EXHIBIT 10.59
FIRST AMENDMENT TO CONVERTIBLE SUBORDINATED DEBENTURE
PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO CONVERTIBLE SUBORDINATED DEBENTURE PURCHASE
AGREEMENT (this "First Amendment"), is made this 12th day of October, 1995, by
and between MEMRY CORPORATION, a Delaware corporation (the "Company"), and
CONNECTICUT INNOVATIONS, INCORPORATED, a specially chartered Connecticut
corporation (the "Investor"). All capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Convertible Subordinated
Debenture Purchase Agreement dated December 22, 1994 between CII and the Company
(the "Original Agreement").
WITNESSETH:
WHEREAS, pursuant to the Original Agreement, the Company issued to CII a
convertible subordinated debenture (the "Debenture") in the original principal
amount of $763,208 and certain warrants of the Company described therein (the
"Warrants"); and
WHEREAS, the Company failed to effect a registration of the Registrable
Securities acquired by CII on or before February 28, 1995 and to reserve by
September 1, 1995 a sufficient number of authorized and issued shares for the
full exercise and conversion of the Class I Warrants, the Class II Warrants, the
Class III Warrants and the Debenture, and to comply with Sections 5.1 and 5.2 of
the Original Agreement; and
WHEREAS, the Company has requested and CII has agreed to waive the
foregoing defaults upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
herein contained, the Company and CII agree as follows:
ARTICLE 1
CONDITIONS TO AMENDMENT
The effectiveness of this First Amendment and the obligations of CII
hereunder are subject to the following conditions:
SECTION 1.1 The Company shall execute and deliver to CII an Addendum to
Convertible Subordinated Debenture in the original principal amount of Seven
hundred Sixty-Three Thousand Two Hundred Eight Dollars ($763,208.00) and having
a final maturity date of December 31, 1999 in form and substance satisfactory to
CII (the "Addendum to Debenture").
SECTION 1.2 CII shall have received a First Amendment to Escrow Agreement
modifying the terms thereof.
SECTION 1.3 CII shall have received from the Company an Addendum to the
Class I Warrants, and Addendum to the Class II Warrants and an Addendum to the
Class III Warrants, all in form and substance satisfactory to CII.
SECTION 1.4 CII shall have received each of the other documents and items
listed below, all in form and substance satisfactory to CII:
(a) Certificate of the Secretary of the Company, certifying: (i) the
accuracy of the corporate resolutions attached thereto authorizing the
transactions contemplated hereby and the execution of all necessary documents;
(ii) that the Certificate of Incorporation attached thereto has not been amended
and is in full force and effect; (iii) that the Bylaws attached thereto are
accurate and have not been amended and are in full force and effect; and (iv)
that the named officers are incumbent and that their signatories are as shown;
(b) Certificate of Good Standing of recent date issued by the Secretary of
the State of Connecticut for the Company;
(c) Tax clearance letters of recent date from the State of Connecticut
Department of Revenue Services for the Company (corporate business tax and sales
and use tax);
(d) Opinion letter of Company's counsel, Xxxx Xxxxx & Xxxxxxx in form and
substance satisfactory to CII;
(e) A check from the Company made payable to the order of Xxxxxxx & Xxxxxxx
in an amount to $3,147.93 for past due fees and expenses; and
(f) A closing check from the Company made payable to the order of Xxxxxxx &
Xxxxxxx for its legal fees and expenses incurred in connection herewith.
ARTICLE 2
AMENDMENTS TO ORIGINAL AGREEMENT
CII and the Company do hereby amend the Original Agreement as follows:
SECTION 2.1 The term "Agreement" as used in the Original Agreement shall
mean the Original Agreement, as amended by this First Amendment.
SECTION 2.2 The term "Debenture" as used in the Original Agreement shall
mean the Debenture, as amended by the Addendum thereto.
SECTION 2.3 The terms "Class I Warrants," "Class II Warrants" and "Class
III Warrants" as used in the Original Agreement shall mean, respectively, the
Class I Warrant, as amended by the Addendum thereto, the Class II Warrant, as
amended by the Addendum thereto and the Class III Warrant, as amended by the
Addendum thereto.
SECTION 2.4 The reference in Section 3.7(c) to "September 1, 1995" shall
be deleted and replaced by "December 20, 1995."
SECTION 2.5 Sections 4.2(a)(i) and 4.2(a)(ii) shall be deleted in its
entirety and replaced by the following:
(i) promptly after December 20, 1995 (or such earlier date as the Company's
annual meeting of stockholders is held), file a registration statement (the
"Registration Statement") covering inter alia, the resale by the Investor of the
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Registrable Securities acquired by it pursuant to this Agreement, which
registration statement may cover the concurrent registration of the resale of
(A) the shares of Common Stock issued by the Company to certain individuals and
entities prior to the date hereof and to be issued by the Company as set forth
on Schedule B hereto, which shares of Common Stock the Company may be required
to register pursuant to the terms of existing agreement in effect on the date
hereof, and (B) the shares of Common Stock underlying the Company's Series G
Preferred Stock issued by the Company pursuant to that certain Securities
Purchase Agreements dated as of June 14, 1995 and to be issued by the Company
pursuant to the Exchange Offer (as defined in Schedule A), provided, however,
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that if the registration is underwritten and a limitation of the number of
shares is required, all of the Registrable Securities shall be included in the
registration and underwriting, (ii) cause such Registration Statement to become
effective no later than March 15, 1996,
SECTION 2.6 The reference to "September 1, 1995" in the definition of
Registration Default in Section 8 shall be deleted and replaced by "December 20,
1995."
SECTION 2.7 The reference to "Closing Date" in the definition of
Expiration Date in Section 8 shall be deleted and replaced by "October 12,
1995."
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
SECTION 3.1 Except as set forth on Schedule A, the Company hereby
restates each of the representations and warranties of the Company contained in
Section 3 of the Original Agreement, and represents and warrants that each such
representation and warranty, as the same may be modified by Schedule A, is true
as of the date of this First Amendment, giving effect to the amendments
contained in Article 2 above.
SECTION 3.2 The Company represents and warrants that it has fully complied
with each of the covenants contained in Section 5 of the Original Agreement and
that there exists no default or Event of Default under the Original Agreement or
Debenture, other than (a) the Company's failure to effect a registration of the
Registrable Securities by February 28, 1995, (b) the Company's failure to
reserve by September 1, 1995 a sufficient number of authorized and issued shares
for the full exercise and conversion of the Class I
Warrants, the Class II Warrants, the Class III Warrants and the Debenture, and
(c) the Company's failure to comply with Sections 5.1 and 5.2 of the Original
Agreement (together, the "Triggering Defaults").
ARTICLE 4
MISCELLANEOUS
SECTION 4.1 The Company will pay all expenses in connection with the
subject matter of this First Amendment, including the fees and disbursements of
CII's special counsel.
SECTION 4.2 Except as expressly modified herein, all other terms,
conditions and obligations of the Original Agreement are hereby ratified and
confirmed.
SECTION 4.3 CII hereby waives its rights and remedies with respect to the
Triggering Defaults, provided that such waiver shall not extend to or affect any
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subsequent default under the Original Agreement, as amended hereby, or impair
any right consequent thereon.
SECTION 4.4 CII has no objection to the Company's withdrawal of the
registration statement filed with the Securities and Exchange Commission (the
"SEC") on November 8, 1994, as amended by Amendment No. 1 filed with the SEC on
January 17, 1995.
IN WITNESS WHEREOF, this First Amendment has been duly sealed and delivered
by the Company and the Investor as of the date and year first above written.
CONNECTICUT INNOVATIONS, INCORPORATED
By: /s/ Xxxxx X. Xxxxx
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Its President
Duly Authorized
MEMRY CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
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Its Acting President and Executive Director
Duly Authorized
SCHEDULE A
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The Company restates each of the representations and warranties of the
Company contained in Section 3 of the Original Agreement, except as qualified
and/or modified by the following with respect to each indicated representation
and warranty:
3.1 There are no "side agreements" or other agreements or understandings
with any person or entity, other than the Investor, regarding registration of
securities of the Company under the Securities Act of 1933, as amended, except
for (i) agreements with Trinity Capital Corporation, whose stock in the Company
is now owned by Harbour Investment Corporation, which agreements have been filed
with the Securities and Exchange Commission, (ii) Securities Purchase Agreements
in the Company's standard form (which form for domestic transactions and form
for foreign transactions have previously been given to the Investor) pursuant to
which sales of securities have been sold to domestic individuals and entities,
(iii) Securities Purchase Agreements with Xxxxx X. Xxxxxxx, Xxxxxxx Xxxxx,
Xxxxxx Xxxxxxx, Dominion Partners and Xxxxx & Company which differ from the
standard form only in that they call for registration of the securities
purchased by a date that has already passed, and (iv) Securities Purchase
Agreements in the form of Exhibit A-1 attached hereto pursuant to which shares
of Series G Preferred Stock have been sold. The Company converses with many of
such shareholders regularly and has no reason to believe that any of such
shareholders would assert a claim against the Company as a result of such
failure to register the securities.
3.2 The representation and warranty set forth in Section 3.2 of the
Original Agreement is replaced in its entirety with the following:
As of the date of the Original Agreement, the Company closed, concurrently
with the Investment, or had already closed, on a minimum of $4,000,000, in
addition to the amount provided by the Investor, of payments for the Company's
equity or convertible indebtedness since January 1, 1993. Schedule B attached
to the Original Agreement contains a list of such payments.
3.3 The representation and warranty set forth in Section 3.3 of the
Original Agreement is replaced in its entirety with the following:
The Company's Annual Report on Form 10-KSB for the fiscal year ended June
30, 1994 and the Company's Quarterly Reports on Form 10-QSB for the quarters
ended September 30, 1994, December 31, 1994 and March 30, 1995 are true and
complete in all material respects, and since March 30, 1995, there have not been
any changes in the business, prospects or affairs of the Company which, in the
aggregate, have been, or are expected to be, materially adverse.
3.7(a) The representation and warranty set forth in Section 3.7(a)
of the Original Agreement is replaced in its entirety with the following:
(a) As of September 1, 1995, the Company's authorized capital stock
consisted of (i) 10,000,000 shares of Common Stock, of $0.01 par value each, of
which 8,101,532 shares (subject to downward adjustment due to the elimination of
fractional shares in conjunction with the Company's one-for-ten reverse stock
split effected on August 8, 1994) was issued and outstanding (2,291,000 shares
have been reserved for issuance upon the conversion of the Company's issued and
outstanding warrants and 508,805 shares have been reserved for issuance to the
Investor upon conversion of the Debenture), and (ii) 100,000 shares of Preferred
Stock, par value $100.00 per share, of which 423 shares of Series G Preferred
Stock are currently outstanding. Except as set forth on Schedule 3.7(a)
attached hereto, the Company has not approved since September 1, 1995 sales of
or agreed to issue any additional shares of the Company's Common Stock.
3.7(b) Schedule E which is referred to in Section 3.7(b) is
replaced by Schedule 3.7(b) attached hereto.
3.7(c) The reference to "September 1, 1995" set forth in Section
3.7(b) is deleted and replaced by "December 20, 1995."
SCHEDULE 3.7(a)
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The Company is in the process of preparing an exchange offer (the "Exchange
Offer") which will allow the exchange of an aggregate of 348,993 shares of
Common Stock by eleven individuals and entities who purchased such shares
between December 1, 1994 and June 30, 1995, inclusive, for 52.96 shares of
Series G Preferred Stock. The number of shares of Series G Preferred Stock to
be received by each participant in the Exchange Offer is based on the original
purchase price paid by such individual or entity divided by a price of $6,500
per share of Series G Preferred Stock, with the resulting quotient being rounded
to the nearest one-thousandth of a share. The participants in such Exchange
Offer will be granted the same registration, information and conversion rights
granted to all holders of the Series G Preferred Stock. The participants in the
Exchange Offer will not be permitted to exchange any shares of Series G
Preferred Stock until such time as the Company has convened a meeting of
stockholders to increase the authorized number of shares of Common Stock from
10,000,000 to 25,000,000 and caused such amendment to be adopted and filed with
the Delaware Secretary of State. From and after the date of the filing of such
amendment, holders of Shares of Series G Preferred Stock will be permitted to
convert each of their shares of Series G Preferred Stock into 10,000 shares of
Common Stock (which conversion ratio is subject to adjustment, as set forth in
the Certificate of Designations for the Series G Preferred Stock).
In addition, the Company is planning to issue to two current or former
employees of the Company or Xxxxxx Machine Corporation an aggregate of 63,000
shares of Common Stock, valued at $1.00 per share.
SCHEDULE 3.7(b)
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The Company has issued an aggregate of 205,850 options under its Stock
Option Plan as to which no shares of Common Stock have been reserved for
issuance; such shares will be so reserved promptly after the shareholders'
meeting which will take place on or prior to December 20, 1995.
For additional rights, see Schedule 3.7(a).
