<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
--------------------
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT FO 1934
For the transition period from ________ to ________
Commission file number 0-14068
---------------------
Memry Corporation
-----------------------------------------
(Exact name of small business issuer as
specified in its charter)
Delaware 06-1084424
-----------------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
57 Commerce Drive, Brookfield, Connecticut 06804
-------------------------------------------------
(Address of principal executive offices)
(203) 740-7311
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date. As of December 31, 1995, 8,241,527
shares of the registrant's common stock, par value $.01 per share, were issued
and outstanding.
Transitional Small Business Disclosure Format (check one):
[ ]Yes [X]No
<PAGE>
INDEX
PART I - FINANCIAL INFORMATION
Page
ITEM 1. Financial Statements
Consolidated Balance Sheet as of 3
December 31, 1995 and June 30, 1995
Consolidated Statement of Operations for 4
the three months and six months
ended December 31, 1995 and 1994
Consolidated Statement of Cash Flows for 5
the six months ended December 31,
1995 and 1994
Notes to the Consolidated Financial Statements 6
ITEM 2. Management's Discussion and Analysis or Plan
of Operation 6
PART II - OTHER INFORMATION
ITEM 2. Changes in Securities 10
ITEM 4. Submission of Matters to a Vote of Security Holders 10
ITEM 6. Exhibits and Reports on Form 8-K 11
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<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
December 31, June 30,
1995 1995
ASSETS ------------ --------
<S> <C> <C>
Current assets
Cash and cash equivalents $49,000 $1,145,000
Accounts receivable less allowances
of $62,000 and $53,000 830,000 691,000
Inventories, net 943,000 849,000
Prepaid expenses and other 16,000 24,000
---------- ----------
Total current assets 1,838,000 2,709,000
Property, Plant & Equipment, net 1,195,000 1,233,000
Other Assets
Patents, at cost, net of accumulated
amortization of $59,000 and $57,000 3,000 5,000
Deposits and sundry 33,000 32,000
---------- ----------
Total other assets 36,000 37,000
Total assets $3,069,000 $3,979,000
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts Payable and accrued expenses $1,114,000 $2,189,000
Notes payable 1,040,000 1,163,000
Mortgage loan payable 519,000 910,000
Revolving loan 576,000 570,000
Term note payable 99,000 167,000
Current portion of capital lease obligations 4,000 4,000
---------- ----------
Total Current Liabilities $3,352,000 $5,003,000
Capital Lease Obligation, less current portion 6,000 7,000
Commitments and Contingencies
Stockholders' deficit
Preferred stock, $100 par value, authorized
100,000 shares of Series G, 424 shares issued
and outstanding 42,000 19,000
Common stock, $.01 par value; authorized shares -
25,000,000 issued and outstanding shares -
8,241,527 82,000 80,000
Additional paid-in capital 31,362,000 29,874,000
Accumulated deficit (31,775,000) (31,004,000)
---------- ----------
Total stockholders' deficit (289,000) (1,031,000)
Total liabilities and stockholders' deficit $3,069,000 $3,979,000
</TABLE>
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See Notes to Consolidated Financial Statements
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
For Three months ended December 31,
1995 1994
---------- --------
<S> <C> <C>
Product sales $1,000,000 $1,080,000
---------- ----------
Cost of Sales
Manufacturing 680,000 873,000
Research and development 98,000 46,000
---------- ----------
Gross Profit 222,000 161,000
Operating Expenses
General, selling, and administrative 539,000 504,000
Depreciation and amortization 24,000 97,000
---------- ----------
563,000 601,000
---------- ----------
Operating loss (341,000) (440,000)
========== ==========
Interest Expense 55,000 111,000
Net loss ($396,000) ($551,000)
========== ==========
Weighted average of common shares outstanding 8,172,000 5,340,122
Net loss per share ($0.05) ($0.10)
========== ==========
<CAPTION>
For Six months ended December 31,
1995 1994
--------- ---------
<S> <C> <C>
Product sales $2,181,000 $2,421,000
---------- ----------
Cost of Sales
Manufacturing 1,578,000 1,906,000
Research and development 235,000 127,000
---------- ----------
Gross Profit 368,000 388,000
Operating Expenses
General, selling, and administrative 981,000 1,004,000
Depreciation and amortization 48,000 140,000
========== ==========
Operating loss (661,000) (756,000)
========== ==========
Interest Expense 110,000 177,000
---------- ---------
Net loss ($771,000) ($933,000)
========== ==========
Weighted average of common shares outstanding 8,131,000 5,169,739
Net loss per share ($0.09) ($0.18)
========== ==========
</TABLE>
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See Notes to Consolidated Financial Statements.
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
<TABLE>
<CAPTION>
For Six Months Ended December 31,
1995 1994
-------- --------
<S> <C> <C>
Operating Activities ($771,000) ($933,000)
Net loss
Adjustments to reconcile net loss to cash
used in operating activities:
Depreciation and amortization 48,000 155,000
Change in operating assets and liabilities:
Increase in accounts receivable (139,000) (202,000)
Increase in inventories (56,000) (34,000)
Increase in prepaid & other (10,000) (30,000)
Decrease in accounts payable and accrued
expenses (1,025,000) (188,000)
------------ ------------
Cash used in operating activities ($1,953,000) ($1,232,000)
Investing Activities
Purchases of property, equipment and patents (3,000) (57,000)
------------ ------------
Financing Activities
Proceeds from sale of stock 1,561,000 615,000
Common stock issue costs (125,000) (24,000)
Net proceeds from revolving line 6,000 9,000
Payments on notes payable (123,000) (3,000)
Principle payments on short term debt (459,000) 721,000
------------ ------------
Cash provided by financing activities 860,000 1,318,000
Decrease in cash and cash equivalents (1,096,000) 29,000
Cash and cash equivalents at the beginning of year 1,145,000 201,000
------------ ------------
Cash and cash equivalents at the end of year $49,000 $230,000
============ ============
</TABLE>
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See Notes to Consolidated Financial Statements.
<PAGE>
MEMRY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principals for interim
financial information and with the instructions to Form 10-QSB. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the six month period ended December 31, 1995 are not necessarily
indicative of the results that may be expected for the year ending June 30,
1996. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's Annual Report on Form 10-KSB for
the year ended June 30, 1995.
NOTE B. STOCKHOLDER'S EQUITY
At the annual shareholders' meeting held December 19, 1995, a proposal to
increase the number of authorized shares of common stock from 10,000,000 to
25,000,000 was approved by a vote of shareholders'.
On June 26, 1995 and July 17, 1995, FirstInvest Holding Ltd., Inc.
("FirstInvest") purchased 193 shares and 230 shares, respectively, of Series G
Preferred Stock of the Company at a per share price of $6,500, for an aggregate
purchase price of $2,749,500. Each share of Series G Preferred Stock is
convertible into 10,000 shares of Common Stock (which conversion ratio is
subject to adjustment). As of February 13, 1996, FirstInvest beneficially owned
more than five percent of both the Series G Preferred Stock and the Common.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results.
(A) LIQUIDITY AND CAPITAL RESOURCES
The Company's consolidated financial statements have been presented on a going
concern basis which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company has incurred net
losses of ($771,000) and ($933,000), and negative cash flow from operations of
($1,953,000) and ($1,232,000), for the six months ended December 31, 1995
-6-
<PAGE>
and 1994, respectively. As a result, the Company has a stockholders' deficit of
($289,000) and its current liabilities exceeded its current assets by $1,514,000
as of December 31, 1995, as compared to a stockholders' deficit of $1,031,000
and an excess of current liabilities over current assets of $2,294,000 as of
December 31, 1994.
The Company anticipates that it will continue to incur losses from operations
until the fourth quarter, at which time the Company expects to be cash flow
positive, for the following reasons. The Company plans to maintain stringent
control on expenses while increasing its revenues and improving gross profit
margins. The Company received a twenty-two month, $308,000 research and
development contract in February 1996 from McDonnell Douglas related to a smart
materials actuator for a helicopter rotor trim tab. The Company also announced
on January 30, 1996 that it will be the exclusive supplier to Nicklaus Golf
Equipment of components to be used in a new line of wedges and a putter named
the IQ Insert. In addition, the Company expects sales of its shape memory
alloy ("SMA") wire to increase as a result of a new application development for
the medical wire business. However, there can be no assurances that the Company
will successfully increase revenues sufficiently to become cash flow positive
by the fourth quarter .
(B) RESULTS OF OPERATIONS
Six months ended December 31, 1995 compared to six months ended December 31,
- ----------------------------------------------------------------------------
1994
- ----
Overall revenues decreased to $2,181,000 in the first half of fiscal 1996 from
$2,421,000 during the same period in fiscal 1995, a decrease of $240,000, or
10%. Revenues relating to the Memry Segment decreased to $575,000 during the
six months ending December 31, 1995 from $610,000 during the same fiscal 1995
period, a decrease of $35,000, or 6%. Memry Segment product sales, exclusive
of research and development contract revenues, decreased $79,000 to $298,000 for
the six months ended December 31, 1995 as compared with $377,000 during the same
period of fiscal 1995, a decrease of 21%. This is largely attributable to the
reduction in MEMRYSAFE(R) product sales to the Australian market. Research and
development revenues increased $44,000, or 19%, during the six months ended
December 31, 1995 to $277,000 from $233,000 billed during the six months ended
December 31, 1994. The increase of research and development revenues is the
result of Wright Machine Segment's increased billings for the work of
subcontractors. Wright Machine Segment sales decreased to $1,606,000 during
the first six months of fiscal 1996 from $1,811,000 during the same period in
fiscal 1995, a decrease of $205,000, or 11%. This reduction is the result of
raw material suppliers increasing prices and requiring payment in advance,
resulting in liquidity constraints.
Manufacturing costs decreased to $1,578,000 in the six months ended December 31,
1995 from $1,906,000 in the period ending December 31, 1994, a decrease of
$328,000, or 17%. The overall gross profit margin was 17% in the first six
months of fiscal 1996, as compared to 16% in the first six months of fiscal
1995. Memry Segment manufacturing costs were $281,000 at December 31, 1995
compared to $279,000 at December 31, 1994, an increase of $2,000, with gross
profit margins of 6% and 26%, respectively. The decrease in the Memry Segment
margin is attributable
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<PAGE>
to the decrease in sales and the increase in re-engineering costs of the
MEMRYSAFE (R) products. Research and development costs were $235,000 in the
first six months of fiscal 1996 compared to $127,000 during the same period in
fiscal 1995. This increase of $108,000, or 85%, was due to the increase in the
research and development contract revenue and additional development work by
outside subcontractors related to the government contracts. Wright Machine
Segment's manufacturing costs for the first six months of fiscal 1996 were
$1,297,000 as compared with $1,626,000 during the same period in fiscal 1995, a
decrease of $329,000, or 20%. The reduction is directly attributible to the
reduced sales.
General, Selling and Administrative Expenses ("GS&A") decreased $23,000, or 2%,
to $981,000 during the period ended December 31, 1995 from $1,004,000 during the
same period in fiscal 1995. This is the result of a decrease in the auditing
fees and a reduction of administrative employees at the Wright Segment.
Depreciation and amortization expense was $48,000 in the first six months of
fiscal 1996, as compared with $140,000 during the same period in fiscal 1995.
The $92,000, or 66% decrease is primarily a result of assets at the Wright
Machine Segment becoming fully depreciated. There was virtuually no change at
the Memry Segment.
Interest expense decreased in the first six months of fiscal 1996 to $110,000
from $177,000 in the six months ending December 31, 1994. This $67,000, or 38%
decrease is primarily due to a paydown of the Wright Machine Segments
mortgage with its bank.
Net loss for the first six months of fiscal 1996 was ($771,000) as compared to
($933,000) for the same period in fiscal 1995, an improvement of $162,000, or
17%. The $41,000, or 6%, increase in the Memry Segment net loss to ($754,000)
for the six months ended December 31, 1995 from ($713,000) for the six months
ended December 31, 1994, was offset by the $203,000, or 92% improvement in the
Wright Machine Segment loss, to ($17,000) for the six months ended Decmber 31,
1995 from ($220,000) for the six months ended December 31, 1994. The Memry
Segment increase in net loss is attributable to lower sales. However, the
Wright Segment improvement is due to lower GS&A and reduced depreciation
expense.
Three months ended December 31, 1995 compared to three months ended December 31,
- --------------------------------------------------------------------------------
1994
- ----
Overall revenues decreased to $1,000,000 in the three months ended December 31,
1995, from $1,080,000 during the same period in fiscal 1995, a decrease of
$80,000, or 7%. Revenues relating to the Memry Segment increased to $270,000
during the three month period ended December 31, 1995 from $208,000 during the
same period in fiscal 1995, an increase of $62,000, or 30%. Product sales,
exclusive of research and development revenues, increased $66,000 to $166,000
for the three months ended December 31, 1995 as compared with $100,000 during
the same period of fiscal 1995, an increase of 66%. This increase is largely
attributable to an increase in sales of the SMA wire and the golf club inserts.
Research and development revenues decreased $4,000 during the quarter ended
December 31, 1995 to $104,000 from $107,000 during the quarter ending December
31, 1994. Wright Machine Segment
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<PAGE>
sales decreased to $730,000 during the first three months of fiscal 1996 from
$872,000 during the same period in fiscal 1995, a decrease of $142,000, or 16%.
This reduction is the result of raw material suppliers increasing prices and
requiring payment in advance, resulting in liquidity constraints.
Manufacturing costs decreased to $680,000 in the three months ended December 31,
1995 from $873,000 in the quarter ending December 31, 1994, a decrease of
$193,000, or 22%. The overall gross profit margin was 22% in the three months
ended December 31, 1995, as compared to 15% in the quarter ending December 31,
1994. Memry Segment manufacturing costs were $153,000 at December 31, 1995
compared to $100,000 at December 31, 1994, an increase of $53,000, or 53%, with
margins of 8% and 0%, respectively. The increase in margin is attributable to
the increase in sales. Wright Machine Segment's manufacturing costs for the
three months of fiscal 1996 were $526,000 as compared with $773,000 during the
same period in fiscal 1995, a decrease of $247,000, or 32%. The reduction is
directly attributible to the reduced sales. Research and development costs were
$98,000 in the three months ended December 31, 1995 compared to $46,000 during
the same quarter in fiscal 1995. This increase of $52,000, or 113%, was due to
the increase in the research and development contract revenue and additional
development work by outside subcontractors relating to the government
contractors.
General, Selling and Administrative Expenses ("GS&A") increased $35,000, or 7%,
to $539,000 during the quarter ended December 31, 1995 from $504,000 during the
same period in fiscal 1995. The increase is largely related to the addition of
the Chief Operating Officer at the Memry Segment, partially offset by decreased
auditing fees and a reduction of administrative employees at the Wright Segment.
Depreciation and amortization expense was $24,000 in the three months ended
December 31, 1995, as compared with $97,000 during the same period in fiscal
1995. The $73,000, or 75% decrease is primarily a result of assets at the
Wright Segment becoming fully depreciated.
Interest expense decreased to $55,000 in the quarter ending December 31, 1995
from $111,000 in the quarter ending December 31, 1994. This $56,000, or 50%,
decrease is primarily due to a paydown of the Wright Machine Segments mortgage
with its bank.
Net loss for the second quarter in fiscal 1996 was ($396,000) as compared to
($551,000) for the same quarter in fiscal 1995, an improvement of $155,000, or
28%. This was due to the $2,000 improvement in the Memry Segment net loss to
($428,000) for the three months ended December 31, 1995 from ($430,000) for the
three months ended December 31, 1994, along with the $152,000, or 127%
improvement in the Wright Machine Segment loss, to a $32,000 net profit for the
three months ended Decmber 31, 1995 from ($120,000) net loss for the three
months ended December 31, 1994. The Memry Segment reduction is attributable to
lower sales. However, the Wright Segment improvement is due to lower GS&A and
reduced depreciation expense.
-9-
<PAGE>
In November 1992, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 112 "Accounting for Postemployment Benefits,"
which was required to be implemented by the Company in fiscal 1995. Because the
Company generally does not provide such benefits, the adoption of this statement
was not material to the Company's financial results for the second quarter of
fiscal 1996.
PART II- OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
On December 19, 1995, a Certificate of Amendment to the Certificate of
Incorporation of the Company (the "Amendment") was filed with the Delaware
Secretary of State. The Amendment, which was approved by the Company's
stockholders at the Annual Meeting of Stockholders of the Company held on such
date, increased the number of authorized shares of Common Stock of the Company
from 10,000,00 to 25,000,000. The primary reason for such increase was to
permit the conversion and exercise of outstanding warrants, shares of Series G
Preferred Stock, options and a debenture, as well as to provide the Company with
future flexibility in effecting equity financings. However, if any or all of
such outstanding securities are exercised to purchase or converted into shares
of Common Stock, or if the Company issues additional shares of Common Stock as
part of an equity financing, current holders of shares of Common Stock could
have their current ownership of the Company's Common Stock substantially
diluted.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On December 19, 1995, the Company held an annual meeting of Stockholders. The
stockholders elected to the Board of Directors James G. Binch, a member since
1989, Nicholas J. Grant, a member since 1985, John A. Morgan, a member since
1989, W. Andrew Krusen, Jr., a member since 1994, and Jack H. Halperin, a member
since 1994. The tabulation of votes for eeach nominee was as follows:
<TABLE>
<CAPTION>
Number of Votes
--------------- Broker
Nominee For Against/Witheld Abstentions Non-Votes
- ------- --- --------------- ----------- ---------
<S> <C> <C> <C> <C>
James G. Binch 9,989,049 16,589 0 0
Nicholas J. Grant 9,989,149 16,489 0 0
Jack H. Halperin, Esq. 9,994,112 11,526 0 0
W. Andrew Krusen, Jr. 9,994,149 11,489 0 0
John A. Morgan 9,993,495 12,143 0 0
</TABLE>
-10-
<PAGE>
The stockholders also approved, with 9,675,319 votes in favor, 130,917 votes
against and 2,920 votes abstaining, an amendment of the Company's Certificate
of Incorporation to increase the authorized Common Stock of the Corporation
from 10,000,000 to 25,000,000 shares. In addition, in a separate class vote,
5,445,319 shares of Common Stock voted in favor of such amendment, 130,917
shares of Common Stock voted against such amendment and 2,920 shares of Common
Stock abstained.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS
3. Certificate of Incorporation of the Company, as amended.
10.1 First Amendment to Convertible Subordinated Debenture
Purchase Agreement, dated October 12, 1995, between
the Company and Connecticut Innovations, Inc. ("CII") (1)
10.2 First Addendum to Convertible Subordinated Debenture
Purchase Agreement, dated October 12, 1995, made by
the Company and agreed to by CII (1)
10.3 First Addendum to Stock Subscription Warrant
(re:Warrant No. 94-4), dated October 12, 1995, made by
the Company and agreed to by CII (1)
10.4 First Addendum to Stock Subscription Warrant
(re:Warrant No. 94-5), dated October 12, 1995, made by
the Company and agreed to by CII (1)
10.5 First Addendum to Stock Subscription Warrant
(re:Warrant No. 94-6), dated October 12, 1995, made by
the Company and agreed to by CII (1)
10.6 Amendment to Escrow Agreement, dated October 12, 1995,
among the Company, CII and Finn, Dixon & Herling as
escrow agent
10.7 Employment Agreement, dated November 7, 1995, between the
Company and William Morton, Jr. (2)
11. Statement regarding computation of per share earnings on
both a primary and fully diluted basis. (1)
27. Financial Data Schedule. (3)
- -------------------
(1) Incorporated by reference to the Company's Annual Report on Form 10-KSB for
the fiscal year ended June 30, 1995.
(2) Incorporated by reference to the Company's Quarterly Report on Form 10-
QSB for the fiscal quarter ended September 30, 1995.
(3) Submitted separately, electronically.
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<PAGE>
(B) REPORTS ON FORM 8-K
N/A
-12-
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Memry Corporation
-----------------
Date: February 13, 1996 /s/James G. Binch
-----------------------------
James G. Binch
President, CEO, Treasurer and Chairman
(Principal Executive Officer)
Date: February 13, 1996 /s/Wendy A. Gavaghan
-----------------------------
Wendy A. Gavaghan
Corporate Controller
(Principal Financial Officer)
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<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT No. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<S> <C> <C>
3. Certificate of Incorporation of the Company, as amended.
10.1 First Amendment to Convertible Subordinated Debenture
Purchase Agreement, dated October 12, 1995, between
the Company and Connecticut Innovations, Inc. ("CII") (1)
10.2 First Addendum to Convertible Subordinated Debenture
Purchase Agreement, dated October 12, 1995, made by
the Company and agreed to by CII (1)
10.3 First Addendum to Stock Subscription Warrant
(re:Warrant No. 94-4), dated October 12, 1995, made by
the Company and agreed to by CII (1)
10.4 First Addendum to Stock Subscription Warrant
(re:Warrant No. 94-5), dated October 12, 1995, made by
the Company and agreed to by CII (1)
10.5 First Addendum to Stock Subscription Warrant
(re:Warrant No. 94-6), dated October 12, 1995, made by
the Company and agreed to by CII (1)
10.6 Amendment to Escrow Agreement, dated October 12, 1995,
among the Company, CII and Finn, Dixon & Herling as
escrow agent
10.7 Employment Agreement, dated November 7, 1995, between the
Company and William Morton, Jr. (2)
11. Statement regarding computation of per share earnings on
both a primary and fully diluted basis. (1)
27. Financial Data Schedule. (3)
</TABLE>
- -------------------
(1) Incorporated by reference to the Company's Annual Report on Form 10-KSB for
the fiscal year ended June 30, 1995.
(2) Incorporated by reference to the Company's Quarterly Report on Form 10-
QSB for the fiscal quarter ended September 30, 1995.
(3) Submitted separately, electronically.
<PAGE>
EXHIBIT 3
CERTIFICATE OF INCORPORATION
OF
MEMORY METALS, INC.
1. The name of the Corporation is
MEMORY METALS, INC.
2. The address of its registered office in the State of Delaware is
No. 100 West-Tenth Street, in the City of Wilmington, County of Newcastle. The
name of its registered agent at such address is The Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted
is:
To invent, develop, market, license, sell and/or acquire, as a principal
partner and/or joint venturer, specialty metals and machine parts or other
objects made therefrom.
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
4. The total number of shares of Common Stock which the Corporation
shall have authority to issue is one million (1,000,000), and the par value of
each of such shares is One Cent ($.01), amounting in the aggregate to Ten
Thousand Dollars ($10,000.00).
5. The name and address of the incorporator is as follows:
Jerry Cohen 50 Court Street
Newton, MA 02160.
6. The Corporation is to have perpetual existence.
7. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
To make, alter, or repeal the bylaws of the Corporation.
<PAGE>
To authorize and cause to be executed mortgages and liens upon the real
and personal property of the Corporation.
To set apart out of any of the funds of the Corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
By a majority of the whole board, to designate one or more committees,
each committee to consist of one or more of the directors of the Corporation.
The board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. The bylaws may provide that in the absence or disqualification
of a member of a committee, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another member of the board of directors to
act at the meeting in the place of any such absent or disqualified member. Any
such committee, to the extent provided in the resolution of the board of
directors, or in the bylaws of the Corporation, shall have and may exercise all
the powers and authority of the board of directors in the management of the
business and affairs of the corporation and may authorize the seal of the
corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
certificate of incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease, or exchange of all or
substantially all of the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of a dissolution,
or amending the bylaws of the Corporation; and, unless the resolution or bylaws
expressly so provide, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock.
When and as authorized by the stockholders in accordance with statute, to
sell, lease, or exchange all or substantially all of the property and assets of
the Corporation, including its goodwill and its corporate franchises, upon such
terms and conditions and for such consideration, which may consist in whole or
in part of money or property including shares of stock in, and/or other
securities of,
<PAGE>
any other corporation or corporations, as its board of directors shall deem
expedient and for the best interests of the Corporation.
3. Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder hereof, or on the
application of any receiver or receivers appointed for the Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for the Corporation under the provisions of Section 279 of Title 8 of
the Delaware Code, order a meeting of the creditors or class of creditors,
and/or the stockholders or class of stockholders of the Corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths (3/4) in value of the creditors
or class of creditors, and/or of the stockholders or class of stockholders of
the Corporation, as the case may be, agree to any compromise or arrangement or
to any reorganization of the Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders of this Corporation, as the case may be,
and also on this Corporation.
9. Meetings of stockholders may be held within or without the State of
Delaware, as the bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the bylaws of the Corporation. Elections of directors
need not be by written ballot unless the bylaws of the Corporation shall so
provide.
<PAGE>
10. The Corporation reserves the right to amend, after, change, or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
I. THE UNDERSIGNED, being the incorporator hereinbefore names, for the
purposes of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, do make this certificate, hereby declaring and
certifying that his is my act and deed and the facts herein stated are true,
and accordingly have hereunto set my hand this 4th day of November 1981.
/s/ Jerry Cohen
------------------------
Jerry Cohen
Commonwealth of Massachusetts )
) ss
County of Middlesex )
BE IT REMEMBERED that on this 4th day of November, 1981, personally
appeared before me, a Notary Public for the Commonwealth of Massachusetts,
Jerry Cohen, a party to the foregoing instrument, known to me personally to be
such, and acknowledged it to be his free act and deed, and that the facts
stated therein are true.
GIVEN under my hand and seal of office the day and year aforesaid.
/s/Grisella G. Slofasow
-----------------------------
Notary Public
My commission expires: August
20, 1987
<PAGE>
Certificate of Amendment No. 1
To
Certificate of Incorporation
Memory Metals, Inc.
----------------------------------
MEMORY METALS, INC., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: That the Board of Directors of said corporation on February
28, 1983 adopted a resolution proposing and declaring advisable that the
amendment of the certificate of incorporation set forth in Exhibit A hereto be
made.
SECOND: The holder of all the outstanding shares of said corporation
voted on February 28, 1983 to authorize the amendment set forth in said
resolution.
THIRD: That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of Sections 242 and 222 of the General
Corporation Law of the State of
Delaware.
FOURTH: That the capital of said corporation shall not be reduced
under or by reason of said amendment.
<PAGE>
IN WITNESS WHEREOF, said Memory Metals, Inc. has caused this certificate
to be signed by Gerald Grosof, its President, and attested by Mary Teufel, its
Assistant Secretary, this 28th day of February, 1983.
MEMORY METALS, IN.
By:/s/ Gerald Grosof
--------------------------
Gerald Grosof
President
ATTEST:
By:/s/ Mary Teufel
-------------------------------------
Mary Teufel, Assistant Secretary
<PAGE>
Exhibit A
RESOLVED, that the Certificate of Incorporation of MEMORY METALS, INC.
(the "corporation") be amended as follows:
By deleting Article Fourth thereof and substituting the following:
FOURTH: The total number of shares of all class stock which the
corporation shall have authority to issue is Ten Million One Hundred Thousand
(10,100,000) shares consisting of (a) Ten Million (10,000,000) shares of common
stock of the par value of One Cent ($.01) per share and (b) One Hundred
Thousand (100,000) shares of preferred stock of the par value of One Hundred
Dollars ($100.000) per share.
The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions, of the preferred stock are as
follows:
A. The preferred stock may be issued from time to time in one or more
series. Subject to the limitations set forth herein and any limitations
prescribed by law, the board of directors is expressly authorized, prior to
issuance of any series of preferred stock, to fix by resolution or resolutions
providing for the issue of any series the number of shares included in such
series and the designation, relative powers, preferences and rights, and the
qualifications, limitations or restrictions of such series. Pursuant to the
foregoing general authority vested in the board of directors, but not in
limitations of the power conferred on the board of directors thereby and by the
General Corporation Law of the State of Delaware, the board of directors is
expressly authorized to determine with respect to each series of preferred
stock:
(1) the designation or designations of such series and the number
of shares (which number from time to time may be decreased by the board
of directors, but not below the number of such shares of such series then
outstanding, or may be increased by the board of directors unless
otherwise provided in creating such series) constituting such series;
(2) the rate or amount and times at which, and the preference and
conditions under which, dividends shall be payable on shares of such
series, the status of such dividends as cumulative or noncumulative, the
date or dates from which dividends, if cumulative, shall accumulate, and
the status of such shares as participating or non-participating after the
payment of dividends as to which such shares are entitled to any
preference;
(3) the rights and preference, if any, of the holders of shares
of such series upon the liquidation, dissolution or winding up of the
assets of, the corporation, which amount may vary depending upon whether
such liquidation, dissolutions or winding up is voluntary or involuntary
and, if voluntary, may vary at different dates, and the status of the
shares of such series as participating or non-participating after the
satisfaction of any such rights and preferences;
(4) the full or limited voting rights, if any, to be provided for
shares of such series, in addition to the voting rights provided by law;
<PAGE>
(5) the times, terms and conditions, if any, upon which shares of
such series shall be subject to redemption, including the amount the
holders of shares of such series shall be entitled to receive upon
redemption (which amount may vary under different conditions or at
different redemption dates) and the amount, terms, conditions and manner
of operation of any purchase, retirement or sinking fund to be provided
for the shares of such series.
(6) the rights, if any, of holders of shares of such series
and/or of the corporation to convert such shares into, or to exchange
such shares for, shares of any other class or classes or of any other
series of the same class, the prices or rates of conversion or exchange,
and adjustments thereto, and any other terms and conditions applicable to
such conversion or exchange;
(7) the limitations,if any, applicable while such series is
outstanding on the payment of dividends or making of distributions on, or
the acquisition or redemption of, common stock or any other class or
shares ranking junior either as to dividends or upon liquidation, to the
shares of such series;
(8) the conditions or restrictions, if any, upon the issue of any
additional shares (including additional shares of such series or any
other series or of any other class) ranking on a parity with or prior to
the shares of such series either as to dividends or upon liquidation; and
(9) any other relative powers, preferences and participating,
optional or other special rights, and the qualifications, limitations or
restrictions thereof, of shares of such series; the provisions of this
Certificate of Incorporation or the General Corporation Law of the State
of Delaware as then in effect.
All shares of preferred stock shall be identical and of equal rank except in
respect to the particular that may be fixed by the board of directors as
provided above, and all shares of each series of preferred stock shall be
identical and of equal rank except in respect to the particulars that may be
fixed by the board of directors as provided.
<PAGE>
Certificate of Amendment No. 2
To
Certificate of Incorporation
Of
Memory Metals, Inc.
------------------------------------
MEMORY METALS, INC., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware. DOES HEREBY
CERTIFY:
FIRST: That the Board of Directors of said corporation on February
23, 1989 and April 25, 1989 adopted resolutions proposing and declaring
advisable that the amendment of the certificate of incorporation set for in
Exhibit A hereto be made.
SECOND: That the shareholders of said corporation, at a Special
Meeting held on May 31, 1989, voted to authorize the amendment set forth in
said resolution.
THIRD: That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of Sections 242 and 222 of the General
Corporation Law of the State of Delaware.
FOURTH: That the capital of said corporation shall not be reduced
under or by reason of said amendment.
<PAGE>
IN WITNESS WHEREOF, said Memory Metals, Inc. has caused this certificate
to be signed by Stephen M. Fisher, its President, and attested by John W.
Johnston, its Secretary, this 1st day of June, 1989.
MEMORY METALS, INC.
By:/s/ Stephen M. Fisher
---------------------------
Stephen M. Fisher,
President
ATTEST:
By:/s/ John W. Johnston
----------------------------
John W. Johnston
Secretary
<PAGE>
EXHIBIT A
RESOLVED, that the Certificate of Incorporation of MEMORY METALS, INC.
(the "corporation") be amended as follows:
FIRST: By deleting Article 1 thereof and substituting the following:
1. The name of the Corporation is Memry Corporation.
SECOND: By deleting the first paragraph of Article 4 thereof and
substituting the following:
4. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is Fifteen Million One Hundred
Thousand (15,100,000) shares consisting of (a) Fifteen Million (15,000,000)
shares of common stock of the par value of One Cent ($.01) per share and (b)
One Hundred Thousand (100,000) shares of preferred stock of the par value of
One Hundred Dollars ($100.00) per share.
THIRD: By adding a new Article 12. to read as follows:
12. To the fullest extent permissible under the General Corporation Law
of the Sate of Delaware, as the same exists of may hereafter be amended, a
director's personal liability to the Corporation and its shareholders for
monetary damages for breach of his fiduciary duty as a director is hereby
eliminated, except for liability (i) for any breach of director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
the law, (iii) for improper dividend payment or unlawful stock purchases or
redemption, or (iv) for any transaction from which the director derived an
improper personal benefit. Any repeal or modification of this Article shall
not adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification.
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING MEMRY TECHNOLOGIES, INC. AND
MEMRY PLUMBING PRODUCTS CORPORATION INTO
MEMRY CORPORATION
(Pursuant to Section 253 of the Delaware General Corporation Law)
Memry Corporation, a Delaware corporation (the "Corporation") does hereby
certify:
FIRST: That the Corporation was incorporated and duly organized
pursuant to the General Corporation Law of the State of Delaware.
SECOND: That the Corporation owns all of the outstanding shares of
each class of the capital stock of Memry Technologies, Inc., a Delaware
corporation ("Subsidiary Corporation No. 1").
THIRD: That the Corporation owns all of the outstanding shares of
each class of the capital stock of Memry Plumbing Products Corporation, a
Delaware corporation ("Subsidiary Corporation No. 2").
FOURTH: That the Corporation, by resolutions duly adopted by its
Board of Directors on the 24th day of September, 1993, determined to merge with
and into itself its subsidiaries, Subsidiary Corporation No. 1 and Subsidiary
Corporation No. 2, pursuant to Section 253 of the General Corporation Law of
the State of Delaware, and that said resolutions on the conditions set forth in
such resolutions:
RESOLVED: That the Corporation merge with and into itself its
subsidiaries, Subsidiary Corporation No. 1 and Subsidiary Corporation No. 2,
and assume all of said subsidiaries' liabilities and obligations:
FURTHER RESOLVED: That the President and the Secretary of the
Corporation be and they hereby are, jointly and severally, authorized and
directed to make, execute and acknowledge a certificate of ownership and merger
setting forth a copy of the resolutions so to merge said Subsidiary Corporation
into the Corporation and to assume said subsidiaries' liabilities and
obligations and the date of adoption thereof and to file the same in the office
of the Secretary of the State of Delaware and a certified copy thereof in the
Office of the Recorder of Deeds of New Castle County, and to do all acts and
things whatsoever whether within or without the State, of Delaware, as may be
necessary and proper to effect the merger.
<PAGE>
IN WITNESS WHEREOF, said Corporation has caused this certificate to be
signed by James G. Binch, its President, and attested by Wendy Gavaghan, its
Secretary, this 27th day of September, 1993.
MEMRY CORPORATION
By:/s/ James G. Binch
----------------------------------
James G. Binch, President
ATTEST:
/s/ Wendy Gavaghan
- -------------------------------
Wendy Gavaghan, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
MEMRY CORPORATION
MEMRY CORPORATION, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify:
First: That the Board of Directors of the Corporation on April 13, 1994
adopted resolutions proposing and declaring advisable that the amendments to
the certificate of incorporation set forth in Exhibit A hereto be made.
Second: That the stockholders of the Corporation, at the annual meeting
of stockholders held on July 19, 1994, voted to authorize the amendments
set forth in said resolution.
Third: That the aforesaid amendments were duly adopted in accordance
with the applicable provisions of Sections 222 and 242 of the General
Corporation Law of the State of Delaware.
Fourth: That the effective date of the foregoing amendments will be
August 8, 1994.
IN WITNESS WHEREOF, the Corporation has caused this certificate to
be signed by James G. Binch, its President, and attested to by Wendy Gavaghan,
its Secretary, this 27th day of July, 1994.
MEMRY CORPORATION
By: /s/ James G. Binch
----------------------------
Name: James G. Binch
Title: President
Attest:
By: /s/ Wendy Gavaghan
---------------------------
Name: Wendy Gavaghan
Title: Secretary
<PAGE>
EXHIBIT A
---------
RESOLVED, that Article 4 of the Certificate of Incorporation be amended by
adding a final paragraph as follows:
Each ten shares of Common Stock of the Company, par value $0.01 per
share, either issued and outstanding or held by the Company as treasury stock,
immediately prior to the time this amendment becomes effective shall be and are
hereby automatically reclassified and changed (without any further act) into
one fully-paid and nonassessable share of the Common Stock of the Company, par
value $0.01 per share, without increasing of decreasing the amount of stated
capital or paid-in surplus of the Company, provided that no fractional shares
shall be issued. Shareholders otherwise entitled to fractional share interests
as a result of the foregoing reclassification and change shall be entitled to
receive in lieu of such fractional share scrip (in bearer or registered form,
as the proper officers of the Company may determine) which shall entitle the
holder to receive a full share upon the surrender of such scrip aggregating a
full share. Such scrip shall be issued subject to the condition that it shall
become void if not exchanged for certificates representing full shares on or
before the date three years after the effective date of this amendment.
RESOLVED, that the Certificate of Incorporation of the Company be amended by
deleting the first paragraph of Article 4 thereof and substituting the
following.
4. The total number of shares of all classes of stock which the Corporation
shall have authority to issue is Ten Million One Hundred Thousand (10,100,000)
shares consisting of (a) Ten Million (10,000,000) shares of common stock of the
par value of One Cent ($0.01) per share and (b) One Hundred Thousand (100,000)
shares of preferred stock of the par value of One Hundred Dollars ($100.00) per
share.
<PAGE>
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF
SERIES G PREFERRED STOCK
OF
MEMRY CORPORATION
The undersigned, James G. Binch, hereby certifies that:
A. He is the duly elected and acting President of Memry Corporation, a
Delaware corporation (the "Corporation").
B. Pursuant to authority given by the Corporation's Certificate of
Incorporation, the Board of Directors of the Corporation has duly adopted the
following recitals and resolutions:
WHEREAS, the Certificate of Incorporation of the Corporation provides for
two classes of shares known as Common Stock and Preferred Stock;
WHEREAS, the Board of Directors of the Corporation is authorized by the
Certificate of Incorporation to provide for the issuance of the shares of
Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of each such series
and the qualifications, limitations or restrictions thereof;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby
designates a Series G Preferred Stock and fixes and determines the powers,
rights, preferences, qualifications, limitations and restrictions relating to
the Series G Preferred Stock as follows:
1. Designation. The Board of Directors of the Corporation hereby
-----------
designates a new series of Preferred Stock as "Series G Preferred Stock."
2. Authorized Number. The number of shares constituting the
-----------------
Series G Preferred Stock shall be 800 shares. The rights, preferences and
restrictions of, and other matters relating to, the Series G Preferred Stock
are as set forth below.
3. Dividends. (a) In the event that the Corporation has not
---------
effected the registration described in Section 4.2 of the Securities Purchase
Agreement, dated as of June 14, 1995 (the "Securities Purchase Agreement"),
between the Corporation and the purchasers set forth therein, on or prior to
March 15, 1996, other than a failure to effect such a registration caused by
the failure of any of the parties entitled to have their shares registered to
comply with the relevant provisions of Section 4 of the Securities Purchase
Agreement (such failure, where not so excused, being hereinafter referred to as
a "Registration Default"), then the holders of the Series G Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of
Directors of the Corporation, out of funds legally available for that purpose,
until such time, if any, as such a registration has been effected, a quarterly
<PAGE>
dividend of $130.00 per share (the "Dividend Amount"). Upon the occurrence of
a Registration Default, such Dividend Amount shall accrue on each March 16,
June 16, September 16 and December 16 thereafter, commencing on March 16, 1996,
occurring prior to the date on which either such a registration has been
effected or such a registration would be effected but for the failure of any of
the parties entitled to have their shares registered pursuant to the terms of
the Securities Purchase Agreement to comply with the provisions of Section 4
thereof (hereinafter referred to as a "Cure"). All such dividends on the
Series G Preferred Stock shall be paid to the holders of record at the close of
business on the date specified by the Board of Directors at the time such
dividend is declared; provided, however, that such date shall not be
-------- -------
more than 60 days nor less than 10 days prior to the applicable dividend
payment date. All dividends shall be fully cumulative and shall accrue on each
March 16, June 16, September 16 and December 16 from the date of a Registration
Default until the time of the Cure, whether or not declared, whether or not the
Corporation shall have sufficient funds available for the payment of required
dividends and whether or not the Corporation shall otherwise then have the
power to declare or pay dividends, without interest. All dividends paid on
Series G Preferred Stock pursuant to this Section 3(a) shall be paid pro
---
rata to the holders of the Series G Preferred Stock entitled thereto, in
- ----
proportion to the number of shares of Series G Preferred Stock owned by each
such holder.
(b) So long as any shares of Series G Preferred Stock are outstanding,
the Corporation shall not declare, pay or set apart for payment any dividend or
make any distribution on, or directly or indirectly purchase in respect of any
redemption, sinking fund or other similar obligation, any shares of Common
Stock or any warrants, rights, calls or options exercisable for or convertible
into Common Stock, or make any distribution in respect thereof, either directly
or indirectly, whether in cash or obligations of the Corporation or other
property, and shall not permit any corporation or other entity directly or
indirectly controlled by the Corporation to purchase or redeem any of the
Common Stock or any warrants, rights, calls or options exercisable for or
convertible into any of the Common Stock, unless prior to or concurrently with
such declaration, payment, setting apart for payment, purchase, redemption or
distribution, as the case may be, the Corporation shall pay or distribute to
each holder of Series G Preferred Stock an amount of cash or other property
equal to the sum of (I) any accrued and unpaid dividends on such share of
Series G Preferred Stock pursuant to Section 3(a) above, plus (II) the product
of (x) the amount of cash or other property paid to a holder of one share of
Common Stock, multiplied by (y) the number of shares of Common Stock which each
holder of Preferred Stock would then be able to acquire upon the immediate
conversion of all of such holder's shares of Series G Preferred Stock into
Common Stock pursuant to Section 6(a) below.
4. Liquidation Preference
----------------------
(a) In the event of any voluntary or involuntary liquidation,
distribution of assets (other than the payment of dividends as provided in
Section 3 above), dissolution or winding up of the Corporation (collectively, a
"Liquidation"), and after payment in full of all debts and other obligations of
the Corporation, the holders of each share of Series G Preferred Stock then
outstanding shall be entitled to be paid out of the remaining assets of the
Corporation available for distribution to its stockholders, whether such assets
are capital, surplus or earnings, an amount in cash equal to the sum of
(i)$6,500.00, plus (ii) any accrued but unpaid dividends thereon pursuant to
Section 3(a) above, plus (iii) any declared but unpaid dividends thereon
pursuant to Section 3(b) above (such sum being hereinafter referred to as the
"Liquidation Amount"), before any payment shall be made or any assets
distributed to the holders of any of the Common Stock. If the assets of the
Corporation shall be insufficient to pay in full the Liquidation Amount to all
holders of Series G Preferred Stock, then such assets will be distributed among
the holders of the Series G Preferred Stock ratably in proportion to the
respective amounts that would be payable on such shares pursuant to this
Section 4(a) if all amounts payable thereon were paid in full.
<PAGE>
(b) Any transaction involving any acquisition of the Corporation,
whether by consolidation or merger (resulting in the exchange of the
outstanding shares of capital stock of the Corporation for cash, securities or
other property), or any sale of all or substantially all of the assets of the
Corporation (any such consolidation, merger or sale, an "Event"), shall be
deemed to be a Liquidation for the purposes of this Section 4; provided,
--------
however, that the Corporation's obligations under Section 4(a) shall be
- -------
satisfied with respect to the Series G Preferred Stock by the distribution to
the holders of shares of Series G Preferred Stock, pursuant to the terms of
such Event, of securities or other property in an amount equal in value (as
determined in good faith by the Board of Directors) to the Liquidation Amount
per share of Series G Preferred Stock held by them.
(c) The liquidation payment with respect to each outstanding
fractional share of Series G Preferred Stock, if any, shall be equal to a
ratably proportionate amount of the liquidation payment made with respect to
each outstanding share of Series G Preferred Stock.
5. Voting Rights; Protective Provisions
------------------------------------
(a) In addition to the rights specified in Paragraphs (b) and (c)
of this Section 5, and any other rights provided in the Corporation's By-Laws
or by applicable law, each share of Series G Preferred Stock shall entitle the
holder thereof to such number of votes as shall equal the number (including any
fraction to one decimal place) of shares of Common Stock into which each such
share of Series G Preferred Stock is convertible, as provided in Section 6
below, as of the record date for the determination of the stockholders entitled
to vote on such matters or, if no record date is established, as of the date
such vote is taken or any written consent of stockholders is solicited, and
each such holder shall be entitled to vote on all matters as to which holders
of Common Stock shall be entitled to vote in the same manner and with the same
effect as such holders of Common Stock, voting together with the holders of
Common Stock as one class. In all cases where the holders of shares of the
Series G Preferred Stock have the right to vote separately as a class, in
addition to the voting rights described above, all such holders shall be
entitled to one vote for each share of Series G Preferred Stock them.
(b) So long as not less than 230 shares of the Series G
Preferred Stock (as constituted on the date hereof) remain outstanding, the
holders of the Series G Preferred Stock, voting separately as one class, shall
have the exclusive right to elect one director. Subject to such right of the
holders of the Series G Preferred Stock, all directors shall be elected by the
vote of the holders of the Common Stock and the Series G Preferred Stock,
voting together as a single class as provided for in Section 5(a) above.
(c) So long as not less than 230 shares of the Series G
Preferred Stock (as constituted on the date hereof) remain outstanding, the
Corporation shall not, without the affirmative consent or approval of the
holders of shares representing at least two thirds of the voting power of the
Series G Preferred Stock then outstanding, voting together as a single class
(but separately from the Common Stock), given by written consent in lieu of a
meeting or by vote at a meeting called for such purpose for which notice shall
have been given to the holders of the Series G Preferred Stock, (i) in any
manner authorize, reclassify or create any class of capital stock ranking,
either as to payment of dividends or distribution of assets, or both, prior to
or on a parity with the Series G Preferred Stock, (ii) in any manner alter or
change the designations or the powers, preferences or rights, or the
qualifications, limitations or restrictions of the Series G Preferred Stock in
any material respect prejudicial to the holders thereof, (iii) increase the
number of authorized shares of Common Stock above 25,000,000, or increase
the number of authorized shares of Preferred Stock, (iv) sell all or any
substantial portion of its assets, or merge or consolidate with any other
entity or entities, or voluntarily dissolve, liquidate or wind up or carry out
any partial liquidation or distribution or transaction in the nature of a
partial
<PAGE>
liquidation or distribution, (v) issue any equity securities other than (X)
Series G Preferred Stock sold prior to July 15, 1995, (Y) stock options, Common
Stock and other equity securities pursuant to the Corporation's currently
existing stock option plan, and (Z) Common Stock issued upon the exercise
and/or conversion of all currently outstanding securities and/or the securities
described in clauses (X) and (Y) above.
6. Conversion
----------
(a) Subject to and upon compliance with the provisions of this
Section 6, the holder of any shares of Series G Preferred Stock shall have the
right, at such holder's option, at any time and from time to time from and
after the date (the "Capitalization Amendment Date") of the filing of the
Certificate of Amendment (as hereinafter defined), to convert any number of
shares of Series G Preferred Stock into such whole number of fully paid and
nonassessable shares of Common Stock as is equal to the quotient obtained by
dividing (a) the product of the Original Issuance Price (as hereinafter
defined) multiplied by the number of shares of Series G Preferred Stock being
converted, by (b) the Conversion Price (as hereinafter defined) (as last
adjusted and then in effect) for such shares of Series G Preferred Stock being
converted (such Conversion Price being subject to adjustment as set forth in
Section 6(e) below), by surrender of the certificate or certificates
representing the shares of Series G Preferred Stock so to be converted in the
manner provided in Section 6(c) below. The "Certificate of Amendment" shall
mean a Certificate of Amendment to the Corporation's Certificate of
Incorporation increasing the number of authorized shares of Common Stock from
10,000,000 to 25,000,000. The "Original Issuance Price" shall be
$6,500.00. The Conversion Price at which shares of Common Stock shall be
issuable upon conversion of shares of Series G Preferred Stock shall be $0.65;
provided, however, that the Conversion Price shall be subject to
- -------- -------
adjustment as set forth in Section 6(e) below. The holder of any shares of
Series G Preferred Stock exercising the aforesaid right to convert such shares
into shares of Common Stock shall be entitled to payment of any declared and
unpaid dividends payable with respect to such shares up to and including the
Conversion Date (as hereinafter defined).
(b) Upon the first to occur of (i) the "Market Price of the Common
Stock" (as defined below) exceeding $1.50 per share for thirty consecutive
business days, or (ii) the conversion into Common Stock pursuant to Section
6(a) above of a sufficient number of shares of Series G Preferred Stock such
that not more than 150 of such shares of Series G Preferred Stock remain issued
and outstanding (such events in clauses (i) and (ii) being collectively
referred to as an "Event of Conversion"), all shares of Series G Preferred
Stock then outstanding shall, by virtue of, and simultaneously with, the
occurrence of the Event of Conversion and without any action on the part of the
holder thereof, be deemed automatically converted into such number of fully
paid and nonassessable shares of Common Stock as the holder thereof could
voluntarily convert such Series G Preferred Stock into pursuant to Section 6(a)
above. The holder of any shares of Series G Preferred Stock whose shares are
automatically converted into shares of Common Stock shall be entitled to
payment of any declared and unpaid dividends payable with respect to such
shares up to and including the Conversion Date (as hereinafter defined).
"Market Price of the Common Stock" shall mean (a) on business days on which the
Common Stock is traded on an exchange, the closing sale price of the Common
Stock on such exchange on such day, and (b) on business days on which the
Common Stock is not traded on an exchange, but is traded over-the-counter, the
closing bid price of the Common Stock on such day, in either case as reasonably
determined by the Corporation.
(c) The holder of any shares of Series G Preferred Stock may
exercise the conversion right pursuant to Section 6(a) hereof as to any part of
such shares by delivering to the Corporation during regular business hours, at
the office of any transfer agent of the Corporation for the Series G Preferred
<PAGE>
Stock or at such other place as may be designated by the Corporation, the
certificate or certificates for the shares to be converted, duly endorsed or
assigned in blank or to the Corporation (if required by it), accompanied by
written notice stating that the holder elects to convert such shares and
stating the name or names (with address) in which the certificate or
certificates for the shares of Common Stock are to be issued. Conversion shall
be deemed to have been effected (a) with respect to conversions under Section
6(a) hereof, on the date when the aforesaid delivery is made, and (b) with
respect to conversions under Section 6(b) hereof, on the date of the occurrence
of the Event of Conversion; and such date, in either case, is referred to
herein as the "Conversion Date." As promptly as practicable thereafter, the
Corporation shall issue and deliver to or upon the written order of such
holder, at such office or to the place designated by such holder, a certificate
or certificates for the number of full shares of Common Stock to which such
holder is entitled, a check or cash in respect of any fractional interest in a
share of Common Stock as provided in Section 6(d) hereof and a check or cash in
payment of all declared and unpaid dividends (to the extent permissible under
law), if any, with respect to the shares of Series G Preferred Stock so
converted up to and including the Conversion Date; provided, however,
-------- -------
that in the event of a conversion pursuant to Section 6(b) above, the
Corporation may withhold such certificate or certificates for Common Stock,
along with any such check, until such time as the holder of the Series G
Preferred stock makes the delivery of a stock certificate and written notice
described in the first sentence of this Section 6(c) with respect to
conversions being made pursuant to Section 6(a). The person in whose names the
certificate or certificates for Common Stock are to be issued shall be deemed
to have become a stockholder of record on the applicable Conversion Date unless
the transfer books of the Corporation are closed on that date, in which event
he shall be deemed to have become a stockholder of record on the next
succeeding date on which the transfer books are open, but the applicable
Conversion Price shall be that in effect on the Conversion Date. Upon
conversion pursuant to Section 6(a) of only a portion of the number of shares
covered by a certificate representing shares of Series G Preferred Stock
surrendered for conversion, the Corporation shall issue and deliver to or upon
the written order of the holder of the certificate so surrendered for
conversion, at the expense of the Corporation, a new certificate covering the
number of shares of Series G Preferred Stock representing the unconverted
portion of the certificate so surrendered, which new certificate shall entitle
the holder thereof to dividends (to the extent declared) on the shares of
Series G Preferred Stock represented thereby to the same extent as if the
certificate theretofore covering such unconverted shares had not been
surrendered for conversion.
(d) No fractional shares of Common Stock or scrip shall be issued
upon conversion of shares of Series G Preferred Stock. If more than one share
of Series G Preferred Stock shall be surrendered for conversion at any one time
by the same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Series G Preferred Stock so surrendered. Instead of any fractional
shares of Common Stock which would otherwise be issuable upon conversion of any
shares of Series G Preferred Stock, the Corporation shall pay a cash adjustment
in respect of such fractional interest in an amount equal to that fractional
interest of the Conversion Price in effect on the date of such conversion.
Fractional interests shall not be entitled to dividends, and the holders of
fractional interests shall not be entitled to any rights as stockholders of the
Corporation in respect of such fractional interests.
(e) The Conversion Price shall be subject to adjustment from time
to time as follows:
(i) If the Corporation shall at any time after the date of the filing
hereof actually issue or be deemed to have issued any shares of Common Stock,
other than Excluded Stock (as hereinafter defined), without consideration or
for a consideration per share less than the Conversion Price, as in effect
immediately prior to the issuance or deemed issuance of such Common Stock, then
the Conversion Price in effect immediately prior to such issuance shall
forthwith be lowered, effective as
<PAGE>
of the date of such issuance, to the price at which Common Stock is actually or
deemed to have been so sold.
For the purposes of determining any adjustment of the Conversion Price
pursuant to this Section 6(e)(i), the following provisions shall be applicable:
(A) In the case of the issuance of Common Stock for cash, the
consideration shall be deemed to be the amount of cash paid therefor
after deducting therefrom any discounts, commissions or other expenses
allowed, paid or incurred by the Corporation for any underwriting or
otherwise in connection with the issuance and sale thereof.
(B) In the case of the issuance of Common Stock for a consideration in
whole or in part other than cash, the consideration other than cash shall
be deemed to be the fair market value thereof as determined in good faith
by the Board of Directors, irrespective of any accounting treatment.
(C) In the case of the issuance of (i) options, warrants or other rights
to purchase or acquire Common Stock (whether or not at the time
exercisable), (ii) securities by their terms convertible into or
exchangeable for Common Stock (whether or not at the time so convertible
or exchangeable) or (iii) options, warrants or other rights to purchase
or acquire such convertible or exchangeable securities:
(1) the shares of Common Stock deliverable upon exercise of such
options, warrants or other rights to purchase or acquire Common
Stock shall be deemed to have been issued at the time such options,
warrants or other rights were issued and for a consideration equal
to the consideration (determined in the manner provided in
subdivisions (A) and (B) above), if any, received by the
Corporation upon the issuance of such options, warrants or rights
plus the minimum purchase price provided in such options, warrants
or rights for the Common Stock covered thereby;
(2) the shares of Common Stock deliverable upon conversion of or
in exchange for any such convertible or exchangeable securities or
upon the exercise of options, warrants or other rights to purchase
or acquire such convertible or exchangeable securities and
subsequent conversion or exchange thereof, shall be deemed to have
been issued at the time such securities were issued or such
options, warrants or other rights were issued and for a
consideration equal to the consideration received by the
Corporation for any such securities and related options, warrants
or other rights (excluding any cash received on account of accrued
interest or accrued dividends), plus the additional consideration,
if any, to be received by the Corporation upon the conversion or
exchange of such securities or the exercise of any related options,
warrants or other rights (the consideration in each case to be
determined in the manner provided in subdivisions (A) and (B)
above);
(3) upon any change in the number of shares or the consideration
per share to be received by the Corporation upon exercise of any
such options, warrants or rights or conversion of, or exchange for,
such convertible or exchangeable securities, including, but not
limited to, a change resulting from the anti-dilution provisions
thereof, the Conversion Price as then in effect shall forthwith be
<PAGE>
readjusted to such Conversion Price as would have been obtained had
an adjustment been made upon the issuance of such options,
warrants, rights or convertible or exchangeable securities on the
basis of such change;
(4) in the event that all of such options, warrants or rights are
not exercised or all of such securities are not converted or
exchanged, then upon the expiration or cancellation of such
options, warrants or rights, or the termination of the right to
convert or exchange all such convertible or exchangeable
securities, if the Conversion Price was adjusted upon the issuance
thereof, the Conversion Price shall forthwith be readjusted to such
Conversion Price as would then be in effect if such options,
warrants or rights had not been issued;
(5) no further adjustment of the Conversion Price shall be made
for the actual issuance of Common Stock upon the exercise,
conversion or exchange of any such convertible or exchangeable
securities, options, warrants or other rights ; and
(6) in no event shall the Conversion Price be increased pursuant
to subclauses (1), (2) and (3) of this Section 6(e)(i).
(ii) For purposes of this Section 6, "Excluded Stock" shall mean (A)
Common Stock issued to employees, consultants, officers, directors or founders
of the Corporation, or options or other rights to purchase or acquire such
Common Stock, or securities by their terms convertible into or exchangeable for
such Common Stock or options or other rights to purchase or acquire Stock or
options or other rights to purchase or acquire rights for such convertible or
exchangeable securities, pursuant to any plan or arrangement in effect as of
June 1, 1995; (B) Common Stock issued as a stock dividend or upon any stock
split or other subdivision or combination of shares of Common Stock; (C) Common
Stock acquirable upon the conversion of Series G Preferred Stock sold at a
gross price of $6,500.00 per share or more; and (D) Common Stock issued or
deemed issued upon the conversion, exchange or exercise of any convertible or
exchangeable securities, warrants, options or other rights outstanding as of
June 1, 1995.
(iii) If, at any time after the date of filing hereof, the number of
shares of Common Stock outstanding is increased by a stock dividend payable in
shares of Common Stock or by a subdivision or stock split of shares of Common
Stock, then, following the record date fixed for the determination of holders
of Common Stock entitled to receive such stock dividend, subdivision or stock
split, the Conversion Price shall be appropriately decreased so that the number
of shares of Common Stock issuable on conversion of each share of Series G
Preferred Stock shall be increased in proportion to such increase in
outstanding shares.
(iv) If, at any time after the date of filing hereof, the number of
shares of Common Stock outstanding is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date for such
combination, the Conversion Price shall be appropriately increased so that the
number of shares of Common Stock issuable on conversion of each share of Series
G Preferred Stock shall be decreased in proportion to such decrease in
outstanding shares.
(v) In case, at any time after the date of filing hereof, of any capital
reorganization or any reclassification of the stock of the Corporation (other
than a change in par value or from par value to no par value or from no par
value to par value or as a result of a stock dividend or subdivision, split-up
or combination of shares), each share of Series G Preferred Stock shall after
such reorganization or
<PAGE>
reclassification be convertible into the kind and number of shares of stock or
other securities or property of the Corporation to which the holder of the
number of shares of Common Stock deliverable (immediately prior to the time of
such reorganization or reclassification) upon conversion of such share would
have been entitled upon such reorganizations or reclassifications. The
provisions of this Section 6(e)(v) shall similarly apply to successive
reorganizations or reclassifications.
(vi) All calculations under this Section 6(e) shall be made to the
nearest one-tenth (1/10) of a cent or to the nearest one-tenth (1/10) of a
share, as the case may be.
(vii) In any case in which the provisions of this Section 6(e) shall
require that an adjustment shall become effective immediately after a record
date for an event, the Corporation may defer until the occurrence of such event
(A) issuing to the holder of any share of Series G Preferred Stock converted
after such record date and before the occurrence of such event the additional
shares of capital stock issuable upon such conversion by reason of the
adjustment required by such event over and above the shares of capital stock
issuable upon such conversion before giving effect to such adjustment and (B)
paying to such holder any amount in cash in lieu of a fractional shares of
capital stock pursuant to Section 6(e)(vi); provided, however, that the
-------- -------
Corporation shall deliver to such holder a due bill or other appropriate
instrument evidencing such holders' right to receive such additional shares,
and such cash, upon the occurrence of the event requiring such adjustment.
(f) Whenever the Conversion Price shall be adjusted as provided in
Section 6(e), the Corporation shall forthwith file, at the office of the
transfer agent for the Series G Preferred Stock or at such other place as may
be designated by the Corporation, a statement, signed by its independent
certified public accountants, showing in detail the facts requiring such
adjustment and the Conversion Price that shall be in effect after such
adjustment. The Corporation shall also cause a copy of such statement to be
sent by mail, first class postage prepaid, to each holder of shares of Series G
Preferred Stock at his address appearing on the Corporation's records. Where
appropriate, such copy may be given in advance and may be included as part of a
notice required to be mailed under the provisions of Section 6(g).
(g) In the event that the Corporation shall propose to take any
action of the types described in clauses (i), (iii), (iv) or (v) of Section
6(e), the Corporation shall give notice to each holder of shares of Series G
Preferred Stock, in the manner set forth in Section 6(f), which notice shall
specify the record date, if any, with respect to any such action and the date
on which such action is to take place. Such notice shall also set forth such
facts with respect thereto as shall be reasonably necessary to indicate the
effect of such action (to the extent such effect may be known at the date of
such notice) on the Conversion Price, and the number, kind or class of shares
or other securities or property which shall be deliverable or purchasable upon
the occurrence of such action or deliverable upon conversion of shares of any
series of Series G Preferred Stock. In the case of any action which would
require the fixing of a record date, such notice shall be given at least 20
days prior to the taking of such proposed action.
(h) For the purposes of this Section 6, the sale or other
disposition of any capital stock of the Corporation theretofore held in its
treasury shall be deemed to be an issuance thereof.
(i) The Corporation shall pay all documentary, stamp or other
transactional taxes attributable to the issuance or delivery of shares of
Common Stock of the Corporation upon conversion of any shares of Series G
Preferred Stock; provided, however, that the Corporation shall not be
-------- -------
required to pay any taxes which may be payable in respect of any transfer
involved in the issuance or delivery
<PAGE>
of any certificate for such shares in a name other than that of the holder of
the shares of the Series G Preferred Stock in respect of which such shares are
being issued.
(j) From and after the Capitalization Amendment Date, the
Corporation shall reserve at all times so long as any shares of Series G
Preferred Stock remain outstanding, free from preemptive rights, out of its
treasury stock or its authorized but unissued shares of Common Stock, or both,
solely for the purpose of effecting the conversion of the shares of the Series
G Preferred Stock, a sufficient number of shares of Common Stock to provide for
the conversion of all outstanding shares of the Series G Preferred Stock.
(k) All shares of Common Stock which may be issued in connection
with the conversion provisions set forth herein will, upon issuance by the
Corporation, be validly issued, fully paid and nonassessable and free from all
taxes, liens or charges with respect thereto.
7. Status of Converted Shares. In the event that any shares of
--------------------------
Series G Preferred Stock shall be converted pursuant to Section 6 hereof, the
shares of Series G Preferred Stock so converted shall be cancelled and shall
not be issuable by the Corporation, and this Certificate shall be appropriately
amended to effect the corresponding reduction in the Corporation's authorized
capital stock.
C. The foregoing recitals and resolutions have not been modified,
altered or amended and are presently in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Designations, Preferences and Rights as of the 29th
day of June, 1995.
/s/ James G. Binch
-------------------------
James G. Binch, President
ATTEST:
/s/ Wendy Gavaghan
- ---------------------------
Wendy Gavaghan, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
MEMRY CORPORATION
It is hereby certified that:
1. The name of the corporation is Memry Corporation (the
"Corporation").
2. The certificate of incorporation of the Corporation is hereby
amended by striking out the first paragraph of Article 4 thereof and by
substituting in lieu of said paragraph the following new paragraph:
"4. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is Twenty-Five Million One Hundred
Thousand (25,100,000) shares consisting of (a) Twenty-Five Million (25,000,000)
shares of common stock of the par value of One Cent ($0.01) per share and (b)
One Hundred Thousand (100,000) shares of preferred stock of the par value of One
Hundred Dollars ($100,000) per share."
3. The amendment of the certificate of incorporation herein
certified has been duly adopted in accordance with the provisions of Section 242
of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate
to be signed by James G. Binch, its President, this 19th day of December, 1995.
MEMRY CORPORATION
By: /s/ James G. Binch
---------------------
Name: James G. Binch
Title: President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MEMRY CORPORATION'S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF
AND FOR THE 6 MONTHS ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 49,000
<SECURITIES> 0
<RECEIVABLES> 892,000
<ALLOWANCES> 62,000
<INVENTORY> 943,000
<CURRENT-ASSETS> 1,838,000
<PP&E> 3,228,000
<DEPRECIATION> 2,033,000
<TOTAL-ASSETS> 3,069,000
<CURRENT-LIABILITIES> 3,352,000
<BONDS> 519,000
0
42,000
<COMMON> 82,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,069,000
<SALES> 1,904,000
<TOTAL-REVENUES> 2,181,000
<CGS> 1,578,000
<TOTAL-COSTS> 1,813,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 110,000
<INCOME-PRETAX> (771,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (771,000)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
