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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
For the fiscal year ended June 30, 1997
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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. [ ]
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Consolidated revenues of the issuer from continuing operations for the fiscal
year ended June 30, 1997 were $13,533,000.
The aggregate market value of voting stock held by non-affiliates of the
registrant was approximately $21,357,000 on August 1, 1997 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, 1997:
17,005,474.
Documents Incorporated by Reference. Memry Corporation's 1997 Proxy Statement
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to be filed with the Commission within 120 days after June 30, 1997, 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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Item 1. DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT
Memry Corporation (referred to herein as "Memry" or the "Company"), a Delaware
corporation incorporated in 1981, is engaged in the business of developing,
manufacturing and marketing materials, components and products utilizing the
properties exhibited by shape memory alloys for surgical instruments, cellular
telephone antenna, medical implants and a wide range of other industrial,
medical and consumer applications. The Company conducts its operations from its
two operating facilities located in Brookfield, Connecticut and Menlo
Park, California. The Company acquired its Menlo Park, California operations
from Raychem Corporation ("Raychem") on June 28, 1996, as part of a transaction
(the "Raychem Acquisition") in which the Company acquired certain assets
comprising Raychem's nickel-titanium product line. 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.
In June of 1997 the Company ceased the operations of its Wright Machine
Corporation ("Wright") operating segment and commenced the orderly liquidation
of Wright's assets. The closing of Wright, whose assets and income are now
reported on the Company's financial statements under the caption of
"Discontinued Operations," leaves the Company with only one operating segment
(which segment, prior to the closing of Wright, was formerly known as the "Memry
Segment").
SHAPE MEMORY EFFECT
Shape memory alloys ("SMAs") possess the ability to change their shape in
response to thermal and mechanical changes, as well as the ability to return to
their original shape following deformations from which conventional materials
cannot recover. This ability results from the transformation of the crystalline
structure of the SMA in reaction to thermal and mechanical changes. As a result
of the crystalline structure changes, SMAs are also able to produce forces many
times greater than those exhibited by conventional materials such as bi-metallic
elements.
The major defining properties of SMAs with which the Company works are "super-
elasticity" and "thermal shape memory." Unlike ordinary metal, certain SMAs
are capable of fully recovering their shape after being deformed as much as six
to eight percent, and of performing this recovery on a repeated basis. This is
more than ten times the recovery ability of ordinary metals. This "super-
elasticity" feature has applications for surgical instruments and devices,
cellular telephone antennae, orthodontic apparatus and other devices. Thermal
recovery applications typically involve instances where a device is controlled
or actuated in response to a pre-determined thermal change. Examples of such
uses include heat activated coupling or sealing devices, value actuation
systems, and thermally-actuated mechanical systems. The majority of today's
commercial applications involve the use of the materials' "super-elastic"
properties.
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THE COMPANY'S OPERATING DIVISIONS
Since 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 conducted its SMA business through two operating divisions. "Memry
West," consisting of most of the business acquired from Raychem, manufactures
semi-finished materials utilizing SMAs and, mostly through Raychem but also
directly in the case of growing medical implant applications, sells such
materials into various industrial, electronic, automotive and medical markets.
"Memry East," which prior to the Raychem Acquisition constituted the Company's
entire SMA business, engages in the manufacture and sale of finished sub-
assemblies and products utilizing SMAs into the medical, industrial and consumer
markets, as well as performing funded application research.
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 the SMA business of
the Company, however, in that where the Company 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 products 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
sub-assemblies for sales to United States Surgical Corporation were relocated to
Memry East in December, 1996, and are included within the discussion of Memry
East).
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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 and components 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 components to OEMs, including helical and strip
actuators, patented locking rings for electronic connectors, medical components,
cellular antennae materials, and sealing components. An "actuator" is a device
that causes action or motion.
A. Sales to Raychem. In connection with the Raychem Acquisition, Memry and
Raychem entered into a Private Label/Distribution Agreement pursuant to which
Raychem 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 from the scope of this
Agreement, as were any future sales for all medical implant and certain consumer
recreational applications. Therefore, at the present time, most of Memry West's
sales are made to Raychem. During the Company's fiscal year ended June 30, 1997,
for example, approximately $5.47 million of Memry West's approximately $5.98
million of sales (excluding sales to United States Surgical Corporation relating
to the finishing of materials into sub-assemblies prior to such operation being
relocated to Memry East in December of 1996) were made to Raychem. Raychem's
largest customers for the products sold to it are cellular telephone antennae
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 wire for braces, medical products and instrument
companies, whose uses of Memry West's products include catheter and guidewires,
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
components 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). This arrangement with
Raychem permits Memry West to keep its internal sales force to a minimum. As of
the end of fiscal 1997, Memry West had only two sales and marketing employees.
B. Other Sales. In addition to its sales to Raychem, Memry West supplies Memry
East with semi-finished materials for processing by Memry East into finished
products and sub-assemblies, much as Raychem sold these materials to Memry East
prior to the Raychem Acquisition. These sales include formed components used by
Memry East as components for products sold to United States Surgical
Corporation. These inter-company sales (including such formed components prior
to the relocation of the finishing operations to Memry East) accounted for
approximately $400,000 of Memry West's fiscal 1997 sales. In addition, the
Company has begun the sale of semi-finished materials and components for medical
implant applications, which applications are outside of the scope of Raychem's
distribution rights under the Amended and Restated Private Label/Distribution
Agreement, dated as of February 19, 1997 and effective as of December 20, 1996,
between the Company and Raychem (the "Private Label/Distribution Agreement").
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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, the marketing) of finished sub-
assemblies and products utilizing SMA materials, and (ii) the conduct of both
funded SMA application research and customer-sponsored development projects.
Memry West also undertakes the latter work.
A. Finished Assemblies and Components. Memry East manufactures and sells
finished assemblies and components for OEMs and also manufactures, sells, and
markets proprietary finished products. While prior to the Raychem Acquisition
the Company generated more revenues from the sale of its proprietary SMA
products than from the sale of semi-finished SMA 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 greater portion of both the
Company's sales and 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 superelastic 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 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 prior to the Raychem Acquisition. This operation was
relocated from Memry West to Memry East in December of 1996.
Products and devices being sold to other medical OEMs include stents, surgical
clips, catheter guidance forms and other products 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 inserts 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. In fiscal 1996 the Company began
selling SMA inserts utilizing a alloy trade named ZEEMET/(TM)/ to a distributor
for resale to the Nicklaus Golf Equipment Company ("Nicklaus"). Nicklaus
inserted these ZEEMET/(TM)/ inserts into a new line of wedges and a putter,
where they constituted the hitting surface of such clubs. While the Company had
high hopes for this program, Nicklaus terminated it during fiscal 1997. Since
such termination, the Company has had conversations with a number of golfing
equipment manufacturers regarding their use of the ZEEMET/(TM)/ inserts, but
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none has yet committed to the use of ZEEMET/TM/ and there can be no assurances
that any will. In addition, 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 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 principal proprietary products are the MEMRYSAFE/R/ line
of temperature-actuated water flow reduction products. In addition, the Company
manufactures and markets the ULTRAVALVE/TM/ electronic combination shower/tub
mixing valve and the FIRECHEK/(R)/ line of industrial fire safety valves.
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. The Company
believes that alternative anti-scald products are more expensive to manufacture
and install and less effective in protecting the user from burns. Nonetheless,
sales to date of the Company's MEMRYSAFE/(R)/ products have fallen short of the
Company's expectations, presumably due to lack of consumer awareness of the
product and their price (when compared not to other types of anti-scalding
valves, which cost at least as much as Memry's products, but to valves without
an anti-scalding feature).
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 these 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. Unfortunately, sales of
ULTRAVALVE/TM/ products to American Standard have fallen short of the
contractually mandated minimum purchase requirements
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for American Standard and product sales still have not achieved a substantial
volume. As the Company is not convinced that sales of ULTRAVALVE/TM/ products,
even if improved, will ever be material to the Company's business, and as the
Company's business focus has shifted away from plumbing products generally to
medical products and industrial and leisure industry uses, the Company is
looking to sell the ULTRAVALVE/TM/ product line. However, while the Company has
discussed a possible sale with a small number of potential buyers, no agreement
for the sale of ULTRAVALVE/TM/ yet exists.
The Company also manufactures and markets the FIRECHEK/(R)/ line of industrial
fire safety valves. While sales of FIRECHEK/(R)/ have been increasing, it does
not appear that this product line will be material to the Company's overall
results of operation in the foreseeable future.
B. Customer Sponsored Development Projects and Funded Product Research. In
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; and data, inventions,
patents, and intellectual property rights pertaining to the SMA technology that
do not specifically relate to the customer's product are owned by the Company.
The largest such project that Memry East is currently working on is the
development of a shape-memory controlled micro-tab on the trailing edge of the
blades of a helicopter rotor for McDonnell Douglas Helicopter Systems. Such a
device, if technically and commercially proven, would permit the pilot of a
helicopter to tune the attitude of each of the rotor blades from the cockpit and
eliminate the need for ground mechanics presently required to perform this
function. In addition, the Company has previously completed projects such as
the development of a three-way line valve 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. The Company has worked on these type of
development projects for a number of years and, with the exception of the sales
that are now being made by Memry West to Raychem 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 has been generally
disappointed with the lack of sales of commercialized products or assemblies
that
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have arisen from these programs. The one successful development, however, led
to $400,000 of component sales in fiscal 1997, and the Company believes that
these sales will be greater in upcoming fiscal years.
Memry East is also involved in various 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 recent years include a National Institute of Health
program to study the use of super-elastic titanium-based alloys as a 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, as previously described, 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
The principal raw material used by the Company is SMA alloys. The Company
obtains its SMA alloys from two principal sources: Teledyne Wah Chang, of
Albany, Oregon; and Special Metals Corporation of New Hartford, New York. The
Company expects to be able to continue to acquire shape memory alloys in
sufficient quantities for its needs from these suppliers. In addition, if the
Company was for whatever reason not able to secure an adequate supply of SMA
from these suppliers, the Company believes that other sources exist that would
be able to supply the Company with sufficient quantities of SMA alloys.
While the Company also relies on outside suppliers for its non-SMA components of
finished products, the Company does not anticipate any difficulty in continuing
to obtain non-SMA raw materials and components necessary for the continuation of
the Company's business.
MATERIAL CUSTOMERS
The Company's two largest customers, Raychem and United States Surgical
Corporation, represented 47% and 30%, respectively, of the Company's total sales
(excluding sales from discontinued operations) during fiscal 1997. Obviously,
the loss of either such customer could have a material adverse effect on the
Company. This risk, however, is lessened by the Company's relationship with
these customers. The Company and Raychem are party to the Private
Label/Distribution Agreement, which requires Raychem to purchase certain
products and materials solely from the Company until June 30, 2001. Furthermore,
while there can be no assurances that Raychem will continue to purchase products
at its current rate, Raychem distributes the components its purchases from Memry
to over two hundred customers.
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worldwide, lessening the risk that the loss of any one customer will have a
material adverse effect on Raychem's purchases from Memry. In addition, in
April 1997 the Company received a two-year exclusive blanket purchase order from
United States Surgical Corporation for the supply of medical instrument
assemblies, commencing April 1, 1997. The estimated value of such shipments is
expected to exceed $7 million over such two-year period. The sub-assembly
covered by this agreement was acquired by the Company as part of the Raychem
Acquisition.
COMPETITION
The Company has competition on two levels: technological competition by other
SMA processors, who compete with the Company mostly in the sale of semi-
finished materials (i.e., mostly with Memry West) and components (i.e., with
both Memry East and Memry West), and end product competitors who compete with
the Company in the sale of the Company's finished products (i.e., who compete
with 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 two major
SMA alloy suppliers to both the Company and the industry as a whole are Teledyne
Wahchang 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.,
Tokin Co. and Daido, 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/EuroFlex, 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 Johnson and Johnson, and its recently-acquired subsidiary Nitinol Devices
and Components Company, are the next largest, followed by Flexmedics, SMA
Applications, Inc., and Nitinol Medical Technology.
Memry East is, pursuant to a purchase order running through March 31, 1999, the
exclusive supplier to United States Surgical Corporation of Memry East's single
most important product line, the Endocatch subassembly. Competition with
respect to Memry East's two major finished product lines and other component
lines and major component lines are discussed above. See "-- Operating
Divisions -- Memry East."
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 valving fields. While price and production capability
are obviously important, the Company believes that it competes mostly on
technological capabilities.
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PATENTS AND TRADEMARKS
As part of the Raychem Acquisition, the Company controls 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 super-elasticity and 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 products market that was not acquired by the Company as part of
the Raychem Acquisition. The Company believes that this latter license may have
been transferred to Medtronics, Inc., a medical products manufacturer (and a
customer of the Company), when Medtronics purchased this "excluded" (from the
Raychem Acquisition) intellectual property from Raychem during fiscal 1997.
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 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 its most important present 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 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
market advantage through patents can require the expense, uncertainty and delay
of litigation. Although the Company's
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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 current or contemplated
products would infringe any existing patents.
The Company has trademark registrations for the MEMRYSAFE/(R)/, SHOWER
GARD/(R)/, SHOWER SAFE/(R)/ (and design) and FLOW GARD/(R)/ (and design)
valves, as well as for the FIRECHEK/(R)/ line of industrial safety valves and
for M/MEMRY/(R)/ (and design) for a variety of products. In addition, the
Company has an allowed trademark registration application for ZEEMET/TM/ for
metal alloys.
RESEARCH AND DEVELOPMENT
During fiscal 1997, the Company spent approximately $125,000 on "pure" research
and development (i.e., research and development done by the Company at its own
cost for purposes of developing future products). In addition, the Company
spent approximately $212,000 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 $420,000 on funded research and development in fiscal 1996,
which amount was accounted for as "costs of goods sold" and the Company spent no
material amounts during fiscal 1996 on "pure" research and development. The
amount of funded research and development that the Company will undertake in the
future will depend upon its customer's needs, but the Company anticipates it
increasing over time as the use of SMAs for various purposes increases. The
Company also anticipates modest increases in the amount of "pure" research and
development that it undertakes as the Company's growth continues and scientific
personnel are added.
EMPLOYEES
As of June 30, 1997, the Company and its subsidiary had 75 full-time and 4
part-time employees. Of the full-time employees, 10 were executive or
management personnel and 17 were science and research personnel. Seven of the
full-time employees and none of the part-time employees were employed by Wright
in order to complete Wright's orderly liquidation. It is anticipated that all
but one of Wright's remaining employees will be terminated by the end of the
first quarter of the Company's 1998 Fiscal Year (which one remaining employee
will be maintained as a part-time employee until the sale of Wright's real
property). None of the employees is represented by collective bargaining units.
The Company believes that its relationship with its employees is generally good.
In addition, as of June 30, 1997, the Company had approximately 20 "temporary"
employees (i.e., employees of temporary manpower companies) working for the
Company.
DISCONTINUED OPERATIONS
The Company's former Wright Machine Segment consisted 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
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taper pin products. Wright provided 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, there were 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 were made of various grades of stainless and
carbon steel.
After a prolonged period of declining sales and ongoing operating losses, the
Company's Board of Directors voted to cease operation at Wright, and proceed
with Wright's orderly liquidation, in April, 1997. Wright proceeded to cease
manufacturing operations, and sell its machinery and equipment, in June of 1997.
The Company recorded a loss of $211,000 on Wright's sales and liquidation.
Wright's assets have at this point been substantially liquidated, except that
Wright's real property, while currently listed for sale, has not yet been sold.
Wright's assets and results from operations are now shown on Memry's financial
statements under the captions of "Assets of Discontinued Segment, Net" and
"Discontinued Operations." See "Item 7 -- Financial Statements"
Item 2. DESCRIPTION OF PROPERTY
The Company has a lease, which was renewed as of September 30, 1995, for a term
to expire on February 1, 2001, for office and manufacturing space located at 57
Commerce Drive, Brookfield, Connecticut 06804. The premises have a floor area
of approximately 24,350 square feet, of which approximately 6,500 square feet is
used by the Company for general administrative, executive, and sales purposes,
and approximately 17,850 square feet is used for engineering, manufacturing,
research and development operations and an environmentally controlled area
("clean room"). The lease provides for an average monthly base rental of
approximately $11,250.
The Company has a sub-lease, from Raychem, for a term to expire on September 30,
1998, for office and manufacturing space located at 4065 Campbell Avenue, Menlo
Park, California 94025. The Company is currently in negotiations with Raychem
and its landlord for a possible extension of this lease term. These premises,
formerly used by Raychem, are the site 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 originally
provided for a monthly base rental of $20,743.68, which amount was raised in
April of 1997 to $21,677.15, due to an adjustment for increases in the consumer
price index.
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.
Wright has listed this property for sale with a broker as part of its
liquidation.
11
<PAGE>
Management believes that the existing facilities of the Company are suitable and
adequate for the Company's 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, will materially affect the
Company's financial position, results of operation or liquidity/cash flows.
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. On June 30, 1997, there were 1,473 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.
Fiscal year ended
June 30 1997 1996
- ------------------- ---- ----
High Low High Low
---- --- ---- ---
1st Quarter $2.06 $1.31 $0.94 $0.53
2nd Quarter 1.94 1.50 0.91 0.44
3rd Quarter 1.94 1.13 1.13 0.50
4th Quarter 1.94 1.19 2.13 0.88
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.
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.
12
<PAGE>
On July 15, 1996 and July 16, 1996, the Company issued to each of Dawn Morton,
wife of William H. Morton, Jr., the Company's Senior Vice President and Chief
Operating Officer, and Dominion Capital Partners, an entity as to which
W. Andrew Krusen, Jr., a director of the Company, is affiliated, warrants
exercisable to purchase 18,000 shares of Common Stock (or an aggregate of 36,000
shares of Common Stock) at an exercise price of $1.50 per share. Such issuance
was in consideration of a bridge loan in the amount of $100,000 from each of
Dawn Morton and Dominion Capital Partners, in reliance on Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act"). With respect to such
exemption, the Company relied on representations made by each of Dawn Morton and
Dominion Capital Partners regarding, among other things, their investment
sophistication.
Between April 1997 and July 1997, the Company sold an aggregate of 180,000
shares of its Common Stock in domestic sales for aggregate consideration of
$270,000 as follows:
Number of Total
Title of Shares Purchasers/ Sales
Date Securities Sold Recipients Price
---- ---------- ---------- ---------- --------
April 5, 1997 Common Stock 25,000 Pediatric & $37,500
Adolescent
Healthcare,
P.C. Employee
Pension
Trust
April 14, 1997 Common Stock 25,000 Stig Host $37,500
May 1, 1997 Common Stock 30,000 Peggyanne $45,000
Kahn
July 1, 1997 Common Stock 50,000 The Alan W. $75,000
Steinberg
Limited
Partnership
July 8, 1997 Common Stock 50,000 BG $75,000
Development
Corp. Pension
Fund
Such sales were exempt from registration pursuant to the terms of Section 4(2)
and Rule 506 promulgated under the Securities Act. With respect to such
exemption, the Company relied on representations made by the purchasers
regarding, among other things, their accredited investor status.
In addition, on April 9, 1997 the Company issued to J. Allen Kosowsky 8,125
shares of Common Stock as payment for consulting services rendered by Mr.
Kosowsky. Such issuance was made pursuant to Section 4(2) and Rule 506 under
the Securities Act, based upon the Company's knowledge of Mr. Kosowsky's
investment sophistication. On September 30, 1996, the Company issued to each of
its four non-employee directors 10,000 shares of Common Stock, for an aggregate
of 40,000 shares of Common Stock, in consideration of services rendered by such
individuals as directors for the fiscal year ended June 30, 1996, and issued to
these same individuals on July 14, 1997, 6,024 shares of Common Stock, for an
aggregate of 24,096 shares of Common Stock, in consideration of services
rendered by such individuals as directors for the fiscal year ended June 30,
1997 in reliance upon Section 4(2) under the Securities Act, based upon the
Company's knowledge of such directors' investment sophistication. Finally, on
December 5, 1996, the Company issued to each of James Proft, Raymond Serna and
Phillipe Poncet, each of whom is an employee of the Company with Mr. Proft being
Vice President and General Manager - Western Operations, 20,000 shares of Common
Stock, being an aggregate of 60,000 shares, which represented the exercise by
each of Messrs. Proft, Serna and Poncet of warrants to purchase Common Stock at
$0.01 per share, for an aggregate purchase price of $600. Such issuance was in
reliance on Section 4(2) of the Securities Act, and with respect to such
exemption, the Company relied on representations made by each of Messrs. Proft,
Serna and Poncet regarding, among other things, their investment sophistication.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations.
Revenues. Revenues from continuing operations increased 916% for the
fiscal year ended June 30, 1997, to $11,545,000 from $1,136,000 for the fiscal
years ended June 30, 1997 and 1996, respectively. The increase of $10,409,000
is primarily due to product sales from both Memry East and Memry West resulting
from the Raychem Acquisition at the end of fiscal 1996. These additional sales
include sales to Raychem pursuant to the Private Label/Distribution Agreement
with Raychem, additional sales to Raychem as an OEM, sales to United States
Surgical Corporation of subcomponents acquired as part of the Raychem
Acquisition and additional sales of SMA products for various medical
applications.
Costs and Expenses. Manufacturing costs increased from $995,000 in fiscal
1996 to $6,517,000 in fiscal 1997, an increase of $5,522,000, or 555%. This
increase was entirely attributable to the 916% increase in revenues, resulting
from both increased efficiencies from greater sales volume and a change in the
Company's product mix away from plumbing and consumer finished products and
assemblies and towards higher margin medical industry products. As a result of
this, the Company's gross margins from sales increased to 44% for fiscal 1997,
compared to 12% for fiscal 1996, and the Company's gross profit from sales
increased by $4,887,000 or over 3000%, from $141,000 in fiscal 1996 to
$5,028,000 in fiscal 1997.
General, selling and administrative ("GSA") expenses from continuing
operations increased to $5,023,000 in fiscal 1997 from $1,804,000 in fiscal
1996, an increase of $3,219,000 or 178%. The increase in GSA expenses was due
to the consummation of the Raychem Acquisition at the end of fiscal 1996. While
most of the increase is recurring, as a result of the greater size of the
Company and its operations, approximately $400,000 of the increased GSA expenses
are the result of one time charges resulting from the Raychem Acquisition and
the termination of a former employee ($157,000 to relocate certain operations
from Memry West to Memry East, $140,000 of employee termination costs and
$100,000 of personnel relocation expenses). Depreciation and amortization
expenses increased to $228,000 in fiscal 1997 from $38,000 in fiscal 1996, an
increase of $190,000, or 500%. The increase in depreciation and amortization
costs was due to the amortization of patents and goodwill purchased in
the Raychem Acquisition at the end of fiscal 1996. Interest expenses increased
from $250,000 in fiscal 1996 to $275,000 in fiscal 1997, an increase of $25,000,
or 10%. This increase arose from an increase in the Company's average
outstanding borrowings during fiscal 1997, largely offset by a decrease in the
interest rate paid by the Company.
Net Loss. As a result of the Company's 916% increase in revenues, along
with proportionately smaller increases in manufacturing costs, SGA expenses, and
interest expense, the Company achieved a net loss from continuing operations of
only $260,000 during fiscal 1997, reduced by $1,653,000, or approximately 86%,
from the $1,913,000 loss from continuing operations recorded in fiscal 1996. The
Company had positive operating income from continuing operations of $5,000 for
fiscal 1997 and, but for the approximately $400,000 of one-time GSA expenses
described above, would have had a small net gain from continuing operations. The
Company expects to have a net gain in fiscal 1998 as sales continue to increase.
During the fourth quarter of fiscal 1997, the Company announced its
decision to cease operations at its Wright subsidiary and to commence the
liquidation of Wright's assets. All of Wright's manufacturing operations ceased
on June 5, 1997, and the results of operations of Wright have therefore been
presented as a discontinued operation for fiscal years 1997 and 1996. Revenues
of Wright decreased from $2,538,000 in fiscal 1996 to $1,988,000 in fiscal 1997,
causing Wright's net loss from operations to increase from $192,000 in fiscal
1996 to $680,000 in fiscal 1997. In addition, the Company realized an
extraordinary gain of $140,000 resulting from a negotiated discount in the
repayment of Wright's previous bank debt, and an extraordinary loss of $211,000
on the liquidation of Wright's business. This resulted in a net loss from
discontinued operations of $751,000 in fiscal 1997 compared to $192,000 in
fiscal 1996, an increase of $559,000, or 291% .
Factoring in the loss from continuing operations, the Company had a net
loss of $1,011,000 during fiscal 1997, a decrease of $1,094,000 (or
approximately 52%) from fiscal 1996.
13
<PAGE>
Liquidity and Capital Resources
The Company's primary capital requirements to date have been to fund losses
from operations. In addition, from time to time the Company has required
capital to effect acquisitions and to fund increases in inventory for certain
products necessary to allow the Company to increase sales for those products.
The Company has historically satisfied its capital requirements from sales of
equity securities and borrowings. During fiscal 1997, net cash used by
operating activities was approximately $1.6 million, net cash provided by
financing activities was approximately $800,000 and net cash provided by
investing activities (which included approximately $900,000 of proceeds from the
sale of property, plant and equipment in excess of purchases of property, plant
and equipment) was approximately $800,000. As a result of the foregoing, the
Company held cash and cash equivalents at June 30, 1997 of $25,000, down from
$57,000 at the close of fiscal 1996. However, the Company had a working capital
deficit (current liabilities less current assets) of only $15,000 at the close
of fiscal 1997, as opposed to a working capital deficit of approximately
$900,000 at the end of fiscal 1996.
On August 9, 1996, the Company entered into a term and revolving loan
agreement with Affiliated Business Credit Corporation ("ABCC"), a commercial
financing subsidiary of First Union Bank, allowing up to $2.635 million of
aggregate borrowings in the form of a term loan and a revolver. The term loan
was a five year $1.135 million loan, with principal payable in monthly
installments of approximately $19,000. Due to payments on the term loan,
including a prepayment upon the sale of Wright's machinery and equipment, the
unpaid balance of the term loan as of June 30, 1997 was $475,000. The entire
unpaid balance, if not earlier demanded, is due and payable on July 31, 2001;
provided, however, that ABCC has the right to accelerate the loan and require
full payment upon demand. Interest on the term loan accrues at the rate of prime
plus 2.25%. The revolving credit facility provides for borrowings at the lesser
of $1.5 million or the sum of (a) 80% of eligible accounts receivable plus (b)
the lesser of $500,000 or 25% of eligible inventory. Borrowings pursuant to the
revolving loan agreement are due upon demand and bear interest, payable monthly,
at prime plus 2%. As of June 30, 1997 the Company had $1,353,000 outstanding on
the revolving line of credit. The loan documents contain standard covenants
including restrictions on dividends and other payments and provide for security
interests in substantially all of the Company's consolidated assets. At the
August 9, 1996 closing, Wright's debt to Fleet Bank was repaid with a $140,000,
or 16% discount.
The Company has in the past grown through acquisitions (including both the
Raychem Acquisition and the Company's earlier acquisition of Wright) and, as
part of its continuing growth strategy, the Company expects to continue to
evaluate and pursue opportunities to acquire other companies, assets and product
lines that either complement or expand the Company's existing businesses. The
Company intends to use available cash from operations, when and if available,
and sales of equity to finance any such acquisitions that may be sought in the
future. The Company does not currently, however, contemplate any material
capital acquisitions for fiscal 1998.
The Company intends to spend between $500,000 and $750,000 on capital
expenditures during the fiscal year ending June 30, 1998, in order to handle its
expected continuing increased sales volume of SMA materials. The Company
expects that it will be able to pay for these expenditures out of cash flow
generated from its sale of products during the current fiscal year.
In connection with a December 1994 subordinated debt financing, the Company
granted Connecticut Innovations, Incorporated ("CII"), currently the holder of
both common stock and warrants of the Company, a "put" right if: (i) at any time
before the earlier of June 28, 2006 and the date on which CII ceases to hold at
least 35% of the common stock underlying the convertible securities originally
issued to it, the Company ceases to (a) maintain its corporate headquarters and
all of its product business operations in the State of Connecticut (including
the assembly of all products to be sold to U.S. Surgical Corporation), excluding
the Company's components and sub-assembly business acquired from Raychem, (b)
base 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 relating to its product business (subject
to the same inclusions and exclusions as clause (a)) in the State of
Connecticut, (c) conduct all of its operations relating to its product business
directly or through subcontractors and through licensed operations in the State
of Connecticut (subject to the same inclusions and exclusions as clause (a)),
and (d) maintain its principal bank accounts with banks located in the State of
Connecticut; or (ii) the Company fails to keep the Registration Statement on
Form S-2 that went effective on January 31, 1997 (the "Registration Statement"),
covering the offer and sale by certain of the Company's shareholders (including
CII) of up to 3,550,630 shares (including up to 3,041,963 shares beneficially
owned by CII) of the Company's common stock, in effect for an aggregate of 120
days during any rolling twelve month period during the three years which the
Company is required to maintain the effectiveness of the Registration Statement.
Upon CII's exercise of its put, the Company shall be obligated to purchase from
CII all the Company's Common Stock then owned by CII and underlying warrants
then owned by CII at a price equal to the greater of the then current market
price of the Company's common stock or $2.00 per share, less, in either event,
the aggregate amount of unpaid exercise prices of all warrants put to the
Company. Using $2.00 per share as the put price per share, the aggregate put
price that would have to be paid by the Company if the put were exercised would
be approximately $4,085,500. To the extent that the current market value of the
Company's common stock exceeds $2.00 per share at any time, the put price would
be greater. If CII were to have the right to put its securities and were to
choose to exercise that right, it would have a serious adverse effect on the
Company's liquidity and the Company would most likely have to seek equity
financing to be able to meet its obligations to CII. However, the Company
believes that it has the ability to insure that its operations do not move from
Connecticut in a manner that would trigger CII's put, and the Company intends to
cause the Registration Statement to be maintained in a manner that would prevent
CII's put from being operative.
The Company believes that the combination of the almost complete
elimination of its working capital deficit, its improved borrowing facility, its
ability to raise equity capital in the past and what it believes will be
material net profits from operations during fiscal 1998 will be sufficient to
meet the Company's capital requirements during fiscal 1998 (assuming that CII's
put rights are not triggered and exercised (and, as stated above, the Company
intends not to cause said put rights to become exercisable)).
FORWARD-LOOKING INFORMATION
- ---------------------------
The statements in this Annual Report on Form 10-KSB that are not historical fact
constitute "forward-looking statements." Said forward-looking statements
involve risks and uncertainties which may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements, express or implied by such forward-looking
statements.
These forward-looking statements are identified by their use of forms of such
terms and phrases as "expects," "intends," "goals," "estimates,"
14
<PAGE>
"projects," "plans," "anticipates," "should," "future," "believes," and
"scheduled".
The variables which may cause differences include, but are not limited to, the
following: general economic and business conditions; competition; success of
operating initiatives; operating costs; advertising and promotional efforts; the
existence or absence of adverse publicity; changes in business strategy or
development plans; the ability to retain management; availability, terms and
deployment of capital; business abilities and judgment of personnel;
availability of qualified personnel; labor and employee benefit costs;
availability and costs of raw materials and supplies; and changes in, or failure
to comply with, government regulations. Although the Company believes that the
assumptions underlying the forward-looking statements contained herein are
reasonable, any of the assumptions could be inaccurate, and therefore, there can
be no assurance that the forward-looking statements included in this filing will
prove to be accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the objectives and expectations of the Company will be achieved.
15
<PAGE>
Item 7. FINANCIAL STATEMENTS
Index to Financial Statements
- -----------------------------
INDEPENDENT AUDITOR'S REPORT F-1
FINANCIAL STATEMENTS:
Consolidated Balance Sheets - F-2
As of June 30, 1997 and 1996
Consolidated Statements of Operations - F-3
For years ended June 30, 1997 and 1996
Consolidated Statements of Stockholders' Equity F-4
For years ended June 30, 1997 and 1996
Consolidated Statements of Cash Flows - F-5
For years ended June 30, 1997 and 1996
Notes to Consolidated Financial Statements F-6
16
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Stockholders and Board of Directors
Memry Corporation and Subsidiary
Brookfield, Connecticut
We have audited the accompanying consolidated balance sheets of Memry
Corporation and subsidiary as of June 30, 1997 and 1996, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Memry Corporation
and subsidiary as of June 30, 1997 and 1996, and the results of their operations
and their cash flows for the years then ended in conformity with generally
accepted accounting principles.
/s/ McGladrey & Pullen, LLP
New Haven, Connecticut
September 18, 1997
F-1
<PAGE>
<TABLE>
<CAPTION>
MEMRY CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
June 30, 1997 and 1996
- -----------------------------------------------------------------------------------------------------------------
ASSETS (Note 8) 1997 1996
--------------------------------
Current Assets
<S> <C> <C>
Cash and cash equivalents (Note 5) $ 25,000 $ 57,000
Accounts receivable, less allowance for doubtful accounts of
$29,000 in 1996 2,419,000 568,000
Inventories (Note 3) 1,664,000 2,044,000
Prepaid expenses and other current assets 369,000 63,000
Assets of discontinued segment, net (Note 11) 936,000 -
--------------------------------
Total current assets 5,413,000 2,732,000
--------------------------------
Property, Plant and Equipment, at cost, net (Notes 4 and 9) 2,765,000 3,881,000
--------------------------------
Other Assets
Patents and patent rights, less accumulated amortization of $194,000
in 1997 and $60,000 in 1996 1,868,000 2,002,000
Goodwill, less accumulated amortization of $70,000 in 1997 974,000 989,000
Deferred financing costs 103,000 36,000
Deposits 29,000 39,000
--------------------------------
2,974,000 3,066,000
--------------------------------
Total assets $ 11,152,000 $ 9,679,000
================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 3,144,000 $ 1,733,000
Notes payable (Note 8) 2,255,000 1,698,000
Unearned revenue - 150,000
Current maturities of capital lease obligations (Note 9) 29,000 3,000
--------------------------------
Total current liabilities 5,428,000 3,584,000
--------------------------------
Capital Lease Obligations, less current maturities (Note 9) 43,000 4,000
--------------------------------
Commitments and Contingencies (Notes 9 and 10)
Stockholders' Equity
Preferred stock (Note 6) - 36,000
Common stock (Note 6) 170,000 130,000
Additional paid-in capital 39,631,000 39,034,000
Accumulated deficit (34,120,000) (33,109,000)
--------------------------------
Total stockholders' equity 5,681,000 6,091,000
--------------------------------
Total liabilities and stockholders' equity $ 11,152,000 $ 9,679,000
================================
</TABLE>
See Notes to Consolidated Financial Statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
MEMRY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended June 30, 1997 and 1996
- -----------------------------------------------------------------------------------------------------------
1997 1996
----------------------------------
<S> <C> <C>
Revenues
Product sales $ 11,290,000 $ 657,000
Research and Development 255,000 479,000
----------------------------------
11,545,000 1,136,000
----------------------------------
Cost of Revenues
Manufacturing 6,305,000 573,000
Research and development 212,000 422,000
----------------------------------
6,517,000 995,000
----------------------------------
Gross profit 5,028,000 141,000
----------------------------------
Operating Expenses
General, selling and administrative (Note 9) 4,795,000 1,766,000
Depreciation and amortization 228,000 38,000
----------------------------------
5,023,000 1,804,000
Operating income (loss) 5,000 (1,663,000)
Other Income (Expense)
Interest expense (Note 8) (275,000) (250,000)
Gain on disposition of assets 10,000 -
----------------------------------
(265,000) (250,000)
----------------------------------
Loss from continuing operations $ (260,000) $ (1,913,000)
----------------------------------
Discontinued operations (Note 11)
Loss from operations of discontinued segment (680,000) (192,000)
Loss on disposal of discontinued segment (211,000) -
Extraordinary gain on early retirement of debt (Note 8) 140,000 -
----------------------------------
(751,000) (192,000)
----------------------------------
Net loss $ (1,011,000) $ (2,105,000)
==================================
Weighted average number of common shares outstanding 16,229,093 8,357,118
==================================
Net loss per common share
Loss from continuing operations $ (0.02) $ (0.21)
Loss from discontinued operations (0.04) (0.04)
----------------------------------
Total $ (0.06) $ (0.25)
===================================
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
MEMRY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended June 30, 1997 and 1996
- ----------------------------------------------------------------------------------------------------------------------------------
Preferred Stock Common Stock
---------------------- --------------------------
Additional
Shares Par Shares Par Paid-in Accumulated
Issued Value Issued Value Capital Deficit
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1995 193 $ 19,000 8,009,997 $ 80,000 $ 29,874,000 $ (31,004,000)
Issuance of common stock - - 3,363,329 33,000 4,570,000 -
Series G preferred stock converted (127) (13,000) 1,269,000 13,000 - -
Series G preferred stock issued 231 23,000 - - 1,478,000 -
Conversion of debenture
to Series H preferred stock 67 7,000 285,528 3,000 753,000 -
Conversion of debt - - 50,000 1,000 49,000 -
Issuance of warrants - - - - 2,310,000 -
Net loss - - - - - (2,105,000)
------------------------------------------------------------------------------------
Balance, June 30, 1996 364 $ 36,000 12,977,854 $ 130,000 $ 39,034,000 $ (33,109,000)
Issuance of common stock - - 388,620 3,000 445,000 -
Series G preferred stock converted (297) (29,000) 2,971,000 30,000 - -
Series H preferred stock converted (67) (7,000) 668,000 7,000 - -
Issuance of warrants - - - - 152,000 -
Net loss - - - - - (1,011,000)
------------------------------------------------------------------------------------
Balance, June 30, 1997 $ - - 17,005,474 $ 170,000 $ 39,631,000 $ (34,120,000)
====================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
MEMRY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended June 30, 1997 and 1996
- ------------------------------------------------------------------------------------------------------------------------
1997 1996
-------------------------------
<S> <C> <C>
Cash Flows From Operating Activities
Net loss $ (1,011,000) $ (2,105,000)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization 723,000 90,000
Gain on early retirement of debt (140,000) -
Gain on disposal of assets (1,071,000) -
Writedown of assets of discontinued segment 470,000 -
Compensation paid by issuance of common stock 229,000 -
Change in operating assets and liabilities, net of assets acquired in
business combination:
(Increase) decrease in accounts receivable (2,069,000) 123,000
(Increase) decrease in inventories (48,000) 98,000
(Increase) decrease in prepaid expenses and other current assets (96,000) 7,000
Increase in other assets (80,000) (82,000)
Increase (decrease) in accounts payable and accrued expenses 1,622,000 (556,000)
Decrease in unearned revenue (150,000) -
--------------------------------
Net cash used in operating activities (1,621,000) (2,425,000)
--------------------------------
Cash Flows From Investing Activities
Purchase of shape memory metals operation (56,000) (4,022,000)
Purchases of property, plant and equipment (202,000) (38,000)
Proceeds from sales of property, plant and equipment 1,096,000 -
--------------------------------
Net cash provided by (used in) investing activities 838,000 (4,060,000)
--------------------------------
Cash Flows From Financing Activities
Proceeds from sale of preferred stock, net - 1,502,000
Proceeds from sale of common stock, net 72,000 4,603,000
Proceeds from notes payable 1,146,000 104,000
Net increase in revolving loans payable 972,000 -
Principal payments on notes payable (1,421,000) (808,000)
Principal payments on capital lease obligations (18,000) (4,000)
--------------------------------
Net cash provided by financing activities 751,000 5,397,000
--------------------------------
Decrease in cash and cash equivalents (32,000) (1,088,000)
Cash and cash equivalents, beginning of year 57,000 1,145,000
--------------------------------
Cash and cash equivalents, end of year $ 25,000 $ 57,000
================================
Supplemental Disclosure of Cash Flow Information
Cash payments for interest $ 257,000 $ 314,000
================================
Supplemental Schedule of Noncash Investing and Financing Activities
Acquisition of shape memory metals division:
Cash purchase price $ - $ 4,022,000
================================
Fair value of assets acquired
Property and equipment $ - $ 2,700,000
Patents - 2,000,000
Inventory - 1,293,000
Goodwill - 989,000
--------------------------------
- 6,982,000
Less
Warrants issued - (2,310,000)
Note payable issued - (350,000)
Liabilities assumed - (300,000)
--------------------------------
$ - $ 4,022,000
================================
Issuance of common stock in settlement of debt $ - $ 813,000
================================
Capital lease obligation incurred for equipment $ 83,000 $ -
================================
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of business
- ------------------
Memry Corporation, a Delaware corporation incorporated in 1981, is engaged in
the businesses of developing, manufacturing and marketing products and
components utilizing the properties exhibited by shape memory alloys, and
manufacturing and marketing metal parts and components machined on screw
machines and smaller metal working machines. As described in Note 11, the
Company ceased the operations of the metal parts and components operations on
June 5, 1997. The Company's sales are primarily to customers located throughout
the United States. The Company extends credit to its customers all on an
unsecured basis on terms that it establishes for individual customers.
Accounting estimates
- --------------------
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Principles of consolidation
- ---------------------------
The financial statements include the accounts of Memry Corporation ("Memry") and
Wright Machine Corporation ("Wright"), its wholly-owned subsidiary
(collectively, the "Company"). All significant intercompany transactions have
been eliminated in consolidation.
Cash and cash equivalents
- -------------------------
For purposes of the consolidated statements of cash flows, the Company considers
all highly liquid investments with a maturity of three months or less, when
purchased, to be cash equivalents. The carrying amount of these financial
instruments approximates fair value because of the short maturity of these
instruments.
Inventories
- -----------
Inventories consist principally of various metal alloy rod, plumbing products
and shape memory alloys. Inventories are stated at the lower of cost,
determined on the first-in, first-out method, or market.
F-6
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
Impairment of assets
- --------------------
The Company reviews its long-lived assets and certain identifiable intangible
assets for impairment whenever events or circumstances indicate that the
carrying amount of the assets may not be recoverable.
Revenue recognition
- -------------------
Revenues from product sales are recognized when the related products are
shipped. Certain revenues are earned in connection with research and
development contracts which are principally with the U.S. Government. Such
revenues are recognized when services are rendered. Some of the Company's
research and development projects are customer-sponsored and typically provide
the Company with the production rights or pay a royalty to the Company if a
commercially viable product results.
Depreciation and amortization
- -----------------------------
Depreciation of property, plant and equipment is computed using the straight-
line method over the estimated useful lives of the respective assets, ranging
from three to thirty years. Leasehold improvements are amortized over the life
of the lease, or the improvements' estimated useful life, if shorter.
Costs of obtaining patents and patent rights are amortized using the straight-
line method over the patents' expected period of benefit which ranges from
thirteen to sixteen years.
Goodwill represents the cost of acquired assets in excess of values ascribed to
net tangible assets and is being amortized using the straight-line method over
15 years.
Costs incurred in obtaining financing are capitalized and are being amortized
over the term of the related debt.
Income taxes
- ------------
Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss and tax
credit carryforwards and deferred tax
F-7
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws
on the date of enactment.
Net loss per common share
- -------------------------
The net loss per common share is based on the net loss from operations and the
weighted average number of shares of common stock outstanding during each year.
Common stock equivalents have been excluded from the computation of the net loss
per common share because inclusion of such equivalents is antidilutive.
Reclassifications
- -----------------
Certain 1996 financial statement amounts have been reclassified to conform with
the 1997 financial statement presentation, primarily relating to the
presentation of Wright's operations as discontinued operations. These
reclassifications had no effect on the 1996 net loss.
Note 2. BUSINESS COMBINATION
On June 28, 1996, the Company purchased certain assets used in conjunction with
the shape memory metals operation of Raychem Corporation ("Raychem"). Details
of the transaction, which was accounted for as a purchase, are as follows:
A summary of the purchase payments in connection with the acquisition is as
follows:
<TABLE>
<S> <C>
Cash paid to seller at closing $ 3,700,000
Note payable to seller 350,000
1,130,000 warrants issued to seller, at $0.01 2,285,000
1,250,000 warrants issued to seller, at $2.00 25,000
Obligations assumed 300,000
Acquisition costs 322,000
------------
$ 6,982,000
============
</TABLE>
F-8
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
A summary of the assets acquired in connection with the acquisition of the shape
memory metals division is as follows:
<TABLE>
<S> <C>
Patent rights $ 2,000,000
Goodwill 989,000
Machinery and equipment 2,700,000
Inventory 1,293,000
------------
$ 6,982,000
============
</TABLE>
During the year ended June 30, 1997, as a result of certain adjustments to the
purchase price, the Company paid an additional $56,000 to Raychem which was
allocated to goodwill.
Unaudited pro forma consolidated results of operations for the year ended June
30, 1996, as though the division had been acquired at July 1, 1995, is as
follows:
<TABLE>
<S> <C>
Sales $ 9,518,000
Net income 122,000
Net income per common share $ 0.01
</TABLE>
The above amounts reflect adjustments for amortization of goodwill, additional
depreciation on revalued purchased assets, and certain production and general
and administrative costs.
Additionally, concurrent with the acquisition, a private label/distribution
agreement was executed between Raychem and the Company, wherein Raychem became
the exclusive distributor, for an initial term of five years, for non-implant
applications of products to certain customers which comprised approximately 70%
of the Raychem division's fiscal 1996 revenues. Sales to Raychem under the
private label/distribution agreement are discounted to allow Raychem to recover
its sales and marketing expenses and to realize a profit upon resale of such
products to its customers. The unaudited proforma consolidated results of
operations set forth above give effect to such discount.
Note 3. INVENTORIES
Inventories at June 30, 1997 and 1996, are summarized as follows:
<TABLE>
<CAPTION>
1997 1996
-------------------------------
<S> <C> <C>
Raw materials and supplies $ 398,000 $ 1,370,000
Work-in-process 1,478,000 1,522,000
Finished goods 478,000 254,000
Allowance for slow-moving and obsolete inventory (690,000) (1,102,000)
-------------------------------
$ 1,664,000 $ 2,044,000
===============================
</TABLE>
F-9
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
Note 4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at June 30, 1997 and 1996, is summarized as
follows:
<TABLE>
<CAPTION>
1997 1996
------------------------------------
<S> <C> <C>
Land $ - $ 166,000
Buildings and improvements - 942,000
Tooling and equipment 3,971,000 4,750,000
Leasehold improvements 138,000 100,000
------------------------------------
4,109,000 5,958,000
Less accumulated depreciation and amortization 1,344,000 2,077,000
------------------------------------
$ 2,765,000 $ 3,881,000
====================================
</TABLE>
Note 5. MAJOR CUSTOMERS
Financial instruments
- ---------------------
Product sales revenue for the year ended June 30, 1997, include sales to two
major customers, each of which accounted for greater than 10% of the total sales
of the Company. A summary of sales to these customers during the year ended
June 30, 1997, and accounts receivable from these customers at June 30, 1997, is
as follows:
<TABLE>
<CAPTION>
Accounts
Customer Sales Receivable
------------- ---------------- -------------
<S> <C> <C>
Company A $ 5,491,000 $ 948,000
Company B 3,429,000 878,000
---------------- -------------
$ 8,920,000 $ 1,826,000
================ =============
</TABLE>
F-10
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
Note 6. CAPITAL STOCK
Preferred stock
- ---------------
The Company had two series of convertible preferred stock outstanding at June
30, 1996. Both series carried voting rights. Information regarding the shares
authorized, issued and outstanding, and conversion rates at June 30, 1996, is as
follows:
<TABLE>
<CAPTION>
Number of Shares
--------------------------
Preferred Issued and Par
Stock Authorized Outstanding value
--------------------------------------------
<S> <C> <C> <C>
Series G 800 297.10 $100
Series H 800 66.85 $100
</TABLE>
During the year ended June 30, 1996, a holder of the Series G preferred stock
converted 126.9 shares to 1,269,000 shares of common stock. During the year
ended June 30, 1997, all preferred stock outstanding was converted to common
stock.
Common stock
- ------------
On December 5, 1996, the Company amended its Certificate of Incorporation to
increase the number of authorized shares of its common stock, par value $0.01
per share, from 25,000,000 to 30,000,000 shares, of which there are 17,005,474
and 12,977,854 shares issued and outstanding at June 30, 1997 and 1996,
respectively.
On January 31, 1997, the Company filed a Registration Statement on Form S-2
covering the offer and sale by certain of the Company's stockholders of up to
3,550,650 shares of the Company's common stock.
During the year ended June 30, 1997, the Company began a private placement of
its common stock for an aggregate offering of $570,000, or 380,000 shares, at a
price of $1.50 per share. As of June 30, 1997, $420,000 was raised through the
sale of 280,000 shares of such stock.
Also during the year ended June 30, 1997, 40,000 shares of stock at an aggregate
price of $65,000 were issued to Company directors as compensation, and 8,125
shares at an aggregate price of $12,188 were issued as compensation to an
outside consultant. In addition, 60,000
F-11
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
shares were issued at an aggregate price of $1,000 upon conversion of 60,000
warrants by certain employees.Common stock reserved for issuance at June 30,
1997, is as follows:
<TABLE>
<CAPTION>
Number of
Shares
-----------
<S> <C>
For exercise of outstanding warrants 5,321,732
For exercise of stock options 1,100,000
-----------
6,421,732
===========
</TABLE>
On June 28, 1996, a convertible, subordinated debenture held by an investor in
the principal amount of $763,208 was converted to 285,528 common shares and
66.85 Series H preferred shares. The investor also holds approximately
2,088,000 warrants to purchase common shares of the Company, exercisable at an
average price of $0.96 per share. These warrants were originally issued in
connection with the issuance of the convertible, subordinated debenture,
referred to above. The agreement with the investor provides, upon the
occurrence of specified events, primarily should the Company cease to maintain
its principal offices within the State of Connecticut or fail to maintain a
registration statement covering the resale of its securities, the investor the
right to put all securities of the Company held by the investor at that time for
a price equal to the greater of the then current market price per share of such
securities (on an as-converted basis) or $2 per share, less, in either event,
the aggregate amount of unpaid exercise prices of all warrants put to the
Company. Using $2.00 per share as the put price per share, the aggregate put
price that would have to be paid by the Company if the put were exercised would
be approximately $4,085,500. If the investor were to have the right to put its
securities and were to choose to exercise that right, such an event would have a
serious adverse effect on the Company's liquidity and the Company would most
likely have to seek equity financing to be able to meet its obligations to the
investor. However, the Company has the ability to insure that its operations do
not move from Connecticut and intends to cause its current registration
statement to be maintained in a manner that would prevent the put from being
operative.
Stock Option Plans
- ------------------
Pursuant to the Company's stock option plan, incentive stock options are granted
at prices equal to or greater than the fair market value of the Company's stock
at the date of grant, and are exercisable at the date of grant unless otherwise
stated. In addition, non-qualified options are granted at a price determined by
the Company's compensation committee, which may be less than market value, in
which case an expense equal to the difference between the option price and
F-12
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
market value is recognized. The exercise period for both the incentive and non-
qualified stock options generally cannot exceed ten years.
The Company adopted Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123"), on July 1, 1996.
SFAS No. 123 established new standards for stock-based compensation plans under
which employees receive shares of stock or other equity instruments, such as
stock options or warrants, of the employer. This Statement established a fair
value based method of expense recognition for stock-based compensation plans and
encouraged, but did not require, entities to adopt that method in place of
existing generally accepted accounting principles. As permitted by SFAS No.
123, for options granted where the exercise price at date of grant is equal to
or exceeds the fair market value of the Company's stock, the Company has elected
to continue under existing generally accepted accounting principles and to
account for the options granted under APB Opinion No. 25, and accordingly, no
compensation cost has been recognized in the statements of operations for grants
under the option plan. Had compensation cost for the stock option plan been
recognized based on the grant date fair values of awards, the method described
in SFAS No. 123, the reported net loss would have been increased to the pro
forma amounts shown below:
<TABLE>
<CAPTION>
1997 1996
-----------------------------------
<S> <C> <C>
Net loss:
As reported $ (1,011,000) $ (2,105,000)
===================================
Pro forma $ (1,355,000) $ (2,242,000)
===================================
Earnings per share:
As reported $ (0.06) $ (0.25)
===================================
Pro forma $ (0.08) $ (0.27)
===================================
</TABLE>
F-13
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
The fair value of each grant, used to determine the proforma net loss above, is
estimated at the grant date using the fair value option-pricing model with the
following weighted average assumptions for grants awarded during the years ended
June 30, 1997 and 1996, respectively:
<TABLE>
<CAPTION>
1997 1996
-----------------
<S> <C> <C>
Dividend rate - -
Risk free interest rate 6.19% 6.27%
Weighted average expected lives, in years 5.75 6.25
Price volatility 30.0% 30.0%
</TABLE>
A summary of the status of the Company's stock option plan at June 30, 1997 and
1996, and changes during the years ended on those dates, is as follows:
<TABLE>
<CAPTION>
Weighted
Average
Shares Options Exercise
Reserved Outstanding Price
--------------------------------------------
<S> <C> <C> <C>
Balance, June 30, 1995 600,000 436,500 $ 3.47
Canceled - (436,500) $ 3.47
Granted - 492,500 $ 1.35
Exercised - - -
--------------------------------------------
Balance, June 30, 1996 600,000 492,500 $ 1.35
Canceled - (57,500) $ 1.50
Granted - 462,000 $ 1.75
Exercised - - -
--------------------------------------------
Balance, June 30, 1997 1,100,000 897,000 $ 1.54
============================================
</TABLE>
At June 30, 1997 and 1996, 693,000 and 223,500 of the outstanding options were
exercisable, respectively. The weighted-average grant-date fair value per option
of options granted during the years ended June 30, 1997 and 1996 were $ .74 and
$ .28, respectively.
F-14
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
A further summary of options outstanding at June 30, 1997, is as follows:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------- ---------------------------
Weighted-
Average Weighted- Weighted-
Remaining Average Average
Range of Exercise Number Contractual Exercise Number Exercise
Prices Outstanding Life (In Years) Price Exercisable Price
- --------------------------------------------------------------- ---------------------------
<S> <C> <C> <C> <C> <C>
$.90 to $1.87 897,000 8.8 $1.54 701,000 $1.64
</TABLE>
Warrants
- --------
The Company has also issued stock warrants to employees and other parties. The
compensation cost charged to operations for warrants granted to employees was
$152,000 during the year ended June 30, 1997.
The following table summarizes warrants outstanding at June 30, 1997 and 1996,
and the changes in warrants during the years then ended:
<TABLE>
<CAPTION>
Weighted-
Average
Shares Number of Exercise
Reserved Shares Price
-------------------------------------------
<S> <C> <C> <C>
Balance, June 30, 1995 6,088,891 6,088,891 $2.31
Adjustment for reverse stock split - (3,085,704) $1.40
Canceled - 2,586,181 $1.05
Granted - - -
Exercised - - -
-------------------------------------------
Balance, June 30, 1996 5,709,368 5,589,368 $1.77
Canceled - (365,036) $7.39
Granted - 97,400 $ .40
Exercised - (60,000) $ .01
-------------------------------------------
Balance, June 30, 1997 5,321,732 5,321,732 $1.37
===========================================
</TABLE>
F-15
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
A further summary of warrants outstanding at June 30, 1997, is as follows:
<TABLE>
<CAPTION>
Warrants Outstanding Warrants Exercisable
---------------------------------------------- ---------------------------
Weighted-
Average Weighted- Weighted-
Remaining Average Average
Range of Exercise Number Contractual Exercise Number Exercise
Prices Outstanding Life (In Years) Price Exercisable Price
- ------------------------------------------------------------------ ---------------------------
<S> <C> <C> <C> <C> <C>
$ .01 to $5.00 5,321,732 4.11 $1.37 5,261,732 $1.38
</TABLE>
Note 7. INCOME TAXES
Deferred income taxes reflect the net effects of temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. For financial reporting purposes,
a valuation allowance of $13.5 million has been recognized at June 30, 1997 and
1996, to reflect the estimated amount of operating loss carryforwards and
temporary differences which may not be realized. The approximate effect of
carryforwards and temporary differences that give rise to deferred tax assets
and liabilities at June 30, 1997 and 1996, are as follows:
<TABLE>
<CAPTION>
1997 1996
----------------------------------------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts $ 13,000 $ 12,000
Inventory reserves 89,000 172,000
Capitalization of inventory costs 29,000 31,000
Vacation accruals 41,000 41,000
Depreciation and amortization (330,000) (13,000)
Research and development credit carryforwards 160,000 160,000
Net operating loss carryforwards 13,500,000 13,100,000
----------------------------------------
Total deferred tax assets 13,502,000 13,503,000
Valuation allowance (13,502,000) (13,503,000)
----------------------------------------
Net deferred tax assets $ - $ -
========================================
</TABLE>
At June 30, 1997, the Company has net operating loss carryforwards for income
tax purposes of approximately $34 million, which expire beginning in 1998. In
addition, the Company has tax credit carryforwards available to offset future
taxable income aggregating approximately $160,000 which expire in various
amounts from 1998 through 2008. As a result of numerous equity transactions,
the net operating loss carryforwards and the unused tax credits may be
significantly limited as to ultimate amounts of these tax attributes which may
be utilized and the periods for which they will apply.
F-16
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
Note 8. NOTES PAYABLE
Notes payable consist of the following at June 30, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
-------------------------------------
<S> <C> <C>
Revolving loan payable to bank, repaid in full,
August 1996. $ - $ 381,000
Term note payable to bank, repaid in full,
August 1996. - 83,000
Mortgage note payable to bank, repaid in full
August 1996. - 471,000
Unsecured note payable to Raychem Corporation,
repaid in full, August 1996. - 350,000
Revolving loan payable to a bank pursuant to
August 9, 1996 credit facility, due upon demand,
interest payable monthly at the prime rate plus
2% (10.5% at June 30, 1997). 1,353,000 -
Term note payable to a bank pursuant to
August 9, 1996 credit facility, due in monthly
installments of $19,000, plus interest at the prime
rate plus 2.25% (10.75% at June 30, 1997), also
due on demand 475,000 -
Unsecured notes payable to a company affiliated with a
stockholder, interest payable at 6%, due on demand. 364,000 344,000
Unsecured note payable to officer/stockholder, interest
payable at 12%, due on demand. 60,000 60,000
Unsecured notes payable to a company affiliated with a
stockholder, interest at prime plus 4%, payable on 3,000 9,000
demand. -------------------------------------
$ 2,255,000 $ 1,698,000
=====================================
</TABLE>
F-17
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
At June 30, 1996, the Company was in default with respect to its revolving loan,
term note and mortgage note. Accordingly, at June 30, 1996, the term and
mortgage loans were classified as current obligations in the accompanying
consolidated balance sheet. On August 9, 1996, the Company entered into a new
credit facility with a different lender, at which time, all amounts under the
prior facility were repaid, except for $140,000 which was forgiven by the
lender. The $140,000 forgiveness of debt is recognized as an extraordinary item
within discontinued operations in the consolidated statement of operations.
The credit facility entered into on August 9, 1996, provides both a revolving
and term loan. The revolving loan provides for borrowings up to the lesser of
$1,500,000 or the sum of a) 80% of eligible accounts receivable and b) the
lesser of $500,000 or 25% of eligible inventory. These loans are cross-
collateralized by substantially all the assets of the Company and the personal
guarantee of the Company's president.
In addition, the credit facility contains various restrictive covenants
including limitations on additional debt, the payment of dividends, management
and ownership changes, and capital expenditures, all of which were complied with
at June 30, 1997.
Note 9. LEASES
The Company leases various equipment under noncancelable leases. These leases
have been recorded as capital leases and are included in the accompanying
consolidated balance sheets under the caption "Property, Plant and Equipment".
The Company also leases its Connecticut and California warehouse and office
facilities under operating leases. The lease on the Connecticut facility
expires in February 2001 and the lease on the California facility expires in
September 1998.
F-18
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
Future minimum lease payments under capital leases and significant noncancelable
operating leases, with remaining terms of one year or more, are as follows at
June 30, 1997:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
------------- ------------
<S> <C> <C>
1998 $ 36,000 $ 395,000
1999 32,000 200,000
2000 15,000 135,000
2001 - 79,000
------------- ------------
83,000 $ 809,000
============
Less amount representing interest 11,000
-------------
Present value of future minimum lease payments 72,000
Less current maturities 29,000
-------------
$ 43,000
=============
</TABLE>
Rent expense under operating leases for the years ended June 30, 1997 and 1996
approximated $392,000 and $130,000, respectively.
Note 10. CONTINGENCIES
401(K) Plan
- -----------
The Company maintains defined contribution plans (401K) which cover
substantially all of its employees. Contributions are based on specific
percentages of employee voluntary contributions. Employees vest immediately.
During the year ended June 30, 1997, $36,000 of expenses were recognized
relating to these plans. There were no expenses recognized for these plans
during the year ended June 30, 1996 as no employees were participating.
F-19
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
Litigation
- ----------
There are various lawsuits and claims, arising in the ordinary course of
business, pending against the Company. In the opinion of management, the
ultimate resolution of these matters will not have a material adverse effect on
the results of operations or the financial position of the company.
Note 11. DISCONTINUED OPERATIONS
On May 8, 1997, the Company decided to discontinue the operations of Wright,
and on June 5, 1997, the Company ceased the operations of Wright. As of June
30, 1997, the Company had sold substantially all of the machinery and equipment
of Wright, and expects to complete the disposal of Wright through the
liquidation of its remaining assets within one year. The estimated loss on
disposal is as follows:
F-20
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Gain from sales and writedown of assets, net $ 456,000
Operating losses from measurement date to June 30, 1997 (366,000)
Estimated operating losses from July 1, 1997 to completion
of disposal (301,000)
---------------
$ (211,000)
===============
</TABLE>
Sales of Wright were $1,988,000 and $2,538,000 for the years ended June 30, 1997
and 1996, respectively.
At June 30, 1997, the assets and liabilities of Wright consisted of the
following:
<TABLE>
<CAPTION>
<S> <C>
Assets
Accounts receivable $ 236,000
Inventories 539,000
Property and equipment 879,000
Other assets 72,000
Less adjustment for write-down to
estimated realizable value (579,000)
---------------
1,147,000
---------------
Liabilities
Estimated losses from disposal of segment 211,000
---------------
Net assets of Wright $ 936,000
===============
</TABLE>
The foregoing net assets have been classified as current at June 30, 1997, since
the disposal of the assets is expected to be completed within one year.
Discontinued operations include management's best estimate of the amounts
expected to be realized on the disposal of its remaining assets. The amounts
the Company will ultimately realize could differ materially in the near term
from the amounts assumed in arriving at the loss on disposal of the discontinued
operations.
Note 12. EMERGING ACCOUNTING STANDARDS
The Financial Accounting Standards Board has issued Statement of Financial
Accounting No. 128, "Earnings Per Share," ("SFAS No. 128") which becomes
effective for the Company's year ending June 30, 1998. SFAS No. 128 establishes
standards for computing and presenting earnings per share, and requires
restatement of all prior period earnings per share data presented. The Company
does not anticipate that the adoption of this standard will have a significant
impact on earnings per share presented in the financial statements.
F-21
<PAGE>
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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, 1997.
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, 1997.
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, 1997.
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, 1997.
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
The Company filed a Form 8-K on May 5, 1997 with respect to disclosure
regarding "Item 5. Other Events," to file the
17
<PAGE>
Company's April 16, 1997 press release regarding the Company's receipt
of a two-year exclusive blanket purchase order from United States
Surgical Corporation for the supply of medical instrument assemblies,
commencing April 1, 1997. A Form 8-K was also filed on June 25, 1997
with respect to disclosure regarding "Item 2. Acquisition or
Disposition of Assets" and "Item 7. Financial Statements and Exhibits,"
disclosing the execution of a Purchase Agreement between Wright and
Thomas Industries Auction and Liquidation Corporation regarding the sale
of substantially all of the machinery and equipment of Wright. In
addition, on July 10, 1997 a Form 8-K was filed with respect to
disclosure regarding "Item 9. Sales of Equity Securities pursuant to
Regulation S," disclosing the sale of 200,000 shares of the Company's
Common Stock to Dominion Financial Group International LDC pursuant to
the terms of Regulation S promulgated under the Securities Act of 1933,
as amended.
18
<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 29, 1997 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.
Signature Title Date
- --------- ----- ----
/s/James G. Binch President, CEO, Treasurer September 29, 1997
- ----------------------- and Chairman of the Board
James G. Binch (Principal Executive Officer
and Principal Financial
Officer)
/s/Nicholas J. Grant Director September 29, 1997
- -----------------------
Nicholas J. Grant
/s/Jack Halperin Director September 29, 1997
- -----------------------
Jack Halperin
/s/W. Andrew Krusen, Jr. Director September 29, 1997
- ------------------------
W. Andrew Krusen, Jr.
/s/John A. Morgan Director September 29, 1997
- -----------------------
John A. Morgan
19
<PAGE>
Exhibit Index
Exhibit
Number Description of Exhibit
- ------ ----------------------
3.1 Certificate of Incorporation of the Company, as amended (11)
3.2 By-Laws of the Company, as amended (10)
10.1 Lease Agreement, dated January 24, 1991, (1)
between the Company and Brookfield Commerce,
relating to 57 Commerce Drive, Brookfield, CT
10.2 Warrant Issued to Connecticut Innovations, (2)
Inc. ("CII") as of March 1, 1992
10.3 Employment Agreement, dated September 24, (3)
1993, between the Company and James G. Binch
10.4 Agreement, dated January 25, 1993, between (3)
the Company and Sciatec, Inc.
10.5 SBIR Contract dated December 9, 1993 between (4)
the Company and NASA
10.6 Employee Non-Disclosure Agreement, dated as of (4)
October 18, 1994, between the Company and
James G. Binch
20
<PAGE>
Exhibit
Number Description of Exhibit
- ------ ----------------------
10.7 Convertible Subordinated Debenture Purchase Agreement, (8)
dated as of December 22, 1994, between the Company and
CII
10.8 Escrow Agreement, dated as of December 22, 1994, among (8)
the Company, CII and Finn Dixon & Herling as escrow
agent
10.9 Form of Securities Purchase Agreement relating to sales (5)
of Series G Preferred Stock of the Company
10.10 First Amendment to Convertible Subordinated Debenture (5)
Purchase Agreement, dated October 11, 1995, between
the Company and CII
10.11 First Addendum to Convertible Subordinated Debenture, (5)
dated October 11, 1995, made by the Company and agreed
to by CII
10.12 First Addendum to Stock Subscription Warrant (re: (5)
Warrant No. 94-4), dated October 11, 1995, made by the
Company and agreed to by CII
10.13 First Addendum to Stock Subscription Warrant (re: (5)
Warrant No. 94-5), dated October 11, 1995, made by the
Company and agreed to by CII
10.14 First Addendum to Stock Subscription Warrant (re: (5)
Warrant No. 94-6), dated October 11, 1995, made by the
Company and agreed to by CII
10.15 Amendment to Escrow Agreement, dated October 11, 1995, (5)
among the Company, CII and Finn Dixon & Herling as escrow
agent
10.16 Employment Agreement, dated as of November 7, 1995, (6)
between the Company and William H. Morton, Jr.
10.17 Second Amendment to Convertible Subordinated Debenture (8)
Purchase Agreement, dated as of June 28, 1996, between
the Company and CII
10.18 Second Amendment to Escrow Agreement, dated as of (8)
June 28, 1996, among the Company, CII and Finn
Dixon & Herling as escrow agent
21
<PAGE>
Exhibit
Number Description of Exhibit
- ------ ----------------------
10.19 Amended and Restated Class I Warrant Certificate (8)
(Warrant Certificate No. 94-4A) issued by the
Company to CII
10.20 Amended and Restated Class II Warrant Certificate (8)
(Warrant Certificate No. 94-5A) issued by the
Company to CII
10.21 Second Addendum to Class III Warrants issued by the (8)
Company to CII
10.22 Sublease, dated as of June 28, 1996, between the Company (7)
and Raychem Corporation
10.23 Warrant Certificate exercisable for 1,130,000 shares of (7)
Common Stock, dated June 28, 1996, issued by the Company
to Raychem Corporation,
10.24 Warrant Certificate exercisable for 1,250,000 shares of (7)
Common Stock, dated June 28, 1996, issued by the Company
to Raychem Corporation,
10.25 Finders Fee Agreement, dated as of June 28, 1996, between (7)
the Company and Raychem Corporation,
10.26 Amended and Restated Asset Purchase Agreement (7)
between the Company and Raychem Corporation,
dated May 10, 1996.
10.27 Letter Agreement, dated June 20, 1996, between (7)
the Company and Raychem Corporation.
10.28 Amendment No. 1 to Amended and Restated Purchase (7)
Agreement between the Company and Raychem
Corporation, dated June 28, 1996.
10.29 Amendment No.2 to Amended and Restated Purchase Agreement (8)
between the Company and Raychem Corporation, dated
August 11, 1996.
10.30 Amendment to Lease Agreement between the Company and (8)
Brookfield Commerce relating to 57 Commerce Drive,
Brookfield, CT.
10.31 Warrant Cert. No. 96-4, dated as of July 16, 1996, (8)
issued to Dominion Capital Partners
10.32 Warrant Cert. No. 96-5, dated as of July 15, 1996, (8)
issued to Dawn M. Morton
22
<PAGE>
Exhibit
Number Description of Exhibit
- ------ ----------------------
10.33 Form of Securities Purchase Agreement relating to (8)
sales of Common Stock at $2.00 per share on
June 28, 1996
10.34 Commercial Revolving Loan, Term Loan and Security (8)
Agreement, dated August 9, 1996, among the Company,
Wright Machine Corporation and Affiliated Business
Credit Corporation
10.35 Mortgage and Security Agreement dated as of August 9, 1996, (8)
from Wright Machine Corporation and Affiliated Business
Credit Corporation
10.36 Letter Agreement, dated June 26, 1996, between the (8)
Company and James Proft
10.37 Letter Agreement, dated as of May 29, 1996, between Memry (8)
Corporation and Dominion Capital Partners re: stock issuance
10.38 Securities Purchase Agreement, dated as of December 9, (8)
1994, between Memry Corporation and Dominion Partners
10.39 Employee Agreement on Inventions and Patents, between (8)
the Company and James G. Binch
10.40 Memry Corporation Stock Option Plan, as amended (9)
10.41 Form of Nontransferable Incentive Stock Option Agreement (9)
10.42 Form of Nontransferable Non-Qualified Stock Option (9)
Agreement
10.43 Warrant Certificate No. 96-7(A), dated as of January ___, (11)
1997, issued to James Proft
10.44 Purchase Agreement, dated as of May 12, 1997, between (10)
Wright and Thomas Industries Auction & Liquidation
Corporation
10.45 Amended and Restated Tinel-Lock Supply Agreement, (11)
dated as of February 19, 1997, and effective as of
December 20, 1996, between the Company and Raychem
Corporation
10.46 Amended and Restated Private Label/Distribution (11)
Agreement, dated as of February 19, 1997, and effective
as of December 20, 1996, between the Company and
Raychem Corporation*
23
<PAGE>
Exhibit
Number Description of Exhibit
- ------ ----------------------
10.47 Amendment No. 3 to Amended and Restated Purchase Agreement (11)
and Amendment No. 1 to Transitional Services Agreement
between the Company and Raychem Corporation, dated as
of February 19, 1997 and effective as of December 20, 1996
10.48 Agreement, dated as of June 5, 1997, between the Company (11)
and Wendy M. Gavaghan
10.49 Securities Purchase Agreement, dated as of June 26, 1997, (11)
between the Company and Dominion Financial Group
International LDC
11 Statement re: Computation of Per Share Earnings (5)
21.1 Information regarding Wright Machine Corporation (13)
27 Financial Data Schedule (11)
- -----------
(1) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1991.
(2) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended September 30, 1991.
(3) Incorporated by reference to the Company's Annual Report on Form 10-KSB for
the fiscal year ended June 30, 1993.
(4) Incorporated by reference to the Company's Annual Report on Form
10-KSB for the fiscal year ended June 30, 1994.
(5) Incorporated by reference to the Company's Annual Report on Form 10-KSB for
the fiscal year ended June 30, 1995.
(6) Incorporated by reference to the Company's Quarterly Report on Form 10-QSB
for the fiscal quarter ended September 30, 1995.
(7) Incorporated by reference to the Company's Current Report on Form 8-K filed
July 15, 1996.
(8) Incorporated by reference to the Company's Annual Report on Form 10-KSB for
the fiscal year ended June 30, 1996, as amended.
24
<PAGE>
(9) Incorporated by reference to the Company's Quarterly Report on Form 10-QSB
for the fiscal year ended December 31, 1996.
(10) Incorporated by reference to the Company's Current Report on Form 8-K filed
June 25, 1997.
(11) Submitted herewith.
* Subject to a confidential treatment request.
25
<PAGE>
EXHIBIT 10.43
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 - 7A WARRANT TO PURCHASE 20,000 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 Warrant Certificate is an amendment and restatement of that
certain Warrant Certificate No. 96-7 issued as of September 19, 1996 (the
"Warrant Issue Date") by Memry Corporation, a Delaware corporation (the
"Company") to James Proft (the "Holder"), which Warrant Certificate No. 96-
7 has been cancelled by the Company as of the date hereof. This certifies
that, for value received, the Holder is entitled, subject to the terms set
forth below, to purchase from the Company, 20,000 shares of the common
stock, par value $0.01 per share ("Common Stock"), of the Company, as
constituted on the date hereof, 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 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
<PAGE>
anniversary of the Warrant Issue Date; and Warrants to purchase the
remaining 10,000 shares of Common Stock may be issued at any time 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
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<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 2 Williams Lane, Foster City,
CA 94404, 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 __ day of January, 1997.
HOLDER: MEMRY CORPORATION
/s/ James Proft By:/s/ James G. Binch
------------------------------ -------------------------
James Proft Name: James G. Binch
Address: Title: President
2 Williams Lane
Foster City, CA 94404
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<PAGE>
ANNEX I
-------
NOTICE OF EXERCISE
To: Memry Corporation
(1) The undersigned hereby irrevocably elects to purchase _____ shares
of Common Stock of Memry Corporation, a Delaware corporation, pursuant to
the terms of the attached Warrant, and tenders herewith payment of the
purchase price for such shares in full, unless the Holder elects to
exercise such Warrant in accordance with Section 3(c) thereof in lieu of
making a cash payment therefor.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock to be issued are being
acquired solely for the account of the undersigned and not as a nominee for
any other party, and for investment, and that the undersigned shall not
offer, sell or otherwise dispose of any such shares of Common Stock except
under circumstances that will not result in a violation of the Securities
Act of 1933, as amended, or any state securities laws.
(3) Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned.
Dated: _____________________
_________________________________
[Holder]
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<PAGE>
EXHIBIT 10.45
AMENDED AND RESTATED
TINEL-LOCK(R) SUPPLY AGREEMENT
------------------------------
THIS Amended and Restated Supply Agreement (the "Agreement") is made
and executed this 19th day of February and effective as of the 20th day of
December, 1996 ("Effective Date"), by and between Raychem Corporation ("Buyer"),
a Delaware corporation having its principal executive offices at 300
Constitution Drive, Menlo Park, California 94025-1164, and Memry Corporation
("Seller"), a Delaware corporation having its principal executive offices at 57
Commerce Drive, Brookfield, Connecticut 06804.
R E C I T A L S
- - - - - - - -
WHEREAS, Buyer and Seller are parties to an Amended and Restated
Asset Purchase Agreement, dated as of May 10, 1996, as amended by that certain
Amendment No. 1 dated June 28, 1996, that certain Amendment No. 2 dated as of
August 11, 1996, and by that certain Amendment No. 3 of even date herewith (as
so amended, the "Purchase Agreement"), pursuant to which Seller acquired certain
assets (including both machinery and equipment and trade secrets and other
intellectual property) previously used by Buyer to produce nickel titanium
components for medical and industrial OEM products; and
WHEREAS, Buyer in connection with the Purchase Agreement, retained
various tangible assets associated with its Tinel-Lock product line; and
WHEREAS, Buyer desires to secure for itself an uninterrupted source of
Products (as defined herein) from Seller, and Seller desires to be Buyer's
exclusive supplier of Products, both upon the terms and conditions set forth
herein; and
WHEREAS, Buyer and Seller have entered into a Tinel-Lock License
Agreement dated as of June 28, 1996 wherein Seller has granted Buyer a license
to specified intellectual property, patents, license and copyrights necessary to
develop, manufacture or sell Tinel-Lock Products.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
covenants of the parties herein and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereby agree
as follows:
<PAGE>
A. DEFINITIONS
-----------
For purposes of this Agreement, the following terms shall have the
following respective meanings:
"Business Day" means a day on which banks are not required or
authorized to be closed in either the State of California or the State of
Connecticut.
"Confidential Information" means any information or data disclosed
pursuant to this Agreement; provided, however, that information and data shall
not be deemed to be Confidential Information if:
(a) it is available to the public at the time of disclosure to the
receiving party, or thereafter becomes available to the public through no fault
of the receiving party, but in such event only as of such later date;
(b) it is independently made available to the receiving party by a
third party without restrictions on disclosure; or
(c) it is known to the receiving party before disclosure to the
receiving party by the disclosing party or developed by the receiving party
without reference to any Confidential Information of the disclosing party.
Customer lists and specifications of Buyer shall, subject to the
exceptions in clauses (a) through (c) above, be deemed "Confidential
Information" under this Agreement.
"GAAP" means United States generally accepted accounting principles as
in effect on the date hereof, applied on a basis consistent with the preparation
of Buyer's historical financial statements.
"Inventions" means all discoveries, know-how, inventions, developments
and improvements, whether patentable or not.
"Private Label Agreement" shall mean the Amended and Restated Private
Label/Distribution Agreement between the parties dated of even date herewith.
"Product" or "Products" shall mean the Tinel-Lock Products currently
being manufactured by Buyer and used by Buyer specifically set forth on Exhibit
A hereto, as well as any other similar and/or derivative Tinel-Lock Products
that (i) meet mutually agreed upon criteria for ongoing business, or (ii) Buyer
and Seller hereafter mutually agree should become Products hereunder, or (iii)
are developed or manufactured by or for Seller, or (iv) are jointly developed by
Buyer and Seller.
"Tinel-Lock Lease Agreement" shall mean the Tinel-Lock Lease Agreement
between the parties dated as of June 28, 1996.
<PAGE>
"Tinel-Lock Products" means products using the Tinel(R) or any nickel
titanium alloy for the termination of electrical/electronic braid in connector
or interconnect applications. Although this is typically a ring of Alloy 'X'
(heat-to-shrink) used to compress an overall cable shield onto a connector
adapter, other covered applications include, without limitation:
(a) wire, braid strap and other electrical grounding methods;
(b) metallic or non-metallic braid and straps used for mechanical
attachment of electrical/electronic or fiber optic cables and interconnection.
Various other defined terms used herein are defined throughout this
Agreement.
B. PURCHASE AND SALE
-----------------
1. Basic Agreement. Subject to the terms, provisions and conditions
---------------
hereinafter set forth, during the term of this Agreement, Seller agrees to sell
Tinel-Lock Products to Buyer, and Buyer agrees to purchase Tinel-Lock Products
from Seller. During the term hereof except as set forth in Section J. of this
Agreement, the Buyer shall purchase its entire requirements of Tinel-Lock
Products, whether for direct sale to third parties or for use by Buyer as
components for products being manufactured and sold by Buyer, from Seller, and
shall not manufacture Tinel-Lock Products for its own use, or purchase Tinel-
Lock Products from any third party, except for purchases from Seller hereunder.
During the term hereof, Seller will not directly or indirectly manufacture
and/or sell Tinel-Lock Products for its own use, or for the use of any third
party, except for sales to Buyer hereunder. Additional products that become
Products will be added to Exhibit A from time to time by the execution by both
Product Managers defined in Section B.4. below of a completed New Product
Amendment in substantially the form attached as Exhibit H hereto.
2. License. Buyer hereby grants to Seller, and Seller hereby
-------
accepts, a license of Buyer's Intellectual Property, to be used solely for the
purpose of manufacturing the Products pursuant to this Agreement.
3. Specifications. The Products shall meet the specifications
--------------
identified in Exhibit B hereto. The Product Managers defined in Section B.4.
below shall be responsible for amending Exhibit B by mutual consent from time to
time as required to reflect agreed upon specifications or to add or delete
specifications as Products are added or deleted from Exhibit A.
4. Product Managers. During the term of this Agreement, the parties
----------------
shall each designate one (1) Product Manager who shall be responsible for
managing the relationship between
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<PAGE>
Seller and Buyer ("Product Manager"). The Product Managers shall confer on a
regular basis.
5. Pricing.
-------
(a) The initial purchase price for each Product listed on Exhibit A
hereto is set forth opposite the description of such Product on said Exhibit A,
and is intended to be the price for such Product for the period commencing on
the date hereof and continuing through June 30, 1997. The parties agree to
amend the purchase price for each Product effective as of every July 1 during
the term hereof to reflect annual increases or decreases in the cost of raw
material. New Products added to Exhibit A from time to time will be priced at a
mutually agreed upon price for such Products through the period ending on the
immediately subsequent June 30.
(b) In the event Seller is able to re-engineer the process for
manufacturing Tinel-Lock Products in a manner which results in such a
significant reduction in manufacturing costs that Buyer believes that the market
for such Products will be greatly expanded, then the parties agree to discuss
changes in pricing, the term of this Agreement and the respective rights of the
parties upon termination.
6. Rolling Forecasts.
-----------------
(a) For each of the quarters constituting the four (4) quarter
period ended June 30, 1997, Buyer shall order Products the aggregate purchase
price for which, when combined with the aggregate purchase price of products
ordered pursuant to the Private Label Agreement, equals or exceeds the aggregate
dollar figure set forth for such quarter on Exhibit C hereto (such amounts the
"Initial Commitment").
(b) Every calendar quarter during the term hereof, at least one (1)
full month prior to the commencement thereof, Buyer shall submit to Seller its
good-faith estimated requirements for total dollar volume to be ordered pursuant
to this Agreement for each of the next six (6) calendar quarters ("Buyer's
Forecast"). The Buyer's Forecast may be combined with forecasts to be delivered
pursuant to the Private Label Agreement. Except as set forth in Section B.7.(b)
hereof, forecasts required by the Private Label Agreement ("Private Label
Forecasts") but delivered with the Buyer's Forecast shall not be governed by
this Agreement, but shall for all purposes be governed by the Private Label
Agreement. Buyer's Product Manager will make commercially reasonable efforts to
make non-binding forecasts on a Product by Product basis. Buyer and Seller
shall each review Buyer's Forecast to assess whether it would require an
unreasonable spike in capacity (i.e., ramp-ups from one quarter to the next or
from the forecast for such quarter from one Buyer's Forecast to the next) in
which event the Buyer and the Seller shall agree upon a mutually acceptable
alternative Buyer's Forecast. Ramp-ups of up to 25% per quarter in all events
shall be deemed reasonable.
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<PAGE>
7. Security Stock; Minimum Take Requirements.
-----------------------------------------
(a) Seller covenants and agrees for every month during the term
hereof to have available for immediate delivery to Buyer, raw material and
manufacturing capacity sufficient to supply Buyer with an amount of Products
equivalent to 40% of the amount forecasted to be ordered in Buyer's Forecast for
the quarter, except if and to the extent that changes in Product mix materially
increase the amount of manufacturing capacity necessary to process a given
volume of raw material. Seller shall only have the right and ability to reject
purchase orders for which it is not required to have sufficient raw material and
manufacturing capacity.
(b) Buyer covenants and agrees for every calendar quarter during
the term hereof beginning with the quarter commencing July 1, 1997 to order from
Seller during such quarter (for purposes of this subsection, such quarter the
"Current Quarter") Products with an aggregate purchase price equal to the
greater of (i) Ninety-Five percent (95%) of the Buyer's Forecast in dollar
volume projected to be ordered during the Current Quarter in the Buyer's
Forecast, which forecast shall be delivered not later than one (1) full month
prior to the commencement of the Current Quarter; or (ii) a number which, when
added to the aggregate purchase price of any products ordered pursuant to the
Private Label Agreement ("Private Label Products") for the Current Quarter, is
not less than Sixty-Five percent (65%) of the aggregate purchase price for all
Products and Private Label Products (such combined aggregate purchase price the
"Combined Purchase Projection") projected to be ordered in such quarter by the
Buyer's Forecast and the corresponding forecast under the Private Label
Agreement (together the "Forecasts") that were delivered not later than four (4)
months prior to the commencement of the Current Quarter; or (iii) a number
which, when added to the aggregate purchase price of any Private Label Products
for the Current Quarter, is not less than twenty-five percent (25%) of the
Combined Purchase Projection projected to be ordered in the Current Quarter by
the Forecasts that were delivered not later than seven (7) months prior to the
commencement of the Current Quarter. In the event Buyer fails to place orders
during the Current Quarter as described above, Buyer shall pay to Seller the
difference between the amount of Product so ordered and the amount of Product
Buyer was required to order pursuant to this Section B.7.(b). In the event Buyer
places an order that Seller is unable to fill because Seller is unable to meet
the technical specifications for such order, and Products are available in the
marketplace that meet such specifications, such order will be treated as having
been placed by Buyer during the quarter Buyer attempted to place such order at
the price then prevailing in the marketplace for comparable products meeting
such specifications. For purposes of clarification, an example of Buyer's order
commitment pursuant to this Section B.7.(b) is set forth as Exhibit I hereto.
8. Commitments of Seller. Seller has since June 28, 1996 conducted,
---------------------
and from and after the Effective Date, agrees to continue to conduct, its
business and act in a manner
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<PAGE>
that will comply with the obligations of Buyer as if Seller were the named party
therein in those agreements of Buyer set forth on Exhibit G (except that Seller
shall not be responsible for Buyer's conduct).
C. TERMS AND CONDITIONS
--------------------
1. Purchase Orders. Buyer shall purchase Products by submitting to
---------------
Seller purchase orders for specific Products. Purchase orders shall specify the
type and quantity of Products to be purchased, the price, the delivery date, the
purchase order number, and test report and certification requirements. Purchase
orders shall be deemed accepted by Seller three Business Days after receipt,
unless Seller notifies Buyer within said period that it is rejecting such
purchase order in accordance with Section B.7.(a) above. Buyer and Seller each
hereby covenants and agrees to monitor the rate of placement of purchase orders
pursuant to this Agreement. Seller agrees to notify Buyer, within the first ten
days of the start of the third month of any quarter, as to the aggregate amount
of purchase orders placed by Buyer hereunder during the first two months of such
quarter, or placed prior to such quarter but creditable against Buyer's order
commitment for such quarter. Buyer agrees to notify Seller promptly if it
appears that insufficient purchase orders will be placed during the Current
Quarter (as defined in Section B.7.(b)) to satisfy Buyer's ordering obligations
as set forth in Section B.7.(b) hereof.
2. Payment Terms; Invoice. Payment terms are net thirty (30) days
----------------------
after Buyer's receipt of Seller's invoice or shipment (whichever is later). The
Buyer description and part number must be referenced on all invoices and packing
lists. All outstanding sums owed to Seller by Buyer shall accrue interest at a
rate of 1.0% per month (or any part thereof) if unpaid within thirty (30) days
after the due date therefor.
3. Terms and Conditions. Except as otherwise provided herein, each
--------------------
sale hereunder shall be governed by Buyer's Standard Terms and Conditions of
Purchase ("Order Terms") attached hereto as Exhibit D. Such terms and
conditions are hereby incorporated herein by reference. Any preprinted terms
and conditions in any acknowledgment, invoice or other document submitted by
Seller are superseded by the terms of this Agreement. In the event of any
inconsistency between this Agreement and the Order Terms, this Agreement shall
be controlling.
4. Delivery.
--------
(a) 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, (x) extend the time for delivery, or (y) 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
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<PAGE>
they are placed by Seller into the possession of Buyer's designated carrier,
packed and ready for shipment to Buyer's designated location. Invoices shall
not precede the delivery date. Seller shall ship Products F.O.B., Seller's
facility. All Products shall be shipped by Buyer's designated standard land
carrier unless otherwise specified by Buyer. In the event that Buyer requests
delivery by air carrier, Seller shall use Buyer's designated standard air
carrier unless otherwise specified by Buyer. Delivery shall be made to Buyer's
plant at Menlo Park, California, unless otherwise specified by Buyer in writing.
(b) Notwithstanding Section C.4.(a) above, Buyer may place Purchase
Orders for delivery later than six (6) weeks after receipt by Seller of such
order; provided, however, that Buyer may cancel, amend, modify, delay or
otherwise alter any such Purchase Order at any time prior to six (6) weeks prior
to the delivery date stated in such order without penalty of any kind.
Beginning six (6) weeks prior to the delivery date specified in each such
purchase order, such purchase order shall be treated as if it had been delivered
to Seller pursuant to Section C.4.(a) above.
5. Packaging Requirements. The Products shall be packed using
----------------------
materials with Buyer's trade name as directed by Buyer. Packaging and labeling
requirements are defined in Exhibit E.
6. Warranty. Seller warrants the Products as set forth in the Order
--------
Terms. Seller also warrants that the Products meet the specifications
identified in Exhibit B. These warranties shall be for a term of three (3)
years from the date of shipment of the Products. These warranties shall inure
to the benefit of Buyer, its successors and assigns and to subsequent purchasers
of the Products and shall survive acceptance and use of, and payment for, the
Products.
7. Cancellations. Buyer shall have the right to cancel any order.
-------------
In the event Buyer cancels any order of Products upon less than thirty (30) days
notice, Buyer shall pay Seller a reasonable charge, to be negotiated in good
faith by the parties, for Seller's costs and expenses, which Seller shall use
its best efforts to properly mitigate. In no event shall the costs and expenses
exceed the purchase price for the Products described in the canceled order or
include consequential damages or lost profits. Buyer shall not pay any
cancellation charge if cancellation is due to Seller's failure to ship Products
in a timely manner pursuant to Section C.4. Cancellation shall not in any way
offset Buyer's "take or pay" obligation set forth in Section B.7., except to the
extent that cancellation results from a failure to perform by Seller.
8. Returns.
-------
(a) Seller agrees to accept return of any Product that fails to
function as warranted in Section C.6. In the event
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<PAGE>
of a return pursuant to this Section, Seller shall perform testing and analysis
of the returned Product and issue a written report to Buyer explaining the cause
of the failure. Seller will insure that problems detected in returned Products
or reported to Seller are corrected in future shipments of Products. Seller
agrees to replace returned Products with new Products immediately or to credit
Buyer for the full amount of the purchase price. IN NO EVENT SHALL SELLER BE
LIABLE FOR ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM THE
USE OF ANY OF THE PRODUCTS BY ANY PERSON; PROVIDED THAT THIS SHALL NOT LIMIT
LIABILITY IN THE EVENT OF A THIRD PARTY CLAIM AGAINST BUYER EXCEPT TO THE EXTENT
OF SUCH LIABILITY; AND FURTHER PROVIDED THAT THIS LIMITATION SHALL NOT APPLY TO
COSTS ASSOCIATED WITH FIXING CUSTOMER PROBLEMS. THE PARTIES SHALL COOPERATE IN
ADDRESSING CUSTOMER PROBLEMS AND WILL EQUITABLY SHARE THE COSTS.
(b) Any claim for breach of warranty hereunder must be presented to
the Seller, in writing, within thirty (30) days after discovery by Buyer of the
alleged defect and that a claim hereunder is probable. Failure to make a claim
within such specified period shall constitute a waiver of the claim only to the
extent that the Seller was thereby prejudiced. Claims must be accompanied by
supporting proof to the extent reasonably available.
9. Insurance.
---------
(a) On written request from Buyer, Seller shall deliver to Buyer a
certificate of insurance evidencing that Seller maintains product liability
insurance for the Products in an amount that is usual and customary for Seller's
business.
(b) Buyer shall maintain product liability insurance for any
products incorporating the Products in an amount that is usual and customary for
Buyer's business.
D. STATUS OF BUYER
---------------
1. The parties expressly agree that the relationship established by
this Agreement as between Seller and Buyer is solely that of Buyer and Seller,
and Seller shall have no right to, and shall not, exercise any supervision or
direction over the Buyer or any of its employees. Nothing contained herein
shall create a partnership, joint venture, or any other business relationship
between Seller and Buyer, other than that of Buyer and Seller of Products
hereunder.
2. Buyer shall not have authority to obligate or bind Seller with
respect to any matter, or make any contract, sale, agreement, warranty or
representation, express or implied, on behalf of Buyer.
3. Buyer shall conduct business solely in its own name and not that
of Seller and shall not use the words "Agent", "Agency" or words of similar
import on stationery, signs,
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<PAGE>
documents, telephone listings, or otherwise in connection with the name of
Seller.
E. TERM AND TERMINATION
--------------------
1. Initial Term. The initial term of this Agreement shall be the
------------
period commencing on the Effective Date and ending on June 30, 2001.
Thereafter, the term of this Agreement shall be automatically renewed for an
unlimited number of successive one (1) year renewal terms; provided, however,
that either party hereto may prevent such automatic renewal by notifying the
other party in writing of its desire not to renew this Agreement at least six
(6) months prior to the expiration of the initial term or any renewal term
hereof.
2. Termination. This Agreement may be terminated at any time during
-----------
the term as follows:
(a) by mutual written consent of the parties at any time;
(b) by either party, at any time and for any reason, by written
notice to the other delivered on or after June 30, 1998, delivered at least one
(1) year prior to the date of termination;
(c) by either party following thirty (30) days notice that the
other party is in breach of any of its material obligations under this Agreement
or the Tinel-Lock Lease Agreement and a failure of the breaching party to cure
the breach within the thirty (30) day period unless the breach is not cured in
which case the Agreement shall terminate immediately following notice. Nothing
contained in this paragraph shall in any way limit a party's right to terminate
this Agreement immediately upon notice as provided in Section E.2.(b) and (d).
If either party fails to keep or perform any of its material obligations
hereunder and such default continues for a period of thirty (30) days after the
defaulting party has been notified of the default by the other party, then the
non-defaulting party may suspend this Agreement (and the Tinel-Lock Lease
Agreement) forthwith upon written notice to the other party until such time as
the default has been cured. However, a non-defaulting party who has suspended
performance pursuant to this Section E.2.(c) or (d) shall not be precluded from
terminating the Agreement pursuant to Sections E.2.(a), (b) or (d) (or from
pursuing its other lawful rights) in the event that the defaulting party does
not cure the default prior to such termination.
(d) by Buyer immediately if, without Buyer's consent, (i) ownership
of more than 25% of the issued and outstanding stock of Seller on a fully-
diluted basis is transferred, beneficially or of record, to a person or entity
or group of persons or entities that Buyer reasonably deems to be a competitor;
(ii) all or substantially all of Seller's assets are transferred in a single
transaction or series of transactions; or
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<PAGE>
(iii) there is a change of more than one-half of Seller's board of directors in
a one-year period.
3. Rights on Termination. Upon termination of this Agreement,
---------------------
Buyer may sell all of its inventory of Products.
F. TECHNICAL SERVICE AND SUPPORT
-----------------------------
1. Engineering Support. During the term of this Agreement, Seller
-------------------
shall make available to Buyer at no cost, at Buyer's request, reasonable
engineering support for customer applications.
2. Customer Tours. Seller shall make its plant available, upon
--------------
reasonable notice and at a reasonable time, to Buyer, for the purpose of
conducting tours for Buyer's customers.
G. LISTING AND APPROVAL
--------------------
1. Listing. Seller agrees to use commercially reasonable efforts
-------
both to obtain necessary government or regulatory approvals and agency listing
and to assist Buyer in obtaining, as necessary, such approvals and listings for
Products.
H. INTELLECTUAL PROPERTY
---------------------
1. Buyer Trademark.
---------------
(a) Seller hereby acknowledges Buyer's ownership of all right,
title and interest in Buyer's trademarks and trade names which Buyer uses to
sell the Products. Seller further acknowledges that it shall acquire no interest
therein by virtue of this Agreement or the performance by either party of their
respective duties and obligations hereunder.
(b) Buyer hereby grants Seller during the term of this Agreement a
fully paid-up, royalty-free, non-transferable, non-exclusive, limited license to
use specified Buyer's trademarks and trade names (i) for the purpose of placing
such trademarks and trade names on Products, and packaging therefor, to be sold
to Buyer (and only to Buyer) pursuant to this Agreement, and (ii) for use in
reports, press releases and other literature concerning Seller and its business
and operations.
(c) Buyer reserves the right to approve all uses by Seller of
Buyer's proprietary names and marks in the Products (and related packaging
materials) in advance.
2. Copyright License. Seller grants Buyer a license to use any
-----------------
literature, data sheets or other documents, without using Seller's trade name,
which may relate to Products in connection with the marketing or sale of
Products.
3. Buyer's Trade Secrets and Proprietary Information. Seller
-------------------------------------------------
acknowledges that the Products are proprietary in nature and
-10-
<PAGE>
that Buyer claims certain trade secrets, copyright and patent rights granted by
law therein and that Buyer neither grants nor otherwise transfers any rights of
ownership in any such intellectual property to Seller.
I. QUALITY CONTROL
---------------
1. Quality Control. Seller must meet Buyer's requirements for
---------------
certified suppliers, as set forth in Exhibit E, and quality control standards as
provided by Buyer to Seller from time to time. Products shall also be
manufactured and supplied to the specifications agreed to on Exhibit B. Seller
shall use reasonable commercial efforts to obtain ISO 9000 certification.
2. Compliance With Laws. All Products sold to Buyer by Seller shall
--------------------
be new and tested per industry standards and the specifications identified in
Exhibit B hereto. Products shall also meet and be manufactured in accordance
with the applicable statutory and regulatory requirements and any applicable
federal, state or local requirements.
3. QC Records. Seller shall be required to submit appropriate QC
----------
records per Buyer's requirements.
4. Changes. Seller shall not make any material changes or process
-------
changes with respect to any Products manufactured by Seller and sold to Buyer
without Buyer's prior written consent, which shall not be unreasonably withheld
or delayed. It will not be unreasonable for Buyer to withhold consent where
Buyer's customers need to consent to such changes. The Product Managers shall
establish a system for managing this consent process.
5. Audit. Buyer shall have the right to perform quality inspections
-----
of Seller's manufacturing facility and process relating to Products at
reasonable times.
6. Test Report Requirement. Seller must supply test data and
-----------------------
certification for each Product as required by the Purchase Order. Test report
certified by Seller's quality control department ("Certified Test Report"),
containing the information as defined in Exhibit F, must be made available upon
Buyer's request.
J. INTERRUPTION OF, INABILITY OR UNWILLINGNESS TO SUPPLY
-----------------------------------------------------
1. Non-Supply. In addition to other remedies available pursuant to
----------
this Agreement or in law or equity, including but not limited to termination,
during the term of this Agreements in the event Seller is unable or unwilling to
supply Products pursuant to purchase orders submitted according to the terms of
this Agreement for any period longer than thirty (30) days which materially
interrupts the continuous supply of Products to Buyer, Buyer shall be entitled
to exercise its rights under the Tinel-Lock License Agreement of even date
herewith between the parties ("License Agreement") until such time as the
continuous supply is
-11-
<PAGE>
reestablished. Buyer shall be released from its obligations under Section B.1.
during this period.
2. Delayed Deliveries. In addition to other remedies available
------------------
pursuant to the Agreement or in law or equity, should repeated, unexcused,
delayed deliveries of more than three percent (3%) of an ordered quantity occur
more than twelve (12) times over a calendar year period with an average delay of
ten (10) business days or of one (1) single delayed delivery exceeding one (1)
month, Buyer shall be entitled to exercise its rights under the License
Agreement with respect to the delayed Product or Products and the exclusivity
required for purchases by Section B.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.
K. CONFIDENTIALITY
---------------
1. Confidential Information. The receiving party shall, from the date
------------------------
of disclosure of any Confidential Information and for a period of ten (10) years
thereafter, use the information solely for its own internal use consistent with
this Agreement, not disclose the information to any person or persons outside
its organization, and disclose the information to any person or persons within
its organization only on a "need to know" basis.
2. If either party is compelled to make a disclosure of any
Confidential Information of the other party by law or government rule or
regulation:
(a) such disclosure shall be limited to the extent required; and
(b) the other party shall have an opportunity to review the
information at least thirty (30) days before disclosure; and
(c) the disclosing party shall promptly apply for applicable
protective orders.
Notwithstanding the foregoing, such review shall not make the reviewing party
responsible for the content of the disclosure.
L. JOINT INVENTIONS
----------------
1. Joint Inventions. It is anticipated that during the term of this
----------------
Agreement the parties will work together to develop new products. Any invention
or product made jointly by both parties will be jointly owned by both parties
("Joint Inventions"). During the term of this Agreement and thereafter, Buyer
shall have the exclusive rights to such Joint Inventions in the Field of Use.
2. Patents for Joint Inventions. In the event of such Joint
----------------------------
Inventions, if Buyer and Seller both wish to seek or maintain patent protection
for a Joint Invention, the costs of seeking or
-12-
<PAGE>
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 maintaining
patent protection for the Joint Invention in said country or countries.
M. MISCELLANEOUS
-------------
1. Entire Agreement. This Agreement (together with Exhibits attached
----------------
hereto as such Exhibits may be amended from time to time in accordance with this
Agreement) constitutes the entire Agreement between Seller and Buyer with
respect to the sale of Products to Buyer and the resale of Products by Buyer.
All prior or contemporaneous agreements, whether written or oral, and all
proposals, understandings and communications between or involving Seller and
Buyer are hereby canceled and superseded. This Agreement may be amended only by
a written instrument executed by both parties.
2. Amendments and Waivers. No amendment of any provision of this
----------------------
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. No waiver by either party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
3. Severability. If any provision of this Agreement is held to be
------------
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the extent possible.
In any event, all other provisions of this Agreement shall be deemed valid and
enforceable to the full extent.
4. Succession and Assignment. This Agreement shall be binding upon
-------------------------
and inure to the benefit of the parties named herein and their respective
successors and permitted assigns. Neither
-13-
<PAGE>
party may assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the other party.
For purposes of the foregoing sentence, an event after which those persons who
were the beneficial owners of a party immediately prior to such event
beneficially own less than a majority of a party immediately after such event
shall be deemed to constitute an assignment.
5. Force Majeure. Neither Seller nor Buyer shall be liable for its
-------------
failure to perform its obligations under this Agreement due to events beyond its
reasonable control including, but not limited to, strikes, riots, wars, fire,
acts of God, labor unrest and acts in compliance with applicable law,
regulation, or order (whether valid or invalid) of any governmental body.
6. Applicable Law. This Agreement and all transactions hereunder
--------------
shall be governed by and construed according to the laws of the State of
California, excluding the choice of laws rules thereof.
7. Survival. Sections E.3., E.11., E.12. and M.9. shall survive
--------
termination of this Agreement.
8. Notices. All notices, requests, demands, claims, and other
-------
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if three (3)
business days thereafter if registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Licensor: Copy (which shall not constitute
notice) to:
Raychem Corporation Raychem Corporation
Electronics Division 300 Constitution Drive
300 Constitution Drive Menlo Park, CA 94025-1164
Attn: Legal Department Attn: Legal Department MS 120/8502
MS 120/8502 Telecopier: (415) 361-4305
Telecopier: (415) 361-4305
If to the Licensee: Copy (which shall not constitute
notice) to:
Memry Corporation Finn Dixon & Herling
57 Commerce Drive One Landmark Square
Brookfield, CT 06804 Stamford, Connecticut 06901
Attn: Mr. James G. Binch Attn: David I. Albin, Esq.
Telecopies: (203) 740-2503 Telecopier: (203) 348-5777
Either party may send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopier, telex, ordinary mail, or electronic mail), but no such
notice, request,
-14-
<PAGE>
demand, claim, or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Either
party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
9. Attorneys' Fees. If legal action is commenced to enforce the
---------------
performance of any part of this Agreement, the prevailing party shall be paid by
the other party reasonable attorneys' fees and expenses.
10. Compliance With Federal Laws. Seller shall comply with all
----------------------------
applicable federal employment, equal opportunity, affirmative action and
environmental laws in the operation of Seller's business and shall provide Buyer
with any Material Safety Data Sheets or other information required by any
federal, state or local statute or regulation.
11. Remedies. Remedies provided herein are not exclusive. Delay in
--------
enforcing any right or remedy as a result of any breach hereof shall not be
deemed a waiver of that or any subsequent breach.
12. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but which together shall constitute
one and the same instrument.
13. Headings. The headings of the Sections of this Agreement are for
--------
convenience and shall not be used to interpret this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives and it shall be effective as
of December 20, 1997.
MEMRY CORPORATION RAYCHEM CORPORATION
By: /s/ James G. Binch By: /s/ John McGraw
------------------ ---------------
Print Name: James G. Binch Print Name: John McGraw
-------------- -----------
Title: President Title: Vice President
--------- --------------
-15-
<PAGE>
EXHIBIT A
PRODUCTS & PRICING
<PAGE>
EXHIBIT B
SPECIFICATIONS
<PAGE>
EXHIBIT C
INITIAL COMMITMENT
<PAGE>
EXHIBIT D
RAYCHEM TERMS & CONDITIONS OF PURCHASE
<PAGE>
EXHIBIT E
PACKAGING AND LABELING REQUIREMENTS
<PAGE>
EXHIBIT F
TEST REPORT REQUIREMENTS
<PAGE>
EXHIBIT G
AGREEMENTS OF BUYER
<PAGE>
EXHIBIT H
FORM OF NEW PRODUCT AMENDMENT
<PAGE>
EXHIBIT I
ORDER COMMITMENT EXAMPLE
<PAGE>
EXHIBIT 10.46
AMENDED AND RESTATED
PRIVATE LABEL/DISTRIBUTION AGREEMENT
THIS Amended and Restated Private Label/Distribution Agreement
("Agreement") is made and executed this 19th day of February and effective as of
the 20th day of December, 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 by that certain
Amendment No. 1 dated June 28, 1996, that certain Amendment No. 2 dated as of
August 11, 1996, and by that certain Amendment No. 3 of even date herewith (as
so amended, the "Purchase Agreement"), pursuant to which Seller acquired certain
assets (including machinery and equipment, inventory, trade secrets and other
intellectual property) previously 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
<PAGE>
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 disclosure; and further provided, that
information and data shall not be deemed to be Confidential Information if:
(a) it is available to the public at the time of disclosure to the
receiving party, or thereafter becomes available to the public through no fault
of the receiving party, but in such event only as of such later date;
(b) it is independently made available to the receiving party by a
third party without restrictions on disclosure; or
(c) it is known to the receiving party before disclosure to the
receiving party by the disclosing party or developed by the receiving party
without reference to any Confidential Information of the disclosing party.
Customer lists and specifications of Buyer shall, subject to the exceptions
in clauses (a) through (c) above, be deemed "Confidential Information" under
this Agreement.
"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.
-2-
<PAGE>
(g) Fluid (gas, liquid, slurry and dry powder) fittings and
couplings.
(h) Electrical interconnection devices and components.
(i) Any application in any of the following industries:
1. Automotive
2. Aerospace
3. Marine
4. Military Ground Systems
5. Rail and Mass Transit
6. Commercial Electronics
7. 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
-3-
<PAGE>
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.
"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.
"Tinel-Lock Supply Agreement" shall mean the Amended and Restated Tinel-
Lock Supply Agreement between the parties dated of even date herewith.
"Titanium Products" shall mean products made almost entirely of Titanium
and containing no Nickel which (a) 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 (b) are developed or manufactured
by or for Seller for the Field of Use; or (c) 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
-4-
<PAGE>
own use, or purchase Products from any other third party. Additional products
that become Products will be added to Exhibit A from time to time by the
execution by both Product Managers defined in Section VI. below of a completed
New Product Amendment in substantially the form attached as Exhibit J hereto.
B. Specifications. The Products shall meet the specifications identified
--------------
in Exhibit B hereto. The Product Managers defined in Section VI. below shall be
---------
responsible for amending Exhibit B by mutual consent from time to time as
---------
required to reflect agreed upon specifications or to add or delete
specifications as Products are added 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) until June 28, 1997, to any customer
who was an existing customer of Seller as of June 28, 1996 (a list of such
customers is attached as 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
-5-
<PAGE>
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
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
-6-
<PAGE>
Section VII.D.1. below. Buyer and Seller each hereby covenants and agrees to
monitor the rate of placement of purchase orders pursuant to this Agreement.
Buyer agrees to notify Seller promptly if it appears that insufficient purchase
orders will be placed during the Current Quarter (as defined in Section
VII.D.2.) to satisfy Buyer's ordering obligations as set forth in Section
VII.D.2. hereof. Seller agrees to notify Buyer, within the first ten days of
the start of the third month of any quarter, as to the aggregate amount of
purchase orders placed by Buyer hereunder during the first two months of such
quarter, or placed prior to such quarter but creditable against Buyer's order
commitment for such quarter.
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. Thereafter, the parties
shall amend the purchase price for each Product effective as of every July 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 Products 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 this Section VII.B.) by June 15 of
each year.
C. Rolling Forecasts.
-----------------
1. For each of the quarters constituting the four (4) quarter period
ended June 30, 1997, Buyer shall order Products the aggregate purchase price for
which, when combined with the aggregate purchase price of products ordered
pursuant to the Tinel-Lock Supply Agreement, equals or exceeds the aggregate
dollar figure set forth for such quarter on Exhibit C hereto (such amounts the
"Initial Commitment").
2. Every calendar quarter during the term hereof, at least one (1)
full month prior to the commencement thereof, Buyer shall submit to Seller its
good-faith estimated requirements for total dollar volume to be ordered pursuant
to this Agreement for each of the next six (6) calendar quarters ("Buyer's
Forecast"). The Buyer's Forecast may be combined with forecasts to be delivered
pursuant to the Tinel-Lock Supply Agreement. Except as set forth in Section
VII.D.2. hereof, forecasts required by the
-7-
<PAGE>
Tinel-Lock Supply Agreement ("Tinel-Lock Forecasts") but delivered with the
Buyer's Forecast shall not be governed by this Agreement, but shall for all
purposes be governed by the Tinel Lock Supply Agreement. Buyer's Product
Manager will make commercially reasonable efforts to make non-binding forecasts
on a Product by Product basis. Buyer and Seller shall each review Buyer's
Forecast to assess whether it would require an unreasonable spike in capacity
(i.e., ramp-ups from one quarter to the next or from the forecast for such
quarter from one Buyer's Forecast to the next) in which event the Buyer and the
Seller shall agree upon a mutually acceptable alternative Buyer's 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 to be ordered in Buyer's Forecast for
the quarter, except if and to the extent that changes in Product mix materially
increase the amount of manufacturing capacity necessary to process a given
volume of raw material. Seller shall only have the right and ability to reject
purchase orders for which it is not required to have sufficient raw material and
manufacturing capacity.
2. Buyer covenants and agrees for every calendar quarter during the
term hereof beginning with the quarter commencing July 1, 1997 to order from
Seller during such quarter (for purposes of this subsection, such quarter the
"Current Quarter") Products with an aggregate purchase price equal to the
greater of (i) Eighty-Five percent (85%) of the Buyer's Forecast in dollar
volume projected to be ordered during the Current Quarter in the Buyer's
Forecast, which forecast shall be delivered not later than one (1) full month
prior to the commencement of the Current Quarter; or (ii) a number which, when
added to the aggregate purchase price of any products ordered pursuant to the
Tinel-Lock Supply Agreement ("Tinel-Lock Products") for the Current Quarter, is
not less than Sixty-Five percent (65%) of the aggregate purchase price for all
Products and Tinel-Lock Products (such combined aggregate purchase price the
"Combined Purchase Projection") projected to be ordered in such quarter by the
Buyer's Forecast and the corresponding forecast under the Tinel-Lock Agreement
(together the "Forecasts") that were delivered not later than four (4) months
prior to the commencement of the Current Quarter; or (iii) a number which, when
added to the aggregate purchase price of Tinel-Lock Products for the Current
Quarter, is not less than twenty-five percent (25%) of the Combined Purchase
Projection projected to be ordered in the Current Quarter by the Forecasts that
were delivered not later than seven (7) months prior to the commencement of the
Current Quarter. In the event Buyer fails to place orders during the Current
Quarter as described above, Buyer
-8-
<PAGE>
shall pay to Seller the difference between the amount of Product so ordered and
the amount of Product Buyer was required to order pursuant to this Section
VII.D.2. In the event Buyer places an order that Seller is unable to fill
because Seller is unable to meet the technical specifications for such order,
and Products are available in the marketplace that meet such specifications,
such order will be treated as having been placed by Buyer during the quarter
Buyer attempted to place such order at the price then prevailing in the
marketplace for comparable products meeting such specifications. For purposes
of clarification, an example of Buyer's order commitment pursuant to this
Section VII.D.2. is set forth as Exhibit K hereto.
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.
--------
1. 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.
2. Notwithstanding Section VII.G.1. above, Buyer may place Purchase
Orders for delivery later than six (6) weeks after
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<PAGE>
receipt by Seller of such order; provided, however, that Buyer may cancel,
amend, modify, delay or otherwise alter any such Purchase Order at any time
prior to six (6) weeks prior to the delivery date stated in such order without
penalty of any kind. Beginning six (6) weeks prior to the delivery date
specified in each such purchase order, such purchase order shall be treated as
if it had been delivered to Seller pursuant to Section VII.G.1. above.
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 VII.G. Cancellation shall not in any way
affect Buyer's "take or pay" obligations set forth in Section VII.D.2. 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 VII.I. 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
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<PAGE>
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 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
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<PAGE>
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:
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 X.B.3. or X.B.4. 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 X.B.2.
shall not be precluded from terminating the Agreement pursuant to Sections
X.B.2., X.B.3. or X.B.4. 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 X.B.3.; 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;
-12-
<PAGE>
(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.
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 XIV 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 XIII.A.2. 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.
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<PAGE>
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.
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
II.A. 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 II.A. 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.
-14-
<PAGE>
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 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:
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<PAGE>
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
-----------------------------------------------
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
-16-
<PAGE>
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 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
-17-
<PAGE>
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 VII.D.2.; provided, however, that Section III.A.
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 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 XVIII.B. and Seller has materially
breached its obligations to supply Titanium Products under said Section XVIII.B.
in a manner that would allow a party hereto to terminate the Agreement under the
standards of Section X.B.2. 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 XIII.C. 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.
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<PAGE>
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
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
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<PAGE>
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 X.A., XVI.A., XVI.B., XVII, XVIII.B., XVIII.C. and
--------
XIX.J. 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:
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
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<PAGE>
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.
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/ James G. Binch By: /s/ John McGraw
-------------------------- --------------------------
Print Name: James G. Binch Print Name: John McGraw
------------------- ------------------
Title: President Title: Vice President
-------------------- ----------------------
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<PAGE>
EXHIBIT A-1
NICKEL TITANIUM PRODUCTS
PRODUCTS & PRICING
CATEGORY PART/DESCRIPTION PRICE TO
RAYCHEM
Other Alloys A, J & C Barstock *
Per Agreement with A.F. Aerospace
dated July 26, 1993
Other Alloy J for Nuclear Electric per *
License Agreement between Raychem
Limited and Nuclear Electric PLC
dated August 19, 1991
Other Alloy C & J Barstock *
* NOTE: PRICES TO RAYCHEM 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.
-22-
<PAGE>
EXHIBIT A-2
TITANIUM PRODUCTS
-23-
<PAGE>
PRIVATE LABEL AGREEMENT
EXHIBIT A-2
PRODUCTS AND PRICING
Price to
CATEGORY PARTDESC PCNMOD UOM Raychem*
ACTUATORS ACT02-01-00 169625- PC
ACTUATORS ACT02-02-00 823121- PC
ACTUATORS ACT03-01-00 656883- PC
ACTUATORS ACT03-49-00 201521- PC
ACTUATORS ACT03-54-00 035131- PC
ACTUATORS ACT03-55-00 938129- PC
ACTUATORS ACT03-72-00 947093- PC
ACTUATORS ACT03-86 654737- PC
ACTUATORS ALLOY-K-0.035X1.05-STRIP 629333- LB
ACTUATORS ALLOY-K-0.042X1.05-STRIP 599269- LB
ACTUATORS ALLOY-K-0.700-BAR-CG 997061- LB
ACTUATORS GIAT-F0531-10217237 433455- PC
ACTUATORS PROTO-ALLOY-K-17.5X307-STR 342343- FT
ACTUATORS PROTO-ACT01-K-23.6 707909- FT
ACTUATORS PROTO-ACT01-K-7.9 849635- FT
ACTUATORS PROTO-STRIP-K-0.034X1.20 733103- LB
ACTUATORS PROTO-STRIP-K-0.041X1.20 830717- LB
*NOTE: PRICES TO RAYCHEM 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.
-24-
<PAGE>
Price to
CATEGORY PARTDESC PCNMOD UOM Raychem*
ANTENNA ALLOY-BC-0.9MM 152703- FT
ANTENNA ALLOY-BC-1.1MM 644289- FT
ANTENNA ANT-BB-0.9-X-62.12-FORMED 554513- PC
ANTENNA ANT-BB-0.9MM 266249- FT
ANTENNA ANT-BB-1.1MM 509759- FT
ANTENNA GALTRONICS-03-12-03-KG 433277- LB
ANTENNA GUIDE-BB-28 156383- FT
ANTENNA GUIDE-BB-35.4 587541- FT OLD PART
DESCRIPTION
ANTENNA GUIDE-BB-35.4-SB 587541- FT
ANTENNA PROTO-CW40-BA-27.2 373729- FT
ANTENNA PROTO-SE-BA-28.0-SB 871379- FT
ANTENNA PROTO-SE-BA-35.0-SB 654707- FT
ANTENNA PROTO-SE-BA-35.0-SB-GAL 941667- FT
ANTENNA SE-BA-35.0X2.446-FORMED 554513- PC
ANTENNA SE-BA-35.0X64.0-PU-COATED 584681- FT
ANTENNA SE-BA-35.0X88.5-PU-COATED 060197- FT
*NOTE: PRICES TO RAYCHEM 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.
-25-
<PAGE>
Price to
CATEGORY PARTDESC PCNMOD UOM Raychem*
FASTENERS DTC-5236443-1 181119- PC
FASTENERS DTC-5236443-2 718361- PC
OTHER ALLOY-BB-1.250-BAR 232835- LB
OTHER ALLOY-BH-0.250-BAR 052895- FT
OTHER ALLOY-K-2.250-BAR 565845- LB
OTHER PROT-CW20-BB-7X200-STRIP 974921- FT
OTHER PROTO-ALLOY-BB-7X35-STRP 655001- FT
OTHER ST.JUDE-320380-001 635821- PC
OTHER ST.JUDE-320437 229809- PC
OTHER WORDS-CLUB 431746- PC
* NOTE: PRICES TO RAYCHEM 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.
-26-
<PAGE>
Price to
CATEGORY PARTDESC PCNMOD UOM Raychem*
TUBES PROT-TB-BB-17.5X24X37.88 483629- PC
TUBES PROT-TB-BB27.2X35.3X34.38 722267- PC
TUBES PROT-TUB-BB-10.7X16XSAMP 628367- FT
TUBES PROT-TUB-BB-115X150X15.31 953923- PC
TUBES PROT-TUB-BB-148X200X15.31 605311- PC
TUBES PROT-TUB-BB-17.5X24XSAMP 830085- FT
TUBES PROT-TUB-BB-18.5X24XSAMP 543053- FT
TUBES PROT-TUB-BB-38.4X48XSAMP 458439- FT
TUBES PROT-TUB-BB-62.5X78XSAMP 707067- FT
TUBES PROT-TUB-BB-81.6X102XSAM 147873- FT
TUBES PROT-TUB-BB-9.3X14X72.83 946053- PC
TUBES PROT-TUB-BB-9.3X14X98.425 977183- PC
TUBES PROT-TUB-BB-13X19.5X25 029165- PC
TUBES PROT-TUB-BB-13X19.5X.35 536271- PC
TUBES PROT-TUB-ST.JUDE862-0012 148031- PC
TUBES PROT-TUBE-BB-10X15X72.83 426395- PC
TUBES PROT-TUBE-BB-10X15XSAMPLE 775899- FT
TUBES PROT-TUBE-BB-10X17X70.85 673061- PC
TUBES PROT-TUBE-BB-11.3X17XSAMP 420189- FT
TUBES PROT-TUBE-BB-12X18XSAMPL 380121- FT
TUBES PROT-TUBE-BB-28X35XSAMPL 365363- FT
TUBES PROT-TUBE-BB-32X40X23.62 585259- PC
TUBES PROT-TUBE-BB-32X40X25.78 510401- PC
TUBES PROT-TUBE-BB-32X40X37.59 179049- PC
TUBES PROT-TUBE-BB-32X40X49.40 092993- PC
TUBES PROT-TUBE-BB-48X60XSAMPL 689669- FT
TUBES PROT-TUBE-BB-53X66.3X39.6 957687- PC
TUBES PROT-TUBE-BB-53X66.3XSAMP 357643- FT
TUBES PROT-TUBE-BB-70X91XSAMPL 743883- FT
TUBES PROT-TUBE-BB-7X11.9XSAMP 164963- FT
TUBES PROT-TUBE-BB-9.3X14X3.36 851235- PC
TUBES PROT-TUBE-BB-9.3X14XSAMPL 060229- FT
TUBES PROT-TUBE-BB90.4X113XSAM 446255- FT
TUBES PROT-TUBEBB19.2X24X61.28 933343- PC
TUBES PROTO-TUBE-BB-10X15X60 707359- PC
TUBES PROTO-TUBE-BB-10X17X60 136443- PC
TUBES PROTO-TUBE-BB-10X17X70.85 673061- PC
TUBES PROTO-TUBE-BB-12X18X144 134061- PC
TUBES PROTO-TUBE-BB-12X18X2 963365- PC
TUBES PROTO-TUBE-BB-16.2X21X60 003573- PC
TUBES PROTO-TUBE-BB-16.9X22X36 452947- PC
TUBES PROTO-TUBE-BB-16X24X12 394955- PC
TUBES PROTO-TUBE-BB-16X24X4 401037- PC
TUBES PROTO-TUBE-BB-16X24X72 676077- PC
TUBES PROTO-TUBE-BB-16X24XSAMPL 394955- PC
TUBES PROTO-TUBE-BB-21X26.3X46 599107- PC
TUBES PROTO-TUBE-BB-21X26.3X72 427851- PC
TUBES PROTO-TUBE-BB-32X40X132 468941- PC
TUBES PROTO-TUBE-BB-32X40X32 744021- PC
TUBES PROTO-TUBE-BB-40X60X12 906527- PC
TUBES PROTO-TUBE-BB-70X91X24 919747- PC
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<PAGE>
Price to
CATEGORY PARTDESC PCNMOD UOM Raychem*
TUBES PROTO-TUBE-BB-9X13X60 598619- PC
TUBES PROTO-TUBE-BB-X-26.3-X-24 715391- PC
TUBES TUBE-BB-40X60X40 919931- PC
TUBES TUBE-BB-9.6X14.1X1.57 331163- PC
* NOTE: PRICES TO RAYCHEM 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.
-28-
<PAGE>
Price to
CATEGORY PARTDESC PCNMOD UOM Raychem*
WIRE ALLOY-B-0.022-WIRE 292693- FT
WIRE ALLOY-B-0.041-WIRE 438469- FT
WIRE ALLOY-B-0.050-WIRE 319243- FT
WIRE ALLOY-B-0.077-WIRE 716039- FT
WIRE ALLOY-BB-0.019X0.125-STRP 345175- FT
WIRE ALLOY-BB-0.0285-WIRE 947259- FT
WIRE ALLOY-BB-0.041-WIRE 904809- FT
WIRE ALLOY-BB-0.050-WIRE 735557- FT
WIRE ALLOY-BB-0.300-ROD 642025- FT
WIRE ALLOY-K-0.0525-WIRE 532581- FT
WIRE ALLOY-K-0.150-WIRE 349813- FT
WIRE ALLOY-K-0.250-WIRE 776544- LB
WIRE ALLOY-KA-0.0236-WIRE 401703- FT
WIRE ALLOY-X-0.078-WIRE 791205- FT
WIRE ANNEALED-K-150 349613- FT
WIRE ANNEALED-K-50.0 844650- FT
WIRE ARCH-BB-10 234475- FT
WIRE ARCH-BB-12 914791- FT
WIRE ARCH-BB-14 818547- FT
WIRE ARCH-BB-14-A 540671- FT
WIRE ARCH-BB-16 010355- FT
WIRE ARCH-BB-16-A 201123- FT
WIRE ARCH-BB-16X16 463499- FT
WIRE ARCH-BB-16X16-A 292613- FT
WIRE ARCH-BB-16X22 247393- FT
WIRE ARCH-BB16X22-A 121479- FT
WIRE ARCH-BB-17X25 027399- FT
WIRE ARCH-BB-17X25-A 960975- FT
WIRE ARCH-BB-18 069883- FT
WIRE ARCH-BB-18-A 128977- FT
WIRE ARCH-BB-18X18 121063- FT
WIRE ARCH-BB-18X25 649715- FT
WIRE ARCH-BB-19X25 969787- FT
WIRE ARCH-BB-19X25-A 178667- FT
WIRE ARCH-BB-20 862511- FT
WIRE ARCH-BB-21X25 521999- FT
WIRE ARCH-BB-21X25-A 939909- FT
WIRE ARCH-BB-9 386847- FT
WIRE GUIDE-BB-10 537487- FT
WIRE GUIDE-BB-12 876357- FT
WIRE GUIDE-BB-14 910413- FT
WIRE GUIDE-BB-16 452725- FT
WIRE GUIDE-BB-18 814169- FT
WIRE GUIDE-BB-20 566597- FT
WIRE GUIDE-BB-20.0-POLISH 595887- FT
WIRE GUIDE-BB-21 753463- FT
WIRE GUIDE-BB-24 849525- FT
WIRE GUIDE-BB-26.7 863549- FT
WIRE GUIDE-BB-26.7-3.75 096851- PC
WIRE GUIDE-BB-28 156383- FT
WIRE GUIDE-BB-30.0 739161- FT
WIRE GUIDE-BB-33.5 060211- FT
WIRE GUIDE-BB-35 768069- FT
WIRE GUIDE-BB-35.4-SB 587541- FT
-29-
<PAGE>
Price to
CATEGORY PARTDESC PCNMOD UOM Raychem*
WIRE GUIDE-BB-40 998373- FT
WIRE GUIDE-BB-41.0 838193- FT
WIRE GUIDE-BB-46.5 940353- FT
WIRE GUIDE-BB-5 180831- FT
WIRE GUIDE-BB-5.5 643115- FT
WIRE GUIDE-BB-52 004589- FT
WIRE GUIDE-BB-53 998585- FT
WIRE GUIDE-BB-59.0 055859- FT
WIRE GUIDE-BB-6 572425- FT
WIRE GUIDE-BB-7 601635- FT
WIRE GUIDE-BB-72 105095- FT
* NOTE: PRICES TO RAYCHEM 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.
-30-
<PAGE>
Price to
CATEGORY PARTDESC PCNMOD UOM Raychem*
WIRE GUIDE-BB-78.6 223521- FT
WIRE GUIDE-BB-8 019479- FT
WIRE GUIDE-BB-8-26 771635- PC
WIRE GUIDE-BB-9.8-X-16 186637- PC
WIRE GUIDE-BC-10 239517- FT
WIRE GUIDE-BC-13.2 380771- FT
WIRE GUIDE-BC-13.5-HT-BLK 204827- FT
WIRE GUIDE-BC-13.8-BLK 770639- FT
WIRE GUIDE-BC-14.0-HT-BLK 560943- FT
WIRE GUIDE-BC-15.2 984371- FT
WIRE GUIDE-BC-16.2 432877- FT
WIRE GUIDE-BC-17.2 129963- FT
WIRE GUIDE-BC-18.0-85-HT-BLK 855885- PC
WIRE GUIDE-BC-18.0-HT-BLK-60 096599- PC
WIRE GUIDE-BC-20.0-BLK 346263- FT
WIRE GUIDE-BC-20.0-HT-BLK 556695- FT
WIRE GUIDE-BC-21 234045- FT
WIRE GUIDE-BC-22.0-BLK 580563- FT
WIRE GUIDE-BC-22.5 547935- FT
WIRE GUIDE-BC-24-BLK 219411- FT
WIRE GUIDE-BC-24.0 893339- FT
WIRE GUIDE-BC-24.0-85-HT-BLK 055467- PC
WIRE GUIDE-BC-24.0-HT-BLK 927117- FT
WIRE GUIDE-BC-26.0 555761- FT
WIRE GUIDE-BC-27.0-HT-BLK 518813- FT
WIRE GUIDE-BC-28.0-HT-BLK-60 678857- PC
WIRE GUIDE-BC-34.0-HT-BLK 674985- FT
WIRE GUIDE-BC-35.0-BLK 863771- FT
WIRE GUIDE-BC-38.0-BLK 241703- FT
WIRE GUIDE-BC-47.0 071623- FT
WIRE HOOK-T-3.83 397438- PC
WIRE HOOK-T-4.83 149990- PC
WIRE HOOK-T-5.83 907722- PC
WIRE HOOK-T-8.83 801255- PC
WIRE PROTO-ARCH-BB-12-HS 927511- FT OLD PART
DESCRIPTION
WIRE PROTO-ARCH-BB-14-HS 859715- FT OLD PART
DESCRIPTION
WIRE PROTO-ARCH-BB-16-HS 651549- FT OLD PART
DESCRIPTION
WIRE PROTO-ARCH-BB-18-HS 914087- FT OLD PART
DESCRIPTION
WIRE PROTO-BTR-BB-12.0 855785- FT
WIRE PROTO-BTR-BB-14.0 416663- FT
WIRE PROTO-BTR-BB-16.0 209781- FT
WIRE PROTO-BTR-BB-16.0-X-22.0 404141- FT
WIRE PROTO-BTR-BB-16.0X16.0 320765- FT
WIRE PROTO-BTR-BB-17.0-X-25.0 525897- FT
WIRE PROTO-BTR-BB-17.7 372895- FT
WIRE PROTO-BTR-BB-17.7-X-17.7 511753- FT
WIRE PROTO-BTR-BB-17.7-X-25.0 171579- FT
WIRE PROTO-BTR-BB-19.0-X-25.0 761403- FT
WIRE PROTO-BTR-BB-20.0 215959- FT
WIRE PROTO-BTR-BB-20.0X20.0 109559- FT
WIRE PROTO-BTR-BB-21.0-X-25.0 312787- FT
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<PAGE>
Price to
CATEGORY PARTDESC PCNMOD UOM Raychem*
WIRE PROTO-CW25-BB-16.0X16.0 013906- FT
WIRE PROTO-CW25-BB-16.0X22.0 043527- FT
WIRE PROTO-CW45-BB-12.1 927511- FT
WIRE PROTO-CW45-BB-14.1 859715- FT
WIRE PROTO-CW45-BB-16.1 651549- FT
WIRE PROTO-CW45-BB-18.1 914087- FT
WIRE PROTO-SE-BA-23.4-HS-BLK 074999- FT
WIRE PROTO-SE-BA-30.0 126365- FT
WIRE PROTO-SE-BA-31.3-HS-BLK 758807- FT
WIRE PROTO-SE-BA-40.1-HS 754589- FT
WIRE PROTO-SE-BA-47.1-HS 550151- FT
*NOTE: PRICES TO RAYCHEM 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.
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<PAGE>
Price to
CATEGORY PARTDESC Raychem*
Other Alloys A, J & C Barstock
Per Agreement with A.F.
Aerospace dated July 26, 1993
Other Alloy J for Nuclear Electric
per License Agreement between
Raychem Limited and Nuclear
Electric PLC dated
August 19, 1991
*NOTE: PRICES TO RAYCHEM 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.
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<PAGE>
EXHIBIT B
SPECIFICATIONS
-34-
<PAGE>
PRIVATE LABEL AGREEMENT
EXHIBIT B
SPECIFICATIONS
CATEGORY PARTDESC PCNMOD SPEC CSR UOM
ACTUATORS ACT02-01-00 169625- ACT02-01 PC
ACTUATORS ACT02-02-00 823121- ACT02-02 PC
ACTUATORS ACT03-01-00 656883- ACT03-01 PC
ACTUATORS ACT03-49-00 201521- ACT03-49 PC
ACTUATORS ACT03-54-00 035131- ACT03-54 PC
ACTUATORS ACT03-55-00 938129- ACT03-55 PC
ACTUATORS ACT03-72-00 947093- ACT03-72 PC
ACTUATORS ACT03-86 654737- ACT03-86 PC
ACTUATORS ALLOY-K-0.035X1.05-STRIP 629333- LB
ACTUATORS ALLOY-K-0.042X1.05-STRIP 599269- LB
ACTUATORS ALLOY-K-0.700-BAR-CG 997081- LB
ACTUATORS GIAT-F0531-10217237 433455- GIATF0531 10217237 PC
ACTUATORS PROT-ALLOY-K-17.5X307-STR 342343- FT
ACTUATORS PROTO-ACT01-K-23.6 707909- MPS-128 FT
ACTUATORS PROTO-ACT01-K-7.9 849835- MPS-128 FT
ACTUATORS PROTO-STRIP-K-0.034X1.20 733103- CRAY 35193700 LB
ACTUATORS PROTO-STRIP-K-0.041X1.20 830717- CRAY 35268300 LB
-35-
<PAGE>
CATEGORY PARTDESC PCNMOD SPEC CSR UOM
ANTENNA ALLOY-BC-0.9MM 152703- 6529 FT
ANTENNA ALLOY-BC-1.1MM 644289- 6529 FT
ANTENNA ANT-BB-0.9-X-62.12-FORMED 554513- CLM-00-02-02-XX 6534 PC
ANTENNA ANT-BB-0.9MM 266249- MPS-141 6529 FT
ANTENNA ANT-BB-1.1MM 509759- MPS-141 6529 FT
ANTENNA GALTRONICS-03-12-03-KG 433277- MPS-141 LB
ANTENNA GUIDE-BB-28 156383- MPS-118 FT
ANTENNA GUIDE-BB-35.4-SB 587541- MPS-118 FT
ANTENNA PROTO-CW40-BA-27.2 373729- CENTURION SPEC FT
ANTENNA PROTO-SE-BA-28.0-SB 871379- MPS-139 FT
ANTENNA PROTO-SE-BA-35.0-SB 654707- MPS-139 6537 FT
ANTENNA PROTO-SE-BA-35.0-SB-GAL 941667- MPS-139 FT
ANTENNA SE-BA-35.0X2.446-FORMED 554513- 6534 PC
ANTENNA SE-BA-35.0X64.0-PU-COATED 584681- 6537 FT
ANTENNA SE-BA-35.0X86.5-PU-COATED 060197- 6537 FT
-36-
<PAGE>
CATEGORY PARTDESC PCNMOD SPEC CSR UOM
FASTENERS DTC-5236443-1 181119- DTC-5236443 PC
FASTENERS DTC-5236443-2 718361- DTC-5236443 PC
OTHER ALLOY-BB-1.350-BAR 232835- LB
OTHER ALLOY-BH-0.250-BAR 052895- FT
OTHER ALLOY-K-2.250-BAR 565845- LB
OTHER PROT-CW20-BB-7X200-STRIP 974921- DW 94634 6538 FT
SYMBIOSIS
OTHER PROTO-ALLOY-BB-7X35-STRP 655001- 055001 CARDIAC 6539 FT
PATHWAYS
OTHER ST-JUDE-320380-001 635821- MED07-03-00-00 6511 PC
OTHER ST-JUDE-320437 229809- MED07-02-00-00 6521 PC
OTHER WORDS-CLUB 431746- 925451 PC
-37-
<PAGE>
CATEGORY PARTDESC PCNMOD SPEC CSR UOM
TUBES PROT-TB-BB-17.5X24X37.88 483629- MPS-127 6510 PC
TUBES PROT-TB-BB27.2X35.3X34.38 722267- MPS-127 6516 PC
TUBES PROT-TUB-BB-10.7X16XSAMP 628367- MPS-127 FT
TUBES PROT-TUB-BB-115X150X15.31 953923- MPS-136 PC
TUBES PROT-TUB-BB-148X200X15.31 605311- MPS-136 PC
TUBES PROT-TUB-BB-17.5X24XSAMP 830085- MPS-127 FT
TUBES PROT-TUB-BB-18.5X24XSAMP 543053- MPS-127 FT
TUBES PROT-TUB-BB-38.4X48XSAMP 458439- MPS-127 FT
TUBES PROT-TUB-BB-62.5X78XSAMP 707087- MPS-127 FT
TUBES PROT-TUB-BB-81.6X102XSAM 147873- MPS-127 FT
TUBES PROT-TUB-BB-9.3X14X72.83 946053- MPS-127 6518 PC
TUBES PROT-TUB-BB-9.3X14X98.425 977183- MPS-127 PC
TUBES PROT-TUB-BB-13X19.5X.25 029165- MPS-127 PC
TUBES PROT-TUB-BB-13X19.5X.35 536271- MPS-127 PC
TUBES PROT-TUBE-TUB-ST.JUDE862-0012 148031- 118-0412 6533 PC
ST JUDE SPEC
TUBES PROT-TUBE-BB-10X15X72.83 426395- MPS-127 6517 PC
TUBES PROT-TUBE-BB-10X15XSAMPL 775899- MPS-127 FT
TUBES PROT-TUBE-BB-10X17X70.85 673061- MPS-127 PC
TUBES PROT-TUBE-BB-11.3X17XSAMP 420189- MPS-127 FT
TUBES PROT-TUBE-BB-12X18XSAMPL 380121- MPS-127 FT
TUBES PROT-TUBE-BB-28X35XSAMPL 365363- MPS-127 FT
TUBES PROT-TUBE-BB-32X40X23.62 585259- MPS-127 PC
TUBES PROT-TUBE-BB-32X40X25.78 510401- MPS-127 PC
TUBES PROT-TUBE-BB-32X40X37.59 179049- MPS-127 PC
TUBES PROT-TUBE-BB-32X40X49.40 092993- MPS-127 PC
TUBES PROT-TUBE-BB-48X60XSAMPL 689869- MPS-127 FT
TUBES PROT-TUBE-BB-53X66.3X39.6 957687- MPS-127 PC
TUBES PROT-TUBE-BB-53X66.3XSAMP 357643- MPS-127 FT
TUBES PROT-TUBE-BB-70X91XSAMPL 743883- MPS-127 FT
TUBES PROT-TUBE-BB-7X11.9XSAMP 164963- MPS-127 FT
TUBES PROT-TUBE-BB-9.3X14X3.38 851235- MPS-127 6535 PC
TUBES PROT-TUBE-BB-9.3X14XSAMPL 060229- MPS-127 FT
TUBES PROT-TUBE-BB90.4X113XSAM 446255- MPS-136 FT
TUBES PROT-TUBEBB19.2X24X61.28 933343- 57-0001-2901 6519 PC
TUBES PROTO-TUBE-BB-10X15X60 707359- MPS-127 PC
TUBES PROTO-TUBE-BB-10X17X60 136443- MPS-127 PC
TUBES PROTO-TUBE-BB-10X17X70.85 673061- MPS-127 PC
TUBES PROTO-TUBE-BB-12X18X144 134081- MPS-127 PC
TUBES PROTO-TUBE-BB-12X18X2 983365- CARDIAC 6542 PC
PATHWAYS
TUBES PROTO-TUBE-BB-16.2X21X80 003573- MPS-127 PC
TUBES PROTO-TUBE-BB-16.9X22X36 452947- MPS-127 PC
TUBES PROTO-TUBE-BB-16X24X12 394955- MPS-127 PC
TUBES PROTO-TUBE-BB-16X24X4 401037- MPS-127 6515 PC
TUBES PROTO-TUBE-BB-16X24X72 676077- MPS-127 PC
TUBES PROTO-TUBE-BB-16X24XSAMP 394955- MPS-127 PC
TUBES PROTO-TUBE-BB-21X26.3X46 599107- MPS-127 PC
TUBES PROTO-TUBE-BB-21X26.3X72 427851- MPS-127 PC
TUBES PROTO-TUBE-BB-32X40X132 468941- MPS-127 PC
TUBES PROTO-TUBE-BB-32X40X32 744021- MPS-127 PC
TUBES PROTO-TUBE-BB-40X60X12 906527- MPS-127 PC
TUBES PROTO-TUBE-BB-70X91X24 919747- MPS-127 PC
TUBES PROTO-TUBE-BB-9X13X60 598619- MPS-127 PC
TUBES PROTO-TUBE-BB-X-26.3-X-24 715391- MPS-127 PC
TUBES TUBE-BB-40X60X40 919931- RM0263002 6512 PC
BARD
TUBES TUBE-BB-9.6X14.1X1.57 331163- RM2006197 6514 PC
ACS
-38-
<PAGE>
CATEGORY PARTDESC PCNMOD SPEC CSR UOM
WIRE ALLOY-B-0.022-WIRE 292693- FT
WIRE ALLOY-B-0.041-WIRE 438469- MPS-134 6508 FT
WIRE ALLOY-B-0.050-WIRE 319243- FT
WIRE ALLOY-B-0.077-WIRE 716039- FT
WIRE ALLOY-BB-0.019X0.125-STRP 345175- FT
WIRE ALLOY-BB-0.0285-WIRE 947259- MPS-109 6502 FT
WIRE ALLOY-BB-0.041-WIRE 904809- MPS-109 6502 FT
WIRE ALLOY-BB-0.050-WIRE 735557- FT
WIRE ALLOY-BB-0.300-ROD 642025- FT
WIRE ALLOY-K-0.0525-WIRE 532581- FT
WIRE ALLOY-K-0.150-WIRE 349813- MPS-130 FT
WIRE ALLOY-K-0.250-WIRE 776544- LB
WIRE ALLOY-KA-0.0236-WIRE 401703- FT
WIRE ALLOY-X-0.078-WIRE 791205- FT
WIRE ANNEALED-K-150 349813- MPS-130 FT
WIRE ANNEALED-K-50.0 844650- MPS-130 FT
WIRE ARCH-BB-10 234475- MPS-106 FT
WIRE ARCH-BB-12 914791- MPS-106 FT
WIRE ARCH-BB-14 818547- MPS-106 6502 FT
WIRE ARCH-BB-14-A 540671- MPS-106 FT
WIRE ARCH-BB-16 010355- MPS-106 6502 FT
WIRE ARCH-BB-16-A 201123- MPS-106 FT
WIRE ARCH-BB-16X16 463499- MPS-106 6502 FT
WIRE ARCH-BB-16X16-A 292613- MPS-106 FT
WIRE ARCH-BB-16X22 247393- MPS-106 6502 FT
WIRE ARCH-BB-16X22-A 121479- MPS-106 FT
WIRE ARCH-BB-17X25 027399- MPS-106 6502 FT
WIRE ARCH-BB-17X25-A 960975- MPS-106 FT
WIRE ARCH-BB-18 069883- MPS-106 6502 FT
WIRE ARCH-BB-18-A 128977- MPS-106 FT
WIRE ARCH-BB-18X18 121083- MPS-106 6502 FT
WIRE ARCH-BB-18X25 649715- MPS-106 6502 FT
WIRE ARCH-BB-19X25 969787- MPS-106 6502 FT
WIRE ARCH-BB-19X25-A 178667- MPS-106 FT
WIRE ARCH-BB-20 862511- MPS-106 6502 FT
WIRE ARCH-BB-21X25 521999- MPS-106 6502 FT
WIRE ARCH-BB-21X25-A 939909- MPS-106 FT
WIRE ARCH-BB-9 386847- MPS-106 FT
WIRE GUIDE-BB-10 537487- MPS-118 FT
WIRE GUIDE-BB-12 876357- MPS-118 FT
WIRE GUIDE-BB-14 910413- MPS-118 FT
WIRE GUIDE-BB-16 452725- MPS-118 FT
WIRE GUIDE-BB-18 814169- MPS-118 FT
WIRE GUIDE-BB-20 566597- MPS-118 FT
WIRE GUIDE-BB-20.0-POLISH 595887- MPS-118 FT
WIRE GUIDE-BB-21 753463- MPS-118 FT
WIRE GUIDE-BB-24 849525- MPS-118 FT
WIRE GUIDE-BB-26.7 863549- MPS-118 FT
WIRE GUIDE-BB-26.7-3.75 096851- MPS-118 PC
WIRE GUIDE-BB-28 156383- MPS-118 FT
WIRE GUIDE-BB-30.0 739161- MPS-118 FT
WIRE GUIDE-BB-33.5 060211- MPS-118 FT
WIRE GUIDE-BB-35 768069- MPS-118 FT
WIRE GUIDE-BB-35.4-SB 587541- MPS-118 FT
WIRE GUIDE-BB-40 996373- MPS-118 FT
WIRE GUIDE-BB-41.0 838193- MPS-118 6523 FT
WIRE GUIDE-BB-46.5 940353- MPS-118 FT
WIRE GUIDE-BB-5 180831- MPS-118 FT
WIRE GUIDE-BB-5.5 643115- MPS-118 FT
WIRE GUIDE-BB-52 004569- MPS-118 FT
WIRE GUIDE-BB-53 998585- MPS-118 FT
WIRE GUIDE-BB-59.0 055859- MPS-118 FT
WIRE GUIDE-BB-6 572425- MPS-118 FT
WIRE GUIDE-BB-7 601635- MPS-118 FT
-39-
<PAGE>
CATEGORY PARTDESC PCNMOD SPEC CSR UOM
WIRE GUIDE-BB-72 105095- MPS-118 FT
WIRE GUIDE-BB-78.6 223521- MPS-118 FT
WIRE GUIDE-BB-8 019479- MPS-118 FT
WIRE GUIDE-BB-8-26 771635- MPS-118 PC
WIRE GUIDE-BB-9.8-X-16 186637- MPS-118 PC
WIRE GUIDE-BC-10 239517- MPS-124 FT
WIRE GUIDE-BC-13.2 380771- MPS-124 6505 FT
WIRE GUIDE-BC-13.5-HT-BLK 204827- MPS-124 FT
WIRE GUIDE-BC-13.8-BLK 770639- MPS-124 6505 FT
WIRE GUIDE-BC-14.0-HT-BLK 560943- MPS-124 FT
WIRE GUIDE-BC-15.2 984371- MPS-124 6505 FT
WIRE GUIDE-BC-16.2 432877- MPS-124 6505 FT
WIRE GUIDE-BC-17.2 129963- MPS-124 6505 FT
WIRE GUIDE-BC-18.0-85-HT-BLK 855885- MPS-124 PC
WIRE GUIDE-BC-18.0-HT-BLK-60 098599- MPS-124 PC
WIRE GUIDE-BC-20.0-BLK 346263- MPS-124 6505 FT
WIRE GUIDE-BC-20.0-HT-BLK 556695- MPS-124 FT
WIRE GUIDE-BC-21 234045- MPS-124 FT
WIRE GUIDE-BC-22.0-BLK 580563- MPS-124 6505 FT
WIRE GUIDE-BC-22.5 547935- MPS-124 FT
WIRE GUIDE-BC-24-BLK 219411- MPS-124 FT
WIRE GUIDE-BC-24.0 893339- MPS-124 6505 FT
WIRE GUIDE-BC-24.0-85-HT-BLK 055467- MPS-124 PC
WIRE GUIDE-BC-24.0-HT-BLK 927117- MPS-124 FT
WIRE GUIDE-BC-26.0 555761- MPS-124 6505 FT
WIRE GUIDE-BC-27.0-HT-BLK 518813- MPS-124 FT
WIRE GUIDE-BC-28.0-HT-BLK-60 678857- MPS-124 PC
WIRE GUIDE-BC-34.0-HT-BLK 674985- MPS-124 FT
WIRE GUIDE-BC-35.0-BLK 863771- MPS-124 FT
WIRE GUIDE-BC-38.0-BLK 241703- MPS-124 FT
WIRE GUIDE-BC-47.0 071623- MPS-124 FT
WIRE HOOK-T-3.83 397438- MPS-104 6501 PC
WIRE HOOK-T-4.83 149990- MPS-104 6501 PC
WIRE HOOK-T-5.83 907722- MPS-104 6501 PC
WIRE HOOK-T-8.83 801255- MPS-104 6501 PC
WIRE PROTO-BTR-BB-12.0 855785- MPS-140 FT
WIRE PROTO-BTR-BB-14.0 416663- MPS-140 FT
WIRE PROTO-BTR-BB-16.0 209781- MPS-140 FT
WIRE PROTO-BTR-BB-16.0-X-22.0 404141- MPS-140 FT
WIRE PROTO-BTR-BB-16.0X16.0 320765- MPS-140 FT
WIRE PROTO-BTR-BB-17.0-X-25.0 525897- MPS-140 FT
WIRE PROTO-BTR-BB-17.7 372895- MPS-140 FT
WIRE PROTO-BTR-BB-17.7-X-17.7 511753- MPS-140 FT
WIRE PROTO-BTR-BB-17.7-X-25.0 171579- MPS-140 FT
WIRE PROTO-BTR-BB-19.0-X-25.0 761403- MPS-140 FT
WIRE PROTO-BTR-BB-20.0 215959- MPS-140 FT
WIRE PROTO-BTR-BB-20.0X20.0 109559- MPS-140 FT
WIRE PROTO-BTR-BB-21.0-X-25.0 312787- MPS-140 FT
WIRE PROTO-CW25-BB-16.0X16.0 013905- MPS-137 FT
WIRE PROTO-CW25-BB-16.0X22.0 043527- MPS-137 FT
WIRE PROTO-CW45-BB-12.1 927511- MPS-137 FT
WIRE PROTO-CW45-BB-14.1 859715- MPS-137 FT
WIRE PROTO-CW45-BB-16.1 651549- MPS-137 FT
WIRE PROTO-CW45-BB-18.1 914067- MPS-137 FT
WIRE PROTO-SE-BA-23.4-HS-BLK 074999- MPS-139 FT
WIRE PROTO-SE-BA-30.0 126365- MPS-139 FT
WIRE PROTO-SE-BA-31.3-HS-BLK 758807- MPS-139 FT
WIRE PROTO-SE-BA-40.1-HS 754589- MPS-139 FT
WIRE PROTO-SE-BA-47.1-HS 550151- MPS-139 6536 FT
-40-
<PAGE>
Category Part/Description Price to Raychem*
Other Alloys A, J & C Barstock
Per Agreement with A.F. Aerospace
dated July 26, 1993
Other Alloy J for Nuclear Electric per License
Agreement between Raychem Limited
and Nuclear Electric PLC dated
August 19, 1991
* NOTE: PRICES TO RAYCHEM 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.
-41-
<PAGE>
EXHIBIT C
INITIAL ORDER COMMITMENT
======================================================================
COMMITMENT FOR FISCAL YEAR ENDED
JUNE 30, 1997 ($K)
--------------------------------
PRODUCT & RELEVANT AGREEMENT Q1 Q2 Q3 Q4 TOTAL
- ----------------------------------------------------------------------
Tinel-Lock (Tinel-Lock Supply 246 290 276 276 1088
Agreement)
Tinel Products (Private 773 935 1114 1114 3936
Label/Distribution Agreement)
Tinel-Lock OR other Tinel Products -- -- 100 100 200
(Agreement As Appropriate)
TOTAL: 1019 1225 1489 1489 5224
======================================================================
-42-
<PAGE>
EXHIBIT D
RAYCHEM'S STANDARD TERMS & CONDITIONS OF PURCHASE
1. TERMS OF AGREEMENT
1.1. This Purchase Order (including any attachments) constitutes Buyer's offer
to purchase the goods, services and/or other property described on the front of
this form ("Products"). Acceptance may occur by (i) Seller's promise to ship, or
(ii) Seller's shipment of some or all of the Products.
1.2. Buyer limits Seller's acceptance of this Purchase Order to the terms and
conditions of this Purchase Order and any related agreement signed by Buyer.
Buyer objects to any additional or different terms or conditions proposed by
Seller.
2. PRICES
The price set forth in this Purchase Order for the Products is the entire amount
owed by Buyer to Seller for the purchase of the Products. The price includes all
of Seller's charges, including packing, shipping, in-transit insurance, and
taxes. The price is the best price available for the Products with respect to
similarly situated customers of Seller purchasing comparable quantities of the
same or similar products.
3. PACKING AND DELIVERY
3.1. Seller shall ship the Products as instructed by Buyer. Receiving dates
stated in this Purchase Order are firm.
3.2. Seller shall pack and ship the Products in accordance with commercial
standards and government regulations.
3.3. Seller shall make domestic shipments in full compliance with (i) the
Uniform Commercial Code as in existence at the location of shipment, and (ii) if
by truck, the National Motor Freight Classification. Seller shall make
international shipments in full compliance with Incoterms.
3.4. Seller shall consolidate on one bill of lading all shipments that are made
(i) on the same day, (ii) by the same carrier, and (iii) on the same terms of
sale.
4. TITLE AND RISK OF LOSS
Deliveries shall be F.O.B. Buyer. Title and risk of loss or damage shall pass to
Buyer upon Buyer's actual receipt of the Products.
5. INSPECTION AND ACCEPTANCE OF PRODUCTS
5.1. Buyer and Buyer's customers may inspect the Products at any reasonable
time and at any reasonable place, including Seller's location. Any inspection is
provisional only and does not constitute final acceptance. All Products are
subject to final inspection and testing by Buyer after receipt.
5.2. Buyer shall have a reasonable time, of not fewer than 30 days after its
receipt of the Products (the "Inspection Period"), to inspect the Products.
During the Inspection Period Buyer may reject the Products, or revoke any prior
acceptance based on any nonconformity of the Products.
5.3. If Buyer's customer has a right to inspect the Products, the Inspection
Period shall not begin until Buyer's customer has actually received the
Products.
6. PAYMENT TERMS
Purchases are on open account credit. Payment terms for sales on open account
begin on the later of receipt of an invoice or receipt of the Products by Buyer.
Buyer's standard payment terms are net 45 days.
7. WARRANTY
7.1. Seller warrants that the Products (i) are free from defects in design,
material fabrication, and workmanship, (ii) conform to all samples and
specifications (furnished by Seller or Buyer) for the Products, (iii) are fit
for Buyer's intended use, and (iv) are free of liens and encumbrances when
shipped to Buyer.
7.2. This warranty extends to the future performance of the Products, to Buyer
and its successors, assigns, and customers.
8. PROPRIETARY INFORMATION
8.1. "Proprietary Information" includes any information obtained from Buyer (i)
that is of a confidential or proprietary nature, (ii) that is not readily
available to Buyer's competitors and, (iii) that, if known by a competitor of
Buyer, might lessen any competitive advantage of Buyer or give such competitor a
competitive advantage.
8.2. Buyer retains ownership of all Proprietary Information. Seller shall not
disclose, duplicate or reproduce any Proprietary Information nor shall Seller
use any Proprietary Information other than in the course of performing under
this Purchase Order.
9. PROPERTY FURNISHED BY BUYER
9.1. Seller shall bear all risk of loss or damage to any property furnished by
Buyer to Seller in connection with the performance of this Purchase Order, until
the property is returned to Buyer. Seller shall not remove any safety features
of the property or modify it in any way. Buyer does not warrant the property
that it furnishes.
9.2. Seller shall cause (i) its General Liability Insurance Policy issued with
respect to the use of the property to name Buyer as an additional insured, and
(ii) its All-Risk Insurance Policy to name Buyer as a loss payee for the full
replacement value of the property.
9.3. Seller shall use the property only in the performance of Seller's
obligations under this Purchase Order. The property shall remain the property of
Buyer and shall be labeled as Buyer's property. Upon completion or termination
of this Purchase Order, Seller shall return all of Buyer's properly in good
condition.
-43-
<PAGE>
RAYCHEM CORPORATION
TERMS & CONDITIONS OF PURCHASE
REVISED JANUARY, 1995
10. WORK BY SUPPLIERS, CONTRACTORS, OR SUBCONTRACTORS ON BUYER PREMISES
10.1. Suppliers, contractors, or subcontractors ("Third Parties") while
performing work on Buyer's premises, shall perform the work in accordance with
all applicable (i) laws and regulations, and (ii) Buyer's work rules and work
permit procedures for the facility.
10.2. Third Parties shall review and comply with Buyer's General Environmental,
Occupational Health, and Safety ("EHS") Rules and Rules Concerning Specialized
EHS Controls.
10.3. Third Parties shall advise Buyer's project manager at least one business
day prior to commencing work on Buyer's premises.
10.4. Third Parties shall not dispose of wastes, unused materials, debris,
packaging, or scrap materials on Buyer's premises.
10.5. Third Parties shall immediately report to Buyer any (i) violations of
local laws, regulations, or Buyer's rules, or (ii) injury to an employee of a
Third Party.
10.6. Buyer may immediately stop a Third Party from continuing any work on
Buyer's premises if Buyer deems the work to be unsafe, potentially harmful to
the environment, or not in compliance with local regulations or rules. Buyer
shall not be liable to Seller for any penalties or other amounts incurred
(including labor costs, equipment rental or lost profits or bonuses) in any way
related to a work stoppage.
11. INDEMNITY
11.1. Seller shall indemnify Buyer against any general, consequential,
incidental or special damages incurred by Buyer arising from (i) any actual or
alleged defect or nonconformity in any Product, (ii) the incorrectness of a
representation or warranty made by Seller, or (iii) any other breach of this
Purchase Order by Seller.
11.2. Seller shall settle or defend. and pay costs and damages arising from,
any claim, suit, or proceeding against Buyer based on an allegation that any
Products infringe any United States or foreign patent, trademark, copyright, or
other property right.
12. MISCELLANEOUS
12.1. Non-Waiver of Default. No failure by Buyer to insist on strict
performance of any term or condition of this Purchase Order shall constitute a
waiver of that term or condition or any breach of that term or condition.
12.2. Applicable Law. This agreement shall be governed by and construed in
accordance with the internal laws of the State of California, U.S.A.
12.3. No Assignment. Seller may not assign or transfer, in whole or in part. by
operation of law or otherwise, this Purchase Order or any interest in it.
12.4. Entire Agreement. This Purchase Order and any documents referred to
herein are the final, complete, and exclusive statement of the terms of the
agreement of the parties concerning the subject matter of those documents.
12.5. Modifications. This Purchase Order may be modified only by a written
agreement of Seller and Buyer, provided that Buyer may make non-material changes
by giving Seller three business days written notice.
12.6. Notices. All notices and other communications hereunder shall be in
writing.
12.7. Expenses and Fees. Seller shall pay all of Buyer's attorneys' and other
fees and costs incurred in enforcing Seller's obligations under this Purchase
Order.
12.8. Time of Essence. Time is of the essence for Seller's obligations under
this Purchase Order.
12.9. English Language. All correspondence pertaining to this Purchase Order
shall be in the English language.
13. COMPLIANCE WITH ENVIRONMENTAL AND SAFETY LAWS
13.1. General. Seller shall, upon request, provide environmentally related
information concerning the materials used in the Products and packaging.
13.2. Material Safety Data Sheet. Unless exempted by applicable state and
federal law, the Seller shall provide, before or with each initial shipment and
before bringing any hazardous materials onto Buyer's premises, a Material Safety
Data Sheet ("MSDS") for each Product. Each container shall also be labeled with
appropriate hazard warnings. The MSDSs and labels shall meet applicable state
and federal requirements, including the Federal Hazard Communications Standard
(29 Code of Federal Regulations 1910).
13.3. Proposition 65. Seller shall not include in the Products any substance
regulated by The Safe Drinking Water and Toxic Enforcement Act of 1986
("Proposition 65") unless adequate warning, as required by Proposition 65, is
provided.
13.4. TSCA. Products supplied by the Seller shall comply with the federal Toxic
Substance Control Act ("TSCA"). Seller certifies to Buyer that any chemical
substance or mixture provided to Buyer is included on the TSCA Inventory.
14. COMPLIANCE WITH LAWS GENERALLY
14.1. General. Seller represents that it is in compliance and agrees to comply
with all applicable federal, state, and local laws and regulations, including
those listed in Section 17.
14.2. Government Business. Seller represents that it has not been debarred,
suspended, or proposed for debarment from United States government business.
14.3. NAFTA. Seller shall provide Buyer with a Certificate of Origin pursuant
to Chapter 5 of the North American Free Trade Agreement as implemented in the
United States. Seller shall maintain all appropriate records to satisfy NAFTA
requirements. Seller shall indemnify Buyer against any general, consequential,
incidental or special
-44-
<PAGE>
RAYCHEM CORPORATION
TERMS & CONDITIONS OF PURCHASE
REVISED JANUARY, 1995
damages incurred by Buyer arising from Seller's failure to comply with NAFTA.
14.4. Certificate of Compliance. Seller shall execute and deliver to Buyer upon
request a Certificate of Compliance with Contract Terms, certifying Seller's
full compliance with each and every requirement imposed upon Seller by this
Purchase Order and by applicable laws, regulations, and industry standards.
15. GOVERNMENT CONTRACTS
Seller understands and acknowledges that (i) Products may be used by Buyer in
the performance by Buyer of its prime contracts and subcontracts where the U.S.
Government is an end user, and (ii) Buyer may be required to make
representations and certifications under these contracts which rely on Seller's
compliance with certain U.S. Iaws and regulations, including compliance with the
laws listed in this Purchase Order. The following clauses (as set forth in the
identified locations) are incorporated into this Purchase Order: "Restrictions
on Subcontractor Sales to the Government" FAR 52.203-6; "Anti-kickback
Procedures" FAR 52.203-7; "Certification and Disclosure Regarding Payments to
Influence Certain Federal Transactions" - FAR 52.203-11; "Security Requirements"
- - FAR 52.2042; "New Material" FAR 52.210-5; "Defense Priority and Allocation
Requirements" - FAR 52.212-8; "Subcontractor Cost or Pricing Data" - FAR 52.215-
24; "Utilization of Small Business Concerns and Small Disadvantaged Business
Concerns" FAR 52.219-8; "Small Business and Small Disadvantaged Business
Subcontracting Plan" - FAR 52.219-9; "Utilization of Women-Owned Small
Businesses" - FAR 52.219-13; "Notice to the Government of Labor Disputes" -FAR
52.222-1; "Contract Work Hours and Safety Standards Act - Overtime Compensation
- - General" - FAR 52.222-4; "Walsh-Healey Public Contracts Acts" - FAR 52.222-20;
"Certificate of Nonsegregated Facilities" - FAR 52.222-21; "Previous Contracts
and Compliance Reports" - FAR 52.222-22; "Equal Opportunity" - FAR 52.222-26;
"Affirmative Action for Special Disabled and Vietnam Era Veterans" -FAR 52.222-
35; "Affirmative Action for Handicapped Workers" - FAR 52.222-36; "Employment
Reports on Special Disabled Veterans and Veterans of the Vietnam Era" - FAR
52.222-37 (if this order exceeds $100,000); "Clean Air and Water" - FAR 52.223-
2; "Certification Regarding a Drug-Free Workplace" - FAR 52.223-5, "Buy American
Act - Supplies" - FAR 52.225-3; "Notice and Assistance Regarding Patent and
Copyright Infringement" - FAR 52.222-2; "Limitation of Liability" - FAR 52.246-
23.
-45-
<PAGE>
EXHIBIT E
PACKAGING & LABELING REQUIREMENTS
Labeling requirements are contained in the MPS (Metals Product Specifications)
specifications and customer specifications in Exhibit B. Standard packaging is
generally on spools for wire and strip, and in tubes or coiled in bags for
microtubing. Special packaging and labeling may be required from time to time
and will be called out on individual purchase orders per customer requirements.
-46-
<PAGE>
EXHIBIT F
TEST REPORT REQUIREMENTS
Certifications and test reports are required on each shipment if specified in
the purchase order. Certifications and test report requirements are contained
in Exhibit B in the MPS (Metals Product Specifications) and customer
specifications. Special certifications and test reports may be required from
time to time and will be called out in individual purchase orders per customer
requirements.
-47-
<PAGE>
EXHIBIT G
SELLER'S EXISTING CUSTOMERS
[NOTE: CUSTOMER NAMES AND NUMBERS 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.]
-48-
<PAGE>
EXHIBIT H
ELECTRICAL AND ELECTRONIC ASSEMBLIES
The Levels of Electrical and Electronic
Packaging Interconnection
LEVEL ONE: DEVICE TO PACKAGE
This level includes connections inside a component package
between a basic circuit element and its lead, such as the link
between a semiconductor chip and its package lead frame.
LEVEL TWO: COMPONENT LEAD TO CIRCUITRY
Connections between a component lead and a printed circuit board
and/or point-to-point wiring by means of permanent or separable
interconnects are typical at Level Two and are exemplified by
various kinds of sockets.
LEVEL THREE: BOARD-TO-BOARD
At this level, connections between two or more printed circuit
boards, typically motherboard/daughterboard or backplane
connections, by means of permanent or separable interconnects
and/or cable assemblies, are common.
LEVEL FOUR: SUBASSEMBLY TO SUBASSEMBLY
Connections between two subassemblies such as a power supply and
an associated subassembly, including the connectors on each
subassembly and the cable assembly between them, or wire-to-wire
connections are typical at this level.
LEVEL FIVE: SUBASSEMBLY TO INPUT/OUTPUT (I/O) PORT
Level Five includes connections for power or signal transmission
from a major subassembly to an input/output port, such as the
link between a computer and a printer or other type of peripheral
equipment.
LEVEL SIX: SYSTEM TO SYSTEM
Connections between physically separated systems occur at Level
Six. The links that interconnect components of a local area
network are typical examples.
-49-
<PAGE>
EXHIBIT I
AGREEMENTS OF BUYER
Material Agreement with Centurion International, Inc.
License Agreement dated July 26, 1993 between AF Aerospace and Raychem
Corporation
U.S. Surgical Corporation Purchase Orders if not assigned
License Agreement dated August 19, 1991 between Nuclear Electric PLC and
Raychem Limited
Supply Agreement dated August 4, 1995 between St. Jude Medical, Inc.,
Cardiac Assist Division and Raychem Corporation (assigned to Bard)
Any open Purchase Orders from customers as of June 28, 1996
-50-
<PAGE>
EXHIBIT I
[NOTE: CHART SETTING FORTH CUSTOMER NAMES AND PRODUCT SPECIFICATIONS 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.]
-51-
<PAGE>
EXHIBIT J
NEW PRODUCT AMENDMENT
A. Date: __________________
B. New Product Identification: _______________________________
___________________________________________________________
___________________________________________________________
C. New Product Specifications: _______________________________
___________________________________________________________
___________________________________________________________
WHEREAS, Raychem Corporation ("Buyer") and Memry Corporation ("Seller")
are parties to that certain Amended and Restated Private Label/Distribution
Agreement effective as of December 20, 1996 (the "Private Label Agreement"); and
WHEREAS, Buyer and Seller have agreed that their respective Product
Managers (as such term is defined in the Private Label Agreement) may add new
products and specifications for such products to the list of products to be sold
pursuant to the Private Label Agreement; and
WHEREAS, the undersigned are the duly designated Project Managers for
Buyer and Seller, respectively:
IT IS HEREBY AGREED:
1. That Exhibit A to the Private Label Agreement is hereby amended to
---------
add the new product(s) listed in (or incorporated into) item B of this New
Product Amendment (the "New Product"), and that the New Product shall from and
after the date indicated in item A hereof (the "Effective Date") be a Product
(as such term is defined in the Private Label Agreement) for all purposes under
such Private Label Agreement.
2. That Exhibit B to the Private Label Agreement is hereby amended to
---------
add the New Product specifications set forth in (or incorporated into) item C of
this New Product Amendment (the "New Specifications"), and that the New
Specifications shall from and after the Effective Date be a part of the Private
Label Agreement for all purposes.
3. Except as specifically set forth in this New Product Amendment, the
terms of the Private Label Agreement and the exhibits and schedules thereto
shall remain unmodified and in full force and effect.
IN WITNESS WHEREOF, the parties have executed this New Product Amendment
as of the date first above written.
MEMRY CORPORATION RAYCHEM CORPORATION
By: ______________________ By: ________________________
Product Manager Product Manager
cc: James G. Binch
Tom Klopack
Raychem Legal Department
-52-
<PAGE>
EXHIBIT K
ORDER COMMITMENT EXAMPLE
-53-
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
A B C D E F G H I J K L
1 Exhibit K
2 Order Commitment Example
3 Projected Dollar Volume for Indicated Quarter
4 P (Present)P+1 P+2 P+3 P+4 P+5 P+6 P+7 P+8 P+9
---------- ------- ----------- -------- -------- -------- -------- -------- --- ---
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 Quarter P Forecast:
---------------------------
6 Tinel Lock A/P/ B/P/ C/P/ D/P/ E/P/ F/P/
7 Other Tinel a/P/ b/P/ c/P/ d/P/ e/P/ f/P/
8
9 Quarter P+1 Forecast:
---------------------------
10 Tinel Lock B/P+1/ C/P+1/ D/P+1/ E/P+1/ F/P+1/ G/P+1/
11 Other Tinel b/P+1/ c/P+1/ d/P+1/ e/P+1/ f/P+1/ g/P+1/
12
13 Quarter P+2 Forecast:
---------------------------
14 Tinel Lock C/P+2/ D/P+2/ E/P+2/ F/P+2/ G/P+2/ H/P+2/
15 Other Tinel c/P+2/ d/P+2/ e/P+2/ f/P+2/ g/P+2/ h/P+2/
16 At quarter P+2, Required Take is the largest number resulting from the following calculations:
---------------------------------------------------------------------------------------------
17
18 At Quarter P+2:
---------------------------
19 Tinel Lock .95C/P+2/ or
--------
20 .65(C/P+1/ + c/P+1/) - (volume of other Tinel products or
21 .25(C/P/ + c/P/) - (volume of other Tinel products ordered in
such quarter)
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C> <C> <C> <C> <C> <C> <C>
22
23 Other Tinel .85C/P+2/ or
--------
24 .65(C/P+1/ + c/P+1/) - (volume of other Tinel-Lock products or
ordered in such quarter) ---
25 .25(C/P/ + c/P/) - (volume of other Tinel-Lock products ordered
in such quarter)
====================================================================================================================================
</TABLE>
Page 1 of 3
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
A B C D E F G H I J K L
1 Exhibit K
2 Order Commitment Example
3 Projected Dollar Volume for Indicated Quarter
4 P (Present) P+1 P+2 P+3 P+4 P+5 P+6 P+7 P+8 P+9
------------- ----- ------- ------------ ---------- ----- ----- ----- ----- -----
26 (Assumes in each case that no "overpurchases" of either Tinel Lock or Other Tinel products
27 reduces the minimum take requirement for the other)
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
28 Quarter P Forecast:
29 Tinel Lock 100 100 100 500 500 500 100
30 Other Tinel 100 100 100 500 500 500 100
31 Required Take:
32 Tinel-Lock 95 95 65 125 0 0 0
33 Other Tinel 85 85 65 125 0 0 0
34
35
36 Quarter P+1 Forecast:
37 Tinel-Lock 100 100 500 500 500 50 100
38 Other Tinel 100 100 500 500 500 50 100
39 Required Take:
40 Tinel-Lock 95 95 325/125 125 0 0 0
41 Other Tinel 85 85 325/125 125 0 0 0
42
43
44 Quarter P+2 Forecast
45 Tinel-Lock 100 100 50 500 100 100 100
46 Other Tinel 100 100 50 500 100 100 100
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
47 Required Take:
48 Tinel-Lock 95/65 95/325/125 32.5/125 125 0 0 0
49 Other Tinel 85/65 85/325/125 32.5/125 125 0 0 0
50
51
====================================================================================================================================
</TABLE>
Page 2 of 3
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
A B C D E F G H I J K L
1 Exhibit K
2 Order Commitment Example
3 Projected Dollar Volume for Indicated Quarter
4 P (Present) P+1 P+2 P+3 P+4 P+5 P+6 P+7 P+8 P+9
------------ ---- ---- ----------- ------------ ---------- ---------- --- ---- ---
52 (Assumes in each case that no "overpurchases" of either Tinel Lock or Other Tinel products
53 reduces the minimum take requirement for the other)
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
54
55 Quarter P+3 Forecast:
56 Tinel Lock 100 0 100 100 100 100 100
57 Other Tinel 100 0 100 100 100 100 100
58 Required Take:
59 Tinel-Lock 95/325/125 0/32.5/125 65/125 25 0 0 0
60 Other Tinel 85/325/125 0/32.5/125 65/125 25 0 0 0
61
62
63 Quarter P+4 Forecast:
64 Tinel-Lock 100 100 10 0 100 100
65 Other Tinel 100 100 10 0 100 100
66 Required Take:
67 Tinel-Lock 95/32.5/125 95/65/125 6.5/25 0 0 0
68 Other Tinel 85/32.5/125 85/65/125 6.5/25 0 0 0
69
70
71 Quarter P+5 Forecast
72 Tinel-Lock 100 500 0 200 100
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C> <C> <C> <C> <C>
73 Other Tinel 100 500 0 50 100
74 Required Take:
75 Tinel-Lock 95/65/125 475/6.5/25 0 50 0
76 Other Tinel 85/65/125 425/6.5/25 0 12.5 0
77
78 The rolling forecast delivery and minimum take requirements continue for the duration of the contract.
===================================================================================================================================
</TABLE>
Page 3 of 3
<PAGE>
EXHIBIT 10.47
Amendment No. 3
to
Amended and Restated
Asset Purchase Agreement
and
Amendment No. 1
to
Transitional Services Agreement
between
Memry Corporation
and
Raychem Corporation
This AMENDMENT NO. 3 to Amended and Restated Asset Purchase Agreement
and AMENDMENT NO. 1 to Transitional Services Agreement (this "Amendment"), is
made and executed this 19th day of February and effective as of the 20th day of
December, 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 and by Amendment No. 2 thereto, dated as of
August 11, 1996 (said agreement, as so amended, the "Purchase Agreement") and a
Transitional Services Agreement dated as of June 28, 1996 (the "Transitional
Services Agreement"). It is the desire of the Parties to amend certain
provisions of the Purchase Agreement and Transitional Services 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:
1. PURCHASE AGREEMENT
(a) All capitalized terms used in this Section 1 but not otherwise
defined herein shall have the meanings ascribed thereto in the Purchase
Agreement.
(b) The section of the Disclosure Schedule to the Purchase Agreement
titled "Patents and Patent Applications" is hereby amended by substituting for
such section the document attached as Exhibit 1 hereto.
---------
<PAGE>
(c) Section 2.(f) of the Purchase Agreement is hereby amended by
substituting the following therefor:
"(f) Inventory Adjustment. Not later than June 30, 1997, Buyer shall
pay to Seller the amount of $150,000 as an adjustment for excess
inventory."
(d) Except as specifically set forth in this Section, the terms of the
Purchase Agreement and the exhibits and schedules thereto shall remain
unmodified and in full force and effect. The parties hereby acknowledge and
agree that nothing herein shall be deemed to constitute a waiver of any or all
of either party's rights under the Purchase Agreement, whether such rights arise
pursuant to contract, common law, or otherwise.
2. TRANSITIONAL SERVICES AGREEMENT
(a) All capitalized terms used in this Section 2 but not otherwise
defined herein shall have the meanings ascribed thereto in the Transitional
Services Agreement.
(b) Section 1 of the Transitional Services Agreement is hereby amended
by renaming Section 1.3 thereto as Section 1.3(a), by adding a new Section
1.3(b) to provide, in its entirety, as set forth below, and by amending and
restating Section 1.4 thereto to provide, in its entirety, as set forth below:
"1.3(b) From and after December 20, 1996 and until not later
than the earlier of (i) the date the Training Personnel (as defined
below) complete training of Memry personnel (as determined by Memry in
its reasonable discretion); and (ii) January 24, 1997, Raychem shall
provide to Memry the services of the employees listed on Exhibit 3
---------
("Training Personnel") at Raychem's total cost of the employees'
services, for the purpose of allowing such Training Personnel to train
Memry personnel in performing tasks heretofore performed by the
Training Personnel. Memry shall provide all travel and temporary
living expenses in connection with services provided by the Training
Personnel after December 20, 1996. Memry shall supervise all Training
Personnel provided pursuant to this subsection. Notwithstanding
anything to the contrary in this Section 1.3(b), Raychem shall have
the authority for necessary disciplinary action relating to such
Training Personnel in accordance with Raychem human resource policies.
Raychem shall have the responsibility for any federal, state and local
employment related taxes or expenses, including federal and state
withholding and unemployment insurance.
1.4 Raychem is not obligated to replace any Personnel or
Training Personnel provided pursuant to Section 1.3 who
-2-
<PAGE>
voluntarily or involuntarily terminate their employment with Raychem
or become unavailable due to disability or medical leave. Raychem
shall not transfer any Personnel or Training Personnel provided
pursuant to Section 1.3 to other positions at Raychem while they are
providing services pursuant to this Agreement without prior agreement
with Memry."
(c) Section 2.3 of the Transitional Services Agreement is hereby
amended by substituting the following therefor:
"2.3 Term. This Agreement shall expire on the earlier to occur of
----
(i) January 24, 1997 or (ii) a date mutually agreed by the parties."
(d) The Transitional Services Agreement is hereby amended by adding
Exhibit 3 hereto as Exhibit 3 thereto.
- --------- ---------
(e) Except as specifically set forth in this Section, the terms of the
Transitional Services Agreement and the exhibits and schedules thereto shall
remain unmodified and in full force and effect. The parties hereby acknowledge
and agree that nothing herein shall be deemed to constitute a waiver of any or
all of either party's rights under the Transitional Services Agreement, whether
such rights arise pursuant to contract, common law, or otherwise.
3. To evidence Buyer's obligation pursuant to Section 2.(f) of the
Purchase Agreement, Buyer shall issue to Seller a promissory note in
substantially the form attached as Exhibit 2 hereto.
---------
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.
5. 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.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
RAYCHEM CORPORATION MEMRY CORPORATION
By: /s/ John McGraw By: /s/ James G. Binch
----------------------------------- -------------------------------
John McGraw James G. Binch
Vice President President
-3-
<PAGE>
EXHIBIT 1
---------
PATENTS AND PATENT APPLICATIONS
-------------------------------
-1-
<PAGE>
EXHIBIT 2
---------
PROMISSORY NOTE
-1-
<PAGE>
EXHIBIT 3
---------
TRAINING PERSONNEL
-2-
<PAGE>
EXHIBIT 10.48
AGREEMENT
---------
Agreement, made as of the 5th day of June, 1997, by and among Memry
Corporation, a Delaware corporation (the "Company"), Wright Machine Corporation,
a Delaware corporation and a wholly-owned subsidiary of the Company ("Wright"),
and Wendy A. Gavaghan ("Gavaghan").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the purpose of this Agreement is to effectuate an amicable
conclusion of the prior relationships between the parties;
NOW, THEREFORE, in consideration of the above recital and further in
consideration of the mutual promises and forbearance anticipated hereunder, the
parties, intending to be bound legally, agree as follows:
1. Effective Date of Termination of Employment.
-------------------------------------------
Gavaghan's employment with the Company and Wright is hereby terminated
effective as of March 15, 1997 (such date, the "Termination Date"). The
termination of Gavaghan's employment shall be deemed to have been a termination
without cause.
2. Accrued Vacation.
----------------
The parties agrees that the Company and Wright shall pay to Gavaghan
$19,232 as payment in full of all accrued vacation owed to Gavaghan, payable as
follows: $5,000 upon the execution of this Agreement, and $12,232 on March 15,
1998 (the "First Anniversary").
3. Consideration.
-------------
The parties agree that:
(a) the Company shall pay Gavaghan her base salary currently in effect,
being $125,000, payable semi-monthly, until the First Anniversary;
(b) the Company shall continue to provide Gavaghan with health and medical
benefits (the "Benefits") without cost until the First Anniversary. In the
event that (i) Gavaghan elects to discontinue benefits prior to the First
Anniversary, she shall be paid the cash value of the Benefits for the period of
time remaining until the First Anniversary (in equal semi-monthly payments), and
(ii) the Benefits are discontinued prior to the First Anniversary, Gavaghan
shall, at her option, be entitled to either accept coverage under any successor
Benefits plan provided to the employees of the Company generally or elect to
discontinue
<PAGE>
receiving Benefits and receive the cash value of the same pursuant to Section
3(b)(i) above; and
(c) the Company shall pay Gavaghan, on or prior to May 31, 1998, a
severance payment in the amount of $36,750.
4. Options and SARs.
----------------
(a) Gavaghan agrees that on or prior to May 31, 1998 she will exercise in
full options granted to her by the Company as of April 30, 1996, being incentive
stock options exercisable to purchase 24,500 shares of Common Stock at an
exercise price of $1.50 per share (the "Options"), pursuant to the terms for the
exercise of the Options set forth in the NonTransferable Incentive Stock Option
Agreement, dated as of April 30, 1996, between the Company and Gavaghan
regarding the Options. The Company agrees that it will use its best efforts to
file and effect prior to May 31, 1998 a registration statement on Form S-8
covering the issuance of 24,500 shares of Common Stock to Gavaghan upon the
exercise of the Options.
(b) Gavaghan and the Company agree that the additional incentive stock
options exercisable to purchase 12,000 shares of Common Stock at an exercise
price of $1.78 issued to Gavaghan as of December 5, 1996 and 1,500 share
appreciation rights issued to Gavaghan as of July 19, 1994 shall be cancelled
effective as of July 30, 1997.
(c) The Company agrees to use its best efforts to cooperate with Gavaghan
in any attempt by her to exercise any of the options or rights described in
Sections 4(a) or 4(b) hereof in accordance with their respective terms.
5. Resignation.
-----------
Gavaghan hereby resigns, effective as of the Termination Date, as an
officer of the Company as well as an officer and director of Wright.
6. Transition.
----------
Gavaghan agrees that, until the First Anniversary, she shall be reasonably
available, upon the Company's prior reasonable request, to answer questions that
any of the Company's officers may have with respect to activities that were
previously the responsibility of Gavaghan in order to facilitate the transition.
7. Release by Gavaghan.
-------------------
(a) In consideration of, among other things, the agreements of the Company
set forth herein, Gavaghan hereby releases on behalf of herself, her heirs,
successors and assigns, the Company, Wright and each of their respective
affiliates and divisions and their respective successors, assigns, officers,
directors, agents, employees and representatives, from
2
<PAGE>
and against any and all claims, demands, grievances, and causes of action,
administrative, court or otherwise, known or unknown, which she has, had, or may
have had against any of them through the Termination Date, including, but not
limited to: (i) any claim arising under the Age Discrimination in Employment
Act, 29 U.S.C. (S)(S) 621 et seq., as amended, and/or Title VII of the Civil
-- ---
Rights Act of 1964, 42 U.S.C. (S)(S) 2000e et seq., as amended, and/or the
-- ---
Americans with Disabilities Act, 42 U.S.C. (S)(S)12111-12117; (ii) any claim for
employment discrimination, whether based on a federal, state or local statute or
court decision; (iii) any claim, whether statutory, common law or otherwise,
arising out of the terms and conditions of Gavaghan's employment or relationship
with the Company and/or Wright, the termination of her employment and
relationship with the Company and/or Wright, or the events surrounding that
termination; and (iv) any claim for attorneys' fees, costs, disbursements and
the like; provided, however, such release shall not be deemed to preclude any
-------- -------
right Gavaghan may have to be indemnified by the Company and Wright pursuant to
the Certificates of Incorporation and/or By-Laws of the Company and Wright or
pursuant to the Delaware General Corporation Law.
(b) Gavaghan acknowledges that the Company has advised her to consult an
attorney prior to executing this Agreement, and she further acknowledges that
she has retained Robert M. Fortgang, Esq., of Simsbury, Connecticut, to advise
her in connection with this Agreement and the termination of her employment with
the Company and Wright. Gavaghan acknowledges that she understands all of the
provisions of this Agreement and that she has been given the opportunity to take
at least 21 days to consider this Agreement and release and consult with her
personal financial, tax and legal advisors before signing this Agreement. She
voluntarily accepts the terms stated in this Agreement and release and
acknowledges that she is not under any duress, coercion, or undue influence.
She further acknowledges that she has had sufficient time to consider her
options, and elects to sign this Agreement and release on this date, while
acknowledging that the Company has given her the opportunity to take at least 21
days within which to consider the release.
(c) Gavaghan acknowledges that for a period of seven (7) days after she
signs this Agreement and release, she may change her mind and revoke her
acceptance of the terms hereof by giving written notice to James G. Binch at the
address set forth in Section 7(b) hereof within that seven-day period. This
Agreement and release will not become effective or enforceable until the seven-
day revocation period has expired.
(d) Gavaghan acknowledges and agrees that, if she exercises her right to
revoke this Agreement and release, she will not be entitled to any benefits
hereunder (although she will still be entitled to whatever pay and benefits to
which she is entitled as a matter of law). She further acknowledges and agrees
that she must advise the Company in writing, after the expiration of the seven-
day revocation period, that she has elected not to revoke this Agreement and
release by signing and returning to the Company the form annexed hereto.
3
<PAGE>
8. General Provisions.
------------------
(a) In the event that any provision or Section of this Agreement shall be
held invalid or unreasonable, the same shall not affect in any respect
whatsoever the validity of the remainder of this Agreement which shall be deemed
severable, and such invalid or unreasonable provision(s) shall be deemed to have
been amended, and the parties hereto agree to execute all documents necessary to
evidence such amendment, so as to modify any such invalid or unreasonable
provision and to carry out the intent of the terms and provisions of this
Agreement to the greatest extent possible and to render such provisions of this
Agreement enforceable and/or reasonable in all respects as modified.
(b) Any written notice under this Agreement shall be personally delivered
or sent by certified or registered mail, return receipt requested and postage
prepaid to (i) the Company or Wright, to the attention of James G. Binch, Memry
Corporation, 57 Commerce Drive, Brookfield, Connecticut 06804, and (ii)
Gavaghan at 312 Popes Island Road, Milford, Connecticut 06460, or to such other
address or addresses as any of the parties shall designate in accordance with
this Section.
(c) This Agreement shall be construed in accordance with, and its
performance shall be governed by, the laws of the State of Connecticut. The
parties hereby waive the right to a jury trial.
(d) Except as otherwise noted herein, this Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof, and
supersedes all prior agreements, representations and promises by either party or
between parties.
(e) No modification of this Agreement shall be effective unless in a
writing executed by both parties hereto.
(f) Nothing in this Agreement shall prevent Gavaghan from enforcing the
terms of this Agreement, and Gavaghan has not waived or released any claim for a
breach of this Agreement.
(g) The Company is hereby paying $1,500 by check to Robert Fortgang
Associates CF Account, in order to assist in defraying the charges of Gavaghan's
legal counsel with respect to this Agreement.
9. Breach of Agreement
-------------------
(a) In the event that either party shall claim that the other has failed to
comply with any of the terms of this Agreement, all remaining provisions of the
Agreement shall remain valid and binding upon the parties. The parties do
hereby stipulate and agree that any dispute or controversy arising out of the
performance or interpretation of this Agreement shall not be submitted to the
jurisdiction of any competent court, but shall instead be addressed
4
<PAGE>
in the following manner and sequence, which shall be a condition precedent to
any court action that might otherwise be taken.
(b) The party alleging that the other has failed to comply with any of the
terms of this Agreement shall provide notice pursuant to Section 8(b) and a
reasonable period of time, that shall not be less than ten (10) days, in which
to cure the alleged breach, or otherwise respond.
(c) If the dispute remains unresolved, either party may initiate
arbitration/alternate dispute resolution (ADR) in Connecticut in accordance with
the Commercial Arbitration and Dispute Resolution Rules of the American
Arbitration Association. Such arbitration/ADR shall first proceed with an
attempt to mediate such dispute. Should mediation be unsuccessful,
arbitration/ADR shall follow, and the award rendered by the Arbitrator(s) shall
be conclusive and binding upon the parties, shall be incorporated herein by
reference, and shall be enforceable in any court of competent jurisdiction.
(d) The party initiating arbitration/ADR shall pay all preliminary
administrative fees for dispute resolution. The responding party shall pay all
preliminary administrative fees, if any, with respect to any counterclaims. The
Arbitrator(s) shall determine the manner in which all of the fees and costs of
the arbitration/ADR shall ultimately be apportioned; however, each party shall
be responsible for the payment of its own attorneys' fees incurred in connection
with the arbitration/ADR.
10. Sale of the Company.
-------------------
In the event that the Board of Directors initiates a sale of all or
substantially all of the assets or stock of the Company which sale is
consummated, all monetary obligations then owed by the Company to Gavaghan shall
be accelerated and due to be paid to Gavaghan simultaneously with the closing of
such sale.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date and year first written above.
/s/ Wendy A. Gavaghan
----------------------------------
Wendy A. Gavaghan
MEMRY CORPORATION
By: /s/ James G. Binch
----------------------------------
Name: James G. Binch
Title: Chairman, President and CEO
WRIGHT MACHINE CORPORATION
By: /s/ James G. Binch
----------------------------------
Name: James G. Binch
Title: President
6
<PAGE>
[Form of Notice Not To Revoke]
___________ ___, 1997
James G. Binch
Memry Corporation
57 Commerce Drive
Brookfield, Connecticut 06804
Dear Jim:
Pursuant to Section 6(d) of the Agreement dated as of June ___, 1997 among
Memry Corporation, Wright Machine Corporation and myself, I am notifying you
that I have elected not to revoke such Agreement and the release by me set forth
in Section 6 of such Agreement.
Very truly yours,
Wendy A. Gavaghan
7
<PAGE>
EXHIBIT 10.49
Investor:Dominion Financial Group International LDC
----------------------------------------------
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated as of June 26, 1997, 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 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 ___________ shares of the Company's Common Stock, par
value $0.01 per share ("Common Stock"), at a purchase price of $1.50 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.
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. Subject to the terms and conditions of this
---------------------
Agreement:
(a) Investor hereby subscribes for, and upon the Company's acceptance
of such subscription as evidenced by the Company's execution of this Agreement,
the Company agrees to sell
<PAGE>
and issue to Investor TWO HUNDRED THOUSAND (200,000) shares of Common Stock (the
"Securities"), for an aggregate purchase price of $300,000.00. The "Purchase
Price"), being $1.50 per share. The sale of the Securities pursuant hereto is
part of the Offering, which Offering shall terminate not later than __________
___, 199_.
(b) 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;
(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
-2-
<PAGE>
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;
(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.
-3-
<PAGE>
(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;
(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 or Rule 904, as applicable, 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
-4-
<PAGE>
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 Cayman Islands, B.W.I. and
that the sale of the Securities has occurred in Cayman Islands, B.W.I.
(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, 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.
-5-
<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:
-6-
<PAGE>
SIGNATURE PAGE - ORGANIZATION ONLY
(INDIVIDUALS ON PREVIOUS PAGE)
Dominion Financial Group International LDC
------------------------------------------
Name(s) of Investor(s)
(Please Print)
/s/ P. Sutcliffe
---------------------------------
P. Sutcliffe
Secretary
Type of Organization (e.g., Corporation, Trust, Limited Partnership, General
Partnership):
Corporation
- --------------------------------------------------------------------------------
Jurisdiction of Formation or Incorporation: Cayman Islands
------------------------------------
Address of Principal Office: P.O. Box 1790, 4th Floor, Cayman
---------------------------------------------------
National Building, Elgin Avenue, George Town, Grand Cayman
- --------------------------------------------------------------------------------
Business Telephone Number: 345-949-0445
-----------------------------------------------------
List any other person(s) who should receive copies of correspondence sent to the
organization, if any:
Name: DFG Management Inc. (Attn: Mr. Tom Hartnett)
--------------------------------------------------------------------------
Address: 2907 Bay to Bay Blvd., Suite 200
-----------------------------------------------------------------------
Tampa, Florida 33629, USA
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ACCEPTED AND AGREED:
MEMRY CORPORATION
By: /s/ James G. Binch
----------------------------------------
Name: James G. Binch
Title: Chairman, President & CEO
Date: 6/26/97
-7-
<PAGE>
EXHIBIT 21.1
Wright Machine Corporation, a wholly-owned subsidiary of Memry Corporation, is a
Delaware Corporation.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Memry
Corporation's consolidated financial statements to its annual report on Form
10KSB for the year ended June 30, 1997. It is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 25
<SECURITIES> 0
<RECEIVABLES> 2,419
<ALLOWANCES> 0
<INVENTORY> 1,664
<CURRENT-ASSETS> 5,413
<PP&E> 4,109
<DEPRECIATION> 1,344
<TOTAL-ASSETS> 11,152
<CURRENT-LIABILITIES> 5,428
<BONDS> 0
0
0
<COMMON> 170
<OTHER-SE> 5,511
<TOTAL-LIABILITY-AND-EQUITY> 11,152
<SALES> 11,290
<TOTAL-REVENUES> 11,545
<CGS> 6,305
<TOTAL-COSTS> 6,517
<OTHER-EXPENSES> 5,023
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 275
<INCOME-PRETAX> (260)
<INCOME-TAX> 0
<INCOME-CONTINUING> (260)
<DISCONTINUED> (751)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,011)
<EPS-PRIMARY> (0.06)
<EPS-DILUTED> (0.06)<F1>
<FN>
<F1>Common Stock equivalents have been excluded from the computation of the net
loss per common share because inclusion of such equivalents would be
anti-dilutive.
</FN>
</TABLE>
