<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-14068
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Memry Corporation
------------
(Exact name of small business issuer as specified in its charter)
Delaware 06-1084424
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization
57 Commerce Drive, Brookfield, Connecticut 06804
(Address of principal executive offices)
(203) 740-7311
------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date. As of February 7, 2000, 21,119,711
shares of the registrant's common stock, par value $.01 per share, were issued
and outstanding.
Transitional Small Business Disclosure Format (check one):
Yes
No X
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INDEX
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets as of December 31, 1999 and June 30, 1999
Condensed Consolidated Statements of Operations for the three and six months
ended December 31, 1999 and 1998
Condensed Consolidated Statements of Cash Flows for the six months ended
December 31, 1999 and 1998
Notes to the Condensed Consolidated Financial Statements
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
PART II OTHER INFORMATION
ITEM 2. Changes in Securities
ITEM 4. Submission of matters to a Vote of Security Holders
ITEM 6. Exhibits and Reports on Form 8-K
2
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Memry Corporation & Subsidiary
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
December 31, June 30,
1999 1999
---- ----
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 1,156,000 $ 1,191,000
Accounts receivable, less allowance for doubtful accounts 3,452,000 2,238,000
Inventories (Note B) 2,519,000 3,182,000
Prepaid expenses and other current assets 69,000 21,000
Income tax receivable 89,000 89,000
Total current assets 7,285,000 6,721,000
------------ ------------
Property, Plant and Equipment 9,005,000 8,007,000
Less accumulated depreciation (3,258,000) (2,691,000)
------------ ------------
5,747,000 5,316,000
Other Assets
Patents and patent rights, less accumulated amortization 1,535,000 1,605,000
Goodwill, less accumulated amortization 4,128,000 4,465,000
Deferred financing costs, less accumulated amortization 22,000 29,000
Deposits 73,000 46,000
5,758,000 6,145,000
------------ ------------
Total assets $ 18,790,000 $ 18,182,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 2,785,000 $ 2,662,000
Notes payable 3,294,000 2,571,000
Acquisition liability - 1,046,000
Current maturities of capital lease obligations 26,000 39,000
------------ ------------
Total current liabilities 6,105,000 6,318,000
============ ============
Capital lease obligations, less current maturities 33,000 36,000
Note Payable, less current maturities 1,711,000 862,000
------------ ------------
Total Liabilities 7,849,000 7,216,000
------------ ------------
Stockholders' Equity
Common stock 211,000 208,000
Additional paid-in capital 44,320,000 43,832,000
Accumulated deficit (32,872,000) (32,544,000)
Accumulated other comprehensive loss:
Foreign currency translation adjustment (718,000) (530,000)
Total stockholders' equity 10,941,000 10,966,000
------------ ------------
Total liabilities and stockholders' equity $ 18,790,000 $ 18,182,000
============ ============
</TABLE>
3
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Memry Corporation & Subsidiary
Consolidated Statements of Operations
For the Three Months Ended December 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
----- ----
<S> <C> <C>
Revenues
Product Sales $ 5,853,000 $ 4,429,000
Research and development 281,000 284,000
----------- -----------
6,134,000 4,713,000
----------- -----------
Cost of revenues
Manufacturing 3,727,000 3,021,000
Research and development 213,000 48,000
----------- -----------
3,940,000 3,069,000
----------- -----------
Gross profit 2,194,000 1,644,000
----------- -----------
Operating expenses
General, selling and administration 1,728,000 1,231,000
Depreciation and amortization 122,000 86,000
----------- -----------
1,850,000 1,317,000
----------- -----------
Operating income 344,000 327,000
Other income (expense)
Interest (expense) (92,000) (31,000)
Interest income 8,000 33,000
Other income (96,000) 8,000
Gain/Loss on disposal of assets (6,000) 9,000
----------- -----------
(186,000) 19,000
=========== ===========
Income from operations before income taxes 158,000 346,000
Provision for income taxes 4,000 82,000
Net income $ 154,000 $ 264,000
=========== ===========
Basic Earnings Per Share: $ .01 $ .01
Diluted Earnings Per Share: $ .01 $ .01
</TABLE>
4
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Memry Corporation & Subsidiary
Consolidated Statements of Operations
For the Six Months Ended December 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
----- ----
<S> <C> <C>
Revenues
Product Sales $ 10,542,000 $ 9,254,000
Research and development 483,000 312,000
------------ -----------
11,025,000 9,566,000
------------ -----------
Cost of revenues
Manufacturing 6,893,000 5,436,000
Research and development 273,000 86,000
------------ -----------
7,166,000 5,522,000
------------ -----------
Gross profit 3,859,000 4,044,000
------------ -----------
Operating expenses
General, selling and administration 3,724,000 2,751,000
Depreciation and amortization 242,000 157,000
------------ -----------
3,966,000 2,908,000
------------ -----------
Operating income (loss) (107,000) 1,136,000
Other income (expense)
Interest (expense) (155,000) (46,000)
Interest income 9,000 48,000
Other income (55,000) 8,000
Gain/Loss on disposal of assets (6,000) 9,000
------------ -----------
(207,000) 19,000
============ ===========
Income (loss) from operations before income taxes (314,000) 1,155,000
Provision for income taxes 14,000 194,000
Net income (loss) $ (328,000) $ 961,000
============ ===========
Basic Earnings Per Share: (.02) $ .05
Diluted Earnings Per Share: (.02) $ .04
</TABLE>
5
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Memry Corporation & Subsidiaries
Consolidated Statements of Comprehensive Income
For the Three Months and Six Months Ended December 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
12/31/1999 12/31/1998 12/31/1999 12/31/1998
=========== ============ ============ ===========
<S> <C> <C> <C> <C>
Net Income (Loss) $ 154,000 $264,000 ($328,000) $961,000
Other Comprehensive (Loss)
Foreign Currency Translation
Adjustments, net of tax (238,000) 0 (188,000) 0
----------- -------- --------- --------
Comprehensive Income (Loss) ($84,000) $264,000 ($516,000) $961,000
=========== ======== ========= ========
</TABLE>
6
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Memry Corporation & Subsidiary
Consolidated Statements of Cash Flows
For the Six Months Ended December 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
----- ----
<S> <C> <C>
Cash Flows From Operating Activities
Net Income (loss) $ (328,000) $ 961,000
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 902,000 429,000
Gain on disposal of assets - 210,000
Warrants issued for partial settlement of liability 39,000 -
Compensation paid by issuance of common stock 62,000 -
Change in operating assets and liabilities:
(Increase) Decrease in accounts receivable (1,313,000) 125,000
Decrease in notes receivable - 525,000
(Increase) decrease in inventories 653,000 (667,000)
(Increase) decrease in prepaid expenses and other assets 8,000 (23,000)
Increase (decrease) in accounts payable and accrued expenses 165,000 (654,000)
(Decrease) in unearned revenue - (1,000)
------- -------
Net cash provided by operating activities 188,000 905,000
------- -------
Cash Flows from Investing Activities
Purchases of property, plant and equipment (1,132,000) (2,125,000)
Deposits - 1,000
---------- ----------
Net cash used in investing activities (1,132,000) (2,124,000)
Cash Flows from Financing Activities
Proceeds from issuance of common stock, net 55,000 76,000
Net increase in revolving loans payable 95,000 1,230,000
Proceeds from (repayment of) notes payable 1,038,000 (240,000)
Payments on Acquisition Obligations (258,000)
Principal payments on capital lease obligations (16,000) (15,000)
------- -------
Net cash provided by financing activities 914,000 1,051,000
Effect of foreign currency exchange rate changes on cash and cash equivalents (5,000) (14,000)
------ -------
</TABLE>
7
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<TABLE>
<S> <C> <C>
(Decrease) in cash and cash equivalents (35,000) (182,000)
Cash and cash equivalents, beginning of period 1,191,000 1,189,000
Cash and cash equivalents, end of period $ 1,156,000 $ 1,007,000
=========== ===========
Supplemental Schedule of Noncash Investing and Financing Activities
Conversion portion of Acquisition Liability to Debt 456,000
Conversion portion of Acquisition Liability to Warrants 39,000
Conversion portion of Acquisition Liability to Common Stock 333,000
- -------------------------------------------------------------------------------------------------
Total Conversion Portion of Acquisition Liability 828,000
</TABLE>
8
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MEMRY CORPORATION & SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note A. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and six month periods ended December 31, 1999 are not
necessarily indicative of the results that may be expected for the year ending
June 30, 2000 ("fiscal 2000"). For further information, refer to the
consolidated financial statements and footnotes thereto included in the Annual
Report on Form 10-KSB for the year ended June 30, 1999 ("fiscal 1999") of Memry
Corporation (the "Company").
Note B. INVENTORIES
Inventories at December 31, 1999 and June 30, 1999, are summarized as follows:
December June
-------- ----
Raw Materials $ 891,000 $ 690,000
Work-in-process 1,241,000 1,789,000
Finished goods 988,000 1,304,000
Allowance for slow-moving
and obsolete inventory (601,000) (601,000)
--------- ---------
2,519,000 3,182,000
Note C. EARNINGS PER SHARE
Basic earnings (loss) per share amounts are computed by dividing income (loss)
from continuing and discontinued operations by the weighted-average number of
common shares outstanding. Diluted per share amounts assume exercise of all
potential common stock instruments unless the effect is to reduce the loss or
increase the income per common share from continuing operations.
For the periods presented, there were no items which changed the income (loss)
from continuing and discontinued operations as presented in the consolidated
statement of operations and the amounts used to compute basic and diluted
earnings (loss) per share. For the six-month period ended December 31, 1999,
common stock equivalents have been excluded from the computation of the net loss
per share because inclusion of such equivalents is antidilutive.
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
12/31/99 12/31/98 12/31/99 12/31/98
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Number of Basic Shares Outstanding 20,891,004 20,642,833 20,872,786 20,296,922
Effect of Dilutive Securities:
Warrants 468,477 896,563 - 979,198
Options 616,705 397,857 - 466,652
Number of Fully Diluted Shares
Outstanding 21,976,187 21,937,254 20,872,786 21,742,772
========== ========== ========== ==========
</TABLE>
9
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results. Certain statements under this caption may constitute "forward-looking
statements". See Part II "Other Information".
(a) RESULTS OF OPERATIONS
Six Months Ended December 31, 1999 compared to six months ended December 31,1998
Revenues. Revenues from continuing operations increased 15% to $11,025,000 for
the first six months of fiscal year 2000 from $9,566,000 during the same period
in fiscal 1999. Revenues of Memry Europe which was purchased in October of 1998,
contributed approximately $400,000 of the increase. The balance was due
primarily to an increase in sales attributable to Wire Solutions which was
purchased in March of 1999, and increased medical and industrial sales from
Memry's east coast operations.
Costs and Expenses. Manufacturing costs (including costs associated with
research and development revenues) increased to $7,166,000 for the six months
ended December 31, 1999 from $5,522,000 during the same six month period in
fiscal 1999. This increase of $1,644,000 or 30% was attributable to the 15%
increase in revenues, a reduction in sales of high margin medical tubes, and
increases in costs attributable to additional engineering and manufacturing
expenses associated with maintaining and improving Memry's west coast operation.
Correspondingly, the Company's gross margin from sales decreased to 35% for the
six months ended December 31, 1999, from 42% in the comparable period in fiscal
1999.
General, selling and administrative expenses (including depreciation and
amortization) increased $1,058,000, or 36%, to $3,966,000 for the six months
ended December 31, 1999, as compared to $2,908,000 during the same period of
fiscal 1999. This increase is primarily attributable to the 15% increase in
sales. The balance of the increase in general, selling and administrative
expenses is primarily attributable to the acquisition of Memry Europe in October
of 1998 and Wire Solutions in March of 1999. Other income (expense) during the
period decreased from $19,000 to ($207,000) during fiscal 2000, due primarily to
an increase in interest expense attributable to a higher level of borrowing. The
Company recorded a provision for income taxes of $14,000 for the first six
months of fiscal 2000 relative to a provision for income tax of $194,000 for the
first six months of fiscal 1999. Such provision reflects an effective tax rate
less than the statutory rate due principally to the benefits arising from net
operating loss carryforwards available to the Company.
Net Income/Loss. Primarily due to the decrease in gross margin and the increase
in General, selling and administrative expense, the Company's net income
decreased by $1,289,000 to a net loss of ($328,000) in the first six months of
fiscal 2000 compared to net income of $961,000 for the first six months of
fiscal 1999.
Three Months Ended December 31, 1999 compared to three months ended December 31,
1998
Revenues. Revenues increased 30% to $6,134,000 for the second quarter of fiscal
year 2000 from $4,713,000 during the same period in fiscal 1999. Memry's east
coast and west coast operations both contributed to the revenue increase.
Revenue increases from Memry's west coast operation are attributable to higher
levels of sales of medical products; increases on the east coast are
attributable to increased sales of both wire and medical products and also the
acquisition of Wire Solutions which occurred in March, 1999.
Costs and Expenses. Manufacturing costs (including costs associated with
research and development revenues) increased to $3,940,000 for the three months
ended December 31, 1999 from $3,069,000 during the same three month period in
fiscal 1999. This increase of $871,000 or 28% was attributable primarily to a
30% increase in revenues. Correspondingly, the Company's gross margin from sales
increased to 36% for the three months ended December 31, 1999, from a 35% margin
in the comparable period in fiscal 1999.
General, selling and administrative expenses (including depreciation and
amortization) increased $533,000 or 40%, to $1,850,000 for the three months
ended December 31, 1999, as compared to $1,317,000 during the same period of
fiscal 1999. This increase is primarily attributable to the 30% increase in
sales. The balance of the increase in general, selling, and administrative
expenses
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is primarily attributable to the acquisition of Wire Solutions in March, 1999.
Other income (expense) during the period decreased from $19,000 in fiscal 1999
to ($186,000) for the three months ended December 31, 1999, due primarily to an
increase in interest expense attributable to a higher level of borrowing. The
Company recorded a provision for income taxes of $4,000 for the second quarter
of fiscal 2000 compared to a tax provision of $82,000 for the second quarter of
fiscal 1999. Such provision reflects an effective tax rate less than the
statutory rate due principally to the benefits arising from net operating loss
carryforwards available to the Company.
Net Income. Primarily because the Company's increases in General, selling, and
administrative costs and an increase in Other Expense offset the increase in
revenues, the Company's net income decreased by $110,000 or 42% to $154,000 for
the three month period ended December 31, 1999 as compared to $264,000 for the
same period in fiscal 1999.
(b) LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1999, the Company's cash and cash equivalents balance was
$1,156,000, a decrease of $35,000 from $1,191,000 at the start of fiscal 2000.
Cash provided by operations was $188,000 for the six months ended December 31,
1999. Cash used in investing activities was $1,132,000, representing funds
invested in property, plant and equipment. During the six months ended December
31, 1999, cash provided by financing activities, consisting primarily of
increased bank borrowings, totaled $914,000. Working capital at December 31,
1999 was $1,180,000 up from $403,000 at June 30, 1999.
Under the terms of the transaction whereby the Company purchased Memry Europe,
Memry was obligated to pay an additional $1,046,000 in cash to the shareholders
of Memry Europe on October 30, 1999. On September 16, 1999, the Company signed
an agreement to convert approximately $455,000 of the obligation to a term loan
which matures on June 30, 2000. On October 29, 1999, the Company paid
approximately $258,000 to other former shareholders of Memry Europe. On December
17, 1999, the Company signed an agreement with the holder of approximately
$333,000 of the obligation to convert such obligation to a combination of common
stock and warrants.
On June 30, 1998, the Company and Webster Bank entered into a Commercial
Revolving Loan, Term Loan, Line of Credit and Security Agreement and related
financing documents and agreements (the "Webster Facility"). Upon entering into
the Webster Facility, the Company paid off all amounts outstanding under its
prior credit facility with First Union National Bank. The Webster Facility
(prior to the amendment described below) included a revolving loan, an equipment
loan line of credit and a $500,000 term loan. The term loan is to be repaid in
equal monthly installments of principal over its five-year term. The revolving
loan provided for borrowings up to the lesser of (a) $3,000,000 or (b) an amount
equal to the aggregate of (1) 80% of eligible accounts receivable and (2) the
lesser of $1,000,000 or 35% of eligible inventory. The revolving loan requires
the payment of a commitment fee equal to .25% per annum of the daily-unused
portion of the revolving loan. The equipment loan line of credit provides for
equipment financing up to the lesser of $750,000 or 75% of the purchase price
for eligible equipment each year through June 30, 2001. On June 30, 1999, the
Company converted $668,000 from the equipment line of credit into a term loan.
The Company has the remaining option of converting amounts borrowed under the
equipment line of credit to term loans on July 1, 2000 and 2001
On November 30, 1999, the Company and Webster Bank reached agreement on an
amendment to the Webster Facility. Under the terms of the agreement, the
revolving loan now provides for borrowings up to the lesser of (a) $5,000,000 or
(b) an amount equal to the aggregate of (1) 80% of eligible accounts receivable
and (2) the lesser of $1,000,000 or 35% of eligible inventory. The equipment
loan is amended to provide for equipment financing up to the lesser of
$1,250,000 or 75% of the purchase price for eligible equipment each year through
June 30, 2001. A new term loan in the amount of $1,000,000 has been provided
with the requirement that not less than $500,000 of the term loan will be used
to finance new machinery and equipment purchases. The other major provisions of
the agreement remain unchanged. At December 31, 1999, an aggregate amount of
approximately $4,180,000 was outstanding under the Webster Facility. The Webster
Facility is secured by substantially all of the Company's domestic assets.
Interest on the revolving loan and equipment line of credit is variable based on
either LIBOR or the Prime Rate as published in the Wall Street Journal, as
elected by the Company. Interest on the term loan and converted equipment loans
is either fixed, at a rate based on the U.S. Treasury yield, or variable based
on the Prime Rate, as elected by the Company. The Company has the ability to
convert between the different rates from time to time subject to certain
conditions.
In addition, the credit facility contains various restrictive covenants,
including, among others, limitations on encumbrances
11
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and additional debt, prohibition on the payment of dividends or redemption of
stock except in connection with certain existing put rights, restrictions on
management/ownership changes and required compliance with specified financial
ratios. As of December 31, 1999, the Company was in breach of certain of these
covenants related to financials conditions and ratios, but the company has since
received a waiver or covenant modification for such financial covenants from
Webster Bank.
Memry Europe has a primary banking relationship with KBC Bank and Insurance
Group of Belgium. As of December 31, 1999, an aggregate of approximately
$327,000 was outstanding with KBC in short-term and long-term debt.
The Company has in the past grown through acquisitions (including the
acquisition of Wire Solutions, Memry Europe and Raychem Corporation's nickel
titanium product line). As part of its continuing growth strategy, the Company
expects to continue to evaluate and pursue opportunities to acquire other
companies, assets and product lines that either complement or expand the
Company's existing businesses. The Company intends to use available cash from
operations and authorized but unissued common stock to finance any such
acquisitions. The Company does not currently, however, contemplate any
additional material acquisitions for fiscal 2000.
The Company plans to spend between $4.0 and $5.0 million on capital expenditures
during the fiscal year ending June 30, 2000, in order to handle its expected
increased sales volume of SMA and superelastic materials. The Company expects
that it will be able to pay for these expenditures through a combination of cash
flow generated through operations, increased borrowings, and sale of stock.
In connection with a December 1994 subordinated debt financing, the Company
granted Connecticut Innovations, Incorporated ("CII"), currently the holder of
both common stock and warrants of the Company, a "put" right if: (i) at any time
before the earlier of June 28, 2006 and the date on which CII ceases to hold at
least 35% of the common stock underlying the convertible securities originally
issued to it, the Company ceases to (a) maintain its corporate headquarters and
all of its product business operations in the State of Connecticut (including
the assembly of all products to be sold to U.S. Surgical Corporation), excluding
the Company's components and sub-assembly business acquired from Raychem, (b)
base its president and chief executive officer, a majority of its senior
executives, and all of its administrative, financial, research and development,
marketing and customer service staff relating to its product business (subject
to the same inclusions and exclusions as clause (a)) in the State of
Connecticut, (c) conduct all of its operations relating to its product business
directly or through subcontractors and through licensed operations in the State
of Connecticut (subject to the same inclusions and exclusions as clause (a)),
and (d) maintain its principal bank accounts with banks located in the State of
Connecticut (provided, however, that assets, revenues, employees, operations and
bank accounts attributable to any entity acquired by the Company shall not be
considered when determining if the Company has satisfied such requirements so
long as such entity (1) was acquired in an arm's length transaction, (2) was not
an affiliate of the Company and was not controlled by an affiliate of the
Company prior to such acquisition, and (3) had been in existence and operating
as a business for at least one year at the time of the acquisition); or (ii) the
Company fails to keep the Registration Statement on Form S-2 that went effective
on January 31, 1997 (the "Registration Statement"), covering the offer and sale
by certain of the Company's shareholders (including CII) of up to 3,550,630
shares (including up to 3,041,963 shares beneficially owned at such time by CII)
of the Company's common stock, in effect for an aggregate of 120 days during any
rolling twelve month period during the three years which the Company is required
to maintain the effectiveness of the Registration Statement. Upon CII's exercise
of its put, the Company shall be obligated to purchase from CII all the
Company's Common Stock then owned by CII and underlying warrants then owned by
CII at a price equal to the greater of the then current market price of the
Company's common stock or $2.00 per share, less, in either event, the aggregate
amount of unpaid exercise prices of all warrants put to the Company. Using $3.00
per share, which was approximately the market price for the Company's common
stock on January 28, 2000, as the put price per share, the aggregate put price
that would have to be paid by the Company if the put were exercised would be
approximately $7,124,832. To the extent that the current market value of the
Company's common stock exceeds $3.00 per share at any time, the put price would
be greater. If CII were to have the right to put its securities and were to
choose to exercise that right, it would have a serious adverse effect on the
Company's liquidity and the Company would most likely have to seek equity
financing to be able to meet its obligations to CII. However, the Company
believes that it has the ability to insure that its operations do not move from
Connecticut in a manner that would trigger CII's put, and the Company believes
it has fulfilled its obligation to cause the Registration Statement to be
maintained in a manner that would prevent CII's put from being operative.
The Company believes that the combination of its borrowing facility, its ability
to raise equity capital in the past and what it believes will be material net
profits from operations during the last three quarters of fiscal 2000 will be
sufficient to meet the Company's capital requirements during the remainder of
the fiscal year.
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YEAR 2000 ISSUE
The "Year 2000 Issue" results from computer programs being written using
two digits, instead of four, to define a given year. Programs running
time-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000, which could result in disruptions to various activities and
operations, miscalculations and even system failures.
Prior to the end of calendar year 1999, the Company upgraded its internal
computer systems to make them as Year 2000 compliant as possible. The Company
completed (i) formal testing of such new systems, (ii) an investigation
regarding the Year 2000 readiness of its other equipment, and (iii) an inquiry
of its suppliers and customers as to whether the Year 2000 Issue will create
substantial risks or disruption.
As of February 10, 1999, the Company had not experienced any material Year
2000 problems.
EURO CONVERSION
The Company conducts business in multiple currencies, including the
currencies of various European countries in the European Union which began
participating in the single European currency by adopting the Euro as their
common currency as of January 1, 1999. During the period January 1, 1999 to
January 1, 2002, the existing currencies of the member countries will remain
legal tender and customers and vendors of the Company may continue to use these
currencies when conducting business. Currency rates during this period, however,
will no longer be computed from one legacy currency to another but instead will
first be converted into the Euro. The Company continues to evaluate the Euro
conversion and the impact on its business, both strategically and operationally.
At this time, the conversion to the Euro has not had, nor is expected to have, a
material adverse effect on the financial condition or results of operations of
the Company.
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PART II - OTHER INFORMATION
The statements in this quarterly report on Form 10-QSB that are not historical
fact constitute "forward-looking statements". Said forward-looking statements
involve risks and uncertainties which may cause the actual results, performance
or achievements of the Company and its subsidiaries to be materially different
from any future results, performance or achievements, express or implied by such
forward-looking statements. These forward-looking statements are identified by
their use of forms of such terms and phrases as "expects", "intends", "goals",
"estimates", "projects", "plans", "anticipates", "should", "future", "believes"
and "scheduled".
The variables which may cause differences include, but are not limited to, the
following: general economic and business conditions; competition; success of
operating initiatives; operating costs; advertising and promotional efforts; the
existence or absence of adverse publicity; changes in business strategy or
development plans; the ability to retain management; availability, terms and
deployment of capital; business abilities and judgement of personnel;
availability of qualified personnel; labor and employee benefit costs;
availability and costs of raw materials and supplies; and changes in, or failure
to comply with, government regulations. Although the Company believes that the
assumptions underlying the forward looking statements contained herein are
reasonable, any of the assumptions could be inaccurate, and therefore, there can
be no assurance that the forward-looking statements included in this filing will
prove to be accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the objectives and expectations of the Company will be achieved.
ITEM 2. CHANGES IN SECURITIES
On December 17, 1999, the Company exchanged 195,852 shares of its common stock
and a warrant to purchase up to 39,170 additional shares at a price of $2.00 per
share, for an obligation owed to a former shareholder of AMT in the approximate
amount of $333,000. The Company believes that the offer and sale of its
securities to the former AMT shareholder was exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
by virtue of Section 4(2) thereof.
On November 22, 1999, the Company issued 15,000 shares of its common stock to
Jonathan Stein in exchange for consulting services valued at $24,375. The
Company believes that the issuance of these shares to Mr. Stein was exempt from
the registration requirements of the Securities Act by virtue of Section 4(2)
thereof.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On November 23, 1999, the Company held its annual meeting of stockholders. At
such meeting, the Company's six nominees for director, James G. Binch, Patrick
F. Cleary, Kempton J. Coady III, Jack H. Halperin, Esq., W. Andrew Krusen, Jr.,
and Robert J. Thatcher were re-elected to the Company's Board of Directors by
the vote specified below:
<TABLE>
<CAPTION>
No. of Votes Broker
Nominee For Against/Withheld Abstentions Non-Votes
- ------- --- ---------------- ----------- ---------
<S> <C> <C> <C> <C>
James G. Binch 15,133,582 83,172 0 0
Patrick F. Cleary 15,133,582 83,172 0 0
Kempton J. Coady III 15,133,582 83,172 0 0
Jack H. Halperin, Esq.. 15,133,582 83,172 0 0
W. Andrew Krusen, Jr. 15,133,582 83,172 0 0
Robert J. Thatcher 15,108,582 108,172 0 0
</TABLE>
Also at such annual meeting, the Company's shareholders approved an amendment to
the Company's Certificate of Incorporation increasing the number of authorized
shares of common stock from 30,000,000 to 40,000,000. The vote on such amendment
was 15,053,586 shares in favor, 149,828 shares against, 13,828 shares abstaining
and 0 broker non-votes.
14
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit Number Description of Exhibit
- -------------- ----------------------
10.1 Amendment Agreement, dated November 30, 1999,
between the Company and Webster Bank.*
10.2 Amended and Restated Revolving Loan Note,
dated November 30, 1999, by the Company in
favor of Webster Bank.*
10.3 Amended and Restated Equipment Loan Note,
dated November 30, 1999, by the Company in
favor of Webster Bank.*
10.4 Loan Agreement, dated September 16, 1999,
between Swissmetal and the Company.*
10.5 Agreement, dated as of December 17, 1999,
among Memry Holdings, S.A, the Company and
G.I.M.V.*
27 Financial Data Schedule*
- ---------------------------------
* Submitted herewith electronically
15
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by undersigned, thereunto duly
authorized.
Memry Corporation
Date: February 14, 2000 /s/ James G.Binch
- ----------------------- -----------------
James G. Binch
CEO and Chairman of the Board
Date: February 14, 2000 /s/ Robert P. Belcher
- ----------------------- ----------------------
Robert P. Belcher
Chief Financial Officer,
Treasurer and Secretary
16
<PAGE>
EXHIBIT 10.1
AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT (the "Agreement") dated November 30, 1999, is
between MEMRY CORPORATION, a Delaware corporation with its chief executive
office and principal place of business at 57 Commerce Drive, Brookfield,
Connecticut 06804 ("BORROWER") and WEBSTER BANK, a banking institution with an
office at 185 Asylum Street, City Place II, 5th Floor, HFD 605, Hartford,
Connecticut 06103-3494 ("LENDER") amending a certain Commercial Revolving Loan,
Term Loan, Line of Credit and Security Agreement by and between the Borrower and
the Lender dated June 30, 1998 as amended by a Letter Agreement dated June 3,
1999, and as further amended by a Letter Agreement dated September 22, 1999 (as
amended, the "LOAN AGREEMENT").
W I T N E S S E T H:
--------------------
WHEREAS, pursuant to the Loan Agreement the Lender made a Revolving Loan to
the Borrower in an amount up to $3,000,000 of which the principal amount of
$2,087,473.43 remains outstanding on November 17, 1999; and
WHEREAS, pursuant to the Loan Agreement the Lender made a Term Loan to the
Borrower in the original principal amount of $500,000 of which the principal
amount of $366,666.72 remains outstanding as of November 17, 1999; and
WHEREAS, pursuant to the Loan Agreement the Lender made an Equipment Loan
to the Borrower in an amount up to $750,000, $667,993.00 of which was converted
to term indebtedness on July 1, 1999 in accordance with the terms of the Loan
Agreement of which the principal amount of $593,771.56 remains outstanding as of
November 17, 1999; and
WHEREAS, pursuant to the Loan Agreement, the Borrower reborrowed amounts
under the Equipment Loan, of which the principal amount of $235,498.37 remains
unconverted and outstanding as of November 17, 1999; and
WHEREAS, the Borrower has requested that the Bank: (i) increase the amount
of the Revolving Loan to $5,000,000; (ii) make an additional term loan in the
original principal amount of $1,000,000; and (iii) increase the amount of the
Equipment Loan to $1,250,000; and
WHEREAS, the Borrower has further requested that the Lender amend certain
terms and conditions of the Loan Agreement; and
WHEREAS, the Lender is willing to increase the amounts of the Loans as
aforesaid and to amend certain other terms and conditions of the Loan Agreement
on the terms and conditions set forth herein.
<PAGE>
-2-
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
(S) 1. Definitions. Capitalized terms used herein without definition that
-----------
are defined in the Loan Agreement shall have the same meanings herein as
therein.
(S) 1.1. Ratification of Existing Agreements. All of the Borrower's
-----------------------------------
obligations and liabilities to the Lender as evidenced by or otherwise arising
under the Loan Agreement, the Revolving Loan Note, the Term Loan Note, the
Equipment Loan Note, the Converted Equipment Loan Note and each and every other
document, instrument or agreement executed in connection therewith (the "Loan
Documents"), are, by Borrower's execution of this Agreement, ratified and
confirmed in all respects. In addition, by Borrower's execution of this
Agreement, Borrower represents and warrants that no counterclaim, right of set-
off, recoupment or defense of any kind exists or is outstanding with respect to
such obligations and liabilities.
(S) 1.2. Representations and Warranties. Except as set forth on Schedule
------------------------------ --------
I attached hereto and made a part hereof, all of the representations and
- -
warranties made by the Borrower in the Loan Agreement, the Notes and the other
Loan Documents are true and correct on the date hereof as if made on and as of
the date hereof, except to the extent that any of such representations and
warranties expressly relate by their terms to a prior date.
(S) 1.3. Conditions Precedent. The effectiveness of the amendments
--------------------
contemplated hereby shall be subject to the satisfaction on or before the date
hereof of each of the following conditions precedent:
A. Representations and Warranties. All of the representations and
------------------------------
warranties made by the Borrower herein, whether directly or incorporated by
reference, shall be true and correct on the date hereof, except as provided in
(S)3 hereof.
B. Performance; No Event of Default. The Borrower shall have performed
--------------------------------
and complied in all material respects with all terms and conditions herein
required to be performed or complied with by it prior to or at the time hereof,
and there shall exist no material adverse change in the financial condition of
the Borrower, and there shall exist no default, Defaulting Event or Event of
Default.
<PAGE>
-3-
C. Corporate Action. All requisite corporate action necessary for the
----------------
valid execution, delivery and performance by the Borrower of this Agreement and
all other instruments and documents delivered by the Borrower in connection
herewith shall have been duly and effectively taken.
D. Delivery. The parties hereto shall have executed and delivered this
--------
Agreement. In addition, the Borrower shall have executed and delivered such
further instruments, and take such further action as the Lender may have
requested, in each case further to effect the purposes of this Agreement, the
Loan Agreement and the other Loan Documents.
E. Fees and Expenses. The Borrower shall have paid to the Lender all
-----------------
fees and expenses incurred by the Lender in connection with this Agreement, the
Loan Agreement or the other Loan Documents.
F. Commitment Fee. The Borrower shall have paid to the Lender at
--------------
closing a non-refundable commitment fee of $17,500.
1. (S) Amendments to the Loan Agreement.
--------------------------------
A. Amendment to the Preamble of the Loan Agreement. The first Whereas
-----------------------------------------------
clause of the Loan Agreement is hereby amended in its entirety to read as
follows:
"WHEREAS, Borrower has requested Lender to extend to
Borrower the following financial accommodations
(collectively, the "Loans"): a revolving loan in the maximum
aggregate principal amount of up to $5,000,000, a term loan
in the original principal amount of $500,000, an additional
term loan in the original principal amount of $1,000,000,
and a line of credit in the original principal amount of up
to $1,250,000 which provides for, among other things,
amounts outstanding thereunder to be converted to term
indebtedness; and"
B. Amendment to the Definitions of the Loan Agreement. The following
--------------------------------------------------
definitions set forth in Article I of the Loan Agreement are hereby amended in
their entirety to read as follows:
<PAGE>
-4-
"(dd) "Equipment Loan Borrowing Base" shall mean: (I) prior to June
30, 2000, an amount equal to the lesser of: (i) One Million Two Hundred
Fifty Thousand Dollars ($1,250,000); or (ii) seventy-five percent (75%) of
the face amount of net invoices and/or purchase orders for Eligible
Equipment, or (II) commencing June 30, 2000, an amount equal to the lesser
of: (i) One Million Two Hundred Fifty Thousand Dollars ($1,250,000); or
(ii) seventy-five percent (75%) of the face amount of net invoices for
Eligible Equipment."
"(cccc) "Revolving Loan Borrowing Base" shall mean: (I) if the
Increased Revolving Loan Borrowing Base Test is satisfied, an amount equal
to the lesser of:
I. Five Million Dollars ($5,000,000) or
II. an amount equal to the aggregate of (1) eighty percent (80%) of
Eligible Accounts and (2) the lesser of (A) forty-five percent (45%) of
Eligible Inventory, or (B) One Million Seven Hundred Fifty Thousand Dollars
($1,750,000), or (II) if the Increased Revolving Loan Borrowing Base Test
is not satisfied, an amount equal to the lesser of (i) Five Million Dollars
($5,000,000) or (ii) an amount equal to the aggregate of (1) eighty percent
(80%) of Eligible Accounts and (2) the lesser of (A) thirty-five percent
(35%) of Eligible Inventory, or (B) One Million Dollars ($1,000,000). As
used herein, the term "Increased Revolving Loan Borrowing Base Test" means:
the consolidated net sales of the Borrower for the three month period
ending December 31, 1999 equal at least $6,297,375 and the consolidated net
profit before taxes of the Borrower for the three month period ending
December 31, 1999 equals at least $790,933."
"(mmm) "Loan" means a Revolving Loan, the Term Loan, the Additional
Term Loan, an Equipment Loan, or a Converted Equipment Loan, and "Loans"
means the Revolving Loans, the Term Loan, the Additional Term Loan, the
Equipment Loans, and the Converted Equipment Loans."
"(ooo) "Note" means the Revolving Loan Note, the Term Loan Note, the
Additional Term Loan Note, the Equipment Loan Note, the Initial Converted
Equipment Loan Note, the Subsequent Converted Equipment Loan Note or the
Final Converted Equipment Loan Note, and "Notes" means the Revolving Loan
Note, the Term Loan Note, the Additional Term Loan Note, the Equipment Loan
Note, the Initial Converted Equipment Loan Note, the
<PAGE>
-5-
Subsequent Converted Equipment Loan Note and the Final Converted Equipment
Loan Note."
A. Amendment to the Definitions of the Loan Agreement. The following
--------------------------------------------------
definitions are added to Article I of the Loan Agreement, inserted in
alphabetical order and each definition shall be re-lettered accordingly:
"Additional Term Loan" shall have the meaning assigned in Section 3.1
hereof."
"Additional Term Loan Maturity Date" shall mean January 1, 2004."
"Additional Term Loan Note" shall have the meaning assigned in Section
3.1 hereof."
B. Amendment to Article III of the Loan Agreement. Article III of the
----------------------------------------------
Loan Agreement is hereby amended in its entirety to read as follows:
"Section 3.1. Amount. Subject to the terms and conditions contained in this
Agreement, Lender has made a loan to Borrower in the original principal amount
of $500,000 (the "Term Loan"). In addition to this Agreement, the Term Loan
shall be evidenced by a Term Loan Note payable to Lender in the form of Exhibit
-------
B attached hereto (the "Term Loan Note").
- -
Subject to the terms and conditions contained in this Agreement, Lender agrees
to make an additional term loan to Borrower in the original principal amount of
$1,000,000, not less than $500,000 of which shall be used to finance the
purchase of Eligible Equipment (the "Additional Term Loan"). While Lender has
agreed to disburse the full amount of the Additional Term Loan on the date
hereof, prior to June 30, 2000 Borrower shall have submitted to Lender
documentation to evidence the purchase of Eligible Equipment including: (a)
copies of invoices and/or purchase orders and proof of payment, which reflect
the actual cost of the Eligible Equipment being purchased with the proceeds of
not less than $500,000 of such Additional Term Loan, including, if any,
installation and other services and costs associated therewith; (b) evidence
satisfactory to Lender that upon payment of the purchase price therefor, the
Eligible Equipment shall be in the Borrower's physical possession and that (1)
the Borrower has acquired good title to such Eligible Equipment, and (2) such
Eligible Equipment is not subject to any pledge, lien, lease, encumbrance or
charge of any kind whatsoever, other than in favor of Lender. In addition to
this Agreement, the Additional Term Loan shall be evidenced by an Additional
Term Loan Note payable to Lender in the form of Exhibit B-1 attached hereto
-----------
(the "Additional Term Loan Note")."
<PAGE>
-6-
"Section 3.2. Notice and Manner of Establishing Interest Rate. Whenever the
Borrower desires to have the Term Loan or Additional Term Loan accrue interest
as a Fixed Rate Loan, the Borrower shall give the Lender written notice at least
three (3) Business Days prior to the day on which the requested Fixed Rate Loan
is to take effect. Such notice (an "Election Notice") shall specify the
effective date of the Fixed Rate Loan and the duration of the initial Interest
Period. The Borrower shall elect the duration of each succeeding Interest Period
by giving irrevocable written notice to Lender of such duration not less than
three (3) Business Days prior to the last day of the then current Interest
Period applicable to such Fixed Rate Loan. If the Lender does not receive timely
notice of the Interest Period elected by the Borrower, the Borrower shall be
deemed to have elected to convert to a Prime Rate Loan subject to Section 7.2
-----------
below."
"Section 3.3. Monthly Statements. On a monthly basis, Lender shall render a
statement for the Term Loan and the Additional Term Loan, which statements shall
be considered correct and accepted by Borrower and conclusively binding upon
Borrower unless Borrower notifies Lender to the contrary within ten (10) days of
the receipt of any such statement by Borrower. Lender shall have the right to
debit any account of Borrower for all principal, interest and other charges on
the Term Loan and the Additional Term Loan as and when the same shall be due and
payable, if not otherwise paid by Borrower."
C. Amendment to Section 5.1 of the Loan Agreement. Section 5.1 of the
----------------------------------------------
Loan Agreement is hereby amended by inserting the words "(which shall not be
reduced by the amount of the Initial Converted Equipment Loan)" after the words
Borrowing Base so to read as follows:
"Section 5.1 Amount. Subject to the terms and conditions contained in this
Agreement and so long as no Defaulting Event has occurred, Lender agrees to make
loans (collectively, the "Subsequent Equipment Loans" and, individually, a
"Subsequent Equipment Loan") to Borrower from time to time until terminated as
provided below in principal amounts not exceeding in the aggregate at any one
time outstanding the Equipment Loan Borrowing Base (which shall not be reduced
by the amount of the Initial Converted Equipment Loan), it being agreed and
understood that at no time shall the maximum aggregate principal amount of the
Equipment Loans made by Lender exceed the Equipment Loan Borrowing Base."
D. Amendment to Section 5.2 of the Loan Agreement. Section 5.2 of the
----------------------------------------------
Loan Agreement is hereby amended by deleting (a) and substituting the following:
<PAGE>
-7-
"(a) copies of invoices and/or purchase orders (and proof of payment within
90 days after the date of the borrowing made with respect thereto), which
reflect the actual cost of the Eligible Equipment being purchased with the
proceeds of such Subsequent Equipment Loan, including, if any, installation and
other services and costs associated therewith;"
E. Amendment to Section 6.1 of the Loan Agreement. Section 6.1 of the
----------------------------------------------
Loan Agreement is hereby amended by inserting the words "(which shall not be
reduced by the amount of the Initial Converted Equipment Loan)" after the words
Borrowing Base so to read as follows:
"Section 6.1 Amount. Subject to the terms and conditions
contained in this Agreement and so long as no Defaulting Event has
occurred, Lender agrees to make loans (collectively, the "Final
Equipment Loans" and, individually, an "Final Equipment Loan") to
Borrower from time to time until terminated as provided below in
principal amounts not exceeding in the aggregate at any one time
outstanding the Equipment Loan Borrowing Base (which shall not be
reduced by the amount of the Initial Converted Equipment Loan or the
Subsequent Converted Equipment Loan), it being agreed and understood
that at no time shall the maximum aggregate principal amount of the
Equipment Loans made by Lender exceed the Equipment Loan Borrowing
Base."
F. Amendment to Section 7.1(a)(ii) of the Loan Agreement. Section
-----------------------------------------------------
7.1(a)(ii) of the Loan Agreement is hereby amended in its entirety to read as
follows:
"(ii) Term Loan and Additional Term Loan. The Term Loan and the
Additional Term Loan shall bear such type of interest as the Borrower may
elect subject to the provisions of this Agreement. The Term Loan and the
Additional Term Loan shall bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto, at a per annum
rate equal to, at the election of the Borrower: (A) if a Prime Rate Loan,
at a floating rate per annum equal to the Prime Rate plus three-quarters of
one percentage point (.75%), or (B) in the case of a Fixed Rate Loan, at a
per annum rate equal to the Fixed Rate plus three hundred twenty-five (325)
basis points."
<PAGE>
-8-
G. Amendment to Section 7.2(h) of the Loan Agreement. Section 7.2(h) of
-------------------------------------------------
the Loan Agreement is hereby amended in its entirety to read as follows:
"(h) Term Loan and Additional Term Loan. Provided that no Event of
Default shall have occurred, the Borrower may, on any Business Day, convert
the outstanding Term Loan or Additional Term Loan bearing interest as a
Prime Rate Loan or a Fixed Rate Loan into a Fixed Rate Loan or a Prime Rate
Loan, respectively, in the same aggregate principal amount, provided,
however, that any conversion of a Fixed Rate Loan shall be made only on the
last Business Day of the then current Interest Period applicable to such
Fixed Rate Loan."
H. Amendment to Section 7.3(a) of the Loan Agreement. Section 7.3(a)
-------------------------------------------------
of the Loan Agreement is hereby amended by inserting the phrase " , Additional
Term Loan" after the words "Term Loan".
I. Amendment to Section 7.7 of the Loan Agreement. Section 7.7 of the
----------------------------------------------
Loan Agreement is hereby amended in its entirety to read as follows:
"Section 7.7. Early Termination Fee. In the event that prior to June
30, 2001 (a) the Revolving Loan is terminated by the Borrower, or (b) the
Revolving Loan is terminated as a result of the occurrence of an Event of
Default, Borrower shall pay to Lender on the effective date of termination,
in addition to any other payments Borrower is required to make hereunder, a
termination fee equal to one percent (1%) of the maximum principal amount
of the Loans (the "Termination Fee"). It is understood that the
determination of the maximum principal amount of the Loans shall be made
without regard to the components of the Revolving Loan Borrowing Base based
upon Eligible Accounts and Eligible Inventory and the component of the
Equipment Loan Borrowing Base based upon Eligible Equipment. For example,
for purposes of this provision, on the date hereof the maximum principal
amount of the Revolving Loan is $5,000,000, the maximum principal amount of
the Equipment Loan is $1,250,000, the maximum principal amount of the Term
Loan is $500,000 and the maximum principal amount of the Additional Term
Loan is $1,000,000 and the Termination Fee would be $77,500."
J. Amendment to Section 11.30 of the Loan Agreement. Section 11.30 of
------------------------------------------------
the Loan Agreement is hereby amended in its entirety to read as follows:
<PAGE>
-9-
"Section 11.30. Debt to Worth Ratio. Permit its Debt to Worth Ratio to
be greater than (a) 4.0 to 1.0 on December 31, 1999, (b) 3.5 to 1.0 on
March 31, 2000, and (c) 3.0 to 1.0 on June 30, 2000, and at the end of each
and every fiscal quarter thereafter."
K. Amendment to Section 11.31 of the Loan Agreement. Section 11.31 of
------------------------------------------------
the Loan Agreement is hereby amended in its entirety to read as follows:
"Section 11.31. Debt Service Coverage Ratio. Permit its Debt Service
Coverage Ratio for each period of four (4) consecutive fiscal quarters to
be less than (a) 1.50 to 1.0 on December 31, 1999, (b) 1.75 to 1.0 on March
31, 2000, and (c) 2.0 to 1.0 on June 30, 2000 and at the end of each and
every fiscal quarter thereafter."
L. Amendment to Section 11.32 of the Loan Agreement. Section 11.32 of
------------------------------------------------
the Loan Agreement is hereby amended in its entirety to read as follows:
"Section 11.32. Leverage Ratio. Permit its Leverage Ratio for each
period of four (4) consecutive fiscal quarters to be greater than (a) 7.0
to 1.0 on December 31, 1999, and (b) 3.0 to 1.0 on March 31, 2000 and at
the end of each and every fiscal quarter thereafter."
M. Amendment to Section 17.1(a) of the Loan Agreement. Section 17.1(a)
--------------------------------------------------
of the Loan Agreement is hereby amended by adding the words "Additional Term
Loan" to the last sentence so as to read:
"At the end of the Revolving Loan Term, Borrower shall pay the entire
balance of the Revolving Loans, the Equipment Loans, the Converted
Equipment Loans, the Term Loan, the Additional Term Loan and all other
outstanding Obligations. Further, upon termination of the Revolving Loan
facility all of the rights, interests and remedies of Lender and
Obligations of Borrower shall survive and Borrower shall have no right to
receive, and Lender shall have no obligation to make, any further Loans."
N. Amendment to Section 17.1(b) of the Loan Agreement. Section 17.1(b)
--------------------------------------------------
of the Loan Agreement is hereby amended in its entirety to read as follows:
"(b) Term Loan and Additional Term Loan.
<PAGE>
-10-
Unless sooner terminated by Lender as a result of the occurrence of an
Event of Default (including without limitation the failure to pay the
Revolving Note upon demand or on its due date), the Term Loan shall be due
and payable in fifty-nine (59) consecutive monthly installments of
principal in the amount of $8,333.33 (plus interest in arrears) commencing
on August 1, 1998 and continuing on the first day of each and every month
thereafter through and including June 1, 2003, and (b) one final
installment of $8,332.53, plus all accrued and unpaid interest, principal
and any other sums due hereunder or under the Term Loan Note on June 30,
2003.
Unless sooner terminated by Lender as a result of the occurrence of an
Event of Default (including without limitation the failure to pay the
Revolving Note upon demand or on its due date), the Additional Term Loan
shall be due and payable in fifty-nine (59) consecutive monthly
installments of principal in the amount of $16,666.67 (plus interest in
arrears) commencing on January 1, 2000 and continuing on the first day of
each and every month thereafter through and including December 1, 2004, and
(b) one final installment of $16,666.67, plus all accrued and unpaid
interest, principal and any other sums due hereunder or under the Term Loan
Note on January 1, 2005."
(S) 1. Expenses. The Borrower agrees to pay to the Bank upon demand an amount
--------
equal to any and all out-of-pocket costs or expenses (including reasonable legal
fees and disbursements) incurred or sustained by the Bank in connection with the
preparation of this Agreement and related matters.
(S) 1.1. Delivery of Notes. Contemporaneously herewith, the Borrower
-----------------
shall execute and deliver to Lender: (a) an Amended and Restated Revolving Loan
Note in form and content satisfactory to Lender which shall be substantially in
the form of Exhibit A attached hereto; (b) an Additional Term Loan Note in form
---------
and content satisfactory to Lender which shall be substantially in the form of
Exhibit B attached hereto; and (c) an Amended and Restated Equipment Loan Note
- ---------
in form and content satisfactory to Lender which shall be substantially in the
form of Exhibit C attached hereto.
---------
The copy of the Revolving Loan Note attached hereto as Exhibit A shall be
deemed to be attached to the Loan Agreement as Exhibit A thereto and the note
---------
attached thereto as Exhibit A is hereby deleted. The copy of the Additional Term
---------
Loan Note attached hereto as Exhibit B shall be deemed to be attached to the
---------
Loan Agreement as Exhibit B-1 thereto. The copy of the Equipment Loan Note
---------
attached hereto as Exhibit C shall be deemed to be attached to the Loan
---------
<PAGE>
-11-
Agreement as Exhibit C thereto and the note attached thereto as Exhibit C is
--------- ---------
hereby deleted.
(S) 1.2 Miscellaneous Provisions.
------------------------
A. Except as otherwise expressly provided by this Agreement, all of the
respective terms, conditions and provisions of the Loan Agreement, the Notes and
the other Loan Documents shall remain the same. It is declared and agreed by
each of the parties hereto that the Loan Agreement, as amended hereby, shall
continue in full force and effect, and that this Agreement and the Loan
Agreement shall be read and construed as one instrument.
B. This Agreement is intended to take effect under, and shall be
construed according to and governed by, the laws of the State of Connecticut.
C. This Agreement may be executed in any number of counterparts, but
all such counterparts shall together constitute but one instrument. In making
proof of this Agreement it shall not be necessary to produce or account for more
than one counterpart signed by each party hereto by and against which
enforcement hereof is sought.
(d) All references in the Notes and Loan Documents to "Loan Agreement"
shall mean and refer to the Loan Agreement as amended by this Agreement.
[Signatures on the following page]
<PAGE>
-12-
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized officers as of the date first above written.
Witnesses:MEMRY CORPORATION
By: /s/
Its
Witnessed:WEBSTER BANK
By /s/
Its
STATE OF CONNECTICUT)
)ss. _________________
COUNTY OF_____________)
Before me, the undersigned, this ____ day of November, 1999, personally
appeared ___________________, known to me to be the ____________ of MEMRY
CORPORATION and that he as such officer, signer and sealer of the foregoing
instrument, acknowledged the execution of the same to be his free act and deed
individually and as such officer, and the free act and deed of said corporation.
In Witness Whereof; I hereunto set my hand.
Notary Public
My Commission Expires:
Commissioner of the Superior Court
<PAGE>
-13-
STATE OF CONNECTICUT )
) ss. Hartford
COUNTY OF HARTFORD )
Before me, the undersigned, this ____ day of November, 1999 personally
appeared ________________________, known to me to be the ___________________ of
WEBSTER BANK, and that he as such officer, signer and sealer of the foregoing
instrument, acknowledged the execution of the same to be his free act and deed
individually and as such officer, and the free act and deed of said corporation.
In Witness Whereof; I hereunto set my hand.
Notary Public
My Commission Expires:
Commissioner of the Superior Court
<PAGE>
Exhibit 10.2
AMENDED AND RESTATED REVOLVING LOAN NOTE
$5,000,000 November 30, 1999
For value received, the undersigned, MEMRY CORPORATION, a Delaware
corporation ("Maker"), promises to pay to WEBSTER BANK, or order ("Lender"), at
its office at CityPlace II, 5th Floor, HFD 605, Hartford, Connecticut 06103-
3439, or at such other place as the holder hereof (including Lender, hereinafter
referred to as "Holder") may designate, the sum of up to FIVE MILLION DOLLARS
($5,000,000), together with interest on the unpaid balance of this Note,
beginning as of the date hereof, before or after maturity or judgment, as
provided for in the Loan Agreement (as defined below), together with all taxes
levied (excluding income taxes) or assessed on this Note or the debt evidenced
hereby against the Holder, and together with all reasonable costs, expenses and
reasonable attorneys' and other reasonable professional fees incurred in any
action to collect this Note or to enforce or foreclose any mortgage, security
agreement or other agreement securing this Note or to protect or sustain the
lien of said mortgage, security agreement or other agreement or in any
litigation or controversy arising from or connected with said mortgage, security
agreement or other agreement or this Note.
This Note is made and delivered by Maker pursuant to Section 2.2 of the
Commercial Revolving Loan, Term Loan, Line of Credit and Security Agreement
dated June 30, 1998 by and between Maker and Lender as amended by a Letter
Agreement dated June 3, 1999, as further amended by a Letter Agreement dated
September 22, 1999, as further amended by an Amendment to Commercial Revolving
Loan, Term Loan, Line of Credit and Security Agreement of even date herewith (as
amended and in effect from time to time, the "Loan Agreement"), and is entitled
to the benefits and is subject to the provisions of the Loan Agreement. All
capitalized terms used herein which are defined in the Loan Agreement that are
not defined herein shall have the same meanings herein as are ascribed to them
in the Loan Agreement.
The Maker also promises to pay interest on the aggregate unpaid principal
amount of the Revolving Loans until all amounts payable under the Loan Agreement
are paid in full, at the rates per annum set forth in or established pursuant to
the Loan Agreement. Such interest shall be payable on such dates as are
determined from time to time pursuant to the Loan Agreement and shall be
calculated as therein provided. Notwithstanding anything to the contrary, the
entire indebtedness under this Note, including but not limited to, all
outstanding principal and accrued and unpaid interest shall be due and payable
in full on June 30, 2001.
The Maker has the right in certain circumstances to prepay the principal of
this Note on the terms and conditions specified in the Loan Agreement.
<PAGE>
-2-
If an Event of Default shall occur, the entire unpaid principal amount of
this Note, all of the unpaid interest accrued thereon and any other sum due
hereunder may become or be declared due and payable in the manner and with the
effect provided in the Loan Agreement.
THE MAKER HEREBY WAIVES TRIAL BY JURY IN ANY COURT AND IN ANY SUIT, ACTION
OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY RELATED TO
THE FINANCING TRANSACTIONS OF WHICH THIS NOTE IS A PART AND/OR THE ENFORCEMENT
OF ANY OF HOLDERS' RIGHTS AND REMEDIES, INCLUDING WITHOUT LIMITATION, TORT
CLAIMS. THE MAKER ACKNOWLEDGES THAT IT MAKES THIS WAIVER KNOWINGLY, VOLUNTARILY,
WITHOUT DURESS AND ONLY AFTER CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER
WITH ITS ATTORNEYS. THE MAKER FURTHER ACKNOWLEDGES THAT LENDER HAS NOT AGREED
WITH OR REPRESENTED TO MAKER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE
FULLY ENFORCED IN ALL INSTANCES.
THE MAKER ACKNOWLEDGES THAT THE LOAN EVIDENCED BY THIS NOTE IS A COMMERCIAL
TRANSACTION AND WAIVES ITS RIGHTS TO NOTICE AND HEARING UNDER CHAPTER 903a OF
THE CONNECTICUT GENERAL STATUTES, OR AS OTHERWISE ALLOWED BY ANY STATE OR
FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH HOLDER MAY DESIRE TO
USE, AND FURTHER WAIVES ITS RIGHTS TO REQUEST THAT HOLDER POST A BOND, WITH OR
WITHOUT SURETY, TO PROTECT SAID MAKER AGAINST DAMAGES THAT MAY BE CAUSED BY ANY
PREJUDGMENT REMEDY SOUGHT OR OBTAINED BY HOLDER. The Maker further waives
diligence, demand, presentment for payment, notice of nonpayment, protest and
notice of protest, and notice of any renewals or extensions of this Note, and
all rights under any statute of limitations, and further consents to the release
of all or any part of the security for the payment hereof, at the discretion of
Holder, or the release of any party liable for this obligation without affecting
the liability of the other parties hereto. The Maker further (i) consents to
any and all delays, extensions, renewals or other modifications of this Note,
any other Financing Agreements or the debts or collateral evidenced hereby or
thereby or any waivers of any term hereof or thereof, any release, surrender,
taking of additional, substitution, exchange, failure to perfect or record any
interest in, failure to preserve or realize upon, failure to lawfully dispose
of, or any other impairment of, any collateral or other security, or any other
failure to act by the Lender or any other forbearance or indulgence shown by the
Lender, from time to time and in one or more instances (without notice to or
assent from the Maker) and agrees that none of the foregoing shall release,
discharge or otherwise impair any of their liabilities; and (ii) waives any
defenses based on suretyship or impairment of collateral. THE MAKER ACKNOWLEDGES
THAT IT MAKES THIS WAIVER KNOWINGLY, VOLUNTARILY, WITHOUT DURESS AND ONLY AFTER
CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH ITS
<PAGE>
-3-
ATTORNEYS. THE MAKER FURTHER ACKNOWLEDGES THAT LENDER HAS NOT AGREED WITH OR
REPRESENTED TO MAKER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY
ENFORCED IN ALL INSTANCES.
This Note hereby amends and restates a certain Revolving Loan Note dated
June 30, 1998, in the original principal amount of up to $3,000,000 executed and
delivered by the Maker to the Lender.
This Note shall be governed by and construed in accordance with the laws of
the State of Connecticut (but not its conflicts of law provisions).
MEMRY CORPORATION
By: /s/
Its
<PAGE>
Exhibit 10.3
AMENDED AND RESTATED EQUIPMENT LOAN NOTE
----------------------------------------
$1,250,000 November 30, 1999
For value received, the undersigned, MEMRY CORPORATION, a Delaware
corporation ("Maker"), promises to pay to WEBSTER BANK, or order ("Lender"), at
its office at CityPlace II, 5th Floor, HFD 605, Hartford, Connecticut 06103-
3439, or at such other place as the holder hereof (including Lender, hereinafter
referred to as "Holder") may designate, the sum of up to ONE MILLION TWO HUNDRED
FIFTY THOUSAND DOLLARS ($1,250,000), together with interest on the unpaid
balance of this Note, beginning as of the date hereof, before or after maturity
or judgment, as provided for in the Loan Agreement (as defined below), together
with all taxes levied (excluding income taxes) or assessed on this Note or the
debt evidenced hereby against the Holder, and together with all reasonable
costs, expenses and reasonable attorneys' and other reasonable professional fees
incurred in any action to collect this Note or to enforce or foreclose any
mortgage, security agreement or other agreement securing this Note or to protect
or sustain the lien of said mortgage, security agreement or other agreement or
in any litigation or controversy arising from or connected with said mortgage,
security agreement or other agreement or this Note.
This Note is made and delivered by Maker pursuant to Section 4.2 of the
Commercial Revolving Loan, Term Loan, Line of Credit and Security Agreement
dated June 30, 1998 by and between Maker and Lender, as amended by a Letter
Agreement dated June 3, 1999, as further amended by a Letter Agreement dated
September 22, 1999, as further amended by an Amendment to Commercial Revolving
Loan, Term Loan, Line of Credit and Security Agreement of even date herewith (as
amended and in effect from time to time, the "Loan Agreement"), and is entitled
to the benefits and is subject to the provisions of the Loan Agreement. All
capitalized terms used herein which are defined in the Loan Agreement that are
not defined herein shall have the same meanings herein as are ascribed to them
in the Loan Agreement.
The Maker also promises to pay interest on the aggregate unpaid principal
amount of the Equipment Loans until all amounts payable under the Loan Agreement
are paid in full, at the rates per annum set forth in or established pursuant to
the Loan Agreement. Such interest shall be payable on such dates as are
determined from time to time pursuant to the Loan Agreement and shall be
calculated as therein provided. Notwithstanding anything to the contrary, the
entire indebtedness under this Note, including but not limited to, all
outstanding principal and accrued and unpaid interest shall be due and payable
in full on December 1, 2004.
The Maker has the right in certain circumstances to prepay the principal of
this Note on the terms and conditions specified in the Loan Agreement.
<PAGE>
-2-
If an Event of Default shall occur, the entire unpaid principal amount of
this Note, all of the unpaid interest accrued thereon and any other sum due
hereunder may become or be declared due and payable in the manner and with the
effect provided in the Loan Agreement.
THE MAKER HEREBY WAIVES TRIAL BY JURY IN ANY COURT AND IN ANY SUIT, ACTION
OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY RELATED TO
THE FINANCING TRANSACTIONS OF WHICH THIS NOTE IS A PART AND/OR THE ENFORCEMENT
OF ANY OF HOLDER'S RIGHTS AND REMEDIES, INCLUDING WITHOUT LIMITATION, TORT
CLAIMS. THE MAKER ACKNOWLEDGES THAT IT MAKES THIS WAIVER KNOWINGLY, VOLUNTARILY,
WITHOUT DURESS AND ONLY AFTER CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER
WITH ITS ATTORNEYS. THE MAKER FURTHER ACKNOWLEDGES THAT LENDER HAS NOT AGREED
WITH OR REPRESENTED TO MAKER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE
FULLY ENFORCED IN ALL INSTANCES.
THE MAKER ACKNOWLEDGES THAT THE LOAN EVIDENCED BY THIS NOTE IS A COMMERCIAL
TRANSACTION AND WAIVES ITS RIGHTS TO NOTICE AND HEARING UNDER CHAPTER 903a OF
THE CONNECTICUT GENERAL STATUTES, OR AS OTHERWISE ALLOWED BY ANY STATE OR
FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH HOLDER MAY DESIRE TO
USE, AND FURTHER WAIVES ITS RIGHT TO REQUEST THAT HOLDER POST A BOND, WITH OR
WITHOUT SURETY, TO PROTECT SAID MAKER AGAINST DAMAGES THAT MAY BE CAUSED BY ANY
PREJUDGMENT REMEDY SOUGHT OR OBTAINED BY HOLDER. The Maker further waives
diligence, demand, presentment for payment, notice of nonpayment, protest and
notice of protest, and notice of any renewals or extensions of this Note, and
all rights under any statute of limitations, and further consents to the release
of all or any part of the security for the payment hereof, at the discretion of
Holder, or the release of any party liable for this obligation without affecting
the liability of the other parties hereto. The Maker further (i) consents to any
and all delays, extensions, renewals or other modifications of this Note, any
other Financing Agreements or the debts or collateral evidenced hereby or
thereby or any waivers of any term hereof or thereof, any release, surrender,
taking of additional, substitution, exchange, failure to perfect or record any
interest in, failure to preserve or realize upon, failure to lawfully dispose
of, or any other impairment of, any collateral or other security, or any other
failure to act by the Lender or any other forbearance or indulgence shown by the
Lender, from time to time and in one or more instances (without notice to or
assent from the Maker) and agrees that none of the foregoing shall release,
discharge or otherwise impair any of their liabilities; and (ii) waives any
defenses based on suretyship or impairment of collateral. THE MAKER ACKNOWLEDGES
THAT IT MAKES THIS WAIVER KNOWINGLY, VOLUNTARILY, WITHOUT DURESS AND ONLY AFTER
CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS. THE MAKER
FURTHER ACKNOWLEDGES THAT LENDER HAS NOT
<PAGE>
-3-
ATTORNEYS. THE MAKER FURTHER ACKNOWLEDGES THAT LENDER HAS NOT AGREED WITH OR
REPRESENTED TO MAKER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY
ENFORCED IN ALL INSTANCES.
This Note hereby amends and restates a certain Equipment Loan Note dated
June 30, 1998, in the original principal amount of up to $750,000 executed and
delivered by the Maker to the Lender.
This Note shall be governed by and construed in accordance with the laws of
the State of Connecticut (but not its conflicts of law provisions).
MEMRY CORPORATION
By: /s/
Its
<PAGE>
Exhibit No. 10.4
----------------
LOAN AGREEMENT
between
SWISSMETAL
UMS Swiss Metalworks Holding Ltd.
CH-3006 Bern
(hereafter Swissmetal)
and
Memry Corporation
57 Commerce Drive
Brookfield, CT 06804
(hereafter Memry)
- --------------------------------------------------------------------------------
1. From the sale of AMT Memry owes to Swissmetal a compensation payment of
$455,650 due on October 31, 1998.
2. Swissmetal agrees to convert this debt into a loan of the same amount.
3. The loan is to be reimbursed on June 30, 2000 in full.
4. Interest on the loan is 1.25% per month payable monthly within 10 days
after month end.
5. In case the interest payment schedule is not met the balance of the loan
becomes immediately due and repayable within 10 days.
For SWISSMETAL For Memry Corporation
UMS Swiss Metalworks Holding Ltd.
/s/ /s/
- ------------------------------ -----------------------
<PAGE>
Exhibit 10.5
AGREEMENT
---------
AGREEMENT (this "Agreement"), dated as of December 17, 1999, by and among
(i) MEMRY HOLDINGS, S.A. (the "Buyer"), a Belgian corporation and a wholly-owned
subsidiary of Memry Corporation, a Delaware corporation (the "Parent"), (ii) the
Parent and (iii) G.I.M.V. (the "Seller").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Seller was previously a shareholder of Advanced Materials and
Technologies, N.V., since renamed Memry Europe, N.V. (the "Company"); and
WHEREAS, pursuant to Section 2.13 of a Stock Purchase Agreement, dated
October 30, 1998 (the "Purchase Agreement"), among Buyer, Seller and certain
other parties, Buyer owes the Seller $332,948.13 (the "Support Payment"); and
WHEREAS, Seller is willing to exchange its right to receive the Support
Payment for (i) 195,852 shares (the "Purchased Shares") of the Parent's common
stock, par value $0.01 per share (the "Parent Common Stock"), and (ii) a
Warrant, in the form of Annex I hereto, to purchase up to 39,170 additional
shares of Parent Common Stock at a purchase price of $2.00 per share (the
"Warrant"), and the Parent and the Buyer desire to issue and deliver the
Purchased Shares and the Warrant in exchange for the cancellation and
forgiveness of the Support Payment, all upon the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto, intending to be legally bound, agree as
follows:
1. Basic Transaction.
-----------------
1.1 Seller hereby forgives the obligation of both Buyer and Parent to
make the Support Payment pursuant to Section 2.13 of the Purchase Agreement, and
hereby irrevocably releases both Buyer and Parent from any such claim. In
exchange for such release and forgiveness, Buyer is hereby delivering to Seller
(i) a certificate, in the name of Seller, for the Purchased Shares, (ii) the
Warrant, and (iii) an opinion of Finn Dixon & Herling LLP, the Parent's counsel,
in the form of Annex II hereto.
1.2 The parties agree that, for all tax and accounting purposes,
Seller shall be deemed to have paid $300,000 for the Purchased Shares and
$32,948.13 for the Warrant.
2. Seller's Representations and Warranties. In connection with the
---------------------------------------
issuance of (i) the Purchased Shares, (ii) the Warrants, and (iii) the shares of
Parent Common Stock underlying the Warrant upon the exercise thereof ((i), (ii)
and (iii), collectively, the "Parent Securities") to the Seller, the Seller
hereby represents, warrants and acknowledges to the Buyer and the Parent as
follows:
2.1 The Parent Securities are being acquired by the Seller for its
own account, for investment purposes and not with a view to the sale or
distribution of all or any part of the Parent Securities, nor with any present
intention to sell or in any way distribute the same, as those terms are used in
the
<PAGE>
Securities Act of 1933, as amended (the "Act"), and the rules and regulations
promulgated thereunder.
2.2 The Seller has sufficient knowledge and experience in financial
matters so as to be capable of evaluating the merits and risks of acquiring the
Parent Securities.
2.3 The Seller has reviewed copies of such documents and other
information as the Seller has deemed necessary in order to make an informed
investment decision with respect to the Seller's acquisition of the Parent
Securities.
2.4 The Seller understands that the Parent Securities may not be
sold, transferred or otherwise disposed of without registration under the Act or
the availability of an exemption therefrom, and that in the absence of an
effective registration statement covering the Parent Securities or an available
exemption from registration under the Act, the Parent Securities must be held
indefinitely. Further, the Seller understands and has the financial capability
of assuming the economic risk of an investment in the Parent Securities for an
indefinite period of time.
2.5 The Seller has been advised that the Seller will not be able to
dispose of the Parent Securities, or any interest therein, without first
complying with the relevant provisions of the Act and any applicable state
securities laws.
2.6 The Seller acknowledges that the Parent is under no obligation to
register the Parent Securities or to furnish any information or take any other
action to assist the undersigned in complying with the terms and conditions of
any exemption which might be available under the Act or any state securities
laws with respect to sales of the Parent Securities in the future.
2.7 Each certificate representing Parent Securities or any other
securities issued or issuable, directly or indirectly, in respect of the Parent
Securities upon any stock split, stock dividend, recapitalization, merger,
consolidation, share exchange or similar event, including pursuant to Section
4.1 below, shall be endorsed, stamped or otherwise imprinted with a legend in
substantially the following form:
THE SALE AND ISSUANCE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAW OF ANY STATE OR OTHER JURISDICTION. THESE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR
IN CONNECTION WITH, THE DISTRIBUTION THEREOF. THESE
SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, OR TRANSFERRED
UNLESS (I) A REGISTRATION STATEMENT UNDER THE ACT IS IN
EFFECT AS TO THESE SECURITIES AND SUCH OFFER, SALE, PLEDGE,
OR TRANSFER IS IN COMPLIANCE WITH APPLICABLE SECURITIES LAW
OF ANY STATE OR OTHER JURISDICTION OR (II) THERE IS AN
OPINION OF COUNSEL OR OTHER EVIDENCE, IN EITHER CASE,
SATISFACTORY TO THE ISSUER OF THIS CERTIFICATE, THAT AN
EXEMPTION THEREFROM IS AVAILABLE AND THAT SUCH OFFER, SALE,
PLEDGE, OR TRANSFER IS IN COMPLIANCE WITH APPLICABLE
SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION.
-2-
<PAGE>
Seller agrees that the Parent may make a notation to this effect on its
records and instruct any transfer agent of the Parent Securities to impose
transfer restrictions on the shares represented by certificates bearing the
legend referred to in this section to enforce the provisions of this Agreement.
2.8 Seller has the capacity and power to enter into and execute this
Agreement and to perform fully Seller's obligations hereunder. The execution of
this Agreement and the consummation by Seller of the transactions contemplated
hereby have been approved and authorized by all necessary corporate action.
This Agreement has been duly executed by Seller and constitutes the legal, valid
and binding obligation of Seller, enforceable against Seller in accordance with
its terms, subject to applicable bankruptcy, liquidation and other concursus
rules.
2.9 The execution of this Agreement by Seller, the consummation of
the transactions contemplated hereby and the performance by Seller of this
Agreement in accordance with its terms and conditions will not: (i) require any
Permit (as defined in the Purchase Agreement), or any notice to, filing or
registration with, or permit, license, variance, waiver, exemption, franchise,
order, consent, authorization or approval of, any other person; (ii) violate,
conflict with or result in a breach of any provision of or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination or modification of, or accelerate
the performance required by, or modify (or allow any other party thereto to
modify), any of the terms, conditions or provisions of (x) Seller's articles of
association or (y) any contract or other agreement to which Seller is a party or
by or to which Seller is bound or subject; or (iii) violate any judgment,
ruling, order, writ, injunction, award, decree, statute, law, ordinance, code,
rule or regulation of any court or foreign, federal, state, provincial,
regional, county or local government or any other governmental, regulatory or
administrative agency or authority which is applicable to Seller.
3. Disposition of Parent Securities.
--------------------------------
3.1 Seller hereby agrees that it shall make no disposition of the
Parent Securities unless and until:
3.1.1 Seller shall have notified the Parent of the proposed
disposition and provided a written summary of the terms and conditions of the
proposed disposition;
3.1.2 Seller shall have complied with all requirements of this
Agreement applicable to the disposition of the Parent Securities; and
3.1.3 Seller shall have provided the Parent with an opinion of
counsel (which counsel shall be Baker & McKenzie or other counsel that is
reasonably acceptable to the Parent), in form and substance satisfactory to the
Parent, that (i) the proposed disposition does not require registration of the
Parent Securities under the Act or (ii) all appropriate action necessary for
compliance with the registration requirements of the Act or of any exemption
from registration available under the Act (including Rule 144 promulgated
thereunder) has been taken.
3.2 The Parent shall not be required (i) to transfer on its books any
Parent Securities that have been sold or transferred in violation of the
provisions of this (S)3 or (ii) to treat as the owner of the Parent Securities,
or otherwise to accord voting or dividend rights to, any transferee to whom the
Parent Securities have been transferred in contravention of this Agreement.
-3-
<PAGE>
4. Anti-Dilution Protection.
------------------------
4.1 If, at any and each time subsequent to the date hereof and prior
to December 15, 2001, the "Exercise Price" of the Warrant is reduced by virtue
of the provisions of Section 3(b) thereof (or would have been so reduced by
virtue of said Section 3(b) but for the fact that the Warrant is then no longer
outstanding) to less than $1.70, then Parent will promptly grant and issue to
Seller an option, exercisable for thirty (30) days from its receipt thereof by
Seller, to purchase, in whole or in part, for a cash purchase price of $0.01 per
share, that number of shares of Parent Common Stock equal to the difference
between (X) the product of (i) 195,852 plus the number of options, if any,
previously delivered to Seller pursuant to this Section 4.1, multiplied by (ii)
a fraction, the numerator of which is equal to the lesser of $1.70 and the
Exercise Price of the Warrant immediately prior to such reduction in the
Exercise Price, and the denominator of which is equal to the Exercise Price of
the Warrant immediately after such reduction in the Exercise Price, minus (Y)
195,852 plus the number of options, if any, previously delivered to Seller
pursuant to this Section 4.1.
4.2 The obligations of Parent pursuant to Section 4.1 above are
conditioned upon and subject to Seller making such representations and
warranties to Parent as are reasonably required by Parent in order to ensure
compliance by Parent with applicable securities laws.
5. Representations and Covenants of Parent.
---------------------------------------
5.1 The Parent hereby represents and warrants to the Sellers that,
but for the failure of the bid price of the Company's common stock to meet the
requirements of the National Association of Securities Dealers, Inc. ("NASD")
for listing on The Nasdaq Small Cap Market, the Company currently meets all
stated requirements for its common stock to be so listed.
5.2 The Parent agrees (i) to reapply to the NASD for listing of its
common stock on The Nasdaq Small Cap Market promptly upon the closing bid price
of such common stock being at or above $4.00 per share for twenty consecutive
trading days, and (ii) upon the filing of such application, to use its
reasonable efforts to effect such a listing. For purposes of providing the
benefits of Rule 144 promulgated under the Act to the Seller, the Parent agrees
to file with the U.S. Securities and Exchange Commission, in a timely manner,
all reports and other documents required of the Parent under the Act and the
U.S. Securities Exchange Act of 1934, as amended.
5.3 Each of Buyer and Parent has the capacity and power to enter into
and execute this Agreement and each other agreement and instrument to be entered
into by such party pursuant hereto and to perform fully its obligations
hereunder and thereunder. The execution by Buyer and Parent of this Agreement
and such other agreements and instruments, the consummation by Buyer and Parent
of the transactions contemplated hereby and thereby and the performance by Buyer
and Parent of their respective obligations hereunder and thereunder (including,
without limitation, the authorization of the issuance of the Parent Securities),
have been approved and authorized by all necessary corporate action of the Buyer
and the Parent, respectively. This Agreement has been duly executed by the Buyer
and the Parent and each other agreement and instrument to be entered into by the
Buyer or the Parent pursuant hereto has been duly executed by such party and
each constitutes the valid and binding obligation of the Buyer and/or the
Parent, as the case may be, enforceable against such party in accordance with
its respective terms, subject to applicable bankruptcy, liquidation and other
concursus rules.
-4-
<PAGE>
5.4 The execution of this Agreement and each other agreement to be
entered into by Buyer and Parent pursuant hereto, the consummation of the
transactions contemplated hereby and thereby and compliance with the provisions
hereof and thereof will not: (i) violate, conflict with or result in a breach of
any provision of or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in a
creation of any Lien upon any of the assets, properties or businesses of the
Buyer or the Parent under, any of the terms, conditions or provisions of (x) the
Buyer's Articles of Association or the Parent's Certificate of Incorporation and
by-laws, each as amended, or (y) any contract or other agreement to which the
Buyer or the Parent or any of their respective assets, properties or businesses
is subject; or (ii) violate any judgment, ruling, order, writ, injunction,
award, decree, statute, law, ordinance, code, rule or regulation of any Belgian,
U.S. or other court, or Belgian, U.S. or foreign or other federal, state,
provincial, regional, county or local government or any other governmental,
regulatory or administrative agency or authority which is applicable to the
Buyer or the Parent or any of their respective assets, properties or businesses;
or (iii) require any Permit, or any notice to, filing or registration with, or
permit, license, variance, waiver, exemption, franchise, order, consent,
authorization or approval of, any other person that has not been obtained.
5.5 The Purchased Securities are duly and validly issued, fully-paid
and non-assessable. Upon the proper exercise of the Warrants and the delivery of
shares of Parent Common Stock pursuant thereto, such shares shall be duly and
validly issued, fully-paid and non-assessable. The Parent has reserved 39,170
shares of Parent Common Stock for issuance upon the full exercise of the
Warrant. The Parent has filed all reports, registration statements, definitive
proxy statements and other documents and all amendments thereto and supplements
thereof required to be filed by it with the U.S. Securities and Exchange
Commission since October 31, 1996 (the "SEC Reports"), all of which have
complied in all material respects with all applicable requirements of the Act,
the Exchange Act and the rules and regulations promulgated thereunder. As of the
respective dates of filing in final or definitive form (or, if amended or
superseded by a subsequent filing, then on the date of such subsequent filing),
none of the Parent's SEC Reports contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
in which they were made, not misleading. The Parent has only one class of common
stock, which is not divided into series, and no classes of preferred stock,
outstanding. Upon delivery of the Parent Securities pursuant to this Agreement,
the Seller will acquire valid title thereto, free and clear of any Lien (except
for Liens arising under this Agreement and the agreements contemplated hereby,
Liens existing with respect to the Seller or created by the Seller and
restrictions imposed upon the transfer of securities by applicable securities
laws).
6. Miscellaneous.
-------------
6.1 Entire Agreement. This Agreement contains the entire agreement
----------------
among the parties with respect to the subject matter hereof and supersedes all
prior contracts and other agreements, written or oral, with respect hereto.
6.2 Waivers and Amendments. This Agreement may be amended, modified,
----------------------
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by the parties hereto or, in
the case of a waiver, by the party waiving compliance. No delay on the part of
any party in exercising any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any waiver on the part of any party of any right,
power or privilege hereunder, nor any single or partial exercise of any right,
power or privilege hereunder, preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder.
-5-
<PAGE>
6.3 Governing Law. This Agreement shall be governed by, and
-------------
construed and enforced in accordance with, and subject to, the laws of the State
of New York, U.S.A.
6.4 Jurisdiction. Any dispute arising from this Agreement shall be
------------
settled by arbitration in accordance with the Commercial Arbitration Rules (the
"Rules") and the Guidelines for Expediting Larger, Complex Commercial
Arbitrations of the American Arbitration Association (the "AAA"), and judgment
upon the award rendered in such arbitration may be entered in any court having
jurisdiction over it. The arbitration shall be conducted in New York, New York.
There shall be one arbitrator (referred to as the "Arbitrator"). The parties
shall endeavor to agree on the selection of an Arbitrator, but if no agreement
has been reached within 40 days of claimant's demand that an arbitrator be
selected the Arbitrator shall be selected by the AAA upon the request of any
party. The Arbitrator shall conduct himself as neutral, and be subject to
disqualification pursuant to Section 19 of the Rules. The Arbitrator shall be
compensated at his normal hourly or per diem rates for all time spent in
connection with the arbitration proceeding, and pending final award, appropriate
compensation and expenses shall be advanced equally by the parties. Within 15
days after the Arbitrator has been appointed, a preliminary hearing among the
Arbitrator and counsel for the parties shall be held for the purpose of evolving
a written plan for the management of the arbitration that shall promote the
efficient, expeditious and cost-effective conduct of the proceeding. Nothing in
this (S)7.4 shall prevent a Party from seeking injunctive relief pending a
decision of an arbitrator pursuant to this (S)7.4 or to enforce such a decision
in any court having jurisdiction over the Party against whom injunctive relief
or enforcement is sought.
6.5 Binding Effect; Benefit. This Agreement shall inure to the
-----------------------
benefit of and be binding upon the parties hereto and their respective
successors and assigns. The Parent is a direct, contemplated third party
beneficiary of this Agreement and may bring action (in accordance with (S)6.4)
to enforce the terms hereof.
6.6 Variations in Pronouns. All pronouns and any variations thereof
----------------------
refer to the masculine, feminine or neuter, singular or plural, as the identity
of the person or persons may require.
6.7 Construction. While the Parent's counsel prepared this
------------
Agreement, the parties have participated jointly in the negotiation of this
Agreement. In the event an ambiguity or question of intent arises, this
Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement. The word
"including" shall mean including without limitation.
6.8 Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
6.9 Headings. The headings in this Agreement are for reference
--------
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
6.10 Severability. If any term, provision, covenant or restriction
------------
of this Agreement, or any part thereof, is held by a court of competent
jurisdiction or any foreign, federal, state, county or local government or any
other governmental, regulatory or administrative agency or authority to be
invalid, void, unenforceable or against public policy for any reason, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated
-6-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
Buyer: MEMRY HOLDINGS, S.A.
By: /s/
-----------------------------
Name:
Title:
Parent: MEMRY CORPORATION
By: /s/
-----------------------------
Name:
Title:
Seller: G.I.M.V.
By: /s/
-----------------------------
Title:
By: /s/
-----------------------------
Name:
Title:
-7-
<PAGE>
Exhibit A
THE SALE AND ISSUANCE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER THE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION. THESE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, OR
TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO
THESE SECURITIES AND SUCH OFFER, SALE, PLEDGE, OR TRANSFER IS IN COMPLIANCE WITH
APPLICABLE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION OR (II) THERE IS AN
OPINION OF COUNSEL OR OTHER EVIDENCE, IN EITHER CASE, SATISFACTORY TO THE ISSUER
OF THIS CERTIFICATE, THAT AN EXEMPTION THEREFROM IS AVAILABLE AND THAT SUCH
OFFER, SALE, PLEDGE, OR TRANSFER IS IN COMPLIANCE WITH APPLICABLE SECURITIES LAW
OF ANY STATE OR OTHER JURISDICTION.
FURTHERMORE, THE SALE, PLEDGE, HYPOTHECATION, TRANSFER OR OTHER DISPOSITION AND
THE VOTING OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS AND CONDITIONS OF A CERTAIN AGREEMENT BY AND AMONG THE INITIAL HOLDER OF
THIS CERTIFICATE, MEMRY HOLDINGS, N.V., AN AFFILIATE OF THE ISSUER OF THIS
CERTIFICATE, AND THE ISSUER OF THIS CERTIFICATE. COPIES OF SUCH AGREEMENT MAY BE
OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE ISSUER OF THIS
CERTIFICATE.
Warrant Cert. No. 99-1 Warrants to Purchase 39,170 Shares of Common Stock
Date: December 17, 1999
TRANSFERABLE WARRANTS
TO PURCHASE COMMON STOCK OF
MEMRY CORPORATION
THIS CERTIFIES THAT, for value received, G.I.M.V., with an address of Karel
Oomsstraat 37, B-2018 Antwerpen, Belgium, or registered assignees, is entitled
to purchase from Memry Corporation, a corporation organized and existing under
the laws of the State of Delaware (hereinafter called the "Company"), at a
purchase price equal to the "Exercise Price" (as hereinafter defined), at any
time from and after the date hereof to and including the "Final Exercise Date"
(as hereinafter defined), 39,170 shares of the Company's Common Stock, $.01 par
value (the "Warrant Shares"), subject, however, to the provisions and upon the
terms and conditions hereinafter set forth. The Exercise Price shall initially
be Two and 00/100 Dollars ($2.00) per share, subject to adjustment as
hereinafter provided.
Certain capitalized terms used in this Warrant Certificate and not
otherwise defined are defined in paragraph 4 hereof. By accepting this Warrant
Certificate, the holder agrees to be bound by the terms hereof.
<PAGE>
THESE WARRANTS ARE SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS:
1. (a) Exercise of Warrants. The rights represented by this Warrant
--------------------
Certificate may be exercised by the registered holder hereof, in whole or in
part (but not as to a fractional share of Common Stock), by (i) the delivery of
this Warrant Certificate, together with a properly completed Subscription Form,
to the principal office of the Company at 57 Commerce Drive, Brookfield,
Connecticut 06804 (or such other office or agency of the Company as it may
designate by notice in writing to the holder hereof) and (ii) payment to the
Company, in immediately available funds, of the Exercise Price for the Warrant
Shares being purchased. Certificates for the Warrant Shares so purchased
(together with a cash adjustment in lieu of any fraction of a share) shall be
delivered to the holder hereof within a reasonable time, not exceeding twenty
(20) business days, after the rights represented by this Warrant Certificate
shall have been so exercised and paid for, and, unless these Warrants have
expired, a new Warrant Certificate representing the number of Warrants, if any,
with respect to which this Warrant Certificate shall not then have been
exercised, in all other respects identical with this Warrant Certificate, shall
also be issued and delivered to the holder hereof within such time, or
appropriate notation may be made on this Warrant Certificate and the same
returned to such holder.
(b) Transfer Restriction Legend. Each certificate for Warrant
---------------------------
Shares issued upon exercise of these Warrants shall bear the legends appearing
on the first page of this Warrant Certificate.
2. Special Agreements of the Company. The Company covenants and agrees
---------------------------------
that:
(a) Character of Warrant Shares. All Warrant Shares which may be
---------------------------
issued upon the exercise of the Warrants represented hereby, upon issuance, will
be duly authorized, validly issued, fully paid and non-assessable and free from
all taxes, liens and charges with respect to the issue thereof, and without
limiting the generality of the foregoing, that it will take from to time all
such action as may be requisite to ensure that the par value per share (if any)
of the Common Stock is at all times equal to or less than the then effective
Exercise Price, and that it will refrain from taking any action which could
pursuant to the terms of the Warrants result in the Exercise Price per share
being less than the par value per share of the Common Stock;
(b) No Violations. The Company will take all such action as may be
-------------
necessary to ensure that Warrant Shares may be so issued without violation of
any applicable United States state or federal law or regulation, or of any
requirements of any securities exchange or inter-dealer quotation system upon
which the Common Stock of the Company may be listed or quoted;
(c) Actions in Avoidance. The Company will not, by amendment of its
--------------------
Certificate or Articles of Incorporation or through any reorganization, transfer
of assets, consolidation, merger, issue or sale of securities or otherwise,
avoid or take any action which would have the effect of avoiding the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith assist in carrying out all of the
provisions of this Warrant Certificate and in taking all of such action as may
be necessary or appropriate in order to protect the rights of the holders of
these Warrants; and
(d) Financial Information. The Company will, if requested, provide
---------------------
each Warrant holder copies of all annual, quarterly and current reports required
to be filed by it pursuant to Section 13 or 15 of the Securities Exchange Act of
1934, as amended, and in addition, promptly after requested, such other
-2-
<PAGE>
information concerning the Company as any Warrant holder may reasonably require
(i) in order to comply with any law or governmental regulation, order of any
court, or order, inquiry or investigation of any governmental agency or
instrumentality, or (ii) in order to exercise any right or privilege of such
Warrant holder or to enforce any obligation of the Company under the Warrants or
any agreement or instrument executed and delivered in connection therewith.
3. (a) Certain Adjustments. The Exercise Price hereof and the number
-------------------
of shares of Common Stock that may be purchased upon the full exercise of this
Warrant shall be subject to adjustment from time to time as hereinafter
provided.
(b) Economic Diluting Issuances.
---------------------------
(i) If the Company shall at any time or from time to time prior
to the Final Expiration Date issue shares of Common Stock, other than Excluded
Stock (as defined below), without consideration or for a consideration per share
less than the Exercise Price in effect immediately prior to the issuance of such
Common Stock, the Exercise Price in effect immediately prior to each such
issuance or adjustment shall forthwith be reduced, concurrently with such issue,
to a price (calculated to the nearest cent) equal to the consideration paid in
connection with such issuance.
(ii) For the purposes of any adjustment of the Exercise Price
pursuant to this clause (b), the following provisions shall be applicable:
1. In the case of the issuance of Common Stock for cash, the
consideration shall be deemed to be the amount of cash paid therefor after
deducting therefrom any discounts, commissions or other expenses allowed, paid
or incurred by the Company for any underwriting or otherwise in connection with
the issuance and sale thereof.
2. In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair market value thereof as determined by the
Board of Directors of the Company, irrespective of any accounting treatment;
provided, however, that such fair market value as determined by the Board of
Directors, together with any cash consideration being paid, shall not exceed the
aggregate Current Market Price of the shares of Common Stock being issued.
3. In the case of the issuance of (i) options to purchase or
rights to subscribe for Common Stock, (ii) securities by their terms convertible
into or exchangeable for Common Stock, or (iii) options to purchase or rights to
subscribe for such convertible or exchangeable securities:
(A) the aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase or rights to subscribe for
Common Stock shall be deemed to have been issued at the time such options or
rights were issued and for a consideration equal to the consideration
(determined in the manner provided in subdivisions (1) and (2) above with the
proviso in subdivision (2) being applied to the number of shares of Common Stock
deliverable upon such exercise), if any, received by the Company upon the
issuance of such options or rights plus the minimum purchase price provided in
such options or rights for the Common Stock covered thereby;
(B) the aggregate maximum number of shares of Common Stock
deliverable
-3-
<PAGE>
upon conversion of or in exchange for any such convertible or exchangeable
securities or upon the exercise of options to purchase or rights to subscribe
for such convertible or exchangeable securities and subsequent conversions or
exchanges thereof shall be deemed to have been issued at the time such
securities were issued and for a consideration equal to the consideration
received by the Company for any such securities and related options or rights
(excluding any cash received on account of accrued interest or accrued
dividends), plus the additional consideration, if any, to be received by the
Company upon the conversion or exchange of such securities or the exercise of
any related options or rights (the consideration in each case to be determined
in the manner provided in subdivisions (1) and (2) above with the proviso in
subdivision (2) being applied to the number of shares of Common Stock
deliverable upon such conversion, exchange or exercise);
(C) on any change in the number of shares of Common Stock
deliverable upon exercise of any such options or rights or conversion of or
exchange for such convertible or exchangeable securities, other than a change
resulting from the antidilution provisions thereof, the Exercise Price shall
forthwith be readjusted to such Exercise Price as would have obtained had the
adjustment made upon the issuance of such options, rights or securities not
converted prior to such change or options or rights related to such securities
not converted prior to such change been made upon the basis of such change; and
(D) on the expiration of any such options or rights, the
termination of any such rights to convert or exchange or the expiration of any
options or rights related to such convertible or exchangeable securities, the
Exercise Price shall forthwith be readjusted to such Exercise Price as would
have obtained had the adjustment made upon the issuance of such options, rights,
securities or options or rights related to such securities been made upon the
basis of the issuance of only the number of shares of Common Stock actually
issued upon the conversion or exchange of such securities or upon the exercise
of the options or rights related to such securities.
(c) Stock Dividends, Subdivisions, Split-Ups. If, at any time prior to
----------------------------------------
the Final Expiration Date, the number of shares of Common Stock outstanding is
increased by a stock dividend payable in shares of Common Stock or by a
subdivision or split-up of shares of Common Stock, then, following the record
date fixed for the determination of holders of Common Stock entitled to receive
such stock dividend, subdivision or split-up, the Exercise Price shall be
appropriately decreased.
(d) Stock Combinations. If, at any time prior to the Final Expiration
------------------
Date, the number of shares of Common Stock outstanding is decreased by a
combination of the outstanding shares of Common Stock, then, following the
record date for such combination, the Exercise Price shall be appropriately
increased in proportion to such decrease in outstanding shares.
(e) Certain Dividends. If, at any time prior to the Final Expiration
-----------------
Date, the Company shall declare a cash dividend upon its Common Stock payable
otherwise than out of earnings or earned surplus or shall distribute to holders
of its Common Stock shares of its capital stock (other than Common Stock), stock
or other securities of other persons, evidences of indebtedness issued by the
Company or other persons, assets (excluding cash dividends and distributions) or
options or rights (excluding options to purchase and rights to subscribe for
Common Stock or other securities of the Company convertible into or exchangeable
for Common Stock), then, in each such case, immediately following the record
date fixed for the determination of the holders of Common Stock entitled to
receive such dividend or distribution, the Exercise Price in effect thereafter
shall be determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction of which the numerator shall be an
amount equal to the
-4-
<PAGE>
difference of (x) the Current Market Price of one share of Common Stock minus
(y) the fair market value (as determined by the Board of Directors of the
Company, whose determination shall be conclusive) of the stock, securities,
evidences of indebtedness, assets, options or rights so distributed in respect
of one share of Common Stock, and of which the denominator shall be such Current
Market Price.
(f) All calculations under this Section 3 shall be made to the nearest
cent or to the nearest share, as the case may be.
(g) Whenever the Exercise Price shall be increased or decreased
pursuant to subsections (c), (d) and/or (e) of this Section 3, but not pursuant
to subsection (b) of this Section 3, the number of shares of Common Stock
acquirable upon the full exercise hereof shall be increased (in the case of a
decrease in the Exercise Price) or decreased (in the case of an increase in the
Exercise Price) to that number of shares of Common Stock obtained by multiplying
the number of shares for which this Warrant was fully exercisable immediately
before the event giving rise to the Exercise Price adjustment by a fraction, the
numerator of which is the Exercise Price immediately prior to such event and the
denominator of which is the Exercise Price immediately upon the consummation of
such event. Whenever the Exercise Price shall be adjusted as provided in Section
3, the Company shall prepare a statement showing the facts requiring such
adjustment and the Exercise Price that shall be in effect after such adjustment.
The Company shall cause a copy of such statement to be sent by mail, first class
postage prepaid, to the holder of this Warrant at its address appearing on the
Company's records. Where appropriate, such copy may be given in advance and may
be included as part of the notice required to be mailed under the provisions of
subsection (i) of this Section 3.
(h) Adjustments made pursuant to clauses (b), (c), (d) and (e) above
shall be made on the date such issuance, dividend, subdivision, split-up,
combination or distribution, as the case may be, is made, and, with respect to
clauses (c), (d) and (e), shall become effective at the opening of business on
the business day next following the record date for the determination of
stockholders entitled to such dividend, subdivision, split-up, combination or
distribution.
(i) In the event the Company shall propose to take any action of the
types described in clauses (c), (d) or (e) of this Section e, the Company shall
forward, at the same time and in the same manner, to the Holder of this Warrant
such notice, if any, which the Company shall give to the holders of capital
stock of the Company.
(j) In any case in which the provisions of this Section 3 shall
require that an adjustment shall become effective immediately after a record
date for an event, the Company may defer until the occurrence of such event
issuing to the holder of all or any part of this Warrant which is exercised
after such record date and before the occurrence of such event the additional
shares of capital stock issuable upon such exercise by reason of the adjustment
required by such event over and above the shares of capital stock issuable upon
such exercise before giving effect to such adjustment exercise; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(k) The sale or other disposition of any shares of Common Stock
theretofore held in the treasury of the Company shall be deemed to be an
issuance thereof.
4. Definitions. The terms defined in this paragraph, whenever used in
-----------
this Warrant Certificate, shall, unless the context otherwise requires, have the
respective meanings hereinafter specified:
-5-
<PAGE>
(a) "Common Stock" shall mean and include the Company's Common Stock,
------------
$.01 par value, and shall also include in case of any reorganization,
reclassification, consolidation, merger or sale of assets of the character
referred to in paragraph 3(c) hereof, the stock, securities or assets provided
for in such paragraph.
(b) "Company" shall mean Memry Corporation and also include any
-------
successor thereto with respect to the obligations hereunder, by merger,
consolidation or otherwise.
(c) "Current Market Price" shall mean, at any date and with respect to
--------------------
one share of Common Stock, the average of the daily closing prices for the 30
consecutive business days ending no more than five business days before the day
in question (as adjusted for any stock dividend, split, combination or
reclassification that took effect during such 30 business day period). The
closing price for each day shall be the last reported sales price regular way
or, in case no such reported sales took place on such day, the average of the
last reported bid and asked prices regular way, in either case on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading or as reported by Nasdaq (or if the Common Stock is not at the time
listed or admitted for trading on any such exchange or if prices of the Common
Stock are not reported by Nasdaq then such price shall be equal to the average
of the last reported bid and asked prices on such day as reported by The
National Quotation Bureau Incorporated or any similar reputable quotation and
reporting service, if such quotation is not reported by The National Quotation
Bureau Incorporated); provided, however, that if the Common Stock is not traded
in such manner that the quotations referred to herein are available for the
period required hereunder, the Current Market Price shall be determined in good
faith by the Board of Directors of the Company or, if such determination cannot
be made, by a nationally recognized independent investment banking firm selected
by the Board of Directors of the Company (or if such selection cannot be made,
by a nationally recognized independent investment banking firm selected by the
American Arbitration Association in accordance with its rules).
(d) "Excluded Stock" shall mean shares of Common Stock issued by the
--------------
Company (A) as a stock dividend payable in shares of Common Stock or upon any
subdivision or split-up of the outstanding shares of Common Stock, (B) in
connection with the issuance of shares of Common Stock (including any share of
Common Stock deemed to have been issued pursuant to subdivision 3 of Section
3(b)(ii) above as a result of the issuance of options or other convertible or
exchangeable securities) (appropriately adjusted for stock splits and
combinations) to directors, officers, or employees of, or consultants to, the
Company in connection with their services as directors or consultants of the
Company or their employment by the Company, (C) upon exercise and/or conversion
of any options, warrants, convertible notes and/or other securities outstanding
on the date hereof, (D) in exchange for all (or substantially all) of the assets
or all (or substantially all) of the equity of another entity (including by way
of stock purchase, asset purchase, merger and/or consolidation, and (E) pursuant
to the Agreement of even date herewith between the Company and the initial
holder hereof (including without limitation pursuant to Section 4.1 thereof).
(e) "Final Exercise Date" shall mean December 15, 2002.
-------------------
(f) "Warrant Certificate" shall mean this instrument evidencing the
-------------------
Warrants issued to the Warrant holder on this date.
(g) "Warrant holder(s)" shall mean the registered holder(s) of the
-----------------
Warrants.
-6-
<PAGE>
(h) "Warrants" shall mean the Warrants represented by this Warrant
--------
Certificate and all Warrants issued in exchange, transfer or replacement or
hereof or thereof.
(i) "Warrant Shares" shall mean the shares of Common Stock
--------------
purchased or purchasable by the holders of Warrants upon the exercise thereof
pursuant to paragraph 1.
5. Exchange, Replacement and Assignability. This Warrant Certificate is
---------------------------------------
exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company described in paragraph 1, for new Warrant Certificates of
like tenor and date representing in the aggregate the right to purchase the
number of Warrant Shares which may be purchased hereunder, each of such new
Warrants to represent the right to purchase such number of Warrant Shares as
shall be designated by such holder hereof at the time of such surrender. Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant Certificate or any such new Warrant Certificates
and, in the case of any such loss, theft or destruction, of a bond of indemnity
or other security satisfactory to the Company, or, in the case of any such
mutilation, upon surrender or cancellation of such mutilated Warrant
Certificate, the Company will issue to the holder hereof a new Warrant
Certificate of like tenor and date, in lieu of this Warrant Certificate or such
new Warrant Certificates, representing the right to purchase the number of
Warrant Shares which may be purchased hereunder. Subject to compliance with
paragraph 2, this Warrant and all rights hereunder (including without limitation
all registration rights) are transferable in whole or in part upon the books of
the Company by the registered holder hereof in person or by duly authorized
attorney, and a new Warrant Certificate shall be made and delivered by the
Company, of the same tenor and date as this Warrant Certificate but registered
in the name of the transferee, upon surrender of this Warrant Certificate, duly
endorsed, to the office or agency of the Company. All expenses, taxes (other
than stock transfer taxes, which shall be the obligation of the Warrant holder)
and other charges payable in connection with the preparation, execution and
delivery of Warrants pursuant to this paragraph 5 shall be paid by the Company.
6. No Rights as Stockholder; Survival of Rights. Neither this Warrant
---------------------------------------------
Certificate nor the Warrants represented hereby shall entitle the holder hereof
to any voting rights or any rights as a stockholder of the Company. The rights
and obligations of the Company, of the holder of these Warrants and of any
holder of Warrant Shares issued upon exercise of these Warrants shall survive
the exercise of these Warrants.
7. Governing Law; Amendments and Waivers; Headings. The validity,
-----------------------------------------------
interpretation and performance of this Warrant Certificate and each of its terms
and provisions shall be governed by the laws of the State of Connecticut. No
provision of this Warrant Certificate may be changed, waived, discharged or
terminated except by an instrument in writing signed by the party against which
enforcement of the same is sought. The headings in this Warrant Certificate are
for purposes of reference only and shall not affect the meaning or construction
of any of the provisions hereof.
8. Notices. Any notice or other document required or permitted to be
-------
given or delivered to Warrant holders shall be delivered at, or sent by
certified or registered mail to each Warrant holder at, the address shown or to
such other address as shall have been furnished to the Company by such Warrant
holder. Any notice or other document required or permitted to be given or
delivered to the Company shall be delivered at, or sent by certified or
registered mail to the principal office of the Company at 57 Commerce Drive,
Brookfield, Connecticut 06804 Attention: Chairman, or such other address as
shall have been furnished to the Warrant holders by the Company.
-7-
<PAGE>
IN WITNESS WHEREOF, Memry Corporation has caused this Warrant
Certificate to be signed by its duly authorized officer under its corporate
seal, duly attested by its authorized officer, and to be dated as of December
17, 1999.
MEMRY CORPORATION
By:___________________________
Name:
Title:
-8-
<PAGE>
NOTICE OF ELECTION
TO: MEMRY CORPORATION
The undersigned, the registered holder of Warrant Cert. No. 99-1, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
Certificate for, and to purchase thereunder, ____________________ shares of
Common Stock of Memry Corporation and herewith makes payment of U.S.____________
therefor, and requests that the certificate for the Common Stock, which will be
issued in the following name, be delivered to the attention of the undersigned
at the following address:
____________________________________________
____________________________________________
____________________________________________
The undersigned hereby represents and warrants to the Company that the
representations made by it on December __, 1999, with respect to the original
acquisition of the warrants described herein in the Agreement between the
Company, the undersigned and Memry Europe, N.V., are true and correct as of the
date hereof with respect to the undersigned's purchase of the Common Stock
described above.
Date:______________________
Name:_________________________
By:___________________________
Title:________________________
-9-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEETS AND CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS FOUND ON PAGES 3-5 OF THE COMPANY'S FORM 10-QSB FOR THE PERIOD-TO-
DATE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,156,000
<SECURITIES> 0
<RECEIVABLES> 3,452,000
<ALLOWANCES> 0
<INVENTORY> 2,519,000
<CURRENT-ASSETS> 7,285,000
<PP&E> 9,005,000
<DEPRECIATION> 3,258,000
<TOTAL-ASSETS> 18,790,000
<CURRENT-LIABILITIES> 6,105,000
<BONDS> 0
0
0
<COMMON> 211,000
<OTHER-SE> 10,730,000
<TOTAL-LIABILITY-AND-EQUITY> 18,790,000
<SALES> 10,542,000
<TOTAL-REVENUES> 11,025,000
<CGS> 6,893,000
<TOTAL-COSTS> 7,166,000
<OTHER-EXPENSES> 3,966,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 155,000
<INCOME-PRETAX> (314,000)
<INCOME-TAX> 14,000
<INCOME-CONTINUING> (328,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (328,000)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
