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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 28, 1996
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Memry Corporation
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(Exact name of registrant as specified in its charter)
Delaware 0-14068 06-1084424
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
57 Commerce Drive, Brookfield, Connecticut 06804
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 740-7311
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(Former name or former address, if changed since last report)
Total # of Pages 7
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Page 1 of 7
Exhibit Index
at Page 6
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
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(a) On June 28, 1996, Memry Corporation, a Delaware corporation (the
"Company"), consummated the purchase from Raychem Corporation, a Delaware
corporation ("Raychem"), of certain tangible assets (primarily consisting of
leasehold improvements, machinery and equipment and inventory) and intangible
assets (primarily consisting of patents, other intellectual property, goodwill
and certain contractual rights) constituting Raychem's shape memory metals
components business. The purchase did not include Raychem's patents and related
intellectual property relating to the production of certain specified medical
instruments.
The purchase price paid by the Company to Raychem consisted of the
following: (i) the payment of $3,650,000 in cash; (ii) a $350,000 promissory
note, payable not later than July 31, 1996, accruing interest at the rate of 10%
per annum and secured by a first lien security interest in the tangible property
being acquired by the Company from Raychem; (iii) warrants to purchase 1,250,000
shares of the Company's common stock, par value $0.01 per share ("Common
Stock"), at an exercise price of $2.00 per share; (iv) warrants to purchase an
additional 1,130,000 shares of Common Stock at an exercise price of $0.01 per
share; and (v) the assumption of certain specified liabilities relating to the
assets being acquired, including $200,000 in severance obligations being
incurred by Raychem. In addition, the Company and Raychem entered into a number
of agreements regarding the ongoing relationship between Raychem and the
Company, including an agreement under which the Company will manufacture and
sell shape memory alloy components to Raychem.
The purchase price paid by the Company to Raychem pursuant to the aforesaid
transaction was determined by arms-length bargaining between two non-affiliated
parties. No material relationship existed between Raychem and the Company
(including any of the Company's affiliates, directors, officers or their
associates) prior to the consummation of the transaction.
The funds that the Company used to pay Raychem the cash portion of the
purchase price were obtained through the sale by the Company on June 28, 1996 of
2,000,000 shares of Common Stock to three sophisticated European investors for a
purchase price of $2.00 per share. The three investors were Conoreq S.A. (which
purchased 1,000,000 of such shares), Banque Privee Edmond de Rothschild S.A.
(which purchased 750,000 of such shares), and Group Des Assurances Nationales
(which purchased 250,000 of such shares). The 2,000,000 shares of Common Stock
were offered and sold in a
Page 2 of 7
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transaction exempt from the registration requirements of the Securities Act of
1933, as amended, by virtue of exemptions provided by both Regulation S
thereunder and Section 4(2) thereof.
(b) The assets acquired by the Company from Raychem included leasehold
improvements, machinery and equipment and inventory. Prior to the sale of such
assets to the Company, Raychem utilized such assets primarily for the purpose of
manufacturing metal components of various products utilizing shape memory
effects. The Company intends to continue such use of the assets.
Page 3 of 7
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
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(a) It is impracticable for the financial statements of the business being
acquired from Raychem that are required to be included as a part of this Current
Report on Form 8-K to be provided at this time. Said financial statements will
be filed as soon as practicable, but not later than 60 days after the date this
Current Report on Form 8-K was required to be filed.
(b) It is impracticable for the pro forma financial information relative to
the business being acquired from Raychem that is required to be included as a
part of this Current Report on Form 8-K to be provided at this time. Said pro
forma financial information will be filed as soon as practicable, but not later
than 60 days after the date this Current Report on Form 8-K was required to be
filed.
(c) The exhibits listed on the Exhibit Index following the signature page
are filed as part of this Current Report on Form 8-K. Please note that an
appropriate Exhibit 27, Financial Data Schedule, will be filed within 60 days
after the date this Current Report on Form 8-K was required to be filed, at such
time that the financial statements described in (a) and (b) are filed.
Page 4 of 7
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MEMRY CORPORATION
Date: July 12, 1996 By: /s/ James G. Binch
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James G. Binch
President
Page 5 of 7
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EXHIBIT INDEX
Exhibit No. Description of Document
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2.1 Amended and Restated Asset Purchase Agreement between Memry
Corporation and Raychem Corporation, dated May 10, 1996./1/
The following exhibits and schedules have been omitted, but will
be provided to the Commission upon request:
Exhibit A-1-Form of Warrant Certificate pursuant to Section
2(c)(ii) of the Amended and Restated
Asset Purchase Agreement
Exhibit A-2-Form of Warrant Certificate pursuant to Section
2(c)(iii) of the Amended and Restated
Asset Purchase Agreement
Exhibit B - Form of Private Label/Distribution Agreement
Exhibit C - Principal Terms of Transitional Services
Agreement
Exhibit D - Form of Registration Rights Agreement
Exhibit E - Form of Finder's Fee Agreement
Exhibit F-1 - Form of Tinel-Lock Lease Agreement
Exhibit F-2 - Form of Tinel-Lock Supply Agreement
Exhibit F-3 - Form of Tinel-Lock License Agreement
Exhibit G - Allocation Schedule
Exhibit H - Form of License Agreement
Exhibit I - Form of Medical Assets License Agreement
Exhibit J - Seller's Severance Policy
Exhibit K - Sublease
Exhibit L - Accounting Procedures
Exhibit M - Form of Buyer's Signing Press Release
Exhibit N - Form of Series H Preferred Stock Disclosure
Schedule
Buyer's Disclosure Schedule
Schedule 7(i) - List of Group I Employees, Group II
Employees and Group III Employees
2.2 Letter Agreement, dated June 20, 1996, between
Memry Corporation and Raychem Corporation./1/
2.3 Amendment No. 1 to Amended and Restated Purchase
Agreement between Memry Corporation and Raychem
Corporation, dated June 28, 1996./1/
The following exhibit has been omitted, but will
be provided to the Commission upon request:
Exhibit A - Patents and Patent Applications
10.1 Sublease between Memry Corporation and Raychem
Corporation, dated as of June 28, 1996./1/
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Exhibit No. Description of Document
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10.2 Tinel-Lock Supply Agreement between Memry
Corporation and Raychem Corporation, dated as of
June 28, 1996./1/
10.3 Private Label/Distribution Agreement between Memry
Corporation and Raychem Corporation, dated as of
June 28, 1996./1/
10.4 Warrant Certificate exercisable for 1,130,000
shares of Common Stock, issued by Memry Corporation
to Raychem Corporation, dated June 28, 1996./1/
10.5 Warrant Certificate exercisable for 1,250,000
shares of Common Stock, issued by Memry Corporation
to Raychem Corporation, dated June 28, 1996./1/
10.6 Finders Fee Agreement between Memry Corporation and
Raychem Corporation, dated as of June 28, 1996./1/
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/1/ Submitted separately, electronically.
Page 7 of 7
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Exhibit 2.1
AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
BETWEEN
MEMRY CORPORATION
AND
RAYCHEM CORPORATION
May 10, 1996
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TABLE OF CONTENTS
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PAGE
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1. Definitions..................................... 1
2. Basic Transaction............................... 11
(a) Purchase and Sale of Acquired Assets..... 11
(b) Assignment of Assigned Assets............ 11
(c) Limited Assumption of Liabilities........ 11
(d) Non-exclusive License.................... 11
(e) Purchase Price........................... 11
(f) Inventory Adjustment..................... 12
(g) The Closing.............................. 13
(h) Deliveries at the Closing................ 13
(i) Allocation............................... 14
(j) Transfer Taxes........................... 14
(k) Retention of Shared Intellectual Property 14
3. Representations and Warranties of the Seller.... 15
(a) Organization of the Seller............... 15
(b) Authorization of Transaction............. 15
(c) Noncontravention......................... 15
(d) Brokers' Fees............................ 16
(e) Title to Assets.......................... 16
(f) Legal Compliance......................... 16
(h) Tax Matters.............................. 17
(i) Real Property............................ 17
(j) Acquired Intellectual Property........... 17
(k) Tangible Assets.......................... 18
(l) Inventory................................ 18
(m) Contracts................................ 18
(n) Litigation............................... 18
(o) Product Warranty and Liability........... 18
(p) Environment, Health and Safety........... 18
(q) Financial Statements..................... 19
(r) Employees................................ 19
(s) Experience............................... 19
(t) Investment............................... 20
(u) Rule 144................................. 20
4. Representations and Warranties of the Buyer..... 20
(a) Organization of the Buyer................ 20
(b) Authorization of Transaction............. 21
(c) Noncontravention......................... 21
(d) Capitalization........................... 21
(e) Disclosure............................... 22
(f) Brokers' Fees............................ 22
5. Pre-Closing Covenants........................... 23
(a) General.................................. 23
(b) Notices and Consents..................... 23
(c) Operation of Business.................... 23
(d) Preservation of Business................. 23
(e) Full Access.............................. 23
(g) Notice of Developments................... 24
(h) Exclusivity.............................. 24
(i) Employment Matters....................... 25
6. Conditions to Obligation to Close............... 25
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TABLE OF CONTENTS
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(continued)
PAGE
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(a) Conditions to Obligation of the Buyer...... 25
(b) Conditions to Obligation of the Seller..... 26
7. Post-Closing Covenants.......................... 28
(a) General.................................... 28
(b) Support.................................... 28
(c) Transition................................. 29
(d) Confidentiality............................ 29
(e) Covenant Not to Compete.................... 29
(f) Nonassignable Contracts.................... 30
(g) Payment of Excluded Liabilities............ 30
(h) Employment Matters......................... 30
8. Remedies for Breaches of This Agreement......... 32
(a) Survival of Representations and
Warranties................................. 32
(b) Indemnification Provisions for Benefit of the
Buyer...................................... 32
(c) Indemnification Provisions for Benefit of the
Seller..................................... 32
(d) Notice Provisions.......................... 33
(e) Limitation on Indemnification.............. 34
9. Termination................................ 34
(a) Termination of Agreement................... 34
(b) Effect of Termination...................... 35
10. Miscellaneous.............................. 35
(a) Press Releases and Public Announcements;
Securities Laws............................ 35
(b) No Third-Party Beneficiaries............... 36
(c) Entire Agreement........................... 36
(d) Succession and Assignment.................. 36
(e) Counterparts............................... 36
(f) Headings................................... 36
(g) Notices.................................... 36
(h) Governing Law.............................. 37
(i) Amendments and Waivers..................... 37
(j) Severability............................... 38
(k) Expenses................................... 38
(l) Construction............................... 38
(m) Incorporation of Exhibits and Schedules.... 38
(n) Dispute Resolution......................... 38
(o) Bulk Transfer Laws......................... 39
Exhibit A-1 - Form of Warrant Certificate pursuant to
Section 2(c)(ii)
Exhibit A-2 - Form of Warrant Certificate pursuant to
Section 2(c)(iii)
Exhibit B - Form of Private Label/Distribution Agreement
Exhibit C - Principal Terms of Transitional Services Agreement
Exhibit D - Form of Registration Rights Agreement
Exhibit E - Form of Finder's Fee Agreement
Exhibit F-1 - Form of Tinel-Lock Lease Agreement
Exhibit F-2 - Form of Tinel-Lock Supply Agreement
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TABLE OF CONTENTS
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(continued)
PAGE
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Exhibit F-3 - Form of Tinel-Lock License Agreement
Exhibit G - Allocation Schedule
Exhibit H - Form of License Agreement
Exhibit I - Form of Medical Assets License Agreement
Exhibit J - Seller's Severance Policy
Exhibit K - Sublease
Exhibit L - Accounting Procedures
Exhibit M - Form of Buyer's Signing Press Release
Exhibit N - Form of Series H Preferred Stock
Disclosure Schedule
Buyer's Disclosure Schedule
Schedule 7(i)
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AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
This Amended and Restated Asset Purchase Agreement entered into as of the
10th day of May, 1996, by and between Memry Corporation, a Delaware corporation
(the "Buyer"), and Raychem Corporation, a Delaware corporation (the "Seller").
The Buyer and the Seller are referred to collectively herein as the "Parties."
R E C I T A L S
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The Seller is currently engaged in the business of designing, developing,
processing, manufacturing and marketing nickel-titanium alloy components, for
OEM applications.
This Agreement contemplates a transaction in which the Buyer will purchase
the assets of the Seller specified herein and assume the liabilities of the
Seller specified herein.
Among other conditions to the Closing hereunder, the Parties require that
the Parties enter into the Private Label Agreement pursuant to which, among
other things, the Seller would act as distributor for various products of the
Business upon the consummation of the transactions contemplated hereby.
Accordingly, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. Definitions.
"4055 Assets" means the assets listed under the heading "Clean Room and
Related Assets" in Section 1 of the Disclosure Schedule.
"Acquired Assets" means the following assets of the Seller:
(a) the Tangible Assets,
(b) the Inventory,
(c) the Acquired Intellectual Property,
(d) the 4055 Assets,
(e) the Documents, provided that the Seller may retain a copy of the
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Documents for its own use after the Closing in connection with matters relating
to the Business as conducted by the Seller prior to the Closing and in
connection with the Seller's activities under the Ancillary Agreements, and
(f) subject to Seller's rights under the Ancillary Agreements, the goodwill
of the Business, provided that in the case of each of clauses (a) through (f)
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above, the Acquired Assets shall exclude
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the Excluded Assets, and provided further that all of the Acquired Assets are
sold subject to the restrictions listed under the heading "Restrictions" in
Section 1 of the Disclosure Schedule and to the restriction set forth in Section
2(j) below.
"Acquired Intellectual Property" means (a) the patents and patent
applications listed under the heading "Patents and Patent Applications" in
Section 1 of the Disclosure Schedule, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, as well as the rights to patent invention disclosure items relating to
the Acquired Intellectual Property, all rights of international priority
associated with the same, the right to collect damages and have other relief for
third party acts of infringement prior to the Closing and the benefits of all
prepaid maintenance fees and the like, (b) all copyrightable works and all
copyrights used in the Business, (c) trade secrets embodied in the Documents,
(d) know-how of the employees actually hired by the Buyer, and (e) the computer
software identified under the heading "Computer Software" in Section 1 of the
Disclosure Schedule. Intellectual Property specifically excludes trademarks,
trade names and service marks whether or not used in the Business.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses
(regardless of whether such Adverse Consequences arise out of or relate to a
dispute between the Parties (or an Indemnified Party) and between either of the
Parties (or an Indemnified Party) and a third party); provided, however, that if
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Adverse Consequences arise out of or relate to a dispute between the Parties (or
an Indemnified Party), Adverse Consequences shall not include court costs,
attorneys' fees and expenses, or other expenses of litigation.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"Ancillary Agreements" means the Private Label Agreement, the Transitional
Services Agreement, each of the Warrants, the Registration Rights Agreement, the
Finder's Fee Agreement, the Tinel-Lock(R) Agreements, the License Agreements,
and the Sublease.
"Assignable Contracts" means assignable purchase orders from U.S. Surgical
Corporation, purchase orders to vendors that are open as of the Closing Date,
and the Contracts that are listed under the heading "Assignable Contracts" in
Section 1 of the Disclosure Schedule.
"Assigned Assets" means (a) the Licenses, and (b) the Assignable Contracts;
provided, that in the case of each of clauses (a) and (b) above, the Assigned
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Assets shall exclude the Excluded
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Assets, and further provided that all of the Assigned Assets are assigned
subject to the restrictions listed under the heading "Restrictions" in Section 1
of the Disclosure Schedule.
"Assumed Liabilities" means (a) all obligations and liabilities of the
Seller under the Assigned Assets (in each case exclusive of any Liability or
obligation arising thereunder as a result of any breach, default or failure of
the Seller to perform any covenants or obligations required to be performed by
the Seller prior to the Closing Date); (b) Transfer Taxes to the extent
specified in Section 2(h); and (c) all other Liabilities and obligations of the
Business set forth under the heading "Assumed Liabilities" in Section 1 of the
Disclosure Schedule.
"Business" means the business currently conducted by Seller of designing,
developing, processing, manufacturing and marketing nickel-titanium alloy
components, but not including the business conducted with the Excluded Assets.
"Business Day" means a day on which banks are not required or authorized to
be closed in the states of California or Connecticut.
"Buyer" has the meaning set forth in the preface above.
"Buyer Common Stock" means the common stock, par value $0.01 per share, of
Buyer.
"Buyer's Letter" has the meaning set forth in Section 2(e) below.
"Buyer's Severance Contribution" has the meaning set forth in Section 7(h)
below.
"Campbell Facility" means the premises located at 4065 Campbell Avenue,
Menlo Park, California, including the building and improvements thereon.
"Cash" means cash and cash equivalents (including marketable securities and
short term investments) calculated in accordance with GAAP, applied on a
consistent basis.
"CII" means Connecticut Innovations, Inc.
"Closing" has the meaning set forth in Section 2(e) below.
"Closing Date" has the meaning set forth in Section 2(e) below.
"Closing Inventory Value" means the value of the Seller's Inventory as of
the Closing Date, determined in accordance with generally accepted accounting
principles as consistently applied by the Buyer, and determined pursuant to the
terms and conditions of Section 2(e) below.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Confidential Information" means any information concerning a Party or its
business that is not already generally available to the public; provided,
however, that Confidential Information shall not include any such information
that is (i) already known to the recipient at the time of disclosure as
evidenced by its prior written records; (ii) published or publicly known prior
to or after disclosure other than through unauthorized acts or omissions of the
recipient; (iii) disclosed in good faith to the recipient by a third party
entitled to make such disclosure; or (iv) independently developed by or on
behalf of the recipient without recourse to the disclosure herein as documented
in writing.
"Contracts" means all material purchase orders, contracts, commitments,
plans, agreements, instruments, advertising arrangements (including cooperative
advertising commitments), other arrangements, and understandings (written or
oral), bids and proposals, including all amendments and supplements thereto, to
which the Seller is a party, which relate to any Acquired Assets or Assigned
Assets, and which have not been fully performed.
"Debenture" means that certain Convertible Subordinated Debenture of the
Buyer, dated December 22, 1994 to CII, in the original principal amount of
$763,208, as same may be amended from time to time.
"Debt Financing" means the indebtedness to be incurred by the Buyer to
finance a portion of the Purchase Price. Buyer currently contemplates that such
debt financing will be substantially in the form of a $2,000,000 term loan and
$1,250,000 revolving credit line.
"Disclosure Schedule" has the meaning set forth in Section 3 below.
"Documents" means the books, records, ledgers, files, documents,
correspondence, lists, materials, catalogs, studies, reports, and other printed
or written materials located at the Campbell Facility related to the Business;
provided that the Documents shall not include any of the foregoing provided to
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the Seller under the secrecy agreements identified or described under the
heading "Secrecy Agreements" in Section 1 of the Disclosure Schedule, unless and
until consent of the party providing such document for transfer of such document
to the Buyer shall have been received; and further provided, that Documents
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shall not include personnel records.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
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"Employee Pension Benefit Plan" has the meaning set forth in ERISA Sec.
3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA Sec.
3(1).
"Environmental, Health and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, the Occupational Safety and Health Act of
1970, as amended, the Federal Food, Drug, and Cosmetic Act, together with any
and all other laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof) concerning pollution
or protection of the environment, cosmetics safety, public health and safety, or
employee health and safety, including laws relating to emissions, discharges,
releases, or threatened releases of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes into ambient air, surface
water, ground water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes.
"Environmental Liabilities" means any liability arising under any
Environmental, Health and Safety Laws relating to or arising out of Seller's
ownership or operation of the Business on or prior to the Closing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" means (1) the Medical Assets (2) the Tinel-Lock Assets,
(3) all trademarks, trade names and service marks of Seller, (4) all accounts
receivables of Seller, (5) the assets listed under the heading "Excluded
Tangible Assets" in Section 1 of the Disclosure Schedule, (6) the software
packages listed under the heading "Excluded Software" in Section 1 of the
Disclosure Schedule, (7) all non-severable or non-transferable assets of Seller;
(8) royalties arising from (i) that certain License Agreement dated 10/01/94
between Teledyne Wah Chang and Seller or (ii) that certain License Agreement
dated 01/08/88 between The Furukawa Electric Co., Ltd. and Seller and Amendment
dated September 14, 1994; and (9) all assets of Seller not specifically included
in the definition of Acquired Assets or Assigned Assets. Without limiting the
generality of the foregoing, the Buyer is not acquiring licenses or rights to
use any intellectual property of the Seller except as specifically included in
the Acquired Assets or the Assigned Assets.
"Excluded Liabilities" and "Excluded Liability" means all Liabilities of
the Seller (and any Affiliate thereof) relating to or arising out of the
ownership, use or operation of the Acquired Assets, the Assigned Assets or the
Business, in any case arising
5
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prior to the Closing, other than the Assumed Liabilities, including: (a)
Transfer Taxes to the extent provided in Section 2(i); (b) any Liability of the
Seller arising out of litigation arising prior to the Closing Date; (c) any
Liabilities arising out of defects in, or damages to, persons or property
arising out of defects in, Products sold or services rendered by the Seller
prior to the Closing; (d) any Liability, whether arising by operation of law,
contract, past custom or otherwise, for unemployment compensation benefits,
post-retirement and post-employment benefits, pension benefits, salaries, wages,
bonuses, incentive compensation, sick leave, severance or termination pay,
vacation and other forms of compensation or any other form of Employee Benefit
Plan, agreement or plan, arrangement or commitment payable to or for the benefit
of any current or former officers, directors and other employees and independent
contractors of the Seller (including any Affiliate thereof) or any other Person
(other than the Buyer) for which the Seller is liable or responsible except as
contemplated by Section 7(h)(ii) below; (e) any Environmental Liabilities; and
(f) the obligations of the Seller under this Agreement or the Ancillary
Agreements.
"Finder's Fee Agreement" means that certain Finder's Fee Agreement, to be
dated as of the Closing Date, between the Parties, in substantially the form of
EXHIBIT E, attached hereto.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Group I Employees" means the employees of the Seller engaged in the
Business who will not be offered employment with the Buyer, as set forth on Part
I of SCHEDULE 7(I) attached hereto; provided that the Buyer may elect, but shall
not be required, to offer employment to any Group I Employee prior to the
Closing Date.
"Group II Employees" means the employees of the Seller engaged in the
Business who will receive an offer to remain employed by the Seller for purposes
of providing services to the Buyer pursuant to the Transitional Services
Agreement for a period not to exceed six months after the Closing, as set forth
on Part II of SCHEDULE 7(I) attached hereto; provided, that the Buyer may elect,
but shall not be required, to offer employment to any Group II Employee prior to
the end of the period for which such employee provides transitional services
under the Transitional Services Agreement.
"Group III Employees" means the employees of the Seller engaged in the
Business who will be offered comparable employment with the Buyer from and after
the Closing, as set forth on Part III of SCHEDULE 7(I) attached hereto.
"Hazardous Substance" has the meaning set forth in (1) the definition of
"hazardous substance" established by the Federal Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C.A. Section 9601 et seq.) and
-- ---
regulations adopted under it; (2) the definition of "hazardous waste"
established by the federal Resource Conservation and Recovery Act (42 U.S.C.A.
6
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Section 6921 et seq.) and regulations adopted under it; and (3) the definition
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of "hazardous chemical" established by the federal Emergency Planning and
Community Right-To-Know Act (42 U.S.C.A. Section 11001 et seq.) and regulations
-- ---
adopted under it.
"Indemnified Party" has the meaning set forth in Section 8(d) below.
"Indemnifying Party" has the meaning set forth in Section 8(d) below.
"Intellectual Property" means all patents (together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof), patent applications, invention disclosures, trade secrets, know-how,
confidential business information (including ideas, research and development,
formulas, compositions, product formulations, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information and related
documentation, studies, and business plans), copyrights, copyrightable assets,
computer software, and rights of use related to any of the foregoing.
"Inventory" means all inventories of raw materials (including nickel-
titanium alloys) and work in process of the Business wherever located, and
finished goods of the Business physically located at the Campbell Facility, all
as listed under the heading "Inventory" in Section 1 of the Disclosure Schedule;
provided that the Inventory shall not include any inventories of raw materials
or work in process located in the United Kingdom.
"Inventory Protocol" has the meaning set forth in Section 2(e).
"Knowledge" means the actual knowledge after reasonable investigation of
any officer of Seller extensively involved in negotiation of this Agreement.
"Lease" means that certain Industrial Park Lease dated as of April 25, 1983
by and between Frances E. Nelson and Seller, as amended by that certain First
Amendment to Lease dated as of May 8, 1989 by and between Frances E. Nelson and
Seller, that certain Second Amendment to Lease dated as of June 10, 1992 by and
between 4065 Associates, a California partnership and successor in interest to
Frances E. Nelson, and Seller, and that certain Third Amendment to Lease dated
as of June 7, 1995 by and between 4065 Associates and Seller, as modified by any
future consents or agreements made prior to the Closing.
"Liability" means any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
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"License Agreements" means the License Agreement and the Medical Assets
License Agreement each to be dated the Closing Date, between the Parties, in
substantially the forms attached hereto as EXHIBITS H AND I.
"Licenses" means the licenses and sublicenses obtained with respect to the
Intellectual Property listed under the heading "Licenses and Sublicenses" in
Section 1 of the Disclosure Schedule, including all rights of the Seller
thereunder, remedies of the Seller against infringements thereof, and rights of
the Seller to protection of interests therein under the laws of all
jurisdictions, and subject to all obligations of Seller thereunder.
"McGladrey" means McGladrey & Pullen, LLP, independent auditors of the
Buyer.
"Medical Assets" means (a) all patents (together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof), patent applications and invention disclosures listed under the heading
"Excluded Medical Intellectual Property" in Section 1 of the Disclosure
Schedule, (b) all trade secrets or know-how related exclusively to any article
coming within the scope of any of the Excluded Medical Intellectual Property so
listed, and (c) any confidential business information (including ideas, research
and development, formulas, compositions, product formulations, manufacturing and
production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information and
related documentation, studies, and business plans) related exclusively to any
article coming within the scope of any of the Intellectual Property described in
clause (a) or (b) above, (d) all copyrights and copyrightable assets exclusively
related to finished medical products, (e) all biocompatibility test data, and
(f) tangible manifestations of any of the foregoing.
"Modified Severance Policy" means the Seller's Severance Policy modified
such that (a) medical and dental coverage shall be provided under the Buyer's
medical and dental plans and for the Buyer's premiums, and (b) no outplacement
shall be provided.
"PW" means Price Waterhouse, LLP, independent auditors of the Seller.
"Ordinary Course of Business" means the ordinary course of business of the
Business consistent with past custom and practice (including with respect to
quantity and frequency).
"Party" has the meaning set forth in the preface above.
"Permits" means all franchises, approvals, permits, licenses, orders,
registrations, certificates, variances, and similar rights or authorizations
obtained from governments or governmental agencies, departments or bodies.
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"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Private Label Agreement" means the Private Label/Distribution Agreement,
to be dated the Closing Date, among the Seller and the Buyer, together with all
ancillary agreements, schedules and exhibits attached thereto, substantially in
the form of EXHIBIT B.
"Purchase Price" has the meaning set forth in Section 2(d) below.
"Registration Rights Agreement" means the Registration Rights Agreement to
be dated the Closing Date, between the Buyer and the Seller, in substantially
the form attached hereto as EXHIBIT D.
"Required Consents" means the consents listed under the heading "Required
Consents" in Section 1 of the Disclosure Schedule.
"Required Permits" means those Permits required to be held by Buyer upon
consummation of the Closing and listed under the heading "Required Permits" in
Section 1 of the Disclosure Schedule.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and the rules and regulations promulgated thereunder.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, equity, option, right (including rights of first
refusal), restriction on transfer or similar restriction of any nature
whatsoever.
"Seller" has the meaning set forth in the preface above.
"Seller's Closing Inventory Statement" has the meaning set forth in Section
2(e) hereof.
"Seller's Severance Policy" means the severance policy attached as EXHIBIT
J.
"Severance Liability" means the liability of the Seller or the Buyer, as
the case may be, to make severance payments to Group I Employees, Group II
Employees and Group III Employees as agreed pursuant to Section 7(h) below.
"Sublease" means the Sublease to be dated the Closing Date, between the
Buyer and the Seller, in substantially the form attached hereto as EXHIBIT K.
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"Subsidiary" means any corporation with respect to which a specified Person
(or a Subsidiary thereof) owns a majority of the common stock or has the power
to vote or direct the voting of sufficient securities to elect a majority of the
directors.
"Tangible Assets" means the tangible personal property (including the
Seller's interest in any fixtures) used in the Business and physically located
at the Campbell Facility, other than the Excluded Assets, which Excluded Assets
are listed under the heading "Excluded Tangible Assets" in Section 1 of the
Disclosure Schedule.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 8(d) below.
"Tinel-Lock Assets" means (i) tangible personal property subject to the
Tinel-Lock Lease Agreement, (ii) books, records, drawings, ledgers, files,
documents, correspondence, lists, vendor and customer lists, creative materials,
catalogs, studies, reports, technical data and other material exclusively
related to the development, testing, manufacture, marketing and distribution of
Tinel-Lock products, (iii) Intellectual Property exclusively related to Tinel-
Lock products, and (iv) Tinel-Lock finished goods inventory.
"Tinel-Lock Agreements" means that certain Tinel-Lock Lease Agreement,
Tinel-Lock Supply Agreement and Tinel-Lock License Agreement, each to be dated
as of the Closing Date, between the Parties, in substantially the forms of
EXHIBITS F-1, F-2 AND F-3 attached hereto.
"Transfer Tax" means any applicable sales, transfer, use, purchase or
similar Taxes resulting from the purchase and sale of the Acquired Assets
pursuant to this Agreement, calculated using the net book value of the Tangible
Assets as recorded on the books of the Seller at Closing.
"Transitional Services Agreement" means the Transitional Services Agreement
to be dated the Closing Date, between the Buyer
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and the Seller, containing substantially the terms outlined in EXHIBIT C.
"Warrants" mean, collectively, the warrants to purchase Buyer Common Stock
referred to in Section 2(d)(i) and (ii) below.
2. Basic Transaction.
(a) Purchase and Sale of Acquired Assets. On the terms and subject to the
conditions of this Agreement, the Buyer agrees to purchase from the Seller, and
the Seller agrees to sell, transfer, convey, and deliver to the Buyer, all of
the Acquired Assets at the Closing for the consideration specified below in this
Section 2.
(b) Assignment of Assigned Assets. On the terms and subject to the
conditions of this Agreement, the Seller agrees to assign to the Buyer, and the
Buyer agrees to accept such assignment from Seller, all of the Assigned Assets
at the Closing for the consideration specified below in this Section 2.
(c) Limited Assumption of Liabilities. On the terms and subject to the
conditions of this Agreement, the Buyer agrees to assume and become responsible
for all of the Assumed Liabilities at the Closing. The Buyer will not assume
and shall not have any responsibility for any Excluded Liability, and Buyer
shall not be deemed by anything contained in this Agreement or any related
agreement or document to have assumed or become responsible for any Excluded
Liability. All Excluded Liabilities shall remain the responsibility of the
Seller or its Affiliates.
(d) Non-exclusive License. Notwithstanding its transfer to Buyer of the
same, the Seller shall retain a non-exclusive license, with the rights of
sublicense and/or assignment, to the patents and patent applications listed in
subschedule B under the heading "Patents and Patent Applications" in Section 1
of the Disclosure Schedule, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof.
(e) Purchase Price. The Buyer agrees to pay to the Seller, at the Closing,
the following consideration (the "Purchase Price"):
(i) The Buyer agrees to pay to the Seller, at the Closing, in cash, by
wire transfer or other immediately available funds, an amount equal to
$4,000,000, as adjusted pursuant to Section 2(f) below;
(ii) The Buyer shall issue and deliver to Seller a warrant to purchase
up to 1,250,000 shares of the Buyer Common Stock at an exercise price equal to
$2.00 per share of Buyer Common Stock, represented by a warrant certificate in
substantially the form of EXHIBIT A-1; and
(iii) The Buyer shall issue and deliver to Seller a warrant to
purchase up to 1,130,000 shares of the Buyer Common
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Stock, at an exercise price equal to $0.01 per share of Buyer Common Stock,
represented by a warrant certificate in substantially the form of EXHIBIT A-2.
(f) Inventory Adjustment.
(i) Prior to the Closing Date, the Parties shall cause PW and
McGladrey to agree upon inventory procedures and systems (which shall be in
accordance with GAAP as consistently applied by the Seller) (the "Inventory
Protocol") to facilitate the expeditious and accurate determination of the
Closing Inventory Value.
(ii) Seller shall conduct an Inventory count as of the Closing, which
shall be observed by PW and McGladrey. Not later than 15 days after the Closing
Date, Seller shall prepare and deliver to the Buyer a statement (the "Seller's
Closing Inventory Statement") which shall include PW's report on Inventory count
and the use of the Inventory Protocol to value the Inventory.
(iii) Within five days following receipt of the Seller's Closing
Inventory Statement, Seller shall pay to Buyer the amount, if any, by which
$1,100,000 exceeds the Closing Inventory Value as shown in such statement and
Buyer shall pay to Seller the amount, if any, by which the Closing Inventory
Value exceeds $1,100,000; provided that Buyer shall not be required to pay for
any Closing Inventory Value in excess of $1,250,000. Such amounts shall be paid
in cash, by wire transfer or other immediately available funds.
(iv) Notwithstanding paragraph (iii), if within 15 days following
receipt of the Seller's Closing Inventory Statement Buyer determines that
Seller's Closing Inventory Statement does not accurately state the value of
Seller's Inventory as determined under the Inventory Protocol, Buyer shall
notify Seller in writing (the "Buyer's Letter") of its proposed adjustments,
including the amount, nature and basis for the adjustments. If the Buyer does
not send a Buyer's Letter to the Seller within such 15-day period, the Seller's
Closing Inventory Statement shall be determinative of the Closing Inventory
Value.
(v) Within five days of Buyer's receipt of the Buyer's Letter, if
any, the Parties (together with PW and McGladrey) shall confer and endeavor to
resolve the adjustments, if any, which are in dispute.
(vi) If the Parties do not confer or are unable to resolve all of the
proposed adjustments in the Buyer's Letter to the mutual satisfaction of the
Parties, then, within 15 days after receipt by the Seller of the Buyer's Letter,
the Parties shall jointly engage Deloitte & Touche ("D&T") (or if D&T shall
decline to so act, then another Big Six audit firm) to arbitrate the dispute.
D&T shall be provided with a copy of this Agreement, the Inventory Protocol, the
Seller's Closing Inventory Statement, and the Buyer's Letter, and shall have
reasonable access to
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representatives of the Parties, PW and McGladrey. Not later than 10 days after
its appointment, D&T shall furnish the Parties with its written determination
regarding each unresolved adjustment submitted for arbitration, which
determination shall be conclusive and binding upon the Parties. The award or
decision of D&T shall be deemed final and may be entered and enforced in any
court of competent jurisdiction. The Parties agree to submit to the
jurisdiction of any such court for the enforcement of such award or decision.
The fees and expenses of D&T shall be borne equally by Seller and Buyer;
provided, however, that each Party shall bear the costs and expenses (including
all disbursements) of its own legal counsel. Section 10(g) ("Notices") shall
apply to all communications made under this Section 2(f).
(vii) Within five (5) Business Days following the date on which the
Closing Inventory Value is finally determined pursuant to this Section 2(f),
Seller shall pay to Buyer, or Buyer shall pay to Seller, the amount of any
adjustment made from the Seller's Closing Inventory Statement.
(viii) In preparing and reviewing the Seller's Closing Inventory
Statement, Buyer's Letter and Seller's Letter, and in conducting the reviews by
any Party and D&T, each Party will grant the other Party and the arbitrator all
reasonable access to the records of the Seller and any work papers, including
(where applicable) auditor work papers prepared with respect to the Seller's
Closing Inventory Statement, Buyer's review thereof and Seller's review of the
Buyer's Letter.
(g) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of the Seller, located
at 300 Constitution Drive, Menlo Park, California, or at such other location
within the continental United States as the Parties shall agree, commencing at
9:00 a.m. local time on the second Business Day following the satisfaction or
waiver of all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby (other than conditions with respect to actions
the respective Parties will take at the Closing itself) or such other date as
the Parties may mutually determine (the "Closing Date"). The Closing Date shall
occur on or before June 28, 1996. The Parties shall coordinate the Closing with
the closing of the Debt Financing.
(h) Deliveries at the Closing. At the Closing:
(i) the Seller will deliver to the Buyer (A) the Required Consents,
and (B) the various certificates, instruments, and documents referred to in
Section 6(a) below.
(ii) the Buyer will deliver to the Seller the various certificates,
instruments, and documents referred to in Section 6(b);
(iii) the Seller will execute, acknowledge (if appropriate), and
deliver to the Buyer (A) transfer documents for
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the Acquired Intellectual Property in proper form for recordation with the
United States Patent and Trademark Office, in a form substantially reasonably
acceptable to the Parties; (B) the Private Label Agreement; (C) the Transitional
Services Agreement; (D) the Registration Rights Agreement; (E) the Finder's Fee
Agreement; (F) the Tinel-Lock Agreements; (G) the License Agreements; (H) the
Sublease; and (I) such bills of sale and other instruments of sale, transfer,
conveyance, and assignment as the Buyer and its counsel reasonably may request
in order to transfer and convey the Acquired Assets;
(iv) the Buyer will execute, acknowledge (if appropriate), and deliver
to the Seller (A) the Private Label Agreement; (B) the Transitional Services
Agreement; (C) the Registration Rights Agreement; (D) the Finder's Fee
Agreement; (E) the Tinel-Lock Agreements; (F) the License Agreements; (G) the
Sublease; and (H) such other instruments of assumption as the Seller and its
counsel reasonably may request;
(v) the Buyer will deliver the Purchase Price (including the cash and
the Warrants) to the Seller;
(vi) the Buyer will deliver the Buyer's Severance Contribution to the
Seller; and
(vii) the Buyer will deliver to the Seller the amount of Transfer
Taxes for which the Buyer is liable as provided in Section 2(j).
(i) Allocation. The Parties agree to allocate the Purchase Price (and all
other capitalized costs) among the Acquired Assets and the Assigned Assets for
tax purposes in accordance with the allocation schedule attached hereto as
EXHIBIT G.
(j) Transfer Taxes. The Buyer and the Seller will each pay one-half of the
Transfer Taxes. The Seller shall properly file on a timely basis all necessary
tax returns and other documentation with respect to any Transfer Taxes, provided
that where such return or other documentation is required to be filed on a joint
basis, the Parties shall cooperate in the timely preparation and filing thereof.
The Parties hereto shall also cooperate in providing the information required by
any returns or other documentation relating to Transfer Taxes.
(k) Retention of Shared Intellectual Property. Notwithstanding its
transfer and conveyance to Buyer of the same, the Parties agree that Seller
retains (I) a royalty-free, irrevocable, transferable right and license, to be
used solely in conjunction with the practice of the Intellectual Property listed
under the heading "Excluded Medical Intellectual Property" in the Disclosure
Schedule, to utilize (a) all trade secrets or know-how related (but not
exclusively related) to any practice under such Intellectual Property, and (b)
any confidential business information (including ideas, research and
development, formulas, compositions, product formulations, manufacturing and
production
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processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information and related
documentation, studies, and business plans) related (but not exclusively) to
practice under such Intellectual Property, and (II) a royalty free, irrevocable,
non-transferable right and license, to be used solely in connection with the
supply of Cryocon connectors and penetrators to the U.K. Ministry of Defense
("MOD") or to contractors or subcontractors for the MOD, to utilize (a) U.S.
Patent No. 4,337,090, issued on June 29 and entitled "Heat Recoverable
Nickel/Titanium Alloy with Improved Stability and Marketability", and all
foreign patent equivalents thereof, and (b) all trade secrets and know-how
necessary to manufacture such Cryocon penetrators and connectors.
3. Representations and Warranties of the Seller. The Seller represents and
warrants to the Buyer that the statements contained in this Section 3 are
correct and complete as of the date of this Agreement, except as set forth in
Section 3 of the disclosure schedule accompanying this Agreement (the
"Disclosure Schedule"). Section 3 of the Disclosure Schedule will be arranged
in paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 3.
(a) Organization of the Seller. The Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. The Seller has all requisite power and
authority, and all licenses, permits and authorizations necessary, to own,
operate and lease its assets, including the Acquired Assets and the Assigned
Assets and to carry on its business, including the Business. The Seller is
qualified to do business and in good standing in the State of California. At
the Closing, the Seller will be qualified to do business and in good standing in
the State of Connecticut.
(b) Authorization of Transaction. The Seller has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and the Ancillary Agreements and to perform its obligations hereunder
and thereunder. All necessary corporate proceedings (including any necessary
approval by the board of directors and stockholders of the Seller) have been
taken by the Seller to duly authorize the execution, delivery, and performance
of this Agreement and the Ancillary Agreements by the Seller. This Agreement
constitutes, and each of the Ancillary Agreements, when executed, will
constitute the valid and legally binding obligation of the Seller, enforceable
against the Seller in accordance with their respective terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement or the Ancillary Agreements nor the consummation of the transactions
contemplated hereby or thereby (including the assignments and assumptions and
other documents referred to in Section 2 above), will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which the Seller is subject or any provision of
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its certificate of incorporation or by-laws, or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, Contract, lease, license, instrument, or other
arrangement to which the Seller is a party or by which it is bound or to which
any of the Acquired Assets or Assigned Assets are subject, or result in the
imposition of any Security Interest upon any of the Acquired Assets or Assigned
Assets, except for accelerations, terminations, modifications, cancellations,
requirements for notice or consents which would not, individually or in the
aggregate, adversely affect the Business in any material respect. The Seller
does not need to give any notice to, make any filings with, or obtain any
permit, authorization, consent or approval of any government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement (including the assignments and assumptions referred to in Section
2 above) or the Ancillary Agreements.
(d) Brokers' Fees. The Seller has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement or the Ancillary Agreements for
which the Buyer could become liable or obligated or which could become a
Security Interest on the Acquired Assets, the Assigned Assets, or any part of
the Business.
(e) Title to Assets. The Seller has, and at the Closing will transfer to
the Buyer, good and marketable title to the Acquired Assets, free and clear of
any Security Interest or restriction on transfer and at the Closing will assign
the Assigned Assets to the Buyer free and clear of any Security Interest or
restriction on transfer, in each case other than the Restrictions listed under
the heading "Restrictions" in Section 1 of the Disclosure Schedule.
(f) Legal Compliance. In all material respects, the Seller has (since at
least July 1, 1992) complied with, and is in full compliance with, all
applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof) and all Permits with
respect to the ownership, operation and use of the Acquired Assets, the Assigned
Assets and the Business; provided that this representation does not apply to
Environmental Health and Safety Laws, Hazardous Substances or Environmental
Liabilities as to which a separate representation is made in section (p) below.
(g) Adequacy of Assets to Conduct the Business. At the Closing, the
Tangible Assets and the Documents will constitute all of the material tangible
assets and documents used by the Seller immediately prior to the Closing in the
design, development, processing, and manufacture of nickel-titanium alloy
components, other than the Excluded Assets (without regard to clause 8 of the
definition thereof). Assuming that the Buyer hires appropriate employees, at
the Closing the Acquired Intellectual Property will constitute all of the
material Intellectual Property used by the
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Seller immediately prior to the Closing in the design, development, processing,
and manufacture of nickel-titanium alloy components, other than the Excluded
Assets (without regard to clause 8 of the definition thereof).
(h) Tax Matters. The Seller has filed all Tax Returns that it was required
to file and has timely paid all Taxes (or properly reserved for any such Taxes
not yet due and payable), the non-filing or non-payment of which, as the case
may be, could result in the imposition of a Security Interest or lien upon, or
the creation of a Security Interest in, or otherwise interfere in any material
way with the Business or Buyer's ownership or operation of the Acquired Assets
or Assigned Assets.
(i) Real Property.
(i) Other than the Lease and the real property used for the 4055
Assets, the Seller does not own or lease any real property which is required to
conduct the Business as contemplated by this Agreement and the Ancillary
Agreements.
(ii) To the Seller's Knowledge, with respect to the Lease:
(A) The Lease is, and upon execution of the Sublease will be, a
legal, valid, binding and enforceable obligation of the Seller;
(B) Neither the Seller nor the landlord is in breach or default, and
no event has occurred which, with notice or lapse of time, would constitute a
breach or default or permit termination, modification, or acceleration
thereunder;
(C) No party to the Lease has repudiated any provision thereof;
(D) There are no disputes, oral agreements, or forbearance programs in
effect as to the Lease;
(E) The Seller has not assigned, transferred, conveyed, mortgaged,
deeded in trust, or encumbered any interest in the Lease; and
(F) The facilities under the Lease have received all approvals of
governmental authorities (including licenses and permits) required in connection
with the operation thereof and have been operated and maintained in accordance
with applicable laws, rules and regulations.
(j) Acquired Intellectual Property.
(i) The Seller owns all of the Acquired Intellectual Property free
and clear of any Security Interest or other restriction or claim except for
restrictions listed under the heading "Restrictions" in Section 1 of the
Disclosure Schedule.
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(ii) To the Seller's Knowledge, no litigation is pending or has been
threatened against the Seller or any Affiliate of the Seller, for the
infringement by any Acquired Asset or Assigned Asset of any Intellectual
Property of any third party within the past five (5) years, nor is there any
basis therefor. To the Seller's Knowledge, no third party is actually
infringing any of the patents included in the Acquired Intellectual Property.
(k) Tangible Assets. THE TANGIBLE ASSETS ARE SOLD ON AN "AS IS-WHERE IS"
BASIS AND, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR THE ANCILLARY
AGREEMENTS, WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED OR
STATUTORY, INCLUDING ANY WARRANTY AS TO THE MERCHANTABILITY, FITNESS FOR ANY
PARTICULAR PURPOSE OR CONDITION OF ANY OF THE TANGIBLE ASSETS.
(l) Inventory. All of the Inventory is for use in the Business.
Appropriate reserves have been taken for obsolete, slow-moving, damaged,
defective or otherwise unsalable inventory in accordance with Seller's customary
practices.
(m) Contracts. Section 3(m) of the Disclosure Schedule lists as of the
date of this Agreement all Contracts (whether or not Assigned Assets) including
any contract or agreement (or group of related agreements with the same party or
parties) the performance of which involves consideration in excess of $25,000
per year. The Seller has delivered (or will deliver at the time of delivery of
the Disclosure Schedule) to the Buyer a correct and complete copy of each
Assignable Contract and each written contract listed in Section 3(m) of the
Disclosure Schedule (other than purchase orders from customers that are on
standard terms and other than Contracts identified as "confidential" in Section
3(m) of the Disclosure Schedule, the terms of which are described to the extent
possible.) In lieu of listing and delivering any vendor purchase order, the
Seller may list such vendors and the amount of committed purchase orders in the
Disclosure Schedule.
(n) Litigation. Section 3(n) of the Disclosure Schedule sets forth each
instance in which the Seller is a party or, to the Knowledge of the Seller, is
threatened to be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or other governmental body relating to
or arising out of the Business, the Acquired Assets or the Assigned Assets which
could have a material adverse effect on the Business, the Acquired Assets or the
Assigned Assets or the Seller's ability to consummate the transactions
contemplated hereby.
(o) Product Warranty and Liability. The Seller is not aware of any pending
product warranty or liability claims with respect to the products sold by the
Business. Section 3(o) of the Disclosure Schedule includes copies of the
standard terms and conditions of sale of Seller (containing applicable guaranty,
warranty, and indemnity provisions).
(p) Environment, Health and Safety. The Seller: (i) has not violated any
Environmental, Health and Safety Laws or released any
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Hazardous Substance, (ii) is not aware of any events, conditions or
circumstances involving Hazardous Substances, and (iii) is not aware of any
claim or investigation, pending or threatened, based on or related to any
Environmental, Health and Safety Laws, that, in any of the foregoing cases, the
Seller could reasonably expect to form the basis of any Environmental
Liabilities which would have a material adverse effect on the value or the
operating condition of any Acquired Asset or Assigned Asset or otherwise have a
material adverse effect on the Business.
(q) Financial Statements. The Seller has delivered to Buyer the following
financial statements (collectively, the "Financial Statements"): (i) unaudited
statements of sales data and manufacturing costs, engineering expenses, and
general and administrative and marketing expenses for the Business for the
fiscal years ended June 30, 1994 and June 30, 1995 (the "Most Recent Fiscal Year
End"), and (ii) unaudited statements of sales data and manufacturing costs,
engineering expenses and general and administration and marketing expenses for
the Business for the period from the Most Recent Fiscal Year End to March 31,
1996 for the Business (the "Most Recent Financial Statements"). The Financial
Statements (including any notes thereto) have been prepared in good faith on a
consistent basis throughout the periods covered thereby in accordance with
EXHIBIT L, and are derived from the information in the Seller's COGNOS database.
Since the date of such statements, there has been no material adverse change in
the condition of the Business, the Acquired Assets or the Assigned Assets;
including without limitation since that date:
(i) the Seller has not sold, leased, transferred, or assigned any
assets used in the Business, tangible or intangible, other than inventory sold
in the Ordinary Course of Business and miscellaneous other items of property
which are not material to the operation of the Business in the Ordinary Course
of Business; and
(ii) the Seller has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to its property used in the Business
involving, individually or in the aggregate, $25,000 or more.
(r) Employees. The Seller is not a party to, or bound by any collective
bargaining agreement, nor has it experienced any strikes, grievances, claims of
unfair labor practices, or other collective bargaining disputes. The Seller has
no Knowledge of any organizational effort presently being made or threatened by
or on behalf of any labor union with respect to employees of the Seller.
(s) Experience. With respect to the issuance of the Warrants and the Buyer
Common Stock issuable upon exercise of the Warrants, the Seller has substantial
experience in evaluating and investing in private placement transactions of
securities and is capable of evaluating the merits and risks of the Seller's
investment in the Buyer and has the capacity to protect the Seller's own
interests.
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(t) Investment. The Seller is acquiring the Warrants for investment for
the Seller's own account, not as a nominee or agent, and not with the view to,
or for resale in connection with, any distribution thereof. The Seller
understands that neither the Warrants nor the Buyer Common Stock underlying the
Warrants have been, nor will be, registered under the Securities Act or the
securities laws of any state by reason of exemptions from the registration
provisions of the Securities Act and such laws which depend upon, among other
things, the bona fide nature of the investment intent and the accuracy of the
Seller's representations as expressed herein. The Seller is an "Accredited
Investor" as that term is defined in Rule 501(a) promulgated under the
Securities Act.
(u) Rule 144. The Seller acknowledges that the Warrants are not
transferable and the Buyer Common Stock underlying the Warrants must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available. The Seller is aware of the
provisions of Rule 144 promulgated under the Securities Act which permit the
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things, (i) the
existence of a public market for the shares, (ii) the availability of certain
current public information about the Buyer, (iii) the resale occurring not less
than two years after a party has purchased and fully paid for the shares to be
sold, (iv) the sale being effected through a "broker's transaction" or in
transactions directly with a "market maker" (as provided by Rule 144(f)) and (v)
the number of shares being sold during any three-month period not exceeding
specified limitations.
(v) Access to Data. The Seller has had an opportunity to discuss the
Buyer's business, management, and financial affairs with the Buyer's management
and the opportunity to review the Buyer's facility, financial condition and
operations. The Seller has also had an opportunity to ask questions of officers
of the Buyer, which questions were answered to its satisfaction. The Seller
acknowledges that it has had an opportunity to conduct its own independent due
diligence investigation of the Buyer.
4. Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Seller that the statements contained in this Section 4 are
correct and complete as of the date of this Agreement, except as set forth in
the Buyer's disclosure schedule accompanying this Agreement (the "Buyer
Disclosure Schedule"). The Buyer Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 4.
(a) Organization of the Buyer. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation. The Buyer has all requisite power and authority, and all
licenses, permits, and authorizations necessary, to own, operate and lease its
assets and properties and to carry on its businesses conducted by Buyer, and is
qualified to
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do business as a foreign corporation in all jurisdictions in which the conduct
of its business or the ownership of its assets requires it to be so qualified,
except for jurisdictions where the failure to so qualify would not result in
exposure of the business to an assessment of a Tax Liability or result in a
material contract of the business or any Ancillary Agreement being rendered
unenforceable.
(b) Authorization of Transaction. The Buyer has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and the Ancillary Agreements and to perform its obligations hereunder
and thereunder. All necessary corporate proceedings (including any necessary
approval by the board of directors and stockholders of the Buyer) have been
taken by the Buyer to duly authorize the execution, delivery, and performance of
this Agreement and the Ancillary Agreements by the Buyer. This Agreement
constitutes, and each of the Ancillary Agreements, when executed, will
constitute the valid and legally binding obligation of the Buyer, enforceable in
accordance with its respective terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement or the Ancillary Agreements, nor the consummation of the transactions
contemplated hereby or thereby (including the assignments and assumptions
referred to in Section 2 above), will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which the Buyer
is subject or any provision of its certificate of incorporation or by-laws or
(ii) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
Permit, license, instrument, or other arrangement to which the Buyer is a party
or by which it is bound or to which any of its assets is subject. The Buyer
does not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Buyer and the Seller to consummate the transactions contemplated
by this Agreement (including the assignments and assumptions referred to in
Section 2 above).
(d) Capitalization. As of April 30, 1996, the Buyer's authorized capital
stock consisted of (i) 25,000,000 shares of Buyer Common Stock, par value $0.01
per share, of which 8,536,641 shares (subject to downward adjustment due to the
elimination of fractional shares in conjunction with the Buyer's one-for-ten
reserve stock split effected on August 8, 1994) was issued and outstanding, and
(ii) 100,000 shares of Preferred Stock, par value $100.00 per share, of which
424 shares of Series G Preferred Stock are currently outstanding and with
respect to which 4,240,000 shares of Buyer Common Stock have been reserved for
issuance upon conversion of such Series G Preferred Stock. 3,103,187 shares of
Buyer Common Stock have been reserved for issuance upon the conversion of the
Buyer's issued and outstanding warrants, 954,010
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shares of Buyer Common Stock have been reserved for issuance upon conversion of
the Debenture, and 600,000 shares of Buyer Common Stock have been reserved for
issuance pursuant to Buyer's 1995 Stock Option Plan. 532,500 options to
purchase Buyer Common Stock have been granted under such stock option plan.
Except as set forth in this Section 4(d) or in Section 4(d) of the Buyer
Disclosure Schedule, there are no outstanding subscriptions, options, warrants,
calls, contracts, demands, commitments, convertible securities or other
contractual obligations of any character or nature whatsoever, except as
contemplated by this Agreement, under which the Buyer is or may be obligated to
issue capital stock or other securities of any kind representing an ownership
interest or contingent ownership interest in the Buyer. No holder of any
security of the Buyer Subsidiaries is entitled to any preemptive or similar
right to purchase securities from the Buyer, including preemptive rights with
respect to the issuance of the Warrants and the issuance of the Buyer Common
Stock underlying the Warrants upon the exercise thereof.
The outstanding shares of Common Stock are all duly and validly
authorized and issued, fully paid and nonassessable, and were issued in
compliance with all federal and state securities laws.
(e) Disclosure. The Buyer has delivered to the Seller copies of (i) the
Buyer's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1995,
(ii) the Company's Quarterly Reports on Form 10-QSB for the three-month periods
ended September 30, 1995 and December 31, 1995, and (iii) all Current Reports on
Form 8-K filed with the Securities and Exchange Commission ("SEC") during 1995
---
and 1996 (collectively, such Forms 10-KSB, 10-QSB and 8-K, as amended to date,
being hereinafter referred to as its "Reports"). The Reports did not contain,
-------
at the time of filing thereof with the SEC, and do not contain, any untrue
statement of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading. At the time of
the respective filings thereof, the Reports complied as to form in all material
respects with the Exchange Act and the rules and regulations of the SEC
thereunder.
(f) Brokers' Fees. The Buyer has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
(g) Permits. The Buyer understands that none of the Permits of the
Business are transferable and that the Buyer will need to obtain any Permits
required for its operation of the Acquired Assets or the Business.
(h) Due Diligence. The Buyer has substantial experience in conducting a
business similar to that of the Business. The Buyer has had an opportunity to
discuss the Business with the Seller, to review the 4065 Campbell Facilities and
the Clean Room, and to
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inspect the Acquired Assets and the Assigned Assets. The Buyer also has had an
opportunity to ask questions of the officers of the Seller and the employees of
the Business, which questions were answered to its satisfaction. The Buyer has
had an opportunity to conduct its own independent due diligence investigation of
the Seller and the Business.
5. Pre-Closing Covenants. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing:
(a) General. Each of the Parties will use its commercially reasonable
efforts to take all action and to do all things necessary in order to consummate
and make effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Section 6
below).
(b) Notices and Consents. The Seller will give any notices to third
parties, and the Parties will use their commercially reasonable efforts to
obtain any required third party consents. Each of the Parties will give any
notices to, make any filings with, and use its commercially reasonable efforts
to obtain any authorizations, consents, Permits and approvals of governments and
governmental agencies in connection with the matters referred to in Section 3(c)
and Section 4(c) above. The Seller will reasonably cooperate with the Buyer in
seeking the Required Permits.
(c) Operation of Business. The Seller will not engage in any practice,
take any action, or enter into any transaction with respect to the Acquired
Assets, the Assigned Assets or the Business which is outside the Ordinary Course
of Business. Notwithstanding the foregoing, Seller shall take such action as it
deems necessary with regard to pending litigation; provided that, without the
consent of the Buyer, which shall not be withheld unreasonably, Seller shall not
settle such litigation for terms other than the payment of money, on terms less
favorable than the Seller's current settlement offer (which terms have been
disclosed to the Buyer).
(d) Preservation of Business. The Seller will use commercially reasonable
efforts to keep the Acquired Assets substantially intact, including its present
operations, physical facilities, working conditions, and relationships with
lessors, licensors, suppliers, customers, and employees. Except as contemplated
by Section 5(h) below, the Buyer will use its commercially reasonable efforts to
keep its business and properties substantially intact, including its present
operations, physical facilities, working conditions, and relationships with
lessors, licensors, suppliers, customers, and employees.
(e) Full Access. The Buyer will permit representatives of the Seller to
have full access upon reasonable notice at all reasonable times to all premises,
properties, personnel, books, records (including Tax records and to the extent
allowed by law, personnel records), contracts and documents of or pertaining to
the
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business, assets and properties of the Buyer. The Seller will permit
representatives of the Buyer to have full access upon reasonable notice at all
reasonable times to the premises and employees of the Business, and to such
other premises and employees of Seller as are involved in the conduct of the
Business by Seller. Requests for access to the Seller's property and employees
shall be coordinated through a representative designated by the Seller.
(f) Clean Room. Prior to the Closing, Seller will dismantle, relocate and
re-assemble the 4055 Assets, at Seller's expense at a location selected by
Seller, subject to the consent of Buyer, which consent shall not be unreasonably
withheld.
(g) Notice of Developments.
(A) Each Party will give prompt written notice to the other Party of any
material adverse development causing a breach of any of its own representations
and warranties in Section 3 and Section 4 above. No disclosure by either Party
pursuant to this Section 5(g), however, shall be deemed to amend or supplement
the Disclosure Schedule or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant.
(B) The Buyer will inform the Seller on a weekly basis of the status of
financing discussions relating to the Purchase Price.
(h) Exclusivity. Neither the Seller nor any of its Affiliates will (i)
solicit any offer or enter into any negotiations concerning the sale or other
disposition of all or substantially all of the Acquired Assets and the Assigned
Assets or the Business to any Person other than the Buyer (including any
acquisition structured as a merger, consolidation, share exchange or otherwise)
or (ii) furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or seek
any of the foregoing; provided that, at the option of the Seller, the Seller's
obligations under this Section 5(h) shall terminate and be of no further force
and effect if (A) the Buyer shall not have delivered to Seller on or before June
7, 1996 commitments for equity financing in the aggregate amount of at least $4
million from private investors to be invested no later than the Closing; (B) the
Buyer shall not have delivered to Seller on or before June 7, 1996 either (x) a
binding commitment from CII to convert the Debenture into Buyer Common Stock at
the Closing, or (y) a binding commitment from CII to convert the Debenture into
a combination of Buyer Common Stock and Series H Preferred Stock and a binding
---
commitment from holders of the Buyer's Series G Preferred Stock to convert into
Buyer Common Stock shares of said Series G Preferred Stock having an aggregate
liquidation value equal to not less than the amount of the Debenture being
converted into Series H Preferred Stock on the terms described in Section
6(a)(viii); or (C) the Buyer shall not have delivered to Seller on or before
June 15, 1996, a bank commitment letter for the Debt Financing.
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(i) Employment Matters. The Seller agrees to allow the Buyer reasonable
opportunity to make presentations to those Group III Employees as the Buyer may
request, and to use its commercially reasonable efforts to cause each such Group
III Employee to attend such presentation.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3 above
were true and correct as and when made and shall be true and correct in all
material respects at and as of the Closing Date;
(ii) the Seller shall have performed and complied in all material
respects with all of its covenants hereunder to be complied with prior to the
Closing;
(iii) the Required Consents and the Required Permits shall have been
received, and the Seller shall have notified the Bay Area Air Quality Management
District that, with respect to Permits to Operate for plant No. 661, the
operator's name is to be changed to that of Buyer;
(iv) except as disclosed in the Disclosure Schedule, no action, suit,
or proceeding shall be pending or threatened before any court or quasi-judicial
or administrative agency of any federal, state, local, or foreign jurisdiction
or before any arbitrator wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, or (C)
affect adversely the right of the Buyer to own or use the Acquired Assets, or to
use any of them to the extent currently being used by the Seller and to
otherwise operate the Business (and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect);
(v) the Seller shall have delivered to the Buyer a certificate to the
effect that each of the conditions specified above in Section 6(a)(i)-(iv) is
satisfied in all respects;
(vi) all actions to be taken by the Seller in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to the
Buyer;
(vii) the Buyer shall have received the Debt Financing and sufficient
equity financing, each on terms and conditions
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reasonably satisfactory to the Buyer, for the purchase of the Acquired Assets;
(viii) Either (a) CII shall have converted the Debenture into Buyer
Common Stock in accordance with the terms thereof, or (b) both (i) CII shall
have converted the Debenture into a combination of (x) Buyer Common Stock in
accordance with the terms of the Debenture and (y) a new Series H Preferred
Stock, par value $100 per share, of the Buyer, having the rights and preferences
set forth on Exhibit N hereto (the "Series H Preferred Stock"), at a rate of
$8,000 of Debenture per each share of Series H Preferred Stock, and (ii) the
holders of the Buyer's outstanding Series G Preferred Stock, par value $100 per
share (the "Series G Preferred Stock"), shall have converted into Buyer Common
Stock shares of said Series G Preferred Stock having an aggregate liquidation
value equal to not less than the amount of the Debenture being converted into
Buyer's Series H Preferred Stock, in accordance with the terms of Buyer's Series
G Preferred Stock.
(ix) the Buyer shall have received long-form good standing
certificates of the Seller from the Secretaries of the States of Delaware and
California;
(x) the Buyer shall have received a certificate of incorporation of
the Seller, as amended through the Closing Date, Certified by the Delaware
Secretary of State;
(xi) the Buyer shall have received from the Seller a copy of the
Seller's By-laws, as amended through the Closing Date, certified by the
Company's Secretary or an Assistant Secretary;
(xii) the Buyer shall have received an opinion of Heller Ehrman White
& McAuliffe, counsel to the Seller, in form reasonably satisfactory to the
Buyer; and
(xiii) Seller shall have filed with the Menlo Park Fire Protection
District a correct and complete application for reinstatement of a fire
protection permit issued to the facility and shall have obtained from such
district a fire protection permit.
The Buyer may waive any condition specified in this Section 6(a) if it
executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Seller. The obligation of the Seller
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 4 above
were true and correct as and when made and shall be true and correct in all
material respects at and as of the Closing Date;
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(ii) the Buyer shall have performed and complied in all material
respects with all of its covenants hereunder to be complied with prior to the
Closing;
(iii) the Required Consents shall have been received;
(iv) except as disclosed in the Disclosure Schedule, no action, suit,
or proceeding shall be pending or threatened before any court or quasi-judicial
or administrative agency of any federal, state, local, or foreign jurisdiction
or before any arbitrator wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation (and no
such injunction, judgment, order, decree, ruling, or charge shall be in effect);
(v) the Buyer shall not have issued or reserved for issuance shares of
Common Stock (or options, warrants or other securities exercisable for or
convertible into Common Stock) other than (i) up to $850,000 of such securities
at not less than $0.85 per share; and (ii) shares of Common Stock for a purchase
price of not less than $2.00 per share; (iii) shares of Common Stock reserved
for issuance as of April 30, 1996 as described in Section 4(d) above or to be
issued as described in Section 4(d) of the Buyer Disclosure Schedule; (iv)
options reissued with a lower exercise price under the Buyer's 1995 Stock Option
Plan; and (v) reservations and issuances of shares of a new Series H Preferred
Stock in a manner that would satisfy the conditions to Closing set forth in
Section 6(a)(viii) above and Section 6(b)(viii) below;.
(vi) the Buyer shall have delivered to the Seller a certificate to the
effect that each of the conditions specified above in Section 6(b)(i)-(v) is
satisfied in all respects;
(vii) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to the
Seller;
(viii) Either (a) CII shall have converted the Debenture into Buyer
Common Stock in accordance with the terms thereof, or (b) both (i) CII shall
have converted the Debenture into a combination of (x) Buyer Common Stock in
accordance with the terms of the Debenture and (y) a new Series H Preferred
Stock, par value $100 per share, of the Buyer, having the rights and preferences
set forth on Exhibit N hereto (the "Series H Preferred Stock"), at a rate of
$8,000 of Debenture per each share of Series H Preferred Stock, and (ii) the
holders of the Buyer's outstanding Series G Preferred Stock, par value $100 per
share (the "Series G Preferred Stock"), shall have converted into Buyer Common
Stock shares of said Series G Preferred Stock having an aggregate liquidation
value equal to not less than the amount of the Debenture being converted
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into Buyer's Series H Preferred Stock, in accordance with the terms of Buyer's
Series G Preferred Stock.
(ix) the Seller shall have received a long-form good standing
certificate of the Buyer from the Secretary of the State of Delaware;
(x) the Seller shall have received a copy of the Buyer's Certificate
of Incorporation, as amended through the date hereof, certified by the Secretary
of the State of Delaware; and
(xi) the Seller shall have received from the Buyer a copy of the
Buyer's By-laws, as amended through the date hereof certified by the Company's
Secretary or an Assistant Secretary; and
(xii) the Seller shall have received an opinion of Finn Dixon and
Herling, counsel to the Buyer in form reasonably satisfactory to the Seller.
The Seller may waive any condition specified in this Section 6(b) if
it executes a writing so stating at or prior to the Closing.
7. Post-Closing Covenants. The Parties agree as follows with respect to the
period following the Closing:
(a) General. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including (i) the execution and delivery
of such further instruments and documents and (ii) the preparation, execution
and filing of such documents as the Buyer reasonably may request in order to
duly record evidence of the assignment to, and the Buyer's ownership of the
Acquired Intellectual Property) as any other Party reasonably may request, all
at the sole cost and expense of the requesting Party (unless the requesting
Party is entitled to indemnification therefor under Section 8 below). Without
limiting the foregoing or anything contained in the License Agreements or the
Transitional Services Agreement, the Buyer and the Seller shall cooperate with
each other and shall cause their respective representatives to cooperate with
each other in any reasonable manner to ensure an orderly transition of the
Acquired Assets and the Assigned Assets from the Seller to the Buyer.
(b) Support. In the event and for so long as any Party is actively
contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving any of the Acquired Assets or the Assigned Assets, the Seller or the
Business, or (iii) any pending litigation described in the Disclosure Schedule,
the other Party will cooperate with the contesting or defending Party and his or
its
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counsel in the contest or defense, make available his or its personnel, and
provide such testimony and access to his or its books and records as shall be
necessary in connection with the contest or defense, all at the sole cost and
expense of the contesting or defending Party (unless the contesting or defending
Party is entitled to indemnification therefor under Section 8 below). The Buyer
agrees to keep books and records relating to its products manufactured prior to
the Closing for a period of seven (7) years, and to maintain all documents
purchased hereunder and relating in any way to the matters subject to the
lawsuit entitled Intrinsic v. Raychem Corporation during the pendency of such
--------------------------------
litigation (including all appeals thereof). To the extent permitted by law, the
Seller will provide reasonable access to the Buyer or transfer to Buyer the
personnel records of Group III employees hired by the Buyer. The Seller agrees
to maintain historical financial performance data (whether on paper or
electronic medium) relating to the Business and constituting an Excluded Asset,
and to provide Buyer with access thereto upon reasonable prior notice for
purposes of Buyer preparing its financial statements and related information
required by the Securities and Exchange Commission, for a period of 15 months
from and after the Closing Date.
(c) Transition. Except as contemplated by the Ancillary Agreements,
neither the Seller nor any of its Affiliates will take any action that is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, representative, supplier, or other business associate of the Business
from maintaining the same business relationships with the Buyer after the
Closing as is maintained with the Seller prior to the Closing.
(d) Confidentiality. Each Party and its Affiliates will treat and hold as
such all of the Confidential Information of the other Party, refrain from using
any of such Confidential Information except in connection with this Agreement
and the Ancillary Agreements, and deliver promptly to the other Party or
destroy, at the request and option of the other Party, all tangible embodiments
(and all copies) of the Confidential Information which are in its possession
(except to the extent that a Party is authorized to retain a copy pursuant to
this Agreement). Notwithstanding the preceding sentence, a Party and any of its
Affiliates may disclose Confidential Information to governmental agencies as
required by law, rule or order; provided, however, that such Party shall use
reasonable commercial efforts to obtain an order or other assurance that
confidential treatment will be accorded to Confidential Information so
disclosed.
(e) Covenant Not to Compete. Except as contemplated by the Private Label
Agreement and the Tinel-Lock Agreements, for a period commencing on the date
hereof and ending upon the termination of the Private Label Agreement for any
reason whatsoever other than breach by the Seller (the "Noncompetition Period")
neither the Seller nor any of its Affiliates will engage in the Business,
provided, however, that no owner of less than 1% of the outstanding
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stock of any publicly traded corporation shall be deemed to engage solely by
reason thereof in any of its businesses.
Except as otherwise contemplated by Section 7(h) hereof, for three (3)
years from the Closing Date, neither the Seller nor its Affiliates shall solicit
for hire, in any capacity, any person who is, or was at any time during the
preceding six (6) months, an employee or officer of the Buyer or an Affiliate.
Further, for one year from the Closing Date, the Buyer agrees not to hire any
Group I or Group II Employee who receives severance payments from the Seller.
(f) Nonassignable Contracts. To the extent that any Assignable Contract
for which assignment to the Buyer is provided for in this Agreement is not
assignable without the consent of another party or the appropriate governmental
authority, this Agreement shall not constitute an assignment or an attempted
assignment thereof if such assignment or attempted assignment would constitute a
breach thereof. The Parties shall use commercially reasonable efforts to obtain
the consent of such other party or governmental authority to the assignment of
any such Assignable Contract to the Buyer in all cases in which such consent is
or may be required for such assignment. If such consent shall not be obtained,
the Seller shall cooperate with the Buyer in any reasonable arrangement designed
to provide for the Buyer the benefits under any such Assignable Contract. If
and to the extent that such arrangement cannot be made with respect to any such
Assignable Contract, the Buyer shall not have any obligation with respect
thereto, any other provision of this Agreement to the contrary notwithstanding;
provided, however, that the Buyer will use commercially reasonable efforts to
provide products to the Seller to satisfy supply, warranty or other obligations
under any such Assignable Contract.
(g) Payment of Excluded Liabilities. The Seller shall pay when due to the
appropriate party any and all Excluded Liabilities which become due and payable
after the Closing.
(h) Employment Matters.
(i) Except as expressly set forth above in this Agreement, Buyer
shall have no obligation (A) to employ, or offer to employ, any of the employees
of the Seller, (B) to adopt, assume or maintain any Employee Benefit Plan or
other employment-related plan, policy, program, contract or arrangement of the
Seller (all Liabilities and responsibility with respect to which shall remain
with the Seller), or (C) to provide any particular type or level of wages,
benefits or other terms and conditions of employment to its employees.
Notwithstanding the foregoing, Buyer agrees to have health insurance in effect
for the Employees of the Seller who accept employment with the Buyer as of the
Closing Date.
(ii) The Buyer agrees to pay to Seller at the Closing $350,000
("Buyer's Severance Contribution") to be applied by the Seller to the Seller's
Severance Liabilities listed below.
30
<PAGE>
(A) The Seller shall pay Severance Liability in accordance with the
Seller's Severance Policy to the Group I Employees, other than any Group I
Employees who are offered and accept employment with the Seller. The amount of
such Severance Liability shall be applied against the Buyer's Severance
Contribution.
(B) The Seller shall pay Severance Liability in accordance with the
Seller's Severance Policy to the Group II Employees, other than any Group II
Employees who are offered and accept employment with the Buyer. The amount of
such Severance Liability shall be applied against the Buyer's Severance
Contribution.
(C) The Buyer shall have Severance Liability for those employees of
Seller who accept employment with the Buyer as follows: If the employment of
any such employee is terminated not later than six months after the Closing and
if Severance Liability exists for such employee, the Buyer shall pay such
Severance Liability in accordance with the Modified Severance Policy giving
credit for years of service with the Seller (and with any Affiliate of Seller
for which said employee is entitled to service credit under Seller's Severance
Policy). If any such employee's employment is terminated later than six months
but not later than 12 months after the Closing and if Severance Liability
exists for such employee, the Buyer shall pay such Severance Liability in
accordance with the Modified Severance Policy giving credit for years of service
with the Seller (and with any Affiliate of Seller for which said employee is
entitled to service credit under Seller's Severance Policy); provided that not
--------
more than 39 weeks of salary need be paid. If any such employee's employment is
terminated later than 12 months after the Closing and if Severance Liability
exists for such employee, the Buyer shall pay such Severance Liability in
accordance with its own severance policy (subject to an amendment thereto
capping severance pay at 26 weeks' salary), but giving credit for years of
service with the Seller (and with any Affiliate of Seller for which said
employee is entitled to service credit under Seller's Severance Policy).
(iii) Not later than 15 days after the later of (A) December 31, 1996
and (B) the date on which the last Group II Employee is terminated by the
Seller, the Seller shall pay to the Buyer the excess, if any, of the amount of
Buyer's Severance Contribution over the amount of Severance Liability actually
accrued by the Seller in connection with the Group I and Group II Employees.
(iv) Seller agrees to issue and deliver, subject (in part) to vesting
over a period in excess of one year, Warrants for 120,000 shares of Common Stock
at an exercise price equal to $0.01 per share to be used solely as incentive
compensation for the hiring and retention of the operations manager, the
technical manager and the general manager for the Business to be operated by
Buyer after the Closing Date. In the event any of such Warrants shall revert to
the Buyer during the first year after the Closing
31
<PAGE>
Date because the operations manager, technical manager or general manager of the
Business (as operated by the Buyer) shall cease to be employed in such capacity
prior to the date such employee's warrants are fully vested, the Buyer may use
such warrants solely for the purpose of hiring and retaining a replacement for
such employee.
(i) Accounting Support. From and after the Closing Date, the Seller shall
provide, during reasonable business hours and upon reasonably notice, reasonable
access to personnel and records of the Seller actually related to the conduct of
the Business by the Seller.
(j) Cooperation with Existing Agreements of Seller. From and after the
Closing Date, Buyer agrees to conduct its business and act in a manner that will
comply with the obligations of Seller as if Buyer were the named party therein
in those agreements of Seller set forth under the heading of "Restrictions" on
Section 1 of the Disclosure Schedule (except that Buyer shall not be responsible
for Seller's conduct).
8. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties. All of the representations
and warranties of the Buyer or Seller contained in this Agreement shall survive
the Closing and shall continue in full force and effect for a period of one year
following the Closing Date.
(b) Indemnification Provisions for Benefit of the Buyer.
Subject to the provisions of Section 8(d) and (e), the Seller agrees to
indemnify the Buyer and its Affiliates from and against any Adverse Consequences
the Buyer and its Affiliates may suffer resulting from, arising out of or caused
by:
(A) any breach by Seller of any representation, warranty or covenant
contained herein, or any third party allegation which, if true, would mean the
Seller has breached any representation, warranty or covenant contained herein;
(B) any Excluded Liability, including any Environmental Liability,
including Liability (other than an Assumed Liability) arising out of the
operation of the Business by the Seller prior to the Closing; or
(C) any Liability of the Buyer arising by operation of law (including
under any bulk transfer law of any jurisdiction or under any common law doctrine
of de facto merger or successor liability) arising out of the purchase and sale
of the Acquired Assets and the assignment of the Assigned Assets contemplated
hereby and which is not an Assumed Liability.
(c) Indemnification Provisions for Benefit of the Seller.
Subject to the provisions of Section 8(d) and (e), the Buyer agrees to indemnify
the Seller and its Affiliates from and against any
32
<PAGE>
Adverse Consequences the Seller and its Affiliates may suffer resulting from,
arising out of, or caused by (A) any breach by Buyer of any representation,
warranty or covenant contained herein, or any third party allegation which, if
true, would mean the Buyer has breached any representation, warranty or covenant
contained herein, (B) any Assumed Liability and (C) any Liability (other than an
Excluded Liability) arising out of the operation of the Business by the Buyer or
any successor to the Buyer from and after the Closing.
(d) Notice Provisions
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give rise
to a claim for indemnification against any other Party (the "Indemnifying
Party") under this Section 8, then the Indemnified Party shall promptly notify
each Indemnifying Party thereof in writing; provided, however, that no delay on
the part of the Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party is prejudiced thereby.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the Indemnifying
Party notifies the Indemnified Party in writing within 15 days after the
Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, or caused by the Third Party Claim and (B) the
Indemnifying Party provides the Indemnified Party with evidence reasonably
acceptable to the Indemnified Party that the Indemnifying Party will have the
financial resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder.
(iii) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 8(d)(ii) above, (A) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim, (B) the Indemnified
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (C) the Indemnifying
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably).
(iv) In the event any of the conditions in Section 8(d)(ii) above is
or becomes unsatisfied, however, (A) the Indemnified Party may defend against,
and consent to the entry of any judgment or enter into any settlement with
respect to, the
33
<PAGE>
Third Party Claim in any manner it reasonably may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (B) the Indemnifying Parties will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable attorneys' fees
and expenses), and (C) the Indemnifying Parties will remain responsible for any
Adverse Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party Claim to the
fullest extent provided in this Section 8.
(e) Limitation on Indemnification. Notwithstanding the provisions of this
Section 8 and any other provisions of this Agreement, neither the Seller nor
the Buyer shall have any liability for any Adverse Consequences by virtue of
breach of representation or warranty under Section 8(b)(A) or 8(c)(A), as
appropriate, until and except to the extent the cumulative amount of any such
Adverse Consequences exceeds Fifty Thousand Dollars ($50,000). In no event
shall the aggregate liability of the Seller or the Buyer for indemnification by
virtue of breach of representation or warranty under Section 8(b)(A) or
8(c)(A), as appropriate, exceed Seven Hundred and Fifty Thousand Dollars
($750,000).
(f) Equitable Remedies. The foregoing indemnification provisions are in
addition to, and not in derogation of specific performance or other equitable
remedies available to a Party.
9. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(i) the Buyer and the Seller may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written notice
to the Seller at any time prior to the Closing in the event (A) the Seller has
breached any material representation, warranty, or covenant contained in this
Agreement in any material respect, the Buyer has notified the Seller of the
breach, and the breach has continued without cure for a period of 20 days after
the notice of breach or (B) if the Closing shall not have occurred on or before
June 28, 1996 by reason of the failure of any condition precedent under Section
6(a) hereof (unless the failure results primarily from the Buyer itself
breaching any representation, warranty, or covenant contained in this
Agreement); and
(iii) the Seller may terminate this Agreement by giving written notice
to the Buyer at any time prior to the Closing (A) in the event the Buyer has
breached any material representation, warranty, or covenant contained in this
Agreement in any material respect, the Seller has notified the Buyer of the
breach, and the
34
<PAGE>
breach has continued without cure for a period of 20 days after the notice of
breach or (B) if the Closing shall not have occurred on or before June 28, 1996,
by reason of the failure of any condition precedent under Section 6(b) hereof
(unless the failure results primarily from the Seller itself breaching any
representation, warranty or covenant contained in this Agreement); and
(iv) the Seller may terminate this Agreement by giving written notice
to the Buyer at any time prior to the Closing if (A) the Buyer shall not have
delivered to Seller on or before June 7, 1996 evidence of equity financing of at
least $4 million from private investors to be invested no later than the
Closing; (B) the Buyer shall not have delivered to Seller on or before June 7,
1996 either (x) a binding commitment from CII to convert the Debenture into
Buyer Common Stock at the Closing, or (y) a binding commitment from CII to
convert the Debenture into a combination of Buyer Common Stock and Series H
Preferred Stock and a binding commitment from holders of the Buyer's Series G
---
Preferred Stock to convert into Buyer Common Stock shares of said Series G
Preferred Stock having an aggregate liquidation value equal to not less than the
amount of the Debenture being converted into Buyer's Series H Preferred Stock on
the terms described in Section 6(a)(viii); or (C) the Buyer shall not have
delivered to Seller on or before June 15, 1996 a bank commitment letter for the
Debt Financing as described in Section 6(a)(vii).
(b) Effect of Termination. If either Party terminates this Agreement
pursuant to Section 9(a) above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of either Party to the other
Party (except for any Liability of a Party then in breach).
10. Miscellaneous.
(a) Press Releases and Public Announcements; Securities Laws. No publicity
release or announcement concerning this Agreement or the transactions
contemplated hereby shall be issued without advance written approval of the form
and substance thereof by the Seller and the Buyer. The Parties agree that (i)
upon execution of this Agreement, the Buyer will issue a press release in the
form attached as EXHIBIT M and (ii) the Seller shall issue an internal Raychem
release, upon fax receipt of confirmation by Buyer of the issuance of the Press
Release attached as EXHIBIT M. Notwithstanding the foregoing, the Parties
acknowledges that neither Party shall be required to obtain the prior written
consent of the other Party in connection with: (a) the filing by such Party of a
statement or report with the Securities and Exchange Commission (the
"Commission") which discloses any or all of the terms of this Agreement or the
transactions contemplated hereby; or (b) the release for dissemination by the
financial wire services of any press release required by applicable law or the
rules of the New York Stock Exchange in the case of the Seller, and the National
Association of Securities Dealers in the case of the Buyer; provided, however,
that the Parties agree that they shall: (x) submit any such statement or report
(in each case, if and only
35
<PAGE>
to the extent that it relates to the proposed transaction) and such press
releases to the other Party for its review prior to its filing or release for
dissemination, as the case may be; (y) provide the other Party with a reasonable
opportunity to comment on any such statement or report (in each case, if and
only to the extent that it relates to this Agreement or the Ancillary Agreements
or the transactions contemplated hereby or thereby) and such press release; and
(z) consider in good faith any comments that the other Party may have with
respect to any such statement or report (in each case, if and only to the extent
that it relates to this Agreement or the transactions contemplated hereby or
thereby) and such press release; provided, further, that any final determination
with respect to the form or content of any such statement, report or press
release shall be within the absolute discretion of the Party making such
dissemination. The Parties intend to issue a press release upon signing this
Agreement.
(b) No Third-Party Beneficiaries. Except as provided in Section 8 of this
Agreement, this Agreement shall not confer any rights or remedies upon any
Person other than the Parties and their respective successors and permitted
assigns.
(c) Entire Agreement. This Agreement and the Ancillary Agreements
(including the Disclosure Schedule and the Schedules and Exhibits hereto and
thereto) and the Nondisclosure Agreement previously entered into by the Parties
constitute the entire agreement between the Parties and supersede any prior
understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they relate in any way to the subject matter
hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. Neither Party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other Party. For purposes of the foregoing sentence, an event
after which those Persons who were the beneficial owners of a Party immediately
prior to such event beneficially own less than a majority of a Party immediately
after such event shall be deemed to constitute an assignment. Notwithstanding
the foregoing, without the consent of the Seller, the Buyer may collaterally
assign this Agreement (but not any of the Ancillary Agreements) to the principal
lender in the Debt Financing, which collateral assignment shall be personal to,
and nonassignable by, such principal lender.
(e) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
36
<PAGE>
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (A) seven
business days after being sent by registered or certified mail, return receipt
requested, postage prepaid, or (B) one Business Day after being sent for "next
day delivery" by a recognized courier service, in each case addressed to the
intended recipient as set forth below:
If to the Seller: Copy (which shall not constitute notice) to:
Raychem Corporation Heller Ehrman White & McAuliffe
300 Constitution Drive 525 University Avenue
Menlo Park, California 94025 Palo Alto, California 94301-1900
Attn: Legal Department Attn: Sarah O'Dowd, Esq.
Telecopier: (415) 361-5623 Telecopier: (415) 324-0638
If to the Buyer: Copy (which shall not constitute notice) to:
Memry Corporation Finn Dixon & Herling
57 Commerce Drive One Landmark Square
Brookfield, Connecticut Stamford, Connecticut 06901
Attn: James, G. Binch Attn: David I. Albin, Esq.
President Telecopier: (203) 348-5777
Telecopier: (203) 740-2503
Either Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, messenger service,
telecopier, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient.
Either Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of California without giving
effect to any choice or conflict of law provision or rule (whether of the State
of California or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of California.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. No waiver by either Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any
37
<PAGE>
rights arising by virtue of any prior or subsequent such occurrence.
(j) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. Each of the Buyer and the Seller shall bear its own costs
and expenses (including legal and accounting fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.
(l) Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring either Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Disclosure Schedule identifies
the representation to which the exception applies with reasonable particularity.
Without limiting the generality of the foregoing, the mere listing (or inclusion
of a copy) of a document or other item shall not be deemed adequate to disclose
an exception to a representation or warranty made herein (unless the
representation or warranty has to do with the existence of the document or other
item itself, or unless the exception is otherwise manifest from the document).
The Parties intend that each representation, warranty, and covenant contained
herein shall have independent significance. If either Party has breached any
representation, warranty, or covenant contained herein in any respect, the fact
that there exists another representation, warranty, or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(m) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
(including the Disclosure Schedule) identified in this Agreement are
incorporated herein by reference and made a part hereof.
(n) Dispute Resolution.
(i) Senior Officers. Any claim or dispute between the Seller and the
Buyer, arising out of or in connection with this
38
<PAGE>
Agreement or any Ancillary Agreement or in connection with the transactions
contemplated hereby or thereby or any alleged breach hereof or thereof (a
"Claim") shall be submitted for resolution to the President of Buyer and the
Division Manager, Electronics, of Seller, who shall meet within 20 days of such
submission to seek in good faith an amicable settlement.
(o) Bulk Transfer Laws. The Buyer acknowledges that the Seller will not
comply with the provisions of any bulk transfer laws of any jurisdiction in
connection with the transactions contemplated by this Agreement.
39
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the
date first above written.
MEMRY CORPORATION
By:/s/ James G. Binch
-------------------------------------
Name: James G. Binch
Title: Chairman, President & CEO
RAYCHEM CORPORATION
By:/s/ A.F. Roake
-------------------------------------
Name: A.F. Roake
Title: Vice President
<PAGE>
EXHIBIT 2.2
RAYCHEM CORPORATION
300 Constitution Drive
Menlo Park, CA 94025
June 20, 1996
Mr. James G. Binch
Memry Corporation
57 Commerce Drive
Brookfield, CT 06804
Re: Raychem/Memry Transaction
Dear Jim:
This will confirm that, notwithstanding the terms of that certain Asset
Purchase Agreement between Raychem Corporation ("Raychem") and Memry Corporation
("Memry") dated May 10, 1996, as amended May 29, 1996 ("Asset Purchase
Agreement"), Raychem and Memry have agreed to the following modifications to the
Asset Purchase Agreement:
1. Notwithstanding the provisions of Section 7(h)(ii) of the Asset
Purchase Agreement, Memry shall deliver to Raychem only $275,000 of the $350,000
required to be delivered to Raychem pursuant to such Section 7(h)(ii) at the
Closing of the Asset Purchase Agreement. Memry shall utilize the $75,000 not
paid to Raychem pursuant to Section 7(h)(ii) of the Asset Purchase Agreement
solely for the hiring and retention of Ray Serna, Philippe Poncet and Jim Proft
(each a "Key Employee"). As soon as practicable following the occurence of an
event described in (i) or (ii) below, Memry shall pay to Raychem in cash an
amount equal to $25,000 for each Key Employee who either (i) has not been hired
by Memry as of the Closing Date of the Asset Purchase Agreement; or (ii) has
failed to render continuous service to Memry from the Closing Date of the Asset
Purchase Agreement until March 1, 1997.
2. If the Closing under the Asset Purchase Agreement occurs on or prior to
June 28, 1996, (i) Memry shall deliver to Raychem only $200,000 of the $350,000
required to be delivered to Raychem pursuant to Section 7(h)(ii) at the Closing
of the Asset Purchase Agreement; and (ii) Raychem shall waive all space charges
agreed to for the use of rooms 1004, 1009 and 1280 of the building located at
220 Jefferson, Menlo Park, California.
<PAGE>
If the foregoing terms are acceptable, please indicate your agreement
thereto by having the enclosed copy of this letter signed in the space indicated
below, mailing the original back to me and faxing a copy of the signed version
to me at (415) 361-6338.
Very truly yours,
/s/ Andy Roake
Andy Roake
Vice President
Memry Corporation
/s/ James Binch
- --------------------------
Name: James Binch
---------------------
Dated: 6-26-96
--------------------
<PAGE>
EXHIBIT 2.3
Amendment No. 1
to
Amended and Restated
Asset Purchase Agreement
between
Memry Corporation
and
Raychem Corporation
This AMENDMENT NO. 1 to Amended and Restated Asset Purchase Agreement (this
"Amendment"), is made as of this 28th day of June, 1996, by and between Memry
Corporation, a Delaware corporation, (the "Buyer"), and Raychem Corporation, a
Delaware corporation (the "Seller"). The Buyer and the Seller are referred to
collectively herein as the "Parties."
R E C I T A L
- - - - - - -
Buyer and Seller have entered into an Amended and Restated Asset Purchase
Agreement, dated as of May 10, 1996 (the "Purchase Agreement"). It is the
desire of the Parties to amend certain provisions of the Purchase Agreement as
set forth herein.
ACCORDINGLY, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows:
A G R E E M E N T
- - - - - - - - -
1. All capitalized terms used herein but not otherwise defined herein
shall have the meanings ascribed thereto in the Purchase Agreement.
2. The definition of "Purchase Price" set forth in Section 1 of the
Purchase Agreement is amended by substituting the following therefor:
"Purchase Price has the meaning set forth in Section 2(e) below."
3. The patents and patent applications listed under the heading "Patents
and Patent Applications" in Section 1 of the Disclosure Schedule to the Purchase
Agreement are amended by substituting therefor the schedule attached as Exhibit
A hereto.
4. Section 2(e) of the Purchase Agreement is amended by substituting the
following therefor:
<PAGE>
"(e) Purchase Price. The Buyer agrees to pay to the Seller at the
Closing, the following consideration (the "Purchase Price"):
(i) The Buyer agrees to pay to the Seller, at the Closing, in
cash, by wire transfer or other immediately available funds, an amount
equal to $3,650,000, as adjusted pursuant to Section 2(f) below;
(ii) The Buyer shall issue and deliver to Seller a warrant to
purchase up to 1,250,000 shares of the Buyer Common Stock at an
exercise price equal to $2.00 per share of Buyer Common Stock,
represented by a warrant certificate in substantially the form of
Exhibit A-1;
(iii) The Buyer shall issue and deliver to Seller a warrant to
purchase up to 1,130,000 shares of the Buyer Common Stock, at an
exercise price equal to $0.01 per share of Buyer Common Stock,
represented by a warrant certificate in substantially the form of
Exhibit A-2; and
(iv) The Buyer agrees to pay to the Seller, not later than July
31, 1996, in cash, by wire transfer or other immediately available
funds, an amount equal to $350,000 plus interest at the rate of 10%
per annum from the date of Closing, such obligation to be further
evidenced by a promissory note in form acceptable to the Seller."
5. Section 7 of the Purchase Agreement is amended by adding a new Section
7(k) thereto:
"(k) Board Approval of Promissory Note. As soon as practicable after
the Closing, but in no event later than July 8, 1996, Buyer shall provide
evidence to Seller of approval of its Board of Directors to the
authorization, issuance and execution of the promissory note evidencing
Buyer's obligation pursuant to Section 2(e)(iv) of the Agreement."
6. Section 10(h) of the Purchase Agreement is amended by substituting the
following therefor:
"(h) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of California
without giving effect to any choice or conflict of law provision or rule
(whether of the State of California or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State
of California; provided, that the first paragraph (and only the first
--------
paragraph) of Section 7(e) shall be governed by and construed in accordance
with the domestic laws of the State of Connecticut without giving effect to
any choice or
2
<PAGE>
conflict of law provision or rule (whether of the State of Connecticut or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the state of Connecticut."
7. A new Section 11 is added to the Agreement as follows:
"11. Grant of Security Interest.
11.1 Grant of Security Interest.
--------------------------
As security for the Buyer's "Obligations" (as defined below) to Seller
the Buyer hereby grants to Seller, a security interest in the Collateral
(as defined below), and to the extent such Collateral constitutes Acquired
Assets or Assigned Assets, such security interest constitutes a purchase
money security interest.
11.2 Collateral. The collateral covered by this Security Agreement
----------
consists of (i) all personal property of the Buyer (or in which the Buyer
has rights), located in the State of California and whether presently
existing or after-acquired, including, without limitation to the generality
of the foregoing, all equipment, inventory, farm products, consumer goods,
accounts, chattel paper, money, instruments, documents, and general
intangibles, (ii) all accessions to any of the foregoing, and (iii) all
proceeds of any of the foregoing (and all proceeds of proceeds), whether
money, accounts, instruments, chattel paper, documents, equipment,
inventory, farm products, consumer goods, general intangibles, or deposit
accounts (collectively, the "Collateral"), which shall include, but not be
limited to, the following:
(a) Inventory Collateral. All inventory, raw material, work in
--------------------
process, and materials used or consumed in the Buyer's business, all
warehouse receipts, bills of lading and other documents evidencing goods
now owned or hereinafter acquired by the Buyer, and all goods covered
thereby including accessions, additions, improvements and all products
thereof whether in possession of the Buyer, warehousemen, bailees or any
other person (collectively, "Inventory Collateral") and all proceeds of
Inventory Collateral;
(b) Accounts Collateral. All accounts, contract rights, chattel
-------------------
paper, instruments, general intangibles, and rights to payment of every
kind now or at any time hereafter arising out of the business of the Buyer
(whether arising from sale, lease or other disposition of Inventory
Collateral or from performance of contracts for services, manufacture,
storage, marketing or otherwise), including all securities, guaranties,
warranties, indemnity agreements,
3
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maintenance agreements, insurance policies and other agreements pertaining
to the same or the property described therein (collectively, "Accounts
Collateral") and all proceeds of Accounts Collateral;
(c) Equipment Collateral. All equipment now owned or hereafter
--------------------
acquired by the Buyer, and all additions and accessions thereto
(collectively "Equipment Collateral") and all the proceeds of Equipment
Collateral;
(d) Fixtures. All fixtures of the Buyer now owned or hereafter
--------
acquired by the Buyer, and all additions and accessions thereto
(collectively, "Fixtures") and all the proceeds of Fixtures; and
(e) Other Personal Property. All personal property of the Buyer
-----------------------
not described in Sections 11.2(a), (b), (c), or (d), including without
limitation any patent, patent application, trade secret, technology or
proprietary rights, whether tangible or intangible, and all additions and
accessions thereto (collectively, "Other Personal Property") and all
proceeds from any sale, transfer or distribution of Other Personal
Property.
11.3 The Buyer's Obligations Secured Hereby.
--------------------------------------
The Buyer's "Obligations" to Seller secured hereby are the following:
(a) Purchase Price. Payment of all amounts due under Section
--------------
2(e)(iv), including but not limited to the principal amount and interest
evidenced by the promissory note referenced in Section 2(e)(iv) (the
"Note").
(b) Other Sums. Payment of all other sums becoming due and
----------
payable to Seller under the Agreement or the Ancillary Agreements.
(c) Performance. Performance and discharge of each and every
-----------
obligation of the Buyer under this Section 11.
11.4 The Buyer's Security Interest Warranties and Representations.
------------------------------------------------------------
The Buyer represents and warrants that:
(a) Inventory Collateral, Equipment Collateral and Other Personal
-------------------------------------------------------------
Property. The Buyer, has or will have when it comes into existence, good
--------
and marketable title to the Inventory Collateral, Equipment Collateral and
Other Personal Property free and clear of all matured liens and adverse
claims and any type whatsoever except those of Seller hereunder, provided
that with respect to the Acquired
4
<PAGE>
Assets, Buyer's representation hereunder is based upon Seller's
representation in Section 3(e) with respect to title transferred by Seller
and to the absence of liens and claims resulting from Seller's ownership
and transfer to Buyer of such Acquired Assets.
11.5 The Buyer's Covenants. The Buyer agrees and covenants that:
---------------------
(a) No Superior Security Interests. The Buyer shall not grant a
------------------------------
security interest in any of the Collateral which is superior in right of
repayment to the Buyer's Obligations to Seller.
(b) Perfection of Security Interest. The Buyer shall execute and
-------------------------------
deliver such documents as Seller deems necessary to create, perfect and
continue the security interests in the Collateral contemplated hereby.
(c) Use of Collateral. The Collateral will not be used for any
-----------------
unlawful purpose or in any way that will void any insurance carried in
connection therewith. The Buyer will keep the Collateral free and clear of
liens and adverse claims and, as appropriate and applicable, will keep it
in good condition and repair, and will clean, shelter, and otherwise handle
and maintain the Collateral in all such ways as are considered good
practice by owners of like Collateral.
(d) Insurance of Collateral. The Collateral will be insured at
-----------------------
the Buyer's sole cost against all risks commonly insured by owners of like
collateral. The Buyer agrees to pay when due all premiums for such
insurance and all taxes, license fees and other charges in connection with
the Collateral. If Seller shall take possession of the Collateral, Seller
may surrender the policies and receive and retain the unearned premiums
thereon.
(e) Indemnification. The Buyer shall indemnify Seller against
---------------
all losses, claims, demands and liabilities of every kind caused by the
Collateral after Seller takes possession, except for any losses, claims,
demands or liabilities arising out of the negligent acts or omissions of
Seller.
(f) Collection of Accounts Collateral. Until Seller elects to do
---------------------------------
so, the Buyer shall collect with diligence all of its Accounts Collateral
and proceeds of Inventory Collateral, Equipment Collateral, Fixtures, and
Other Personal Property and shall hold such Accounts Collateral and
proceeds subject to a security interest in Seller to secure its Obligations
secured hereby.
5
<PAGE>
(g) Records. The Buyer shall prepare and keep in accordance with
-------
generally accepted accounting principles consistently applied, complete and
accurate records regarding all Accounts Collateral, Inventory Collateral,
Equipment Collateral, Fixtures and Other Personal Property, and proceeds
thereof, and if and when requested by Seller, shall, from time to time,
prepare and deliver a complete and accurate schedule of all the Collateral,
in such detail as Seller may reasonably request. The information required
to be delivered by the Buyer hereunder shall be kept confidential by the
Seller and shall not be used for any purpose other than the protection of
the rights of the Seller and the enforcement of the obligations of the
Buyer under this Section 11.
(h) Assignments. If and when requested by Seller, the Buyer
-----------
shall upon any Event of Default (as defined below) prepare and deliver to
Seller assignments in writing of all Accounts Collateral, instruments,
documents and other evidence thereof.
(i) Inspection of the Buyer's Books. The Buyer shall permit
-------------------------------
Seller and its designees at reasonable times and from time to time to
inspect the Buyer's books, records, and properties and to audit and to make
copies of extracts from such books and records. The information available
to the Seller (and its designees) hereunder shall be kept confidential by
the Seller (and its designees) and shall not be used for any purpose other
than the protection of the rights of the Seller and the enforcement of the
obligations of the Buyer under this Section 11.
(j) Fees and Costs. Upon any Event of Default the Buyer shall
--------------
pay all expenses, including attorneys fees, incurred by Seller in the
preservation, realization, enforcement or exercise of any of Seller's
rights under this Section 11.
11.6 Events of Default.
-----------------
The occurrence of any of the following events shall constitute an
"Event of Default" under this Section 11:
(a) Default in Payment of Purchase Price. Default by the Buyer
------------------------------------
in payment of the Purchase Price when due under Section 2(e)(iv), including
but not limited to payments of any principal and interest under the Note
when due, whether by acceleration or otherwise.
(b) Bankruptcy. (i) The Buyer shall be or become insolvent, or
----------
admit in writing the Buyer's inability to pay its debts as they mature;
(ii) the Buyer shall apply for, consent to, or acquiesce in the appointment
of a trustee or receiver for the Buyer or for a substantial part of the
6
<PAGE>
property of the Buyer or, in the absence of such application, consent or
acquiescence, a trustee or receiver shall be appointed for the Buyer or for
a substantial part of the property of the Buyer and shall not be discharged
within a period of 30 days; (iii) any bankruptcy, reorganization, debt
arrangement or other proceedings under any bankruptcy or insolvency law or
a dissolution or liquidation proceeding shall be instituted with respect to
the Buyer, shall be consented to or acquiesced in by the Buyer or shall not
be dismissed, or, if contested, stayed within a period of 30 days; or (iv)
any judgment, writ of attachment or execution or any similar process shall
be issued or levied against a substantial part of the property of the Buyer
and shall not be released, stayed, bonded or vacated within a period of 30
days after its issue or levy.
(c) Default on Other Obligations to Seller. The Buyer shall
--------------------------------------
default in the payment when due of any other amount payable by the Buyer to
Seller under this Agreement or any Ancillary Agreement.
(d) Default in Obligations to Persons Other than the Seller. The
-------------------------------------------------------
Buyer shall default in the payment of principal of, or interest on, any
obligation other than the Note, unless such obligation is diligently being
contested in good faith, beyond any period of grace provided with respect
thereto or any extension of the due date granted by the obligee.
11.7 Remedies on Default.
-------------------
Upon the occurrence of an Event of Default, Seller shall have all
rights, privileges, powers and remedies provided by law and this Agreement,
which rights, privileges, powers and remedies shall be cumulative, and no
single or partial exercise of any of them shall preclude the further or
other exercise of the same or any of them. By way of example and not by
way of limitation, Seller may, pursuant to this Section 11, exercise any
one or all of the remedies hereinafter set forth:
(a) Payment Under Note. The Seller may by notice under this
------------------
Agreement declare the aggregate unpaid principal balance of the Note,
together with all unpaid accrued interest thereon, to be immediately due
and payable; and thereupon all such amounts shall be and become immediately
due and payable to Seller.
(b) Possession of Collateral. The Seller may take possession of
------------------------
all Collateral covered hereby (which Collateral the Buyer will assemble and
make available to Seller) and complete the processing of Inventory
Collateral using the employees, facilities, equipment and other
7
<PAGE>
property of the Buyer to do so, all at the Buyer's expense and without
compensation to the Buyer.
(c) Use, Operation and Sale of Collateral by Seller. The Seller
-----------------------------------------------
may use, operate, consume and sell the Collateral in its possession as
appropriate for the purpose of performing the Buyer's Obligations with
respect thereto. The Buyer and Seller agree that public or private sales,
for cash or on credit, to a wholesaler or retailer or user of collateral of
the types subject to this Section 11, or at public auction, are all
commercially reasonably since differences in the sale prices generally
realized in the different kinds of sale are ordinarily offset by the
differences in the costs and credit risks of such sales.
11.8 Payments After an Event of Default.
----------------------------------
All payments received and amounts realized by the Seller pursuant to
Section 11.7, including all such payments and amounts received after the
Seller has declared pursuant to Section 11.7(a), the entire unpaid
principal and interest amount of the Note to be due and payable, as well as
all payments or amounts then held or thereafter received by the Seller as
part of the Collateral while an Event of Default shall be continuing, shall
be promptly applied and distributed by the Seller in the following order of
priority:
(a) first, to the payment of all costs and expenses, including
legal expenses and attorneys fees, incurred or made hereunder by the
Seller, including any such costs and expenses of foreclosure or suit, if
any, and of any sale or the exercise of any other remedy under Section
11.7, and of all taxes, assessments or liens superior to the lien granted
under this Section 11, except any taxes, assessments or other superior lien
subject to which any said sale under Section 11.7 hereof may have been
made;
(b) second, to the payment to Seller the amount then owing or
unpaid on the Note, such application to be made upon presentation of the
Note and the notation thereon of the payment, if partially paid, or the
surrender and cancellation thereof, if fully paid; and
(c) third, to the payment, of the balance or surplus, if any, to
the Buyer, the Buyer's successors and assigns, or to whomsoever may be
lawfully entitled to receive the same.
8
<PAGE>
11.9 Power of Attorney.
-----------------
The Buyer hereby appoints Seller the attorney-in-fact of the Buyer to
prepare, sign and file or record, for the Buyer in the Buyer's name, any
financing statements, applications for registration and like papers and to
take any other action deemed by Seller necessary or desirable in order to
perfect the security interest of Seller under this Section 11, and, to
perform any obligations of the Buyer hereunder, at the Buyer's expense, but
without obligation to do so."
8. The Buyer has full power and authority (including full corporate power
and authority) to execute and deliver this Amendment and to perform its
obligations hereunder. All necessary corporate proceedings (including any
necessary approval by the board of directors and stockholders of the Buyer) have
been taken by the Buyer to duly authorize the execution, delivery, and
performance of this Amendment by the Buyer. This Amendment constitutes the
valid and legally binding obligation of the Buyer, enforceable in accordance
with its terms and conditions.
9. Neither the execution and the delivery of this Amendment, nor the
consummation of the transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which the Buyer is subject or any provision of its certificate of
incorporation or by-laws or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, Permit, license, instrument, or other
arrangement to which the Buyer is a party or by which it is bound or to which
any of its assets is subject. The Buyer does not need to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Buyer and the Seller to
consummate the transactions contemplated by this Amendment.
10. Seller hereby acknowledges that it has received a copy of a Disclosure
Supplement, dated June 27,1996 from Buyer. Seller further acknowledges that it
has read such Disclosure Supplement and understands such information as it
relates to an investment in the Buyer. The Buyer represents that the amount due
to be paid to its lender on July 1, 1996 is $939,229.83.
11. Except as specifically set forth herein, the terms of the Purchase
Agreement and the exhibits and schedules to the Purchase Agreement shall remain
unmodified and in full force and effect.
9
<PAGE>
12. This Amendment shall be governed by and construed according to the
laws of the State of California, excluding the choice of laws rules thereof.
This Amendment may be executed in counterparts, each of which shall be deemed an
original, but which together shall constitute one and the same instrument.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
10
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
RAYCHEM CORPORATION MEMRY CORPORATION
By /s/ Andrew F. Roake By /s/ William H. Morton, Jr.
------------------------ --------------------------
Andrew F. Roake William H. Morton, Jr.
Title Vice President Title Senior Vice President
---------------------- ----------------------
11
<PAGE>
EXHIBIT 10.1
SUBLEASE
THIS SUBLEASE ("Sublease") is made as of June 28, 1996 by and between
RAYCHEM CORPORATION, a Delaware corporation ("Sublessor"), and MEMRY
CORPORATION, a Delaware corporation ("Sublessee").
R E C I T A L S
- - - - - - - -
A. 4065 Associates, a California partnership, as successor-in-interest
to Frances E. Nelson ("Landlord"), and Sublessor, as Tenant, are parties to a
certain Industrial Park Lease dated as of April 25, 1983, as amended by (i) that
certain First Amendment to Lease dated as of May 8, 1989 by and between
Sublessor and Frances E. Nelson, (ii) that certain Second Amendment to Lease
dated as of June 10, 1992 by and between Sublessor and Landlord and (iii) that
certain Third Amendment to Lease dated as of June 7, 1995 by and between
Sublessor and Landlord (as so amended, the "Lease"). Under the Lease, Landlord
has leased to Sublessor certain premises located at 4065 Campbell Avenue, San
Mateo County, Menlo Park, California and more particularly described in Section
1 below. (Capitalized terms not otherwise defined in this Sublease shall have
the meanings given to them in the Lease; all Section references in this Sublease
shall refer to provisions of the Lease.) The Lease is attached hereto as
Exhibit A and incorporated herein.
- ---------
B. This Sublease is entered into pursuant to, and in connection with the
closing under, that certain Asset Purchase Agreement dated as of May ___, 1996
("Purchase Agreement") between the parties providing for, among other things,
the sale of "Acquired Assets" and "Assigned Assets" (as those terms are defined
in the Purchase Agreement) of Sublessor.
C. Sublessor now desires to sublease to Sublessee, and Sublessee desires
to sublease from Sublessor, on the terms and conditions contained herein, the
Premises.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. SUBLEASE. Sublessor hereby subleases to Sublessee, and Sublessee
--------
hereby subleases from Sublessor, the demised premises as described in Exhibit A
to the Lease, together with all buildings, improvements, fixtures located
thereon and appurtenances thereto (the "Demised Premises"), on the terms and
conditions contained in this Sublease.
2. TERM. The term of this Sublease ("Sublease Term") shall commence on
----
the Closing Date (as defined in the Purchase Agreement) and, unless sooner
terminated as herein provided,
-1-
<PAGE>
shall end on September 30, 1998. Sublessee shall have no right or option to
extend the Sublease Term under any circumstances.
3. CONDITION OF PREMISES.
---------------------
(a) In entering into this Sublease Sublessee has not relied upon or been
induced by any statements or representations of any persons with respect to the
physical condition of the Demised Premises or with respect to any other matter
affecting the Demised Premises, that might be pertinent in considering the
subleasing of the Demised Premises or the execution of this Sublease, except for
the representations of Sublessor specifically relating to the Demised Premises
contained in Section 3 of the Purchase Agreement. Sublessee has, except for the
foregoing representations, relied solely on such investigations, examinations
and inspections of the Demised Premises as Sublessee has chosen to make or have
made on its behalf. Sublessee acknowledges that Sublessor has afforded
Sublessee the opportunity for full and complete investigations, examinations and
inspections of the Demised Premises. Upon taking possession of the Demised
Premises Sublessee shall be deemed to have accepted the Demised Premises in an
"as-is" condition. Sublessor shall have the right to remove from the Demised
Premises (i) Sublessor's proprietary security system and (ii) the communications
system embodied by the computer software and hardware at the Demised Premises
linking the Demised Premises to other facilities of Sublessor, but excluding
therefrom the telephones and cable and wire connectors relating thereto. Such
removal may occur before or after the commencement of this Sublease, and
Sublessee shall grant Sublessor reasonable access to the Demised Premises for
purposes of such removal.
(b) Sublessee shall be fully responsible for maintenance, repair and
surrender of the Demised Premises as provided in Articles 7, 11 and 13 and
Section 16.3 of the Lease. Sublessor shall not be required to make any
improvements to the Demised Premises; Sublessee shall not install any
alterations, additions or improvements in the Demised Premises (including
signs), unless it shall first submit to Sublessor plans therefor and obtain the
written consent of Sublessor and Landlord, as provided in the Lease.
(c) Sublessee acknowledges that Sublessor shall have no obligation or
responsibility with respect to security for the Demised Premises, all of which
shall be the sole responsibility of Sublessee, which shall take all necessary
and appropriate measures to safeguard the personal safety and security of
persons and property in the Demised Premises.
4. RENT. Sublessee shall pay to Sublessor, monthly on or before the
----
first day of each calendar month throughout the Sublease Term, rent (as the same
may be adjusted as provided in the Lease) in the amount set out in Section 2.1
(as amended by the Third Amendment to the Lease, and shall pay in addition all
amounts for insurance, taxes and other fees payable to Landlord
-2-
<PAGE>
pursuant to Sections 5.1, 10.5 and 11.4 and Article 15 of the Lease
(collectively, "Rent"). Rent shall be paid to Sublessor, without deduction or
offset of any kind, in lawful money of the United States of America at
Sublessor's address for notices set forth in Section 10 hereof or to such other
person or at such other place as Sublessor may from time to time designate in
writing, provided, however, that any such written notice shall not be effective
until five (5) days following receipt thereof by Sublessee. Upon execution of
this Sublease, Sublessee shall pay to Sublessor the first full month's Rent or
such lesser amount equal to the number of days remaining in said month
multiplied by the monthly rent divided by 30.
5. INCORPORATION OF LEASE.
----------------------
(a) This Sublease is subject to all of the terms and conditions of the
Lease, all of which are hereby incorporated by reference, except for the
------ ---
following provisions: Sections 2.4, 2.5 (as added by the Third Amendment to
Lease) and 17.4 of the Lease. Without limiting the scope of the foregoing,
Sublessee acknowledges that it shall have no right to renew the term of the
Lease or this Sublease. All references in the Lease to Landlord, Tenant,
demised premises and Lease Term shall, for purposes of incorporation thereof
into this Sublease, mean and refer to Sublessor, Sublessee, Demised Premises and
Sublease Term, respectively. Sublessee hereby agrees to assume and perform,
fully and in a timely manner for the benefit of Sublessor, each and all of the
conditions, covenants and obligations to be performed by Sublessor, as Tenant
under the Lease, to the extent said conditions, covenants and obligations are
incorporated in this Sublease. Without limiting the foregoing, Sublessee shall
not commit or permit to be committed on the Demised Premises any act or omission
which shall violate any term, covenant or condition of the Lease. To the extent
Rent is paid by Sublessee directly to Sublessor pursuant to Section 4 above,
Sublessor shall timely make the corresponding payments due under the Lease; in
addition, so long as Sublessee shall continue to perform all obligations imposed
upon it under this Sublease, Sublessor shall take no action which could result
in a termination of the Lease by Landlord.
(b) With respect to the obligations imposed upon Sublessor hereunder in
accordance with subparagraph (a) above, Sublessor's liability shall be limited
to exercising commercially reasonable efforts to cause Landlord to perform such
obligations owed to the Sublessor under and pursuant to the Lease. Except as
aforesaid, Sublessor shall have no additional or further liability to Sublessee
under this Sublease and shall not be liable to Sublessee for any breach or
default by Landlord under the Lease.
(c) In determining whether to grant or withhold any consent or approval
hereunder, Sublessor may expressly condition the same upon the consent or
approval of Landlord, as applicable.
-3-
<PAGE>
(d) Notwithstanding anything to the contrary contained herein, whenever
any provision of the Lease incorporated herein specifies a time period in
connection with the performance of any act by Sublessee hereunder, or the
exercise of any right or remedy by Sublessor hereunder, such time period shall
be shortened in each instance by three days for the purpose of incorporation
into this Sublease.
(e) This Sublease is and shall be at all times subject and subordinate to
the Lease, including all rights of Landlord thereunder. Without limiting the
generality of the foregoing, in the event of termination of Sublessor's interest
under the Lease for any reason (including, without limitation, upon the
occurrence of any casualty or condemnation pertaining to the Demised Premises),
this Sublease shall terminate coincidentally therewith without any liability of
Sublessor to Sublessee.
(f) In the event of conflict between any provision of the Lease and any
provision of this Sublease, the latter shall control.
6. INSURANCE. Sublessee shall provide and/or pay for insurance as
---------
provided in Articles 9 and 10 of the Lease, and shall maintain such additional
insurance as Sublessor may from time to time reasonably require. Such liability
insurance shall name, as additional insureds, Landlord, Sublessor and other
parties required to be named under said Section, and a policy or certificate
thereof shall be provided to Sublessor not later than the commencement of the
Sublease Term.
7. HOLDOVER. Under no circumstances shall Sublessee be permitted to
--------
holdover following the end of the Sublease Term. If Sublessee has not fully
surrendered possession of the Demised Premises, in the manner required hereby,
on or before termination of this Sublease, all of the terms, covenants and
agreements hereof shall continue to bind Sublessee to the extent applicable,
except that (a) the monthly Rent shall be equal to one-hundred-fifty percent
(150%) of the entire rent and all other sums payable by Sublessor under the
Lease, and (b) Sublessee shall indemnify and defend Sublessor against, and hold
Sublessor harmless from, any and all claims, losses and liabilities for damages,
consequential or otherwise, resulting from Sublessee's failure to surrender
possession, including, without limitation, any such claims by Landlord.
8. WAIVER AND INDEMNIFICATION.
--------------------------
(a) Sublessor shall not be liable or responsible in any way for, and
Sublessee hereby waives all claims against Sublessor with respect to or arising
out of, any death or injury of any nature whatsoever that may be suffered or
sustained by Sublessee or its employees, agents, licensees, contractors,
subcontractors, customers, invitees, guests, or parties permitted to enter the
Demised Premises by any of the foregoing (Sublessee and such persons
collectively "Sublessee Parties"), from any
-4-
<PAGE>
causes whatsoever, or any loss or damage or injury to any property outside or
within the Demised Premises belonging to Sublessee Party, or any other person,
except to the extent such injury or damage (i) arose prior to the date hereof or
(ii) is caused by the negligence or willful misconduct of, or breach of this
Sublease by, Sublessor or its employees, agents, licensees, contractors,
subcontractors, customers, invitees, or guests (Sublessor and such persons
collectively "Sublessor Parties").
(b) Sublessee shall indemnify, defend (with legal counsel acceptable to
Sublessor) and hold Sublessor, Landlord and their respective shareholders,
officers, agents, employees, successors and assigns harmless from any and all
losses, damages, claims, demands, judgments or liability actually incurred by it
for any damage to any property (including diminution in value of the Demised
Premises or damages from loss or restriction on use of the Demised Premises) or
injury, illness or death of any person (i) occurring in or on the Demised
Premises, or any part thereof, arising from any cause which occurred on or after
the date hereof, except to the extent caused by the negligence or willful
misconduct or breach of this Sublease by Sublessor Parties; (ii) arising out of
or in connection with the handling, storage, use, generation, treatment,
manufacture, other management or Release of any Hazardous Materials by any
Sublessee Party; or (iii) resulting from a breach of this Sublease by Sublessee.
(c) Sublessor shall indemnify, defend (with legal counsel acceptable to
Sublessee) and hold Sublessee and its shareholders, officers, agents, employees,
successors and assigns harmless from any and all losses, damages, claims,
demands, judgments or liability actually incurred by it for any damage to any
property (including diminution in value of the Demised Premises or damages from
loss or restriction on use of the Demised Premises) or injury, illness or death
of any person (i) occurring in or on the Demised Premises, or any part thereof,
arising from any cause which occurred before the date hereof, except to the
extent caused by the negligence or willful misconduct or breach of this Sublease
by Sublessee Parties; (ii) arising out of or in connection with the handling,
storage, use, generation, treatment, manufacture, other management or Release of
any Hazardous Materials by any Sublessor Party; or (iii) resulting from a breach
of this Sublease by Sublessor.
9. HAZARDOUS MATERIALS
-------------------
A. Definitions.
-----------
As used herein, the term "Hazardous Materials" shall mean any hazardous
wastes, materials or substances and other pollutants or contaminants, which are
or become regulated by any federal, state or local laws, ordinances,
regulations, rules or requirements, including but not limited to, the Resource
Conservation and Recovery Act, as amended, (42 U.S.C. sections 6901 et seq.),
-- ---
the Comprehensive Environmental Response,
-5-
<PAGE>
Compensation and Liability Act, as amended, (42 U.S.C. (S)(S) 9601 et seq.), the
-- ---
California Hazardous Materials Control Act, as amended, (Cal. Health & Safety
Code (S)(S) 25100 et seq.), the California Hazardous Substance Account Act, as
-- ---
amended, (Cal. Health & Safety Code (S)(S) 25300 et seq.) and the Safe Drinking
-- ---
Water and Toxic Enforcement Act (Cal. Health & Safety Code (S) 25249.8)
(Proposition 65). Without limiting the above, the term "Hazardous Materials"
also includes petroleum (including crude oil and any of its fractions),
radioactive materials, asbestos, pesticides, PCBs, and medical or biologic
wastes.
B. Compliance with Law.
-------------------
(1) Sublessee shall comply with all federal, state and local laws,
ordinances, regulations, rules or requirements relating to the use, condition,
and occupancy of the Demised Premises, including but not limited to those
relating to worker safety, public health and the environment ("Applicable
Laws"). Specifically, but without limiting Sublessee's obligations described
above, Sublessee shall establish and adhere to any hazardous material management
plan (the "Plan") required by the County of San Mateo, City of Menlo Park or any
other federal, state or local governmental agency having jurisdiction
("Agency"). If a Plan is required, Sublessee shall, following reasonable notice
by Sublessor and at reasonable times specified by Sublessee, allow Sublessor to
inspect the Demised Premises for compliance with the Plan, and Sublessee shall
correct any items not in compliance with Applicable Laws. Sublessor shall not
inspect the Demised Premises pursuant to the authority provided by this section
more frequently than twice a year. Sublessee also shall not cause, maintain or
permit any nuisance in, on or about the Demised Premises, and shall not install
any tanks outside or within the Demised Premises, above or below ground, without
the express written consent of Sublessor.
(2) If an Agency directs Landlord, Sublessee and/or Sublessor to take any
action with respect to the presence, release or threatened release of any
Hazardous Materials on, under or about the Demised Premises, and that directive
arises out of Sublessee's use or occupancy of the Demised Premises, Sublessee
shall promptly commence and thereafter diligently prosecute to completion, at
Sublessee's sole expense, any and all actions required by the Agency. Sublessor
shall retain the right to review and approve any remediation action proposed by
Sublessee. Sublessee shall notify Sublessor prior to taking any action in
response to the directive.
C. Sublessee's Use of Hazardous Materials.
--------------------------------------
(1) Sublessee shall not, and Sublessee shall not permit Sublessee Parties
to, manage, handle, store or use in any way on the Demised Premises any
Hazardous Materials other than those ordinarily used in connection with the
business of designing, developing, processing, manufacturing and marketing
nickel-titanium alloy compounds for OEM applications without
-6-
<PAGE>
prior approval by Sublessor. All activity involving Hazardous Materials must be
in compliance with all Applicable Laws. Sublessee Parties shall not spill,
leak, pump, pour, emit, empty, discharge, inject, leach, dump or dispose
(hereinafter "Release") any Hazardous Materials onto, into or about the Demised
Premises except in a manner consistent with Applicable Laws. Upon Sublessor's
request, Sublessee shall provide Sublessor with a list of all Hazardous
Materials managed, handled, stored, used, or located on the Subleased Premises
at any time during the Sublease Term. Submission of a complete, accurate and
current Hazardous Material Inventory Statement prepared pursuant to the Plan
shall suffice as a list of all Hazardous Materials required pursuant to this
section. Sublessee shall comply fully, including the completion of any
corrective or remediation action, with any premises closure requirements under
Applicable Law not later than the end of the Sublessee Term.
--- ----- ----
(2) Sublessee shall have an individual on staff (on at least a part-time
basis) who is trained and assigned to handle environmental, health and safety
matters, such as, but not limited to, radiation safety and emergency planning.
D. Sublessor's Right to Inspect.
----------------------------
Upon prior written notice to Sublessee, Sublessor shall have the right at
all times during the Sublease Term to conduct a reasonable inspection of the
Demised Premises, including performing reasonable tests and investigations to
determine if Sublessee is in compliance with the terms of this Sublease. In
conducting these inspections, Sublessor shall use its best efforts not to
unreasonably disrupt Sublessee's business operations. Sublessor shall bear the
cost of any tests and/or investigations, except that the cost of such tests
and/or investigations shall be borne by Sublessee if both (a) the tests and/or
investigations indicate that Hazardous Materials are present on or under the
Demised Premises at concentrations exceeding levels for which remediation is
required under any Applicable Law, and (b) Sublessee is responsible for the
presence of such Hazardous Materials. For purposes of this Agreement, there
shall be a rebuttable presumption that Sublessee is responsible for the presence
of the contamination if the Hazardous Materials found are the same as, or the
breakdown products of, Hazardous Materials managed, handled, stored or used in
any way on the Demised Premises at any time during the term of the Sublease by
any Sublessee Party. With respect to such rebuttable presumption, where it can
be shown with respect to specific damages that: (a) no specific event or
occurrence gave rise to the specific damages; and (b) both Sublessee and
Sublessor engaged in a highly similar activity involving the same Hazardous
Materials, which activity and Hazardous Materials gave rise to the specific
damages over time; then the relative time periods in which Sublessee and
Sublessor engaged in the activity shall be admissible evidence regarding their
respective liability for the specific damages.
-7-
<PAGE>
E. Notices.
-------
Sublessee will immediately notify Sublessor orally (with a written follow-
up notice within five days) if Sublessee knows or has reasonable cause to
believe that a Hazardous Material has come or will come to be located on, in,
about or beneath the Demised Premises other than in compliance with applicable
law. Sublessee also shall notify Sublessor of (a) any formal or informal
correspondence or communication from any Agency concerning the presence of
Hazardous Materials on or migrating to or from the Demised Premises, or the
violation or possible violation of any Applicable Law; or (b) any claims made or
threatened by any third party relating to loss, damage or injury claimed to have
been caused by any Sublessee Party's handling, storage or use of any kind of
Hazardous Materials on the Demised Premises or any Sublessee Party's alleged
violation of any Applicable Laws.
F. Remediation of Hazardous Materials.
----------------------------------
If a Release of any Hazardous Material occurs on the Demised Premises
during the term of the Sublease as a result of any act or omission of any
Sublessee Party, Sublessee, at its sole expense, shall (a) promptly make all
reasonable efforts to contain and mitigate such Release, (b) provide prompt
notification to the proper authorities if required by any Applicable Law, and
(c) upon notice to Sublessor and with Sublessor's approval, investigate and take
all appropriate removal or remedial actions necessary to comply with any
Applicable Law. The provisions of Sections 8 and 9 of this Sublease shall
survive the expiration or termination of this Sublease.
10. NOTICES. All notices, demands, statements and other communications
-------
that may or are required to be given by either party to the other hereunder
shall be in writing and shall be (i) personally delivered or sent via facsimile
(so long as any facsimile transmission shall have a copy thereof further
delivered concurrently in the manner specified in either of the following
clauses), or (ii) sent by the United States mail, certified or registered,
postage prepaid, return receipt requested, or (iii) delivered by a reputable
overnight courier service and, in any case, addressed as follows:
If to Sublessor: Raychem Corporation
300 Constitution Drive
Menlo Park, CA 94025-1164
Attn: Real Estate Manager
106/8700
FAX: (415) 361-5090
-8-
<PAGE>
If to Sublessee: Memry Corporation
57 Commerce Drive
Brookfield, CT 06804
Attn: Mr. James G. Binch
FAX: (203) 740-2503
Notices shall be deemed to have been fully given upon actual receipt or, if
delivery thereof is refused, then upon such refusal to accept delivery (provided
that there is reasonable evidence of such refusal).
11. MISCELLANEOUS.
-------------
(a) This Sublease may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one instrument.
(b) This Sublease cannot be changed or terminated orally. Except as
expressly provided in the Purchase Agreement, all understandings and agreements
heretofore made between the parties are merged in this Sublease, which alone
fully and completely expresses the agreement between Sublessor and Sublessee.
(c) Each and every indemnification set forth in, or incorporated into,
this Sublease shall survive the termination hereof.
(d) This Sublease shall not become effective unless and until Sublessor
and Sublessee have executed and delivered same, and Landlord has executed and
delivered a Consent in the form attached hereto as Exhibit B. By delivering
---------
this Sublease, each party hereby represents and warrants to the other that such
execution and delivery has been duly authorized by all necessary corporate
action and that the person(s) executing same have been duly authorized to do so.
(e) Sublessee shall have no right to assign this Sublease or sublet all or
any part of the Demised Premises without the prior written consent of Sublessor
and Landlord.
(f) Upon the commencement of the Sublease Term, Sublessee shall
separately arrange, in its own name, for the provision of all utility services
to the Demised Premises, as well as any other such services not provided by
Landlord.
(g) This Sublease shall be construed and enforced in accordance with
California law.
-9-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Sublease of the date
hereinabove set forth.
Sublessor: RAYCHEM CORPORATION, a
Delaware corporation
By: /s/ Andrew F. Roake
-------------------------
Its: Vice President
-------------------------
Sublessee: MEMRY CORPORATION, a Delaware
corporation
By: /s/ William H. Morton, Jr.
--------------------------
Its: Senior Vice President
-------------------------
By: _________________________
Its: _________________________
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<PAGE>
EXHIBIT A
---------
LEASE
-----
<PAGE>
EXHIBIT B
---------
LANDLORD CONSENT
----------------
<PAGE>
EXHIBIT 10.2
TINEL-LOCK(R) SUPPLY AGREEMENT
------------------------------
THIS Supply Agreement (the "Agreement") is made as of the 28TH day of June,
1996 ("Effective Date"), by and between Raychem Corporation ("Buyer"), a
Delaware corporation having its principal executive offices at 300 Constitution
Drive, Menlo Park, California 94025-1164, and Memry Corporation ("Seller"), a
Delaware corporation having its principal executive offices at 57 Commerce
Drive, Brookfield, Connecticut 06804.
R E C I T A L S
- - - - - - - -
WHEREAS, Buyer and Seller are parties to an Amended and Restated Asset
Purchase Agreement, dated as of May 10, 1996, as amended from time to time,
pursuant to which Seller is contemporaneously with the execution and delivery
hereof acquiring certain assets (including both machinery and equipment and
trade secrets and other intellectual property) heretofore used by Buyer to
produce nickel titanium components for medical and industrial OEM products; and
WHEREAS, Buyer in connection with the Asset Purchase Agreement, retained
various tangible assets associated with its Tinel-Lock product line; and
WHEREAS, Buyer desires to secure for itself an uninterrupted source of
Products (as defined herein) from Seller, and Seller desires to be Buyer's
exclusive supplier of Products, both upon the terms and conditions set forth
herein; and
WHEREAS, Buyer and Seller have entered into a Tinel-Lock License Agreement
contemporaneously with the execution and delivery hereof wherein Seller has
granted Buyer a license to any intellectual property, patents, license and
copyrights necessary to develop, manufacture or sell Tinel-Lock Products.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
covenants of the parties herein and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereby agree
as follows:
A. DEFINITIONS
-----------
For purposes of this Agreement, the following terms shall have the
following respective meanings:
"Business Day" means a day on which banks are not required or
authorized to be closed in either the State of California or the State of
Connecticut.
"Confidential Information" means any information or data disclosed
pursuant to this Agreement; provided, however,
<PAGE>
that information and data shall not be deemed to be Confidential Information if:
a. it is available to the public at the time of disclosure to
the receiving party, or thereafter becomes available to the public through no
fault of the receiving party, but in such event only as of such later date;
b. it is independently made available to the receiving party by
a third party without restrictions on disclosure; or
c. it is known to the receiving party before disclosure to the
receiving party by the disclosing party or developed by the receiving party
without reference to any Confidential Information of the disclosing party.
Customer lists and specifications of Buyer shall, subject to the
exceptions in clauses (a) through (c) above, be deemed "Confidential
Information" under this Agreement.
"GAAP" means United States generally accepted accounting principles as
in effect on the date hereof, applied on a basis consistent with the preparation
of Buyer's historical financial statements.
"Inventions" means all discoveries, know-how, inventions, developments
and improvements, whether patentable or not.
"Product" or "Products" shall mean the Tinel-Lock Products currently
being manufactured by Buyer and used by Buyer specifically set forth on Exhibit
A hereto, as well as any other similar and/or derivative Tinel-Lock Products
that (i) meet mutually agreed upon criteria for ongoing business, or (ii) Buyer
and Seller hereafter mutually agree should become Products hereunder, or (iii)
are developed or manufactured by or for Seller, or (iv) are jointly developed by
Buyer and Seller.
"Tinel-Lock Lease Agreement" shall mean the Tinel-Lock Lease Agreement
between the parties executed on even date hereof.
"Tinel-Lock Products" means products using the Tinel(R) or any nickel
titanium alloy for the termination of electrical/electronic braid in connector
or interconnect applications. Although this is typically a ring of Alloy X
(heat-to-shrink) used to compress an overall cable shield onto a connector
adapter, other covered applications include, without limitation:
(a) wire, braid strap and other electrical grounding methods;
(b) metallic or non-metallic braid and straps used for mechanical
attachment of electrical/electronic or fiber optic cables and interconnection.
-2-
<PAGE>
Various other defined terms used herein are defined throughout this
Agreement.
B. PURCHASE AND SALE
-----------------
1. Basic Agreement. Subject to the terms, provisions and conditions
---------------
hereinafter set forth, during the term of this Agreement, Seller agrees to sell
Tinel-Lock Products to Buyer, and Buyer agrees to purchase Tinel-Lock Products
from Seller. During the term hereof except as set forth in Section 11 of this
Agreement, the Buyer shall purchase its entire requirements of Tinel-Lock
Products, whether for direct sale to third parties or for use by Buyer as
components for products being manufactured and sold by Buyer, from Seller, and
shall not manufacture Tinel-Lock Products for its own use, or purchase Tinel-
Lock Products from any third party, except for purchases from Seller hereunder.
During the term hereof, Seller will not directly or indirectly manufacture
and/or sell Tinel-Lock Products for its own use, or for the use of any third
party, except for sales to Buyer hereunder. Additional products that become
Products will be deemed added to Exhibit A from time to time without the need
for further action.
2. License. Buyer hereby grants to Seller, and Seller hereby
-------
accepts, a license of Buyer's Intellectual Property, to be used solely for the
purpose of manufacturing the Products pursuant to this Agreement.
3. Specifications. The Products shall meet the specifications
--------------
identified in Exhibit B hereto. The Product Managers defined in Section 2.4
below shall be responsible for amending Exhibit B by mutual consent from time to
time as required to reflect agreed upon specifications or to add or delete
specifications as Products are added or deleted from Exhibit A.
4. Product Managers. During the term of this Agreement, the parties
----------------
shall each designate one (1) Product Manager who shall be responsible for
managing the relationship between Seller and Buyer ("Product Manager"). The
Product Managers shall confer on a regular basis.
5. Pricing.
-------
a. The initial purchase price for each Product listed on
Exhibit A hereto is set forth opposite the description of such Product on said
Exhibit A, and is intended to be the price for such Product for the period
commencing on the date hereof and continuing through June 30, 1997. The parties
agree to amend the purchase price for each Product effective as of every July 1
during the term hereof to reflect annual increases or decreases in the cost of
raw material. New Products added to Exhibit A from time to time will be priced
at a mutually agreed upon price for such Product through the period ending on
the immediately subsequent June 30.
-3-
<PAGE>
b. In the event Seller is able to re-engineer the process for
manufacturing Tinel-Lock Product in a manner which results in such a significant
reduction in manufacturing costs that Buyer believes that the market for the
Products will be greatly expanded, then the parties agree to discuss changes in
pricing, the term of this Agreement and the respective rights of the parties
upon termination.
6. Rolling Forecasts. Every calendar quarter during the term
-----------------
hereof, at least one (1) full month prior to the commencement thereof, Buyer
shall submit to Seller its good-faith estimated requirements for total dollar
volume to be purchased pursuant to this Section 2 for each of the next six (6)
calendar quarters ("Buyer's Forecast"). Exhibit C hereto consists of Buyer's
Forecast for the period July 1, 1996, through December 31, 1997 (the "Initial
Forecast"), which Initial Forecast shall remain in effect as Buyer's Forecast
without amendment until submission of the six (6) quarter forecast for the
period October 1, 1996, through March 31, 1998, which forecast will be due on or
prior to September 1, 1996. Buyer's Product Manager will make commercially
reasonable efforts to make non-binding forecasts on a Product by Product basis.
Buyer and Seller shall each review Forecasts to assess whether it would require
an unreasonable spike in capacity (i.e., ramp-ups from one quarter to the next
or from the forecast for such quarter from one Buyer's Forecast to the next) in
which event the Buyer and the Seller shall agree upon a mutually acceptable
alternative Forecast. Ramp-ups of up to 25% per quarter in all events shall be
deemed reasonable.
7. Security Stock; Minimum Take Requirements.
-----------------------------------------
a. Seller covenants and agrees for every month during the term
hereof to have available for immediate delivery to Buyer, raw material and
manufacturing capacity sufficient to supply Buyer with an amount of Products
equivalent to 40% of the amount forecasted in Buyer's Forecast for the quarter,
except if and to the extent that changes in Product mix materially increase the
amount of manufacturing capacity necessary to process a given volume of raw
material. Seller shall only have the right and ability to reject purchase
orders for which it is not required to have sufficient raw material and
manufacturing capacity.
b. Buyer covenants and agrees for every calendar quarter during
the term hereof either to order from Seller Products with an aggregate purchase
price equal to (i) One hundred percent (100%) of the Buyer's Forecast in dollar
volume for the first succeeding quarter after the delivery of the Buyer's
Forecast for such quarter, (ii) sixty-five percent (65%) of the Buyer's Forecast
amount in dollar volume for the second succeeding calendar quarter after the
Buyer's Forecast, and (iii) fifteen percent (15%) of the Buyer's Forecast in
dollar volume for the third succeeding quarter after the Buyer's Forecast, or
pay to Seller the difference between the amount of Product so ordered and the
greater of (i), (ii) or (iii) above.
-4-
<PAGE>
8. Commitments of Seller. From and after the Closing Date, Seller
---------------------
hereby agrees to conduct its business and act in a manner that will comply with
the obligations of Buyer as if Seller were the named party therein in those
agreements of Buyer set forth on Exhibit G (except that Seller shall not be
responsible for Buyer's conduct).
C. TERMS AND CONDITIONS
--------------------
1. Purchase Orders. Buyer shall purchase Products by submitting to
---------------
Seller purchase orders for specific Products. Purchase orders shall specify the
type and quantity of Products to be purchased, the price, the delivery date, the
purchase order number, and test report and certification requirements. Purchase
orders shall be deemed accepted by Seller three Business Days after receipt,
unless Seller notifies Buyer within said period that it is rejecting such
purchase order in accordance with Section 2.8 above.
2. Payment Terms; Invoice. Payment terms are net thirty (30) days
----------------------
after Buyer's receipt of Seller's invoice or shipment (whichever is later). The
Buyer description and part number must be referenced on all invoices and packing
lists. All outstanding sums owed to Seller by Buyer shall accrue interest at a
rate of 1.0% per month (or any part thereof) if unpaid within thirty (30) days
after the due date therefor.
3. Terms and Conditions. Except as otherwise provided herein, each
--------------------
sale hereunder shall be governed by Buyer's Standard Terms and Conditions of
Purchase ("Order Terms") attached hereto as Exhibit D. Such terms and
conditions are hereby incorporated herein by reference. Any preprinted terms
and conditions in any acknowledgment, invoice or other document submitted by
Seller are superseded by the terms of this Agreement. In the event of any
inconsistency between this Agreement and the Order Terms, this Agreement shall
be controlling.
4. Delivery. Time is of the essence for Purchase Orders. Standard
--------
delivery for Products is six (6) weeks after receipt of Buyer's order. The
parties may agree on shorter lead times to meet customer needs. If Seller does
not meet the committed ship date Buyer may, at Buyer's option, without incurring
any liability, (a) extend the time for delivery, or (b) cancel all or any part
of the Purchase Order. The delivery dates for all Products sold pursuant to
this Agreement shall be deemed to be the dates on which they are placed by
Seller into the possession of Buyer's designated carrier, packed and ready for
shipment to Buyer's designated location. Invoices shall not precede the
delivery date. Seller shall ship Products F.O.B., Seller's facility. All
Products shall be shipped by Buyer's designated standard land carrier unless
otherwise specified by Buyer. In the event that Buyer requests delivery by air
carrier, Seller shall use Buyer's designated standard air carrier unless
otherwise specified by Buyer. Delivery shall be made to Buyer's
-5-
<PAGE>
plant at Menlo Park, California, unless otherwise specified by Buyer in writing.
5. Packaging Requirements. The Products shall be packed using
----------------------
materials with Buyer's trade name as directed by Buyer. Packaging and labeling
requirements are defined in Exhibit E.
6. Warranty. Seller warrants the Products as set forth in the Order
--------
Terms. Seller also warrants that the Products meet the specifications
identified in Exhibit B. These warranties shall be for a term of three (3)
years from the date of shipment of the Products. These warranties shall inure
to the benefit of Buyer, its successors and assigns and to subsequent purchasers
of the Products and shall survive acceptance and use of, and payment for, the
Products.
7. Cancellations. Buyer shall have the right to cancel any order.
-------------
In the event Buyer cancels any order of Products upon less than thirty (30) days
notice, Buyer shall pay Seller a reasonable charge, to be negotiated in good
faith by the parties, for Seller's costs and expenses, which Seller shall use
its best efforts to properly mitigate. In no event shall the costs and expenses
exceed the purchase price for the Products described in the canceled order or
include consequential damages or lost profits. Buyer shall not pay any
cancellation charge if cancellation is due to Seller's failure to ship Products
in a timely manner pursuant to Section 3.4. Cancellation shall not in any way
offset Buyer's "take or pay" obligation set forth in Section 2.8, except to the
extent that cancellation results from a failure to perform by Seller.
8. Returns.
-------
a. Seller agrees to accept return of any Product that fails to
function as warranted in Section 3.6. In the event of a return pursuant to this
Section, Seller shall perform testing and analysis of the returned Product and
issue a written report to Buyer explaining the cause of the failure. Seller
will insure that problems detected in returned Products or reported to Seller
are corrected in future shipments of Products. Seller agrees to replace returned
Products with new Products immediately or to credit Buyer for the full amount of
the purchase price. IN NO EVENT SHALL SELLER BE LIABLE FOR ANY INCIDENTAL,
SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM THE USE OF ANY OF THE PRODUCTS
BY ANY PERSON; PROVIDED THAT THIS SHALL NOT LIMIT LIABILITY IN THE EVENT OF A
THIRD PARTY CLAIM AGAINST BUYER EXCEPT TO THE EXTENT OF SUCH LIABILITY; AND
FURTHER PROVIDED THAT THIS LIMITATION SHALL NOT APPLY TO COSTS ASSOCIATED WITH
FIXING CUSTOMER PROBLEMS. THE PARTIES SHALL COOPERATE IN ADDRESSING CUSTOMER
PROBLEMS AND WILL EQUITABLY SHARE THE COSTS.
b. Any claim for breach of warranty hereunder must be presented
to the Seller, in writing, within thirty (30) days after discovery by Buyer of
the alleged defect and that a
-6-
<PAGE>
claim hereunder is probable. Failure to make a claim within such specified
period shall constitute a waiver of the claim only to the extent that the Seller
was thereby prejudiced. Claims must be accompanied by supporting proof to the
extent reasonably available.
9. Insurance.
---------
(a) On written request from Buyer, Seller shall deliver to Buyer
a certificate of insurance evidencing that Seller maintains product liability
insurance for the Products in an amount that is usual and customary for Seller's
business.
(b) Buyer shall maintain product liability insurance for any
products incorporating the Products in an amount that is usual and customary for
Buyer's business.
D. STATUS OF BUYER
---------------
1. The parties expressly agree that the relationship established by
this Agreement as between Seller and Buyer is solely that of Buyer and Seller,
and Seller shall have no right to, and shall not, exercise any supervision or
direction over the Buyer or any of its employees. Nothing contained herein
shall create a partnership, joint venture, or any other business relationship
between Seller and Buyer, other than that of Buyer and Seller of Products
hereunder.
2. Buyer shall not have authority to obligate or bind Seller with
respect to any matter, or make any contract, sale, agreement, warranty or
representation, express or implied, on behalf of Buyer.
3. Buyer shall conduct business solely in its own name and not that
of Seller and shall not use the words "Agent", "Agency" or words of similar
import on stationery, signs, documents, telephone listings, or otherwise in
connection with the name of Seller.
E. TERM AND TERMINATION
--------------------
1. Initial Term. The initial term of this Agreement shall be the
------------
period commencing on the Effective Date and ending on June 30, 2001.
Thereafter, the term of this Agreement shall be automatically renewed for an
unlimited number of successive one (1) year renewal terms; provided, however,
that either party hereto may prevent such automatic renewal by notifying the
other party in writing of its desire not to renew this Agreement at least six
(6) months prior to the expiration of the initial term or any renewal term
hereof.
2. Termination. This Agreement may be terminated at any time during
-----------
the term as follows:
-7-
<PAGE>
a. by mutual written consent of the parties at any time;
b. by either party, at any time and for any reason, by written
notice to the other delivered on or after June 30, 1998, delivered at least one
(1) year prior to the date of termination;
c. by either party following thirty (30) days notice that the
other party is in breach of any of its material obligations under this Agreement
or the Tinel-Lock Lease Agreement and a failure of the breaching party to cure
the breach within the thirty (30) day period unless the breach is not cured in
which case the Agreement shall terminate immediately following notice. Nothing
contained in this paragraph shall in any way limit a party's right to terminate
this Agreement immediately upon notice as provided in Section 6.2(b) and (d).
If either party fails to keep or perform any of its material obligations
hereunder and such default continues for a period of thirty (30) days after the
defaulting party has been notified of the default by the other party, then the
non-defaulting party may suspend this Agreement (and the Tinel-Lock Lease
Agreement) forthwith upon written notice to the other party until such time as
the default has been cured. However, a non-defaulting party who has suspended
performance pursuant to this Section 6.2(c) or (d) shall not be precluded from
terminating the Agreement pursuant to Sections 6.2(a),(b) or (d)(or from
pursuing its other lawful rights) in the event that the defaulting party does
not cure the default prior to such termination.
(d) by Buyer immediately if, without Buyer's consent, (i)
ownership of more than 25% of the issued and outstanding stock of Seller on a
fully-diluted basis is transferred, beneficially or of record, to a person or
entity or group of persons or entities that Buyer reasonably deems to be a
competitor; (ii) all or substantially all of Seller's assets are transferred in
a single transaction or series of transactions; or (iii) there is a change of
more than one-half of Seller's board of directors in a one-year period.
3. Rights on Termination. Upon termination of this Agreement, Buyer
---------------------
may sell all of its inventory of Products.
F. TECHNICAL SERVICE AND SUPPORT
-----------------------------
1. Engineering Support. During the term of this Agreement, Seller
-------------------
shall make available to Buyer at no cost, at Buyer's request, reasonable
engineering support for customer applications.
2. Customer Tours. Seller shall make its plant available, upon
--------------
reasonable notice and at a reasonable time, to Buyer, for the purpose of
conducting tours for Buyer's customers.
-8-
<PAGE>
G. LISTING AND APPROVAL
--------------------
1. Listing. Seller agrees to use commercially reasonable efforts
-------
both to obtain necessary government or regulatory approvals and agency listing
and to assist Buyer in obtaining, as necessary, such approvals and listings for
Products.
H. INTELLECTUAL PROPERTY
---------------------
1. Buyer Trademark.
---------------
a. Seller hereby acknowledges Buyer's ownership of all right,
title and interest in Buyer's trademarks and trade names which Buyer uses to
sell the Products. Seller further acknowledges that it shall acquire no
interest therein by virtue of this Agreement or the performance by either party
of their respective duties and obligations hereunder.
b. Buyer hereby grants Seller during the term of this Agreement
a fully paid-up, royalty-free, non-transferable, non-exclusive, limited license
to use specified Buyer's trademarks and trade names (i) for the purpose of
placing such trademarks and trade names on Products, and packaging therefor, to
be sold to Buyer (and only to Buyer) pursuant to this Agreement, and (ii) for
use in reports, press releases and other literature concerning Seller and its
business and operations.
c. Buyer reserves the right to approve all uses by Seller of
Buyer's proprietary names and marks in the Products (and related packaging
materials) in advance.
2. Copyright License. Seller grants Buyer a license to use any
-----------------
literature, data sheets or other documents, without using Seller's trade name,
which may relate to Products in connection with the marketing or sale of
Products.
3. Buyer's Trade Secrets and Proprietary Information. Seller
-------------------------------------------------
acknowledges that the Products are proprietary in nature and that Buyer claims
certain trade secrets, copyright and patent rights granted by law therein and
that Buyer neither grants nor otherwise transfers any rights of ownership in any
such intellectual property to Seller.
I. QUALITY CONTROL
---------------
1. Quality Control. Seller must meet Buyer's requirements for
---------------
certified suppliers, as set forth in Exhibit E, and quality control standards as
provided by Buyer to Seller from time to time. Products shall also be
manufactured and supplied to the specifications agreed to on Exhibit B. Seller
shall use reasonable commercial efforts to obtain ISO 9000 certification.
2. Compliance With Laws. All Products sold to Buyer by Seller shall
--------------------
be new and tested per industry standards and the
-9-
<PAGE>
specifications identified in Exhibit B hereto. Products shall also meet and be
manufactured in accordance with the applicable statutory and regulatory
requirements and any applicable federal, state or local requirements.
3. QC Records. Seller shall be required to submit appropriate QC
----------
records per Buyer's requirements.
4. Changes. Seller shall not make any material changes or process
-------
changes with respect to any Products manufactured by Seller and sold to Buyer
without Buyer's prior written consent, which shall not be unreasonably withheld
or delayed. It will not be unreasonable for Buyer to withhold consent where
Buyer's customers need to consent to such changes. The Product Managers shall
establish a system for managing this consent process.
5. Audit. Buyer shall have the right to perform quality inspections
-----
of Seller's manufacturing facility and process relating to Products at
reasonable times.
6. Test Report Requirement. Seller must supply test data and
-----------------------
certification for each Product as required by the Purchase Order. Test report
certified by Seller's quality control department ("Certified Test Report"),
containing the information as defined in Exhibit F, must be made available upon
Buyer's request.
J. INTERRUPTION OF, INABILITY OR UNWILLINGNESS TO SUPPLY
-----------------------------------------------------
1. Non-Supply. In addition to other remedies available pursuant to
----------
this Agreement or in law or equity, including but not limited to termination,
during the term of this Agreements in the event Seller is unable or unwilling to
supply Products pursuant to purchase orders submitted according to the terms of
this Agreement for any period longer than thirty (30) days which materially
interrupts the continuous supply of Products to Buyer, Buyer shall be entitled
to exercise its rights under the Tinel-Lock License Agreement of even date
herewith between the parties ("License Agreement") until such time as the
continuous supply is reestablished. Buyer shall be released from its
obligations under Section 2.1 during this period.
2. Delayed Deliveries. In addition to other remedies available
------------------
pursuant to the Agreement or in law or equity, should repeated, unexcused,
delayed deliveries of more than three percent (3%) of an ordered quantity occur
more than twelve (12) times over a calendar year period with an average delay of
ten (10) business days or of one (1) single delayed delivery exceeding one (1)
month, Buyer shall be entitled to exercise its rights under the License
Agreement with respect to the delayed Product or Products and the exclusivity
required for purchases by Section 2.1 shall not apply to such Product or
Products. Exercise of rights under the License Agreement does not by itself
constitute a termination of this Agreement.
-10-
<PAGE>
K. CONFIDENTIALITY
---------------
1. Confidential Information. The receiving party shall, from the
------------------------
date of disclosure of any Confidential Information and for a period of ten (10)
years thereafter, use the information solely for its own internal use consistent
with this Agreement, not disclose the information to any person or persons
outside its organization, and disclose the information to any person or persons
within its organization only on a "need to know" basis.
2. If either party is compelled to make a disclosure of any
Confidential Information of the other party by law or government rule or
regulation:
a. such disclosure shall be limited to the extent required; and
b. the other party shall have an opportunity to review the
information at least thirty (30) days before disclosure; and
c. the disclosing party shall promptly apply for applicable
protective orders.
Notwithstanding the foregoing, such review shall not make the reviewing party
responsible for the content of the disclosure.
L. JOINT INVENTIONS
----------------
1. Joint Inventions. It is anticipated that during the term of this
----------------
Agreement the parties will work together to develop new products. Any invention
or product made jointly by both parties will be jointly owned by both parties
("Joint Inventions"). During the term of this Agreement and thereafter, Buyer
shall have the exclusive rights to such Joint Inventions in the Field of Use.
2. Patents for Joint Inventions. In the event of such Joint
----------------------------
Inventions, if Buyer and Seller both wish to seek or maintain patent protection
for a Joint Invention, the costs of seeking or maintaining such patent
protection shall be divided equally between them. If only one (1) of Buyer and
Seller wishes to seek or maintain patent protection for a Joint Invention
("First Party"), it shall be entitled to do so at its own expense, and the other
party ("Second Party") shall provide, at the First Party's expense, all
reasonable assistance to that end. If the First Party, with respect to one or
more countries, thereafter decides not to seek patent protection for, or decides
to abandon a patent application or patent relating to, the Joint Invention, the
First Party shall notify the Second party in writing of its decision. The
Second Party shall then be entitled, after payment of half the out-of-pocket
costs already incurred by the First Party in seeking or maintaining patent
protection, to require that all rights in the Joint Invention in
-11-
<PAGE>
said country or countries be assigned to it so that it can seek or maintain
patent protection for the Joint Invention in said country or countries. The
notification shall be in writing and shall be made in a timely fashion which
preserves the patent rights. The First Party shall thereafter provide, at the
Second Party's expense, all reasonable assistance in seeking or maintaining
patent protection for the Joint Invention in said country or countries.
M. MISCELLANEOUS
-------------
1. Entire Agreement. This Agreement (together with Exhibits
----------------
attached hereto as such Exhibits may be amended from time to time in accordance
with this Agreement) constitutes the entire Agreement between Seller and Buyer
with respect to the sale of Products to Buyer and the resale of Products by
Buyer. All prior or contemporaneous agreements, whether written or oral, and
all proposals, understandings and communications between or involving Seller and
Buyer are hereby canceled and superseded. This Agreement may be amended only by
a written instrument executed by both parties.
2. Amendments and Waivers. No amendment of any provision of this
----------------------
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. No waiver by either party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
3. Severability. If any provision of this Agreement is held to be
------------
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the extent possible.
In any event, all other provisions of this Agreement shall be deemed valid and
enforceable to the full extent.
4. Succession and Assignment. This Agreement shall be binding upon
-------------------------
and inure to the benefit of the parties named herein and their respective
successors and permitted assigns. Neither party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of the other party. For purposes of the foregoing
sentence, an event after which those persons who were the beneficial owners of a
party immediately prior to such event beneficially own less than a majority of a
party immediately after such event shall be deemed to constitute an assignment.
5. Force Majeure. Neither Seller nor Buyer shall be liable for its
-------------
failure to perform its obligations under this Agreement due to events beyond its
reasonable control including, but not limited to, strikes, riots, wars, fire,
acts of God, labor unrest and acts in compliance with applicable law,
-12-
<PAGE>
regulation, or order (whether valid or invalid) of any governmental body.
6. Applicable Law. This Agreement and all transactions hereunder
--------------
shall be governed by and construed according to the laws of the State of
California, excluding the choice of laws rules thereof.
7. Survival. Sections 5.3, 11, 12 and 13.9 shall survive
--------
termination of this Agreement.
8. Notices. All notices, requests, demands, claims, and other
-------
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if three (3)
business days thereafter if registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Licensor: Copy (which shall not constitute
notice) to:
Raychem Corporation Raychem Corporation
Electronics Division 300 Constitution Drive
300 Constitution Drive Menlo Park, CA 94025-1164
Attn: Legal Department Attn: Legal Department MS 120/8502
MS 120/8502 Telecopier: (415) 361-4305
Telecopier: (415) 361-4305
If to the Licensee: Copy (which shall not constitute
notice) to:
Memry Corporation Finn Dixon & Herling
57 Commerce Drive One Landmark Square
Brookfield, CT 06804 Stamford, Connecticut 06901
Attn: Mr. James G. Binch Attn: David I. Albin, Esq.
Telecopies: (203) 740-2503 Telecopier: (203) 348-5777
Either party may send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopier, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Either party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other Party notice in the manner herein set forth.
9. Attorneys' Fees. If legal action is commenced to enforce the
---------------
performance of any part of this Agreement, the prevailing party shall be paid by
the other party reasonable attorneys' fees and expenses.
-13-
<PAGE>
10. Compliance With Federal Laws. Seller shall comply with all
----------------------------
applicable federal employment, equal opportunity, affirmative action and
environmental laws in the operation of Seller's business and shall provide Buyer
with any Material Safety Data Sheets or other information required by any
federal, state or local statute or regulation.
11. Remedies. Remedies provided herein are not exclusive. Delay in
--------
enforcing any right or remedy as a result of any breach hereof shall not be
deemed a waiver of that or any subsequent breach.
12. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but which together shall constitute
one and the same instrument.
13. Headings. The headings of the Sections of this Agreement are for
--------
convenience and shall not be used to interpret this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives and it shall be effective as of the
date first above written.
MEMRY CORPORATION RAYCHEM CORPORATION
By: /s/William H. Morton, Jr. By: /s/ Andrew F. Roake
------------------------- -------------------
Print Name: William H. Morton, Jr. Print Name: Andrew F. Roake
---------------------- ---------------
Title: Senior Vice President Title: Vice President
--------------------- --------------
-14-
<PAGE>
EXHIBIT A
PRODUCTS & PRICING
-15-
<PAGE>
EXHIBIT B
SPECIFICATIONS
-16-
<PAGE>
EXHIBIT C
BUYER'S SIX QUARTER FORECAST
-17-
<PAGE>
EXHIBIT D
RAYCHEM TERMS & CONDITIONS OF PURCHASE
-18-
<PAGE>
EXHIBIT E
PACKAGING AND LABELING REQUIREMENTS
-19-
<PAGE>
EXHIBIT F
TEST REPORT REQUIREMENTS
-20-
<PAGE>
EXHIBIT G
AGREEMENTS OF BUYER
-21-
<PAGE>
EXHIBIT 10.3
PRIVATE LABEL/DISTRIBUTION AGREEMENT
THIS Private Label/Distribution Agreement ("Agreement") is made as of
the 28th day of June, 1996 ("Effective Date"), between Memry Corporation, a
Delaware corporation with its principal place of business at 57 Commerce Drive,
Brookfield, Connecticut 06804 ("Seller") and the Electronics Division of Raychem
Corporation, a Delaware corporation with its principal place of business at 300
Constitution Drive, Menlo Park, California, 94025-1164 ("Buyer").
WHEREAS, Seller and Buyer are party to an Amended and Restated Asset
Purchase Agreement, dated as of May 10, 1996, as amended from time to time,
pursuant to which Seller is contemporaneously with the execution and delivery
hereof acquiring certain assets (including machinery and equipment, inventory,
trade secrets and other intellectual property) heretofore used by Buyer to
produce nickel titanium components sold by Buyer; and
WHEREAS, Buyer, principally through its Electronics Division, markets
and sells nickel titanium components, heretofore manufactured by Buyer, to its
customers throughout the world; and
WHEREAS, Buyer desires to secure for itself an uninterrupted source of
nickel titanium products from Seller subsequent to the execution and delivery
hereof, and Seller desires to be Buyer's exclusive supplier of such products,
both upon the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the premises, the agreements,
covenants and conditions herein contained, it is agreed as follows:
I. DEFINITIONS
-----------
For the purposes of this Agreement, the following terms shall have the
following respective meanings:
"Business Day" means a day on which banks are not required or authorized
to be closed in either the State of California or the State of Connecticut.
"Confidential Information" means any information or data disclosed
pursuant to this Agreement; provided, however, that information and data shall
not be deemed to be Confidential Information unless disclosed in writing and
clearly marked "confidential" or "proprietary" or, if disclosed orally, reduced
to writing and clearly marked "confidential" or "proprietary" and delivered to
the other party in such written and marked form within thirty (30) days
immediately following its oral
<PAGE>
disclosure; and further provided, that information and data shall not be deemed
to be Confidential Information if:
1. it is available to the public at the time of disclosure to the
receiving party, or thereafter becomes available to the public through no fault
of the receiving party, but in such event only as of such later date;
2. it is independently made available to the receiving party by a
third party without restrictions on disclosure; or
3. it is known to the receiving party before disclosure to the
receiving party by the disclosing party or developed by the receiving party
without reference to any Confidential Information of the disclosing party.
Customer lists and specifications of Buyer shall, subject to the
exceptions in clauses (a) through (c) above, be deemed "Confidential
Information" under this Agreement.
"Excluded Customers" shall mean Bausch & Lomb, United States Surgical
Corporation, any successors to the businesses of any of the foregoing, and any
other actual or potential customer to the extent (and only to the extent) that
such customer uses Products for implant applications.
"Field of Use" shall mean the following worldwide fields of use anywhere
in the world:
A. Sealing and fastening devices and components.
B. Mechanical protection devices and components.
C. Actuators and actuating devices and components including
mechanical, electrical, and hydraulic components, except if
and to the extent that any such device has been developed by
Memry (i.e., existing fluid and vapor valves, as well as
later generation and derivative fluid and vapor valves) prior
to the effective date hereof.
D. Any component or device used in any of the 6 levels of
electrical and electronic assemblies as set forth in Exhibit
H. -------
-
E. Noise and vibration dampening devices and components, except
with respect to sporting and leisure goods.
F. Medical and dental devices and components.
G. Fluid (gas, liquid, slurry and dry powder) fittings and
couplings.
-2-
<PAGE>
H. Electrical interconnection devices and components.
I. Any application in any of the following industries:
(a) Automotive
(b) Aerospace
(c) Marine
(d) Military Ground Systems
(e) Rail and Mass Transit
(f) Commercial Electronics
(g) Industrial Electronics
"GAAP" means United States generally accepted accounting principles as
in effect on the date hereof, applied on a basis consistent with the preparation
of Buyer's historical financial statements.
"Inventions" means all discoveries, know-how, inventions, developments
and improvements, whether patentable or not.
"License Agreement" means the License Agreement of even date herewith
between Buyer and Seller.
"Net Sales" means gross sales of the Products (other than Products
manufactured by Seller or its assignees or successors in interest) billed and
shipped by or on behalf of Buyer and its subsidiaries, less competitive
discounts actually allowed (other than advertising allowances or fees or
commissions to salesmen or sales representatives), and returns, and shall not
include billed taxes and customs duties paid by Buyer, freight and transit
insurance or any sale to Buyer's employees for any reason other than resale or
distribution. If a Licensed Product constitutes a component of a larger product,
then the gross sales from the sale of the larger product shall be allocated
across its component parts in proportion to their separate purchase prices (as
evidenced by recent third party sales), and if no such separate purchase prices
exist, then in proportion to their relative manufacturing costs. Net Sales shall
not include sales between the parties hereto, sales by independent distributors,
or sales between Buyer and its subsidiaries. Notwithstanding the above,
royalties shall be paid on all net sales of Products recorded as sales by Buyer
and its subsidiaries under GAAP in their consolidated audited financial
statements.
"Permitted Customers" shall mean all actual and potential customers for
the Products in the Field of Use, excluding only the Excluded Customers.
"Products" shall mean (i) Nickel Titanium Products listed on Exhibit A-1
hereto and (ii) Titanium Products listed on Exhibit A-2 hereto. Products listed
on Exhibit A-1 or A-2 shall meet the specifications identified in Exhibit B.
---------
Products shall not include Tinel-Lock(R) Products, which are covered by a
separate agreement between the parties.
-3-
<PAGE>
"Nickel Titanium Products" shall mean nickel titanium products currently
being manufactured, sold and/or used by Buyer specifically set forth on Exhibit
A-1 hereto, as well as any other similar and/or derivative nickel titanium
products that (i) meet mutually agreed upon criteria for ongoing business, or
(ii) Buyer and Seller hereafter mutually agree should become Nickel Titanium
Products under this Agreement, or (iii) are developed or manufactured by or for
Seller for the Field of Use; or (iv) are jointly developed by Buyer and Seller
for the Field of Use.
"Tinel-Lock(R) Products" shall mean products using any nickel titanium
alloy for the termination of electrical/electronic braid in connector or
interconnect applications. Although this is typically a ring of Alloy `X' (heat-
to-shrink) used to compress an overall cable shield onto a connector adapter,
other covered applications include, without limitation:
(a) wire, braid strap and other electrical grounding methods;
(b) metallic or non-metallic braid and straps used for mechanical
attachment of electrical/electronic or fiber optic cables and interconnection.
"Titanium Products" shall mean products made almost entirely of Titanium
and containing no Nickel which (i) Buyer and Seller hereafter mutually agree
should become Products under this Agreement (and which will be listed on Exhibit
A-2 hereto at the time of the agreement), or (ii) are developed or manufactured
by or for Seller for the Field of Use; or (iii) are jointly developed by Buyer
and Seller for the Field of Use.
Various other defined terms used herein are defined throughout this
Agreement.
II. PURCHASE AND SALE
-----------------
A. Purchase and Sale. Subject to and in accordance with the terms and
-----------------
conditions hereof, Seller shall sell to Buyer the Products identified on Exhibit
-------
A hereto from time to time. Except as specifically set forth herein, during the
- -
term of this Agreement, the Buyer shall purchase its entire requirements for
Products, whether for direct sale to third parties or for use by Buyer as
components for products being manufactured and sold by Buyer, from Seller, and
shall not manufacture Products for its own use, or purchase Products from any
other third party. Additional products that become Products will be deemed
added to Exhibit A from time to time without the need for further action.
B. Specifications. The Products shall meet the specifications
--------------
identified in Exhibit B hereto. The Product Managers defined in Section 6 below,
---------
shall be responsible for amending Exhibit B by mutual consent from time to time
---------
as required to reflect agreed upon specifications or to add or
-4-
<PAGE>
delete specifications as Products are added to or deleted from Exhibit A.
C. Resale. Subject to the terms hereof, Buyer may resell the Nickel
------
Titanium Products under Buyer's own trade names using Buyer's trade literature
and/or all or portion of Seller's literature, except Seller's trade name or
trademarks. Subject to the terms hereof, Buyer shall resell the Titanium
Products only under Buyer's trade names, but in conjunction with Seller's
trademarks.
D. Commitments of Seller. Seller hereby agrees to conduct its business
---------------------
and act in a manner as if the Seller were the named party therein in those
agreements of Buyer listed on Exhibit I (except that Seller shall not be
responsible for Buyer's conduct).
III. EXCLUSIVITY
-----------
A. Exclusivity. Buyer shall be the exclusive seller or distributor in
-----------
the Field of Use to Permitted Customers for Products during the term hereof.
Seller shall not market or sell Products or products similar to Products to any
Permitted Customer in the Field of Use either directly or indirectly through
OEMs, representatives, distributors or other third parties, other than Buyer
during the term hereof. Notwithstanding the two preceding sentences, however,
Seller may directly sell Products or other products similar to Products to
Permitted Customers in the Field of Use (i) for the first year following the
Effective Date hereof, to any customer who is an existing customer of Seller as
of the Effective Date as set forth on Exhibit G hereto; provided, however, that
this clause (i) only allows Seller to sell to any such customer during such
period products that have previously been sold to such customer by Seller prior
to June 30, 1996, or (ii) if, prior to its commercialization, a particular
product is being sold by Seller to a customer under a research and/or
development project.
IV. BUYER'S SALES EFFORTS
---------------------
A. During the term hereof Buyer shall:
1. continuously use reasonable efforts to promote the sale of the
Products at its own cost, through advertisement and through distribution of
literature, pamphlets, catalogs, samples and other merchandising aids, and
maintain customer relations with Permitted Customers in the Field of Use, and to
refrain from acts that could reasonably be expected to be detrimental to the
interests of the Seller;
2. maintain at all times and at its own cost (i) a sales
organization which Buyer determines, in its reasonable discretion, is capable of
promoting and selling the Products to Permitted Customers within the Field of
Use, and (ii) an inventory of Products in such amounts as it determines, in its
-5-
<PAGE>
reasonable discretion, to be sufficient to supply its customers with Products
with reasonable promptness;
3. maintain product liability insurance for any products
incorporating the Products in an amount that is usual and customary for Buyer's
business;
4. assuming Seller provides all requisite information to Buyer,
comply with all applicable laws and regulations, relating to the storage,
packaging and sale of the Products; and
5. not knowingly sell or distribute the Products to Excluded
Customers, and shall not knowingly sell such Products to Permitted Customers for
sale or transportation to Excluded Customers, nor sell such Products to a third
party after the Seller has notified the Buyer that such third party is reselling
such Products to Excluded Customers.
V. MANUFACTURING COST.
------------------
A. Seller shall make reasonable commercial efforts to reduce prices to
Buyer by continuously seeking lower raw material costs and improving its
processes and efficiencies to reduce manufacturing costs while maintaining
quality levels acceptable to Buyer and while meeting all of the terms and
conditions of this Agreement.
VI. PRODUCT MANAGERS
----------------
A. During the term of this Agreement, the parties shall each designate
one (1) Product Manager who shall be responsible for managing the relationship
between Seller and Buyer ("Product Manager"). The Product Managers shall confer
on a regular basis.
VII. TERMS AND CONDITIONS
--------------------
A. Purchase Orders. Buyer shall purchase Products by submitting to
---------------
Seller purchase orders for specific Products. Purchase orders shall specify the
type and quantity of Products to be purchased, the price, the delivery date, the
purchase order number, and test report and certification requirements. Purchase
orders shall be deemed accepted by Seller three Business Days after receipt,
unless Seller notifies Buyer within said period that it is rejecting such
purchase order in accordance with Section 7.4(a) below.
B. Pricing.
-------
1. The initial purchase price for each Product listed on Exhibit A-1
-----------
hereto is set forth opposite the description of such Product on said Exhibit
-------
A-1, and is intended to be the price for such Product for the period commencing
- ---
on the date hereof and continuing through June 30, 1997. The parties agree to
amend the purchase price for each Product effective as of every July 1 during
the term hereof, and to commence negotiations on said
-6-
<PAGE>
purchase price adjustments on or about each April 1 during the term hereof. New
Products added to Exhibit A from time to time, whether to Exhibit A-1 or A-2,
---------
will be priced at a mutually agreed upon price for such Product through the
period ending on the immediately subsequent June 30. The premise upon which
pricing for both Nickel Titanium Products and Titanium Products is and will be
based is as follows: (i) that the Buyer will achieve a thirty seven and one-half
percent (37.5%) gross margin on products purchased by Buyer from Seller, and the
Seller will achieve at least a thirty-seven and one-half percent (37.5%) gross
margin on such Products; and (ii) that in the event that aggregate margins are
not sufficient to achieve such a result, the price from Seller to Buyer will be
the price that provides Buyer and Seller with the same percentage margins for
said Product. The Seller will use a consistent basis for computing its costs
year-to-year.
2. In the event the parties cannot agree as to new pricing as of
June 1 of each year, the parties shall mutually agree on an individual, not
affiliated with either party, who shall make a final decision regarding pricing
(in accordance with the basis set forth in Section 7.2(a) above) by June 15 of
each year.
C. Rolling Forecasts. Every calendar quarter during the term hereof, at
-----------------
least one (1) full month prior to the commencement thereof, Buyer shall submit
to Seller its good-faith estimated requirements for the total dollar volume to
be purchased pursuant to this Agreement for each of the next six (6) calendar
quarters ("Buyer's Forecast"). Exhibit C hereto, which will be provided by June
1, 1996, consists of Buyer's Forecast for the period July 1, 1996, through
December 31, 1997 (the "Initial Forecast"), which Initial Forecast shall remain
in effect as Buyer's Forecast without amendment until submission of the six (6)
quarter forecast for the period October 1, 1996, through March 31, 1998, which
forecast will be due on or prior to September 1, 1996. Buyer will make
commercially reasonable efforts to make non-binding forecasts on a Product by
Product basis. Buyer and Seller shall each review Forecasts to assess whether it
would require an unreasonable spike in capacity (i.e., ramp-ups from one quarter
to the next or from the forecast for such quarter from one Buyer's Forecast to
the next) in which event the Buyer and Seller shall agree upon a mutually
acceptable alternative forecast. Ramp-ups of up to 25% per quarter in all events
shall be deemed reasonable.
D. Security Stock; Minimum Take Requirements.
-----------------------------------------
1. Seller covenants and agrees for every month during the term
hereof to have available for immediate delivery to Buyer, raw material and
manufacturing capacity sufficient to supply Buyer with an amount of Products
equivalent to 40% of the amount forecasted in Buyer's Forecast for the quarter,
except if and to the extent that changes in Product mix materially increase the
amount of manufacturing capacity necessary to process a given
-7-
<PAGE>
volume of raw material. Seller shall only have the right and ability to reject
purchase orders for which it is not required to have sufficient raw material and
manufacturing capacity.
2. Buyer covenants and agrees for every calendar quarter during the
term hereof either to order from Seller Products with an aggregate purchase
price equal to (i) One hundred percent (100%) of the Buyer's Forecast in dollar
volume for the first succeeding quarter after the delivery of the Buyer's
Forecast for such quarter, (ii) sixty-five percent (65%) of the Buyer's Forecast
amount in dollar volume for the second succeeding calendar quarter after the
Buyer's Forecast, and (iii) fifteen percent (15%) of the Buyer's Forecast in
dollar volume for the third succeeding quarter after the Buyer's Forecast, or
pay to Seller the difference between the amount of Product so ordered and the
greater of (i), (ii) or (iii) above.
E. Payment Terms; Invoice. Payment terms are net thirty (30) days after
----------------------
Buyer's receipt of Seller's invoice or the date of shipment (whichever is
later). The Buyer description and part number must be referenced on all invoices
and packing lists. All outstanding sums owed to Seller by Buyer shall accrue
interest at a rate of 1.0% per month (or any part thereof) if unpaid within
thirty (30) days after the due date therefor.
F. Terms and Conditions. Except as otherwise provided herein, each sale
--------------------
hereunder shall be governed by Buyer's Standard Terms and Conditions of Purchase
("Order Terms") attached hereto as Exhibit D. Such terms and conditions are
hereby incorporated herein by reference. Any preprinted terms and conditions in
any acknowledgment, invoice or other document submitted by Seller are superseded
by the terms of this Agreement. In the event of any inconsistency between this
Agreement and the Order Terms, this Agreement shall be controlling.
G. Delivery. Time is of the essence for Purchase Orders. Standard
--------
delivery for Products is six (6) weeks after receipt of Buyer's order. The
parties may agree on shorter lead times to meet customer needs. If Seller does
not meet the committed ship date Buyer may, at Buyer's option, without incurring
any liability, (a) extend the time for delivery, or (b) cancel all or any part
of the Purchase Order. The delivery dates for all Products sold pursuant to
this Agreement shall be deemed to be the dates on which they are placed by
Seller into the possession of Buyer's designated carrier, packed and ready for
shipment to Buyer's designated location. Invoices shall not precede the
delivery dates. Seller shall ship Products F.O.B., Seller's facility. All
Products shall be shipped by Buyer's designated standard land carrier unless
otherwise specified by Buyer. In the event that Buyer requests delivery by air
carrier, Seller shall use Buyer's designated standard air carrier unless
otherwise specified by Buyer. Delivery shall be made to Buyer's plant at Menlo
Park, California, unless otherwise specified by Buyer in writing.
-8-
<PAGE>
H. Packaging Requirements. The Nickel Titanium Products shall be packed
----------------------
using materials with Buyer's trade name as directed by Buyer. The Titanium
Products shall be packed using materials with Buyer's trade name and Seller's
trademarks, in a manner reasonably satisfactory to both Buyer and Seller.
Packaging and labeling requirements are defined in Exhibit E.
---------
I. Warranty. Seller warrants the Products as set forth in the Order
--------
Terms. Seller also warrants that the Products meet the specifications
identified in Exhibit B. These warranties shall be for a term of three (3)
---------
years from the date of shipment of the Products. These warranties shall inure
to the benefit of Buyer, its successors and assigns and to subsequent purchasers
of the Products and shall survive acceptance and use of, and payment for, the
Products.
J. Cancellations. Buyer shall have the right to cancel any order. In
-------------
the event Buyer cancels any order of Products upon less than thirty (30) days
notice, Buyer shall pay Seller a reasonable charge, to be negotiated in good
faith by the parties, for Seller's costs and expenses, which Seller shall use
its best efforts to properly mitigate. In no event shall the costs and expenses
exceed the purchase price for the Products described in the canceled order or
include consequential damages or lost profits. Buyer shall not pay any
cancellation charge if cancellation is due to Seller's failure to ship Products
in a timely manner pursuant to Section 7.7. Cancellation shall not in any way
affect Buyer's "take or pay" obligations set forth in Section 7.4(b) except to
the extent that cancellation results from a failure to perform by Seller.
K. Returns.
-------
1. Seller agrees to accept return of any Product that fails to
function as warranted in Section 7.9 In the event of a return pursuant to this
Section, Seller shall perform testing and analysis of the returned Product and
issue a written report to Buyer explaining the cause of the failure. Seller
will insure that problems detected in returned Products or reported to Seller
are corrected in future shipments of Products. Seller agrees to replace returned
Products with new Products immediately or to credit Buyer for the full amount of
the purchase price. IN NO EVENT SHALL SELLER BE LIABLE FOR ANY INCIDENTAL,
SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM THE USE OF ANY OF THE PRODUCTS
BY ANY PERSON; PROVIDED THAT THIS SHALL NOT LIMIT LIABILITY IN THE EVENT OF A
THIRD PARTY CLAIM AGAINST BUYER EXCEPT TO THE EXTENT OF SUCH LIABILITY; AND
FURTHER PROVIDED THAT THIS LIMITATION SHALL NOT APPLY TO COSTS ASSOCIATED WITH
FIXING CUSTOMER PROBLEMS. THE PARTIES SHALL COOPERATE IN ADDRESSING CUSTOMER
PROBLEMS AND WILL EQUITABLY SHARE THE COSTS.
2. Buyer shall carefully inspect all goods promptly upon the
receipt from the carrier. Any claim for breach of warranty hereunder must be
presented to the Seller, in writing, within thirty (30) days after discovery by
Buyer of the alleged
-9-
<PAGE>
defect and that a claim hereunder is probable. Failure to make a claim within
such specified period shall constitute a waiver of the claim only to the extent
that the Seller was thereby prejudiced. Claims must be accompanied by
supporting proof to the extent reasonably available.
L. Insurance. On written request from Buyer, Seller shall deliver to
---------
Buyer a certificate of insurance evidencing that Seller maintains product
liability insurance for the Products in an amount that is usual and customary
for Seller's business.
VIII. Status of Buyer
---------------
A. The parties expressly agree that the relationship established by
this Agreement as between Seller and Buyer is solely that of buyer and seller,
and Seller shall have no right to, and shall not, exercise any supervision or
direction over the Buyer or any of its employees. Nothing contained herein shall
create a partnership, joint venture, or any other business relationship between
Seller and Buyer, other than that of buyer and seller of Products hereunder.
B. Buyer shall not have authority to obligate or bind Seller with
respect to any matter, or make any contract, sale, agreement, warranty or
representation, express or implied, on behalf of Buyer.
C. Buyer shall conduct business solely in its own name and not that of
Seller and shall not use the words "Agent," "Agency" or words of similar import
on stationery, signs, documents, telephone listings, or otherwise in connection
with the name of Seller.
IX. SUBAGREEMENTS
-------------
A. The Buyer may distribute or sell Products purchased pursuant to this
Agreement through third party distributors, representatives or resellers without
the consent of the Seller. Buyer will give Seller prompt written notice of any
such subagreements.
X. TERM AND TERMINATION
--------------------
A. Initial Term. The initial term of this Agreement shall be the period
------------
commencing on the Effective Date and ending on June 30, 2001. Thereafter, the
term of this Agreement shall be automatically renewed for an unlimited number of
successive one (1) year renewal terms; provided, however, that either party
hereto may prevent such automatic renewal by notifying the other party in
writing of its desire not to renew this Agreement at least six (6) months prior
to the expiration of the initial term or any renewal term hereof.
B. Termination. This Agreement may be terminated at any time during the
-----------
term as follows:
-10-
<PAGE>
1. by either party, at any time and for any reason, by written
notice to the other party given on or after June 30, 1998 delivered at least one
(1) year prior to the date of termination;
2. by either party following thirty (30) days notice that the other
party is in breach of any of its material obligations under this Agreement and a
failure of the breaching party to cure the breach within the thirty (30) day
period, unless the breach is not capable of being cured in which case this
Agreement shall terminate immediately following notice. Nothing contained in
this paragraph shall in any way limit a party's right to terminate this
Agreement immediately upon notice as provided in Section 10.2(c) or (d). If
either party fails to keep or perform any of its material obligations hereunder
and such default continues for a period of thirty (30) days after the defaulting
party has been notified of the default by the other party, then the non-
defaulting party may suspend this Agreement forthwith upon written notice to the
other party until such time as the default has been cured. However, a non-
defaulting party who has suspended performance pursuant to this Section 10.2(b)
shall not be precluded from terminating the Agreement pursuant to Sections
10.2(b), (c) or (d) from pursuing its other lawful rights in the event that the
defaulting party does not cure the default prior to such termination.
3. by either party immediately (i) if any proceeding in bankruptcy,
reorganization or arrangement for the appointment of a receiver or trustee to
take possession of the other party's assets or any other proceeding under any
law for relief from creditors shall be instituted by or against the other party;
or (ii) if the other party shall make an assignment for the benefit of its
creditors. Each party shall immediately give written notice to the other party
of the occurrence of any event of the type described in this Section 10.2(c); or
4. by Buyer immediately if, without Buyer's consent,
(i) ownership of more than 25% of the issued and outstanding
stock of Seller on a fully-diluted basis is transferred, beneficially or of
record, to a person or entity or group of persons or entities that Buyer
reasonably deems to be a competitor;
(ii) all or substantially all of Seller's assets are transferred
in a single transaction or series of transactions; or
(iii) there is a change of more than one-half of Seller's board
of directors in a one-year period.
C. Rights on Termination.
---------------------
1. Upon termination of this Agreement, Buyer may sell all of its
inventory of Products.
-11-
<PAGE>
2. Notwithstanding anything to the contrary set forth in this
Agreement, upon (i) the termination of this Agreement for any reason, or (ii)
upon Seller's inability or unwillingness to supply as defined in Section 14 of
this Agreement, Buyer shall be entitled to exercise its rights to the License
Agreement.
XI. TECHNICAL SERVICE AND SUPPORT
-----------------------------
A. Engineering Support. During the term of this Agreement, Seller shall
-------------------
make available to Buyer at no cost, at Buyer's request, reasonable engineering
support for customer applications.
B. Customer Tours. Seller shall make its plant available, upon
--------------
reasonable notice and at a reasonable time, to Buyer for the purpose of
conducting tours for Buyer's customers.
XII. LISTING AND APPROVAL
--------------------
A. Listing. Seller agrees to use commercially reasonable efforts both
-------
to obtain necessary government or regulatory approvals and agency listings and
to assist Buyer in obtaining, as necessary, such approvals and listings for
Products.
XIII. INTELLECTUAL PROPERTY
---------------------
A. Buyer's Trademark.
-----------------
1. Seller hereby acknowledges Buyer's ownership of all right, title
and interest in Buyer's trademarks and trade names which Buyer uses to sell the
Nickel Titanium Products. Seller further acknowledges that it shall acquire no
interest therein by virtue of this Agreement or the performance by either party
of their respective duties and obligations hereunder. Buyer hereby acknowledges
Seller's ownership of all right, title and interest in Seller's trademarks and
trade names which Buyer uses to sell the Titanium Products. Buyer hereby
acknowledges that, except as set forth in Section 13.1(b) below, it shall
acquire no interest therein by virtue of this Agreement or the performance by
either party of their respective duties and obligations hereunder.
2. Buyer hereby grants Seller during the term of this Agreement a
fully paid-up, royalty-free, non-transferable, nonexclusive, limited license to
use Buyer's trademarks and trade names specified by Buyer for the purpose of
placing such trademarks and trade names on Nickel Titanium Products, and
packaging therefor, to be sold to Buyer (and only to Buyer) pursuant to this
Agreement. Seller hereby grants to Buyer during the term of this Agreement a
fully paid, royalty-free, non-transferable, nonexclusive, limited license to use
Seller's trademarks and trade names specified by Seller for the purpose of
placing such trademarks and trade names on Titanium Products and packaging
therefor, to be sold to Buyer pursuant to this Agreement.
-12-
<PAGE>
3. Buyer reserves the right to approve all uses by Seller of Buyer's
proprietary names and marks on the Nickel Titanium Products (and related
packaging materials) in advance. Seller reserves the right to approve all uses
by Buyer of Seller's proprietary names and marks on the Titanium Products (and
related packaging materials) in advance.
B. Copyright License. Seller grants Buyer a license to use any
-----------------
literature, data sheets or other documents, without using Seller's trade name,
relating to Products in connection with the marketing or sale of Products
purchased by Buyer pursuant to this Agreement.
XIV. INTERRUPTION OF, INABILITY OR UNWILLINGNESS TO SUPPLY
-----------------------------------------------------
A. Non-Supply; Delayed Deliveries.
------------------------------
1. Non-Supply. In addition to other remedies available pursuant to
----------
this Agreement or in law or equity, in the event Seller is unable or unwilling
to supply Products pursuant to the terms of this Agreement for any period longer
than thirty (30) days which materially interrupts the continuous supply of
Products to Buyer pursuant to the terms of this Agreement, Buyer shall be
entitled to exercise its rights under the License Agreement until such time as
the continuous supply is reestablished. The exclusivity requirements of Section
2.1 shall also be suspended during this period.
2. Delayed Deliveries. In addition to other remedies available
------------------
pursuant to the Agreement or in law or equity, should repeated, unexcused,
delayed deliveries of more than three percent (3%) of an ordered quantity occur
more than twelve (12) times over a calendar year period with an average delay of
ten (10) business days or of one (1) single delayed delivery exceeding one (1)
month, then Buyer shall be entitled to exercise its rights under the License
Agreement with respect to the delayed Product or Products, and the exclusivity
required for purchases by Section 2.1 shall not apply to such Product or
Products. Exercise of rights under the License Agreement does not by itself
constitute a termination of this Agreement.
XV. QUALITY CONTROL
---------------
A. Quality Control. Seller must meet Buyer's requirements for certified
---------------
suppliers, as set forth in Exhibit J, and commercially reasonable quality
---------
control standards as provided by Buyer to Seller from time to time. Products
shall also be manufactured and supplied to the specifications agreed to on
Exhibit B. Seller shall use reasonable commercial efforts to obtain ISO 9000
- ---------
certification.
B. Compliance With Laws. All Products sold to Buyer by Seller shall be
--------------------
new and tested per industry standards and shall comply with the specifications
identified in Exhibit B hereto. Products shall also meet and be manufactured in
---------
accordance with
-13-
<PAGE>
the applicable statutory and regulatory requirements and any applicable federal,
state or local requirements including Good Manufacturing Practices if required.
C. QC Records. Seller shall be required to submit appropriate QC
----------
records per Buyer's requirements.
D. Test Report Requirement. Seller must supply test data and
-----------------------
certification for each Product as required by the Purchase Order. Test reports
certified by Seller's quality control department ("Certified Test Report"),
containing the information as defined in Exhibit F, must be provided to Buyer or
---------
its customers upon Buyer's request.
E. Changes. Seller shall not make any material changes or process
-------
changes with respect to any Products manufactured by Seller and sold to Buyer
without Buyer's prior written consent, which shall not be unreasonably withheld
or delayed. It will not be unreasonable for Buyer to withhold consent if
Buyer's customers need to consent to such changes. The Product Managers shall
establish a system for managing this consent process.
F. Audit. Buyer shall have the right to perform quality inspections of
-----
Seller's manufacturing facility and manufacturing process relating to Products
at reasonable times and upon reasonable notice.
XVI. CONFIDENTIAL INFORMATION
------------------------
A. Confidential Information. The receiving party shall, from the date
------------------------
of disclosure of any Confidential Information and for a period of ten (10) years
thereafter, use the information solely for its own internal use consistent with
this Agreement, not disclose the information to any person or persons outside
its organization, and disclose the information to any person or persons within
its organization only on a "need to know" basis.
B. If either party is compelled to make a disclosure of any
Confidential Information of the other party by law or government rule or
regulation:
1. such disclosure shall be limited to the extent required; and
2. the other party shall have an opportunity to review the
information at least thirty (30) days before disclosure; and
3. the disclosing party shall promptly apply for applicable
protective orders.
Notwithstanding the foregoing, such review shall not make the reviewing party
responsible for the content of the disclosure.
XVII. JOINT INVENTIONS AND INVENTIONS SOLELY BY BUYER
-----------------------------------------------
-14-
<PAGE>
A. Nickel Titanium Products Joint Inventions. It is anticipated that
-----------------------------------------
the parties will work together to develop new Nickel Titanium Products during
the term of this Agreement. Any Invention relating to Nickel Titanium Products
or related products, process or materials made jointly by both parties will be
jointly owned by both parties ("Nickel Titanium Joint Inventions"). During the
term of this Agreement, Buyer shall have the exclusive right to sell or
distribute such Nickel Titanium Joint Inventions to Permitted Customers in the
Field of Use. Following termination of the Agreement, Buyer may, at its option,
elect to continue its exclusivity with respect to the Nickel Titanium Joint
Inventions to Permitted Customers in the Field of Use, even as to manufacture,
distribution or sale by Seller, by paying Seller a two percent (2%) royalty on
Net Sales of such Nickel Titanium Joint Inventions.
B. Titanium Products Joint Inventions. It is anticipated that the
----------------------------------
parties will work together to develop new Titanium Products during the term of
this Agreement. Any Invention relating to Titanium Products or related
products, process or materials made jointly by both parties will be jointly
owned by both parties ("Titanium Joint Inventions" and together with the Nickel
Titanium Joint Inventions, the "Joint Inventions"). During the term of this
Agreement, Buyer shall have the exclusive right to sell or distribute such
Titanium Joint Inventions to Permitted Customers in the Field of Use. Following
termination of the Agreement, Buyer may, at its option, elect to continue its
exclusivity with respect to the Titanium Joint Inventions to Permitted Customers
in the Field of Use, for distribution or sale by Seller, by paying Seller a two
percent (2%) royalty on Net Sales of such Titanium Joint Inventions.
C. Patents for Joint Inventions. In the event of such Joint Inventions,
----------------------------
if Buyer and Seller both wish to seek or maintain patent protection for a Joint
Invention, the costs of seeking or maintaining such patent protection shall be
divided equally between them. If only one (1) of Buyer and Seller wishes to seek
or maintain patent protection for a Joint Invention ("First Party"), it shall be
entitled to do so at its own expense, and the other party ("Second Party") shall
provide, at the First Party's expense, all reasonable assistance to that end. If
the First Party, with respect to one or more countries, thereafter decides not
to seek patent protection for, or decides to abandon a patent application or
patent relating to, the Joint Invention, the First Party shall notify the Second
party in writing of its decision. The Second Party shall then be entitled, after
payment of half the out-of-pocket costs already incurred by the First Party in
seeking or maintaining patent protection, to require that all rights in the
Joint Invention in said country or countries be assigned to it so that it can
seek or maintain patent protection for the Joint Invention in said country or
countries. The notification shall be in writing and shall be made in a timely
fashion which preserves the patent rights. The First Party shall thereafter
provide, at the Second Party's expense, all reasonable assistance in seeking or
-15-
<PAGE>
maintaining patent protection for the Joint Invention in said country or
countries.
D. Products Proposed or Invented Solely by Buyer. It is anticipated
---------------------------------------------
that Buyer will work to develop new Products during the term of this Agreement.
Any Invention relating to Nickel Titanium Products or Titanium Products made
solely by Buyer will be owned by Buyer. Such Inventions will become Products
only if accepted as Products by Seller. Seller hereby grants Buyer and its
affiliates an exclusive, perpetual, worldwide, irrevocable right and license,
with the right of sublicense and assignment, to utilize the Seller's "Licensed
Technology" (as defined in the License Agreement of even date between the
parties) to make, have made, use, import, offer for sale, and sell (a) products
invented solely by Buyer that would become Products except that Seller does not
agree to include them as such and (b) products that Buyer proposes to Seller for
manufacture and Seller decides not to manufacture.
XVIII. COOPERATION PROVISIONS
----------------------
A. General Cooperation.
-------------------
1. The parties agree to explore the possibility of Buyer purchasing
components made on traditional automatic screw machines from Seller's Wright
Machine Corporation subsidiary.
2. The parties agree to schedule and cause meetings of Seller's
President and the division manager of Buyer's Electronics Division, as well as
other appropriate personnel on both sides reasonably acceptable to the parties,
to be held not less than twice per calendar year in metropolitan San Francisco,
California (or such other site as is mutually acceptable to the parties). The
purpose of said meeting shall be to discuss how the parties are performing their
obligations under this agreement, how the relationships arising from said
agreements might be improved upon and strengthened and what other supply, sales,
distribution and/or similar relationships the parties might establish that would
prove to be mutually beneficial.
B. Agreements as to Titanium Products Post Closing. In the event that
-----------------------------------------------
this Agreement is terminated for any reason, Buyer may, by giving written notice
to Seller, continue to purchase Titanium Products from Seller, and resell said
Titanium Products to Permitted Customers in the Field of Use in accordance with
all the terms and conditions hereof, including without limitation Seller's
obligations under Section 7.4(b); provided, however, that Section 3.1 hereof
shall no longer be operative (i.e., Buyer shall no longer be an exclusive seller
and/or distributor). Pricing to Buyer shall initially be the lesser of (a) the
best price at which such Titanium Products are sold to Seller's distributors or
(b) a price that equals the average of Buyer's gross margin over the preceding
12 months for Titanium Products. Prices shall be reviewed at the end of the
first 12 months of this arrangement and annually thereafter. Pricing will
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<PAGE>
thereafter be based on the lower of (a) the best price at which such Titanium
Products are sold to Seller distributors or (b) a 35% discount from average end
user prices.
C. License for Titanium Products. Subject to the limitations set forth
-----------------------------
in the immediately succeeding sentence, Seller hereby grants to Buyer a non-
exclusive, perpetual, worldwide, irrevocable right and license (the "Titanium
License"), with the right of sublicense and assignment, to utilize the Titanium
Licensed Technology to make, have made, use, import, offer for sale, and sell
Titanium Products to Permitted Customers in the Field of Use. Notwithstanding
the foregoing, Buyer's right to practice under the Titanium License shall become
effective only at such time as this Agreement has been terminated, Buyer has
given the notice specified in Section 18.2 and Seller has materially breached
its obligations to supply Titanium Products under said Section 18.2 in a manner
that would allow a party hereto to terminate the Agreement under the standards
of Section 10.2(b). If the Titanium License shall become effective as
aforesaid, Buyer shall pay to Seller a royalty of three per cent (3%) of Net
Sales of Licensed Products during the life of the Titanium Patents. For
purposes of this Section 18.3, the following terms shall have the following
definitions:
1. "Titanium Licensed Technology" means any and all of the
Proprietary Rights (as defined in the License Agreement) now owned or licensed
or hereafter acquired by Seller relating to Titanium Products.
2. "Titanium Patents" means Patents (as defined in the License
Agreement) owned by Seller having one or more claims covering the Titanium
Products manufactured or sold by Buyer.
XIX. MISCELLANEOUS
-------------
A. Entire Agreement. This Agreement (together with Exhibits attached
----------------
hereto as such Exhibits may be amended from time to time in accordance with this
Agreement) constitutes the entire Agreement between Seller and Buyer with
respect to the sale of Products to Buyer and the resale of Products by Buyer.
All prior or contemporaneous agreements, whether written or oral, and all
proposals, understandings and communications between or involving Seller and
Buyer are hereby canceled and superseded. This Agreement may be amended only by
a written instrument executed by both parties.
B. Amendments and Waivers. No amendment of any provision of this
----------------------
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. No waiver by either Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
-17-
<PAGE>
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
C. Severability. If any provision of this Agreement is held to be
------------
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the extent possible.
In any event, all other provisions of this Agreement shall be deemed valid and
enforceable to the full extent.
D. Succession and Assignment. This Agreement shall be binding upon and
-------------------------
inure to the benefit of the parties named herein and their respective successors
and permitted assigns. Neither party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other party. For purposes of the foregoing sentence, an event
after which those persons who were the beneficial owners of a party immediately
prior to such event beneficially own less than a majority of a party immediately
after such event shall be deemed to constitute an assignment.
E. Force Majeure. Neither Seller nor Buyer shall be liable for its
-------------
failure to perform its obligations under this Agreement due to events beyond its
reasonable control including, but not limited to, strikes, riots, wars, fire,
acts of God, labor unrest and acts in compliance with applicable law,
regulation, or order (whether valid or invalid) of any governmental body.
F. Status of Parties. This Agreement will not be construed as creating
-----------------
any agency, partnership, joint venture, or other similar legal relationship
between the parties; nor will either party hold itself out as the agent,
partner, or co-venturer of the other party. Both parties shall be, and shall
act as, independent contractors.
G. Applicable Law. This Agreement and all transactions hereunder shall
--------------
be governed by and construed according to the laws of the State of California,
excluding the choice of laws rules thereof.
H. Survival. Sections 10.1, 16.1, 16.2, 17, 18.2, 18.3 and 19.10 shall
--------
survive termination of this Agreement.
I. Notices. All notices, requests, demands, claims, and other
-------
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if three (3)
business days thereafter if registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
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<PAGE>
If to the Seller: Copy (which shall not constitute
notice) to:
Raychem Corporation Raychem Corporation
Electronic Division 300 Constitution Drive
300 Constitution Drive Menlo Park, C 94025-1164
Menlo Park, CA 94025 Attn: Legal Department MS 120/8502
Telecopier: Telecopier: (415) 361-4305
If to the Licensee: Copy (which shall not constitute
notice) to:
Memry Corporation Finn Dixon & Herling
57 Commerce Drive One Landmark Square
Brookfield, CT 06804 Stamford, Connecticut 06901
Attn: Mr. James G. Binch Attn: David I. Albin , Esq.
Telecopier: (203) 740-2503 Telecopier: (203) 348-5777
Either party may send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopier, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Either party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other Party notice in the manner herein set forth.
J. Attorneys' Fees. If legal action is commenced to enforce the
---------------
performance of any part of this Agreement, the prevailing party shall be paid by
the other party reasonable attorneys' fees and expenses.
K. Counterparts. This Agreement may be executed in counterparts, each
------------
of which shall be deemed an original, but which together shall constitute one
and the same instrument.
L. Headings. The headings of the Sections of this Agreement are for
--------
convenience and shall not be used to interpret this Agreement.
M. Remedies. Remedies provided herein are not exclusive. Delay in
--------
enforcing any right or remedy as a result of any breach hereof shall not be
deemed a waiver of that or any subsequent breach.
N. Compliance With Federal Laws. Seller shall comply with all
----------------------------
applicable federal employment, equal opportunity, affirmative action and
environmental laws in the operation of Seller's business and shall provide Buyer
with any Material Safety Data Sheets or other information required by any
federal, state or local statute or regulation.
-19-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives and it shall be effective as
of the date first above written.
MEMRY CORPORATION RAYCHEM CORPORATION
By: /s/William H. Morton, Jr. /s/ Andrew F. Roake
------------------------- -------------------
Print Name: William H. Morton, Jr. Print Name: Andrew F. Roake
---------------------- ----------------------------
Title: Senior Vice President Title: Vice President
--------------------- ----------------------
-20-
<PAGE>
EXHIBIT A-1
NICKEL TITANIUM PRODUCTS
PRODUCTS & PRICING
-21-
<PAGE>
EXHIBIT A-2
TITANIUM PRODUCTS
-22-
<PAGE>
EXHIBIT B
SPECIFICATIONS
-23-
<PAGE>
EXHIBIT C
BUYER'S SIX QUARTER FORECAST
-24-
<PAGE>
EXHIBIT D
RAYCHEM'S STANDARD TERMS & CONDITIONS OF PURCHASE
-25-
<PAGE>
EXHIBIT E
PACKAGING & LABELING REQUIREMENTS
-26-
<PAGE>
EXHIBIT F
TEST REPORT REQUIREMENTS
-27-
<PAGE>
EXHIBIT G
SELLER'S EXISTING CUSTOMERS
-28-
<PAGE>
EXHIBIT H
ELECTRICAL AND ELECTRONIC ASSEMBLIES
-29-
<PAGE>
EXHIBIT I
AGREEMENTS OF BUYER
-30-
<PAGE>
EXHIBIT 10.4
SEE BACK OF SIGNATURE PAGE FOR RESTRICTIVE LEGENDS
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE DISTRIBUTION THEREOF. THESE SECURITIES
MAY NOT BE OFFERED, SOLD, PLEDGED, OR TRANSFERRED.
NO. WB - ________ WARRANT TO PURCHASE 1,130,000 SHARES OF COMMON STOCK
(SUBJECT TO ADJUSTMENT)
WARRANT TO PURCHASE COMMON STOCK, PAR VALUE $0.01 PER SHARE
OF
MEMRY CORPORATION
VOID AFTER JUNE 28, 2003
This certifies that, for value received, Raychem Corporation, a
Delaware corporation (the "Holder"), is entitled, subject to the terms set
forth below, to purchase from Memry Corporation, a Delaware corporation
(the "Company"), 1,130,000 shares of the common stock, par value $0.01 per
share ("Common Stock"), of the Company, as constituted on the date hereof
(the "Warrant Issue Date"), upon surrender hereof, at the principal office
of the Company referred to below, with the Notice of Exercise form attached
hereto as Annex I duly executed, and simultaneous payment therefor in
lawful money of the United States or otherwise as hereinafter provided, at
the "Exercise Price" as set forth in Section 2 below. The number,
character and Exercise Price of such shares of Common Stock are subject to
adjustment as provided below. The term "Warrant" as used herein shall
include this Warrant and any warrants delivered in substitution,
replacement or exchange therefor as provided herein.
This Warrant is issued in connection with the transactions
contemplated by that certain Amended and Restated Asset Purchase Agreement,
dated as of May 10, 1996, as amended from time to time, between the Holder
and the Company (the "Asset Purchase Agreement") and the Registration
Rights Agreement (the "Registration Rights Agreement"), dated of even date
herewith, between the Holder hereof and the Company. The Holder of this
Warrant is subject to certain restrictions, and shall be entitled to
certain rights and privileges, including registration rights, set forth in
the Registration Rights Agreement.
1. TERM OF WARRANT. Subject to the terms and conditions set forth herein,
this Warrant shall be exercisable, in whole or in part, during the term
commencing on the date hereof and ending at 5:00 p.m., Eastern Standard
Time, on June 28, 2003, and shall be void thereafter.
<PAGE>
2. EXERCISE PRICE. The Exercise Price at which this Warrant may be
exercised shall be $0.01 per share of Common Stock, as adjusted from time
to time pursuant to Section 11 hereof.
3. EXERCISE OF WARRANT.
(a) The purchase rights represented by this Warrant are exercisable by
the Holder in whole or in part at any time, or from time to time, during
the term hereof as described in Section 1 above, by the surrender of this
Warrant and the Notice of Exercise attached as Annex I hereto duly
completed and executed on behalf of the Holder, at the principal office of
the Company (or such other office or agency of the Company as it may
designate by notice in writing to the Holder at the address of the Holder
appearing on the books of the Company), upon payment (i) in cash payable to
the Company, (ii) by wire transfer, (iii) by cancellation by the Holder of
indebtedness of the Company to the Holder, or (iv) by some combination of
(i), (ii) and (iii), in each case, of the exercise price of the shares of
Common Stock to be purchased.
(b) This Warrant shall be deemed to have been exercised immediately
prior to the close of business on the date of its surrender for exercise as
provided above, and the person entitled to receive the shares of Common
Stock issuable upon such exercise shall be treated for all purposes as the
holder of record of such shares as of the close of business on such date.
As promptly as practicable on or after such date and in any event within
ten (10) days thereafter, the Company, at its expense, shall issue and
deliver to the person or persons entitled to receive the same, a
certificate or certificates for the number of shares issuable upon such
exercise. In the event that this Warrant is exercised in part, the
Company, at its expense, shall execute and deliver a new Warrant of like
tenor exercisable for the number of shares for which this Warrant may then
be exercised.
(c) Notwithstanding any provisions herein to the contrary, if the
fair market value of one share of Common Stock is greater than the Exercise
Price (at the date of calculation as set forth below), in lieu of
exercising this Warrant for cash, the Holder may elect to receive shares of
Common Stock equal to the value (as determined below) of this Warrant (or
the portion thereof being cancelled) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed Notice
of Exercise and notice of such election in which event the Company shall
issue to the Holder a number of shares of Common Stock computed using the
following formula:
X = Y(A-B)
------
A
Where X = the number of shares of Common Stock to be issued to the
Holder;
Y = the number of shares of Common Stock purchasable under the
Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being cancelled (at
the date of such calculation);
A = the fair market value of one share of the Company's Common
Stock (at the date of such calculation); and
B = Exercise Price (as adjusted to the date of such
calculation).
- 2 -
<PAGE>
For purposes of the above calculation, the fair market value of one share
of Common Stock shall be the average of the closing bid and asked prices of
the Common Stock quoted in the over-the-counter market, or if not so
quoted, the average of the high bid and low asked prices in the over-the-
counter market, or the last reported sale price of the Common Stock or the
closing price quoted on the NASDAQ National Market System or on any
exchange on which the Common Stock is listed, whichever is applicable, as
published in the Eastern Edition of The Wall Street Journal for the five
--- ---- ------ -------
trading days prior to the date of determination of fair market value;
provided, however, that if no public market for the Common Stock exists at
-------- -------
the time of such exercise, the fair market value per share shall be
determined by the Company's Board of Directors in good faith.
4. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would
otherwise be entitled, the Company shall make a cash payment equal to the
Exercise Price multiplied by such fraction.
5. REPLACEMENT OF WARRANT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation
of this Warrant and, in the case of loss, theft or destruction, on delivery
of an indemnity agreement reasonably satisfactory in form and substance to
the Company or, in the case of mutilation, on surrender and cancellation of
this Warrant, the Company at its expense shall execute and deliver, in lieu
of this Warrant, a new warrant of like tenor and amount.
6. RIGHTS OF STOCKHOLDERS. Subject to Sections 9 and 11 hereof, the
Holder shall not be entitled to vote or receive dividends or be deemed the
holder of Common Stock or any other securities of the Company that may at
any time be issuable on the exercise hereof for any purpose, nor shall
anything contained herein be construed to confer upon the Holder, as such,
any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance of stock, reclassification of
stock, change of par value, or change of stock to no par value,
consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until
this Warrant shall have been exercised as provided herein.
7. REGISTRATION OF WARRANT; SECURITIES LAW MATTERS.
(a) WARRANT REGISTER. The Company shall maintain a register (the
"Warrant Register") containing the address of the Holder. The Holder may
change its address as shown on the Warrant Register by written notice to
the Company requesting such change. Any notice or written communication
required or permitted to be given to the Holder may be delivered or given
by mail to such Holder as shown on the Warrant Register and at the address
shown on the Warrant Register. The Company may treat the Holder as shown
on the Warrant Register as the absolute owner of this Warrant for all
purposes, notwithstanding any notice to the contrary.
(b) COMPLIANCE WITH SECURITIES LAWS. (i) The Holder of this Warrant,
by acceptance hereof, acknowledges that this Warrant is being acquired
solely for the Holder's own account and not as a nominee for any other
party, and for investment, and that the Holder shall not offer, sell or
otherwise dispose of this Warrant, except under circumstances that will not
result in a violation of the Act or any state securities laws. Upon
exercise of this Warrant the Holder shall, if reasonably requested by the
Company, confirm in writing, in a form satisfactory to the Company, that
the shares of Common Stock
- 3 -
<PAGE>
so purchased are being acquired solely for the Holder's own account and not
as a nominee for any other party, for investment, and not with a view
toward distribution or resale.
(ii) All shares of Common Stock issued upon exercise hereof
shall be stamped or imprinted with a legend in substantially the following
form (in addition to any legend required by state securities laws):
THE SHARES OF COMMON STOCK REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SHARES OF
COMMON STOCK REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD, TRANSFERRED,
EXCHANGED OR OTHERWISE DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE ACT,
AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER, AND ANY OTHER
APPLICABLE LAW, RULES AND REGULATIONS, INCLUDING, WITHOUT LIMITATION,
APPLICABLE STATE SECURITIES LAWS, RULES AND REGULATIONS.
8. RESERVATION OF STOCK.
The Company covenants that during the term that this Warrant is
exercisable, the Company shall reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of
Common Stock upon the exercise of all or any portion of this Warrant and,
from time to time, shall take all steps necessary to amend its Certificate
of Incorporation, as amended (the "Certificate") to provide sufficient
reserves of shares of Common Stock issuable upon exercise of the Warrant.
The Company further covenants that all shares which may be issued upon the
exercise of the rights represented by this Warrant and payment of the
Exercise Price, all as set forth herein, will be free from all taxes, liens
and charges in respect of the issue thereof (other than taxes in respect of
any transfer occurring contemporaneously or otherwise specified herein).
The Company agrees that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of
Common Stock upon the exercise of this Warrant.
9. CERTIFICATES OF ADJUSTMENT; NOTICES
(a) Whenever the Exercise Price or number of shares purchasable
hereunder shall be adjusted or readjusted pursuant to Section 11 hereof,
the Company shall issue a certificate signed by its Chief Financial Officer
setting forth, in reasonable detail, the event requiring the adjustment or
readjustment, the amount of the adjustment or readjustment, the method by
which such adjustment was calculated and the Exercise Price and number of
shares purchasable hereunder after giving effect to such adjustment and the
amount, if any, of other property that at the time would be received upon
exercise of the Warrant, all after giving effect to such adjustment or
readjustment. A copy of such certificate to be mailed to the Holder of
this Warrant in accordance with Section 13 hereof.
- 4 -
<PAGE>
(b) In the event:
(i) that the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time receivable upon the
exercise of this Warrant) for the purpose of entitling them to receive any
dividend or other distribution, or any right to subscribe for or purchase
any shares of stock of any class or any other securities, or to receive any
other right; or
(ii) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any conveyance
of all of substantially all of the assets of the Company to another
corporation; or
(iii) of any voluntary dissolution, liquidation or winding-up of
the Company,
then, and in each such case, the Company shall mail or cause to be mailed
to the Holder a notice specifying, as the case may be, (A) the date on
which a record is to be taken for the purposes of such dividend,
distribution or right, and stating the amount and character of such
dividend, distribution or right, or (b) the date on which such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up is to take place, and the time, if
any is to be fixed, as of which the holders of record of Common Stock (or
such stock or securities at the time receivable upon the exercise of this
Warrant) shall be entitled to exchange their shares of Common Stock (or
such other stock or securities) for securities or other property
deliverable upon such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up. Such notice
shall be mailed at least 20 days prior to the date therein specified for
the occurrence of any of the foregoing events.
(c) All such notices, advice and communications shall be deemed to
have been given in the manner set forth in Section 13 hereof.
10. AMENDMENTS
This Warrant or any term of provision hereof may not be amended
without the written consent of the Company and the Holder.
11. ADJUSTMENTS. The Exercise Price and the number of shares
purchasable hereunder are subject to adjustment from time to time as
follows:
11.1. MERGER, SALE OF ASSETS, ETC. If at any time while this Warrant
or any portion hereof is outstanding and unexpired, there shall be (i) a
reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), (ii) a merger or
consolidation of the Company with or into another corporation in which the
Company is not the surviving entity and by which the shares of the
Company's capital stock outstanding immediately prior to the merger are
converted by virtue of the merger into other property, whether in the form
of securities, cash, or otherwise, or (iii) a sale or transfer of the
Company's properties and assets as, or substantially as, an entirety to any
other person, then, as a part of such reorganization, merger,
consolidation, sale or transfer, lawful provision shall be made so that the
holder of this Warrant shall thereafter be entitled to receive upon
exercise of this Warrant, during the period specified herein and upon
payment of the Exercise Price then in effect, the number of shares of stock
or other securities or property of the successor corporation resulting from
such reorganization, merger, consolidation, sale or transfer which a holder
of the shares deliverable upon exercise of this Warrant would have been
entitled to receive in
- 5 -
<PAGE>
such reorganization, consolidation, merger, sale or transfer if this
Warrant had been exercised immediately before such reorganization,
consolidation, merger, sale or transfer, all subject to further adjustment
as provided in this Section 11. The foregoing provisions of this Section
11.1 shall similarly apply to successive reorganizations, consolidations,
mergers, sales and transfers and to the stock or securities of any other
corporation that are at the time receivable upon the exercise of this
Warrant. If the per-share consideration payable to the Holder for shares
in connection with any such transaction is in a form other than cash or
marketable securities, then the value of such consideration shall be
determined in good faith by the Company's Board of Directors. In all
events, appropriate adjustment (as determined in good faith by the
Company's Board of Directors) shall be made in the application of the
provisions of this Warrant with respect to the rights and interest of this
Warrant shall be applicable after that event, as near as reasonably may be,
in relation to any shares or other property deliverable after that event
upon exercise of this Warrant.
11.2. RECLASSIFICATION, ETC. If the Company, at any time while this
Warrant or any portion hereof remains outstanding and unexpired, by
reclassification of securities or otherwise, shall change any of the
securities as to which purchase rights under this Warrant exist into the
same or a different number of securities of any other class or classes,
this Warrant shall thereafter represent the right to acquire such number
and kind of securities as would have been issuable as the result of such
change with respect to the securities that were subject to the purchase
rights under this Warrant immediately prior to such reclassification or
other change and the Exercise Price therefor shall be appropriately
adjusted, all subject to further adjustment as provided in this Section 11.
11.3. SPLIT, SUBDIVISION OR COMBINATION OF SHARES. If the Company at
any time while this Warrant or any portion hereof remains outstanding and
unexpired, shall split, subdivide or combine the securities as to which
purchase rights under this Warrant exist, into a different number of
securities of the same class, the Exercise Price for such securities shall
be proportionately decreased, and the number of shares of such securities
for which this Warrant may be exercised shall be proportionately increased,
in the case of a split or subdivision, or the Exercise Price for such
securities shall be proportionately increased and the number of shares of
such securities for which this Warrant may be exercised shall be
proportionately decreased, in the case of a combination.
11.4. ADJUSTMENTS FOR CASH DIVIDENDS AND DIVIDENDS IN STOCK OR OTHER
SECURITIES OR PROPERTY. If at any time while this Warrant or any portion
hereof remains outstanding and unexpired, the holders of the Common Stock
or other securities as to which purchase rights under this Warrant exist at
the time shall have received, or, on or after the record date fixed for the
determination of eligible Stockholders, shall have become entitled to
receive, without payment therefor, cash or other or additional stock or
other securities or property of the Company by way of dividend or other
distribution, then and in each case, this Warrant shall represent the right
to acquire, in addition to the number of shares of the security receivable
upon exercise of this Warrant, and without payment of any additional
consideration therefor, the amount of such cash or other or additional
stock or other securities or property of the Company that the Holder would
hold on the date of such exercise had it been the holder of record of the
security receivable upon exercise of this Warrant on the date hereof and
had thereafter, during the period from the date hereof to and including the
date of such exercise, retained such shares and/or all other additional
stock available by it as aforesaid during such period, giving effect to all
adjustments called for during such period by the provisions of this Section
11.
11.5. NO IMPAIRMENT. The Company shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue
- 6 -
<PAGE>
or sale of securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but shall at all times in good faith
assist in the carrying out of all the provisions of this Section 11 and in
the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Holder of this Warrant against impairment.
12. GOVERNING LAW. This Warrant shall be governed by and construed
in accordance with the laws of the State of Delaware.
13. NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered
or certified mail, postage prepaid, or otherwise delivered by hand or by
messenger, addressed (i) if to the Holder at 300 Constitution Drive, Menlo
Park, CA 94025, Attention: Kenneth C. Frederick, or at such other address
as the Holder shall have furnished to the Company in writing, or (ii) if to
the Company, to 57 Commerce Drive, Brookfield, CT 06804, Attention: James
G. Binch, or at such other address as the Company shall have furnished to
the Holder. Such notices or communications shall be deemed given if
personally delivered, on the date of delivery by hand or by messenger, or
three (3) days after mailing if send by mail as set forth herein.
14. DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power, or remedy accruing to the Holder upon any breach or default under
this Warrant, shall be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent, or
approval of any kind or character on the part of the Holder of any breach
or default under this Warrant, or any waiver on the part of any party of
any provisions or conditions of this Warrant, must be in writing and shall
be effective only to the extent specifically set forth in such writing.
All remedies, either under this Warrant or by law or otherwise afforded to
the Holder shall be cumulative and not alternative.
15. SEVERABILITY. If any provision of this Warrant is held to be
unenforceable under applicable law, then such provision shall be excluded
from this Warrant and the balance of this Warrant shall be interpreted as
if such provision were so excluded and shall be enforceable in accordance
with its terms. A court of competent jurisdiction, in its discretion, may
substitute for the excluded provision an enforceable provision which in
economic substance reasonably approximates the excluded provision.
16. PRONOUNS. All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the identity of the
person or persons may require.
Executed effective on this 28th day of June, 1996.
RAYCHEM CORPORATION MEMRY CORPORATION
By:/s/ Andrew F. Roake By:/s/ William H. Morton, Jr.
------------------- --------------------------
Andrew F. Roake William H. Morton, Jr.
Vice President Senior Vice President
- 7 -
<PAGE>
ANNEX I
-------
NOTICE OF EXERCISE
To: Memry Corporation
(1) The undersigned hereby irrevocably elects to purchase _____ shares
of Common Stock of Memry Corporation, a Delaware corporation, pursuant to
the terms of the attached Warrant, and tenders herewith payment of the
purchase price for such shares in full, unless the Holder elects to
exercise such Warrant in accordance with Section 3(c) thereof in lieu of
making a cash payment therefor.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock to be issued are being
acquired solely for the account of the undersigned and not as a nominee for
any other party, and for investment, and that the undersigned shall not
offer, sell or otherwise dispose of any such shares of Common Stock except
under circumstances that will not result in a violation of the Securities
Act of 1933, as amended, or any state securities laws.
(3) Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned.
Dated: _____________________ RAYCHEM CORPORATION
By: _________________________________
Name:
Title:
- 8 -
<PAGE>
EXHIBIT 10.5
SEE BACK OF SIGNATURE PAGE FOR RESTRICTIVE LEGEND
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE DISTRIBUTION THEREOF. THESE SECURITIES
MAY NOT BE OFFERED, SOLD, PLEDGED, OR TRANSFERRED.
NO. WA - ________ WARRANT TO PURCHASE 1,250,000 SHARES OF COMMON STOCK
(SUBJECT TO ADJUSTMENT)
WARRANT TO PURCHASE COMMON STOCK, PAR VALUE $0.01 PER SHARE
OF
MEMRY CORPORATION
VOID AFTER JUNE 28, 2003
This certifies that, for value received, Raychem Corporation, a
Delaware corporation (the "Holder"), is entitled, subject to the terms set
forth below, to purchase from Memry Corporation, a Delaware corporation
(the "Company"), 1,250,000 shares of the common stock, par value $0.01 per
share ("Common Stock"), of the Company, as constituted on the date hereof
(the "Warrant Issue Date"), upon surrender hereof, at the principal office
of the Company referred to below, with the Notice of Exercise form attached
hereto as Annex I duly executed, and simultaneous payment therefor in
lawful money of the United States or otherwise as hereinafter provided, at
the "Exercise Price" as set forth in Section 2 below. The number,
character and Exercise Price of such shares of Common Stock are subject to
adjustment as provided below. The term "Warrant" as used herein shall
include this Warrant and any warrants delivered in substitution,
replacement or exchange therefor as provided herein.
This Warrant is issued in connection with the transactions
contemplated by that certain Amended and Restated Asset Purchase Agreement,
dated as of May 10, 1996, as amended from time to time, between the Holder
and the Company (the "Asset Purchase Agreement") and the Registration
Rights Agreement (the "Registration Rights Agreement"), dated of even date
herewith, between the Holder hereof and the Company. The Holder of this
Warrant is subject to certain restrictions, and shall be entitled to
certain rights and privileges, including registration rights, set forth in
the Registration Rights Agreement.
1. TERM OF WARRANT. Subject to the terms and conditions set forth herein,
this Warrant shall be exercisable, in whole or in part, during the term
commencing on the date hereof and ending at 5:00 p.m., Eastern Standard
Time, on June 28, 2003, and shall be void thereafter.
2. EXERCISE PRICE. The Exercise Price at which this Warrant may be
exercised shall be $2.00 per share of Common Stock, as adjusted from time
to time pursuant to Section 11 hereof.
<PAGE>
3. EXERCISE OF WARRANT.
(a) The purchase rights represented by this Warrant are exercisable by
the Holder in whole or in part at any time, or from time to time, during
the term hereof as described in Section 1 above, by the surrender of this
Warrant and the Notice of Exercise attached as Annex I hereto duly
completed and executed on behalf of the Holder, at the principal office of
the Company (or such other office or agency of the Company as it may
designate by notice in writing to the Holder at the address of the Holder
appearing on the books of the Company), upon payment (i) in cash payable to
the Company, (ii) by wire transfer, (iii) by cancellation by the Holder of
indebtedness of the Company to the Holder, or (iv) by some combination of
(i), (ii) and (iii), in each case, of the exercise price of the shares of
Common Stock to be purchased.
(b) This Warrant shall be deemed to have been exercised immediately
prior to the close of business on the date of its surrender for exercise as
provided above, and the person entitled to receive the shares of Common
Stock issuable upon such exercise shall be treated for all purposes as the
holder of record of such shares as of the close of business on such date.
As promptly as practicable on or after such date and in any event within
ten (10) days thereafter, the Company, at its expense, shall issue and
deliver to the person or persons entitled to receive the same, a
certificate or certificates for the number of shares issuable upon such
exercise. In the event that this Warrant is exercised in part, the
Company, at its expense, shall execute and deliver a new Warrant of like
tenor exercisable for the number of shares for which this Warrant may then
be exercised.
(c) Notwithstanding any provisions herein to the contrary, if the
fair market value of one share of Common Stock is greater than the Exercise
Price (at the date of calculation as set forth below), in lieu of
exercising this Warrant for cash, the Holder may elect to receive shares of
Common Stock equal to the value (as determined below) of this Warrant (or
the portion thereof being cancelled) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed Notice
of Exercise and notice of such election in which event the Company shall
issue to the Holder a number of shares of Common Stock computed using the
following formula:
X = Y(A-B)
------
A
Where X = the number of shares of Common Stock to be issued to the
Holder;
Y = the number of shares of Common Stock purchasable under the
Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being cancelled (at
the date of such calculation);
A = the fair market value of one share of the Company's Common
Stock (at the date of such calculation); and
B = Exercise Price (as adjusted to the date of such
calculation).
For purposes of the above calculation, the fair market value of one share
of Common Stock shall be the average of the closing bid and asked prices of
the Common Stock quoted in the over-the-counter market, or if not so
quoted, the average of the high bid and low asked prices in the over-the-
counter market, or
- 2 -
<PAGE>
the last reported sale price of the Common Stock or the closing price
quoted on the NASDAQ National Market System or on any exchange on which the
Common Stock is listed, whichever is applicable, as published in the
Eastern Edition of The Wall Street Journal for the five trading days prior
--- ---- ------ -------
to the date of determination of fair market value; provided, however, that
-------- -------
if no public market for the Common Stock exists at the time of such
exercise, the fair market value per share shall be determined by the
Company's Board of Directors in good faith.
4. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would
otherwise be entitled, the Company shall make a cash payment equal to the
Exercise Price multiplied by such fraction.
5. REPLACEMENT OF WARRANT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation
of this Warrant and, in the case of loss, theft or destruction, on delivery
of an indemnity agreement reasonably satisfactory in form and substance to
the Company or, in the case of mutilation, on surrender and cancellation of
this Warrant, the Company at its expense shall execute and deliver, in lieu
of this Warrant, a new warrant of like tenor and amount.
6. RIGHTS OF STOCKHOLDERS. Subject to Sections 9 and 11 of this Warrant,
the Holder shall not be entitled to vote or receive dividends or be deemed
the holder of Common Stock or any other securities of the Company that may
at any time be issuable on the exercise hereof for any purpose, nor shall
anything contained herein be construed to confer upon the Holder, as such,
any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance of stock, reclassification of
stock, change of par value, or change of stock to no par value,
consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until
this Warrant shall have been exercised as provided herein.
7. REGISTRATION OF WARRANT; SECURITIES LAW MATTERS.
(a) WARRANT REGISTER. The Company shall maintain a register (the
"Warrant Register") containing the address of the Holder. The Holder may
change its address as shown on the Warrant Register by written notice to
the Company requesting such change. Any notice or written communication
required or permitted to be given to the Holder may be delivered or given
by mail to such Holder as shown on the Warrant Register and at the address
shown on the Warrant Register. The Company may treat the Holder as shown
on the Warrant Register as the absolute owner of this Warrant for all
purposes, notwithstanding any notice to the contrary.
(b) COMPLIANCE WITH SECURITIES LAWS. (i) The Holder of this Warrant,
by acceptance hereof, acknowledges that this Warrant is being acquired
solely for the Holder's own account and not as a nominee for any other
party, and for investment, and that the Holder shall not offer, sell or
otherwise dispose of this Warrant, except under circumstances that will not
result in a violation of the Act or any state securities laws. Upon
exercise of this Warrant the Holder shall, if reasonably requested by the
Company, confirm in writing, in a form satisfactory to the Company, that
the shares of Common Stock so purchased are being acquired solely for the
Holder's own account and not as a nominee for any other party, for
investment, and not with a view toward distribution or resale.
- 3 -
<PAGE>
(ii) All shares of Common Stock issued upon exercise hereof
shall be stamped or imprinted with a legend in substantially the following
form (in addition to any legend required by state securities laws):
THE SHARES OF COMMON STOCK REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SHARES OF
COMMON STOCK REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD, TRANSFERRED,
EXCHANGED OR OTHERWISE DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE ACT,
AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER, AND ANY OTHER
APPLICABLE LAW, RULES AND REGULATIONS, INCLUDING, WITHOUT LIMITATION,
APPLICABLE STATE SECURITIES LAWS, RULES AND REGULATIONS.
8. RESERVATION OF STOCK.
The Company covenants that during the term that this Warrant is
exercisable, the Company shall reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of
Common Stock upon the exercise of all or any portion of this Warrant and,
from time to time, shall take all steps necessary to amend its Certificate
of Incorporation, as amended (the "Certificate") to provide sufficient
reserves of shares of Common Stock issuable upon exercise of the Warrant.
The Company further covenants that all shares which may be issued upon the
exercise of the rights represented by this Warrant and payment of the
Exercise Price, all as set forth herein, will be free from all taxes, liens
and charges in respect of the issue thereof (other than taxes in respect of
any transfer occurring contemporaneously or otherwise specified herein).
The Company agrees that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of
Common Stock upon the exercise of this Warrant.
9. CERTIFICATES OF ADJUSTMENT; NOTICES
(a) Whenever the Exercise Price or number of shares purchasable
hereunder shall be adjusted or readjusted pursuant to Section 11 hereof,
the Company shall issue a certificate signed by its Chief Financial Officer
setting forth, in reasonable detail, the event requiring the adjustment or
readjustment, the amount of the adjustment or readjustment, the method by
which such adjustment was calculated and the Exercise Price and number of
shares purchasable hereunder after giving effect to such adjustment and the
amount, if any, of other property that at the time would be received upon
exercise of the Warrant, all after giving effect to such adjustment or
readjustment. A copy of such certificate to be mailed to the Holder of
this Warrant in accordance with Section 13 hereof.
(b) In the event:
(i) that the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time receivable upon the
exercise of this Warrant) for the purpose of entitling them to receive any
dividend or other distribution, or any right to subscribe for or purchase
any shares of stock of any class or any other securities, or to receive any
other right; or
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<PAGE>
(ii) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any conveyance
of all of substantially all of the assets of the Company to another
corporation; or
(iii) of any voluntary dissolution, liquidation or winding-up of
the Company,
then, and in each such case, the Company shall mail or cause to be mailed
to the Holder a notice specifying, as the case may be, (A) the date on
which a record is to be taken for the purposes of such dividend,
distribution or right, and stating the amount and character of such
dividend, distribution or right, or (b) the date on which such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up is to take place, and the time, if
any is to be fixed, as of which the holders of record of Common Stock (or
such stock or securities at the time receivable upon the exercise of this
Warrant) shall be entitled to exchange their shares of Common Stock (or
such other stock or securities) for securities or other property
deliverable upon such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up. Such notice
shall be mailed at least 20 days prior to the date therein specified for
the occurrence of any of the foregoing events.
(c) All such notices, advice and communications shall be deemed to
have been given in the manner set forth in Section 13 hereof.
10. AMENDMENTS
This Warrant or any term of provision hereof may not be amended
without the written consent of the Company and the Holder.
11. ADJUSTMENTS. The Exercise Price and the number of shares purchasable
hereunder are subject to adjustment from time to time as follows:
11.1. MERGER, SALE OF ASSETS, ETC. If at any time while this Warrant
or any portion hereof is outstanding and unexpired, there shall be (i) a
reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), (ii) a merger or
consolidation of the Company with or into another corporation in which the
Company is not the surviving entity and by which the shares of the
Company's capital stock outstanding immediately prior to the merger are
converted by virtue of the merger into other property, whether in the form
of securities, cash, or otherwise, or (iii) a sale or transfer of the
Company's properties and assets as, or substantially as, an entirety to any
other person, then, as a part of such reorganization, merger,
consolidation, sale or transfer, lawful provision shall be made so that the
holder of this Warrant shall thereafter be entitled to receive upon
exercise of this Warrant, during the period specified herein and upon
payment of the Exercise Price then in effect, the number of shares of stock
or other securities or property of the successor corporation resulting from
such reorganization, merger, consolidation, sale or transfer which a holder
of the shares deliverable upon exercise of this Warrant would have been
entitled to receive in such reorganization, consolidation, merger, sale or
transfer if this Warrant had been exercised immediately before such
reorganization, consolidation, merger, sale or transfer, all subject to
further adjustment as provided in this Section 11. The foregoing
provisions of this Section 11.1 shall similarly apply to successive
reorganizations, consolidations, mergers, sales and transfers and to the
stock or securities of any other corporation that are at the time
receivable upon the exercise of this Warrant. If the per-share
consideration payable to the Holder for shares in connection with any such
transaction is in a form other than cash or marketable securities, then the
value of such consideration shall be determined in good faith by the
Company's Board of Directors. In all
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<PAGE>
events, appropriate adjustment (as determined in good faith by the
Company's Board of Directors) shall be made in the application of the
provisions of this Warrant with respect to the rights and interest of this
Warrant shall be applicable after that event, as near as reasonably may be,
in relation to any shares or other property deliverable after that event
upon exercise of this Warrant.
11.2. RECLASSIFICATION, ETC. If the Company, at any time while this
Warrant or any portion hereof remains outstanding and unexpired, by
reclassification of securities or otherwise, shall change any of the
securities as to which purchase rights under this Warrant exist into the
same or a different number of securities of any other class or classes,
this Warrant shall thereafter represent the right to acquire such number
and kind of securities as would have been issuable as the result of such
change with respect to the securities that were subject to the purchase
rights under this Warrant immediately prior to such reclassification or
other change and the Exercise Price therefor shall be appropriately
adjusted, all subject to further adjustment as provided in this Section 11.
11.3. SPLIT, SUBDIVISION OR COMBINATION OF SHARES. If the Company at
any time while this Warrant or any portion hereof remains outstanding and
unexpired, shall split, subdivide or combine the securities as to which
purchase rights under this Warrant exist, into a different number of
securities of the same class, the Exercise Price for such securities shall
be proportionately decreased, and the number of shares of such securities
for which this Warrant may be exercised shall be proportionately increased,
in the case of a split or subdivision, or the Exercise Price for such
securities shall be proportionately increased and the number of shares of
such securities for which this Warrant may be exercised shall be
proportionately decreased, in the case of a combination.
11.4. ADJUSTMENTS FOR DIVIDENDS IN STOCK OR OTHER SECURITIES OR
PROPERTY. If at any time while this Warrant or any portion hereof remains
outstanding and unexpired, the holders of the Common Stock or other
securities as to which purchase rights under this Warrant exist at the time
shall have received, or, on or after the record date fixed for the
determination of eligible Stockholders, shall have become entitled to
receive, without payment therefor, other or additional stock or other
securities or property (other than cash) of the Company by way of dividend
or other distribution, then and in each case, this Warrant shall represent
the right to acquire, in addition to the number of shares of the security
receivable upon exercise of this Warrant, and without payment of any
additional consideration therefor, the amount of such other or additional
stock or other securities or property (other than cash) of the Company that
the Holder would hold on the date of such exercise had it been the holder
of record of the security receivable upon exercise of this Warrant on the
date hereof and had thereafter, during the period from the date hereof to
and including the date of such exercise, retained such shares and/or all
other additional stock available by it as aforesaid during such period,
giving effect to all adjustments called for during such period by the
provisions of this Section 11.
11.5. NO IMPAIRMENT. The Company shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by
the Company, but shall at all times in good faith assist in the carrying
out of all the provisions of this Section 11 and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of
the Holder of this Warrant against impairment.
12. GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware.
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<PAGE>
13. NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered
or certified mail, postage prepaid, or otherwise delivered by hand or by
messenger, addressed (i) if to the Holder at 300 Constitution Drive, Menlo
Park, CA 94025, Attention: Kenneth C. Frederick, or at such other address
as the Holder shall have furnished to the Company in writing, or (ii) if to
the Company, to 57 Commerce Drive, Brookfield, CT 06804, Attention: James
G. Binch, or at such other address as the Company shall have furnished to
the Holder. Such notices or communications shall be deemed given if
personally delivered, on the date of delivery by hand or by messenger, or
three (3) days after mailing if send by mail as set forth herein.
14. DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power, or remedy accruing to the Holder upon any breach or default under
this Warrant, shall be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent, or
approval of any kind or character on the part of the Holder of any breach
or default under this Warrant, or any waiver on the part of any party of
any provisions or conditions of this Warrant, must be in writing and shall
be effective only to the extent specifically set forth in such writing.
All remedies, either under this Warrant or by law or otherwise afforded to
the Holder shall be cumulative and not alternative.
15. SEVERABILITY. If any provision of this Warrant is held to be
unenforceable under applicable law, then such provision shall be excluded
from this Warrant and the balance of this Warrant shall be interpreted as
if such provision were so excluded and shall be enforceable in accordance
with its terms. A court of competent jurisdiction, in its discretion, may
substitute for the excluded provision an enforceable provision which in
economic substance reasonably approximates the excluded provision.
16. PRONOUNS. All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the identity of the
person or persons may require.
Executed effective on this 28th day of June, 1996.
RAYCHEM CORPORATION MEMRY CORPORATION
By: /s/ Andrew F. Roake By: /s/ William H. Morton, Jr.
--------------------- ---------------------------------
Name: Andrew F. Roake Name: /s/ William H. Morton, Jr.
--------------- ---------------------------
Title: Vice President Title: Senior Vice President
-------------- --------------------------
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<PAGE>
ANNEX I
-------
NOTICE OF EXERCISE
To: MEMRY CORPORATION
(1) The undersigned hereby irrevocably elects to purchase _____ shares
of Common Stock of MEMRY CORPORATION, a Delaware corporation, pursuant to
the terms of the attached Warrant, and tenders herewith payment of the
purchase price for such shares in full, unless the Holder elects to
exercise such Warrant in accordance with Section 3(c) thereof in lieu of
making a cash payment therefor.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock to be issued are being
acquired solely for the account of the undersigned and not as a nominee for
any other party, and for investment, and that the undersigned shall not
offer, sell or otherwise dispose of any such shares of Common Stock except
under circumstances that will not result in a violation of the Securities
Act of 1933, as amended, or any state securities laws.
(3) Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned.
Dated: _____________________ RAYCHEM CORPORATION
By: _________________________________
Name:
Title:
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<PAGE>
EXHIBIT 10.6
FINDERS FEE AGREEMENT
THIS Finders Fee Agreement (the "Agreement") is made as of the 28th day of
June, 1996, by and between Raychem Corporation ("Finder"), a Delaware
corporation having its principal executive offices at 300 Constitution Drive,
Menlo Park, California 94025-1164, and Memry Corporation ("Supplier"), a
Delaware corporation having its principal executive offices at 57 Commerce
Drive, Brookfield, Connecticut 06820. Capitalized terms used herein and not
otherwise defined herein shall have the meanings given to those terms in that
certain Amended and Restated Asset Purchase Agreement (the "Purchase
Agreement"), dated as of May 10, 1996, as amended from time to time, between
Finder and Supplier.
R E C I T A L S
- - - - - - - -
WHEREAS, Finder and Supplier are party to the Purchase Agreement, pursuant
to which Supplier, contemporaneously with the execution and delivery hereof, is
acquiring the Acquired Assets (including, without limitation, machinery and
equipment, inventory, trademarks, trade names, trade secrets and other
intellectual property) heretofore used by Finder in the Business to produce
nickel titanium components; and
WHEREAS, Supplier is not acquiring from Finder the Excluded Assets,
including the Medical Patents, which Medical Patents Finder contemplates selling
to an unrelated third party (the "Medical Patent Purchaser") at some point in
the future; and
WHEREAS, Supplier is a potential manufacturer of products produced by or
for the Medical Patent Purchasers, and arrangements may be entered into in the
future under which Supplier would manufacture and sell such products to the
Medical Patent Purchaser, its assignee, successor or designated manufacturer.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
covenants of the parties herein and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereby agree
as follows:
A. Finders Fee. If Supplier shall have entered into an agreement with or
-----------
receives orders from an unrelated third party, on terms and conditions
acceptable to it in its sole discretion under which it would manufacture and
sell products covered by the Medical Patents to or for the Medical Patent
Purchaser (after such time as the Medical Patents shall have been sold or
transferred to it), its assignees, successors or designated manufacturer
designee, Supplier agrees to pay to Finder, in cash, a fee equal to ten percent
(10%) of the Net Sales of such products up to a maximum cumulative total fee of
$2,000,000.
<PAGE>
B. Net Sales. Net Sales shall mean gross sales of the Products billed and
---------
shipped by or on behalf of Supplier and its subsidiaries or permitted
sublicensees or assigns, less competitive discounts actually allowed (other than
advertising allowances, or fees or commissions to salesmen or sales
representatives), and returns, and shall not include billed taxes and customs
duties paid by Supplier, freight and transit insurance, any sale to Supplier's
employees for any reason other than resale or distribution or any sales by
Supplier to or through Finder or its assignee or successor in interest. Net
Sales shall not include sales between the parties hereto or sales between
Supplier and its subsidiaries. Notwithstanding the above, royalties shall be
paid on all net sales of Products recorded as sales by Supplier and its
subsidiaries under GAAP in their consolidated audited financial statements.
Amounts due pursuant to this Agreement shall accrue as and when a sale
subject to a royalty is recorded under GAAP by Supplier. The fee shall be paid
quarterly to Supplier by Supplier within forty-five (45) days of the end of each
calendar quarter during which such Net Sales are recorded.
C. Audit. Finder may elect and Supplier shall allow, at `Finder's
-----
expense, and upon reasonable notice, an independent certified public accounting
firm of nationally recognized standing appointed by Finder, to examine the books
and records of Supplier pertaining to sales for calculating the Finder's Fee.
All information received by or disclosed to such firm shall be confidential
information of Supplier and shall not be disclosed to any other party; provided
that the results (but not the basis thereof) may be disclosed to Finder.
D. Limitations. Nothing in this Agreement shall obligate Finder to sell
-----------
its Medical Patents to any person, at any time, on any terms, all of which shall
be in its sole and absolute discretion. Nothing in this Agreement shall
obligate Supplier to undertake to manufacture products covered by the Medical
Patents for any person on any terms, all of which shall be in its sole and
absolute discretion. Supplier shall have no obligation to Finder hereunder to
pay a fee with respect to any sales which are not actually made, including sales
contracted for by Supplier which are not completed for any reason, including any
breach by Supplier under any such contract.
E. Status of Finder.
----------------
1. The parties expressly agree that the relationship established by
this Agreement as between Supplier and Finder is solely that of an independent
contractor. Nothing contained herein shall create a partnership, joint venture,
or any other business relationship between Supplier and Finder, other than that
of an independent contractor.
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<PAGE>
2. Finder shall not have authority to obligate or bind Supplier with
respect to any matter, or make any contract, sale, agreement, warranty or
representation, express or implied, on behalf of Supplier.
3. Finder shall conduct business solely in its own name and not that
of its Supplier and shall not use the words "Agent", "Agency" or words of
similar import on stationery, signs, documents, telephone listings, or otherwise
in connection with the name of Supplier.
F. Duration of Contract.
--------------------
1. Subject to the remaining provisions of this Section 7, the
initial term of this Agreement shall be for the period commencing on the date
hereof and ending on June 30, 2006.
2. Either of the parties hereto, in its sole discretion, may
terminate this Agreement immediately upon the giving of written notice in
accordance with the provisions hereof if any proceeding in bankruptcy, any
proceeding for reorganization, any proceeding for the appointment of a receiver
or trustee, or any other proceeding under any law or by contract for the relief
of debtors shall be instituted by or against the other party or if the other
party makes any general assignment for the benefit of creditors.
3. Except as otherwise provided herein, in the event that either
party hereto shall be in default or breach of any material term or condition in
this Agreement, the party aggrieved by such default or breach may, in its sole
discretion, terminate this Agreement by giving the other party hereto thirty
(30) days prior written notice of termination unless the default or breach shall
be cured within such thirty (30) day period. Nothing contained in this
paragraph shall in any way limit a party's right to terminate this Agreement
immediately upon notice as provided in Section 7(b) above.
G. Applicable Law and Waiver of Breach.
-----------------------------------
1. This Agreement and any question concerning its validity,
construction or performance shall be governed by the laws of the State of
California, excluding the choice of law rules thereof.
2. Neither a course of conduct, nor any waiver by either party with
respect to a default or breach of any provision of this Agreement by the other
party, shall operate or be construed as a waiver of any subsequent default or
breach or as a modification of this Agreement.
H. Succession and Assignment. This Agreement shall be binding upon and
-------------------------
inure to the benefit of the parties named herein and their respective successors
and permitted assigns.
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<PAGE>
I. Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed an original but which together shall constitute one and
the same instrument.
J. Headings. The headings of the Sections of this Agreement are for
--------
convenience and shall not be used to interpret this Agreement.
K. Notices. All notices, requests, demands, claims, and other
-------
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (A) seven
business days after being sent by registered or certified mail, return receipt
requested, postage prepaid, or (B) one business day after being sent for "next
day delivery" by a recognized courier service, in each case addressed to the
intended recipient as set forth below:
If to the Finder: Copy (which shall not constitute
notice) to:
Raychem Corporation Raychem Corporation
Electronics Division 300 Constitution Drive
300 Constitution Drive Menlo Park, CA 94025-1165
Menlo Park, CA 94025-1165 Attn: Legal Department MS 120/8502
Attn: Legal Department Telecopier: (415) 361-4305
If to the Seller: Copy (which shall not constitute
notice) to:
Memry Corporation Finn Dixon & Herling
57 Commerce Drive One Landmark Square
Brookfield, CT 06804 Stamford, Connecticut 06901
Attn: Legal Department Attn: David I. Albin, Esq.
Telecopier: (203) 740-2503 Telecopier: (203) 348-5777
Either party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, messenger service,
telecopier, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient.
Either party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other party
notice in the manner herein set forth.
L. No License. This Agreement shall not be construed to confer upon
----------
Supplier or its customers any license under any patent of Finder or any third
party.
M. Attorneys' Fees. If legal action is commenced to enforce the
---------------
performance of any part of this Agreement, the
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<PAGE>
prevailing party shall be paid by the other party reasonable attorneys' fees and
expenses.
N. Entire Agreement. This Agreement, together with its Exhibits,
----------------
constitutes the entire agreement between the parties regarding the subject
matter hereof and supersedes any and all prior negotiations, correspondence,
understandings and agreements regarding such subject matter.
O. Severability. If any provision of this Agreement is held to be
------------
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the extent possible.
In any event, all other provisions of this Agreement shall be deemed valid and
enforceable to the full extent.
P. Remedies. Remedies provided herein are not exclusive.
--------
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year above written.
MEMRY CORPORATION RAYCHEM CORPORATION
By: /s/ William H. Morton, Jr. By: /s/ Andrew F. Roake
----------------------------- -------------------------
Print Name: William H. Morton, Jr. Print Name: Andrew F. Roake
--------------------- ---------------
Title: Senior Vice President Title: Vice President
--------------------- --------------
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