<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional
Materials
[_] Soliciting Material Pursuant to (S)(S)240.14a-11(c) or (S)(S)240.14a-12
MEMRY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
[LOGO] MEMRY\(R)\ CORPORATE HEADQUARTERS
CORPORATION 57 Commerce Drive, Brookfield, Connecticut 06804
Tel: 203-740-7311 Fax: 203-740-2503
(Executive Offices) or 203-775-2359 (Sales/Marketing)
WESTERN OPERATIONS
4065 Campbell Avenue, Menlo Park, California 94025
Tel: 415-463-3400 Fax: 415-463-3456
November 12, 1997
To Our Shareholders:
Fiscal 1997, ending June 30, 1997, marked a watershed year for your
Company. Following the acquisition of the shape memory alloy business of Raychem
Corporation in June of 1996, the Company has been able to achieve sustained
growth in its principal shape memory application markets - cellular telephone
antennae, medical components and materials, and selected industrial markets. At
the same time, Wright Machine Corporation (a subsidiary of Memry) continued to
face difficult market conditions with an aged manufacturing base. In late spring
of 1997, a decision was made to liquidate the productive assets of Wright
Machine. Accordingly, a contract of sale was negotiated with Thomas Industries
of Guilford, Connecticut, resulting in cash receipts of $1.1 million for the
equipment, with the sale of the land and buildings still pending. As a result of
these steps, Memry is now a company focused exclusively on the development,
manufacture and sale of semi-finished materials, components and products based
upon the use of shape memory alloys.
Numerous operational changes also occurred throughout the year, as the
Company configured its newly-acquired Menlo Park, CA operations to maximize
efficiencies in high volume production of Nitinol wire, strip and tubing, and
components made therefrom. The medical assembly activities were transferred to
Memry's Brookfield, CT facilities in January of 1997 and have since achieved
record levels of production. In August of 1996 the Company obtained a $1.13
million term loan and a $1.5 million revolving credit facility with a unit of
Center Financial Corporation, since acquired by First Union Bank of Connecticut.
By fiscal year end the term loan had been reduced by $688,000 to $442,000,
primarily generated from $470,000 of proceeds from the Wright Machine asset
sale. As previously reported, earnings from continuing operations before
interest, taxes and depreciation in fiscal 1997 rose to $233,000 from a negative
$1,625,000 in fiscal 1996. These results were a reflection of the significant
increases in high margin revenues attributable to the acquisition, growth
throughout the year and the achievement of adequate "economies of scale" in
overall operations.
Less noticeable in fiscal results is the dramatic shift in the end markets
being served by the Company. During fiscal 1997, sales of materials, components
and assemblies to medical industry customers (including sales made to Raychem
for resale to medical industry customers) rose to 68% of consolidated revenues
from continuing operations. Equally important, this segment of the Company's
business is expected to
<PAGE>
grow substantially for the next several years. However, not all growth is
confined to medical applications The cellular communications industry is
enjoying greater than 30% year to year growth, with individual cell phone demand
rising at a record rate. Memry's Menlo Park facility has been successful, in
conjunction with our private label/distribution partner, Raychem Corporation, in
securing contracts for the supply of coated cellular telephone antenna
materials -made from Nitinol - to the majority of the suppliers to the industry
leaders. This application is primarily responsible for what Memry believes will
be a nearly twofold increase in material volume in fiscal 1998 from what was
processed in fiscal 1997. In addition, several other industrial, commercial and
electronic industry applications were commenced in fiscal 1997 with further
additions planned in fiscal 1998.
We are especially pleased with the developing relationship with Raychem
Corporation's Electronics OEM Components group, with whom Memry has a private
label/distribution agreement. The shared efforts undertaken by both companies
to generate Nitinol sales, worldwide, has been most gratifying. Finally, we
would like to thank all our employees for their untiring efforts in successfully
launching the "new" Memry Corporation. To our shareholders, I would add our
thanks for your continued confidence in the bright future of our Company.
Sincerely,
/s/ JAMES G. BINCH
JAMES G. BINCH
Chairman, President & CEO
<PAGE>
MEMRY CORPORATION
57 COMMERCE DRIVE
BROOKFIELD, CONNECTICUT 06804
(203) 740-7311
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------
November 12, 1997
To the Holders of Common Stock of
MEMRY CORPORATION
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of Memry Corporation (the "Company") will be held at the
Ramada Inn, Exit 8, I-84, Danbury, Connecticut 06810, on Wednesday, December 10,
1997, at 10:00 a.m., for the following purposes:
1. To elect five persons to the Board of Directors, each to hold office
until the next Annual Meeting of Stockholders and until his
respective successor is elected and qualified.
2. To consider and vote upon the adoption of Memry Corporation's 1997
Long-Term Incentive Plan.
3. To consider and act upon such other business as may properly come
before the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on November 4,
1997, as the record date for the determination of stockholders entitled to
notice of, and to vote at, the Annual Meeting. A list of stockholders entitled
to vote at the Annual Meeting will be available for examination by any
stockholder, for any purpose relevant to the meeting, on and after November 26,
1997, during ordinary business hours at the Company's principal executive
offices located at the address first set forth above.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING. PLEASE
COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED STAMPED RETURN ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING. YOU MAY REVOKE YOUR PROXY IN THE MANNER DESCRIBED IN THE ACCOMPANYING
PROXY STATEMENT AT ANY TIME BEFORE IT HAS BEEN VOTED AT THE ANNUAL MEETING.
Dated: Brookfield, Connecticut By Order of the Board of Directors,
November 12, 1997
/s/ Katie Terhune
Katie Terhune
Secretary
<PAGE>
MEMRY CORPORATION
57 COMMERCE DRIVE
BROOKFIELD, CONNECTICUT 06804
(203) 740-7311
--------------
PROXY STATEMENT
--------------
ANNUAL MEETING OF STOCKHOLDERS
WEDNESDAY, DECEMBER 10, 1997
--------------
INTRODUCTION
This proxy statement ("Proxy Statement") is being furnished in
connection with the solicitation of proxies by the Board of Directors of Memry
Corporation (the "Company") for use at the Annual Meeting of Stockholders (the
"Annual Meeting") to be held on December 10, 1997, and at any adjournment of
that meeting. All proxies will be voted in accordance with the stockholders'
instructions and, if no choice is specified, the proxies will be voted in favor
of election of the five nominees for directors specified herein and in favor of
the other matters set forth herein.
The Company's Annual Report on Form 10-KSB for the Company's fiscal year
ended June 30, 1997, as amended through October 28, 1997, was mailed to
stockholders, along with these proxy materials, on or about November 12, 1997.
The Annual Meeting of Stockholders of Memry Corporation will be held on
Wednesday, December 10, 1997 at the Ramada Inn, Exit 8, I-84, Danbury,
Connecticut 06810, at 10:00 a.m. local time.
VOTING RIGHTS AND PROXY INFORMATION
Proxies in the accompanying form are solicited on behalf of and at the
direction of the Board of Directors, which has fixed the close of business of
Tuesday, November 4, 1997, as the record date (the "Record Date") for the
determination of holders of outstanding shares of the Company's Common Stock
entitled to notice of and to vote at the Annual Meeting or any adjournment(s)
thereof. Holders of record of Common Stock at the close of business on November
4, 1997, are entitled to notice of and to vote at the meeting. As of November 4,
1997, there were issued and outstanding 17,206,589 shares of the Company's
Common Stock, each entitled to one vote, which were held of record on such date
by approximately 1,463 holders. All five directors shall be elected by a
plurality of the shares of the Company's Common Stock present and voting (in
other words, the five individuals receiving the largest number of votes will be
elected). The affirmative vote of the holders of a majority of the present and
voting shares of the Company's Common Stock is required for the adoption of the
resolution authorizing and approving Memry Corporation's 1997 Long-Term
Incentive Plan, a copy of which is attached hereto as Appendix A (the "Plan").
Shares that abstain from voting on approval of the Plan, as well as broker
non-votes, would not be counted either in favor of or against the proposal.
All shares of the Company's Common Stock represented by properly
executed proxies will be voted at the Annual Meeting in accordance with the
directions indicated on the proxies unless such proxies have previously been
revoked.
<PAGE>
To the extent that no direction is indicated, the shares will be voted FOR the
election of all of the Company's nominees as directors and FOR the adoption of a
resolution approving the Plan. See "PROPOSAL NO. 1 - ELECTION OF DIRECTORS" AND
"PROPOSAL NO. 2 - MEMRY CORPORATION'S 1997 LONG-TERM INCENTIVE PLAN." If any
other matters are properly presented at the Annual Meeting for action, including
a question of adjourning the meeting from time to time, the persons named in the
proxies and acting thereunder will have discretion to vote on such matters in
accordance with their best judgment. The Annual Meeting may be adjourned, and
additional proxies solicited, if at the time of the Annual Meeting a quorum is
not present or the votes necessary to approve the Plan have not been obtained.
Any adjournment of the Annual Meeting would require the affirmative vote of the
holders of at least a majority of the shares of the Company's Common Stock
represented at the Annual Meeting (regardless of whether such shares constituted
a quorum).
Any stockholder who has executed and returned a proxy has the power to
revoke it at any time before it is voted. A stockholder who wishes to revoke a
proxy can do so by attending the Annual Meeting and voting in person, by
executing a later-dated proxy relating to the same shares or by a writing
revoking the proxy and, in the latter two cases, delivering such later-dated
proxy or writing to the Secretary of the Company prior to the vote at the Annual
Meeting. Any writing intended to revoke a proxy should be sent to the Company at
its principal executive offices, 57 Commerce Drive, Brookfield, Connecticut
06804, Attention: Katie Terhune, Secretary.
In addition to the use of the mail, proxies may be solicited via
personal interview and telephone or telegraph by the directors, officers and
regular employees of the Company. Such persons will receive no additional
compensation for such services. Arrangements will also be made with certain
brokerage firms and certain other custodians, nominees and fiduciaries for the
forwarding of solicitation materials to the beneficial owners of the Company's
Common Stock held of record by such persons, and such brokers, custodians,
nominees and fiduciaries will be reimbursed by the Company for reasonable
out-of-pocket expenses incurred by them in connection therewith.
The stockholders of the Company have no dissenters' rights in connection
with any of the proposals.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth, as of October 1, 1997, information regarding
beneficial ownership of the Company's Common Stock by (i) each person who is
known by the Company to own beneficially more than 5% of the outstanding Common
Stock (based on information furnished to the Company on behalf of such persons
or otherwise known to the Company), (ii) each of the directors of the Company,
(iii) each of the executive officers named in the Annual Compensation table
captioned "Summary Compensation Table," and (iii) all directors and executive
officers as a group.
<TABLE>
COMMON STOCK
Percentage of
Name and Address Amount and Nature of Common Stock
of Beneficial Owner Beneficial Ownership Outstanding (1)
- ------------------- -------------------- -------------
<S> <C> <C>
Harbour Holdings Limited Partnership 1,964,765 11.5%
1281 Main Street
Stamford, Connecticut 06902
Harbour Investment Corporation 1,964,765 (2) 11.5%
1281 Main Street
Stamford, Connecticut 06902
Raychem Corporation 2,380,000 (3) 12.2%
300 Constitution Drive
Menlo Park, CA 94025
Connecticut Innovations, 3,041,963 (4) 15.8%
Incorporated ("CII")
40 Cold Spring Road
Rocky Hill, CT 06067
FirstInvest Holding Ltd Inc. 4,230,000 24.7%
Ch. des Primeveres 45
1701 Fribourg, Switzerland
Conoreq S.A. 1,413,236 8.3%
Ch. des Primeveres 45
1701 Fribourg, Switzerland
James G. Binch 2,187,997 (5)(6) 12.7%
362 Canoe Hill Road
New Canaan, CT 06840
Nicholas J. Grant 47,708 *
Materials Sciences and
Engineering Department
Massachusetts Institute of Technology
Cambridge, Massachusetts 02139
Jack H. Halperin, Esq. 28,524 *
361 Silver Court
Woodmere, New York 11598
</TABLE>
3
<PAGE>
<TABLE>
Percentage of
Name and Address Amount and Nature of Common Stock
of Beneficial Owner Beneficial Ownership Outstanding (1)
- ------------------- -------------------- -------------
<S> <C> <C>
W. Andrew Krusen, Jr. 333,352 (7) 1.9%
Dominion Financial Group
Incorporated
2909 Bay-to-Bay Blvd., Suite 200
Tampa, Florida 33629
John A. Morgan 68,208 (8) *
121 Elderwood Avenue
Pelham, New York 10803
William H. Morton, Jr. 122,000 (9) *
Memry Corporation
57 Commerce Drive
Brookfield, Connecticut 06804
James Proft 36,667 (10) *
Memry Corporation
4065 Campbell Avenue
Menlo Park, California 94025
Wendy A. Gavaghan 30,383 (11) *
312 Popes Island Road
Milford, Connecticut 06460
All directors and 2,814,456 (12) 16.2%
executive officers as
a group (7 persons)
</TABLE>
- --------------------------------
* Less than one percent.
(1) In each case where shares subject to warrants or options are included as
beneficially owned by an individual or group, the percentage of all
shares owned by such individual or group is calculated as if all such
warrants or options had been exercised prior to such calculation.
(2) Comprised of the 1,964,765 shares of Common Stock beneficially owned by
Harbour Holdings Limited Partnership. Harbour Investment Corporation is
the sole general partner of Harbour Holdings Limited Partnership.
(3) Comprised of 1,250,000 shares of Common Stock for which warrants owned
by Raychem Corporation may be exercised at an exercise price of $2.00
per share, and 1,130,000 shares of Common Stock for which warrants owned
by Raychem Corporation may be exercised at an exercise price of $0.01
per share, all of which warrants expire on June 28, 2003.
(4) Includes (i) 1,282,450 shares of Common Stock for which Class I warrants
issued by the Company to CII may be exercised at $0.853 per share, which
warrants expire on April 25, 2002, (ii) 705,485 shares of Common Stock
for which Class II warrants issued by the Company to CII may be
exercised at $1.19 per share, which warrants expire on April 25, 2002,
and (iii) 100,000 shares of Common Stock for which Class III warrants
issued by the Company to CII may be exercised at $1.00 per share, which
warrants expire on May 5, 2008. The expiration dates of these warrants
are subject to extension under certain circumstances.
4
<PAGE>
(5) Includes currently exercisable options to purchase 152,000 shares of the
Common Stock at $1.50 per share. Additional options granted to Mr. Binch
to purchase 48,000 shares of Common Stock at $1.50 per share are not yet
exercisable. Also includes 232 shares of Common Stock owned by Mr.
Binch's daughter. Mr. Binch disclaims beneficial ownership of such
shares owned by his daughter.
(6) Includes 1,964,765 shares of Common Stock beneficially owned by Harbour
Holdings Limited Partnership. Mr. Binch is the President, Chief
Executive Officer and sole shareholder of Harbour Investment
Corporation, the sole general partner of Harbour Holdings Limited
Partnership. He is also individually a limited partner of Harbour
Holdings Limited Partnership, with a limited partnership interest of
less than one percent.
(7) Includes 71,328 shares of Common Stock owned by Dominion Partners,
20,000 shares of Common Stock owned by 169855 Canada Inc., 8,000 shares
of Common Stock owned by Krusen-Vogt & Co, 200,000 shares of Common
Stock owned by Dominion Financial Group International LDC ("LDC") and
18,000 shares of Common Stock for which warrants issued by the Company
to LDC may be exercised at $1.50 per share, which warrants expire on
July 15, 1999. Mr. Krusen is the President and a principal shareholder
of Dominion Financial Group, Inc. which is the managing General Partner
of Dominion Partners, President of 169855 Canada Inc., and a General
Partner of Krusen-Vogt & Co. In addition, Mr. Krusen is the chairman of
the Executive Committee of LDC, and also indirectly beneficially owns
certain outstanding securities of LDC through Dominion Partners and
through Dominion Financial Group, Inc.
(8) 1,307 of such shares of Common Stock are owned jointly by Mr. Morgan and
his wife, Deborah Morgan. Another 120 of such shares of Common Stock are
owned solely by Mrs. Morgan, and Mr. Morgan disclaims beneficial
ownership of such 120 shares. Another 10,000 of such shares are owned by
a trust for Annette Morgan for which Mr. Morgan is the trustee.
(9) Includes options to purchase 50,000 shares of the Company's Common Stock
at $0.90 per share, 25,000 of which become exercisable November 7, 1997
as well as warrants issued to Mr. Morton's wife, Dawn Morton, to
purchase 18,000 shares of Common Stock at a purchase price of $1.50 per
share, which warrants expire on July 16, 1999. Additional options
granted to Mr. Morton to purchase 75,000 shares of Common Stock at $0.90
per share are not yet exercisable.
(10) Includes options to purchase 6,667 shares of the Company's Common Stock
at $1.59 per share which became exercisable July 1, 1997 as well as
warrants to purchase 10,000 shares of Common Stock at a purchase price
of $0.01 per share, which warrants expire on September 30, 2003.
(11) Includes options to purchase 24,500 shares of the Company's Common Stock
at $1.50 per share.
(12) See preceding footnotes. Excludes securities of the Company beneficially
owned by Wendy A. Gavaghan, whose employment with the Company terminated
as of March 15, 1997.
-------------------
5
<PAGE>
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The Board of Directors of the Company consists of five members. All of
the directors are elected annually and hold office until the next succeeding
Annual Meeting of Stockholders or until their respective successors are duly
elected and qualified. The Board of Directors recommends the election of all
five nominees for director. It is intended that the persons named as proxies
will vote FOR the election of the following nominees as directors, all of whom
currently are directors of the Company.
<TABLE>
<CAPTION>
Positions with Director
Name Age the Company Since
---- --- --------------- -----
<S> <C> <C> <C>
James G. Binch 50 President, CEO, Treasurer and 1989
Chairman of the Board
Nicholas J. Grant 82 Director 1986
John A. Morgan 1 51 Director 1989
W. Andrew Krusen, Jr.1 49 Director 1994
Jack H. Halperin 1 51 Director 1994
</TABLE>
--------------------------
1 Member of Compensation Committee.
JAMES G. BINCH has been President and Chief Executive Officer of the
Company since December 11, 1991, Chairman of the Board since September 24, 1993
and Treasurer since July 19, 1994. He was the President and a director of
Trinity Capital Corporation, a merchant banking firm, from its inception in June
of 1987 to August 1994. He has been the President, Chief Executive Officer and
the sole shareholder of Harbour Investment Corporation, the general partner of
Harbour Holdings Limited Partnership, an investment management company, since
its inception in June 1992. From 1985 to 1987 he served as President and Chief
Operating Officer of Lummus Crest, Inc., the principal engineering subsidiary of
Combustion Engineering, Inc., with annual revenues of $300,000,000 and
approximately 4,000 employees. From 1980 to 1985, Mr. Binch served as Vice
President, Corporate Strategic Planning for Combustion Engineering, Inc., a
manufacturing and engineering firm. Mr. Binch is a graduate engineer from
Princeton University. He also holds an M.B.A. from the Wharton School of the
University of Pennsylvania.
NICHOLAS J. GRANT was a Director of the Massachusetts Institute of
Technology's Center for Materials Science and Engineering from 1968 to 1976, and
has been its Abex Professor in Advanced Materials since 1976. Dr. Grant is a
Fellow of the American Society for Metals, a Fellow of the American Institute of
Mining and Metallurgy, a Fellow of the American Academy of Arts, a Member of the
National Academy of Arts and Sciences, and a member of the National Academy of
Engineering. He has published over 380 technical and scientific articles,
including several books. He is a director of Instron Corp., a producer of
instruments and systems for worldwide materials testing; CGM Corp. and Capital
Development Funds, both mutual funds; and National Forge Co., a producer of high
alloy steel and related components. He is also a director of Engineered
Precision Casting Corp., Kimball Physics Corp. and Capital Growth Management.
JACK H. HALPERIN, ESQ., has practiced corporate and securities law in
New York for more than 20 years. Since 1987 he has been in private practice,
concentrating on international financing transactions. Mr. Halperin holds a B.A.
6
<PAGE>
degree (summa cum laude) from Columbia College and a J.D. from New York
University School of Law, where he was Note-and-Comment Editor of the Law
Review. Mr. Halperin is a director of AccuMed International, Inc., I-Flow
Corporation and Pacific Pharmaceuticals, Inc.
W. ANDREW KRUSEN, JR., is a graduate of Princeton University with a
Bachelor's Degree in Geology. Since 1989 he has been President (as well as a
principal shareholder) of Dominion Financial Group, Inc., a family-controlled
corporation in real estate development, construction, leasing and manufacturing,
and which is also the managing general partner of Dominion Partners as well as
Dominion Capital Partners. In addition, he is Chairman of the Board of Directors
and a principal shareholder of Dominion Energy and Minerals Corporation, an oil
and gas concern. Mr. Krusen is also the chairman of the Executive Committee of
Dominion Financial Group International, LDC, a principal shareholder of 169855
Canada Inc. and the General Partner of Krusen-Vogt & Co. He is a director of
Raymond James Trust Company, Northstar Energy Corporation, Florida Education
Fund, and First National Bank of Tampa.
JOHN A. MORGAN has been a Vice President of Smith Barney, an investment
banking firm, since 1992. Prior to that, Mr. Morgan was a Vice President of
Kidder Peabody & Co. since 1982.
On May 31, 1989, the Board of Directors established Audit, Nominating
and Compensation Committees of the Board of Directors. However, separate Audit
and Nominating Committees were eliminated by the Board as of October 11, 1994,
with the full Board of Directors acting as both the Audit and Nominating
Committees from and after October 11, 1994.
In its role as the Audit Committee, the Board of Directors is authorized
(i) to select the Company's independent auditors, (ii) to review all
recommendations made by such independent auditors with respect to the Company's
accounting methods or internal controls, and (iii) to review the scope of the
audit conducted by such independent auditors.
In its role as the Nominating Committee, the Board of Directors is
authorized (i) to establish criteria and procedures for the election of
directors, (ii) to review the qualifications of candidates proposed for
nomination to the Board, (iii) to recommend, prior to each annual meeting of
stockholders, a slate of directors to be elected at such meeting, and (iv) to
recommend, when appropriate, changes in the structure, size or function of the
Board. The Board will consider nominees recommended by security holders.
Security holders wishing to recommend nominees for election as directors at an
annual meeting should submit such recommendation, together with any relevant
information that they wish the Board to consider, to the Company no later than
120 days prior to such annual meeting of stockholders.
The Compensation Committee, the members of which are Messrs. Morgan,
Halperin and Krusen, is authorized, subject to review by the entire Board (i) to
determine the compensation of officers and directors of the Company and its
subsidiaries, (ii) to make awards under and oversee the administration of the
Company's stock option plans, and (ii) to review the adequacy of all employee
benefit plans and revise existing plans or develop new plans when appropriate.
The Compensation Committee met twice during the fiscal year ended June 30, 1997.
The Board of Directors held six meetings during the fiscal year ended
June 30, 1997. Each incumbent director except for Dr. Grant attended 75% or more
of the aggregate of the total number of meetings of the Board of Directors and
the total number of meetings held by all committees of the Board on which he
served.
COMPENSATION OF DIRECTORS
Effective for the fiscal year ended June 30, 1997, non-employee
directors became entitled to receive compensation comprised of such number of
shares of Common Stock as shall have a fair market value equal to $10,000, such
fee to be paid in arrears within thirty days of the last day of fiscal year
1997. For each fiscal year thereafter, all non-employee directors who remain as
such as of the last day of any given fiscal quarter shall be issued quarterly,
in arrears, within sixty days of the last day of each fiscal quarter, such
number of shares of Common Stock as shall have a fair market value equal to
$2,500. If the Plan is approved, such stock grants will be part of the awards
granted pursuant to the Plan. See
7
<PAGE>
"PROPOSAL NO. 2 - MEMRY CORPORATION'S 1997 LONG-TERM INCENTIVE PLAN." Directors
are reimbursed for expenses reasonably incurred in connection with the
performance of their duties.
EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
Name Position Age
---- -------- ---
<S> <C> <C>
James G. Binch President, Chief Executive Officer, Treasurer 50
& Chairman
William H. Morton, Jr. Senior Vice President and Chief Operating 52
Officer
James Proft Vice President and General Manager - Western 39
Operations
Thomas D. Carey Vice President, Corporate Development and 36
Chief Financial Officer.
</TABLE>
Executive officers are elected until the next annual meeting of the
Board of Directors and until their respective successors are elected and
qualified. Information with respect to Mr. Binch is set forth above.
WILLIAM H. MORTON, JR. was employed by the Company on November 7, 1995
as Senior Vice President and Chief Operating Officer. In addition, Mr. Morton
has served as a director of Deck House, Inc. in Acton, Massachusetts since 1976.
Since 1985 Mr. Morton has been Vice President of Coastal Aviation, Inc. in
Stamford, Connecticut, a general aviation marketing firm, and since 1986 he has
been the sole stockholder and President of The Risor Corporation, a merchant
banking firm. Previously, Mr. Morton was a registered representative with Lazard
Freres & Co. and First Hanover Securities, investment banking firms in New York,
New York. During fiscal year 1995, Mr. Morton also acted as a consultant to the
Company. Mr. Morton holds a B.A. degree from Middlebury College.
JAMES L. PROFT was employed by the Company on July 23, 1996 as Vice
President and General Manager Western Operations. From July 1984 through March
1989, Mr. Proft served as Research Metallurgist with Raychem Corporation's
Metals Division. From April 1989 through July 1992, Mr. Proft served as Area
Sales Manager for Raychem Corporation's Electronics Group. From August 1992
through January of 1993, Mr. Proft was the Vice President of Sales and Marketing
of Shape Memory Applications, Inc., followed by a return to Raychem Corporation
as Marketing Manager for its Medical Division. Prior to joining the Company,
from January 1996 to July 1996, Mr. Proft was Regional Sales Manager of Planar
America, an electroluminescent flat panel display company located in Beaverton,
Oregon. Mr. Proft holds a B.S. degree in materials engineering from the
University of Wisconsin-Milwaukee and a Masters degree in material science and
engineering from Stanford University.
Thomas D. Carey was employed by the Company on October 27, 1997, as its
Vice President, Corporate Development and Chief Financial Officer. From 1996 to
October of 1997, Mr. Carey served as Vice President, Corporate Development and
Chief Financial Officer of A.M. Pappas & Associates, LLC, an international
venture development company located in Research Triangle Park, North Carolina.
From 1993 to 1996, Mr. Carey served as Vice President, Finance & Administration
and Chief Financial Officer of Apex Bioscience, Inc., a biothcrapcutics company
in Research Triangle Park, North Carolina. From 1991 to 1993, Mr. Carey served
as Vice President, Finance and Administration and Chief Financial Officer of
Energy Biosystems Corporation, a publicly traded industrial biotechnology
company located in The Woodlands, Texas. Prior to such time, Mr. Carey served as
a financial analyst and an investment banking associate at Kidder, Peabody &
Co., Incorporated. Mr. Carey holds a B.S. degree in physics from the College of
the Holy Cross and an M.B.A. degree from the Kellogg Graduate School of
Management at Northwestern University.
EXECUTIVE COMPENSATION
The following table sets forth for the fiscal years ended June 30, 1997, 1996
and 1995, certain information regarding the total remuneration paid to the
Company's chief executive officer and its next three most highly compensated
executive officers.
8
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
--------------------------
Annual Compensation Long Term Compensation Awards
-------------------- -----------------------------
(a) (b) (c) (g) (i)
Shares of Common
Name & Principal Fiscal Stock Underlying All Other
Position Year Salary $ Bonus ($) Options/SARs(#) Compensation ($)
- ---------------- ------ ---------- --------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
James G. Binch, President, 1997 $167,500(1) $ -0- 20,000/0 (2) $ - 0 -
Chief Executive Officer, 1996 $150,000(1) $ -0- 200,000/0 (3) $ - 0 -
Treasurer & Chairman 1995 $150,000(1) $ -0- 240,000/0 (3) $ - 0 -
William H. Morton, Jr., 1997 $161,666 $ -0- 5,000/0 (2) $ - 0 -
Senior Vice President and 1996 $150,000 $ 95,000 (4) 125,000/0 (5) $ - 0 -
Chief Operating Officer 1995 $ - 0 - $ -0- - 0 - $ - 0 -
James Proft, Vice President 1997 $135,404 $ 10,000 45,000/0 (6) $ 92,548(7)
and General Manager - 1996 $ - 0 - $ -0- - 0 - $ - 0 -
Western Operations 1995 $ - 0 - $ -0- - 0 - $ - 0 -
Wendy A. Gavaghan 1997 $ 81,250 $ -0- 12,000/0 (8) $175,257(9)
Former Corporate 1996 $ 82,400 $ -0- 24,500/0 (10) $ - 0 -
Controller and Secretary 1995 $ 81,917 $ -0- 24,500/1,500 (10) $ - 0 -
</TABLE>
- -------------------------------
(1) Does not include any amounts which may be deemed to be paid to Mr. Binch
by Harbour Investment Corporation for serving as President of the
Company. See discussion following.
(2) These options are exercisable in three equal annual installments,
commencing December 5, 1997.
(3) In April 1996 Mr. Binch agreed to the termination (for no value, except
as provided in the following sentence) of 40,000 of the 240,000 options
previously granted to him, which options had been exercisable in five
equal annual installments, commencing on September 24, 1994. With
respect to the remaining 200,000 options, the exercise price was
repriced from $4.40 per share to $1.50 per share simultaneously with the
repricing in April 1996 of all of the Company's outstanding incentive
stock options with exercise prices above $1.50 to $1.50. The 144,000 of
such options which had not vested as of April 1996 are exercisable in
three equal annual installments, with the last installment vesting on
September 24, 1998.
(4) Includes payment of $50,000 to The Risor Corporation, of which Mr.
Morton is President and the sole stockholder, for consulting services.
(5) These options are exercisable in five equal annual installments,
commencing November 7, 1996.
(6) With respect to 20,000 of such options, such options are exercisable in
three equal annual installments, commencing July 1, 1997, and with
respect to 25,000 of such options, such options are exercisable in three
equal annual installments, commencing December 5, 1997.
9
<PAGE>
(7) Pursuant to the terms of an agreement between the Company and Mr. Proft
dated as of June 26, 1996, as hereinafter described, the Company issued
to Mr. Proft on September 19, 1996 warrants exercisable to purchase
40,000 shares of Common Stock, as to which warrants exercisable to
purchase 20,000 shares of Common Stock were immediately exercisable. As
of September 19, 1996, these warrants were valued at $1.59 per warrant,
being $31,800 total. In addition, also pursuant to the agreement between
the Company and Mr. Proft, the Company paid $60,748 for expenses related
to the relocation of Mr. Proft and his family from the Portland, Oregon
area to the San Francisco, California area, including the moving of
household effects, brokerage fees and closing costs, and also for
expenses related to an earlier move to the Portland, Oregon area.
(8) These options, originally exercisable in three equal annual installments
commencing December 5, 1996, were cancelled as of July 30, 1997,
pursuant to the terms of an agreement, dated as of June 5, 1997, among
the Company, Wright Machine Corporation, the Company's wholly-owned
subsidiary ("Wright"), and Ms. Gavaghan.
(9) Pursuant to the terms of an agreement among the Company, Wright and Ms.
Gavaghan dated as of June 5, 1997, as hereinafter described, Ms.
Gavaghan's employment with the Company terminated as of March 15, 1997.
With respect to the fiscal year ended June 30, 1997, salary payments in
the amount of $36,458 were paid to Ms. Gavaghan as part of severance
arrangements from March 15 through June 30 pursuant to such agreement,
and $5,000 was paid to Ms. Gavaghan as partial payment of accrued
vacation pay. In addition, the Company accrued with respect to Ms.
Gavaghan $88,542 in salary payments to be paid between July 1, 1997 and
March 15, 1998, $12,232 with respect to remaining accrued vacation pay
to be paid on March 15, 1998, $1,275 with respect to health and medical
benefits, and $36,750 as a severance payment to be paid on or before May
31, 1998.
(10) Simultaneously with the repricing in April 1996 of all of the Company's
outstanding incentive stock options and stock appreciation rights with
exercise prices above $1.50 to $1.50, these options and stock
appreciation rights, originally issued in July 1994, were repriced from
$2.34 per share to $1.50 per share in April 1996.
--------------------
10
<PAGE>
Option/SAR Grants in Last Fiscal Year
Individual Grants
-----------------
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Shares % of Total
of Common Stock Options/SARs
Underlying Granted to
Options/SARs Employees in Exercise or Base Expiration
Name Granted (#) Fiscal Year(1) Price($/Shares) Date
- ---- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C>
James G. Binch 20,000/0 (2) 4.3% $1.78 December 5, 2006
William H. Morton, Jr 5,000/0 (2) 1.1% $1.78 December 5, 2006
James Proft 20,000/0 (3)(4) 4.3% $1.59 July 1, 2006
25,000/0 (2) 5.4% $1.78 December 5, 2006
Wendy A. Gavaghan 12,000/0 (5) 2.6% $1.78 (5)
</TABLE>
(1) Assumes full vesting of options.
(2) These options are exercisable in three equal annual installments,
commencing December 5, 1997.
(3) These options are exercisable in three equal annual installments,
commencing July 1, 1997.
(4) The Company has agreed to pay to Mr. Proft 35% of the difference between
(i) the actual closing price per share of the Common Stock on the date
of exercise of all or a portion of such options, and (ii) $1.59, times
the number of options exercised, as reimbursement for the tax liability
to Mr. Proft with respect to the exercise of such options. See
discussion of same following.
(5) These options originally were exercisable in three equal annual
installments, commencing December 5, 1997, and had an expiration date of
December 5, 2006. However, pursuant to the terms of an agreement, dated
as of June 5, 1997, among the Company, Wright and Ms. Gavaghan, these
options expired July 30, 1997.
----------------------
11
<PAGE>
Aggregated Option/SAR Exercises in Last
Fiscal Year and FY-End Option/SAR Values
----------------------------------------
<TABLE>
<CAPTION>
(a) (d) (e)
Number of Shares
of Common Stock
Underlying Value of Unexercised
Unexercised Options/ In-the-Money Options/
SARs at FY-end (#) SARs at FY-End (#)
Name Exercisable/Unexercisable Exercisable/Unexercisable(1)
---- ------------------------- ----------------------------
<S> <C> <C>
James G. Binch 104,000 Options Exercisable/ $ 16,640/$15,360
116,000 Options Unexercisable
William H. Morton, Jr 25,000 Options Exercisable/ $ 19,000/$76,000
105,000 Options Unexercisable
James Proft 0 Options Exercisable/ $ 0/$1,400
45,000 Options Unexercisable
Wendy A. Gavaghan 24,500 Options Exercisable/ $ 3,920/$0
12,000 Options Unexercisable
1,500 SARs Exercisable/ $ 240/$0
0 SARs Unexercisable
</TABLE>
-----------------------
(1) Based on average of bid and asked prices per share of the
Company's Common Stock on June 30, 1997, being $1.66.
----------------------
Effective September 24, 1993, the Company and James G. Binch entered
into a two-year employment agreement, which automatically renews for successive
one-year periods unless or until Mr. Binch or the Company gives notice of its
intention not to renew. Pursuant to said renewal provision, this agreement
automatically renewed for a one-year period effective September 24, 1997. The
agreement entitled Mr. Binch to an annual salary of $150,000 from and after
January 1, 1993, which salary was increased in November 1996 to $180,000. The
agreement also entitled Mr. Binch to (i) $20,000 as compensation for services
rendered from October 1, 1992 to December 31, 1992, (ii) a bonus of $50,000 and
80,000 shares of the Company's Common Stock as inducement to enter into the
contract, and (iii) an option to purchase up to 240,000 shares of the Company's
Common Stock at an exercise price of $4.40 per share under and pursuant to the
Memry Corporation Stock Option Plan, subject to the approval of such Plan by the
Company's stockholders (which approval was obtained in the first quarter of
fiscal 1995). The options are exercisable in five equal installments, commencing
on September 24, 1994, and will expire on September 24, 2003. The Agreement also
provides that if Mr. Binch's employment is terminated due to either the failure
by the Company to observe or comply with any of the provisions of such agreement
(if such failure has not been cured within 10 days after written notice of same
to the Company), or, at the election of Mr. Binch, upon a change in control of
the Company (and within 6 months of such change in control), Mr. Binch will be
entitled to a lump-sum payment equal to two times his annual salary at the rate
in effect immediately prior to the date of termination. During the fiscal year
ended June 30, 1996, Mr. Binch and the Company agreed to the termination of
40,000 of his options (for no value) and the repricing of his remaining options
from $4.40 per share to $1.50 per share simultaneously with the repricing of all
of the Company's outstanding incentive stock options with exercises above $1.50
to $1.50.
12
<PAGE>
Mr. Binch is President, the sole director and the sole stockholder of
Harbour Investment Corporation, a Delaware corporation ("HIC"). HIC is managing
general partner of Harbour Holdings Limited Partnership, a Connecticut limited
partnership ("Harbour") and a significant shareholder of the Company. (See
"Security Ownership of Certain Beneficial Owners and Management"). Pursuant to
Harbour's amended and restated Agreement of Limited Partnership, Harbour
retained HIC to act as its managing general partner, and to perform investment
manager, custodial and administrative services, in consideration of custodial
fees of (i) $465,000 for the period commencing on February 24, 1993, and
continuing through December 31, 1993, and (ii) $350,000 for each of calendar
years 1994 and 1995. HIC's retention was extended for calendar 1996 on January
1, 1996, for an additional $350,000 custodial fee. Although HIC has continued to
serve as Harbour's managing general partner and to perform such services since
the expiration of such extension, there is currently no agreement in place
regarding payment by Harbour of a custodial fee. One of a number of services
performed by HIC for Harbour is providing the services of Mr. Binch in the
capacity of the Company's President. Because (i) there is no allocation of the
annual fee paid by Harbour to HIC as between providing the services of Mr. Binch
as the Company's President and other services, (ii) HIC does not pay Mr. Binch a
salary, and (iii) HIC incurs numerous expenses in fulfilling its duties to
Harbour that must be paid before it pays either salary or dividends to Mr.
Binch, it is impossible to quantify the amount, if any, that Harbour or HIC
could be deemed to be paying Mr. Binch for serving as President of the Company.
Therefore, Mr. Binch's compensation as set forth in the foregoing compensation
table does not include any such amounts.
On November 7, 1995, William H. Morton, Jr. joined the Company as Senior
Vice President and Chief Operating Officer. Mr. Morton's employment agreement
provides for a two-year term of employment, which term automatically renews for
successive one-year periods unless either Mr. Morton or the Company gives the
other notice of his or its intention not to renew such contract. This agreement
entitles Mr. Morton to an annual salary of $150,000, which salary was increased
to $170,000 in November 1996. In addition, as consideration for past services
rendered by either Mr. Morton individually or through The Risor Corporation,
this agreement entitles Mr. Morton to 50,000 shares of Common Stock of the
Company as well as payment of $50,000 to The Risor Corporation. This agreement
also grants to Mr. Morton options under and pursuant to the Memry Corporation
Stock Option Plan exercisable to purchase 125,000 shares of Common Stock for an
exercise price of $0.90, exercisable in five equal annual installments,
commencing on November 7, 1996 and terminating on November 7, 2005. In the event
of a change in control of the Company, these options will become immediately
exercisable.
On July 23, 1996, James Proft joined the Company as Vice President and
General Manager - Western Operations. A letter agreement, dated June 26, 1996,
between the Company and Mr. Proft entitles Mr. Proft to an annual salary of
$140,000. In addition, as inducement to Mr. Proft to enter into such employment
agreement, this agreement entitles Mr. Proft to: (i) warrants exercisable to
purchase 40,000 shares of Common Stock at an exercise price of $0.01 per share,
of which warrants exercisable to purchase 20,000 shares of Common Stock became
exercisable on September 19, 1996, with one-half of the remaining warrants
becoming exercisable on each of September 19, 1997 and 1998; (ii) non-qualified
stock options, pursuant to the Company's Stock Option Plan, to purchase 20,000
shares of Common Stock at $1.59 per share (representing a discount of 25% from
market price on June 28, 1996), which options were granted on July 1, 1996 and
which are exercisable in three equal annual installments commencing July 1997,
and which expire July 2006; (iii) a cash bonus of $25,000 on March 31, 1997 to
be applied to any tax liability arising from the grant of warrants if Mr. Proft
remains in the employ of the Company on such date; (iv) cash compensation from
February 1, 1997 and March 31, 1997 equal to an aggregate of $3,710 (35% of the
difference between the actual closing price per share of the Common Stock on
June 28, 1996 of $2 1/8 and $1.59, times 20,000 options) to cover the tax effect
of such option grant; (v) incentive stock options exercisable to purchase 25,000
shares of Common Stock, which options were granted on December 5, 1996 and which
are exercisable in three installments commencing on the first anniversary of the
date of grant; (vi) reimbursement of certain relocation expenses (including
those associated with an earlier move to another entity); (vii) a mortgage
assistance loan of $25,000 at an annual interest rate of 6.75%, secured by a
second mortgage on Mr. Proft's residence (with only interest due for the first
two years, principal being due in five annual installments thereafter, with the
entire balance being payable within thirty days of the termination of Mr.
Proft's employment with the Company); and (viii) a cash signing bonus of $10,000
payable in equal installments on July 31, 1996 and August 31, 1996. The issuance
of the 20,000 shares of Common Stock to Mr. Proft upon exercise of 20,000 of the
above-described warrants was subject
13
<PAGE>
to the right of the Company to repurchase any or all of such shares at a price
of $0.01 per share if Mr. Proft did not remain an employee of the Company as of
September 19, 1997.
The provisions in Mr. Proft's letter agreement regarding payments
related to tax liability were modified by an oral agreement between the Company
and Mr. Proft, which the parties intend to memorialize in a written agreement.
Pursuant to such agreement, Mr. Proft and the Company have agreed to defer the
payment of such amount with respect to the grant of 20,000 options, being 35% of
the difference between (i) the actual closing price per share of the Common
Stock on the date of exercise of all or a portion of the 20,000 options, and
(ii) $1.59, times the number of options exercised, until 30 days after the date
on which Mr. Proft actually incurs taxable income with respect to such options.
In addition, with respect to the payment to be made to Mr. Proft by the Company
with respect to 30,000 of the warrants, the parties have agreed that $24,057
will be paid to Mr. Proft within 30 days after the end of calendar year 1997.
With respect to the payment to be made to Mr. Proft by the Company with respect
to the remaining 10,000 warrants, the parties have agreed that the Company will
pay to Mr. Proft 33% of the difference between (i) the actual closing price per
share of the Common Stock on September 19, 1998, and (ii) $0.01, times 10,000,
within 30 days after the end of calendar year 1998. As of October 1, 1997, Mr.
Proft had exercised 20,000 of his warrants and none of his options.
Wendy A. Gavaghan's employment with the Company and Wright terminated as
of March 15, 1997. Ms. Gavaghan had been Corporate Controller and Secretary of
the Company and Secretary and a director of Wright. Pursuant to an agreement
dated as of June 5, 1997 among the Company, Wright and Ms. Gavaghan, the Company
agreed to pay to Ms. Gavaghan $19,232 as payment in full of all accrued vacation
owed to Ms. Gavaghan, and agreed to pay her base salary then in effect, being
$125,000, semi-monthly until March 15, 1998 (the "First Anniversary"). In
addition, the Company agreed to provide Ms. Gavaghan with health and medical
benefits at the Company's cost until the First Anniversary. The Company also
agreed to pay to Ms. Gavaghan, on or prior to May 31, 1998, a severance payment
in the amount of $36,750. Ms. Gavaghan and the Company agreed to the
cancellation, effective as of July 30, 1997, of incentive stock options
exercisable to purchase 12,000 shares of Common Stock at an exercise price of
$1.78 previously issued to Ms. Gavaghan as of December 5, 1996 and 1,500 share
appreciation rights previously issued to Ms. Gavaghan as of July 19, 1994.
Finally, Ms. Gavaghan agreed that on or prior to May 31, 1998, she will exercise
in full options granted to her by the Company as of April 30, 1996, being
incentive stock options exercisable to purchase 24,500 shares of Common Stock at
an exercise price of $1.50 per share.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Pursuant to a Convertible Subordinated Debenture Purchase Agreement,
dated as of December 22, 1994 (the "Purchase Agreement"), the Company issued to
CII the following securities (the "CII Securities") for an aggregate
consideration (comprised of cash and forgiveness of indebtedness) of $750,000:
(i) a Convertible Subordinated Debenture dated December 22, 1994 from the
Company to CII in the principal amount of $763,208 (the "Debenture"), (ii) a
warrant dated December 22, 1994 to purchase 508,805 shares of Common Stock at an
initial exercise price of $2.15 per share (the "Class I Warrants"), (iii) a
warrant dated December 22, 1994 to purchase 305,283 shares of Common Stock at an
initial exercise price of $2.75 per share (the "Class II Warrants"), and (iv) a
warrant dated December 22, 1994 to purchase 100,000 shares of Common Stock at an
initial exercise price of $1.00, such warrant being an amendment and restatement
of a warrant previously held by CII to purchase 10,000 shares of Common Stock at
an exercise price of $10.00 per share. On October 12, 1995, the Purchase
Agreement and the CII Securities were modified, such that the Debenture became
convertible into 954,010 shares of Common Stock, and due to anti-dilution
provisions, the Class I Warrants became exercisable for 1,176,269 shares of
Common Stock at an exercise price of $0.93 per share and the Class II Warrants
became exercisable for 705,485 shares of Common Stock at an exercise price of
$1.19 per share. The number of shares of Common Stock for which the Class III
Warrants were exercisable remained the same, but the exercise price per share
was adjusted to $0.65. On June 24, 1996, the parties agreed that in order to
help the Company market the Common Stock sold to fund the acquisition of Raychem
Corporation's nickel-titanium product line, CII would convert the Debenture into
equity, and a further amendment to the Purchase Agreement was executed by CII
and the Company, which amendment became effective on June 28, 1996. Pursuant to
such further amendment, on June 28, 1996, the Debenture was converted into
285,528 shares of Common Stock and 66.85 shares of Series H Preferred Stock (the
"Series H Shares"). The parties agreed that additional shares of Common Stock
which were issuable to CII due to a penalty adjustment provision of the
14
<PAGE>
Debenture would be folded into the Class I Warrants. Accordingly, the number of
shares of Common Stock for which the Class I Warrants are exercisable was
increased to 1,282,450, with the exercise price per share of such Class I
Warrants being adjusted to $0.853 per share. The Class II and Class III Warrants
were not adjusted. As of the close of business on September 4, 1996, all of the
Series H Shares automatically were converted into 668,500 shares of Common
Stock, pursuant to the terms of the Certificate of Designations, Rights and
Preferences of the Series H Preferred Stock. The Class I, II and III Warrants
are subject to certain antidilution rights. CII also has been granted a "put"
right if, among other things, the Company ceases to maintain its principal
offices and certain operations within the State of Connecticut or fails to
maintain the effectiveness of a registration statement covering the resale of
its securities. Upon CII's exercise of its put, the Company would be obligated
to purchase from CII all CII Securities and Registrable Securities held at that
time by CII for a price equal to the greater of (x) the then current market
price of such CII Securities and Registrable Securities (on an as-converted
basis) and (y) $2.00, multiplied by the number of CII Securities and Registrable
Securities (on an as-converted basis), less in the case of Common Stock issued
upon the exercise of the Class I Warrants, the Class II Warrants or Class III
Warrants, any exercise price paid to acquire Common Stock. As of October 1,
1997, CII beneficially owned more than five percent of the Common Stock.
On June 26, 1995 and July 17, 1995, FirstInvest Holding Ltd. Inc.
("FirstInvest") purchased 193 shares and 230 shares, respectively, of Series G
Preferred Stock ("G Preferred") of the Company at a per share price of $6,500
for an aggregate purchase price of $2,749,500. At the time of this transaction,
FirstInvest was not a holder of any securities of the Company, and such
transaction was negotiated on an arm's length basis. On June 25, 1996,
FirstInvest voluntarily converted 126.9 shares of Series G Preferred Stock into
1,269,000 shares of Common Stock of the Company. As of the close of business on
September 4, 1996, the remaining 296.1 shares of Series G Preferred Stock owned
by FirstInvest automatically were converted into 2,960,000 shares of Common
Stock. As of October 1, 1997, FirstInvest beneficially owned more than five
percent of the Common Stock.
On November 7, 1995, William H. Morton, Jr. joined the Company as Senior
Vice President and Chief Operating Officer. Pursuant to the terms of the
employment agreement between the Company and Mr. Morton, as consideration for
past services rendered by either Mr. Morton individually or through The Risor
Corporation, the Company granted to Mr. Morton 50,000 shares of Common Stock and
agreed to pay $50,000 to The Risor Corporation. See "Proposal No. 1 - Executive
Compensation."
On March 28, 1996, Conoreq S.A. purchased 295,118 shares of Common Stock
for $0.85 per share, for an aggregate purchase price of $250,850.30.
Subsequently, on May 17, 1996, Conoreq S.A. purchased an additional 118,118
shares of Common Stock for $0.85 per share, for an aggregate purchase price of
$100,400.30, and on June 28, 1996, purchased 1,000,000 shares of Common Stock
for a purchase price of $2,000,000. As of October 1, 1997, Conoreq S.A.
owned more than 5% of the Common Stock.
On June 28, 1996, the Company consummated the purchase from Raychem
Corporation, a Delaware corporation ("Raychem"), of certain tangible assets
(primarily consisting of leasehold improvements, machinery and equipment and
inventory) and intangible assets (primarily consisting of patents, other
intellectual property, goodwill and certain contractual rights) constituting
Raychem's shape memory metals components business. The purchase did not include
Raychem's patents and related intellectual property relating to the production
of certain medical instruments. The purchase price paid by the Company to
Raychem consisted of the following: (i) the payment of $3,650,000 in cash; (ii)
a $350,000 promissory note, accruing interest at the rate of 10% per annum and
secured by a first lien security interest in the tangible property being
acquired by the Company from Raychem; (iii) warrants to purchase 1,250,000
shares of the Company's common stock, par value $0.01 per share ("Common
Stock"), at an exercise price of $2.00 per share; (iv) warrants to purchase an
additional 1,130,000 shares of Common Stock at an exercise price of $0.01 per
share; and (v) the assumption of certain specified liabilities relating to the
assets being acquired, including $200,000 in severance obligations being
incurred by Raychem. In addition, the Company and Raychem entered into a number
of agreements regarding the ongoing relationship between Raychem and the
Company, including an agreement under which the Company will manufacture and
sell shape memory alloy components to Raychem. The latter agreement was amended
and restated as of February 19, 1997, with an effective date as of December 20,
1996. The purchase price paid by the Company to Raychem pursuant to the
aforesaid transaction was determined by arms-length bargaining between two
non-affiliated parties. No material
15
<PAGE>
relationship existed between Raychem and the Company (including any of the
Company's affiliates, directors, officers or their associates) prior to the
consummation of the transaction. The $350,000 promissory note from the Company
to Raychem was repaid in full on August 9, 1996. As of October 1, 1997, Raychem
owned more than 5% of the Common Stock.
The funds that the Company used to pay Raychem the cash portion of the
purchase price were obtained through the sale by the Company on June 28, 1996 of
2,000,000 shares of Common Stock to three sophisticated European investors for a
purchase price of $2.00 per share, including sales to Conoreq S.A. (which, as
described above, purchased 1,000,000 of such shares) and Group Des Assurances
Nationales (which, as described above, purchased 250,000 of such shares).
On July 15 and 16, 1996, as part of bridge financing for working capital
purposes until financing could be obtained from Affiliated Business Credit
Corporation, the Company borrowed $100,000 from each of Dawn Morton and Dominion
Capital Partners (for an aggregate of $200,000), at an annual interest rate of
10%, such notes to be due on the earlier of August 15, 1996 and the date of
consummation of financing in the amount of at least $1,500,000 from Affiliated
Business Credit Corporation to the Company. As additional consideration for such
loans, the Company issued to each of Ms. Morton and Dominion Capital Partners
warrants exercisable to purchase 18,000 shares of Common Stock at an exercise
price of $1.50 per share. Each of Ms. Morton and DFG Management, Inc. was also
paid a facility fee of $5,000 in connection with such bridge financing. These
notes were paid in full by the Company on August 9, 1996. Ms. Morton is the wife
of William H. Morton, Jr., the Company's Senior Vice President and Chief
Operating Officer. The managing general partner of Dominion Partners is Dominion
Financial Group, Inc., of which W. Andrew Krusen, Jr. is a principal shareholder
and the President. In addition, Mr. Krusen is the sole stockholder of DFG
Management, Inc.
On July 23, 1996, James Proft joined the Company as Vice President and
General Manager - Western Operations. For the terms of Mr. Proft's employment
agreement, see "Proposal No. 1 - Executive Compensation." In addition, on
September 20, 1996, the Company loaned to Mr. Proft $45,000 at an annual
interest rate of 6-3/4%, in connection with certain relocation expenses of Mr.
Proft. This loan was repaid in full on October 16, 1996. In addition, as of
December 5, 1996, the Company issued to Mr. Proft 20,000 shares of Common Stock,
which represented the exercise by Mr. Proft of warrants to purchase Common Stock
at $0.01 per share.
Wendy A. Gavaghan's employment with the Company and Wright terminated as
of March 15, 1997. Ms. Gavaghan had been Corporate Controller and Secretary of
the Company and Secretary and a director of Wright. The Company, Wright and Ms.
Gavaghan entered into an agreement, dated as of June 5, 1997, regarding
severance arrangements. See "PROPOSAL NO. 1 - EXECUTIVE COMPENSATION."
On June 26, 1997, the Company sold 200,000 shares of its Common Stock,
to Dominion Financial Group International LDC, a Cayman Islands corporation
("LDC"), for total consideration of $300,000. Such sale was part of an offering
of 380,000 shares of Common Stock at $1.50 per share from April 1997 through
July 1997. The sale to LDC was exempt from registration pursuant to the terms of
Regulation S promulgated under the Securities Act of 1933, as amended. W. Andrew
Krusen, Jr., a director of the Company, is the chairman of the executive
committee of LDC and also indirectly beneficially owns certain outstanding
securities of LDC through Dominion Partners, of which Dominion Financial Group,
Inc. (as to which Mr. Krusen is President and a principal shareholder) ("DFGI")
is the managing general partner and immediate family members of Mr. Krusen are
the remaining partners, and through DFGI itself.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires directors, executive officers and 10% beneficial owners of the
Company's Common Stock to file certain reports concerning their ownership of the
Company's equity securities. Based solely upon a review of Forms 3 and 4 and
amendments thereto furnished to the Company during its most recently completed
fiscal year, and Forms 5 and amendments thereto furnished to the Company with
respect to its most recently completed fiscal year, the directors, officers and
beneficial owners of 10% or more of the Registrant's Common Stock which failed
to make the requisite filings on a timely basis are set forth below.
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James Proft failed to timely file a Form 3 to report his becoming an
executive officer on December 5, 1997, although a Form 3 was subsequently filed
by Mr. Proft.
Nicholas Grant failed to timely file a Form 4 to report his acquisition
of 6,024 shares of Common Stock of the Company on July 14, 1997, although a Form
4 was subsequently filed by Dr. Grant.
PROPOSAL NO. 2 - MEMRY CORPORATION'S 1997 LONG-TERM INCENTIVE PLAN
The Company's 1997 Long-Term Incentive Plan (the "Plan") was adopted by
the Board of Directors on October 31, 1997. A copy of the Plan is attached
hereto as Appendix A, and the following summary description is qualified in its
entirety by reference to the Plan. The purposes of the Plan are to advance the
long-term interests of the Company by motivating key employees with the
opportunity to obtain an equity interest in the Company, and to attract and
retain key employees upon whose performance the success of the Company largely
depends. Under the terms of the Plan, the Committee (as defined below) may grant
stock options, stock appreciation rights, limited stock appreciation rights,
restricted stock awards and/or performance shares to key employees of the
Company, and shall grant shares of Common Stock to non-employee directors as set
forth in the Plan.
The Plan will be effective as of December 10, 1997, subject to stockholder
approval, and will remain in effect so long as shares of Common Stock available
for grants or awards thereunder.
NUMBER OF SHARES
The Plan provides that 2,000,000 shares of Common Stock will be available
in the aggregate for the grant of stock options, stock appreciation rights,
limited stock appreciation rights, restricted stock awards, grants to
non-employee directors and/or performance shares from time to time. The market
value of such 2,000,000 shares of Common Stock, based upon the average of the
bid and asked price per share on November 5, 1997, being $4.39, is $8,780,000.
No more than 300,000 shares of Common Stock subject to the Plan may be awarded
in any year to any participant in the Plan.
These numbers are subject to adjustment to reflect certain distributions
of shares of stock and certain stock changes such as stock dividends, stock
splits and share exchanges. Shares of Common Stock available for issuance under
the Plan may be authorized but unissued treasury shares. Shares of Common Stock
covered by lapsed, canceled, surrendered or terminated options or other awards
will be available again for grant under the Plan.
ADMINISTRATION; ELIGIBILITY
The Plan will be administered by a committee (the "Committee") composed of
not less than two directors, each of whom shall be a "Non-Employee Director"
described in Rule 16b-3 promulgated under the Securities Exchange Act of 1934,
as amended, and shall come within the parameters of Treasury Regulation Section
1.162.27(e)(3)(i) (such individuals, "Non-Employee Directors"). Members of the
Committee will be appointed by and will serve at the pleasure of the Board of
Directors. The initial members of the Committee are Messrs. Halperin, Krusen and
Morgan. Except with respect to Non-Employee Directors, the selection of the
participants in the Plan and the extent of the participation of each will be
determined by the Committee. Such participants will be employees of the Company
and its subsidiaries whose performance, as determined by the Committee, can have
an effect on the growth, profitability and success of the Company. As of today,
the Company has approximately 82 employees, as well as four Non-Employee
Directors, who will be eligible to participate in the Plan.
STOCK OPTIONS
The Committee may grant a participant the option to purchase shares of
Common Stock of the Company through incentive stock options qualified under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") or
options not qualified under Section 422 of the Code ("non-qualified stock
options") or a combination of both. Incentive
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stock options must be granted at not less than 100% of the fair market value of
the underlying Common Stock on the date the option is granted, and at not less
than 110% of such fair market value if granted to an employee who, at the time
of grant, owns stock having more than 10% of the total combined voting power of
all classes of stock of the Company (a "Ten Percent Stockholder"). However, in
the Committee's sole discretion, non-qualified stock options may be granted at
less than fair market value. Upon exercise, the option price is to be paid in
full in cash, in shares of Common Stock, in such other consideration as the
Committee may deem appropriate, or through an arrangement with a broker. Options
will be exercisable in whole or in such installments and at such times as may be
determined by the Committee, provided that no stock option may be exercisable
more than ten years after the date of its grant, and with respect to an
incentive stock option granted to a Ten Percent Stockholder, no such incentive
stock option may be exercisable more than five years after the date of its
grant.
STOCK APPRECIATION RIGHTS
The Committee may grant key employees the right to receive a payment equal
to the appreciation in market value of a stated number of shares of Common Stock
from the date of the agreement granting the stock appreciation right (the "base
price") to its date of exercise. These stock appreciation rights may or may not
be granted in tandem with stock options.
Stock appreciation rights granted in tandem with stock options will be
exercisable only to the extent the related stock option is exercisable and upon
exercise of such a tandem stock appreciation right, the related stock option
shall be canceled to the extent of the number of stock appreciation rights
exercised. The base price for a tandem stock appreciation right that is not a
limited stock appreciation right as described in the following paragraph will be
determined by the Committee, but it must not be less than the exercise price of
the related stock option.
Free-standing stock appreciation rights will be exercisable at the time or
times determined by the Committee. The base price for a free-standing stock
appreciation right will be determined by the Committee, but it must not be less
than the fair market value of the Common Stock on the date of the grant of the
stock appreciation right.
LIMITED STOCK APPRECIATION RIGHTS
The Committee may grant key employees the right to receive a payment in
cash equal to the appreciation over the base price by the greater of either the
highest price of shares of Common Stock paid in connection with a change in
control or the highest average closing bid and ask price of the shares of Common
Stock during the 60 days prior to the change in control. These limited stock
appreciation rights may only be granted in tandem with a stock option or stock
appreciation right, but may be granted at the time such option or stock
appreciation right is granted or at any time thereafter. Limited stock
appreciation rights are exercisable in full for a period of seven months
following the date of a change in control.
If limited stock appreciation rights are exercised, the stock options and
stock appreciation rights to which they are attached can no longer be exercised.
If the stock options or stock appreciation rights are exercised or terminated,
the related unexercised limited stock appreciation rights are simultaneously
canceled.
RESTRICTED STOCK AWARDS
The Plan permits the Committee to award restricted stock to key employees
of the Company with such terms, conditions, restrictions or limitations as the
Committee deems appropriate (including, in the discretion of the Committee,
without payment of consideration by the participant). While the restrictions are
in effect, the Committee may permit a participant the right to vote shares and
the right to receive any dividends. Restricted stock awards may be evidenced by
stock certificates, book-entry registrations or in such other manner as the
Committee determines.
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GRANTS TO NON-EMPLOYEE DIRECTORS
The Plan provides that all Non-Employee Directors who remain as such on
the last day of any given fiscal quarter will be issued quarterly, in arrears,
such number of shares of Common Stock as have a fair market value equal to
$2,500, with such fee being pro-rated for any director who serves less than such
full fiscal quarter.
PERFORMANCE SHARES
The Plan permits the Committee to grant performance shares to employees,
which will entitle such employee to convert the performance shares into shares
of Common Stock, into cash or into a combination thereof, as determined by the
Committee, if pre-determined performance targets or goals are met. Performance
goals may include, but not be limited to, one or more of the following:
operating earnings, net earnings, return on equity, income, market share,
stockholder return, combined ratio, level of expenses or growth in revenue. The
Committee will determine the length of the performance period. Award payments
made in cash rather than by the issuance of shares will not result in additional
shares being available under the Plan.
EMPLOYMENT; TRANSFERABILITY
The Committee is authorized under the Plan to adopt policies regarding the
entitlement of participants who cease to be employed by the Company because of
death, disability, resignation, termination or retirement. These policies may
vary depending upon the specific circumstances and the individual involved.
The Committee in its sole discretion may permit the assignment or transfer
of the rights and interests of a participant under the Plan, and of any security
issued or granted under the Plan; provided, however, an award under the Plan may
not be assignable or transferrable unless the exercise thereof is eligible for
registration on a Registration Statement on Form S-8.
AMENDMENTS
The Committee may amend, alter or discontinue the Plan at any time but may
not, without stockholder approval, make any amendment, alteration or
discontinuation that would impair the rights of a participant under an award
previously granted. In addition, the Committee may not, without stockholder
approval, adopt any amendment which would (a) increase the number of shares of
Common Stock which may be issued under the Plan (except in the event of certain
extraordinary occurrences, as described in the Plan), (b) change the employees
or class of employees eligible to participate in the Plan, or (c) change the
terms of grants to Non-Employee Directors provided for in the Plan.
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NEW PLAN BENEFITS
MEMRY CORPORATION'S 1997 LONG-TERM INCENTIVE PLAN
Name and Position Dollar Value Number of Shares
- ----------------- ------------ ----------------
James G. Binch, (1) (1)
Chairman, President, Treasurer
and CEO
William H. Morton, Jr., (1) (1)
Senior Vice President and
Chief Operating Officer
James Proft, (1) (1)
Vice President and
General Manager -
Western Operations
Wendy A. Gavaghan $0 $0
Former Corporate
Controller and Secretary
Current executive officers (1) (1)
as a group
Current directors, who are not $40,000(2) (1)
executive officers, as a group
All current employees, including $136,090(3) 31,000(4)
officers who are not executive
officers, as a group
- --------------------------
(1) Not yet determinable.
(2) Represents dollar value of annual amount to be awarded to such
Non-Employee Directors. Assumes that such individuals remain Non-Employee
Directors as of June 30, 1998.
(3) Based on average of bid and asked prices per share on November 5, 1997,
being $4.39.
(4) Represents restricted stock awards to be made under the Plan, subject to
stockholder approval.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the Federal income tax treatment of the
incentive stock options, non-qualified stock options, stock appreciation rights,
limited stock appreciation rights, restricted stock awards and performance
shares that may be granted under the Plan based upon the current provisions of
the Code and regulations promulgated thereunder.
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Incentive Stock Options. Incentive stock options under the Plan are
intended to meet the requirements of Section 422 of the Code. Under this section
of the Code, the grant of an incentive stock option will not result in the
realization of income to the option holder, and the Company will likewise not be
entitled to a deduction. Furthermore, if an option holder acquires stock upon
the exercise of an incentive stock option, no income will result to the option
holder and the Company will be allowed no deduction as a result of such exercise
if the following conditions are met: (a) at all times during the period
beginning with the date of the grant of the option and ending on the date three
months before the date of such exercise, the option holder is an employee of the
Company or of a subsidiary; and (b) the option holder makes no disposition of
the stock within two years from the date the option is granted nor within one
year after the option is exercised. In the event of a sale of such stock by the
option holder after compliance with these conditions, any gain realized over the
price paid for the stock will ordinarily be treated as a capital gain, and any
loss will ordinarily be treated as a capital loss, in the year of sale. Under
recently enacted Federal tax law, the rate of tax applicable to such capital
gain or loss will depend on the date on which the stock is acquired and the
period during which it is held. The exercise of an incentive stock option may
result in alternative minimum tax liability to the option holder.
If the option holder fails to comply with the employment or holding
period requirements discussed above, such person will be treated as having
received compensation taxable as ordinary income and/or having received a
capital gain (or loss) in accordance with the provisions of the Code. If the
option holder is treated as having received compensation because of this failure
to comply with either condition above, an equivalent deduction from income will
be allowed to the Company in the same year.
Non-Qualified Stock Options. The grant of a non-qualified stock option
will not result in the realization of income for Federal tax purposes for an
option holder, nor will the grant entitle the Company to a tax deduction. An
option holder who exercises a non-qualified stock option will generally realize
compensation taxable as ordinary income in an amount equal to the difference
between the option price and the fair market value of the shares on the date of
exercise, and the Company will be entitled to a deduction from income in the
same amount. The option holder's basis in such shares will be the fair market
value on the date exercised, and the capital gain or loss will be recognized in
the year of sale.
Stock Appreciation Rights. The grant of a stock appreciation right will
not result in tax consequences to the Company or to an award holder. A holder
who exercises a stock appreciation right will realize compensation taxable as
ordinary income in an amount equal to the cash or the fair market value of the
shares or other property received on the date of exercise, and the Company will
be entitled to a deduction in the same amount.
If an employee allows a stock appreciation right granted in tandem with
an option to expire, otherwise than as a result of exercising a related option,
the Internal Revenue Service may contend that the employee will have taxable
income in the year of expiration equal to the amount of cash or the fair market
value of stock or other property which he would have received if he had
exercised his stock appreciation right immediately before it expired. In
addition, under Treasury Regulations governing incentive stock options, a stock
appreciation right with respect to an incentive stock option must be granted at
the same time the incentive stock option is granted in order to ensure that the
incentive stock option remains qualified as such.
Limited Stock Appreciation Rights. The grant of a limited stock
appreciation right will not result in tax consequences to the Company or to a
participant. A participant who exercises a limited stock appreciation right will
realize compensation taxable as ordinary income in an amount equal to the cash
or the fair market value of the shares or other property received on the date of
exercise, and the Company will be entitled to a deduction in the same amount. A
participant who does not exercise at the time of a change in control and allows
the limited stock appreciation rights to lapse could be taxed as though exercise
had occurred at either of those two dates.
Restricted Stock Awards. Restricted stock awards granted under the Plan
will constitute taxable income to the recipient, and a deductible expense to the
Company, in the year in which the restrictions lapse unless the participant
elects to recognize income in the year the award is made. Unless such an
election is made, the amount of the taxable income and corresponding deduction
will be equal to the excess of the fair market value of the stock on the date
the restrictions
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lapse over the amount, if any, paid for such stock. The Company is also allowed
a compensation deduction for dividends paid to participants (provided they have
not elected to recognize income at the time of the award) on restricted stock
while the restrictions remain in force.
Performance Shares. Performance Shares awarded under the Plan will not
constitute a taxable event to the recipient until such time as the recipient
actually receives shares of Common Stock or cash or other property related to
such award. The amount of taxable income will be equal to the amount of cash
received or the fair market value of stock or other property received at such
time. The Company will be entitled to a compensation deduction in the same year.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends approval of the Plan. Proxies
solicited by the Board of Directors will be voted FOR the Plan unless
stockholders specify otherwise.
INTEREST OF CERTAIN PERSONS
Each of the executive officers of the Company has an interest in the
proposal to adopt the Plan because all employees of the Company are eligible to
receive awards under such Plan. However, no determination has yet been made as
to specific recipients and amounts of such awards.
INDEPENDENT AUDITORS
McGladrey & Pullen, LLP ("M&P") have audited the consolidated financial
statements of the Company for the fiscal years ended June 30, 1997 and June 30,
1996. The selection of M&P was made by the Board of Directors in its capacity as
Audit Committee, which reviewed the professional competence of the firm and its
audit scope. The Board of Directors of the Company, in its capacity as Audit
Committee, has also elected M&P as independent auditors for the fiscal year
ending June 30, 1998. It is expected that a representative of M&P will be
present at the Annual Meeting to respond to appropriate questions of
stockholders and to make a statement if he so desires.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's 1998
Annual Meeting of Stockholders, which the Company contemplates holding in
December 1998, must be received at the Company's principal executive offices
located at 57 Commerce Drive, Brookfield, Connecticut 06804 on or before July
10, 1998 for consideration for inclusion in the Company's Proxy Statement and
form of proxy relating to that meeting.
OTHER MATTERS
As of the date of this Proxy Statement, the Company's management does
not know of any business, other than that mentioned above, which will be
presented for consideration at the Annual Meeting. However, if any other matters
should properly come before the Annual Meeting, it is the intention of the
persons named in the accompanying form of proxy to vote the proxies in
accordance with their judgment on such matters.
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EXHIBITS TO ANNUAL REPORT ON FORM 10-KSB
THE COMPANY IS MAILING HEREWITH TO EACH STOCKHOLDER OF RECORD AS OF
NOVEMBER 4, 1997 A COPY OF ITS ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR
ENDED JUNE 30, 1997, AS AMENDED THROUGH OCTOBER 28, 1997, INCLUDING FINANCIAL
STATEMENTS. THE COMPANY WILL PROVIDE, AT A CHARGE OF $0.10 PER PAGE TO COVER
PHOTOCOPYING EXPENSES, TO EACH BENEFICIAL HOLDER OF ITS COMMON STOCK ON THE
RECORD DATE, UPON THE WRITTEN REQUEST OF ANY SUCH PERSON, COPIES OF THE EXHIBITS
TO THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED JUNE 30,
1997, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. ANY SUCH REQUEST
SHOULD BE MADE IN WRITING TO KATIE TERHUNE, SECRETARY, MEMRY CORPORATION, 57
COMMERCE DRIVE, BROOKFIELD, CONNECTICUT 06804.
By Order of the Board of Directors,
/s/ Katie Terhune
Katie Terhune
Secretary
November 12, 1997
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APPENDIX A
----------
MEMRY CORPORATION'S 1997 LONG-TERM INCENTIVE PLAN
<PAGE>
MEMRY CORPORATION'S 1997 LONG-TERM INCENTIVE PLAN
SECTION 1. PURPOSES. The purposes of Memry Corporation's 1997 Long-Term
Incentive Plan (the "Plan") are to encourage selected key employees and the
directors of Memry Corporation (the "Company") and its Affiliates (as
hereinafter defined) to acquire a proprietary and vested interest in the growth
and performance of the Company and to generate an increased incentive to
contribute to the Company's future success and prosperity, thereby enhancing the
value of the Company for the benefit of stockholders and the ability of the
Company to attract and retain individuals of exceptional talent.
SECTION 2. DEFINITIONS. As used in the Plan, the following terms shall have the
meanings set forth below:
(a) "Award" shall mean any Option, Stock Appreciation Right, Limited Stock
Appreciation Right, Restricted Stock Award, Performance Share or any other
right, interest, or option granted pursuant to the provisions of the Plan.
(b) "Award Agreement" shall mean any written agreement, contract, or other
instrument or document evidencing any Award granted hereunder and signed by both
the Company and the Participant or by both the Company and a Non- Employee
Director.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time, including the rules, regulations, and interpretations promulgated
thereunder.
(e) "Committee" shall mean the Compensation Committee of the Board, composed of
not less than two directors each of whom is a Non-Employee Director.
(f) "Company" shall mean Memry Corporation.
(g) "Dividend Equivalent" shall mean any right granted pursuant to Section 14(i)
hereof to receive an equivalent amount of interest or dividends with respect to
the number of shares covered by an Award.
(h) "Employee" shall mean any salaried employee of the Company or of any
Affiliate.
(i) "Fair Market Value" shall mean, with respect to any property, the market
value of such property determined by such methods or procedures as shall be
established from time to time by the Committee.
(j) "Incentive Stock Option" shall mean an Option granted under Section 6 hereof
that is intended to meet the requirements of Section 422 of the Code or any
successor provision thereto.
(k) "Limited Stock Appreciation Right" shall mean a Stock Appreciation Right
that can only be exercised in the event of a change in control, according to the
definition and provisions of Section 8 of the Plan.
(l) "Non-Employee Director" shall mean a person described in both (i) Rule
16b-3(b)(3) promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, or any successor definition adopted
by the Securities and Exchange Commission, and (ii) Treasury Regulation Section
1.162-27(e)(3)(i), or any successor provision, adopted by the Department of the
Treasury.
(m) "Non-qualified Stock Option" shall mean an Option granted to a Participant
under Section 6 hereof that is not intended to be an Incentive Stock Option.
(n) "Option" shall mean any right granted to a Participant under the Plan
allowing such Participant to purchase Shares at such price or prices and during
such period or periods as the Committee shall determine.
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(o) "Participant" shall mean an Employee who is selected by the Committee to
receive an Award under the Plan.
(p) "Payment Value" shall mean the dollar amount assigned to a Performance Share
which shall be equal to the Fair Market Value per Share on the close of business
on the last day of a Performance Cycle.
(q) "Person" shall mean any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, or government or
political subdivision thereof.
(r) "Performance Cycle" or "Cycle" shall mean the period of time selected by the
Committee during which the performance is measured for the purpose of
determining the extent to which an award of Performance Shares has been earned.
(s) "Performance Goals" shall mean the objectives established by the Committee
for a Performance Cycle, for the purpose of determining the extent to which
Performance Shares which have been contingently awarded for such Cycle are
earned.
(t) "Performance Share" shall mean an Award granted pursuant to Section 10
hereof which shall represent the right, subject to the terms set forth in
Section 10 hereof, to either one Share or the Payment Value in cash of one
Share.
(u) "Restricted Stock" shall mean any Share issued with the restriction that the
holder may not sell, transfer, pledge, or assign such Share and with such other
restrictions as the Committee, in its sole discretion, may impose (including,
without limitation, any restriction on the right to vote such Share, and the
right to receive any cash dividends), which restrictions may lapse separately or
in combination at such time or times, in installments or otherwise, as the
Committee may deem appropriate.
(v) "Restricted Stock Award" shall mean an award of Restricted Stock under
Section 9 hereof.
(w) "Shares" shall mean shares of the common stock of the Company, $0.01 par
value per share, and such other securities of the Company as the Committee may
from time to time determine.
(x) "Stock Appreciation Right" shall mean any right granted to a Participant
pursuant to Section 7 hereof to receive, upon exercise by the Participant, the
excess of (i) the Fair Market Value of one Share on the date of exercise or, if
the Committee shall so determine in the case of any such right other than one
related to any Incentive Stock Option, at any time during a specified period
before the date of exercise over (ii) the grant price of the right as specified
by the Committee, in its sole discretion, on the date of grant, which shall not
be less than the Fair Market Value of one Share on such date. Any payment by the
Company in respect of such right may be made in cash, Shares, other property, or
any combination thereof, as the Committee, in its sole discretion, shall
determine.
(y) "Stockholder Meeting" shall mean the annual meeting of stockholders of the
Company held each year.
SECTION 3. ADMINISTRATION. The Plan shall be administered by the Committee. The
Committee shall have full power and authority, subject to such orders or
resolutions not inconsistent with the provisions of the Plan as may from time to
time be adopted by the Board, to: (i) select the Employees of the Company to
whom Awards may from time to time be granted hereunder; (ii) determine the type
or types of Award to be granted to each Participant hereunder; (iii) determine
the number of Shares to be covered by each Award granted hereunder; provided,
however, that Shares subject to any form of award granted to any individual
employee during any calendar year shall not exceed a total of 300,000 Shares;
(iv) determine the terms and conditions, not inconsistent with the provisions of
the Plan, of any Award granted hereunder; (v) determine whether, to what extent
and under what circumstances Awards may be settled in cash, Shares or other
property or canceled or suspended; (vi) determine whether, to what extent and
under what circumstances cash, Shares and other property and other amounts
payable with respect to an Award under this Plan shall be deferred either
automatically or at the election of the Participant; (vii) interpret and
administer the Plan and any instrument or agreement entered into under the Plan;
(viii) establish such rules and regulations and appoint such agents as it shall
deem appropriate for the proper administration of the Plan; and (ix) make any
other determination and take any other action that the
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Committee deems necessary or desirable for administration of the Plan. Decisions
of the Committee shall be final, conclusive and binding upon all persons,
including the Company, any Participant, any stockholder, and any Employee of the
Company or of any Affiliate. Notwithstanding the above, the Committee shall not
have discretion with respect of any Shares granted to Non-Employee Directors
pursuant to Section 11 hereof. A majority of the members of the Committee may
determine its actions and fix the time and place of its meetings.
SECTION 4. SHARES SUBJECT TO THE PLAN.
(a) Subject to adjustment as provided in Section 4(b), the total number of
Shares available for grant under the Plan shall be 2,000,000 Shares. In
addition, any Shares issued by the Company through the assumption or
substitution of outstanding grants from an acquired company shall not reduce the
shares available for grants under the Plan. Any Shares issued hereunder may
consist, in whole or in part, of authorized and unissued shares or treasury
shares. If any Shares subject to any Award granted hereunder are forfeited or
such Award otherwise terminates without the issuance of such Shares or of other
consideration in lieu of such Shares, the Shares subject to such Award, to the
extent of any such forfeiture or termination, shall again be available for grant
under the Plan.
(b) In the event of any merger, reorganization, consolidation, recapitalization,
stock dividend, or other change in corporate structure affecting the Shares,
such adjustment shall be made in the type and aggregate number of Shares which
may be delivered under the Plan or such other securities to be delivered in
place thereof, and in the number of Shares subject to outstanding Options
granted under the Plan, and in the value or number of Shares subject to Awards
granted under the Plan as may be determined to be appropriate by the Committee,
in its sole discretion, provided that the number of Shares subject to any Award
shall always be a whole number, and provided further, that the number of Shares
granted to NonEmployee Directors pursuant to Section 11 hereof and the number of
Shares subject in the future to be granted pursuant to Section 11 hereof shall
be subject to adjustment only as set forth in Section 11.
SECTION 5. ELIGIBILITY. Any Employee (excluding any member of the Committee)
shall be eligible to be selected as a Participant. All Non-Employee Directors
shall automatically be eligible to receive Awards pursuant to Section 11.
SECTION 6. STOCK OPTIONS. Options may be granted hereunder to Participants
either alone or in addition to other Awards granted under the Plan. Any Option
granted to a Participant under the Plan shall be evidenced by an Award Agreement
in such form as the Committee may from time to time approve. Any such Option
shall be subject to the following terms and conditions and to such additional
terms and conditions, not inconsistent with the provisions of the Plan, as the
Committee shall deem desirable:
(a) Option Price. The purchase price per Share purchasable under an Option shall
be determined by the Committee in its sole discretion; provided that such
purchase price in the case of Incentive Stock Options shall not be less than the
Fair Market Value of the Share on the date of the grant of the Option; provided
further that the purchase price per Share for an Incentive Stock Option granted
to an Employee who, at the time of grant, owns stock having more than 10 percent
of the total combined voting power of all classes of stock of the Company (a
"Ten Percent Stockholder"), shall not be less than 110 percent of the Fair
Market Value on the date of grant, all as determined by the Committee.
(b) Option Period. The term of each Option shall be fixed by the Committee in
its sole discretion; provided that no Incentive Stock Option shall be
exercisable after the expiration of ten years from the date the Option is
granted; provided further that no Incentive Stock Option granted to an Employee
who is a Ten Percent Stockholder shall be exercisable after the expiration of
five years form the date the Option is granted.
(c) Exercisability. Options shall be exercisable at such time or times as
determined by the Committee at or subsequent to grant.
(d) Method of Exercise. Subject to the other provisions of the Plan and any
applicable Award Agreement, any Option may be exercised by the Participant in
whole or in part at any time or times, and the Participant may make payment of
the option price in such form or forms, including, without limitation, payment
by delivery of cash, Shares or other
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consideration, or through an arrangement with a broker in which the Participant
delivers to the Company an irrevocable notice of exercise accompanied by the
broker's payment in full and an irrevocable instruction to the Company to
deliver the Shares issuable upon exercise to the broker for the Participant's
account.
(e) Incentive Stock Options. In accordance with rules and procedures established
by the Committee, the aggregate Fair Market Value (determined as of the time of
grant) of the Shares with respect to which Incentive Stock Options held by any
Participant which are exercisable for the first time by such Participant during
any calendar year under the Plan (and under any other benefit plans of the
Company or subsidiary of the Company) shall not exceed $100,000 or, if
different, the maximum limitation in effect at the time of grant under Section
422 of the Code, or any successor provision, and any regulations promulgated
thereunder. The terms of any Incentive Stock Option granted hereunder shall
comply in all respects with the provisions of Section 422 of the Code, or any
successor provision, and any regulations promulgated thereunder.
(f) California Residents. Notwithstanding anything to the contrary in this Plan,
either within or without this Section 6, no Options shall be granted to
Employees resident in the State of California unless either (i) the Award
agreement entered into in connection with such grant conforms in all respects
with the requirements of Rule 260.140.41 of the State of California's Blue Sky
Regulations, as same may be amended, or (ii) the offer and sale of Shares upon
the exercise of such Award to such California resident is exempt from the
qualification requirements of Section 25110 of the California Corporate
Securities Law, as same may be amended.
SECTION 7. STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be granted
hereunder to Participants either alone or in addition to other Awards granted
under the Plan and may, but need not, relate to a specific Option granted under
Section 6. The provisions of Stock Appreciation Rights need not be the same with
respect to each recipient. Any Stock Appreciation Right related to a
Non-qualified Stock Option may be granted at the same time such Option is
granted or at any time thereafter before exercise or expiration of such Option.
Any Stock Appreciation Right related to an Incentive Stock Option must be
granted at the same time such Option is granted. In the case of any Stock
Appreciation Right related to any Option, the Stock Appreciation Right or
applicable portion thereof shall terminate and no longer be exercisable upon the
termination or exercise of the related Option, except that a Stock Appreciation
Right granted with respect to less than the full number of Shares covered by a
related Option shall not be reduced until the exercise or termination of the
related Option exceeds the number of shares not covered by the Stock
Appreciation Right. Any Option related to any Stock Appreciation Right shall no
longer be exercisable to the extent the related Stock Appreciation Right has
been exercised. The Committee may impose such conditions or restrictions on the
exercise of any Stock Appreciation Right as it shall deem appropriate.
SECTION 8. LIMITED STOCK APPRECIATION RIGHTS.
Limited Stock Appreciation Rights may be granted hereunder to Participants in
relation to any Option or Stock Appreciation Right granted under the Plan. A
Limited Stock Appreciation Right may be granted at the time the Option or Stock
Appreciation Right is granted or at any time thereafter. Limited Stock
Appreciation Rights are exercisable in full for a period of seven months
following the date of a Change in Control as defined in Section 12(b).
(a) Amount of Payment. The amount of payment to which a Participant shall be
entitled upon the exercise of each Limited Stock Appreciation Right shall be
equal to the difference between the Option price of the Shares covered by the
related Option or Stock Appreciation Right and the Market Price of such Shares.
Market Price is defined to be the greater of (i) the highest price of the Shares
paid in connection with a Change in Control and (ii) (a) if the Shares are
traded on an exchange, the highest closing trade price per Share on such
exchange during the 60-day period prior to the Change in Control, and (b) if the
Shares are not traded on an exchange, but are traded over-the-counter, the
average of the highest daily closing bid and ask price per Share during the
60-day period prior to the Change in Control, in either case as reasonably
determined by the Corporation.
(b) Form of Payment. Payments to Participants upon the exercise of Limited Stock
Appreciation Rights shall be made solely in cash.
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(c) Effect of Exercise. If Limited Stock Appreciation Rights are exercised, the
Options and Stock Appreciation Rights related to them cease to be exercisable.
Upon the exercise or termination of the Options or Stock Appreciation Rights,
the related unexercised Limited Stock Appreciation Rights terminate.
SECTION 9. RESTRICTED STOCK.
(a) Issuance. Restricted Stock Awards may be issued hereunder to Participants,
for no cash consideration or such consideration as may be determined by the
Committee to be appropriate, either alone or in addition to other Awards granted
under the Plan. The provisions of Restricted Stock Awards need not be the same
with respect to each recipient.
(b) Registration. Any Restricted Stock issued hereunder may be evidenced in such
manner as the Committee in its sole discretion shall deem appropriate,
including, without limitation, book-entry registration or issuance of a stock
certificate or certificates. In the event any stock certificate is issued in
respect of shares of Restricted Stock awarded under the Plan, such certificate
shall be registered in the name of the Participant, and shall bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such Award.
(c) Forfeiture. Except as otherwise determined by the Committee at the time of
grant, upon termination of employment for any reason during the restriction
period specified in connection with such award, all shares of Restricted Stock
still subject to restriction shall be forfeited by the Participant and
reacquired by the Company; provided that in the event of a Participant's
retirement, permanent disability or death, or in cases of special circumstances,
the Committee may, in its sole discretion, when it finds that a waiver would be
in the best interests of the Company, waive in whole or in part any or all
remaining restrictions with respect to such Participant's shares of Restricted
Stock. Unrestricted Shares, evidenced in such manner as the Committee shall deem
appropriate, shall be issued to the grantee promptly after the period of
forfeiture upon satisfaction of all requirements under the applicable Restricted
Stock Award, as determined or modified by the Committee.
SECTION 10. PERFORMANCE SHARES.
(a) Issuance. Performance Shares may be issued hereunder to Participants either
alone or in addition to other Awards granted under the Plan. The terms of
Performance Shares need not be the same with respect to each recipient.
Performance Shares shall entitle the recipient thereof to convert same into
Shares, cash, or a combination thereof, as determined by the Committee, based
upon satisfaction of pre-determined performance targets or goals. The Committee
shall have sole and complete authority to determine the Employees who shall
receive Performance Shares and the number of such Shares for each Performance
Cycle, and to determine the duration of each Performance Cycle. There may be
more than one Performance Cycle in existence at any one time, and the duration
of Performance Cycles may differ from each other.
(b) Performance Goals. The Committee shall establish Performance Goals for each
Cycle based on any one or more of the following, or any other factor the
Committee deems to be relevant: the operating earnings, net earnings, return on
equity, income, market share, stockholder return, combined ratio, level of
expenses or growth in revenue. During any Cycle, the Committee may adjust the
Performance Goals for such Cycle as it deems equitable in recognition of unusual
or non-recurring events affecting the Company, changes in applicable tax laws or
accounting principles, or such other factors as the Committee may determine;
provided, however, that no such adjustment shall be applicable to the extent
such adjustment would result in a disallowance of a tax deduction pursuant to
Section 162(m) of the Code.
(c) Determination of Earned Performance Shares. As soon as practicable after the
end of a Performance Cycle, the Committee shall determine the number of
Performance Shares which have been earned on the basis of performance in
relation to the established Performance Goals.
(d) Payment Values. As soon as practicable after the expiration of the
Performance Cycle and the Committee's determination under paragraph (c), above,
the Committee shall determine whether the Participant should be distributed cash
and/or Shares. To the extent that distributions are made in cash, the amount of
cash distributed shall be equal to the
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number of earned Performance Shares for which cash is being distributed, times
the Payment Value. Award payments made in cash rather than by the issuance of
Shares shall not result in additional Shares being available under the Plan. To
the extent that distributions are made in Shares, the number of Shares
distributed shall be equal to the number of earned Performance Shares for which
Shares are being distributed.
SECTION 11. NON-EMPLOYEE DIRECTORS' STOCK GRANTS.
(a) Grant of Shares. All Non-Employee Directors who remain as such on the last
day of any given fiscal quarter shall be issued quarterly, in arrears, within 60
days of the last day of each fiscal quarter, such number of Shares as shall have
a fair market value equal to $2,500, with such fee being pro-rated for any
Non-Employee Director who serves as such for less than such full fiscal quarter.
For the purposes of the foregoing, the fair market value of a Share shall be the
average of the bid and asked prices per Share on the last trading day of a
particular fiscal quarter.
(b) Adjustment of Award. In case there shall be a merger, reorganization,
consolidation, recapitalization, stock dividend or other change in corporate
structure such that the Shares of the Company are changed into or become
exchangeable for a different security, thereafter the Shares subject to be
granted to Non-Employee Directors pursuant to the provisions of this Section 11
shall be adjusted accordingly.
SECTION 12. CHANGE IN CONTROL.
(a) In order to maintain the Participants' rights in the event of any Change in
Control of the Company, as hereinafter defined, the Committee, as constituted
before such Change in Control, may, in its sole discretion, as to any Award
(except Shares granted pursuant to Section 11), either at the time an Award is
made hereunder or any time thereafter, take any one or more of the following
actions: (i) provide for the acceleration of any time periods relating to the
exercise or realization of any such Award so that such Award may be exercised or
realized in full on or before a date fixed by the Committee; (ii) provide for
the purchase of any such Award, upon the Participant's request, for an amount of
cash equal to the amount that could have been attained upon the exercise of such
Award or realization of the Participant's rights had such Award been currently
exercisable or payable; or (iii) make such adjustment to any such Award then
outstanding as the Committee deems appropriate to reflect such Change in
Control. In addition, the Committee, upon receiving approval of a majority of
the full Board, may, in its discretion, cause any Award outstanding at such time
to be assumed, or new rights substituted therefor, by the acquiring or surviving
corporation after such Change in Control. The Committee may, in its discretion,
include such further provisions and limitations in any agreement documenting
such Awards as it may deem equitable and in the best interests of the Company.
(b) A "Change in Control" shall be deemed to have occurred if (i) any Person
other than a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, and other than the Company or a corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934), directly or indirectly, of securities of the Company representing 25%
or more of the combined voting power of the Company's then outstanding
securities; or (ii) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board and any new Director (other
than a Director designated by a person who has entered into an agreement with
the Company to effect a transaction described in (i) above) whose election by
the Board or nomination for election by the Company's stockholders was approved
by a vote of at least two-thirds (2/3) of the Directors then still in office who
either were Directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof.
SECTION 13. AMENDMENTS AND TERMINATION. The Committee may amend, alter or
discontinue the Plan, but no amendment, alteration, or discontinuation shall be
made that would impair the rights of a Participant under an Award theretofore
granted, without the Participant's consent, or that without the approval of the
Stockholders as required by applicable law would:
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(a) except as is provided in Section 4(b) or 11(b) of the Plan, increase the
total number of Shares reserved for the purposes of the Plan;
(b) change the Employees or class of Employees eligible to participate in the
Plan; or
(c) change in any way the Shares provided for in Section 11 of the Plan.
The Committee may amend the terms of any Award theretofore granted (except
Shares granted pursuant to Section 11 hereof), prospectively or retroactively,
but no such amendment shall impair the rights of any Participant without his
consent. The Committee may also substitute new Awards for Awards previously
granted to Participants, including without limitation previously granted Options
having Fair Market Value or higher option prices.
SECTION 14. GENERAL PROVISIONS.
(a) At the sole discretion of the Committee at the time of grant, Awards may be
assignable or transferable by a Participant or a Non-Employee Director; provided
that no Award shall be assignable or transferable unless the exercise of such
Award and subsequent sale may be covered by a Registration Statement on Form
S-8.
(b) The term of each Award shall be for such period of months or years from the
date of its grant as may be determined by the Committee; provided that in no
event shall the term of any Incentive Stock Option, or any Stock Appreciation
Right related to any Incentive Stock Options, exceed a period of ten (10) years
from the date of its grant; provided further that in no event shall the term of
any Incentive Stock Option, or any Stock Appreciation Right related to any
Incentive Stock Option granted to a Ten Percent Stockholder exceed a period of
five (5) years from the date of its grant.
(c) Nothing in this Plan shall confer upon any Employee or Participant any right
to continue in the employ of the Company or any Affiliate or interfere in any
way with the right of any Company or any Affiliate to terminate his or her
employment at any time. No Employee or Participant shall have any claim to be
granted any Award under the Plan and there is no obligation for uniformity of
treatment of Employees or Participants under the Plan.
(d) The prospective recipient of any Award under the Plan shall not, with
respect to such Award, be deemed to have become a Participant, or to have any
rights with respect to such Award, until and unless such recipient shall have
executed an Award Agreement or other instrument evidencing the Award and
delivered a fully executed copy thereof to the Company, and otherwise complied
with the then applicable terms and conditions.
(e) Subject to Section 13 hereof, the Committee shall be authorized to make
adjustments in performance award standards or in the terms and conditions of
other Awards in recognition of unusual or nonrecurring events affecting the
Company or its financial statements or changes in applicable laws, regulations
or accounting principles. The Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem desirable to carry it into effect. In the event
the Company shall assume outstanding employee benefit awards or the right or
obligation to make future such awards in connection with the acquisition of
another corporation or business entity, the Committee may, in its discretion,
make such adjustments in the terms of Awards under the Plan as it shall deem
appropriate. Notwithstanding the above, the Committee shall not have the right
to make any adjustments in the terms or conditions of Shares granted pursuant to
Section 11 hereof.
(f) The Committee shall have full power and authority to determine any other
type and form of Award beyond those enumerated above to grant a Participant for
the furtherance of the purposes of the Plan.
(g) The Committee shall have full power and authority to determine whether, to
what extent and under what circumstances any Award (other than Shares granted
pursuant to Section 11 hereof) shall be canceled or suspended. In particular,
but without limitation, all outstanding Awards to any Participant shall be
canceled if the Participant, without the consent of the Committee, while
employed by the Company or after termination of such employment, becomes
associated with, employed by, renders services to, or owns any interest in
(other than any nonsubstantial interest, as determined by the
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Committee), any business that is in competition with the Company or with any
business in which the Company has a substantial interest as determined by the
Committee.
(h) All certificates for Shares delivered under the Plan pursuant to any Award
shall be subject to such stock-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 Shares are then listed, and any applicable Federal or state securities
law, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(i) Subject to the provisions of this Plan and any Award Agreement, the
recipient of an Award may, if so determined by the Committee, be entitled to
receive, currently or on a deferred basis, interest or dividends, or interest or
Dividend Equivalents, with respect to the number of Shares covered by the Award,
as determined by the Committee, in its sole discretion, and the Committee may
provide that such amounts (if any) shall be deemed to have been reinvested in
additional Shares or otherwise reinvested.
(j) As circumstances may from time to time require, the Committee may in its
sole discretion make available to Participants loans for the purpose of
exercising Options.
(k) The Company shall be authorized to withhold from any Award granted or
payment due under the Plan the amount of withholding taxes due with respect to
an Award or payment hereunder and to take such other action as may be necessary
in the opinion of the Company to satisfy all obligations for the payment of such
taxes. The Company shall also be authorized to accept the delivery of shares by
a Participant in payment for the withholding of federal, state and local taxes
(but not for social security and Medicare taxes) up to the Participant's
marginal tax rate.
(l) Nothing contained in this Plan shall prevent the Board of Directors from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases.
(m) The validity, construction, and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance with the laws
of the State of Connecticut and applicable Federal law.
(n) If any provision of this Plan is or becomes or is deemed invalid, illegal or
unenforceable in any jurisdiction, or would disqualify the Plan or any Award
under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to applicable laws or if it cannot be
construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan, it shall be stricken and the
remainder of the Plan shall remain in full force and effect.
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APPENDIX B
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MEMRY CORPORATION
PROXY FOR ANNUAL MEETING
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all previous proxies, hereby appoints James G.
Binch and William H. Morton, Jr., or either of them (the "Proxies"), as
attorneys and proxies, each with full power of substitution and all of the
powers which the undersigned would possess, if present in person, to represent
and vote, as designated on the reverse side of this proxy, all of the shares of
Common Stock of Memry Corporation (the "Company") registered in the name of the
undersigned at the Annual Meeting of Stockholders of the Company to be held on
December 10, 1997, and at any adjournment thereof.
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS DIRECTED BY THIS PROXY.
IF NO DIRECTION IS MADE, THE PROXIES WILL VOTE SUCH SHARES FOR THE ELECTION OF
ALL NOMINEES FOR DIRECTOR LISTED UNDER PROPOSAL NO. 1 AND FOR THE ADOPTION OF
THE MEMRY CORPORATION'S 1997 LONG-TERM INCENTIVE PLAN DESCRIBED IN PROPOSAL NO.
2, AND SUCH PROXIES WILL VOTE IN ACCORDANCE WITH THEIR DISCRETION ON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
(IMPORTANT - TO BE MARKED, SIGNED AND DATED ON REVERSE SIDE)
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[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE
1. ELECTION OF DIRECTORS
NOMINEES: James G. Binch, Nicholas J. Grant, Jack H. Halperin, W.
Andrew Krusen, Jr., John A. Morgan.
[_] FOR all nominees [_] WITHHELD from all nominees
FOR, except vote withheld from the following nominee(s): [_]
----------
2. Proposal to adopt Memry Corporation's 1997 Long-Term Incentive Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
------------------------------------
Signature of Stockholder
------------------------------------
Signature if held jointly
Date: , 1997
-------------------------
Note: Please sign exactly as name appears
hereon. When shares are held by
joint tenants, both should sign.
Executors, administrators, trustees
and other fiduciaries should so
indicate when signing. If a
corporation, please sign in full
corporate name by president, or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person. This proxy may be mailed,
postage-free, in the enclosed
envelope.
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