lane, which is the
southwesterly corner of the herein described parcel and the southeasterly
corner of the land belonging to Stephen Hanisko & Adele Hanisko:
thence, running the following courses and distances:
N 03 05'40" E along the easterly line of Hanisko, 170.38 feet to a point;
N 84 26'14" W along the northerly line of Hanisko, 200.00 feet to a point;
thence, N 32 58' 32" W along the easterly line of lot #1, 324.96 feet to a
point at the southeasterly corner of lot #2;
thence, N 03 03'51" E along the easterly line of lot #2, 420.00 feet to a point
on the southerly line of a proposed road to be known as Skyline Drive;
thence, S 77 39'59" E along the southerly line of Skyline Drive, 238.61 feet to
a point;
thence, in a general easterly, thence northerly, thence northwesterly direction
along the line of a curve to the left having a radius of 60.00 feet an arc
length of 151.13 feet to a point;
thence, N 48 00'54" E being bounded on the northwest by other land of Medway
Associates, 147.04 feet to a point;
thence, S 77 39'59" E along the southerly line of other land of Medway
Associates, 400.00 feet to a point lying on the westerly line of land of
Connecticut Light & Power Company;
thence, S 13 42'20" W along the westerly line of said Connecticut Light & Power
Company property, 168.22 feet to a point;
thence, S 37 04'46" E along Connecticut Light & Power land, 80.00 feet to a
point at the northerly most limit of lot #4;
thence, S 10 21'34" W along the westerly line of lot #4, 699.45 feet to a point
on the northerly line of Carpenter
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Lane, being the southeasterly corner of the herein described parcel;
thence, S 88 51'00" W along the northerly line of Carpenter Lane, 69.04 feet to
a concrete monument;
thence, continuing along the northerly line of Carpenter Lane, S 84 21'34" W,
245.56 feet to a concrete monument;
thence, continuing along the northerly line of Carpenter Lane along the line of
a curve to the right having a radius of 970.00 feet an arc length of 15.57 feet
to the point of beginning.
Said parcel contains 610,818 square feet more or less and is more particularly
shown on a plan entitled: RESUBDIVISION PLAN PORTION OF PROPERTY OF MEDWAY
ASSOCIATES, L.P., RESEARCH PARKWAY/CARPENTER LANE, WALLINGFORD, CONNECTICUT,
DATED: JULY 18, 1995 REV'D TO 10/23/95, BY: ANGUS MCDONALD/GARY SHARPE &
ASSOCIATES, INC.
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EXHIBIT B
Building Definition
The following plans, specifications and memorandum define the-
scope of work to be performed in the project:
SITE - Plans dated October 31, 1995
L-1 Site Layout, Planting and Lighting Plan
L-2 Site Grading and Utilities Plan
L-3 Erosion and Sedimentation control Plan
L-4 Site Details
L-5 Site Details
ARCHITECTURAL - Base Building dated Nov. 15, 1995
A-1 1/16" Scale Floor Plan Revised 12-21-95
A-2 Partial Floor Plan - Manufacturing
A-3 Partial Floor Plan - Office
A-4 Exterior Elevations
A-5 Roof Plan and Details
A-6 Wall Sections A, B, C
A-7 Wall Sections D, E, F
A-8 Wall Sections G, H
A-9 Section J/ Details
A-10 Column Details 1-25
A-11 Column Details 26-39
A-12 Miscellaneous Details
A-13 Window Elevations and Details
ARCHITECTURAL - Interior Buildout dated Nov. 15,1995
A-14 Reflected Ceiling Plan - Manufacturing
A-15 Reflected Ceiling Plan - Office
A-16 Toilet Plans and Elevations
A-17 1/4" Scale Lobby Plan and Details
A-18 Casework Elevations and Details
A-19 Door Schedule/Elevations/Details
A-20 Miscellaneous Details
STRUCTURAL - Plans dated Nov. 7, 1995
S-1 Foundation Plan - Manufacturing
S-2 Foundation Plan - Office
S-3 High Roof Framing Plan
S-4 Low Roof Framing Plan
S-5 Column Schedule and General Notes
S-6 Foundation Details
S-7 Roof Details
Memorandum dated December 26, 1995
Specifications which are part of this Exhibit B
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(KG) NOVA 06/95
OUTLINE SPECIFICATION
NOVAMETRICS
CARPENTER LANE
WALLINGFORD, CONNECTICUT
DESIGN BUILD TEAM
Architectural: Prepared and sealed by an Architect registered in the State of
Connecticut.
Mechanical/Electrical: Prepared and sealed by an Engineer licensed in the
State of Connecticut.
Sprinkler: Designed by a Sprinkler Engineer licensed in the State of
Connecticut.
Site: Prepared and sealed by a Registered Landscape Architect and a Civil
Engineer licensed in the State of Connecticut.
CODE INFORMATION
Use Group: F-2 Low Hazard Industrial
Type Construction: 2 C (3st/40'/14400 SF)
Building Area: SF (unlimited 504.1)
Building Height: 14'/18'
Fire Suppression: Sprinkler System - wet
OUTLINE SPECIFICATIONS
01000 SCOPE
Design build a 52,000 SF Office/Manufacturing facility for
Novametrics, Wallingford, Connecticut on 14.0 acre parcel on the
North Side of Carpenter Lane, Wallingford, Connecticut.
01200 EXCLUSIONS
Security Alarm System
Telephone System
Voice and data wiring
Air Compressor/Distribution Piping
Warehouse Racks
Paging System
Communications Room Equipment
Furniture
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(KG) NOVA 06/95
Modular Office Partitioning/System(s)
Factory Air Purification
In Rack Sprinklers/Hose Stations
Flammable Storage Venting
02200 SITE WORK (Refer to Site Drawings)
Clear and grub site.
Strip and stockpile topsoil.
Excavate/backL.ill for foundations/buildings platform; 8" lifts, 95%
compaction.
Fill, grade and pave new parking areas/roads.
Provide Fire Service and Water Service from street main to Building.
Provide storm water management system (absorption and/or retention)
zero run off design per Town of Wallingford regulations.
Provide trenching/backfilling for utilities.
Rough grade site, spread topsoil, back up curbing.
Fine grade and seed.
Provide landscaping as per approved Landscaping Plan.
Provide trenching and foundations for site lighting, bollards, etc.
03300 CONCRETE (Refer to Structural Drawings)
Soil Bearing Capacity: 1.5 tons.
Strength: 3000 PSF/28 Day Strength.
Rebar: Deformed grade 60, ASTM-A615.
Note: Building's exterior walls to be designed to accept future
expansion except Office South and West walls.
04200 MASONRY
Concrete Masonry Units: ASTM C90, Grade N-1, lightweight units,
8"x16"-4, 6 or 8.
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(KG) NOVA 06/95
Exterior CMU: (Manufacturing East Wall) Nominal 8"x16" Grade N, 2
core units with polystyrene insulated liner equal to
"Insulblock"/"Korfil".
Face Brick: Grade SW, 60% solid, modular, 3-5/8" x 2-1/4" x 7-5/8";
allowance $400/1000.
Joints: Face Brick: Weather Joint
CMU: Concaved Tooled Joint
Masonry Mortar: ASTM C 270
[S] [C]
Exterior CMU: Type S
Face Brick: Type S - premixed colored masonry cement
Interior CMU: Type N or Type S
Joint Reinforcing: Truss type, 9 ga. galvanized, 16" O.C. all single
wythe and double wythe masonry walls.
Column/Beam Ties: 3/16" galvanized wire anchors equal to AA spaced
24" O.C. vertically, 36" O.C. horizontally.
Seismic Reinforcing: Provide in single and double wythe masonry
walls; provide #5's vertically at 4'-0" O.C. doweled into foundation
wall, run full height of wall, grout rod cores shut, provide bond
beam with 2 - #5's at top of all CMU walls.
Masonry Flashings: 20 mil PVC, lap and seal joints, fill first 6"
with peastone, provide full head weeps at 24" O.C.
05120 STRUCTURAL STEEL
Strength: A36 or A50 members
Design L.L. Loads:
High Roof 32 PSF
Low Roof 120 PSF (maximum shedding), 32 PSF (typical).
Engineered Frames: WF columns, tube columns at office perimeter,
truss joist girders, long span steel roof joists, primed metal roof
deck.
Exterior wall to be designed for expansion except Office South and
West walls.
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(KG) NOVA 06/95
05500 MISCELLANEOUS METALS
Ramp Railing: Four (4) rail unit, welded construction, fabricated
from 1-1/2" O.D. pipe, posts 6' O.C. core/grout installation; +-30
LF required.
Lintels: Provide double angle lintels at all MO's.
Vertical Access Ladders (2): Rails 1-1/2" O.D. steel pipe, rungs 3/4"
diameter bar - non slip surface 12"0.C.
Exterior Bollards: 8" diameter, 8'-0"L, extra strong steel pipe,
steel capped. One (1) required
Handicap Bollards: 4"x12"xl/4" steel tube, 7'-0"L, steel capped. Six
(6) required.
Interior Bollards: 6" diameter, 8'-0"L extra heavy steel pipe
bollards with weld on steel cap. Four (4) required.
Angle Frames: Provide 3-1/2" x 5" x 5/16" angle frames for all roof
openings larger than 12".
Overhead Door Frames (Exterior): Fabricate frames from C12 x 20.7
channels, steel jambs to underside of roof steel, bolted connections.
Masonry strap anchors 16" O.C. on jambs to 8'. Two (2) 8'W x 9'H
required.
Overhead Door Frame (Interior): Fabricate frame from C7 x 14.75 steel
channels, steel jambs to underside of roof steel, bolted connections.
One (1) 10'Hx 10'W required.
Dock Leveler Frame: 2" x 2" x 1/4" angle frame with 6" anchors 12"
O.C. with extension ears to door jambs. One(1) required.
06100 ROUGH CARPENTRY
Nailers/Blocking: Construction grade Douglas Fir or Hem Fir S4S.
Preservative Treat all nailers/blocking in connection with
roofing/flashing.
Backing for Electrical/Telephone Equipment: APA C-D PLUGGED INT,
exterior glue, fire retardant treated, 3/4".
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(KG) NOVA 06/95
Wood Soffit Substrate: 3/4" CDX
Aluminum Window Subsill: 3/4" CDX PT
Exterior Wood Soffits: 1x6 T & G, square edge, random lengths, Clear
Western Red Cedar, smooth face exposed, blind nailed, installed
perpendicular to windows with 1/2" reveal at T/B.
06200 FINISHED CARPENTRY
TOILET ROOM VANITIES:
Grade: Premium
Exposed Surface: Plastic laminate
Construction: As detailed, slab type for drop in sinks 6" skirt
W/C.O. for HC access, 12" back splash, support gussets each end.
Requirements: Four (4).
WINDOW SILL: (Office)
Grade: Premium
Construction: As detailed, 13" with 1-1/2" applied nosing, eased
edges, 9' L; set on mastic secure with finishing nails.
Solid Wood: Red Oak, plain sawn, FAS.
Plywood: 3/4" plywood, slip matched, red oak veneer face, plain
sliced.
Finish: Stain/transparent; stain in shop.
Requirements: Provide at all exterior aluminum windows.
LOW CABINET: (Canteen)
Grade: Premium
Exposed Surfaces: High pressure plastic laminate.
Interior Surfaces: White cabinet liner.
Construction: Reveal overlay with 4"H slash back and two (2) sides.
Hardware:
- Hinged: Concealed self closing, Blum or Gras.
- Drawer Slides: KV - 1620
- Pulls: Stanley 3-1/2" wire pulls/US 26D.
- Shelf Supports: KV 256.
- Shelf Standards: KV 255.
Requirement (Canteen): Low Cabinet 2-0"W x 10'L; two (2) dummy
fronts/six (6) drawer/eight (8) door.
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(KG) NOVA 06/95
COAT SHELVES: (Office)
Grade: Custom
Exposed Surfaces: Red Oak veneer plywood
Construction: 1-1/2" top with 8" cleats three sides; 1-1/2" O.D.
chrome clothes pole.
Finish: Transparent/field applier.
Requirement: Two (2) 6'L.
07200 BUILDING INSULATION
Blanket Type: 3-1/2" and 6" F.G. batt; foil faced.
Sound Insulation: 3-1/2" F.G. batt; unfaced. All Office common walls
and Toilet Room walls.
Foundation: 2" expanded polystyrene.
Cavity Wall: 2" expanded polystyrene.
07410 PREFORMED METAL SIDING
System: 2-1/2"Tx36"W T & G fabricated insulated metal panel,
concealed fastened, factory sealed joint; WL=30 PSF/deflection L/180;
U=0.17.
Face Panel: 26 ga. Fluropon finish; to be one of manufacturers
standard colors.
Liner Panel: 26 ga; standard white wash coat finish.
Insulation: Foamed in place, U=0.12.
Gravel Stop: 18 ga., 1" high stop, 7" face dimension blind spline
joints, to be furnished under this SECTION and installed by roofer.
Drip Edge: Fabricate from 18 ga. material; standard profile.
Outside Corners: Preformed single length units, formed from face
panel material to provide same profile. No exposed fasteners!
07500 MEMBRANE ROOFING
FM Class I/UL Class A
Membrane: Single ply EPDM, .45 mil, mechanically fastened; 10 year
manufacturers warranty to be provided.
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(KG) NOVA 06/95
Roof Assembly "U": Equal or less than 0.075.
Gravel Stop: Furnished by metal siding manufacturer, to be installed
under this SECTION; blind spline, joints, continuous cleat.
07800 ROOF ACCESSORIES
Roof Hatches: Two (2) Bilco NB-20's, 2'-6"W x 3'-0"L.
07820 SKYLIGHT STRUCTURES
Manufacturer: Naturalite/EPI or Equal.
Type: Pyramid
Size: 16'x16'
Pitch: 6 on 12
Design Loads:
-L.L. 40 PSF
-W.L. 30 PSF
-C.L. 250 LBS
Allowable Deflection: NTE L/180
Framing Material: 6063-T5, 6063-T6 or 6061-T6 extruded aluminum/
tubular profile framing finish.
Clear anodized (AAM 10C 22 A 41).
Glazing: Specified in SECTION 08800
Requirement: One (1)
07900 JOINT SEALERS
Sealant: Two part polyurethane, Tremco Dymeric or equal for exterior
masonry control joints; one (1) of Manufacturers standard colors.
Backer Rod: Flexible/non-absorptive as recommended by sealant
manufacturer.
Interior Building Caulking: Acrylic Terpolymer for vertical and
horizontal use.
08100 HOLLOW METAL DOORS/FRAMES
Doors (Manufacturing): Flush type/seamless 3'-0"x7'-0"x1-3/4"T SD1
100 Type II, Style 2; exterior insulated. 16 GA exterior/18 GA
interior.
Door Frames: 16 GA SUAW for exterior/KD for interior frames standard
2"D wrap-around units with 2" head except 4" head in CMU walls.
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(KG) NOVA 06/95
Borrowed Lite Frames: 16 GA SUAW, standard 2"D drywall frame profile.
Provide 1/2"x 5/8" metal stops. Frames to be 2'Wx6'-10"H.
08120 ALUMINUM DOORS/FRAMES - VESTIBULE
Door: Narrow Style jambs/head; bottom rail. Equal to Kawneer Narrow
Style 190 Series; size 3'-0" x 7'-0", two (2) pair and two (2) single
required Architectural Style pulls, surface closures, 1-1/2" pair
butts, thumb turns thresholds; cylinder B.O.
Frames: 1-3/8" x 3-7/8" extruded aluminum, flush glazed. Equal to
Kawneer NuCore with double head.
Finish: Anodized.
08200 WOOD DOORS
Wood Doors (Office Area): Flush type, 3'-0"x7'-0"x1 3/4"T, plain
sliced, slip matched red oak veneer, SC units, stain/transparent
finish.
08360 SECTIONAL OVERHEAD DOORS
Doors: 1-5/8" thick, upward acting, insulated, high headroom,
overhead units, manual operation equal to THERMA CORE; U=.09; one
lite/door. Two (2) 8'Wx9'H and one (1) 10'W x 10"H required.
Finish: Factory applied - Manufacturer's standard white enamel
finish.
08520 ALUMINUM WINDOWS
Window System: Kawneer NuCore or equal 1 3/8" x 3 7/8" x 025 sections
with 3/4" x 1" applied stops to receive 1" insulating glass.
Vertical mullions at 6'4" O.C. and to run to underside of steel girt.
Sill Flash: 0.040" break metal.
08700 BUILDERS' HARDWARE
Builders' Hardware: Includes all hardware for swinging doors:
Butts (ball bearing type)
Cylindrical locksets/latchsets (Sargent 10 Line)
Push/pull units
Surface closures
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Weatherstripping
Thresholds
Kick plates
Door wall/floor bumpers
Strike guards
Thresholds
Acoustical seals
Finish: US 26D interior/US 32 exterior.
Keying: Master/individually keyed.
08800 GLASS AND GLAZING
Window Glass: 1" insulated (1/4" - 1/2" - 1/4"), tinted grey
insulated units, hermetically sealed; 10 year warranty, fabricated
for butt glazing installation.
Borrowed Lite Frame Glass: 1/4" clear plate; butt glazed with eased
vertical edges.
Skylight Glazing: +-1-4/16" tinted insulated safety glass.
09250 GYPSUM DRYWALL
Studs: 2-1/2"/3-5/8" galvanized metal 24" O.C.; 25 GA for interior
less than 10'H, 20 GA for interior studs above 10'H and for all
exterior studs/bracing.
Exterior Sheathing: 1/2"
Gypsum Board: Regular Type, 5/8" tapered long edges for non rated
walls. Type X 5/8" tapered long edges for rated walls, Type MR in
toilet rooms.
Type Fasteners: Screw applied.
Corner Bead: Metal type bead; fabricated for concealment.
Provide plastic "T": shaped tapeable bead with removable strip at all
exposed places where gypsum board abuts dissimilar materials.
Joint Treatment: 3 coats, ready-mixed vinyl type on all gypsum board;
vertical joint treatment to be taken to concrete slab.
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Deck Flutes: Stuff void between metal track and deck with thermal
insulation at Factory/Office fire separation wall.
09300 TILE WORK
Toilet Room Floor Tile: 2" x 2" x 1/8" Ceramic Mosaic, thin set,
colored latex grout with matching 5"H x 2" x 2" base.
09500 ACOUSTICAL CEILING (Office Areas, Clean Room, Service Lab)
Ceiling Tiles: 2' x 4" x 5/8", lay in units.
Suspension System: Direct hung, Intermediate Duty, exposed
grid-white; tees/cross tees double web construction. Support in
accordance with latest addition of SCBBC: and provide wire support at
corner of each 2 x 4 fixture.
09650 RESILIENT TLE (Canteen, Clean Room, Service Lab)
Tile: 12" x 12" x 1/8" VCT.
Base: 4" vinyl topset cover with VCT, straight with carpet and
provide at the base of gypsum board partitions in Manufacturing which
sit on concrete floor.
09690 CARPETING (Office Areas).
Carpet: Direct glue down installation; Class II/SCFSC, single
pattern/color. Level loop pile; 26 oz. $15/SY allowance; allowable
include installation and sales tax.
Base: 4" straight vinyl.
09900 PAINTING
Items to be painted:
- Hollow Metal Doors/Frames
- Pipe Railings
- Interior Exposed Structural Steel/Joist/Deck in Manufacturing
- Gypsum Drywall
- Wood Doors
- Exterior Wood Soffit
- Roof Top Units
- Access Ladders
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(KG) NOVA 06/95
- Bollards
- RTU's
Hollow Metal: (Interior/exterior) Semi-Gloss Alkyd Enamel, 2 finish
coats over prime; dry fog application above 20; AFF in Warehouse.
CMU: (Exterior) Flat Acrylic Finish, 2 coats over filler coat.
Gypsum Board: (Interior) Lusterless Latex Enamel, primer plus 1 coat.
Wood Doors: Stain/Synthetic Transparent Finish, 2 coats, sand between
coats.
Wood Soffit: (Exterior) Transparent oil base stain, 2 coats.
10160 TOILET PARTITIONS
Partitions: Metal, floor supported, overhead braced units/baked
enamel finish; wall supported screens.
10520 FIRE EXTINGUISHERS/CABINETS
Manufacturer: J.L. Industries or approved equal.
Extinguishers: Dry Chemical: Cosmic 10E,Cosmic 20E.
Cabinet: Ambassador: 1017-S21.
10800 TOILET ACCESSORIES
Recessed/Semi-Recessed stainless units by Bobrick or approved equal.
Toilet Tissue Holders
Sanitary Napkin Vendor
Paper Towel Dispenser/Waste
Soap Dispensers
Sanitary Napkin Waste
Mirrors: (18"x30")HC
Swing Away Grab Bars
Grab Bars
E-136
<PAGE> 50
(KG) NOVA 06/95
11160 DOCK EQUIPMENT
Dock Leveler:
Manufacturer: Kelly
Model: M608
Size: 6'W x 8'L
Operation: Mechanical
Capacity: 27,000 Ibs.
Bumpers: 4" L shaped molded rubber; two (2)/dock
Requirement: one (1)
12690 ENTRANCE MATS
Manufacturer: Mats Inc.
Product: Decorib/38 oz polypropylene
15400 PLUMBING
Fixtures:
- Water Closets
- Urinals
- Lavatories
- Canteen Sink
- Water Heaters
- Janitor's Sink
Piping: Underground sanitary and rain leader piping - cast iron;
domestic hot and cold water - copper; gas piping - steel.
Roof Drains: Eight (8) roof mounted, four (4) high/four (4) low.
Water Pump: Design size of pump to provide adequate water pressure to
plumbing fixtures.
Floor Drains: Four (4) floor drains in Toilet Rooms and One (1) in
Mechanical Room w/primers.
Exterior building hose bibs. Two (2) required.
Insulate all cold, hot water, and horizontal roof leaders.
15500 FIRE PROTECTION
Authority Having Jurisdiction: FM (Assumed)
E-137
<PAGE> 51
(KG) NOVA 06/95
Service: 8" cast iron from street main in Proposed Road at end of
cul-de-sac.
Design Criteria: (Verify with underwriter having authority)
- Manufacturing: .15 GPM/SF, design area 2500 SF.
- Office Area: .10 GPM/SF design area 1500 SF.
Distribution:
- Maintain Piping: Schedule 10/steel pipe - 2-1/2" and larger
Victaulic fittings or equal.
- Branch Piping: Schedule 40 or XL steel pipe - 2" and smaller
threaded fittings.
Heads:
- Office Area: Chrome pendant/semi recessed, with removable
escutcheons.
- Factory: Uprights.
Riser: To comply with design criteria of authorities having
jurisdiction - OS&Y, check valve, gong, electric flow switch, Siamese
connection, etc.
FS Diesel Booster Pump: Provide duplex type designed to provide
proper GPM for 2000 SF.
15600 HEATING/AIR CONDITIONING (Design Build)
HVAC
Office Area: Provision to heat/cool with single zone RTU's; for
heating RTU's to maintain 72 degree F DB at 0 degree F DB outdoor
ambient temperature; for cooling RTU's to maintain 70 degree F DB at
84 degree F DB/74 degree F WB.
Air Lock: provide GUH.
RTU Returns and supplies to be ducted above ATC.
Thermostats to be digital type seven (7) day with night set back
capability.
Thermostat/RTU control wiring by HVAC contractor.
Ductwork to be galvanized metal for branch ductwork, in
manufacturing, fiberglass for branch ductwork in office and flexible
fiberglass for diffuser tie ins.
Ventilation: Provide exhaust fans for Toilet Rooms, Janitor's Closet
and Conference Rooms. Conference Room
E-138
<PAGE> 52
(KG) NOVA 06/95
Fans to be exhausted to ceiling plenum and remotely located.
Remaining fans to be exhausted through roof.
16400 ELECTRICAL
Service: Amp (1200 Amps) 277 V/480 V 4 wire, 3 phase service, provide
1200 Amp CT switch with 1200 Amp distribution panel.
Lighting:
Office Area: 2 x 4/3 tube, lay in fluorescent fixtures;
providing 55 FC/SF maintained at desk height; 277 V.
Manufacturing: 8'2 tube H.O. 277 V industrial fluorescent
fixtures with reflectives.
Site: 25' high pole mounted single/arm 400 W HPS units; on by
eye/off clock. See Site Plan for location.
Wall Packs: Two (2) HPS 250 W units at loading dock area,
"Shoe Box" type, on by eye/off by clock.
Switching:
Office: Each room individually switched.
Manufacturing: At panel; 50/50 grid.
Outlets:
Manufacturing: Fifteen (15) duplex
Office Area: 12' O.C.
Wire: All conductors to be copper.
Fire Protection Signaling System: Provide per BOCA 1990/SBC 06/15/94
Supplement Section 1016.0.
Emergency Lighting: as per SCBBC/CSFC, recessed type in Office Area,
exposed mount in Warehouse.
HVAC: Provide disconnects for RTU's, SUM's, etc.
Temperature Control Wiring: By HVAC.
Temporary Lighting: By Electrician.
Exit Lighting: in accordance with SCBBC/CSFC.
E-139
<PAGE> 53
MEMO: #015
DATE: 12-26-95/1:30 PM @ NOVAMETRIX
PROJECT: NOVAMETRIX
PRESENT: BILL LACOURCIERE
JOEL MAYNARD
JOE VINCIENT
DAVE SESSIONS
ANDY SMITH
JIM VON HOORN
PURPOSE: REVIEW/APPROVAL OF PROJECT COST ITEMS BETWEEN NOVAMETRIX AND BUILDING
DEVELOPER.
(a) All extra cost items as developed from the Floor Plan dated
12/21/95 and meetings between Casle and Novametrix were
presented to show cost impact to Novametrix prior to signing
the lease on Tuesday, January 2, 1996.
(b) The attached exhibit with columns and its headings relating to
Site and Architectural issues were described to Novametrix in
the following manner:
o Column 1 (Approx. Cost): Gave cost values to each
item except for carpet which was deleted as a cost
upgrade.
o Column 2 (Financed In Lease): Cost items that are
being absorbed by the Developer as part of the lease
agreement with Novametrix.
o Column 3 (Financed In Extra): Extra cost items that
are approved by Novametrix. The Developer agreed to
pay for the added costs shown in this column as part
of the $7.75/s.f. lease price in return for
Novametrix' forgiveness of its right for reduce the
rent by $9,490. due to interest rate reductions.
o Column 4 (Paid Direct by N.M.S.): Itemized list of
cost items approved by Novametrix that are to be paid
directly by Novametrix to Casle Corporation in cash
upon the completion of the building.
o Column 5 (Comments): General comments pertaining to
the specific items as they relate to the cost.
(c) Items listed in the exhibit as Owner Process-Related
Requirement and Miscellaneous. references specific specialty
needs of Novametrix.
E-140
<PAGE> 54
The cost of these items are the responsibility of Novametrix. Casle
is to design, price and coordinate these issues as required for
approval by Novametrix for payment by Novametrix to Casle at the end
of the project.
(d) The scope of the new process related equipment and its
functions as Casle currently understands is explained below:
(i) Provide and install new exhaust fans for Foam, Wave
Solder, Sensor Fume Hood and Disposable Assembly
Hood. All roof top openings and frames to be
provided and installed by Casle. All existing hoods
that can be reused are to be relocated.
(ii) Relocate existing Compressed Air machine. Provide new
air lines. Novametrix to provide Casle with layout.
(iii) Computer Room: Relocate existing power conditioner.
Use common office HVAC requirements but with the
ability to call for extra cooling if required.
Requires static free VCT floor.
(iv) Disposable Room: ABS / J.M. to design room as a class
10,000 Cleanroom with HEPA filters and air tight
light fixtures/ ceiling pads.
(v) Provide new free standing fiberglass sink for Sensor
Area. Requires H/C water with filter for "unwanted
waste".
(vi) Relocate existing DI water system. Provide cold
water piping.
(vii) Novametrix to provide Canteen requirements i.e.,
refrigerators, microwaves, and vending machines.
(viii) Co2 Room: Requires 100% clean air (outside fresh air)
Will need separate R.T.U. for this room. How many
tons for approx. 400 S.F?
(e) Miscellaneous Cost Items by Novametrix that need to be
designed by ABS and priced by Casle for review by Novametrix.
E-141
<PAGE> 55
- North Entrance Canopy. Design to address weather protection.
- Above ceiling storage in Assembly Area.
- Typical cubical cost to include casework, plastic laminate
shelves, fabric wrapped homosote board above counters, power
outlets/ circuits and data/ telephone outlets.
ABS/jd
pc: NOVA: W. LaCourciere, J. Maynard
CASLE: D. Sessions, K. Leathers, J. von Hoorn
E-142
<PAGE> 56
Novametrix - Extra Cost Items
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Approx. Financed Financed Paid Direct
Work Item Cost In Lease In Extra by NMS Comments
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SITE ISSUES
Patio 2,000 2,000
Grass Pavers (West Fire Road) 8,000 4,000 4,000
Lawn Sprinkler 4,000 4,000
ARCHITECTURAL FINISHES
Executive Toilet 3,000 3,000
First Aid Toilet 3,000 3,000
Partial Height Partitions 19,705 19,705
Drywall over Original Budget 21,928 10,964 10,964
Borrowed Lite Frames 15,000 15,000 **30 Frames
Window Blinds 3,000 3,000
Wood Door Frames 6,400 6,400 **32 Doors
Exterior Sign 2,500 2,500
Vinyl Wall covering in traffic 9,760 9,760
areas
Carpet Upgrade - Exec. Area - - deleted
High Bay Glass (delete) (20,000) (20,000)
Tile In Main Vestibule 640 640
Lockers 3,500 3,500
VCT in Assembly Area 20,000 20,000
Totals 102,433 25,504 52,929 24,000
OWNER PROCESS-RELATED REQUIREMENT *Tenant's
allowance
shall be
$65,000
Exhaust Systems
-Shipping (Foam)
-Wave solder
-Sensor fume hood
Compressed Air (Relocation & New)
Computer Room Issues
-Separate Air Conditioner
-Relocate Power Conditioner
-FM 200 (Suppression System)
Disposable Room
-HEPA Ceiling Fixtures
-Light Fixtures/Ceiling Tiles
-Disposal Area
Sensor Sink
Appliances for Canteen
DI Water System (Relocation)
Partial Height Cubicles
-Desks, Countertops etc.
-Electrical/Data Distribution
MISCELLANEOUS
North Entrance Canopy
Above-Ceiling Storage Area
Mail Slots
- -------------------------------------------------------------------------------------------------------------
</TABLE>
* All numbers are approximations designed to identify the magnitude of the
decision.
** The counts of these items are to be reduced together with a
corresponding decrease in cost.
*** All work to be performed by Developer.
Tenant's contribution is limited to the amounts shown in Column 4. If
cost to complete any work item exceeds the amount shown in Column 1,
Developer shall be responsible for the payment of such excess. Work
items with no budgets shall be the responsibility of the Tenant if the
Tenant elects to perform the work.
E-143
<PAGE> 57
<TABLE>
<CAPTION>
===================================================================================================================================
Novametrix Medical Systems Exhibit C - Lease between Nova Associates & Novametrix
All References to dates are for the Week Ending
Construction Schedule
- -----------------------------------------------------------------------------------------------------------------------------------
Decem. January February
- -----------------------------------------------------------------------------------------------------------------------------------
PROJECT FUNCTION 22 29 5 12 19 26 23 2 9 16 23
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DEVELOPMENT FUNCTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Lease Execution X
- -----------------------------------------------------------------------------------------------------------------------------------
Land Closing X
- -----------------------------------------------------------------------------------------------------------------------------------
Construction Loan Closing X X
- -----------------------------------------------------------------------------------------------------------------------------------
Permanent Loan Closing X X
- -----------------------------------------------------------------------------------------------------------------------------------
DESIGN FUNCTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Working Drawings - Arch. X X X X X X X
- -----------------------------------------------------------------------------------------------------------------------------------
Design Development - M & E X X X
- -----------------------------------------------------------------------------------------------------------------------------------
Working Drawings - M & E X X X X X X
- -----------------------------------------------------------------------------------------------------------------------------------
Owner Approval - M & E X
- -----------------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION FUNCTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Building Permit X
- -----------------------------------------------------------------------------------------------------------------------------------
Sitework X X X X X X X
- -----------------------------------------------------------------------------------------------------------------------------------
Concrete Foundations X X X X X X
- -----------------------------------------------------------------------------------------------------------------------------------
Structural Steel Delivery X
- -----------------------------------------------------------------------------------------------------------------------------------
Steel Erection X X X
- -----------------------------------------------------------------------------------------------------------------------------------
Shell Completion
- -----------------------------------------------------------------------------------------------------------------------------------
Interior Improvements
- -----------------------------------------------------------------------------------------------------------------------------------
Temporary Certif. of Occupancy
- -----------------------------------------------------------------------------------------------------------------------------------
Substantial Completion
- -----------------------------------------------------------------------------------------------------------------------------------
Site Improvements
- -----------------------------------------------------------------------------------------------------------------------------------
Punch List Items
- -----------------------------------------------------------------------------------------------------------------------------------
FINAL COMPLETION
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
===================================================================================================================================
Novametrix Medical Systems Exhibit C - Lease between Nova Associates & Novametrix
All References to dates are for the Week Ending
Construction Schedule
- -----------------------------------------------------------------------------------------------------------------------------------
March April May
- -----------------------------------------------------------------------------------------------------------------------------------
PROJECT FUNCTION 1 8 15 22 29 5 12 19 26 3 10 17 24 31
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DEVELOPMENT FUNCTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Lease Execution
- -----------------------------------------------------------------------------------------------------------------------------------
Land Closing
- -----------------------------------------------------------------------------------------------------------------------------------
Construction Loan Closing
- -----------------------------------------------------------------------------------------------------------------------------------
Permanent Loan Closing
- -----------------------------------------------------------------------------------------------------------------------------------
DESIGN FUNCTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Working Drawings - Arch.
- -----------------------------------------------------------------------------------------------------------------------------------
Design Development - M & E
- -----------------------------------------------------------------------------------------------------------------------------------
Working Drawings - M & E
- -----------------------------------------------------------------------------------------------------------------------------------
Owner Approval - M & E
- -----------------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION FUNCTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Building Permit
- -----------------------------------------------------------------------------------------------------------------------------------
Sitework
- -----------------------------------------------------------------------------------------------------------------------------------
Concrete Foundations
- -----------------------------------------------------------------------------------------------------------------------------------
Structural Steel Delivery
- -----------------------------------------------------------------------------------------------------------------------------------
Steel Erection
- -----------------------------------------------------------------------------------------------------------------------------------
Shell Completion X X X X X X X X X X X X X X
- -----------------------------------------------------------------------------------------------------------------------------------
Interior Improvements X X
- -----------------------------------------------------------------------------------------------------------------------------------
Temporary Certif. of Occupancy
- -----------------------------------------------------------------------------------------------------------------------------------
Substantial Completion
- -----------------------------------------------------------------------------------------------------------------------------------
Site Improvements
- -----------------------------------------------------------------------------------------------------------------------------------
Punch List Items
- -----------------------------------------------------------------------------------------------------------------------------------
FINAL COMPLETION
===================================================================================================================================
</TABLE>
E-144
<PAGE> 58
<TABLE>
<CAPTION>
===================================================================================================================================
Novametrix Medical Systems
Exhibit C - Lease between Nova Associates & Novametrix
All References to dates are for the Week Ending
Construction Schedule Continued
- -----------------------------------------------------------------------------------------------------------------------------------
June July
- -----------------------------------------------------------------------------------------------------------------------------------
PROJECT FUNCTION 7 14 21 28 5 12 19 26
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DEVELOPMENT FUNCTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Lease Execution
- -----------------------------------------------------------------------------------------------------------------------------------
Land Closing
- -----------------------------------------------------------------------------------------------------------------------------------
Construction Loan Closing
- -----------------------------------------------------------------------------------------------------------------------------------
Permanent Loan Closing
- -----------------------------------------------------------------------------------------------------------------------------------
DESIGN FUNCTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Working Drawings - Arch.
- -----------------------------------------------------------------------------------------------------------------------------------
Design Development - M & E
- -----------------------------------------------------------------------------------------------------------------------------------
Working Drawings - M & E
- -----------------------------------------------------------------------------------------------------------------------------------
Owner Approval - M & E
- -----------------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION FUNCTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Building Permit
- -----------------------------------------------------------------------------------------------------------------------------------
Sitework
- -----------------------------------------------------------------------------------------------------------------------------------
Concrete Foundations
- -----------------------------------------------------------------------------------------------------------------------------------
Structural Steel Delivery
- -----------------------------------------------------------------------------------------------------------------------------------
Steel Erection
- -----------------------------------------------------------------------------------------------------------------------------------
Shell Completion
- -----------------------------------------------------------------------------------------------------------------------------------
Interior Improvements X X X X X X X X
- -----------------------------------------------------------------------------------------------------------------------------------
Temporary Certif. of Occupancy
- -----------------------------------------------------------------------------------------------------------------------------------
Substantial Completion
- -----------------------------------------------------------------------------------------------------------------------------------
Site Improvements
- -----------------------------------------------------------------------------------------------------------------------------------
Punch List Items
- -----------------------------------------------------------------------------------------------------------------------------------
FINAL COMPLETION
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
===================================================================================================================================
Novametrix Medical Systems
Exhibit C - Lease between Nova Associates & Novametrix
All References to dates are for the Week Ending
Construction Schedule Continued
- -----------------------------------------------------------------------------------------------------------------------------------
August September
- -----------------------------------------------------------------------------------------------------------------------------------
PROJECT FUNCTION 2 9 16 23 30 6 13 20 27
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DEVELOPMENT FUNCTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Lease Execution
- -----------------------------------------------------------------------------------------------------------------------------------
Land Closing
- -----------------------------------------------------------------------------------------------------------------------------------
Construction Loan Closing
- -----------------------------------------------------------------------------------------------------------------------------------
Permanent Loan Closing
- -----------------------------------------------------------------------------------------------------------------------------------
DESIGN FUNCTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Working Drawings - Arch.
- -----------------------------------------------------------------------------------------------------------------------------------
Design Development - M & E
- -----------------------------------------------------------------------------------------------------------------------------------
Working Drawings - M & E
- -----------------------------------------------------------------------------------------------------------------------------------
Owner Approval - M & E
- -----------------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION FUNCTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Building Permit
- -----------------------------------------------------------------------------------------------------------------------------------
Sitework
- -----------------------------------------------------------------------------------------------------------------------------------
Concrete Foundations
- -----------------------------------------------------------------------------------------------------------------------------------
Structural Steel Delivery
- -----------------------------------------------------------------------------------------------------------------------------------
Steel Erection
- -----------------------------------------------------------------------------------------------------------------------------------
Shell Completion
- -----------------------------------------------------------------------------------------------------------------------------------
Interior Improvements X
- -----------------------------------------------------------------------------------------------------------------------------------
Temporary Certif. of Occupancy X
- -----------------------------------------------------------------------------------------------------------------------------------
Substantial Completion X
- -----------------------------------------------------------------------------------------------------------------------------------
Site Improvements X X X X X
- -----------------------------------------------------------------------------------------------------------------------------------
Punch List Items X X X X
- -----------------------------------------------------------------------------------------------------------------------------------
FINAL COMPLETION X
===================================================================================================================================
</TABLE>
E-144
<PAGE> 59
EXHIBIT D
DECLARATION OF RESTRICTIVE COVENANTS
KNOW ALL MEN BY THESE PRESENTS that, MEDWAY ASSOCIATES, a
Connecticut limited partnership having an office in Farmington, Connecticut,
acting herein by Bill L. Richards, its General Partner, and being the owner of
a certain piece of parcel of land located in Meriden and Wallingford,
Connecticut, more particularly described in that deed from Research Park, Inc.
and Research Center, Inc. to Medway Associates dated May 1, 1980 and
recorded at Vol. 499, Pg. 152 of the Wallingford Land Records, the boundary
descriptions contained therein being incorporated herein as if fully set forth,
does hereby place the following covenants and restrictions against said
premises which shall rule with the land and be binding upon it and shall be
binding upon Medway Associates, its successors and assigns and any other
person, entity or corporation claiming directly or indirectly by, through or
under it, viz:
A. A right in Medway Associates, its successors and assigns to construct
and use such utility, water and drainage facilities on the Premises as
Medway Associates may deem necessary for the proper development and
operation of Medway Business Park wherein the Premises is located,
provided, however: that such facilities and the construction thereof
shall not interfere with the reasonable use of the Premises by Medway
Associates, its successors and assigns, that such utility, water and
drainage facilities shall be located only within fifty (50) feet of the
boundary lines of the subdivided parcels; that all expenses incurred in
the construction and maintenance of such facilities shall be borne by
Medway Associates, its successors and assigns; and that upon completion
of such construction, the Premises shall be substantially restored to
its state prior to such construction. Such right, upon the request of
Medway Associates, its successors and assigns, which request shall not
be unreasonably denied, shall be converted into an easement in form and
substance usual and ordinary as is then required by the various utility
companies, and municipal and state departments, agencies and
commissions.
E-146
<PAGE> 60
B. A restriction that the ground floor area of the building coverage on
any lot subdivided from the subject premises shall not exceed twenty
(20) percent thereof.
C. No building or buildings, site improvements; or alterations, signs or
other structures shall be constructed on the Premises or any parcels
subdivided therefrom nor shall any addition thereto be constructed
without the prior written approval of Medway Associates, its successors
and assigns or its designees of the plot plans, building plans and
specifications for such building or addition. Such approval shall not
be unreasonably withheld. It is the intent of Medway Associates that
such building and any additions thereto including signs shall harmonize
in appearance and be of substantially the same quality and workmanship
as the other buildings in the Medway Business Park.
D. Park Association rules concerning the safety, cleanliness, general
appearance and proper conduct of the Medway Business Park as
promulgated by an Association representing at least sixty (60) percent
of the occupants of the Medway Business Park or, if no such recognized
Association exists then by Medway Associates, the purposes for which
shall be to protect and maintain the esthetic beauty of the park and
its grounds, and improvements by regulations, restrictions and other
desirable means.
E. The owner of any site or lot shall at all times keep the premises,
buildings, improvements, and appurtenances in a safe, clean, wholesome
condition and comply in all respects with all Government, health, fire
and police requirements and regulations; and the owner will remove at
his or its own expense any rubbish of any character whatsoever which
may accumulate on such site or lot. In the event such owner fails to
comply with any or all of such specifications or requirements and does
not cure such failure within ten (10) days after the receipt of notice
to do so, then Medway Associates, its successors and assigns shall have
the right, privilege, and license to enter upon such premises and make
any and all corrections or improvements that may be necessary to meet
such standards and to charge and collect from such owner the reasonable
expenses incurred in doing so.
F. Outdoor storage yards shall be screened from public view and shall be
placed so as to conform with the building line restriction established
for each parcel
E-147
<PAGE> 61
or lot. Long term storage of trailers of any kind is absolutely
prohibited.
G. The material of the exterior walls of all buildings shall not be
changed or modified and such walls shall not be painted or repainted,
except with the color quality originally applied, unless prior written
approval has been obtained from Medway Associates, its successors and
assigns, which approval shall not be unreasonably withheld.
H. The invalidation of any one of the restrictions herein set forth or the
failure to enforce any of such restrictions at the time of its
violation shall in no event affect any of the other restrictions nor be
deemed a waiver of the right to enforce the same thereafter.
I. These restrictions and covenants are made for the benefit of any and
all persons, corporations or other entities who may now own, or who may
hereafter own, property in Medway Business Park. Such persons,
corporations or other entities are specifically given the right to
enforce these restrictions and covenants by injunction or other lawful
procedure, and to recover damages resulting from any violation thereof.
E-148
<PAGE> 62
This Declaration of Restrictive Covenants, which has
previously been recorded in the Wallingford Land Records at Volume 507, Page 94
is being re-recorded solely for the purpose of correcting the insertion of an
improper name in the acknowledgement. In all other respects, this Declaration
shall remain the same.
IN WITNESS WHEREOF, Medway Associates has caused this
Instrument to be executed this 1st day of September, 1981.
Signed, Sealed and Delivered MEDWAY ASSOCIATES
in the presence of:
/s/ Judith C. Anderson By: /s/ Bill L. Richards
- ---------------------------- --------------------------
Judith C. Anderson Its General Partner
/s/ Neal H. Jordan
- ----------------------------
Neal H. Jordan
STATE OF CONNECTICUT )
) ss.: Farmington
COUNTY OF HARTFORD )
One this the 1st day of September, 1981, before me, NEAL H.
JORDAN, the undersigned officer, personally appeared BILL L. RICHARDS, who
acknowledged himself to be the GEN. PARTNER of Medway Associates, and that he,
as such officer, being duly authorized to do so, executed the foregoing
Instrument for the purposes therein contained, by signing the name of the
Partnership by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand.
RECEIVED FOR RECORD SEP 3, 1980 /s/ Neal H. Jordan
----------- -------------------------
AT 10:45 A.M. and RECORDED BY Commissioner of the
TOWN CLERK Superior Court
- ------------
E-149
<PAGE> 63
ESTATE OF DATE OF CERTIFICATE
ELIZABETH RUTH DALY, September 1, 1981
aka BETTE R. DALY
DATE OF BIRTH PLACE WHERE LAST DWELT
4/2/81 Wallingford
[x] DIED TESTATE [ ] DIED INTESTATE
FIDUCIARY'S NAME AND ADDRESS
Richard D. Stapleton
428 Squire Hill Road, Cheshire, CT.
FIDUCIARY'S POSITION OF TRUST DATE OF APPOINTMENT
Executor May 11, 1981
This certificate is made and caused to be recorded in the Land
Records of the town wherein the siad deceased the owner of real property or any
interest therein, or a mortgage or lien upon real property.
/s/ Richard D. Stagaletan
-------------------------
Fiduciary's Signature
E-150
<PAGE> 64
EXHIBIT E
Permitted Exceptions
(f) Taxes to the Town of Wallingford on the List of October 1, 1994, not
yet due and payable.
(g) Declaration of Restrictive Covenants by Medway Associates recorded in
Volume 507, Page 94 and rerecorded in Volume 508, Page 74 of the
Wallingford Land Records.
(h) Easement in favor of The Connecticut Light and Power Company from
Research Park, Inc. and Research Center, Inc. dated April 18, 1980 and
recorded on April 23, 1980 in Volume 498, Page 682 of the Wallingford
Land Records.
(i) Drainage easements in favor of the Town of Wallingford by deed dated
January 7, 1986 and recorded in Volume 564, Page 15 of the Wallingford
Land Records.
(j) Effect of Paragraph 6 only of an Agreement among The Town of
Wallingford, The Department of Public Works, Medway Associates and
F.l.P. Corporation dated September 16, 1983 and recorded in Volume 524,
Page 423 of the Wallingford Land Records.
(k) Certain limitation and agreements as set forth in a deed from Research
Park, Inc. and Research Center, Inc. to The Connecticut Light and Power
Company dated April 18, 1980 and recorded April 23, 1980 in Volume 498,
Page 654 of the Wallingford Land Records.
Said Premises are leased together with:
1. An easement to pass and repass, for all purposes for which a highway
may be used, including, but not limited to, the right to construct,
maintain, repair, and replace improvements related to utilities for the
benefit of the Premises upon, over and across land of Medway Associates
shown as Skyline Drive on the map referenced in Exhibit A hereof which
easement is referenced in the Warranty Deed from Medway Associates to
Landlord dated December 28, 1995 which deed is recorded in the
Wallingford Land Records.
2. A permanent drainage easement hereby granted by Medway Associates to
the Landlord, its successors and assigns forever, referenced in the
Warranty Deed from Medway Associates to Landlord dated December 28,
1995 which deed is recorded in the Wallingford Land Records.
E-151
<PAGE> 1
EXHIBIT 11
NOVAMETRIX MEDICAL SYSTEMS INC.
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------------------------
April 28, 1996 April 30, 1995 May 1, 1994
------------------------------------------------------------
<S> <C> <C> <C>
PRIMARY EARNINGS PER SHARE:
Weighted average number of shares of Common
Stock outstanding 6,157,192 5,591,536 4,504,865
Net effect of dilutive common stock
equivalents (1):
Preferred Stock 849,206 1,111,110 1,111,110
All other 1,070,319 947,300 980,136
--------- --------- ---------
1,919,525 2,058,410 2,091,246
Total weighted average number of shares of
Common Stock and dilutive common stock
--------- --------- ---------
equivalents outstanding 8,076,717 7,649,946 6,596,111
========= ========= =========
NET INCOME $3,116,795 $1,604,367 $ 754,720
Per common share amounts (2): $ .39 $ .21 $ .11
============= ============= =============
</TABLE>
(1) Earnings per common share amounts were computed by dividing net income by
the weighted average number of shares of Common Stock and dilutive common stock
equivalents outstanding during the year. Common stock equivalents consist of
the Company's Preferred Stock, stock options, warrants and shares subscribed
under the Company's employee stock purchase plan. The computations of dilutive
common stock equivalents are based on the if-converted method for the Preferred
Stock and on the treasury stock method for the other common stock equivalents
using the average market price.
(2) Fully diluted earnings per share are not materially different than primary
earnings per share.
E-152
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF NOVAMETRIX MEDICAL SYSTEMS INC.
1. NTC Technology Inc.
2. NTC Management Inc.
3. Emertech, Sarl.
4. Novametrix International, Ltd.
E-153
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statement Number
33-58789 on Form S-3 dated April 25, 1995, Registration Statement Number
33-82336 on Form S-8 dated August 3, 1994, Post Effective Amendment No. 1 on
Form S-3 dated August 12, 1994 to Registration Statement Number 33-67478 on Form
S-1 dated August 17, 1993, and Registration Statement Number 33-44786 on Form
S-8 dated December 30, 1991 pertaining to Novametrix Medical Systems Inc. 1990
Stock Option Plan of our report dated June 14, 1996, with respect to the
consolidated financial statements of Novametrix Medical Systems Inc. included in
this Annual Report (Form 10-KSB) for the year ended April 28, 1996.
Ernst & Young LLP
Hartford, Connecticut
July 24, 1996
E-154
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
NOVAMETRIX MEDICAL SYSTEMS INC.
FINANCIAL DATA SCHEDULE
This schedule contains summary financial information extracted from the audited
Novametrix Medical Systems Inc. Consolidated Statements of Income for the year
ended April 28, 1996 and the Consolidated Balance Sheets at April 28, 1996, and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-28-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> APR-28-1996
<CASH> 283,003
<SECURITIES> 0
<RECEIVABLES> 6,184,528
<ALLOWANCES> (250,000)
<INVENTORY> 5,675,480
<CURRENT-ASSETS> 12,325,394
<PP&E> 6,243,454
<DEPRECIATION> (5,019,466)
<TOTAL-ASSETS> 18,823,362
<CURRENT-LIABILITIES> 3,961,480
<BONDS> 1,583,333
<COMMON> 69,860
0
1,000,000
<OTHER-SE> 12,458,689
<TOTAL-LIABILITY-AND-EQUITY> 18,823,362
<SALES> 25,260,180
<TOTAL-REVENUES> 25,274,168
<CGS> 10,929,686
<TOTAL-COSTS> 22,780,977
<OTHER-EXPENSES> 69,621
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 286,775
<INCOME-PRETAX> 2,136,795
<INCOME-TAX> (980,000)
<INCOME-CONTINUING> 3,116,795
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,116,795
<EPS-PRIMARY> .39
<EPS-DILUTED> .38
</TABLE>
