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U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-KSB/A-1
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1997
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ______
Commission file number 0-14068
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MEMRY CORPORATION
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(Name of small business issuer in its charter)
Delaware 06-1084424
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
57 Commerce Drive, Brookfield, CT 06804
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number (203) 740-7311
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Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
None None
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Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.01 per share
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(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
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Check if no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
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Consolidated revenues of the issuer from continuing operations for the fiscal
year ended June 30, 1997 were $13,533,000.
The aggregate market value of voting stock held by non-affiliates of the
registrant was approximately $21,357,000 on August 1, 1997 based upon the
average of the bid and asked prices on that date.
The number of shares of Common Stock outstanding as of June 30, 1997:
17,005,474.
Documents Incorporated by Reference. None.
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Transitional Small Business Disclosure Format
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Yes NO X
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This amendment to the Annual Report on Form 10-KSB of Memry Corporation
(the "Company") for the fiscal year ended June 30, 1997 (the "Original Form 10-
KSB") amends and modifies the Original Form 10-KSB as follows:
(1) The cover page is amended to indicate that no documents are incorporated
by reference in the Original Form 10-KSB, as amended hereby.
(2) The sixth sentence of the second paragraph under the heading "Shape Memory
Effect" and the seventh sentence under the heading "The Company's Operating
Divisions - Memry West - Sales to Raychem" under "Item 1. Description of
Business" are amended to correct typographical errors.
(3) "Item 7. Financial Statements" is amended as follows:
(a) The Company's Consolidated Statements of Stockholders' Equity are
amended to add a new line item captioned "Direct stock offering
costs."
(b) The table set forth under "Note 2. Business Combination" regarding
unaudited pro forma consolidated results of operations for the year
ended June 30, 1996 is amended to correct a typographical error.
(c) "Note 5. Major Customers" is amended to correct a typographical error.
(d) The second paragraph under the heading "Common Stock" under "Note 6.
Capital Stock" is amended to add a sentence regarding the offering of
up to 3,550,650 shares of Common Stock.
(e) The tables regarding the status of the Company's stock option plan at
June 30, 1997 and 1996 and the table regarding a further summary of
options outstanding at June 30, 1997, along with related text, under
the heading "Stock Option Plans" under "Note 6. Capital Stock" are
amended to correct information regarding the number of options
canceled, granted and exercisable.
(f) The table summarizing warrants outstanding at June 30, 1997 and 1996
under the heading "Warrants" under "Note 6. Capital Stock" is amended
to correct a typographical error as well as to correct the number of
warrants canceled and granted since June 30, 1996.
(g) The first sentence of the second paragraph under "Note 7. Income
Taxes" is amended to modify the disclosure regarding net operating
loss carryforwards for income tax purposes.
(h) The table under "Note 8. Notes Payable" is amended to correct a
typographical error.
(i) The last sentence under the heading "Litigation" under "Note 10.
Contingencies" is amended to correct a typographical error.
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(j) The first sentence of "Note 11. Discontinued Operations" is amended to
indicate that the Company's decision to discontinue operations of
Wright occurred in April 1997.
(4) "Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act" is amended to include
such disclosure, rather than to incorporate by reference to the Company's
Definitive Proxy Statement.
(5) "Item 10. Executive Compensation" is amended to include such disclosure,
rather than to incorporate by reference to the Company's Definitive Proxy
Statement.
(6) "Item 11. Security Ownership of Certain Beneficial Owners and Management"
is amended to include such disclosure, rather than to incorporate by
reference to the Company's Definitive Proxy Statement.
(7) "Item 12. Certain Relationships and Related Transactions" is amended to
include such disclosure, rather than to incorporate by reference to the
Company's Definitive Proxy Statement.
(8) The Exhibit Index is amended to correct certain typographical errors.
(9) Exhibit 10.46 is re-filed, with certain portions being subject to a
confidential treatment request, to make a correction to Exhibit G thereto
in response to a comment from the Securities and Exchange Commission.
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Item 1. DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT
Memry Corporation (referred to herein as "Memry" or the "Company"), a Delaware
corporation incorporated in 1981, is engaged in the business of developing,
manufacturing and marketing materials, components and products utilizing the
properties exhibited by shape memory alloys for surgical instruments, cellular
telephone antenna, medical implants and a wide range of other industrial,
medical and consumer applications. The Company conducts its operations from its
two operating facilities located in Brookfield, Connecticut and Menlo
Park, California. The Company acquired its Menlo Park, California operations
from Raychem Corporation ("Raychem") on June 28, 1996, as part of a transaction
(the "Raychem Acquisition") in which the Company acquired certain assets
comprising Raychem's nickel-titanium product line. The Company's principal
executive offices are located at 57 Commerce Drive, Brookfield, Connecticut
06804, and its telephone number at such address is (203) 740-7311.
In June of 1997 the Company ceased the operations of its Wright Machine
Corporation ("Wright") operating segment and commenced the orderly liquidation
of Wright's assets. The closing of Wright, whose assets and income are now
reported on the Company's financial statements under the caption of
"Discontinued Operations," leaves the Company with only one operating segment
(which segment, prior to the closing of Wright, was formerly known as the "Memry
Segment").
SHAPE MEMORY EFFECT
Shape memory alloys ("SMAs") possess the ability to change their shape in
response to thermal and mechanical changes, as well as the ability to return to
their original shape following deformations from which conventional materials
cannot recover. This ability results from the transformation of the crystalline
structure of the SMA in reaction to thermal and mechanical changes. As a result
of the crystalline structure changes, SMAs are also able to produce forces many
times greater than those exhibited by conventional materials such as bi-metallic
elements.
The major defining properties of SMAs with which the Company works are "super-
elasticity" and "thermal shape memory." Unlike ordinary metal, certain SMAs
are capable of fully recovering their shape after being deformed as much as six
to eight percent, and of performing this recovery on a repeated basis. This is
more than ten times the recovery ability of ordinary metals. This "super-
elasticity" feature has applications for surgical instruments and devices,
cellular telephone antennae, orthodontic apparatus and other devices. Thermal
recovery applications typically involve instances where a device is controlled
or actuated in response to a pre-determined thermal change. Examples of such
uses include heat activated coupling or sealing devices, valve actuation
systems, and thermally-actuated mechanical systems. The majority of today's
commercial applications involve the use of the materials' "super-elastic"
properties.
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THE COMPANY'S OPERATING DIVISIONS
Since the Company's June 28, 1996 acquisition of Raychem's nickel-titanium
product line (referred to at times herein as the "Raychem Acquisition"), the
Company has conducted its SMA business through two operating divisions. "Memry
West," consisting of most of the business acquired from Raychem, manufactures
semi-finished materials utilizing SMAs and, mostly through Raychem but also
directly in the case of growing medical implant applications, sells such
materials into various industrial, electronic, automotive and medical markets.
"Memry East," which prior to the Raychem Acquisition constituted the Company's
entire SMA business, engages in the manufacture and sale of finished sub-
assemblies and products utilizing SMAs into the medical, industrial and consumer
markets, as well as performing funded application research.
MEMRY WEST
On June 28, 1996, the Company acquired Raychem's nickel-titanium product line.
This business utilized inventory, leasehold improvements, machinery and
equipment and patent and other intellectual property rights to manufacture and
sell SMAs primarily composed of nickel-titanium. Prior to the Raychem
Acquisition, Raychem was both a supplier of nickel-titanium SMAs to the Company
and a competitor in certain markets (particularly in the medical market for
finished components). The acquired business differed from the SMA business of
the Company, however, in that where the Company had historically specialized in
the manufacture of finished products and components, Raychem specialized more in
the manufacture of semi-finished materials used by original equipment
manufacturers ("OEMs"). Not surprisingly, therefore, the point at which Memry
and Raychem most competed was at the level of components sales to OEMs,
particularly in the medical products industry. The leased facility, inventory,
machinery and equipment, leasehold improvements and know-how purchased from
Raychem now constitute Memry West (except that, as discussed below under "--
Memry East," Raychem's operations relating to the finishing of materials into
sub-assemblies for sales to United States Surgical Corporation were relocated to
Memry East in December, 1996, and are included within the discussion of Memry
East).
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Memry West, located in Menlo Park, California, is engaged in the processing and
manufacture of SMAs, the vast majority of which result in the sale of custom
designed semi-finished materials and components used by OEMs. Memry West sells
semi-finished SMAs in three basic forms: wire, strip and tube. To a lesser
degree, Memry West also sells components to OEMs, including helical and strip
actuators, patented locking rings for electronic connectors, medical components,
cellular antennae materials, and sealing components. An "actuator" is a device
that causes action or motion.
A. Sales to Raychem. In connection with the Raychem Acquisition, Memry and
Raychem entered into a Private Label/Distribution Agreement pursuant to which
Raychem was made Memry's exclusive distributor for the acquired product line in
certain specified fields of use for an initial term of five years. Sales by the
Company to certain customers, including United States Surgical Corporation (as
described below in "--Memry East"), were excluded from the scope of this
Agreement, as were any future sales for all medical implant and certain consumer
recreational applications. Therefore, at the present time, most of Memry West's
sales are made to Raychem. During the Company's fiscal year ended June 30, 1997,
for example, approximately $5.47 million of Memry West's approximately $5.98
million of sales (excluding sales to United States Surgical Corporation relating
to the finishing of materials into sub-assemblies prior to such operation being
relocated to Memry East in December of 1996) were made to Raychem. Raychem's
largest customers for the products sold to it are cellular telephone antennae
manufacturers who utilize the superelasticity of SMAs for a more durable
antenna. Raychem's other customers of Memry West's products include orthodontic
manufacturers, who use SMA wire for braces, medical products and instrument
companies, whose uses of Memry West's products include catheter and guidewires,
automotive manufacturers, who use SMA actuators to control coolant systems and
SMA plugs for high-pressure fuel injector sealant devices, and industrial
product manufacturers who use SMAs for a variety of other uses, including
electronic connectors. In addition, Raychem purchases some of Memry West's
components for its own use. The sales to Raychem under the agreement are
discounted from the ultimate resale price to OEMs in order to allow Raychem to
recover its sales and marketing expenses and to realize a profit upon resale of
such products to its customers (primarily OEMs). This arrangement with Raychem
permits Memry West to keep its internal sales force to a minimum. As of the end
of fiscal 1997, Memry West had only two sales and marketing employees.
B. Other Sales. In addition to its sales to Raychem, Memry West supplies Memry
East with semi-finished materials for processing by Memry East into finished
products and sub-assemblies, much as Raychem sold these materials to Memry East
prior to the Raychem Acquisition. These sales include formed components used by
Memry East as components for products sold to United States Surgical
Corporation. These inter-company sales (including such formed components prior
to the relocation of the finishing operations to Memry East) accounted for
approximately $400,000 of Memry West's fiscal 1997 sales. In addition, the
Company has begun the sale of semi-finished materials and components for medical
implant applications, which applications are outside of the scope of Raychem's
distribution rights under the Amended and Restated Private Label/Distribution
Agreement, dated as of February 19, 1997 and effective as of December 20, 1996,
between the Company and Raychem (the "Private Label/Distribution Agreement").
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MEMRY EAST
Memry East, located in the same facility as the Company's corporate headquarters
in Brookfield, Connecticut, is engaged in (i) the development and manufacture
(and, in the case of proprietary products, the marketing) of finished sub-
assemblies and products utilizing SMA materials, and (ii) the conduct of both
funded SMA application research and customer-sponsored development projects.
Memry West also undertakes the latter work.
A. Finished Assemblies and Components. Memry East manufactures and sells
finished assemblies and components for OEMs and also manufactures, sells, and
markets proprietary finished products. While prior to the Raychem Acquisition
the Company generated more revenues from the sale of its proprietary SMA
products than from the sale of semi-finished SMA materials, assemblies and
components to OEMs, both the consummation of the Raychem Acquisition and the
growth in sales of SMA assemblies to the medical industry have made the
materials, assemblies and components business the greater portion of both the
Company's sales and Memry East.
The single largest portion of Memry East's business is selling assemblies and
components to United States Surgical Corporation ("USSC") and other medical
industry OEMs. The primary item sold by Memry to USSC is an SMA subassembly
used by USSC for endoscopic instruments. The use of superelastic SMAs allows
the instruments to be constrained outside the body, inserted into the body in
its constrained form through small passages, to then take a different shape
while inside the body, and then to return to its constrained shape for removal.
While USSC was working with Memry on a number of projects at the time of the
Raychem Acquisition, the bulk of this business represents selling finished
medical sub-assemblies that Raychem manufactured at a separate Menlo Park
facility and sold to USSC prior to the Raychem Acquisition. This operation was
relocated from Memry West to Memry East in December of 1996.
Products and devices being sold to other medical OEMs include stents, surgical
clips, catheter guidance forms and other products using plastic with shape
memory properties for orthoscopic procedures. All of the Company's major SMA
competitors compete with the Company in this market (see "-- Competition").
In 1992 the United States Golf Association ("USGA"), professional golf's
regulating body in the U.S., modified its rules to allow inserts to be used for
the hitting surface of golf clubs. Prior to that time, the Company had developed
an application of certain properties of SMAs for such purpose. The SMA alloy
allows the energy created when a club strikes a golf ball to be absorbed,
without deformation of the club's shape, to a far higher degree than other
materials used in the golf club industry. In fiscal 1996 the Company began
selling SMA inserts utilizing a alloy trade named ZEEMET/(TM)/ to a distributor
for resale to the Nicklaus Golf Equipment Company ("Nicklaus"). Nicklaus
inserted these ZEEMET/(TM)/ inserts into a new line of wedges and a putter,
where they constituted the hitting surface of such clubs. While the Company had
high hopes for this program, Nicklaus terminated it during fiscal 1997. Since
such termination, the Company has had conversations with a number of golfing
equipment manufacturers regarding their use of the ZEEMET/(TM)/ inserts, but
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none has yet committed to the use of ZEEMET/TM/ and there can be no assurances
that any will. In addition, the golfing equipment industry is highly
competitive and various manufacturers have in recent years been developing more
and more technical sophistication. While the Company believes that the current
SMA application has several advantages over current competing technology, there
can be no assurances that it will continue to hold such advantages.
In addition to its sales of finished assemblies to OEMs, Memry East currently
manufactures and markets a number of consumer and industrial products utilizing
SMAs. The Company's principal proprietary products are the MEMRYSAFE/R/ line
of temperature-actuated water flow reduction products. In addition, the Company
manufactures and markets the ULTRAVALVE/TM/ electronic combination shower/tub
mixing valve and the FIRECHEK/(R)/ line of industrial fire safety valves.
The MEMRYSAFE/R/ products provide protection from accidental scalding in
showers, bathtubs and sinks by instantly restricting the flow at the point of
outlet prior to the onset of a scalding condition. The Company sells this
product to distributors for sales as retrofit products into the retail market,
to OEMs as components and, through sales agents, to governmental authorities for
installation in governmental housing. While the majority of sales of the
MEMRYSAFE/R/ products are being made in North America, distribution is also
underway in Canada, Australia and New Zealand. Retail prices in the U.S. range
from $7.89 to $24.99. The Company is aware of only one directly competitive
product in the U.S. and another in Australia. However, the primary competition
for the product comes from major U.S. plumbing manufacturers who market and sell
conventional thermostatic and pressure balanced mixing valves. The Company
believes that alternative anti-scald products are more expensive to manufacture
and install and less effective in protecting the user from burns. Nonetheless,
sales to date of the Company's MEMRYSAFE/(R)/ products have fallen short of the
Company's expectations, presumably due to lack of consumer awareness of the
product and their price (when compared not to other types of anti-scalding
valves, which cost at least as much as Memry's products, but to valves without
an anti-scalding feature).
The Company has been selling the micro-processor controlled ULTRAVALVE/TM/
shower and bath valve since June of 1990. Because it combines the safety and
comfort of a thermostatic mixing valve with the ease and accuracy of a computer-
controlled temperature setting, the Company believes that its ULTRAVALVE/TM/
systems have clear performance advantages over the other premium competing
products on the market today. In addition, the ULTRAVALVE/TM/ system
incorporates the Company's patented anti-scald protection. The ULTRAVALVE/TM/
system is assembled at Memry East with certain components purchased from outside
vendors. In May 1995, the Company entered into a three year agreement with
American Standard, Inc., whereby American Standard became the exclusive marketer
and distributor of the ULTRAVALVE/TM/ product line in the United States. The
Company has retained the right to market these products outside of the United
States. American Standard markets the products in the U.S. under both the
American Standard and the Ideal Standard brand names. Unfortunately, sales of
ULTRAVALVE/TM/ products to American Standard have fallen short of the
contractually mandated minimum purchase requirements
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for American Standard and product sales still have not achieved a substantial
volume. As the Company is not convinced that sales of ULTRAVALVE/TM/ products,
even if improved, will ever be material to the Company's business, and as the
Company's business focus has shifted away from plumbing products generally to
medical products and industrial and leisure industry uses, the Company is
looking to sell the ULTRAVALVE/TM/ product line. However, while the Company has
discussed a possible sale with a small number of potential buyers, no agreement
for the sale of ULTRAVALVE/TM/ yet exists.
The Company also manufactures and markets the FIRECHEK/(R)/ line of industrial
fire safety valves. While sales of FIRECHEK/(R)/ have been increasing, it does
not appear that this product line will be material to the Company's overall
results of operation in the foreseeable future.
B. Customer Sponsored Development Projects and Funded Product Research. In
addition to the manufacture and sale of commercialized components and products,
Memry East is also engaged in both sponsored development projects in which the
Company designs, manufactures and sells prototype components and products to
customers, and funded product research.
Memry East is currently working on a number of programs to develop SMA
components for OEM customer's products. The Company will accept customer-
sponsored development contracts when management believes that the customer is
likely to order a successfully developed component or product in sufficient
quantity to justify the allocation of the engineering resources necessary.
Generally under such programs, the identity of the customer is confidential; the
data, inventions, patents and intellectual property rights which specifically
relate to the SMA component are either owned by the customer, or, in several
instances, shared between the Company and the customer; and data, inventions,
patents, and intellectual property rights pertaining to the SMA technology that
do not specifically relate to the customer's product are owned by the Company.
The largest such project that Memry East is currently working on is the
development of a shape-memory controlled micro-tab on the trailing edge of the
blades of a helicopter rotor for McDonnell Douglas Helicopter Systems. Such a
device, if technically and commercially proven, would permit the pilot of a
helicopter to tune the attitude of each of the rotor blades from the cockpit and
eliminate the need for ground mechanics presently required to perform this
function. In addition, the Company has previously completed projects such as
the development of a three-way line valve for a Canadian utility company
intended for use in an off-peak residential electric water heater system.
Because the decision as to when a program is complete and ready for
commercialization belongs to the customer, and not to the Company, the Company
is not able to accurately predict if or when any products developed in this type
of program will come to market. The Company has worked on these type of
development projects for a number of years and, with the exception of the sales
that are now being made by Memry West to Raychem for components for a
proprietary sealing system for high pressure fuel injectors that were developed
by Memry East and the customer in such a program, the Company has been generally
disappointed with the lack of sales of commercialized products or assemblies
that
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have arisen from these programs. The one successful development, however, led
to $400,000 of component sales in fiscal 1997, and the Company believes that
these sales will be greater in upcoming fiscal years.
Memry East is also involved in various customer and government sponsored
research programs in which the Company gets paid not for the sale of products
but for performing the research. The Company will continue to pursue funded
development programs which advance the Company's knowledge of shape memory
materials and/or demonstrate clear potential for commercialization. Projects
undertaken by the Company in recent years include a National Institute of Health
program to study the use of super-elastic titanium-based alloys as a replacement
for the current nickel-based alloys used in orthodontic procedures, a United
States Air Force program for the development of SMA-based reusable lock nuts,
and a program with the National Aeronautical and Space Administration for the
development of shroud rings in the compressor sections of small jet turbines.
The largest ongoing development program is, as previously described, with
McDonnell Douglas for the development of SMA actuated control surfaces on
advanced helicopter blades. Research contracts with the U.S. Government are
subject to termination or renegotiation by the U.S. Government pursuant to
standard government procurement contract terms.
SUPPLIERS
The principal raw material used by the Company is SMA alloys. The Company
obtains its SMA alloys from two principal sources: Teledyne Wah Chang, of
Albany, Oregon; and Special Metals Corporation of New Hartford, New York. The
Company expects to be able to continue to acquire shape memory alloys in
sufficient quantities for its needs from these suppliers. In addition, if the
Company was for whatever reason not able to secure an adequate supply of SMA
from these suppliers, the Company believes that other sources exist that would
be able to supply the Company with sufficient quantities of SMA alloys.
While the Company also relies on outside suppliers for its non-SMA components of
finished products, the Company does not anticipate any difficulty in continuing
to obtain non-SMA raw materials and components necessary for the continuation of
the Company's business.
MATERIAL CUSTOMERS
The Company's two largest customers, Raychem and United States Surgical
Corporation, represented 47% and 30%, respectively, of the Company's total sales
(excluding sales from discontinued operations) during fiscal 1997. Obviously,
the loss of either such customer could have a material adverse effect on the
Company. This risk, however, is lessened by the Company's relationship with
these customers. The Company and Raychem are party to the Private
Label/Distribution Agreement, which requires Raychem to purchase certain
products and materials solely from the Company until June 30, 2001. Furthermore,
while there can be no assurances that Raychem will continue to purchase products
at its current rate, Raychem distributes the components its purchases from Memry
to over two hundred customers.
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worldwide, lessening the risk that the loss of any one customer will have a
material adverse effect on Raychem's purchases from Memry. In addition, in
April 1997 the Company received a two-year exclusive blanket purchase order from
United States Surgical Corporation for the supply of medical instrument
assemblies, commencing April 1, 1997. The estimated value of such shipments is
expected to exceed $7 million over such two-year period. The sub-assembly
covered by this agreement was acquired by the Company as part of the Raychem
Acquisition.
COMPETITION
The Company has competition on two levels: technological competition by other
SMA processors, who compete with the Company mostly in the sale of semi-
finished materials (i.e., mostly with Memry West) and components (i.e., with
both Memry East and Memry West), and end product competitors who compete with
the Company in the sale of the Company's finished products (i.e., who compete
with Memry East). Technologically, there are several major U.S., Japanese and
European companies engaged in the supply or use of SMAs, some of which have
substantially greater resources than the Company. Within the U.S., the two major
SMA alloy suppliers to both the Company and the industry as a whole are Teledyne
Wahchang and Special Metals Corporation. Each of these companies has
substantially greater resources than the Company and could determine that it
wishes to compete with the Company in the Company's markets. Special Metals has
in fact become a competitor of Memry West for semi-finished wire and strip
materials. Japanese competitors include Furakawa Electric Co., Sumitomo Co.,
Tokin Co. and Daido, all of which produce SMAs and sell to users in Japan and
internationally. The principal European competitors are AMT, a unit of the
SwissMetal group of companies, and G. Rau/EuroFlex, a German company. Within
North America, the Company believes that it is the largest single processor of
SMAs, accounting for approximately 35% of all SMA usage. The Company believes
that Johnson and Johnson, and its recently-acquired subsidiary Nitinol Devices
and Components Company, are the next largest, followed by Flexmedics, SMA
Applications, Inc., and Nitinol Medical Technology.
Memry East is, pursuant to a purchase order running through March 31, 1999, the
exclusive supplier to United States Surgical Corporation of Memry East's single
most important product line, the Endocatch subassembly. Competition with
respect to Memry East's two major finished product lines and other component
lines and major component lines are discussed above. See "-- Operating
Divisions -- Memry East."
The Company intends to compete, and advance its position, based upon its
worldwide sales and distribution alliance with Raychem Corporation, its
proprietary alloy positions, and its knowledge of the processing parameters of
the alloys and unique design and assembly capabilities, particularly in the
medical instrument and valving fields. While price and production capability
are obviously important, the Company believes that it competes mostly on
technological capabilities.
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PATENTS AND TRADEMARKS
As part of the Raychem Acquisition, the Company controls five U.S. patents, as
well as a variety of foreign patents and domestic and foreign patent
applications, relating primarily to the production and utilization of nickel-
titanium alloys having super-elasticity and shape memory effect. While these
acquired patents in no way dominate the entire field of shape memory metals,
they do provide the Company with some competitive advantages in the covered
uses. In addition, notwithstanding the Company's acquisition of these patents
and patent applications as part of the Raychem Acquisition, under certain
circumstances the Company will be required to license the acquired intellectual
property back to Raychem for specified uses. For example, (i) upon the
termination of the private/label distribution agreement between the Company and
Raychem, Raychem will have a non-exclusive perpetual license to utilize these
patents to sell products within specified fields of uses for a specified
royalty, and (ii) Raychem has a non-exclusive, transferable perpetual license to
utilize these patents in connection with certain intellectual property relating
to the medical products market that was not acquired by the Company as part of
the Raychem Acquisition. The Company believes that this latter license may have
been transferred to Medtronics, Inc., a medical products manufacturer (and a
customer of the Company), when Medtronics purchased this "excluded" (from the
Raychem Acquisition) intellectual property from Raychem during fiscal 1997.
With respect to specific products, the Company has a patent pending for the use
of SMA in the hitting surface of golf clubs. The Company owns two patents
relating to the SMA scald-protection valves, the last of which expires in the
year 2010. The Company also holds a variety of other patents relating to both
SMA technology generally and specific products.
The Company's patent rights do not dominate the field of SMA utilization,
although the patents acquired from Raychem do dominate the use of nickel-
titanium alloys having a two-way shape memory effect, although not in the
medical instrument and in-body applications fields. The Company does not,
however, have specific patent protection for its most important present products
or product components. The Company's patent rights obviously do not dominate
any specific fields in which the Company sells products (medical instruments,
plumbing products, etc.). The Company does believe, however, that various
patents provide it with advantages in the manufacture and sale of different
products, and that its know-how relating to various SMA alloys provides the
Company with a competitive advantage.
While a U.S. patent is presumed valid, the presumption of validity is not
conclusive, and the scope of a patent's claim coverage, even if valid, may be
less than needed to secure a significant market advantage. Gaining effective
market advantage through patents can require the expense, uncertainty and delay
of litigation. Although the Company's
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technical staff is generally familiar with the SMA patent environment and has
reviewed patent searches when considered relevant, the Company has not requested
any legal opinion to determine whether any of its current or contemplated
products would infringe any existing patents.
The Company has trademark registrations for the MEMRYSAFE/(R)/, SHOWER
GARD/(R)/, SHOWER SAFE/(R)/ (and design) and FLOW GARD/(R)/ (and design)
valves, as well as for the FIRECHEK/(R)/ line of industrial safety valves and
for M/MEMRY/(R)/ (and design) for a variety of products. In addition, the
Company has an allowed trademark registration application for ZEEMET/TM/ for
metal alloys.
RESEARCH AND DEVELOPMENT
During fiscal 1997, the Company spent approximately $125,000 on "pure" research
and development (i.e., research and development done by the Company at its own
cost for purposes of developing future products). In addition, the Company
spent approximately $212,000 on research and development contributing to the
development of SMA components pursuant to customer and government-sponsored
development arrangements. These research and development costs are borne
directly by the federal government and customers of the Company, as applicable,
and, for purposes of the Company's financial statements, are part of "costs of
goods sold," rather than research and development. By comparison, the Company
spent approximately $420,000 on funded research and development in fiscal 1996,
which amount was accounted for as "costs of goods sold" and the Company spent no
material amounts during fiscal 1996 on "pure" research and development. The
amount of funded research and development that the Company will undertake in the
future will depend upon its customer's needs, but the Company anticipates it
increasing over time as the use of SMAs for various purposes increases. The
Company also anticipates modest increases in the amount of "pure" research and
development that it undertakes as the Company's growth continues and scientific
personnel are added.
EMPLOYEES
As of June 30, 1997, the Company and its subsidiary had 75 full-time and 4
part-time employees. Of the full-time employees, 10 were executive or
management personnel and 17 were science and research personnel. Seven of the
full-time employees and none of the part-time employees were employed by Wright
in order to complete Wright's orderly liquidation. It is anticipated that all
but one of Wright's remaining employees will be terminated by the end of the
first quarter of the Company's 1998 Fiscal Year (which one remaining employee
will be maintained as a part-time employee until the sale of Wright's real
property). None of the employees is represented by collective bargaining units.
The Company believes that its relationship with its employees is generally good.
In addition, as of June 30, 1997, the Company had approximately 20 "temporary"
employees (i.e., employees of temporary manpower companies) working for the
Company.
DISCONTINUED OPERATIONS
The Company's former Wright Machine Segment consisted of Wright Machine
Corporation ("Wright"), a wholly-owned subsidiary of the Company with a 120-year
history as a New England manufacturer of screw machine and
10
<PAGE>
taper pin products. Wright provided these products to OEMs in the plumbing,
electrical, electronic, fire protection, valve, appliance and automotive markets
through both direct sales accounts and three manufacturers' representatives.
Within the overall activity of Wright, there were three basic business segments:
(i) the manufacture of threaded rings for the plumbing industry; (ii) the
manufacture of predominantly brass parts on screw machines ranging in size
between 1.5 inches to 2.5 inches; and (iii) the manufacture of custom and
standard taper pins, most of which were made of various grades of stainless and
carbon steel.
After a prolonged period of declining sales and ongoing operating losses, the
Company's Board of Directors voted to cease operation at Wright, and proceed
with Wright's orderly liquidation, in April, 1997. Wright proceeded to cease
manufacturing operations, and sell its machinery and equipment, in June of 1997.
The Company recorded a loss of $211,000 on Wright's sales and liquidation.
Wright's assets have at this point been substantially liquidated, except that
Wright's real property, while currently listed for sale, has not yet been sold.
Wright's assets and results from operations are now shown on Memry's financial
statements under the captions of "Assets of Discontinued Segment, Net" and
"Discontinued Operations." See "Item 7 -- Financial Statements"
11
<PAGE>
Item 7. FINANCIAL STATEMENTS
Index to Financial Statements
- -----------------------------
INDEPENDENT AUDITOR'S REPORT F-1
FINANCIAL STATEMENTS:
Consolidated Balance Sheets - F-2
As of June 30, 1997 and 1996
Consolidated Statements of Operations - F-3
For years ended June 30, 1997 and 1996
Consolidated Statements of Stockholders' Equity F-4
For years ended June 30, 1997 and 1996
Consolidated Statements of Cash Flows - F-5
For years ended June 30, 1997 and 1996
Notes to Consolidated Financial Statements F-6
12
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Stockholders and Board of Directors
Memry Corporation and Subsidiary
Brookfield, Connecticut
We have audited the accompanying consolidated balance sheets of Memry
Corporation and subsidiary as of June 30, 1997 and 1996, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Memry Corporation
and subsidiary as of June 30, 1997 and 1996, and the results of their operations
and their cash flows for the years then ended in conformity with generally
accepted accounting principles.
/s/ McGladrey & Pullen, LLP
New Haven, Connecticut
September 18, 1997
F-1
<PAGE>
<TABLE>
<CAPTION>
MEMRY CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
June 30, 1997 and 1996
- -----------------------------------------------------------------------------------------------------------------
ASSETS (Note 8) 1997 1996
--------------------------------
Current Assets
<S> <C> <C>
Cash and cash equivalents (Note 5) $ 25,000 $ 57,000
Accounts receivable, less allowance for doubtful accounts of
$29,000 in 1996 2,419,000 568,000
Inventories (Note 3) 1,664,000 2,044,000
Prepaid expenses and other current assets 369,000 63,000
Assets of discontinued segment, net (Note 11) 936,000 -
--------------------------------
Total current assets 5,413,000 2,732,000
--------------------------------
Property, Plant and Equipment, at cost, net (Notes 4 and 9) 2,765,000 3,881,000
--------------------------------
Other Assets
Patents and patent rights, less accumulated amortization of $194,000
in 1997 and $60,000 in 1996 1,868,000 2,002,000
Goodwill, less accumulated amortization of $70,000 in 1997 974,000 989,000
Deferred financing costs 103,000 36,000
Deposits 29,000 39,000
--------------------------------
2,974,000 3,066,000
--------------------------------
Total assets $ 11,152,000 $ 9,679,000
================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 3,144,000 $ 1,733,000
Notes payable (Note 8) 2,255,000 1,698,000
Unearned revenue - 150,000
Current maturities of capital lease obligations (Note 9) 29,000 3,000
--------------------------------
Total current liabilities 5,428,000 3,584,000
--------------------------------
Capital Lease Obligations, less current maturities (Note 9) 43,000 4,000
--------------------------------
Commitments and Contingencies (Notes 9 and 10)
Stockholders' Equity
Preferred stock (Note 6) - 36,000
Common stock (Note 6) 170,000 130,000
Additional paid-in capital 39,631,000 39,034,000
Accumulated deficit (34,120,000) (33,109,000)
--------------------------------
Total stockholders' equity 5,681,000 6,091,000
--------------------------------
Total liabilities and stockholders' equity $ 11,152,000 $ 9,679,000
================================
</TABLE>
See Notes to Consolidated Financial Statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
MEMRY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended June 30, 1997 and 1996
- -----------------------------------------------------------------------------------------------------------
1997 1996
----------------------------------
<S> <C> <C>
Revenues
Product sales $ 11,290,000 $ 657,000
Research and Development 255,000 479,000
----------------------------------
11,545,000 1,136,000
----------------------------------
Cost of Revenues
Manufacturing 6,305,000 573,000
Research and development 212,000 422,000
----------------------------------
6,517,000 995,000
----------------------------------
Gross profit 5,028,000 141,000
----------------------------------
Operating Expenses
General, selling and administrative (Note 9) 4,795,000 1,766,000
Depreciation and amortization 228,000 38,000
----------------------------------
5,023,000 1,804,000
Operating income (loss) 5,000 (1,663,000)
Other Income (Expense)
Interest expense (Note 8) (275,000) (250,000)
Gain on disposition of assets 10,000 -
----------------------------------
(265,000) (250,000)
----------------------------------
Loss from continuing operations $ (260,000) $ (1,913,000)
----------------------------------
Discontinued operations (Note 11)
Loss from operations of discontinued segment (680,000) (192,000)
Loss on disposal of discontinued segment (211,000) -
Extraordinary gain on early retirement of debt (Note 8) 140,000 -
----------------------------------
(751,000) (192,000)
----------------------------------
Net loss $ (1,011,000) $ (2,105,000)
==================================
Weighted average number of common shares outstanding 16,229,093 8,357,118
==================================
Net loss per common share
Loss from continuing operations $ (0.02) $ (0.21)
Loss from discontinued operations (0.04) (0.04)
----------------------------------
Total $ (0.06) $ (0.25)
===================================
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
MEMRY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended June 30, 1997 and 1996
- ----------------------------------------------------------------------------------------------------------------------------------
Preferred Stock Common Stock
---------------------- --------------------------
Additional
Shares Par Shares Par Paid-in Accumulated
Issued Value Issued Value Capital Deficit
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1995 193 $ 19,000 8,009,997 $ 80,000 $ 29,874,000 $ (31,004,000)
Issuance of common stock - - 3,363,329 33,000 4,570,000 -
Series G preferred stock converted (127) (13,000) 1,269,000 13,000 - -
Series G preferred stock issued 231 23,000 - - 1,478,000 -
Conversion of debenture
to Series H preferred stock 67 7,000 285,528 3,000 753,000 -
Conversion of debt - - 50,000 1,000 49,000 -
Issuance of warrants - - - - 2,310,000 -
Net loss - - - - - (2,105,000)
------------------------------------------------------------------------------------
Balance, June 30, 1996 364 $ 36,000 12,977,854 $ 130,000 $ 39,034,000 $ (33,109,000)
Issuance of common stock - - 388,620 3,000 495,000 -
Series G preferred stock converted (297) (29,000) 2,971,000 30,000 - -
Series H preferred stock converted (67) (7,000) 668,000 7,000 - -
Issuance of warrants - - - - 152,000 -
Direct stock offering costs - - - - (50,000) -
Net loss - - - - - (1,011,000)
------------------------------------------------------------------------------------
Balance, June 30, 1997 $ - - 17,005,474 $ 170,000 $ 39,631,000 $ (34,120,000)
====================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
MEMRY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended June 30, 1997 and 1996
- ------------------------------------------------------------------------------------------------------------------------
1997 1996
-------------------------------
<S> <C> <C>
Cash Flows From Operating Activities
Net loss $ (1,011,000) $ (2,105,000)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization 723,000 90,000
Gain on early retirement of debt (140,000) -
Gain on disposal of assets (1,071,000) -
Writedown of assets of discontinued segment 470,000 -
Compensation paid by issuance of common stock 229,000 -
Change in operating assets and liabilities, net of assets acquired in
business combination:
(Increase) decrease in accounts receivable (2,069,000) 123,000
(Increase) decrease in inventories (48,000) 98,000
(Increase) decrease in prepaid expenses and other current assets (96,000) 7,000
Increase in other assets (80,000) (82,000)
Increase (decrease) in accounts payable and accrued expenses 1,622,000 (556,000)
Decrease in unearned revenue (150,000) -
--------------------------------
Net cash used in operating activities (1,621,000) (2,425,000)
--------------------------------
Cash Flows From Investing Activities
Purchase of shape memory metals operation (56,000) (4,022,000)
Purchases of property, plant and equipment (202,000) (38,000)
Proceeds from sales of property, plant and equipment 1,096,000 -
--------------------------------
Net cash provided by (used in) investing activities 838,000 (4,060,000)
--------------------------------
Cash Flows From Financing Activities
Proceeds from sale of preferred stock, net - 1,502,000
Proceeds from sale of common stock, net 72,000 4,603,000
Proceeds from notes payable 1,146,000 104,000
Net increase in revolving loans payable 972,000 -
Principal payments on notes payable (1,421,000) (808,000)
Principal payments on capital lease obligations (18,000) (4,000)
--------------------------------
Net cash provided by financing activities 751,000 5,397,000
--------------------------------
Decrease in cash and cash equivalents (32,000) (1,088,000)
Cash and cash equivalents, beginning of year 57,000 1,145,000
--------------------------------
Cash and cash equivalents, end of year $ 25,000 $ 57,000
================================
Supplemental Disclosure of Cash Flow Information
Cash payments for interest $ 257,000 $ 314,000
================================
Supplemental Schedule of Noncash Investing and Financing Activities
Acquisition of shape memory metals division:
Cash purchase price $ - $ 4,022,000
================================
Fair value of assets acquired
Property and equipment $ - $ 2,700,000
Patents - 2,000,000
Inventory - 1,293,000
Goodwill - 989,000
--------------------------------
- 6,982,000
Less
Warrants issued - (2,310,000)
Note payable issued - (350,000)
Liabilities assumed - (300,000)
--------------------------------
$ - $ 4,022,000
================================
Issuance of common stock in settlement of debt $ - $ 813,000
================================
Capital lease obligation incurred for equipment $ 83,000 $ -
================================
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of business
- ------------------
Memry Corporation, a Delaware corporation incorporated in 1981, is engaged in
the businesses of developing, manufacturing and marketing products and
components utilizing the properties exhibited by shape memory alloys, and
manufacturing and marketing metal parts and components machined on screw
machines and smaller metal working machines. As described in Note 11, the
Company ceased the operations of the metal parts and components operations on
June 5, 1997. The Company's sales are primarily to customers located throughout
the United States. The Company extends credit to its customers all on an
unsecured basis on terms that it establishes for individual customers.
Accounting estimates
- --------------------
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Principles of consolidation
- ---------------------------
The financial statements include the accounts of Memry Corporation ("Memry") and
Wright Machine Corporation ("Wright"), its wholly-owned subsidiary
(collectively, the "Company"). All significant intercompany transactions have
been eliminated in consolidation.
Cash and cash equivalents
- -------------------------
For purposes of the consolidated statements of cash flows, the Company considers
all highly liquid investments with a maturity of three months or less, when
purchased, to be cash equivalents. The carrying amount of these financial
instruments approximates fair value because of the short maturity of these
instruments.
Inventories
- -----------
Inventories consist principally of various metal alloy rod, plumbing products
and shape memory alloys. Inventories are stated at the lower of cost,
determined on the first-in, first-out method, or market.
F-6
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
Impairment of assets
- --------------------
The Company reviews its long-lived assets and certain identifiable intangible
assets for impairment whenever events or circumstances indicate that the
carrying amount of the assets may not be recoverable.
Revenue recognition
- -------------------
Revenues from product sales are recognized when the related products are
shipped. Certain revenues are earned in connection with research and
development contracts which are principally with the U.S. Government. Such
revenues are recognized when services are rendered. Some of the Company's
research and development projects are customer-sponsored and typically provide
the Company with the production rights or pay a royalty to the Company if a
commercially viable product results.
Depreciation and amortization
- -----------------------------
Depreciation of property, plant and equipment is computed using the straight-
line method over the estimated useful lives of the respective assets, ranging
from three to thirty years. Leasehold improvements are amortized over the life
of the lease, or the improvements' estimated useful life, if shorter.
Costs of obtaining patents and patent rights are amortized using the straight-
line method over the patents' expected period of benefit which ranges from
thirteen to sixteen years.
Goodwill represents the cost of acquired assets in excess of values ascribed to
net tangible assets and is being amortized using the straight-line method over
15 years.
Costs incurred in obtaining financing are capitalized and are being amortized
over the term of the related debt.
Income taxes
- ------------
Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss and tax
credit carryforwards and deferred tax
F-7
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws
on the date of enactment.
Net loss per common share
- -------------------------
The net loss per common share is based on the net loss from operations and the
weighted average number of shares of common stock outstanding during each year.
Common stock equivalents have been excluded from the computation of the net loss
per common share because inclusion of such equivalents is antidilutive.
Reclassifications
- -----------------
Certain 1996 financial statement amounts have been reclassified to conform with
the 1997 financial statement presentation, primarily relating to the
presentation of Wright's operations as discontinued operations. These
reclassifications had no effect on the 1996 net loss.
Note 2. BUSINESS COMBINATION
On June 28, 1996, the Company purchased certain assets used in conjunction with
the shape memory metals operation of Raychem Corporation ("Raychem"). Details
of the transaction, which was accounted for as a purchase, are as follows:
A summary of the purchase payments in connection with the acquisition is as
follows:
<TABLE>
<S> <C>
Cash paid to seller at closing $ 3,700,000
Note payable to seller 350,000
1,130,000 warrants issued to seller, at $0.01 2,285,000
1,250,000 warrants issued to seller, at $2.00 25,000
Obligations assumed 300,000
Acquisition costs 322,000
------------
$ 6,982,000
============
</TABLE>
F-8
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
A summary of the assets acquired in connection with the acquisition of the shape
memory metals division is as follows:
<TABLE>
<S> <C>
Patent rights $ 2,000,000
Goodwill 989,000
Machinery and equipment 2,700,000
Inventory 1,293,000
------------
$ 6,982,000
============
</TABLE>
During the year ended June 30, 1997, as a result of certain adjustments to the
purchase price, the Company paid an additional $56,000 to Raychem which was
allocated to goodwill.
Unaudited pro forma consolidated results of operations for the year ended June
30, 1996, as though the division had been acquired at July 1, 1995, is as
follows:
<TABLE>
<S> <C>
Sales $ 9,518,000
Net income $ 122,000
Net income per common share $ 0.01
</TABLE>
The above amounts reflect adjustments for amortization of goodwill, additional
depreciation on revalued purchased assets, and certain production and general
and administrative costs.
Additionally, concurrent with the acquisition, a private label/distribution
agreement was executed between Raychem and the Company, wherein Raychem became
the exclusive distributor, for an initial term of five years, for non-implant
applications of products to certain customers which comprised approximately 70%
of the Raychem division's fiscal 1996 revenues. Sales to Raychem under the
private label/distribution agreement are discounted to allow Raychem to recover
its sales and marketing expenses and to realize a profit upon resale of such
products to its customers. The unaudited proforma consolidated results of
operations set forth above give effect to such discount.
Note 3. INVENTORIES
Inventories at June 30, 1997 and 1996, are summarized as follows:
<TABLE>
<CAPTION>
1997 1996
-------------------------------
<S> <C> <C>
Raw materials and supplies $ 398,000 $ 1,370,000
Work-in-process 1,478,000 1,522,000
Finished goods 478,000 254,000
Allowance for slow-moving and obsolete inventory (690,000) (1,102,000)
-------------------------------
$ 1,664,000 $ 2,044,000
===============================
</TABLE>
F-9
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
Note 4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at June 30, 1997 and 1996, is summarized as
follows:
<TABLE>
<CAPTION>
1997 1996
------------------------------------
<S> <C> <C>
Land $ - $ 166,000
Buildings and improvements - 942,000
Tooling and equipment 3,971,000 4,750,000
Leasehold improvements 138,000 100,000
------------------------------------
4,109,000 5,958,000
Less accumulated depreciation and amortization 1,344,000 2,077,000
------------------------------------
$ 2,765,000 $ 3,881,000
====================================
</TABLE>
Note 5. MAJOR CUSTOMERS
Product sales revenue for the year ended June 30, 1997, include sales to two
major customers, each of which accounted for greater than 10% of the total sales
of the Company. A summary of sales to these customers during the year ended
June 30, 1997, and accounts receivable from these customers at June 30, 1997, is
as follows:
<TABLE>
<CAPTION>
Accounts
Customer Sales Receivable
------------- ---------------- -------------
<S> <C> <C>
Company A $ 5,491,000 $ 948,000
Company B 3,429,000 878,000
---------------- -------------
$ 8,920,000 $ 1,826,000
================ =============
</TABLE>
F-10
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
Note 6. CAPITAL STOCK
Preferred stock
- ---------------
The Company had two series of convertible preferred stock outstanding at June
30, 1996. Both series carried voting rights. Information regarding the shares
authorized, issued and outstanding, and conversion rates at June 30, 1996, is as
follows:
<TABLE>
<CAPTION>
Number of Shares
--------------------------
Preferred Issued and Par
Stock Authorized Outstanding value
--------------------------------------------
<S> <C> <C> <C>
Series G 800 297.10 $100
Series H 800 66.85 $100
</TABLE>
During the year ended June 30, 1996, a holder of the Series G preferred stock
converted 126.9 shares to 1,269,000 shares of common stock. During the year
ended June 30, 1997, all preferred stock outstanding was converted to common
stock.
Common stock
- ------------
On December 5, 1996, the Company amended its Certificate of Incorporation to
increase the number of authorized shares of its common stock, par value $0.01
per share, from 25,000,000 to 30,000,000 shares, of which there are 17,005,474
and 12,977,854 shares issued and outstanding at June 30, 1997 and 1996,
respectively.
On January 31, 1997, the Company filed a Registration Statement on Form S-2
covering the offer and sale by certain of the Company's stockholders of up to
3,550,650 shares of the Company's common stock. The Company received no proceeds
from this offering, and $50,000 of direct costs relating to the offering were
charged to additional paid-in capital.
During the year ended June 30, 1997, the Company began a private placement of
its common stock for an aggregate offering of $570,000, or 380,000 shares, at a
price of $1.50 per share. As of June 30, 1997, $420,000 was raised through the
sale of 280,000 shares of such stock.
Also during the year ended June 30, 1997, 40,000 shares of stock at an aggregate
price of $65,000 were issued to Company directors as compensation, and 8,125
shares at an aggregate price of $12,188 were issued as compensation to an
outside consultant. In addition, 60,000
F-11
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
shares were issued at an aggregate price of $1,000 upon conversion of 60,000
warrants by certain employees.Common stock reserved for issuance at June 30,
1997, is as follows:
<TABLE>
<CAPTION>
Number of
Shares
-----------
<S> <C>
For exercise of outstanding warrants 5,321,732
For exercise of stock options 1,100,000
-----------
6,421,732
===========
</TABLE>
On June 28, 1996, a convertible, subordinated debenture held by an investor in
the principal amount of $763,208 was converted to 285,528 common shares and
66.85 Series H preferred shares. The investor also holds approximately
2,088,000 warrants to purchase common shares of the Company, exercisable at an
average price of $0.96 per share. These warrants were originally issued in
connection with the issuance of the convertible, subordinated debenture,
referred to above. The agreement with the investor provides, upon the
occurrence of specified events, primarily should the Company cease to maintain
its principal offices within the State of Connecticut or fail to maintain a
registration statement covering the resale of its securities, the investor the
right to put all securities of the Company held by the investor at that time for
a price equal to the greater of the then current market price per share of such
securities (on an as-converted basis) or $2 per share, less, in either event,
the aggregate amount of unpaid exercise prices of all warrants put to the
Company. Using $2.00 per share as the put price per share, the aggregate put
price that would have to be paid by the Company if the put were exercised would
be approximately $4,085,500. If the investor were to have the right to put its
securities and were to choose to exercise that right, such an event would have a
serious adverse effect on the Company's liquidity and the Company would most
likely have to seek equity financing to be able to meet its obligations to the
investor. However, the Company has the ability to insure that its operations do
not move from Connecticut and intends to cause its current registration
statement to be maintained in a manner that would prevent the put from being
operative.
Stock Option Plans
- ------------------
Pursuant to the Company's stock option plan, incentive stock options are granted
at prices equal to or greater than the fair market value of the Company's stock
at the date of grant, and are exercisable at the date of grant unless otherwise
stated. In addition, non-qualified options are granted at a price determined by
the Company's compensation committee, which may be less than market value, in
which case an expense equal to the difference between the option price and
F-12
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
market value is recognized. The exercise period for both the incentive and non-
qualified stock options generally cannot exceed ten years.
The Company adopted Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123"), on July 1, 1996.
SFAS No. 123 established new standards for stock-based compensation plans under
which employees receive shares of stock or other equity instruments, such as
stock options or warrants, of the employer. This Statement established a fair
value based method of expense recognition for stock-based compensation plans and
encouraged, but did not require, entities to adopt that method in place of
existing generally accepted accounting principles. As permitted by SFAS No.
123, for options granted where the exercise price at date of grant is equal to
or exceeds the fair market value of the Company's stock, the Company has elected
to continue under existing generally accepted accounting principles and to
account for the options granted under APB Opinion No. 25, and accordingly, no
compensation cost has been recognized in the statements of operations for grants
under the option plan. Had compensation cost for the stock option plan been
recognized based on the grant date fair values of awards, the method described
in SFAS No. 123, the reported net loss would have been increased to the pro
forma amounts shown below:
<TABLE>
<CAPTION>
1997 1996
-----------------------------------
<S> <C> <C>
Net loss:
As reported $ (1,011,000) $ (2,105,000)
===================================
Pro forma $ (1,355,000) $ (2,242,000)
===================================
Earnings per share:
As reported $ (0.06) $ (0.25)
===================================
Pro forma $ (0.08) $ (0.27)
===================================
</TABLE>
F-13
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
The fair value of each grant, used to determine the proforma net loss above, is
estimated at the grant date using the fair value option-pricing model with the
following weighted average assumptions for grants awarded during the years ended
June 30, 1997 and 1996, respectively:
<TABLE>
<CAPTION>
1997 1996
-----------------
<S> <C> <C>
Dividend rate - -
Risk free interest rate 6.19% 6.27%
Weighted average expected lives, in years 5.75 6.25
Price volatility 30.0% 30.0%
</TABLE>
A summary of the status of the Company's stock option plan at June 30, 1997 and
1996, and changes during the years ended on those dates, is as follows:
<TABLE>
<CAPTION>
Weighted
Average
Shares Options Exercise
Reserved Outstanding Price
--------------------------------------------
<S> <C> <C> <C>
Balance, June 30, 1995 600,000 436,500 $ 3.47
Canceled - (436,500) $ 3.47
Granted - 492,500 $ 1.35
Exercised - - -
--------------------------------------------
Balance, June 30, 1996 600,000 492,500 $ 1.35
Canceled - 62,500 $ 1.51
Granted - 467,000 $ 1.75
Exercised - - -
--------------------------------------------
Balance, June 30, 1997 1,100,000 897,000 $ 1.54
============================================
</TABLE>
At June 30, 1997 and 1996, 246,500 and 223,500 of the outstanding options were
exercisable, respectively. The weighted-average grant-date fair value per option
of options granted during the years ended June 30, 1997 and 1996 were $ .74 and
$ .28, respectively.
F-14
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
A further summary of options outstanding at June 30, 1997, is as follows:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------- ---------------------------
Weighted-
Average Weighted- Weighted-
Remaining Average Average
Range of Exercise Number Contractual Exercise Number Exercise
Prices Outstanding Life (In Years) Price Exercisable Price
- --------------------------------------------------------------- ---------------------------
<S> <C> <C> <C> <C> <C>
$.90 to $1.87 897,000 8.8 $1.54 246,500 $1.45
</TABLE>
Warrants
- --------
The Company has also issued stock warrants to employees and other parties. The
compensation cost charged to operations for warrants granted to employees was
$152,000 during the year ended June 30, 1997.
The following table summarizes warrants outstanding at June 30, 1997 and 1996,
and the changes in warrants during the years then ended:
<TABLE>
<CAPTION>
Weighted-
Average
Shares Number of Exercise
Reserved Shares Price
-------------------------------------------
<S> <C> <C> <C>
Balance, June 30, 1995 6,088,891 6,088,891 $2.31
Canceled - (3,085,704) $1.40
Granted - 2,586,181 $1.05
Exercised - - -
-------------------------------------------
Balance, June 30, 1996 5,709,368 5,589,368 $1.77
Canceled - 363,636 $7.39
Granted - 156,000 $ .40
Exercised - (60,000) $ .01
-------------------------------------------
Balance, June 30, 1997 5,321,732 5,321,732 $1.37
===========================================
</TABLE>
F-15
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
A further summary of warrants outstanding at June 30, 1997, is as follows:
<TABLE>
<CAPTION>
Warrants Outstanding Warrants Exercisable
---------------------------------------------- ---------------------------
Weighted-
Average Weighted- Weighted-
Remaining Average Average
Range of Exercise Number Contractual Exercise Number Exercise
Prices Outstanding Life (In Years) Price Exercisable Price
- ------------------------------------------------------------------ ---------------------------
<S> <C> <C> <C> <C> <C>
$ .01 to $5.00 5,321,732 4.11 $1.37 5,261,732 $1.38
</TABLE>
Note 7. INCOME TAXES
Deferred income taxes reflect the net effects of temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. For financial reporting purposes,
a valuation allowance of $13.5 million has been recognized at June 30, 1997 and
1996, to reflect the estimated amount of operating loss carryforwards and
temporary differences which may not be realized. The approximate effect of
carryforwards and temporary differences that give rise to deferred tax assets
and liabilities at June 30, 1997 and 1996, are as follows:
<TABLE>
<CAPTION>
1997 1996
----------------------------------------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts $ 13,000 $ 12,000
Inventory reserves 89,000 172,000
Capitalization of inventory costs 29,000 31,000
Vacation accruals 41,000 41,000
Depreciation and amortization (330,000) (13,000)
Research and development credit carryforwards 160,000 160,000
Net operating loss carryforwards 13,500,000 13,100,000
----------------------------------------
Total deferred tax assets 13,502,000 13,503,000
Valuation allowance (13,502,000) (13,503,000)
----------------------------------------
Net deferred tax assets $ - $ -
========================================
</TABLE>
At June 30, 1997, the Company has net operating loss carryforwards for income
tax purposes of approximately $34 million, which expire ratably in 1998 through
2012. In addition, the Company has tax credit carryforwards available to offset
future taxable income aggregating approximately $160,000 which expire in various
amounts from 1998 through 2008. As a result of numerous equity transactions, the
net operating loss carryforwards and the unused tax credits may be significantly
limited as to ultimate amounts of these tax attributes which may be utilized and
the periods for which they will apply.
F-16
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
Note 8. NOTES PAYABLE
Notes payable consist of the following at June 30, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
-------------------------------------
<S> <C> <C>
Revolving loan payable to bank, repaid in full,
August 1996. $ - $ 381,000
Term note payable to bank, repaid in full,
August 1996. - 83,000
Mortgage note payable to bank, repaid in full
August 1996. - 471,000
Unsecured note payable to Raychem Corporation,
repaid in full, August 1996. - 350,000
Revolving loan payable to a bank pursuant to
August 9, 1996 credit facility, due upon demand,
interest payable monthly at the prime rate plus
2% (10.5% at June 30, 1997). 1,353,000 -
Term note payable to a bank pursuant to
August 9, 1996 credit facility, due in monthly
installments of $19,000, plus interest at the prime
rate plus 2.25% (10.75% at June 30, 1997), also
due on demand 475,000 -
Unsecured notes payable to a company affiliated with a
stockholder, interest payable at 6%, due on demand. 364,000 344,000
Unsecured note payable to officer/stockholder, interest
payable at 12%, due on demand. 60,000 60,000
Unsecured notes payable to a company affiliated with a
stockholder, interest at prime plus 4%, payable on 3,000 9,000
demand. -------------------------------------
$ 2,255,000 $ 1,698,000
=====================================
</TABLE>
F-17
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
At June 30, 1996, the Company was in default with respect to its revolving loan,
term note and mortgage note. Accordingly, at June 30, 1996, the term and
mortgage loans were classified as current obligations in the accompanying
consolidated balance sheet. On August 9, 1996, the Company entered into a new
credit facility with a different lender, at which time, all amounts under the
prior facility were repaid, except for $140,000 which was forgiven by the
lender. The $140,000 forgiveness of debt is recognized as an extraordinary item
within discontinued operations in the consolidated statement of operations.
The credit facility entered into on August 9, 1996, provides both a revolving
and term loan. The revolving loan provides for borrowings up to the lesser of
$1,500,000 or the sum of a) 80% of eligible accounts receivable and b) the
lesser of $500,000 or 25% of eligible inventory. These loans are cross-
collateralized by substantially all the assets of the Company and the personal
guarantee of the Company's president.
In addition, the credit facility contains various restrictive covenants
including limitations on additional debt, the payment of dividends, management
and ownership changes, and capital expenditures, all of which were complied with
at June 30, 1997.
Note 9. LEASES
The Company leases various equipment under noncancelable leases. These leases
have been recorded as capital leases and are included in the accompanying
consolidated balance sheets under the caption "Property, Plant and Equipment".
The Company also leases its Connecticut and California warehouse and office
facilities under operating leases. The lease on the Connecticut facility
expires in February 2001 and the lease on the California facility expires in
September 1998.
F-18
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
Future minimum lease payments under capital leases and significant noncancelable
operating leases, with remaining terms of one year or more, are as follows at
June 30, 1997:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
------------- ------------
<S> <C> <C>
1998 $ 36,000 $ 395,000
1999 32,000 200,000
2000 15,000 135,000
2001 - 79,000
------------- ------------
83,000 $ 809,000
============
Less amount representing interest 11,000
-------------
Present value of future minimum lease payments 72,000
Less current maturities 29,000
-------------
$ 43,000
=============
</TABLE>
Rent expense under operating leases for the years ended June 30, 1997 and 1996
approximated $392,000 and $130,000, respectively.
Note 10. CONTINGENCIES
401(K) Plan
- -----------
The Company maintains defined contribution plans (401K) which cover
substantially all of its employees. Contributions are based on specific
percentages of employee voluntary contributions. Employees vest immediately.
During the year ended June 30, 1997, $36,000 of expenses were recognized
relating to these plans. There were no expenses recognized for these plans
during the year ended June 30, 1996 as no employees were participating.
F-19
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
Litigation
- ----------
There are various lawsuits and claims, arising in the ordinary course of
business, pending against the Company. In the opinion of management, the
ultimate resolution of these matters will not have a material adverse effect on
the results of operations or the financial position of the Company.
Note 11. DISCONTINUED OPERATIONS
In April 1997, the Company decided to discontinue the operations of Wright, and
on June 5, 1997, the Company ceased the operations of Wright. As of June 30,
1997, the Company had sold substantially all of the machinery and equipment of
Wright, and expects to complete the disposal of Wright through the liquidation
of its remaining assets within one year. The estimated loss on disposal is as
follows:
F-20
<PAGE>
MEMRY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Gain from sales and writedown of assets, net $ 456,000
Operating losses from measurement date to June 30, 1997 (366,000)
Estimated operating losses from July 1, 1997 to completion
of disposal (301,000)
---------------
$ (211,000)
===============
</TABLE>
Sales of Wright were $1,988,000 and $2,538,000 for the years ended June 30, 1997
and 1996, respectively.
At June 30, 1997, the assets and liabilities of Wright consisted of the
following:
<TABLE>
<CAPTION>
<S> <C>
Assets
Accounts receivable $ 236,000
Inventories 539,000
Property and equipment 879,000
Other assets 72,000
Less adjustment for write-down to
estimated realizable value (579,000)
---------------
1,147,000
---------------
Liabilities
Estimated losses from disposal of segment 211,000
---------------
Net assets of Wright $ 936,000
===============
</TABLE>
The foregoing net assets have been classified as current at June 30, 1997, since
the disposal of the assets is expected to be completed within one year.
Discontinued operations include management's best estimate of the amounts
expected to be realized on the disposal of its remaining assets. The amounts
the Company will ultimately realize could differ materially in the near term
from the amounts assumed in arriving at the loss on disposal of the discontinued
operations.
Note 12. EMERGING ACCOUNTING STANDARDS
The Financial Accounting Standards Board has issued Statement of Financial
Accounting No. 128, "Earnings Per Share," ("SFAS No. 128") which becomes
effective for the Company's year ending June 30, 1998. SFAS No. 128 establishes
standards for computing and presenting earnings per share, and requires
restatement of all prior period earnings per share data presented. The Company
does not anticipate that the adoption of this standard will have a significant
impact on earnings per share presented in the financial statements.
F-21
<PAGE>
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
DIRECTORS
The following table lists the names and ages of the five members of the Board of
Directors of the Company, their positions with the Company and the year in which
each director was first elected or appointed as a director of the Company.
Positions with Director
Name Age the Company Since
---- --- ----------- -----
James G. Binch 50 President, CEO, Treasurer and 1989
Chairman of the Board
Nicholas J. Grant 82 Director 1986
John A. Morgan 51 Director 1989
W. Andrew Krusen, Jr. 49 Director 1994
Jack H. Halperin 51 Director 1994
Certain information regarding the directors is set forth below. Directors are
elected until the next annual meeting of stockholders and until their successors
are duly elected and qualified.
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
13
<PAGE>
a B.A. 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., Biosciences,
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.
EXECUTIVE OFFICERS OF THE COMPANY
The following table lists the names and ages of each of the executive officers
of the Company.
Name Position Age
---- -------- ---
James G. Binch President, Chief Executive Officer, 50
Treasurer & Chairman
William H. Morton, Jr. Senior Vice President and Chief Operating 52
Officer
James Proft Vice President and General Manager - Western 39
Operations
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, since 1985, Mr. Morton
has been Vice President, Aircraft Sales, of Coastal Aviation, Inc. in Stamford,
Connecticut, a general aviation marketing firm, and since 1986, Mr. Morton has
been the sole stockholder and President of The Risor Corporation in Stamford,
Connecticut, a merchant banking firm. Mr. Morton was a registered
representative for First Hanover Securities, Inc., a securities firm, from 1982
to 1997. 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.
14
<PAGE>
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.
James Proft failed to timely file a Form 3 to report his becoming an executive
officer on July 23, 1996, 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.
15
<PAGE>
Item 10. 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.
Summary Compensation Table
--------------------------
<TABLE>
<CAPTION>
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 (8) $175,257(9)
Former Corporate 1996 $ 82,400 $ -0- 24,500 (10) $ - 0 -
Controller and Secretary 1995 $ 81,917 $ -0- 24,500 (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.
16
<PAGE>
(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.
(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 with exercise prices above $1.50 to
$1.50, these options, originally issued in July 1994, were repriced from
$2.34 per share to $1.50 per share in April 1996.
____________________
17
<PAGE>
Option/SAR Grants in Last Fiscal Year
Individual Grants
-----------------
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Shares % of Total
of Common Stock Options/SARs
Underlying Granted to
Options/SARs Employees in Exercise or Base Expiration
Name Granted (#) Fiscal Year(1) Price($/Share) 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.
----------------------
18
<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.
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
19
<PAGE>
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 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
letter agreement, Mr. Proft and the Company have agreed to defer the
20
<PAGE>
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, for a maximum payment with
respect to such 10,000 warrants of $20,943. 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.
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. Directors are
reimbursed for expenses reasonably incurred in connection with the performance
of their duties.
21
<PAGE>
Item 11. 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 set
forth under "Executive Compensation" below, and (iii) all directors and
executive officers as a group.
COMMON STOCK
<TABLE>
<CAPTION>
Percentage of
Name and Address Amount and Nature of Common Stock
of Beneficial Owner Beneficial Ownership Outstanding (1)
- ------------------- -------------------- ----------------
<S> <C> <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>
22
<PAGE>
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Common Stock
of Beneficial Owner Beneficial Ownership Outstanding (1)
- ------------------- -------------------- ----------------
<S> <C> <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.
(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
23
<PAGE>
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) 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.
___________________
24
<PAGE>
Item 12. CERTAIN RELATIONSHIPS AND RELATED 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 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 "Item 10. EXECUTIVE COMPENSATION."
25
<PAGE>
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 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 "Item 10. 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
26
<PAGE>
and Ms. Gavaghan entered into an agreement, dated as of June 5, 1997, regarding
severance arrangements. See "Item 10. 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.
27
<PAGE>
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The Exhbits listed in the Index to Exhibits following the Signature
Page herein are filed as part of this Annual Report on Form 10-KSB.
(b) Reports on Form 8-K
The company filed a Form 8-K on May 5, 1997 with respect to disclosure
regarding "Item 5. Other Events," to file the Company's April 16, 1997
press release regarding the Company's receipt of a two-year exclusive
blanket purchase order from United States Surgical Corporation for the
supply of medical instrument assemblies, commencing April 1, 1997. A
Form 8-K was also filed on June 25, 1997 with respect to disclosure
regarding "Item 2. Acquisition or Disposition of Assets" and "Item 7.
Financial Statements and Exhibits," disclosing the execution of a
Purchase Agreement between Wright and Thomas Industries Auction and
Liquidation Corporation regarding the sale of substantially all of the
machinery and equipment of Wright. In addition, on July 10, 1997 a Form
8-K was filed with respect to disclosure regarding "Item 9. Sales of
Equity Securities pursuant to Regulation S," disclosing the sale of
200,000 shares of the Company's Common Stock to Dominion Financial Group
International LDC pursuant to the terms of Regulation S promulgated
under the Securities Act of 1933, as amended.
28
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MEMRY CORPORATION
Date: October 28, 1997 By:/s/James G. Binch
--------------------- --------------------------------
James G. Binch
President, CEO,
Treasurer and
Chairman of the Board
29
<PAGE>
Exhibit Index
Exhibit
Number Description of Exhibit
- ------ ----------------------
3.1 Certificate of Incorporation of the Company, as amended (9)
3.2 By-Laws of the Company, as amended (8)
10.1 Lease Agreement, dated January 24, 1991, (1)
between the Company and Brookfield Commerce,
relating to 57 Commerce Drive, Brookfield, CT
10.2 Warrant Issued to Connecticut Innovations, (2)
Inc. ("CII") as of March 1, 1992
10.3 Employment Agreement, dated September 24, (3)
1993, between the Company and James G. Binch
10.4 Agreement, dated January 25, 1993, between (3)
the Company and Sciatec, Inc.
10.5 SBIR Contract dated December 9, 1993 between (4)
the Company and NASA
10.6 Employee Non-Disclosure Agreement, dated as of (4)
October 18, 1994, between the Company and
James G. Binch
30
<PAGE>
Exhibit
Number Description of Exhibit
- ------ ----------------------
10.7 Convertible Subordinated Debenture Purchase Agreement, (8)
dated as of December 22, 1994, between the Company and
CII
10.8 Escrow Agreement, dated as of December 22, 1994, among (8)
the Company, CII and Finn Dixon & Herling as escrow
agent
10.9 Form of Securities Purchase Agreement relating to sales (5)
of Series G Preferred Stock of the Company
10.10 First Amendment to Convertible Subordinated Debenture (5)
Purchase Agreement, dated October 11, 1995, between
the Company and CII
10.11 First Addendum to Convertible Subordinated Debenture, (5)
dated October 11, 1995, made by the Company and agreed
to by CII
10.12 First Addendum to Stock Subscription Warrant (re: (5)
Warrant No. 94-4), dated October 11, 1995, made by the
Company and agreed to by CII
10.13 First Addendum to Stock Subscription Warrant (re: (5)
Warrant No. 94-5), dated October 11, 1995, made by the
Company and agreed to by CII
10.14 First Addendum to Stock Subscription Warrant (re: (5)
Warrant No. 94-6), dated October 11, 1995, made by the
Company and agreed to by CII
10.15 Amendment to Escrow Agreement, dated October 11, 1995, (5)
among the Company, CII and Finn Dixon & Herling as escrow
agent
10.16 Employment Agreement, dated as of November 7, 1995, (6)
between the Company and William H. Morton, Jr.
10.17 Second Amendment to Convertible Subordinated Debenture (8)
Purchase Agreement, dated as of June 28, 1996, between
the Company and CII
10.18 Second Amendment to Escrow Agreement, dated as of (8)
June 28, 1996, among the Company, CII and Finn
Dixon & Herling as escrow agent
31
<PAGE>
Exhibit
Number Description of Exhibit
- ------ ----------------------
10.19 Amended and Restated Class I Warrant Certificate (8)
(Warrant Certificate No. 94-4A) issued by the
Company to CII
10.20 Amended and Restated Class II Warrant Certificate (8)
(Warrant Certificate No. 94-5A) issued by the
Company to CII
10.21 Second Addendum to Class III Warrants issued by the (8)
Company to CII
10.22 Sublease, dated as of June 28, 1996, between the Company (7)
and Raychem Corporation
10.23 Warrant Certificate exercisable for 1,130,000 shares of (7)
Common Stock, dated June 28, 1996, issued by the Company
to Raychem Corporation,
10.24 Warrant Certificate exercisable for 1,250,000 shares of (7)
Common Stock, dated June 28, 1996, issued by the Company
to Raychem Corporation,
10.25 Finders Fee Agreement, dated as of June 28, 1996, between (7)
the Company and Raychem Corporation,
10.26 Amended and Restated Asset Purchase Agreement (7)
between the Company and Raychem Corporation,
dated May 10, 1996.
10.27 Letter Agreement, dated June 20, 1996, between (7)
the Company and Raychem Corporation.
10.28 Amendment No. 1 to Amended and Restated Purchase (7)
Agreement between the Company and Raychem
Corporation, dated June 28, 1996.
10.29 Amendment No.2 to Amended and Restated Purchase Agreement (8)
between the Company and Raychem Corporation, dated
August 11, 1996.
10.30 Amendment to Lease Agreement between the Company and (8)
Brookfield Commerce relating to 57 Commerce Drive,
Brookfield, CT.
10.31 Warrant Cert. No. 96-4, dated as of July 16, 1996, (8)
issued to Dominion Capital Partners
10.32 Warrant Cert. No. 96-5, dated as of July 15, 1996, (8)
issued to Dawn M. Morton
32
<PAGE>
Exhibit
Number Description of Exhibit
- ------ ----------------------
10.33 Form of Securities Purchase Agreement relating to (8)
sales of Common Stock at $2.00 per share on
June 28, 1996
10.34 Commercial Revolving Loan, Term Loan and Security (8)
Agreement, dated August 9, 1996, among the Company,
Wright Machine Corporation and Affiliated Business
Credit Corporation
10.35 Mortgage and Security Agreement dated as of August 9, 1996, (8)
from Wright Machine Corporation and Affiliated Business
Credit Corporation
10.36 Letter Agreement, dated June 26, 1996, between the (8)
Company and James Proft
10.37 Letter Agreement, dated as of May 29, 1996, between Memry (8)
Corporation and Dominion Capital Partners re: stock issuance
10.38 Securities Purchase Agreement, dated as of December 9, (8)
1994, between Memry Corporation and Dominion Partners
10.39 Employee Agreement on Inventions and Patents, between (8)
the Company and James G. Binch
10.40 Memry Corporation Stock Option Plan, as amended (9)
10.41 Form of Nontransferable Incentive Stock Option Agreement (9)
10.42 Form of Nontransferable Non-Qualified Stock Option (9)
Agreement
10.43 Warrant Certificate No. 96-7(A), dated as of January ___, (11)
1997, issued to James Proft
10.44 Purchase Agreement, dated as of May 12, 1997, between (10)
Wright and Thomas Industries Auction & Liquidation
Corporation
10.45 Amended and Restated Tinel-Lock Supply Agreement, (11)
dated as of February 19, 1997, and effective as of
December 20, 1996, between the Company and Raychem
Corporation
10.46 Amended and Restated Private Label/Distribution (11)
Agreement, dated as of February 19, 1997, and effective
as of December 20, 1996, between the Company and
Raychem Corporation*
33
<PAGE>
Exhibit
Number Description of Exhibit
- ------ ----------------------
10.47 Amendment No. 3 to Amended and Restated Purchase Agreement (11)
and Amendment No. 1 to Transitional Services Agreement
between the Company and Raychem Corporation, dated as
of February 19, 1997 and effective as of December 20, 1996
10.48 Agreement, dated as of June 5, 1997, between the Company (11)
and Wendy M. Gavaghan
10.49 Securities Purchase Agreement, dated as of June 26, 1997, (11)
between the Company and Dominion Financial Group
International LDC
11 Statement re: Computation of Per Share Earnings (5)
21.1 Information regarding Wright Machine Corporation (11)
27 Financial Data Schedule (11)
- -----------
(1) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1991.
(2) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended September 30, 1991.
(3) Incorporated by reference to the Company's Annual Report on Form 10-KSB for
the fiscal year ended June 30, 1993.
(4) Incorporated by reference to the Company's Annual Report on Form
10-KSB for the fiscal year ended June 30, 1994.
(5) Incorporated by reference to the Company's Annual Report on Form 10-KSB for
the fiscal year ended June 30, 1995.
(6) Incorporated by reference to the Company's Quarterly Report on Form 10-QSB
for the fiscal quarter ended September 30, 1995.
(7) Incorporated by reference to the Company's Current Report on Form 8-K filed
July 15, 1996.
(8) Incorporated by reference to the Company's Annual Report on Form 10-KSB for
the fiscal year ended June 30, 1996, as amended.
34
<PAGE>
(9) Incorporated by reference to the Company's Quarterly Report on Form 10-QSB
for the fiscal quarter ended December 31, 1996.
(10) Incorporated by reference to the Company's Current Report on Form 8-K filed
June 25, 1997.
(11) Submitted herewith.
* Subject to a confidential treatment request.
35
<PAGE>
EXHIBIT 10.46
AMENDED AND RESTATED
PRIVATE LABEL/DISTRIBUTION AGREEMENT
THIS Amended and Restated Private Label/Distribution Agreement
("Agreement") is made and executed this 19th day of February and effective as of
the 20th day of December, 1996 ("Effective Date"), between Memry Corporation, a
Delaware corporation with its principal place of business at 57 Commerce Drive,
Brookfield, Connecticut 06804 ("Seller"), and the Electronics Division of
Raychem Corporation, a Delaware corporation with its principal place of business
at 300 Constitution Drive, Menlo Park, California 94025-1164 ("Buyer").
WHEREAS, Seller and Buyer are party to an Amended and Restated Asset
Purchase Agreement, dated as of May 10, 1996, as amended by that certain
Amendment No. 1 dated June 28, 1996, that certain Amendment No. 2 dated as of
August 11, 1996, and by that certain Amendment No. 3 of even date herewith (as
so amended, the "Purchase Agreement"), pursuant to which Seller acquired certain
assets (including machinery and equipment, inventory, trade secrets and other
intellectual property) previously used by Buyer to produce nickel titanium
components sold by Buyer; and
WHEREAS, Buyer, principally through its Electronics Division, markets and
sells nickel titanium components, heretofore manufactured by Buyer, to its
customers throughout the world; and
WHEREAS, Buyer desires to secure for itself an uninterrupted source of
nickel titanium products from Seller subsequent to the execution and delivery
hereof, and Seller desires to be Buyer's exclusive supplier of such products,
both upon the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the premises, the agreements, covenants
and conditions herein contained, it is agreed as follows:
I. DEFINITIONS
-----------
For the purposes of this Agreement, the following terms shall have the
following respective meanings:
"Business Day" means a day on which banks are not required or authorized to
be closed in either the State of California or the State of Connecticut.
"Confidential Information" means any information or data disclosed pursuant
to this Agreement; provided, however, that information and data shall not be
deemed to be Confidential Information unless disclosed in writing and clearly
marked "confidential" or "proprietary" or, if disclosed orally, reduced
<PAGE>
to writing and clearly marked "confidential" or "proprietary" and delivered to
the other party in such written and marked form within thirty (30) days
immediately following its oral disclosure; and further provided, that
information and data shall not be deemed to be Confidential Information if:
(a) it is available to the public at the time of disclosure to the
receiving party, or thereafter becomes available to the public through no fault
of the receiving party, but in such event only as of such later date;
(b) it is independently made available to the receiving party by a
third party without restrictions on disclosure; or
(c) it is known to the receiving party before disclosure to the
receiving party by the disclosing party or developed by the receiving party
without reference to any Confidential Information of the disclosing party.
Customer lists and specifications of Buyer shall, subject to the exceptions
in clauses (a) through (c) above, be deemed "Confidential Information" under
this Agreement.
"Excluded Customers" shall mean Bausch & Lomb, United States Surgical
Corporation, any successors to the businesses of any of the foregoing, and any
other actual or potential customer to the extent (and only to the extent) that
such customer uses Products for implant applications.
"Field of Use" shall mean the following worldwide fields of use anywhere in
the world:
(a) Sealing and fastening devices and components.
(b) Mechanical protection devices and components.
(c) Actuators and actuating devices and components including
mechanical, electrical, and hydraulic components, except if
and to the extent that any such device has been developed by
Memry (i.e., existing fluid and vapor valves, as well as
later generation and derivative fluid and vapor valves)
prior to the effective date hereof.
(d) Any component or device used in any of the 6 levels of
electrical and electronic assemblies as set forth in Exhibit
-------
H.
-
(e) Noise and vibration dampening devices and components, except
with respect to sporting and leisure goods.
(f) Medical and dental devices and components.
-2-
<PAGE>
(g) Fluid (gas, liquid, slurry and dry powder) fittings and
couplings.
(h) Electrical interconnection devices and components.
(i) Any application in any of the following industries:
1. Automotive
2. Aerospace
3. Marine
4. Military Ground Systems
5. Rail and Mass Transit
6. Commercial Electronics
7. Industrial Electronics
"GAAP" means United States generally accepted accounting principles as in
effect on the date hereof, applied on a basis consistent with the preparation of
Buyer's historical financial statements.
"Inventions" means all discoveries, know-how, inventions, developments and
improvements, whether patentable or not.
"License Agreement" means the License Agreement of even date herewith
between Buyer and Seller.
"Net Sales" means gross sales of the Products (other than Products
manufactured by Seller or its assignees or successors in interest) billed and
shipped by or on behalf of Buyer and its subsidiaries, less competitive
discounts actually allowed (other than advertising allowances or fees or
commissions to salesmen or sales representatives), and returns, and shall not
include billed taxes and customs duties paid by Buyer, freight and transit
insurance or any sale to Buyer's employees for any reason other than resale or
distribution. If a Licensed Product constitutes a component of a larger
product, then the gross sales from the sale of the larger product shall be
allocated across its component parts in proportion to their separate purchase
prices (as evidenced by recent third party sales), and if no such separate
purchase prices exist, then in proportion to their relative manufacturing costs.
Net Sales shall not include sales between the parties hereto, sales by
independent distributors, or sales between Buyer and its subsidiaries.
Notwithstanding the above, royalties shall be paid on all net sales of Products
recorded as sales by Buyer and its subsidiaries under GAAP in their consolidated
audited financial statements.
"Permitted Customers" shall mean all actual and potential customers for the
Products in the Field of Use, excluding only the Excluded Customers.
"Products" shall mean (i) Nickel Titanium Products listed on Exhibit A-1
hereto and (ii) Titanium Products listed on
-3-
<PAGE>
Exhibit A-2 hereto. Products listed on Exhibit A-1 or A-2 shall meet the
specifications identified in Exhibit B. Products shall not include Tinel-
---------
Lock(R) Products, which are covered by a separate agreement between the parties.
"Nickel Titanium Products" shall mean nickel titanium products currently
being manufactured, sold and/or used by Buyer specifically set forth on Exhibit
A-1 hereto, as well as any other similar and/or derivative nickel titanium
products that (i) meet mutually agreed upon criteria for ongoing business, or
(ii) Buyer and Seller hereafter mutually agree should become Nickel Titanium
Products under this Agreement, or (iii) are developed or manufactured by or for
Seller for the Field of Use; or (iv) are jointly developed by Buyer and Seller
for the Field of Use.
"Tinel-Lock(R) Products" shall mean products using any nickel titanium
alloy for the termination of electrical/electronic braid in connector or
interconnect applications. Although this is typically a ring of Alloy `X'
(heat-to-shrink) used to compress an overall cable shield onto a connector
adapter, other covered applications include, without limitation:
(a) wire, braid strap and other electrical grounding methods;
(b) metallic or non-metallic braid and straps used for mechanical
attachment of electrical/electronic or fiber optic cables and interconnection.
"Tinel-Lock Supply Agreement" shall mean the Amended and Restated Tinel-
Lock Supply Agreement between the parties dated of even date herewith.
"Titanium Products" shall mean products made almost entirely of Titanium
and containing no Nickel which (a) Buyer and Seller hereafter mutually agree
should become Products under this Agreement (and which will be listed on Exhibit
A-2 hereto at the time of the agreement), or (b) are developed or manufactured
by or for Seller for the Field of Use; or (c) are jointly developed by Buyer and
Seller for the Field of Use.
Various other defined terms used herein are defined throughout this
Agreement.
II. PURCHASE AND SALE
-----------------
A. Purchase and Sale. Subject to and in accordance with the terms and
-----------------
conditions hereof, Seller shall sell to Buyer the Products identified on Exhibit
-------
A hereto from time to time. Except as specifically set forth herein, during the
- -
term of this Agreement, the Buyer shall purchase its entire requirements for
Products, whether for direct sale to third parties or for use by Buyer as
components for products being manufactured and sold by Buyer, from Seller, and
shall not manufacture Products for its
-4-
<PAGE>
own use, or purchase Products from any other third party. Additional products
that become Products will be added to Exhibit A from time to time by the
execution by both Product Managers defined in Section VI. below of a completed
New Product Amendment in substantially the form attached as Exhibit J hereto.
B. Specifications. The Products shall meet the specifications identified
--------------
in Exhibit B hereto. The Product Managers defined in Section VI. below shall be
---------
responsible for amending Exhibit B by mutual consent from time to time as
---------
required to reflect agreed upon specifications or to add or delete
specifications as Products are added to or deleted from Exhibit A.
C. Resale. Subject to the terms hereof, Buyer may resell the Nickel
------
Titanium Products under Buyer's own trade names using Buyer's trade literature
and/or all or portion of Seller's literature, except Seller's trade name or
trademarks. Subject to the terms hereof, Buyer shall resell the Titanium
Products only under Buyer's trade names, but in conjunction with Seller's
trademarks.
D. Commitments of Seller. Seller hereby agrees to conduct its business
---------------------
and act in a manner as if the Seller were the named party therein in those
agreements of Buyer listed on Exhibit I (except that Seller shall not be
responsible for Buyer's conduct).
III. EXCLUSIVITY
-----------
A. Exclusivity. Buyer shall be the exclusive seller or distributor in
-----------
the Field of Use to Permitted Customers for Products during the term hereof.
Seller shall not market or sell Products or products similar to Products to any
Permitted Customer in the Field of Use either directly or indirectly through
OEMs, representatives, distributors or other third parties, other than Buyer
during the term hereof. Notwithstanding the two preceding sentences, however,
Seller may directly sell Products or other products similar to Products to
Permitted Customers in the Field of Use (i) until June 28, 1997, to any customer
who was an existing customer of Seller as of June 28, 1996 (a list of such
customers is attached as Exhibit G hereto); provided, however, that this clause
(i) only allows Seller to sell to any such customer during such period products
that have previously been sold to such customer by Seller prior to June 30,
1996, or (ii) if, prior to its commercialization, a particular product is being
sold by Seller to a customer under a research and/or development project.
IV. BUYER'S SALES EFFORTS
---------------------
A. During the term hereof Buyer shall:
1. continuously use reasonable efforts to promote the sale of the
Products at its own cost, through advertisement and
-5-
<PAGE>
through distribution of literature, pamphlets, catalogs, samples and other
merchandising aids, and maintain customer relations with Permitted Customers in
the Field of Use, and to refrain from acts that could reasonably be expected to
be detrimental to the interests of the Seller;
2. maintain at all times and at its own cost (i) a sales
organization which Buyer determines, in its reasonable discretion, is capable of
promoting and selling the Products to Permitted Customers within the Field of
Use, and (ii) an inventory of Products in such amounts as it determines, in its
reasonable discretion, to be sufficient to supply its customers with Products
with reasonable promptness;
3. maintain product liability insurance for any products
incorporating the Products in an amount that is usual and customary for Buyer's
business;
4. assuming Seller provides all requisite information to Buyer,
comply with all applicable laws and regulations, relating to the storage,
packaging and sale of the Products; and
5. not knowingly sell or distribute the Products to Excluded
Customers, and shall not knowingly sell such Products to Permitted Customers for
sale or transportation to Excluded Customers, nor sell such Products to a third
party after the Seller has notified the Buyer that such third party is reselling
such Products to Excluded Customers.
V. MANUFACTURING COST.
------------------
A. Seller shall make reasonable commercial efforts to reduce prices to
Buyer by continuously seeking lower raw material costs and improving its
processes and efficiencies to reduce manufacturing costs while maintaining
quality levels acceptable to Buyer and while meeting all of the terms and
conditions of this Agreement.
VI. PRODUCT MANAGERS
----------------
A. During the term of this Agreement, the parties shall each designate
one (1) Product Manager who shall be responsible for managing the relationship
between Seller and Buyer ("Product Manager"). The Product Managers shall confer
on a regular basis.
VII. TERMS AND CONDITIONS
--------------------
A. Purchase Orders. Buyer shall purchase Products by submitting to
---------------
Seller purchase orders for specific Products. Purchase orders shall specify the
type and quantity of Products to be purchased, the price, the delivery date, the
purchase order number, and test report and certification requirements. Purchase
orders shall be deemed accepted by Seller three Business Days after receipt,
unless Seller notifies Buyer within said period that it is rejecting such
purchase order in accordance with
-6-
<PAGE>
Section VII.D.1. below. Buyer and Seller each hereby covenants and agrees to
monitor the rate of placement of purchase orders pursuant to this Agreement.
Buyer agrees to notify Seller promptly if it appears that insufficient purchase
orders will be placed during the Current Quarter (as defined in Section
VII.D.2.) to satisfy Buyer's ordering obligations as set forth in Section
VII.D.2. hereof. Seller agrees to notify Buyer, within the first ten days of
the start of the third month of any quarter, as to the aggregate amount of
purchase orders placed by Buyer hereunder during the first two months of such
quarter, or placed prior to such quarter but creditable against Buyer's order
commitment for such quarter.
B. Pricing.
-------
1. The initial purchase price for each Product listed on Exhibit A-1
-----------
hereto is set forth opposite the description of such Product on said Exhibit A-
---------
1, and is intended to be the price for such Product for the period commencing on
the date hereof and continuing through June 30, 1997. Thereafter, the parties
shall amend the purchase price for each Product effective as of every July 1
during the term hereof. New Products added to Exhibit A from time to time,
---------
whether to Exhibit A-1 or A-2, will be priced at a mutually agreed upon price
for such Products through the period ending on the immediately subsequent June
30. [NOTE: REMAINING TWO SENTENCES OF THIS PARAGRAPH OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION, PURSUANT TO RULE 24B-2
PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED]
2. In the event the parties cannot agree as to new pricing as of
June 1 of each year, the parties shall mutually agree on an individual, not
affiliated with either party, who shall make a final decision regarding pricing
(in accordance with the basis set forth in this Section VII.B.) by June 15 of
each year.
C. Rolling Forecasts.
-----------------
1. For each of the quarters constituting the four (4) quarter period
ended June 30, 1997, Buyer shall order Products the aggregate purchase price for
which, when combined with the aggregate purchase price of products ordered
pursuant to the Tinel-Lock Supply Agreement, equals or exceeds the aggregate
dollar figure set forth for such quarter on Exhibit C hereto (such amounts the
"Initial Commitment").
2. Every calendar quarter during the term hereof, at least one (1)
full month prior to the commencement thereof, Buyer shall submit to Seller its
good-faith estimated requirements for total dollar volume to be ordered pursuant
to this Agreement for each of the next six (6) calendar quarters ("Buyer's
Forecast"). The Buyer's Forecast may be combined with forecasts to be delivered
pursuant to the Tinel-Lock Supply Agreement. Except as set forth in Section
VII.D.2. hereof, forecasts required by the
-7-
<PAGE>
Tinel-Lock Supply Agreement ("Tinel-Lock Forecasts") but delivered with the
Buyer's Forecast shall not be governed by this Agreement, but shall for all
purposes be governed by the Tinel Lock Supply Agreement. Buyer's Product
Manager will make commercially reasonable efforts to make non-binding forecasts
on a Product by Product basis. Buyer and Seller shall each review Buyer's
Forecast to assess whether it would require an unreasonable spike in capacity
(i.e., ramp-ups from one quarter to the next or from the forecast for such
quarter from one Buyer's Forecast to the next) in which event the Buyer and the
Seller shall agree upon a mutually acceptable alternative Buyer's Forecast.
Ramp-ups of up to 25% per quarter in all events shall be deemed reasonable.
D. Security Stock; Minimum Take Requirements.
-----------------------------------------
1. Seller covenants and agrees for every month during the term
hereof to have available for immediate delivery to Buyer, raw material and
manufacturing capacity sufficient to supply Buyer with an amount of Products
equivalent to 40% of the amount forecasted to be ordered in Buyer's Forecast for
the quarter, except if and to the extent that changes in Product mix materially
increase the amount of manufacturing capacity necessary to process a given
volume of raw material. Seller shall only have the right and ability to reject
purchase orders for which it is not required to have sufficient raw material and
manufacturing capacity.
2. Buyer covenants and agrees for every calendar quarter during the
term hereof beginning with the quarter commencing July 1, 1997 to order from
Seller during such quarter (for purposes of this subsection, such quarter the
"Current Quarter") Products with an aggregate purchase price equal to the
greater of (i) Eighty-Five percent (85%) of the Buyer's Forecast in dollar
volume projected to be ordered during the Current Quarter in the Buyer's
Forecast, which forecast shall be delivered not later than one (1) full month
prior to the commencement of the Current Quarter; or (ii) a number which, when
added to the aggregate purchase price of any products ordered pursuant to the
Tinel-Lock Supply Agreement ("Tinel-Lock Products") for the Current Quarter, is
not less than Sixty-Five percent (65%) of the aggregate purchase price for all
Products and Tinel-Lock Products (such combined aggregate purchase price the
"Combined Purchase Projection") projected to be ordered in such quarter by the
Buyer's Forecast and the corresponding forecast under the Tinel-Lock Agreement
(together the "Forecasts") that were delivered not later than four (4) months
prior to the commencement of the Current Quarter; or (iii) a number which, when
added to the aggregate purchase price of Tinel-Lock Products for the Current
Quarter, is not less than twenty-five percent (25%) of the Combined Purchase
Projection projected to be ordered in the Current Quarter by the Forecasts that
were delivered not later than seven (7) months prior to the commencement of the
Current Quarter. In the event Buyer fails to place orders during the Current
Quarter as described above, Buyer
-8-
<PAGE>
shall pay to Seller the difference between the amount of Product so ordered and
the amount of Product Buyer was required to order pursuant to this Section
VII.D.2. In the event Buyer places an order that Seller is unable to fill
because Seller is unable to meet the technical specifications for such order,
and Products are available in the marketplace that meet such specifications,
such order will be treated as having been placed by Buyer during the quarter
Buyer attempted to place such order at the price then prevailing in the
marketplace for comparable products meeting such specifications. For purposes
of clarification, an example of Buyer's order commitment pursuant to this
Section VII.D.2. is set forth as Exhibit K hereto.
E. Payment Terms; Invoice. Payment terms are net thirty (30) days after
----------------------
Buyer's receipt of Seller's invoice or the date of shipment (whichever is
later). The Buyer description and part number must be referenced on all
invoices and packing lists. All outstanding sums owed to Seller by Buyer shall
accrue interest at a rate of 1.0% per month (or any part thereof) if unpaid
within thirty (30) days after the due date therefor.
F. Terms and Conditions. Except as otherwise provided herein, each sale
--------------------
hereunder shall be governed by Buyer's Standard Terms and Conditions of Purchase
("Order Terms") attached hereto as Exhibit D. Such terms and conditions are
---------
hereby incorporated herein by reference. Any preprinted terms and conditions in
any acknowledgment, invoice or other document submitted by Seller are superseded
by the terms of this Agreement. In the event of any inconsistency between this
Agreement and the Order Terms, this Agreement shall be controlling.
G. Delivery.
--------
1. Time is of the essence for Purchase Orders. Standard delivery
for Products is six (6) weeks after receipt of Buyer's order. The parties may
agree on shorter lead times to meet customer needs. If Seller does not meet the
committed ship date Buyer may, at Buyer's option, without incurring any
liability, (a) extend the time for delivery, or (b) cancel all or any part of
the Purchase Order. The delivery dates for all Products sold pursuant to this
Agreement shall be deemed to be the dates on which they are placed by Seller
into the possession of Buyer's designated carrier, packed and ready for shipment
to Buyer's designated location. Invoices shall not precede the delivery dates.
Seller shall ship Products F.O.B., Seller's facility. All Products shall be
shipped by Buyer's designated standard land carrier unless otherwise specified
by Buyer. In the event that Buyer requests delivery by air carrier, Seller
shall use Buyer's designated standard air carrier unless otherwise specified by
Buyer. Delivery shall be made to Buyer's plant at Menlo Park, California,
unless otherwise specified by Buyer in writing.
2. Notwithstanding Section VII.G.1. above, Buyer may place Purchase
Orders for delivery later than six (6) weeks after
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<PAGE>
receipt by Seller of such order; provided, however, that Buyer may cancel,
amend, modify, delay or otherwise alter any such Purchase Order at any time
prior to six (6) weeks prior to the delivery date stated in such order without
penalty of any kind. Beginning six (6) weeks prior to the delivery date
specified in each such purchase order, such purchase order shall be treated as
if it had been delivered to Seller pursuant to Section VII.G.1. above.
H. Packaging Requirements. The Nickel Titanium Products shall be packed
----------------------
using materials with Buyer's trade name as directed by Buyer. The Titanium
Products shall be packed using materials with Buyer's trade name and Seller's
trademarks, in a manner reasonably satisfactory to both Buyer and Seller.
Packaging and labeling requirements are defined in Exhibit E.
---------
I. Warranty. Seller warrants the Products as set forth in the Order
--------
Terms. Seller also warrants that the Products meet the specifications
identified in Exhibit B. These warranties shall be for a term of three (3)
---------
years from the date of shipment of the Products. These warranties shall inure
to the benefit of Buyer, its successors and assigns and to subsequent purchasers
of the Products and shall survive acceptance and use of, and payment for, the
Products.
J. Cancellations. Buyer shall have the right to cancel any order. In
-------------
the event Buyer cancels any order of Products upon less than thirty (30) days
notice, Buyer shall pay Seller a reasonable charge, to be negotiated in good
faith by the parties, for Seller's costs and expenses, which Seller shall use
its best efforts to properly mitigate. In no event shall the costs and expenses
exceed the purchase price for the Products described in the canceled order or
include consequential damages or lost profits. Buyer shall not pay any
cancellation charge if cancellation is due to Seller's failure to ship Products
in a timely manner pursuant to Section VII.G. Cancellation shall not in any way
affect Buyer's "take or pay" obligations set forth in Section VII.D.2. except to
the extent that cancellation results from a failure to perform by Seller.
K. Returns.
-------
1. Seller agrees to accept return of any Product that fails to
function as warranted in Section VII.I. In the event of a return pursuant to
this Section, Seller shall perform testing and analysis of the returned Product
and issue a written report to Buyer explaining the cause of the failure. Seller
will insure that problems detected in returned Products or reported to Seller
are corrected in future shipments of Products. Seller agrees to replace returned
Products with new Products immediately or to credit Buyer for the full amount of
the purchase price. IN NO EVENT SHALL SELLER BE LIABLE FOR ANY INCIDENTAL,
SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM THE USE OF ANY OF THE PRODUCTS
BY ANY PERSON; PROVIDED THAT THIS SHALL NOT LIMIT LIABILITY IN THE EVENT OF A
THIRD PARTY CLAIM AGAINST BUYER
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EXCEPT TO THE EXTENT OF SUCH LIABILITY; AND FURTHER PROVIDED THAT THIS
LIMITATION SHALL NOT APPLY TO COSTS ASSOCIATED WITH FIXING CUSTOMER PROBLEMS.
THE PARTIES SHALL COOPERATE IN ADDRESSING CUSTOMER PROBLEMS AND WILL EQUITABLY
SHARE THE COSTS.
2. Buyer shall carefully inspect all goods promptly upon the receipt
from the carrier. Any claim for breach of warranty hereunder must be presented
to the Seller, in writing, within thirty (30) days after discovery by Buyer of
the alleged defect and that a claim hereunder is probable. Failure to make a
claim within such specified period shall constitute a waiver of the claim only
to the extent that the Seller was thereby prejudiced. Claims must be
accompanied by supporting proof to the extent reasonably available.
L. Insurance. On written request from Buyer, Seller shall deliver to
---------
Buyer a certificate of insurance evidencing that Seller maintains product
liability insurance for the Products in an amount that is usual and customary
for Seller's business.
VIII. Status of Buyer
---------------
A. The parties expressly agree that the relationship established by this
Agreement as between Seller and Buyer is solely that of buyer and seller, and
Seller shall have no right to, and shall not, exercise any supervision or
direction over the Buyer or any of its employees. Nothing contained herein
shall create a partnership, joint venture, or any other business relationship
between Seller and Buyer, other than that of buyer and seller of Products
hereunder.
B. Buyer shall not have authority to obligate or bind Seller with respect
to any matter, or make any contract, sale, agreement, warranty or
representation, express or implied, on behalf of Buyer.
C. Buyer shall conduct business solely in its own name and not that of
Seller and shall not use the words "Agent," "Agency" or words of similar import
on stationery, signs, documents, telephone listings, or otherwise in connection
with the name of Seller.
IX. SUBAGREEMENTS
-------------
A. The Buyer may distribute or sell Products purchased pursuant to this
Agreement through third party distributors, representatives or resellers without
the consent of the Seller. Buyer will give Seller prompt written notice of any
such subagreements.
X. TERM AND TERMINATION
--------------------
A. Initial Term. The initial term of this Agreement shall be the period
------------
commencing on the Effective Date and ending on June 30, 2001. Thereafter, the
term of this Agreement shall be
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automatically renewed for an unlimited number of successive one (1) year renewal
terms; provided, however, that either party hereto may prevent such automatic
-------- -------
renewal by notifying the other party in writing of its desire not to renew this
Agreement at least six (6) months prior to the expiration of the initial term or
any renewal term hereof.
B. Termination. This Agreement may be terminated at any time during the
-----------
term as follows:
1. by either party, at any time and for any reason, by written
notice to the other party given on or after June 30, 1998 delivered at least one
(1) year prior to the date of termination;
2. by either party following thirty (30) days notice that the other
party is in breach of any of its material obligations under this Agreement and a
failure of the breaching party to cure the breach within the thirty (30) day
period, unless the breach is not capable of being cured in which case this
Agreement shall terminate immediately following notice. Nothing contained in
this paragraph shall in any way limit a party's right to terminate this
Agreement immediately upon notice as provided in Section X.B.3. or X.B.4. If
either party fails to keep or perform any of its material obligations hereunder
and such default continues for a period of thirty (30) days after the defaulting
party has been notified of the default by the other party, then the non-
defaulting party may suspend this Agreement forthwith upon written notice to the
other party until such time as the default has been cured. However, a non-
defaulting party who has suspended performance pursuant to this Section X.B.2.
shall not be precluded from terminating the Agreement pursuant to Sections
X.B.2., X.B.3. or X.B.4. from pursuing its other lawful rights in the event that
the defaulting party does not cure the default prior to such termination.
3. by either party immediately (i) if any proceeding in bankruptcy,
reorganization or arrangement for the appointment of a receiver or trustee to
take possession of the other party's assets or any other proceeding under any
law for relief from creditors shall be instituted by or against the other party;
or (ii) if the other party shall make an assignment for the benefit of its
creditors. Each party shall immediately give written notice to the other party
of the occurrence of any event of the type described in this Section X.B.3.; or
4. by Buyer immediately if, without Buyer's consent,
(i) ownership of more than 25% of the issued and outstanding
stock of Seller on a fully-diluted basis is transferred, beneficially or of
record, to a person or entity or group of persons or entities that Buyer
reasonably deems to be a competitor;
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<PAGE>
(ii) all or substantially all of Seller's assets are transferred
in a single transaction or series of transactions; or
(iii) there is a change of more than one-half of Seller's board
of directors in a one-year period.
C. Rights on Termination.
---------------------
1. Upon termination of this Agreement, Buyer may sell all of its
inventory of Products.
2. Notwithstanding anything to the contrary set forth in this
Agreement, upon (i) the termination of this Agreement for any reason, or (ii)
upon Seller's inability or unwillingness to supply as defined in Section XIV of
this Agreement, Buyer shall be entitled to exercise its rights to the License
Agreement.
XI. TECHNICAL SERVICE AND SUPPORT
-----------------------------
A. Engineering Support. During the term of this Agreement, Seller shall
-------------------
make available to Buyer at no cost, at Buyer's request, reasonable engineering
support for customer applications.
B. Customer Tours. Seller shall make its plant available, upon
--------------
reasonable notice and at a reasonable time, to Buyer for the purpose of
conducting tours for Buyer's customers.
XII. LISTING AND APPROVAL
--------------------
A. Listing. Seller agrees to use commercially reasonable efforts both to
-------
obtain necessary government or regulatory approvals and agency listings and to
assist Buyer in obtaining, as necessary, such approvals and listings for
Products.
XIII. INTELLECTUAL PROPERTY
---------------------
A. Buyer's Trademark.
-----------------
1. Seller hereby acknowledges Buyer's ownership of all right, title
and interest in Buyer's trademarks and trade names which Buyer uses to sell the
Nickel Titanium Products. Seller further acknowledges that it shall acquire no
interest therein by virtue of this Agreement or the performance by either party
of their respective duties and obligations hereunder. Buyer hereby acknowledges
Seller's ownership of all right, title and interest in Seller's trademarks and
trade names which Buyer uses to sell the Titanium Products. Buyer hereby
acknowledges that, except as set forth in Section XIII.A.2. below, it shall
acquire no interest therein by virtue of this Agreement or the performance by
either party of their respective duties and obligations hereunder.
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<PAGE>
2. Buyer hereby grants Seller during the term of this Agreement a
fully paid-up, royalty-free, non-transferable, nonexclusive, limited license to
use Buyer's trademarks and trade names specified by Buyer for the purpose of
placing such trademarks and trade names on Nickel Titanium Products, and
packaging therefor, to be sold to Buyer (and only to Buyer) pursuant to this
Agreement. Seller hereby grants to Buyer during the term of this Agreement a
fully paid, royalty-free, non-transferable, nonexclusive, limited license to use
Seller's trademarks and trade names specified by Seller for the purpose of
placing such trademarks and trade names on Titanium Products and packaging
therefor, to be sold to Buyer pursuant to this Agreement.
3. Buyer reserves the right to approve all uses by Seller of Buyer's
proprietary names and marks on the Nickel Titanium Products (and related
packaging materials) in advance. Seller reserves the right to approve all uses
by Buyer of Seller's proprietary names and marks on the Titanium Products (and
related packaging materials) in advance.
B. Copyright License. Seller grants Buyer a license to use any
-----------------
literature, data sheets or other documents, without using Seller's trade name,
relating to Products in connection with the marketing or sale of Products
purchased by Buyer pursuant to this Agreement.
XIV. INTERRUPTION OF, INABILITY OR UNWILLINGNESS TO SUPPLY
-----------------------------------------------------
A. Non-Supply; Delayed Deliveries.
------------------------------
1. Non-Supply. In addition to other remedies available pursuant to
----------
this Agreement or in law or equity, in the event Seller is unable or unwilling
to supply Products pursuant to the terms of this Agreement for any period longer
than thirty (30) days which materially interrupts the continuous supply of
Products to Buyer pursuant to the terms of this Agreement, Buyer shall be
entitled to exercise its rights under the License Agreement until such time as
the continuous supply is reestablished. The exclusivity requirements of Section
II.A. shall also be suspended during this period.
2. Delayed Deliveries. In addition to other remedies available
------------------
pursuant to the Agreement or in law or equity, should repeated, unexcused,
delayed deliveries of more than three percent (3%) of an ordered quantity occur
more than twelve (12) times over a calendar year period with an average delay of
ten (10) business days or of one (1) single delayed delivery exceeding one (1)
month, then Buyer shall be entitled to exercise its rights under the License
Agreement with respect to the delayed Product or Products, and the exclusivity
required for purchases by Section II.A. shall not apply to such Product or
Products. Exercise of rights under the License Agreement does not by itself
constitute a termination of this Agreement.
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<PAGE>
XV. QUALITY CONTROL
---------------
A. Quality Control. Seller must meet Buyer's requirements for certified
---------------
suppliers, as set forth in Exhibit J, and commercially reasonable quality
---------
control standards as provided by Buyer to Seller from time to time. Products
shall also be manufactured and supplied to the specifications agreed to on
Exhibit B. Seller shall use reasonable commercial efforts to obtain ISO 9000
- ---------
certification.
B. Compliance With Laws. All Products sold to Buyer by Seller shall be
--------------------
new and tested per industry standards and shall comply with the specifications
identified in Exhibit B hereto. Products shall also meet and be manufactured in
---------
accordance with the applicable statutory and regulatory requirements and any
applicable federal, state or local requirements including Good Manufacturing
Practices if required.
C. QC Records. Seller shall be required to submit appropriate QC records
----------
per Buyer's requirements.
D. Test Report Requirement. Seller must supply test data and
-----------------------
certification for each Product as required by the Purchase Order. Test reports
certified by Seller's quality control department ("Certified Test Report"),
containing the information as defined in Exhibit F, must be provided to Buyer or
---------
its customers upon Buyer's request.
E. Changes. Seller shall not make any material changes or process
-------
changes with respect to any Products manufactured by Seller and sold to Buyer
without Buyer's prior written consent, which shall not be unreasonably withheld
or delayed. It will not be unreasonable for Buyer to withhold consent if
Buyer's customers need to consent to such changes. The Product Managers shall
establish a system for managing this consent process.
F. Audit. Buyer shall have the right to perform quality inspections of
-----
Seller's manufacturing facility and manufacturing process relating to Products
at reasonable times and upon reasonable notice.
XVI. CONFIDENTIAL INFORMATION
------------------------
A. Confidential Information. The receiving party shall, from the date of
------------------------
disclosure of any Confidential Information and for a period of ten (10) years
thereafter, use the information solely for its own internal use consistent with
this Agreement, not disclose the information to any person or persons outside
its organization, and disclose the information to any person or persons within
its organization only on a "need to know" basis.
B. If either party is compelled to make a disclosure of any Confidential
Information of the other party by law or government rule or regulation:
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<PAGE>
1. such disclosure shall be limited to the extent required; and
2. the other party shall have an opportunity to review the
information at least thirty (30) days before disclosure; and
3. the disclosing party shall promptly apply for applicable
protective orders.
Notwithstanding the foregoing, such review shall not make the reviewing party
responsible for the content of the disclosure.
XVII. JOINT INVENTIONS AND INVENTIONS SOLELY BY BUYER
-----------------------------------------------
A. Nickel Titanium Products Joint Inventions. It is anticipated that the
-----------------------------------------
parties will work together to develop new Nickel Titanium Products during the
term of this Agreement. Any Invention relating to Nickel Titanium Products or
related products, process or materials made jointly by both parties will be
jointly owned by both parties ("Nickel Titanium Joint Inventions"). During the
term of this Agreement, Buyer shall have the exclusive right to sell or
distribute such Nickel Titanium Joint Inventions to Permitted Customers in the
Field of Use. Following termination of the Agreement, Buyer may, at its option,
elect to continue its exclusivity with respect to the Nickel Titanium Joint
Inventions to Permitted Customers in the Field of Use, even as to manufacture,
distribution or sale by Seller, by paying Seller a [NOTE: PERCENTAGE OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION, PURSUANT TO RULE
24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED] royalty
on Net Sales of such Nickel Titanium Joint Inventions.
B. Titanium Products Joint Inventions. It is anticipated that the
----------------------------------
parties will work together to develop new Titanium Products during the term of
this Agreement. Any Invention relating to Titanium Products or related
products, process or materials made jointly by both parties will be jointly
owned by both parties ("Titanium Joint Inventions" and together with the Nickel
Titanium Joint Inventions, the "Joint Inventions"). During the term of this
Agreement, Buyer shall have the exclusive right to sell or distribute such
Titanium Joint Inventions to Permitted Customers in the Field of Use. Following
termination of the Agreement, Buyer may, at its option, elect to continue its
exclusivity with respect to the Titanium Joint Inventions to Permitted Customers
in the Field of Use, for distribution or sale by Seller, by paying Seller a
[NOTE: PERCENTAGE OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION, PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED] royalty on Net Sales of such Titanium Joint Inventions.
C. Patents for Joint Inventions. In the event of such Joint Inventions,
----------------------------
if Buyer and Seller both wish to seek or
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<PAGE>
maintain patent protection for a Joint Invention, the costs of seeking or
maintaining such patent protection shall be divided equally between them. If
only one (1) of Buyer and Seller wishes to seek or maintain patent protection
for a Joint Invention ("First Party"), it shall be entitled to do so at its own
expense, and the other party ("Second Party") shall provide, at the First
Party's expense, all reasonable assistance to that end. If the First Party,
with respect to one or more countries, thereafter decides not to seek patent
protection for, or decides to abandon a patent application or patent relating
to, the Joint Invention, the First Party shall notify the Second party in
writing of its decision. The Second Party shall then be entitled, after payment
of half the out-of-pocket costs already incurred by the First Party in seeking
or maintaining patent protection, to require that all rights in the Joint
Invention in said country or countries be assigned to it so that it can seek or
maintain patent protection for the Joint Invention in said country or countries.
The notification shall be in writing and shall be made in a timely fashion which
preserves the patent rights. The First Party shall thereafter provide, at the
Second Party's expense, all reasonable assistance in seeking or maintaining
patent protection for the Joint Invention in said country or countries.
D. Products Proposed or Invented Solely by Buyer. It is anticipated that
---------------------------------------------
Buyer will work to develop new Products during the term of this Agreement. Any
Invention relating to Nickel Titanium Products or Titanium Products made solely
by Buyer will be owned by Buyer. Such Inventions will become Products only if
accepted as Products by Seller. Seller hereby grants Buyer and its affiliates
an exclusive, perpetual, worldwide, irrevocable right and license, with the
right of sublicense and assignment, to utilize the Seller's "Licensed
Technology" (as defined in the License Agreement of even date between the
parties) to make, have made, use, import, offer for sale, and sell (a) products
invented solely by Buyer that would become Products except that Seller does not
agree to include them as such and (b) products that Buyer proposes to Seller for
manufacture and Seller decides not to manufacture.
XVIII. COOPERATION PROVISIONS
----------------------
A. General Cooperation.
-------------------
1. The parties agree to explore the possibility of Buyer purchasing
components made on traditional automatic screw machines from Seller's Wright
Machine Corporation subsidiary.
2. The parties agree to schedule and cause meetings of Seller's
President and the division manager of Buyer's Electronics Division, as well as
other appropriate personnel on both sides reasonably acceptable to the parties,
to be held not less than twice per calendar year in metropolitan San Francisco,
California (or such other site as is mutually acceptable to the parties). The
purpose of said meeting shall be to discuss how
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<PAGE>
the parties are performing their obligations under this agreement, how the
relationships arising from said agreements might be improved upon and
strengthened and what other supply, sales, distribution and/or similar
relationships the parties might establish that would prove to be mutually
beneficial.
B. Agreements as to Titanium Products Post Closing. In the event that
-----------------------------------------------
this Agreement is terminated for any reason, Buyer may, by giving written notice
to Seller, continue to purchase Titanium Products from Seller, and resell said
Titanium Products to Permitted Customers in the Field of Use in accordance with
all the terms and conditions hereof, including without limitation Seller's
obligations under Section VII.D.2.; provided, however, that Section III.A.
hereof shall no longer be operative (i.e., Buyer shall no longer be an exclusive
seller and/or distributor). Pricing to Buyer shall initially be the lesser of
(a) the best price at which such Titanium Products are sold to Seller's
distributors or (b) a price that equals the average of Buyer's gross margin over
the preceding 12 months for Titanium Products. Prices shall be reviewed at the
end of the first 12 months of this arrangement and annually thereafter. Pricing
will thereafter be based on the lower of (a) the best price at which such
Titanium Products are sold to Seller distributors or (b) a [NOTE: PERCENTAGE
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION,
PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED] discount from average end user prices.
C. License for Titanium Products. Subject to the limitations set forth
-----------------------------
in the immediately succeeding sentence, Seller hereby grants to Buyer a non-
exclusive, perpetual, worldwide, irrevocable right and license (the "Titanium
License"), with the right of sublicense and assignment, to utilize the Titanium
Licensed Technology to make, have made, use, import, offer for sale, and sell
Titanium Products to Permitted Customers in the Field of Use. Notwithstanding
the foregoing, Buyer's right to practice under the Titanium License shall become
effective only at such time as this Agreement has been terminated, Buyer has
given the notice specified in Section XVIII.B. and Seller has materially
breached its obligations to supply Titanium Products under said Section XVIII.B.
in a manner that would allow a party hereto to terminate the Agreement under the
standards of Section X.B.2. If the Titanium License shall become effective as
aforesaid, Buyer shall pay to Seller a royalty of [NOTE: PERCENTAGE OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION, PURSUANT TO RULE
24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED] of Net
Sales of Licensed Products during the life of the Titanium Patents. For
purposes of this Section XIII.C. the following terms shall have the following
definitions:
1. "Titanium Licensed Technology" means any and all of the
Proprietary Rights (as defined in the License Agreement) now owned or licensed
or hereafter acquired by Seller relating to Titanium Products.
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<PAGE>
2. "Titanium Patents" means Patents (as defined in the License
Agreement) owned by Seller having one or more claims covering the Titanium
Products manufactured or sold by Buyer.
XIX. MISCELLANEOUS
-------------
A. Entire Agreement. This Agreement (together with Exhibits attached
----------------
hereto as such Exhibits may be amended from time to time in accordance with this
Agreement) constitutes the entire Agreement between Seller and Buyer with
respect to the sale of Products to Buyer and the resale of Products by Buyer.
All prior or contemporaneous agreements, whether written or oral, and all
proposals, understandings and communications between or involving Seller and
Buyer are hereby canceled and superseded. This Agreement may be amended only by
a written instrument executed by both parties.
B. Amendments and Waivers. No amendment of any provision of this
----------------------
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. No waiver by either Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
C. Severability. If any provision of this Agreement is held to be
------------
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the extent possible.
In any event, all other provisions of this Agreement shall be deemed valid and
enforceable to the full extent.
D. Succession and Assignment. This Agreement shall be binding upon and
-------------------------
inure to the benefit of the parties named herein and their respective successors
and permitted assigns. Neither party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other party. For purposes of the foregoing sentence, an event
after which those persons who were the beneficial owners of a party immediately
prior to such event beneficially own less than a majority of a party immediately
after such event shall be deemed to constitute an assignment.
E. Force Majeure. Neither Seller nor Buyer shall be liable for its
-------------
failure to perform its obligations under this Agreement due to events beyond its
reasonable control including, but not limited to, strikes, riots, wars, fire,
acts of God, labor unrest and acts in compliance with applicable law,
regulation, or order (whether valid or invalid) of any governmental body.
F. Status of Parties. This Agreement will not be construed as creating
-----------------
any agency, partnership, joint venture, or
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<PAGE>
other similar legal relationship between the parties; nor will either party hold
itself out as the agent, partner, or co-venturer of the other party. Both
parties shall be, and shall act as, independent contractors.
G. Applicable Law. This Agreement and all transactions hereunder shall
--------------
be governed by and construed according to the laws of the State of California,
excluding the choice of laws rules thereof.
H. Survival. Sections X.A., XVI.A., XVI.B., XVII, XVIII.B., XVIII.C. and
--------
XIX.J. shall survive termination of this Agreement.
I. Notices. All notices, requests, demands, claims, and other
-------
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if three (3)
business days thereafter if registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Seller: Copy (which shall not constitute notice) to:
Raychem Corporation Raychem Corporation
Electronics Division 300 Constitution Drive
300 Constitution Drive Menlo Park, CA 94025-1164
Menlo Park, CA 94025 Attn: Legal Department MS 120/8502
Telecopier: Telecopier: (415) 361-4305
If to the Licensee: Copy (which shall not constitute notice) to:
Memry Corporation Finn Dixon & Herling
57 Commerce Drive One Landmark Square
Brookfield, CT 06804 Stamford, Connecticut 06901
Attn: Mr. James G. Binch Attn: David I. Albin, Esq.
Telecopier: (203) 740-2503 Telecopier: (203) 348-5777
Either party may send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopier, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Either party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other Party notice in the manner herein set forth.
J. Attorneys' Fees. If legal action is commenced to enforce the
---------------
performance of any part of this Agreement, the
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<PAGE>
prevailing party shall be paid by the other party reasonable attorneys' fees and
expenses.
K. Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed an original, but which together shall constitute one and
the same instrument.
L. Headings. The headings of the Sections of this Agreement are for
--------
convenience and shall not be used to interpret this Agreement.
M. Remedies. Remedies provided herein are not exclusive. Delay in
--------
enforcing any right or remedy as a result of any breach hereof shall not be
deemed a waiver of that or any subsequent breach.
N. Compliance With Federal Laws. Seller shall comply with all applicable
----------------------------
federal employment, equal opportunity, affirmative action and environmental laws
in the operation of Seller's business and shall provide Buyer with any Material
Safety Data Sheets or other information required by any federal, state or local
statute or regulation.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives and it shall be effective as of the
date first above written.
MEMRY CORPORATION RAYCHEM CORPORATION
By: /s/ James G. Binch By: /s/ John McGraw
-------------------------- --------------------------
Print Name: James G. Binch Print Name: John McGraw
------------------- ------------------
Title: President Title: Vice President
-------------------- ----------------------
-21-
<PAGE>
EXHIBIT A-1
NICKEL TITANIUM PRODUCTS
PRODUCTS & PRICING
CATEGORY PART/DESCRIPTION PRICE TO
RAYCHEM
Other Alloys A, J & C Barstock *
Per Agreement with A.F. Aerospace
dated July 26, 1993
Other Alloy J for Nuclear Electric per *
License Agreement between Raychem
Limited and Nuclear Electric PLC
dated August 19, 1991
Other Alloy C & J Barstock *
* NOTE: PRICES TO RAYCHEM OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION, PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
-22-
<PAGE>
EXHIBIT A-2
TITANIUM PRODUCTS
-23-
<PAGE>
PRIVATE LABEL AGREEMENT
EXHIBIT A-2
PRODUCTS AND PRICING
Price to
CATEGORY PARTDESC PCNMOD UOM Raychem*
ACTUATORS ACT02-01-00 169625- PC
ACTUATORS ACT02-02-00 823121- PC
ACTUATORS ACT03-01-00 656883- PC
ACTUATORS ACT03-49-00 201521- PC
ACTUATORS ACT03-54-00 035131- PC
ACTUATORS ACT03-55-00 938129- PC
ACTUATORS ACT03-72-00 947093- PC
ACTUATORS ACT03-86 654737- PC
ACTUATORS ALLOY-K-0.035X1.05-STRIP 629333- LB
ACTUATORS ALLOY-K-0.042X1.05-STRIP 599269- LB
ACTUATORS ALLOY-K-0.700-BAR-CG 997061- LB
ACTUATORS GIAT-F0531-10217237 433455- PC
ACTUATORS PROTO-ALLOY-K-17.5X307-STR 342343- FT
ACTUATORS PROTO-ACT01-K-23.6 707909- FT
ACTUATORS PROTO-ACT01-K-7.9 849635- FT
ACTUATORS PROTO-STRIP-K-0.034X1.20 733103- LB
ACTUATORS PROTO-STRIP-K-0.041X1.20 830717- LB
*NOTE: PRICES TO RAYCHEM OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION, PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
-24-
<PAGE>
Price to
CATEGORY PARTDESC PCNMOD UOM Raychem*
ANTENNA ALLOY-BC-0.9MM 152703- FT
ANTENNA ALLOY-BC-1.1MM 644289- FT
ANTENNA ANT-BB-0.9-X-62.12-FORMED 554513- PC
ANTENNA ANT-BB-0.9MM 266249- FT
ANTENNA ANT-BB-1.1MM 509759- FT
ANTENNA GALTRONICS-03-12-03-KG 433277- LB
ANTENNA GUIDE-BB-28 156383- FT
ANTENNA GUIDE-BB-35.4 587541- FT OLD PART
DESCRIPTION
ANTENNA GUIDE-BB-35.4-SB 587541- FT
ANTENNA PROTO-CW40-BA-27.2 373729- FT
ANTENNA PROTO-SE-BA-28.0-SB 871379- FT
ANTENNA PROTO-SE-BA-35.0-SB 654707- FT
ANTENNA PROTO-SE-BA-35.0-SB-GAL 941667- FT
ANTENNA SE-BA-35.0X2.446-FORMED 554513- PC
ANTENNA SE-BA-35.0X64.0-PU-COATED 584681- FT
ANTENNA SE-BA-35.0X88.5-PU-COATED 060197- FT
*NOTE: PRICES TO RAYCHEM OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION, PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
-25-
<PAGE>
Price to
CATEGORY PARTDESC PCNMOD UOM Raychem*
FASTENERS DTC-5236443-1 181119- PC
FASTENERS DTC-5236443-2 718361- PC
OTHER ALLOY-BB-1.250-BAR 232835- LB
OTHER ALLOY-BH-0.250-BAR 052895- FT
OTHER ALLOY-K-2.250-BAR 565845- LB
OTHER PROT-CW20-BB-7X200-STRIP 974921- FT
OTHER PROTO-ALLOY-BB-7X35-STRP 655001- FT
OTHER ST.JUDE-320380-001 635821- PC
OTHER ST.JUDE-320437 229809- PC
OTHER WORDS-CLUB 431746- PC
* NOTE: PRICES TO RAYCHEM OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION, PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
-26-
<PAGE>
Price to
CATEGORY PARTDESC PCNMOD UOM Raychem*
TUBES PROT-TB-BB-17.5X24X37.88 483629- PC
TUBES PROT-TB-BB27.2X35.3X34.38 722267- PC
TUBES PROT-TUB-BB-10.7X16XSAMP 628367- FT
TUBES PROT-TUB-BB-115X150X15.31 953923- PC
TUBES PROT-TUB-BB-148X200X15.31 605311- PC
TUBES PROT-TUB-BB-17.5X24XSAMP 830085- FT
TUBES PROT-TUB-BB-18.5X24XSAMP 543053- FT
TUBES PROT-TUB-BB-38.4X48XSAMP 458439- FT
TUBES PROT-TUB-BB-62.5X78XSAMP 707067- FT
TUBES PROT-TUB-BB-81.6X102XSAM 147873- FT
TUBES PROT-TUB-BB-9.3X14X72.83 946053- PC
TUBES PROT-TUB-BB-9.3X14X98.425 977183- PC
TUBES PROT-TUB-BB-13X19.5X25 029165- PC
TUBES PROT-TUB-BB-13X19.5X.35 536271- PC
TUBES PROT-TUB-ST.JUDE862-0012 148031- PC
TUBES PROT-TUBE-BB-10X15X72.83 426395- PC
TUBES PROT-TUBE-BB-10X15XSAMPLE 775899- FT
TUBES PROT-TUBE-BB-10X17X70.85 673061- PC
TUBES PROT-TUBE-BB-11.3X17XSAMP 420189- FT
TUBES PROT-TUBE-BB-12X18XSAMPL 380121- FT
TUBES PROT-TUBE-BB-28X35XSAMPL 365363- FT
TUBES PROT-TUBE-BB-32X40X23.62 585259- PC
TUBES PROT-TUBE-BB-32X40X25.78 510401- PC
TUBES PROT-TUBE-BB-32X40X37.59 179049- PC
TUBES PROT-TUBE-BB-32X40X49.40 092993- PC
TUBES PROT-TUBE-BB-48X60XSAMPL 689669- FT
TUBES PROT-TUBE-BB-53X66.3X39.6 957687- PC
TUBES PROT-TUBE-BB-53X66.3XSAMP 357643- FT
TUBES PROT-TUBE-BB-70X91XSAMPL 743883- FT
TUBES PROT-TUBE-BB-7X11.9XSAMP 164963- FT
TUBES PROT-TUBE-BB-9.3X14X3.36 851235- PC
TUBES PROT-TUBE-BB-9.3X14XSAMPL 060229- FT
TUBES PROT-TUBE-BB90.4X113XSAM 446255- FT
TUBES PROT-TUBEBB19.2X24X61.28 933343- PC
TUBES PROTO-TUBE-BB-10X15X60 707359- PC
TUBES PROTO-TUBE-BB-10X17X60 136443- PC
TUBES PROTO-TUBE-BB-10X17X70.85 673061- PC
TUBES PROTO-TUBE-BB-12X18X144 134061- PC
TUBES PROTO-TUBE-BB-12X18X2 963365- PC
TUBES PROTO-TUBE-BB-16.2X21X60 003573- PC
TUBES PROTO-TUBE-BB-16.9X22X36 452947- PC
TUBES PROTO-TUBE-BB-16X24X12 394955- PC
TUBES PROTO-TUBE-BB-16X24X4 401037- PC
TUBES PROTO-TUBE-BB-16X24X72 676077- PC
TUBES PROTO-TUBE-BB-16X24XSAMPL 394955- PC
TUBES PROTO-TUBE-BB-21X26.3X46 599107- PC
TUBES PROTO-TUBE-BB-21X26.3X72 427851- PC
TUBES PROTO-TUBE-BB-32X40X132 468941- PC
TUBES PROTO-TUBE-BB-32X40X32 744021- PC
TUBES PROTO-TUBE-BB-40X60X12 906527- PC
TUBES PROTO-TUBE-BB-70X91X24 919747- PC
-27-
<PAGE>
Price to
CATEGORY PARTDESC PCNMOD UOM Raychem*
TUBES PROTO-TUBE-BB-9X13X60 598619- PC
TUBES PROTO-TUBE-BB-X-26.3-X-24 715391- PC
TUBES TUBE-BB-40X60X40 919931- PC
TUBES TUBE-BB-9.6X14.1X1.57 331163- PC
* NOTE: PRICES TO RAYCHEM OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION, PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
-28-
<PAGE>
Price to
CATEGORY PARTDESC PCNMOD UOM Raychem*
WIRE ALLOY-B-0.022-WIRE 292693- FT
WIRE ALLOY-B-0.041-WIRE 438469- FT
WIRE ALLOY-B-0.050-WIRE 319243- FT
WIRE ALLOY-B-0.077-WIRE 716039- FT
WIRE ALLOY-BB-0.019X0.125-STRP 345175- FT
WIRE ALLOY-BB-0.0285-WIRE 947259- FT
WIRE ALLOY-BB-0.041-WIRE 904809- FT
WIRE ALLOY-BB-0.050-WIRE 735557- FT
WIRE ALLOY-BB-0.300-ROD 642025- FT
WIRE ALLOY-K-0.0525-WIRE 532581- FT
WIRE ALLOY-K-0.150-WIRE 349813- FT
WIRE ALLOY-K-0.250-WIRE 776544- LB
WIRE ALLOY-KA-0.0236-WIRE 401703- FT
WIRE ALLOY-X-0.078-WIRE 791205- FT
WIRE ANNEALED-K-150 349613- FT
WIRE ANNEALED-K-50.0 844650- FT
WIRE ARCH-BB-10 234475- FT
WIRE ARCH-BB-12 914791- FT
WIRE ARCH-BB-14 818547- FT
WIRE ARCH-BB-14-A 540671- FT
WIRE ARCH-BB-16 010355- FT
WIRE ARCH-BB-16-A 201123- FT
WIRE ARCH-BB-16X16 463499- FT
WIRE ARCH-BB-16X16-A 292613- FT
WIRE ARCH-BB-16X22 247393- FT
WIRE ARCH-BB16X22-A 121479- FT
WIRE ARCH-BB-17X25 027399- FT
WIRE ARCH-BB-17X25-A 960975- FT
WIRE ARCH-BB-18 069883- FT
WIRE ARCH-BB-18-A 128977- FT
WIRE ARCH-BB-18X18 121063- FT
WIRE ARCH-BB-18X25 649715- FT
WIRE ARCH-BB-19X25 969787- FT
WIRE ARCH-BB-19X25-A 178667- FT
WIRE ARCH-BB-20 862511- FT
WIRE ARCH-BB-21X25 521999- FT
WIRE ARCH-BB-21X25-A 939909- FT
WIRE ARCH-BB-9 386847- FT
WIRE GUIDE-BB-10 537487- FT
WIRE GUIDE-BB-12 876357- FT
WIRE GUIDE-BB-14 910413- FT
WIRE GUIDE-BB-16 452725- FT
WIRE GUIDE-BB-18 814169- FT
WIRE GUIDE-BB-20 566597- FT
WIRE GUIDE-BB-20.0-POLISH 595887- FT
WIRE GUIDE-BB-21 753463- FT
WIRE GUIDE-BB-24 849525- FT
WIRE GUIDE-BB-26.7 863549- FT
WIRE GUIDE-BB-26.7-3.75 096851- PC
WIRE GUIDE-BB-28 156383- FT
WIRE GUIDE-BB-30.0 739161- FT
WIRE GUIDE-BB-33.5 060211- FT
WIRE GUIDE-BB-35 768069- FT
WIRE GUIDE-BB-35.4-SB 587541- FT
-29-
<PAGE>
Price to
CATEGORY PARTDESC PCNMOD UOM Raychem*
WIRE GUIDE-BB-40 998373- FT
WIRE GUIDE-BB-41.0 838193- FT
WIRE GUIDE-BB-46.5 940353- FT
WIRE GUIDE-BB-5 180831- FT
WIRE GUIDE-BB-5.5 643115- FT
WIRE GUIDE-BB-52 004589- FT
WIRE GUIDE-BB-53 998585- FT
WIRE GUIDE-BB-59.0 055859- FT
WIRE GUIDE-BB-6 572425- FT
WIRE GUIDE-BB-7 601635- FT
WIRE GUIDE-BB-72 105095- FT
* NOTE: PRICES TO RAYCHEM OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION, PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
-30-
<PAGE>
Price to
CATEGORY PARTDESC PCNMOD UOM Raychem*
WIRE GUIDE-BB-78.6 223521- FT
WIRE GUIDE-BB-8 019479- FT
WIRE GUIDE-BB-8-26 771635- PC
WIRE GUIDE-BB-9.8-X-16 186637- PC
WIRE GUIDE-BC-10 239517- FT
WIRE GUIDE-BC-13.2 380771- FT
WIRE GUIDE-BC-13.5-HT-BLK 204827- FT
WIRE GUIDE-BC-13.8-BLK 770639- FT
WIRE GUIDE-BC-14.0-HT-BLK 560943- FT
WIRE GUIDE-BC-15.2 984371- FT
WIRE GUIDE-BC-16.2 432877- FT
WIRE GUIDE-BC-17.2 129963- FT
WIRE GUIDE-BC-18.0-85-HT-BLK 855885- PC
WIRE GUIDE-BC-18.0-HT-BLK-60 096599- PC
WIRE GUIDE-BC-20.0-BLK 346263- FT
WIRE GUIDE-BC-20.0-HT-BLK 556695- FT
WIRE GUIDE-BC-21 234045- FT
WIRE GUIDE-BC-22.0-BLK 580563- FT
WIRE GUIDE-BC-22.5 547935- FT
WIRE GUIDE-BC-24-BLK 219411- FT
WIRE GUIDE-BC-24.0 893339- FT
WIRE GUIDE-BC-24.0-85-HT-BLK 055467- PC
WIRE GUIDE-BC-24.0-HT-BLK 927117- FT
WIRE GUIDE-BC-26.0 555761- FT
WIRE GUIDE-BC-27.0-HT-BLK 518813- FT
WIRE GUIDE-BC-28.0-HT-BLK-60 678857- PC
WIRE GUIDE-BC-34.0-HT-BLK 674985- FT
WIRE GUIDE-BC-35.0-BLK 863771- FT
WIRE GUIDE-BC-38.0-BLK 241703- FT
WIRE GUIDE-BC-47.0 071623- FT
WIRE HOOK-T-3.83 397438- PC
WIRE HOOK-T-4.83 149990- PC
WIRE HOOK-T-5.83 907722- PC
WIRE HOOK-T-8.83 801255- PC
WIRE PROTO-ARCH-BB-12-HS 927511- FT OLD PART
DESCRIPTION
WIRE PROTO-ARCH-BB-14-HS 859715- FT OLD PART
DESCRIPTION
WIRE PROTO-ARCH-BB-16-HS 651549- FT OLD PART
DESCRIPTION
WIRE PROTO-ARCH-BB-18-HS 914087- FT OLD PART
DESCRIPTION
WIRE PROTO-BTR-BB-12.0 855785- FT
WIRE PROTO-BTR-BB-14.0 416663- FT
WIRE PROTO-BTR-BB-16.0 209781- FT
WIRE PROTO-BTR-BB-16.0-X-22.0 404141- FT
WIRE PROTO-BTR-BB-16.0X16.0 320765- FT
WIRE PROTO-BTR-BB-17.0-X-25.0 525897- FT
WIRE PROTO-BTR-BB-17.7 372895- FT
WIRE PROTO-BTR-BB-17.7-X-17.7 511753- FT
WIRE PROTO-BTR-BB-17.7-X-25.0 171579- FT
WIRE PROTO-BTR-BB-19.0-X-25.0 761403- FT
WIRE PROTO-BTR-BB-20.0 215959- FT
WIRE PROTO-BTR-BB-20.0X20.0 109559- FT
WIRE PROTO-BTR-BB-21.0-X-25.0 312787- FT
-31-
<PAGE>
Price to
CATEGORY PARTDESC PCNMOD UOM Raychem*
WIRE PROTO-CW25-BB-16.0X16.0 013906- FT
WIRE PROTO-CW25-BB-16.0X22.0 043527- FT
WIRE PROTO-CW45-BB-12.1 927511- FT
WIRE PROTO-CW45-BB-14.1 859715- FT
WIRE PROTO-CW45-BB-16.1 651549- FT
WIRE PROTO-CW45-BB-18.1 914087- FT
WIRE PROTO-SE-BA-23.4-HS-BLK 074999- FT
WIRE PROTO-SE-BA-30.0 126365- FT
WIRE PROTO-SE-BA-31.3-HS-BLK 758807- FT
WIRE PROTO-SE-BA-40.1-HS 754589- FT
WIRE PROTO-SE-BA-47.1-HS 550151- FT
*NOTE: PRICES TO RAYCHEM OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION, PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
-32-
<PAGE>
Price to
CATEGORY PARTDESC Raychem*
Other Alloys A, J & C Barstock
Per Agreement with A.F.
Aerospace dated July 26, 1993
Other Alloy J for Nuclear Electric
per License Agreement between
Raychem Limited and Nuclear
Electric PLC dated
August 19, 1991
*NOTE: PRICES TO RAYCHEM OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION, PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
-33-
<PAGE>
EXHIBIT B
SPECIFICATIONS
-34-
<PAGE>
PRIVATE LABEL AGREEMENT
EXHIBIT B
SPECIFICATIONS
CATEGORY PARTDESC PCNMOD SPEC CSR UOM
ACTUATORS ACT02-01-00 169625- ACT02-01 PC
ACTUATORS ACT02-02-00 823121- ACT02-02 PC
ACTUATORS ACT03-01-00 656883- ACT03-01 PC
ACTUATORS ACT03-49-00 201521- ACT03-49 PC
ACTUATORS ACT03-54-00 035131- ACT03-54 PC
ACTUATORS ACT03-55-00 938129- ACT03-55 PC
ACTUATORS ACT03-72-00 947093- ACT03-72 PC
ACTUATORS ACT03-86 654737- ACT03-86 PC
ACTUATORS ALLOY-K-0.035X1.05-STRIP 629333- LB
ACTUATORS ALLOY-K-0.042X1.05-STRIP 599269- LB
ACTUATORS ALLOY-K-0.700-BAR-CG 997081- LB
ACTUATORS GIAT-F0531-10217237 433455- GIATF0531 10217237 PC
ACTUATORS PROT-ALLOY-K-17.5X307-STR 342343- FT
ACTUATORS PROTO-ACT01-K-23.6 707909- MPS-128 FT
ACTUATORS PROTO-ACT01-K-7.9 849835- MPS-128 FT
ACTUATORS PROTO-STRIP-K-0.034X1.20 733103- CRAY 35193700 LB
ACTUATORS PROTO-STRIP-K-0.041X1.20 830717- CRAY 35268300 LB
-35-
<PAGE>
CATEGORY PARTDESC PCNMOD SPEC CSR UOM
ANTENNA ALLOY-BC-0.9MM 152703- 6529 FT
ANTENNA ALLOY-BC-1.1MM 644289- 6529 FT
ANTENNA ANT-BB-0.9-X-62.12-FORMED 554513- CLM-00-02-02-XX 6534 PC
ANTENNA ANT-BB-0.9MM 266249- MPS-141 6529 FT
ANTENNA ANT-BB-1.1MM 509759- MPS-141 6529 FT
ANTENNA GALTRONICS-03-12-03-KG 433277- MPS-141 LB
ANTENNA GUIDE-BB-28 156383- MPS-118 FT
ANTENNA GUIDE-BB-35.4-SB 587541- MPS-118 FT
ANTENNA PROTO-CW40-BA-27.2 373729- CENTURION SPEC FT
ANTENNA PROTO-SE-BA-28.0-SB 871379- MPS-139 FT
ANTENNA PROTO-SE-BA-35.0-SB 654707- MPS-139 6537 FT
ANTENNA PROTO-SE-BA-35.0-SB-GAL 941667- MPS-139 FT
ANTENNA SE-BA-35.0X2.446-FORMED 554513- 6534 PC
ANTENNA SE-BA-35.0X64.0-PU-COATED 584681- 6537 FT
ANTENNA SE-BA-35.0X86.5-PU-COATED 060197- 6537 FT
-36-
<PAGE>
CATEGORY PARTDESC PCNMOD SPEC CSR UOM
FASTENERS DTC-5236443-1 181119- DTC-5236443 PC
FASTENERS DTC-5236443-2 718361- DTC-5236443 PC
OTHER ALLOY-BB-1.350-BAR 232835- LB
OTHER ALLOY-BH-0.250-BAR 052895- FT
OTHER ALLOY-K-2.250-BAR 565845- LB
OTHER PROT-CW20-BB-7X200-STRIP 974921- DW 94634 6538 FT
SYMBIOSIS
OTHER PROTO-ALLOY-BB-7X35-STRP 655001- 055001 CARDIAC 6539 FT
PATHWAYS
OTHER ST-JUDE-320380-001 635821- MED07-03-00-00 6511 PC
OTHER ST-JUDE-320437 229809- MED07-02-00-00 6521 PC
OTHER WORDS-CLUB 431746- 925451 PC
-37-
<PAGE>
CATEGORY PARTDESC PCNMOD SPEC CSR UOM
TUBES PROT-TB-BB-17.5X24X37.88 483629- MPS-127 6510 PC
TUBES PROT-TB-BB27.2X35.3X34.38 722267- MPS-127 6516 PC
TUBES PROT-TUB-BB-10.7X16XSAMP 628367- MPS-127 FT
TUBES PROT-TUB-BB-115X150X15.31 953923- MPS-136 PC
TUBES PROT-TUB-BB-148X200X15.31 605311- MPS-136 PC
TUBES PROT-TUB-BB-17.5X24XSAMP 830085- MPS-127 FT
TUBES PROT-TUB-BB-18.5X24XSAMP 543053- MPS-127 FT
TUBES PROT-TUB-BB-38.4X48XSAMP 458439- MPS-127 FT
TUBES PROT-TUB-BB-62.5X78XSAMP 707087- MPS-127 FT
TUBES PROT-TUB-BB-81.6X102XSAM 147873- MPS-127 FT
TUBES PROT-TUB-BB-9.3X14X72.83 946053- MPS-127 6518 PC
TUBES PROT-TUB-BB-9.3X14X98.425 977183- MPS-127 PC
TUBES PROT-TUB-BB-13X19.5X.25 029165- MPS-127 PC
TUBES PROT-TUB-BB-13X19.5X.35 536271- MPS-127 PC
TUBES PROT-TUBE-TUB-ST.JUDE862-0012 148031- 118-0412 6533 PC
ST JUDE SPEC
TUBES PROT-TUBE-BB-10X15X72.83 426395- MPS-127 6517 PC
TUBES PROT-TUBE-BB-10X15XSAMPL 775899- MPS-127 FT
TUBES PROT-TUBE-BB-10X17X70.85 673061- MPS-127 PC
TUBES PROT-TUBE-BB-11.3X17XSAMP 420189- MPS-127 FT
TUBES PROT-TUBE-BB-12X18XSAMPL 380121- MPS-127 FT
TUBES PROT-TUBE-BB-28X35XSAMPL 365363- MPS-127 FT
TUBES PROT-TUBE-BB-32X40X23.62 585259- MPS-127 PC
TUBES PROT-TUBE-BB-32X40X25.78 510401- MPS-127 PC
TUBES PROT-TUBE-BB-32X40X37.59 179049- MPS-127 PC
TUBES PROT-TUBE-BB-32X40X49.40 092993- MPS-127 PC
TUBES PROT-TUBE-BB-48X60XSAMPL 689869- MPS-127 FT
TUBES PROT-TUBE-BB-53X66.3X39.6 957687- MPS-127 PC
TUBES PROT-TUBE-BB-53X66.3XSAMP 357643- MPS-127 FT
TUBES PROT-TUBE-BB-70X91XSAMPL 743883- MPS-127 FT
TUBES PROT-TUBE-BB-7X11.9XSAMP 164963- MPS-127 FT
TUBES PROT-TUBE-BB-9.3X14X3.38 851235- MPS-127 6535 PC
TUBES PROT-TUBE-BB-9.3X14XSAMPL 060229- MPS-127 FT
TUBES PROT-TUBE-BB90.4X113XSAM 446255- MPS-136 FT
TUBES PROT-TUBEBB19.2X24X61.28 933343- 57-0001-2901 6519 PC
TUBES PROTO-TUBE-BB-10X15X60 707359- MPS-127 PC
TUBES PROTO-TUBE-BB-10X17X60 136443- MPS-127 PC
TUBES PROTO-TUBE-BB-10X17X70.85 673061- MPS-127 PC
TUBES PROTO-TUBE-BB-12X18X144 134081- MPS-127 PC
TUBES PROTO-TUBE-BB-12X18X2 983365- CARDIAC 6542 PC
PATHWAYS
TUBES PROTO-TUBE-BB-16.2X21X80 003573- MPS-127 PC
TUBES PROTO-TUBE-BB-16.9X22X36 452947- MPS-127 PC
TUBES PROTO-TUBE-BB-16X24X12 394955- MPS-127 PC
TUBES PROTO-TUBE-BB-16X24X4 401037- MPS-127 6515 PC
TUBES PROTO-TUBE-BB-16X24X72 676077- MPS-127 PC
TUBES PROTO-TUBE-BB-16X24XSAMP 394955- MPS-127 PC
TUBES PROTO-TUBE-BB-21X26.3X46 599107- MPS-127 PC
TUBES PROTO-TUBE-BB-21X26.3X72 427851- MPS-127 PC
TUBES PROTO-TUBE-BB-32X40X132 468941- MPS-127 PC
TUBES PROTO-TUBE-BB-32X40X32 744021- MPS-127 PC
TUBES PROTO-TUBE-BB-40X60X12 906527- MPS-127 PC
TUBES PROTO-TUBE-BB-70X91X24 919747- MPS-127 PC
TUBES PROTO-TUBE-BB-9X13X60 598619- MPS-127 PC
TUBES PROTO-TUBE-BB-X-26.3-X-24 715391- MPS-127 PC
TUBES TUBE-BB-40X60X40 919931- RM0263002 6512 PC
BARD
TUBES TUBE-BB-9.6X14.1X1.57 331163- RM2006197 6514 PC
ACS
-38-
<PAGE>
CATEGORY PARTDESC PCNMOD SPEC CSR UOM
WIRE ALLOY-B-0.022-WIRE 292693- FT
WIRE ALLOY-B-0.041-WIRE 438469- MPS-134 6508 FT
WIRE ALLOY-B-0.050-WIRE 319243- FT
WIRE ALLOY-B-0.077-WIRE 716039- FT
WIRE ALLOY-BB-0.019X0.125-STRP 345175- FT
WIRE ALLOY-BB-0.0285-WIRE 947259- MPS-109 6502 FT
WIRE ALLOY-BB-0.041-WIRE 904809- MPS-109 6502 FT
WIRE ALLOY-BB-0.050-WIRE 735557- FT
WIRE ALLOY-BB-0.300-ROD 642025- FT
WIRE ALLOY-K-0.0525-WIRE 532581- FT
WIRE ALLOY-K-0.150-WIRE 349813- MPS-130 FT
WIRE ALLOY-K-0.250-WIRE 776544- LB
WIRE ALLOY-KA-0.0236-WIRE 401703- FT
WIRE ALLOY-X-0.078-WIRE 791205- FT
WIRE ANNEALED-K-150 349813- MPS-130 FT
WIRE ANNEALED-K-50.0 844650- MPS-130 FT
WIRE ARCH-BB-10 234475- MPS-106 FT
WIRE ARCH-BB-12 914791- MPS-106 FT
WIRE ARCH-BB-14 818547- MPS-106 6502 FT
WIRE ARCH-BB-14-A 540671- MPS-106 FT
WIRE ARCH-BB-16 010355- MPS-106 6502 FT
WIRE ARCH-BB-16-A 201123- MPS-106 FT
WIRE ARCH-BB-16X16 463499- MPS-106 6502 FT
WIRE ARCH-BB-16X16-A 292613- MPS-106 FT
WIRE ARCH-BB-16X22 247393- MPS-106 6502 FT
WIRE ARCH-BB-16X22-A 121479- MPS-106 FT
WIRE ARCH-BB-17X25 027399- MPS-106 6502 FT
WIRE ARCH-BB-17X25-A 960975- MPS-106 FT
WIRE ARCH-BB-18 069883- MPS-106 6502 FT
WIRE ARCH-BB-18-A 128977- MPS-106 FT
WIRE ARCH-BB-18X18 121083- MPS-106 6502 FT
WIRE ARCH-BB-18X25 649715- MPS-106 6502 FT
WIRE ARCH-BB-19X25 969787- MPS-106 6502 FT
WIRE ARCH-BB-19X25-A 178667- MPS-106 FT
WIRE ARCH-BB-20 862511- MPS-106 6502 FT
WIRE ARCH-BB-21X25 521999- MPS-106 6502 FT
WIRE ARCH-BB-21X25-A 939909- MPS-106 FT
WIRE ARCH-BB-9 386847- MPS-106 FT
WIRE GUIDE-BB-10 537487- MPS-118 FT
WIRE GUIDE-BB-12 876357- MPS-118 FT
WIRE GUIDE-BB-14 910413- MPS-118 FT
WIRE GUIDE-BB-16 452725- MPS-118 FT
WIRE GUIDE-BB-18 814169- MPS-118 FT
WIRE GUIDE-BB-20 566597- MPS-118 FT
WIRE GUIDE-BB-20.0-POLISH 595887- MPS-118 FT
WIRE GUIDE-BB-21 753463- MPS-118 FT
WIRE GUIDE-BB-24 849525- MPS-118 FT
WIRE GUIDE-BB-26.7 863549- MPS-118 FT
WIRE GUIDE-BB-26.7-3.75 096851- MPS-118 PC
WIRE GUIDE-BB-28 156383- MPS-118 FT
WIRE GUIDE-BB-30.0 739161- MPS-118 FT
WIRE GUIDE-BB-33.5 060211- MPS-118 FT
WIRE GUIDE-BB-35 768069- MPS-118 FT
WIRE GUIDE-BB-35.4-SB 587541- MPS-118 FT
WIRE GUIDE-BB-40 996373- MPS-118 FT
WIRE GUIDE-BB-41.0 838193- MPS-118 6523 FT
WIRE GUIDE-BB-46.5 940353- MPS-118 FT
WIRE GUIDE-BB-5 180831- MPS-118 FT
WIRE GUIDE-BB-5.5 643115- MPS-118 FT
WIRE GUIDE-BB-52 004569- MPS-118 FT
WIRE GUIDE-BB-53 998585- MPS-118 FT
WIRE GUIDE-BB-59.0 055859- MPS-118 FT
WIRE GUIDE-BB-6 572425- MPS-118 FT
WIRE GUIDE-BB-7 601635- MPS-118 FT
-39-
<PAGE>
CATEGORY PARTDESC PCNMOD SPEC CSR UOM
WIRE GUIDE-BB-72 105095- MPS-118 FT
WIRE GUIDE-BB-78.6 223521- MPS-118 FT
WIRE GUIDE-BB-8 019479- MPS-118 FT
WIRE GUIDE-BB-8-26 771635- MPS-118 PC
WIRE GUIDE-BB-9.8-X-16 186637- MPS-118 PC
WIRE GUIDE-BC-10 239517- MPS-124 FT
WIRE GUIDE-BC-13.2 380771- MPS-124 6505 FT
WIRE GUIDE-BC-13.5-HT-BLK 204827- MPS-124 FT
WIRE GUIDE-BC-13.8-BLK 770639- MPS-124 6505 FT
WIRE GUIDE-BC-14.0-HT-BLK 560943- MPS-124 FT
WIRE GUIDE-BC-15.2 984371- MPS-124 6505 FT
WIRE GUIDE-BC-16.2 432877- MPS-124 6505 FT
WIRE GUIDE-BC-17.2 129963- MPS-124 6505 FT
WIRE GUIDE-BC-18.0-85-HT-BLK 855885- MPS-124 PC
WIRE GUIDE-BC-18.0-HT-BLK-60 098599- MPS-124 PC
WIRE GUIDE-BC-20.0-BLK 346263- MPS-124 6505 FT
WIRE GUIDE-BC-20.0-HT-BLK 556695- MPS-124 FT
WIRE GUIDE-BC-21 234045- MPS-124 FT
WIRE GUIDE-BC-22.0-BLK 580563- MPS-124 6505 FT
WIRE GUIDE-BC-22.5 547935- MPS-124 FT
WIRE GUIDE-BC-24-BLK 219411- MPS-124 FT
WIRE GUIDE-BC-24.0 893339- MPS-124 6505 FT
WIRE GUIDE-BC-24.0-85-HT-BLK 055467- MPS-124 PC
WIRE GUIDE-BC-24.0-HT-BLK 927117- MPS-124 FT
WIRE GUIDE-BC-26.0 555761- MPS-124 6505 FT
WIRE GUIDE-BC-27.0-HT-BLK 518813- MPS-124 FT
WIRE GUIDE-BC-28.0-HT-BLK-60 678857- MPS-124 PC
WIRE GUIDE-BC-34.0-HT-BLK 674985- MPS-124 FT
WIRE GUIDE-BC-35.0-BLK 863771- MPS-124 FT
WIRE GUIDE-BC-38.0-BLK 241703- MPS-124 FT
WIRE GUIDE-BC-47.0 071623- MPS-124 FT
WIRE HOOK-T-3.83 397438- MPS-104 6501 PC
WIRE HOOK-T-4.83 149990- MPS-104 6501 PC
WIRE HOOK-T-5.83 907722- MPS-104 6501 PC
WIRE HOOK-T-8.83 801255- MPS-104 6501 PC
WIRE PROTO-BTR-BB-12.0 855785- MPS-140 FT
WIRE PROTO-BTR-BB-14.0 416663- MPS-140 FT
WIRE PROTO-BTR-BB-16.0 209781- MPS-140 FT
WIRE PROTO-BTR-BB-16.0-X-22.0 404141- MPS-140 FT
WIRE PROTO-BTR-BB-16.0X16.0 320765- MPS-140 FT
WIRE PROTO-BTR-BB-17.0-X-25.0 525897- MPS-140 FT
WIRE PROTO-BTR-BB-17.7 372895- MPS-140 FT
WIRE PROTO-BTR-BB-17.7-X-17.7 511753- MPS-140 FT
WIRE PROTO-BTR-BB-17.7-X-25.0 171579- MPS-140 FT
WIRE PROTO-BTR-BB-19.0-X-25.0 761403- MPS-140 FT
WIRE PROTO-BTR-BB-20.0 215959- MPS-140 FT
WIRE PROTO-BTR-BB-20.0X20.0 109559- MPS-140 FT
WIRE PROTO-BTR-BB-21.0-X-25.0 312787- MPS-140 FT
WIRE PROTO-CW25-BB-16.0X16.0 013905- MPS-137 FT
WIRE PROTO-CW25-BB-16.0X22.0 043527- MPS-137 FT
WIRE PROTO-CW45-BB-12.1 927511- MPS-137 FT
WIRE PROTO-CW45-BB-14.1 859715- MPS-137 FT
WIRE PROTO-CW45-BB-16.1 651549- MPS-137 FT
WIRE PROTO-CW45-BB-18.1 914067- MPS-137 FT
WIRE PROTO-SE-BA-23.4-HS-BLK 074999- MPS-139 FT
WIRE PROTO-SE-BA-30.0 126365- MPS-139 FT
WIRE PROTO-SE-BA-31.3-HS-BLK 758807- MPS-139 FT
WIRE PROTO-SE-BA-40.1-HS 754589- MPS-139 FT
WIRE PROTO-SE-BA-47.1-HS 550151- MPS-139 6536 FT
-40-
<PAGE>
Category Part/Description Price to Raychem*
Other Alloys A, J & C Barstock
Per Agreement with A.F. Aerospace
dated July 26, 1993
Other Alloy J for Nuclear Electric per License
Agreement between Raychem Limited
and Nuclear Electric PLC dated
August 19, 1991
* NOTE: PRICES TO RAYCHEM OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION, PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.
-41-
<PAGE>
EXHIBIT C
INITIAL ORDER COMMITMENT
======================================================================
COMMITMENT FOR FISCAL YEAR ENDED
JUNE 30, 1997 ($K)
--------------------------------
PRODUCT & RELEVANT AGREEMENT Q1 Q2 Q3 Q4 TOTAL
- ----------------------------------------------------------------------
Tinel-Lock (Tinel-Lock Supply 246 290 276 276 1088
Agreement)
Tinel Products (Private 773 935 1114 1114 3936
Label/Distribution Agreement)
Tinel-Lock OR other Tinel Products -- -- 100 100 200
(Agreement As Appropriate)
TOTAL: 1019 1225 1489 1489 5224
======================================================================
-42-
<PAGE>
EXHIBIT D
RAYCHEM'S STANDARD TERMS & CONDITIONS OF PURCHASE
1. TERMS OF AGREEMENT
1.1. This Purchase Order (including any attachments) constitutes Buyer's offer
to purchase the goods, services and/or other property described on the front of
this form ("Products"). Acceptance may occur by (i) Seller's promise to ship, or
(ii) Seller's shipment of some or all of the Products.
1.2. Buyer limits Seller's acceptance of this Purchase Order to the terms and
conditions of this Purchase Order and any related agreement signed by Buyer.
Buyer objects to any additional or different terms or conditions proposed by
Seller.
2. PRICES
The price set forth in this Purchase Order for the Products is the entire amount
owed by Buyer to Seller for the purchase of the Products. The price includes all
of Seller's charges, including packing, shipping, in-transit insurance, and
taxes. The price is the best price available for the Products with respect to
similarly situated customers of Seller purchasing comparable quantities of the
same or similar products.
3. PACKING AND DELIVERY
3.1. Seller shall ship the Products as instructed by Buyer. Receiving dates
stated in this Purchase Order are firm.
3.2. Seller shall pack and ship the Products in accordance with commercial
standards and government regulations.
3.3. Seller shall make domestic shipments in full compliance with (i) the
Uniform Commercial Code as in existence at the location of shipment, and (ii) if
by truck, the National Motor Freight Classification. Seller shall make
international shipments in full compliance with Incoterms.
3.4. Seller shall consolidate on one bill of lading all shipments that are made
(i) on the same day, (ii) by the same carrier, and (iii) on the same terms of
sale.
4. TITLE AND RISK OF LOSS
Deliveries shall be F.O.B. Buyer. Title and risk of loss or damage shall pass to
Buyer upon Buyer's actual receipt of the Products.
5. INSPECTION AND ACCEPTANCE OF PRODUCTS
5.1. Buyer and Buyer's customers may inspect the Products at any reasonable
time and at any reasonable place, including Seller's location. Any inspection is
provisional only and does not constitute final acceptance. All Products are
subject to final inspection and testing by Buyer after receipt.
5.2. Buyer shall have a reasonable time, of not fewer than 30 days after its
receipt of the Products (the "Inspection Period"), to inspect the Products.
During the Inspection Period Buyer may reject the Products, or revoke any prior
acceptance based on any nonconformity of the Products.
5.3. If Buyer's customer has a right to inspect the Products, the Inspection
Period shall not begin until Buyer's customer has actually received the
Products.
6. PAYMENT TERMS
Purchases are on open account credit. Payment terms for sales on open account
begin on the later of receipt of an invoice or receipt of the Products by Buyer.
Buyer's standard payment terms are net 45 days.
7. WARRANTY
7.1. Seller warrants that the Products (i) are free from defects in design,
material fabrication, and workmanship, (ii) conform to all samples and
specifications (furnished by Seller or Buyer) for the Products, (iii) are fit
for Buyer's intended use, and (iv) are free of liens and encumbrances when
shipped to Buyer.
7.2. This warranty extends to the future performance of the Products, to Buyer
and its successors, assigns, and customers.
8. PROPRIETARY INFORMATION
8.1. "Proprietary Information" includes any information obtained from Buyer (i)
that is of a confidential or proprietary nature, (ii) that is not readily
available to Buyer's competitors and, (iii) that, if known by a competitor of
Buyer, might lessen any competitive advantage of Buyer or give such competitor a
competitive advantage.
8.2. Buyer retains ownership of all Proprietary Information. Seller shall not
disclose, duplicate or reproduce any Proprietary Information nor shall Seller
use any Proprietary Information other than in the course of performing under
this Purchase Order.
9. PROPERTY FURNISHED BY BUYER
9.1. Seller shall bear all risk of loss or damage to any property furnished by
Buyer to Seller in connection with the performance of this Purchase Order, until
the property is returned to Buyer. Seller shall not remove any safety features
of the property or modify it in any way. Buyer does not warrant the property
that it furnishes.
9.2. Seller shall cause (i) its General Liability Insurance Policy issued with
respect to the use of the property to name Buyer as an additional insured, and
(ii) its All-Risk Insurance Policy to name Buyer as a loss payee for the full
replacement value of the property.
9.3. Seller shall use the property only in the performance of Seller's
obligations under this Purchase Order. The property shall remain the property of
Buyer and shall be labeled as Buyer's property. Upon completion or termination
of this Purchase Order, Seller shall return all of Buyer's properly in good
condition.
-43-
<PAGE>
RAYCHEM CORPORATION
TERMS & CONDITIONS OF PURCHASE
REVISED JANUARY, 1995
10. WORK BY SUPPLIERS, CONTRACTORS, OR SUBCONTRACTORS ON BUYER PREMISES
10.1. Suppliers, contractors, or subcontractors ("Third Parties") while
performing work on Buyer's premises, shall perform the work in accordance with
all applicable (i) laws and regulations, and (ii) Buyer's work rules and work
permit procedures for the facility.
10.2. Third Parties shall review and comply with Buyer's General Environmental,
Occupational Health, and Safety ("EHS") Rules and Rules Concerning Specialized
EHS Controls.
10.3. Third Parties shall advise Buyer's project manager at least one business
day prior to commencing work on Buyer's premises.
10.4. Third Parties shall not dispose of wastes, unused materials, debris,
packaging, or scrap materials on Buyer's premises.
10.5. Third Parties shall immediately report to Buyer any (i) violations of
local laws, regulations, or Buyer's rules, or (ii) injury to an employee of a
Third Party.
10.6. Buyer may immediately stop a Third Party from continuing any work on
Buyer's premises if Buyer deems the work to be unsafe, potentially harmful to
the environment, or not in compliance with local regulations or rules. Buyer
shall not be liable to Seller for any penalties or other amounts incurred
(including labor costs, equipment rental or lost profits or bonuses) in any way
related to a work stoppage.
11. INDEMNITY
11.1. Seller shall indemnify Buyer against any general, consequential,
incidental or special damages incurred by Buyer arising from (i) any actual or
alleged defect or nonconformity in any Product, (ii) the incorrectness of a
representation or warranty made by Seller, or (iii) any other breach of this
Purchase Order by Seller.
11.2. Seller shall settle or defend. and pay costs and damages arising from,
any claim, suit, or proceeding against Buyer based on an allegation that any
Products infringe any United States or foreign patent, trademark, copyright, or
other property right.
12. MISCELLANEOUS
12.1. Non-Waiver of Default. No failure by Buyer to insist on strict
performance of any term or condition of this Purchase Order shall constitute a
waiver of that term or condition or any breach of that term or condition.
12.2. Applicable Law. This agreement shall be governed by and construed in
accordance with the internal laws of the State of California, U.S.A.
12.3. No Assignment. Seller may not assign or transfer, in whole or in part. by
operation of law or otherwise, this Purchase Order or any interest in it.
12.4. Entire Agreement. This Purchase Order and any documents referred to
herein are the final, complete, and exclusive statement of the terms of the
agreement of the parties concerning the subject matter of those documents.
12.5. Modifications. This Purchase Order may be modified only by a written
agreement of Seller and Buyer, provided that Buyer may make non-material changes
by giving Seller three business days written notice.
12.6. Notices. All notices and other communications hereunder shall be in
writing.
12.7. Expenses and Fees. Seller shall pay all of Buyer's attorneys' and other
fees and costs incurred in enforcing Seller's obligations under this Purchase
Order.
12.8. Time of Essence. Time is of the essence for Seller's obligations under
this Purchase Order.
12.9. English Language. All correspondence pertaining to this Purchase Order
shall be in the English language.
13. COMPLIANCE WITH ENVIRONMENTAL AND SAFETY LAWS
13.1. General. Seller shall, upon request, provide environmentally related
information concerning the materials used in the Products and packaging.
13.2. Material Safety Data Sheet. Unless exempted by applicable state and
federal law, the Seller shall provide, before or with each initial shipment and
before bringing any hazardous materials onto Buyer's premises, a Material Safety
Data Sheet ("MSDS") for each Product. Each container shall also be labeled with
appropriate hazard warnings. The MSDSs and labels shall meet applicable state
and federal requirements, including the Federal Hazard Communications Standard
(29 Code of Federal Regulations 1910).
13.3. Proposition 65. Seller shall not include in the Products any substance
regulated by The Safe Drinking Water and Toxic Enforcement Act of 1986
("Proposition 65") unless adequate warning, as required by Proposition 65, is
provided.
13.4. TSCA. Products supplied by the Seller shall comply with the federal Toxic
Substance Control Act ("TSCA"). Seller certifies to Buyer that any chemical
substance or mixture provided to Buyer is included on the TSCA Inventory.
14. COMPLIANCE WITH LAWS GENERALLY
14.1. General. Seller represents that it is in compliance and agrees to comply
with all applicable federal, state, and local laws and regulations, including
those listed in Section 17.
14.2. Government Business. Seller represents that it has not been debarred,
suspended, or proposed for debarment from United States government business.
14.3. NAFTA. Seller shall provide Buyer with a Certificate of Origin pursuant
to Chapter 5 of the North American Free Trade Agreement as implemented in the
United States. Seller shall maintain all appropriate records to satisfy NAFTA
requirements. Seller shall indemnify Buyer against any general, consequential,
incidental or special
-44-
<PAGE>
RAYCHEM CORPORATION
TERMS & CONDITIONS OF PURCHASE
REVISED JANUARY, 1995
damages incurred by Buyer arising from Seller's failure to comply with NAFTA.
14.4. Certificate of Compliance. Seller shall execute and deliver to Buyer upon
request a Certificate of Compliance with Contract Terms, certifying Seller's
full compliance with each and every requirement imposed upon Seller by this
Purchase Order and by applicable laws, regulations, and industry standards.
15. GOVERNMENT CONTRACTS
Seller understands and acknowledges that (i) Products may be used by Buyer in
the performance by Buyer of its prime contracts and subcontracts where the U.S.
Government is an end user, and (ii) Buyer may be required to make
representations and certifications under these contracts which rely on Seller's
compliance with certain U.S. Iaws and regulations, including compliance with the
laws listed in this Purchase Order. The following clauses (as set forth in the
identified locations) are incorporated into this Purchase Order: "Restrictions
on Subcontractor Sales to the Government" FAR 52.203-6; "Anti-kickback
Procedures" FAR 52.203-7; "Certification and Disclosure Regarding Payments to
Influence Certain Federal Transactions" - FAR 52.203-11; "Security Requirements"
- - FAR 52.2042; "New Material" FAR 52.210-5; "Defense Priority and Allocation
Requirements" - FAR 52.212-8; "Subcontractor Cost or Pricing Data" - FAR 52.215-
24; "Utilization of Small Business Concerns and Small Disadvantaged Business
Concerns" FAR 52.219-8; "Small Business and Small Disadvantaged Business
Subcontracting Plan" - FAR 52.219-9; "Utilization of Women-Owned Small
Businesses" - FAR 52.219-13; "Notice to the Government of Labor Disputes" -FAR
52.222-1; "Contract Work Hours and Safety Standards Act - Overtime Compensation
- - General" - FAR 52.222-4; "Walsh-Healey Public Contracts Acts" - FAR 52.222-20;
"Certificate of Nonsegregated Facilities" - FAR 52.222-21; "Previous Contracts
and Compliance Reports" - FAR 52.222-22; "Equal Opportunity" - FAR 52.222-26;
"Affirmative Action for Special Disabled and Vietnam Era Veterans" -FAR 52.222-
35; "Affirmative Action for Handicapped Workers" - FAR 52.222-36; "Employment
Reports on Special Disabled Veterans and Veterans of the Vietnam Era" - FAR
52.222-37 (if this order exceeds $100,000); "Clean Air and Water" - FAR 52.223-
2; "Certification Regarding a Drug-Free Workplace" - FAR 52.223-5, "Buy American
Act - Supplies" - FAR 52.225-3; "Notice and Assistance Regarding Patent and
Copyright Infringement" - FAR 52.222-2; "Limitation of Liability" - FAR 52.246-
23.
-45-
<PAGE>
EXHIBIT E
PACKAGING & LABELING REQUIREMENTS
Labeling requirements are contained in the MPS (Metals Product Specifications)
specifications and customer specifications in Exhibit B. Standard packaging is
generally on spools for wire and strip, and in tubes or coiled in bags for
microtubing. Special packaging and labeling may be required from time to time
and will be called out on individual purchase orders per customer requirements.
-46-
<PAGE>
EXHIBIT F
TEST REPORT REQUIREMENTS
Certifications and test reports are required on each shipment if specified in
the purchase order. Certifications and test report requirements are contained
in Exhibit B in the MPS (Metals Product Specifications) and customer
specifications. Special certifications and test reports may be required from
time to time and will be called out in individual purchase orders per customer
requirements.
-47-
<PAGE>
EXHIBIT G
SELLER'S EXISTING CUSTOMERS
Memry Corporation
4/30/96 9:03 AM
Exhibit G
Cust
Number Customer Name
278 American Standard, Inc.
4990 McDonnell Douglas Helicopter Sys.
460 United States Surgical Corp.
338 American Standard, Inc. - Mktg
580 Wright Machine Corp.
387 NASA Langley Research Center
[NOTE: ALL OTHER CUSTOMER NAMES AND NUMBERS OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION, PURSUANT TO RULE 24B-2 PROMULGATED UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.]
-48-
<PAGE>
EXHIBIT H
ELECTRICAL AND ELECTRONIC ASSEMBLIES
The Levels of Electrical and Electronic
Packaging Interconnection
LEVEL ONE: DEVICE TO PACKAGE
This level includes connections inside a component package
between a basic circuit element and its lead, such as the link
between a semiconductor chip and its package lead frame.
LEVEL TWO: COMPONENT LEAD TO CIRCUITRY
Connections between a component lead and a printed circuit board
and/or point-to-point wiring by means of permanent or separable
interconnects are typical at Level Two and are exemplified by
various kinds of sockets.
LEVEL THREE: BOARD-TO-BOARD
At this level, connections between two or more printed circuit
boards, typically motherboard/daughterboard or backplane
connections, by means of permanent or separable interconnects
and/or cable assemblies, are common.
LEVEL FOUR: SUBASSEMBLY TO SUBASSEMBLY
Connections between two subassemblies such as a power supply and
an associated subassembly, including the connectors on each
subassembly and the cable assembly between them, or wire-to-wire
connections are typical at this level.
LEVEL FIVE: SUBASSEMBLY TO INPUT/OUTPUT (I/O) PORT
Level Five includes connections for power or signal transmission
from a major subassembly to an input/output port, such as the
link between a computer and a printer or other type of peripheral
equipment.
LEVEL SIX: SYSTEM TO SYSTEM
Connections between physically separated systems occur at Level
Six. The links that interconnect components of a local area
network are typical examples.
-49-
<PAGE>
EXHIBIT I
AGREEMENTS OF BUYER
Material Agreement with Centurion International, Inc.
License Agreement dated July 26, 1993 between AF Aerospace and Raychem
Corporation
U.S. Surgical Corporation Purchase Orders if not assigned
License Agreement dated August 19, 1991 between Nuclear Electric PLC and
Raychem Limited
Supply Agreement dated August 4, 1995 between St. Jude Medical, Inc.,
Cardiac Assist Division and Raychem Corporation (assigned to Bard)
Any open Purchase Orders from customers as of June 28, 1996
-50-
<PAGE>
EXHIBIT I
[NOTE: CHART SETTING FORTH CUSTOMER NAMES AND PRODUCT SPECIFICATIONS OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION, PURSUANT TO RULE
24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.]
-51-
<PAGE>
EXHIBIT J
NEW PRODUCT AMENDMENT
A. Date: __________________
B. New Product Identification: _______________________________
___________________________________________________________
___________________________________________________________
C. New Product Specifications: _______________________________
___________________________________________________________
___________________________________________________________
WHEREAS, Raychem Corporation ("Buyer") and Memry Corporation ("Seller")
are parties to that certain Amended and Restated Private Label/Distribution
Agreement effective as of December 20, 1996 (the "Private Label Agreement"); and
WHEREAS, Buyer and Seller have agreed that their respective Product
Managers (as such term is defined in the Private Label Agreement) may add new
products and specifications for such products to the list of products to be sold
pursuant to the Private Label Agreement; and
WHEREAS, the undersigned are the duly designated Project Managers for
Buyer and Seller, respectively:
IT IS HEREBY AGREED:
1. That Exhibit A to the Private Label Agreement is hereby amended to
---------
add the new product(s) listed in (or incorporated into) item B of this New
Product Amendment (the "New Product"), and that the New Product shall from and
after the date indicated in item A hereof (the "Effective Date") be a Product
(as such term is defined in the Private Label Agreement) for all purposes under
such Private Label Agreement.
2. That Exhibit B to the Private Label Agreement is hereby amended to
---------
add the New Product specifications set forth in (or incorporated into) item C of
this New Product Amendment (the "New Specifications"), and that the New
Specifications shall from and after the Effective Date be a part of the Private
Label Agreement for all purposes.
3. Except as specifically set forth in this New Product Amendment, the
terms of the Private Label Agreement and the exhibits and schedules thereto
shall remain unmodified and in full force and effect.
IN WITNESS WHEREOF, the parties have executed this New Product Amendment
as of the date first above written.
MEMRY CORPORATION RAYCHEM CORPORATION
By: ______________________ By: ________________________
Product Manager Product Manager
cc: James G. Binch
Tom Klopack
Raychem Legal Department
-52-
<PAGE>
EXHIBIT K
ORDER COMMITMENT EXAMPLE
-53-
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
A B C D E F G H I J K L
1 Exhibit K
2 Order Commitment Example
3 Projected Dollar Volume for Indicated Quarter
4 P (Present)P+1 P+2 P+3 P+4 P+5 P+6 P+7 P+8 P+9
---------- ------- ----------- -------- -------- -------- -------- -------- --- ---
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 Quarter P Forecast:
---------------------------
6 Tinel Lock A/P/ B/P/ C/P/ D/P/ E/P/ F/P/
7 Other Tinel a/P/ b/P/ c/P/ d/P/ e/P/ f/P/
8
9 Quarter P+1 Forecast:
---------------------------
10 Tinel Lock B/P+1/ C/P+1/ D/P+1/ E/P+1/ F/P+1/ G/P+1/
11 Other Tinel b/P+1/ c/P+1/ d/P+1/ e/P+1/ f/P+1/ g/P+1/
12
13 Quarter P+2 Forecast:
---------------------------
14 Tinel Lock C/P+2/ D/P+2/ E/P+2/ F/P+2/ G/P+2/ H/P+2/
15 Other Tinel c/P+2/ d/P+2/ e/P+2/ f/P+2/ g/P+2/ h/P+2/
16 At quarter P+2, Required Take is the largest number resulting from the following calculations:
---------------------------------------------------------------------------------------------
17
18 At Quarter P+2:
---------------------------
19 Tinel Lock .95C/P+2/ or
--------
20 .65(C/P+1/ + c/P+1/) - (volume of other Tinel products or
21 .25(C/P/ + c/P/) - (volume of other Tinel products ordered in
such quarter)
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C> <C> <C> <C> <C> <C> <C>
22
23 Other Tinel .85C/P+2/ or
--------
24 .65(C/P+1/ + c/P+1/) - (volume of other Tinel-Lock products or
ordered in such quarter) ---
25 .25(C/P/ + c/P/) - (volume of other Tinel-Lock products ordered
in such quarter)
====================================================================================================================================
</TABLE>
Page 1 of 3
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
A B C D E F G H I J K L
1 Exhibit K
2 Order Commitment Example
3 Projected Dollar Volume for Indicated Quarter
4 P (Present) P+1 P+2 P+3 P+4 P+5 P+6 P+7 P+8 P+9
------------- ----- ------- ------------ ---------- ----- ----- ----- ----- -----
26 (Assumes in each case that no "overpurchases" of either Tinel Lock or Other Tinel products
27 reduces the minimum take requirement for the other)
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
28 Quarter P Forecast:
29 Tinel Lock 100 100 100 500 500 500 100
30 Other Tinel 100 100 100 500 500 500 100
31 Required Take:
32 Tinel-Lock 95 95 65 125 0 0 0
33 Other Tinel 85 85 65 125 0 0 0
34
35
36 Quarter P+1 Forecast:
37 Tinel-Lock 100 100 500 500 500 50 100
38 Other Tinel 100 100 500 500 500 50 100
39 Required Take:
40 Tinel-Lock 95 95 325/125 125 0 0 0
41 Other Tinel 85 85 325/125 125 0 0 0
42
43
44 Quarter P+2 Forecast
45 Tinel-Lock 100 100 50 500 100 100 100
46 Other Tinel 100 100 50 500 100 100 100
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
47 Required Take:
48 Tinel-Lock 95/65 95/325/125 32.5/125 125 0 0 0
49 Other Tinel 85/65 85/325/125 32.5/125 125 0 0 0
50
51
====================================================================================================================================
</TABLE>
Page 2 of 3
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
A B C D E F G H I J K L
1 Exhibit K
2 Order Commitment Example
3 Projected Dollar Volume for Indicated Quarter
4 P (Present) P+1 P+2 P+3 P+4 P+5 P+6 P+7 P+8 P+9
------------ ---- ---- ----------- ------------ ---------- ---------- --- ---- ---
52 (Assumes in each case that no "overpurchases" of either Tinel Lock or Other Tinel products
53 reduces the minimum take requirement for the other)
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
54
55 Quarter P+3 Forecast:
56 Tinel Lock 100 0 100 100 100 100 100
57 Other Tinel 100 0 100 100 100 100 100
58 Required Take:
59 Tinel-Lock 95/325/125 0/32.5/125 65/125 25 0 0 0
60 Other Tinel 85/325/125 0/32.5/125 65/125 25 0 0 0
61
62
63 Quarter P+4 Forecast:
64 Tinel-Lock 100 100 10 0 100 100
65 Other Tinel 100 100 10 0 100 100
66 Required Take:
67 Tinel-Lock 95/32.5/125 95/65/125 6.5/25 0 0 0
68 Other Tinel 85/32.5/125 85/65/125 6.5/25 0 0 0
69
70
71 Quarter P+5 Forecast
72 Tinel-Lock 100 500 0 200 100
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C> <C> <C> <C> <C>
73 Other Tinel 100 500 0 50 100
74 Required Take:
75 Tinel-Lock 95/65/125 475/6.5/25 0 50 0
76 Other Tinel 85/65/125 425/6.5/25 0 12.5 0
77
78 The rolling forecast delivery and minimum take requirements continue for the duration of the contract.
===================================================================================================================================
</TABLE>
Page 3 of 3
