<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MEMRY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
MEMRY CORPORATION
57 COMMERCE DRIVE
BROOKFIELD, CONNECTICUT 06804
(203) 740-7311
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
--------------------
October 27, 1998
To the Holders of Common Stock of
MEMRY CORPORATION
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Memry Corporation (the "Company") will be held at Hotel Sofitel,
223 Twin Dolphin Drive, Redwood City, California, on Monday, November 23, 1998,
at 9:30 a.m., for the following purposes:
1. To elect four persons to the Board of Directors, each to hold office
until the next Annual Meeting of Stockholders and until his respective
successor is elected and qualified.
2. To consider and vote upon an amendment to Memry Corporation's 1997 Long-
Term Incentive Plan to (i) increase from $2,500 per quarter to $7,500
per quarter the value of shares of the Company's Common Stock that will
be granted to each non-employee director, and (ii) make such grants
"restricted" such that the stock granted to each such non-employee
director will vest in equal thirds on the first, second and third
anniversaries of the date of grant (subject to forfeiture upon the
occurrence of certain events).
3. To consider and act upon such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on October 16, 1998,
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the Annual Meeting. A list of stockholders entitled to vote at
the Annual Meeting will be available for examination by any stockholder, for any
purpose relevant to the meeting, on and after October 27, 1998, during ordinary
business hours at the Company's principal executive offices located at the
address first set forth above.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING. PLEASE
COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED STAMPED RETURN ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING. YOU MAY REVOKE YOUR PROXY IN THE MANNER DESCRIBED IN THE ACCOMPANYING
PROXY STATEMENT AT ANY TIME BEFORE IT HAS BEEN VOTED AT THE ANNUAL MEETING.
Dated: Brookfield, Connecticut By Order of the Board of Directors,
October 27, 1998
Katie Terhune
Secretary
<PAGE>
MEMRY CORPORATION
57 COMMERCE DRIVE
BROOKFIELD, CONNECTICUT 06804
(203) 740-7311
--------------------
PROXY STATEMENT
--------------------
ANNUAL MEETING OF STOCKHOLDERS
MONDAY, NOVEMBER 23, 1998
--------------------
INTRODUCTION
This proxy statement ("Proxy Statement") is being furnished in connection
with the solicitation of proxies by the Board of Directors of Memry Corporation
(the "Company") for use at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held on November 23, 1998, and at any adjournment of that
meeting. All proxies will be voted in accordance with the stockholders'
instructions and, if no choice is specified, the proxies will be voted in favor
of election of the four nominees for directors specified herein and in favor of
the other matters set forth herein.
The Company's Annual Report on Form 10-KSB for the Company's fiscal year
ended June 30, 1998 was mailed to stockholders, along with these proxy
materials, on or about October 27, 1998.
The Annual Meeting of Stockholders of Memry Corporation will be held on
Monday, November 23, 1998 at the Hotel Sofitel, 223 Twin Dolphin Drive, Redwood
City, California, at 9:30 a.m. local time.
VOTING RIGHTS AND PROXY INFORMATION
Proxies in the accompanying form are solicited on behalf of and at the
direction of the Board of Directors, which has fixed the close of business of
Friday, October 16, 1998, as the record date (the "Record Date") for the
determination of holders of outstanding shares of the Company's Common Stock
entitled to notice of and to vote at the Annual Meeting or any adjournment(s)
thereof. Holders of record of Common Stock at the close of business on October
16, 1998, are entitled to notice of and to vote at the meeting. As of October
16, 1998, there were issued and outstanding 19,954,140 shares of the Company's
Common Stock, each entitled to one vote, which were held of record on such date
by approximately 1,281 record holders. All four directors shall be elected by a
plurality of the shares of the Company's Common Stock present and voting (in
other words, the four individuals receiving the largest number of votes will be
elected). The affirmative vote of the holders of a majority of the present and
voting shares of the Company's Common Stock is required for the adoption of the
resolution authorizing and approving the amendment (the "Amendment") to Memry
Corporation's 1997 Long-Term Incentive Plan (the "Plan"). A copy of the Plan as
amended by the Amendment is attached hereto as Appendix A. Shares that abstain
from voting on approval of the Amendment, as well as broker non-votes, would not
be counted either in favor of or against the proposal.
<PAGE>
All shares of the Company's Common Stock represented by properly executed
proxies will be voted at the Annual Meeting in accordance with the directions
indicated on the proxies unless such proxies have previously been revoked. To
the extent that no direction is indicated, the shares will be voted FOR the
election of all of the Company's nominees as directors and FOR the adoption of a
resolution approving the Amendment. See "PROPOSAL NO. 1 - ELECTION OF
DIRECTORS" AND "PROPOSAL NO. 2 - AMENDMENT TO MEMRY CORPORATION'S 1997 LONG-TERM
INCENTIVE PLAN." If any other matters are properly presented at the Annual
Meeting for action, including a question of adjourning the meeting from time to
time, the persons named in the proxies and acting thereunder will have
discretion to vote on such matters in accordance with their best judgment. The
Annual Meeting may be adjourned, and additional proxies solicited, if at the
time of the Annual Meeting a quorum is not present or the votes necessary to
approve the Plan have not been obtained. Any adjournment of the Annual Meeting
would require the affirmative vote of the holders of at least a majority of the
shares of the Company's Common Stock represented at the Annual Meeting
(regardless of whether such shares constituted a quorum).
Any stockholder who has executed and returned a proxy has the power to
revoke it at any time before it is voted. A stockholder who wishes to revoke a
proxy can do so by attending the Annual Meeting and voting in person, by
executing a later-dated proxy relating to the same shares or by a writing
revoking the proxy and, in the latter two cases, delivering such later-dated
proxy or writing to the Secretary of the Company prior to the vote at the Annual
Meeting. Any writing intended to revoke a proxy should be sent to the Company
at its principal executive offices, 57 Commerce Drive, Brookfield, Connecticut
06804, Attention: Katie Terhune, Secretary.
In addition to the use of the mail, proxies may be solicited via personal
interview and telephone or telegraph by the directors, officers and regular
employees of the Company. Such persons will receive no additional compensation
for such services. Arrangements will also be made with certain brokerage firms
and certain other custodians, nominees and fiduciaries for the forwarding of
solicitation materials to the beneficial owners of the Company's Common Stock
held of record by such persons, and such brokers, custodians, nominees and
fiduciaries will be reimbursed by the Company for reasonable out-of-pocket
expenses incurred by them in connection therewith.
The stockholders of the Company have no dissenters' rights in connection
with any of the proposals.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth, as of September 22, 1998, information regarding
beneficial ownership of the Company's Common Stock by (i) each person who is
known by the Company to own beneficially more than 5% of the outstanding Common
Stock (based on information furnished to the Company on behalf of such persons
or otherwise known to the Company), (ii) each of the directors of the Company,
(iii) each of the executive officers named in the Annual Compensation table
captioned "Summary Compensation Table" below, and (iv) all directors and
executive officers as a group. Beneficial ownership of a security is determined
pursuant to Section 13d-3 of the Securities Exchange Act of 1934, as amended. A
person is deemed to be the beneficial owner of a security, subject to Section
13d-3(b) if, among other things, that person has the right to acquire such
security within 60 days.
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>
Harbour Holdings Limited Partnership 1,913,265 9.63%
57 Commerce Drive
Brookfield, CT 06804
Harbour Investment Corporation 1,913,265 (2) 9.63%
57 Commerce Drive
Brookfield, CT 06804
Raychem Corporation 1,662,928 8.36%
300 Constitution Drive
Menlo Park, CA 94025
Connecticut Innovations, 2,791,963 (3) 13.25%
Incorporated ("CII")
40 Cold Spring Road
Rocky Hill, CT 06067
James G. Binch 2,217,517 (4)(5) 11.00%
362 Canoe Hill Road
New Canaan, CT 06840
Nicholas J. Grant 50,441 *
Materials Sciences and
Engineering Department
Massachusetts Institute of Technology
Cambridge, Massachusetts 02139
Jack H. Halperin, Esq. 31,257 *
361 Silver Court
Woodmere, New York 11598
W. Andrew Krusen, Jr. 326,085 (6) 1.64%
2907 Bay-to-Bay Blvd., Suite 200
Tampa, Florida 33629
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Name and Address Amount and Nature of Common Stock
of Beneficial Owner Beneficial Ownership Outstanding (1)
- ------------------- -------------------- ----------------
<S> <C> <C>
John A. Morgan 70,821 (7) *
121 Elderwood Avenue
Pelham, New York 10803
William H. Morton, Jr. 191,333 (8) *
6 Hunting Ridge Lane
Wilton, CT 06987
James L. Proft 81,667 (9) *
2 Williams Lane
Foster City, California 94404
Thomas D. Carey 35,000 (10) *
19 Heartstone Lane
Wilton, Connecticut 06987
Ming H. Wu 25,333 (11) *
12 Briar Cliff Manor
Bethel, Connecticut 06801
All directors and 2,814,456 (12) 14.59%
executive officers as
a group (8 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 1,913,265 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) Includes (i) 482,450 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, and (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. The
expiration dates of these warrants are subject to extension under certain
circumstances.
(4) Includes currently exercisable options to purchase 200,000 shares of the
Common Stock at $1.50 per share and options to purchase 13,333 shares of
Common Stock at $1.78 per share. Additional Options granted to Mr. Binch
to purchase 6,667 and 280,000 shares of Common Stock at $1.78 and $4.00 per
share, respectively, are not yet exercisable. Also includes 232 shares of
Common Stock owned by Mr. Binch's daughter. Mr. Binch disclaims beneficial
ownership of such shares owned by his daughter.
4
<PAGE>
(5) Includes 1,913,265 shares of Common Stock owned by Harbour Holdings Limited
Partnership. Mr. Binch is the President, Chief Executive Officer and sole
shareholder of Harbour Investment Corporation, the sole general partner of
Harbour Holdings Limited Partnership. He is also individually a limited
partner of Harbour Holdings Limited Partnership, with a limited partnership
interest of less than one percent.
(6) Includes 71,328 shares of Common Stock owned by WIT Ventures, LTD. ("WIT"),
10,000 shares of Common Stock owned by 169855 Canada Inc., 8,000 shares of
Common Stock owned by Krusen-Vogt & Co, and 200,000 shares of Common Stock
owned by Dominion Financial Group International LDC ("DFGI"). Also
includes 18,000 shares of Common Stock for which warrants issued by the
Company to DFGI 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 JAWIT Corporation which is the managing General Partner of WIT,
President of 169855 Canada Inc., a General Partner of Krusen-Vogt & Co. and
a limited partner of WIT. In addition, Mr. Krusen is the chairman of the
Executive Committee of DFGI, and also indirectly beneficially owns certain
outstanding securities of DFGI through WIT.
(7) 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.
(8) Includes 20,000 shares of Common Stock owned by Mr. Morton's children. Mr.
Morton disclaims beneficial ownership of such shares. Also includes
options to purchase 100,000 shares of the Company's Common Stock at $0.90
per share, 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, and options to purchase 3,333 shares of
the Company's Common Stock at $1.78 per share, 1,667 of which become
exercisable on December 5, 1998. Additional options granted to Mr. Morton
to purchase 25,000, 1,667 and 90,000 shares of Common Stock at $0.90 per
share, $1.78 and $4.00, respectively, are not yet exercisable.
(9) Includes 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.
Also includes 16,667 options to purchase common stock at $1.78 per share
and 25,000 option to purchase common stock at $1.59 per share. Options
granted to Mr. Proft to purchase 28,000 and 8,333 shares of Common Stock at
$4.00 per share and $1.78 per share, respectively, are not yet exercisable.
(10) Consists of options to purchase 35,000 shares of the Company's Common Stock
at $3.75 per share. Additional options granted to Mr. Carey to purchase
25,000 shares of Common Stock at $4.25 per share, 40,000 shares of Common
Stock at $3.75 per share and 15,000 shares of Common Stock at $4.00 per
share are not yet exercisable.
(11) Includes currently exercisable options to purchase 14,500 shares of Common
Stock at $1.50 per share and 7,333 shares of Common Stock at $1.78 per
share. Options granted to Dr. Wu to purchase 10,000 shares at an exercise
price of $4.00 per share and 14,667 shares at an exercise price of $1.78
per share are not yet exercisable.
(12) See prior footnotes.
___________________
5
<PAGE>
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of five members.
However, effective upon the convening of the Annual Meeting of Stockholders, the
size of the Board of Directors is being decreased from five members to four
members. All of the directors are elected annually and hold office until the
next succeeding Annual Meeting of Stockholders or until their respective
successors are duly elected and qualified. The Board of Directors recommends
the election of all the following four nominees for director. It is intended
that the persons named as proxies will vote FOR the election of the following
nominees as directors, all of whom currently are directors of the Company.
<TABLE>
<CAPTION>
Positions with Director
Name Age the Company Since
---- --- ----------- -----
<S> <C> <C> <C>
James G. Binch 51 President, CEO, Treasurer and 1989
Chairman of the Board
John A. Morgan/1/ 52 Director 1989
W. Andrew Krusen, Jr./1, 2/ 50 Director 1994
Jack H. Halperin/1, 2/ 52 Director 1994
</TABLE>
- ---------
/1/ Member of Compensation Committee.
/2/ Member of Audit Committee.
-----------------------------
The Company is searching for a director to replace Nicholas J. Grant, who
has not been renominated. It is anticipated that, if and when a suitable
individual is found, the Board of Directors will increase the size of the Board
back to five members and elect such individual to fill the vacancy.
Nominees For Director
- ---------------------
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.
JACK H. HALPERIN, ESQ., has practiced corporate and securities law in New
York for more than 20 years. Since 1987 he has been in private practice,
concentrating on international financing transactions. Mr. Halperin holds a
B.A. degree
6
<PAGE>
(summa cum laude) from Columbia College and a J.D. from New York University
School of Law, where he was Note-and-Comment Editor of the Law Review. Mr.
Halperin is a director of AccuMed International, Inc., I-Flow Corporation,
Pacific Pharmaceuticals, Inc. and Nocopi Technologies, 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,
as well as Chairman 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, President and principal shareholder of
169855 Canada Inc., and a General Partner of Krusen-Vogt & Co. He is a director
of Raymond James Trust Company, Northstar Energy Corporation, S&P Cellular
Holding, Inc., and Florida Banks, Inc.
JOHN A. MORGAN has been a Vice President of Salomon Smith Barney, an
investment banking firm, since 1992. Prior to that, Mr. Morgan was a Vice
President of Kidder Peabody & Co. since 1982.
Retiring Director
- -----------------
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.
The Board of Directors established an Audit Committee on May 28, 1998. The
Audit Committee consists of Messrs. Halperin and Krusen. The Audit Committee is
authorized (i) to select the Company's independent auditors, (ii) to review all
recommendations made by such independent auditors with respect to the Company's
accounting methods or internal controls, and (iii) to review the scope of the
audit conducted by such independent auditors. The Audit Committee did not meet
in fiscal 1998.
The Compensation Committee, the members of which are Messrs. Morgan,
Halperin and Krusen, is authorized, subject to review by the entire Board (i) to
determine the compensation of officers and directors of the Company and its
subsidiaries, (ii) to make awards under and oversee the administration of the
Company's stock option plans, and (iii) to review the adequacy of all employee
benefit plans and revise existing plans or develop new plans when appropriate.
The Compensation Committee met 9 times during the fiscal year ended June 30,
1998.
The full Board of Directors acts as its own Nominating Committee. In its
role as the Nominating Committee, the Board of Directors is authorized (i) to
establish criteria and procedures for the election of directors, (ii) to review
the qualifications of candidates proposed for nomination to the Board, (iii) to
recommend, prior to each annual meeting of stockholders, a slate of directors to
be elected at such meeting, and (iv) to recommend, when appropriate, changes in
the structure, size or function of the Board. The Board will consider nominees
recommended by security holders. Security holders wishing to recommend nominees
for election as directors at an annual meeting should submit such
recommendation, together with any relevant information that they wish the Board
to consider, to the Company no later than 120 days prior to such annual meeting
of stockholders.
The Board of Directors held 6 meetings during the fiscal year ended June
30, 1998. Each incumbent director except for Dr. Grant attended 75% or more of
the aggregate of the total number of meetings of the Board of Directors and the
total number of meetings held by all committees of the Board on which he served.
7
<PAGE>
COMPENSATION OF DIRECTORS
All non-employee directors who remain as such as of the last day of any
given fiscal quarter shall be issued quarterly, in arrears, within sixty days of
the last day of each fiscal quarter, such number of shares of Common Stock as
shall have a fair market value equal to $2,500. If the Amendment is approved,
the value of the shares of the Company's Common Stock to be granted to non-
employee directors will increase from $2,500 to $7,500 per quarter, retroactive
to April 1, 1998, and such stock grants will be "restricted" such that the
shares of Common Stock granted to each non-employee director will vest in equal
thirds over a period of three years and such grants will become subject to
forfeiture. See "PROPOSAL NO. 2 -AMENDMENT TO MEMRY CORPORATION'S 1997 LONG-
TERM INCENTIVE PLAN." In addition, effective April 1, 1998, all non-employee
directors became entitled to receive $1,000 for each meeting of the entire
board, and $600 for each committee meeting, attended by them. In addition,
Directors are reimbursed for expenses reasonably incurred in connection with the
performance of their duties.
EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
Name Position Age
---- -------- ---
<S> <C> <C>
James G. Binch President, Chief Executive Officer, Treasurer & 51
Chairman
William H. Morton, Jr. Senior Vice President and Chief Operating 53
Officer
James L. Proft Vice President and General Manager - Western 40
Operations
Thomas D. Carey Vice President, Corporate Development and 37
Chief Financial Officer
</TABLE>
Executive officers are elected until the next annual meeting of the Board
of Directors and until their respective successors are elected and qualified.
Information with respect to Mr. Binch is set forth above.
WILLIAM H. MORTON, JR. was employed by the Company on November 7, 1995 as
Senior Vice President and Chief Operating Officer. In addition, Mr. Morton has
served as a director of Deck House, Inc. in Acton, Massachusetts since 1976.
Since 1985 Mr. Morton has been Vice President of Coastal Aviation, Inc. in
Stamford, Connecticut, a general aviation marketing firm, and since 1986 he has
been the sole stockholder and President of The Risor Corporation, a merchant
banking firm. Previously, Mr. Morton was a registered representative with
Lazard Freres & Co. and First Hanover Securities, investment banking firms in
New York, New York. During fiscal year 1995, Mr. Morton also acted as a
consultant to the Company. Mr. Morton holds a B.A. degree from Middlebury
College.
JAMES L. PROFT was employed by the Company on July 23, 1996 as Vice
President and General Manager - Western Operations. From July 1984 through
March 1989, Mr. Proft served as Research Metallurgist with Raychem Corporation's
Metals Division. From April 1989 through July 1992, Mr. Proft served as Area
Sales Manager for Raychem Corporation's Electronics Group. From August 1992
through January of 1993, Mr. Proft was the Vice President of Sales and Marketing
of Shape Memory Applications, Inc., followed by a return to Raychem Corporation
as Marketing Manager for its Medical Division. Prior to joining the Company,
from January 1996 to July 1996, Mr. Proft was Regional Sales Manager of Planar
America, an electroluminescent flat panel display company located in Beaverton,
Oregon. Mr. Proft holds a B.S. degree in materials engineering from the
University of Wisconsin-Milwaukee and a Masters degree in material science and
engineering from Stanford University.
THOMAS D. CAREY was employed by the Company on October 27, 1997, as its
Vice President, Corporate Development and Chief Financial Officer. From 1996 to
October of 1997, Mr. Carey served as Vice President, Corporate Development and
Chief Financial Officer of A.M. Pappas & Associates, LLC, an international
venture development company
8
<PAGE>
located in Research Triangle Park, North Carolina. From 1993 to 1996, Mr. Carey
served as Vice President, Finance & Administration and Chief Financial Officer
of Apex Bioscience, Inc., a biotherapeutics company in Research Triangle Park,
North Carolina. From 1991 to 1993, Mr. Carey served as Vice President, Finance
and Administration and Chief Financial Officer of Energy Biosystems Corporation,
a publicly traded industrial biotechnology company located in The Woodlands,
Texas. Prior to such time, Mr. Carey served as a financial analyst and an
investment banking associate at Kidder, Peabody & Co., Incorporated. Mr. Carey
holds a B.S. degree in physics from the College of the Holy Cross and an M.B.A.
degree from the Kellogg Graduate School of Management at Northwestern
University.
EXECUTIVE COMPENSATION
The following table sets forth for the fiscal years ended June 30, 1998, 1997
and 1996, certain information regarding the total remuneration paid to the
Company's chief executive officer, its three other executive officers and
Dr. Ming H. Wu.
Summary Compensation Table
--------------------------
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION AWARDS
-------------------------------------------------- ------------------------------
(a) (b) (c) (g) (i)
SHARES OF
COMMON STOCK ALL OTHER
UNDERLYING COMPENSATION
NAME & PRINCIPAL POSITION FISCAL YEAR SALARY $ BONUS ($) OPTIONS SARS(#) ($)
- ----------------------------- ------------ ------------------ ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
James G. Binch, President, 1998 $ 208,750 /(1)/ $ 115,000 280,000/0 /(2)/ $ 3,600 /(18)/
Chief Executive Officer, 1997 $ 167,500 /(1)/ $ -0- 20,000/0 /(5)/ $ -0-
Treasurer & Chairman 1996 $ 150,000 /(1)/ $ -0- 200,000/0 /(5)/ $ -0-
William H. Morton, Jr., 1998 $ 185,000 $ 67,500 90,000/0 /(3)/ $ 3,600 /(18)/
Senior Vice President and 1997 $ 161,666 $ -0- 5,000/0 /(4)/ $ -0-
Chief Operating Officer 1996 $ 150,000 $ 95,000/(6)/ 125,000/0 /(7)/ $ -0-
James L. Proft, Vice President 1998 $ 151,667 $ 42,000 28,000/0 /(8)/ $ 59,499 /(9)/
and General Manager 1997 $ 135,404 $ 10,000 45,000/0 /(10)/ $ 92,548 /(11)/
Western Operations 1996 $ -0- $ -0- -0- $ -0-
Thomas D. Carey 1998 $ 96,635 /(12)/ $ 80,000 /(12)/ 115,000/0 /(13)/ $ 50,272/(14)/
Vice President, 1997 $ -0- $ -0- -0- $ -0-
Corporate Development and 1996 $ -0- $ -0- -0- $ -0-
Chief Financial Officer
Ming H. Wu, Vice President, 1998 $ 119,000 /(15)/ $ 25,000 10,000/0 /(16)/ $ -0-
and General Manager 1997 $ 95,000 $ -0- 22,000/0 /(17)/ $ -0-
Eastern Operations 1996 $ 82,000 $ -0- -0- $ -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.
9
<PAGE>
(2) 180,000 of the aggregate 280,000 options granted to Mr. Binch in Fiscal
year 1998 become exercisable in fourths on February 2 of each of 1999,
2000, 2001 and 2002. The remaining 100,000 options also become exercisable
in fourths on June 1 of each 1999, 2000, 2001 and 2002. The exercise price
for all 280,000 options is $4.00 per share.
(3) 40,000 of the options granted to Mr. Morton in fiscal year 1998 become
exercisable in fourths on February 2 of each of 1999, 2000, 2001 and 2002.
The remaining 50,000 options also become exercisable in fourths on June 1
of each 1999, 2000, 2001 and 2002. The exercise price for all 90,000
options is $4.00 per share.
(4) These options are exercisable in three equal annual installments,
commencing December 5, 1997.
(5) 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 became exercisable in three equal annual
installments, with the last installment vesting on September 24, 1998.
(6) Includes payment of $50,000 to The Risor Corporation, of which Mr. Morton
is President and the sole stockholder, for consulting services.
(7) These options are exercisable in five equal annual installments, commencing
November 7, 1996.
(8) These 28,000 options become exercisable in fourths on June 1 of each 1999,
2000, 2001 and 2002. The exercise price for these options is $4.00 per
share.
(9) The Company paid Mr. Proft $55,899 to cover the tax liability to Mr. Proft
arising as the result of the vesting of certain common stock purchase
warrants owned by him. In addition, Mr. Proft received a car allowance in
fiscal year 1998 in the amount of $3,600.
(10) 20,000 of such options are exercisable at a price of $1.59 per share in
three equal annual installments, commencing July 1, 1997 and 25,000 of such
options are exercisable at a price of $1.78 per share in three equal annual
installments, commencing December 5, 1997.
(11) 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, of which warrants to purchase 20,000 shares of
Common Stock were immediately exercisable. As of September 19, 1996, such
20,000 immediately exercisable warrants were valued at $1.59 per warrant or
$31,800 aggregate value. 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.
(12) The amounts entered in the Summary Compensation Table for Mr. Carey reflect
his compensation for the period from October 27, 1997 (the date of the
commencement of Mr. Carey's employment with the Company) through June 30,
1998. Of the $80,000 of bonuses paid to Mr. Carey, $50,000 was a
contractual signing bonus and the remaining $30,000 was a year-end bonus.
(13) With respect to 75,000 of the 115,000 options granted to Mr. Carey in
fiscal year 1998, 15,000 have already vested, and 20,000 will vest on each
of October 29, 1998, 1999 and 2000. The exercise price for such 75,000
options is $3.75 per share. Another 25,000 of such 115,000 options will
vest in three annual installments commencing as of July 23, 1999. The
exercise price for such 25,000 options is $4.25 per share. With respect to
the remaining 15,000
10
<PAGE>
of the options granted to Mr. Carey during fiscal year 1998, one-fourth
will become exercisable on each of June 1, 1999, 2000, 2001 and 2002. The
exercise price for such 15,000 options is $4.00 per share.
(14) Pursuant to Mr. Carey's employment agreement, the Company paid him $47,572
for expenses related to the relocation of Mr. Carey and his family from the
Raleigh, North Carolina area to the Brookfield, Connecticut area, including
the moving of household effects, brokerage fees and closing costs. During
the period from October 27, 1998 (the date Mr. Carey commenced employment
with the Company) through the Company's fiscal year end, Mr. Carey received
$2,700 as a car allowance pursuant to his employment agreement.
(15) In addition to his base salary and bonus, on February 6, 1998, Dr. Wu was
granted 500 shares of the Company's Common Stock. The market price per
share of the Company's Common Stock on February 6, 1998 was $4.19.
(16) These 10,000 options become exercisable in fourths on June 1 of each of
1999, 2000, 2001 and 2002. The exercise price per share for such options
is $4.00.
(17) 7,333 of such 22,000 options are exercisable. The remaining 14,667 of such
options become exercisable in equal installments on December 5, 1998 and
1999. The exercise price per share for such options is $1.78.
(18) Messrs. Binch & Morton each received a car allowance in fiscal 1998 in the
amount of $3,600.
____________________
11
<PAGE>
Option/SAR Grants in Last Fiscal Year
Individual Grants
-----------------
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Shares % of Total
of Common Stock Options/SARs
Underlying Granted to
Options/SARs Employees in Exercise or Base Expiration
Name Granted (#) Fiscal Year(1) Price($/Share) Date
- ---- ----------------- --------------- ----------------- -----------------
<S> <C> <C> <C> <C>
James G. Binch 180,000/0 (2) 23.5% $4.00 February 2, 2008
100,000/0 (3) 13.1% $4.00 June 1, 2008
William H. Morton, Jr. 40,000/0 (2) 5.2% $4.00 February 2, 2008
50,000/0 (3) 6.5% $4.00 June 1, 2008
James L. Proft 28,000/0 (3) 3.7% $4.00 July 1, 2008
Thomas D. Carey 75,000/0 (4) 9.8% $3.75 October 29, 2007
25,000/0 (5) 3.3% $4.25 October 29, 2007
15,000/0 (3) 2.0% $4.00 June 1, 2008
Ming H. Wu 10,000/0 (3) 1.3% $4.00 June 1, 2008
</TABLE>
- ---------------------------
(1) Assumes full vesting of options.
(2) These options are exercisable in fourths on February 2 of each of 1999,
2000, 2001 and 2002.
(3) These options are exercisable in fourths on June 1 of each of 1999, 2000,
2001 and 2002.
(4) 15,000 of these options have already vested. 20,000 of these options will
vest on each of October 29, 1998, 1999 and 2000.
(5) These options vest in equal annual installments on July 23, 1999, 2000 and
2001.
----------------------
12
<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 206,667 Options Exercisable/ $630,534/$193,866
293,333 Options Unexercisable
William H. Morton, Jr. 101,667 Options Exercisable/ $370,634/$151,166
118,333 Options Unexercisable
James L. Proft 21,666 Options Exercisable/ $ 62,765/$81,815
51,334 Options Unexercisable
Thomas D. Carey 35,000 Options Exercisable/ $ 28,350/$48,500
80,000 Options Unexercisable
Ming H. Wu 21,833 Options Exercisable/ $ 64,756/$46,374
24,667 Options Unexercisable
1,000 SARs $ 3,060
</TABLE>
- ----------
(1) Based on average of bid and asked prices per share of the
Company's Common Stock on June 30, 1998, being $4.56.
----------------------
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, 1998. The
agreement entitled Mr. Binch to an annual salary of $150,000 from and after
January 1, 1993, which salary was increased effective January 1, 1998 to
$237,500. 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
13
<PAGE>
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
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. Pursuant to
said renewal provisions, such agreement automatically renewed for a one-year
period effective November 7, 1997. This agreement entitles Mr. Morton to an
annual salary of $150,000, which salary was increased effective January 1, 1998
to $200,000. In addition, as consideration for past services rendered by either
Mr. Morton individually or through The Risor Corporation, this agreement
entitled 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 granted 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, such 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, and one-half of the remaining 20,000 warrants
became 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
14
<PAGE>
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. Pursuant to such agreement, Mr. Proft and the Company have agreed to
defer the payment of such amount with respect to the grant of 20,000 options,
being 35% of the difference between (i) the actual closing price per share of
the Common Stock on the date of exercise of all or a portion of the 20,000
options, and (ii) $1.59, times the number of options exercised, until 30 days
after the date on which Mr. Proft actually incurs taxable income with respect to
such options. With respect to the payment to be made to Mr. Proft by the
Company with respect to the remaining 10,000 warrants, the parties have agreed
that the Company will pay to Mr. Proft 33% of the difference between (i) the
actual closing price per share of the Common Stock on September 19, 1998, and
(ii) $0.01, times 10,000, within 30 days after the end of calendar year 1998.
As of October 1, 1998, Mr. Proft had exercised 30,000 of his warrants, in the
aggregate, and none of his options.
On October 27, 1997, Thomas D. Carey joined the Company as Vice President
of Corporate Development and Chief Financial Officer. Mr. Carey's employment
agreement provides for a one-year term of employment, which term automatically
renews for successive one-year periods unless either Mr. Carey or the Company
gives the other notice of his or its intention not to renew such contract.
Pursuant to the Agreement, Mr. Carey received a signing bonus of $75,000, of
which (i) two-thirds ($50,000) was paid to Mr. Carey upon executing the
agreement and (ii) the remaining one-third ($25,000) is to be paid to Mr. Carey
on October 29, 1998, provided, that Mr. Carey is still in the employ of the
Company at such time, or terminated without cause prior to such time. The
agreement entitles Mr. Carey to an annual base salary of $150,000 plus such
annual bonuses as may be determined by the Compensation Committee. Mr. Carey is
entitled to fringe benefits comparable to the benefits afforded to other
executive employees of the Company and he also receives a car allowance of
$300.00 per month, twenty working days of vacation per calendar year and eight
paid sick days. The agreement also granted to Mr. Carey options under and
pursuant to the Memry Corporation Long Term Incentive Plan exercisable to
purchase 75,000 shares of Common Stock for an exercise price of $3.75, 15,000 of
which became exercisable on the date of grant and an additional 20,000 become
exercisable on each of the first, second and third anniversaries of the date of
grant. The agreement also entitled Mr. Carey to an additional 25,000 options,
which are exercisable at $4.25 per share. Such 25,000 options vest in three
equal annual installments commencing on July 23, 1999. Finally, Mr. Carey is
entitled to receive severance payments equal to his regular salary payments for
a period of six months after a termination by the Company without cause.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
On July 15 and 16, 1996, as part of bridge financing for working capital
purposes until financing could be obtained from Affiliated Business Credit
Corporation, the Company borrowed $100,000 from each of Dawn Morton and Dominion
Capital Partners (for an aggregate of $200,000), at an annual interest rate of
10%, such notes to be due on the earlier of August 15, 1996 and the date of
consummation of financing in the amount of at least $1,500,000 from Affiliated
Business Credit Corporation to the Company. As additional consideration for
such loans, the Company issued to each of Ms. Morton and Dominion Capital
Partners warrants exercisable to purchase 18,000 shares of Common Stock at an
exercise price of $1.50 per share. Each of Ms. Morton and DFG Management, Inc.
was also paid a facility fee of $5,000 in connection with such bridge financing.
These notes were paid in full by the Company on August 9, 1996. Ms. Morton is
the wife of William H. Morton, Jr., the Company's Senior Vice President and
Chief Operating Officer. The managing general partner of Dominion Partners is
Dominion Financial Group, Inc., of which W. Andrew Krusen, Jr. is a principal
shareholder and the President. In addition, Mr. Krusen is the sole stockholder
of DFG Management, Inc.
On July 23, 1996, James Proft joined the Company as Vice President and
General Manager - Western Operations. For the terms of Mr. Proft's employment
agreement, see "Proposal No. 1 - Executive Compensation." In addition, on
September 20, 1996, the Company loaned to Mr. Proft $45,000 at an annual
interest rate of 6-3/4%, in connection with certain relocation expenses of Mr.
Proft. This loan was repaid in full on October 16, 1996. In addition, as of
December 5, 1996, the Company issued to Mr. Proft 20,000 shares of Common Stock,
which represented the exercise by Mr. Proft of warrants to purchase Common Stock
at $0.01 per share.
15
<PAGE>
On June 26, 1997, the Company sold 200,000 shares of its Common Stock, to
Dominion Financial Group International LDC, a Cayman Islands corporation
("LDC"), for total consideration of $300,000. Such sale was part of an offering
of 380,000 shares of Common Stock at $1.50 per share from April 1997 through
July 1997. The sale to LDC was exempt from registration pursuant to the terms
of Regulation S promulgated under the Securities Act of 1933, as amended. W.
Andrew Krusen, Jr., a director of the Company, is the chairman of the executive
committee of LDC and also indirectly beneficially owns certain outstanding
securities of LDC through Dominion Partners, of which Dominion Financial Group,
Inc. (as to which Mr. Krusen is President and a principal shareholder) ("DFGI")
is the managing general partner and immediate family members of Mr. Krusen are
the remaining partners, and through DFGI itself.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors, executive officers and 10% beneficial owners of the Company's Common
Stock to file certain reports concerning their ownership of the Company's equity
securities. Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recently completed fiscal year, and
Forms 5 and amendments thereto furnished to the Company with respect to its most
recently completed fiscal year, the directors, officers and beneficial owners of
10% or more of the Registrant's Common Stock which failed to make the requisite
filings on a timely basis are set forth below.
James G. Binch failed to timely file a Form 4 to report (i) the receipt by
Mr. Binch on December 23, 1997 of 19,687 shares of common stock from the Company
in exchange for the forgiveness by Mr. Binch of a $60,000 promissory note, and
(ii) the sale by Harbour Holdings Limited Partnership, an affiliate of
Mr. Binch, of an aggregate 11,500 shares of the Company's Common Stock on
January 5, 1998. Mr. Binch subsequently reported these transactions on a Form 4
that was filed on March 10, 1998.
John Morgan failed to file a Form 4 to report the sale by his wife of 120
shares of the Company's Common Stock on May 6, 1998. The transaction was
subsequently reported on a Form 5.
Raychem Corporation failed to file Forms 4 with respect to (i) the "net
exercise" of warrants to purchase 1,300,000 shares of the Company's Common Stock
for $0.01 per share on November 25, 1997, whereby Raychem Corporation received
1,127,214 shares of the Company's Common Stock in exchange for all such
warrants, and (ii) the "net exercise" of warrants to purchse 1,250,000 shares of
the Company's Common Stock for $2.00 per share on March 6, 1998, whereby Raychem
Corporation received 535,714 shares of the Company's Common Stock in exchange
for all such warrants.
FirstInvest Holding Ltd Inc. failed to file a Form 5 with respect to the
Company's 1998 fiscal year.
PROPOSAL NO. 2 - AMENDMENT TO MEMRY CORPORATION'S 1997 LONG-TERM INCENTIVE PLAN
On June 1, 1998, the Company's Board of Directors adopted an amendment (the
"Amendment") to the Memry Corporation 1997 Long-Term Incentive Plan (the
"Plan"). Subject to stockholder approval, the Amendment will (a) increase from
$2,500 per quarter to $7,500 per quarter the value of shares of the Company's
Common Stock that will be granted to each outside director and (b) make such
grants "restricted" such that the stock granted to each such outside director
will vest in equal thirds on the first, second and third anniversaries of the
date of grant, subject to forfeiture prior to vesting if the outside director
voluntarily resigns (except for voluntary resignations following a "Change in
Control"). A copy of the Plan, as amended by the Amendment, is attached hereto
as Appendix A (the "Amended Plan"). The following summary description of the
Amended Plan is qualified in its entirety by reference to the Amended Plan.
REASONS FOR THE AMENDMENT
In September, 1998 the Company retained Aon Consulting, Inc. ("Aon") to
review the Company's compensation levels; as well as the compensation of the
Company's outside directors. The Company hired Aon because management felt that
it was important to provide sufficient compensation to its executive officers,
key employees and directors in order to motivate and retain such persons upon
whose success the Company's performance is dependant. At a meeting of the Board
of Directors of the Company held on March 25, 1998, representatives of Aon's
Compensation Consulting Group provided the Board with a written report on
competitive levels of annual compensation for outside directors of the Company
(the "Report") and led a discussion of the results of the Report. The Report
concluded, among other things, that the annualized total direct compensation
(including, fees paid to, and the value of stock and options granted to, outside
directors) for the outside directors of the Company was 44% below the average of
peer group companies. In addition, based upon the regression methodology used by
Aon, which takes into account the revenue differences among the Company's peer
group and produces an "expected value" of total direct compensation that is then
applied to various revenue projections of the Company in order to obtain a range
of Company "expected values", Aon found that compensation of the Company's
outside directors was below the minimum expected value direct compensation
levels. The Board felt that it was important, based upon the conclusions
contained in the Report, to increase the compensation paid to outside directors
by effecting the Amendment and by providing the payment to the Company's outside
directors of board fees of $1,000 for each meeting of the entire Board and $600
for each committee meeting.
16
<PAGE>
PURPOSE OF PLAN
The purposes of the Plan are to advance the long-term interests of the
Company by motivating key employees with the opportunity to obtain an equity
interest in the Company, and to attract and retain key employees upon whose
performance the success of the Company largely depends. Under the terms of the
Plan, the Committee (as defined below) may grant stock options, stock
appreciation rights, limited stock appreciation rights, restricted stock awards
and/or performance shares to key employees of the Company, and shall grant
shares of Common Stock to non-employee directors as set forth in the Plan.
The Plan became effective on December 10, 1997 and will remain in effect so
long as shares of Common Stock available for grants or awards thereunder. The
Amendment, if approved by the Company's stockholders will be retroactively
effective to the fiscal quarter commencing April 1, 1998.
NUMBER OF SHARES
The Plan provides that 2,000,000 shares of Common Stock will be available in
the aggregate for the grant of stock options, stock appreciation rights, limited
stock appreciation rights, restricted stock awards, grants to non-employee
directors and/or performance shares from time to time. The market value of such
2,000,000 shares of Common Stock, based upon the closing trade price per share
on October 9, 1998, being $2.812, is $5,624,000. No more than 300,000 shares of
Common Stock subject to the Plan may be awarded in any year to any participant
in the Plan.
These numbers are subject to adjustment to reflect certain distributions of
shares of stock and certain stock changes such as stock dividends, stock splits
and share exchanges. Shares of Common Stock available for issuance under the
Plan may be authorized but unissued treasury shares. Shares of Common Stock
covered by lapsed, cancelled, surrendered or terminated options or other awards
will be available again for grant under the Plan.
As of September 29, 1998, 1,386,588 shares of Common Stock remain available
for issuance under the Plan.
ADMINISTRATION; ELIGIBILITY
The Plan is administered by a committee (the "Committee") composed of not
less than two directors, each of whom shall be a "Non-Employee Director"
described in Rule 16b-3 promulgated under the Securities Exchange Act of 1934,
as amended, and shall come within the parameters of Treasury Regulation Section
1.162.27(e)(3)(i) (such individuals, "Non-Employee Directors"). Members of the
Committee will be appointed by and will serve at the pleasure of the Board of
Directors. The present members of the Committee are Messrs. Halperin, Krusen
and Morgan. Except with respect to Non-Employee Directors, the selection of the
participants in the Plan and the extent of the participation of each will be
determined by the Committee. Such participants will be employees of the Company
and its subsidiaries whose performance, as determined by the Committee, can have
an effect on the growth, profitability and success of the Company. As of today,
the Company has approximately 95 employees, as well as four Non-Employee
Directors, who will be eligible to participate in the Plan. (Upon the Annual
Meeting of Stockholders, the Company will have three Non-Employee Directors.)
STOCK OPTIONS
The Committee may grant a participant the option to purchase shares of Common
Stock of the Company through incentive stock options qualified under Section 422
of the Internal Revenue Code of 1986, as amended (the "Code") or options not
qualified under Section 422 of the Code ("non-qualified stock options") or a
combination of both. Incentive stock options must be granted at not less than
100% of the fair market value of the underlying Common Stock on the date the
option is granted, and at not less than 110% of such fair market value if
granted to an employee who, at the time of grant, owns stock having more than
10% of the total combined voting power of all classes of stock of the Company (a
"Ten Percent Stockholder"). However, in the Committee's sole discretion, non-
qualified stock options may be granted at less than fair market value. Upon
exercise, the option price is to be paid in full in cash, in shares of Common
Stock, in such other consideration as the Committee may deem appropriate, or
through an arrangement with a broker. Options will be exercisable in whole or
in such installments and at such times as may be determined by the Committee,
provided that no stock option
17
<PAGE>
may be exercisable more than ten years after the date of its grant, and with
respect to an incentive stock option granted to a Ten Percent Stockholder, no
such incentive stock option may be exercisable more than five years after the
date of its grant.
STOCK APPRECIATION RIGHTS
The Committee may grant key employees the right to receive a payment equal to
the appreciation in market value of a stated number of shares of Common Stock
from the date of the agreement granting the stock appreciation right (the "base
price") to its date of exercise. These stock appreciation rights may or may not
be granted in tandem with stock options.
Stock appreciation rights granted in tandem with stock options will be
exercisable only to the extent the related stock option is exercisable and upon
exercise of such a tandem stock appreciation right, the related stock option
shall be canceled to the extent of the number of stock appreciation rights
exercised. The base price for a tandem stock appreciation right that is not a
limited stock appreciation right as described in the following paragraph will be
determined by the Committee, but it must not be less than the exercise price of
the related stock option.
Free-standing stock appreciation rights will be exercisable at the time or
times determined by the Committee. The base price for a free-standing stock
appreciation right will be determined by the Committee, but it must not be less
than the fair market value of the Common Stock on the date of the grant of the
stock appreciation right.
LIMITED STOCK APPRECIATION RIGHTS
The Committee may grant key employees the right to receive a payment in cash
equal to the appreciation over the base price by the greater of either the
highest price of shares of Common Stock paid in connection with a change in
control or the highest average closing bid and ask price of the shares of Common
Stock during the 60 days prior to the change in control. These limited stock
appreciation rights may only be granted in tandem with a stock option or stock
appreciation right, but may be granted at the time such option or stock
appreciation right is granted or at any time thereafter. Limited stock
appreciation rights are exercisable in full for a period of seven months
following the date of a change in control.
If limited stock appreciation rights are exercised, the stock options and
stock appreciation rights to which they are attached can no longer be exercised.
If the stock options or stock appreciation rights are exercised or terminated,
the related unexercised limited stock appreciation rights are simultaneously
canceled.
RESTRICTED STOCK AWARDS
The Plan permits the Committee to award restricted stock to key employees of
the Company with such terms, conditions, restrictions or limitations as the
Committee deems appropriate (including, in the discretion of the Committee,
without payment of consideration by the participant). While the restrictions
are in effect, the Committee may permit a participant the right to vote shares
and the right to receive any dividends. Restricted stock awards may be
evidenced by stock certificates, book-entry registrations or in such other
manner as the Committee determines.
GRANTS TO NON-EMPLOYEE DIRECTORS
Subject to approval by the stockholders of the Amendment, the Plan provides
that all Non-Employee Directors who remain as such on the last day of any given
fiscal quarter will be issued quarterly, in arrears, such number of shares of
Common Stock as have a fair market value equal to $7,500, with such fee being
pro-rated for any director who serves less than such full fiscal quarter. The
Plan currently provides that all Non-Employee Directors who remain as such on
the last day of any given fiscal quarter will receive shares having a fair
market value equal to $2,500. If the Amendment is adopted, this increase will
be effective retroactively to the quarter that commenced April 1, 1998.
Any shares granted to Non-Employee Directors if the Amendment is adopted
would be "restricted" such that any such shares will vest in equal thirds on the
first, second and third anniversaries of the date of grant. In addition, until
shares granted to Non-Employee Directors vest in accordance with the immediately
preceding sentence, such shares are subject to
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<PAGE>
forfeiture upon the voluntary resignation of a director (but excluding voluntary
resignations occurring within one-year of a "Change of Control," as defined
below). No vesting or forfeiture provisions currently exist with respect to
grants to Non-Employee Directors. For purposes of the Plan, a "Change of
Control" is defined as (i) any merger or consolidation or other corporate
reorganization of the Company in which the Company is not the surviving entity;
or (ii) any sale of all or substantially all of the Company's assets, in either
a single transaction or a series of transactions; or (iii) a liquidation of all
or substantially all of the Company's assets; or (iv) if there is a change
within one twelve-month period of a majority of the directors constituting the
Company's Board of Directors at the beginning of such twelve-month period; or
(v) if a single person or entity, or a related group of persons or entities, at
any time beneficially owns 25% or more of the Company's outstanding voting
securities; unless, with respect to clause (iv), the change of directors is
approved by the Board of Directors as constituted prior to such change and no
event described in clause (v) has occurred. Each Non-Employee Director may, at
his option, make an election under Section 83(b) of the Internal Revenue Code of
1986, as amended with respect to such grants.
PERFORMANCE SHARES
The Plan permits the Committee to grant performance shares to employees,
which will entitle such employee to convert the performance shares into shares
of Common Stock, into cash or into a combination thereof, as determined by the
Committee, if pre-determined performance targets or goals are met. Performance
goals may include, but not be limited to, one or more of the following:
operating earnings, net earnings, return on equity, income, market share,
stockholder return, combined ratio, level of expenses or growth in revenue. The
Committee will determine the length of the performance period. Award payments
made in cash rather than by the issuance of shares will not result in additional
shares being available under the Plan.
EMPLOYMENT; TRANSFERABILITY
The Committee is authorized under the Plan to adopt policies regarding the
entitlement of participants who cease to be employed by the Company because of
death, disability, resignation, termination or retirement. These policies may
vary depending upon the specific circumstances and the individual involved.
The Committee in its sole discretion may permit the assignment or transfer of
the rights and interests of a participant under the Plan, and of any security
issued or granted under the Plan; provided, however, an award under the Plan may
not be assignable or transferrable unless the exercise thereof is eligible for
registration on a Registration Statement on Form S-8. A Registration StaTement
on Form S8 is currently effective with respect to the Plan.
AMENDMENTS
The Committee may amend, alter or discontinue the Plan at any time but may
not, without stockholder approval, make any amendment, alteration or
discontinuation that would impair the rights of a participant under an award
previously granted. In addition, the Committee may not, without stockholder
approval, adopt any amendment which would (a) increase the number of shares of
Common Stock which may be issued under the Plan (except in the event of certain
extraordinary occurrences, as described in the Plan), (b) change the employees
or class of employees eligible to participate in the Plan, or (c) change the
terms of grants to Non-Employee Directors provided for in the Plan.
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NEW PLAN BENEFITS
MEMRY CORPORATION'S 1997 LONG-TERM INCENTIVE PLAN
<TABLE>
<CAPTION>
Name and Position Dollar Value Number of Shares
- ----------------- ------------ ----------------
<S> <C> <C>
James G. Binch, (1) (1)
Chairman, President, Treasurer
and CEO
William H. Morton, Jr., (1) (1)
Senior Vice President and
Chief Operating Officer
James L. Proft, (1) (1)
Vice President and
General Manager -
Western Operations
Thomas V. Carey (1) (1)
Vice President,
Corporate Development
and Chief Financial Officer
Ming H. Wu (1) (1)
Vice President and
General Manager -
Eastern Operations
Current executive officers (1) (1)
as a group
Current directors, who are not $120,000(2) (1)
executive officers, as a group
All current employees, including $120,000(2) (1)
officers who are not executive
officers, as a group
</TABLE>
- ----------
(1) Not yet determinable.
(2) Represents dollar value of annual amount to be awarded to Non-Employee
Directors. Assumes that such individuals (including, Dr. Grant, who is not
being renominated, or his replacement) remain Non-Employee Directors as of
June 30, 1999.
20
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FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the Federal income tax treatment of the
incentive stock options, non-qualified stock options, stock appreciation rights,
limited stock appreciation rights, restricted stock awards and performance
shares that may be granted under the Plan based upon the current provisions of
the Code and regulations promulgated thereunder.
Incentive Stock Options. Incentive stock options under the Plan are
intended to meet the requirements of Section 422 of the Code. Under this
section of the Code, the grant of an incentive stock option will not result in
the realization of income to the option holder, and the Company will likewise
not be entitled to a deduction. Furthermore, if an option holder acquires stock
upon the exercise of an incentive stock option, no income will result to the
option holder and the Company will be allowed no deduction as a result of such
exercise if the following conditions are met: (a) at all times during the
period beginning with the date of the grant of the option and ending on the date
three months before the date of such exercise, the option holder is an employee
of the Company or of a subsidiary; and (b) the option holder makes no
disposition of the stock within two years from the date the option is granted
nor within one year after the option is exercised. In the event of a sale of
such stock by the option holder after compliance with these conditions, any gain
realized over the price paid for the stock will ordinarily be treated as a
capital gain, and any loss will ordinarily be treated as a capital loss, in the
year of sale. Under recently enacted Federal tax law, the rate of tax
applicable to such capital gain or loss will depend on the date on which the
stock is acquired and the period during which it is held. The exercise of an
incentive stock option may result in alternative minimum tax liability to the
option holder.
If the option holder fails to comply with the employment or holding period
requirements discussed above, such person will be treated as having received
compensation taxable as ordinary income and/or having received a capital gain
(or loss) in accordance with the provisions of the Code. If the option holder
is treated as having received compensation because of this failure to comply
with either condition above, an equivalent deduction from income will be allowed
to the Company in the same year.
Non-Qualified Stock Options. The grant of a non-qualified stock option
will not result in the realization of income for Federal tax purposes for an
option holder, nor will the grant entitle the Company to a tax deduction. An
option holder who exercises a non-qualified stock option will generally realize
compensation taxable as ordinary income in an amount equal to the difference
between the option price and the fair market value of the shares on the date of
exercise, and the Company will be entitled to a deduction from income in the
same amount. The option holder's basis in such shares will be the fair market
value on the date exercised, and the capital gain or loss will be recognized in
the year of sale.
Stock Appreciation Rights. The grant of a stock appreciation right will
not result in tax consequences to the Company or to an award holder. A holder
who exercises a stock appreciation right will realize compensation taxable as
ordinary income in an amount equal to the cash or the fair market value of the
shares or other property received on the date of exercise, and the Company will
be entitled to a deduction in the same amount.
If an employee allows a stock appreciation right granted in tandem with an
option to expire, otherwise than as a result of exercising a related option, the
Internal Revenue Service may contend that the employee will have taxable income
in the year of expiration equal to the amount of cash or the fair market value
of stock or other property which he would have received if he had exercised his
stock appreciation right immediately before it expired. In addition, under
Treasury Regulations governing incentive stock options, a stock appreciation
right with respect to an incentive stock option must be granted at the same time
the incentive stock option is granted in order to ensure that the incentive
stock option remains qualified as such.
Limited Stock Appreciation Rights. The grant of a limited stock
appreciation right will not result in tax consequences to the Company or to a
participant. A participant who exercises a limited stock appreciation right
will realize compensation taxable as ordinary income in an amount equal to the
cash or the fair market value of the shares or other property received on the
date of exercise, and the Company will be entitled to a deduction in the same
amount. A participant who does not
21
<PAGE>
exercise at the time of a change in control and allows the limited stock
appreciation rights to lapse could be taxed as though exercise had occurred at
either of those two dates.
Restricted Stock Awards. Restricted stock awards granted under the Plan
will constitute taxable income to the recipient, and a deductible expense to the
Company, in the year in which the restrictions lapse unless the participant
elects to recognize income in the year the award is made. Unless such an
election is made, the amount of the taxable income and corresponding deduction
will be equal to the excess of the fair market value of the stock on the date
the restrictions lapse over the amount, if any, paid for such stock. The
Company is also allowed a compensation deduction for dividends paid to
participants (provided they have not elected to recognize income at the time of
the award) on restricted stock while the restrictions remain in force.
Performance Shares. Performance Shares awarded under the Plan will not
constitute a taxable event to the recipient until such time as the recipient
actually receives shares of Common Stock or cash or other property related to
such award. The amount of taxable income will be equal to the amount of cash
received or the fair market value of stock or other property received at such
time. The Company will be entitled to a compensation deduction in the same
year.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends approval of the Amendment. Proxies
solicited by the Board of Directors will be voted FOR the Amendment unless
stockholders specify otherwise.
INTEREST OF CERTAIN PERSONS
Each of the Non-Employee Directors of the Company has an interest in the
proposal to amend the Plan because all such Non-Employee Directors of the
Company would receive an increased number of shares of Common Stock under the
Plan,which additional shares have a value of $5,000 per quarter or $20,000 per
year.
INDEPENDENT AUDITORS
McGladrey & Pullen, LLP ("M&P") have audited the consolidated financial
statements of the Company for the fiscal years ended June 30, 1998 and June 30,
1997. The selection of M&P was made by the Board of Directors in its capacity
as Audit Committee at the time of each such selection, which reviewed the
professional competence of the firm and its audit scope. The Company's Audit
Committee has also elected M&P as independent auditors for the fiscal year
ending June 30, 1999. It is expected that a representative of M&P will be
present at the Annual Meeting to respond to appropriate questions of
stockholders and to make a statement if he so desires.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's 1999 Annual
Meeting of Stockholders, which the Company contemplates holding in December
1999, must be received at the Company's principal executive offices located at
57 Commerce Drive, Brookfield, Connecticut 06804 on or before June 29, 1999 for
consideration for inclusion in the Company's Proxy Statement and form of proxy
relating to that meeting.
22
<PAGE>
OTHER MATTERS
As of the date of this Proxy Statement, the Company's management does not
know of any business, other than that mentioned above, which will be presented
for consideration at the Annual Meeting. However, if any other matters should
properly come before the Annual Meeting, it is the intention of the persons
named in the accompanying form of proxy to vote the proxies in accordance with
their judgment on such matters.
EXHIBITS TO ANNUAL REPORT ON FORM 10-KSB
The Company is mailing herewith to each stockholder of record as of October
16, 1998 a copy of its Annual Report on Form 10-KSB for the fiscal year ended
June 30, 1998, including financial statements. The Company will provide, at a
charge of $0.10 per page to cover photocopying expenses, to each beneficial
holder of its Common Stock on the Record Date, upon the written request of any
such person, copies of the exhibits to the Company's Annual Report on Form 10-
KSB for the fiscal year ended June 30, 1998, as filed with the Securities and
Exchange Commission. Any such request should be made in writing to Katie
Terhune, Secretary, Memry Corporation, 57 Commerce Drive, Brookfield,
Connecticut 06804.
By Order of the Board of Directors,
Katie Terhune
Secretary
October 27, 1998
23
<PAGE>
APPENDIX A
----------
MEMRY CORPORATION'S AMENDED AND RESTATED 1997 LONG-TERM INCENTIVE PLAN
<PAGE>
MEMRY CORPORATION'S AMENDED AND RESTATED 1997 LONG-TERM INCENTIVE PLAN
SECTION 1. PURPOSES. The purposes of Memry Corporation's 1997 Long-Term
Incentive Plan (the "Plan") are to encourage selected key employees and the
directors of Memry Corporation (the "Company") and its Affiliates (as
hereinafter defined) to acquire a proprietary and vested interest in the growth
and performance of the Company and to generate an increased incentive to
contribute to the Company's future success and prosperity, thereby enhancing the
value of the Company for the benefit of stockholders and the ability of the
Company to attract and retain individuals of exceptional talent.
SECTION 2. DEFINITIONS. As used in the Plan, the following terms shall have
the meanings set forth below:
(a) "Award" shall mean any Option, Stock Appreciation Right, Limited Stock
Appreciation Right, Restricted Stock Award, Performance Share or any other
right, interest, or option granted pursuant to the provisions of the Plan.
(b) "Award Agreement" shall mean any written agreement, contract, or other
instrument or document evidencing any Award granted hereunder and signed by both
the Company and the Participant or by both the Company and a Non-Employee
Director.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time, including the rules, regulations, and interpretations promulgated
thereunder.
(e) "Committee" shall mean the Compensation Committee of the Board, composed of
not less than two directors each of whom is a Non-Employee Director.
(f) "Company" shall mean Memry Corporation.
(g) "Dividend Equivalent" shall mean any right granted pursuant to Section 14(i)
hereof to receive an equivalent amount of interest or dividends with respect to
the number of shares covered by an Award.
(h) "Employee" shall mean any salaried employee of the Company or of any
Affiliate.
(i) "Fair Market Value" shall mean, with respect to any property, the market
value of such property determined by such methods or procedures as shall be
established from time to time by the Committee.
(j) "Incentive Stock Option" shall mean an Option granted under Section 6 hereof
that is intended to meet the requirements of Section 422 of the Code or any
successor provision thereto.
(k) "Limited Stock Appreciation Right" shall mean a Stock Appreciation Right
that can only be exercised in the event of a change in control, according to the
definition and provisions of Section 8 of the Plan.
(l) "Non-Employee Director" shall mean a person described in both (i) Rule 16b-
3(b)(3) promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, or any successor definition adopted
by the Securities and Exchange Commission, and (ii) Treasury Regulation Section
1.162-27(e)(3)(i), or any successor provision, adopted by the Department of the
Treasury.
(m) "Non-qualified Stock Option" shall mean an Option granted to a Participant
under Section 6 hereof that is not intended to be an Incentive Stock Option.
(n) "Option" shall mean any right granted to a Participant under the Plan
allowing such Participant to purchase Shares at such price or prices and during
such period or periods as the Committee shall determine.
A-1
<PAGE>
(o) "Participant" shall mean an Employee who is selected by the Committee to
receive an Award under the Plan.
(p) "Payment Value" shall mean the dollar amount assigned to a Performance
Share which shall be equal to the Fair Market Value per Share on the close of
business on the last day of a Performance Cycle.
(q) "Person" shall mean any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, or government or
political subdivision thereof.
(r) "Performance Cycle" or "Cycle" shall mean the period of time selected by
the Committee during which the performance is measured for the purpose of
determining the extent to which an award of Performance Shares has been earned.
(s) "Performance Goals" shall mean the objectives established by the Committee
for a Performance Cycle, for the purpose of determining the extent to which
Performance Shares which have been contingently awarded for such Cycle are
earned.
(t) "Performance Share" shall mean an Award granted pursuant to Section 10
hereof which shall represent the right, subject to the terms set forth in
Section 10 hereof, to either one Share or the Payment Value in cash of one
Share.
(u) "Restricted Stock" shall mean any Share issued with the restriction that the
holder may not sell, transfer, pledge, or assign such Share and with such other
restrictions as the Committee, in its sole discretion, may impose (including,
without limitation, any restriction on the right to vote such Share, and the
right to receive any cash dividends), which restrictions may lapse separately or
in combination at such time or times, in installments or otherwise, as the
Committee may deem appropriate.
(v) "Restricted Stock Award" shall mean an award of Restricted Stock under
Section 9 hereof.
(w) "Shares" shall mean shares of the common stock of the Company, $0.01 par
value per share, and such other securities of the Company as the Committee may
from time to time determine.
(x) "Stock Appreciation Right" shall mean any right granted to a Participant
pursuant to Section 7 hereof to receive, upon exercise by the Participant, the
excess of (i) the Fair Market Value of one Share on the date of exercise or, if
the Committee shall so determine in the case of any such right other than one
related to any Incentive Stock Option, at any time during a specified period
before the date of exercise over (ii) the grant price of the right as specified
by the Committee, in its sole discretion, on the date of grant, which shall not
be less than the Fair Market Value of one Share on such date. Any payment by
the Company in respect of such right may be made in cash, Shares, other
property, or any combination thereof, as the Committee, in its sole discretion,
shall determine.
(y) "Stockholder Meeting" shall mean the annual meeting of stockholders of the
Company held each year.
SECTION 3. ADMINISTRATION. The Plan shall be administered by the Committee.
The Committee shall have full power and authority, subject to such orders or
resolutions not inconsistent with the provisions of the Plan as may from time to
time be adopted by the Board, to: (i) select the Employees of the Company to
whom Awards may from time to time be granted hereunder; (ii) determine the type
or types of Award to be granted to each Participant hereunder; (iii) determine
the number of Shares to be covered by each Award granted hereunder; provided,
however, that Shares subject to any form of award granted to any individual
employee during any calendar year shall not exceed a total of 300,000 Shares;
(iv) determine the terms and conditions, not inconsistent with the provisions of
the Plan, of any Award granted hereunder; (v) determine whether, to what extent
and under what circumstances Awards may be settled in cash, Shares or other
property or canceled or suspended; (vi) determine whether, to what extent and
under what circumstances cash, Shares and other property and other amounts
payable with respect to an Award under this Plan shall be deferred either
automatically or at the election of the Participant; (vii) interpret and
administer the Plan and any instrument or agreement entered into under the Plan;
(viii) establish such rules and regulations and appoint such agents as it shall
deem appropriate for the proper administration of the Plan; and (ix) make any
other determination and take any other action that the Committee deems necessary
or desirable for administration of the Plan. Decisions of the Committee shall
be final, conclusive and binding upon all persons, including the Company, any
Participant, any stockholder, and any Employee of the Company or of any
Affiliate. Notwithstanding the
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above, the Committee shall not have discretion with respect of any Shares
granted to Non-Employee Directors pursuant to Section 11 hereof. A majority of
the members of the Committee may determine its actions and fix the time and
place of its meetings.
SECTION 4. SHARES SUBJECT TO THE PLAN.
(a) Subject to adjustment as provided in Section 4(b), the total number of
Shares available for grant under the Plan shall be 2,000,000 Shares. In
addition, any Shares issued by the Company through the assumption or
substitution of outstanding grants from an acquired company shall not reduce the
shares available for grants under the Plan. Any Shares issued hereunder may
consist, in whole or in part, of authorized and unissued shares or treasury
shares. If any Shares subject to any Award granted hereunder are forfeited or
such Award otherwise terminates without the issuance of such Shares or of other
consideration in lieu of such Shares, the Shares subject to such Award, to the
extent of any such forfeiture or termination, shall again be available for grant
under the Plan.
(b) In the event of any merger, reorganization, consolidation, recapitalization,
stock dividend, or other change in corporate structure affecting the Shares,
such adjustment shall be made in the type and aggregate number of Shares which
may be delivered under the Plan or such other securities to be delivered in
place thereof, and in the number of Shares subject to outstanding Options
granted under the Plan, and in the value or number of Shares subject to Awards
granted under the Plan as may be determined to be appropriate by the Committee,
in its sole discretion, provided that the number of Shares subject to any Award
shall always be a whole number, and provided further, that the number of Shares
granted to Non-Employee Directors pursuant to Section 11 hereof and the number
of Shares subject in the future to be granted pursuant to Section 11 hereof
shall be subject to adjustment only as set forth in Section 11.
SECTION 5. ELIGIBILITY. Any Employee (excluding any member of the Committee)
shall be eligible to be selected as a Participant. All Non-Employee Directors
shall automatically be eligible to receive Awards pursuant to Section 11.
SECTION 6. STOCK OPTIONS. Options may be granted hereunder to Participants
either alone or in addition to other Awards granted under the Plan. Any Option
granted to a Participant under the Plan shall be evidenced by an Award Agreement
in such form as the Committee may from time to time approve. Any such Option
shall be subject to the following terms and conditions and to such additional
terms and conditions, not inconsistent with the provisions of the Plan, as the
Committee shall deem desirable:
(a) Option Price. The purchase price per Share purchasable under an Option
shall be determined by the Committee in its sole discretion; provided that such
purchase price in the case of Incentive Stock Options shall not be less than the
Fair Market Value of the Share on the date of the grant of the Option; provided
further that the purchase price per Share for an Incentive Stock Option granted
to an Employee who, at the time of grant, owns stock having more than 10 percent
of the total combined voting power of all classes of stock of the Company (a
"Ten Percent Stockholder"), shall not be less than 110 percent of the Fair
Market Value on the date of grant, all as determined by the Committee.
(b) Option Period. The term of each Option shall be fixed by the Committee in
its sole discretion; provided that no Incentive Stock Option shall be
exercisable after the expiration of ten years from the date the Option is
granted; provided further that no Incentive Stock Option granted to an Employee
who is a Ten Percent Stockholder shall be exercisable after the expiration of
five years form the date the Option is granted.
(c) Exercisability. Options shall be exercisable at such time or times as
determined by the Committee at or subsequent to grant.
(d) Method of Exercise. Subject to the other provisions of the Plan and any
applicable Award Agreement, any Option may be exercised by the Participant in
whole or in part at any time or times, and the Participant may make payment of
the option price in such form or forms, including, without limitation, payment
by delivery of cash, Shares or other consideration, or through an arrangement
with a broker in which the Participant delivers to the Company an irrevocable
notice of exercise
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accompanied by the broker's payment in full and an irrevocable instruction to
the Company to deliver the Shares issuable upon exercise to the broker for the
Participant's account.
(e) Incentive Stock Options. In accordance with rules and procedures
established by the Committee, the aggregate Fair Market Value (determined as of
the time of grant) of the Shares with respect to which Incentive Stock Options
held by any Participant which are exercisable for the first time by such
Participant during any calendar year under the Plan (and under any other benefit
plans of the Company or subsidiary of the Company) shall not exceed $100,000 or,
if different, the maximum limitation in effect at the time of grant under
Section 422 of the Code, or any successor provision, and any regulations
promulgated thereunder. The terms of any Incentive Stock Option granted
hereunder shall comply in all respects with the provisions of Section 422 of the
Code, or any successor provision, and any regulations promulgated thereunder.
SECTION 7. STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be granted
hereunder to Participants either alone or in addition to other Awards granted
under the Plan and may, but need not, relate to a specific Option granted under
Section 6. The provisions of Stock Appreciation Rights need not be the same
with respect to each recipient. Any Stock Appreciation Right related to a Non-
qualified Stock Option may be granted at the same time such Option is granted or
at any time thereafter before exercise or expiration of such Option. Any Stock
Appreciation Right related to an Incentive Stock Option must be granted at the
same time such Option is granted. In the case of any Stock Appreciation Right
related to any Option, the Stock Appreciation Right or applicable portion
thereof shall terminate and no longer be exercisable upon the termination or
exercise of the related Option, except that a Stock Appreciation Right granted
with respect to less than the full number of Shares covered by a related Option
shall not be reduced until the exercise or termination of the related Option
exceeds the number of shares not covered by the Stock Appreciation Right. Any
Option related to any Stock Appreciation Right shall no longer be exercisable to
the extent the related Stock Appreciation Right has been exercised. The
Committee may impose such conditions or restrictions on the exercise of any
Stock Appreciation Right as it shall deem appropriate.
SECTION 8. LIMITED STOCK APPRECIATION RIGHTS.
Limited Stock Appreciation Rights may be granted hereunder to Participants in
relation to any Option or Stock Appreciation Right granted under the Plan. A
Limited Stock Appreciation Right may be granted at the time the Option or Stock
Appreciation Right is granted or at any time thereafter. Limited Stock
Appreciation Rights are exercisable in full for a period of seven months
following the date of a Change in Control as defined in Section 12(b).
(a) Amount of Payment. The amount of payment to which a Participant shall be
entitled upon the exercise of each Limited Stock Appreciation Right shall be
equal to the difference between the Option price of the Shares covered by the
related Option or Stock Appreciation Right and the Market Price of such Shares.
Market Price is defined to be the greater of (i) the highest price of the Shares
paid in connection with a Change in Control and (ii) (a) if the Shares are
traded on an exchange, the highest closing trade price per Share on such
exchange during the 60-day period prior to the Change in Control, and (b) if the
Shares are not traded on an exchange, but are traded over-the-counter, the
average of the highest daily closing bid and ask price per Share during the 60-
day period prior to the Change in Control, in either case as reasonably
determined by the Corporation.
(b) Form of Payment. Payments to Participants upon the exercise of Limited
Stock Appreciation Rights shall be made solely in cash.
(c) Effect of Exercise. If Limited Stock Appreciation Rights are exercised, the
Options and Stock Appreciation Rights related to them cease to be exercisable.
Upon the exercise or termination of the Options or Stock Appreciation Rights,
the related unexercised Limited Stock Appreciation Rights terminate.
SECTION 9. RESTRICTED STOCK.
(a) Issuance. Restricted Stock Awards may be issued hereunder to Participants,
for no cash consideration or such consideration as may be determined by the
Committee to be appropriate, either alone or in addition to other Awards granted
under the Plan. The provisions of Restricted Stock Awards need not be the same
with respect to each recipient.
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(b) Registration. Any Restricted Stock issued hereunder may be evidenced in
such manner as the Committee in its sole discretion shall deem appropriate,
including, without limitation, book-entry registration or issuance of a stock
certificate or certificates. In the event any stock certificate is issued in
respect of shares of Restricted Stock awarded under the Plan, such certificate
shall be registered in the name of the Participant, and shall bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such Award.
(c) Forfeiture. Except as otherwise determined by the Committee at the time of
grant, upon termination of employment for any reason during the restriction
period specified in connection with such award, all shares of Restricted Stock
still subject to restriction shall be forfeited by the Participant and
reacquired by the Company; provided that in the event of a Participant's
retirement, permanent disability or death, or in cases of special circumstances,
the Committee may, in its sole discretion, when it finds that a waiver would be
in the best interests of the Company, waive in whole or in part any or all
remaining restrictions with respect to such Participant's shares of Restricted
Stock. Unrestricted Shares, evidenced in such manner as the Committee shall
deem appropriate, shall be issued to the grantee promptly after the period of
forfeiture upon satisfaction of all requirements under the applicable Restricted
Stock Award, as determined or modified by the Committee.
SECTION 10. PERFORMANCE SHARES.
(a) Issuance. Performance Shares may be issued hereunder to Participants either
alone or in addition to other Awards granted under the Plan. The terms of
Performance Shares need not be the same with respect to each recipient.
Performance Shares shall entitle the recipient thereof to convert same into
Shares, cash, or a combination thereof, as determined by the Committee, based
upon satisfaction of pre-determined performance targets or goals. The Committee
shall have sole and complete authority to determine the Employees who shall
receive Performance Shares and the number of such Shares for each Performance
Cycle, and to determine the duration of each Performance Cycle. There may be
more than one Performance Cycle in existence at any one time, and the duration
of Performance Cycles may differ from each other.
(b) Performance Goals. The Committee shall establish Performance Goals for each
Cycle based on any one or more of the following, or any other factor the
Committee deems to be relevant: the operating earnings, net earnings, return on
equity, income, market share, stockholder return, combined ratio, level of
expenses or growth in revenue. During any Cycle, the Committee may adjust the
Performance Goals for such Cycle as it deems equitable in recognition of unusual
or non-recurring events affecting the Company, changes in applicable tax laws or
accounting principles, or such other factors as the Committee may determine;
provided, however, that no such adjustment shall be applicable to the extent
such adjustment would result in a disallowance of a tax deduction pursuant to
Section 162(m) of the Code.
(c) Determination of Earned Performance Shares. As soon as practicable after
the end of a Performance Cycle, the Committee shall determine the number of
Performance Shares which have been earned on the basis of performance in
relation to the established Performance Goals.
(d) Payment Values. As soon as practicable after the expiration of the
Performance Cycle and the Committee's determination under paragraph (c), above,
the Committee shall determine whether the Participant should be distributed cash
and/or Shares. To the extent that distributions are made in cash, the amount of
cash distributed shall be equal to the number of earned Performance Shares for
which cash is being distributed, times the Payment Value. Award payments made
in cash rather than by the issuance of Shares shall not result in additional
Shares being available under the Plan. To the extent that distributions are
made in Shares, the number of Shares distributed shall be equal to the number of
earned Performance Shares for which Shares are being distributed.
SECTION 11. NON-EMPLOYEE DIRECTORS' STOCK GRANTS.
(a) Grant of Shares. All Non-Employee Directors who remain as such on the last
day of any given fiscal quarter shall be issued quarterly, in arrears, within 60
days of the last day of each fiscal quarter, such number of Shares (subject to
the restrictions and risk of forfeiture as set forth in Section 11(b) below) as
shall have a fair market value equal to $7,500, with such fee being pro-rated
for any Non-Employee Director who serves as such for less than such full fiscal
quarter. For the
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purposes of the foregoing, the fair market value of a Share shall be the average
of the bid and asked prices per Share on the last trading day of a particular
fiscal quarter.
(b) Vesting and Forfeiture. All Shares granted to Non-Employee Directors
pursuant to this Section 11 shall be "restricted" and subject to forfeiture
until such Shares vest in accordance with the immediately succeeding sentence.
Shares granted to Non-Employee Directors shall vest in equal thirds on each of
the first, second and third anniversaries of the date of grant. Prior to
vesting, such Shares shall be subject to forfeiture upon the voluntary
resignation of such Non-Employee Director, but excluding voluntary resignations
within one year of a change of control (as defined below). For purposes of this
Section 11, "Change of Control" shall mean (i) any merger or consolidation or
other corporate reorganization of the Company in which the Company is not the
surviving entity; or (ii) any sale of all or substantially all of the Company's
assets, in either a single transaction or a series of transactions; or (iii) a
liquidation of all or substantially all of the Company's assets; or (iv) if
there is a change within one twelve-month period of a majority of the directors
constituting the Company's Board of Directors at the beginning of such twelve-
month period; or (v) if a single person or entity, or a related group of persons
or entities, at any time subsequent to the date of grant acquires beneficial
ownership of 25% or more of the Company's outstanding voting securities; unless,
with respect to clause (iv), the change of directors is approved by the Board of
Directors as constituted prior to such change and no event described in clause
(v) has occurred.
(c) Adjustment of Award. In case there shall be a merger, reorganization,
consolidation, recapitalization, stock dividend or other change in corporate
structure such that the Shares of the Company are changed into or become
exchangeable for a different security, thereafter the Shares subject to be
granted to Non-Employee Directors pursuant to the provisions of this Section 11
shall be adjusted accordingly.
(d) 83(b) Election. Non-Employee Directors that are granted Shares pursuant to
this Section 11 may, at their option, make an election pursuant to Section 83(b)
of the Code.
SECTION 12. CHANGE IN CONTROL.
(a) In order to maintain the Participants' rights in the event of any Change in
Control of the Company, as hereinafter defined, the Committee, as constituted
before such Change in Control, may, in its sole discretion, as to any Award
(except Shares granted pursuant to Section 11), either at the time an Award is
made hereunder or any time thereafter, take any one or more of the following
actions: (i) provide for the acceleration of any time periods relating to the
exercise or realization of any such Award so that such Award may be exercised or
realized in full on or before a date fixed by the Committee; (ii) provide for
the purchase of any such Award, upon the Participant's request, for an amount of
cash equal to the amount that could have been attained upon the exercise of such
Award or realization of the Participant's rights had such Award been currently
exercisable or payable; or (iii) make such adjustment to any such Award then
outstanding as the Committee deems appropriate to reflect such Change in
Control. In addition, the Committee, upon receiving approval of a majority of
the full Board, may, in its discretion, cause any Award outstanding at such time
to be assumed, or new rights substituted therefor, by the acquiring or surviving
corporation after such Change in Control. The Committee may, in its discretion,
include such further provisions and limitations in any agreement documenting
such Awards as it may deem equitable and in the best interests of the Company.
(b) A "Change in Control" shall be deemed to have occurred if (i) any Person
other than a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, and other than the Company or a corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934), directly or indirectly, of securities of the Company representing 25%
or more of the combined voting power of the Company's then outstanding
securities; or (ii) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board and any new Director (other
than a Director designated by a person who has entered into an agreement with
the Company to effect a transaction described in (i) above) whose election by
the Board or nomination for election by the Company's stockholders was approved
by a vote of at least two-thirds (2/3) of the Directors then still in office who
either were Directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof.
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SECTION 13. AMENDMENTS AND TERMINATION. The Committee may amend, alter or
discontinue the Plan, but no amendment, alteration, or discontinuation shall be
made that would impair the rights of a Participant under an Award theretofore
granted, without the Participant's consent, or that without the approval of the
Stockholders as required by applicable law would:
(a) except as is provided in Section 4(b) or 11(b) of the Plan, increase the
total number of Shares reserved for the purposes of the Plan;
(b) change the Employees or class of Employees eligible to participate in the
Plan; or
(c) change in any way the Shares provided for in Section 11 of the Plan.
The Committee may amend the terms of any Award theretofore granted (except
Shares granted pursuant to Section 11 hereof), prospectively or retroactively,
but no such amendment shall impair the rights of any Participant without his
consent. The Committee may also substitute new Awards for Awards previously
granted to Participants, including without limitation previously granted Options
having Fair Market Value or higher option prices.
SECTION 14. GENERAL PROVISIONS.
(a) At the sole discretion of the Committee at the time of grant, Awards may be
assignable or transferable by a Participant or a Non-Employee Director; provided
that no Award shall be assignable or transferable unless the exercise of such
Award and subsequent sale may be covered by a Registration Statement on Form S-
8.
(b) The term of each Award shall be for such period of months or years from the
date of its grant as may be determined by the Committee; provided that in no
event shall the term of any Incentive Stock Option, or any Stock Appreciation
Right related to any Incentive Stock Options, exceed a period of ten (10) years
from the date of its grant; provided further that in no event shall the term of
any Incentive Stock Option, or any Stock Appreciation Right related to any
Incentive Stock Option granted to a Ten Percent Stockholder exceed a period of
five (5) years from the date of its grant.
(c) Nothing in this Plan shall confer upon any Employee or Participant any right
to continue in the employ of the Company or any Affiliate or interfere in any
way with the right of any Company or any Affiliate to terminate his or her
employment at any time. No Employee or Participant shall have any claim to be
granted any Award under the Plan and there is no obligation for uniformity of
treatment of Employees or Participants under the Plan.
(d) The prospective recipient of any Award under the Plan shall not, with
respect to such Award, be deemed to have become a Participant, or to have any
rights with respect to such Award, until and unless such recipient shall have
executed an Award Agreement or other instrument evidencing the Award and
delivered a fully executed copy thereof to the Company, and otherwise complied
with the then applicable terms and conditions.
(e) Subject to Section 13 hereof, the Committee shall be authorized to make
adjustments in performance award standards or in the terms and conditions of
other Awards in recognition of unusual or nonrecurring events affecting the
Company or its financial statements or changes in applicable laws, regulations
or accounting principles. The Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem desirable to carry it into effect. In the event
the Company shall assume outstanding employee benefit awards or the right or
obligation to make future such awards in connection with the acquisition of
another corporation or business entity, the Committee may, in its discretion,
make such adjustments in the terms of Awards under the Plan as it shall deem
appropriate. Notwithstanding the above, the Committee shall not have the right
to make any adjustments in the terms or conditions of Shares granted pursuant to
Section 11 hereof.
(f) The Committee shall have full power and authority to determine any other
type and form of Award beyond those enumerated above to grant a Participant for
the furtherance of the purposes of the Plan.
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(g) The Committee shall have full power and authority to determine whether, to
what extent and under what circumstances any Award (other than Shares granted
pursuant to Section 11 hereof) shall be canceled or suspended. In particular,
but without limitation, all outstanding Awards to any Participant shall be
canceled if the Participant, without the consent of the Committee, while
employed by the Company or after termination of such employment, becomes
associated with, employed by, renders services to, or owns any interest in
(other than any nonsubstantial interest, as determined by the Committee), any
business that is in competition with the Company or with any business in which
the Company has a substantial interest as determined by the Committee.
(h) All certificates for Shares delivered under the Plan pursuant to any Award
shall be subject to such stock-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Shares are then listed, and any applicable Federal or state securities
law, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(i) Subject to the provisions of this Plan and any Award Agreement, the
recipient of an Award may, if so determined by the Committee, be entitled to
receive, currently or on a deferred basis, interest or dividends, or interest or
Dividend Equivalents, with respect to the number of Shares covered by the Award,
as determined by the Committee, in its sole discretion, and the Committee may
provide that such amounts (if any) shall be deemed to have been reinvested in
additional Shares or otherwise reinvested.
(j) As circumstances may from time to time require, the Committee may in its
sole discretion make available to Participants loans for the purpose of
exercising Options.
(k) The Company shall be authorized to withhold from any Award granted or
payment due under the Plan the amount of withholding taxes due with respect to
an Award or payment hereunder and to take such other action as may be necessary
in the opinion of the Company to satisfy all obligations for the payment of such
taxes. The Company shall also be authorized to accept the delivery of shares by
a Participant in payment for the withholding of federal, state and local taxes
(but not for social security and Medicare taxes) up to the Participant's
marginal tax rate.
(l) Nothing contained in this Plan shall prevent the Board of Directors from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases.
(m) The validity, construction, and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance with the laws
of the State of Connecticut and applicable Federal law.
(n) If any provision of this Plan is or becomes or is deemed invalid, illegal or
unenforceable in any jurisdiction, or would disqualify the Plan or any Award
under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to applicable laws or if it cannot be
construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan, it shall be stricken and the
remainder of the Plan shall remain in full force and effect.
SECTION 15. SPECIAL CALIFORNIA PROVISIONS.
Notwithstanding anything to the contrary in the Plan or in any Award Agreement,
no Awards shall be granted to Employees resident in the State of California
unless either (i) the Award agreement entered into in connection with such grant
conforms in all respects with the State of California's Blue Sky Regulations, as
same may be amended (the "California Regulations"), including, without
limitation, the requirements of Rule 260.140.41 of the California Regulations,
or (ii) the offer and sale of Shares upon the exercise of such Award to such
California resident is exempt from the qualification requirements of Section
25110 of the California Corporate Securities Law, as same may be amended.
Without limiting the foregoing, each Option and Award, as the case may be,
granted or made to a California resident and subject to clause (i) immediately
above, shall
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provide for or comply with, as the case may be, each of the following, whether
set forth in the applicable Award Agreement or incorporated therein by reference
to the Plan:
(a) subject to any higher minimum purchase price per Share provided for
elsewhere in the Plan, each Option shall have a purchase price per Share which
is not less than 85% of its "fair value" (as defined in Section 260.140.50 of
the California Regulations) on the date of grant;
(b) each Option shall have an exercise period of not more than 120 months from
the date the Option is granted;
(c) each Option shall be nontransferable other than by will or the laws of
descent and distribution;
(d) each Option shall provide for a right to exercise the Option at the rate of
at least 20% per year over 5 years from the date the Option is granted, subject
to reasonable conditions such as continued employment, provided, however, that,
in the case of an Option granted to officers, directors or consultants of the
Company or any of its affiliates, the Option may become fully exercisable,
subject to reasonable conditions such as continued employment, at any time or
during any period established by the Company or any of its affiliates;
(e) each Option shall, unless employment is terminated for "cause", as defined
by applicable law, the terms of the Plan or the applicable Award Agreement or
contract of employment, as the case may be, provide for the right to exercise in
the event of termination of employment, to the extent that the optionee is
entitled to exercise on the date employment terminates, as follows:
(1) At least 6 months from the date of termination if termination was
caused by death or disability; and
(2) At least 30 days from the date of termination if termination was
caused by other than death or disability;
(f) no Performance Shares shall be issued to any California resident unless, at
the time of grant, such person is paid salary by the Company or any of its
affiliates at the rate of $60,000 per annum or more; and
(g) no Award made to a California resident, excluding any Award made to any
officer, director or consultant of the Company or any of its affiliates, shall
provide for the acceleration of any time periods relating to the exercise or
realization of any such Award so that such Award may be exercised or realized in
full on or before a date previously fixed by the Committee.
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APPENDIX B
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MEMRY CORPORATION
PROXY FOR ANNUAL MEETING
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all previous proxies, hereby appoints James G.
Binch and Thomas D. Carey, or either of them (the "Proxies"), as attorneys and
proxies, each with full power of substitution and all of the powers which the
undersigned would possess, if present in person, to represent and vote, as
designated on the reverse side of this proxy, all of the shares of Common Stock
of Memry Corporation (the "Company") registered in the name of the undersigned
at the Annual Meeting of Stockholders of the Company to be held on November 23,
1998 and at any adjournment thereof.
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS DIRECTED BY THIS PROXY. IF
NO DIRECTION IS MADE, THE PROXIES WILL VOTE SUCH SHARES FOR THE ELECTION OF ALL
NOMINEES FOR DIRECTOR LISTED UNDER PROPOSAL NO. 1 AND FOR THE ADOPTION OF THE
AMENDMENT TO MEMRY CORPORATION'S 1997 LONG-TERM INCENTIVE PLAN DESCRIBED IN
PROPOSAL NO. 2, AND SUCH PROXIES WILL VOTE IN ACCORDANCE WITH THEIR DISCRETION
ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
(IMPORTANT - TO BE MARKED, SIGNED AND DATED ON REVERSE SIDE)
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1. ELECTION OF DIRECTORS
NOMINEES: James G. Binch, Jack H. Halperin, W. Andrew Krusen, Jr.,
John A. Morgan.
[ ] FOR all nominees [ ] WITHHELD from all nominees
FOR, except vote withheld from the following nominee(s): [ ]
----------
2. Proposal to adopt the amendment to Memry Corporation's 1997 Long-Term
Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
-------------------------------
Signature of Stockholder
-------------------------------
Signature if held jointly
Date: __________________________________, 1998
Note: Please sign exactly as name appears hereon. When
shares are held by joint tenants, both should
sign. Executors, administrators, trustees and
other fiduciaries should so indicate when
signing. If a corporation, please sign in full
corporate name by president, or other authorized
officer. If a partnership, please sign in
partnership name by authorized person. This
proxy may be mailed, postage-free, in the
enclosed envelope.
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