<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
-----------------
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE EXCHANGE ACT
For the transition period from _______ to _______
Commission File Number 0-14068
-------
Memry Corporation
-----------------
(Exact name of small business issuers as
specified in its charter)
Delaware 06-1084424
-------------------------------------------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation of organization
57 Commerce Drive, Brookfield, Connecticut 06804
------------------------------------------------
(Address of principal executive offices)
(203) 740-73ll
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [ X ] No [_]
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date. As of December 31, 1996, 16,717,354
shares of the registrant's common stock, par value $.01 per share, were issued
and outstanding.
Transitional Small Business Disclosure Format (check one):
_____ Yes [ X ] No
- ---
<PAGE>
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
Consolidated Balance Sheet as of December 31, 1996 and June 30, 1996
Consolidated Statement of Operations for three and six months ended
December 31, 1996 and 1995
Consolidated Statement of Cash Flows for the six months ended December
31, 1996 and 1995
Notes to the Consolidated Financial Statements
ITEM 2. Management's Discussion and Analysis or Plan of Operation
PART II --- OTHER INFORMATION
ITEM 2. Changes in Securities
ITEM 4. Submission of Matters to a Vote of Security Holders
ITEM 6. Exhibits and Reports on Form 8-K
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MEMRY CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
December 31, 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
December 31, June 30,
ASSETS 1996 1996
------------------------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 26,000 $ 57,000
Accounts receivable, less allowance for doubtful accounts
December 31, 1996 $32,000; June 30, 1996 $29,000 1,510,000 568,000
Inventories 2,256,000 2,044,000
Prepaid expenses and other 47,000 63,000
-------------- ------------
Total current assets 3,839,000 2,732,000
-------------- ------------
Property,Plant and Equipment, at cost, net 3,783,000 3,881,000
-------------- ------------
Other Assets
Patents and patent rights, less accumulated amortization
December 31, 1996 $127,000; June 30, 1996 $60,000 1,935,000 2,002,000
Goodwill, less accumulated amortization
December 31, 1996 $33,000; June 30, 1996 $0 956,000 989,000
Deferred financing, less accumulated amortization
December 31, 1996 $16,000; June 30, 1996 $0 140,000 36,000
Deposits 53,000 39,000
-------------- ------------
3,084,000 3,066,000
-------------- ------------
Total assets $ 10,706,000 $ 9,679,000
============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 2,241,000 $ 1,733,000
Notes payable 2,642,000 1,698,000
Unearned revenue - 150,000
Current maturities of capital lease obligations 3,000 3,000
------------ ------------
Total current liabilities 4,886,000 3,584,000
------------ ------------
Capital lease obligations, less current maturities - 4,000
------------ ------------
Stockholders' Equity
Preferred stock - 36,000
Common stock, $.01 par value; 30,000,000 authorized
shares; 16,717,354 shares issued and outstanding 167,000 130,000
Additional paid-in capital 39,099,000 39,034,000
Accumulated deficit (33,446,000) (33,109,000)
------------ ------------
Total stockholders' equity 5,820,000 6,091,000
------------ ------------
Total liabilities and stockholders' equity $10,706,000 $ 9,679,000
============ ============
</TABLE>
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For Three Months Ended December 31, 1996 and 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For three months ended December 31,
1996 1995
------------------------------------
<S> <C> <C>
Revenues
Product sales $3,466,000 $ 896,000
Research and development 43,000 104,000
------------ ------------
3,509,000 1,000,000
Cost of revenues ------------ ------------
Manufacturing 2,225,000 680,000
Research and development 81,000 98,000
------------ ------------
2,306,000 778,000
------------ ------------
Gross profit 1,203,000 222,000
------------ ------------
Operating expenses
General, selling and administration 1,295,000 539,000
Depreciation and amortization 178,000 24,000
------------ ------------
1,473,000 563,000
------------ ------------
Operating loss (270,000) (341,000)
Other income (expense)
Interest (72,000) (55,000)
------------ ------------
(72,000) (55,000)
------------ ------------
Net loss (342,000) (396,000)
============ ===========
Weighted average number of common shares
outstanding 16,674,311 8,172,000
============ ============
Net loss per common share $(0.02) $(0.05)
============ ============
</TABLE>
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For Six Months Ended December 31, 1996 and 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For six months ended December 31,
1996 1995
---------------------------------
<S> <C> <C>
Revenues
Product sales $ 5,977,000 $ 1,904,000
Research and development 140,000 277,000
--------------- --------------
6,117,000 2,181,000
--------------- --------------
Cost of revenues
Manufacturing 3,807,000 1,578,000
Research and development 166,000 235,000
--------------- --------------
3,973,000 1,813,000
--------------- --------------
Gross profit 2,144,000 368,000
--------------- --------------
Operating expenses
General, selling and administration 2,135,000 981,000
Depreciation and amortization 354,000 48,000
--------------- --------------
2,489,000 1,029,000
--------------- --------------
Operating loss (345,000) (661,000)
Other income (expense)
Interest (142,000) (110,000)
Gain on disposition of assets 10,000 -
--------------- --------------
(132,000) (110,000)
--------------- --------------
Loss before extraordinary item (477,000) (771,000)
Extraordinary item, gain on retirement
of debt 140,000 -
--------------- --------------
Net loss ($337,000) ($771,000)
=============== ==============
Weighted average number of common shares outstanding 15,340,577 8,131,000
=============== ==============
Net loss per common share $(0.02) $(0.09)
=============== ==============
</TABLE>
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For Six Months Ended December 31, 1996 and 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For Six Months Ended
December 31,
1996 1995
----------- ------------
<S> <C> <C>
Cash Flows From Operating Activities
Net loss ($337,000) ($771,000)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 354,004 48,000
Gain on retirement of debt (140,000) -
Non-cash compensation 65,000 -
Change in working capital components
Increase in accounts receivable (942,000) (139,000)
Increase in inventories (212,000) (56,000)
Decrease (increase) in prepaid & other 17,000 (10,000)
Increase (decrease) in accounts payable and accrued expenses 508,000 (1,025,000)
Increase in other assets (20,000) -
Decrease in deferred income (150,000) -
----------- ------------
Net cash used in operating activities (857,000) (1,953,000)
----------- ------------
Cash Flows Used In Investing Activities
Purchases of property, plant and equipment (139,000) (3,000)
----------- ------------
Cash Flows From Financing Activities
Proceeds from sale of common stock, net 1,000 1,436,000
Net short term borrowings (payments) 1,084,000 (453,000)
Payments on notes payable - (123,000)
Deferred financing costs (120,000) -
----------- ------------
Net cash provided by financing activities 965,000 860,000
----------- ------------
Net decrease in cash and cash equivalents (31,000) (1,096,000)
Cash and cash equivalents, beginning of period 57,000 1,145,000
----------- ------------
Cash and cash equivalents, end of period $26,000 $49,000
=========== ============
</TABLE>
<PAGE>
MEMRY CORPORATION & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note A. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principals for interim
financial information and with the instructions to Form 10-QSB. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and six month periods ended December 31, 1996 are not
necessarily indicative of the results that may be expected for the year ending
June 30, 1997. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Annual Report on Form
10-KSB for the year ended June 30, 1996.
Note B. NOTES PAYABLE
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 Center Financial Corporation, allowing up to $2.635 million of
aggregate borrowing. The term loan is a five year $1.135 million loan, with
principal payable in monthly installments of approximately $19,000. An
additional $135,000 of principal is due on or before June 30th, 1997. 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
<PAGE>
for borrowing 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%. The terms with ABCC
generally are more favorable than the terms that the Company's Wright subsidiary
had with Fleet Bank, the Company's prior lender. The loan documents contain
standard covenants, including security interests in substantially all of the
Company's consolidated assets, commitment fees and negative convenants
(including restrictions on dividends and other payments), which the Company does
not expect to materially impact operations. At the August 9, 1996 closing,
Wright's debt to Fleet Bank was repaid with a $140,000, or 16%, discount.
Borrowings from ABCC as of December 31, 1996, aggregated approximately
$2,217,000. The remainder of the Company's notes payable consisted of
subordinated demand obligations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results.
(a) LIQUIDITY AND CAPITAL RESOURCES
During the six months ended December 31, 1996, the Company was able to fund
operations from cash flow generated through its revolving credit facility, as
described below. The Company historically satisfied its cash requirements from
sales of equity securities and borrowings. During such six month period, net
cash used in operating activities was $857,000, net cash used for purchases of
property, plant and equipment was $139,000 and net cash provided by financing
activities was $965,000. As a result of the foregoing, at December 31, 1996, the
Company held cash and cash equivalents of $26,000, down $31,000 from the start
of fiscal 1997. At December 31, 1996 the Company had a working capital (current
assets less current liabilities) deficit of $1,047,000 ($195,000 worse than the
working capital deficit of $852,000 at June 30, 1996).
On August 9, 1996, the Company entered into a term and revolving loan agreement
with ABCC, a commercial financing subsidiary of Center Financial Corporation,
allowing up to $2.635 million of aggregate borrowings. The term loan is a five
year $1.135 million loan, with principal payable in monthly installments of
approximately $19,000. An additional $135,000 of principal is due
<PAGE>
on or before June 30, 1997. 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%. The terms with ABCC
generally are more favorable than the terms that the Company's Wright Machine
Corporation subsidiary ("Wright") had with Fleet Bank, the Company's prior
lender. The loan documents contain standard covenants, including security
interests in substantially all of the Company's consolidated assets, commitment
fees and negative covenants (including restrictions on dividends and other
payments), which the Company does not expect to materially impact operations. At
the August 9, 1996 closing, Wright's debt to Fleet Bank was repaid with a
$140,000, or 16% discount.
The Company's only currently contemplated material capital expenditure for
fiscal 1997 is to make substantial improvements to certain machinery and
equipment located at Memry West (which is part of the Company's Memry Segment
located in Menlo Park, California, and which manufactures semi-finished
materials utilizing shape memory alloys and, through Raychem Corporation
("Raychem"), sells such materials into various industrial electronic, automotive
and medical markets) and used to manufacture Tinel-Lock product for Raychem.
However, as a result of an agreement entered into at the time of the acquisition
of Raychem's nickel-titanium product line (the "Raychem Acquisition"), it is
anticipated that Raychem will bear substantially all the costs of such
improvements. During the second quarter of fiscal 1997, the Company's liquidity
was adversely effected by the approximately $140,000 of expenses incurred in
connection with the move of the medical assemblies portion of the business
purchased in the Raychem Acquisition from Menlo Park, California to the
Company's headquarters in Brookfield, Connecticut (including related relocation
expenses). The Company had previously expected such relocation to cost only
slightly more than $100,000.
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 within
the Memry Segment. 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.
In connection with a December 1994 subordinated debt financing, the Company
granted Connecticut Innovations, Incorporated
<PAGE>
("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 business operations relating to
Wright's production of screw machine products and taper pins and 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, excluding all banks associated with Wright; or (ii) the Company
fails to keep the Registration Statement on Form S-2 that went effective on
January 31, 1997, covering the offer and sale by certain of the Company's
shareholders (including CII) of up to 3,550,630 shares (including up to
3,041,964 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 Registrable Securities
then held 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. 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.
<PAGE>
The Company believes that the combination of its improved borrowing facility,
its ability to raise equity capital in the past and operating profit being
produced by those portions of the Company's Memry Segment business acquired in
the Raychem Acquisition will be sufficient to meet the Company's working
capital requirements (assuming both that ABCC does not demand immediate
repayment of the term loan and 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).
The Company does not expect that there are any contingencies, other than as set
forth above, which would have a material effect on the Company's financial
condition, future operating results and/or liquidity.
(b) RESULTS OF OPERATIONS
Six Months Ended December 31, 1996 compared to six months ended December 31,
- ----------------------------------------------------------------------------
1995
- ----
Sales Overview. Overall revenues increased 180%, to $6,117,000, in the first
- ---------------
six months of fiscal 1997 from $2,181,000 during the same period in fiscal 1996.
Revenues relating to the Memry Segment were responsible for all of the increase.
Memry Sales. Revenues at the Memry Segment increased 811% to $5,239,000 during
- ------------
the six month period ended December 31, 1996, as compared with $575,000 during
the same period in fiscal 1996. The significant increase in revenues is entirely
due to product sales resulting from the Raychem Acquisition. Medical material,
parts and component sales were responsible for 60% of the Memry Segment revenue
increase. Research and development revenues were $140,000, as compared to
$277,000, in the six month periods ended December 31, 1996 and 1995,
respectively, decreasing 50%, or $137,000. This decrease was the result of
reduced labor hours available to work on government contracts due to the efforts
made to prepare for the medical assemblies unit which moved from California to
the Connecticut location.
Wright Sales. Wright Machine Segment revenues decreased 45% in the period ended
- -------------
December 31, 1996, from $1,606,000 to $878,000. The decrease in product sales is
the result of an earlier reduction in order backlog due to Wright's inability to
perform on orders on a timely basis due to the Company's cash constraints prior
to the consummation of the August 9, 1996 financing provided by ABCC. Wright's
backlog had decreased from $1,200,000 as of June 30, 1995, to $650,000 as of
June 30, 1996. However, Wright revenues increased from $341,00 in the first
quarter of fiscal 1997 to $537,000 in the second quarter of fiscal 1997. In
addition, Wright's order backlog increased from $650,000 on June 30, 1996 to
$1,100,000 on December 31, 1996.
COSTS AND EXPENSES
- ------------------
<PAGE>
Manufacturing Costs Overview. Manufacturing costs increased to $3,807,000 in
- -----------------------------
the six months ended December 31, 1996, from $1,578,000 during the same six
month period in fiscal 1996. This increase of $2,229,000, or 141%, is due to the
increased sales volume related to the aforementioned Raychem Acquisition. Gross
margin increased to 35% for the six month period ended December 31, 1996,
from a 17% margin in the same fiscal 1996 period, due to the higher margin
product sales resulting from the Raychem Acquisition.
Memry Manufacturing Costs. Memry Segment manufacturing costs increased to
- --------------------------
$2,704,000 from $281,000, an 862% increase, in the first six months of fiscal
years 1997 and 1996, respectively. The $2,423,000 increase is the result of the
increased sales volume of Memry Segment products. Gross margins increased for
the six month period ending December 31, 1996 to 48%, compared with a margin of
approximately 6% in the same fiscal 1996 period ending December 31, 1995, due to
the allocation of fixed costs to a much greater volume of sales due to the lines
of business acquired in the Raychem Acquisition.
Wright Manufacturing Costs. The Wright Segment manufacturing costs decreased
- ---------------------------
15% to $1,103,000 from $1,297,000 in the six month periods ending December 31,
1996 and 1995, respectively. The decreased manufacturing costs are due to the
decrease in revenues at Wright. Gross margin decreased from 19% to negative 26%
for the same six month fiscal periods ended December 31, 1995 and 1996,
respectively, due primarily to the reduced sales volume and an increase in
direct costs.
Research and Development Costs. Research and development costs decreased 30%,
- -------------------------------
to $166,000, in the first six months of fiscal 1997 as compared with $235,000 in
the same period of fiscal 1996. This is the result of the revenue decrease of
50%, offset by increased internal development costs.
General, Selling and Administrative Expense ("GS&A"). Overall GS&A increased
- -----------------------------------------------------
$1,154,000, or 118%, to $2,135,000 in the six months ended December 31, 1996, as
compared to $981,000 during the same period of fiscal 1996. The increase is
directly related to the addition of the California facility, which accounted for
approximately 58% of the increase. The remaining 42% is attributable to the
Connecticut facility, which incurred approximately $94,000 of expenses related
to the move of the medical assemblies unit to Brookfield from California,
employee relocation expense of $70,000, an approximate $153,000 increase in
administrative salary expense, an increase of $46,000 in travel expense, and to
the absence in the first six months of fiscal 1997 of $116,000 of negotiated
<PAGE>
supplier discounts taken in the corresponding period of fiscal 1996.
Depreciation and Amortization Expense. Depreciation and amortization expense
- --------------------------------------
increased 538%, or $306,000, primarily as a result of the inventory, patents,
and goodwill purchased as part of the acquisition made of the nickel-titanium
product line. In addition, the Company is amortizing over a five year period
certain debt financing costs.
Other Income(Expense). Interest expense increased $32,000, or 29%, as a result
- ----------------------
of the $944,000 increase in notes payable. The Company realized a gain through
the sale of fully depreciated equipment of approximately $10,000.
Gain on Retirement of Debt. The Company, through a re-financing (as described
- ---------------------------
above in liquidity and capital resources) paid $718,000 of principal debt,
representing payment in full, to Wright's bank on loans of $858,000
which resulted in a gain of $140,000.
NET LOSS
- --------
Overview. Net loss for the first six months of fiscal 1997 was $337,000, as
- ---------
compared with a net loss of $771,000 for the first six months of fiscal 1996, an
improvement of $434,000. The net loss, absent the extraordinary gain on the debt
retirement, would have been $477,000. The overall improvement is a result of the
increase in revenues and margins resulting from the Raychem Acquisition and the
discount of $140,000 given by Wright's bank on its principal debt. The net loss,
however, included approximately $257,000 of non-recurring expenses attributable
to the acquisition of the nickel-titanium line, such as the move of the medical
assemblies unit to Connecticut, which was approximately $94,000, relocation
expense of $125,000 and incentive bonus expenses for various California
employees of $38,000.
Memry Segment. Memry Segment's loss for the first six months of fiscal 1997 was
- --------------
$65,000, as compared with a net loss of $754,000 during the same fiscal 1996
period. The improvement of $689,000 results from the significantly increased
revenues and margins.
Wright Segment. The Wright Segment operating loss for the first six months of
- ---------------
fiscal 1997 was $412,000 as compared with $17,000 during the same six month
period in fiscal 1996. However, after the extraordinary gain on the forgiveness
of Wright's debt, the net loss was reduced to $272,000. The $395,000 increase
in net loss is directly related to the 45% reduction in revenues and an increase
in direct costs.
<PAGE>
Three Months Ended December 31, 1996 compared to three months ended December 31,
- --------------------------------------------------------------------------------
1995
- ----
Sales Overview. Overall revenues increased 251%, to $3,509,000, in the three
- ---------------
months ended December 31, 1996, from $1,000,000 during the same period in fiscal
1996. Revenues relating to the Memry Segment were responsible for all of the
increase.
Memry Sales. Revenues at the Memry Segment increased 1,000%, to $2,972,000,
- ------------
during the three month period ended December 31, 1996 as compared with $270,000
during the same period in fiscal 1996. The significant increase in revenues is
entirely due to the increase in product sales resulting from the acquisition of
the nickel-titanium product line from Raychem. Medical material, parts and
component sales were responsible for 60% of the Memry Segment revenue increase.
Research and development revenues were $43,000 as compared to $104,000, in the
three month periods ended December 31, 1996 and 1995, respectively, decreasing
59%, or $61,000. This decrease continued to be the result of reduced labor hours
available to work on government contracts due to the efforts made to prepare for
the medical assemblies unit which moved from California to Connecticut
at the end of the second quarter.
Wright Sales. Wright Machine Segment revenues decreased 26% in the period ended
- -------------
December 31, 1996, from $730,000 to $537,000. The decrease in product sales is
the result of the reduction in order backlog due to Wright's inability to
perform on orders in fiscal 1996 due to the Company's cash constraints.
COSTS AND EXPENSES
- ------------------
Manufacturing Costs Overview. Manufacturing costs increased to $2,306,000 in
- -----------------------------
the three months ended December 31, 1996, from $778,000 during the same three
month period in fiscal 1996. This 196% increase is due to the increased sales
volume related to the aforementioned acquisition. Gross margin increased 12%
during the period ended December 31, 1996 to 34%, from a 22% margin in the same
fiscal 1996 period, due to the greater volume of products sold by the Memry
Segment and the shift in product mix from the Wright Segment to the Memry
Segment.
Memry Manufacturing Costs. Memry Segment manufacturing costs increased to
- --------------------------
$1,596,000 from $154,000, or 936%, in the three month period ended December 31,
1996 and 1995, respectively. The $1,334,000 increase is the result of the
increased sales volume. Gross margins for the three month period ending December
31, 1996 were 46%, from a margin of 3% in the three month period ending December
31, 1995. The increase in margin is due to higher margin product sales as a
result of the Raychem Acquisition.
Wright Manufacturing Costs. The Wright Segment manufacturing costs increased
- ---------------------------
20%, to $629,000 from $526,000, in the three month periods ending December 31,
1996 and 1995, respectively. The increase in manufacturing costs,
notwithstanding the reduction in sales, was primarily due to an increase in
direct and indirect labor rates. The
<PAGE>
Gross margin decreased from 28% to a negative 17% in the same three month fiscal
periods ended December 31, 1995 and 1996, respectively, due primarily to the
reduced sales volume and a high level of costs.
Research and Development Costs. Research and development costs decreased 17%,
- -------------------------------
to $81,000, in the three month period ended December 31, 1996, as compared with
$98,000 in the same period of fiscal 1996. The decrease is a result of the
revenue decrease of 59% and the increase in internal development costs of 91%.
During the three month period ended December 31, 1996, internal development
costs accounted for 85%, or $69,000, of the total research and development
costs, as compared with 37%, or $36,000, in the same period of fiscal 1996. This
increase in internal development costs arose from the efforts made to prepare
for the medical assemblies unit move from California to Connecticut.
General, Selling and Administrative Expense ("GS&A"). Overall GS&A increased
- -----------------------------------------------------
$756,000, or 140%, to $1,295,000 in the three months ended December 31, 1996, as
compared to $539,000 during the same period of fiscal 1996. The increase is
directly related to the addition of the California facility, which accounted for
approximately 54% of the increase. The remaining 46% of the increase is related
to the operations of the Connecticut facility, which incurred approximately
$94,000 of expenses related to the move of the medical assemblies unit to
Brookfield from California, employee relocation expense of $70,000,an
approximate $59,000 increase in salary and benefit expense, an increase in
patent taxes attributable to the acquired patents of $20,000,an increase of
approximately $23,000 in professional fees and an increase of $20,000 in travel
expense during the three month period of fiscal 1997, and to the absence in the
same three month period of fiscal 1997 of $30,000 of negotiated supplier
discounts taken in the corresponding quarter of fiscal 1996.
Depreciation and Amortization Expense. Depreciation and amortization expense
- --------------------------------------
increased 542%, or $164,000, primarily as a result of the inventory, patents,
and goodwill purchased as part of the Raychem Acquisition. In addition, the
Company is amortizing certain debt financing costs over a five year period.
Other Income(Expense). Interest expense increased $17,000, or 31%, as a result
- ----------------------
of the $408,000 increase in notes payable.
NET LOSS
- ----------
Overview. Net loss for the three months ended December 31, 1996 was $342,000,
- ---------
as compared with a net loss of $396,000 for the same period of fiscal
1996, an improvement of only $54,000. The net loss, however, included $204,000
of non-recurring expenses (the
<PAGE>
move of the medical assemblies unit to Connecticut cost approximately $94,000
and related relocation expenses cost approximately $110,000).
Memry Segment. Memry Segment's loss for the three months ended December 31,
- --------------
1996 was $158,000, as compared with a net loss of $428,000 during the same
fiscal 1996 period. The improvement of $270,000 results from the significantly
increased revenues and margins. The improvement would have been greater but for
the significant costs related to the move of the medical assemblies unit to
Connecticut (amounting to $94,000) and relocation expense of $110,000.
Wright Segment. The Wright Segment loss for the three months ended December 31,
- ---------------
1996 was $184,000, as compared with a $32,000 profit during the same three month
period in fiscal 1996. The decrease in profit of $216,000 is the result of
decreased revenues and resulting negative gross margins.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
(a) On December 5, 1996, a Certificate of Amendment to the Certificate of
Incorporation of the Company (the "Amendment") was filed with the Delaware
Secretary of State. The Amendment, which was approved at the annual meeting of
Stockholders of the Company held on such date, increased the number of
authorized shares of Common Stock of the Company from 25,000,000 to 30,000,000.
If the Company should issue additional shares of Common Stock, current holders
of shares of Common Stock could have their current ownership substantially
diluted.
(c) As of December 5, 1996, each of James Proft, Raymond Serna and Phillipe
Poncet exercised warrants to purchase 20,000 shares of Common Stock at an
exercise price of $0.01 per share, for an aggregate exercise price of $200 per
person. The Common Stock was sold in reliance on the exemption from
registration provided by Section 4 (2) of the Securities Act. Mr. Proft is Vice
President and General Manager - Western Operations of the Company, and each of
Messrs. Serna and Poncet is an employee of the Company. Messrs. Proft, Serna
and Poncet were issued the warrants in order to induce them to accept offers of
employment from the Company following the Raychem Acquisition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On December 5, 1996 the Company held an annual meeting of Stockholders. The
stockholders elected to the Board of Directors James G. Binch, Nicholas J.
Grant, Jack H. Halperin, John A. Morgan and W. Andrew Krusen, Jr. The
tabulation of votes for each nominee was as follows:
Number of Votes
-------------------------
Nominee For Against/Witheld
- ------------------------------------------------------
James G. Binch 10,872,099 8,999
Nicholas J. Grant 10,872,099 8,999
Jack H. Halperin, Esq. 10,872,093 9,005
W. Andrew Krusen, Jr. 10,872,099 8,999
John A. Morgan 10,872,099 8,999
<PAGE>
The stockholders also approved, with 10,800,920 votes in favor, 39,631 votes
against and 40,547 votes abstaining, an amendment of the Company's Certificate
of Incorporation increasing the authorized Common Stock of the Corporation from
25,000,000 shares to 30,000,000 shares.
The stockholders also approved, with 10,717,244 votes in favor, 19,067 votes
against and 43,360 votes abstaining, an amendment to the Memry Corporation Stock
Option Plan increasing the maximum number of shares of the Company's Common
Stock that could be issued pursuant thereto from 600,000 to 1,100,000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit
Number Description of Exhibit
- ------ ----------------------
3.1 Certificate of Incorporation, as amended
10.1 Memry Corporation Stock Option Plan, as amended *
10.2 Form of Nontransferable Incentive Stock Option
Agreement *
10.3 Form of Nontransferable Non-Qualified Stock Option
Agreement *
27 Financial Data Schedule *
* Submitted herewith electronically
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by undersigned, thereunto duly
authorized.
Memry Corporation
-----------------
Date: February 14, 1996 /s/ James G.Binch
----------------- -------------------------------
James G. Binch
President, CEO and Director
(Principal Executive Officer)
Date: February 14, 1996 /s/ Wendy A.Gavaghan
----------------- -------------------------------
Wendy A. Gavaghan
Corporate Controller
(Principal Financial Officer)
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------ ----------------------
3.1 Certificate of Incorporation, as amended
10.1 Memry Corporation Stock Option Plan, as amended *
10.2 Form of Nontransferable Incentive Stock Option
Agreement *
10.3 Form of Nontransferable Non-Qualified Stock Option
Agreement *
27 Financial Data Schedule *
* Submitted herewith electronically
<PAGE>
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
MEMORY METALS, INC.
1. The name of the Corporation is
MEMORY METALS, INC.
2. The address of its registered office in the State of Delaware is No.
100 West-Tenth Street, in the City of Wilmington, County of Newcastle. The name
of its registered agent at such address is The Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted is:
To invent, develop, market, license, sell and/or acquire, as a principal
partner and/or joint venturer, specialty metals and machine parts or other
objects made therefrom.
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
4. The total number of shares of Common Stock which the Corporation shall
have authority to issue is one million (1,000,000), and the par value of each of
such shares is One Cent ($.01), amounting in the aggregate to Ten Thousand
Dollars ($10,000.00).
5. The name and address of the incorporator is as follows:
Jerry Cohen 50 Court Street
Newton, MA 02160.
6. The Corporation is to have perpetual existence.
7. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
To make, alter, or repeal the bylaws of the Corporation.
To authorize and cause to be executed mortgages and liens upon the real
and personal property of the Corporation.
<PAGE>
To set apart out of any of the funds of the Corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
By a majority of the whole board, to designate one or more committees,
each committee to consist of one or more of the directors of the Corporation.
The board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. The bylaws may provide that in the absence or disqualification of
a member of a committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the board of directors,
or in the bylaws of the Corporation, shall have and may exercise all the powers
and authority of the board of directors in the management of the business and
affairs of the corporation and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the certificate of incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease, or exchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution, or amending the
bylaws of the Corporation; and, unless the resolution or bylaws expressly so
provide, no such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock.
When and as authorized by the stockholders in accordance with statute, to
sell, lease, or exchange all or substantially all of the property and assets of
the Corporation, including its goodwill and its corporate franchises, upon such
terms and conditions and for such consideration, which may consist in whole or
in part of money or property including shares of stock in, and/or other
securities of,
<PAGE>
any other corporation or corporations, as its board of directors shall deem
expedient and for the best interests of the Corporation.
3. Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder hereof, or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of Section 279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors, and/or the stockholders
or class of stockholders of the Corporation, as the case may be, to be summoned
in such manner as the said court directs. If a majority in number representing
three-fourths (3/4) in value of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of the Corporation, as the case may
be, agree to any compromise or arrangement or to any reorganization of the
Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders of this Corporation, as the case may be, and also on this
Corporation.
9. Meetings of stockholders may be held within or without the State of
Delaware, as the bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the bylaws of the Corporation. Elections of directors
need not be by written ballot unless the bylaws of the Corporation shall so
provide.
<PAGE>
10. The Corporation reserves the right to amend, after, change, or repeal
any provision contained in this certificate of incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
I. THE UNDERSIGNED, being the incorporator hereinbefore names, for the
purposes of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and certifying
that his is my act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand this 4th day of November 1981.
/s/ Jerry Cohen
--------------------------------
Jerry Cohen
Commonwealth of Massachusetts )
) ss
County of Middlesex )
BE IT REMEMBERED that on this 4th day of November, 1981, personally
appeared before me, a Notary Public for the Commonwealth of Massachusetts, Jerry
Cohen, a party to the foregoing instrument, known to me personally to be such,
and acknowledged it to be his free act and deed, and that the facts stated
therein are true.
GIVEN under my hand and seal of office the day and year aforesaid.
/s/Grisella G. Slofasow
--------------------------------
Notary Public
My commission expires:
August 20, 1987
<PAGE>
Certificate of Amendment No. 1
To
Certificate of Incorporation
Memory Metals, Inc.
MEMORY METALS, INC., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: That the Board of Directors of said corporation on February 28,
1983 adopted a resolution proposing and declaring advisable that the amendment
of the certificate of incorporation set forth in Exhibit A hereto be made.
SECOND: The holder of all the outstanding shares of said corporation voted
on February 28, 1983 to authorize the amendment set forth in said resolution.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Sections 242 and 222 of the General Corporation Law
of the State of Delaware.
FOURTH: That the capital of said corporation shall not be reduced under or
by reason of said amendment.
<PAGE>
IN WITNESS WHEREOF, said Memory Metals, Inc. has caused this certificate
to be signed by Gerald Grosof, its President, and attested by Mary Teufel, its
Assistant Secretary, this 28th day of February, 1983.
MEMORY METALS, IN.
By:/s/ Gerald Grosof
--------------------------------------
Gerald Grosof
President
ATTEST:
By:/s/ Mary Teufel
- --------------------------------------
Mary Teufel, Assistant Secretary
<PAGE>
Exhibit A
RESOLVED, that the Certificate of Incorporation of MEMORY METALS, INC.
(the "corporation") be amended as follows:
By deleting Article Fourth thereof and substituting the following:
FOURTH: The total number of shares of all class stock which the
corporation shall have authority to issue is Ten Million One Hundred Thousand
(10,100,000) shares consisting of (a) Ten Million (10,000,000) shares of common
stock of the par value of One Cent ($.01) per share and (b) One Hundred Thousand
(100,000) shares of preferred stock of the par value of One Hundred Dollars
($100.000) per share.
The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions, of the preferred stock are as
follows:
A. The preferred stock may be issued from time to time in one or more
series. Subject to the limitations set forth herein and any limitations
prescribed by law, the board of directors is expressly authorized, prior to
issuance of any series of preferred stock, to fix by resolution or resolutions
providing for the issue of any series the number of shares included in such
series and the designation, relative powers, preferences and rights, and the
qualifications, limitations or restrictions of such series. Pursuant to the
foregoing general authority vested in the board of directors, but not in
limitations of the power conferred on the board of directors thereby and by the
General Corporation Law of the State of Delaware, the board of directors is
expressly authorized to determine with respect to each series of preferred
stock:
(1) the designation or designations of such series and the number of
shares (which number from time to time may be decreased by the board of
directors, but not below the number of such shares of such series then
outstanding, or may be increased by the board of directors unless
otherwise provided in creating such series) constituting such series;
(2) the rate or amount and times at which, and the preference and
conditions under which, dividends shall be payable on shares of such
series, the status of such dividends as cumulative or noncumulative, the
date or dates from which dividends, if cumulative, shall accumulate, and
the status of such shares as participating or non- participating after the
payment of dividends as to which such shares are entitled to any
preference;
(3) the rights and preference, if any, of the holders of shares of
such series upon the liquidation, dissolution or winding up of the assets
of, the corporation, which amount may vary depending upon whether such
liquidation, dissolutions or winding up is voluntary or involuntary and,
if voluntary, may vary at different dates, and the status of the shares of
such series as participating or non-participating after the satisfaction
of any such rights and preferences;
<PAGE>
(4) the full or limited voting rights, if any, to be provided for
shares of such series, in addition to the voting rights provided by law;
(5) the times, terms and conditions, if any, upon which shares of
such series shall be subject to redemption, including the amount the
holders of shares of such series shall be entitled to receive upon
redemption (which amount may vary under different conditions or at
different redemption dates) and the amount, terms, conditions and manner
of operation of any purchase, retirement or sinking fund to be provided
for the shares of such series.
(6) the rights, if any, of holders of shares of such series and/or
of the corporation to convert such shares into, or to exchange such shares
for, shares of any other class or classes or of any other series of the
same class, the prices or rates of conversion or exchange, and adjustments
thereto, and any other terms and conditions applicable to such conversion
or exchange;
(7) the limitations,if any, applicable while such series is
outstanding on the payment of dividends or making of distributions on, or
the acquisition or redemption of, common stock or any other class or
shares ranking junior either as to dividends or upon liquidation, to the
shares of such series;
(8) the conditions or restrictions, if any, upon the issue of any
additional shares (including additional shares of such series or any other
series or of any other class) ranking on a parity with or prior to the
shares of such series either as to dividends or upon liquidation; and
(9) any other relative powers, preferences and participating,
optional or other special rights, and the qualifications, limitations or
restrictions thereof, of shares of such series; the provisions of this
Certificate of Incorporation or the General Corporation Law of the State
of Delaware as then in effect.
All shares of preferred stock shall be identical and of equal rank except in
respect to the particular that may be fixed by the board of directors as
provided above, and all shares of each series of preferred stock shall be
identical and of equal rank except in respect to the particulars that may be
fixed by the board of directors as provided.
<PAGE>
Certificate of Amendment No. 2
To
Certificate of Incorporation
Of
Memory Metals, Inc.
MEMORY METALS, INC., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware. DOES HEREBY
CERTIFY:
FIRST: That the Board of Directors of said corporation on February 23,
1989 and April 25, 1989 adopted resolutions proposing and declaring advisable
that the amendment of the certificate of incorporation set for in Exhibit A
hereto be made.
SECOND: That the shareholders of said corporation, at a Special Meeting
held on May 31, 1989, voted to authorize the amendment set forth in said
resolution.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Sections 242 and 222 of the General Corporation Law
of the State of Delaware.
FOURTH: That the capital of said corporation shall not be reduced under or
by reason of said amendment.
<PAGE>
IN WITNESS WHEREOF, said Memory Metals, Inc. has caused this certificate
to be signed by Stephen M. Fisher, its President, and attested by John W.
Johnston, its Secretary, this 1st day of June, 1989.
MEMORY METALS, INC.
By: /s/ Stephen M. Fisher
--------------------------------------
Stephen M. Fisher,
President
ATTEST:
By: /s/ John W. Johnston
- --------------------------------
John W. Johnston
Secretary
<PAGE>
EXHIBIT A
RESOLVED, that the Certificate of Incorporation of MEMORY METALS, INC.
(the "corporation") be amended as follows:
FIRST: By deleting Article 1 thereof and substituting the following:
1. The name of the Corporation is Memry Corporation.
SECOND: By deleting the first paragraph of Article 4 thereof and
substituting the following:
4. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is Fifteen Million One Hundred
Thousand (15,100,000) shares consisting of (a) Fifteen Million (15,000,000)
shares of common stock of the par value of One Cent ($.01) per share and (b) One
Hundred Thousand (100,000) shares of preferred stock of the par value of One
Hundred Dollars ($100.00) per share.
THIRD: By adding a new Article 12. to read as follows:
12. To the fullest extent permissible under the General Corporation Law of
the Sate of Delaware, as the same exists of may hereafter be amended, a
director's personal liability to the Corporation and its shareholders for
monetary damages for breach of his fiduciary duty as a director is hereby
eliminated, except for liability (i) for any breach of director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
the law, (iii) for improper dividend payment or unlawful stock purchases or
redemption, or (iv) for any transaction from which the director derived an
improper personal benefit. Any repeal or modification of this Article shall not
adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification.
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING MEMRY TECHNOLOGIES, INC. AND
MEMRY PLUMBING PRODUCTS CORPORATION INTO
MEMRY CORPORATION
(Pursuant to Section 253 of the Delaware General Corporation Law)
Memry Corporation, a Delaware corporation (the "Corporation") does hereby
certify:
FIRST: That the Corporation was incorporated and duly organized
pursuant to the General Corporation Law of the State of Delaware.
SECOND: That the Corporation owns all of the outstanding shares of each
class of the capital stock of Memry Technologies, Inc., a Delaware corporation
("Subsidiary Corporation No. 1").
THIRD: That the Corporation owns all of the outstanding shares of each
class of the capital stock of Memry Plumbing Products Corporation, a Delaware
corporation ("Subsidiary Corporation No. 2").
FOURTH: That the Corporation, by resolutions duly adopted by its Board of
Directors on the 24th day of September, 1993, determined to merge with and into
itself its subsidiaries, Subsidiary Corporation No. 1 and Subsidiary Corporation
No. 2, pursuant to Section 253 of the General Corporation Law of the State of
Delaware, and that said resolutions on the conditions set forth in such
resolutions:
RESOLVED: That the Corporation merge with and into itself its
subsidiaries, Subsidiary Corporation No. 1 and Subsidiary Corporation No. 2, and
assume all of said subsidiaries' liabilities and obligations:
FURTHER RESOLVED: That the President and the Secretary of the Corporation
be and they hereby are, jointly and severally, authorized and directed to make,
execute and acknowledge a certificate of ownership and merger setting forth a
copy of the resolutions so to merge said Subsidiary Corporation into the
Corporation and to assume said subsidiaries' liabilities and obligations and the
date of adoption thereof and to file the same in the office of the Secretary of
the State of Delaware and a certified copy thereof in the Office of the Recorder
of Deeds of New Castle County, and to do all acts and things whatsoever whether
within or without the State, of Delaware, as may be necessary and proper to
effect the merger.
<PAGE>
IN WITNESS WHEREOF, said Corporation has caused this certificate to be
signed by James G. Binch, its President, and attested by Wendy Gavaghan, its
Secretary, this 27th day of September, 1993.
MEMRY CORPORATION
By:/s/ James G. Binch
--------------------------------------
James G. Binch, President
ATTEST:
/s/ Wendy Gavaghan
- -----------------------------------
Wendy Gavaghan, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
MEMRY CORPORATION
MEMRY CORPORATION, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify:
First: That the Board of Directors of the Corporation on April 13, 1994
adopted resolutions proposing and declaring advisable that the amendments to the
certificate of incorporation set forth in Exhibit A hereto be made.
Second: That the stockholders of the Corporation, at the annual meeting of
stockholders held on July 19, 1994, voted to authorize the amendments set forth
in said resolution.
Third: That the aforesaid amendments were duly adopted in accordance with
the applicable provisions of Sections 222 and 242 of the General Corporation Law
of the State of Delaware.
Fourth: That the effective date of the foregoing amendments will be August
8, 1994.
IN WITNESS WHEREOF, the Corporation has caused this certificate to
be signed by James G. Binch, its President, and attested to by Wendy Gavaghan,
its Secretary, this 27th day of July, 1994.
MEMRY CORPORATION
By: /s/ James G. Binch
----------------------------------
Name: James G. Binch
Title: President
Attest:
By: /s/ Wendy Gavaghan
------------------------------------
Name: Wendy Gavaghan
Title: Secretary
<PAGE>
RIDER A
-------
EXHIBIT A
---------
RESOLVED, that Article 4 of the Certificate of Incorporation be amended by
adding a final paragraph as follows:
Each ten shares of Common Stock of the Company, par value $0.01 per share,
either issued and outstanding or held by the Company as treasury stock,
immediately prior to the time this amendment becomes effective shall be and are
hereby automatically reclassified and changed (without any further act) into one
fully-paid and nonassessable share of the Common Stock of the Company, par value
$0.01 per share, without increasing of decreasing the amount of stated capital
or paid-in surplus of the Company, provided that no fractional shares shall be
issued. Shareholders otherwise entitled to fractional share interests as a
result of the foregoing reclassification and change shall be entitled to receive
in lieu of such fractional share scrip (in bearer or registered form, as the
proper officers of the Company may determine) which shall entitle the holder to
receive a full share upon the surrender of such scrip aggregating a full share.
Such scrip shall be issued subject to the condition that it shall become void if
not exchanged for certificates representing full shares on or before the date
three years after the effective date of this amendment.
RESOLVED, that the Certificate of Incorporation of the Company be amended by
deleting the first paragraph of Article 4 thereof and substituting the
following.
4. The total number of shares of all classes of stock which the Corporation
shall have authority to issue is Ten Million One Hundred Thousand (10,100,000)
shares consisting of (a) Ten Million (10,000,000) shares of common stock of the
par value of One Cent ($0.01) per share and (b) One Hundred Thousand (100,000)
shares of preferred stock of the par value of One Hundred Dollars ($100.00) per
share.
<PAGE>
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
MEMRY CORPORATION
It is hereby certified that:
1. The name of the corporation is Memry Corporation (the "Corporation").
2. The certificate of incorporation of the Corporation is hereby amended
by striking out the first paragraph of Article 4 thereof and by substituting in
lieu of said paragraph the following new paragraph:
"4. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is Twenty-Five Million One
Hundred Thousand (25,100,000) shares consisting of (a) Twenty-Five Million
(25,000,000) shares of common stock of the par value of One Cent ($0.01)
per share and (b) One Hundred Thousand (100,000) shares of preferred stock
of the par value of One Hundred Dollars ($100.00) per share."
3. The amendment of the certificate of incorporation herein certified has
been duly adopted in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate to
be signed by James G. Binch, its President, this 19th day of December, 1995.
MEMRY CORPORATION
By: /s/ James G. Binch
----------------------------------
Name: James G. Binch
Title: President
<PAGE>
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
MEMRY CORPORATION
It is hereby certified that:
1. The name of the corporation is Memry Corporation (the
"Corporation").
2. The certificate of incorporation of the Corporation is hereby
amended by striking out the first paragraph of Article 4 thereof and by
substituting in lieu of said paragraph the following new paragraph:
"4. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is Thirty Million One
Hundred Thousand (30,100,000) shares consisting of (a) Thirty Million
(30,000,000) shares of common stock of the par value of One Cent
($0.01) per share and (b) One Hundred Thousand (100,000) shares of
preferred stock of the par value of One Hundred Dollars ($100.00) per
share."
3. The amendment of the certificate of incorporation herein certified
has been duly adopted in accordance with the provisions of Section 242 of
the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate
to be signed by James G. Binch, its President, this 5th day of December,
1996.
MEMRY CORPORATION
By: /s/ James G. Binch
---------------------
Name: James G. Binch
Title: President
<PAGE>
EXHIBIT 10.1
MEMRY CORPORATION
STOCK OPTION PLAN
<PAGE>
MEMRY CORPORATION
STOCK OPTION PLAN
Table of Contents
<TABLE>
<CAPTION>
Section Page
<S> <C>
1. Purpose..................................................................... 1
2. Definitions................................................................. 1
3. Shares Subject to the Plan.................................................. 2
4. Grant of Stock Options...................................................... 2
5. Certificates for Award of Stock............................................. 4
6. Beneficiary................................................................. 4
7. Administration of the Plan.................................................. 5
8. Amendment or Discontinuance................................................. 5
9. Adjustments in Event of Change in Common Stock.............................. 5
10. Miscellaneous............................................................... 6
11. Effective Date and Stockholder Approval..................................... 7
</TABLE>
<PAGE>
MEMRY CORPORATION
STOCK OPTION PLAN
1. Purpose
-------
The purpose of the Memry Corporation Stock Option Plan is to attract and
retain persons of ability as employees of Memry Corporation, its subsidiaries
and affiliates and encourage such employees to continue to exert their best
efforts on behalf of the Company, its subsidiaries and affiliates.
2. Definitions
-----------
When used herein, the following terms shall have the following meanings:
"Beneficiary" means the beneficiary or beneficiaries designated pursuant to
Section 6 to receive the benefit, if any, provided under the Plan upon the death
of an Employee.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended. (All citations to sections of the Code are to such sections
as they may from time to time be amended or renumbered.)
"Committee" means the Committee appointed by the Board pursuant to Section
7.
"Company" means Memry Corporation, and its successors and assigns.
"Employee" means an employee of a Participating Company who, in the
judgment of the Committee, is responsible for or contributes to the growth or
profitability of the business of the Company.
"Exchange" means the New York Stock Exchange, or if the Stock is not listed
on the New York Stock Exchange, the principal exchange on which the Stock is
listed or the NASDAQ system of the National Association of Securities Dealers.
"Fair Market Value" means, as of any date, the mean between the reported
high and low sales prices on the Exchange for one share of Stock on such date,
or, if no sales of Stock have taken place on such date, the Fair Market Value of
one share of Stock on the most recent date on which selling prices were reported
on the Exchange. In the event that the Company's shares are not publicly traded
on an Exchange, the Committee shall determine the fair market value for all
purposes.
"Option" means an option to purchase Stock subject to the applicable
provisions of Section 4 and awarded in accordance with the terms of the Plan and
which may be an incentive stock option qualified under Section 422 of the Code
or a nonqualified stock option.
"Option Agreement" means the written agreement evidencing each Option or
SAR granted to an Employee under the Plan.
"Participating Company" means the Company or any corporation which at the
time such option is granted qualifies as a "subsidiary corporation" of the
Company under Section 424(f) of the Code.
"Plan" means the Memry Corporation Stock Option Plan, as the same may be
amended, administered or interpreted from time to time.
"SAR" means a stock appreciation right to subject to the appropriate
requirements under Section 4 and awarded in accordance with the terms of the
Plan.
<PAGE>
"Stock" means the common stock, $0.01 par value, of the Company.
"Total Disability" means the permanent and total disability (within the
meaning of Section 22(e)(3) of the Code) of an Employee.
3. Shares Subject to the Plan
--------------------------
The aggregate number of shares of Stock which may be awarded under the
Plan, used to determine the value of SARs, or subject to purchase by exercising
Options is 1,100,000 shares. Such shares shall be made available either from
authorized and unissued shares or shares held by the Company in its treasury.
If, for any reason, any shares of Stock subject to purchase or payment by
exercising an Option or SAR under the Plan are not delivered or are reacquired
by the Company, for reasons including, but not limited to, termination of
employment, or expiration or a cancellation with the consent of an Employee of
an Option or SAR, such shares of Stock shall again become available for award
under the Plan.
4. Grant of Stock Options
----------------------
(a) Subject to the provisions of the Plan, the Committee shall (i)
determine and designate from time to time those Employees to whom Options and/or
SARs are to be granted; (ii) determine the number of shares of Stock subject to
each Option; (iii) determine the time or times when and the manner in which each
Option shall be exercisable, the exercise price and the duration of the exercise
period; (iv) determine whether such Option shall be incentive stock options or
nonqualified stock options or a combination of incentive stock options and
nonqualified stock options; and (v) determine the number of shares of Stock that
shall be used to determine the value of an SAR; provided, however, that (A) no
-------- -------
Option or SAR shall be granted after the expiration of ten years from the
effective date of the Plan and (B) the aggregate Fair Market Value (determined
as of the date an Option is granted) of the Stock for which incentive stock
options granted to any Employee under this Plan that may first become
exercisable in any calendar year shall not exceed $100,000.
(b) The exercise period for an incentive stock option shall be no more
than ten years from the date of grant, except that in the case of an incentive
stock option granted to an Employee who is a Ten Percent Shareholder as
described in Section 4(c), the exercise period shall be no more than five years.
The exercise period for a nonqualified stock option or an SAR shall be no more
than ten years.
(c) The Option or SAR exercise price per share shall be determined by the
Committee at the time the Option is granted and shall be at least equal to the
par value of one share of Stock; provided, however, that the exercise price for
-------- -------
an incentive stock option and any tandem SARs shall be not less than the Stock's
Fair Market Value at date of grant, or in the case of an incentive stock option
and any tandem SARs granted to an Employee who, at the time of grant, owns stock
possessing more than 10 percent of the total combined voting power of all
classes of stock of the Company (a "Ten Percent Shareholder"), 110 percent of
the Fair Market Value on the date of grant, all as determined by the Committee.
(d) No part of any Option or SAR may be exercised by an Employee until
such Employee shall have (i) remained in the employ of one or more Participating
Companies for one year after the date on which the Option is granted, unless
employment is terminated on account of death or Total Disability, or (ii)
achieved such performance or other criteria, as the Committee may specify, if
any, of the Company or any other Participating Company, and the Committee may
further require exercisability in installments; provided, however, the period
-------- -------
during which an SAR is exercisable shall commence no earlier than six months
following the date the SAR is granted.
(e) (i) If the Employee's employment terminates because of (a) involuntary
termination of employment by the Participating Company other than for cause, as
determined by the Company in its sole discretion, or (b) retirement in
accordance with the terms and conditions of a retirement plan adopted by the
Participating Company; he or she may exercise his or her Options to the extent
that he or she shall have been entitled to do so at the date of the termination
of his or her employment, at any time, or from time to time, within three months
after the date of the termination of his or
2
<PAGE>
her employment or within such other period, and subject to such terms and
conditions as the Committee may specify, but not later than the expiration date
specified in Section 4(b) above.
(ii) If an Employee who has been granted an Option or SAR dies while
an Employee of a Participating Company, his or her Options or SARs may be
exercised, to the extent that the Employee shall have been entitled to do so on
the date of his or her death or such termination of employment, by his or her
Beneficiary including, if applicable, his or her executors or administrators, at
any time, or from time to time, within three months after the date of the
Employee's death or within such other period, and subject to such terms and
conditions as the Committee may specify, but no later than the expiration date
specified in Section 4(b) above.
(iii) If the Employee's employment by a Participating Company
terminates because of his or her Total Disability, he or she may exercise his or
her Options or SARs, to the extent that he or she shall have been entitled to do
so at the date of the termination of his or her employment, at any time, or from
time to time, within one year after the date of the termination of his or her
employment or within such other period, and subject to such terms and conditions
as the Committee may specify, but not later than the expiration date specified
in Section 4(b) above.
(iv) If an Employee's employment is terminated by a Participating
Company for cause, as determined by the Company in its sole discretion, or by
the Employee voluntarily, all outstanding Options and SARs immediately shall be
forfeited as of the date of termination.
(f) No Option or SAR granted under the Plan shall be transferable other
than by will or by the laws of descent and distribution. During the lifetime of
the optionee, an Option shall be exercisable only by him or her.
(g) With respect to an incentive stock option, the Committee shall specify
such terms and provisions as the Committee may determine to be necessary or
desirable in order to qualify such Option as an incentive stock option within
the meaning of Section 422 of the Code.
(h) Each Option and SAR granted under the Plan shall be evidenced by a
written Option Agreement, in a form approved by the Committee. Such agreement
shall be subject to and incorporate the express terms and conditions, if any,
required under the Plan or as required by the Committee for the form of Option
granted and such other terms and conditions as the Committee may specify.
Further, each such Option Agreement shall provide that unless at the time of
exercise of the Option there shall be, in the opinion of counsel for the
Company, a valid and effective registration statement under the Securities Act
of 1933 ("'33 Act") and appropriate qualification and registration under
applicable state securities laws relating to the Stock being acquired pursuant
to the Option, the Employee shall upon exercise of the Option give a
representation that he or she is acquiring such shares for his or her own
account for investment and not with a view to, or for sale in connection with,
the resale or distribution of any such shares. In the absence of such
registration statement, the Employee shall be required to execute a written
affirmation, in a form reasonably satisfactory to the Company, of such
investment intent and to further agree that he or she will not sell or transfer
any Stock acquired pursuant to the Option until he or she requests and receives
an opinion of the Company's counsel to the effect that such proposed sale or
transfer will not result in a violation of the '33 Act, or a registration
statement covering the sale or transfer of the shares has been declared
effective by the Securities and Exchange Commission, or he or she obtains a no-
action letter from the Securities and Exchange Commission with respect to the
proposed transfer.
(i) Except as otherwise provided in the Plan, the purchase price of the
shares as to which an Option shall be exercised shall be paid to the Company at
the time of exercise either in cash or in Stock already owned by the optionee,
or a combination of cash and Stock, or in such other consideration acceptable to
the Committee (including, to the extent permitted by applicable law, the
relinquishment of a portion of the Option) as the Committee deems appropriate,
having a total Fair Market Value equal to the purchase price. For purposes of
this Section 4(i), the fair market value of the portion of an Option that is
relinquished shall be the excess of
(x) the Fair Market Value at the time of exercise of the number of
shares of Stock subject to the portion of the Option that is
relinquished over
3
<PAGE>
(y) the aggregate exercise price specified in the Option with respect
to such shares.
(j) Upon exercise of an SAR, the Employee shall be entitled to receive all
or a portion of (i) the Fair Market Value of a specified number of shares of
Stock at the time of exercise over (ii) a specified amount which shall not,
subject to Section 4(i), be less than the Fair Market Value of such specified
number of shares of Stock at the time the SAR is granted. Upon exercise of an
SAR, payment of such excess shall be made in cash or Stock, or both, as
determined by the Committee in its sole discretion.
(k) If the Option granted to an Employee allows the Employee to elect to
cancel all or any portion of an unexercised Option by exercising a related
(tandem) SAR, then the Option price per share of Stock shall be used as the
specified price in Section 4(j), to determine the value of the SAR upon such
exercise, and, in the event of the exercise of such SAR, the Company's
obligation in respect of such Option or such portion thereof will be discharged
by payment of the SAR so exercised.
5. Certificates for Award of Stock
-------------------------------
(a) Each Employee entitled to receive shares of Stock under the Plan shall
be issued a certificate for such shares. Such certificate shall be registered
in the name designated by the Employee, and shall bear an appropriate legend
reciting the terms, conditions and restrictions, if any, applicable to such
shares and shall be subject to appropriate stop-transfer orders.
(b) Shares of Stock shall be made available under the Plan either from
authorized and unissued shares, or shares held by the Company in its treasury.
The Company shall not be required to issue or deliver any certificates for
shares of Stock prior to (i) the listing of such shares on any stock exchange on
which the Stock may then be listed, (ii) the completion of any registration or
qualification of such shares under any federal or state law, or any ruling or
regulation of any governmental body, which the Committee shall, in its sole
discretion, determine to be necessary or advisable and (iii) the recipient's
execution of a shareholders agreement providing such terms and conditions as the
Committee may determine in its sole discretion.
(c) All certificates for shares of Stock delivered under the Plan also
shall be subject to such stop-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Stock is then listed and any applicable federal or state securities
laws, and the Committee may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions. The foregoing
provisions of this Section 5(c) shall not be effective if and to the extent that
the shares of Stock delivered under the Plan are covered by an effective and
current registration statement under the Securities Act of 1933, or if, and so
long as, the Committee determines that application of such provisions is no
longer required or desirable. In making such determination, the Committee may
rely upon an opinion of counsel for the Company.
(d) Each Employee who receives Stock upon exercise of an Option shall have
all of the rights of a shareholder with respect to such shares, including the
right to vote the shares and receive dividends and other distributions. No
Employee awarded an Option shall have any right as a shareholder with respect to
any shares subject to such Option prior to the date of issuance to him or her of
a certificate or certificates for such shares.
6. Beneficiary
-----------
(a) Each Employee shall file with the Company a written designation of one
or more persons as the Beneficiary who shall be entitled to receive the Option
or SAR, if any, awarded under the Plan upon his or her death. An Employee may
from time to time revoke or change his or her Beneficiary designation without
the consent of any prior Beneficiary by filing a new designation with the
Company. The last such designation received by the Company shall be
controlling; provided, however, that no designation, or change or revocation
-------- -------
thereof, shall be effective unless received by the Company prior to the
Employee's death, and in no event shall it be effective as of a date prior to
such receipt.
4
<PAGE>
(b) If no such Beneficiary designation is in effect at the time of a
Employee's death, or if no designated Beneficiary survives the Employee or if
such designation conflicts with law, the Employee's estate shall be entitled to
receive the Option, if any, awarded under the Plan upon his or her death. If
the Company is in doubt as to the right of any person to receive such Option or
SAR, the Company may retain such Option or SAR, without liability for any income
thereon, until the Company determines the rights thereto, or the Company may
transfer such Option or SAR into any court of appropriate jurisdiction and such
payment shall be a complete discharge of the liability of the Company therefor.
7. Administration of the Plan
--------------------------
(a) The Plan shall be administered by the Compensation Committee of the
Board of such other committee as appointed by the Board (the "Committee"). The
Committee shall have at least two members and each member shall be a "Non-
Employee Director" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934 or successor rule or regulation. No member of the
Committee shall have been granted an option or SAR under the Plan or have been
granted or awarded an option or other right with respect to equity securities of
the Company pursuant to any other plan of a Participating Company at any time
within the one-year period immediately preceding the member's appointment to the
Committee.
(b) All decisions, determinations or actions of the Committee made or
taken pursuant to grants of authority under the Plan shall be made or taken in
the sole discretion of the Committee and shall be final, conclusive and binding
on all persons for all purposes.
(c) The Committee shall have full power, discretion and authority to
interpret, construe and administer the Plan and any part thereof, and its
interpretations and constructions thereof and actions taken thereunder shall be
final, conclusive and binding on all persons for all purposes.
(d) The Committee's decisions and determinations under the Plan need not
be uniform and may be made selectively among Employees, whether or not such
Employees are similarly situated.
(e) The act of a majority of the members present at a meeting duly called
and held shall be the act of the Committee. Any decision or determination
reduced to writing and signed by all members of the Committee shall be fully as
effective as if made by unanimous vote at a meeting duly called and held.
(f) Notwithstanding anything else herein to the contrary, the Committee
shall not be required to direct the Company to grant any Options or SARs under
this Plan.
8. Amendment or Discontinuance
---------------------------
The Board may, at any time, amend or terminate the Plan. No amendment
shall, without approval by a majority of the Company's stockholders, (i) alter
the group of persons eligible to participate in the Plan, (ii) materially
increase the benefits provided under the Plan to the extent that stockholder
approval would then be required pursuant to Rule 16b-3 under the Securities
Exchange Act of 1934 or successor rule or regulation, (iii) increase the maximum
number of shares of Stock which are available for awards under the Plan or (iv)
extend the period during which Options may be granted under the Plan beyond the
expiration of ten years from the effective date of the Plan. No amendment or
termination shall retroactively impair the rights of any person with respect to
an Option or SAR.
9. Adjustments in Event of Change in Common Stock
----------------------------------------------
(a) Subject to Section 9(b), if the outstanding shares of Stock of the
Company are increased, decreased, or exchanged for a different number or kind of
shares or other securities, or if additional shares or new or different shares
or other securities are distributed with respect to such shares of Stock or
other securities, through merger, consolidation, sale of all of substantially
all of the property of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
distribution with respect to such shares of Stock or other securities, then,
5
<PAGE>
to the extent permitted by the Company, an appropriate and proportionate
adjustment shall be made in (i) the maximum number and kind of shares provided
in Section 3, (ii) the number and kind of shares or other securities subject to
the outstanding Options and SARS, if any, and (iii) the price for each share or
other unit of any other securities subject to outstanding Options or SARs
without change in the aggregate purchase price or value as to which such Options
or SARS remain exercisable or subject to restrictions. Any adjustment under
this Section 9(a) shall be made by the Board, whose determination as to what
adjustments shall be made and the extent thereof will be final, binding and
conclusive. No fractional interests will be issued under the Plan resulting
from any such adjustment.
(b) Notwithstanding anything else herein to the contrary, the Board, in
its sole discretion at the time of grant of an Option or SAR or otherwise may,
in an Option Agreement or otherwise, provide that, with any Employee's consent,
upon the occurrence of certain events, including a change in control of the
Company (as determined by the Board) any outstanding Options or SARs, not
theretofore exercisable, shall immediately become exercisable in their entirety
and that any such Option or SAR may be purchased by the Company for cash at a
price to be determined by the Board.
10. Miscellaneous
-------------
(a) Nothing in this Plan or any Option Agreement hereunder shall confer
upon any employee any right to continue in the employ of any Participating
Company or interfere in any way with the right of any Participating Company to
terminate his or her employment at any time.
(b) No Option or SAR granted under the Plan shall be deemed salary or
compensation for the purpose of computing benefits under any employee benefit
plan or other arrangement of any Participating Company for the benefit of its
employees unless any such Participating Company shall determine otherwise.
(c) No Employee shall have any claim to an Option or SAR until it is
actually granted under the Plan. To the extent that any person acquires a right
to receive payments from the Company under this Plan, such right shall be no
greater than the right of an unsecured general creditor of the Company.
(d) Absence on leave approved by a duly constituted officer of a
Participating Company shall not be considered interruption or termination of
employment for any purposes of the Plan; provided, however, that no Option or
-------- -------
SAR may be granted to an employee while he or she is absent on leave.
(e) If the Committee shall find that any person to whom any Option or SAR,
or portion thereof, is awarded to under the Plan is unable to care for his or
her affairs because of illness or accident, or is a minor, then any payment due
him or her (unless a prior claim therefor has been made by a duly appointed
legal representative) may, if the Committee so directs the Company, be paid to
his or her spouse, a child, a relative, an institution maintaining or having
custody of such person, or any other person deemed by the Committee to be a
proper recipient on behalf of such person otherwise entitled to payment. Any
such payment shall be a complete discharge of the liability of the Company
therefor.
(f) The right of any Employee or other person to any Option, SAR or Stock
under the Plan may not be assigned, transferred, pledged or encumbered, either
voluntarily or by operation of law, except as provided in Section 6 with respect
to the designation of a Beneficiary or as may otherwise be required by law. If,
by reason of any attempted assignment, transfer, pledge, or encumbrance or any
bankruptcy or other event happening at any time, any amount payable under the
Plan would be made subject to the debts or liabilities or the Employee or his or
her Beneficiary or would otherwise devolve upon anyone else and not be enjoyed
by the Employee or his or her Beneficiary, then the Committee may terminate such
person's interest in any such payment and direct that the same be held and
applied to or for the benefit of the Employee, his or her Beneficiary or any
other persons deemed to be the natural objects of his or her bounty, taking into
account the expressed wishes of the Employee (or, in the event of his or her
death, those of his or her Beneficiary) in such manner as the Committee may deem
proper.
(g) Copies of the Plan and all amendments, administrative rules and
procedures and interpretations shall be made available to all Employees at all
reasonable times at the Company's headquarters.
6
<PAGE>
(h) The Committee may cause to be made, as a condition precedent to the
grant and exercise of any Option or SAR, or otherwise, appropriate arrangements
with the Employee or his or her Beneficiary, for the withholding of any federal,
state, local or foreign taxes prior to the delivery of any certificate or
certificates for Stock.
(i) The Plan and the grant and exercise of Options and SARs shall be
subject to all applicable federal and state laws, rules, and regulations and to
such approvals by any government or regulatory agency as may be required.
(j) All elections, designations, requests, notices, instructions and other
communications from an Employee, Beneficiary or other person to the Committee,
required or permitted under the Plan, shall be in such form as is prescribed
from time to time by the Committee and shall be mailed by first class mail or
delivered to such location as shall be specified by the Committee.
(k) The terms of the Plan shall be binding upon the Company and its
successors and assigns.
(l) Captions preceding the sections hereof are inserted solely as a matter
of convenience and in no way define or limit the scope or intent of any
provision hereof.
11. Effective Date and Stockholder Approval
---------------------------------------
The effective date of the Plan shall be September 24, 1993, subject to
approval by a majority of the Company's stockholders at the 1994 Annual Meeting.
Notwithstanding anything in the Plan to the contrary, if the Plan shall have
been approved by the Board prior to such stockholder approval, Employees may be
selected and award criteria may be determined as provided herein subject to such
subsequent stockholder approval.
7
<PAGE>
EXHIBIT 10.2
FORM FOR ISO UNDER MEMRY
CORPORATION STOCK OPTION PLAN
-----------------------------
NONTRANSFERABLE INCENTIVE STOCK OPTION
AGREEMENT dated as of ________ __, 199_,
between MEMRY CORPORATION, a Delaware
corporation (the "Company"), and
_______________ (the "Optionee", which term
as used herein shall be deemed to include any
successor to the Optionee by will or by the
laws of descent and distribution, unless the
context shall otherwise require).
Pursuant to the Company's Stock Option Plan, as amended (as so
amended, the "Plan"), the Company, acting through the Compensation Committee of
its Board of Directors (the "Committee"), approved the issuance to the Optionee,
effective as of the date set forth above, of an incentive stock option to
purchase up to an aggregate of [# OF SHARES] shares of Common Stock, $.01 par
value, of the Company (the "Common Stock"), at the price (the "Option Price") of
[PRICE] per share, upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual premises and
undertakings hereinafter set forth, the parties hereto agree as follows:
1. OPTION; OPTION PRICE. On behalf of the Company, the Committee
--------------------
hereby grants to the Optionee the option (the "Option") to purchase, subject to
the terms and conditions of this Agreement and the Plan (which are incorporated
by reference herein and which in all cases shall control in the event of any
conflict with the terms, definitions and provisions of this Agreement), [# OF
SHARES] shares of Common Stock of the Company at an exercise price per share
equal to the Option Price, which Option is intended to qualify for federal
income tax purposes as an "incentive stock option" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"). A copy of
the Plan as in effect on the date hereof has been supplied to the Optionee, and
the Optionee hereby acknowledges receipt thereof.
2. TERM. The term (the "Option Term") of the Option shall commence
----
on the date of this Agreement and shall expire on the tenth anniversary of the
date of this Agreement, unless such Option shall theretofore have been
terminated in accordance with the terms hereof or of the Plan.
<PAGE>
3. TIME OF EXERCISE. (a) Unless accelerated in the discretion of
----------------
the Committee or as otherwise provided herein, the Option shall become
exercisable as to the total number of shares of Common Stock subject to the
Option in accordance with Exhibit A attached hereto; provided, however, no part
-------- -------
of such Option may be exercised by the Optionee until such Optionee shall have
remained in the employ of the Company or any corporation which at the time the
Option is granted qualifies as a "subsidiary corporation" of the Company under
Section 424(f) of the Code (any of the aforementioned, a "Participating
Company") for at least one year from the date of grant of the Option, unless
employment of the Optionee is terminated on account of death or a Total
Disability (as defined in Section 4(a)(iii) below). Subject to the provisions
of Sections 5 and 8 hereof, shares as to which the Option becomes exercisable
pursuant to the foregoing provisions may be purchased at any time thereafter
prior to the expiration or termination of the Option.
(b) Anything contained in this Agreement to the contrary
notwithstanding, the Option shall not be exercisable to the extent that the
aggregate Fair Market Value (as defined in the Plan) on the date hereof of all
stock with respect to which incentive stock options are exercisable for the
first time by the Optionee during any calendar year (under the Plan and all
other plans of all Participating Companies) exceeds $100,000. In the event that
such aggregate Fair Market Value exceeds $100,000, such excess portion shall
roll over into the next calendar year and be counted towards the $100,000 cap in
such calendar year.
4. TERMINATION OF OPTION. (a) The unexercised portion of the
---------------------
Option (which portion was otherwise exercisable on the date of termination) (the
"Unexercised Portion") shall automatically terminate and shall become null and
void and be of no further force or effect upon the first to occur of the
following:
(i) the expiration of the Option Term;
(ii) the expiration of three months from the date that the
Optionee ceases to be an employee of a Participating Company for any reason
(including death), other than as a result of a Total Disability (as defined
in subparagraph (iii) below), a Resignation (as defined in subparagraph
(iv) below) or a Termination For Cause (as defined in subparagraph (iv)
below)); provided, however, that if the Optionee ceases to be an employee
-------- -------
other than due to death but subsequently dies during such three-month
period, the Unexercised Portion shall be exercisable by the Optionee's
executors or administrators during such period in accordance with Section
10 hereof;
(iii) the expiration of 12 months from the date that the
Optionee ceases to be an employee of a
-2-
<PAGE>
Participating Company as a result of the Optionee's permanent and total
disability (within the meaning of Section 22(e)(3) of the Code) (a "Total
Disability");
(iv) immediately if the Optionee ceases to be employed by
any Participating Company if such termination is a voluntary termination by
the Optionee (a "Resignation") or a termination for cause or is otherwise
attributable to a breach by the Optionee of an employment, noncompetition
or other similar agreement with a Participating Company (any such
termination, determined in accordance with paragraph (c) below, a
"Termination For Cause"); provided, however, a retirement on or after an
-------- -------
early or normal retirement date in accordance with the terms and conditions
of a retirement plan adopted by a Participating Company shall not be deemed
to be a Resignation;
(v) except to the extent permitted by Section 10(f) of the
Plan, the date on which the Option or any part thereof or right or
privilege relating thereto is transferred (otherwise than by will or the
laws of descent and distribution), assigned, pledged, hypothecated,
attached or otherwise disposed of by the Optionee.
(b) Any unexercised portion of the Option which was not
exercisable on the date the Optionee ceases to be employed by any Participating
Company shall terminate at midnight on the date on which such employment ceases.
(c) The Board of Directors of the Company shall have the power
to determine what constitutes a Termination For Cause, and the date upon which
such Termination For Cause occurs. Any such determination shall be final,
conclusive and binding upon the Optionee.
(d) Anything contained herein to the contrary notwithstanding,
the Option shall not be affected by any change of duties or position of the
Optionee (including a transfer to or from any Participating Company), so long as
the Optionee continues to be an employee of a Participating Company.
5. PROCEDURE FOR EXERCISE. (a) The Option may be exercised, from
----------------------
time to time, in whole or in part (but for the purchase of whole shares only),
by delivery of a written notice (the "Notice") from the Optionee to the
Secretary of the Company, which Notice shall:
(i) state that the Optionee elects to exercise the Option;
-3-
<PAGE>
(ii) state the number of shares of Common Stock with respect
to which the Option is being exercised (the "Optioned Shares");
(iii) state the method of payment for the Optioned Shares
pursuant to Section 5(b) hereof;
(iv) state the date upon which the Optionee desires to
consummate the purchase of the Optioned Shares (which date must be prior to
the termination of such Option and no later than 30 days from the delivery
of such Notice);
(v) include any representations of the Optionee required
under Section 8(b) hereof; and
(vi) if the Option shall be exercised pursuant to Section 10
hereof by any person other than the Optionee, include evidence to the
satisfaction of the Committee of the right of such person to exercise the
Option.
(b) Payment of the Option Price for the Optioned Shares shall be
made (i) in cash or by personal or certified check, (ii) by delivery of stock
certificates (in negotiable form) representing shares of Common Stock that have
been owned of record by the Optionee for at least six months prior to the date
of exercise and that have a Fair Market Value on the date of exercise equal to
the product of (A) the number of Optioned Shares which are being purchased
pursuant to the exercise of such Option, multiplied by (B) the applicable Option
Price, (iii) a combination of either of the methods set forth in clauses (i) and
(ii) above, (iv) (A) by arrangements which are acceptable to the Committee and
as permitted by applicable law whereby the Optionee relinquishes a portion of
the Option, or (B) in compliance with any other cashless exercise program
authorized by the Committee for use in connection with the Plan at the time of
such exercise, or (v) in such other consideration as shall be acceptable to the
Committee. For the purpose of the preceding clause (iv)(A), the fair market
value of the portion of the Option that is relinquished shall be the Fair Market
Value at the time of exercise of the number of Optioned Shares subject to the
portion of the Option that is relinquished less the aggregate Option Price
specified in the Option with respect to such Optioned Shares.
(c) The Company shall issue a stock certificate in the name of
the Optionee (or such other person exercising the Option in accordance with the
provisions of Section 10 hereof) for the Optioned Shares as soon as practicable
after receipt of the Notice and payment of the aggregate Option Price for such
shares.
6. NO RIGHTS AS A STOCKHOLDER. The Optionee shall not have any
--------------------------
privileges of a stockholder of the Company with respect to
-4-
<PAGE>
any Optioned Shares until the date of issuance of a stock certificate pursuant
to Section 5(c) hereof.
7. ADJUSTMENTS. If the outstanding shares of Common Stock of the
-----------
Company are increased, decreased, or exchanged for a different number or kind of
shares or other securities, or if additional shares or new or different shares
or other securities are distributed with respect to such shares of Common Stock
or other securities, through merger, consolidation, sale of all of substantially
all of the property of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
distribution with respect to such shares of Common Stock or other securities,
then an appropriate and proportionate adjustment shall be made in (i) the number
and kind of shares or other securities subject to the Option and (ii) the price
for each share or other unit of any other securities subject to the Option
without change in the aggregate purchase price or value as to which such Option
remains exercisable or subject to restrictions. Any adjustment under this
Section 7 shall be made by the Company's Board of Directors, whose determination
as to what adjustments shall be made and the extent thereof will be final,
binding and conclusive. No fractional interests will be issued under the Plan
resulting from any such adjustment.
8. ADDITIONAL PROVISIONS RELATED TO EXERCISE. (a) The Option shall
-----------------------------------------
be exercisable only on such date or dates and during such period and for such
number of shares of Common Stock as are set forth in this Agreement.
(b) To exercise the Option, the Optionee shall follow the
procedures set forth in Section 5 hereof. Unless at the time of exercise of the
Option there shall be, in the opinion of counsel for the Company, a valid and
effective registration statement under the Securities Act of 1933 (the "'33
Act") and appropriate qualification and registration under applicable state
securities laws relating to the Optioned Shares being acquired pursuant to the
Option, the Optionee shall be required, upon exercise of the Option, to give to
the Company a written representation, in a form reasonably satisfactory to the
Company, that he or she is acquiring the Optioned Shares for his or her own
account for investment and not with a view to, or for sale in connection with,
the resale or distribution of any such shares. The Optionee shall be further
required to agree that he or she will not sell or transfer any Optioned Shares
acquired pursuant to exercise of the Option until he or she requests and
receives an opinion of the Company's counsel to the effect that such proposed
sale or transfer will not result in a violation of the '33 Act, or a
registration statement covering the sale or transfer of the shares has been
declared effective by the Securities and Exchange Commission, or he or she
obtains a no-action letter from the Securities and Exchange Commission with
respect to the proposed transfer.
-5-
<PAGE>
(c) Stock certificates representing shares of Common Stock
acquired upon the exercise of the Option that have not been registered under the
Securities Act shall bear the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE COMPANY THAT SUCH SALE, OFFER FOR SALE, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION DOES NOT VIOLATE THE PROVISIONS OF
SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.
9. NO EVIDENCE OF EMPLOYMENT OR SERVICE. Nothing contained in the
------------------------------------
Plan or this Agreement shall confer upon the Optionee any right to continue in
the employ of a Participating Company or interfere in any way with the right of
a Participating Company (subject to the terms of any separate agreement to the
contrary) to terminate the Optionee's employment or to increase or decrease the
Optionee's compensation at any time.
10. RESTRICTION ON TRANSFER. The Option may not be transferred,
-----------------------
pledged, assigned, hypothecated or otherwise disposed of in any way by the
Optionee, except by will or by the laws of descent and distribution or as may
otherwise be required by law, and may be exercised during the lifetime of the
Optionee only by the Optionee. If the Optionee dies, the Option shall thereafter
be exercisable, during the period specified in Section 4(a)(ii) hereof, by his
or her executors or administrators to the full extent to which the Option was
exercisable by the Optionee at the time of his or her death. The Option shall
not be subject to execution, attachment or similar process. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of the Option
contrary to the provisions hereof, and the levy of any execution, attachment or
similar process upon the Option, shall be null and void and without effect.
11. DISQUALIFYING DISPOSITIONS; TAXES. (a) If Optioned Shares are
---------------------------------
disposed of within two years following the date of this Agreement or one year
following the issuance thereof to the Optionee (a "Disqualifying Disposition"),
the Optionee shall, immediately prior to such Disqualifying Disposition, notify
the Company in writing of the date and terms of such Disqualifying Disposition
and provide such other information regarding the Disqualifying Disposition as
the Company may reasonably require.
(b) At the time of a Disqualifying Disposition, the Optionee
shall remit to the Company in cash the amount of any applicable Federal, state
and local withholding taxes and
-6-
<PAGE>
employment taxes; provided, however, if such funds are not so remitted to the
-------- -------
Company and at such time the Optionee is an Employee of a Participating Company,
the Company may withhold such portion of the Optionee's salary as is equal to
the amount of such taxes.
12. NOTICES. All notices or other communications which are required
-------
or permitted hereunder shall be in writing and sufficient if (i) personally
delivered, (ii) sent by nationally-recognized overnight courier or (iii) sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to the Optionee, to the address set forth on the signature
page hereto; and
If to the Company, to:
Memry Corporation
57 Commerce Drive
Brookfield, Connecticut 06804
Attention: Secretary;
or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. Any such
communication shall be deemed to have been given (i) when delivered, if
personally delivered or if sent by nationally-recognized overnight courier, and
(ii) on the third Business Day (as hereinafter defined) following the date on
which the piece of mail containing such communication is posted, if sent by
mail. As used herein, "Business Day" means a day that is not a Saturday, Sunday
or a day on which banking institutions in the city to which the notice or
communication is to be sent are not required to be open.
13. NO WAIVER. No waiver of any breach or condition of this
---------
Agreement shall be deemed to be a waiver of any other or subsequent breach or
condition, whether of like or different nature.
14. OPTIONEE UNDERTAKING. The Optionee hereby agrees to take
--------------------
whatever additional actions and execute whatever additional documents the
Company may in its reasonable judgment deem necessary or advisable in order to
carry out or effect one or more of the obligations or restrictions imposed on
the Optionee pursuant to the express provisions of this Agreement.
15. MODIFICATION OF RIGHTS. The rights of the Optionee are subject
----------------------
to modification and termination in certain events as provided in this Agreement
and the Plan.
-7-
<PAGE>
16. GOVERNING LAW. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Delaware applicable to
contracts made and to be wholly performed therein.
17. COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
18. ENTIRE AGREEMENT. This Agreement and the Plan constitute the
----------------
entire agreement between the parties with respect to the subject matter hereof,
and supersede all previously written or oral negotiations, commitments,
representations and agreements with respect thereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Nontransferable Incentive Stock Option Agreement as of the date first written
above.
MEMRY CORPORATION
By:________________________________
Name:
Title:
OPTIONEE:
___________________________________
Name: ____________________________
Address: _________________________
_________________________
_________________________
-8-
<PAGE>
EXHIBIT A
---------
[description of terms regarding exercise to be inserted]
<PAGE>
EXHIBIT 10.3
FORM FOR NSO UNDER MEMRY
CORPORATION STOCK OPTION PLAN
-----------------------------
NONTRANSFERABLE NON-QUALIFIED STOCK OPTION
AGREEMENT dated as of ________ __, 199_, between
MEMRY CORPORATION, a Delaware corporation (the
"Company"), and _______________ (the "Optionee",
which term as used herein shall be deemed to
include any successor to the Optionee by will or
by the laws of descent and distribution, unless
the context shall otherwise require).
Pursuant to the Company's Stock Option Plan, as amended (as so
amended, the "Plan"), the Company, acting through the Compensation Committee of
its Board of Directors (the "Committee"), approved the issuance to the Optionee,
effective as of the date set forth above, of a non-qualified stock option to
purchase up to an aggregate of [# OF SHARES] shares of Common Stock, $.01 par
value, of the Company (the "Common Stock"), at the price (the "Option Price") of
[PRICE] per share, upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual premises and
undertakings hereinafter set forth, the parties hereto agree as follows:
1. OPTION; OPTION PRICE. On behalf of the Company, the Committee
--------------------
hereby grants to the Optionee the option (the "Option") to purchase, subject to
the terms and conditions of this Agreement and the Plan (which are incorporated
by reference herein and which in all cases shall control in the event of any
conflict with the terms, definitions and provisions of this Agreement), [# OF
SHARES] shares of Common Stock of the Company at an exercise price per share
equal to the Option Price, which Option is not intended to qualify for federal
---
income tax purposes as an "incentive stock option" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"). A copy of the
Plan as in effect on the date hereof has been supplied to the Optionee, and the
Optionee hereby acknowledges receipt thereof.
2. TERM. The term (the "Option Term") of the Option shall commence
----
on the date of this Agreement and shall expire on the tenth anniversary of the
date of this Agreement, unless such Option shall theretofore have been
terminated in accordance with the terms hereof or of the Plan.
<PAGE>
3. TIME OF EXERCISE. Unless accelerated in the discretion of the
----------------
Committee or as otherwise provided herein, the Option shall become exercisable
as to the total number of shares of Common Stock subject to the Option in
accordance with Exhibit A attached hereto; provided, however, no part of such
-------- -------
Option may be exercised by the Optionee until such Optionee shall have remained
in the employ of the Company or any corporation which at the time the Option is
granted qualifies as a "subsidiary corporation" of the Company under Section
424(f) of the Code (any of the aforementioned, a "Participating Company") for at
least one year from the date of grant of the Option, unless employment of the
Optionee is terminated on account of death or a Total Disability (as defined in
Section 4(a)(iii) below). Subject to the provisions of Sections 5 and 8 hereof,
shares as to which the Option becomes exercisable pursuant to the foregoing
provisions may be purchased at any time thereafter prior to the expiration or
termination of the Option.
4. TERMINATION OF OPTION. (a) The unexercised portion of the
---------------------
Option (which portion was otherwise exercisable on the date of termination) (the
"Unexercised Portion") shall automatically terminate and shall become null and
void and be of no further force or effect upon the first to occur of the
following:
(i) the expiration of the Option Term;
(ii) the expiration of three months from the date that the
Optionee ceases to be an employee of a Participating Company for any reason
(including death), other than as a result of a Total Disability (as defined
in subparagraph (iii) below), a Resignation (as defined in subparagraph
(iv) below) or a Termination For Cause (as defined in subparagraph (iv)
below)); provided, however, that if the Optionee ceases to be an employee
-------- -------
other than due to death but subsequently dies during such three-month
period, the Unexercised Portion shall be exercisable by the Optionee's
executors or administrators during such period in accordance with Section
10 hereof;
(iii) the expiration of 12 months from the date that the
Optionee ceases to be an employee of a Participating Company as a result of
the Optionee's permanent and total disability (within the meaning of
Section 22(e)(3) of the Code) (a "Total Disability");
(iv) immediately if the Optionee ceases to be employed by
any Participating Company if such termination is a voluntary termination by
the Optionee (a "Resignation") or a termination for cause or is otherwise
attributable to a breach by the Optionee of an employment, noncompetition
or other similar agreement with a Participating Company (any such
termination, determined in accordance with paragraph (c)
-2-
<PAGE>
below, a "Termination For Cause"); provided, however, a retirement on or
-------- -------
after an early or normal retirement date in accordance with the terms and
conditions of a retirement plan adopted by a Participating Company shall
not be deemed to be a Resignation;
(v) except to the extent permitted by Section 10(f) of the
Plan, the date on which the Option or any part thereof or right or
privilege relating thereto is transferred (otherwise than by will or the
laws of descent and distribution), assigned, pledged, hypothecated,
attached or otherwise disposed of by the Optionee.
(b) Any unexercised portion of the Option which was not
exercisable on the date the Optionee ceases to be employed by any Participating
Company shall terminate at midnight on the date on which such employment ceases.
(c) The Board of Directors of the Company shall have the power
to determine what constitutes a Termination For Cause, and the date upon which
such Termination For Cause occurs. Any such determination shall be final,
conclusive and binding upon the Optionee.
(d) Anything contained herein to the contrary notwithstanding,
the Option shall not be affected by any change of duties or position of the
Optionee (including a transfer to or from any Participating Company), so long as
the Optionee continues to be an employee of a Participating Company.
5. PROCEDURE FOR EXERCISE. (a) The Option may be exercised, from
----------------------
time to time, in whole or in part (but for the purchase of whole shares only),
by delivery of a written notice (the "Notice") from the Optionee to the
Secretary of the Company, which Notice shall:
(i) state that the Optionee elects to exercise the Option;
(ii) state the number of shares of Common Stock with respect
to which the Option is being exercised (the "Optioned Shares");
(iii) state the method of payment for the Optioned Shares
pursuant to Section 5(b) hereof;
(iv) state the date upon which the Optionee desires to
consummate the purchase of the Optioned Shares (which date must be
prior to the termination of such Option and no later than 30 days from
the delivery of such Notice);
-3-
<PAGE>
(v) include any representations of the Optionee required
under Section 8(b) hereof; and
(vi) if the Option shall be exercised pursuant to Section 10
hereof by any person other than the Optionee, include evidence to the
satisfaction of the Committee of the right of such person to exercise
the Option.
(b) Payment of the Option Price for the Optioned Shares shall be
made (i) in cash or by personal or certified check, (ii) by delivery of stock
certificates (in negotiable form) representing shares of Common Stock that have
been owned of record by the Optionee for at least six months prior to the date
of exercise and that have a Fair Market Value on the date of exercise equal to
the product of (A) the number of Optioned Shares which are being purchased
pursuant to the exercise of such Option, multiplied by (B) the applicable Option
Price, (iii) a combination of either of the methods set forth in clauses (i) and
(ii) above, (iv) (A) by arrangements which are acceptable to the Committee and
as permitted by applicable law whereby the Optionee relinquishes a portion of
the Option, or (B) in compliance with any other cashless exercise program
authorized by the Committee for use in connection with the Plan at the time of
such exercise, or (v) in such other consideration as shall be acceptable to the
Committee. For the purpose of the preceding clause (iv)(A), the fair market
value of the portion of the Option that is relinquished shall be the Fair Market
Value at the time of exercise of the number of Optioned Shares subject to the
portion of the Option that is relinquished less the aggregate Option price
specified in the Option with respect to such Optioned Shares.
(c) The Company shall issue a stock certificate in the name of
the Optionee (or such other person exercising the Option in accordance with the
provisions of Section 10 hereof) for the Optioned Shares as soon as practicable
after receipt of the Notice and payment of the aggregate Option Price for such
shares.
6. NO RIGHTS AS A STOCKHOLDER. The Optionee shall not have any
--------------------------
privileges of a stockholder of the Company with respect to any Optioned Shares
until the date of issuance of a stock certificate pursuant to Section 5(c)
hereof.
7. ADJUSTMENTS. If the outstanding shares of Common Stock of the
-----------
Company are increased, decreased, or exchanged for a different number or kind of
shares or other securities, or if additional shares or new or different shares
or other securities are distributed with respect to such shares of Common Stock
or other securities, through merger, consolidation, sale of all of substantially
all of the property of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
distribution with respect to such
-4-
<PAGE>
shares of Common Stock or other securities, then an appropriate and
proportionate adjustment shall be made in (i) the number and kind of shares or
other securities subject to the Option and (ii) the price for each share or
other unit of any other securities subject to the Option without change in the
aggregate purchase price or value as to which such Option remains exercisable or
subject to restrictions. Any adjustment under this Section 7 shall be made by
the Company's Board of Directors, whose determination as to what adjustments
shall be made and the extent thereof will be final, binding and conclusive. No
fractional interests will be issued under the Plan resulting from any such
adjustment.
8. ADDITIONAL PROVISIONS RELATED TO EXERCISE. (a) The Option shall
-----------------------------------------
be exercisable only on such date or dates and during such period and for such
number of shares of Common Stock as are set forth in this Agreement.
(b) To exercise the Option, the Optionee shall follow the
procedures set forth in Section 5 hereof. Unless at the time of exercise of the
Option there shall be, in the opinion of counsel for the Company, a valid and
effective registration statement under the Securities Act of 1933 (the "'33
Act") and appropriate qualification and registration under applicable state
securities laws relating to the Optioned Shares being acquired pursuant to the
Option, the Optionee shall be required, upon exercise of the Option, to give to
the Company a written representation, in a form reasonably satisfactory to the
Company, that he or she is acquiring the Optioned Shares for his or her own
account for investment and not with a view to, or for sale in connection with,
the resale or distribution of any such shares. The Optionee shall be further
required to agree that he or she will not sell or transfer any Optioned Shares
acquired pursuant to exercise of the Option until he or she requests and
receives an opinion of the Company's counsel to the effect that such proposed
sale or transfer will not result in a violation of the '33 Act, or a
registration statement covering the sale or transfer of the shares has been
declared effective by the Securities and Exchange Commission, or he or she
obtains a no-action letter from the Securities and Exchange Commission with
respect to the proposed transfer.
(c) Stock certificates representing shares of Common Stock
acquired upon the exercise of the Option that have not been registered under the
Securities Act shall bear the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR AN OPINION OF COUNSEL IN
-5-
<PAGE>
FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY THAT SUCH SALE, OFFER
FOR SALE, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION DOES NOT VIOLATE
THE PROVISIONS OF SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH
ACT.
9. NO EVIDENCE OF EMPLOYMENT OR SERVICE. Nothing contained in the
------------------------------------
Plan or this Agreement shall confer upon the Optionee any right to continue in
the employ of a Participating Company or interfere in any way with the right of
a Participating Company (subject to the terms of any separate agreement to the
contrary) to terminate the Optionee's employment or to increase or decrease the
Optionee's compensation at any time.
10. RESTRICTION ON TRANSFER. The Option may not be transferred,
-----------------------
pledged, assigned, hypothecated or otherwise disposed of in any way by the
Optionee, except by will or by the laws of descent and distribution or as may
otherwise be required by law, and may be exercised during the lifetime of the
Optionee only by the Optionee. If the Optionee dies, the Option shall thereafter
be exercisable, during the period specified in Section 4(a)(ii) hereof, by his
or her executors or administrators to the full extent to which the Option was
exercisable by the Optionee at the time of his or her death. The Option shall
not be subject to execution, attachment or similar process. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of the Option
contrary to the provisions hereof, and the levy of any execution, attachment or
similar process upon the Option, shall be null and void and without effect.
11. TAXES. Whenever shares of Common Stock are to be delivered to
-----
the Optionee upon exercise of the Option, the Company shall be entitled to
require as a condition of delivery that the Optionee remit or, in appropriate
cases, agree to remit when due, an amount sufficient to satisfy all current or
estimated future federal, state and local withholding tax and employment tax
requirements relating thereto; provided, however, if such funds are not so
-------- -------
remitted to the Company and at such time the Optionee is an Employee of a
Participating Company, the Company may withhold such portion of the Optionee's
salary as is equal to the amount of such tax requirements.
12. NOTICES. All notices or other communications which are required
-------
or permitted hereunder shall be in writing and sufficient if (i) personally
delivered, (ii) sent by nationally-recognized overnight courier or (iii) sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to the Optionee, to the address set forth on the signature
page hereto; and
-6-
<PAGE>
If to the Company, to:
Memry Corporation
57 Commerce Drive
Brookfield, Connecticut 06804
Attention: Secretary;
or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. Any such
communication shall be deemed to have been given (i) when delivered, if
personally delivered or if sent by nationally-recognized overnight courier, and
(ii) on the third Business Day (as hereinafter defined) following the date on
which the piece of mail containing such communication is posted, if sent by
mail. As used herein, "Business Day" means a day that is not a Saturday, Sunday
or a day on which banking institutions in the city to which the notice or
communication is to be sent are not required to be open.
13. NO WAIVER. No waiver of any breach or condition of this
---------
Agreement shall be deemed to be a waiver of any other or subsequent breach or
condition, whether of like or different nature.
14. OPTIONEE UNDERTAKING. The Optionee hereby agrees to take
--------------------
whatever additional actions and execute whatever additional documents the
Company may in its reasonable judgment deem necessary or advisable in order to
carry out or effect one or more of the obligations or restrictions imposed on
the Optionee pursuant to the express provisions of this Agreement.
15. MODIFICATION OF RIGHTS. The rights of the Optionee are subject
----------------------
to modification and termination in certain events as provided in this Agreement
and the Plan.
16. GOVERNING LAW. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Delaware applicable to
contracts made and to be wholly performed therein.
17. COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
18. ENTIRE AGREEMENT. This Agreement and the Plan constitute the
----------------
entire agreement between the parties with respect to the subject matter hereof,
and supersede all previously written or oral negotiations, commitments,
representations and agreements with respect thereto.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Nontransferable Non-Qualified Stock Option Agreement as of the date first
written above.
MEMRY CORPORATION
By:________________________________
Name:
Title:
OPTIONEE:
___________________________________
Name: ____________________________
Address: _________________________
_________________________
_________________________
<PAGE>
EXHIBIT A
---------
[description of terms regarding exercise to be inserted]
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MEMRY
CORPORATION'S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE
THREE MONTHS ENDED DECEMBER 31, 1996.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 26,000<F1>
<SECURITIES> 0
<RECEIVABLES> 1,542,000
<ALLOWANCES> 32,000
<INVENTORY> 2,256,000
<CURRENT-ASSETS> 3,839,000
<PP&E> 6,097,000<F2>
<DEPRECIATION> 2,314,000
<TOTAL-ASSETS> 10,706,000
<CURRENT-LIABILITIES> 4,886,000
<BONDS> 0
0
0
<COMMON> 167,000
<OTHER-SE> 39,099,000
<TOTAL-LIABILITY-AND-EQUITY> 10,706,000
<SALES> 5,977,000
<TOTAL-REVENUES> 6,117,000
<CGS> 3,807,000
<TOTAL-COSTS> 3,973,000
<OTHER-EXPENSES> 2,125,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 142,000
<INCOME-PRETAX> (477,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (477,000)
<DISCONTINUED> 0
<EXTRAORDINARY> (140,000)
<CHANGES> 0
<NET-INCOME> (337,000)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> 0
</TABLE>
