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U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
For the fiscal year ended June 30, 1996
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period from _________ to _________
Commission file number 0-14068
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MEMRY CORPORATION
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(Name of small business issuer in its charter)
Delaware 06-1084424
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
57 Commerce Drive, Brookfield, CT 06804
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number (203) 740-7311
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Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
None None
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Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.01 per share
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(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the 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
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Check if no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
Consolidated revenues of the issuer for the fiscal year ended June 30,
1996 were $_________.
The aggregate market value of voting stock held by non-affiliates of the
registrant was approximately $14,310,400 on June 28, 1996 based upon the
average of the bid and asked prices on that date.
The number of shares of Common Stock outstanding as of June 30, 1996:
12,977,854. All references to numbers of shares of Common Stock contained
herein with respect to periods prior to August 8, 1994 give effect to the one-
for-ten reverse stock split of the Company's Common Stock (the "Reverse Split")
effected on August 8, 1994.
Documents Incorporated by Reference. Memry Corporation's 1996 Proxy Statement
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to be filed with the Commission within 120 days after June 30, 1996, is
incorporated by reference in Part III of this Form 10-KSB.
Transitional Small Business Disclosure Format
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Yes ____ NO X
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Omitted Disclosure Items. This Form 10-KSB omits consolidated revenues of the
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issuer for the fiscal year ended June 30, 1996 on the cover page, "Item 6.
Management Disclosure and Analysis or Plan of Operation" and "Item 7. Financial
Statements" which will be filed within fifteen days after the prescribed due
date hereof, pursuant to Rule 12b-25 promulgated under the Securities Exchange
Act of 1934, as amended.
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PART I
Item 1. DESCRIPTION OF BUSINESS
Memry Corporation (referred to as "Memry" or the "Company"), a Delaware
corporation incorporated in 1981, is primarily engaged in the business of
developing, manufacturing and marketing materials, components and products
utilizing the properties exhibited by shape memory alloys (the "Memry Segment").
In addition, the Company is engaged in the manufacturing and marketing of metal
parts and components machined on screw machines and smaller metal working
machines (the "Wright Machine Segment"). The Company's principal executive
offices are located at 57 Commerce Drive, Brookfield, Connecticut 06804, and its
telephone number at such address is (203) 740-7311.
On June 28, 1996, the Company acquired from Raychem Corporation, a Delaware
corporation located in Menlo Park, California ("Raychem"), the assets comprising
Raychem's nickel-titanium product line. Said acquired business is described in
more detail below under the heading "-- Memry Segment -- Operating Divisions."
MEMRY SEGMENT
SHAPE MEMORY EFFECT
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Shape memory alloys ("SMAs") possess the ability to change from one shape to
another in response to thermal changes, as well as the ability to return to
their original shape following deformations substantially greater than
deformations from which conventional materials can recover. This ability
results from the transformation of the structure of the SMA from one crystalline
form to another in reaction to thermal changes. It is not related to the normal
thermal expansion and contraction properties of most materials. Due to the
crystalline structure change taking place, SMAs are also able to produce forces
many times greater than forces caused by thermal reactions in items such as bi-
metallic elements. SMAs are capable of producing both force and motion at
predetermined temperatures in order both to control and to drive various types
of devices.
The major defining properties of SMAs with which the Company works are their
"super-elasticity" and their ability to demonstrate both a "one-way" memory and
a "two-way" memory. Unlike an ordinary metal, certain SMAs are capable of fully
recovering their shape after being deformed as much as five percent, and of
performing this recovery on a repeated basis. This is more than 50 times the
recovery ability of ordinary metals. This "superelasticity" feature has
applications for surgical instruments and devices, the hitting surface on golf
clubs, orthodontic apparatus, cellular telephone antennae and other devices.
When an actuator (a device that causes action or motion) is required to perform
just a single actuation, it is processed to return to and permanently retain its
original shape when it reaches its actuation temperature, a procedure referred
to as imparting "one-way" memory. One-way memory applications include
fasteners, couplings and sealing devices. "Two-way" memory refers to the
processing of a material so that it has its original shape at one temperature
and other shapes at different temperatures. The cycle of shape changes can (if
the actuator is so processed) be made to repeat almost indefinitely in response
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temperature changes. SMA actuation temperatures can be set from approximately -
100 degrees C (-150 degrees F) to 200 degrees C (392 degrees F). Two-way memory
applications include products and devices which rely upon the SMA to actuate a
mechanism at a predetermined temperature and reverse the action at another
temperature on a repeated basis, such as various types of valves, circuit
breakers and electronic connectors.
OPERATING DIVISIONS
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Due to the Company's June 28, 1996 acquisition of Raychem's nickel-titanium
product line (referred to at times herein as the "Raychem Acquisition"), the
Company has restructured its Memry Segment. "Memry West," consisting of most of
the business acquired from Raychem, manufactures semi-finished materials
utilizing SMAs and, through Raychem, sells such materials into various
industrial electronic, automotive and medical markets. "Memry East," which
prior to the Raychem Acquisition constituted the entire Memry Segment, engages
in the manufacture and sale of finished assemblies and products utilizing SMAs
into the medical, industrial and consumer markets, as well as performing funded
research and product development activities.
A. MEMRY WEST
On June 28, 1996, the Company acquired Raychem's nickel-titanium product line.
This business utilized inventory, leasehold improvements, machinery and
equipment and patent and other intellectual property rights to manufacture and
sell SMAs primarily composed of nickel-titanium. Prior to the Raychem
Acquisition, Raychem was both a supplier of nickel-titanium SMAs to the Company
and a competitor in certain markets (particularly in the medical market for
finished components). The acquired business differed from that of the Company,
however, in that where the Company's Memry Segment had historically specialized
in the manufacture of finished products and components, Raychem specialized more
in the manufacture of semi-finished materials used by original equipment
manufacturers ("OEMs"). Not surprisingly, therefore, the point at which Memry
and Raychem most competed was at the level of components sales to OEMs,
particularly in the medical industry. The leased facility, inventory, machinery
and equipment, leasehold improvements and know-how purchased from Raychem now
constitute Memry West (except that, as discussed below under "-- Memry East,"
Raychem's operations relating to the finishing of materials into components for
sales to United States Surgical Corporation will be relocated to Memry East
prior to December 31, 1996, and is included within the discussion of Memry
East).
Memry West, located in Menlo Park, California, is engaged in the processing and
manufacture of SMAs, the vast majority of which result in the sale of custom
designed semi-finished materials used by OEMs. Memry West sells semi-finished
SMAs in three basic forms: wire, strip and tube. To a lesser degree, Memry
West also sells subcomponents to OEMs, including helical and strip actuators,
patented locking rings for electronic connectors, coated antenna materials, and
sealing components. In connection with the Raychem Acquisition, Memry and
Raychem entered into a Private Label/Distribution Agreement pursuant to which
Raychem
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was made Memry's exclusive distributor for the acquired product line in certain
specified fields of use for an initial term of five years. Sales by the Company
to certain customers, including United States Surgical Corporation (as described
below in "-- Memry East"), were excluded, as were any future sales for medical
implant applications. Therefore, at the present time, substantially all of
Memry West's sales are made to Raychem. Raychem's largest customers for the
products sold to it are cellular telephone antenna manufacturers who utilize the
superelasticity of SMAs for a more durable antenna. Raychem's other customers
of Memry West's products include orthodontic manufacturers, who use SMA strip
for braces, medical products and instrument companies, whose uses of the Memry
West's products include catheter guidewire and medical tubing, automotive
manufacturers, who use SMA actuators to control coolant systems and SMA plugs
for high-pressure fuel injector sealant devices, and industrial product
manufacturers who use SMAs for a variety of other uses including electronic
connectors. In addition, Raychem purchases some of Memry West's semi-finished
materials for its own use. The sales to Raychem under the agreement are
discounted from the ultimate resale price to OEMs in order to allow Raychem to
recover its sales and marketing expenses and to realize a profit upon resale of
such products to its customers (primarily OEMs). Because of this relationship,
Memry West does not have any internal sales force. In addition, Memry West
supplies Memry East with semi-finished materials for processing by Memry East
into finished products and components, much as Raychem sold these materials to
Memry East prior to the Raychem Acquisition.
B. MEMRY EAST
Memry East, located in the same facility as the Company's corporate headquarters
in Brookfield, Connecticut, is engaged in (i) the development and manufacture
(and, in the case of proprietary products, marketing) of finished components and
products utilizing SMA materials, and (ii) the conduct of both funded product
research and customer-sponsored development projects.
(i) Finished Assemblies and Components. Memry East manufactures and sells
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finished assemblies and components for OEMs and also manufactures, sells, and
markets proprietary finished products. While historically the Company has had
more revenues from the sale of its proprietary products than from the sale of
semi-finished materials, assemblies and components to OEMs, both the
consummation of the Raychem Acquisition and the growth in sales of SMA
assemblies to the medical industry have made the materials, assemblies and
components business the greatest part of both the Memry Segment and even Memry
East.
The single largest portion of Memry East's business is selling assemblies and
components to United States Surgical Corporation ("USSC") and other medical
industry OEMs. The primary item sold by Memry to USSC is an SMA subassembly
used by USSC for endoscopic instruments. The use of two-way memory SMAs allows
the instruments to be constrained outside the body, inserted into the body in
its constrained form through small passages, to then take a different shape
while inside the body, and then to return to its constrained shape for removal.
While USSC was working with Memry on a number of projects at the time of the
Raychem
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Acquisition, the bulk of this business represents selling finished medical sub-
assemblies that Raychem manufactured at a separate Menlo Park facility and sold
to USSC. Memry is currently subleasing a separate facility from Raychem in
which it is continuing to process semi-finished materials into sub-assemblies
for sale to USSC. This separate facility will be relocated into Memry East's
facility prior to December 31, 1996. Products and devices being sold to other
medical OEMs include stents, surgical clips, catheter guidance forms and others
using plastic with shape memory properties for orthoscopic procedures. All of
the Company's major SMA competitors compete with the Company in this market (see
"-- Competition").
In 1992 the United States Golf Association ("USGA"), professional golf's
regulating body in the U.S., modified its rules to allow SMAs to be used for the
hitting surface of golf clubs. Prior to that time, the Company had developed an
application of certain properties of SMAs for such purpose. The SMA alloy
allows the energy created when a club strikes a golf ball to be absorbed,
without deformation of the club's shape, to a far higher degree than other
materials used in the golf club industry. Through an exclusive distribution
arrangement that prevents the Company from selling these products to other golf
club manufacturers and the purchaser from sourcing these components elsewhere,
in fiscal 1996 the Company began selling SMA inserts utilizing a alloy trade
named ZeeMet/(R)/ to the Nicklaus Golf Equipment Company ("Nicklaus"). Nicklaus
inserts these ZeeMet/(R)/ inserts into a new line of wedges and a putter, where
they constitute the hitting surface of such clubs. The golfing equipment
industry is highly competitive and various manufacturers have in recent years
been developing more and more technical sophistication. While the Company
believes that the current SMA application, as utilized by Nicklaus, has several
advantages over current competing technology, there can be no assurances that it
will continue to hold such advantages.
In addition to its sales of finished assemblies to OEMs, Memry East currently
manufactures and markets a number of consumer and industrial products utilizing
SMAs. The Company's two principal proprietary products are the MEMRYSAFE/(R)/
line of temperature-actuated water flow reduction products and the
ULTRAVALVE/TM/ electronic combination shower/tub mixing valve. In addition, the
Company manufactures and markets the FIRECHECK/TM/ line of industrial fire
safety valves, but has not yet derived any material amount of revenues
therefrom.
The MEMRYSAFE/(R)/ products provide protection from accidental scalding in
showers, bathtubs and sinks by instantly restricting the flow at the point of
outlet prior to the onset of a scalding condition. The Company sells this
product to distributors for sales as retrofit products into the retail market,
to OEMs as components and, through sales agents, to governmental authorities for
installation in governmental housing. While the majority of sales of the
MEMRYSAFE/(R)/ products are being made in North America, distribution is also
underway in Canada, Australia and New Zealand. Retail prices in the U.S. range
from $7.89 to $24.99. The Company is aware of only one directly competitive
product in the U.S. and another in Australia. However, the primary competition
for the product comes from major U.S. plumbing manufacturers who market and sell
conventional thermostatic and pressure balanced mixing valves. Sales to
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date have fallen short of the Company's expectations, presumably due to lack of
consumer awareness of the product. Nonetheless, the Company believes that these
alternative products are more expensive to manufacture and install and less
effective in protecting the user from burns.
The Company has been selling the micro-processor controlled ULTRAVALVE/TM/
shower and bath valve since June of 1990. Because it combines the safety and
comfort of a thermostatic mixing valve with the ease and accuracy of a computer-
controlled temperature setting, the Company believes that its ULTRAVALVE/TM/
systems have clear performance advantages over the other premium competing
products on the market today. In addition, the ULTRAVALVE/TM/ system
incorporates the Company's patented anti-scald protection. The ULTRAVALVE/TM/
system is assembled at Memry East with certain components purchased from outside
vendors. In May 1995, the Company entered into a three year agreement with
American Standard, Inc., whereby American Standard became the exclusive marketer
and distributor of the ULTRAVALVE/TM/ product line in the United States. The
Company has retained the right to market the products outside of the United
States. American Standard markets the products in the U.S. under both the
American Standard and the Ideal Standard brand names. Due to American Standards'
delay in launching the product, sales of ULTRAVALVE/TM/ products to American
Standard have fallen short of the contractual mandated minimum purchase
requirements for American Standard and product sales still have not achieved a
substantial volume. The primary competition for this product line are the
higher-end pressure-balanced valves manufactured and sold by most major U.S.
plumbing companies and thermostatic valves manufactured by selected European
companies such as F. Grohe.
(ii) Customer Sponsored Development Projects and Funded Product Research. In
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addition to the manufacture and sale of commercialized components and products,
Memry East is also engaged in both sponsored development projects in which the
Company designs, manufactures and sells prototype components and products to
customers, and funded product research.
Memry East is currently working on a number of programs to develop SMA
components for OEM customer's products. The Company will accept customer-
sponsored development contracts when management believes that the customer is
likely to order a successfully developed component or product in sufficient
quantity to justify the allocation of the engineering resources necessary.
Generally under such programs, the identity of the customer is confidential; the
data, inventions, patents and intellectual property rights which specifically
relate to the SMA component are either owned by the customer, or in several
instances shared between the Company and the customer; data, inventions,
patents, and intellectual property rights pertaining to the SMA technology that
do not specifically relate to the customer's product are to be owned in all
cases by the Company. The largest such projects that Memry East is currently
working on include superelastic eyeglass frames under development with a major
U.S. eyewear manufacture and a specialized coolant valve for high performance
commercial aviation jet engines in conjunction with a major aerospace company.
In addition, the Company has only recently completed the development of a three-
way line valve
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for a Canadian utility company intended for use in an off-peak residential
electric water heater system. Because the decision as to when a program is
complete and ready for commercialization belongs to the customer, and not to the
Company, the Company is not able to accurately predict if or when any products
developed in this type of program will come to market. In fact, the Company has
worked on this type of development projects for a number of years and, with the
exception of the sales that are now being made by Memry West for components for
a proprietary sealing system for high pressure fuel injectors that were
developed by Memry East and the customer in such a program, the Company does not
yet have any material sales of commercialized products or assemblies that have
arisen from these programs.
Memry East is also involved in a number of customer and government sponsored
research programs in which the Company gets paid not for the sale of products
but for performing the research. The Company will continue to pursue funded
development programs which advance the Company's knowledge of shape memory
materials and/or demonstrate clear potential for commercialization. Projects
undertaken by the Company in the last few years include a National Institute of
Health program to study the use of super-elastic titanium-based alloys as
replacement for the current nickel-based alloys used in orthodontic procedures,
a United States Air Force program for the development of SMA-based reusable lock
nuts, and a program with the National Aeronautical and Space Administration for
the development of shroud rings in the compressor sections of small jet
turbines. The largest ongoing development program is with McDonnell Douglas for
the development of SMA actuated control surfaces on advanced helicopter blades.
Research contracts with the U.S. Government are subject to termination or
renegotiation by the U.S. Government pursuant to standard government procurement
contract terms.
SUPPLIERS
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The principal raw material used by the Memry Segment is SMA alloys. The Company
expects to be able to continue to acquire, from several sources, shape memory
alloys in sufficient quantities for its needs. While the Company relies heavily
on outside suppliers for its non-SMA components of finished products, the
Company also does not anticipate any difficulty in continuing to obtain non-SMA
raw materials and components necessary for the continuation of the Memry
Segment's business.
COMPETITION
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The Company has competition on two levels: technological competition by other
SMA processors, who compete with the Memry Segment mostly on the sale of semi-
finished materials (i.e., mostly with Memry West) and components (i.e., mostly
with Memry East), and end product competitors who compete with the Company in
the sale of the Memry Segment's finished products (i.e., who compete with Memry
East). Competition with respect to Memry East's two major finished product
lines and two major component lines are discussed above. See "-- Operating
Divisions -- Memry East." Technologically, there are several major U.S.,
Japanese and European companies engaged in the supply or use of SMAs, some of
which have substantially greater resources than the Company. Within the U.S.,
the
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two major SMA alloy suppliers to both the Company and the industry as a whole
are Teledyne and Special Metals Corporation. Each of these companies has
substantially greater resources than the Company and could determine that it
wishes to compete with the Company in the Company's markets. Special Metals has
in fact become a competitor of Memry West for semi-finished wire and strip
materials. Japanese competitors include Furakawa Electric Co., Sumitomo Co. and
Tokin Co., all of which produce SMAs and sell to users in Japan and
internationally. The principal European competitors are AMT, a unit of the
SwissMetal group of companies, and G. Rau, a German company. Within North
America, the Company believes that it is the largest single processor of SMAs,
accounting for approximately 35% of all SMA usage. The Company believes that
Beta Group, Inc., and its subsidiary Nitinol Devices Company, are the next
largest, followed by Flexmedics, Nitinol Medical Technology and SMA
Applications, Inc.
The Company intends to compete, and advance its position, based upon its
worldwide sales and distribution alliance with Raychem Corporation, its
proprietary alloy positions, and its knowledge of the processing parameters of
the alloys and unique design and assembly capabilities, particularly in the
medical instrument and valuing fields. While price and production capability
are obviously important, the Company believes that it competes mostly on
technological capabilities in the Memry Segment.
WRIGHT MACHINE SEGMENT
The Company's Wright Machine Segment consists of Wright Machine Corporation
("Wright"), a wholly-owned subsidiary of the Company with a 120-year history as
a New England manufacturer of screw machine and taper pin products. Wright
provides these products to OEMs in the plumbing, electrical, electronic, fire
protection, valve, appliance and automotive markets through both direct sales
accounts and three manufacturers' representatives. Within the overall activity
of Wright, it has three basic business segments: (i) the manufacture of
threaded rings for the plumbing industry; (ii) the manufacture of predominantly
brass parts on screw machines ranging in size between 1.5 inches to 2.5 inches;
and (iii) the manufacture of custom and standard taper pins, most of which are
made of various grades of stainless and carbon steel.
CUSTOMERS AND SUPPLIERS
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Wright sells its products to OEM's in the plumbing, electrical, electronic, fire
protection, valve, appliance and automotive markets. The majority of Wrights's
customers are located within a 300 mile radius of Wright's factory in Worcester,
Massachusetts. However, Wright services customers throughout the United States.
In fiscal 1996, Wrights's ten largest customers accounted for 49% of its total
revenues. Obviously, the loss of one or more of these customers would have a
material adverse effect on Wright's operations.
Wright buys free cutting brass rod and hollow brass tube at market prices direct
from producers and other suppliers. Stainless and other steel supplies are
provided by a large number of suppliers. These
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materials are all available from numerous sources and Wright does not anticipate
any difficulties in being able to acquire any of such materials.
COMPETITION
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Wright's competition comes from other screw machining job shops, primarily on
the East Coast (in proximity to most of Wright's customers) and, frequently, the
customer's own internal machining capacity. The primary measures of
competitiveness are price, quality and delivery, with price frequently being the
most important. There has been a significant contraction in Wright's industry
over the past few years, resulting in fewer but more able competitors.
Wright has enacted major cost reduction measures in both the spring of 1994 and
again in the spring of 1996 in order to become more cost competitive with its
competitors. However, liquidity constraints over the last few years have
adversely affected Wright's ability to obtain timely deliveries of raw
materials, thus making Wright less competitive as to delivery and resulting in
diminished orders from customers and revenues. In addition, several of the
machine shops and many internal screw machine facilities with which Wright
competes have greater financial strength and similar production capabilities.
PATENTS AND TRADEMARKS
As part of the Raychem Acquisition, the Company acquired five U.S. patents, as
well as a variety of foreign patents and domestic and foreign patent
applications, relating primarily to the production and utilization of nickel-
titanium alloys having shape memory effect. While these acquired patents in no
way dominate the entire field of shape memory metals, they do provide the
Company with some competitive advantages in the covered uses. In addition,
notwithstanding the Company's acquisition of these patents and patent
applications as part of the Raychem Acquisition, under certain circumstances the
Company will be required to license the acquired intellectual property back to
Raychem for specified uses. For example, (i) upon the termination of the
private/label distribution agreement between the Company and Raychem, Raychem
will have a non-exclusive perpetual license to utilize these patents to sell
products within specified fields of uses for a specified royalty, and (ii)
Raychem has a non-exclusive, transferable perpetual license to utilize these
patents in connection with certain intellectual property relating to the medical
market that was not acquired by the Company as part of the Raychem Acquisition.
With respect to specific products, the Company has a patent pending for the use
of SMA in the hitting surface of golf clubs. The Company owns two patents
relating to the SMA scald-protection valves, the last of which expires in the
year 2010. The Company owns three commercially material U.S. and one Canadian
patent for the ULTRAVALVE/TM/ system. The Company has filed for patent
protection for the ULTRAVALVE/TM/ system in other countries, including the
European Economic Community. U.S. patent protection for the ULTRAVALVE/TM/
product expires in 2007. The Company also holds a variety of other patents
relating to both SMA technology generally and specific products.
The Company's patent rights do not dominate the field of SMA utilization,
although the patents acquired from Raychem do dominate the use of nickel-
titanium alloys having a two-way shape memory effect, although not in the
medical instrument and in-body applications fields. The Company does not,
however, have specific patent protection for many of its present or presently
proposed products or product components. The Company's patent rights obviously
do not dominate any specific fields in which the Company sells products (medical
instruments, plumbing products, etc.). The Company does believe, however, that
various patents provide it with advantages in the manufacture and sale
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of different products, and that its know-how relating to various SMA alloys
provides the Company with a competitive advantage.
While a U.S. patent is presumed valid, the presumption of validity is not
conclusive, and the scope of a patent's claim coverage, even if valid, may be
less than needed to secure a significant market advantage. Gaining effective
marketing advantage through patents can require the expense, uncertainty and
delay of litigation. Although the Company's technical staff is generally
familiar with the SMA patent environment and has reviewed patent searches when
considered relevant, the Company has not requested any legal opinion to
determine whether any of its contemplated products would infringe any existing
patents.
The Company has trademark registrations for the MEMRYSAFE/(R)/, SHOWERGARD/(R)/
and FLOWGARD/(R)/ valves, as well as for the ZeeMet/(R)/ golf club inserts.
RESEARCH AND DEVELOPMENT
During fiscal 1996, the Company did not spend any material amounts on "pure"
research and development (i.e., research and development done by the Company at
its own cost for purposes of developing future products). However, the Company
spent approximately $422,000 on research and development contributing to the
development of SMA components pursuant to customer and government sponsored
development arrangements. These research and development costs are borne
directly by the federal government and customers of the Company, as applicable,
and, for purposes of the Company's financial statements, are part of "costs of
goods sold," rather than research and development. By comparison, the Company
spent approximately $300,000 on funded research and development in fiscal 1995,
which amount was also accounted for as "costs of goods sold." The aforesaid
numbers do not include amounts spent by Raychem for research and development in
said fiscal years (approximately $1.88 million in fiscal 1996 and $2.04 million
in fiscal 1995), as these amounts were expended primarily for the development of
intellectual property in the medical applications area that was not sold to
Memry as part of the Raychem acquisition.
EMPLOYEES
As of June 30, 1996 (and giving effect to the employees hired in connection with
the Raychem Acquisition which was consummated on June 28, 1996), the Company and
its subsidiary had seventy-six full-time and two part-time employees. Of the
full-time employees, thirteen were executive or management personnel and three
were science and research personnel. Thirty of the full-time employees and
none of the part-time employees were employed by Wright. In addition, pursuant
to a transitional services agreement entered into with Raychem as part of the
Raychem acquisition, Raychem was as of such date supplying Memry, on a temporary
basis at Memry's cost, with the use of two Raychem employees. The Company
anticipates replacing such temporary workers by January of 1997 through a
combination of temporary and permanent employees working out of both Memry West
and Memry East. None of the employees is represented by collective bargaining
units.
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Item 2. DESCRIPTION OF PROPERTY
The Company has a lease, which was renewed as of September 30, 1995, for a term
to expire on September 30, 2000, for office and manufacturing space located at
57 Commerce Drive, Brookfield, Connecticut 06804. The premises have a floor
area of approximately 21,350 square feet, of which approximately 5,500 square
feet is used by the Company for general administrative, executive, and sales
purposes, and approximately 11,350 square feet is used for manufacturing and
research and development operations. The lease provides for an average annual
base rental of approximately $135,000.
The Company has a lease, for a term to expire on September 30, 1998, for office
and manufacturing space located at 4065 Campbell Avenue, Menlo Park, California
94025. These premises, formerly used by Raychem, are the headquarters of the
Company's west coast operations. These premises have a floor area of
approximately 28,032 square feet, which is used by the Company for
manufacturing, warehousing, general administrative and research and development
operations. The lease provides for monthly base rental of $20,743.68, subject
to adjustment in April of 1997 for increases in the consumer price index. The
Company also has a lease, through December 31, 1996, for 3,300 square feet of
laboratory and manufacturing space at 220 Jefferson, Menlo Park, California
94025. This space is leased to the Company by Raychem with base rent waived for
its term. The space is primarily used as an environmentally controlled area
("clean room"). The Company intends to relocate this clean room to its
Brookfield headquarters when this lease expires.
Wright owns approximately 2.9 acres of land, together with manufacturing and
office facilities, located at 69 Armory Street, Worcester, Massachusetts. Three
buildings have an aggregate floor area of approximately 85,000 square feet, of
which approximately 5,000 square feet is used for general administrative,
executive, and sales purposes, and the remainder for manufacturing screw machine
and taper pin products. The property is subject to a mortgage in favor of the
Company's and Wright's principal lender, which secures a loan to the Company and
Wright. See "Management Discussion and Analysis or Plan of Operations" and
the note to the Financial Statements entitled "Subsequent Events" for a
discussion of the status of the mortgage loan.
Management believes that the existing facilities of the Company and Wright are
suitable and adequate for their present needs and that additional facilities
will be readily available if needed. Management also believes that the
properties are adequately covered by insurance.
Item 3. LEGAL PROCEEDINGS
The Company is involved in various legal proceedings, none of which are believed
to involve a claim for damages exceeding 10% of the current assets of the
Company. Although it is not feasible to predict the outcome of any such
proceedings, or any claims made against the Company, the Company does not
anticipate that the ultimate liability, if any, in any such proceeding will
materially affect the Company's financial position, results of operation or
liquidity/cash flows.
10
<PAGE>
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
Item 5. MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded on the OTC Bulletin Board (through which
various market dealers make the market of the Company's Common Stock and trades
are reported through what is commonly known as the "pink sheets") under the
symbol MRMY. Prior to August 8, 1994, the Company's Common Stock was traded
under the symbol MRMT. On August 8, 1994, the Company effected a one-for-ten
reverse stock split (the "Reverse Split") of its Common Stock. It should be
noted that all references to Common Stock (both number of shares and per share
prices) have been adjusted to reflect the Reverse Split. On June 30, 1996,
there were 1,505 holders of record of the Company's Common Stock.
The following table sets forth, for the periods indicated, the quarterly high
and low representative bid quotations for the Company's Common Stock as reported
by the National Quotations Bureau. Quotations reflect inter-dealer prices,
without retail mark-ups, mark-downs, or commissions, and may not necessarily
represent actual transactions.
<TABLE>
<CAPTION>
Fiscal year ended
June 30 1996 1995
- - ------------------- ----- ----
High Low High Low
---- --- ---- ---
<S> <C> <C> <C> <C>
1st Quarter $0.94 $0.53 $2.50 $1.00
2nd Quarter 0.91 0.44 1.88 0.75
3rd Quarter 1.13 0.50 1.69 0.50
4th Quarter 2.13 0.88 1.38 0.63
</TABLE>
The Company has never paid a cash dividend on its Common Stock and the Company
does not contemplate paying any cash dividends on its Common Stock in the near
future.
By letter agreement dated May 22, 1995 between Harbour Holdings Limited
Partnership ("Harbour") and the Company, Harbour agreed to accept the issuance
to it by the Company of 747,500 shares of Common Stock as payment in full of
declared, accrued and unpaid dividends in the amount of $598,000 that accrued
prior to June 30, 1993 with respect to shares of Series A Preferred Stock and
Series B Preferred stock held at such time by Harbour.
Pursuant to the Company's August 9, 1996 loan agreement with its principal
lender, the Company is prohibited from declaring or paying any dividends, or
making a distribution to its stockholders, until the termination of such
agreement and the repayment of all amounts due to such lender.
11
<PAGE>
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Management's Discussion and Analysis will be filed within fifteen days after the
prescribed due date hereof, pursuant to Rule 12b-25 promulgated under the
Securities Exchange Act of 1934, as amended.
Item 7. FINANCIAL STATEMENTS
Financial Statements will be filed within fifteen days after the prescribed due
date hereof, pursuant to Rule 12b-25 promulgated under the Securities Exchange
Act of 1934, as amended.
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None that have not been previously reported, as that term is defined in Rule
12b-2 promulgated under the Securities Exchange Act of 1934, as amended.
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The information required by this Item is incorporated herein by reference to the
sections entitled "Proposal No. 1 - Election of Directors," "-Executive Officers
of the Company" and "-Section 16(a) Beneficial Ownership Reporting Compliance"
of the Company's Definitive Proxy Statement to be filed with the Commission
within 120 days after June 30, 1996.
Item 10. EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by reference to the
sections entitled "Proposal No. 1-Election of Directors-Compensation of
Directors" and "-Executive Compensation" of the Company's Definitive Proxy
Statement to be filed with the Commission within 120 days after June 30, 1996.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated herein by reference to the
section entitled "Security Ownership of Certain Beneficial Owners and
Management" of the Company's Definitive Proxy Statement to be filed with the
Commission within 120 days after June 30, 1996.
Item 12. CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS
The information required by this Item is incorporated herein by reference to the
section entitled "Proposal No.1 -Election of Directors-Certain Relationships and
Transactions" of the Company's Definitive Proxy Statement to be filed with the
Commission within 120 days after June 30, 1996.
12
<PAGE>
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The Exhibits listed in the Index to Exhibits following the Signature
Page herein are filed as part of this Annual Report on Form 10-KSB.
(b) Reports on Form 8-K
No Form 8-K was filed during the last quarter of the fiscal year ended
June 30, 1995. However, a Form 8-K was filed on July 15, 1996 with
respect to disclosure regarding "Item 2. Acquisition or Disposition of
Assets" and "Item 7. Financial Statements and Exhibits," disclosing the
consummation of the Raychem Acquisition. On September 13, 1996, the
Company filed a Form 8-K/A containing the financial statements relating
to the Raychem Acquisition.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MEMRY CORPORATION
Date: September 30, 1996 By: /s/ James G. Binch
--------------------- -------------------
James G. Binch
President, CEO,
Treasurer and
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- - --------- ----- ----
<S> <C> <C>
/s/ James G. Binch President, CEO, Treasurer September 30, 1996
- - ----------------------
James G. Binch and Chairman of the Board
(Principal Executive Officer)
/s/ Wendy A. Gavaghan Corporate Controller September 30, 1996
- - ---------------------
Wendy A. Gavaghan (Principal Financial
Officer)
/s/ Jack Halperin Director September 30, 1996
- - ----------------------
Jack Halperin
/s/ John A. Morgan Director September 30, 1996
- - ----------------------
John A. Morgan
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit Index
Exhibit Sequential
Number Description of Exhibit Page
- - ------ ---------------------- ----------
<S> <C> <C>
3.1 Certificate of Incorporation of the Company, as amended (9)
3.2 By-Laws of the Company, as amended (8)
10.1 Employment Agreement, dated January 1, 1990, (1)
between the Company and Ming H. Wu
10.2 Lease Agreement, dated January 24, 1991, (2)
between the Company and Brookfield Commerce,
relating to 57 Commerce Drive, Brookfield, CT
10.3 SBIR Contract, dated August 6, 1992, between the (4)
Company and the U.S. Air Force
10.4 Warrant Issued to Connecticut Innovations, (3)
Inc. ("CII") as of March 1, 1992
10.5 Employment Agreement, dated September 24, (5)
1993, between the Company and James G. Binch
10.6 Warrant issued to American Equities Overseas (5)
Inc., pursuant to Placement Agreement of
September 8, 1993
10.7 Warrant issued to American Equities Overseas (5)
Inc., pursuant to Placement Agreement of
November 22, 1993
10.8 Agreement, dated January 25, 1993, between (5)
the Company and Sciatec, Inc.
10.9 Memry Corporation Stock Option Plan adopted (6)
as of July 19, 1994
10.10 SBIR Contract dated December 9, 1993 between (6)
the Company and NASA
10.11 Letter Agreement dated as of October 12, 1994 (6)
between the Company and Harbour Holdings Limited
Partnership regarding Series A Preferred stock
conversion calculation
10.12 Employee Non-Disclosure Agreement, dated as of (6)
October 18, 1994, between the Company and
James G. Binch
10.13 Employee Non-Disclosure Agreement, dated as of (6)
January 24, 1994, between the Company and
Wendy A. Gavaghan
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description of Exhibit Page
- - ------- ---------------------- ----------
<S> <C> <C>
10.14 Convertible Subordinated Debenture Purchase Agreement, (9)
dated as of December 22, 1994, between the Company and
CII
10.15 Escrow Agreement, dated as of December 22, 1994, among (9)
the Company, CII and Finn Dixon & Herling as escrow
agent
10.16 Letter Agreement, dated May 22, 1995, between (7)
Harbour Holdings Limited Partnership and the
Company regarding conversion of Series A and
Series B Preferred Stock and issuance of shares
of Common Stock as payment in full of accrued dividends.
10.17 Form of Securities Purchase Agreement relating to (7)
sales of Series G Preferred Stock of Memry Corporation
10.18 First Amendment to Convertible Subordinated Debenture (7)
Purchase Agreement, dated October 11, 1995, between
the Company and CII
10.19 First Addendum to Convertible Subordinated Debenture, (7)
dated October 11, 1995, made by the Company and agreed
to by CII
10.20 First Addendum to Stock Subscription Warrant (re: (7)
Warrant No. 94-4), dated October 11, 1995, made by the
Company and agreed to by CII
10.21 First Addendum to Stock Subscription Warrant (re: (7)
Warrant No. 94-5), dated October 11, 1995, made by the
Company and agreed to by CII
10.22 First Addendum to Stock Subscription Warrant (re: (7)
Warrant No. 94-6), dated October 11, 1995, made by the
Company and agreed to by CII
10.23 Amendment to Escrow Agreement, dated October 11, 1995, (7)
among the Company, CII and Finn Dixon & Herling as escrow
agent
10.24 Second Amendment to Convertible Subordinated Debenture (9)
Purchase Agreement, dated as of June 28, 1996, between
Memry and CII
10.25 Second Amendment to Escrow Agreement, dated as of (9)
June 28, 1996, among Memry, CII and Finn Dixon & Herling
as escrow agent
10.26 Amended and Restated Class I Warrant Certificate (9)
(Warrant Certificate No. 94-4A) issued by the
Company to CII
10.27 Amended and Restated Class II Warrant Certificate (9)
(Warrant Certificate No. 94-5A) issued by the
Company to CII
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description of Exhibit Page
- - ------- ---------------------- ----------
<S> <C> <C>
10.28 Second Addendum to Class III Warrants issued by the (9)
Company to CII
10.29 Sublease, dated as of June 28, 1996, between the Company (8)
and Raychem Corporation
10.30 Tinel-Lock Supply Agreement, dated as of June 28, 1996, (8)
between the Company and Raychem Corporation
10.31 Private Label/Distribution Agreement, dated as of (9)
June 28, 1996, between the Company and Raychem Corporation
10.32 Warrant Certificate exercisable for 1,130,000 shares of (8)
Common Stock, dated June 28, 1996, issued by the Company
to Raychem Corporation,
10.33 Warrant Certificate exercisable for 1,250,000 shares of (8)
Common Stock, dated June 28, 1996, issued by the Company
to Raychem Corporation,
10.34 Finders Fee Agreement, dated as of June 28, 1996, between (8)
the Company and Raychem Corporation,
10.35 Amended and Restated Asset Purchase Agreement (8)
between the Company and Raychem Corporation,
dated May 10, 1996.
10.36 Letter Agreement, dated June 20, 1996, between (8)
Memry Corporation and Raychem Corporation.
10.37 Amendment No. 1 to Amended and Restated Purchase (8)
Agreement between Memry Corporation and Raychem
Corporation, dated June 28, 1996.
10.38 Amendment No.2 to Amended and Restated Purchase Agreement (9)
between Memry Corporation and Raychem Corporation, dated
August 11, 1996.
10.39 Amendment to Lease Agreement between the Company and (9)
Brookfield Commerce relating to 57 Commerce Drive,
Brookfield, CT.
10.40 Securities Purchase Agreement, dated as of (9)
June 14, 1996, between Memry Corporation and
Wendy A. Gavaghan
10.41 Warrant Cert. No. 96-4, dated as of July 16, 1996, (9)
issued to Dominion Captial Partners
10.42 Warrant Cert. No. 96-5, dated as of July 15, 1996, (9)
issued to Dawn M. Morton
10.43 Form of Securities Purchase Agreement relating to (9)
sales of Common Stock at $2.00 per share on
June 28, 1996
10.44 Commercial Revolving Loan, Term Loan and Security (9)
Agreement, dated August 9, 1996, among the Company,
Wright Machine Corporation and Affiliated Business
Credit Corporation
10.45 Mortgage and Security Agreement dated as of August 9, 1996, (9)
from Wright Machine Corporation and Affiliated Business
Credit Corporation
10.46 Letter Agreement, dated June 26, 1996, between Memry (9)
Corporation and James Proft
10.47 Warrant Certificate No. 96-7, dated September 19, 1996, (9)
issued to James Proft
10.48 Letter Agreement, dated as of May 29, 1996, between Memry (9)
Corporation and Dominion Capital Partners re: stock issuance
21.1 Information regarding Wright Machine Corporation (7)
</TABLE>
- - ---------------------------------
(1) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1990.
<PAGE>
(2) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1991.
(3) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1991.
(4) Incorporated by reference to the Company's Annual Report on Form 10-KSB for
the fiscal year ended June 30, 1992.
(5) Incorporated by reference to the Company's Annual Report on Form 10-KSB for
the fiscal year ended June 30, 1993.
(6) Incorporated by reference to the Company's Annual Report on Form 10-KSB for
the fiscal year ended June 30, 1994.
(7) Incorporated by reference to the Company's Annual Report on Form 10-KSB for
the fiscal year ended June 30, 1995.
(8) Incorporated by reference to the Company's Current Report on Form 8-K filed
July 15, 1996.
(9) Submitted separately, electronically.
<PAGE>
Exhibit 3.1
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.
To authorize and cause to be executed mortgages and liens upon the real
and personal property of the Corporation.
<PAGE>
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;
<PAGE>
(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;
(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>
RIDER A
-------
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 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 ($100.00) 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
<PAGE>
Exhibit 10.14
CONVERTIBLE SUBORDINATED DEBENTURE
PURCHASE AGREEMENT
MEMRY CORPORATION
December 22, 1994
<PAGE>
CONVERTIBLE SUBORDINATED DEBENTURE PURCHASE AGREEMENT
-----------------------------------------------------
THIS CONVERTIBLE SUBORDINATED DEBENTURE PURCHASE AGREEMENT ("Agreement")
is made as of the 22nd day of December, 1994, by and between MEMRY CORPORATION,
a Delaware corporation (the "Company"), and CONNECTICUT INNOVATIONS,
INCORPORATED, a specially chartered Connecticut corporation (the "Investor").
Certain capitalized terms used herein and not defined where used are defined in
Section 8 hereof.
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Securities.
-------------------------------
1.1 Sale and Issuance of Securities.
-------------------------------
(a) Subject to the terms and conditions of this Agreement, on
the Closing Date (as defined below) the Investor agrees to purchase and the
Company agrees to sell and issue to the Investor the following securities
(collectively the "Purchased Securities"): (i) a Convertible Subordinated
Debenture of the Company in the form of Exhibit A hereto and in the principal
amount of $763,208.00 (the "Debenture"); (ii) Warrants to purchase 508,805
shares of the Company's Common Stock, par value $0.01 (the "Common Stock"), at
an initial price of $2.15 per share, evidenced by a Warrant Certificate in the
form of Exhibit B hereto (the "Class I Warrants"); and (iii) Warrants to
purchase 305,283 shares of Common Stock at an initial price of $2.75 per share,
evidenced by a Warrant Certificate in the form of Exhibit C hereto (the "Class
II Warrants"). The issuance and sale by the Company to the Investor of the
Purchased Securities at the Closing shall be in consideration of the following:
(x) the delivery to the Company of a check in the amount of $370,153; (y) the
delivery to the law firm of Finn Dixon & Herling, counsel to the Company, of a
check, in the amount of $45,000, payable to the order of "Finn Dixon & Herling
Trust Account" pursuant to the Escrow Agreement described below; and (z) the
delivery by the Investor to the Company of the Company's 10% Convertible Demand
Note, dated August 1, 1994, in the stated principal amount of $334,847.00 (the
"Note"), marked "paid in full" by the Investor, for an aggregate purchase price
for the Purchased Securities of Seven Hundred Sixty Three Thousand Two Hundred
and Eight Dollars ($763,208) (the "Purchase Price").
(b) The Company and the Investor, having adverse interests and
as a result of arm's length bargaining, agree that (i) the Investor has not
rendered or agreed to render any services to the Company in connection with this
Agreement or the issuance of the Debenture, Class I Warrants and Class II
Warrants; and (ii) the assumed price at which the Debenture would be issued if
it were issued apart from the Class I Warrants and Class II Warrants is 99% of
the principal amount thereof.
<PAGE>
- 2 -
(c) The Company shall use the $370,153 cash proceeds from the
sale of the Purchased Securities pursuant to Section 1.1(a) above for activities
conducted in the State of Connecticut for the development, marketing and
production of its shape memory products. Without limitation, the Company will
not use the proceeds for repayment of indebtedness, including trade payables
except in the ordinary course of business and incurred after November 29, 1993.
1.2 Closing.
(a) The Closing shall take place at the offices of Shipman &
Goodwin, Hartford, Connecticut, commencing at 10:00 a.m. Eastern daylight
savings time on Thursday, December 22, 1994 (the "Closing Date").
(b) At the Closing the Company shall deliver to the Investor
the Purchased Securities which the Investor is purchasing against delivery to
the Company of the Purchase Price.
2. Representations and Warranties of the Investor. The Investor
----------------------------------------------
hereby represents and warrants to the Company and acknowledges and intends that
the Company rely thereon, as follows:
(a) The Investor will not sell, assign, pledge, transfer, or
otherwise dispose of, whether directly or indirectly, all or any portion of the
Purchased Securities, or any Common Stock obtained upon the exercise or
conversion of the Purchased Securities or as a stock dividend on the Common
Stock so obtained (such Common Stock being hereinafter collectively referred to
as the "Underlying Securities"; the Purchased Securities and the Underlying
Securities are hereinafter collectively referred to as the "Securities")), to
any person or entity without complying with applicable securities laws;
(b) The Investor is acquiring the Purchased Securities and the
Underlying Securities for the Investor's own account, for investment purposes
only and not with a view to any distribution of such Securities;
(c) The Investor acknowledges and agrees that the Company has
informed the Investor that the Securities are not registered under any
securities laws, and, therefore, that (absent registration under or exemption
from applicable securities laws) the Securities are subject to substantial
restrictions on transfer;
<PAGE>
- 3 -
(d) The Investor has investigated the purchase of the
Securities to the extent the Investor deems necessary or desirable, and the
Company has provided the Investor with any assistance in connection therewith
which Investor has requested. The Investor has such knowledge and experience in
financial and business matters that the Investor is capable of evaluating the
merits and risks of the acquisition of the Securities and of making an informed
investment decision with respect thereto and the Investor has the ability to
bear the economic risk of an investment in the Company and to withstand a
complete loss of its investment. The Investor is financially able to hold the
Securities for an indefinite period of time;
(e) The Investor has been furnished by the Company with all
information the Investor has reasonably requested in order to form an informed
investment decision concerning the purchase of the Securities. The Investor has
been afforded an opportunity to ask questions of, and receive answers from
representatives of the Company concerning the terms and conditions of the
Investor's purchase of the Securities and has been afforded the opportunity to
obtain any additional information (to the extent the Company had such
information or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of information otherwise furnished by the
Company;
(f) The Investor understands that no United States federal or
state agency or any agency of any other government has passed upon or made any
recommendation or endorsement of any investment in the Company;
(g) The Investor has not been organized for the purpose of
purchasing the Securities;
(h) The Investor is a "financial institution" or
"institutional buyer" as such terms are defined in Section 36- 490(b)(8) of the
General Statutes of Connecticut;
(i) The Investor understands that the certificates evidencing
the Purchased Securities and any Underlying Securities will bear a legend
stating in substance:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT
OR AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE
<PAGE>
- 4 -
COMPANY THAT SUCH SALE, OFFER FOR SALE, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION DOES NOT VIOLATE THE PROVISIONS OF SUCH ACT OR UNLESS SOLD PURSUANT
TO RULE 144 OF SUCH ACT."
provided, however, that the Company agrees to cause such legend to be removed
from any certificates representing any Securities after such Securities have
been transferred pursuant to a registered public offering, an effective
exemption under Section 4(1) of that Act, or Rule 144 promulgated thereunder;
and
(j) The Investor agrees and acknowledges that, as of the date
hereof: (i) the Company has not reserved shares of Common Stock for issuance
upon the exercise of the Class I Warrants, the Class II Warrants or the 90,000
additional shares of Common Stock that the Class III Warrants (as defined in
Section 7.7 hereof) are being amended to grant to the Investor, or upon the
conversion of the Debenture, except as described in Section 3.7 below; (ii) that
the Company does not currently have authorized and unreserved a sufficient
number of shares of Common Stock to allow for the full conversion and exercise
of the Purchased Securities; and (iii) that pursuant to the terms of the
Purchased Securities and this Agreement, while the Company is obligated to use
its best efforts to cause such a sufficient number of shares to be authorized
and reserved for issuance upon the conversion and exercise of the Purchased
Securities as soon as practicable, it is not required to accomplish the same
prior to September 1, 1995.
3. Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants to the Investor as follows:
3.1 Registration and Other Rights. Except as set forth on Schedule A, and
-----------------------------
with respect to the registration rights granted herein, there are no "side
agreements" or other agreements or understandings with any person regarding
registration of securities of the Company under the Securities Act of 1933, as
amended. Between June 30, 1994 and the date hereof, no securities of the Company
have been sold which provide any registration or other rights more favorable
than those set forth herein. Between the date hereof and July 1, 1995, the
Company agrees that it will not provide any registration or other rights more
favorable than those set forth herein unless the Investor is also concurrently
offered comparable rights or unless such rights differ only as to price and
trigger adjustments to the conversion price for the Debenture and the exercise
price for the Class I Warrants and the Class II Warrants. The Company shall
provide the Investor with copies of all such sale agreements and related
documents.
<PAGE>
- 5 -
3.2 Amount of Financing. The Company is closing, concurrently with the
-------------------
Investment, or has already closed, on a minimum of $4,000,000, in addition to
the amount provided by the Investor, of payments for the Company's equity or
convertible indebtedness since January 1, 1993. Schedule B hereto contains a
list of such payments.
3.3 No Adverse Change. Since the date of the Placement Memorandum (as
-----------------
hereinafter defined) there have not been any changes in the business, prospects
or affairs of the Company which, in the aggregate, have been, or are expected to
be, materially adverse, which have not been disclosed in the Company's Annual
Report on Form 10-KSB for the fiscal year ended June 30, 1994, or the Company's
Quarterly Report on Form 10-QSB for the first quarter of the Company's current
fiscal year.
3.4 Authorization. All action on the part of the Company, its directors
-------------
and shareholders necessary for the authorization, execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated herein, and for the authorization, execution and
delivery of the Purchased Securities, have been taken (except that the Company
has not reserved for issuance shares of Common Stock to be issued (x) upon the
exercise of the Class I Warrants, the Class II Warrants or the 90,000 additional
shares of Common Stock that the Class III Warrants are being amended and
restated to grant to the Investor, or (y) upon the conversion of the Debenture
at a conversion price of less than $1.50 per share (although the Company has
duly reserved 508,805 shares of its Common Stock for issuance upon the full
conversion of the Debenture at its original conversion price of $1.50 per share)
nor does the Company currently have authorized and unreserved a sufficient
number of shares of Common Stock to allow for the conversion and exercise of the
Purchased Securities not already reserved for as provided above). This
Agreement, including the exhibits hereto, is a valid and binding obligation of
the Company, enforceable in accordance with its terms against the Company.
3.5 Disclosure. Neither this Agreement nor any other written statement
----------
furnished to the Investor nor its counsel in connection with the investment made
hereby contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained therein or
herein not misleading in the light of the circumstances under which they were
made.
<PAGE>
- 6 -
3.6 Confidentiality, Non-Competition, Proprietary Information and
Employment Agreements. Each of the key employees and consultants of the Company
and of each subsidiary listed on Schedule C has entered into a confidentiality
agreement, a non-competition agreement, a proprietary information and invention
agreement and/or an employment agreement, true and accurate copies of which have
been provided to the Investor.
3.7 Capitalization.
(a) Upon the consummation of the Closing, the Company's authorized
capital stock will consist of (i) 10,000,000 shares of Common Stock, of $0.01
par value each, of which 5,370,708 shares (subject to downward adjustment due to
the elimination of fractional shares in conjunction with the Company's
one-for-ten reverse stock split effected on or about August 8, 1994 (the
"Reverse Stock Split")) will be issued and outstanding (1,086,761 shares have
been reserved for issuance upon the conversion of the Company's issued and
outstanding preferred stock, 2,291,000 reserved for issuance upon the conversion
of the Company's issued and outstanding warrants, 600,000 shares have been
reserved for issuance upon the exercise of options under the Company's Stock
Option Plan (under which plan 205,850 options have currently been granted) and
508,805 shares will be reserved for issuance to the Investor upon conversion of
the Debenture) and (ii) 100,000 shares of preferred stock, par value $100.00 per
share, of which 124 shares of Series A Preferred Stock and 250 shares of Series
B Preferred Stock are currently outstanding. Except as set forth on Schedule D,
the Company has not approved sales of or agreed to issue any additional shares
of the Company's Common Stock.
(b) Upon consummation of the Closing, all issued and outstanding
shares of capital stock of the Company will have been duly authorized and
validly issued, will be fully paid and nonassessable and will have been offered,
issued, sold and delivered by the Company in compliance with applicable federal
and state securities laws. There are no outstanding preemptive or other
preferential rights, conversion rights or other rights, options, warrants or
agreements granted or issued by or binding upon the Company for the purchase or
acquisition of any shares of its capital stock, except with respect to options,
warrants and preferred stock conversion rights for which Common Stock has been
reserved as set forth above, or as set forth on Schedule E. To the Company's
knowledge, no holder of Common Stock has granted any option or other right to
purchase from such shareholder any interest in any share of Common Stock. The
Company holds no shares of its capital stock in its treasury.
<PAGE>
- 7 -
(c) The Company shall use its best efforts to (i) convene a
meeting of the Company's shareholders as promptly as practicable but in no event
later than September 1, 1995, for the purpose of amending the Company's
Certificate of Incorporation to increase the number of authorized shares of the
Company's Common Stock to a number sufficient to allow for the full exercise and
conversion of the Purchased Securities, and (ii) at such meeting, cause such
proposed amendment (the "Capitalization Amendment") to be adopted. Promptly upon
the adoption of the Capitalization Amendment, the Company shall (i) file with
the Delaware Secretary of State a Certificate of Amendment to Certificate of
Incorporation giving effect to the Capitalization Amendment and (ii) immediately
upon the effectiveness of such filing, reserve a sufficient number of shares of
Common Stock to allow for the full exercise and conversion of the Purchased
Securities.
4. Registration. The Company covenants and agrees as follows:
4.1 Definitions. For purposes of this Section 4:
(a) The terms "register", "registered", and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act of 1933, as
amended (the "Act"), and the declaration or ordering of effectiveness of such
registration statement or document;
(b) The term "Registrable Securities" means any Underlying
Securities owned or acquirable by the Investor, and any shares of Common Stock
acquired or acquirable upon the exercise of the Class III Warrants (as described
below), excluding, however, any Registrable Securities (x) sold by a person in a
transaction in which its rights under this Section 4 are not assigned, (y) sold
pursuant to a registration, and (z) saleable under paragraph (k) of Rule 144;
(c) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in accordance
with Section 4.10 hereof; and
(d) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the Securities and Exchange Commission (the "SEC") which permits
including or incorporation of substantial information by reference to other
documents filed by the Company with the SEC.
<PAGE>
- 8 -
4.2 Registration of Investor's Resale of the
Registrable Securities.
(a) The Company shall (i) promptly convert its registration
statement currently filed under the Act to a registration statement covering,
inter. alia, the resale by the Investor of the Registrable Securities acquired
by it pursuant to this Agreement (the "Registration Statement"), (ii) cause such
Registration Statement to become effective no later than February 28, 1995,
(iii) subject to the provisions of this Section 4, maintain the effectiveness of
the Registration Statement (or, to the extent required, one or more additional
registration statements) for a period of three years from the effective date
thereof, and (iv) use its best efforts to allow the Investor to continually sell
Registrable Securities pursuant to such registration free from any stop orders
or suspensions by the Company or advice of Company's counsel or Investor's
counsel to cease trading. The Company shall furnish to the Investor copies of
all documents filed and correspondence with the SEC relating to the Registration
Statement, and such other information as the Investor shall reasonably request.
(b) The Company shall effect the Registration Statement
pursuant to the following conditions:
(i) If, at some time in the future, the Holders intend
to distribute the Registrable Securities covered by the registration by means of
an underwriting, they shall so advise the Company. All Holders proposing to
distribute their securities through such underwriting ("Participating Holders")
shall (together with the Company as provided in subsection 4.3(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by a majority in interest of the Participating
Holders. Notwithstanding any other provision of this Section 4.2, if the
underwriter advises the Participating Holders in writing that marketing factors
require a limitation of the number of shares to be underwritten, then the number
of shares of Registrable Securities that may be included in the underwriting
shall be allocated among all Participating Holders thereof in proportion (as
nearly as practicable) to the amount of Registrable Securities of the Company
owned by each Participating Holder.
(ii) Notwithstanding the foregoing, if the Company shall
furnish to Holders a certificate signed by the President of the Company stating
that the Company is engaged in an activity which, in the good faith judgment of
the Board of
<PAGE>
- 9 -
Directors of the Company, would be adversely affected by the requested
underwritten registration to the material detriment of the Company, then the
Company shall have the right to defer such underwriting for a period of not more
than four months, provided that such right may not be exercised more than once.
(c) In the event that on the third anniversary of the
effective date of the Registration Statement the Investor shall be deemed to be
an affiliate for purposes of Rule 144 under the Act, the Investor shall have the
right to make a written request to the Company for registration under the Act of
the resale of all or part of the Registrable Securities ("Demand Registration")
which Demand Registration the Company shall be obligated to effect pursuant to
and subject to the terms and conditions of this Section 4.
4.3 Obligations of the Company. With respect to the Registration
Statement, the Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to the Registrable Securities, and use its best efforts to cause
such registration statement to become effective;
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of the securities covered
by such registration statement;
(c) Furnish to the Investor or, as applicable, the Holders
such numbers of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Act, and such other documents as the
Investor or, as applicable, the Holders may reasonably request;
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Investor or, as applicable, the Holders to effect such registration statement
or, as applicable, to enable the Holders to consummate the disposition in such
jurisdictions of such securities, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
<PAGE>
- 10 -
business or to file a general consent to service of process in any such states
or jurisdictions;
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering (each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement);
(f) Notify the Investor or, as applicable, each Holder of
Registrable Securities covered by such registration statement and each
underwriter thereof, if any, of the effectiveness of such registration statement
and, at any time when a prospectus relating thereto is required to be delivered
under the Act, of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements made therein not misleading
in the light of the circumstances then existing, and at the request of the
Investor or, as applicable, any such Holder or underwriter promptly prepare and
furnish to the Investor or, as applicable, such Holder or underwriter, if any, a
reasonable number of copies of a prospectus supplemented or amended so that such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing; and
(g) Furnish, at the request of (i) the Investor, on the date
on which the Registration Statement becomes effective and on such later dates as
requested, or (ii) as applicable, any Holder, on the date that such Holder's
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to Section 4.2(b) hereof, if such securities are
being sold through underwriters, (A) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to the underwriters in an underwritten public
offering, addressed to the Investor or, as applicable, underwriters, if any, and
to the Holders and (B) a letter, dated such date, from the independent public
accountants of the Company, in form and substance as is customarily given by
independent public accountants to underwriters in an underwritten public
offering, addressed to the Investor or, as applicable, the underwriters, if any,
and to the Holders; provided, however, that the Company will only bear the cost
of
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obtaining the comfort described in (A) and (B) above on the first two
occasions thereof, and notwithstanding anything to the contrary contained
elsewhere herein the Investor will be required to bear the costs of obtaining
such comfort on all subsequent occasions.
4.4 Obligations of Selling Holders.
(a) It shall be a condition precedent to the obligations of
the Company to take any action pursuant to this Section 4 with respect to the
Registrable Securities of any selling Holder that such Holder shall furnish to
the Company in writing such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.
(b) The Holders of Registrable Securities included in a
registration statement will not (until further notice) effect sales thereof
after receipt of telegraphic or written notice from the Company to suspend sales
to permit the Company to correct or update a registration statement or
prospectus.
4.5 Expenses of Registration. All expenses other than underwriting
discounts and commissions incurred in connection with registrations, filings, or
qualifications pursuant to Section 4.2, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursement of counsel for the Company, transportation expenses, mailing
expenses, and the fees and disbursements of counsel for the selling Holders
shall be borne and paid by the Company.
4.6 Underwriting Requirements. In connection with any offering
involving an underwriting of shares being issued by the Company, the Company
shall not be required to include any of the Holders' securities in such
underwriting unless they accept the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it, and then only in such
quantity as will not, in the opinion of the underwriters, jeopardize the success
of the offering by the Company. If the total amount of securities, including
Registrable Securities, requested by shareholders to be included in such
offering exceeds the amount of securities to be sold other than by the Company
that the underwriters reasonably believe compatible with the success of the
offering, then the Company shall be required to include in the offering only
that number of such securities, including Registrable Securities, which the
underwriters believe will not jeopardize the success of the offering (the
securities so included to be
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apportioned pro rata among the selling Holders according to the total amount of
securities entitled to be included therein owned by each selling Holder or in
such other proportions as shall mutually be agreed to by such selling Holders).
4.7 Delay of Registration. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 4.
4.8 Indemnification. With respect to the Registration Statement
and in the event any Registrable Securities are included in a registration
statement under Section 4.2(b) hereof:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless the Investor, any Holder, or any underwriter (as defined in
the Act) for such Holder, each person, if any, who controls such Holder or
underwriter within the meaning of the Act or the Securities Exchange Act of
1934, as amended (the "1934 Act"), and each officer, director or agent of the
Holder against any losses, claims, damages, or liabilities (joint or several) to
which they, or any of them, may become subject under the Act, the 1934 Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in the relevant registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
made therein not misleading, or (iii) any violation or alleged violation by the
Company of the Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the Act, the 1934 Act or any state securities law
applicable to the Company in connection with any such registration; and the
Company will pay to the Investor or each such Holder, underwriter, controlling
person, officer, director or agent, as incurred, any legal or other expenses
reasonably incurred by them or any of them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this subsection 4.8(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability, or
action if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), nor shall the
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Company be liable in any such case for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder,
underwriter, controlling person, officer, director or agent.
(b) To the extent permitted by law, the Investor and any
Holder will indemnify and hold harmless the Company, each of its directors, each
of its officers who has signed the registration statement, each person, if any,
who controls the Company within the meaning of the Act, any underwriter, any
other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages, or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Act, the 1934 Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by the Investor or any
Holder, as applicable, expressly for use in connection with such registration;
and the Investor or any Holder, as applicable, will pay, as incurred, any legal
or other expenses reasonably incurred by any person intended to be indemnified
pursuant to this subsection 4.8(b) in connection with investigating or defending
any such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 4.8(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Investor or any
Holder, as applicable, which consent shall not be unreasonably withheld.
(c) Promptly after receipt by an indemnified party under this
Section 4.8 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 4, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party
<PAGE>
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by the counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party and any
other party represented by such counsel in such proceeding. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 4.8, but omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 4.8.
(d) The obligations of the Company, the Investor and any
Holders under this Section 4.8 shall survive the completion of any offering of
Registrable Securities in a registration statement under this Section 4, and
otherwise.
4.9 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders of Registrable Securities the benefits of Rule
144 promulgated under the Act (Rule "144") and any other rule or regulation of
the SEC that may at any time permit a Holder to sell securities of the Company
to the public without registration or pursuant to a registration on Form S-3,
the Company agrees on and after the Closing that it will:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144;
(b) Use its best efforts to enable the Holders to utilize Form
S-3 for the sale of their Registrable Securities and, at such time that Form S-3
can be utilized, to replace the Registration Statement with a registration
statement on said Form S-3;
(c) File with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act;
(d) Furnish to any Holder of Registrable Securities, so long
as the Holder owns Registrable Securities representing one percent (1%) or more
of the Company's Common Stock, (i) forthwith upon request a written statement by
the Company that it has complied with the reporting requirements of Rule 144,
the Act and the 1934 Act (to the extent that the Company has so complied), or
that it qualifies as a registrant whose securities may be resold pursuant to
Form S-3 (at any time after it so qualifies), (ii) substantially concurrently
with the filing
<PAGE>
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thereof, copies of the annual and quarterly reports of the Company, filed with
the SEC and such other reports and documents so filed by the Company, (iii) as
soon as they shall become available to the Company, any and all audited
financial statements of the Company and management letters from the Company's
independent auditors and the Company's response thereto, and (iv) such other
information as may be reasonably requested in availing any Holder of Registrable
Securities of any rule or regulations or the SEC which permits the selling of
any such securities without registration or pursuant to such form; and
(e) Not terminate the registration statement relating to the
Registrable Securities prior to the third anniversary of the date hereof unless
and until in the opinion of counsel for the Company, which opinion shall be
reasonably satisfactory to the Holder and its counsel, the Holder has the right
to sell the Registrable Securities immediately under Rule 144(k) of the Act.
4.10 Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities pursuant to Section 4.2(b) hereof may be
assigned by a Holder of Registrable Securities to a transferee or assignee of
such securities provided the Company is, prior to or simultaneously with such
transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; and provided, further, that such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Act.
4.11 Amendment of Registration Rights.
Any provision of this Section 4 pertaining to Registrable
Securities may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of the Company and the holders of a majority of
the Registrable Securities then outstanding. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities, and the Company.
5. Covenants of the Company. The Company hereby covenants and agrees, that
so long as the Investor owns any Securities:
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5.1 Basic Financial Information. The Company will furnish the following
reports to the Investor:
(a) As soon as practicable after the end of each fiscal year of
the Company, and in any event within ninety (90) days thereafter, a consolidated
(and consolidating) balance sheet of the Company and its subsidiaries, if any,
as at the end of such fiscal year, and consolidated (and consolidating)
statements of income and source and application of funds of the Company and its
subsidiaries, if any, for such year, prepared in accordance with generally
accepted accounting principles consistently applied and setting forth in
comparative form the figures for the previous fiscal year, all in reasonable
detail and audited (without scope limitations imposed by the Company) by
independent public accountants of recognized standing selected by the Company
and satisfactory to the Investor;
(b) As soon as practicable after the end of the first, second and
third quarterly accounting periods in each fiscal year of the Company, and in
any event within forty-five (45) days thereafter, a consolidated (and
consolidating) balance sheet of the Company and its subsidiaries, if any, as of
the end of such quarterly period, and consolidated (and consolidating)
statements of income and source and application of funds of the Company and its
subsidiaries, if any, for such period and for the current fiscal year to date,
prepared in accordance with generally accepted accounting principles
consistently applied and setting forth in comparative form the figures for the
corresponding periods of the previous fiscal year, subject to changes resulting
from year-end audit adjustments, and setting forth any events which could
reasonably be expected to have an adverse effect upon the Company's finances or
the results of its operations, all in reasonable detail and certified by the
principal financial or accounting officer of the Company;
(c) Within five days after the time periods required for the
furnishing thereof, copies of its reports filed on Form 10- KSB, Form 10-QSB,
Form 8-K (or such comparable forms as the Company may be qualified to use), or
any successor form or forms, and if such reports are filed in a timely manner
under the Exchange Act, they shall be in lieu of the financial information
required pursuant to Sections 5.1(a) and (b) above;
(d) Each set of financial statements delivered to the Investor
pursuant to Section 5.1 will be accompanied by a certificate of the Chairperson,
President or a Vice President and
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the Treasurer or an Assistant Treasurer of the Company setting forth:
(i) Covenant Compliance - any information required in order to
establish whether the Company was in compliance with the requirements of this
Section 5 during the period covered by the income statements then being
furnished; and
(ii) Event of Default - that the signers have reviewed the
relevant terms of this Agreement and the Debenture and have made, or caused to
be made, under their supervision, a review of the transactions and conditions of
the Company and its subsidiaries, if any, from the beginning of the accounting
period covered by the income statements being delivered therewith to the date of
the certificate and that such review has not disclosed the existence during such
period of any condition or event which constitutes a breach or default under
this Agreement or, if any such condition or event existed or exists, specifying
the nature and period of existence thereof and what action the Company has taken
or proposes to take with respect thereto.
5.2 Additional Information and Rights. The Company will:
(a) Permit the Investor (or its designated representative) to
visit and inspect any of the properties of the Company, including its books of
account, and to discuss its affairs, finances and accounts with the Company's
officers and its independent public accountants, all at such reasonable times
and as often as any such party may reasonably request;
(b) Deliver to the Investor the reports and data described below:
(i) As soon as available, information and data on any material
adverse changes in or any event or condition which materially adversely affects
the business, operations or plans of the Company;
(ii) Immediately upon becoming aware of any condition or event
which constitutes a breach of this Agreement or the Debenture, written notice
specifying the nature and period of existence thereof and what action the
Company is taking or proposes to take with respect thereto; and
(iii) With reasonable promptness, such other information and
data with respect to the Company and its
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subsidiaries as the Investor may from time to time reasonably request;
(c) Not hold any meetings of its Board of Directors on less than
five (5) business days' written notice and will permit the Investor to send a
representative (without voting rights) as an observer to each meeting of the
Board of Directors of the Company and all committees of such Board. The Company
shall give the Investor notice of each such meeting in the form and manner such
notice is given to the Company's directors. The Company will not permit its
directors or shareholders to conduct any material business by written consent
without giving at least five (5) days' written notice to the Investor, which
notice shall contain an exact copy of the consent resolution proposed to be
adopted.
5.3 Maintenance of Connecticut Presence. Prior to the Expiration Date, the
Company or any Permitted Successor, as the case may be, together with its
subsidiaries, shall maintain a Connecticut Presence.
5.4 Connecticut Employment.
(a) The Company shall create jobs in the State of Connecticut and
shall use its best efforts to employ residents of Connecticut in these jobs.
(b) The Company shall not relocate (as that term is defined in
Section 32-5a of the Connecticut General Statutes) within the State of
Connecticut without first obtaining the express written consent of the Investor,
which consent the Investor may withhold in its discretion. If the Company
relocates within the State of Connecticut, it will offer employment at its new
location to its employees from the original location if such employment is
available.
(c) The Company shall furnish to the Investor copies of the
quarterly reports filed by the Company and any of its subsidiaries with the
Connecticut Department of Labor and upon request, employment records and such
other personnel records to the extent permitted by law as the Investor may
reasonably request to verify the creation or retention of Connecticut
employment.
(d) The Company will at any time at the request of the Investor
provide the Investor with authorization satisfactory to the Connecticut
Department of Labor enabling the Investor to examine all records of said
Department relating to the Company and/or any of its subsidiaries.
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5.5 Equal Opportunity. The Company agrees and warrants that it is an equal
opportunity employer and that it does not discriminate. The Company further
agrees and warrants that:
(a) The Company will not discriminate or permit discrimination
against any employee or applicant for employment because of sex, sexual
orientation, race, color, religious creed, age, marital status, mental
retardation, physical disability, national origin, or ancestry. Such action
shall include, but not be limited to, the following: employment upgrading,
demotion or transfer, recruitment advertising; lay-off or termination; rates of
pay or other forms of compensation; and selection for training, including
apprenticeship.
(b) The Company agrees to take affirmative action to insure that
applicants with job-related qualifications are employed.
(c) The Company will, in its solicitation for employees, state
that it is an "affirmative action-equal opportunity employer."
(d) The Company agrees to provide each labor union or
representative of workers with which the Company has a collective bargaining
agreement or other contract or understanding, and each vendor with which the
Company has a contract or understanding, a notice to be provided by the
Commission of Human Rights and Opportunities (the "CHRO") to post copies of the
notice in conspicuous places available to employees and applicants for
employment.
(e) The Company agrees to cooperate with the Investor, the State
of Connecticut and/or any of its agencies and the CHRO to insure that the
purpose of this equal opportunity clause is being carried out.
(f) The Company agrees to comply with all relevant regulations and
orders issued by the CHRO, to provide the CHRO with such information as it may
request, and to permit the CHRO access to pertinent books, records, and accounts
concerning the contractor's employment practices and procedures.
(g) The Company agrees to comply with all of the requirements set
out by Section 4a-60 of the Connecticut General Statutes, as it may be amended.
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(h) The Company agrees to post a notice of this acceptance of the
foregoing equal employment opportunity provisions at its place of business,
clearly visible, in such form as is satisfactory to the Investor.
6. Right to Put Shares.
6.1 Right to Put. On the terms and conditions herein set forth, the
Investor shall have the right to sell the Company, and the Company agrees to
purchase from the Investor, all Securities held at that time (the "Put"), for
the Put Price.
6.2 Method of Exercise. On the terms and conditions herein set forth, the
Investor may exercise its rights hereunder to sell all Securities held by the
Investor at that time by delivering to the Company a notice of Put (a "Notice of
Put") in the form attached hereto as Exhibit D.
6.3 Time of Exercise. At any time prior to the Expiration Date, the rights
of the Investor to Put its Securities shall become exercisable at any time, and
each time, that either (i) the Company or any Permitted Successor, as the case
may be, together with its subsidiaries, ceases to maintain a Connecticut
Presence, or upon the taking of action by Board of Directors, stockholders or
officers of the Company or any Permitted Successor to authorize the Company or
any Permitted Successor not to maintain a Connecticut Presence, or (ii) a
Registration Default occurs, or (iii) if any provision of Section 4 hereof is
amended and/or revised pursuant to Section 4.11 without the Investor's prior
written consent. The Company shall promptly notify the Investor in writing of
the occurrence of any of the events specified in clauses (i) through (iii)
above, and if the Company so notifies the Investor, the Investor may, at anytime
within sixty (60) days after receipt of such notice from the Company of that
failure and/or Registration Default, deliver a Notice of Put to the Company. If
the Company fails to provide the Investor with such a notice when required, the
Investor may exercise its right to Put at any time thereafter.
6.4 Put Closing. The closing (the "Put Closing") of the purchase and sale
of the Securities then owned by the Investor pursuant to this Section 6 shall be
held on the date (the "Put Date") which is the sixtieth (60th) day after
delivery of the Notice of Put. At the Put Closing, the Investor will deliver the
Securities to the Company which are being Put, and the Company will deliver to
the Investor the Put Price for the Securities being Put in cash, certified or
bank check, or by wire transfer.
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6.5 Inclusion of Class III Warrants. At the option of the Investor, the
Investor may include within the Put any or all Class III Warrants then held by
the Investor along with any or all shares of Common Stock obtained by the
Investor upon the exercise of any Class III Warrants prior to the date of the
Put Closing (collectively the "Class III Securities"). In the event the Investor
exercises its rights pursuant to this Section 6.5, the term "Securities" as used
in clauses (ii)(x) and (ii)(y) of the definition of Put Price in Section 8
hereof shall be deemed to include the Class III Securities, and the phrase "and
Class III Warrants" shall be deemed to be inserted in clause (ii)(y) between the
phrase "Class II Warrants" and the word "included."
7. Conditions to Closing of Investor.
The obligation of the Investor to consummate the transactions contemplated
hereby is subject to the fulfillment to its satisfaction on or prior to the
Closing Date of each of the following conditions:
7.1 Representations and Warranties Correct. The representations and
warranties made by the Company in this Agreement shall be true and correct when
made, and shall be true and correct in all respects at the Closing Date as if
made at and as of the Closing and with respect thereto, after giving effect to
the transactions contemplated hereby.
7.2 Performance. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Company on or prior to
the Closing Date shall have been so performed or complied with in all respects.
7.3 Compliance and Secretary's Certificates. The Investor shall have
received a certificate from the Secretary of the Company, substantially in the
form of Exhibit E to this Agreement, dated the Closing Date, with respect to the
matters therein set forth.
7.4 Opinion of Company Counsel. The Investor shall have received from Finn
Dixon & Herling, counsel to the Company, an opinion addressed to it, dated the
Closing Date, to the effect and in substantially the form set forth in Exhibit F
hereto.
7.5 Good Standing Certificates. The Company shall have delivered to the
Investor a certificate of recent date from the Secretary of the State of
Delaware with respect to the Company's and the subsidiary's due incorporation,
good standing, legal
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corporate existence, due authorization to conduct business and the payment of
all franchise taxes, and, certificates from the Secretary of State in each
jurisdiction in which the Company or any subsidiary is required to be qualified
to do business with respect to the Company's or such subsidiary's good standing
and due authorization to conduct business therein.
7.6 Tax Matters. The Company shall have delivered to the Investor tax
clearance letters from the Connecticut Department of Revenue Services or other
applicable taxing authority with respect to the corporation business tax and
sales and use tax respecting the Company and each subsidiary and similar tax
clearance letters from the Massachusetts taxing authority with respect to Wright
Machine Corporation.
7.7 Amendment of Warrant. The existing warrants held by the Investor to
purchase 10,000 shares of Common Stock at an exercise price of $10.00 per share
(such number of shares and price having been adjusted to give effect to the
Reverse Stock Split) are being amended to provide the Investor, inter alia, the
right to purchase 100,000 shares of Common Stock at an exercise price of $1.00
per share, and such amended warrants (the "Class III Warrants") are being
codified by the delivery to the Investor of a new warrant certificate, in the
form of Exhibit G hereto, in return for the old warrant certificate marked
"cancelled".
7.8 Delivery of Escrow Agreement. Simultaneously with the execution and
delivery hereof, the Investor, the Company and the Company's counsel are
entering into an escrow agreement in the form of Exhibit H hereto relating to
the $45,000 deposited in escrow pursuant to Section 1.1 above and the manner in
which the Company's use of such funds is expressly limited.
7.9 Legal Investment. At the time of the Closing, the purchase of the
Purchased Securities by the Investor shall be legally permitted by all laws and
regulations to which the Investor and the Company are subject.
7.10 Qualifications. All authorizations, approvals, consents or permits of
any governmental authority, regulatory body or third party that are required in
connection with the lawful issuance and sale of the Purchased Securities
pursuant to this Agreement (except as otherwise specifically provided herein)
shall have been duly obtained and shall be effective on and as of the Closing
Date, including, if necessary, permits from applicable state securities
authorities, qualifying the offer and sale of the Purchased Securities and the
Underlying Shares.
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7.11 Proceedings and Documents. All corporate and other proceedings taken
by the Company in connection with the transactions contemplated hereby and all
documents and instruments incident to such transactions shall be satisfactory in
substance and form to the Investor and special counsel for the Investor.
7.12 Non-Competition and Proprietary Information Agreements. Each of the
key employees and consultants of the Company and of each subsidiary listed on
Schedule C shall have entered into a confidentiality agreement, a
non-competition agreement, a proprietary information and invention agreement
and/or an employment agreement in form and substance satisfactory to the
Investor.
8. Certain Definitions.
In addition to the definitions contained elsewhere herein, for all
purposes of this Agreement, the following terms shall have the meanings set
forth below:
Change in Control - shall mean any transaction in which the
Company or any Permitted Successor sells all or substantially all its assets or
transfers or exclusively licenses its principal intellectual property to another
person or entity, or merges with or into another entity and the holders of
voting stock of the Company or the Permitted Successor prior to such event do
not own and continue to own more than fifty percent (50%) of the voting stock of
the surviving entity, or any single holder or group of holders of voting stock
of the Company or any Permitted Successor sell an equity interest to another
person or entity, which equity interest either exceeds fifty percent (50%) of
the voting stock of the Company or any Permitted Successor or is the largest
holding of voting stock.
Connecticut Presence - shall mean (i) maintaining its corporate
headquarters and a majority of its shape memory business operations in the State
of Connecticut, (ii) basing its president and chief executive officer, all of
its administrative and financial staff, all of its marketing and customer
service staff (excluding individuals specific to the Wright Machine Corporation
subsidiary only), and all of its research and development staff in the State of
Connecticut, (iii) conducting a majority of its operations in the aggregate
(including manufacturing and production), directly or through subcontractors and
through licensed operations, in the State of Connecticut, excluding Wright
Machine Corporation's business related to the production of screw machine
products and taper pins, and (iv) maintaining its principal bank accounts with
banks located in the State of Connecticut,
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excluding all banks associated with Wright Machine Corporation. Each failure to
comply with any of the clauses set forth in this definition shall constitute a
failure to maintain a "Connecticut Presence."
Current Market Price - shall mean on any day:
(a) the average of the daily closing prices for the thirty (30)
consecutive business days ending no more than fifteen (15) business days before
the day in question (as adjusted for any stock dividend, split, combination or
reclassification that took effect during such thirty (30) business day period);
the closing price for each day shall be the last reported sales price regular
way or, in case no such reported sales took place on such day, the average of
the last reported bid and asked prices regular way, in either case on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading (or if the Common Stock is not at the time listed or
admitted for trading on any such exchange, then such price as shall be equal to
the average of the last reported bid and asked prices, as reported by the
National Association of Securities Dealers Automated Quotations System
("NASDAQ") on such day, or if, on any day in question, the security shall not be
quoted on the NASDAQ, then such price shall be equal to the average of the last
reported bid and asked prices on such day as reported by The National Quotation
Bureau Incorporated or any similar reputable quotation and reporting service, if
such quotation is not reported by The National Quotation Bureau Incorporated);
or
(b) if the Common Stock is not traded in such manner that the
quotations referred to in clause (a) above are available for the period required
hereunder, the value determined in good faith by the Board of Directors of the
Company or, if such determination cannot be made or is reasonably objected to by
the Investor within twenty (20) days of its notification thereof, by a
nationally recognized independent investment banking firm (which has no past or
present relationship with the Company or the Investor) selected in good faith by
the Board of Directors of the Company, or if such selection cannot be made or is
reasonably objected to by the Investor within twenty (20) days of its
notification thereof, by a nationally recognized independent investment banking
firm selected by the American Arbitration Association in Hartford, Connecticut
in accordance with its rules.
Exchange Act - shall mean the Securities Exchange Act of 1934, as
amended from time to time.
<PAGE>
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Expiration Date - shall mean the first to occur of (i) ten (10)
years from the Closing Date or (ii) the date when the Investor ceases to hold
both (a) at least thirty-five percent (35%) of the number of shares of Common
Stock acquired or acquirable by the Investor upon the full conversion of the
Debenture and exercise of the Class I Warrants and Class II Warrants, as
adjusted to date, and (b) any portion of the Debenture.
Permitted Successor - shall mean any person or entity which
succeeds to the control of the business or assets or intellectual property of
the Company following any Change in Control, provided that such successor (i)
has and maintains a Connecticut Presence and (ii) agrees to be bound by the
provisions of this Agreement.
Placement Memorandum - shall mean the Confidential Private
Placement Memorandum dated April 29, 1993, including an offering memorandum, a
descriptive memorandum and financial projections.
Put Date - shall mean the date on which a Notice of Put is given
in accordance with this Agreement.
Put Price - shall mean the greater of (i) that amount which yields
to the Investor a compounded rate of return of 25% per annum on that portion of
the Purchase Price allocated to Securities still held by the Investor (or as
appropriate, the securities converted into or exercised for such Securities),
plus, in the case of Common Stock issued upon the exercise of any Class I
Warrants or Class II Warrants, any exercise prices paid to acquire Common Stock,
when paid, or (ii) the difference between (x) the product of the Current Market
Price on the Put Date multiplied by the number of shares of Common Stock
included within or acquirable upon the exercise or conversion of all of the
Investor's Securities, minus (y) any exercise prices that would have to be paid
upon the full exercise of the remaining Class I Warrants and Class II Warrants
included within the Securities.
Registration Default - Either (i) the breach by the Company of the
provisions of Section 4.2(a)(ii) above, or (ii) the failure by the Company to
keep the Registration Statement effective, free from any stop orders or
suspensions by the Company pursuant to Section 4.4(b) above or upon the advice
of its counsel or Investor's counsel, for an aggregate of 120 days during any
rolling twelve month period (it being agreed and understood that, upon the
occurrence of a Registration Default pursuant to this clause (ii), no new
rolling twelve month period pursuant to this
<PAGE>
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clause (ii) shall commence prior to the date of such Registration Default), or
(iii) the failure by the Company to have authorized and unissued shares of
Common Stock reserved for the full exercise and conversion of the Class I
Warrants, the Class II Warrants, the Class III Warrants and the Debenture by
September 1, 1995.
9. Miscellaneous.
9.1 Survival of Warranties. The warranties, representations and covenants
of the Company and Investor contained in or made pursuant to this Agreement
shall survive the execution and delivery of this Agreement and the closings and
shall in no way be affected by any investigation of the subject matter thereof
made by or on behalf of the Investor or the Company.
9.2 Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
9.3 Governing Law. This Agreement shall be governed by and construed under
the laws of the State of Connecticut as applied to agreements among Connecticut
residents entered into and to be performed entirely within Connecticut.
9.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.5 Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
9.6 Notices. Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given (i) upon personal delivery to the party to be notified, (ii) 48 hours
after deposit with the United States Post Office, by registered or certified
mail, postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other address
as such party may designate by ten (10) days' advance written notice to the
other parties, (iii) upon transmission of a confirmed telecopy to such party at
a telecopier number furnished
<PAGE>
- 27 -
by such party for such purpose, or (iv) upon delivery to such address by Federal
Express or other courier service.
9.7 Finder's Fee. Each party represents that it neither is nor will be
obligated for any finder's fee or commission in connection with this
transaction. The Company agrees to indemnify and hold harmless the Investor, and
the Investor agrees to indemnify and hold harmless the Company, from any
liability for any commission or compensation in the nature of a finder's fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company, or the Investor, as the case may be, or any of
their respective officers, employees or representatives is responsible.
9.8 Amendments and Waivers. Except as specified in Section 4.11, any term
of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Investor. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each holder of any securities purchased under
this Agreement at the time outstanding (including securities into which such
securities are convertible), each future holder of all such securities, and the
Company.
9.9 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
9.10 Indemnification.
(a) The Company shall, with respect to the representations,
warranties, covenants and agreements made by the Company herein, indemnify,
defend and hold the Investor harmless against all liability, loss or damage,
together with all reasonable costs and expenses related thereto (including legal
and accounting fees and expenses), arising from the untruth, inaccuracy or
breach of any such representations, warranties, covenants or agreements of the
Company.
(b) The Investor shall, with respect to the representations,
warranties, covenants and agreements made by the Investor herein, indemnify,
defend and hold the Company harmless against all liability, loss or damage,
together with all reasonable costs and expenses related thereto (including legal
and accounting
<PAGE>
- 28 -
fees and expenses), arising from the untruth, inaccuracy or breach of any such
representations, warranties, covenants or agreements of the Investor.
9.11 Remedies. In case any one or more of the covenants and/or agreements
set forth in this Agreement shall have been breached by the Company, the
Investor may proceed to protect and enforce its or their rights either by suit
in equity and/or by action at law, including, but not limited to, an action for
damages as a result of any such breach and/or an action for specific performance
of any such covenant or agreement contained in this Agreement. A party acting
pursuant to this Section 9.11 shall be indemnified against all liability, loss
or damage, together with all reasonable costs and expenses related thereto
(including legal and accounting fees and expenses) in accordance with Section
9.10.
9.12 Nouns and Pronouns. Whenever the context may require, any pronouns
used herein shall include the corresponding masculine, feminine or neuter forms,
and the singular form of names and pronouns shall include the plural and vice
versa.
9.13 Information to be Provided by Investor. Investor agrees to provide to
the Company such information as the Company may reasonably request in order to
make accurate and timely required filings and disclosures to its stockholders
and to federal, state and self-regulatory agencies.
9.14 Confidentiality. Any information provided to Investor pursuant to
this Agreement shall be used by the Investor solely for, and will only be
disclosed to Investor's officers, employees, agents and professional advisors
who need to know such information and who will use such information solely for,
the purpose of evaluating the Investor's investment in the Company and in
furtherance of its interests as an investor in the Company, and the Investor
will, and will cause such officers, employees, agents and professional advisors
to, maintain the confidentiality of all non- public information of the Company
obtained pursuant to this Agreement which is designated by the Company as
confidential and which could not otherwise be legally and legitimately obtained
by the Investor. Nothwithstanding the foregoing, this Section 9.14 shall not
prevent the Investor from disclosing information to any offices, agency or
legislative body of the State of Connecticut.
9.15 Legal Fees and Expenses.
(a) The Company shall pay the reasonable legal fees and
out-of-pocket expenses of special counsel to the Investor with
<PAGE>
- 29 -
respect to this Agreement and the transactions contemplated hereby, as well as
pursuant to the August 1 agreements between the Company and the Investor,
whether or not the Closing occurs. The Company shall also pay the reasonable
legal fees and the fees of experts and consultants engaged by the Investor
incurred with respect to the enforcement of this Agreement and/or with respect
to responding to any request made by the Company for the consent of the Investor
to any action that the Company wishers to take that is either barred under the
terms of this Agreement or requires the consent of the Investor therefor.
(b) If an investment banking firm is engaged in accordance with
the provisions of this Agreement, the fees and expenses of such firm in
connection with such engagement shall be divided equally between the Company and
the Investor.
9.16 Supercission of Prior Agreements; Releases.
(a) This Agreement supersedes both (i) the Securities Purchase
Agreement (the "Prior Purchase Agreement"), dated August 1, 1994, between the
Company and the Investor, and (ii) the Supplement to Securities Purchase
Agreement (the "Supplement"), dated as of August 1, 1994, between such parties.
Notwithstanding the foregoing, however, (i) the representations and warranties
made by the Investor in Section 2 of the Prior Purchase Agreement survive with
respect to securities offered and sold thereunder, and (ii) the termination
described in Section 2 of the Supplement remains in effect.
(b) The Company acknowledges and agrees that (i) the Company has
no claim or cause of action against CII; (ii) the Company has no offset rights,
counterclaim or defense of any kind with respect to any of the Company's
obligations, indebtedness or liabilities to CII and/or against CII for any
reason whatsoever. The Company further unconditionally releases, waives, and
forever discharges (A) any and all liabilities, obligations, duties, promises or
indebtedness of any kind of CII to the Company, except the obligations to be
performed by CII for the Company as expressly stated in this Agreement and other
document executed in connection herewith; and (B) all claims, offsets, causes of
action, suits or defenses of any kind whatsoever (if any), whether known or
unknown, which the Company might otherwise have against CII or any of its
directors, officers, shareholders, employees, agent and/or attorneys.
<PAGE>
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
MEMRY CORPORATION
57 Commerce Drive
Brookfield, Connecticut 06804
By: /s/ James G. Binch
----------------------------------------
James G. Binch, President
CONNECTICUT INNOVATIONS, INCORPORATED
40 Cold Spring Road
Rocky Hill, Connecticut 06067
By: /s/ Victor R. Budnick
----------------------------------------
Name: Victor R. Budnick
Title: Acting Pres. & Exec. Dir.
<PAGE>
Exhibit 10.15
ESCROW AGREEMENT
This Escrow Agreement (this "Agreement"), entered into as of the 22nd day
of December, 1994, by and between (i) Memry Corporation, a Delaware corporation
("Memry"), (ii) Connecticut Innovations, Incorporated, a specially chartered
Connecticut corporation ("CII"), and (iii) Finn Dixon & Herling, as escrow agent
hereunder (the "Escrow Agent").
WITNESSETH
WHEREAS, Memry and CII are parties to a Convertible Subordinated Debenture
Purchase Agreement, dated as of December 22, 1994 (the "Purchase Agreement");
and
WHEREAS, the Purchase Agreement requires that Memry register with the
Securities and Exchange Commission CII's resale of its Registrable Securities
(as defined in the Purchase Agreement) not later than February 28, 1995, and
maintain such registration (the "Resale Registration") for a period of three
years from the Closing Date (as defined in the Purchase Agreement); and
WHEREAS, as a condition to its entering into of the Purchase Agreement,
CII has required that this Agreement be executed and delivered in order to
provide financial wherewithal in the event that Memry is unable or does not
maintain the effectiveness of such registration; and
WHEREAS, the parties hereto desire to enter into this Agreement on the
terms and conditions set forth herein;
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which is acknowledged by
each of the parties hereto, the parties hereto hereby agree as follows:
1. Definitions. Capitalized terms used herein and not defined
herein shall have the meanings attributed thereto in the Purchase Agreement.
2. Escrow Agent's Appointment and Duties. Memry and CII each hereby
appoint the Escrow Agent as escrow agent hereunder, and the Escrow Agent hereby
accepts such appointment. The Escrow Agent's duties hereunder are limited solely
to the holding of the Escrowed Funds (as hereinafter defined) and the release of
the same as provided herein, the giving of notices to CII and Memry as provided
herein and such other duties as are specifically set forth herein. No duties or
obligations not expressly set forth herein shall be implied to the Escrow Agent.
<PAGE>
3. Escrowed Funds. On the date hereof, Memry has deposited in escrow with
the Escrow Agent $45,000 (the "Escrowed Funds"). The Escrow Agent hereby
acknowledges receipt of a check from CII, in the amount of $45,000, representing
the Escrowed Funds. Memry and CII agree and acknowledge that the Escrow Agent
will maintain the Escrowed Funds in a non-interest bearing account.
4. Use of Escrowed Funds; Settlement.
a. Settlements by Escrow Agent. The Escrow Agent shall retain
possession of the Escrowed Funds in its trust account except as follows: (i) for
disposals of Escrowed Funds to a successor escrow agent pursuant to Section 5(b)
below; (ii) upon its receipt at any time on or prior to February 28, 1998, of a
Certificate (defined in Section 4(b) below) executed by both Memry and CII
instructing it as to how to disburse all or any portion of the Escrowed Funds
then remaining, the Escrow Agent shall promptly disburse the specified Escrowed
Funds in accordance with said Certificate; (iii) upon receipt of a written
certificate signed solely by CII instructing the Escrow Agent to disburse all or
any portion of the Escrow Funds to Memry, the Escrow Agent shall promptly so
disburse the specified Escrowed Funds; and (iv) on March 10, 1998, the Escrow
Agent shall disburse any remaining Escrowed Funds to (or, upon the receipt of
written instructions from Memry, for the account of) Memry. In determining
whether to disburse the Escrowed Funds from time to time in accordance with the
above-stated provisions of clauses (ii) or (iii) of this Section 4.a, the Escrow
Agent shall rely exclusively upon the written notice received by it hereunder or
the fact that a certain written notice has not been received by it, as the case
may be, notwithstanding either (i) any notice to the contrary which may be
received by the Escrow Agent from any other person or entity or (ii) any
knowledge which it may have or may be deemed to have as to the correctness of
the content of any notice given to it hereunder.
b. Requests by Memry for Disbursements. Memry covenants and agrees
to use its best efforts to pay the fees and expenses of legal counsel and
accountants in connection with the maintenance of the reporting requirements of
the Securities Act of 1934, as amended (the "1934 Act"), and maintenance of
CII's ability to sell its Registrable Securities pursuant to the Resale
Registration (the "Contemplated Purpose"). However, if at any time and from time
to time between the date hereof and February 18, 1998, Memry is unable to pay
such fees and expenses in the ordinary course of business, Memry may give CII
written notice (a "Notice") of its desire to use the Escrowed Funds for such
fees and expenses, an explanation of the nature of the Contemplated Purpose, the
amount of the Escrowed Funds desired to be used, and why it is necessary or
appropriate for the Escrowed Funds (rather than Memry's other funds) to be
applied for such Contemplated Purpose. Each Notice shall be accompanied by a
written certificate (a "Certificate"), signed by Memry and providing a space for
the signature of CII, instructing the Escrow Agent to disburse all or a
designated portion of the Escrowed Funds in the manner specified in the Notice
(which manner of disbursement shall also be specified in the Certificate).
- 2 -
<PAGE>
c. Responses to Notices by CII. CII shall respond to all Notices
within fifteen (15) business days of its receipt thereof. Such response shall
consist of either (i) signing the Certificate in the space provided for such
purpose and sending the Certificate to the Escrow Agent, or (ii) returning the
Certificate to Memry unsigned. In the event that the relevant Notice requests
that Escrowed Funds be used for any purpose other than the Contemplated Purpose,
CII may sign or refuse to sign the Certificate in its absolute and sole
discretion, and need not provide Memry with any reason for its actions with
respect thereto. In the event that the relevant Notice requests that Escrowed
Funds be applied only for the Contemplated Purpose, CII shall in good faith
determine if the use of the Escrowed Funds constitutes an "Appropriate Use" of
said funds within the guidelines set forth in Section 5.d below. If CII
determines that the use of the Escrowed Funds pursuant to the Notice is an
Appropriate Use, it shall, within the aforesaid fifteen (15) day period, sign
the Certificate and send it to the Escrow Agent. If CII determines that the use
of the Escrowed Funds pursuant to the Notice is not an Appropriate Use, it may
either (i) sign the Certificate and deliver it to the Escrow Agent, or (ii)
return the Certificate to Memry unsigned with an explanation as to why CII has
concluded that the use of the Escrowed Funds described in the Notice is not an
Appropriate Use.
d. Guidelines for Determining Appropriate Use. In determining
whether or not a proposed use of Escrowed Funds for the Contemplated Purpose as
described in a Notice constitutes an "Appropriate Use", CII shall consider the
following factors: (i) that it is the intent of Memry and CII on the date of
this Agreement that the Escrowed Funds shall only be applied to the Contemplated
Purpose where Memry would not otherwise have the financial wherewithal to
continue CII's ability to sell its Registrable Securities pursuant to the Resale
Registration; and (ii) that it is also the intent of Memry and CII on the date
of this Agreement that, where Memry does not have the ability in the ordinary
course of business to pay the fees and expenses of its legal counsel and/or
accountants in connection with the maintenance of the reporting requirements of
the 1934 Act and maintenance of CII's ability to sell its Registrable Securities
pursuant to the Registration Statement, the Escrowed Funds would be used for
that purpose (it not being the intent of the parties that Memry would in such
instance be denied use of the Escrowed Funds with the intention of enabling CII
to realize the benefits of various penalties which would be imposed upon Memry
under the Purchase Agreement and the Securities issued pursuant thereto if CII
were unable to sell its Registrable Securities pursuant to the Registration
Statement).
5. Other Provisions Regarding the Escrow Agent.
a. Indemnification. CII and Memry acknowledge that the Escrow Agent is
acting solely as an escrow agent at their request and for their convenience and
that the Escrow Agent shall not be liable to either party for any act or
omission on its part unless taken or suffered in willful disregard of this
Agreement or involving gross negligence on the part of the Escrow Agent. CII and
Memry jointly and severally agree to defend, indemnify and hold the Escrow
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<PAGE>
Agent harmless from and against all costs, claims and expenses (including
attorneys' fees and disbursements) incurred in connection with the performance
of the Escrow Agent's duties hereunder, except (i) with respect to actions or
omissions taken or suffered by the Escrow Agent in willful disregard of this
Agreement or involving gross negligence on the part of the Escrow Agent, and
(ii) that solely Memry shall be liable to the Escrow Agent for the Escrow
Agent's costs of preparing this Agreement. The Escrow Agent shall promptly
notify CII and Memry in writing upon the incurrence of any costs, claims and
expenses with respect to which the Escrow Agent is entitled to be so
indemnified. The Escrow Agent may act or refrain from acting in respect of any
matter referred to herein in full reliance upon and with the advice of counsel
which may be selected by it and shall be fully protected in so acting or
refraining from acting upon the advice of such counsel. The provisions of this
Section 5.a shall survive the termination of this Agreement.
b. Replacement of Escrow Agent.
(i) Resignation of Escrow Agent. The Escrow Agent may
resign and be discharged of the obligations created by
this Agreement at any time by executing and delivering
to CII and Memry notice of its resignation as Escrow
Agent and specifying the date (which shall not be less
than twenty (20) days from the date of such notice) when
such resignation is intended to take effect. Upon
receiving such notice of resignation, CII and Memry
shall endeavor to agree upon a successor Escrow Agent to
be appointed by written instrument, in duplicate,
executed by CII and Memry, one copy of which instrument
shall be delivered to the successor Escrow Agent. If no
agreement has been reached as aforesaid and no successor
Escrow Agent shall have been so appointed and have
accepted such appointment within twenty (20) days after
such notice of resignation, Memry shall appoint a
successor Escrow Agent. The resignation of the Escrow
Agent shall become effective upon the acceptance of
appointment by the successor Escrow Agent.
(ii) Discharge of Escrow Agent. At any time, CII and Memry may
discharge the Escrow Agent by jointly executing and
delivering to the Escrow Agent notice of its discharge as
escrow agent hereunder and specifying (i) the date when
such discharge shall take effect and (ii) whom the
successor Escrow Agent is, in which even the Escrow Agent
will be discharged of its duties as of such date.
(iii) Successor Escrow Agent. If the Escrow Agent shall be
dissolved, or if its property or affairs shall be taken
under the control of any state or federal court or
administrative body or agency because of
- 4 -
<PAGE>
insolvency or bankruptcy or for any other reason, a vacancy
shall forthwith exist in the office of Escrow Agent, and
within a period of thirty (30) days thereafter, a successor
shall be appointed by the mutual agreement of CII and
Memry. If no agreement has been reached as aforesaid and no
successor Escrow Agent shall have been so appointed and
have accepted such appointment within such thirty (30) day
period, Memry shall appoint a successor Escrow Agent.
(iv) Instruments in Writing. Appointments made by Memry and/or
CII under this Section 5.b. shall be made by an instrument
or instruments in writing. Copies of each instrument shall
be delivered by CII and Memry to the predecessor Escrow
Agent and to the successor Escrow Agent so appointed.
(v) Successor Escrow Agents. Any successor Escrow Agent
appointed hereunder shall execute, acknowledge and
deliver to CII and Memry an instrument accepting such
appointment hereunder, and thereupon such successor
Escrow Agent, without any further act, deed or
conveyance, shall become duly vested with all of the
property, rights, powers, trusts, duties and obligations
of its predecessor hereunder, with the same effect as if
originally named Escrow Agent herein. Notwithstanding
any other provision of this Agreement, upon request of
such successor Escrow Agent, the Escrow Agent ceasing to
act, CII and Memry shall execute and deliver an
instrument transferring to such successor Escrow Agent
all the property, rights, powers and trusts created
hereby of the Escrow Agent so ceasing to act hereunder,
and the Escrow Agent so ceasing to act shall immediately
deliver to the successor Escrow Agent the Escrowed Funds
then held by it hereunder.
6. Governing Law; Jurisdiction; Modification or Waiver. This Agreement
shall be governed and construed in accordance with the laws of the State of
Connecticut, regardless of any principles or conflicts of law thereunder. The
parties hereto agree that the Superior Court, State of Connecticut, Judicial
District of Stamford/Norwalk, shall have sole jurisdiction over any disputes
relating to this Agreement, and that they will submit to the jurisdiction of
said court and that any and all proceedings to enforce the terms of this
Agreement shall be brought in that court. The terms and provisions of this
Agreement may only be modified or waived by a writing executed and delivered by
all parties hereto.
7. Notices. All notices, demands, approvals, consents, elections or other
communications permitted or required to be given hereunder (the "Notices") shall
be in writing and shall be deemed given (i) three (3) days after being posted
certified mail, return receipt
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<PAGE>
requested, postage prepaid, or (ii) when delivered, if sent by hand delivery or
by overnight courier service. Notices shall be addressed as follows:
If to Memry: Mr. James G. Binch
Memry Corporation
57 Commerce Drive
Brookfield, CT 06804
With a copy to: David I. Albin, Esq.
Finn Dixon & Herling
One Landmark Square
Suite 600
Stamford, CT 06901
If to CII: Ms. Katie Schultz
Connecticut Innovations, Incorporated
40 Cold Spring Road
Rocky Hill, CT 06067
With a copy to: Frank J. Marco, Esq.
Shipman & Goodwin
One American Row
Hartford, CT 06103-2819
If to Escrow Agent: David I. Albin, Esq.
Finn Dixon & Herling
One Landmark Square
Suite 600
Stamford, CT 06901
or to such address as any party may from time to time specify in writing to the
others. If such notice is given by personal delivery, the person to whom such
notice is given shall, if requested, acknowledge receipt of such notice and the
date of such receipt on a copy of such notice.
8. No Third Party Rights. This Agreement is intended to be solely for the
benefit of the parties hereto and is not intended to confer any benefits upon,
or create any rights in favor of, any person other than the parties hereto,
except as expressly provided to the contrary elsewhere in this Agreement.
9. Binding Effect. Subject to Section 5, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs executors, administrators, legal representatives, successors and assigns.
- 6 -
<PAGE>
10. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be considered an original but all of which
together shall be deemed to constitute one and the same document.
- 7 -
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of this
22nd day of December, 1994.
MEMRY CORPORATION
By: /s/ James G. Binch
----------------------------------------------
Its: President & CEO
CONNECTICUT INNOVATIONS, INCORPORATED
By: /s/ Victor R. Budnick
----------------------------------------------
Its: Acting Pres. & Exec. Dir.
FINN DIXON & HERLING
By: /s/ David I. Albin
-----------------------------------------------
a partner
- 8 -
<PAGE>
Exhibit 10.24
SECOND AMENDMENT TO CONVERTIBLE SUBORDINATED DEBENTURE PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO CONVERTIBLE SUBORDINATED DEBENTURE PURCHASE
AGREEMENT (this "Second Amendment"), is made this 24 day of June, 1996, by and
between MEMRY CORPORATION, a Delaware corporation (the "Company"), and
CONNECTICUT INNOVATIONS, INCORPORATED, a specially chartered Connecticut
corporation ("CII"). All capitalized terms not otherwise defined herein shall
have the meanings ascribed to them in the Convertible Subordinated Debenture
Purchase Agreement dated December 22, 1994 between CII and the Company, as
amended by the First Amendment to Convertible Subordinated Debenture Purchase
Agreement dated October 12, 1995 (the "Agreement").
W I T N E S S E T H:
WHEREAS, pursuant to the Agreement, the Company issued to CII a
convertible subordinated debenture, as amended (the "Debenture"), in the
original principal amount of $763,208 and certain warrants, as amended and
restated, of the Company described therein (the "Warrants"); and
WHEREAS, the Company has executed that certain Asset Purchase Agreement by
and between the Company and Raychem Corporation, dated as of May 10, 1996 (as
amended from time to time, the "Asset Purchase Agreement"); and
WHEREAS, as a condition to closing the Asset Purchase Agreement, the
Company must cause CII to convert the Debenture and waive certain defaults of
the Company under certain operative agreements between the Company and CII; and
WHEREAS, the Company has requested and CII has agreed to convert the
Debenture and grant certain waivers upon the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
herein contained, the Company and CII agree as follows:
<PAGE>
ARTICLE 1
CLOSING; CONDITIONS TO AMENDMENT
Section 1.1 (a) The effectiveness of this Second Amendment shall occur at
a closing (the "Closing") at the offices of Shipman & Goodwin, One American Row,
Hartford, Connecticut on or before July 31, 1996 (the "Closing Date"), or at
such other place as may be agreed to by the parties hereto, simultaneously with
the closing of the transactions contemplated by the Asset Purchase Agreement.
All documents to be delivered at the Closing and acts to be performed thereat
shall be deemed to have taken place simultaneously.
(b) At the Closing, CII shall deliver to the Company the Debenture, marked
"cancelled", in exchange for either (i) in the event that, by the date of the
Closing Date, the Company's Series G Preferred Stock, par value $100.00 per
share (the "Series G Preferred"), as a class, has been automatically converted
by its terms into Common Stock, 954,010 shares of Common Stock, or (ii) in the
event that, on the Closing Date, the Series G Preferred remains outstanding as a
class, both (x) 285,528 shares of Common Stock, and (y) 66.85 shares of a new
series of the Company's Series H Preferred Stock, par value $100.00 per share
(the "Series H Preferred"), having the rights, privileges and preferences set
forth in the form of Certificate of Designations, Preferences and Rights of
Series H Preferred Stock set forth as Exhibit A hereto (the "Series H
Certificate").
Section 1.2 The Closing and the obligations of CII hereunder are subject
to the following conditions:
(a) The Company shall close the Asset Purchase Agreement no later than
July 31, 1996 on the terms specified therein;
(b) The representations and warranties made by the Company herein shall
be true and correct when made, and shall be true and correct in all respects at
the Closing Date as if made at and as of the Closing and with respect thereto,
after giving effect to the transactions contemplated hereby;
(c) CII shall have received a Second Amendment to Escrow Agreement in
the form of Exhibit B hereto;
(d) CII shall have received from the Company amended and restated Class
I Warrants in the form of Exhibit C hereto, amended and restated Class II
Warrants in the form of Exhibit D hereto and a Second Addendum to the Class III
Warrants in the form of Exhibit E hereto;
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<PAGE>
(e) CII shall have received each of the other documents and items
listed below, all in form and substance satisfactory to CII:
(i) Certificate of the Secretary of the Company, certifying: (i)
the accuracy of the corporate resolutions attached thereto authorizing the
transactions contemplated hereby and the execution of all necessary documents;
(ii) that the Certificate of Incorporation attached thereto has not been further
amended (other than the filing of the Series H Certificate) and is in full force
and effect; (iii) that the Bylaws attached thereto are accurate and have not
been further amended and are in full force and effect; and (iv) that the named
officers are incumbent and that their signatures are as shown;
(ii) Certificates of Good Standing of recent date issued by the
Secretary of the State of Delaware and the Secretary of the State of Connecticut
for the Company;
(iii) Tax clearance letters of recent date from the State of
Connecticut Department of Revenue Services for the Company (corporate business
tax and sales and use tax);
(iv) Opinion letter of Company's counsel, Finn, Dixon & Herling
in form and substance satisfactory to CII; and
(v) A closing check from the Company made payable to the order of
Shipman & Goodwin for its legal fees and expenses incurred in connection
herewith;
(f) If any shares of the Series G Preferred remain outstanding on the
Closing Date, the board of directors of the Company shall have duly adopted and
the Company shall have duly filed with the Secretary of State of Delaware the
Series H Certificate, the Company shall have reserved for issuance a sufficient
number of shares of Series H Preferred Stock to allow for the conversion of the
Debenture as set forth herein, and the Company shall have reserved for issuance
a sufficient number of shares of Common Stock to allow for the conversion of
Series H Preferred Stock to be issued to CII pursuant to the terms of the Series
H Certificate;
(g) If any shares of the Series G Preferred remain outstanding on the
Closing Date, the holders of shares representing at least two-thirds of the
voting power of the Series G Preferred shall have duly approved the issuance to
CII of a sufficient number of shares of the Series H Preferred to allow for the
conversion of the Debenture as set forth herein;
(h) The Company shall have reserved for issuance a sufficient number of
shares of Common Stock to allow for the full exercise of the Warrants;
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<PAGE>
(i) At least 29% of the outstanding shares of the Series G Preferred
shall have been or simultaneously shall be converted into Common Stock;
(j) The Company shall be in full compliance with the terms, conditions
and covenants of the Debenture, including but not limited to, the timely payment
of interest, all of which accrued and unpaid interest must be paid prior to the
Closing;
(k) The Company shall not have outstanding any preferred stock (except
for shares of Series G Preferred outstanding as of the Closing Date) or
convertible indebtedness (except for convertible indebtedness which is being
converted into Common Stock no later than the Closing Date) or other equity
securities which are senior to the Common Stock; and
(l) All closing conditions shall be satisfied only upon the receipt by
CII's counsel of evidence reasonably satisfactory to CII's counsel that such
conditions have been satisfied.
ARTICLE 2
AMENDMENTS TO AGREEMENT
CII and the Company do hereby amend the Agreement as follows:
Section 2.1 The term "Agreement" as used in the Agreement shall mean the
Agreement, as amended by this Second Amendment.
Section 2.2 The terms "Class I Warrants," "Class II Warrants" and "Class
III Warrants" as used in the Agreement shall mean, respectively, the Class I
Warrants, as amended and restated pursuant to the terms hereof, the Class II
Warrants, as amended and restated pursuant to the terms hereof, and the Class
III Warrants, as amended by the Second Addendum thereto.
Section 2.3 Section 2(a) shall be deleted in its entirety and replaced by
the following:
(a) The Investor will not sell, assign, pledge, transfer, or otherwise
dispose of, whether directly or indirectly, all or any portion of the
Purchased Securities, or any Common Stock or any shares of the Company's
Series H Preferred Stock, par value $100 per share (the "Series H Preferred
Stock"), obtained upon the exercise or conversion of the Purchased
Securities or upon the closing of the Second Amendment to this Agreement,
or any Common Stock obtained upon conversion of the Series H Preferred
Stock or any Common Stock obtained as a stock dividend on the Common Stock
so obtained (such Common Stock and Series H Preferred Stock being
hereinafter collectively referred to as the "Underlying Securities"; the
Purchased Securities and the Underlying
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<PAGE>
Securities are hereinafter collectively referred to as the "Securities")),
to any person or entity without complying with applicable securities laws;
Section 2.4 Section 4.1(b) shall be deleted in its entirety and replaced
by the following:
(b) The term "Registrable Securities" means any Common Stock obtained
by the Investor upon exercise or conversion of the Purchased Securities or
upon the closing of the Second Amendment to this Agreement, upon conversion
of the Series H Preferred Stock or as a stock dividend on the Common Stock
so obtained owned or acquirable upon the exercise of the Class III Warrants
(as described below), excluding, however, any Registrable Securities (x)
sold by a person in a transaction in which its rights under this Section 4
are not assigned, (y) sold pursuant to a registration statement declared
effective by the Securities and Exchange Commission, and (z) saleable under
paragraph (k) of Rule 144.
Section 2.5 Section 4.1(d) shall be deleted in its entirety and replaced
by the following:
(d) The terms "Form S-2" and "Form S-3" means such forms under the Act
as in effect on the date hereof or any registration form under the Act
subsequently adopted by the Securities and Exchange Commission (the "SEC")
which permits including or incorporation of substantial information by
reference to other documents filed by the Company with the SEC.
Section 2.6 Sections 4.2(a)(i) and 4.2(a)(ii) shall be deleted in their
entirety and replaced by the following:
(i) no later than October 31, 1996, file a registration statement (the
"Registration Statement") covering inter alia, the resale by the Investor
of the Registrable Securities acquired by it pursuant to this Agreement,
which registration statement may cover the concurrent registration of the
resale of (A) the shares of Common Stock issued by the Company to certain
individuals and entities prior to October 12, 1995 and to be issued by the
Company as set forth on Schedule A hereto, which shares of Common Stock the
Company may be required to register pursuant to the terms of existing
agreements in effect on the date of closing of the Second Amendment to this
Agreement, (B) the shares of Common Stock underlying the Company's Series G
Preferred Stock issued by the Company pursuant to those certain Securities
Purchase Agreements dated as of June 14, 1995, and (C) the shares of Common
Stock issued, or issuable upon the conversion of convertible securities
issued, in connection with the transactions contemplated by the Asset
Purchase Agreement, as described on Schedule A hereto, or as otherwise
described on Schedule A hereto; provided,
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<PAGE>
however, that if the registration is underwritten and a limitation on the
aggregate number of shares being sold thereby is required, the Registrable
Securities shall have priority over all of the securities held by
stockholders of the Company other than Raychem Corporation, and shall have
the right to participate pari passu with Raychem Corporation based upon
their respective stockholdings (on a fully diluted basis), (ii) cause such
Registration Statement to become effective no later than January 31, 1997,
Section 2.7 The first paragraph of Section 4.9 and Section 4.9(d) are
hereby amended by inserting the phrase "Form S-2 or" prior to "Form S-3."
Section 2.8 Section 4.9(b) is hereby amended by inserting the phrase "At
such time as the Common Stock is listed and registered on a national securities
exchange or is quoted on the automated quotation system of a national securities
association," at the beginning of such section.
Section 2.9 The last sentence of Section 6.5 shall be deleted and replaced
by the following:
In the event the Investor exercises its rights pursuant to this Section
6.5, the phrase "and Class III Warrants" shall be deemed to be inserted
after the phrase "Class II Warrants" in clauses (i)(c) and (iii)(y) of the
definition of Put Price in Section 8 hereof after the phrase "Class II
Warrants."
Section 2.10 The definition of "Connecticut Presence" in Section 8 shall
be deleted in its entirety and replaced by the following:
Connecticut Presence - shall mean (i) maintaining its corporate
headquarters and all of its product business operations in the State of
Connecticut, including, but not limited to, after January 1, 1997, the
assembly of all products to be sold to the U.S. Surgical Corporation, but
excluding its business operations related to Wright Machine Corporation's
business related to the production of screw machine products and taper pins
and the Company's components and sub-assembly business to be acquired from
Raychem Corporation to be carried out in the State of California, (ii)
basing its president and chief executive officer, a majority of its senior
executives, and all of its administrative, financial, research and
development, marketing and customer service staff related to its product
business, including, but not limited to, after January 1, 1997, the
assembly of all products to be sold to the U.S. Surgical Corporation, (but
excluding Wright Machine Corporation's business related to the production
of screw machine products and taper pins and the Company's components and
sub-assembly business to be acquired from Raychem
- 6 -
<PAGE>
Corporation to be carried out in the State of California) in the State of
Connecticut, (iii) conducting all of its operations (including
manufacturing and production) related to its product business, directly or
through subcontractors and through licensed operations, in the State of
Connecticut, including, but not limited to, after January 1, 1997, the
assembly of all products to be sold to the U.S. Surgical Corporation, but
excluding Wright Machine Corporation's business related to the production
of screw machine products and taper pins and the Company's components and
sub-assembly business to be acquired from Raychem Corporation to be carried
out in the State of California, and (iv) maintaining its principal bank
accounts with banks located in the State of Connecticut, excluding all
banks associated with Wright Machine Corporation. Each failure to comply
with any of the clauses set forth in this definition shall constitute a
failure to maintain a "Connecticut Presence."
Section 2.11 The definition of "Put Price" in Section 8 shall be deleted
in its entirety and replaced by the following:
Put Price - shall mean the sum of the following:
(i) the product of the Multipler multiplied by the number of shares of
Common Stock held by the Investor on the date of the Put Closing which were
obtained by the Investor (a) upon the closing of the Second Amendment to
this Agreement, (b) upon conversion of shares of Series H Preferred Stock
obtained upon the closing of the Second Amendment to this Agreement, (c)
upon exercise of any or all of the Class I Warrants and Class II Warrants,
and (d) pursuant to a stock dividend or stock split with respect to the
shares of Common Stock referred to in clauses (a) through (c) above;
(ii) the product of the Multiplier multiplied by the number of shares
of Common Stock acquirable upon the conversion of shares of Series H
Preferred Stock held by the Investor on the date of the Put Closing which
shares of Series H Preferred Stock were obtained upon the closing of the
Second Amendment to this Agreement; and
(iii) the difference between (x) the Multiplier multiplied by the
number of shares of Common Stock acquirable upon the exercise of the
remaining Class I Warrants and Class II Warrants, minus (y) any exercise
prices that would have to be paid upon full exercise of the remaining Class
I Warrants and Class II Warrants.
Section 2.12 The definition of Registration Default in Section 8 shall be
deleted in its entirety and replaced by the following:
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<PAGE>
Registration Default - Either (i) the breach by the Company of the
provisions of Section 4.2(a) (i) and/or (ii) above, or (ii) the failure by
the Company to keep the Registration Statement effective, free from any
stop orders issued by the SEC or suspensions by the Company pursuant to
Section 4.4(b) above (other than suspensions the notice of which is
accompanied by a certificate signed by the President and at least 80% of
the members of the Board of Directors of the Company and prepared in good
faith stating that, in the good faith judgment of the Board of Directors of
the Company it would be seriously detrimental to the Company for the
Investor to effect sales of Registerable Securities included in a
registration statement at such time and the reason therefor (it being
understood by the Investor that such reason may be material, non-public
information)), for an aggregate of 120 days during any rolling twelve month
period (it being agreed and understood that, upon the occurrence of a
Registration Default pursuant to this clause (ii), no new rolling twelve
month period pursuant to this clause (ii) shall commence prior to the date
of such Registration Default).
Section 2.13 The reference to "October 12, 1995" in the definition of
Expiration Date in Section 8 shall be deleted and replaced by "Subsequent
Closing Date (as hereinafter defined)."
Section 2.14 The following shall be added to the end of Section 8:
Subsequent Closing Date - shall mean the date upon which the Closing
of that certain Second Amendment, dated June 24, 1996, to this Agreement
occurs.
Multiplier - shall mean the greater of (i) the Current Market Price on
the Put Date, or (ii) $2.00 (subject to adjustments for subdivisions, stock
dividends, stock splits or consolidations of Common Stock).
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE COMPANY
Section 3.1 All action on the part of the Company, its directors and
stockholders necessary for the authorization, execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated herein, and for the authorization, execution and
delivery of the Warrants and, if applicable, the Series H Preferred have been
taken or will be taken prior to the Closing. This Second Amendment, and the
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<PAGE>
Agreement as amended hereby, is a valid and binding obligation of the Company,
enforceable in accordance with its terms against the Company.
Section 3.2 The Company hereby makes to CII all of the representations and
warranties that it is making to Raychem Corporation pursuant to the Asset
Purchase Agreement to the same extent as if such representations and warranties
were set forth in full herein.
Section 3.3 Neither this Agreement as amended hereby, nor any other
written statement furnished to CII nor its counsel in connection with the
transaction contemplated hereby contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained therein or herein not misleading in the light of the circumstances
under which they were made.
Section 3.4 Each of the key employees and consultants of the Company and
of each subsidiary listed on Schedule B hereto, other than persons to become key
employees of the Company in connection with the closing of the Asset Purchase
Agreement (the "Raychem Employees"), has entered into a confidentiality
agreement, a non-competition agreement, a proprietary information and invention
agreement and/or an employment agreement, true and accurate copies of which have
been provided to CII. The Company hereby covenants and agrees to use its best
efforts to cause each of the Raychem Employees to enter into a confidentiality
agreement, a proprietary information and inventions agreement and/or employment
agreement no later than July 15, 1996.
Section 3.5 There are no "side agreements" or other agreements or
understandings between the Company and any third party providing compensation or
other consideration to any third party in connection with the conversion of
Series G Preferred into Common Stock, except for the terms of the Certificate of
Designations, Rights and Preferences of said Series G Preferred Stock.
Section 3.6 The Company represents and warrants that it has fully complied
with each of the covenants contained in Section 5 of the Agreement and there
exists no default or Event of Default under the Agreement or Debenture and no
event has occurred which with the passage of time would constitute an Event of
Default, other than the Company's failure to file and effect a registration of
the Registrable Securities by March 15, 1996.
Section 3.7 The Company represents and warrants that except as set forth
on Part I of Schedule C hereto, and with respect to the registration rights
granted to CII, there are no "side agreements" or other agreements or
understandings with any person regarding registration of securities of the
Company under the Securities Act of 1933, as amended. Except as set forth on
Part II of Schedule C hereto, between July 1, 1995 and the date hereof, no
securities of the Company have been sold which provide registration or other
rights more favorable than those set forth herein. In the event that the Company
grants registration rights to any other holder
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<PAGE>
of securities of the Company, the Company will promptly give to CII written
notice thereof and, if in the opinion of CII such registration rights are more
favorable than the registration rights provided under this Agreement, CII shall
so notify the Company within thirty (30) days of receipt of the foregoing notice
from the Company, whereupon such registration rights shall automatically be
deemed to be incorporated in this Agreement in substitution of the registration
rights currently granted by this Agreement.
Section 3.8 The Company represents and warrants that during the six-month
period ending on the Closing Date the Company has not issued, and does not
currently intend to issue, any capital stock of any class which has rights to be
preferred as to dividends or as to the distribution of assets upon voluntary or
involuntary liquidation, dissolution or winding up ("Preferred Securities"),
other than the shares of Series H Preferred which may be issued to CII upon
conversion of the Debenture.
Section 3.9 The Company represents and warrants that except as set forth
on Part II of Schedule C hereto, during the six-month period ending and
including the Closing Date, the Company has not issued, and does not currently
intend to issue any "Additional Common Shares" (as such term is defined in the
Debenture) for a consideration per share less than $0.80.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF CII
Section 4.1 CII hereby restates each of the representations and warranties
of CII contained in Section 2 of the Agreement, as amended hereby (other than
Section 2(j) thereof), and represents and warrants that each such representation
and warranty is true and correct on the date hereof and will be true and correct
on the date of the Closing.
Section 4.2 Effective upon the Closing, CII hereby waives its rights and
remedies pursuant to the Agreement and the Debenture with respect to the
Company's failure to file and effect a registration of Registrable Securities by
March 15, 1996 (including without limitation its right to receive any adjustment
to the Common Stock Conversion Price (as defined in the Debenture) pursuant to
Section 2.3 of the Debenture), provided that such waiver shall not extend to or
affect the right of CII to receive additional interest pursuant to the second
paragraph of the Debenture or any subsequent default under the Agreement, as
amended hereby, or impair any right consequent thereon.
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<PAGE>
ARTICLE 5
MISCELLANEOUS
Section 5.1 The Company will pay all expenses in connection with the
subject matter of this Second Amendment, including the fees and disbursements of
CII's special counsel.
Section 5.2 Except as expressly modified herein, all other terms,
conditions and obligations of the Agreement are hereby ratified and confirmed.
Section 5.3 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.
[The following page is the signature page.]
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<PAGE>
IN WITNESS WHEREOF, this Second Amendment has been duly signed, sealed and
delivered by the Company and CII as of the date and year first above written.
CONNECTICUT INNOVATIONS, INCORPORATED
By: /s/ Victor R. Budnick
--------------------------------------------
Its: President and Executive Director
Duly Authorized
MEMRY CORPORATION
By: /s/ James G. Binch
--------------------------------------------
Its: President
Duly Authorized
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<PAGE>
EXHIBITS AND SCHEDULES INTENTIONALLY OMITTED
- 13 -
<PAGE>
Exhibit 10.25
SECOND AMENDMENT TO ESCROW AGREEMENT
This Second Amendment to Escrow Agreement (this "Amendment") is made this
28th day of June, 1996, by and among Memry Corporation, a Delaware corporation
("Memry"), Connecticut Innovations, Incorporated, a specially chartered
Connecticut corporation ("CII") and Finn Dixon & Herling, as escrow agent (the
"Escrow Agent").
W I T N E S S E T H:
WHEREAS, Memry, CII and Escrow Agent are parties to an Escrow Agreement
dated December 22, 1994, as amended (the "Escrow Agreement");
WHEREAS, Memry and CII have entered into a Second Amendment dated June 24,
1996 (the "Second Amendment") to Convertible Subordinated Debenture Purchase
Agreement dated December 22, 1994, as amended (the "Purchase Agreement");
WHEREAS, Memry, CII and Escrow Agent wish to modify the Escrow Agreement
to reflect the amendments made pursuant to the Second Amendment and other
understandings of the parties.
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration given to each party hereto, the receipt and sufficiency
of which are hereby acknowledged, Memry, CII and the Escrow Agent agree as
follows:
1. All references to the "Purchase Agreement" shall be deemed references
to the Purchase Agreement, as amended by the Second Amendment.
2. The reference in the preamble to "March 15, 1999" shall be deleted and
replaced with "January 31, 1997."
3. The phrase "on or prior to March 15, 1999," shall be deleted from
Section 4(a)(ii).
4. Section 4(a)(iv) shall be amended by substituting for the phrase "on
March 25, 1999" the following:
on the earlier to occur of January 25, 2000 or the receipt by the Escrow
Agent of instructions pursuant to Section 4(e) below.
5. Section 4(a) is further amended by substituting for the phrase
"provisions of clauses (ii) or (iii) of this Section 4.a" the phrase "provisions
of clauses (ii), (iii) or (iv) of this Section 4.a."
<PAGE>
6. The reference in Section 4(b) to "March 5, 1999" shall be deleted and
replaced with "January 25, 2000."
7. A new Section 4(e) is added, such section to provide, in its entirety,
as follows:
e. At such time during the term hereof as Memry has effected and
maintained in effect a registration statement covering CII's resale of the
Registrable Securities for an aggregate of 365 calendar days, not including
days on which CII is not entitled to resell Registrable Securities because
of Securities and Exchange Commission stop orders and/or the Company having
provided CII with notice to suspend sales to permit the Company to correct
or update a registration statement or prospectus then in effect, CII shall
promptly provide the Escrow Agent with written instructions to return any
remaining Escrowed Funds to (or, upon Memry's instructions, for the account
of) Memry.
IN WITNESS WHEREOF, the parties have executed this Agreement as of this
28th day of June, 1996.
MEMRY CORPORATION
By: /s/ James G. Binch
-------------------------------
Its: President & CEO
CONNECTICUT INNOVATIONS,
INCORPORATED
By: /s/ Victor R. Budnick
-------------------------------
Its: Pres. & Exec. Dir.
FINN DIXON & HERLING
By: /s/ David I. Albin
-------------------------------
Its: A partner
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<PAGE>
Exhibit 10.26
NEITHER THE WARRANTS REPRESENTED HEREBY NOR THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. THE WARRANTS REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN AND WILL BE SOLD IN RELIANCE UPON EXEMPTIONS
THEREUNDER. THE SALE OR OTHER DISPOSITION OF THE WARRANTS REPRESENTED HEREBY AND
THE SECURITIES ISSUABLE UPON EXERCISE HEREOF IS RESTRICTED IN ACCORDANCE WITH
THAT ACT AND THOSE LAWS, MAY ONLY BE MADE PURSUANT TO A REGISTRATION UNDER THAT
ACT AND THOSE LAWS OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION AND, IN
THE EVENT OF SUCH AN UNREGISTERED SALE OR OTHER DISPOSITION, IS PROHIBITED
UNLESS MEMRY CORPORATION RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO IT AND
ITS COUNSEL THAT SUCH SALE OR OTHER DISPOSITION CAN BE MADE WITHOUT REGISTRATION
UNDER THAT ACT OR THOSE LAWS.
Warrant Cert. No. 94-4A Warrants to Purchase
1,282,450 Shares
of Common Stock
TRANSFERABLE WARRANTS
TO PURCHASE COMMON STOCK OF
MEMRY CORPORATION
This Warrant Certificate is an amendment and restatement of that certain
Warrant Certificate No. 94-4 issued by Memry Corporation, a corporation
organized and existing under the laws of the State of Delaware (hereinafter
called the "Company") to Connecticut Innovations, Incorporated ("CII"), with an
address of 40 Cold Spring Road, Rocky Hill, Connecticut 06067, which Warrant
Certificate No. 94-4 has been cancelled by the Company as of the date hereof.
This Warrant Certificate certifies that CII, or registered assignees, is
entitled to purchase from the Company, in whole or part, at a purchase price
equal to the "Exercise Price" (as hereinafter defined), at any time from and
after the date hereof to and including the "Final Exercise Date" (as hereinafter
defined), 1,282,450 shares of the Company's Common Stock, $.01 par value (the
"Warrant Shares"), subject, however, to the provisions and upon the terms and
conditions hereinafter set forth. The Exercise Price shall initially be Eighty
Five and Three-Tenths Cents ($0.853) per share, subject to adjustment as
hereinafter provided. The Final Exercise Date shall initially be as of August
25, 2002, subject to adjustment as provided in paragraph 5 hereof.
<PAGE>
These Warrants are issued pursuant to a Convertible Subordinated Debenture
Purchase Agreement dated as of December 22, 1994, as amended, between the
Company and the initial holder hereof (as so amended, the "Debenture Purchase
Agreement"). Certain capitalized terms used in this Warrant Certificate are
defined in paragraph 5 hereof. By accepting this Warrant Certificate, the holder
agrees to be bound by the terms of the Debenture Purchase Agreement.
THESE WARRANTS ARE SUBJECT TO THE FOLLOWING TERMS AND
CONDITIONS:
1. (a) Exercise of Warrants. The rights represented by this Warrant
Certificate may be exercised by the registered holder hereof, in whole or in
part (but not as to a fractional share of Common Stock), by (i) the delivery of
this Warrant Certificate, together with a properly completed Notice of Election,
to the principal office of the Company at 57 Commerce Drive, Brookfield,
Connecticut 06804 (or such other office or agency of the Company as it may
designate by notice in writing to the holder hereof) and (ii) payment to the
Company, in immediately available funds, of the Exercise Price for the Warrant
Shares being purchased. Certificates for the Warrant Shares so purchased
(together with a cash adjustment in lieu of any fraction of a share) shall be
delivered to the holder hereof within a reasonable time, not exceeding twenty
(20) business days, after the rights represented by this Warrant Certificate
shall have been so exercised and paid for, and, unless these Warrants have
expired, a new Warrant Certificate representing the number of Warrants, if any,
with respect to which this Warrant Certificate shall not then have been
exercised, in all other respects identical with this Warrant Certificate, shall
also be issued and delivered to the holder hereof within such time, or
appropriate notation may be made on this Warrant Certificate and the same
returned to such holder.
(b) 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 Warrants for
cash, the registered Holder hereof may elect to receive shares of Common Stock
equal to the value (as determined below) of the Warrants being exercised by
surrender of this Warrant Certificate at the principal office of the Company
together with the properly completed Notice of Election in which event the
Company shall issue to such holder a number of shares of Common Stock computed
using the following formula:
X = Y(A-B)
------
A
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<PAGE>
Where X = the number of shares of Common Stock to be issued
to such holder;
Y = the number of shares of Common Stock purchasable under the
Warrant Certificate or, if only a portion of the Warrant
Certificate is being exercised, the portion of the Warrant
Certificate 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
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.
(c) Transfer Restriction Legend. Each certificate for Warrant Shares
issued upon exercise of these Warrants (unless as otherwise provided for
pursuant to paragraph 2(b) hereof) shall bear the legend appearing on the first
page of this Warrant Certificate and any additional legend which the Company, in
its sole discretion, may deem appropriate at such time.
2. (a) Warrants and Warrant Shares Not Registered. Each holder of these
Warrants, by acceptance hereof, represents and covenants that: (1) these
Warrants and the Warrant Shares which may be purchased upon exercise of these
Warrants are not being registered under the Securities Act of 1933, as amended
(the "Securities Act"), on the grounds that the issuance of this Warrant
Certificate and the offering and sale of such Warrant Shares to the holder are
and will be exempt from registration under Section 4(2) of the Securities Act as
not involving any public offering; and (2) it (i) is acquiring these Warrants
for investment for its own account, with no present intention of reselling or
otherwise distributing the same, subject, nevertheless, to any requirement of
law that the disposition of its property shall at all times be
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within its control, (ii) is an "accredited investor" as defined in Regulation D
under the Securities Act, (iii) has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
the investments made or to be made in connection with the acquisition and
exercise of these Warrants, and (iv) has, so far as such holder is aware, been
provided all such information and access to information concerning its
investment hereunder as such holder has requested from the Company. Except as
provided for in paragraph 2(b) hereof, the Company may condition any Warrant
exercise and issuance of Warrant Shares upon its receipt of the representations
and covenants given above and under the Debenture Purchase Agreement by the
original Warrant holder with respect to such Warrant Shares.
(b) Notice of Proposed Transfer; Opinion of Counsel. Each holder of
this Warrant Certificate, by acceptance hereof, agrees that prior to the
disposition of these Warrants or any Warrant Shares in a transaction for which a
registration statement under the Securities Act is not currently effective, such
holder will give written notice to the Company of such intention, together with
an opinion of counsel acceptable to the Company and its counsel (1) that
registration under the Securities Act is not necessary with respect to such
disposition and that such disposition will comply with the Securities Act, and
(2) that such disposition will also be in compliance with applicable securities
laws of states and other jurisdictions.
3. Special Agreements of the Company. The Company covenants and agrees
that:
(a) Character of Warrant Shares. All Warrant Shares which may be
issued upon the exercise of the Warrants represented hereby, upon issuance, will
be duly authorized, validly issued, fully paid and non-assessable and free from
all taxes, liens and charges with respect to the issue thereof, and without
limiting the generality of the foregoing, that it will take from to time all
such action as may be requisite to ensure that the par value per share (if any)
of the Common Stock is at all times equal to or less than the then effective
Exercise Price, and that it will refrain from taking any action which could
pursuant to the terms of the Warrants result in the Exercise Price per share
being less than the par value per share of the Common Stock;
(b) No Violations. The Company will take all such action as may be
necessary to ensure that Warrant Shares may be so issued without violation of
any applicable United States state or federal law or regulation, or of any
requirements of any securities exchange or inter-dealer quotation system upon
which the Common Stock of the Company may be listed or quoted;
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<PAGE>
(c) Actions in Avoidance; Non-Dilution. The Company will not, by
amendment of its Certificate or Articles of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, issue or sale of
securities or otherwise, avoid or take any action which would have the effect of
avoiding the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good faith assist
in carrying out all of the provisions of this Warrant Certificate and in taking
all of such action as may be necessary or appropriate in order to protect the
rights of the holders of these Warrants against dilution or other impairment;
and
(d) Financial Information. The Company will, if requested, provide
each Warrant holder copies of all annual, quarterly and current reports required
to be filed by it pursuant to Section 13 or 15 of the Securities Exchange Act of
1934, as amended, and in addition, promptly after requested, such other
information concerning the Company as any Warrant holder may reasonably require
(i) in order to comply with any law or governmental regulation, order of any
court, or order, inquiry or investigation of any governmental agency or
instrumentality, or (ii) in order to exercise any right or privilege of such
Warrant holder or to enforce any obligation of the Company under the Warrants or
any agreement or instrument executed and delivered in connection therewith.
4. Anti-Dilution Provisions.
(a) Adjustments to Exercise Price, Number of Warrants. The number of
Warrants represented hereby and the Exercise Price for each such Warrant shall
be subject to adjustment from time to time as hereinafter provided. Upon the
occurrence of each event causing an adjustment of the "Trigger Price," as such
term is defined below, the Exercise Price shall automatically be adjusted to an
amount equal to 143.3% of such adjusted Trigger Price, if such amount is less
than the current Exercise Price. Upon each such adjustment of the Exercise
Price, the number of Warrants represented hereby shall automatically be adjusted
to the number obtained by multiplying the Exercise Price in effect immediately
prior to such adjustment by the number of Warrants represented hereby
immediately prior to such adjustment, and then dividing the product thereof by
the new Exercise Price.
(b) Adjustments to Trigger Price.
(i) Special Definitions. For purposes of this
Section 4(b), the following definitions shall apply:
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(A) "Options" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Stock or
Convertible Securities.
(B) "Original Issue Date" shall mean December 22, 1994.
(C) "Convertible Securities" shall mean any evidence of
indebtedness, shares of capital stock or other securities
convertible into or exchangeable for Common Stock.
(D) "Additional Common Shares" shall mean all Common
Stock issued (or, pursuant to Section 4(b)(v), deemed to be issued)
by the Company after the Original Issue Date, other than Common
Stock issued or issuable at any time:
(1) upon conversion of the Company's Series A
Preferred Stock and Series B Preferred Stock;
(2) upon exercise of any of the Company's
currently outstanding Convertible Securities (including
without limitation any convertible debentures and/or warrants
issued pursuant to the Debenture Purchase Agreement and the
warrants originally issued on March 1, 1992 and amended
thereby);
(3) to officers, directors and employees of, and
consultants to, the Company pursuant to the Company's 1994
Employee Stock Option Plan;
(4) as a dividend or distribution upon the Common
Stock (which event is addressed in Section 4(b)(vii)); or
(5) the issuance of an aggregate of up to
1,250,000 warrants with an exercise price of $0.01 per share
to Raychem Corporation and to employees of Raychem Corporation
who agree to become employees of the Company upon the closing
of the transactions contemplated by the Asset Purchase
Agreement (as such term is defined in the Debenture Purchase
Agreement).
(ii) Trigger Price. The Trigger Price shall be equal to $0.65
effective as of June 14, 1995, subject to adjustment as hereinafter
provided.
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(iii) Adjustment Upon Issuances of Additional Common Shares.
In the event the Company, at any time after the Original Issue Date, shall
issue Additional Common Shares (including Additional Common Shares deemed
to be issued pursuant to Section 4(b)(v)) without consideration or for a
consideration per share less than the Trigger Price in effect on the date
of and immediately prior to such issue, then and in such event, the
Trigger Price shall be reduced, concurrently with such issue, to the price
for which such Additional Common Shares were deemed to be issued, as
calculated pursuant to Section 4(b)(vi) below.
(iv) Penalty Adjustments. Each time that a "Penalty Adjustment
Event" (as defined below) occurs, the Trigger Price shall be reduced to
the lower of (x) 90% of the Trigger Price immediately theretofore in
effect, and (y) the average of the closing bid prices (or, at such time,
if any, as trades of the Common Stock, rather than bid and asked
quotations, are available, the closing trade prices) of the Common Stock
for the ten trading days immediately preceding the date of the Penalty
Adjustment Event. For purposes of this Section 4(b)(iv), a "Penalty
Adjustment Event" shall mean any of the following: (i) the failure by the
Company to comply with the provisions of Section 4.2(a)(i) of the
Debenture Purchase Agreement by October 31, 1996; (ii) the failure by the
Company to comply with the provisions of Section 4.2(a)(ii) of the
Debenture Purchase Agreement by January 31, 1997; (iii) the expiration of
each non-overlapping ninety day period from and after January 31, 1997,
that a Registration Statement (as defined in the Debenture Purchase
Agreement) has not been effected; (iv) the holder is unable to sell any or
all of such Common Stock under the Registration Statement for more than
ninety days during any rolling 12 month period subsequent to the
effectiveness of a Registration Statement, due to either stop orders
issued by the Securities and Exchange Commission and/or suspensions in
trading on advice of the Company's counsel or requested by the Company in
order to amend or supplement, as the case may be, the Registration
Statement and/or the prospectus contained therein (other than suspensions
by the Company, the written notice of which is accompanied by a
certificate signed by the President and at least 80% of the members of the
Board of Directors of the Company and prepared in good faith stating that,
in the good faith judgment of the Board of Directors of the Company it
would be seriously detrimental to the Company for the holder to effect
sales of shares of Common Stock included in the Registration Statement at
such time and the reason therefor (it being understood by the holder that
such reason may be material, non-public information)) (it being agreed and
understood that, upon the occurrence of a Penalty Adjustment
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Event by virtue of this clause (iv), no future one year period for purpose
of this clause (iv) can start prior to the date of such Penalty Adjustment
Event).
(v) Deemed Issue of Additional Common Shares.
(A) Option and Convertible Securities. In the event the
Company, at any time or from time to time after the Original Issue
Date, shall issue any Options or Convertible Securities or shall
fix a record date for the determination of holders of any class of
securities entitled to receive any such Options or Convertible
Securities, then the maximum number of shares of Common Stock (as
set forth in the instrument relating thereto without regard to any
provisions contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or, in the case
of Convertible Securities and Options therefor, the conversion or
exchange of such Convertible Securities, shall be deemed to be
Additional Common Shares issued as of the time of such issue or, in
case such a record date shall have been fixed, as of the close of
business on such record date, provided that in any such case in
which Additional Common Shares are deemed to be issued:
(1) no further adjustment in the Trigger Price
shall be made upon the subsequent issue of Convertible
Securities or shares of Common Stock upon the exercise of such
Options or conversion or exchange of such Convertible
Securities;
(2) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise,
for any increase or decrease in the consideration payable to
the Company, or in the number of shares of Common Stock
issuable upon the exercise, conversion or exchange thereof,
the Trigger Price computed upon the original issue thereof (or
upon the occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall, upon any
such increase or decrease becoming effective, be recomputed to
reflect such increase or decrease insofar as it affects such
Options or the rights of conversion or exchange under such
Convertible Securities;
(3) upon the expiration of any such Options or any
rights of conversion or exchange under such Convertible
Securities which shall not
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have been exercised, the Trigger Price computed upon the
original issue thereof (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments
based thereon, shall, upon such expiration, be recomputed as
if:
(I) in the case of Convertible Securities or
Options for Common Stock, the only Additional Common
Shares issued were Common Stock, if any, actually issued
upon the exercise of such Options or the conversion or
exchange of such Convertible Securities and the
consideration received therefor was the consideration
actually received by the Company for the issue of all
such Options, whether or not exercised, plus the
consideration actually received by the Company upon such
exercise, or for the issue of all such Convertible
Securities which were actually converted or exchanged,
plus the additional consideration, if any, actually
received by the Company upon such conversion or
exchange, and
(II) in the case of Options for Convertible
Securities, the only Convertible Securities issued were
Convertible Securities, if any, actually issued upon the
exercise of such Options, and the consideration received
by the Company for the Additional Common Shares deemed
to have been issued was the consideration actually
received by the Company for the issue of all such
Options, whether or not exercised, plus the
consideration actually received by the Company upon the
issue of the Convertible Securities with respect to
which such Options were actually exercised;
(4) no readjustment pursuant to clause (2) or (3)
above shall have the effect of increasing the Trigger Price to
an amount which exceeds the lower of (x) the Trigger Price on
the original adjustment date, and (y) the Trigger Price that
would have resulted from any issuance of Additional Common
Shares between the original adjustment date and such
readjustment for which no adjustment was made; and
(5) in the case of any Options which expire by
their terms not more than 60 days after the date of issue
thereof, no adjustment of the
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Trigger Price shall be made until the expiration or exercise
of all such Options.
(B) Intentionally omitted.
(vi) Determination of Consideration. For purposes of this
Section 4(b), the consideration received by the Company for the issue of
any Additional Common Shares shall be computed as follows:
(A) Cash and Property. Such consideration shall:
(1) insofar as it consists of cash, be computed at
the aggregate amount of cash received by the Company including
amounts paid or payable for accrued interest or accrued
dividends;
(2) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of
such issue, as determined in good faith by the Company's Board
of Directors (the "Board of Directors"); and
(3) in the event Additional Common Shares are
issued together with other shares or securities or other
assets of the Company for consideration so received, computed
as provided in clause (1) and (2) above, as determined in good
faith by the Board of Directors.
(B) Options and Convertible Securities. The
consideration per share received by the Company for Additional
Common Shares deemed to have been issued pursuant to Section
4(b)(v), relating to Options and Convertible Securities, shall be
determined by dividing:
(x) the total amount, if any, received or
receivable by the Company as consideration for the issue of
such Options or Convertible Securities, plus the minimum
aggregate amount of additional consideration (as set forth in
the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of
such consideration) payable to the Company upon the exercise
of such Options or the conversion or exchange of such
Convertible Securities, or in the case of Options for
Convertible Securities, the exercise of such Options for
Convertible Securities and the
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<PAGE>
conversion or exchange of such Convertible Securities, by
(y) the maximum number of shares of Common Stock
(as set forth in the instruments relating thereto, without
regard to any provision contained therein or a subsequent
adjustment of such number) issuable upon the exercise of such
Options or the conversion or exchange of such Convertible
Securities.
(vii) Adjustments for Subdivisions, Stock Dividends, Stock
Splits or Consolidation of Common Stock. In the event the outstanding
Common Stock shall be subdivided (by stock dividend, stock split or
otherwise), into a greater number of shares of Common Stock, the Trigger
Price then in effect shall, concurrently with the effectiveness of such
subdivision, be proportionately decreased. In the event the outstanding
Common Stock shall be combined or consolidated, by reclassification or
reverse stock split or otherwise, into a lesser number of shares of Common
Stock, the Trigger Price then in effect shall, concurrently with the
effectiveness of such combination or consolidation, be proportionately
increased.
(viii) Continuation of Terms. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any
transfer) referred to in this Section 4(b)(viii) this Warrant Certificate
shall continue in full force and effect and the terms hereof shall be
applicable to the shares of stock and other securities and property
receivable on the exercise of the Warrants after the consummation of such
reorganization, consolidation or merger or the effective date of the
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including,
in the case of any such transfer, the person acquiring all or
substantially all of the properties or assets of the Company, whether or
not such person shall have expressly assumed the terms of this Warrant
Certificate.
(c) Reorganizations and Asset Sales. If any capital reorganization
or reclassification of the capital stock of the Company, or any consolidation or
merger of the Company with another corporation, or the sale of all or
substantially all of its assets to another corporation or a tender or exchange
offer for shares of Common Stock, or any liquidation of all or substantially all
of the Company's assets shall be effected in such a way that holders of Common
Stock shall be entitled to, or will upon the declaration of a liquidating
dividend, receive stock, securities or assets with
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<PAGE>
respect to or in exchange for Common Stock, then the following provisions shall
apply:
(i) As a condition of such reorganization, reclassification,
consolidation, merger, sale, tender offer, exchange offer or liquidation
(except as otherwise provided below in this paragraph 4(c)), lawful and
adequate provisions shall be made whereby each holder of Warrants shall
thereafter have the right to receive upon the terms and conditions
specified in this Warrant Certificate and in lieu of the Warrant Shares
immediately theretofore receivable upon the exercise of each Warrant, such
shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding shares of such
Common Stock equal to the number of Warrant Shares immediately theretofore
so receivable had such reorganization, reclassification, consolidation,
merger, sale, tender offer, exchange offer or liquidation not taken place,
and in any such case appropriate provision shall be made with respect to
the rights and interests of such holder to the end that the provisions
hereof (including without limitation provisions for adjustments of the
Exercise Price and the number of Warrants represented hereby) shall
therefore be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise of
these Warrants.
(ii) In the event of a merger or consolidation of the Company
with or into another corporation as a result of which a number of shares
of Common Stock of the surviving corporation greater or lesser than the
number of shares of Common Stock of the Company outstanding immediately
prior to such merger or consolidation are issuable to holders of Common
Stock or the Company, then the Exercise Price in effect immediately prior
to such merger or consolidation shall be adjusted in the same manner as
though there were a subdivision or combination of the outstanding shares
of Common Stock of the Company, and the number of Warrants represented
hereby shall be proportionately adjusted for such adjustment in the
Exercise Price.
(d) Notice of Adjustment. Whenever the Exercise Price and/or the
number of Warrants represented hereby shall be adjusted as herein provided, or
the rights of Warrant holders shall change by reason of other events specified
herein, the Company shall compute the adjusted Exercise Price and the adjusted
number of Warrants represented hereby in accordance with the provisions hereof
and shall prepare a certificate signed by its President, Vice President,
Treasurer or Secretary setting forth the adjusted Exercise Price and number of
Warrants represented hereby or
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<PAGE>
specifying the other shares of stock, securities or assets receivable as a
result of such change in rights, and showing in reasonable detail the facts and
calculations upon which such adjustments or other changes are based. The Company
shall promptly cause to be mailed to the holder of these Warrants copies of such
officer's certificate together with a notice stating that the Exercise Price
and/or the number of Warrants represented hereby, as the case may be, have been
adjusted and setting forth the adjusted Exercise Price and number of Warrants
represented hereby.
(e) Notifications to Holders. In case at any time the Company
proposes:
(i) to declare any dividend upon any class of
stock other than preferred stock;
(ii) to make any special dividend or other distribution to the
holders of any class of stock, other than dividends of Common Stock paid
to holders of Common Stock;
(iii) to offer for subscription pro rata to the holders of its
securities any additional securities or other rights;
(iv) to effect any capital reorganization, or reclassification
of the capital stock of the Company, or consolidation or merger of the
Company with another corporation, or sale or other disposition of all or
substantially all of its assets; or
(v) to effect a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in any one or more of said cases, the Company shall give the holder of
these Warrants (A) at least twenty (20) days' (but not more than ninety (90)
days) prior written notice of the date on which the books of the Company shall
close or a record shall be taken for such dividend, distribution or subscription
rights or for determining rights to vote in respect of such issuance,
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, and (B) in the case of any such issuance,
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, at least twenty (20) days' (but not more than ninety
(90) days) prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (A) shall also specify, in the
case of any such dividend, distribution or subscription rights, the date on
which the holders of any securities shall be entitled thereto, and such notice
in accordance with the foregoing clause (B) shall also specify the date on which
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<PAGE>
the holders of any securities shall be entitled to exchange their securities for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, as the case may be.
(f) Company to Prevent Dilution. If any event or condition occurs as
to which other provisions of this paragraph 4 are not strictly applicable or if
strictly applicable would not fairly protect the exercise or purchase rights of
these Warrants in accordance with the essential intent and principles of such
provisions, or which might materially and adversely affect the exercise or
purchase rights of the Warrant holders under any provision of these Warrants,
then the Company shall make an adjustment in the application of such provisions,
in accordance with such essential intent and principles, so as to protect such
exercise and purchase rights as aforesaid, and any adjustment necessary with
respect to the Exercise Price and the number of Warrants represented hereby so
as to preserve without dilution the rights of the holders of Warrants.
5. Definitions. The terms defined in this paragraph, whenever used in this
Warrant Certificate, shall, unless the context otherwise requires, have the
respective meanings hereinafter specified:
(a) "Common Stock" shall mean and include the Company's Common
Stock, $.01 par value, and shall also include in case of any reorganization,
reclassification, consolidation, merger or sale of assets of the character
referred to in paragraph 4(c) hereof, the stock, securities or assets provided
for in such paragraph.
(b) "Company" shall mean Memry Corporation and also include any
successor thereto with respect to the obligations hereunder, by merger,
consolidation or otherwise.
(c) "Final Exercise Date" shall mean August 25, 2002; provided,
however, that the Final Exercise Date shall be extended two days for each day
(i) after October 31, 1996 that the Company fails to file the Registration
Statement, (ii) after January 31, 1997 that the Registration Statement has not
been declared effective by the Securities and Exchange Commission and/or (iii)
that the holder may not offer and sell the Warrant Shares under the Registration
Statement due to either stop orders issued by the Securities and Exchange
Commission and/or suspensions in trading on advice of the Company's counsel or
requested by the Company in order to amend or supplement, as the case may be,
the Registration Statement and/or the prospectus contained therein (other than
suspensions by the Company, the written notice of which is accompanied by a
certificate signed by the President and at least 80% of the members of the Board
of Directors of the Company and
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<PAGE>
prepared in good faith stating that, in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company for
the holder to effect sales of shares of Common Stock included in the
Registration Statement at such time and the reason therefor (it being understood
by the holder that such reason may be material, non-public information)).
(d) "Warrant Certificate" shall mean this instrument evidencing the
Warrants issued to the Warrant holder on this date.
(e) "Warrants" shall mean the Warrants represented by this Warrant
Certificate and all Warrants issued in exchange, transfer or replacement or
hereof or thereof.
(f) "Warrant Shares" shall mean the shares of Common Stock purchased
or purchasable by the holders of Warrants upon the exercise thereof pursuant to
paragraph 1.
(g) "Warrant holder(s)" and "holder(s)" shall mean the registered
holder(s) of the Warrants.
6. Exchange, Replacement and Assignability. This Warrant Certificate is
exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company described in paragraph 1, for new Warrant Certificates of
like tenor and date representing in the aggregate the right to purchase the
number of Warrant Shares which may be purchased hereunder, each of such new
Warrants to represent the right to purchase such number of Warrant Shares as
shall be designated by such holder hereof at the time of such surrender. Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant Certificate or any such new Warrant Certificates
and, in the case of any such loss, theft or destruction, of a bond of indemnity
or other security satisfactory to the Company, or, in the case of any such
mutilation, upon surrender or cancellation of such mutilated Warrant
Certificate, the Company will issue to the holder hereof a new Warrant
Certificate of like tenor and date, in lieu of this Warrant Certificate or such
new Warrant Certificates, representing the right to purchase the number of
Warrant Shares which may be purchased hereunder. Subject to compliance with
paragraph 2 and the provisions of the Debenture Purchase Agreement, this Warrant
and all rights hereunder (including without limitation all registration rights)
are transferable in whole or in part upon the books of the Company by the
registered holder hereof in person or by duly authorized attorney, and a new
Warrant Certificate shall be made and delivered by the Company, of the same
tenor and date as this Warrant Certificate but registered in the name of the
transferee, upon surrender of this Warrant Certificate, duly endorsed, to the
office or agency of the Company. All expenses, taxes (other than stock transfer
taxes, which shall be the
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obligation of the Warrant holder) and other charges payable in connection with
the preparation, execution and delivery of Warrants pursuant to this paragraph 6
shall be paid by the Company.
7. No Rights as Stockholder; Survival of Rights. Neither this Warrant
Certificate nor the Warrant represented hereby shall entitle the holder hereof
to any voting rights or any rights as a stockholder of the Company. The rights
and obligations of the Company, of the holder of these Warrants and of any
holder of Warrant Shares issued upon exercise of these Warrants shall survive
the exercise of these Warrants.
8. Governing Law; Amendments and Waivers; Headings. The validity,
interpretation and performance of this Warrant Certificate and each of its terms
and provisions shall be governed by the laws of the State of Connecticut. No
provision of this Warrant Certificate may be changed, waived, discharged or
terminated except by an instrument in writing signed by the party against which
enforcement of the same is sought. The headings in this Warrant Certificate are
for purposes of reference only and shall not affect the meaning or construction
of any of the provisions hereof.
9. Notices. Any notice or other document required or permitted to be given
or delivered to Warrant holders shall be delivered at, or sent by certified or
registered mail to each Warrant holder at, the address shown or to such other
address as shall have been furnished to the Company by such Warrant holder.
Any notice or other document required or permitted to be given or delivered to
the Company shall be delivered at, or sent by certified or registered mail to
the principal office of the Company at 57 Commerce Drive, Brookfield,
Connecticut 06804 Attention: President, or such other address as shall have been
furnished to the Warrant holders by the Company.
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<PAGE>
IN WITNESS WHEREOF, Memry Corporation has caused this Warrant Certificate
to be signed by its duly authorized officer under its corporate seal, duly
attested by its authorized officer, and to be dated as of June 28, 1996.
MEMRY CORPORATION
By:/s/ James Binch
----------------------------------------
Title: Chm, President & CEO
[Corporate Seal]
ATTEST:
/s/ Wendy A. Gavaghan
- - ----------------------------------
Secretary
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NOTICE OF ELECTION
TO: MEMRY CORPORATION
The undersigned, the registered holder of Warrant Cert. No. 94-4A, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
Certificate for, and to purchase thereunder, ____________________ shares of
Common Stock of Memry Corporation and herewith makes payment of U.S.____________
therefor, and requests that the certificate for the Common Stock, which will be
issued in the following name, be delivered to the attention of the undersigned
at the following address:
--------------------------------------------
--------------------------------------------
--------------------------------------------
Date:______________________
Name:______________________________
By:________________________________
Title:_____________________________
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<PAGE>
Exhibit 10.27
NEITHER THE WARRANTS REPRESENTED HEREBY NOR THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. THE WARRANTS REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN AND WILL BE SOLD IN RELIANCE UPON EXEMPTIONS
THEREUNDER. THE SALE OR OTHER DISPOSITION OF THE WARRANTS REPRESENTED HEREBY AND
THE SECURITIES ISSUABLE UPON EXERCISE HEREOF IS RESTRICTED IN ACCORDANCE WITH
THAT ACT AND THOSE LAWS, MAY ONLY BE MADE PURSUANT TO A REGISTRATION UNDER THAT
ACT AND THOSE LAWS OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION AND, IN
THE EVENT OF SUCH AN UNREGISTERED SALE OR OTHER DISPOSITION, IS PROHIBITED
UNLESS MEMRY CORPORATION RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO IT AND
ITS COUNSEL THAT SUCH SALE OR OTHER DISPOSITION CAN BE MADE WITHOUT REGISTRATION
UNDER THAT ACT OR THOSE LAWS.
Warrant Cert. No. 94-5A Warrants to Purchase
705,485 Shares
of Common Stock
TRANSFERABLE WARRANTS
TO PURCHASE COMMON STOCK OF
MEMRY CORPORATION
This Warrant Certificate is an amendment and restatement of that certain
Warrant Certificate No. 94-5 issued by Memry Corporation, a corporation
organized and existing under the laws of the State of Delaware (hereinafter
called the "Company") to Connecticut Innovations, Incorporated ("CII"), with an
address of 40 Cold Spring Road, Rocky Hill, Connecticut 06067, which Warrant
Certificate No. 94-5 has been cancelled by the Company as of the date hereof.
This Warrant Certificate certifies that CII, or registered assignees, is
entitled to purchase from the Company, in whole or part, at a purchase price
equal to the "Exercise Price" (as hereinafter defined), at any time from and
after the date hereof to and including the "Final Exercise Date" (as hereinafter
defined), 705,485 shares of the Company's Common Stock, $.01 par value (the
"Warrant Shares"), subject, however, to the provisions and upon the terms and
conditions hereinafter set forth. The Exercise Price shall initially be One and
Nineteen Hundredths Dollars ($1.19) per share, subject to adjustment as
hereinafter provided. The Final Exercise Date shall initially be as of August
25, 2002, subject to adjustment as provided in paragraph 5 hereof.
<PAGE>
These Warrants are issued pursuant to a Convertible Subordinated Debenture
Purchase Agreement dated as of December 22, 1994, as amended, between the
Company and the initial holder hereof (as so amended, the "Debenture Purchase
Agreement"). Certain capitalized terms used in this Warrant Certificate are
defined in paragraph 5 hereof. By accepting this Warrant Certificate, the holder
agrees to be bound by the terms of the Debenture Purchase Agreement.
THESE WARRANTS ARE SUBJECT TO THE FOLLOWING TERMS AND
CONDITIONS:
1. (a) Exercise of Warrants. The rights represented by this Warrant
Certificate may be exercised by the registered holder hereof, in whole or in
part (but not as to a fractional share of Common Stock), by (i) the delivery of
this Warrant Certificate, together with a properly completed Notice of Election,
to the principal office of the Company at 57 Commerce Drive, Brookfield,
Connecticut 06804 (or such other office or agency of the Company as it may
designate by notice in writing to the holder hereof) and (ii) payment to the
Company, in immediately available funds, of the Exercise Price for the Warrant
Shares being purchased. Certificates for the Warrant Shares so purchased
(together with a cash adjustment in lieu of any fraction of a share) shall be
delivered to the holder hereof within a reasonable time, not exceeding twenty
(20) business days, after the rights represented by this Warrant Certificate
shall have been so exercised and paid for, and, unless these Warrants have
expired, a new Warrant Certificate representing the number of Warrants, if any,
with respect to which this Warrant Certificate shall not then have been
exercised, in all other respects identical with this Warrant Certificate, shall
also be issued and delivered to the holder hereof within such time, or
appropriate notation may be made on this Warrant Certificate and the same
returned to such holder.
(b) 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 Warrants for
cash, the registered Holder hereof may elect to receive shares of Common Stock
equal to the value (as determined below) of the Warrants being exercised by
surrender of this Warrant Certificate at the principal office of the Company
together with the properly completed Notice of Election in which event the
Company shall issue to such holder a number of shares of Common Stock computed
using the following formula:
X = Y(A-B)
------
A
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<PAGE>
Where X = the number of shares of Common Stock to be issued
to such holder;
Y = the number of shares of Common Stock purchasable under the
Warrant Certificate or, if only a portion of the Warrant
Certificate is being exercised, the portion of the Warrant
Certificate 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
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.
(c) Transfer Restriction Legend. Each certificate for Warrant Shares
issued upon exercise of these Warrants (unless as otherwise provided for
pursuant to paragraph 2(b) hereof) shall bear the legend appearing on the first
page of this Warrant Certificate and any additional legend which the Company, in
its sole discretion, may deem appropriate at such time.
2. (a) Warrants and Warrant Shares Not Registered. Each holder of these
Warrants, by acceptance hereof, represents and covenants that: (1) these
Warrants and the Warrant Shares which may be purchased upon exercise of these
Warrants are not being registered under the Securities Act of 1933, as amended
(the "Securities Act"), on the grounds that the issuance of this Warrant
Certificate and the offering and sale of such Warrant Shares to the holder are
and will be exempt from registration under Section 4(2) of the Securities Act as
not involving any public offering; and (2) it (i) is acquiring these Warrants
for investment for its own account, with no present intention of reselling or
otherwise distributing the same, subject, nevertheless, to any requirement of
law that the disposition of its property shall at all times be
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<PAGE>
within its control, (ii) is an "accredited investor" as defined in Regulation D
under the Securities Act, (iii) has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
the investments made or to be made in connection with the acquisition and
exercise of these Warrants, and (iv) has, so far as such holder is aware, been
provided all such information and access to information concerning its
investment hereunder as such holder has requested from the Company. Except as
provided for in paragraph 2(b) hereof, the Company may condition any Warrant
exercise and issuance of Warrant Shares upon its receipt of the representations
and covenants given above and under the Debenture Purchase Agreement by the
original Warrant holder with respect to such Warrant Shares.
(b) Notice of Proposed Transfer; Opinion of Counsel. Each holder of
this Warrant Certificate, by acceptance hereof, agrees that prior to the
disposition of these Warrants or any Warrant Shares in a transaction for which a
registration statement under the Securities Act is not currently effective, such
holder will give written notice to the Company of such intention, together with
an opinion of counsel acceptable to the Company and its counsel (1) that
registration under the Securities Act is not necessary with respect to such
disposition and that such disposition will comply with the Securities Act, and
(2) that such disposition will also be in compliance with applicable securities
laws of states and other jurisdictions.
3. Special Agreements of the Company. The Company covenants and agrees
that:
(a) Character of Warrant Shares. All Warrant Shares which may be
issued upon the exercise of the Warrants represented hereby, upon issuance, will
be duly authorized, validly issued, fully paid and non-assessable and free from
all taxes, liens and charges with respect to the issue thereof, and without
limiting the generality of the foregoing, that it will take from to time all
such action as may be requisite to ensure that the par value per share (if any)
of the Common Stock is at all times equal to or less than the then effective
Exercise Price, and that it will refrain from taking any action which could
pursuant to the terms of the Warrants result in the Exercise Price per share
being less than the par value per share of the Common Stock;
(b) No Violations. The Company will take all such action as may be
necessary to ensure that Warrant Shares may be so issued without violation of
any applicable United States state or federal law or regulation, or of any
requirements of any securities exchange or inter-dealer quotation system upon
which the Common Stock of the Company may be listed or quoted;
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<PAGE>
(c) Actions in Avoidance; Non-Dilution. The Company will not, by
amendment of its Certificate or Articles of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, issue or sale of
securities or otherwise, avoid or take any action which would have the effect of
avoiding the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good faith assist
in carrying out all of the provisions of this Warrant Certificate and in taking
all of such action as may be necessary or appropriate in order to protect the
rights of the holders of these Warrants against dilution or other impairment;
and
(d) Financial Information. The Company will, if requested, provide
each Warrant holder copies of all annual, quarterly and current reports required
to be filed by it pursuant to Section 13 or 15 of the Securities Exchange Act of
1934, as amended, and in addition, promptly after requested, such other
information concerning the Company as any Warrant holder may reasonably require
(i) in order to comply with any law or governmental regulation, order of any
court, or order, inquiry or investigation of any governmental agency or
instrumentality, or (ii) in order to exercise any right or privilege of such
Warrant holder or to enforce any obligation of the Company under the Warrants or
any agreement or instrument executed and delivered in connection therewith.
4. Anti-Dilution Provisions.
(a) Adjustments to Exercise Price, Number of Warrants. The number of
Warrants represented hereby and the Exercise Price for each such Warrant shall
be subject to adjustment from time to time as hereinafter provided. Upon the
occurrence of each event causing an adjustment of the "Trigger Price," as such
term is defined below, the Exercise Price shall automatically be adjusted to an
amount equal to 183.3% of such adjusted Trigger Price, if such amount is less
than the current Exercise Price. Upon each such adjustment of the Exercise
Price, the number of Warrants represented hereby shall automatically be adjusted
to the number obtained by multiplying the Exercise Price in effect immediately
prior to such adjustment by the number of Warrants represented hereby
immediately prior to such adjustment, and then dividing the product thereof by
the new Exercise Price.
(b) Adjustments to Trigger Price.
(i) Special Definitions. For purposes of this
Section 4(b), the following definitions shall apply:
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<PAGE>
(A) "Options" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Stock or
Convertible Securities.
(B) "Original Issue Date" shall mean December 22, 1994.
(C) "Convertible Securities" shall mean any evidence of
indebtedness, shares of capital stock or other securities
convertible into or exchangeable for Common Stock.
(D) "Additional Common Shares" shall mean all Common
Stock issued (or, pursuant to Section 4(b)(v), deemed to be issued)
by the Company after the Original Issue Date, other than Common
Stock issued or issuable at any time:
(1) upon conversion of the Company's Series A
Preferred Stock and Series B Preferred Stock;
(2) upon exercise of any of the Company's
currently outstanding Convertible Securities (including
without limitation any convertible debentures and/or warrants
issued pursuant to the Debenture Purchase Agreement and the
warrants originally issued on March 1, 1992 and amended
thereby);
(3) to officers, directors and employees of, and
consultants to, the Company pursuant to the Company's 1994
Employee Stock Option Plan;
(4) as a dividend or distribution upon the Common
Stock (which event is addressed in Section 4(b)(vii)); or
(5) the issuance of an aggregate of up to
1,250,000 warrants with an exercise price of $0.01 per share
to Raychem Corporation and to employees of Raychem Corporation
who agree to become employees of the Company upon the closing
of the transactions contemplated by the Asset Purchase
Agreement (as such term is defined in the Debenture Purchase
Agreement).
(ii) Trigger Price. The Trigger Price shall be equal to $0.65
effective as of June 14, 1995, subject to adjustment as hereinafter
provided.
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<PAGE>
(iii) Adjustment Upon Issuances of Additional Common Shares.
In the event the Company, at any time after the Original Issue Date, shall
issue Additional Common Shares (including Additional Common Shares deemed
to be issued pursuant to Section 4(b)(v)) without consideration or for a
consideration per share less than the Trigger Price in effect on the date
of and immediately prior to such issue, then and in such event, the
Trigger Price shall be reduced, concurrently with such issue, to the price
for which such Additional Common Shares were deemed to be issued, as
calculated pursuant to Section 4(b)(vi) below.
(iv) Penalty Adjustments. Each time that a "Penalty Adjustment
Event" (as defined below) occurs, the Trigger Price shall be reduced to
the lower of (x) 90% of the Trigger Price immediately theretofore in
effect, and (y) the average of the closing bid prices (or, at such time,
if any, as trades of the Common Stock, rather than bid and asked
quotations, are available, the closing trade prices) of the Common Stock
for the ten trading days immediately preceding the date of the Penalty
Adjustment Event. For purposes of this Section 4(b)(iv), a "Penalty
Adjustment Event" shall mean any of the following: (i) the failure by the
Company to comply with the provisions of Section 4.2(a)(i) of the
Debenture Purchase Agreement by October 31, 1996; (ii) the failure by the
Company to comply with the provisions of Section 4.2(a)(ii) of the
Debenture Purchase Agreement by January 31, 1997; (iii) the expiration of
each non-overlapping ninety day period from and after January 31, 1997,
that a Registration Statement (as defined in the Debenture Purchase
Agreement) has not been effected; (iv) the holder is unable to sell any or
all of such Common Stock under the Registration Statement for more than
ninety days during any rolling 12 month period subsequent to the
effectiveness of a Registration Statement, due to either stop orders
issued by the Securities and Exchange Commission and/or suspensions in
trading on advice of the Company's counsel or requested by the Company in
order to amend or supplement, as the case may be, the Registration
Statement and/or the prospectus contained therein (other than suspensions
by the Company, the written notice of which is accompanied by a
certificate signed by the President and at least 80% of the members of the
Board of Directors of the Company and prepared in good faith stating that,
in the good faith judgment of the Board of Directors of the Company it
would be seriously detrimental to the Company for the holder to effect
sales of shares of Common Stock included in the Registration Statement at
such time and the reason therefor (it being understood by the holder that
such reason may be material, non-public information)) (it being agreed and
understood that, upon the occurrence of a Penalty Adjustment
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<PAGE>
Event by virtue of this clause (iv), no future one year period for purpose
of this clause (iv) can start prior to the date of such Penalty Adjustment
Event).
(v) Deemed Issue of Additional Common Shares.
(A) Option and Convertible Securities. In the event the
Company, at any time or from time to time after the Original Issue
Date, shall issue any Options or Convertible Securities or shall fix
a record date for the determination of holders of any class of
securities entitled to receive any such Options or Convertible
Securities, then the maximum number of shares of Common Stock (as
set forth in the instrument relating thereto without regard to any
provisions contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or, in the case
of Convertible Securities and Options therefor, the conversion or
exchange of such Convertible Securities, shall be deemed to be
Additional Common Shares issued as of the time of such issue or, in
case such a record date shall have been fixed, as of the close of
business on such record date, provided that in any such case in
which Additional Common Shares are deemed to be issued:
(1) no further adjustment in the Trigger Price
shall be made upon the subsequent issue of Convertible
Securities or shares of Common Stock upon the exercise of such
Options or conversion or exchange of such Convertible
Securities;
(2) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise,
for any increase or decrease in the consideration payable to
the Company, or in the number of shares of Common Stock
issuable upon the exercise, conversion or exchange thereof,
the Trigger Price computed upon the original issue thereof (or
upon the occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall, upon any
such increase or decrease becoming effective, be recomputed to
reflect such increase or decrease insofar as it affects such
Options or the rights of conversion or exchange under such
Convertible Securities;
(3) upon the expiration of any such Options or any
rights of conversion or exchange under such Convertible
Securities which shall not
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<PAGE>
have been exercised, the Trigger Price computed upon the
original issue thereof (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments
based thereon, shall, upon such expiration, be recomputed as
if:
(I) in the case of Convertible Securities or
Options for Common Stock, the only Additional Common
Shares issued were Common Stock, if any, actually issued
upon the exercise of such Options or the conversion or
exchange of such Convertible Securities and the
consideration received therefor was the consideration
actually received by the Company for the issue of all
such Options, whether or not exercised, plus the
consideration actually received by the Company upon such
exercise, or for the issue of all such Convertible
Securities which were actually converted or exchanged,
plus the additional consideration, if any, actually
received by the Company upon such conversion or
exchange, and
(II) in the case of Options for Convertible
Securities, the only Convertible Securities issued were
Convertible Securities, if any, actually issued upon the
exercise of such Options, and the consideration received
by the Company for the Additional Common Shares deemed
to have been issued was the consideration actually
received by the Company for the issue of all such
Options, whether or not exercised, plus the
consideration actually received by the Company upon the
issue of the Convertible Securities with respect to
which such Options were actually exercised;
(4) no readjustment pursuant to clause (2) or (3)
above shall have the effect of increasing the Trigger Price to
an amount which exceeds the lower of (x) the Trigger Price on
the original adjustment date, and (y) the Trigger Price that
would have resulted from any issuance of Additional Common
Shares between the original adjustment date and such
readjustment for which no adjustment was made; and
(5) in the case of any Options which expire by
their terms not more than 60 days after the date of issue
thereof, no adjustment of the
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<PAGE>
Trigger Price shall be made until the expiration or exercise
of all such Options.
(B) Intentionally omitted.
(vi) Determination of Consideration. For purposes of this
Section 4(b), the consideration received by the Company for the issue of
any Additional Common Shares shall be computed as follows:
(A) Cash and Property. Such consideration shall:
(1) insofar as it consists of cash, be computed at
the aggregate amount of cash received by the Company including
amounts paid or payable for accrued interest or accrued
dividends;
(2) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of
such issue, as determined in good faith by the Company's Board
of Directors (the "Board of Directors"); and
(3) in the event Additional Common Shares are
issued together with other shares or securities or other
assets of the Company for consideration so received, computed
as provided in clause (1) and (2) above, as determined in good
faith by the Board of Directors.
(B) Options and Convertible Securities. The
consideration per share received by the Company for Additional
Common Shares deemed to have been issued pursuant to Section
4(b)(v), relating to Options and Convertible Securities, shall be
determined by dividing:
(x) the total amount, if any, received or
receivable by the Company as consideration for the issue of
such Options or Convertible Securities, plus the minimum
aggregate amount of additional consideration (as set forth in
the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of
such consideration) payable to the Company upon the exercise
of such Options or the conversion or exchange of such
Convertible Securities, or in the case of Options for
Convertible Securities, the exercise of such Options for
Convertible Securities and the
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<PAGE>
conversion or exchange of such Convertible Securities, by
(y) the maximum number of shares of Common Stock
(as set forth in the instruments relating thereto, without
regard to any provision contained therein or a subsequent
adjustment of such number) issuable upon the exercise of such
Options or the conversion or exchange of such Convertible
Securities.
(vii) Adjustments for Subdivisions, Stock Dividends, Stock
Splits or Consolidation of Common Stock. In the event the outstanding
Common Stock shall be subdivided (by stock dividend, stock split or
otherwise), into a greater number of shares of Common Stock, the Trigger
Price then in effect shall, concurrently with the effectiveness of such
subdivision, be proportionately decreased. In the event the outstanding
Common Stock shall be combined or consolidated, by reclassification or
reverse stock split or otherwise, into a lesser number of shares of Common
Stock, the Trigger Price then in effect shall, concurrently with the
effectiveness of such combination or consolidation, be proportionately
increased.
(viii) Continuation of Terms. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any
transfer) referred to in this Section 4(b)(viii) this Warrant Certificate
shall continue in full force and effect and the terms hereof shall be
applicable to the shares of stock and other securities and property
receivable on the exercise of the Warrants after the consummation of such
reorganization, consolidation or merger or the effective date of the
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including,
in the case of any such transfer, the person acquiring all or
substantially all of the properties or assets of the Company, whether or
not such person shall have expressly assumed the terms of this Warrant
Certificate.
(c) Reorganizations and Asset Sales. If any capital reorganization
or reclassification of the capital stock of the Company, or any consolidation or
merger of the Company with another corporation, or the sale of all or
substantially all of its assets to another corporation or a tender or exchange
offer for shares of Common Stock, or any liquidation of all or substantially all
of the Company's assets shall be effected in such a way that holders of Common
Stock shall be entitled to, or will upon the declaration of a liquidating
dividend, receive stock, securities or assets with
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<PAGE>
respect to or in exchange for Common Stock, then the following provisions shall
apply:
(i) As a condition of such reorganization, reclassification,
consolidation, merger, sale, tender offer, exchange offer or liquidation
(except as otherwise provided below in this paragraph 4(c)), lawful and
adequate provisions shall be made whereby each holder of Warrants shall
thereafter have the right to receive upon the terms and conditions
specified in this Warrant Certificate and in lieu of the Warrant Shares
immediately theretofore receivable upon the exercise of each Warrant, such
shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding shares of such
Common Stock equal to the number of Warrant Shares immediately theretofore
so receivable had such reorganization, reclassification, consolidation,
merger, sale, tender offer, exchange offer or liquidation not taken place,
and in any such case appropriate provision shall be made with respect to
the rights and interests of such holder to the end that the provisions
hereof (including without limitation provisions for adjustments of the
Exercise Price and the number of Warrants represented hereby) shall
therefore be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise of
these Warrants.
(ii) In the event of a merger or consolidation of the Company
with or into another corporation as a result of which a number of shares
of Common Stock of the surviving corporation greater or lesser than the
number of shares of Common Stock of the Company outstanding immediately
prior to such merger or consolidation are issuable to holders of Common
Stock or the Company, then the Exercise Price in effect immediately prior
to such merger or consolidation shall be adjusted in the same manner as
though there were a subdivision or combination of the outstanding shares
of Common Stock of the Company, and the number of Warrants represented
hereby shall be proportionately adjusted for such adjustment in the
Exercise Price.
(d) Notice of Adjustment. Whenever the Exercise Price and/or the
number of Warrants represented hereby shall be adjusted as herein provided, or
the rights of Warrant holders shall change by reason of other events specified
herein, the Company shall compute the adjusted Exercise Price and the adjusted
number of Warrants represented hereby in accordance with the provisions hereof
and shall prepare a certificate signed by its President, Vice President,
Treasurer or Secretary setting forth the adjusted Exercise Price and number of
Warrants represented hereby or
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<PAGE>
specifying the other shares of stock, securities or assets receivable as a
result of such change in rights, and showing in reasonable detail the facts and
calculations upon which such adjustments or other changes are based. The Company
shall promptly cause to be mailed to the holder of these Warrants copies of such
officer's certificate together with a notice stating that the Exercise Price
and/or the number of Warrants represented hereby, as the case may be, have been
adjusted and setting forth the adjusted Exercise Price and number of Warrants
represented hereby.
(e) Notifications to Holders. In case at any time the Company
proposes:
(i) to declare any dividend upon any class of
stock other than preferred stock;
(ii) to make any special dividend or other distribution to the
holders of any class of stock, other than dividends of Common Stock paid
to holders of Common Stock;
(iii) to offer for subscription pro rata to the holders of its
securities any additional securities or other rights;
(iv) to effect any capital reorganization, or reclassification
of the capital stock of the Company, or consolidation or merger of the
Company with another corporation, or sale or other disposition of all or
substantially all of its assets; or
(v) to effect a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in any one or more of said cases, the Company shall give the holder of
these Warrants (A) at least twenty (20) days' (but not more than ninety (90)
days) prior written notice of the date on which the books of the Company shall
close or a record shall be taken for such dividend, distribution or subscription
rights or for determining rights to vote in respect of such issuance,
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, and (B) in the case of any such issuance,
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, at least twenty (20) days' (but not more than ninety
(90) days) prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (A) shall also specify, in the
case of any such dividend, distribution or subscription rights, the date on
which the holders of any securities shall be entitled thereto, and such notice
in accordance with the foregoing clause (B) shall also specify the date on which
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<PAGE>
the holders of any securities shall be entitled to exchange their securities for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, as the case may be.
(f) Company to Prevent Dilution. If any event or condition occurs as
to which other provisions of this paragraph 4 are not strictly applicable or if
strictly applicable would not fairly protect the exercise or purchase rights of
these Warrants in accordance with the essential intent and principles of such
provisions, or which might materially and adversely affect the exercise or
purchase rights of the Warrant holders under any provision of these Warrants,
then the Company shall make an adjustment in the application of such provisions,
in accordance with such essential intent and principles, so as to protect such
exercise and purchase rights as aforesaid, and any adjustment necessary with
respect to the Exercise Price and the number of Warrants represented hereby so
as to preserve without dilution the rights of the holders of Warrants.
5. Definitions. The terms defined in this paragraph, whenever used in this
Warrant Certificate, shall, unless the context otherwise requires, have the
respective meanings hereinafter specified:
(a) "Common Stock" shall mean and include the Company's Common
Stock, $.01 par value, and shall also include in case of any reorganization,
reclassification, consolidation, merger or sale of assets of the character
referred to in paragraph 4(c) hereof, the stock, securities or assets provided
for in such paragraph.
(b) "Company" shall mean Memry Corporation and also include any
successor thereto with respect to the obligations hereunder, by merger,
consolidation or otherwise.
(c) "Final Exercise Date" shall mean August 25, 2002; provided,
however, that the Final Exercise Date shall be extended two days for each day
(i) after October 31, 1996 that the Company fails to file the Registration
Statement, (ii) after January 31, 1997 that the Registration Statement has not
been declared effective by the Securities and Exchange Commission and/or (iii)
that the holder may not offer and sell the Warrant Shares under the Registration
Statement due to either stop orders issued by the Securities and Exchange
Commission and/or suspensions in trading on advice of the Company's counsel or
requested by the Company in order to amend or supplement, as the case may be,
the Registration Statement and/or the prospectus contained therein (other than
suspensions by the Company, the written notice of which is accompanied by a
certificate signed by the President and at least 80% of the members of the Board
of Directors of the Company and
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<PAGE>
prepared in good faith stating that, in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company for
the holder to effect sales of shares of Common Stock included in the
Registration Statement at such time and the reason therefor (it being understood
by the holder that such reason may be material, non-public information)).
(d) "Warrant Certificate" shall mean this instrument evidencing the
Warrants issued to the Warrant holder on this date.
(e) "Warrants" shall mean the Warrants represented by this Warrant
Certificate and all Warrants issued in exchange, transfer or replacement or
hereof or thereof.
(f) "Warrant Shares" shall mean the shares of Common Stock purchased
or purchasable by the holders of Warrants upon the exercise thereof pursuant to
paragraph 1.
(g) "Warrant holder(s)" and "holder(s)" shall mean the registered
holder(s) of the Warrants.
6. Exchange, Replacement and Assignability. This Warrant Certificate is
exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company described in paragraph 1, for new Warrant Certificates of
like tenor and date representing in the aggregate the right to purchase the
number of Warrant Shares which may be purchased hereunder, each of such new
Warrants to represent the right to purchase such number of Warrant Shares as
shall be designated by such holder hereof at the time of such surrender. Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant Certificate or any such new Warrant Certificates
and, in the case of any such loss, theft or destruction, of a bond of indemnity
or other security satisfactory to the Company, or, in the case of any such
mutilation, upon surrender or cancellation of such mutilated Warrant
Certificate, the Company will issue to the holder hereof a new Warrant
Certificate of like tenor and date, in lieu of this Warrant Certificate or such
new Warrant Certificates, representing the right to purchase the number of
Warrant Shares which may be purchased hereunder. Subject to compliance with
paragraph 2 and the provisions of the Debenture Purchase Agreement, this Warrant
and all rights hereunder (including without limitation all registration rights)
are transferable in whole or in part upon the books of the Company by the
registered holder hereof in person or by duly authorized attorney, and a new
Warrant Certificate shall be made and delivered by the Company, of the same
tenor and date as this Warrant Certificate but registered in the name of the
transferee, upon surrender of this Warrant Certificate, duly endorsed, to the
office or agency of the Company. All expenses, taxes (other than stock transfer
taxes, which shall be the
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<PAGE>
obligation of the Warrant holder) and other charges payable in connection with
the preparation, execution and delivery of Warrants pursuant to this paragraph 6
shall be paid by the Company.
7. No Rights as Stockholder; Survival of Rights. Neither this Warrant
Certificate nor the Warrant represented hereby shall entitle the holder hereof
to any voting rights or any rights as a stockholder of the Company. The rights
and obligations of the Company, of the holder of these Warrants and of any
holder of Warrant Shares issued upon exercise of these Warrants shall survive
the exercise of these Warrants.
8. Governing Law; Amendments and Waivers; Headings. The validity,
interpretation and performance of this Warrant Certificate and each of its terms
and provisions shall be governed by the laws of the State of Connecticut. No
provision of this Warrant Certificate may be changed, waived, discharged or
terminated except by an instrument in writing signed by the party against which
enforcement of the same is sought. The headings in this Warrant Certificate are
for purposes of reference only and shall not affect the meaning or construction
of any of the provisions hereof.
9. Notices. Any notice or other document required or permitted to be given
or delivered to Warrant holders shall be delivered at, or sent by certified or
registered mail to each Warrant holder at, the address shown or to such other
address as shall have been furnished to the Company by such Warrant holder.
Any notice or other document required or permitted to be given or delivered to
the Company shall be delivered at, or sent by certified or registered mail to
the principal office of the Company at 57 Commerce Drive, Brookfield,
Connecticut 06804 Attention: President, or such other address as shall have been
furnished to the Warrant holders by the Company.
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<PAGE>
IN WITNESS WHEREOF, Memry Corporation has caused this Warrant Certificate
to be signed by its duly authorized officer under its corporate seal, duly
attested by its authorized officer, and to be dated as of June 28, 1996.
MEMRY CORPORATION
By:/s/ James Binch
----------------------------------------
Title: Chm, President & CEO
[Corporate Seal]
ATTEST:
/s/ Wendy A. Gavaghan
- - ----------------------------------------
Secretary
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<PAGE>
NOTICE OF ELECTION
TO: MEMRY CORPORATION
The undersigned, the registered holder of Warrant Cert. No. 94-5A, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
Certificate for, and to purchase thereunder, ____________________ shares of
Common Stock of Memry Corporation and herewith makes payment of U.S.____________
therefor, and requests that the certificate for the Common Stock, which will be
issued in the following name, be delivered to the attention of the undersigned
at the following address:
--------------------------------------------
--------------------------------------------
--------------------------------------------
Date:______________________
Name:______________________________
By:________________________________
Title:_____________________________
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<PAGE>
Exhibit 10.28
SECOND ADDENDUM TO STOCK SUBSCRIPTION WARRANT
1. Reference is hereby made to that certain Amended and Restated Stock
Subscription Warrant, as further amended, to purchase 100,000 shares of the
Company's Common Stock, $0.01 par value (the "Warrant") dated December 22, 1994,
as evidenced by Warrant Certificate No. 94-6, and the first addendum thereto,
issued by Memry Corporation (the "Company") to Connecticut Innovations,
Incorporated ("CII") pursuant to the Convertible Subordinated Debenture Purchase
Agreement by and between the Company and CII dated December 22, 1994, as amended
by the First Amendment to Convertible Subordinated Debenture Purchase Agreement
dated as of October 12, 1995 and by the Second Amendment to Convertible
Subordinated Debenture Purchase Agreement dated as of June 24, 1996 (the
"Purchase Agreement").
2. The definition of "Final Exercise Date" in Section 5(g) of the Warrant
shall be deleted in its entirety and the following substituted in lieu thereof:
(g) "Final Exercise Date" shall mean May 5, 2008, provided, however, that
the Final Exercise Date shall be extended two days for each day (i) after
October 31, 1996 that the Company fails to file a registration statement
covering the resale by the holder of the Warrant Shares (the "Registration
Statement"), (ii) after January 31, 1997 that Registration Statement has not
been declared effective by the Securities and Exchange Commission and/or (iii)
the Holder may not offer and sell the Warrant Shares under the Registration
Statement due to either stop orders issued by the Securities and Exchange
Commission and/or suspensions in trading on advice of the Company's counsel or
requested by the Company in order to amend or supplement, as the case may be,
the Registration Statement and/or the prospectus contained therein (other than
suspensions by the Company, the written notice of which is accompanied by a
certificate signed by the President and at least 80% of the members of the Board
of Directors of the Company and prepared in good faith stating that, in the good
faith judgment of the Board of Directors of the Company it would be seriously
detrimental to the Company for the Holder to effect sales of shares of Common
Stock included in the Registration Statement at such time and the reason
therefor (it being understood by the Holder that such reason may be material,
non-public information)).
4. The terms "Warrants" and "Warrant Certificate" as used in the Warrant
shall mean, respectively, the Warrants, as amended by this Second Addendum and
the Warrant Certificate, as amended by this Second Addendum.
5. The term "Debenture Purchase Agreement" as used in the Warrant shall
mean the Purchase Agreement.
<PAGE>
6. This Second Addendum to Stock Subscription Warrant, dated June 28,
1996, shall be affixed to the Warrant.
MEMRY CORPORATION
By: /s/ James G. Binch
--------------------------
Name: James G. Binch
Title: President & CEO
Acknowledged and Agreed:
CONNECTICUT INNOVATIONS, INCORPORATED
By: /s/ Victor R. Budnick
--------------------------------------
Name: Victor Budnick
Title: President & Executive Director
<PAGE>
Exhibit 10.31
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.
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<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.
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<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
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<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
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<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
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<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. [NOTE: REMAINING TWO
SENTENCES OF THIS PARAGRAPH OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION, PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.]
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
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<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.
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<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
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<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 [NOTE: PERCENTAGE OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION, PURSUANT TO RULE
24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.]
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 [NOTE: PERCENTAGE
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION,
PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.] 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
- 16 -
<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 [NOTE: PERCENTAGE OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION, PURSUANT TO RULE
24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.]
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 [NOTE:
PERCENTAGE OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION, PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED.] 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
Electronics Division 300 Constitution Drive
300 Constitution Drive Menlo Park, CA 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>
Exhibits Intentionally Omitted
-21-
<PAGE>
Exhibit 10.38
Amendment No. 2
to
Amended and Restated
Asset Purchase Agreement
between
Memry Corporation
and
Raychem Corporation
This AMENDMENT NO. 2 to Amended and Restated Asset Purchase Agreement
(this "Amendment"), is made as of this 11th day of August, 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."
RECITAL
Buyer and Seller have entered into an Amended and Restated Asset Purchase
Agreement, dated as of May 10, 1996, as amended by Amendment No. 1 thereto dated
as of June 28, 1996 (said agreement, as so amended, 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:
AGREEMENT
1. All capitalized terms used herein but not otherwise defined herein
shall have the meanings ascribed thereto in the Purchase Agreement.
2. The Purchase Agreement is hereby amended by substituting for Exhibit G
thereto Exhibit G hereto.
3. Except as specifically set forth herein, the terms of the Purchase
Agreement and the exhibits and schedules thereto shall remain unmodified and in
full force and effect.
4. 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.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
RAYCHEM CORPORATION MEMRY CORPORATION
By:/s/ Andrew F. Roake By:/s/ James G. Binch
-------------------------- -----------------------------
Name: Andrew F. Roake Name: James G. Binch
Title: Vice President Title: President & CEO
<PAGE>
EXHIBIT G
<TABLE>
<CAPTION>
PURCHASE PRICE ALLOCATION
<S> <C>
Cash Purchase Price: $4,000,000
Severance Liability: 200,000
Inventory Adjustment: 150,000
$0.01 Warrants: 2,285,000
$2.00 Warrants: 25,000
----------
$6,660,000
Patent Rights: $2,000,000
Inventory: 1,293,221
Leasehold Improvements: 900,000
Machinery and equipment: 1,200,000
Goodwill: 1,266,779
----------
$6,660,000
</TABLE>
<PAGE>
Exhibit 10.39
DONNELLY, McNAMARA & GUSTAFSON, P.C.
ATTORNEYS AT LAW
150 DANBURY ROAD
P.O. BOX 2006
RIDGEFIELD, CONNECTICUT 06877-0906
-----
(203) 438-6534
September 12, 1995
Mr. James G. Binch, President & CEO
Memry Corporation
57 Commerce Drive
Brookfield, Connecticut 06804
Re: Brookfield Commerce/Memry Corporation Lease Agreement
Dear Jim:
This letter is to inform you that your option to renew the above
referenced lease agreement expires on September 30, 1995.
If you wish to continue the lease for the additional five (5) years,
please execute a copy of this letter.
Very truly yours,
/s/ Paul S. McNamara
--------------------
Paul S. McNamara
PSM/ces
Option Exercised
Memry Corporation
by /s/ James G. Binch
--------------------
James G. Binch, Its.
President and CEO
<PAGE>
Exhibit 10.40
SECURITIES PURCHASE AGREEMENT
MEMRY CORPORATION
June 14, 1996
<PAGE>
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT ("Agreement") is made as of the 14th
day of June, 1996 by and between MEMRY CORPORATION, a Delaware corporation (the
"Company"), and Wendy A. Gavaghan (the "Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Securities.
1.1. Sale and Issuance of Securities. Subject to the terms and
conditions of this Agreement, on the Closing Date (defined below) the Investor
agrees to purchase and the Company agrees to sell and issue to the Investor Five
Thousand Eight Hundred and Eighty Three (5,883) shares of the Company's Common
Stock for a purchase price of Five Thousand and Fifty Five Hundredths Dollars
($5,000.55), being $0.85 per share (the "Closing"). The shares of the Company's
Common Stock purchased pursuant to this Section 1.1 are hereinafter referred to
as the "Shares" and the "Securities," and the purchase price paid pursuant to
this Section 1.1 is hereinafter referred to as the "Purchase Price."
1.2 Closing.
(a) The Closing shall take place at the offices of the Company,
Brookfield, Connecticut, no later than June 14, 1996 (the "Closing Date"), or by
such other method as agreed upon by the parties.
(b) Promptly after the Closing, the Company shall deliver to the
Investor a certificate representing the appropriate number of shares of Common
Stock which the Investor is purchasing against delivery to the Company by such
Investor of a check in the amount of the applicable portion of the Purchase
Price to be paid at such Closing.
2. Representations and Warranties of the Investor. Investor hereby
represents and warrants to the Company, and acknowledges and intends that the
Company rely thereon, as follows:
(a) Investor is an "accredited investor" within the meaning of Rule
501(a) of the Securities Act of 1933, as amended (the "Act"), and qualifies as
such under Rule 501(a)(6) of the Act.
(b) Investor will not sell, assign, pledge, transfer, or otherwise
dispose of, whether directly or indirectly, all or any portion of the Securities
purchased hereby to any person or entity without complying with applicable
securities laws;
<PAGE>
- 2 -
(c) Investor is acquiring the Securities for Investor's own account,
for investment purposes only and not with a view to any distribution of such
Securities;
(d) Investor acknowledges and agrees that the Company has informed
Investor that the Securities are not registered under any securities laws, and
therefore that (absent registration under or exemption from applicable
securities laws) the Securities are subject to substantial restrictions on
transfer and the Securities may not be transferred for an indefinite period of
time;
(e) Investor has investigated the purchase of the Securities to the
extent Investor deems necessary or desirable, and the Company has provided
Investor with any assistance in connection therewith which Investor has
requested. Investor has such knowledge and experience in financial and business
matters that Investor is capable of evaluating the merits and risks of the
acquisition of the Securities and of making an informed investment decision with
respect thereto and Investor has the ability to bear the economic risk of an
investment in the Company and to withstand a complete loss of its investment.
Investor is financially able to hold the Securities for an indefinite period of
time;
(f) Investor is not relying on the Company or any of its directors,
officers, employees, or agents for guidance with respect to tax and other
applicable laws of any jurisdiction, or other economic considerations, and
Investor has been furnished by the Company with all information Investor has
deemed necessary or appropriate in order to form an informed investment decision
concerning the purchase of the Securities. Investor has been afforded an
opportunity to ask questions of and receive answers from representatives of the
Company concerning the terms and conditions of Investor's purchase of the
Securities and has been afforded the opportunity to obtain any additional
information (to the extent that the Company had such information or could
acquire it without unreasonable effort or expense) necessary to verify the
accuracy of information otherwise furnished by the Company;
(g) Investor understands that no United States federal or state
agency or any agency of any other government has passed upon or made any
recommendation or endorsement of any investment in the Company;
(h) Investor has not been organized for the purpose of purchasing
the Securities;
(i) Investor is a resident of Connecticut; and
<PAGE>
- 3 -
(j) Investor understands that the certificates evidencing the
Securities will bear a legend stating in substance:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY
TO THE COMPANY THAT SUCH SALE, OFFER FOR SALE, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION DOES NOT VIOLATE THE PROVISIONS OF SUCH ACT OR UNLESS
SOLD PURSUANT TO RULE 144 OF SUCH ACT."
provided, however that the Company agrees to cause such legend to be removed
from any certificates representing the Securities after such Securities have
been transferred pursuant to an effective registration under the Act or an
available exemption under Section 4(1) of the Act, or Rule 144 promulgated
thereunder.
3. Piggy-back Registration Rights.
3.1 Right to Piggy-back. If at any time prior to the second
anniversary hereof the Company proposes to file a registration statement in
order to register any of its equity securities (as defined in the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) under the Act (other than
in connection with a merger, and acquisition or an offering of securities under
and employee benefit plan), and the registration form to be used may be used for
the registration (a "Piggy-Back Registration") of the Securities, the Company
will give prior written notice to all registered holders of the Securities of
its intention to effect such a registration and will, subject to Sections 3.2
and 3.3 hereof, include in such registration all Securities with respect to
which the Company has received written requests for inclusion therein within 20
days after the receipt of the Company's notice. Notwithstanding the foregoing,
the Company shall have the right at any time after it shall have given written
notice pursuant to this Section 3.1 (irrespective of whether a written request
for inclusion of any Securities shall have been made) to elect not to file any
such proposed registration statement or to withdraw the same after the filing
but prior to the effective date thereof.
3.2 Limitation on Inclusion.
(a) If the registration of which the Company gives notice
pursuant to Section 3.1 is for an underwritten offering, the
<PAGE>
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Company shall not be required to include Securities of any holder in such
underwriting unless such holder accepts the terms of the underwriting as agreed
upon between the Company and the underwriters selected by it, and then only in
such quantity as will not, in the opinion of the underwriters, jeopardize the
success of the offering by the Company. Notwithstanding any provision of this
Section 3 to the contrary, if the underwriter determines that marketing factors
require a limitation of the number of shares to be underwritten or determines
that any other limitation is advisable, the underwriter may exclude or otherwise
limit the number of Securities to be included in the registration and
underwriting. The Company shall so advise all holders of Securities (except
those holders who have not indicated to the Company their decision to distribute
any of the Securities through such underwriting), and the number of Securities
that may be included in such registration and underwriting, if any, shall be
allocated among such holders of Securities in proportion, as nearly as
practicable, to the respective amounts of Securities requested to be registered
by such holders or otherwise as the underwriter or the Company shall advise. No
Securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall be included in such registration. If any holder of
Securities disapproves of any such underwriting, such person may elect to
withdraw therefrom by written notice to the Company and the underwriter. The
Securities so withdrawn from such underwriting shall also be withdrawn from such
registration.
(b) The Investor agrees and acknowledges that current or
future holders of other securities of the Company may have registration rights
that are more favorable than those set forth herein and that such holders may be
subject to lesser or no underwriter's marketing limitations.
3.3 Two Piggy-Back Registrations Only. The Company shall only be
obligated to offer the opportunity for two Piggy-Bank Registrations, pursuant to
this Section 3, with respect to all Securities.
3.4 Expenses of Registration. All expenses other than underwriting
discounts and commissions incurred in connection with registrations, filings, or
qualifications pursuant to Section 3.1, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company, transportation expenses, mailing
expenses, and the fees and disbursements of one counsel selected by the selling
holders of Securities to represent them shall be borne and paid by the Company.
<PAGE>
- 5 -
3.5 Obligations of Selling Holders.
(a) It shall be a condition precedent to the obligations of
the Company to take any action pursuant to this Section 3.5 with respect to the
Securities of any selling holder that such holder shall furnish to the Company
in writing such information regarding itself, the Securities held by it, and the
intended method of disposition of such Securities as shall be required to effect
the registration of such holder's Securities.
(b) The holders of Securities included in a registration
statement pursuant to Section 3.1 hereof will not (until further notice) effect
sales thereof after receipt of telegraphic or written notice from the Company to
suspend sales to permit the Company to correct or update a registration
statement or prospectus.
3.6 Opinion of Counsel as Alternative. The registration rights
granted to the holders of Securities under this Section 3 shall be subject to
the condition that any registration of Securities proposed to be effected need
not be effected if the Company shall deliver to the holders requesting such
registration an opinion satisfactory to such holders and their counsel to the
effect that the proposed disposition for which registration was requested does
not require registration under the Act.
3.7 Company's Registration Obligations. Whenever the Company is
required to register any Securities pursuant to the terms hereof, the Company
will use its best efforts to effect the registration for sale of such Securities
in accordance with the intended method of disposition thereof and pursuant
thereto the Company will as expeditiously as reasonably possible:
(a) Prepare and file with the Securities and Exchange Commission
(the "Commission") a registration statement covering such Securities, and use
its best efforts to cause such registration statement to become effective and to
remain effective as provided herein;
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
until distribution is completed, but in any event for no longer than one hundred
eighty (180) days subsequent to the effective date of such registration in the
case of a registration statement on Form SB-2 (or any similar form of
registration statement) required to set forth substantially
<PAGE>
- 6 -
identical information) and for no longer than one hundred twenty (120) days in
the case of a registration statement;
(c) Furnish to the Investor or, as applicable, holders of Securities
such number of copies of a prospectus, including a preliminary prospectus, in
conformity with the Act, and such other documents as the Investor or, as
applicable, holders of Securities may reasonably request;
(d) Use its best efforts to register and qualify the Securities
covered by such registration statement under such securities or blue sky laws of
such jurisdictions as may reasonably be requested by the Investor or, as
applicable, the holders of Securities to effect such registration or, as
applicable, to enable the holders of Securities to consummate the disposition in
such jurisdictions of the Securities owned by such seller, provided that the
Company shall not be required in connection therewith or as a condition thereto
to qualify generally to do business or to file a general consent to service of
process in any such states or jurisdictions;
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering (each holder of Securities
participating in such underwriting shall also enter into and perform its
obligations under such an agreement);
(f) Notify the Investor or, as applicable, each holder of Securities
covered by such registration statement and each underwriter thereof, if any, of
the effectiveness of such registration statement and, at any time when a
prospectus relating thereto is required to be delivered under the Act, of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements made therein not misleading in the light of the
circumstances then existing, and at the request of the Investor or, as
applicable, any such holder of Securities or underwriter promptly prepare and
furnish to the Investor or, as applicable, such holder of Securities or
underwriter, if any, a reasonable number of copies of a prospectus supplemented
or amended so that such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing; and
<PAGE>
- 7 -
(g) Furnish, at the request of the Investor, or as applicable, any
holder of Securities, on the date that the Investor's or such Holder's
Securities are delivered to the underwriters for sale in connection with a
registration pursuant to Section 3.2 hereof, if such securities are being sold
through underwriters, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to the underwriters in an underwritten public
offering, addressed to the Investor or, as applicable, underwriters, if any, and
to the holders of Securities and (ii) a letter, dated such date, from the
independent public accountants of the Company, in form and substance as is
customarily given by independent public accountants to underwriters in an
underwritten public offering, addressed to the Investor or, as applicable, the
underwriters, if any, and to the holders of Securities; provided, however, that
the Company will only bear the cost of obtaining the comfort described in (i)
and (ii) above on the first two occasions thereof, and notwithstanding anything
to the contrary contained elsewhere herein the Investor will be required to bear
the costs of obtaining such comfort on all subsequent occasions.
3.8 Delay of Registration. No holder of Securities shall have any
right to obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 3.
3.9 Indemnification. In the event any Securities are included in a
registration statement under this Section 3:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless the Investor, any holder of Securities requesting to join in
such registration, any underwriter (as defined in the Act) for such holder and
each person, if any, who controls such Holder of Securities or underwriter
within the meaning of the Act or the Exchange Act, and each officer, director or
agent of such holder against any losses, claims, damages, or liabilities (joint
or several) to which they, or any of them, may become subject under the Act, the
Exchange Act or any other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in the relevant registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a
<PAGE>
- 8 -
material fact required to be stated therein, or necessary to make the statements
made therein not misleading, or (iii) any violation or alleged violation by the
Company of the Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law applicable to the Company in connection with any such
registration; and the Company will pay to the Investor or each such holder of
Securities, underwriter, controlling person, officer, director or agent, as
incurred, any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided however, that the indemnity agreement contained in this Section
3.9(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage liability, or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such holder of
Securities, underwriter, controlling person, officer, director or agent.
(b) To the extent permitted by law, the Investor and any
holder of Securities will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration statement, each
person, if any, who controls the Company within the meaning of the Act, any
underwriter, any other holder of Securities selling securities in such
registration statement and any controlling person of any such underwriter or
other holder, against any losses, claims, damages, or liabilities (joint or
several) to which any of the foregoing persons may become subject, under the
Act, the Exchange Act or other federal or state law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereto) arise out of or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by the Investor or any holder of Securities, as
applicable, expressly for use in connection with such registration; and the
Investor or any such holder of Securities, as applicable, will pay, as incurred,
any legal or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this Section 3.9(b) in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this Section 3.9(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Investor or
<PAGE>
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any holder of Securities, as applicable, which consent shall not be unreasonably
withheld.
(c) Promptly after receipt by an indemnified party under this
Section 3.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 3, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnified party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 3.9, but omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 3.9.
(d) The obligations of the Company and holders of Securities
under this Section 3.9 shall survive the completion of any offering of
Securities in a registration statement under this Section 3, and otherwise.
3.10 Reports Under Securities Exchange Act of 1934. With a view to
making available to the holders of Securities the benefits of Rule 144
promulgated under the Act ("Rule 144") and any other rule or regulation of the
Commission that may at any time permit a holder of Securities to sell securities
of the Company to the public without registration or pursuant to a registration
on Form S-3, Form S-2, or such other registration form under the Act
subsequently adopted by the Commission which permits inclusion or incorporation
of substantial information by reference to other documents filed by the Company
with the Commission (collectively, the "Forms"), the Company agrees on and after
the Closing to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144;
<PAGE>
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(b) Use its best efforts to enable the holders of Securities
to utilize the Forms for the sale of their Securities;
(c) File with the Commission in a timely manner all reports
and other documents required of the Company under the Act and the Exchange Act;
and
(d) Furnish to any holder of Securities, if and so long as
such holder owns Securities representing one percent (1%) or more of the
Company's Common Stock, (i) forthwith upon request a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Act and the Exchange Act (to the extent that the Company has so complied), or
that it qualifies as a registrant whose securities may be resold pursuant to any
of the Forms (at any time after it so qualifies), (ii) substantially
concurrently with the filing thereof, copies of the annual and quarterly reports
of the Company filed with the Commission and such other reports and documents so
filed by the Company, (iii) as soon as they shall become available to the
Company, any and all audited financial statements of the Company and management
letters from the Company's independent auditors and the Company's response
thereto, and (iv) such other information as may be reasonably requested in
availing any holder of Securities of any rule or regulation of the Commission
which permits the selling of any such securities without registration or
pursuant to such form.
3.11 Assignment of Registration Rights. The rights to cause the
Company to register Securities pursuant to Section 3.1 hereof may be assigned by
a holder of Securities to a transferee or assignee of such Securities provided
the Company is, prior to or simultaneously with such transfer, furnished with
written notice of the name and address of such transferee or assignee and the
Securities with respect to which such registration rights are being assigned;
and provided, further, that such assignment shall be effective only if
immediately following such transfer the further disposition of such Securities
by the transferee or assignee is restricted under the Act.
3.12 Amendment of Registration Rights. Any provision of this Section
3 may be amended and the observance thereof may be waived (either generally or
in a particular instance and either retroactively or prospectively) only with
the written consent of the Company and the holders of a majority of the
Securities then outstanding. Any amendment or waiver effected in accordance with
this paragraph shall be binding upon each holder of any Securities purchased
under this Agreement at the time outstanding, each future holder of all such
Securities, and the Company.
<PAGE>
- 11 -
4. Miscellaneous.
4.1 Survival of Warranties. The warranties, representations and
covenants of the Company and Investor contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investor or the Company.
4.2 Successors and Assigns. The terms and conditions of this
agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
4.3 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Connecticut as applied to agreements among
Connecticut residents entered into and to be performed entirely within
Connecticut.
4.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this agreement.
4.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given (i) upon personal delivery to the party to be notified, (ii)
48 hours after deposit with the United States Post Office, by registered or
certified mail, postage prepaid and addressed to the party to be notified at the
address indicated for such party on the signature page hereof, or at such other
address as such party may designate by ten (10) days' advance written notice to
the other parties, (iii) upon transmission of a confirmed telecopy to such party
at a telecopier number furnished by such party for such purpose, or (iv) upon
delivery to such address by Federal Express or other courier service.
4.7 Finder's Fee. Each party represents that it neither is nor will
be obligated for any finder's fee or commission in
<PAGE>
- 12 -
connection with this transaction. The Company agrees to indemnify and hold
harmless the Investor, and the Investor agrees to indemnify and hold harmless
the Company, from any liability for any commission or compensation in the nature
of a finder's fee (and the costs and expenses of defending against such
liability or asserted liability) for which the Company, or the Investor, as the
case may be, or any of their respective officers, employees or representatives
is responsible.
4.8 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the outstanding Securities. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each Holder of any
Securities purchased under this Agreement at the time outstanding, each future
Holder of all such Securities and the Company.
4.9 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
4.10 Indemnification.
(a) The Company shall, with respect to the representations,
warranties, covenants and agreements made by the Company herein, indemnify,
defend and hold the Investor harmless against all liability, loss or damage,
together with all reasonable costs and expenses related thereto (including legal
and accounting fees and expenses), arising from the untruth, inaccuracy or
breach of any such representations, warranties, covenants or agreements of the
Company.
(b) The Investor shall, with respect to the representations,
warranties, covenants and agreements made by the Investor herein, indemnify,
defend and hold the Company harmless against all liability, loss or damage,
together with all reasonable costs and expenses related thereto (including legal
and accounting fees and expenses), arising from the untruth, inaccuracy or
breach of any such representations, warranties, covenants or agreements of the
Investor.
4.11 Remedies. In case any one or more of the covenants and/or
agreements set forth in this Agreement shall have been breached by the Company,
the Investor may proceed to protect and
<PAGE>
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enforce its or their rights either by suit in equity and/or by action at law,
including, but not limited to, an action for damages as a result of any such
breach and/or an action for specific performance of any such covenant or
agreement contained in this Agreement. A party acting pursuant to this Section
4.11 shall be indemnified against all liability, loss or damage, together with
all reasonable costs land expenses related thereto (including legal and
accounting fees and expenses) in accordance with Section 4.10.
4.12 Nouns and Pronouns. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of names and pronouns shall include the
plural and vice versa.
4.13 Information to be Provided by Investor. Investor agrees to
provide to the Company such information as the Company may reasonably request in
order to make accurate and timely required filings and disclosures to its
stockholders and to federal, state and self-regulatory agencies.
4.14 Confidentiality. Any information provided to Investor pursuant
to this Agreement shall be used by the Investor solely for, and will only be
disclosed to Investor's officers, employees, agents and professional advisors
who need to know such information and who will use such information solely for,
the purpose of evaluating the Investor's investment in the Company and in
furtherance of its interests as an investor in the Company, and the Investor
will, and will cause such officers, employees, agents and professional advisors
to, maintain the confidentiality of all non-public information of the Company
obtained pursuant to this Agreement which is designated by the Company as
confidential and which could not otherwise be legally and legitimately obtained
by the Investor.
<PAGE>
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
MEMRY CORPORATION
Address:
57 Commerce Drive
Brookfield, Connecticut 06804
By:/s/ James G. Binch
----------------------------------
James G. Binch, President
INVESTOR
Address:
312 Popes Island Road
Milford, Connecticut 06460
/s/ Wendy A. Gavaghan
-------------------------------------
Name: Wendy A. Gavaghan
<PAGE>
Exhibit 10.41
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN AND WILL
BE SOLD IN RELIANCE UPON EXEMPTIONS THEREUNDER. THE SALE OR OTHER DISPOSITION OF
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF IS RESTRICTED IN
ACCORDANCE WITH THAT ACT AND THOSE LAWS, MAY ONLY BE MADE PURSUANT TO A
REGISTRATION UNDER THAT ACT AND THOSE LAWS OR PURSUANT TO AN EXEMPTION FROM SUCH
REGISTRATION AND, IN THE EVENT OF SUCH AN UNREGISTERED SALE OR OTHER
DISPOSITION, IS PROHIBITED UNLESS MEMRY CORPORATION RECEIVES AN OPINION OF
COUNSEL SATISFACTORY TO IT AND ITS COUNSEL THAT SUCH SALE OR OTHER DISPOSITION
CAN BE MADE WITHOUT REGISTRATION UNDER THAT ACT OR THOSE LAWS.
Warrant Cert. No. 96-4 Warrants to Purchase
18,000 Shares of
Common Stock
TRANSFERABLE WARRANTS
TO PURCHASE COMMON STOCK OF
MEMRY CORPORATION
THIS CERTIFIES THAT, for value received, Dominion Capital Partners, with
an address of 2907 Bay-to-Bay Boulevard, Suite 200, Tampa, Florida 33629, or
registered assignees, is entitled to purchase from Memry Corporation, a
corporation organized and existing under the laws of the State of Delaware
(hereinafter called the "Company"), at a purchase price equal to the "Exercise
Price" (as hereinafter defined), at any time from and after July 16, 1996 to and
including the "Final Exercise Date" (as hereinafter defined), 18,000 shares of
the Company's Common Stock, $.01 par value (the "Warrant Shares"), subject,
however, to the provisions and upon the terms and conditions hereinafter set
forth. The Exercise Price shall initially be One and 50/100 Dollars ($1.50) per
share, subject to adjustment as hereinafter provided.
Certain capitalized terms used in this Warrant Certificate and not
otherwise defined are defined in paragraph 8 hereof. By accepting this Warrant
Certificate, the holder agrees to be bound by the terms hereof.
THESE WARRANTS ARE SUBJECT TO THE FOLLOWING TERMS AND
CONDITIONS:
1. (a) Exercise of Warrants. The rights represented by this Warrant
Certificate may be exercised by the registered holder hereof, in whole or in
part (but not as to a fractional share of Common Stock), by (i) the delivery of
this Warrant Certificate,
<PAGE>
together with a properly completed Subscription Form, to the principal office of
the Company at 57 Commerce Drive, Brookfield, Connecticut 06804 (or such other
office or agency of the Company as it may designate by notice in writing to the
holder hereof) and (ii) payment to the Company, in immediately available funds,
of the Exercise Price for the Warrant Shares being purchased. Certificates for
the Warrant Shares so purchased (together with a cash adjustment in lieu of any
fraction of a share) shall be delivered to the holder hereof within a reasonable
time, not exceeding twenty (20) business days, after the rights represented by
this Warrant Certificate shall have been so exercised and paid for, and, unless
these Warrants have expired, a new Warrant Certificate representing the number
of Warrants, if any, with respect to which this Warrant Certificate shall not
then have been exercised, in all other respects identical with this Warrant
Certificate, shall also be issued and delivered to the holder hereof within such
time, or appropriate notation may be made on this Warrant Certificate and the
same returned to such holder.
(b) Transfer Restriction Legend. Each certificate for Warrant Shares
issued upon exercise of these Warrants shall bear the legend appearing on the
first page of this Warrant Certificate and any additional legend which the
Company, in its sole discretion, may deem appropriate at such time.
2. Representations and Warranties of Holder. Each holder of the Warrants
and Warrant Shares, by acceptance hereof, represents and warrants to the Company
and acknowledges and intends that the Company rely thereon, as follows:
(a) Such holder will not sell, assign, pledge, transfer, or
otherwise dispose of, whether directly or indirectly, all or a portion of the
Warrants or any Warrant Shares obtained upon the exercise of any Warrants to any
person or entity without complying with applicable securities laws and the
transaction restrictions set forth in paragraph 4 hereof;
(b) Such holder is acquiring the Warrants and any Warrant Shares
obtained upon exercise of any Warrants for its own account, for investment
purposes only and not with a view to any distribution of such Warrants or
Warrant Shares and no other person has a direct or indirect beneficial interest
in such Warrants or the Warrant Shares;
(c) Such holder acknowledges and agrees that the Company has
informed it that the Warrants and the Warrant Shares are not registered under
any securities laws, are subject to substantial restrictions on transfer, and
may not be transferred for an indefinite period of time;
(d) Such holder has investigated the purchase of the Warrants and
the Warrant Shares to the extent it deems necessary or
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desirable, and the Company has provided it with any assistance in connection
therewith which it has requested. Such holder has such knowledge and experience
in financial and business matters that it is capable of evaluating the merits
and risks of the acquisition of the Warrants and the Warrant Shares and of
making an informed investment decision with respect thereto and it has the
ability to bear the economic risk of an investment in the Company and to
withstand a complete loss of its investment. Such holder is financially able to
hold the Warrants and the Warrant Shares for an indefinite period of time;
(e) Such holder is not relying on the Company or any of its
directors, officers, employees, or agents for guidance with respect to tax and
other applicable laws of any jurisdiction, or other economic considerations, and
it has been furnished by the Company with all information such holder has deemed
necessary or appropriate in order to form an informed investment decision
concerning the purchase of the Warrants and the Warrant Shares. Such holder has
been afforded an opportunity to ask questions of, and receive answers from,
representatives of the Company concerning the terms and conditions of such
holder's purchase of Warrants and any Warrant Shares and has been afforded the
opportunity to obtain any additional information (to the extent the Company had
such information or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of information otherwise furnished by the
Company;
(f) Such holder has not used a purchaser
representative;
(g) Such holder understands that no United States federal or state
agency or any agency of any other government has passed upon or made any
recommendation or endorsement of any investment in the Company;
(h) Such holder (a) has not been organized for the purpose of
purchasing the Warrants and any Warrant Shares, or (b) has been organized for
the purpose of purchasing the Warrants and any Warrant Shares and has made the
representations and warranties contained herein with respect to and on behalf of
all of the beneficial owners thereof; and
(i) Such holder is an "accredited investor" as such term is defined
in Rule 501 adopted pursuant to the Securities Act.
The Company may condition any exercise of the Warrants and issuance of Warrant
Shares upon its receipt of the representations and covenants given above by the
original Warrant holder with respect to such Warrant Shares.
3. Indemnification. Each holder of this Warrant Certificate, by acceptance
hereof, hereby indemnifies, and agrees to hold harmless, the Company, each
corporation and entity
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affiliated with the Company, and the shareholders, partners, officers,
directors, employees, professional advisors, and agents of each of the
foregoing, from and against any and all loss, damage, liability or expense,
including reasonable attorneys' fees and other legal expenses, which the
indemnified party may incur by reason of or in connection with, any
misrepresentation made by the holder hereof or any breach of any of such
holder's representations and warranties.
4. Transaction Restrictions. Each holder of this Warrant Certificate, by
acceptance hereof, understands and acknowledges that none of these Warrants or
any Warrant Shares have been registered under the Securities Act and may not be
offered, sold, pledged, hypothecated or otherwise disposed of in the absence of
a registration statement in effect with respect to the offer and disposition of
said securities under the Securities Act or pursuant to an exemption from the
registration requirements of the Securities Act. Each holder of this Warrant
Certificate, by acceptance hereof, represents that it will offer or sell the
Securities only in accordance with the Securities Act and, in the case of offers
and sales made in accordance with exemptions therefrom, only after having
delivered to the Company a satisfactory legal opinion that said offer and sale
is in effect so exempt. Each holder hereof agrees and acknowledges that every
certificate representing the Warrants and the Warrant Shares will bear a legend
to the foregoing effect.
5. Special Agreements of the Company. The Company covenants and agrees
that:
(a) Character of Warrant Shares. All Warrant Shares which may be
issued upon the exercise of the Warrants represented hereby, upon issuance, will
be duly authorized, validly issued, fully paid and non-assessable and free from
all taxes, liens and charges with respect to the issue thereof, and without
limiting the generality of the foregoing, that it will take from to time all
such action as may be requisite to ensure that the par value per share (if any)
of the Common Stock is at all times equal to or less than the then effective
Exercise Price, and that it will refrain from taking any action which could
pursuant to the terms of the Warrants result in the Exercise Price per share
being less than the par value per share of the Common Stock;
(b) No Violations. The Company will take all such action as may be
necessary to ensure that Warrant Shares may be so issued without violation of
any applicable United States state or federal law or regulation, or of any
requirements of any securities exchange or inter-dealer quotation system upon
which the Common Stock of the Company may be listed or quoted;
(c) Actions in Avoidance. The Company will not, by amendment of its
Certificate or Articles of Incorporation or
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through any reorganization, transfer of assets, consolidation, merger, issue or
sale of securities or otherwise, avoid or take any action which would have the
effect of avoiding the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in carrying out all of the provisions of this Warrant Certificate
and in taking all of such action as may be necessary or appropriate in order to
protect the rights of the holders of these Warrants; and
(d) Financial Information. The Company will, if requested, provide
each Warrant holder copies of all annual, quarterly and current reports required
to be filed by it pursuant to Section 13 or 15 of the Securities Exchange Act of
1934, as amended, and in addition, promptly after requested, such other
information concerning the Company as any Warrant holder may reasonably require
(i) in order to comply with any law or governmental regulation, order of any
court, or order, inquiry or investigation of any governmental agency or
instrumentality, or (ii) in order to exercise any right or privilege of such
Warrant holder or to enforce any obligation of the Company under the Warrants or
any agreement or instrument executed and delivered in connection therewith.
6. (a) Certain Adjustments. The number of Warrants represented hereby and
the Exercise Price for each such Warrant shall be subject to adjustment from
time to time as hereinafter provided.
(b) Stock Splits and Reverse Splits. In the event that the Company
shall at any time subdivide its outstanding shares of Common Stock into a
greater number of shares (including without limitation by way of a stock
dividend), the Exercise Price in effect immediately prior to such subdivision
shall be proportionately reduced and the number of Warrants represented by this
Warrant Certificate immediately prior to such subdivision shall be
proportionately increased, and conversely, in the event that the outstanding
shares of Common Stock of the Company shall at any time be combined into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased and the number of Warrants
represented by this Warrant Certificate immediately prior to such subdivision
shall be proportionately decreased.
(c) Reorganizations and Asset Sales. If any capital reorganization
or reclassification of the capital stock of the Company, or any consolidation or
merger of the Company with another corporation, or the sale of all or
substantially all of its assets to another corporation or a tender or exchange
offer for shares of Common Stock, or any liquidation of all or substantially all
of the Company's assets shall be effected in such a way that holders of Common
Stock shall be entitled to, or will upon the declaration of
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<PAGE>
a liquidating dividend, receive stock, securities or assets with respect to or
in exchange for Common Stock, then the following provisions shall apply:
(i) As a condition of such reorganization, reclassification,
consolidation, merger, sale, tender offer, exchange offer or
liquidation (except as otherwise provided below in this paragraph
6(c)), lawful and adequate provisions shall be made whereby each
holder of Warrants shall thereafter have the right to receive upon
the terms and conditions specified in this Warrant Certificate and
in lieu of the Warrant Shares immediately theretofore receivable
upon the exercise of each Warrant, such shares of stock, securities
or assets as may be issued or payable with respect to or in exchange
for a number of outstanding shares of such Common Stock equal to the
number of Warrant Shares immediately theretofore so receivable had
such reorganization, reclassification, consolidation, merger, sale,
tender offer, exchange offer or liquidation not taken place, and in
any such case appropriate provision shall be made with respect to
the rights and interests of such holder to the end that the
provisions hereof (including without limitation provisions for
adjustments of the Exercise Price and the number of Warrants
represented hereby) shall therefore be applicable, as nearly as may
be, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise of these Warrants.
(ii) In the event of a merger or consolidation of the Company
with or into another corporation as a result of which a number of
shares of Common Stock of the surviving corporation greater or
lesser than the number of shares of Common Stock of the Company
outstanding immediately prior to such merger or consolidation are
issuable to holders of Common Stock or the Company, then the
Exercise Price in effect immediately prior to such merger or
consolidation shall be adjusted in the same manner as though there
were a subdivision or combination of the outstanding shares of
Common Stock of the Company, and the number of Warrants represented
hereby shall be proportionately adjusted for such adjustment in the
Exercise Price.
(d) Notice of Adjustment. Whenever the Exercise Price and/or the
number of Warrants represented hereby shall be adjusted as herein provided, or
the rights of Warrant holders shall change by reason of other events specified
herein, the Company shall compute the adjusted Exercise Price and the adjusted
number of Warrants represented hereby in accordance with the provisions hereof
and shall prepare a certificate signed by its President, Vice President,
Treasurer or Secretary setting forth the adjusted
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Exercise Price and number of Warrants represented hereby or specifying the other
shares of stock, securities or assets receivable as a result of such change in
rights, and showing in reasonable detail the facts and calculations upon which
such adjustments or other changes are based. The Company shall promptly cause to
be mailed to the holder of these Warrants copies of such officer's certificate
together with a notice stating that the Exercise Price and/or the number of
Warrants represented hereby, as the case may be, have been adjusted and setting
forth the adjusted Exercise Price and number of Warrants represented hereby.
(e) Notifications to Holders. In case at any time the Company
proposes:
(i) to declare any dividend upon any class of
stock other than preferred stock;
(ii) to make any special dividend or other distribution to the
holders of any class of stock, other than dividends of Common Stock
paid to holders of Common Stock;
(iii) to offer for subscription pro rata to the holders of its
securities any additional securities or other rights;
(iv) to effect any capital reorganization, or reclassification
of the capital stock of the Company, or consolidation or merger of
the Company with another corporation, or sale or other disposition
of all or substantially all of its assets; or
(v) to effect a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in any one or more of said cases, the Company shall give the holder of
these Warrants (A) at least twenty (20) days' (but not more than ninety (90)
days') prior written notice of the date on which the books of the Company shall
close or a record shall be taken for such dividend, distribution or subscription
rights or for determining rights to vote in respect of such issuance,
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, and (B) in the case of any such issuance,
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, at least twenty (20) days' (but not more than ninety
(90) days) prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (A) shall also specify, in the
case of any such dividend, distribution or subscription rights, the date on
which the holders of any securities shall be entitled thereto, and such notice
in accordance with the foregoing clause (B) shall also specify the date on which
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<PAGE>
the holders of any securities shall be entitled to exchange their securities for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, as the case may be.
(f) Company to Protect Rights. If any event or condition occurs as
to which other provisions of this paragraph 6 are not strictly applicable or if
strictly applicable would not fairly protect the exercise or purchase rights of
these Warrants in accordance with the essential intent and principles of such
provisions, then the Company shall make an adjustment in the application of such
provisions, in accordance with such essential intent and principles, so as to
protect such exercise and purchase rights as aforesaid.
7. Piggy-back Registration Rights.
(a) Right to Piggy-back. If at any time prior to the Final Exercise
Date the Company proposes to file a registration statement in order to register
any of its equity securities (as defined in the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) under the Securities Act (other than in
connection with a merger, and acquisition or an offering of securities under an
employee benefit plan), and the registration form to be used may be used for the
registration (a "Piggy-Back Registration") of Warrants and Warrant Shares, the
Company will give prior written notice to all registered holders of Warrants and
Warrant Shares of its intention to effect such a registration and will, subject
to paragraph 7(b) and 7(c) hereof, include in such registration all Warrants and
Warrant Shares with respect to which the Company has received written requests
for inclusion therein within 20 days after the receipt of the Company's notice.
Notwithstanding the foregoing, the Company shall have the right at any time
after it shall have given written notice pursuant to paragraph 7(a)
(irrespective of whether a written request for inclusion of any Warrants and/or
Warrant Shares shall have been made) to elect not to file any such proposed
registration statement or to withdraw the same after the filing but prior to the
effective date thereof.
(b) Limitation on Inclusion. If the registration of which the
Company gives notice pursuant to paragraph 7(a) is for an underwritten offering,
only securities which are to be included in the underwriting may be included in
the registration. Notwithstanding any provision of paragraph 7(a) to the
contrary, if the underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten or determines that any
other limitation is advisable, the underwriter may exclude or otherwise limit
the number of Warrants or Warrant Shares to be included in the registration and
underwriting. The Company shall so advise all holders (except those holders who
have not indicated to the Company their decision to distribute any of their
Warrants or Warrant Shares through such underwriting), and the number of
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<PAGE>
Warrants and/or Warrant Shares that may be included in such registration and
underwriting, if any, shall be allocated among such holders as determined by the
Company or otherwise as the underwriter shall advise. No Warrants or Warrant
Shares excluded from the underwriting by reason of the underwriter's marketing
limitation shall be included in such registration. If any holder disapproved of
any such underwriting, such person may elect to withdraw therefrom by written
notice to the Company and the underwriter. The Warrants and Warrant Shares so
withdrawn from such underwriting shall also be withdrawn from such registration.
In addition, whether or not such registration is underwritten, the inclusion of
Warrants or Warrant Shares in any particular registration shall be subject to
the rights of existing security holders to bar or limit the inclusion thereof.
(c) Two Piggy-Back Registrations Only. The Company shall only be
obligated to offer the opportunity for two Piggy-Back Registrations, pursuant to
this paragraph 7, with respect to all Warrants and Warrant Shares.
(d) Expenses of Registration. All expenses other than underwriting
discounts and commissions incurred in connection with registrations, filings, or
qualifications pursuant to paragraph 7(a), including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company, transportation expenses, mailing
expenses, and the fees and disbursements of one counsel selected by the selling
holders of Warrants and Warrant Shares to represent them shall be borne and paid
by the Company.
(e) Registration Conditions and Obligations. The obligations of the
Company with respect to Piggy-Back Registrations under this paragraph 7 are
subject to the conditions that each holder of the Warrants and Warrant Shares
which are to be included in any registration:
(i) cooperates with the Company in preparing such
registration, and executed such agreements as may be reasonable
necessary in favor of any underwriter selected by the Company; and
(ii) promptly supplies the Company with all information,
documents, representations and agreements requested by the Company
and reasonably necessary in connection with the registration of such
holder's Warrants and Warrant Shares,
(iii) agrees not to effect sales of Warrants and Warrant
Shares after receipt of telegraphic or written notice from the
Company to suspend sales to permit the Company to correct or update
a registration statement or prospectus.
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In connection with any Piggy-Back Registration involving an underwritten public
offering, each holder of Warrants and Warrant Shares included therein shall
agree, if requested by the underwriters, not to effect any public sale of
Warrant and Warrant Shares not included in such registration during the seven
(7) days prior to, and the ninety (90) day period beginning on the effective
date of such underwritten registration.
Each holder of the Warrants and Warrant Shares included in a registration
statement effected pursuant to this paragraph 7 shall, at the end of the period
during which the Company keeps the registration statement current and effective,
discontinue sales of Warrants and Warrant Shares pursuant to such registration
statement upon receipt of notice from the Company of its intention to remove
from registration the Warrants or Warrant Shares covered by such registration
statement which remain unsold, and such holder shall notify the Company of the
number of Warrants and Warrant Shares registered which remain unsold immediately
upon receipt of such notice from the Company.
(f) Opinion of Counsel as Alternative. The registration rights
granted to the holders of Warrants and Warrant Shares under this paragraph 7
shall be subject to the condition that any registration of Warrants and Warrant
Shares proposed to be effected need not be effected if the Company shall deliver
to the holders requesting such registration an opinion satisfactory to such
holders and their counsel to the effect that the proposed disposition for which
registration was requested does not require registration under the Securities
Act.
(g) Company's Registration Obligations. Whenever the Company is
required to register any Warrants and Warrant Shares pursuant to the terms
hereof, the Company will use its best efforts to effect the registration for
sale of such Warrants and Warrant Shares in accordance with the intended method
of disposition thereof and pursuant thereto the Company will as expeditiously as
reasonably possible:
(i) Prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement with respect
to such Warrants and Warrant Shares, which registration statement
will state that the holders of Warrants and Warrant Shares covered
thereby may sell such Warrants and Warrant Shares under such
registration statement, and use its best efforts to cause such
registration statement to become effective and to remain effective
as provided herein; provided that before filing a registration
statement or prospectus or any amendments or supplements thereto,
the Company will furnish to counsel selected by a majority of the
holders of Warrants and Warrant Shares covered by such registration
statement copies of all such documents
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<PAGE>
proposed to be filed, which documents will be subject to the review
of such counsel;
(ii) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such
registration statement effective until two years after the date
hereof or until after distribution is completed (if sooner), and
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement
during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration
statement, including without limitation, (A) setting forth any
information necessary in order that such registration statement not
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading, (B) reflecting in the prospectus included in such
registration statement any facts or events arising after the
effective date of such registration statement (or the most recent
post-effective amendment thereto) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement, (C) to include any prospectus
required by Section 10(a)(3) of the Securities Act, or (D) to
include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information therein;
(iii) Furnish to each seller of Warrants and Warrant Shares
such number of copies of such registration statement, each amendment
and supplement thereto, the prospectus included in such registration
statement including each preliminary prospectus) and such other
documents as such seller may reasonably request in order to
facilitate the disposition of Warrants and Warrant Shares owned by
such seller;
(iv) Use its best efforts to register or qualify such Warrants
and Warrant Shares under such securities or blue sky laws of such
jurisdictions as may reasonably be requested and do any and all
other acts and things which may be reasonably necessary or advisable
to enable such seller to consummate the disposition in such
jurisdictions of the Warrants and Warrant Shares owned by such
seller (provided that the Company shall not be required to (A)
qualify generally to do business in any jurisdiction where it would
not otherwise be required to qualify but for this paragraph
7(g)(iv), (B) subject
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<PAGE>
itself to taxation in any such jurisdiction or (C) consent generally
to service of process in any such jurisdiction);
(v) Notify each seller of such Warrants and Warrant Shares, at
any time when a prospectus relating thereto is required to be
delivered under the Securities Act, when it becomes aware of the
happening of any event as a result of which the prospectus included
in such registration statement (as then in effect) contains an
untrue statement of a material fact or omits to state any fact
necessary to make the statements therein not misleading in light of
the circumstances then existing, and, as promptly as practicable
thereafter, prepare in sufficient quantities a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Warrants and Warrant Shares, such prospectus will
not contain an untrue statement of a material fact or omit to state
any fact necessary to make the statements therein not misleading in
light of the circumstances then existing;
(vi) Cause all such Warrants and Warrant Shares so requested
by the holders thereof to be listed on each securities exchange on
which similar securities issued by the Company are then listed.
(vii) Provide a transfer agent and registrar for all of such
Warrants and Warrant Shares not later than the effective date of
such registration statement;
(viii) Enter into such customary agreements (including an
underwriting agreement in customary form) and take all such other
actions as the holders of majority of the Warrants and Warrant
Shares to be included in the registration statement reasonably
request in order to expedite or facilitate the disposition of such
Warrants and/or Warrant Shares;
(ix) Make available for inspection by any seller of Warrants
and/or Warrant Shares, any underwriter participating in any
disposition pursuant to such registration statement, any attorney,
accountant or other agent retained by any such seller or
underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information
reasonably requested by any such seller, under writer, attorney,
accountant or agent in connection with such registration statement
to the extent such information is necessary in such seller's
reasonable
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<PAGE>
judgment to satisfy any of its obligations under applicable law; and
(x) Use its best efforts to obtain an appropriate opinion for
the Company's counsel and a cold-comfort letter from the Company's
independent public accountants in customary form and covering such
matters of the type customarily covered by opinions of Company
counsel and cold-comfort letters in similar registrations as the
holders of a majority of the Warrants and Warrant Shares being sold
reasonably request.
Each holder of the Warrants and Warrant Shares shall be deemed to have agreed by
acquisition of such Warrants and Warrant Shares that, upon receipt of any notice
from the Company of the happening of any event of the kind described in
paragraph 7(g)(v) hereof, such holder will forthwith discontinue such holder's
disposition of Warrants and Warrant Shares until such holder's receipt of the
copies of the supplemented or amended prospectus contemplated by paragraph
7(g)(v) hereof and, if so directed by the Company, will deliver to the Company
(at the holder's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus covering such Warrants and Warrant
Shares current at the time of receipt of such notice. In the event the Company
shall give any such notice, the period mentioned in paragraph 7(g)(ii) hereof
shall be extended by the number of days during such period from and including
the date of the giving of such notice to and including the date when each seller
of any Warrants and Warrant Shares covered by such registration statement shall
have received the copies of the supplemented or amended prospectus contemplated
by paragraph 7(g)(v) hereof.
(h) Indemnification.
(i) The Company agrees to indemnify, to the extent permitted
by law, each holder of the Warrants and Warrant Shares, its officers
and directors and each person who otherwise controls such holder
(within the meaning of the Securities Act) (collectively,
"Indemnitees") against all losses, claims, damages, liabilities and
expenses caused by any untrue statement of a material fact contained
in any registration statement (including any post-effective
amendment thereto), prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission of a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are
caused by any information furnished in writing to the Company by or
on behalf of such holder expressly for use therein or by such
holder's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto which the
Company is not required to
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<PAGE>
deliver after the Company has furnished such holder with a
sufficient number of copies of the same, or any violation by the
Company of the Securities Act or any rule or regulation promulgated
under the Securities Act applicable to the Company and relating to
action or inaction required of the Company in connection with any
such registration, qualification or compliance. In connection with
an underwritten public offering, the Company will indemnify such
underwriters, their officers and directors and each person who
controls such underwriters (within the meaning of the Securities
Act) to the same extent as provided above with respect to the
indemnification of the holders of Warrants and Warrant Shares.
(ii) The Company will reimburse each such Indemnitee for any
legal and other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability
or action; provided, however, that this paragraph 7(h)(ii) shall not
apply to amounts paid in settlement of any such claim, loss, damage,
liability or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any
such claim, loss, damage, liability or action to the extent that it
(A) arises out of or is based upon any untrue statement or omission
so made in conformity with written information furnished to the
Company by such Indemnitee(s) and stated to be specifically for use
therein or (B) relates to any such untrue statement (or alleged
untrue statement) or omission (or alleged omission) made in the
preliminary prospectus but eliminated or remedied in the amended
prospectus on file with the Commission at the time the registration
statement becomes effective or in the amended prospectus filed with
the Commission pursuant to Rule 424(b), if such prospectus was not
furnished to the person or entity asserting the claim, loss, damage,
liability or action at or prior to the time such furnishing is
required by the Securities Act. This indemnification shall not be
deemed to relieve any underwriter of any of its due diligence
obligations.
(iii) In connection with any registration statement in which a
holder of Warrants and Warrant Shares is participating, each such
holder will furnish to the Company in writing such information and
affidavits as the Company reasonably requests for use in connection
with any such registration statement or prospectus and, to the
extent permitted by law, will indemnify the Company, its directors
and officers and each person who
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<PAGE>
controls the Company (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses
resulting from any untrue statement of a material fact contained in
the registration statement (including any post-effective amendment
thereto), prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission of a material fact
required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue
statement or omission is contained in any information or affidavit
so furnished in writing by or on behalf of such holder; provided
that the obligation to indemnify will be several, not joint and
several, among such holders of and Warrants and Warrant Shares and
the liability of each such holder of Warrants and Warrant Shares
will be in proportion to and limited to the net amount received by
such holder from the sale of Warrants and Warrant Shares pursuant to
such registration.
(iv) Any person entitled to indemnification hereunder will (A)
give prompt written notice to the indemnifying party of any claim
with respect to which it seeks indemnification (but the omission so
to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than
under this paragraph) and (B) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim
with counsel reasonably satisfactory to the indemnified party. If
such defense is assumed, the indemnifying party will not be subject
to any liability for any settlement made by the indemnified party
without its consent (but such consent will not be unreasonably
withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay
the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and
any other of such indemnified parties with respect to such claim.
(v) The indemnification provided for under this Warrant will
remain in full force and effect regardless of any investigation made
by or on behalf of the indemnified party or any officer, director or
controlling person of such indemnified party and will survive the
transfer of securities.
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8. Definitions. The terms defined in this paragraph, whenever used in this
Warrant Certificate, shall, unless the context otherwise requires, have the
respective meanings hereinafter specified:
(a) "Common Stock" shall mean and include the Company's Common
Stock, $.01 par value, and shall also include in case of any reorganization,
reclassification, consolidation, merger or sale of assets of the character
referred to in paragraph 6(c) hereof, the stock, securities or assets provided
for in such paragraph.
(b) "Company" shall mean Memry Corporation and also include any
successor thereto with respect to the obligations hereunder, by merger,
consolidation or otherwise.
(c) "Final Exercise Date" shall mean July 16, 1999.
(d) "Warrant Certificate" shall mean this instrument evidencing the
Warrants issued to the Warrant holder on this date.
(e) "Warrants" shall mean the Warrants represented by this Warrant
Certificate and all Warrants issued in exchange, transfer or replacement or
hereof or thereof.
(f) "Warrant Shares" shall mean the shares of Common Stock purchased
or purchasable by the holders of Warrants upon the exercise thereof pursuant to
paragraph 1.
(g) "Warrant holder(s)" shall mean the registered holder(s) of the
Warrants.
9. Exchange, Replacement and Assignability. This Warrant Certificate is
exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company described in paragraph 1, for new Warrant Certificates of
like tenor and date representing in the aggregate the right to purchase the
number of Warrant Shares which may be purchased hereunder, each of such new
Warrants to represent the right to purchase such number of Warrant Shares as
shall be designated by such holder hereof at the time of such surrender. Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant Certificate or any such new Warrant Certificates
and, in the case of any such loss, theft or destruction, of a bond of indemnity
or other security satisfactory to the Company, or, in the case of any such
mutilation, upon surrender or cancellation of such mutilated Warrant
Certificate, the Company will issue to the holder hereof a new Warrant
Certificate of like tenor and date, in lieu of this Warrant Certificate or such
new Warrant Certificates, representing the right to purchase the number of
Warrant Shares which may be purchased hereunder. Subject to compliance with
paragraph 2, this Warrant and all rights hereunder (including without limitation
all registration rights) are transferable in
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whole or in part upon the books of the Company by the registered holder hereof
in person or by duly authorized attorney, and a new Warrant Certificate shall be
made and delivered by the Company, of the same tenor and date as this Warrant
Certificate but registered in the name of the transferee, upon surrender of this
Warrant Certificate, duly endorsed, to the office or agency of the Company. All
expenses, taxes (other than stock transfer taxes, which shall be the obligation
of the Warrant holder) and other charges payable in connection with the
preparation, execution and delivery of Warrants pursuant to this paragraph 8
shall be paid by the Company.
10. No Rights as Stockholder; Survival of Rights. Neither this Warrant
Certificate nor the Warrants represented hereby shall entitle the holder hereof
to any voting rights or any rights as a stockholder of the Company. The rights
and obligations of the Company, of the holder of these Warrants and of any
holder of Warrant Shares issued upon exercise of these Warrants shall survive
the exercise of these Warrants.
11. Governing Law; Amendments and Waivers; Headings. The validity,
interpretation and performance of this Warrant Certificate and each of its terms
and provisions shall be governed by the laws of the State of Connecticut. No
provision of this Warrant Certificate may be changed, waived, discharged or
terminated except by an instrument in writing signed by the party against which
enforcement of the same is sought. The headings in this Warrant Certificate are
for purposes of reference only and shall not affect the meaning or construction
of any of the provisions hereof.
12. Notices. Any notice or other document required or permitted to be
given or delivered to Warrant holders shall be delivered at, or sent by
certified or registered mail to each Warrant holder at, the address shown or to
such other address as shall have been furnished to the Company by such Warrant
holder. Any notice or other document required or permitted to be given or
delivered to the Company shall be delivered at, or sent by certified or
registered mail to the principal office of the Company at 57 Commerce Drive,
Brookfield, Connecticut 06804 Attention: President, or such other address as
shall have been furnished to the Warrant holders by the Company.
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IN WITNESS WHEREOF, Memry Corporation has caused this Warrant Certificate
to be signed by its duly authorized officer under its corporate seal, duly
attested by its authorized officer, and to be dated as of July 16, 1996.
MEMRY CORPORATION
By:/s/ James G. Binch
----------------------------------------
James G. Binch
President
[Corporate Seal]
ATTEST:
/s/ Wendy A. Gavaghan
- - ------------------------------
Wendy A. Gavaghan
Secretary
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NOTICE OF ELECTION
TO: MEMRY CORPORATION
The undersigned, the registered holder of Warrant Cert. No. 96-4, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
Certificate for, and to purchase thereunder, ____________________ shares of
Common Stock of Memry Corporation and herewith makes payment of U.S.____________
therefor, and requests that the certificate for the Common Stock, which will be
issued in the following name, be delivered to the attention of the undersigned
at the following address:
--------------------------------------------
--------------------------------------------
--------------------------------------------
Date:______________________
Name:______________________________
By:________________________________
Title:_____________________________
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Exhibit 10.42
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN AND WILL
BE SOLD IN RELIANCE UPON EXEMPTIONS THEREUNDER. THE SALE OR OTHER DISPOSITION OF
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF IS RESTRICTED IN
ACCORDANCE WITH THAT ACT AND THOSE LAWS, MAY ONLY BE MADE PURSUANT TO A
REGISTRATION UNDER THAT ACT AND THOSE LAWS OR PURSUANT TO AN EXEMPTION FROM SUCH
REGISTRATION AND, IN THE EVENT OF SUCH AN UNREGISTERED SALE OR OTHER
DISPOSITION, IS PROHIBITED UNLESS MEMRY CORPORATION RECEIVES AN OPINION OF
COUNSEL SATISFACTORY TO IT AND ITS COUNSEL THAT SUCH SALE OR OTHER DISPOSITION
CAN BE MADE WITHOUT REGISTRATION UNDER THAT ACT OR THOSE LAWS.
Warrant Cert. No. 96-5 Warrants to Purchase
18,000 Shares of
Common Stock
TRANSFERABLE WARRANTS
TO PURCHASE COMMON STOCK OF
MEMRY CORPORATION
THIS CERTIFIES THAT, for value received, Dawn M. Morton, with an address
of 6 Hunting Ridge Lane, Wilton, Connecticut 06897, or registered assignees, is
entitled to purchase from Memry Corporation, a corporation organized and
existing under the laws of the State of Delaware (hereinafter called the
"Company"), at a purchase price equal to the "Exercise Price" (as hereinafter
defined), at any time from and after July 16, 1996 to and including the "Final
Exercise Date" (as hereinafter defined), 18,000 shares of the Company's Common
Stock, $.01 par value (the "Warrant Shares"), subject, however, to the
provisions and upon the terms and conditions hereinafter set forth. The Exercise
Price shall initially be One and 50/100 Dollars ($1.50) per share, subject to
adjustment as hereinafter provided.
Certain capitalized terms used in this Warrant Certificate and not
otherwise defined are defined in paragraph 8 hereof. By accepting this Warrant
Certificate, the holder agrees to be bound by the terms hereof.
THESE WARRANTS ARE SUBJECT TO THE FOLLOWING TERMS AND
CONDITIONS:
1. (a) Exercise of Warrants. The rights represented by this Warrant
Certificate may be exercised by the registered holder hereof, in whole or in
part (but not as to a fractional share of Common Stock), by (i) the delivery of
this Warrant Certificate,
<PAGE>
together with a properly completed Subscription Form, to the principal office of
the Company at 57 Commerce Drive, Brookfield, Connecticut 06804 (or such other
office or agency of the Company as it may designate by notice in writing to the
holder hereof) and (ii) payment to the Company, in immediately available funds,
of the Exercise Price for the Warrant Shares being purchased. Certificates for
the Warrant Shares so purchased (together with a cash adjustment in lieu of any
fraction of a share) shall be delivered to the holder hereof within a reasonable
time, not exceeding twenty (20) business days, after the rights represented by
this Warrant Certificate shall have been so exercised and paid for, and, unless
these Warrants have expired, a new Warrant Certificate representing the number
of Warrants, if any, with respect to which this Warrant Certificate shall not
then have been exercised, in all other respects identical with this Warrant
Certificate, shall also be issued and delivered to the holder hereof within such
time, or appropriate notation may be made on this Warrant Certificate and the
same returned to such holder.
(b) Transfer Restriction Legend. Each certificate for Warrant Shares
issued upon exercise of these Warrants shall bear the legend appearing on the
first page of this Warrant Certificate and any additional legend which the
Company, in its sole discretion, may deem appropriate at such time.
2. Representations and Warranties of Holder. Each holder of the Warrants
and Warrant Shares, by acceptance hereof, represents and warrants to the Company
and acknowledges and intends that the Company rely thereon, as follows:
(a) Such holder will not sell, assign, pledge, transfer, or
otherwise dispose of, whether directly or indirectly, all or a portion of the
Warrants or any Warrant Shares obtained upon the exercise of any Warrants to any
person or entity without complying with applicable securities laws and the
transaction restrictions set forth in paragraph 4 hereof;
(b) Such holder is acquiring the Warrants and any Warrant Shares
obtained upon exercise of any Warrants for its own account, for investment
purposes only and not with a view to any distribution of such Warrants or
Warrant Shares and no other person has a direct or indirect beneficial interest
in such Warrants or the Warrant Shares;
(c) Such holder acknowledges and agrees that the Company has
informed it that the Warrants and the Warrant Shares are not registered under
any securities laws, are subject to substantial restrictions on transfer, and
may not be transferred for an indefinite period of time;
(d) Such holder has investigated the purchase of the Warrants and
the Warrant Shares to the extent it deems necessary or
2
<PAGE>
desirable, and the Company has provided it with any assistance in connection
therewith which it has requested. Such holder has such knowledge and experience
in financial and business matters that it is capable of evaluating the merits
and risks of the acquisition of the Warrants and the Warrant Shares and of
making an informed investment decision with respect thereto and it has the
ability to bear the economic risk of an investment in the Company and to
withstand a complete loss of its investment. Such holder is financially able to
hold the Warrants and the Warrant Shares for an indefinite period of time;
(e) Such holder is not relying on the Company or any of its
directors, officers, employees, or agents for guidance with respect to tax and
other applicable laws of any jurisdiction, or other economic considerations, and
it has been furnished by the Company with all information such holder has deemed
necessary or appropriate in order to form an informed investment decision
concerning the purchase of the Warrants and the Warrant Shares. Such holder has
been afforded an opportunity to ask questions of, and receive answers from,
representatives of the Company concerning the terms and conditions of such
holder's purchase of Warrants and any Warrant Shares and has been afforded the
opportunity to obtain any additional information (to the extent the Company had
such information or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of information otherwise furnished by the
Company;
(f) Such holder has not used a purchaser
representative;
(g) Such holder understands that no United States federal or state
agency or any agency of any other government has passed upon or made any
recommendation or endorsement of any investment in the Company;
(h) Such holder (a) has not been organized for the purpose of
purchasing the Warrants and any Warrant Shares, or (b) has been organized for
the purpose of purchasing the Warrants and any Warrant Shares and has made the
representations and warranties contained herein with respect to and on behalf of
all of the beneficial owners thereof; and
(i) Such holder is an "accredited investor" as such term is defined
in Rule 501 adopted pursuant to the Securities Act.
The Company may condition any exercise of the Warrants and issuance of Warrant
Shares upon its receipt of the representations and covenants given above by the
original Warrant holder with respect to such Warrant Shares.
3. Indemnification. Each holder of this Warrant Certificate, by acceptance
hereof, hereby indemnifies, and agrees to hold harmless, the Company, each
corporation and entity
3
<PAGE>
affiliated with the Company, and the shareholders, partners, officers,
directors, employees, professional advisors, and agents of each of the
foregoing, from and against any and all loss, damage, liability or expense,
including reasonable attorneys' fees and other legal expenses, which the
indemnified party may incur by reason of or in connection with, any
misrepresentation made by the holder hereof or any breach of any of such
holder's representations and warranties.
4. Transaction Restrictions. Each holder of this Warrant Certificate, by
acceptance hereof, understands and acknowledges that none of these Warrants or
any Warrant Shares have been registered under the Securities Act and may not be
offered, sold, pledged, hypothecated or otherwise disposed of in the absence of
a registration statement in effect with respect to the offer and disposition of
said securities under the Securities Act or pursuant to an exemption from the
registration requirements of the Securities Act. Each holder of this Warrant
Certificate, by acceptance hereof, represents that it will offer or sell the
Securities only in accordance with the Securities Act and, in the case of offers
and sales made in accordance with exemptions therefrom, only after having
delivered to the Company a satisfactory legal opinion that said offer and sale
is in effect so exempt. Each holder hereof agrees and acknowledges that every
certificate representing the Warrants and the Warrant Shares will bear a legend
to the foregoing effect.
5. Special Agreements of the Company. The Company covenants and agrees
that:
(a) Character of Warrant Shares. All Warrant Shares which may be
issued upon the exercise of the Warrants represented hereby, upon issuance, will
be duly authorized, validly issued, fully paid and non-assessable and free from
all taxes, liens and charges with respect to the issue thereof, and without
limiting the generality of the foregoing, that it will take from to time all
such action as may be requisite to ensure that the par value per share (if any)
of the Common Stock is at all times equal to or less than the then effective
Exercise Price, and that it will refrain from taking any action which could
pursuant to the terms of the Warrants result in the Exercise Price per share
being less than the par value per share of the Common Stock;
(b) No Violations. The Company will take all such action as may be
necessary to ensure that Warrant Shares may be so issued without violation of
any applicable United States state or federal law or regulation, or of any
requirements of any securities exchange or inter-dealer quotation system upon
which the Common Stock of the Company may be listed or quoted;
(c) Actions in Avoidance. The Company will not, by amendment of its
Certificate or Articles of Incorporation or
4
<PAGE>
through any reorganization, transfer of assets, consolidation, merger, issue or
sale of securities or otherwise, avoid or take any action which would have the
effect of avoiding the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in carrying out all of the provisions of this Warrant Certificate
and in taking all of such action as may be necessary or appropriate in order to
protect the rights of the holders of these Warrants; and
(d) Financial Information. The Company will, if requested, provide
each Warrant holder copies of all annual, quarterly and current reports required
to be filed by it pursuant to Section 13 or 15 of the Securities Exchange Act of
1934, as amended, and in addition, promptly after requested, such other
information concerning the Company as any Warrant holder may reasonably require
(i) in order to comply with any law or governmental regulation, order of any
court, or order, inquiry or investigation of any governmental agency or
instrumentality, or (ii) in order to exercise any right or privilege of such
Warrant holder or to enforce any obligation of the Company under the Warrants or
any agreement or instrument executed and delivered in connection therewith.
6. (a) Certain Adjustments. The number of Warrants represented hereby and
the Exercise Price for each such Warrant shall be subject to adjustment from
time to time as hereinafter provided.
(b) Stock Splits and Reverse Splits. In the event that the Company
shall at any time subdivide its outstanding shares of Common Stock into a
greater number of shares (including without limitation by way of a stock
dividend), the Exercise Price in effect immediately prior to such subdivision
shall be proportionately reduced and the number of Warrants represented by this
Warrant Certificate immediately prior to such subdivision shall be
proportionately increased, and conversely, in the event that the outstanding
shares of Common Stock of the Company shall at any time be combined into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased and the number of Warrants
represented by this Warrant Certificate immediately prior to such subdivision
shall be proportionately decreased.
(c) Reorganizations and Asset Sales. If any capital reorganization
or reclassification of the capital stock of the Company, or any consolidation or
merger of the Company with another corporation, or the sale of all or
substantially all of its assets to another corporation or a tender or exchange
offer for shares of Common Stock, or any liquidation of all or substantially all
of the Company's assets shall be effected in such a way that holders of Common
Stock shall be entitled to, or will upon the declaration of
5
<PAGE>
a liquidating dividend, receive stock, securities or assets with respect to or
in exchange for Common Stock, then the following provisions shall apply:
(i) As a condition of such reorganization, reclassification,
consolidation, merger, sale, tender offer, exchange offer or
liquidation (except as otherwise provided below in this paragraph
6(c)), lawful and adequate provisions shall be made whereby each
holder of Warrants shall thereafter have the right to receive upon
the terms and conditions specified in this Warrant Certificate and
in lieu of the Warrant Shares immediately theretofore receivable
upon the exercise of each Warrant, such shares of stock, securities
or assets as may be issued or payable with respect to or in exchange
for a number of outstanding shares of such Common Stock equal to the
number of Warrant Shares immediately theretofore so receivable had
such reorganization, reclassification, consolidation, merger, sale,
tender offer, exchange offer or liquidation not taken place, and in
any such case appropriate provision shall be made with respect to
the rights and interests of such holder to the end that the
provisions hereof (including without limitation provisions for
adjustments of the Exercise Price and the number of Warrants
represented hereby) shall therefore be applicable, as nearly as may
be, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise of these Warrants.
(ii) In the event of a merger or consolidation of the Company
with or into another corporation as a result of which a number of
shares of Common Stock of the surviving corporation greater or
lesser than the number of shares of Common Stock of the Company
outstanding immediately prior to such merger or consolidation are
issuable to holders of Common Stock or the Company, then the
Exercise Price in effect immediately prior to such merger or
consolidation shall be adjusted in the same manner as though there
were a subdivision or combination of the outstanding shares of
Common Stock of the Company, and the number of Warrants represented
hereby shall be proportionately adjusted for such adjustment in the
Exercise Price.
(d) Notice of Adjustment. Whenever the Exercise Price and/or the
number of Warrants represented hereby shall be adjusted as herein provided, or
the rights of Warrant holders shall change by reason of other events specified
herein, the Company shall compute the adjusted Exercise Price and the adjusted
number of Warrants represented hereby in accordance with the provisions hereof
and shall prepare a certificate signed by its President, Vice President,
Treasurer or Secretary setting forth the adjusted
6
<PAGE>
Exercise Price and number of Warrants represented hereby or specifying the other
shares of stock, securities or assets receivable as a result of such change in
rights, and showing in reasonable detail the facts and calculations upon which
such adjustments or other changes are based. The Company shall promptly cause to
be mailed to the holder of these Warrants copies of such officer's certificate
together with a notice stating that the Exercise Price and/or the number of
Warrants represented hereby, as the case may be, have been adjusted and setting
forth the adjusted Exercise Price and number of Warrants represented hereby.
(e) Notifications to Holders. In case at any time the Company
proposes:
(i) to declare any dividend upon any class of
stock other than preferred stock;
(ii) to make any special dividend or other distribution to the
holders of any class of stock, other than dividends of Common Stock
paid to holders of Common Stock;
(iii) to offer for subscription pro rata to the holders of its
securities any additional securities or other rights;
(iv) to effect any capital reorganization, or reclassification
of the capital stock of the Company, or consolidation or merger of
the Company with another corporation, or sale or other disposition
of all or substantially all of its assets; or
(v) to effect a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in any one or more of said cases, the Company shall give the holder of
these Warrants (A) at least twenty (20) days' (but not more than ninety (90)
days') prior written notice of the date on which the books of the Company shall
close or a record shall be taken for such dividend, distribution or subscription
rights or for determining rights to vote in respect of such issuance,
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, and (B) in the case of any such issuance,
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, at least twenty (20) days' (but not more than ninety
(90) days) prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (A) shall also specify, in the
case of any such dividend, distribution or subscription rights, the date on
which the holders of any securities shall be entitled thereto, and such notice
in accordance with the foregoing clause (B) shall also specify the date on which
7
<PAGE>
the holders of any securities shall be entitled to exchange their securities for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, as the case may be.
(f) Company to Protect Rights. If any event or condition occurs as
to which other provisions of this paragraph 6 are not strictly applicable or if
strictly applicable would not fairly protect the exercise or purchase rights of
these Warrants in accordance with the essential intent and principles of such
provisions, then the Company shall make an adjustment in the application of such
provisions, in accordance with such essential intent and principles, so as to
protect such exercise and purchase rights as aforesaid.
7. Piggy-back Registration Rights.
(a) Right to Piggy-back. If at any time prior to the Final Exercise
Date the Company proposes to file a registration statement in order to register
any of its equity securities (as defined in the Securities Exchange Act of 1934,
as amended (the
"Exchange Act")) under the Securities Act (other than in connection with a
merger, and acquisition or an offering of securities under an employee benefit
plan), and the registration form to be used may be used for the registration (a
"Piggy-Back Registration") of Warrants and Warrant Shares, the Company will give
prior written notice to all registered holders of Warrants and Warrant Shares of
its intention to effect such a registration and will, subject to paragraph 7(b)
and 7(c) hereof, include in such registration all Warrants and Warrant Shares
with respect to which the Company has received written requests for inclusion
therein within 20 days after the receipt of the Company's notice.
Notwithstanding the foregoing, the Company shall have the right at any time
after it shall have given written notice pursuant to paragraph 7(a)
(irrespective of whether a written request for inclusion of any Warrants and/or
Warrant Shares shall have been made) to elect not to file any such proposed
registration statement or to withdraw the same after the filing but prior to the
effective date thereof.
(b) Limitation on Inclusion. If the registration of which the
Company gives notice pursuant to paragraph 7(a) is for an underwritten offering,
only securities which are to be included in the underwriting may be included in
the registration. Notwithstanding any provision of paragraph 7(a) to the
contrary, if the underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten or determines that any
other limitation is advisable, the underwriter may exclude or otherwise limit
the number of Warrants or Warrant Shares to be included in the registration and
underwriting. The Company shall so advise all holders (except those holders who
have not indicated to the Company their decision to distribute any of their
Warrants or Warrant Shares through such underwriting), and the number of
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<PAGE>
Warrants and/or Warrant Shares that may be included in such registration and
underwriting, if any, shall be allocated among such holders as determined by the
Company or otherwise as the underwriter shall advise. No Warrants or Warrant
Shares excluded from the underwriting by reason of the underwriter's marketing
limitation shall be included in such registration. If any holder disapproved of
any such underwriting, such person may elect to withdraw therefrom by written
notice to the Company and the underwriter. The Warrants and Warrant Shares so
withdrawn from such underwriting shall also be withdrawn from such registration.
In addition, whether or not such registration is underwritten, the inclusion of
Warrants or Warrant Shares in any particular registration shall be subject to
the rights of existing security holders to bar or limit the inclusion thereof.
(c) Two Piggy-Back Registrations Only. The Company shall only be
obligated to offer the opportunity for two Piggy-Back Registrations, pursuant to
this paragraph 7, with respect to all Warrants and Warrant Shares.
(d) Expenses of Registration. All expenses other than underwriting
discounts and commissions incurred in connection with registrations, filings, or
qualifications pursuant to paragraph 7(a), including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company, transportation expenses, mailing
expenses, and the fees and disbursements of one counsel selected by the selling
holders of Warrants and Warrant Shares to represent them shall be borne and paid
by the Company.
(e) Registration Conditions and Obligations. The obligations of the
Company with respect to Piggy-Back Registrations under this paragraph 7 are
subject to the conditions that each holder of the Warrants and Warrant Shares
which are to be included in any registration:
(i) cooperates with the Company in preparing such
registration, and executed such agreements as may be reasonable
necessary in favor of any underwriter selected by the Company; and
(ii) promptly supplies the Company with all information,
documents, representations and agreements requested by the Company
and reasonably necessary in connection with the registration of such
holder's Warrants and Warrant Shares,
(iii) agrees not to effect sales of Warrants and Warrant
Shares after receipt of telegraphic or written notice from the
Company to suspend sales to permit the Company to correct or update
a registration statement or prospectus.
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<PAGE>
In connection with any Piggy-Back Registration involving an underwritten public
offering, each holder of Warrants and Warrant Shares included therein shall
agree, if requested by the underwriters, not to effect any public sale of
Warrant and Warrant Shares not included in such registration during the seven
(7) days prior to, and the ninety (90) day period beginning on the effective
date of such underwritten registration.
Each holder of the Warrants and Warrant Shares included in a registration
statement effected pursuant to this paragraph 7 shall, at the end of the period
during which the Company keeps the registration statement current and effective,
discontinue sales of Warrants and Warrant Shares pursuant to such registration
statement upon receipt of notice from the Company of its intention to remove
from registration the Warrants or Warrant Shares covered by such registration
statement which remain unsold, and such holder shall notify the Company of the
number of Warrants and Warrant Shares registered which remain unsold immediately
upon receipt of such notice from the Company.
(f) Opinion of Counsel as Alternative. The registration rights
granted to the holders of Warrants and Warrant Shares under this paragraph 7
shall be subject to the condition that any registration of Warrants and Warrant
Shares proposed to be effected need not be effected if the Company shall deliver
to the holders requesting such registration an opinion satisfactory to such
holders and their counsel to the effect that the proposed disposition for which
registration was requested does not require registration under the Securities
Act.
(g) Company's Registration Obligations. Whenever the Company is
required to register any Warrants and Warrant Shares pursuant to the terms
hereof, the Company will use its best efforts to effect the registration for
sale of such Warrants and Warrant Shares in accordance with the intended method
of disposition thereof and pursuant thereto the Company will as expeditiously as
reasonably possible:
(i) Prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement with respect
to such Warrants and Warrant Shares, which registration statement
will state that the holders of Warrants and Warrant Shares covered
thereby may sell such Warrants and Warrant Shares under such
registration statement, and use its best efforts to cause such
registration statement to become effective and to remain effective
as provided herein; provided that before filing a registration
statement or prospectus or any amendments or supplements thereto,
the Company will furnish to counsel selected by a majority of the
holders of Warrants and Warrant Shares covered by such registration
statement copies of all such documents
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<PAGE>
proposed to be filed, which documents will be subject to the review
of such counsel;
(ii) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such
registration statement effective until two years after the date
hereof or until after distribution is completed (if sooner), and
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement
during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration
statement, including without limitation, (A) setting forth any
information necessary in order that such registration statement not
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading, (B) reflecting in the prospectus included in such
registration statement any facts or events arising after the
effective date of such registration statement (or the most recent
post-effective amendment thereto) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement, (C) to include any prospectus
required by Section 10(a)(3) of the Securities Act, or (D) to
include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information therein;
(iii) Furnish to each seller of Warrants and Warrant Shares
such number of copies of such registration statement, each amendment
and supplement thereto, the prospectus included in such registration
statement including each preliminary prospectus) and such other
documents as such seller may reasonably request in order to
facilitate the disposition of Warrants and Warrant Shares owned by
such seller;
(iv) Use its best efforts to register or qualify such Warrants
and Warrant Shares under such securities or blue sky laws of such
jurisdictions as may reasonably be requested and do any and all
other acts and things which may be reasonably necessary or advisable
to enable such seller to consummate the disposition in such
jurisdictions of the Warrants and Warrant Shares owned by such
seller (provided that the Company shall not be required to (A)
qualify generally to do business in any jurisdiction where it would
not otherwise be required to qualify but for this paragraph
7(g)(iv), (B) subject
11
<PAGE>
itself to taxation in any such jurisdiction or (C) consent generally
to service of process in any such jurisdiction);
(v) Notify each seller of such Warrants and Warrant Shares, at
any time when a prospectus relating thereto is required to be
delivered under the Securities Act, when it becomes aware of the
happening of any event as a result of which the prospectus included
in such registration statement (as then in effect) contains an
untrue statement of a material fact or omits to state any fact
necessary to make the statements therein not misleading in light of
the circumstances then existing, and, as promptly as practicable
thereafter, prepare in sufficient quantities a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Warrants and Warrant Shares, such prospectus will
not contain an untrue statement of a material fact or omit to state
any fact necessary to make the statements therein not misleading in
light of the circumstances then existing;
(vi) Cause all such Warrants and Warrant Shares so requested
by the holders thereof to be listed on each securities exchange on
which similar securities issued by the Company are then listed.
(vii) Provide a transfer agent and registrar for all of such
Warrants and Warrant Shares not later than the effective date of
such registration statement;
(viii) Enter into such customary agreements (including an
underwriting agreement in customary form) and take all such other
actions as the holders of majority of the Warrants and Warrant
Shares to be included in the registration statement reasonably
request in order to expedite or facilitate the disposition of such
Warrants and/or Warrant Shares;
(ix) Make available for inspection by any seller of Warrants
and/or Warrant Shares, any underwriter participating in any
disposition pursuant to such registration statement, any attorney,
accountant or other agent retained by any such seller or
underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information
reasonably requested by any such seller, under writer, attorney,
accountant or agent in connection with such registration statement
to the extent such information is necessary in such seller's
reasonable
12
<PAGE>
judgment to satisfy any of its obligations under applicable law; and
(x) Use its best efforts to obtain an appropriate opinion for
the Company's counsel and a cold-comfort letter from the Company's
independent public accountants in customary form and covering such
matters of the type customarily covered by opinions of Company
counsel and cold-comfort letters in similar registrations as the
holders of a majority of the Warrants and Warrant Shares being sold
reasonably request.
Each holder of the Warrants and Warrant Shares shall be deemed to have agreed by
acquisition of such Warrants and Warrant Shares that, upon receipt of any notice
from the Company of the happening of any event of the kind described in
paragraph 7(g)(v) hereof, such holder will forthwith discontinue such holder's
disposition of Warrants and Warrant Shares until such holder's receipt of the
copies of the supplemented or amended prospectus contemplated by paragraph
7(g)(v) hereof and, if so directed by the Company, will deliver to the Company
(at the holder's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus covering such Warrants and Warrant
Shares current at the time of receipt of such notice. In the event the Company
shall give any such notice, the period mentioned in paragraph 7(g)(ii) hereof
shall be extended by the number of days during such period from and including
the date of the giving of such notice to and including the date when each seller
of any Warrants and Warrant Shares covered by such registration statement shall
have received the copies of the supplemented or amended prospectus contemplated
by paragraph 7(g)(v) hereof.
(h) Indemnification.
(i) The Company agrees to indemnify, to the extent permitted
by law, each holder of the Warrants and Warrant Shares, its officers
and directors and each person who otherwise controls such holder
(within the meaning of the Securities Act) (collectively,
"Indemnitees") against all losses, claims, damages, liabilities and
expenses caused by any untrue statement of a material fact contained
in any registration statement (including any post-effective
amendment thereto), prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission of a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are
caused by any information furnished in writing to the Company by or
on behalf of such holder expressly for use therein or by such
holder's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto which the
Company is not required to
13
<PAGE>
deliver after the Company has furnished such holder with a
sufficient number of copies of the same, or any violation by the
Company of the Securities Act or any rule or regulation promulgated
under the Securities Act applicable to the Company and relating to
action or inaction required of the Company in connection with any
such registration, qualification or compliance. In connection with
an underwritten public offering, the Company will indemnify such
underwriters, their officers and directors and each person who
controls such underwriters (within the meaning of the Securities
Act) to the same extent as provided above with respect to the
indemnification of the holders of Warrants and Warrant Shares.
(ii) The Company will reimburse each such Indemnitee for any
legal and other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability
or action; provided, however, that this paragraph 7(h)(ii) shall not
apply to amounts paid in settlement of any such claim, loss, damage,
liability or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any
such claim, loss, damage, liability or action to the extent that it
(A) arises out of or is based upon any untrue statement or omission
so made in conformity with written information furnished to the
Company by such Indemnitee(s) and stated to be specifically for use
therein or (B) relates to any such untrue statement (or alleged
untrue statement) or omission (or alleged omission) made in the
preliminary prospectus but eliminated or remedied in the amended
prospectus on file with the Commission at the time the registration
statement becomes effective or in the amended prospectus filed with
the Commission pursuant to Rule 424(b), if such prospectus was not
furnished to the person or entity asserting the claim, loss, damage,
liability or action at or prior to the time such furnishing is
required by the Securities Act. This indemnification shall not be
deemed to relieve any underwriter of any of its due diligence
obligations.
(iii) In connection with any registration statement in which a
holder of Warrants and Warrant Shares is participating, each such
holder will furnish to the Company in writing such information and
affidavits as the Company reasonably requests for use in connection
with any such registration statement or prospectus and, to the
extent permitted by law, will indemnify the Company, its directors
and officers and each person who
14
<PAGE>
controls the Company (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses
resulting from any untrue statement of a material fact contained in
the registration statement (including any post-effective amendment
thereto), prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission of a material fact
required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue
statement or omission is contained in any information or affidavit
so furnished in writing by or on behalf of such holder; provided
that the obligation to indemnify will be several, not joint and
several, among such holders of and Warrants and Warrant Shares and
the liability of each such holder of Warrants and Warrant Shares
will be in proportion to and limited to the net amount received by
such holder from the sale of Warrants and Warrant Shares pursuant to
such registration.
(iv) Any person entitled to indemnification hereunder will (A)
give prompt written notice to the indemnifying party of any claim
with respect to which it seeks indemnification (but the omission so
to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than
under this paragraph) and (B) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim
with counsel reasonably satisfactory to the indemnified party. If
such defense is assumed, the indemnifying party will not be subject
to any liability for any settlement made by the indemnified party
without its consent (but such consent will not be unreasonably
withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay
the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and
any other of such indemnified parties with respect to such claim.
(v) The indemnification provided for under this Warrant will
remain in full force and effect regardless of any investigation made
by or on behalf of the indemnified party or any officer, director or
controlling person of such indemnified party and will survive the
transfer of securities.
15
<PAGE>
8. Definitions. The terms defined in this paragraph, whenever used in this
Warrant Certificate, shall, unless the context otherwise requires, have the
respective meanings hereinafter specified:
(a) "Common Stock" shall mean and include the Company's Common
Stock, $.01 par value, and shall also include in case of any reorganization,
reclassification, consolidation, merger or sale of assets of the character
referred to in paragraph 6(c) hereof, the stock, securities or assets provided
for in such paragraph.
(b) "Company" shall mean Memry Corporation and also include any
successor thereto with respect to the obligations hereunder, by merger,
consolidation or otherwise.
(c) "Final Exercise Date" shall mean July 16, 1999.
(d) "Warrant Certificate" shall mean this instrument evidencing the
Warrants issued to the Warrant holder on this date.
(e) "Warrants" shall mean the Warrants represented by this Warrant
Certificate and all Warrants issued in exchange, transfer or replacement or
hereof or thereof.
(f) "Warrant Shares" shall mean the shares of Common Stock purchased
or purchasable by the holders of Warrants upon the exercise thereof pursuant to
paragraph 1.
(g) "Warrant holder(s)" shall mean the registered holder(s) of the
Warrants.
9. Exchange, Replacement and Assignability. This Warrant Certificate is
exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company described in paragraph 1, for new Warrant Certificates of
like tenor and date representing in the aggregate the right to purchase the
number of Warrant Shares which may be purchased hereunder, each of such new
Warrants to represent the right to purchase such number of Warrant Shares as
shall be designated by such holder hereof at the time of such surrender. Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant Certificate or any such new Warrant Certificates
and, in the case of any such loss, theft or destruction, of a bond of indemnity
or other security satisfactory to the Company, or, in the case of any such
mutilation, upon surrender or cancellation of such mutilated Warrant
Certificate, the Company will issue to the holder hereof a new Warrant
Certificate of like tenor and date, in lieu of this Warrant Certificate or such
new Warrant Certificates, representing the right to purchase the number of
Warrant Shares which may be purchased hereunder. Subject to compliance with
paragraph 2, this Warrant and all rights hereunder (including without limitation
all registration rights) are transferable in
16
<PAGE>
whole or in part upon the books of the Company by the registered holder hereof
in person or by duly authorized attorney, and a new Warrant Certificate shall be
made and delivered by the Company, of the same tenor and date as this Warrant
Certificate but registered in the name of the transferee, upon surrender of this
Warrant Certificate, duly endorsed, to the office or agency of the Company. All
expenses, taxes (other than stock transfer taxes, which shall be the obligation
of the Warrant holder) and other charges payable in connection with the
preparation, execution and delivery of Warrants pursuant to this paragraph 8
shall be paid by the Company.
10. No Rights as Stockholder; Survival of Rights. Neither this Warrant
Certificate nor the Warrants represented hereby shall entitle the holder hereof
to any voting rights or any rights as a stockholder of the Company. The rights
and obligations of the Company, of the holder of these Warrants and of any
holder of Warrant Shares issued upon exercise of these Warrants shall survive
the exercise of these Warrants.
11. Governing Law; Amendments and Waivers; Headings. The validity,
interpretation and performance of this Warrant Certificate and each of its terms
and provisions shall be governed by the laws of the State of Connecticut. No
provision of this Warrant Certificate may be changed, waived, discharged or
terminated except by an instrument in writing signed by the party against which
enforcement of the same is sought. The headings in this Warrant Certificate are
for purposes of reference only and shall not affect the meaning or construction
of any of the provisions hereof.
12. Notices. Any notice or other document required or permitted to be
given or delivered to Warrant holders shall be delivered at, or sent by
certified or registered mail to each Warrant holder at, the address shown or to
such other address as shall have been furnished to the Company by such Warrant
holder. Any notice or other document required or permitted to be given or
delivered to the Company shall be delivered at, or sent by certified or
registered mail to the principal office of the Company at 57 Commerce Drive,
Brookfield, Connecticut 06804 Attention: President, or such other address as
shall have been furnished to the Warrant holders by the Company.
17
<PAGE>
IN WITNESS WHEREOF, Memry Corporation has caused this Warrant Certificate
to be signed by its duly authorized officer under its corporate seal, duly
attested by its authorized officer, and to be dated as of July 15, 1996.
MEMRY CORPORATION
By:/s/ James G. Binch
-----------------------------------------
James G. Binch
President
[Corporate Seal]
ATTEST:
/s/ Wendy A. Gavaghan
- - ------------------------------------
Wendy A. Gavaghan
Secretary
18
<PAGE>
NOTICE OF ELECTION
TO: MEMRY CORPORATION
The undersigned, the registered holder of Warrant Cert. No. 96-5, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
Certificate for, and to purchase thereunder, ____________________ shares of
Common Stock of Memry Corporation and herewith makes payment of U.S.____________
therefor, and requests that the certificate for the Common Stock, which will be
issued in the following name, be delivered to the attention of the undersigned
at the following address:
--------------------------------------------
--------------------------------------------
--------------------------------------------
Date:______________________
Name:______________________________
By:________________________________
Title:_____________________________
19
<PAGE>
Exhibit 10.43
Investor: ________________________________________________
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated as of June ___, 1996, by and among
MEMRY CORPORATION, a corporation formed under the laws of the State of Delaware,
with its principal office at 57 Commerce Drive, Brookfield, Connecticut 06804
(the "Company"), and the investor whose name is set forth at the top of this
page ("Investor").
THE SECURITIES SOLD HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. THE SECURITIES COVERED HEREBY ARE BEING OFFERED IN RELIANCE UPON
REGULATION S UNDER SUCH ACT AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
STATES OR TO U.S. PERSONS (OTHER THAN DISTRIBUTORS) UNLESS SUCH SECURITIES ARE
REGISTERED UNDER SUCH ACT, OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
SUCH ACT IS AVAILABLE. TERMS USED IN THIS PARAGRAPH HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S.
- - --------------------------------------------------------------------------------
W I T N E S S E T H:
WHEREAS, the Company has entered into an Asset Purchase Agreement, dated
as of May 10, 1996, as amended, with Raychem Corporation ("Raychem") pursuant to
which the Company will acquire certain assets of Raychem relating to the
business of designing, developing, processing, manufacturing, and marketing
shape memory alloy components (the "Acquisition"), which acquisition is
scheduled to close on or around June 28, 1996 (such actual date of closing, the
"Closing Date"); and
WHEREAS, as part of the financing for the Acquisition, the Company desires
to issue, in a securities offering pursuant to Regulation S under the United
States Securities Act of 1933, as amended (the "Securities Act"), up to
2,500,000 shares of the Company's Common Stock, par value $0.01 per share
("Common Stock"), at a purchase price of $2.00 per share (the "Offering"); and
WHEREAS, the Company wishes to sell to Investor, and Investor wishes to
purchase, the number of shares of Common Stock set forth below, on the terms and
conditions set forth in this Agreement, as part of the Offering.
<PAGE>
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
promises contained herein, the Company and Investor hereby agree as follows:
1. Purchase and Delivery.
(a) Subject to the terms and conditions of this Agreement, including
without limitation the consummation of the Acquisition, Investor hereby
subscribes for, and upon the Company's acceptance of such subscription on the
Closing Date as evidenced by the Company's execution of this Agreement on the
Closing Date, the Company agrees to sell and issue to Investor ________________
______________ ( ) shares of Common Stock (the "Securities"), for an
aggregate purchase price of ___________________ (the "Purchase Price"), being
$2.00 per share. The sale of the Securities pursuant hereto is part of the
Offering, which Offering shall terminate not later than June 24, 1996 (the
"Termination Date").
(b) Pending the closing of the Acquisition, the Purchase Price shall
be deposited through electronic transfer prior to or on the Termination Date in
the trust account maintained by Finn Dixon & Herling, the Company's counsel
("FD&H"), pursuant to the wire instructions set forth on Schedule A attached
hereto. Upon and simultaneously with the closing of the Acquisition on the
Closing Date, FD&H shall electronically transfer the Purchase Price to the
Company; provided, however, if for any reason the Acquisition is not consummated
on or by July 15, 1996, FD&H shall return the Purchase Price to Investor,
without interest, unless otherwise agreed to by the parties.
(c) Upon consummation of the Acquisition, the Company agrees that it
shall cause to be delivered to Investor at Investor's address set forth on the
signature page hereof a certificate representing the Securities promptly after
the expiration of the forty-day restricted period under Regulation S of the
Securities Act.
2. Representations and Warranties of Investor. Investor hereby represents
and warrants to the Company, and acknowledges and intends that the Company rely
thereon, as follows:
(a) Investor will not sell, assign, pledge, transfer, or otherwise
dispose of, whether directly or indirectly, all or any portion of the Securities
purchased hereby to any person or entity without complying with applicable
securities laws and the transaction restrictions set forth in Section 4 hereof;
(b) Investor is acquiring the Securities for Investor's own account,
for investment purposes only and not with a view to any distribution of the
Securities and no other person has a direct or indirect beneficial interest in
the Securities;
-2-
<PAGE>
(c) Investor acknowledges and agrees that the Company has informed
Investor that the Securities are not registered under any securities laws, and
therefore that (absent registration under or exemption from applicable
securities laws) the Securities are subject to substantial restrictions on
transfer and the Securities may not be transferred for an indefinite period of
time;
(d) Investor has investigated the purchase of the Securities to the
extent Investor deems necessary or desirable, and the Company has provided
Investor with any assistance in connection therewith which Investor has
requested. Investor has such knowledge and experience in financial and business
matters that Investor is capable of evaluating the merits and risks of the
acquisition of the Securities and of making an informed investment decision with
respect thereto and Investor has the ability to bear the economic risk of an
investment in the Company and to withstand a complete loss of its investment.
Investor is financially able to hold the Securities for an indefinite period of
time;
(e) Investor is not relying on the Company or any of its directors,
officers, employees, or agents for guidance with respect to tax and other
applicable laws of any jurisdiction, or other economic considerations, and
Investor has been furnished by the Company with all information Investor has
deemed necessary or appropriate in order to form an informed investment decision
concerning the purchase of the Securities. Investor has been afforded an
opportunity to ask questions of and receive answers from representatives of the
Company concerning the terms and conditions of Investor's purchase of the
Securities and has been afforded the opportunity to obtain any additional
information (to the extent that the Company had such information or could
acquire it without unreasonable effort or expense) necessary to verify the
accuracy of information otherwise furnished by the Company;
(f) Investor understands that no United States federal or state
agency or any agency of any other government has passed upon or made any
recommendation or endorsement of any investment in the Company;
(g) Investor is not any of the following (each of the
following, a "U.S. Person"):
(i) any natural person resident in the United States;
(ii) any partnership or corporation organized or incorporated
under the laws of the United States;
(iii) any estate of which any executor or administrator is a
U.S. Person;
-3-
<PAGE>
(iv) any trust of which any trustee is a U.S. Person;
(v) any agency or branch of a foreign entity located in
the United States;
(vi) any non-discretionary account or similar account
(other than an estate or trust) held by a dealer or other fiduciary for
the benefit or account of a U.S. Person;
(vii) any discretionary account or similar account (other than
an estate or trust) held by a dealer or other fiduciary organized,
incorporated, or (if an individual) resident in the United States; and
(viii) any partnership or corporation if:
(A) organized or incorporated under the laws of any
foreign jurisdiction; and
(B) formed by a U.S. Person principally for the purpose
of investing in securities not registered under the Securities Act,
unless it is organized or incorporated, and owned, by accredited
investors (as defined in Rule 501(a) under the Securities Act) who
are not natural persons, estates or trusts.
(h) If Investor is an organization, Investor; (i) has not been
organized for the purpose of purchasing the Securities, or (ii) has been
organized for the purpose of purchasing the Securities and has made the
representations and warranties contained in this Agreement with respect to and
on behalf of all of the beneficial owners thereof;
(i) If Investor is an organization, that (i) this Agreement and the
transactions contemplated hereby have been duly authorized by all necessary
directors, officers, trustees, partners, or other necessary persons of Investor
and will not violate any agreement to which Investor is a party; (ii) the
undersigned natural person executing this Agreement on behalf of Investor has
the requisite right, power, capacity, and authority under Investor's governing
instruments, a copy of which shall be provided to the Company at its request, to
enter into this Agreement; (iii) this Agreement will be binding on and
enforceable against Investor in accordance with its terms; and (iv) the
undersigned natural person, as well as Investor, will be duly subject to the
provisions of Paragraph 3;
(j) Investor is an "accredited investor" as such term is defined in
Rule 501 adopted pursuant to the United States Securities Act;
-4-
<PAGE>
(k) Investor understands and acknowledges that the Securities have
not been and will not be registered under the Securities Act and may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. Persons (other than distributors, as defined in Regulation S) unless
the Securities are registered under the Securities Act, or pursuant to an
exemption from the registration requirements of the Securities Act;
(l) Until 40 days after the Closing Date, Investor will offer or
sell the Securities only in accordance with Rule 903 of Regulation S under the
Securities Act; and
(m) None of Investor, its affiliates (as defined in Rule 251
promulgated under the Securities Act) nor any persons acting on its or their
behalf have engaged or will engage in any activity undertaken for the purpose
of, or that could reasonably be expected to have the effect of, conditioning the
market in the United States for any of the Securities, and it and they have
complied and will comply with the offering restrictions requirement of
Regulation S with respect to the Securities.
3. Indemnification. Investor hereby indemnifies, and agrees to hold
harmless, the Company, each corporation and entity affiliated with the Company,
and the stockholders, partners, officers, directors, employees, professional
advisors, and agents of each of the foregoing, from and against any and all
loss, damage, liability or expense, including reasonable attorneys' fees and
other legal expenses, which the indemnified party may incur by reason of or in
connection with any misrepresentation made by Investor, any breach of any of
Investor's representations and warranties, or Investor's failure to fulfill any
of its covenants or agreements under this Agreement.
4. Miscellaneous
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Connecticut, U.S.A., without regard to its
conflicts of law rules or principles. The parties acknowledge, however, that
they have executed and delivered this Agreement in ____________________________
and that the sale of the Securities has occurred in _________________________
_______________________________.
(b) This Agreement constitutes the entire agreement between the
parties hereto with respect to Investor's purchase of the Securities, and no
amendment, alteration, or modification of this Agreement shall be valid, unless
such amendment, alteration, or modification is expressed in a written instrument
duly executed by Investor and the Company.
(c) This Agreement shall inure to the benefit of and be binding upon
the successors, assigns, legal representatives,
-5-
<PAGE>
executors, and/or administrator of Investor and the Company, but shall not be
assignable by Investor.
(d) This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(e) If any of the provisions contained herein shall be deemed to be
unenforceable for any reason, the parties hereto agree this Agreement shall be
interpreted so as to be enforceable to the greatest extent possible.
(f) Investor's representations, warranties, and indemnification
obligations contained herein shall survive the acceptance hereof.
-6-
<PAGE>
SIGNATURE PAGE - INDIVIDUALS ONLY
(ORGANIZATIONS ON FOLLOWING PAGE)
--------------------------------
Name(s) of Investor(s)
(Please Print)
--------------------------------
Signature of Investor(s)
--------------------------------
Signature of Joint Investor
(if any)
Home Address: _____________________________________________________
_____________________________________________________
Home Telephone Number:_____________________________________________
ACCEPTED AND AGREED:
MEMRY CORPORATION
By:
---------------------------------
Name:
Title:
Date:
ACCEPTED AND AGREED WITH RESPECT TO SECTION 1(b) ONLY:
FINN DIXON & HERLING
By: ______________________________, a partner
Name:
-7-
<PAGE>
SIGNATURE PAGE - ORGANIZATION ONLY
(INDIVIDUALS ON PREVIOUS PAGE)
________________________________
Name(s) of Investor(s)
(Please Print)
________________________________
Signature of Investor(s)
Type of Organization (e.g., Corporation, Trust, Limited
Partnership, General Partnership):
________________________________________________________________________________
Jurisdiction of Formation or Incorporation:_____________________________________
Address of Principal Office:____________________________________________________
________________________________________________________________________________
Business Telephone Number:______________________________________________________
List any other person(s) who should receive copies of correspondence sent to the
organization, if any:
Name:___________________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
ACCEPTED AND AGREED:
MEMRY CORPORATION
By:____________________________________
Name:
Title:
Date:
ACCEPTED AND AGREED WITH RESPECT TO SECTION 1(b) ONLY:
FINN DIXON & HERLING
By:_______________________________, a partner
Name:
-8-
<PAGE>
SCHEDULE A
WIRE INSTRUCTIONS
The Purchase Price is to be sent by electronic transfer, in immediately
available funds, pursuant to the terms of this Agreement, to:
Shawmut Bank
777 Main Street
Hartford, Connecticut
Attention: Wire transfer department
ABA Number 011900445, for credit to the account of Finn Dixon & Herling Trust
Account, account number 6674 7952
-9-
<PAGE>
Form of Securities Purchase Agreement executed, as of June 28, 1996, by:
1. Conoreq S.A. - 1,000,000 shares of Common Stock for $2,000,000.
2. Banque Pour L'Industrie Francaise ref: GAN - 250,000 shares of Common
Stock for $500,000.
3. Banque Privee Edmond De Rothschild S.A. - 750,000 shares of Common Stock
for $1,500,000.
-10-
<PAGE>
EXHIBIT 10.44
COMMERCIAL REVOLVING LOAN,
TERM LOAN AND SECURITY AGREEMENT
This Commercial Revolving Loan, Term Loan and Security Agreement dated
August 9, 1996 among MEMRY CORPORATION, a Delaware corporation with its chief
executive office and principal place of business at 57 Commerce Drive,
Brookfield, Connecticut 06804 ("MEMRY"), WRIGHT MACHINE CORPORATION, a Delaware
corporation with its chief executive office and principal place of business at
69 Armory Street, Worcester, Massachusetts 01603 ("WRIGHT"; Memry and Wright
collectively, the "BORROWERS"), and AFFILIATED BUSINESS CREDIT CORPORATION, a
Connecticut corporation with an office at 72 Queen Street, Southington,
Connecticut 06489 ("LENDER").
____________________
PREAMBLE
WHEREAS, Borrowers have requested Lender to extend to Borrowers the
following financial accommodations (collectively, the "LOANS"): (a) a revolving
loan in the maximum aggregate principal amount of up to $1,500,000, and (b) a
term loan in the original principal amount of $1,135,000; and
WHEREAS, Lender has agreed to extend the Loans to Borrowers on the
conditions set forth below.
NOW, THEREFORE, for the mutual considerations contained in this Agreement,
Borrowers and Lender agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.1. ACCOUNTING TERMS; ETC.
Unless otherwise defined, all accounting terms shall be construed, and all
computations or classifications of assets and liabilities and of income and
expenses shall be made or determined in accordance with generally accepted
accounting principles consistently applied. As used herein, or in the Financing
Agreements or in any certificate, document or report delivered pursuant to this
Agreement or any other Financing Agreement, the following terms shall have the
following meanings:
(a) "Account" and "Accounts" shall have the meanings assigned in Section
-------
8.1(a) hereof.
- - ------
(b) "Account Debtor" and "Account Debtors" shall mean the person or entity
or persons or entities obligated to Borrowers upon the Accounts.
<PAGE>
-2-
(c) "Agreement" shall mean this Commercial Revolving Loan, Term Loan and
Security Agreement as the same may from time to time be amended, supplemented or
otherwise modified.
(d) "Arrangement" and "Arrangements" shall have the meaning assigned in
Section 5.1(n) hereof.
- - --------------
(e) "Assignment of Leases and Rents" shall have the meaning assigned in
Section 6.1(1) hereof;
- - --------------
(f) "Bank Accounts" shall mean the account described in Section 7.15
------------
hereof.
(g) "Borrowing Base" shall mean an amount equal to the lesser of: (i) One
Million Five Hundred Thousand Dollars ($1,500,000) or (ii) an amount equal to
the aggregate of (1) eighty percent (80%) of Eligible Accounts and (2) the
lesser of (A) twenty-five percent (25%) of Eligible Inventory, or (B) Five
Hundred Thousand Dollars ($500,000).
(h) "Business Day" shall mean any day other than a day on which commercial
banks in Hartford, Connecticut are required or permitted by law to close.
(i) "CII Agreement" shall have the meaning assigned in Section 6.1(p)
--------------
hereof;
(j) "Collateral" shall mean the property of Borrowers described in Section
-------
8.1 hereof.
- - ---
(k) "Company" and "Companies" shall mean Borrowers and any entities
affiliated with Borrowers in connection with any Plan.
(l) "Defaulting Event" shall mean the occurrence of an Event of Default or
the occurrence of any condition or event which but for the giving of notice or
passage of time or both would constitute an Event of Default.
(m) "Dollar" and the sign "$" shall mean lawful money of the United States
of America.
(n) "Eligible Accounts" shall mean those Accounts of Borrowers which arise
from the sale of inventory or rendition of services in the ordinary course of
Borrowers' businesses, are subject to Lender's perfected, first lien security
interest and no other lien or security interest, and are evidenced by an invoice
or other documentary evidence satisfactory to Lender. Further, no Account shall
be an Eligible Account if:
(i) it arises out of a sale made by Borrowers to any
<PAGE>
-3-
affiliate, division, subsidiary or parent of Borrowers or to any person or
entity controlled by or under common control with an affiliate, division,
subsidiary or parent of Borrowers;
(ii) it is due or unpaid more than ninety (90) days after its original
invoice date;
(iii) the account debtor is also Borrowers' creditor or supplier, has
disputed liability or made any claim with respect to any other account due from
such account debtor to Borrowers, or the account is otherwise subject to any
defense, counterclaim or offset of or by the account debtor (provided, however,
that Accounts of Borrowers arising out of sales to Raychem Corporation shall not
be ineligible pursuant to this subsection (iii) if Lender has received a "no
off-set" agreement acceptable in form, scope and substance to Lender in Lender's
sole discretion);
(iv) the account debtor is located outside the United States (unless such
account is supported by a letter of credit or credit insurance acceptable in
form, scope and substance to Lender in Lender's sole discretion);
(v) the account debtor is located in New Jersey or Minnesota, unless
Borrowers have (x) filed a Notice of Business Activities Report in the
appropriate office or agency for such state in the then current year, or (y)
received a Certificate of Authority to do business and is in good standing in
such state;
(vi) the sale giving rise to the account is on a bill-and-hold, guaranteed
sale, sale-and-return, sale on approval, consignment or other repurchase or
return basis, or is evidenced by a Notes or chattel paper;
(vii) Borrowers have made an agreement with the account debtor for any
deduction from the invoice representing said account except for discounts or
allowances made in the ordinary course of Borrowers' businesses for prompt
payment, which discounts or allowances are reflected in the calculation of the
face value of each respective invoice related thereto;
(viii) twenty-five percent (25%) or more of the aggregate invoices for an
account debtor are due or unpaid for more than ninety (90) days after their
original invoice date;
(ix) it arises out of a sale made by the Borrowers to an account debtor
that is the United States Government or any agency or subdivision thereof
(collectively the "GOVERNMENT"), unless Borrowers have complied in all respects
with the Federal Assignment of Claims Act of 1940, or has otherwise satisfied
Lender as to the assignability and collectability of said accounts; or
<PAGE>
-4-
(x) the Lender in its sole discretion deems the Account to be unacceptable
for any reason.
If there is any dispute as to whether any Account is an Eligible Account,
the determination of Lender shall at all times control.
(o) "Eligible Inventory" shall mean Memry's inventory of raw materials and
finished goods located at 57 Commerce Drive, Brookfield, Connecticut, 69 Armory
Street, Worcester, Massachusetts, 4065 Campbell Avenue, San Mateo County, Menlo
Park, California, and 220 Jefferson Avenue, Menlo Park, California to the extent
Lender, in its sole discretion, determines that such inventory is eligible for
advance. In addition and without limiting Lender's discretion, Eligible
Inventory shall be net of reserves and returns, valued at the lower of cost or
market (as determined in accordance with the FIFO method of accounting), and
subject to Lender's perfected first security interest and to no other lien or
security interest. Further and without limiting Lender's discretion, no
inventory shall be eligible if it is:
(i) deemed by Lender as slow moving or obsolete;
(ii) not otherwise in good condition and salable through normal trade
channels; or
(iii) not salable in the ordinary course of Borrowers' businesses.
(p) "Environmental Laws" shall mean any and all applicable foreign,
federal, state and local statutes, laws, regulations, rules, ordinances, orders,
guidances, policies or common law (whether now existing or hereafter enacted or
promulgated) pertaining to the environment, of any and all federal, state or
local governments and governmental and quasi-governmental agencies, bureaus,
subdivisions, commissions or departments which may now or hereafter have
jurisdiction over Borrowers and all applicable judicial and administrative and
regulatory decrees, judgments and orders, including common law rulings and
determinations, relating to injury to, or the protection of, real or personal
property or human health or the environment, including, without limitation, all
requirements pertaining to reporting, licensing, permitting, investigation,
remediation and removal of emissions, discharges, releases or threatened
releases of Hazardous Materials, chemical substances, pollutants or contaminants
whether solid, liquid or gaseous in nature, into the environment or relating to
the manufacture, processing, distribution use, treatment, storage, disposal,
transport or handling of such Hazardous Materials, chemical substances,
pollutants or contaminants.
Without limiting the generality of the foregoing, the term "Environmental
Laws" shall encompass each of the following statutes, and regulations
<PAGE>
-5-
promulgated thereunder, and amendments and successors to such statutes and
regulations, as may be enacted and promulgated from time to time: Federal
Occupational Safety and Health Act ("OSHA"); the Clean Air Act ("CAA"); the
Toxic Substances Control Act ("TSCA"); the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), as amended by the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"); the Clean Water Act
("CWA"); the Resource Conservation and Recovery Act, as amended by the Hazardous
and Solid Waste Amendments of 1984 ("RCRA"); the Hazardous Materials
Transportation Act; and all applicable Environmental Laws of each state and
municipality in which Borrowers conduct business or locate assets and all rules
and regulations thereunder and amendments thereto, and all similar state and
local laws, rules and regulations.
(q) "ERISA" shall mean the Employee Retirement Income Security Act of 1974
and all rules and regulations promulgated pursuant thereto, as the same may from
time to time be supplemented or amended.
(r) "Event of Default" and "Events of Default" shall have the meanings
assigned in Section 9.1 hereof.
-----------
(s) "Fidelity Agreements" shall have the meaning assigned in Section 6.1(d)
-------------
hereof.
(t) "Fidelity Guarantors" shall have the meaning assigned in Section 6.1(d)
--------------
hereof.
(u) "Financing Agreement" or "Financing Agreements" shall mean this
Agreement, the Notes, the Mortgage, the Assignment of Leases and Rents, the
Indemnity Agreement, the Stock Pledge Agreement, the Patent Security Agreement,
the Trademark Security Agreement and any and all other instruments, agreements
and documents executed in connection herewith or therewith or related hereto or
thereto, together with any amendments, supplements or modifications hereto or
thereto.
(v) "Fixed Assets" shall mean equipment and other assets of Borrowers
which, by generally accepted accounting principles, must be treated as fixed
assets in financial statements of Borrowers.
(w) "Government" shall have the meaning assigned in clause (ix) of the
definition of Eligible Accounts.
(x) "Hazardous Material" shall mean any chemical, compound, material,
mixture or substance: (i) the presence of which requires or may hereafter
require notification, investigation, monitoring or remediation under any
Environmental Law; (ii) which is or becomes defined as a "hazardous waste",
"hazardous material" or "hazardous substance" or "toxic substance" or
<PAGE>
-6-
"pollutant" or contaminant" under any present or future applicable federal,
state or local law or under the rules and regulations adopted or promulgated
pursuant thereto, including, without limitation, the Environmental Laws; (iii)
which is toxic, explosive, corrosive, reactive, ignitable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is or becomes
regulated by any governmental authority, agency, department, commission, board,
agency or instrumentality of any foreign country, the United States, any state
of the United States, or any political subdivision thereof to the extent any of
the foregoing has or had jurisdiction over Borrowers; (iv) which contains
without limitation, gasoline, diesel fuel or other petroleum products, asbestos
or polychlorinated biphenyls ("PCBS"); or (v) any other chemical, material or
substance, exposure to, or disposal of, which is now or hereafter prohibited,
limited or regulated by any federal, state or local governmental body,
instrumentality or agency.
(y) "Indemnifiable Liability" shall have the same meaning assigned in
Section 14.1(a) hereof.
- - --------------
(z) "Indemnitee" and "Indemnitees" shall have the meanings assigned in
Section 14.1(a) hereof.
- - --------------
(aa) "Indemnity Agreement" shall have the same meaning assigned in Section
-------
6.1(m) hereof.
- - ------
(bb) "Inventory" shall have the meaning assigned in Section 8.1(d) hereof.
-------------
(cc) "Lessor's Agreements" shall have the meaning assigned in Section
-------
6.1(g) hereof.
- - ------
(dd) "Life Insurance Assignment" shall have the meaning assigned in Section
-------
6.1(e) hereof.
- - ------
(ee) "Loan" means a Revolving Loan or the Term Loan and "Loans" means the
Revolving Loans and the Term Loan.
(ff) "Massachusetts Premises" shall have the meaning assigned in Section
-------
6.1(k) hereof.
- - ------
(gg) "Minimum Balance" shall have the meaning assigned in Section 5.1(a)
-------------
hereof.
(hh) "Mortgage" shall have the meaning assigned in Section 6.1(k) hereof.
--------------
(ii) "No Off-Set Agreement" shall have the meaning assigned in
<PAGE>
-7-
Section 6.1(o) hereof.
- - --------------
(jj) "Note" means the Revolving Promissory Note or the Term Promissory
Note, and "Notes" means the Revolving Promissory Note and the Term Promissory
Note.
(kk) "Notice of Borrowing" shall have the meaning assigned in Section 2.3
-----------
hereof.
(ll) "Obligation" and "Obligations" mean and include all loans advances,
interest, indebtedness, liabilities, obligations, fees, charges, expenses,
guaranties, covenants and duties at any time owing by Borrowers to Lender of
every kind and description, whether or not evidenced by any note or other
instrument, whether or not for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
including, but not limited to, the Loans, the Service Charge, the Termination
Fee, the Minimum Interest Amount, and all other indebtedness, liabilities and
obligations of Borrowers arising under this Agreement and the other Financing
Agreements or otherwise, and all reasonable costs, expenses, fees, charges
incurred by Lender hereunder or otherwise with respect to Borrowers, including,
without limitation, reasonable fees and expenses of attorneys, paralegals and
other professionals incurred in connection with any of the foregoing, or in any
way connected with, involving or relating to the preservation, enforcement,
protection or defense of, or realization under this Agreement, any of the other
Financing Agreements, any related agreement, document or instrument, the
Collateral and the rights and remedies hereunder or thereunder, including
without limitation, all reasonable costs, expenses and fees incurred in
inspecting or surveying mortgaged real estate, if any, or conducting
Environmental studies or tests, and all reasonable costs, expenses and fees
incurred in connection with any "workout" or default resolution negotiations
involving legal counsel or other professionals and further in connection with
any modification, renegotiation or restructuring of the indebtedness evidenced
by this Agreement and/or any of the other Financing Agreements and/or
Obligations.
(mm) "Patent Security Agreement" shall have the meaning assigned in Section
-------
6.1(p) hereof.
- - ------
(nn) "Plan" means any employee benefit plan or other plan maintained by
Borrowers or any entity affiliated with Borrowers for employees covered by Title
I of ERISA.
(oo) "Premises" shall mean the real property located at 57 Commerce Drive,
Brookfield, Connecticut, 69 Armory Street, Worcester, Massachusetts, 4065
Campbell Avenue, San Mateo County, Menlo Park, California and 220 Jefferson
Avenue, Menlo Park, California.
<PAGE>
-8-
(pp) "Prime Rate" shall mean the Prime Rate as published from time to time
in the "Money Rates" section of The Wall Street Journal or any successor
-----------------------
publication, or in the event that such rate is no longer published in The Wall
--------
Street Journal, a comparable index or reference selected by Lender. The Prime
- - --------------
Rate need not and may not necessarily be the lowest or most favorable rate.
(qq) "Receivables" shall have the meaning assigned in Section 8.1(a)
-------------
hereof.
(rr) "Release" shall mean any release, emission, disposal, leaching or
migration into the environment (including, without limitation, the abandonment
or disposal of any barrels, containers, or other closed receptacles containing
any Hazardous Materials) or into or out of any property owned, occupied or used
by Borrowers.
(ss) "Revolving Loan" and "Revolving Loans" shall have the meanings
assigned in Section 2.1 hereof.
-----------
(tt) "Revolving Loan Account" shall have the meaning assigned in Section
-------
2.3 hereof.
- - ---
(uu) "Revolving Promissory Note" shall have the meaning assigned in Section
-------
2.3 hereof.
- - ---
(vv) "Service Charge" shall have the meaning assigned in Section 4.3 below.
-----------
(ww) "Stock Pledge Agreement" shall have the meaning assigned in Section
-------
6.1(j) hereof.
- - ------
(xx) "Subordinating Creditor" and "Subordinating Creditors" mean James G.
Binch, Emitzel Holdings SA and Harbour Investment Corporation.
(yy) "Subordination Agreement" and "Subordination Agreements" shall have
the meaning set forth in Section 6.1(f) hereof.
-------------
(zz) "Subsidiary" and "Subsidiaries" shall mean any corporation or
corporations of which the outstanding shares of any stock having ordinary voting
power is at the time owned by Borrowers and/or by one or more Subsidiaries.
(aaa) "Term" shall have the meaning assigned in Section 13.1(a) hereof.
--------------
(bbb) "Term Promissory Note" shall have the meaning assigned in Section 3.1
hereof.
<PAGE>
-9-
(ccc) "Termination Fee" shall have the meaning assigned in Section 13.1(b)
--------------
hereof.
(ddd) "Trademark Security Agreement" shall have the meaning assigned in
Section 6.1(q) hereof.
- - --------------
ARTICLE II. REVOLVING LOANS
SECTION 2.1. AMOUNTS.
Subject to the terms and conditions contained in this Agreement, and so
long as no Defaulting Event has occurred, Lender agrees, in its sole discretion,
to make and remake loans (collectively, the "REVOLVING LOANS" and, individually,
a "REVOLVING LOAN") to Borrowers from time to time until terminated as provided
below in principal amounts not exceeding in the aggregate at any one time
outstanding the Borrowing Base, it being agreed and understood that at no time
shall the maximum aggregate principal amount of the Revolving Loans made by
Lender exceed the Borrowing Base.
SECTION 2.2. PAYMENT ON DEMAND.
ALL OBLIGATIONS OF BORROWERS ARISING UNDER THE REVOLVING LOANS SHALL BE
PAID BY BORROWERS IN FULL UPON DEMAND BY LENDER NOTWITHSTANDING LENDER'S RIGHTS
UPON THE OCCURRENCE OF AN EVENT OF DEFAULT AND WHETHER OR NOT SUCH EVENT OF
DEFAULT HAS OCCURRED.
SECTION 2.3. PROCEDURE FOR ADVANCES, NOTICE OF BORROWING, REVOLVING
PROMISSORY NOTE, ETC.
Within the limits of the Borrowing Base and the Term, so long as Borrowers
are in compliance with all of the terms and conditions of this Agreement and no
Defaulting Event has occurred, Borrowers may request borrowings and may repay
and request reborrowings of Revolving Loans. Whenever Borrowers desire an
advance, Borrowers shall notify Lender (which notice shall be irrevocable) by
telecopy or telephone of the proposed borrowing. Such notice (each, a "NOTICE
OF BORROWING") shall specify the date of the proposed borrowing and the amount
proposed to be borrowed. Each Notice of Borrowing must be received by Lender no
later than 11:00 a.m., Hartford, Connecticut time on the day such borrowing is
requested. In addition to this Agreement, the Revolving Loans shall be
evidenced by a revolving Promissory Note payable to Lender in the form of
Exhibit A attached hereto (the "REVOLVING PROMISSORY NOTE"). Insofar as
- - ---------
Borrowers may request and Lender shall make Revolving Loans hereunder, Lender
shall enter such advances as debits on a revolving loan account maintained by
Borrowers with Lender (the "REVOLVING LOAN ACCOUNT"). In order to facilitate
the requesting and making of advances hereunder, each of the Borrowers hereby
appoints Memry as their agent authorized to request, receive and distribute to
the Borrowers advances under the Revolving Loan and to communicate with the
Lender with respect to
<PAGE>
-10-
the Revolving Loan, and Wright hereby accepts such appointment. Lender may also
record to the Revolving Loan Account, in accordance with customary accounting
practices and procedures, (i) all fees, accrued and unpaid interest, late fees,
usual and customary charges for the maintenance and administration of checking
and any other accounts maintained by Borrowers with Lender, and other fees and
charges which are properly chargeable to Borrowers under this Agreement, (ii)
all payments, subject to collection, made by or account of indebtedness
evidenced by the Revolving Loan Account, (iii) all proceeds of Collateral which
are finally paid to Lender in its own office in cash or collected items, and
(iv) other appropriate debits and credits, including without limitation,
payments of interest due hereunder.
SECTION 2.4. MONTHLY STATEMENTS.
On a monthly basis, Lender shall render a statement for the Revolving Loan
Account, which statement shall be considered correct and accepted by Borrowers
and conclusively binding upon Borrowers unless Borrowers notify Lender to the
contrary within ten (10) days of the receipt of said statement by Borrowers.
Lender shall have the right to debit the Revolving Loan Account for all interest
charges on the Revolving Loan as and when the same shall be due and payable, if
not otherwise paid by Borrowers, subject to applicable law.
SECTION 2.5. LENDER DISCRETION.
Nothing herein shall be construed to (a) require Lender to make Revolving
Loans, and/or (b) prohibit Lender from lending in excess of the Borrowing Base,
it being agreed that all such loans and advances shall be at Lender's sole
discretion and shall not establish a pattern or custom binding upon Lender.
ARTICLE III. TERM LOAN
SECTION 3.1. AMOUNT.
Subject to the terms and conditions contained in this Agreement, Lender
agrees to make a loan to Borrowers in the original principal amount of
$1,135,000 (the "TERM LOAN"). In addition to this Agreement, the Term Loan
shall be evidenced by a Term Promissory Note payable to Lender in the form of
Exhibit B attached hereto (the "TERM PROMISSORY NOTE").
- - ---------
SECTION 3.2. MONTHLY STATEMENTS.
On a monthly basis, Lender shall render a statement for the Term Loan,
which statement shall be considered correct and accepted by Borrowers and
conclusively binding upon Borrowers unless Borrowers notify Lender to the
contrary within ten (10) days of the receipt of said statement by Borrowers.
Lender shall have the right to debit any account of Borrowers for all principal,
interest and other charges on the Term Loan as and when the same shall be due
and payable, if not otherwise paid by Borrowers.
<PAGE>
-11-
ARTICLE IV. INTEREST, FEES AND OTHER CHARGES
SECTION 4.1. INTEREST.
(a) INTEREST RATES.
(i) REVOLVING LOANS. So long as no Defaulting Event has occurred, each
Revolving Loan shall bear interest (from the date made through and including the
date of payment in full) at a floating rate per annum equal to two percentage
points (2%) above the Prime Rate, on the greater of (i) the actual monthly
balance outstanding under the Revolving Loan, or (ii) a minimum assumed monthly
loan balance of, for the period commencing on the date hereof and continuing for
a period of ninety (90) days from the date hereof, $250,000; for the period
commencing on the date ninety-one (91) days from the date hereof and continuing
through and including the date one hundred eighty (180) days from the date
hereof, $500,000; and thereafter, $750,000 (the "MINIMUM BALANCE").
(ii) TERM LOAN. So long as no Event of Default has occurred and shall be
continuing, the Term Loan shall bear interest (from the date made through and
including the date of payment in full) on the outstanding principal amount
thereof at a floating rate per annum equal to two and one-quarter percentage
points (2.25%) above the Prime Rate.
(b) PAYMENT OF INTEREST. So long as any of the Obligations remain
outstanding, interest on the Loans shall be due and payable without notice or
demand monthly in arrears beginning on September 1, 1996 and continuing on the
first business day of each and every month thereafter.
(c) DEFAULT INTEREST RATE. Notwithstanding the foregoing, interest on the
Loans, at all times after the occurrence of an Event of Default and during the
continuance of an Event of Default, and interest on all payments of interest
that are not paid when due, shall accrue at a rate per annum equal to four
percentage points (4.0%) above the applicable interest rates otherwise in effect
under this Agreement.
(d) CALCULATION OF INTEREST. Interest on the Loans shall be calculated on
the basis of a 360-day year and the actual number of days elapsed.
(e) LATE PAYMENT. If any amount due hereunder or under the Notes is not
paid within ten (10) days after the date it is due and payable, without in any
way affecting Lender's right to make demand hereunder or to declare an Event of
Default to have occurred, Lender may in its sole discretion assess a late charge
equal to five percent (5.0%) of such payment against Borrowers, which late
charge shall be immediately due and payable and may be paid by a charge to
Borrowers' loan account as contemplated in Section 2.3
<PAGE>
-12-
above.
(f) LAWFUL INTEREST. It being the intent of the parties that the rate of
interest and all other charges to Borrowers be lawful, if for any reason the
payment of a portion of interest, fees or charges as required by this Agreement
would exceed the limit established by applicable law which a commercial lender
such as Lender may charge to a commercial Borrowers such as Borrowers, then the
obligation to pay interest or charges shall automatically be reduced to such
limit and, if any amounts in excess of such limits shall have been paid, then
such amounts shall be applied to the unpaid principal amount of the Obligations
or refunded to Borrowers, so that under no circumstances shall interest or
charges required hereunder exceed the maximum rate allowed by law.
SECTION 4.2. CLOSING FEES.
On or before the date hereof, Borrowers shall pay or have paid to Lender
all fees, expenses and other costs incurred by Lender in connection with the
closing of the extension of the Loans (including without limitation, all
attorney's and other professionals' fees and expenses).
SECTION 4.3. SERVICE CHARGES.
Borrowers shall also pay to Lender a monthly service charge of $1,250 for
services rendered by Lender in connection with the maintenance of the Revolving
Loan facility being provided hereunder (the "SERVICE CHARGE"), which Service
Charge shall be due and payable for each month of the Term. The Service Charge
shall be paid commencing on the first business day of the first month following
the date hereof and continuing on the first business day of each and every month
thereafter until the Revolving Loan is paid in full and any obligation of Lender
to make further advances has been terminated.
SECTION 4.4. COMMITMENT FEE.
On or before the date hereof, Borrowers shall pay or have paid to Lender a
non-refundable commitment fee of $7,500 in connection with the closing of the
Revolving Loan, and a non-refundable origination fee of $5,675 in connection
with the closing of the Term Loan.
SECTION 4.5. TERM LOAN PREPAYMENTS.
Borrower may not make any optional prepayments, in whole or in part, on
the Term Loan.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
SECTION 5.1. REPRESENTATIONS AND WARRANTIES.
Each of the Borrowers represents and warrants to Lender that:
(a) GOOD STANDING AND QUALIFICATION. It is duly organized, validly existing
and in good standing under the laws of the State of Delaware.
<PAGE>
-13-
It has all requisite corporate power and authority to own and operate its
properties and to carry on its business as presently conducted and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction wherein the character of the properties owned or leased by it
therein or in which the transaction of its business therein makes such
qualification necessary, except where such failure to be so qualified would not
have a material adverse effect on the financial condition, assets or operations
of the Borrowers.
(b) CORPORATE AUTHORITY. It has full power and authority to enter into this
Agreement and the other Financing Agreements to which it is a party, to make the
borrowings contemplated herein, to execute and deliver the Notes and the other
Financing Agreements to which it is a party, and to incur the obligations
provided for herein and therein, all of which have been duly authorized by all
necessary and proper corporate action. No other consent or approval or the
taking of any other action in respect of shareholders or of any public authority
is required as a condition to the validity or enforceability of this Agreement,
the Notes, the other Financing Agreements or any other instrument, document or
agreement delivered in connection herewith or therewith.
(c) BINDING AGREEMENTS. This Agreement constitutes, and the Notes and the
other Financing Agreements executed and/or delivered in connection herewith or
therewith, when issued and delivered pursuant hereto for value received shall
constitute, valid and legally binding obligations of Borrowers, enforceable in
accordance with their respective terms, except as enforcement may be limited by
principles of equity, bankruptcy, insolvency, or other laws affecting the
enforcement of creditors' rights generally.
(d) LITIGATION. Except as set forth on Schedule 5.1(d) attached hereto,
---------------
there are no actions, suits or proceedings pending against Borrowers before any
court or administrative agency, nor are there any actions, suits or proceedings
threatened, which, individually or in the aggregate, would materially and
adversely affect the financial condition, assets or operations of Borrowers, nor
are there any such actions, suits or proceedings which question the validity of
this Agreement, the Notes, any of the other Financing Agreements or any action
to be taken in connection with the transactions contemplated hereby or thereby.
(e) NO CONFLICTING LAW OR AGREEMENTS. The execution, delivery and
performance by Borrowers of this Agreement, the Notes and each other Financing
Agreement, as the case may be, does not (i) violate any provision of its
Certificate of Incorporation or By-laws or any order, decree or judgment, or any
material provision of any statute, rule or regulation to which the Borrowers may
be subject; (ii) violate or conflict with, result in a breach of or constitute
(with notice or lapse of time, or both) a material default under any
<PAGE>
-14-
shareholder agreement, stock preference agreement, mortgage, indenture or other
contract or undertaking to which it is a party, or by which any of its
properties may be bound; and (iii) result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any property or assets
of Borrowers, except for the liens granted hereunder to Lender.
(f) TAXES. With respect to all of its taxable periods it has filed all tax
returns which are required to be filed and all federal, state, municipal,
franchise and other taxes shown on such filed returns have been paid or are
being diligently contested by appropriate proceedings and have been reserved
against, as required by generally accepted accounting principles, consistently
applied.
(g) FINANCIAL STATEMENTS. It has heretofore delivered to Lender its
audited annual balance sheet as of June 30, 1995, and the related statements of
income, retained earnings and cash flows for the fiscal year or period then
ended. Each of such statements is complete and correct in all material respects
and fairly presents its consolidated financial condition as of the dates and for
the periods referred to therein and has been prepared in accordance with
generally accepted accounting principles. There are no liabilities, direct or
indirect, fixed or contingent, of Borrowers as of the dates of said balance
sheets which are not reflected in such statements or in the Notes thereto.
(h) ADVERSE DEVELOPMENTS. Since its unaudited balance sheet as of March
31, 1996, there has been no material adverse change in its financial condition,
business, operations, affairs or prospects or in any of its properties or
assets.
(i) EXISTENCE OF ASSETS AND TITLE THERETO. It has good and marketable
title to all of its properties and assets, including the properties and assets
reflected in the financial statements delivered in connection herewith. None of
such properties or assets are subject to any mortgage, pledge, lien, lease,
encumbrance or charge, except those permitted under the terms of this Agreement,
pledges or deposits in connection with or to secure workers' compensation,
unemployment or liability insurance, liens for property taxes not yet due and
payable, and other similar liens arising by operation of law and not in the
aggregate material.
(j) REGULATIONS G, T, U AND X. The proceeds of the borrowings hereunder
are not being used and will not be used, directly or indirectly, for the
purposes of purchasing or carrying any margin stock in contravention, or which
would cause any Lender to be in violation, of Regulations G, T, U or X
promulgated by the Board of Governors of the Federal Reserve System.
<PAGE>
-15-
(k) COMPLIANCE. Except as set forth on Schedule 5.1(k) attached hereto, it
---------------
is not in default with respect to any order, writ, injunction or decree of any
court or of any federal, state, municipal or other governmental department,
commission, board, bureau, agency, authority or official, nor is it in violation
of any material law, statute, rule or regulation to which it is or any of its
properties are subject and it has not received notice of any such default from
any party and is not in default in the payment or performance of any of its
material obligations to any third parties or in the performance of any material
mortgage, indenture, lease, contract or other agreement to which it is a party
or by which any of its assets or properties may be bound.
(l) LEASES AND SUBLEASES. It enjoys quiet and undisturbed possession under
all leases and subleases under which it is operating, and all of such leases and
subleases are valid and subsisting and not in default.
(m) PENSION PLANS.
(i) No fact, including but not limited to any "reportable event", as that
term is defined in Section 4043 of ERISA, exists in connection with any Plan of
any of the Companies under Sections 414(b), (c), (m), (n) and (o) of the
Internal Revenue Code of 1986, as amended (the "CODE") which might constitute
grounds for termination of any such Plan by the Pension Benefit Guaranty
Corporation (the "PBGC") or for the appointment by the appropriate United States
District Court of a trustee to administer any such Plan. A list of all of the
Companies' respective Plans are attached hereto on Schedule 5.1(m) attached
--------------
hereto;
(ii) No "prohibited transaction" within the meaning of Section 406 of ERISA
or Section 4975 of the Code exists or will exist upon the execution and delivery
of this Agreement and the other Financing Agreements, or the performance by the
parties hereto or thereto of their respective duties and obligations hereunder
and thereunder;
(iii) Each of the Companies agrees to do all acts, including, but not
limited to, making all contributions necessary to maintain compliance with ERISA
or the Code, and agrees not to terminate any such Plan in a manner (or do or
fail to do any act) which could result in the imposition of a lien on any of its
properties pursuant to Section 4068 of ERISA;
(iv) None of the Companies sponsors or maintains, and has never contributed
to, and has not incurred any withdrawal liability under a "multi-employer plan"
as defined in Section 3 of ERISA and none of the Companies has any written or
verbal commitment of any kind to establish, maintain or contribute to any
"multi-employer plan" under the Multi-employer Pension Plan Amendment Act of
1980;
<PAGE>
-16-
(v) None of the Companies has any unfunded liability in contravention of
ERISA and the Code;
(vi) Each and every Plan complies currently, and has complied in the past,
both as to form and operation, with its terms and with provisions of the Code
and ERISA, and all applicable regulations thereunder and all rules issued by the
Internal Revenue Service U.S. Department of Labor and the PBGC and as such, is
and remains a "qualified" plan under the Code;
(vii) No actions, suits or claims are pending (other than routine claims
for benefits) against any Plan, or the assets of any such Plan;
(viii) The Companies have performed all obligations required to be
performed by it under any Plan and the Companies are not in default, or in
violation of any Plan, and have no knowledge of any such default or violation by
any other party to any and all Plans;
(ix) No liability has been incurred by any of the Companies to the PBGC or
to participants or beneficiaries on account of any termination of a Plan subject
to Title IV of ERISA, no notice of intent to terminate a Plan has been filed by
(or on behalf of) any of the Companies pursuant to Section 4041 of ERISA and no
proceeding has been commenced by the PBGC pursuant to Section 4042 of ERISA;
(x) The reporting and disclosure provisions of the Securities Act of 1933
and Securities Exchange Act of 1934 have been complied with for all such Plans.
(n) DEFERRED COMPENSATION ARRANGEMENTS. Except as set forth in Schedule
--------
5.1(n) attached hereto, none of the Companies has entered into employment
- - -----
contracts or deferred compensation plans, incentive compensation plans,
executive compensation plans, arrangements or commitments (each, individually an
"ARRANGEMENT"). With respect to each such Arrangement:
(i) Such Arrangement complies currently, and has complied in the past, both
as to form and operation, with its terms and the provisions of the Code and
ERISA and all applicable laws, rules and regulations;
(ii) The disclosure and reporting provisions of the Securities Act of 1933
and the Securities Exchange Act of 1934 have been satisfied;
(iii) Such Arrangement is legally valid and binding and is in full force
and effect;
(iv) The Companies have made all contributions required to
<PAGE>
-17-
be made under such Arrangement and no contributions are currently due and owing
thereunder;
(v) There are no actions, suits or claims pending (other than routine
claims for benefits) or, to the best of the Companies' knowledge, which could be
reasonably expected to be asserted against such Arrangement; and
(vi) The Companies have performed all obligations required to be performed
by it under such Arrangement and the Companies are not in default or in
violation of, and the Companies have no knowledge of a such default or violation
by any other party to such Arrangement.
Notwithstanding anything to the contrary contained herein, the
representations and warranties contained in this Section 5.1(n) are qualified in
their entirety by the disclosure set forth in Schedule 5.1(n) attached hereto.
---------------
(o) CHIEF EXECUTIVE OFFICE. Its chief executive office and principal
place of business, and the office where its books and records concerning
Collateral are kept, is as set forth in the first paragraph of this Agreement
and in Schedule 5.1(o) attached hereto.
---------------
(p) PLACES OF BUSINESS. It has no other places of business and locates no
Collateral, specifically including books and records, at any location other than
as set forth in Schedule 5.1(o) attached hereto. It shall maintain a full and
---------------
complete set of its books and records in its offices at the chief executive
office described in the immediately preceding paragraph.
(q) CONTINGENT LIABILITIES. It is not a party to any suretyship, guaranty
or other similar type agreement, nor has it offered its endorsement to any
individual, concern, corporation or other entity or acted or failed to act in
any manner which would in any way create a contingent liability that does not
appear in the financial statements referred to hereinbefore.
(r) CONTRACTS. After giving effect to the transactions contemplated upon
the closing of this Agreement, no material contract, governmental or otherwise,
to which it will be a party is subject to renegotiation, nor will it be in
default of any material contract to which it is a party.
(s) UNIONS AND PENSIONS. It is not a party to any collective bargaining or
union agreement.
(t) LICENSES. It has or, with respect to the conduct of its business in
California, has applied and reasonably expects to be granted, all material
licenses, permits and other permissions required by any government,
<PAGE>
-18-
agency or subdivision thereof, or from any licensing entity to which Borrowers
may be subject, necessary for the conduct of its business, all of which it
represents to be in good standing and in full force and effect.
(u) COLLATERAL. After giving effect to the transactions contemplated upon
the closing of this Agreement, it will be the sole owner of the Collateral free
and clear of all liens, encumbrances, security interests and claims except the
liens granted to Lender hereunder and the security interests and liens listed on
Schedule 5.1(u) attached hereto. Borrowers are fully authorized to grant a
- - --------------
security interest in each and every item of the Collateral to Lender. All
documents and agreements related to the Collateral shall be true and correct and
in all respects what they purport to be. All signatures and endorsements that
appear thereon shall be genuine and all signatories and endorsers shall have
full capacity to contract. None of the transactions underlying or giving rise to
the Collateral shall violate any applicable state or federal laws or
regulations. All documents relating to the Collateral shall be legally
sufficient under such laws or regulations and shall be legally enforceable in
accordance with their terms. Borrowers agree to defend the Collateral against
the claims of all persons other than Lender. Notwithstanding anything to the
contrary contained herein, the representations and warranties contained in this
Section 5.1(u) are qualified in their entirety by the disclosure set forth in
Schedule 5.1(u) attached hereto.
- - ---------------
(v) TRADENAMES. It does not have any material tradenames other than as set
forth in Schedule 5.1(v) attached hereto.
---------------
(w) FINANCIAL INFORMATION. All financial information, including, but not
limited to information relating to the Receivables and Inventory, submitted by
it to Lender, whether previously or in the future, is and will be true and
correct in all material respects, and is and will be complete insofar as may be
necessary to render it a true and accurate depiction of the subject matter to
which it relates.
(x) PARENT, AFFILIATE OR SUBSIDIARY CORPORATIONS. Borrowers have no parent
corporation and have no affiliates or Subsidiaries other than as set forth in
Schedule 5.1(x) attached hereto.
- - ---------------
(y) ENVIRONMENTAL MATTERS.
(i) It has obtained all permits, licenses and other authorizations which
are required under all Environmental Laws. It is in compliance with the terms
and conditions of all such permits, licenses and authorizations, and is also in
compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
any applicable Environmental Law or in any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued,
<PAGE>
-19-
entered, promulgated or approved thereunder.
(ii) No notice, notification, demand, request for information, citation,
summons or order has been issued, no complaint has been filed, no penalty has
been assessed and no investigation or review is pending or threatened by any
governmental or other entity with respect to any alleged failure by Borrowers to
have any permit, license or authorization required in connection with the
conduct of its business or with respect to any Environmental Laws, including
without limitation, Environmental Laws relating to the generation, treatment,
storage, recycling, transportation, disposal or release of any Hazardous
Materials.
(iii) No oral or written notification of a release of any Hazardous
Material has been filed by or against Borrowers and no property now or
previously owned, leased or used by it, including without limitation, the
Premises, is listed or proposed for listing on the Comprehensive Environmental
Response, Compensation and Inventory of Sites or National Priorities List under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, or on any similar state or federal list of sites requiring
investigation or cleanup.
(iv) There are no liens or encumbrances arising under or pursuant to any
Environmental Laws on any of the property or properties owned, leased or used by
it, including without limitation, any of the properties owned or leased by it,
and no governmental actions have been taken or are in process which could
subject any of such properties to such liens or encumbrances or, as a result of
which Borrowers would be required to place any notice or restriction relating to
the presence of Hazardous Materials at any property owned by it in any deed to
such property.
(v) Neither it nor, to the best knowledge of Borrowers, any previous owner,
tenant, occupant or user of any property owned, leased or used by Borrowers, has
(i) engaged in or permitted any operations or activities upon or any use or
occupancy of such property, or any portion thereof, for the purpose of or in any
way involving the release, discharge, refining, dumping or disposal (whether
legal or illegal, accidental or intentional) of any Hazardous Materials on,
under, or in or about such property, or (ii) transported or had transported any
Hazardous Materials to such property except to the extent such Hazardous
Materials are raw products commonly used in day-to-day manufacturing operations
of such property and, in such case, in compliance with, all Environmental Laws;
(iii) engaged in or permitted any operations or activities which would allow the
facility to be considered a treatment, storage or disposal facility as that term
is defined in 40 CFR 264 and 265, (iv) engaged in or permitted any operations or
activities which would cause any of Borrowers' properties to become subject to
The Connecticut Transfer Act. Section 22a-134 et
<PAGE>
-20-
sea. C.G.S., or (v) constructed, stored or otherwise located Hazardous Materials
on under, in or about any such property except to the extent commonly used in
day-to-day operations of any such property and, in such case, in compliance with
all Environmental Laws. Further, to the best knowledge of Borrowers, no
Hazardous Materials have migrated from other properties upon, about or beneath
any such property.
Notwithstanding anything to the contrary contained herein, the
representations and warranties contained in this Section 5.1(y) are, as they
relate to 220 Jefferson Avenue, Menlo Park, California, qualified in their
entirety by the best of Borrowers' knowledge and by the disclosure set forth in
Schedule 5.1(y) attached hereto.
- - ---------------
(z) USE OF PROCEEDS. It will use the proceeds of the Loans solely (i) by
Wright to satisfy in full loans outstanding to Fleet National Bank on the date
hereof, (ii) by Memry to satisfy in full a certain loan outstanding to Raychem
Corporation on the date hereof, (iii) by Memry to satisfy in full loans
outstanding to William Morton and Dominion Capital Partners LLP, and (iv) for
working capital purposes.
ARTICLE VI. CONDITIONS OF LENDING
SECTION 6.1. CONDITIONS OF THE INITIAL LOAN.
Subject to the terms hereof, the obligation of Lender to make the first
Revolving Loan and the Term Loan under this Agreement is subject to the
fulfillment of the following conditions precedent at the time of the execution
of this Agreement:
(a) NOTES. Lender shall have received a duly executed Revolving Promissory
Note and the Term Promissory Note drawn to its order.
(b) EVIDENCE OF CORPORATE ACTION. Lender shall have received certified
copies of all corporate action (in form and substance satisfactory to Lender)
taken by Borrowers to authorize the execution, delivery and performance of this
Agreement, the Notes, and the other Financing Agreements to which it is a party,
and the borrowings to be made hereunder and thereunder, together with true
copies of Borrowers' Certificate of Incorporation and By-laws and such other
papers as Lender or its counsel may require.
(c) OPINION OF COUNSEL. Lender shall have received a favorable written
opinion of counsel for Borrowers, accompanied by such supporting documents as
Lender or its counsel may require.
(d) FIDELITY AGREEMENTS. Lender shall have received duly executed Fidelity
Agreements (collectively, the "FIDELITY AGREEMENTS") from James G. Binch and
Wendy Gavaghan (collectively, the "FIDELITY GUARANTORS"). The Fidelity
Agreements shall be in form, scope and substance
<PAGE>
-21-
satisfactory to Lender.
(e) LIFE INSURANCE ASSIGNMENT. Lender shall have received a duly executed
life insurance assignment as collateral (the "LIFE INSURANCE ASSIGNMENT") on the
life of James G. Binch, which shall be in an amount equal to at least $500,000.
The Life Insurance Assignment shall be in form, scope and substance satisfactory
to Lender.
(f) SUBORDINATION AGREEMENTS. Lender shall have received a subordination
agreement from each of the Subordinating Creditors in form, scope and substance
satisfactory to Lender (collectively, the "SUBORDINATION AGREEMENTS").
(g) LESSOR'S AGREEMENTS. Borrowers shall cause to be delivered to Lender
lessor's agreements with respect to the Premises leased or subleased by
Borrowers (the "LESSOR'S AGREEMENTS") in form, scope and substance satisfactory
to Lender.
(h) UCC-1 FINANCING STATEMENTS. Lender shall have received from Borrowers
duly executed UCC-1 financing statements and such other documents as Lender
deems necessary or proper to perfect, upon filing of such UCC-1 financing
statements or such other documents, the security interest in the Collateral, all
of which shall be in form, scope and substance satisfactory to Lender and its
counsel.
(i) NOTICES OF ASSIGNMENT AND POST OFFICE BOX CHANGE OF ADDRESS CARDS.
Lender shall have received notices of assignment and a post office change of
address cards from Borrowers, which shall be in form, scope and substance
satisfactory to Lender and its counsel.
(j) STOCK PLEDGE AGREEMENT. Lender shall have received a stock pledge
agreement from Memry, pursuant to which Memry shall have pledged to the Lender
100% of the issued and outstanding shares of stock of Wright, in form, scope and
substance satisfactory to Lender (the "STOCK PLEDGE AGREEMENT");
(k) MORTGAGE. Lender shall have received a duly executed first priority
mortgage (the "MORTGAGE") from Wright on the real property of Wright located at
69 Armory Street, Worcester, Massachusetts (the "MASSACHUSETTS PREMISES"), in
form, scope and substance satisfactory to Lender.
(l) ASSIGNMENT OF LEASES AND RENTS. Lender shall have received a duly
executed first priority assignment of leases and rents (the "ASSIGNMENT OF
LEASES AND RENTS") from Wright on the Massachusetts Premises, in form, scope and
substance satisfactory to Lender.
<PAGE>
-22-
(m) INDEMNITY AGREEMENT. Lender shall have received an Indemnity Agreement
Regarding Hazardous Materials with respect to the Massachusetts Premises, in
form, scope and substance satisfactory to Lender (the "INDEMNITY AGREEMENT").
(n) NO OFF-SET AGREEMENT. Lender shall have received a no off-set
agreement from Raychem Corporation, in form, scope and substance satisfactory to
Lender (the "NO OFF-SET AGREEMENT").
(o) CII AGREEMENT. Lender shall have received an agreement from
Connecticut Innovations, Inc., in form, scope and substance satisfactory to
Lender (the "CII AGREEMENT").
(p) PATENT SECURITY AGREEMENT. Lender shall have received a Patent Security
Agreement, in form, scope and substance satisfactory to Lender (the "PATENT
SECURITY AGREEMENT").
(q) TRADEMARK SECURITY AGREEMENT. Lender shall have received a Trademark
Security Agreement in form, scope and substance satisfactory to Lender (the
"TRADEMARK SECURITY AGREEMENT").
(r) FURTHER DOCUMENTS. Lender shall have received such further documents,
instruments and agreements as Lender may request, including without limitation,
title insurance or an attorneys' certificate of title, landlord's agreements,
warehouse agreements, and evidence that the insurance policies and certificates
evidencing adequate insurance and coverage on Borrowers' assets are currently in
full force and effect, continue to name Lender as loss payee or additional
insured, as the case may be, and that the premiums are current.
SECTION 6.2. CONDITIONS OF ADDITIONAL REVOLVING LOANS.
In addition to the conditions in Section 5.1 above, Lender shall make no
further Revolving Loans (collectively, the "FURTHER LOANS") unless the following
conditions shall exist or have been satisfied by Borrowers at the time any
Further Loan is requested:
(a) ABSENCE OF TERMINATION OR DEFAULT. Lender shall not have terminated
the Revolving Loan facility hereunder, nor shall a Defaulting Event exist or
have occurred.
(b) COMPLIANCE CERTIFICATES. On the date of each Revolving Loan hereunder
and after giving effect thereto, Memry shall have delivered to Lender, upon
Lender's request, a certificate executed by its chief financial officer which
states, among other things, that: (i) Borrowers have complied, and are then in
compliance, with all the terms, covenants and conditions of this Agreement and
the other Financing Agreements to which they are a party; (ii)
<PAGE>
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there exists no Event of Default or Defaulting Event; and (iii) the
representations and warranties contained herein and in the other Financing
Agreements are true and correct with the same effect as though such
representations and warranties had been made at the time of each Further Loan.
(c) BORROWING BASE. The indebtedness of Borrowers by virtue of the making
of any Revolving Loan shall not exceed the Borrowing Base. Borrowers shall not
request any Revolving Loan if the effect of such Revolving Loan shall be to
cause the balance of all Revolving Loans to exceed the Borrowing Base.
(d) FURTHER DOCUMENTS. Lender shall have received such further documents,
instruments and agreements as Lender may reasonably request.
ARTICLE VII. COVENANTS
A. AFFIRMATIVE COVENANTS.
Each of the Borrowers covenants and agrees that from the date hereof until
payment and performance in full of all Obligations, and until the termination of
this Agreement, unless Lender otherwise consents in writing, each of the
Borrowers shall:
SECTION 7.1. FINANCIAL STATEMENTS.
Memry shall deliver or caused to be delivered to Lender: (a) within twenty
(20) days after the close of each fiscal month of Borrowers, internally prepared
financial statements of Borrowers including balance sheets as of the close of
such month, and statements of income and retained earnings for such month and
for that portion of the fiscal year-to-date then ended, all of which financial
statements shall be prepared on a basis consistent with that of the preceding
period or containing disclosure of the effect on financial condition or results
of operations, and which shall be certified by the chief financial officer of
Borrowers as being accurate and fairly presenting the financial condition of
Borrowers; (b) its audited opening-day balance sheet on or before September 15,
1996 and, within ninety (90) days after the close of each fiscal year of
Borrowers, audited financial statements including a balance sheet as of the
close of such fiscal year and statements of income, stockholders' capital and
cash flow for the year then ended, both prepared in conformity with generally
accepted accounting principles, applied on a basis consistent with that of the
preceding year or containing disclosure of the effect on financial condition or
results of operations of any change in the application of accounting principles
during the year, and accompanied by a report thereon containing an unqualified
opinion of a recognized certified public accounting firm selected by Borrowers
and reasonably satisfactory to Lender (it being hereby agreed and understood
that as of the date
<PAGE>
-24-
hereof, McGladrey & Pullen is an accounting firm satisfactory to Lender), which
opinion shall state that such financial statements fairly present the financial
condition and results of operations of Borrowers in accordance with generally
accepted accounting principles; (c) at least thirty (30) days prior to the close
of each fiscal year of Borrowers, internally prepared drafts of annual
projections of Borrowers, in form, scope and substance satisfactory to Lender;
(d) within fifteen (15) days of the close of each month, monthly aging of
accounts receivable and accounts payable and inventory status reports in form,
scope and substance satisfactory to Lender; (e) daily loan and collateral
designations in the form supplied by Lender to Borrowers; (f) contemporaneously
with the delivery to shareholders or governmental agencies, copies of all
reports and information delivered to shareholders or filed with governmental
agencies; (g) within sixty (60) days after the date hereof, its unaudited
financial statements for its 1996 fiscal year end in form and scope reasonably
satisfactory to Lender; (h) promptly upon Lender's written request, such other
information about the financial condition and operations of Borrowers or the
Fidelity Guarantors, as Lender may, from time to time, reasonably request; and
(i) promptly upon becoming aware of any Event of Default, or the occurrence or
existence of a Defaulting Event, notice thereof in writing. Notwithstanding
anything to the contrary contained herein, the requirements herein with respect
to interim financial statements shall be subject to normal and customary year-
end audit adjustments and the fact that footnotes sufficient to satisfy the
requirements of the Securities and Exchange Act of 1934, as amended, need not be
as extensive as what may be required by generally accepted accounting
principles.
SECTION 7.2. INSURANCE AND ENDORSEMENTS.
(a) Keep its properties and cause the Premises to be insured against fire
and other hazards (pursuant to so-called "All Risk" coverage) in amounts and
with companies satisfactory to Lender to the same extent and covering such risks
as is customary in the same or a similar business; maintain public liability
coverage, including without limitation, products liability coverage, against
claims for personal injuries or death; and maintain all worker's compensation,
employment or similar insurance as may be required by applicable law; and (b)
all insurance shall contain such terms, be in such form, and be for such periods
reasonably satisfactory to Lender, and be written by carriers duly licensed by
the appropriate governmental authorities of each state where any Collateral is
located. Without limiting the generality of the foregoing, such insurance must
provide that it may not be canceled without thirty (30) days' prior written
notice to Lender. Borrowers shall cause Lender to be endorsed as a loss payee
with a long form Lender's Loss Payable Clause, in form and substance acceptable
to Lender on all such insurance. In the event of failure to provide and
maintain insurance as herein provided, Lender may, at its option, provide such
insurance and charge the amount thereof to the Revolving Loan Account.
Borrowers shall furnish to Lender certificates or other satisfactory evidence of
compliance with the foregoing insurance provisions. Borrowers hereby
irrevocably appoint
<PAGE>
-25-
Lender as their attorney-in-fact, coupled with an interest, to, except as set
forth in the Mortgage, make proofs of loss and claims for insurance, and to
receive payments of the insurance proceeds and execute and endorse all
documents, checks and drafts in connection with payment of such insurance. Any
insurance proceeds received by Lender shall be applied to the Obligations in
such order and manner as Lender shall determine in its sole discretion.
SECTION 7.3. TAX AND OTHER LIENS.
Comply in all material respects with all statutes and government
regulations and pay all taxes, assessments, governmental charges or levies, or
claims for labor, supplies, rent and other obligations made against it or their
property which, if unpaid, might become a lien or charge against Borrowers or
their properties, except for any of the foregoing being contested in good faith
and against which adequate reserves have been established in accordance with
generally accepted accounting principles. Lender shall have the right to debit
the Revolving Loan Account to, at its option, pay off, and obtain the release
of, that certain attachment on the premises located at 69 Armory Street,
Worchester, Massachusetts in the event Lender deems such payment necessary to
preserve or protect such premises and/or Lender's mortgage on such premises.
SECTION 7.4. PLACE OF BUSINESS; LOCATIONS OF COLLATERAL.
Maintain its chief place of business and chief executive offices at the address
set forth in the introductory sentence hereof and its other places of business
as set forth in Schedule 7.4 hereto unless Borrowers shall have given Lender
------------
thirty (30) days' prior written notice of each change in such place of business.
Locate no Collateral at any location other than the Premises; provided, however,
that Borrower may locate inventory (a) which in the aggregate at any one time
does not have a value of more than $50,000 at locations in the United Kingdom,
and (b) which in the aggregate at any one time does not have a value of more
than $50,000 in New Mexico.
SECTION 7.5. INSPECTIONS.
Allow Lender by or through any of its officers, attorneys, and/or
accountants designated by it, for the purpose of ascertaining whether or not
each and every provision hereof and of any related agreement, instrument and
document is being performed, to enter the offices and plants of Borrowers to
examine or inspect any of the properties, books and records or extracts
therefrom, to make copies of such books and records or extracts therefrom and to
make complete environmental studies and/or investigations, and to discuss the
affairs, finances and accounts thereof with Borrowers all at such reasonable
times, upon reasonable notice and as often as Lender or any representative of
Lender may reasonably request. In addition, upon Lender's request, Borrowers
shall provide Lender with an environmental site assessment or environmental
audit report, or an update of such an assessment or audit, all in scope, form
and content satisfactory of Borrowers.
<PAGE>
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SECTION 7.6. LITIGATION.
Promptly advise Lender of the commencement or threat of litigation,
including arbitration proceedings and any proceedings before any governmental
agency (but excluding product liability claims which are either fully covered by
insurance or adequately covered by insurance and which are not likely to have a
material adverse effect on the business, assets or condition (financial or
otherwise) of Borrowers), which is instituted against Borrowers and is
reasonably likely to have a materially adverse effect upon the condition
financial, operating or otherwise, of Borrowers.
SECTION 7.7. MAINTENANCE OF EXISTENCE.
Maintain its corporate existence and comply with all valid and applicable
statutes, rules and regulations, and maintain its properties in good repair,
working order and operating condition. Borrowers shall immediately notify Lender
of any event causing material loss in the value of their assets.
SECTION 7.8. INVENTORY.
Allow Lender to examine and inspect the Inventory at reasonable times and
intervals and upon reasonable notice. Borrowers shall immediately notify Lender
of any event causing material loss or depreciation in value of Inventory and the
amount of such loss or depreciation.
SECTION 7.9. ERISA.
Immediately notify Lender of any event which causes it not to be in
compliance with ERISA in all material respects.
SECTION 7.10. NOTICE OF CERTAIN EVENTS.
Give prompt written notice to Lender of:
(a) any material dispute that may arise between Borrowers and any
governmental regulatory body or law enforcement agency;
(b) any labor controversy resulting or likely to result in a strike or work
stoppage against Borrowers;
(c) any proposal by any public authority to acquire the assets or business
of Borrowers;
(d) the location of any Collateral other than at Borrowers' places of
business disclosed in this Agreement (other than Collateral in transit in the
ordinary course of Borrowers' businesses);
(e) any proposed or actual change of the name, identity or legal form of
organization of Borrowers;
(f) any circumstance or event by virtue of which or in connection with
which Borrowers may have incurred or may incur any liability, expense or
responsibility under any Environmental Law, including, without limitation: (i)
any Release of any Hazardous Material required to be reported to any federal,
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state or local governmental authority instrumentality or agency under any
applicable Environmental Law; (ii) any and all written communications with
respect to claims or suits under any applicable Environmental Law or any Release
of Hazardous Material required to be reported to any federal, state or local
governmental authority, instrumentality or agency; (iii) any remedial action
taken by Borrowers or any other person in response to (A) any Hazardous Material
on, under or about the properties or assets of Borrowers, the existence of which
may give rise to a claim or suit resulting in a material change of Borrowers'
business operations or financial condition, or (B) any claim or suit resulting
in a material change of Borrowers' business operations or financial condition;
(iv) Borrowers' discovery of any occurrence or condition on any real property
adjoining or in the vicinity of Borrowers' business premises which may cause
such premises to be in violation of any Environmental Law or to be subject to
any restrictions on the ownership, occupation, transferability or use thereof
under any Environmental Law and (v) any request for information from any
federal, state or local governmental authority, instrumentality or agency that
indicates such entity is investigating Borrowers' potential responsibility for a
Release of Hazardous Material;
(g) any other matter which has resulted or is reasonably likely to result
in a material adverse change in the financial condition or operations of
Borrowers;
(h) any information received by Borrowers with respect to any Receivable
that may materially affect the value thereof or the rights and remedies of
Lender with respect thereto; and
(i) any action, suit or claim pending or which is threatened or asserted
against Borrowers.
SECTION 7.11. DEFAULTS.
Upon the occurrence of an Event of Default or of a Defaulting Event, give
prompt written notice of such occurrence to Lender signed by the president or
chief financial officer of Memry describing such occurrence and the action, if
any, being taken to cure the Event of Default or Defaulting Event.
SECTION 7.12. DUTIES.
Borrowers have complied and will continue to comply with any and all
material federal, state and local laws affecting their businesses, including,
but not limited to, payment of all federal and state taxes with respect to sales
to Account Debtors by Borrowers and disclosures in connection therewith.
Borrowers jointly and severally agree to indemnify Lender against and hold
Lender harmless from, all claims, actions and losses, including reasonable
attorney's fees and costs incurred by Lender arising from any contention,
whether well founded or otherwise, that there has been a failure to comply with
such laws.
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SECTION 7.13. COLLATERAL DUTIES.
Do whatever Lender may reasonably request from time to time by way of
obtaining, executing, delivering and filing financing statements, assignments,
landlord's or mortgagee's waivers, warehouse agreements and other notices and
amendments and renewals of any of the foregoing, and Borrowers will take any and
all reasonable steps and observe such formalities as Lender may reasonably
request, in order to create and maintain a valid and enforceable first lien
upon, pledge of, and first priority security interest in, any and all of the
Collateral. Lender hereby is authorized to file financing statements without
the signature of Borrowers and to execute and file such financing statements on
behalf of Borrowers as specified by the Uniform Commercial Code to perfect or
maintain its security interest in all of the Collateral. All reasonable
charges, expenses and fees Lender may incur in filing any of the foregoing,
together with reasonable costs and expenses of any lien search required by
Lender, and any taxes relating thereto, shall be charged to the Revolving Loan
Account and added to the Obligations.
SECTION 7.14. AUDIT AND APPRAISALS BY LENDER; FEES.
Permit Lender by or through any of its officers, employees or other
representatives to audit the books and records of Borrowers and to conduct or
cause to be conducted appraisals of Borrowers' assets at such times, upon
reasonable notice, and in such manner and detail as Lender deems reasonable.
Without limiting the generality of the foregoing, Lender shall be allowed to
verify the Receivables and Inventory of Borrowers and to confirm with Account
Debtors the validity and amount of Receivables. Borrowers shall promptly pay to
Lender audit fees of $500 per man per day and any out-of-pocket expenses
incurred in connection with any audit performed by or for Lender. In addition,
Borrowers shall promptly pay or reimburse Lender for the costs of any such
appraisals conducted by or for Lender. Lender is hereby authorized to charge
any such audit and appraisal fees and out-of-pocket expenses to the Revolving
Loan Account. Notwithstanding the foregoing, so long as Lender has not made
demand for payment of any or all of the Revolving Loans and no Event of Default
has occurred, Borrowers shall not be obligated to reimburse or pay to Lender in
excess of $15,000 per annum for fees and expenses incurred in connection with
any such audit or appraisal.
SECTION 7.15. BANK ACCOUNTS.
Maintain all of its bank accounts, including without limitation, its
operating and depository accounts, at Fleet National Bank; provided, however,
that Memry shall be permitted to have operating and depository accounts in
California so long as the aggregate amount on deposit therein (not including for
payroll) does not exceed $50,000 at any one time (collectively, the "BANK
ACCOUNTS").
B. NEGATIVE COVENANTS.
Each of the Borrowers covenants and agrees that from the date hereof
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until payment and performance in full of all Obligations and until the
termination of this Agreement, unless Lender otherwise consents in writing,
neither of the Borrowers shall:
SECTION 7.16. ENCUMBRANCES.
Incur or permit to exist any lien, mortgage, charge or other encumbrance
against any of its properties or assets, whether now owned or hereafter
acquired, except: (a) liens required or expressly permitted by this Agreement;
(b) pledges or deposits in connection with or to secure worker's compensation,
unemployment or liability insurance; (c) those listed on Schedule 5.1(u)
--------------
attached hereto; and (d) purchase money liens securing financing for machinery
and equipment purchased in the ordinary course of business as permitted pursuant
to Section 7.17(b) below.
SECTION 7.17. LIMITATION ON INDEBTEDNESS.
Create, incur or guarantee any indebtedness or obligation for borrowed
money (including without limitation, any reimbursement obligations for any
letter of credit issued by any financial institution) or issue or sell any of
its obligations to any lender, except: (a) as set forth on Schedule 7.17
-------------
attached hereto; and (b) purchase money financing and/or capitalized lease
obligations for machinery and equipment purchased or leased in the ordinary
course of business in the aggregate principal amount of not greater than (i) in
Borrowers' 1997 fiscal year, the sum of $460,000 minus the aggregate amount of
capital expenditures made during such fiscal year, and (ii) in Borrowers' 1998
fiscal year, the sum of $250,000 minus the aggregate amount of capital
expenditures made during such fiscal year plus any unused amount under (i)
above.
SECTION 7.18. CONTINGENT LIABILITIES.
Assume, guarantee, endorse or otherwise become liable upon the obligations
of any person, firm or corporation, or enter into any purchase or option
agreement or other arrangement having substantially the same effect as such a
guarantee, except by the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business.
SECTION 7.19. CONSOLIDATION OR MERGER.
Merge into or consolidate with or into any entity.
SECTION 7.20. LOANS, ADVANCES, INVESTMENTS.
Make or permit to exist any loans or advances to, or purchase any stock,
other securities or evidences of indebtedness of, or make or permit to exist any
investment (including without limitation the acquisition of stock of a
corporation), or acquire any assets or any other interest whatsoever, in any
other person; provided, however, that Borrowers shall be permitted to make
investments in short-term direct obligations of the United States Government so
long as such obligations mature not more than one (1) year after the date of
acquisition thereof and that Lender continues to have a duly perfected first
lien security
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interest in such obligations in form, scope and substance satisfactory to
Lender; and provided further that each of the Borrowers shall be permitted to
make loans to its officers, directors and shareholders in the ordinary course of
business in the aggregate principal amount of not greater than $20,000 in any
calendar year.
SECTION 7.21. ACQUISITION OF STOCK OF BORROWERS; DIVIDENDS.
Except as may be permitted pursuant to the terms of the CII Agreement,
purchase, acquire, redeem or retire, or make any commitment to purchase,
acquire, redeem or retire, any of the capital stock of Borrowers, whether now or
hereafter outstanding, or declare or pay any dividend, or make any distribution
to any of its stockholders.
SECTION 7.22. SALE AND LEASE OF ASSETS.
Sell or lease any of the assets of the Borrowers, except for sales of
inventory in the ordinary course of business consistent with past practices and
on an arms-length basis.
SECTION 7.23. NAME CHANGES.
Change its name or style from that set forth in this Agreement.
SECTION 7.24. PROHIBITED TRANSFERS.
Transfer, in any manner, either directly or indirectly, any cash,
property, or other asset to any parent or any of its affiliates or Subsidiaries,
other than sales made in the ordinary course of business and for fair
consideration on terms no less favorable than if such sale had been an arms-
length transaction between Borrowers or such Subsidiary and an unaffiliated
entity.
SECTION 7.25. NO MANAGEMENT/OWNERSHIP CHANGE.
Suffer James G. Binch to: (a) cease to be the President of Memry and
performing such duties normally associated with such position, or (b) cease to
be the beneficial owner of the 280,000 shares of stock of, and warrants in,
Memry currently beneficially owned by James G. Binch, or allow Harbour Holdings
L.P. to dispose of more than 500,000 shares of stock of Memry.
SECTION 7.26. LEASEBACKS.
Lease any real estate or other capital asset from any lessor who shall
have acquired such property from Borrowers.
SECTION 7.27. LOANS TO OFFICERS, DIRECTORS AND/OR SHAREHOLDERS.
Make any loan or advance or make any transfers, in any manner, of any
cash, property or other asset to or on behalf of any of its officers, directors
or shareholders; provided, however, that Borrowers may make advances to such
persons for travel expenses incurred in the ordinary course of Borrowers'
business.
SECTION 7.28. PAYMENT OF SUBORDINATED DEBT.
Make payment of any sums to the Subordinating Creditors in violation of
any of the
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Subordination Agreements.
SECTION 7.29. CII AGREEMENT.
Make payment of any sums to CII in violation of the CII Agreement.
SECTION 7.30. CAPITAL EXPENDITURES.
Make any capital expenditure if the amount of such expenditure, when added
to all other capital expenditures and purchase money financing and capital lease
obligations incurred during such fiscal year, would exceed $460,000 in
Borrowers' 1997 fiscal year and $250,000 (plus any unused amount from the
Borrowers' 1997 fiscal year) in Borrowers' 1998 fiscal year.
ARTICLE VIII. COLLATERAL
SECTION 8.1. GRANT.
To secure the prompt payment and performance of each and all of the
Obligations, each of the Borrowers pledges, assigns, transfers and grants to
Lender a continuing first lien security interest in the following property of
Borrowers, whether now owned or hereafter acquired or arising (the
"COLLATERAL"):
(a) All accounts and accounts receivable related to or arising from the
sale or lease of inventory or rendition of services by Borrowers (the
"ACCOUNTS") and all other accounts, bank accounts, contracts, contract rights,
Notes, documents, chattel paper, instruments, acceptances, drafts or other forms
of obligations and receivables (collectively with the Accounts, the
"RECEIVABLES"), whether or not the same are listed on any schedules assignments
or reports furnished to Lender from time to time, and whether such Receivables
are now existing or are created or arise at any time hereafter, together with
all goods, inventory and merchandise returned by or reclaimed by or repossessed
from customers wherever such goods, inventory and merchandise are located, and
all proceeds thereto including without limitation, proceeds of insurance thereon
and all guaranties, securities, and liens which Borrowers may hold for the
payment of any such Receivables, including without limitation, all rights of
stoppage in transit, replevin and reclamation and all other rights and remedies
of an unpaid vendor or lienor, and any liens held by Borrowers as a mechanic,
contractor, subcontractor, processor, materialman, machinist manufacturer,
artisan, or otherwise;
(b) All documents, instruments, documents of title, general intangibles,
policies and certificates of insurance, guaranties, securities chattel paper,
deposits, tax returns, proceeds of insurance, proceeds of an eminent domain or
condemnation award, cash, liens or other property, which are now or may
hereinafter be in the possession of Borrowers or as to which Borrowers may now
or hereafter control possession by documents of title or otherwise,
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including, but not limited to, all property allocable to unshipped orders
relating to Receivables and Inventory;
(c) All books, records, customer lists, supplier lists, ledgers, evidences
of shipping, invoices, purchase orders, sales orders and all other evidences of
Borrowers' business records, including all cabinets, drawers, etc. that may hold
the same; computer records, lists, software, programs, wherever located, all
whether now existing or hereafter arising or acquired;
(d) All of Borrowers' inventory, whether now owned or hereafter acquired
(collectively, the "INVENTORY"), including without limitation : (i) all goods
manufactured or acquired for sale or lease, and any piece goods, raw materials,
work in process and finished merchandise, findings or component materials, and
all supplies, goods, incidentals, office supplies, packaging materials, and any
and all items including machinery and equipment used or consumed in the
operation of the business of Borrowers or which contribute to the finished
product or to the, sale, promotion and shipment thereof, in which Borrowers may
now or at any time hereafter have an interest, whether or not such inventory is
listed in this Agreement on any reports furnished to Lender from time to time;
(ii) all inventory whether or not the same is in transit or in the constructive,
actual or exclusive occupancy or possession of Borrowers or is held by Borrowers
or by others for the Accounts, including without limitation, all goods covered
by purchase orders and contracts with suppliers and all goods billed and held by
suppliers; (iii) all inventory which may be located on the premises of Borrowers
or of any carrier, forwarding agents, truckers, warehousemen, vendors, selling
agents or third parties; (iv) all general intangibles relating to or arising out
of inventory; (v) all proceeds and products of the foregoing resulting from the
sale, lease or other disposition of inventory, including cash, accounts
receivable, other non-cash proceeds and trade-ins; and (vi) with respect to
after-acquired inventory, the security interest shall be deemed to be a purchase
money security interest;
(e) All general intangibles, including without limitation, tax refunds,
proceeds of insurance eminent domain awards, condemnation proceeds, and patents,
copyrights, tradenames, trademarks, applications therefor, and licenses to any
patent, copyright, trademark, or tradename that Borrowers now owns, has the
right to use or may hereafter own or acquire the right to use;
(f) All equipment, machinery, appliances, and furniture and fixtures, now
existing or hereafter arising, wherever located, and all contracts, contract
rights and chattel paper arising out of any lease of any of the foregoing;
(g) All other collateral in which Borrowers may hereafter grant to Lender a
security interest; and
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(h) All renewals, substitutions, replacements, additions, accessions,
proceeds, and products of any and all of the foregoing, including without
limitation, all proceeds of credit, fire and other insurance and also including,
without limitation, rents and profits resulting from the temporary use of the
Collateral.
ARTICLE IX. EVENTS OF DEFAULT
SECTION 9.1. EVENTS OF DEFAULT.
Without affecting the demand nature of the Revolving Loan which shall at
all times be due and payable on demand, any and all Obligations, including
without limitation, the Obligations arising pursuant to or in connection with
the Loans, shall, at the option of Lender and notwithstanding any time or credit
allowed by any Notes or agreement, become immediately due and payable if any one
or more of the following events (collectively, ''EVENTS OF DEFAULT" and
individually, an "EVENT OF DEFAULT") shall occur:
(a) Borrowers' failure to pay principal, interest or any other sum due
hereunder or under the Notes;
(b) Borrowers' failure to pay or perform when due any other covenant, duty,
indebtedness, liability or obligation arising under this Agreement, the Notes or
any of the other Financing Agreements, or any other Obligation, or such failure
by Fidelity Guarantors (provided, however, that the Borrowers' failure to
perform any of the obligations set forth in Sections 7.3, 7.6, 7.7, 7.9 and 7.12
shall not constitute an Event of Default unless and until such failure continues
for thirty (30) days or more;
(c) the making by Borrowers or Fidelity Guarantors of any misrepresentation
of a material fact to Lender;
(d) the filing, making or issuance of any lien, levy, seizure, attachment,
garnishment, injunction, execution, tax lien or judgment upon or against
Borrowers or any of the Collateral, or any other property or assets of Borrowers
which is not discharged or removed within a period of thirty (30) days from the
date of such filing, making or issuance;
(e) any of the following of, by, or involving Borrowers: insolvency
(failure to pay debts as they mature or where the fair value of assets is not in
excess of liabilities); business failure; appointment of a receiver or
custodian; assignment for the benefit of creditors; calling of a meeting of
creditors; appointment of a committee of creditors, or liquidating banks, or
offering of a composition extension to creditors; or the commencement of any
proceedings under any bankruptcy or insolvency law;
(f) Borrowers' failure to keep the Collateral insured against loss
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by fire or otherwise for the full insurable value thereof with companies and for
coverages (including Lender's Long Form Loss Payable Endorsement) acceptable to
Lender and making the loss, if any, payable to Lender;
(g) the loss, revocation or failure to renew any license and/or permit now
held or hereafter acquired by Borrowers which materially adversely affects the
ability of Borrowers to continue their operations as presently conducted;
(h) the declaration of a default under any obligation of Borrowers for
borrowed money to any other creditor;
(i) the occurrence of any event or circumstance with respect to the
Borrowers such that Lender shall reasonably and in good faith believe that the
prospect of payment of all or any part of Obligations or the performance by the
Borrowers under this Agreement, or any other agreement between the Lender and
the Borrowers, is impaired or there shall occur any material adverse change in
the business or financial condition of the Borrowers;
(j) the receipt by Lender of a Default Notice from Raychem Corporation (as
defined in the Lessor's Agreement from Raychem Corporation); or
(k) the receipt by Lender of a Put Notice from Connecticut Innovations,
Inc. (as defined in the CII Agreement).
Upon the occurrence of any Event of Default, at the option of Lender: (x)
any and all Obligations, including without limitation, the Obligations arising
from or in connection with the Loans, shall become immediately due and payable,
and (y) Borrowers' eligibility to request any Further Revolving Loans shall
automatically and immediately terminate, without presentment, demand, protest,
notice of protest or other notice or requirements of any kind, all of which
Borrowers expressly waive. Notwithstanding the foregoing sentence, if any Event
of Default under clause (e) occurs, the acceleration of the Obligations and
termination of Borrowers' eligibility to request Further Revolving Loans shall
be automatic.
At any time after an Event of Default, Lender may proceed to enforce the
rights of Lender whether by suit in equity or by action at law, whether for
specific performance of any covenant or agreement contained in this Agreement,
the Notes or the other Financing Agreements, or in aid of the exercise of any
power granted in either this Agreement or the Notes or any other Financing
Agreement, or it may proceed to obtain judgment or any other relief whatsoever
appropriate to the enforcement of such rights, or proceed to enforce any legal
or
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equitable right which Lender may have by reason of the occurrence of any
Event of Default hereunder.
ARTICLE X. COLLECTION OF RECEIVABLES
SECTION 10.1. DEPOSITS.
Until Lender exercises its rights to collect the Receivables as provided
for in this Agreement, Borrowers shall continue direct collection of all
Receivables. All collections and other proceeds of Receivables which Borrowers
receive shall be received in trust for Lender and Borrowers shall: (i) keep all
such collections separate and apart from all of its other funds and property
(ii) identify such collections and proceeds as the property of Lender and (ii)
immediately deposit such collections in the identical form received in accounts
of Lender as designated by Lender from time to time.
SECTION 10.2. SCHEDULE.
All collections of Receivables shall be set forth on a schedule in form
and substance satisfactory to Lender. Collections of Receivables shall be
credited to the Obligations of Borrowers on the day of their actual receipt by
Lender; provided, however, that all credits shall be conditional credits subject
to collection and that returned items at Lender's option, may be charged to
Borrowers; and further provided that for purposes of the computation of
interest, items shall not be deemed to be collected until three (3) days after
their actual receipt by Lender.
ARTICLE XI. RETURNED MERCHANDISE
SECTION 11.1. PROCEDURES.
Until Lender exercises its rights to collect the Receivables as provided
for in this Agreement, Borrowers may continue their present policies for
returned merchandise and adjustments, but shall promptly notify Lender of any
credits, adjustments or disputes arising concerning the goods or services
represented by Receivables. In any event, Borrowers will immediately pay Lender
from their own funds (and not from the proceeds of Receivables), for application
to the Revolving Loans, an amount equal to any credit or adjustment made to any
Eligible Accounts; provided, however, that so long as Borrowers are not in
default hereunder, such payment need not be made if Borrowers shall have, after
making such credit or adjustment, sufficient Receivables to maintain the
aggregate outstanding balance of the Revolving Loans under the Borrowing Base.
ARTICLE XII. RIGHTS AND REMEDIES OF LENDER
SECTION 12.1. REMEDIES OF LENDER.
Upon Lender's demand for payment of the Revolving Loan or upon the
occurrence of any Event of Default, Lender shall have in any jurisdiction where
enforcement of this Agreement, the Notes or any other Financing Agreement is
sought, in addition to all other rights and remedies which Lender may have under
law and equity, the following rights and remedies, all of which may be exercised
with or without further
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notice to Borrowers and without a prior judicial or administrative hearing,
which notice and hearing are expressly waived: to occupy any of Borrowers'
premises for up to six (6) months rent free for the purposes of liquidating
Collateral, including, without limitation, conducting an auction thereon; to
enforce or foreclose the liens and security interests created under this
Agreement or under any other agreement relating to Collateral by any available
judicial procedure or without judicial process; to enter any premises where any
Collateral may be located for the purpose of taking possession or removing the
same; to sell, assign, lease, or otherwise dispose of Collateral or any part
thereof, either at public or private sale, in lots or in bulk, for cash, on
credit or otherwise, with or without representations or warranties, and upon
such terms as shall be acceptable to Lender, all at Lender's sole option and as
Lender in its sole discretion may deem advisable; to bid or become purchaser at
any such sale if public; and, at the option of Lender to apply or be credited
with the amount of all or any part of the Obligations owing to Lender against
the purchase price bid by Lender at any such sale.
SECTION 12.2. SPECIFIC POWERS.
Lender may at any time, before (with respect to clauses (v), (vii) and (x)
of this Section 12.2) or after the occurrence of a demand for payment of the
Revolving Loan or an Event of Default and during the continuance of an Event of
Default, at Lender's sole discretion: (i) give notice of assignment to any
Account Debtor (it being agreed and understood that Lender may at any time,
before or after demand for payment of the Revolving Loan or the occurrence of an
Event of Default, verify receivables directly with Account Debtors); (ii)
collect Receivables directly and charge, or cause to be charged, the collection
costs and expenses to the Revolving Loan Account; (iii) collect receivables
submitted by Borrowers to Lender for collection and charge, or cause to be
charged, the collection costs and expenses to the Revolving Loan Account; (iv)
settle or adjust disputes and claims directly with Account Debtors for amounts
and upon terms which Lender considers advisable, and credit, or cause to be
credited, the Revolving Loan Account with the net amounts received in payment of
Receivables; (v) exercise all other rights granted in this Agreement and the
other Financing Agreements; (vi) receive, open and dispose of all mail addressed
to Borrowers and notify the Post Office authorities to change the address for
delivery of Borrowers' mail to an address designated by Lender; (vii) endorse
the name of Borrowers on any checks or other evidence of payment that may come
into possession of Lender and on any invoice, freight or express bill, bill of
lading or other document; (viii) in the name of Borrowers or otherwise, demand,
sue for, collect and give acquittance for any and all monies due or to become
due on Receivables; (ix) compromise, prosecute or defend any action, claim or
proceeding concerning Receivables; and (x) do any and all things necessary and
proper to carry out the purposes contemplated in this Agreement, the other
Financing Agreements and any other agreement between the parties. Neither Lender
nor any person acting as its representative hereunder shall be liable for any
acts or omissions or for any
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error of judgment or mistake of fact or law, except for gross negligence or
willful misconduct. Borrowers agree that the powers granted hereunder, being
coupled with an interest, shall be irrevocable so long as any Obligation remains
unsatisfied. Notwithstanding the foregoing, it is understood that Lender is
under no duty to take any of the foregoing actions and that after having made
demand upon the Account Debtors for payment, Lender shall have no further duty
as to the collection or protection of Receivables or any income therefrom and no
further duty to preserve any rights pertaining thereto, other than the safe
custody thereof in the event Lender takes possession thereof.
SECTION 12.3. DUTIES AFTER DEMAND OR DEFAULT.
Borrowers will, at Lender's request, assemble all Collateral and make it
available to Lender at places which Lender may reasonably select, whether at the
premises of Borrowers or elsewhere, and will make available to Lender all
premises and facilities of Borrowers for the purpose of Lender taking possession
of Collateral or of removing or putting the Collateral in salable form. In the
event that Lender elects to exercise its right to take possession and control of
any Collateral, and any goods called for in any sales order, contract, invoice
or other instrument or agreement evidencing or purporting to give rise to any
Receivable shall not have been delivered or shall be claimed to be defective by
any customer, Lender shall have the right in its sole discretion to use and
deliver to such customer any goods of Borrowers to fulfill such order, contract
or the like so as to make good any such Receivable. If any Collateral shall
require repairing, maintenance, preparation, or the like, or is in process or
other unfinished state, Lender shall have the right, but shall not be obligated,
to effectuate such repair, maintenance, preparation, processing or completion of
manufacturing for the purpose of putting the same in such salable form as Lender
shall deem appropriate, provided that Lender shall nonetheless have the right to
sell or dispose of such Collateral without such processing. The net cash
proceeds resulting from the collection, liquidation, sale, lease or other
disposition of Collateral shall be applied first to the expenses (including all
attorneys' and professionals' fees) of retaking, holding, storing, processing
and preparing for sale, selling, collecting, liquidating and the like such
collateral, and then to the satisfaction of all Obligations, (application as to
any particular Obligations or against principal or interest to be at Lender's
sole discretion), and then, upon full and final payment of the Obligations, and
unless otherwise prohibited by court order or law, to Borrowers, it being agreed
that if any such payment made to Lender is recovered from or repaid by Lender in
whole or in part in any bankruptcy, insolvency or similar proceeding instituted
by or against Borrowers, this Agreement automatically shall be reinstated
without any further action by Borrowers and Lender. Borrowers shall be liable
to Lender and shall pay to Lender on demand any deficiency which may remain
after such sale, disposition, collection or liquidation of Collateral.
SECTION 12.4. CUMULATIVE REMEDIES.
The enumeration of
<PAGE>
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Lender's rights and remedies set forth in this Article XII is not intended to be
exhaustive and the exercise by Lender of any right or remedy hereunder shall not
preclude the exercise of any other rights or remedies, all of which shall be
cumulative and shall be in addition to any other right or remedy given hereunder
or under any other agreement between the parties or which may now or hereafter
exist in law or at equity or by suit or otherwise. No delay or failure to take
action on the part of Lender in exercising any right, power or privilege shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or privilege preclude other or further exercise thereof or the
exercise of any other right, power or privilege or shall be construed to be a
waiver of any Event of Default. No course of dealing between Borrowers and
Lender or its employees shall be effective to change, modify or discharge any
provision of this Agreement or to constitute a waiver of any Event of Default.
ARTICLE XIII. TERM
SECTION 13.1. TERM AND TERMINATION.
(a) REVOLVING LOAN. Unless sooner terminated by Lender as a result of the
occurrence of a demand, an Event of Default, or a Defaulting Event, Borrowers'
eligibility to request Revolving Loans shall commence on the date hereof and
shall continue for a period through and including July 31, 1998 (the "TERM").
Borrowers' eligibility to request Revolving Loans may be extended after the Term
only with the express written consent of both Borrowers and Lender. At the end
of the Term, Borrowers shall pay the entire balance of the Revolving Loans, the
Term Loan and all other outstanding Obligations. Further, upon termination of
the Revolving Loan facility all of the rights, interests and remedies of Lender
and Obligations of Borrowers shall survive and Borrowers shall have no right to
receive, and Lender shall have no obligation to make, any further Revolving
Loans. Upon full, final and indefeasible payment of the Obligations to Lender,
all rights and remedies of Borrowers and Lender hereunder shall cease, so long
as any payment so made to Lender and applied to the Obligations is not
thereafter recovered from or repaid by Lender in whole or in part in any
bankruptcy, insolvency or similar proceeding instituted by or against Borrowers,
whereupon this Agreement shall be automatically reinstated without any further
action by Borrowers and Lender and shall continue to be fully applicable to such
Obligations to the same extent as though the payment so recovered or repaid had
never been originally made on such Obligations.
(b) TERMINATION FEE AND MINIMUM INTEREST. In the event that (a) this
Agreement is terminated by Borrowers as of any date other than the end of the
Term, or (b) this Agreement is terminated as a result of the occurrence of an
Event of Default or a Defaulting Event (other than Event of Default arising
solely under 9.1(i) above), Borrowers shall pay to Lender on the effective date
of such termination, in addition to the Minimum Interest Amount
<PAGE>
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and any other payments Borrowers are required to make hereunder, a termination
charge equal to one percent (1%) of the sum of the maximum principal amount of
the Revolving Loan ($1,500,000) plus the then outstanding principal amount of
----
the Term Loan (the "TERMINATION FEE"). In the event that (x) Borrowers breach
this Agreement by terminating this Agreement prior to the expiration of the
Term, or (y) Borrowers give to Lender less than sixty (60) days notice that
Borrowers intend to decline to extend the term of this Agreement at the end of
the Term, or (z) this Agreement is terminated as a result of: (i) a demand by
Lender for payment of the Loans; or (ii) the occurrence of an Event of Default
or a Defaulting Event, Borrowers shall pay to Lender the Minimum Interest Amount
on the effective date of such termination, in addition to the Termination Fee
and any other payments Borrowers are required to make hereunder. All other
amounts due from Borrowers to Lender prior to or in connection with any
termination of this Agreement which have not been previously paid, shall be paid
by Borrowers on or before the effective date of the termination. As used herein,
the "Minimum Interest Amount" means interest upon the Minimum Balance at the
interest rate in effect on the date that express written notice of such
termination is given to Lender (or, if no such notice is given, the rate in
effect on the effective date of termination), for the period commencing on the
date of such written notice of termination (or, if no such notice is given,
commencing on the effective date of termination) and ending at the end of the
Term (or at the end of a period of sixty (60) days thereafter, if such
termination notice is given by Borrowers during or at the end of the Term on
less than sixty (60) days notice or if no termination notice is given).
ARTICLE XIV. MISCELLANEOUS
SECTION 14.1. INDEMNIFICATION.
(a) In consideration of Lender's execution and delivery of this Agreement
and Lender's making of the Loans hereunder and in addition to all other
obligations of Borrowers under this Agreement, each of the Borrowers hereby
jointly and severally agrees to defend, protect, indemnify and hold harmless
Lender, its successors, assigns, officers, directors, employees and agents
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (individually, each an "INDEMNITEE"
and collectively, the "INDEMNITEES") from and against any and all actions,
causes of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages and expenses in connection therewith (irrespective of whether any such
Indemnitees is a party to any action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements as and when
incurred (collectively, the "INDEMNIFIABLE LIABILITIES") incurred by the
Indemnitees or any of them as a result of, or arising out of, or relating to (i)
the execution, delivery, performance or enforcement of this Agreement and the
other
<PAGE>
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Financing Agreements and any instrument, document or agreement executed
pursuant hereto to any of the Indemnitees; (ii) Lender's status as lender to, or
creditor of, Borrowers; or (iii) the operation of Borrowers' businesses from and
after the date hereof, including, without limitation, those arising under any
Environmental Law. To the extent that the foregoing undertaking by Borrowers
may be unenforceable for any reason, Borrowers shall make the maximum
contribution to the payment and satisfaction of each of the Indemnifiable
Liabilities which is permissible under applicable-law.
(b) Each of the Borrowers hereby jointly and severally covenants and agrees
at all times to indemnify, hold harmless and defend the Indemnitees, whether as
secured party in possession or as successor in interest to Borrowers as owner of
any personal property assets located on the real property of Borrowers by virtue
of any action taken by Lender pursuant to the Financing Agreements, the Uniform
Commercial Code (as in effect in any applicable jurisdiction) or otherwise, from
and against any and all liabilities, losses, damages, costs, expenses,
penalties, fines, causes of actions, suits, claims, demands or judgments,
including, without limitation, attorneys' fees and expenses, suffered or
incurred in connection with: (i) the Environmental Laws, including, without
limitation, liens or claims of any federal, state or municipal government or
quasi-governmental agency or any third person, whether arising under any
Environmental Law or any other federal, state or municipal law or regulation;
(ii) any spill or contamination affecting the Premises or any other property
owned, leased, controlled or used by Borrowers, including, without imitation,
any Hazardous Substance or other waste-like or toxic substances located on,
under, emanating from or relating to the Premises or such property from and on
and after the date hereof or any portion of any thereof or any property
contiguous to the Premises or such property from and after the date hereof, and
including, without limitation, any loss of value of the Premises or such
property as a result of any such spill or contamination; and (iii) the direct or
indirect installation, use, generation, manufacture, production, storage,
release, threatened release, discharge, disposal or presence of any Hazardous
Substance on under or about the Premises or any other property owned, leased,
controlled or used by Borrowers or any portion of any thereof, from and
including all consequential damages, the costs of any required or necessary
repair, cleanup or detoxification, and the costs of the preparation and
implementation of any closure, remedial or other required plans; provided,
however, that Borrowers shall have no obligation to indemnify the Indemnitees
under this Subsection 14.1(b) for claims or losses resulting solely from the
Indemnitees' Parties own negligent action while on the Premises or property of
Borrowers. Further, is expressly agreed and understood that the mere fact that
an Indemnitee has been declared an "owner" or "operator" (as such term is
defined in any Environmental Law) resulting from such Indemnitee having taking
possession of any of the Collateral (without any negligence on the part of such
Indemnitee) shall not exonerate Borrowers from any claim by such
<PAGE>
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Indemnitee or any other Indemnitee seeking indemnification.
SECTION 14.2. PAYMENT SET-ASIDE.
To the extent that Borrowers make a payment or payments to Lender (whether
hereunder, under the Notes, or under the other Financing Agreements) or Lender
enforces its security interests or rights or exercises its right of setoff; and
such payment or payments or the proceeds of such enforcement or setoff or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside, recovered from, disgorged by or are required to be
refunded, repaid or otherwise restored to Borrowers, a trustee, receiver or any
other person under any law (including, without limitation, any bankruptcy law,
state or federal law, common law or equitable cause of action) in connection
with any bankruptcy or similar proceeding involving Borrowers, then to the
extent of any such restoration the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such enforcement or setoff had not
occurred.
SECTION 14.3. SET-OFF.
Each of the Borrowers hereby grants to Lender a lien and right of setoff
for all its liabilities to Lender upon and against all its deposits, credits,
collateral and property now or hereafter in the possession or control of Lender
or in transit to Lender. Lender may, upon the occurrence of any Event of
Default or Defaulting Event or both, apply or exercise the right of set off
against any or all of the foregoing or any part of any thereof against any
liability of Borrowers to Lender, regardless whether such liability is matured
or unmatured.
SECTION 14.4. COVENANTS TO SURVIVE; BINDING AGREEMENT.
All covenants, agreements, warranties and representations made herein, in
the Notes, in the other Financing Agreements, and in all certificates or other
documents of Borrowers shall survive the advances of money made by Lender to
Borrowers hereunder and the delivery of the Notes and the other Financing
Agreements, and all such covenants, agreements, warranties and representations
shall be binding upon and inure to the benefit of Lender and its successors and
assigns, whether or not so expressed.
SECTION 14.5. CROSS-COLLATERALIZATION.
All Collateral which Lender may at any time acquire from Borrowers or from
any other source in connection with Obligations arising under this Agreement and
the other Financing Agreements shall constitute collateral for each and every
Obligation, without apportionment or designation as to particular Obligations
and all Obligations, however and whenever incurred, shall be secured by all
Collateral however and whenever acquired, and Lender shall have the right, in
its sole discretion, to determine the order in which Lender's rights in or
remedies against any Collateral are to be exercised and which type of Collateral
or which portions of Collateral are to be proceeded against and the order of
application of
<PAGE>
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proceeds of Collateral as against particular Obligations.
SECTION 14.6. CROSS-DEFAULT.
Borrowers acknowledge and agree that an Event of Default and/or Defaulting
Event under any one of the Financing Agreements shall constitute an Event of
Default or Defaulting Event under each of the other Financing Agreements.
SECTION 14.7. AMENDMENTS AND WAIVERS.
Neither this Agreement, the Notes, the other Financing Agreements, nor any
term, covenant or condition hereof or thereof may be changed, waived,
discharged, modified or terminated except by a writing executed by the parties
hereto or thereto. No failure on the part of Lender to exercise, and no delay
in exercising, any right, remedy or power hereunder or under the Notes or the
other Financing Agreements shall preclude any other or future exercise thereof,
or the exercise of any other right remedy or power.
SECTION 14.8. NOTICES.
All notices, requests, consents, demands and other communications
hereunder shall be in writing and shall be mailed by first class mail to the
respective parties to this Agreement to the address set forth in the
introductory sentence hereof.
SECTION 14.9. TRANSFER OF LENDER'S INTEREST.
Borrowers hereby agree that Lender, in its sole discretion, may freely
sell, assign or otherwise transfer participations, portions, co-lender interests
or other interests in all or any portion of the indebtedness, liabilities or
obligations arising in connection with or in any way related to the financing
transactions of which this Agreement is a part provided that such transferee is
a recognized financial institution. In the event of any such transfer, the
transferee may, in Lender's sole discretion, have and enforce all the rights,
remedies and privileges of Lender. Borrowers consent to the release by Lender
to any potential transferee of any and all information (including, without
limitation, financial information) pertaining to Borrowers as Lender, in its
sole discretion, may deem appropriate. If such transferee so participates with
Lender in making loans or advances hereunder or under any other agreement
between such Lender and Borrowers, Borrowers hereby grant to such transferee and
such transferee shall have and is hereby given a continuing lien and security
interest in any money, securities or other property of Borrowers in the custody
or possession of such transferee, including the right of setoff under
circumstances consistent with this Agreement, to the extent of such transferee's
participation in the Obligations of Borrowers to Lender.
SECTION 14.10. WAIVERS.
(a) EACH OF THE BORROWERS ACKNOWLEDGES THAT THE LOANS EVIDENCED HEREBY ARE
COMMERCIAL TRANSACTIONS AND WAIVES ITS RIGHT TO NOTICE AND HEARING
<PAGE>
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UNDER CHAPTER 903A OF THE CONNECTICUT GENERAL STATUTES, OR AS OTHERWISE ALLOWED
BY ANY STATE OR FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH LENDER
MAY DESIRE TO USE, AND FURTHER WAIVES ITS RIGHTS TO REQUEST THAT LENDER POST A
BOND, WITH OR WITHOUT SURETY, TO PROTECT BORROWERS AGAINST DAMAGES THAT MAY BE
CAUSED BY ANY PREJUDGMENT REMEDY SOUGHT OR OBTAINED BY LENDER. EACH OF THE
BORROWERS FURTHER WAIVES DILIGENCE, DEMAND, PRESENTMENT FOR PAYMENT, NOTICE OF
NONPAYMENT, PROTEST AND NOTICE OF ANY RENEWALS OR EXTENSIONS.
(b) EACH OF THE BORROWERS HEREBY WAIVES TRIAL BY JURY IN ANY COURT IN ANY
SUIT, ACTION OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH OR IN ANY
WAY RELATED TO THE FINANCING TRANSACTIONS OF WHICH THIS AGREEMENT IS A PART
AND/OR THE ENFORCEMENT OF ANY OF LENDER'S RIGHTS, INCLUDING, WITHOUT LIMITATION,
TORT CLAIMS. EACH OF THE BORROWERS FURTHER ACKNOWLEDGES THAT LENDER HAS NOT
REPRESENTED TO BORROWERS THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY
ENFORCED IN ALL INSTANCES.
(c) EACH OF THE BORROWERS ACKNOWLEDGES THAT IT MAKES THE FOREGOING WAIVERS
IN CLAUSE (A) AND CLAUSE (B) ABOVE, KNOWINGLY, VOLUNTARILY, WITHOUT DURESS AND
ONLY AFTER CONSIDERATION OF THE RAMIFICATIONS OF SUCH WAIVERS WITH ITS
ATTORNEYS.
SECTION 14.11. SECTION HEADINGS; SEVERABILITY; ENTIRE AGREEMENT.
Section and subsection headings have been inserted herein for
convenience only and shall not be construed as part of this Agreement. Every
provision of this Agreement, the Notes and the other Financing Agreements is
intended to be severable; if any term or provision of this Agreement, the Notes,
the other Financing Agreements, or any other document delivered in connection
herewith shall be invalid, illegal or unenforceable for any reason whatsoever,
the validity, legality and enforceability of the remaining provisions hereof or
thereof shall not in any way be affected or impaired thereby. All Exhibits and
Schedules to this Agreement shall be annexed hereto and shall be deemed to be
part of this Agreement. This Agreement, the other Financing Agreements, and the
Exhibits and Schedules attached hereto and thereto embody the entire agreement
and understanding between Borrowers and Lender and supersede all prior
agreements and understandings relating to the subject matter hereof unless
otherwise specifically reaffirmed or restated herein.
<PAGE>
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SECTION 14.12. GOVERNING LAW, NOTICE AND SERVICE OF PROCESS,
PLEADINGS AND OTHER PAPERS.
This Agreement and the other Financing Agreements, and all transactions,
assignments and transfers hereunder and thereunder, and all the rights of the
parties, shall be governed as to validity, construction, enforcement and in all
other respects by the laws of the State of Connecticut (but not its conflicts of
law provisions). Borrowers hereby designate and appoint, without power of
revocation, the Secretary of the State of Connecticut as Borrowers' agent upon
whom may be served all process, pleadings, notices or other papers which may be
served upon it as a result of any of its Obligations under this Agreement or
other Financing Agreements. Borrowers agree that the Superior Court for the
Judicial District of Hartford/New Britain or the United States District Court
for the District of Connecticut shall have jurisdiction to hear and determine
any claims or disputes pertaining to the financing transactions of which this
Agreement is a part and/or to any matter arising or in any way related to this
Agreement or any other agreement between Lender and Borrowers, and Borrowers
expressly submit and consent in advance to such jurisdiction in any action or
proceeding.
SECTION 14.13. JOINT AND SEVERAL OBLIGATION.
Each of the Borrowers acknowledges that (a) the Obligations are the joint
and several obligation of each of the Borrowers and all references to Borrowers
are deemed to refer to each of them individually and both of them collectively,
(b) Wright is a wholly-owned subsidiary of Memry and each of them derives a
direct and material financial benefit from the Loans extended to the other, and
(c) for reasons of simplicity and administrative ease, the Borrowers desire that
the Loans be extended to them as co-borrowers. The security interests, liens and
other rights and interests in and relative to any of the real or personal
property of the Borrowers now or hereafter granted to Lender by the Borrowers or
in any instrument or agreement, shall serve as security for any and all of the
Obligations, including but not limited to, the obligations arising under the
Loans and, for the repayment thereof, Lender may resort to any security held by
it in such order and manner as it may elect.
SECTION 14.14. MISCELLANEOUS PROVISIONS REGARDING MEMRY'S DOCUMENTS.
(a) Lender acknowledges that, pursuant to Section 7(b) of the Amended
and Restated Asset Purchase Agreement, dated as of May 10, 1996, between Memry
and Raychem Corporation, a Delaware corporation ("RAYCHEM"), as amended (the
"RAYCHEM AGREEMENT"), Memry is required (i) to keep books and records relating
to products which Memry manufactures and which Raychem manufactured prior to the
Closing (as defined in the Raychem Agreement) for a period of seven (7) years,
and (ii) to maintain all documents purchased from Raychem under the Raychem
Agreement relating in any way to the matters subject to the lawsuit entitled
Intrinsic v. Raychem Corporation
- - --------------------------------
<PAGE>
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during the pendency of such litigation (including all appeals thereof). In the
event that Lender forecloses upon any such books, records and/or documents at a
time when the aforesaid requirements are still in force, Lender agrees to take
possession of such books, records and/or documents, and/or to sell or otherwise
convey such books, records and/or documents, or cause such books, records and/or
documents to be sold or otherwise conveyed, subject to the aforesaid
restrictions.
<PAGE>
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(b) Lender acknowledges that, pursuant to the definition of the term
"Documents" contained in Section 1 of the Raychem Agreement, Memry may not have
title to certain documents in Memry's possession due to the inability of Raychem
to transfer such documents to Memry without the prior written consent of various
third parties. Lender agrees and acknowledges that its lien upon Memry's assets
hereunder only covers documents to the extent that Memry in fact has any right,
title and/or interest in and to the same, and that Lender will have no more
interest in any such documents upon an exercise of any of its foreclosure or
similar rights hereunder than Memry currently has to such documents. Borrowers
represent and warrant to Lender that the aforesaid documents (i) do not relate
to the Borrowers' accounts receivable, inventory and/or machinery and equipment,
and (ii) are not material to the Borrowers' respective assets, businesses and/or
prospects.
SECTION 14.15. WAIVER.
Without limiting the generality of the waivers contained in this Agreement
or in any other Financing Agreement, Borrowers irrevocably waive any right to
claim that Lender is not dealing fairly with them, or for any other reason has
any liability to them, regardless of the status of the business, financial
condition, or prospects of Borrowers, on account of Lender taking action to
repossess or collect upon the Collateral or otherwise to collect the Obligations
as a result of receiving a Put Notice from Connecticut Innovations, Inc.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the date first above written.
Witnesses: MEMRY CORPORATION
/s/ By: /s/ Wendy A. Gavaghan
- - --------------------------- -------------------------------
Its V.P. Finance
/s/
- - ---------------------------
Witnessed: WRIGHT MACHINE CORPORATION
/s/ By: /s/ Wendy A. Gavaghan
- - --------------------------- -------------------------------
Its Secretary
/s/
- - ---------------------------
<PAGE>
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Witnessed: AFFILIATED BUSINESS CREDIT
CORPORATION
/s/ By: /s/ Gary W. Burdick
- - --------------------------- -------------------------------
Its President
/s/
- - ---------------------------
STATE OF CONNECTICUT )
) ss. Hartford
COUNTY OF HARTFORD )
Before me, the undersigned, this 9th day of August, 1996, personally
appeared Wendy Gavaghan, known to me to be the V.P.-Finance of MEMRY
CORPORATION and that he as such officer, signer and sealer of the foregoing
instrument, acknowledged the execution of the same to be his free act and deed
individually and as such officer, and the free act and deed of said corporation.
In Witness Whereof; I hereunto set my hand.
/s/ David I. Albin
-----------------------------------------
Commissioner of the Superior Court
<PAGE>
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STATE OF CONNECTICUT )
) ss. Hartford
COUNTY OF HARTFORD )
Before me, the undersigned, this 9th day of August, 1996, personally
appeared Wendy A. Gavaghan, known to me to be the Secretary of WRIGHT
MACHINE CORPORATION and that he as such officer, signer and sealer of the
foregoing instrument, acknowledged the execution of the same to be his free act
and deed individually and as such officer, and the free act and deed of said
corporation.
In Witness Whereof; I hereunto set my hand.
/s/ David I. Albin
-----------------------------------------
Commissioner of the Superior Court
STATE OF CONNECTICUT )
) ss. Hartford
COUNTY OF HARTFORD )
Before me, the undersigned, this 9th day of August, 1996 personally
appeared Gary Burdick, known to me to be the President of Affiliated Business
Credit Corporation, and that he as such officer, signer and sealer of the
foregoing instrument, acknowledged the execution of the same to be his free act
and deed individually and as such officer, and the free act and deed of said
corporation.
In Witness Whereof; I hereunto set my hand.
/s/ David I. Albin
-----------------------------------------
Commissioner of the Superior Court
<PAGE>
Exhibits and Schedules Intentionally Omitted
<PAGE>
EXHIBIT 10.45
MORTGAGE AND SECURITY AGREEMENT
-------------------------------
This MORTGAGE AND SECURITY AGREEMENT dated as of the 9th day of August,
1996, is from WRIGHT MACHINE CORPORATION, a Delaware corporation, having a
mailing address at 69 Armory Street, Worcester, Massachusetts ("MORTGAGOR"), to
AFFILIATED BUSINESS CREDIT CORPORATION, a Connecticut corporation having an
office at 72 Queen Street, Southington, Connecticut 06489 (hereinafter referred
to as "MORTGAGEE").
WHEREAS Mortgagor is justly indebted to Mortgagee for the payment and
performance of the Obligations as defined below;
(S)1. GRANTING CLAUSE
NOW THIS INDENTURE WITNESSETH, that Mortgagor, in consideration of the
Obligations, and to secure the payment to Mortgagee of the principal with
interest, and all other sums provided for in the Obligations, and in this
Mortgage, according to their respective terms and conditions, and for
performance of the agreements, conditions, covenants, provisions and
stipulations contained herein and therein, and in certain other agreements and
instruments made and given or to be given by Mortgagor to Mortgagee in
connection therewith, including, without limitation, financing statements and
any assignment of rents and leases, does hereby grant, bargain, sell convey,
warrant, assign, transfer, mortgage, pledge and set over unto Mortgagee and its
successors and assigns with MORTGAGE COVENANTS all of the property described in
Schedule A attached hereto and incorporated herein by reference as if fully set
- - ----------
out herein (the "PROPERTY").
(S)2. CERTAIN COVENANTS AND CONDITIONS
The Mortgagor covenants and agrees as follows.
(S)2.1. GOVERNMENTAL CHARGES.
--------------------
Mortgagor shall pay before the same become delinquent all taxes,
charges, sewer use fees, water rates and assessments of every name and
nature, whether or not assessed against Mortgagor, if applicable or related
to the Property, or any interest therein, or applicable or related to any
of the Obligations, which, if unpaid, shall by law become a lien or charge
upon all or any part of the Property; provided, however, that, so long as
no distraint, foreclosure sale or other levy upon or transfer with respect
to the Property or any part thereof shall have been effected or threatened,
and no Event of Default shall have occurred and be continuing, Mortgagor
shall not be required to pay any such taxes, charges, fees, rates and
assessments by reason of this (S)2.1 if (a) the amount, applicability or
validity thereof is currently being
<PAGE>
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contested by Mortgagor in good faith by appropriate legal proceedings, (b)
Mortgagor shall have set aside on its books reserves (segregated to the
extent required by sound accounting principles and practices) reasonably
deemed by Mortgagee to be adequate with respect hereto and (c) Mortgagor
shall have provided to the Mortgagee a bond or other security of such
nature and in such amount as Mortgagee deems sufficient as security for
payment thereof.
(S)2.2. HAZARD AND OTHER INSURANCE.
--------------------------
(a) Mortgagor, at its expense, shall procure and maintain for the
benefit of Mortgagor and Mortgagee, insurance policies issued by such
insurance companies, in such amounts, in such form and substance, and
with such coverages, endorsements, deductibles, and expiration dates
as are acceptable to Mortgagee, providing the following types of
insurance covering the Property.
(i) "All Risks" property insurance (including broad form flood
(if required), broad form earthquake (if required) and
comprehensive boiler and machinery coverages) on the Improvements
and the Mortgagor's contents therein in an amount not less than
one hundred percent (100%) of the full replacement cost of the
Improvements and the Mortgagor's contents therein determined
annually by an insurer or qualified appraiser selected and paid
for by Mortgagor and acceptable to Mortgagee, with deductibles
not to exceed $5,000 for any one occurrence, with a replacement
cost coverage endorsement, an agreed amount endorsement, and, if
requested by Mortgagee, a contingent liability from operation of
building laws endorsement, a demolition cost endorsement and an
increased cost of construction endorsement in such amounts as
Mortgagee may require. Full replacement cost as used herein means
the cost of replacing the Improvements (exclusive of the cost of
excavations, foundations and footings below the lowest basement
floor) and the Mortgagor's contents therein without deduction for
physical depreciation thereof.
(ii) During the course of construction or repair of any
Improvements on the Property, the insurance required by clause
(i) above shall be written on a builders risk, completed value,
non-reporting form, meeting all of the terms required by clause
(i) above, covering the total value of work performed, materials,
equipment, machinery and supplies
<PAGE>
-3-
furnished, existing structures, and temporary structures being
erected on or near the Premises, including coverage against
collapse and damage during transit or while being stored off-
site, and containing a soft costs (including loss of rents)
coverage endorsement and a permission to occupy endorsement.
(iii) Flood insurance if at any time the improvements are located
in any federally designated "special hazard area" (including any
area having special flood, mudslide and/or flood-related erosion
hazards, and shown on a Flood Hazard Boundary Map or a Flood
Insurance Rate Map published by the Federal Emergency Management
Agency as Zone A, AO, A1-30, AE, A99, AH, VO, V1-30, VE, V, M or
E) and the broad form flood coverage required by clause (i) above
is not available, in an amount equal to the full replacement cost
or the maximum amount then available under the National Flood
Insurance Program.
(iv) Commercial general liability insurance against claims for
personal injury (to include, without limitation, bodily injury
and personal injury) and property damage liability, all on an
occurrence basis, if available, with such coverages as Mortgagee
may reasonably request (including, without limitation,
contractual liability coverage, completed operations coverage for
a period of two (2) years following completion of construction of
any improvements on the Property, and coverages equivalent to an
ISO broad form endorsement), with a general aggregate limit of
not less than $1,000,000, a completed operations aggregate limit
of not less than $1,000,000, and a combined single "per
occurrence" limit of not less than $1,000,000 for bodily injury,
property damage and medical payments.
(v) During the course of construction or repair of any
improvements on the Property, owner's contingent or protective
liability insurance covering claims not covered by or under the
terms or provisions of the insurance required by clause (v)
above.
(vi) Employers liability insurance.
(vii) Worker's compensation insurance for all employees of
Mortgagor engaged on or with respect to the Property.
<PAGE>
-4-
(viii) Such other insurance in such form and in such amounts as
may from time to time be reasonably required by Mortgagee against
other insurable hazards and casualties which at the time are
commonly insured against in the case of properties of similar
character and location to the Property.
Mortgagor shall pay all premiums on insurance policies. The
insurance policies provided for in clauses (v), (vi) and (viii) above
shall name Mortgagee as an additional insured and shall contain a
cross liability/severability endorsement. The insurance policies
provided for in clauses (i), (ii), (iii) and (iv) above shall name
Mortgagee as mortgagee and loss payee, shall be first payable in case
of loss to Mortgagee, and shall contain mortgage clauses and lender's
loss payable endorsements in form and substance acceptable to
Mortgagee. Mortgagor shall deliver duplicate originals or certified
copies of all such policies to Mortgagee, and Mortgagor shall promptly
furnish to Mortgagee all renewal notices and all receipts of paid
premiums. At least thirty (30) days prior to the expiration date of
the policies, Mortgagor shall deliver to Mortgagee evidence reasonable
satisfactory to Mortgagee that all such policies have been renewed,
duplicate originals or certified copies of renewal policies in form
satisfactory to Mortgagee.
(b) All policies of insurance required by this Mortgage shall
contain clauses or endorsements to the effect that (i) no act or
omission of either Mortgagor or anyone acting for Mortgagor
(including, without limitation, any representations made by Mortgagor
in the procurement of such insurance), which might otherwise result in
a forfeiture of such insurance or any part thereof, no occupancy or
use of the Property of purposes more hazardous than permitted by the
terms of the policy, and no foreclosure or any other change in title
to the Property or any part thereof, shall affect the validity or
enforceability of such insurance insofar as Mortgagee is concerned,
(ii) the insurer waives any right of setoff, counterclaim,
subrogation, or any deduction in respect of any liability of Mortgagor
and Mortgagee, (iii) such insurance is primary and without right of
contribution from any other insurance which may be available, (iv)
such policies shall not be modified, cancelled or terminated without
the insurer thereunder giving at least thirty (30) days prior written
notice to Mortgagee by certified or registered mail, and (v) Mortgagee
shall not be liable for any premiums thereon or subject to any
assessments thereunder, and shall in all events be in amounts
sufficient to avoid any coinsurance liability; provided, however, that
Mortgagor shall not be liable for
<PAGE>
-5-
any failure of the insurance company (ies) to do anything required by
it under such policy.
(c) The insurance required by this Mortgage may be effected through a
blanket policy or policies covering additional locations and property
of Mortgagor not included in the Property, provided that such blanket
policy or policies comply with all of the terms and provisions of this
(S)2.2 and contain endorsements or clauses assuring that any claim
recovery will not be less than that which a separate policy would
provide, including, without limitation, a priority claim endorsement
in the case of property insurance and an aggregate limits of insurance
per location endorsement in the case of liability insurance.
(d) All policies of insurance required by this Mortgage shall be
issued by companies licensed to do business in the State where the
policy is issued and also in the Commonwealth of Massachusetts and
having a rating in Best's Key Rating Guide of at least "A" and a
financial size category of at least "VIII".
(e) Mortgagor shall not carry separate insurance, concurrent in kind
or form or contributing in the event of loss, with any insurance
required under this Mortgage unless such insurance complies with the
terms and provisions of this (S)2.2.
(f) In the event of any loss or damage to the Property, Mortgagor
shall give immediate written notice to the insurance carrier and
Mortgagee. Mortgagor hereby irrevocably authorizes and empowers
Mortgagee, at Mortgagee's option and in Mortgagee's sole discretion,
as attorney in fact for Mortgagor, to make proof of such loss, to
adjust and compromise any claim under insurance policies, to appear in
and prosecute any action arising from such insurance policies, to
collect and receive insurance proceeds, and to deduct therefrom
Mortgagee's expenses incurred in the collection of such proceeds,
provided, however, that so long as Mortgagee has not made demand for
payment of any of the Obligations and no Event of Default has occurred
and shall be continuing, Mortgagor shall be entitled to utilize any
insurance proceeds to repair, replace or rebuild any of the Property.
If the Property is sold or the Property is acquired by Mortgagee, all
right, title and interest of Mortgagor in and to any insurance
policies and unearned premiums thereon and in and to the proceeds
thereof resulting from loss or damage to the Property prior to the
sale or acquisition shall pass to Mortgagee
<PAGE>
-6-
or any other successor in interest to Mortgagor or purchaser or
grantor of the Property.
(S)2.3. CASUALTIES AND TAKING.
---------------------
All proceeds of any property or casualty insurance or awards of
damages on account of any taking or condemnation for public use of or
injury to the Property shall be paid to the Mortgagee. In the case of a
casualty loss, or taking, the Mortgagee may, in its sole discretion, apply
such proceeds to or toward the Obligations or release to Mortgagor such
portion of the proceeds paid to it as Mortgagee shall in its sole
discretion determine to be necessary and appropriate for the repair or
restoration of that part of the Property so damaged by such casualty loss
or remaining after such taking, such proceeds to be advanced in accordance
with and subject to the requirements of Mortgagee's usual procedures for
funding construction advances and to be applied to the cost of repairing
and restoring the Property or the remaining portion thereof, with any
balance remaining to be applied to or toward the Obligations, provided,
however, that, so long as Mortgagee has not made demand for payment of any
of the Obligations and no Event of Default has occurred, the Mortgagee
shall release to Mortgagor any such proceeds to be applied by Mortgagor in
accordance with the terms hereof.
(S)2.4. LEASES; ASSIGNMENTS; SUBORDINATION.
----------------------------------
Except to the extent expressly permitted pursuant to the Loan
Agreement, Mortgagor shall not lease the Property or any part thereof
without the prior written consent of the Mortgagee. If Mortgagee shall
consent and Mortgagor shall enter into a lease, Mortgagor shall faithfully
keep, observe and satisfy all the obligations on the part of the lessor to
be kept, performed and satisfied under every lease from time to time in
force with reference to the Property, and shall not alter or terminate any
such lease, or any guarantee of such lease, or accept any rentals for more
than one month in advance. As part of the consideration for the
Obligations, Mortgagor has absolutely and unconditionally assigned and
transferred to Mortgagee all of Mortgagor's right, title and interest in
and to the leases of the Property and the rents and profits therefrom,
provided, that Mortgagor shall be entitled to retain such rents and profits
--------
as trustee for the benefit of Mortgagee until an Event of Default shall
have occurred. Mortgagee shall have no obligations or liabilities to
tenants under any such leases unless and until the Mortgagee takes actual
possession of the Property after the occurrence and during the continuance
of an Event of Default, in which case the obligations of the Mortgagee will
be limited to those arising after the Mortgagee takes possession of the
Property. Until Mortgagee has taken possession or has given Mortgagor
notice of termination of any such rights the Mortgagor may exercise all
rights of landlord under such leases
<PAGE>
-7-
except as expressly limited hereunder or under the other Security
Documents. At any time on notice from the Mortgagee, Mortgagor shall submit
to the Mortgagee for examination all such leases. The Mortgagee shall have
the right, by the execution of suitable written instruments from time to
time, to subordinate this Mortgage, and the rights of the Mortgagee
hereunder, to any lease or leases from time to time in force with reference
to the Property, and, on the execution of any such instrument, this
Mortgage shall be subordinate to the lease for which such subordination is
applicable with the same force and effect as if such lease had been
executed and delivered, and a notice thereof recorded to the extent
required to give notice to third persons, prior to the execution, delivery
and recording of this Mortgage.
(S)2.5. ENCUMBRANCES.
------------
Mortgagor shall not create or permit to be created or permit to exist
any encumbrance on the Property (other than any lien for property taxes not
yet due and payable and the Permitted Encumbrances) even if such
encumbrance is inferior to this Mortgage, without the prior express written
consent of Mortgagee.
(S)2.6. TRANSFERS OF OWNERSHIP.
----------------------
Mortgagor shall not sell or permit any transfer of any interest in
the Property, or any part thereof, without the prior express written
consent of Mortgagee.
(S)2.7. EXPENSES.
--------
Mortgagor shall pay when due all fees and charges (including
reasonable attorneys' fees) incurred by the Mortgagee incident to the
transactions evidenced by the Obligations and secured by this Mortgage, the
assurance of the security represented by this Mortgage, and incident to the
enforcement of the Obligations and this Mortgage, including without
limitation, all filing, registration, recording, search, appraisal and
information fees, all title insurance premiums, all transfer taxes and
expenses incident to the execution and acknowledgment of this Mortgage and
all other documents securing the Obligations, and all federal, state,
county, municipal and other taxes, duties, stamps, imposts, assessments and
charges arising out of or in connection with the execution and delivery of
this Mortgage and the instruments evidencing the Obligations. Such fees
and charges shall be secured by the lien of this Mortgage and shall accrue
interest at the rates set forth in the Notes.
(S)2.8. PRIORITY OF LIEN; AFTER-ACQUIRED PROPERTY.
------------------------------------------
This Mortgage is and will be maintained as a valid mortgage lien on
the Property subject only to the Permitted Encumbrances. All property of
every kind acquired by the Mortgagor after the date hereof which, by the
terms hereof, is required or intended to be subjected to the lien of this
Mortgage shall, immediately upon the acquisition thereof by the
<PAGE>
-8-
Mortgagor, and without any further mortgage, conveyance, assignment or
transfer, become subject to the lien of this Mortgage. The Mortgagor will
do, execute, acknowledge and deliver all and every such further
conveyances, mortgages, and assurances as the Mortgagee shall reasonably
require for accomplishing the purposes of this Mortgage. If any action or
proceeding shall be instituted to recover possession of the Property or for
the foreclosure of any other mortgage or for any other purpose affecting
the Property or this Mortgage, the Mortgagor will immediately, upon service
thereof on or by the Mortgagor, deliver to the Mortgagee a true copy of
each precept, petition, summons, complaint, notice of motion, order to show
cause, and all other process, pleadings and papers, however designated,
served in any such action or proceeding.
(S)2.9. WAIVER AND MODIFICATION.
-----------------------
Whether or not for additional interest or other consideration paid or
payable to the Mortgagee, no forbearance on the part of the Mortgagee or
extension of the time for the payment of the whole or any part of the
Obligations secured hereby, whether oral or in writing, or any other
indulgence given by the Mortgagee to Mortgagor or to any other party
claiming any interest in or to the Property, shall operate to release or in
any manner affect the original liability of Mortgagor, or the priority of
this Mortgage or to limit, prejudice or impair any right of the Mortgagee,
including, without limitation, the right to realize upon the security, or
any part thereof, for the Obligations secured hereby or any of them, notice
of any such extension, forbearance or indulgence being hereby waived by
Mortgagor and all those claiming by, through or under Mortgagor. No
consent or waiver, express or implied, by the Mortgagee to or of any
default by Mortgagor shall be construed as a consent or waiver to or of any
further default in the same or any other term, condition, covenant or
provision of this Mortgage or of the Obligations secured hereby.
(S)2.10. FIXTURES AND EQUIPMENT; FINANCING STATEMENT.
-------------------------------------------
This Mortgage constitutes a security agreement under the Uniform
Commercial Code, and Mortgagor hereby grants to the Mortgagee to secure the
payment and performance of the Obligations and also to secure the
performance of all agreements and covenants herein contained, a security
interest in all fixtures, Building Service Equipment and any other property
included in the Property, now owned or hereafter acquired by Mortgagor,
which might otherwise be deemed "personal property" (and all accessions
thereto and the proceeds thereof). The Mortgagor covenants and agrees that
upon the subsequent acquisition of fixtures or Building Service Equipment,
it will provide to the Mortgagee such further assurances as may be required
by the Mortgagee to establish the Mortgagee's first and prior security
interest in such fixtures and Building
<PAGE>
-9-
Service Equipment. IT IS INTENDED BY MORTGAGOR AND THE MORTGAGEE THAT THIS
MORTGAGE BE EFFECTIVE AS A FINANCING STATEMENT FILED WITH THE REAL ESTATE
RECORDS AS A FIXTURE FILING. Mortgagor shall execute, deliver and cause to
be recorded and filed from time to time with all necessary public offices,
at Mortgagor's sole cost and expense, continuances and such other
instruments as will maintain the Mortgagee's priority of security in all
fixtures and Building Service Equipment. The names and addresses of the
Mortgagor and the Mortgagee from which information concerning the security
interest may be obtained are set forth in Section 5.1 hereof.
(S)3. DEFAULT AND REMEDIES
(S)3.1. DEFAULT; ACCELERATION OF OBLIGATIONS.
------------------------------------
If an Event of Default shall occur and be continuing the Mortgagee
may exercise any and all remedies provided under this Mortgage, under the
Notes, and under any and all other instruments and documents providing
security for the Obligations, or any other remedies available under
applicable law or any one or more of such remedies.
(S)3.2. STATUTORY CONDITION AND STATUTORY POWER OF SALE; OTHER
------------------------------------------------------
REMEDIES.
--------
This Mortgage is upon the STATUTORY CONDITION and upon the further
condition that all covenants and agreements on the part of the Mortgagor
herein undertaken shall be kept and fully and timely performed and that no
breach of any of the covenants or conditions specified in this Mortgage
shall be permitted for any breach of which, upon the occurrence and during
the continuance of an Event of Default, the Mortgagee shall have the
STATUTORY POWER OF SALE together with all other remedies now or hereafter
permitted by law. Such remedies shall include the right to collect and
receive the rents and profits from the leases of the Property assigned to
the Mortgagee. Mortgagor agrees that neither the prior assignment of the
leases to Mortgagee nor the exercise of any of Mortgagee's rights and
remedies shall be deemed to make Mortgagee a mortgagee-in-possession or
otherwise responsible or liable in any manner with respect to the leases
the Property or the use, occupancy, enjoyment or operation of all or any
portion thereof, unless and until Mortgagee, in person or by agent, assumes
actual possession thereof. No remedy herein conferred on the Mortgagee is
intended to be exclusive of any other remedy and each and every remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing.
(S)3.3. RIGHT OF MORTGAGEE TO CURE AN EVENT OF DEFAULT.
----------------------------------------------
If an Event of Default shall have occurred and be continuing, the
Mortgagee
<PAGE>
-10-
shall have the right, but without any obligation so to do, to cure such
default for the account of the Mortgagor and to make any payment or take
any action necessary to effect such cure. Without limiting the generality
of the foregoing, the Mortgagor hereby authorizes the Mortgagee to pay all
taxes, sewer use fees, water rates and assessments, with interest, costs
and charges accrued thereon, which may at any time be a lien upon the
Property, or any part thereof; to pay the premiums for any insurance
required hereunder; to incur and pay reasonable expenses in protecting its
rights hereunder and the security hereby granted; and to pay any balance
due under any security agreement on any fixtures and equipment included as
a part of the Property under financing arrangements; and the payment of all
amounts so incurred shall be secured hereby as fully and effectually as any
other obligation of the Mortgagor secured hereby. If Mortgagee shall make
any payment or take action in accordance with this section, Mortgagee will
give to Mortgagor written notice of the making of any such payment or the
taking of any such action. In any such event, Mortgagee and any person
designated by the Mortgagee shall have, and is hereby granted, the right to
enter upon the demised premises at reasonable times and from any time and
from time to time for the purpose of taking any such action, and all monies
expended by Mortgagee in connection therewith (including, but not limited
to, reasonable legal expenses and disbursements), together with interest
thereon at an annual rate of interest equal to the rate applicable to
overdue payments under the Notes (or the highest rate permitted by law,
whichever shall be less), from the date of each such expenditure, shall be
paid by Mortgagor to Mortgagee forthwith upon demand by Mortgagee, and
shall be secured by this Mortgage, and Mortgagee shall have, in addition to
any other right or remedy of Mortgagee, the same rights and remedies in the
event of nonpayment of any such sums by Mortgagor as in the case of a
default by Mortgagor in the payment of any installment of principal or
interest due and payable under the Notes.
(S)3.4. RECEIVER.
--------
Upon the occurrence of an Event of Default, or any actual or
threatened waste to all or any part of the Property, or at any time while a
suit is pending to foreclose or reform this Mortgage or to enforce any
provision hereof, Mortgagee shall have the right to apply for the
appointment of a receiver of all or any part of the Property and the rents
and profits thereof, and such receiver shall have all the broad and
effective functions and powers anywhere entrusted by a court to a receiver.
Mortgagee shall be entitled to the appointment of such receiver forthwith
as a matter of absolute right, without regard to the adequacy or inadequacy
of the value of the Property or the solvency or insolvency of Mortgagor or
any other defendant, and Mortgagor hereby waives any right to object to the
appointment of such receiver and expressly consents
<PAGE>
-11-
thereto. The income, profits, rents, issues and revenues from the Property
shall be applied by such receiver according to the provisions of this
Mortgage and the practice of the court appointing such receiver.
(S)3.5. CERTAIN TERMS OF FORECLOSURE SALE.
---------------------------------
At any foreclosure sale, any combination, or all, of the Property or
security given to secure the indebtedness secured hereby, may be offered
for sale for one total price, and the proceeds of such sale accounted for
in one account without distinction between the items of security or without
assigning to them any proportion of such proceeds, the Mortgagor hereby
waiving the application of any doctrine of marshalling; and, in case the
Mortgagee, in the exercise of the power of sale herein given, elects to
sell in parts or parcels, said sales may be held from time to time, and the
power shall not be fully executed until all of the property or security not
previously sold shall have been sold.
(S)3.6. UNIFORM COMMERCIAL CODE.
-----------------------
If the provisions of the Uniform Commercial Code as adopted in
Massachusetts are applicable to any property or security given to secure
the indebtedness secured hereby which is sold in combination with or as a
part of the Property, or any part thereof, at one or more foreclosure
sales, any notice required under such provisions shall be fully satisfied
by the notice given in execution of the Statutory Power of Sale (described
to below) with respect to the Property or any part thereof.
(S)4. DEFINITIONS
The following terms as used herein shall have the following meanings:
"Building Service Equipment" shall mean all apparatus, fixtures and
--------------------------
articles of personal property owned by the Mortgagor now or hereafter
attached to or used or procured for use in connection with the operation or
maintenance of any building, structure or other improvement located on or
included in the Property, including, but without limiting the generality of
the foregoing, all engines, furnaces, boilers, stokers, pumps, heaters,
tanks, dynamos, motors, generators, switchboards, electrical equipment,
heating, plumbing, lifting and ventilating apparatus, air-cooling and air-
conditioning apparatus, gas and electric fixtures, elevators, escalators,
fittings, and machinery and all other equipment of every kind and
description, used or procured for use in the operation of the building
standing on the mortgaged Property (except apparatus, fixtures or articles
of personal property belonging to lessees or other occupants of such
building or to persons other than the Mortgagor unless the same be
abandoned by any such lessee or other occupant or person), together with
any and all replacements thereof and additions thereto.
<PAGE>
-12-
"Default" shall mean any event which, with the giving of notice or the
-------
lapse of time, or both, would become an Event of Default.
"Event of Default" shall mean (a) any Event of Default under the Loan
----------------
Agreement, as defined therein, or (b) any default in the payment or
performance of the obligations of the Mortgagor hereunder, or (c) any
representation or warranty of the Mortgagor hereunder proving to be untrue
in any material respect or (d) any default in the performance of the
obligations of the Mortgagor under any of the Loan Documents.
"Improvements" shall mean all buildings, structures and other
------------
improvements located on the Premises.
"Loan Agreement" shall mean the Commercial Revolving Loan, Term Loan
--------------
and Security Agreement between Mortgagor and Mortgagee dated as of the date
hereof (the "LOAN AGREEMENT").
"Loan Documents" shall mean this Mortgage, the Loan Agreement, the
--------------
Notes and any other agreements, documents or instruments now or hereafter
executed in connection therewith, including but not limited to any
assignment of leases and rents and any indemnity agreement regarding
hazardous materials.
"Mortgage" See page 1 of this instrument.
--------
"Mortgagee" shall mean the Mortgagee named at the beginning of this
---------
instrument, and any subsequent holder or holders of this Mortgage.
"Mortgagor" shall mean the person or persons named at the beginning of
---------
this instrument as the Mortgagor, and any subsequent owner or owners of the
equity of redemption of the Property.
"Notes" shall mean the Revolving Promissory Note in the original
-----
principal amount of up to $1,500,000 and the Term Promissory Note in the
original principal amount of $1,135,000, both from the Mortgagor and Memry
Corporation to the Mortgagee and both dated the date hereof, as originally
executed, or if varied, extended, supplemented, consolidated, amended or
restated from time to time as so varied, extended, supplemented,
consolidated, amended or restated.
"Obligations" shall mean any and all indebtedness, obligations and
-----------
liabilities of Mortgagor to Mortgagee existing on the date hereof or
arising or incurred hereafter under the Loan Agreement, the Notes, any
other Loan Documents, or other instruments at any time evidencing any
thereof, and any and all other indebtedness, obligations and liabilities of
<PAGE>
-13-
Mortgagor to Mortgagee however incurred, now existing or hereafter coming
into existence, whether individually or collectively, direct or indirect,
joint or several, absolute or contingent, matured or unmatured, liquidated
or unliquidated, secured or unsecured, arising thereunder or hereunder by
contract, operation of law or otherwise.
"Permitted Encumbrances" shall mean the encumbrances listed on
----------------------
Schedule B to the title insurance policy delivered to the Mortgagor in
----------
connection herewith.
"Premises" shall have the meaning assigned to that term in Schedule B
-------- ----------
hereto, which is incorporated herein by reference as if fully set forth
herein.
"Property" shall have the meaning set forth in Schedule A to this
-------- ----------
Mortgage.
(S)5. MISCELLANEOUS
(S)5.1. NOTICES.
-------
All notices, requests and other communications hereunder shall be
made in writing and delivered in hand or mailed by first-class mail,
postage prepaid, or sent by commercial overnight courier delivery service,
charges prepaid, or sent by telex, telecopier or hand delivery, addressed
as follows:
(a) If to Mortgagor:
Wright Machine Corporation
69 Armory Street
Worcester, Massachusetts
with a copy to:
Memry Corporation
57 Commerce Drive
Brookfield, Connecticut 06804
Attention: James G. Binch
(b) If to Mortgagee:
Affiliated Business Credit Corporation
72 Queen Street
Southington, CT 06489
<PAGE>
-14-
Any such notice shall be deemed to have been given when delivered in
hand to an officer of the addressee, or one (1) day after being delivered
to a commercial overnight courier delivery service, charges prepaid, for
next day delivery, or when deposited in the United States mails, registered
or certified mail, postage prepaid, and, in each case addressed as provided
above or to such other address as the party to whom such communication is
being sent shall have notified the other party hereto (in the manner
specified herein) to be its address for purposes of this Mortgage.
(S)5.2. SUCCESSORS AND ASSIGNS; JOINT AND SEVERAL LIABILITY; PARTIAL
------------------------------------------------------------
INVALIDITY.
----------
All the covenants and agreements of the Mortgagor herein contained
shall be binding upon the Mortgagor and the successors and assigns of the
Mortgagor. In case any one or more of the provisions of this Mortgage may
be found to be invalid, or unenforceable for any reason or in any respect,
such invalidity or unenforceability shall not limit or impair enforcement
of any other provision thereof.
(S)5.3. MODIFICATION.
------------
No change, amendment, modification, cancellation or discharge of this
Mortgage, or any part hereof, shall be valid unless in writing and signed
by the parties hereto or their respective successors and assigns.
(S)5.4. CAPTIONS.
--------
Section headings are inserted for convenience of reference only, do
not form part of this Mortgage and shall be disregarded for purposes of the
interpretation of the terms of this Mortgage.
(S)5.5. GOVERNING LAW.
-------------
This Mortgage shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
<PAGE>
-15-
IN WITNESS WHEREOF, this Mortgage and Security Agreement has been executed as a
sealed instrument this 9th day of August, 1996.
WRIGHT MACHINE CORPORATION
/s/ James Shaughnessy By: /s/ James G. Binch
- - ------------------------ -------------------------
James Shaughnessy James G. Binch
Its President
/s/ David I. Albin Duly Authorized
- - ------------------------
David I. Albin
/s/ James Shaughnessy By: /s/ Wendy A. Gavaghan
- - ------------------------ -------------------------
Wendy A. Gavaghan
/s/ David I. Albin Its Secretary
- - ------------------------ Duly Authorized
<PAGE>
-16-
STATE OF CONNECTICUT )
) ss: Hartford
COUNTY OF HARTFORD )
On this the 9th day of August, 1996 before me, Nina C. Crane, the
undersigned officer, personally appeared James G. Binch, who acknowledged
himself to be the President of Wright Machine Corporation, a corporation and
that he as such President, being authorized so to do, executed the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by himself as such President and as his/her and its free act and
deed.
In witness whereof I hereunto set my hand.
/s/ Nina C. Crane
--------------------------
Notary Public
My Commission Expires:
STATE OF CONNECTICUT )
) ss: Hartford
COUNTY OF HARTFORD )
On this the 9th day of August, 1996 before me, Marlene Febeo, the
undersigned officer, personally appeared Wendy A. Gavaghan, who acknowledged
him/herself to be the Secretary of Wright Machine Corporation, a corporation and
that he/she as such Secretary, being authorized so to do, executed the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by him/herself as such Secretary and as his/her and its free act and
deed.
In witness whereof I hereunto set my hand.
/s/ Marlene Febeo
-----------------------------
Notary Public
My Commission Expires:
<PAGE>
SCHEDULE A
----------
(a) All that certain tract or parcel of land more particularly described
and set forth in Schedule B attached hereto and made a part hereof (the
----------
"PREMISES"):
(b) All and singular the tenements, hereditaments, easements,
appurtenances, passages (and all waters, water courses and riparian rights, if
any), pipes, conduits, electrical and other utility lines, other rights,
liberties and privileges thereof or in any way now or hereafter appertaining to
the Premises, including any other claim at law or in equity as well as any after
acquired title, franchise or license and the reversion and reversions and
remainder and remainders thereof, and all of the estate, right, title, claim or
Term whatsoever of Mortgagor therein and in the streets, ways and areas adjacent
thereto:
(c) All buildings and other improvements of every kind and description now
or hereafter erected or placed on the Premises or any part thereof owned by the
Mortgagor, and all of the right, title and interest of Mortgagor in and to all
materials intended for construction, reconstruction, alteration and repairs of
such improvements now or hereafter erected thereon, all of which materials shall
be deemed to be included within the Premises immediately upon the delivery
thereof to the Premises, and all fixtures, Building Service Equipment, and all
renewals or replacements thereof or articles in substitution therefor; it being
mutually agreed that all the aforesaid property owned or to be owned by
Mortgagor and placed by it on the Premises and such buildings and improvements
shall, so far as permitted by law, be deemed to be affixed thereto and covered
by this Mortgage;
(d) All of the estate, right, title and interest now owned or hereafter
acquired by Mortgagor in and to any and all sidewalks and alleys, and all strips
and gores of land, adjacent to or in connection with the Premises;
(e) All present and future leases and licenses of space in the buildings
and improvements now or hereafter erected on the Premises (collectively
"LEASES", and individually a "LEASE") and the rents, revenues, income, issues
and profits thereunder subject, however, to the right of Mortgagor to receive
and use the same and to exercise all rights and privileges as landlord under all
of the leases until an Event of Default shall have occurred and be continuing
under this Mortgage, together with all the rights and privileges of the
Mortgagor as landlord thereunder;
(f) All unearned premiums accrued, accruing or to accrue under any and all
insurance policies now or hereafter obtained by the Mortgagor pursuant to the
provisions of the Mortgage;
<PAGE>
-2-
(g) All proceeds of the conversion, voluntary or involuntary, of any of the
foregoing into cash or liquidated claims, including, but without limitation,
proceeds of insurance provided for in this Mortgage and proceeds of condemnation
awards and awards for restriction of access to, or change of grade of, streets;
(h) All transferable building service, building maintenance, construction,
management and other similar agreements and contracts, written or oral, express
or implied, now or hereafter entered into arising or in any manner related to
the construction, design, improvement, use, operation, occupation, enjoyment,
sale, conversion or other disposition (voluntary or involuntary) of the
Premises, or the buildings and improvements now or hereafter located thereon, or
any other interest in the Premises, or any combination thereof, including all
property management agreements, sales contracts, contract deposits, earnest
money deposits, prepaid items and payments due and to become due thereunder, and
further including all payment and performance bonds, construction guaranties,
warranties, construction contracts, architects agreements, general contract
agreements, design agreements, engineering agreements technical service
agreements, architectural plans and specifications, sewer and water and other
utility agreements, permits, approvals, licenses, building permits, service
contracts, advertising contracts, purchase orders and equipment leases; and
(i) All proceeds and products of the foregoing of every type.
All of the foregoing described property, rights, privileges, interests and
franchises more particularly described in paragraphs (a) through (i) above
herein granted are intended to be, and are collectively referred to herein as,
the "Property."
<PAGE>
SCHEDULE B
----------
[LEGAL DESCRIPTION OF PREMISES]
Intentionally Omitted
<PAGE>
EXHIBIT 10.46
June 26, 1996
Mr. James Proft
17550 SW 10th Avenue
Tualatin, Oregon 97062
Dear Jim:
This letter supersedes my letter to you of June 17, 1996 and is
inclusive of the comments expressed in your letter to me of today's date.
We hereby confirm our offer to you to join Memry Corporation as Vice
President & General Manager-Western Operations reporting to Bill Morton,
Memory's Senior Vice President & Chief Operating Officer. You will have profit
and loss responsibility for Western Operations, and both Eastern and Western
Operations will receive agreed upon credit for internal transfers of materials,
components or assemblies in their respective P&L budgets and results. As
previously stated, you will not have P&L responsibility for final medical
assemblies shipped to USSC.
You will also be a member of the Corporation's executive staff and a
standing member of the strategy group, the latter including Ming Wu, Rich
Gordon, Philippe Poncet, Bill Morton, Wendy Gavaghan and myself. Among the
tasks this team will deal with are the delineation of the merged entity's
overall business strategy and a very focused medical strategy. The same team
will also be responsible for the development of recommendations to the
corporation's Board of Directors regarding the design and implementation of
performance-based bonus compensation programs incorporating both divisional and
corporate personnel.
In respect of staff, it is understood that Messrs. Poncet, Serna,
Vanderpan and Ferris comprise your initial team, plus a budgeted but unfilled
marketing/sales position. The role of logistics needs further refinement before
being acted upon as we discussed earlier today. All are direct reports to the
General Manager except John Ferris, who has of necessity a dual reporting
relationship to both the General Manager and the Corporate Controller Wendy
Gavaghan.
Turning now to the compensation aspects of our offer, we are prepared
to offer a base salary of $14O,OOO, to be reviewed annually by both Bill Morton
and myself. In addition, you will receive 40,000 Warrant Shares exercisable at
$0.01 per share, of which 20,000 will be vested immediately upon your first day
of
<PAGE>
employment with Memry Corporation, with the remaining 20,000 Warrant
Shares vesting equally in twelve (12) and twenty four (24) months from your
date of hire. Should you remain in the employ of Memry as of March 1, 1997, you
will receive a twenty five thousand dollar ($25,000) cash bonus on that date to
be applied to any tax liability arising from the Warrant Share grant.
As a senior officer of the Corporation, you will also receive 20,000
Non Qualified Incentive Stock Options priced twenty five (25) per cent below the
closing market price of the Corporation's Common Stock on the Date of Closing
(the date on which Memry Corporation completes the acquisition of the assets
being sold by Raychem Corporation). These shall vest equally in three
installments on the first, second and third anniversary of the date of grant,
and are exercisable for ten (10) years. Memry will provide cash compensation
between February 1, 1997 and March 31, 1997 equal to thirty five (35) per cent
of the difference between the actual closing price of the Common Stock on the
Date of Closing and the discounted price, times the number of Options granted,
to cover the tax effect of this below market grant. In addition, upon
shareholder approval of an increase in the number of Incentive Stock Options in
the Corporation's Incentive Stock Option Plan at the November, 1996 Annual
Stockholders Meeting, you will be granted a further 25,000 Incentive Stock
Options.
With respect to vacation and severance, you will be entitled to four
(4) weeks of paid vacation annually, plus up to eight (8) sick days per year.
Memry Corporation will credit you with your twelve years of service with Raychem
upon your employment with us for purposes of determining severance, which
allowance would entitle you to twenty four (24) weeks of severance within the
first year of your employment and subsequently be capped at twenty, six week's
(26) under Memry's corporate policy. In recognition of the move you would be
making, we are prepared to guarantee your employment for the first twelve
months, allowing the policy to take effect thereafter.
Memry will reimburse you and your family for all reasonable costs
incurred in the relocation from the Portland area to the San Francisco area,
including the moving of household effects, brokerage fees, any set-off from your
present employer, and closing costs in San Francisco (points, legal fees, and
title fees). As further stipulated, Memry will reimburse you for any IRS-
disqualified relocation expenses with a tax adder equal to thirty (30) per cent
of the disqualified amount. The latter will be inclusive of the move to Portland
with a $ 5,000 tax adder cap applicable thereto.
You will be provided with a mortgage assistance loan of $25,000 on
the following terms: (i) interest set at 6.75 per cent APR, (ii) interest only
payable for the first two years, (iii) five equal annual installments thereafter
inclusive of interest, (iv) secured by a second mortgage lien on your primary
San Francisco-area residence, and (v) should you leave the employ of Memry, the
remaining balance would
2
<PAGE>
become due and payable within thirty (30) days of your last day of employment
with Memry.
Finally you will be entitled to a $300.00 per month car allowance and
full participation in Memry's various benefit programs, including the 401 K
Plan, the medical/dental plans, and any others the Corporation undertakes in
future years. As a final incentive, Memry will pay to you a signing bonus of
$10,000, payable as to $ 5,000 on July 31st and $ 5,000 on August 31st of 1996.
James, I reiterate - this is a wonderful opportunity for you to begin
to spread your managerial wings. Both Bill and I are fully committed to seeing
that you succeed, along with the entire Menlo Park team.
This letter, in its entirety, supercedes all previous correspondence
and represents Memry Corporation's offer of employment to you. Upon your
acceptance hereof in the signature blank below, Memry attorneys will begin to
immediately draft an Employment Agreement between the Company and yourself, to
be executed by both parties on or prior to your desired starting date of July
22, 1996.
On behalf of Memry Corporations
/s/ James G. Binch
--------------------------------
James G. Binch
Chairman, President & CEO
Accepted by:
/s/ James Proft
- - ---------------------
Mr. James Proft
Date: June 26, 1996
3
<PAGE>
Exhibit 10.47
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. 96 - 7 Warrant to Purchase 40,000 Shares of Common Stock
(subject to adjustment)
WARRANT TO PURCHASE COMMON STOCK, PAR VALUE $0.01 PER SHARE
of
MEMRY CORPORATION
Void after September 30, 2003
This certifies that, for value received, James Proft (the "Holder") is
entitled, subject to the terms set forth below, to purchase from Memry
Corporation, a Delaware corporation (the "Company"), 40,000 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.
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
September 30, 2003, and shall be void thereafter.
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 shall be exercisable
by the Holder in whole or in part at any time as follows: Warrants to purchase
20,000 shares of Common Stock may be issued at any time or from time to time,
during the term hereof from and after the date hereof; Warrants to purchase an
additional 10,000 shares of Common Stock may be issued at any time or from time
to time during the term hereof, from and after the date of the one year
anniversary of the Warrant Issue Date; and Warrants to purchase the remaining
10,000 shares of Common Stock may be issued at any time
<PAGE>
as from time to time during the term hereof from and after the date of the
second anniversary of the Warrant Issue Date; in any case, 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 in cash payable to the Company.
(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
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
-2-
<PAGE>
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 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):
-3-
<PAGE>
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.
(c) Restriction on Transfer. This Warrant may not be transferred, assigned
or otherwise disposed of, in whole or in part, except by devise or interstate
succession upon the death of the Holder; provided, however, that any such
transfer, assignment or other disposition is otherwise in compliance with all of
the other provisions of this Section 7. Any transfer in violation of this
Section 7(c) shall be void ab initio.
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
-4-
<PAGE>
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 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
-5-
<PAGE>
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 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, 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 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 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
-6-
<PAGE>
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 [ ], 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 19th day of September, 1996.
HOLDER: MEMRY CORPORATION
/s/ James Proft By:/s/ James G. Binch
- - ---------------------------------- -----------------------------------
James Proft Name: James G. Binch
Address: Title: 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: _____________________
---------------------------------
[Holder]
-8-
<PAGE>
Exhibit 10.48
MEMRY CORPORATION
57 Commerce Drive
Brookfield, CT 06804
203-740-7311
Fax 203-775-2359
May 29, 1996
Dominion Partners
2909 Bay to Bay Blvd., #200
Tampa, FL 33629
Attention: Mr. W. Andrew Krusen, Jr.
Dear Andy:
Memry Corporation (the "Company") is planning to issue to you, for no new
consideration, 24,176 shares (the "Additional Shares") of Common Stock, par
value $0.01 per share ("Common Stock"), of the Company in accordance with the
terms of your purchase of 14,286 shares of Common Stock between December 1, 1994
and June 30, 1995, inclusive (the "Prior Purchase"). Such issuance (the "Offer")
is based on the original purchase price paid by you for the Common Shares
divided by a price of $0.65 per share of Common Stock, less shares received by
you in the Prior Purchase, with the resulting number being rounded to the
nearest share. This offer is intended to effectively reduce your purchase price
to the same $0.65 per share purchase price that was paid by the purchasers of
the Company's Series G Preferred Stock, par value $100 per share (the "G
Preferred"), shortly after your purchase.
If you participate in the Offer, as a holder of the Additional Shares, you
would be granted the same registration and information rights granted to all
holders of the G Preferred, as set forth in more detail on Annex A attached
hereto.
If you would like to participate in the Offer, please so indicate by
signing in the space provided below. By so signing below, you agree that all of
the representations and warranties made by you in the Securities Purchase
Agreement between you and the Company pursuant to which you purchased the Common
Shares, including without limitation the representation and warranty that such
acquisition is for your own account, are true and correct as of the date of your
signature below, as if made on such date. Please then return this signed letter
to the Company, to be received by the Company no later than June 17, 1996, at
the above-referenced address, to the attention of Wendy A. Gavaghan. A new stock
certificate will be issued to you promptly thereafter evidencing the Additional
Shares. Please note that the Additional Shares have not been registered under
any securities laws, and therefore are subject to substantial restrictions on
transfer and may not be transferred for an indefinite period of time. The
certificate evidencing the Additional Shares will contain the following
restrictive legends:
<PAGE>
Mr. W. Andrew Krusen, Jr.
May 29, 1996
Page 2
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
COMPANY THAT SUCH SALE, OFFER FOR SALE, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION DOES NOT VIOLATE THE PROVISIONS OF SUCH ACT OR UNLESS SOLD
PURSUANT TO RULE 144 OF SUCH ACT.
THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13) OF
CODE SECTION 10-5-9 OF THE "GEORGIA SECURITIES ACT OF 1973," AND MAY NOT
BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH
ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT.
If you have any questions or would like further information concerning
this proposed offer, please call me.
Very truly yours,
/s/ James G. Binch
-------------------------------
James G. Binch
I agree to participate in the Offer upon the terms set forth above:
DOMINION FINANCIAL GROUP, INC.
/s/ W. Andrew Krusen, Jr. - Pres.
- - ---------------------------------
Name: DOMINION PARTNERS
Title, if appropriate:
Date: 6-3-96
<PAGE>
Annex A Intentionally Omitted
