<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 17, 1997
FILE NO. 1-13391
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
FORM 10/A
------------------------
AMENDMENT NO. 1
TO REGISTRATION STATEMENT
ON FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
THERMO VISION CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C>
DELAWARE 04-3296594
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
8E FORGE PARKWAY, FRANKLIN, MASSACHUSETTS 02038
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (508) 553-1689
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
- --------------------------------------------------------------------------------------------
<S> <C>
COMMON STOCK,
PAR VALUE $.01 PER SHARE AMERICAN STOCK EXCHANGE
</TABLE>
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
================================================================================
<PAGE> 2
THERMO VISION CORPORATION
PART I
INFORMATION INCLUDED IN INFORMATION STATEMENT
CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT
AND ITEMS OF FORM 10
<TABLE>
<CAPTION>
ITEM FORM 10 ITEM CAPTION CAPTION IN INFORMATION STATEMENT
- ---- ------------------------------ ---------------------------------------------------------
<S> <C> <C>
1. Business...................... Summary -- Distributed Company, -- Vision and -- Summary
Consolidated Financial Information; The Company; Selected
Financial Information; Management's Discussion and
Analysis of Financial Condition and Results of
Operations; Business; Trademarks
2. Financial Information......... Summary -- Summary Consolidated Financial Information;
Capitalization; Selected Financial Information;
Management's Discussion and Analysis of Financial
Condition and Results of Operations; Index to Financial
Statements
3. Properties.................... Business -- Properties; Certain Transactions -- Other
Relationships
4. Security Ownership of Certain
Beneficial Owners and
Management.................... Security Ownership of Certain Beneficial Owners and
Management
5. Directors and Executive
Officers...................... Management
6. Executive Compensation........ Summary -- Vision Stock Option Grants; The
Distribution -- Vision Stock Option Grants; Listing and
Trading of Vision Common Stock; Management -- Executive
Compensation
7. Certain Relationship and
Related Transactions.......... Summary -- Relationship with Optek after the Distribution
and -- Relationship with Thermo Electron, Thermo
Instrument and other Affiliates; The
Distribution -- Relationship Between Optek and Vision
After the Distribution; Risk Factors -- Potential
Conflicts of Interest and -- Control by Thermo
Instrument; Listing and Trading of Vision Common Stock;
Certain Transactions
8. Legal Proceedings............. Business -- Legal Proceedings
9. Market Price of and Dividends
on the Registrant's Common
Equity and Related Shareholder
Matters....................... Summary -- Trading Market and -- Dividend Policy; Risk
Factors -- Absence of Public Market; Possible Volatility
of Stock Price; Possible Delisting and -- Absence of
Dividends; Listing and Trading of Vision Common Stock;
Description of Capital Stock
10. Recent Sales of Unregistered
Securities.................... Recent Sales of Unregistered Securities
11. Description of Registrant's
Securities to be Registered... Description of Capital Stock
12. Indemnification of Directors
and Officers.................. Indemnification of Directors and Officers
13. Financial Statements and
Supplementary Data............ Index to Financial Statements
14. Changes in and Disagreements
With Accountants on Accounting
and Financial Disclosure...... Not Applicable
</TABLE>
NOTE: THIS REGISTRATION STATEMENT ON FORM 10/A ASSUMES THAT THE VISION
COMMON STOCK HAS BEEN ACCEPTED FOR LISTING ON THE AMEX, ALTHOUGH SUCH ACCEPTANCE
HAD NOT OCCURRED AS OF THE DATE OF THE FILING OF THIS REGISTRATION STATEMENT ON
FORM 10/A WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 3
[THERMO OPTEK CORPORATION LETTERHEAD]
, 1997
Dear Shareholder:
On , 1997, the Board of Directors (the "Optek Board")
of Thermo Optek Corporation, a Delaware corporation ("Optek"), approved a
distribution (the "Distribution") to Optek shareholders of all of the
outstanding shares of Common Stock of Thermo Vision Corporation ("Vision") held
by Optek (approximately 6,783,800 shares which constitute 100% of the
outstanding shares). It is expected that the Distribution will be made on or
about , 1997, to shareholders of record of Optek Common Stock on ,
1997, which is the date that the Optek Board initially has fixed as the record
date for the Distribution (such date, as it may be deferred, the "Record Date").
However, the Record Date will be deferred by one day for each day that the
pricing of Vision's planned initial underwritten public offering described below
(the "IPO") is deferred beyond , 1997. If you are an Optek shareholder on
the Record Date, you will also be entitled to become a shareholder of Vision.
The Distribution will not be effected unless immediately thereafter the IPO is
consummated.
The shares of Vision Common Stock to be distributed in the Distribution
will be subject to a restriction set forth in Vision's Certificate of
Incorporation that will prohibit the sale, transfer, pledge, or other
disposition of such shares until the sooner to occur of (i) 60 days following
the pricing of the IPO or (ii) March 1, 1998.
Immediately following consummation of the Distribution, Vision will be
owned by the same shareholders, in the same proportions as Optek. As a result,
Thermo Instrument Systems Inc., a Delaware corporation ("Thermo Instrument") and
holder of approximately 93% of the outstanding shares of Common Stock of Optek,
will own approximately 93% of the outstanding shares of Common Stock of Vision.
Thermo Instrument is a majority-owned subsidiary of Thermo Electron Corporation.
Vision has filed a registration statement on Form S-1 with the Securities
and Exchange Commission (the "Commission") relating to the IPO, which provides
for an offering of approximately 1,075,000 shares of Vision Common Stock. Vision
expects to close the IPO immediately following the Distribution. Following the
consummation of the IPO, Thermo Instrument will own approximately 80% of the
outstanding shares of Vision Common Stock.
Vision, established as a separate subsidiary of Optek in November 1995, is
a supplier of a diverse array of photonics products, including optical
components, imaging sensors and systems, lasers, optically based instruments,
optoelectronics, and fiber optics.
The Optek Board believes that the Distribution is in the best interests of
Optek, Vision, and the Optek shareholders because it will, by creating two
separate public companies, improve both companies' access to capital, improve
the focus of management and employees on the performance of their respective
businesses, and provide improved management incentives directly linked to the
objective performance of each company's stock in the public markets.
If you are a holder of Optek Common Stock on the Record Date, you will
receive 14 shares of Vision Common Stock for each 100 shares of Optek Common
Stock you own on that date. Based on the currently anticipated timing of the
IPO, it is expected that certificates representing Vision Common Stock will be
mailed to you on or about , 1997. However, the timing of the mailing
will be delayed if the pricing of the IPO is delayed. The Common Stock of Vision
has been approved for listing on the American Stock Exchange under the symbol
"VIZ," subject to the condition that the IPO is consummated immediately
following the consummation of the Distribution.
<PAGE> 4
The enclosed Information Statement provides important information regarding
the Distribution and Vision's organization, business, properties, and historical
and pro forma financial information. Shareholders are encouraged to read this
material carefully.
Holders of Optek Common Stock on the record date for the Distribution are
not required to take any action to participate in the Distribution. Shareholder
approval of the Distribution is not required, and Optek is therefore not
soliciting your proxy.
Sincerely,
EARL R. LEWIS
Chairman and
Chief Executive Officer
2
<PAGE> 5
SUBJECT TO COMPLETION DATED NOVEMBER 17, 1997
INFORMATION STATEMENT
------------------------
THERMO VISION CORPORATION
Distribution of approximately 6,783,800 Shares of
Common Stock
(par value, $.01 per share)
This Information Statement is being furnished to shareholders of Thermo
Optek Corporation, a Delaware corporation ("Optek"), in connection with the
distribution (the "Distribution") by Optek to its shareholders of all of the
outstanding shares of common stock, $.01 par value ("Vision Common Stock"), of
its wholly owned subsidiary Thermo Vision Corporation, a Delaware corporation
("Vision"), held by Optek (approximately 6,783,800 shares or 100% of the
outstanding shares).
It is expected that the Distribution will be made beginning on or about
, 1997, to holders of record of common stock, $.01 par value, of
Optek ("Optek Common Stock") on , 1997, which is the date that the
Optek Board of Directors (the "Optek Board") initially has fixed as the record
date for the Distribution (such date, as it may be deferred, the "Record Date").
However, the Record Date will be deferred by one day for each day that the
pricing
of Vision's planned initial underwritten public offering described below (the
"IPO") is deferred beyond , 1997. The Distribution will be made on the
basis of 14 shares of Vision Common Stock for each 100 shares of Optek Common
Stock held by Optek stockholders on the Record Date. The shares of Vision Common
Stock to be distributed in the Distribution will be subject to a restriction set
forth in Vision's Certificate of Incorporation that will prohibit the sale,
transfer, pledge, or other disposition of such shares until the sooner to occur
of (i) 60 days following the pricing of the IPO or (ii) March 1, 1998 (the
"Charter Transfer Restriction"). See "Description of Capital Stock." The
Distribution will not be effected unless the IPO is scheduled to close
immediately thereafter.
No consideration will be required to be paid by Optek shareholders for the
shares of Vision Common Stock to be received by them in the Distribution, nor
will they be required to surrender or exchange shares of Optek Common Stock in
order to receive Vision Common Stock. The Internal Revenue Service (the "IRS")
has ruled that the receipt of shares of Vision Common Stock in the Distribution
will not result in the recognition of income, gain, or loss to Optek
shareholders for federal income tax purposes. See "The Distribution -- Certain
Federal Income Tax Considerations of the Distribution." Neither Optek nor Vision
will receive any cash or other proceeds from the distribution of Vision Common
Stock.
Immediately following consummation of the Distribution, Thermo Instrument
Systems Inc., a Delaware corporation ("Thermo Instrument") and holder of
approximately 93% of the outstanding shares of Optek Common Stock, will own
approximately 93% of the outstanding shares of Vision Common Stock. Thermo
Instrument is a majority-owned subsidiary of Thermo Electron Corporation
("Thermo Electron").
Vision has filed a registration statement on Form S-1 with the Securities
and Exchange Commission (the "Commission") relating to the IPO, which provides
for an offering of approximately 1,075,000 shares of Vision Common Stock. Vision
expects to close the IPO immediately following the Distribution. Following the
consummation of the IPO, Thermo Instrument will own approximately 80% of the
outstanding shares of Vision Common Stock. See "Introduction." As a result,
Thermo Instrument will have the power to elect the entire Board of Directors of
Vision and to approve or disapprove any corporate actions submitted to a vote of
Vision's shareholders
No public trading market for the Vision Common Stock currently exists. It
is possible that a "when-issued" trading market may develop prior to the Record
Date, although such trading is not expected to occur because the shares of
Vision Common Stock to be distributed in the Distribution are subject to the
Charter Transfer Restriction. The Vision Common Stock has been approved for
listing on the American Stock Exchange (the "AMEX") under the symbol "VIZ,"
subject to the condition that the IPO is consummated immediately following the
consummation of the Distribution. See "Listing and Trading of Vision Common
Stock."
IN REVIEWING THIS INFORMATION STATEMENT, YOU SHOULD CAREFULLY CONSIDER THE
MATTERS DESCRIBED UNDER THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 12.
------------------------
NO VOTE OF SHAREHOLDERS IS REQUIRED IN CONNECTION WITH THE
DISTRIBUTION. WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS INFORMATION STATEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS INFORMATION STATEMENT IS , 1997.
<PAGE> 6
No person is authorized to give any information or to make any
representation other than those contained in this Information Statement, and if
given or made, such information or representations must not be relied upon as
having been authorized. This Information Statement does not constitute an offer
to sell or a solicitation of any offer to buy any securities. This Information
Statement presents information concerning Vision believed by Vision to be
accurate as of the date set forth on the cover hereof. This Information
Statement presents information concerning Optek believed by Optek to be accurate
as of the date set forth on the cover hereof. Changes may occur in the presented
information after that date. Neither Vision nor Optek plans to update said
information except in the course of fulfilling their respective normal public
reporting and disclosure obligations.
Certain statements in this Information Statement constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). For this purpose, any
statements contained herein that are not statements of historical fact may be
deemed to be forward-looking statements. Without limiting the foregoing, the
words "believes," "anticipates," "plans," "expects," "intends," and similar
expressions are intended to identify forward-looking statements. There are a
number of important factors that could cause the results of Vision to differ
materially from those indicated by such forward-looking statements, including
among others, those set forth in this Information Statement under the heading
"Risk Factors."
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
- -------------------------------------------------------------------------------------- -----
<S> <C>
SUMMARY............................................................................... 3
THE COMPANY........................................................................... 7
INTRODUCTION.......................................................................... 7
THE DISTRIBUTION...................................................................... 8
RISK FACTORS.......................................................................... 12
LISTING AND TRADING OF VISION COMMON STOCK............................................ 16
CAPITALIZATION........................................................................ 18
SELECTED FINANCIAL INFORMATION........................................................ 19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.......................................................................... 20
BUSINESS.............................................................................. 23
MANAGEMENT............................................................................ 35
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT........................ 40
CERTAIN TRANSACTIONS.................................................................. 42
RECENT SALES OF UNREGISTERED SECURITIES............................................... 45
DESCRIPTION OF CAPITAL STOCK.......................................................... 46
INDEMNIFICATION OF DIRECTORS AND OFFICERS............................................. 46
EXPERTS............................................................................... 47
AVAILABLE INFORMATION................................................................. 47
TRADEMARKS............................................................................ 47
INDEX TO FINANCIAL STATEMENTS......................................................... F-1
ANNEX A............................................................................... A-1
</TABLE>
2
<PAGE> 7
SUMMARY
The following is a summary of certain information contained elsewhere in
this Information Statement. Reference is made to, and this summary is qualified
in its entirety by, the more detailed information contained, or incorporated by
reference, in this Information Statement and the Annex hereto. Unless otherwise
defined herein, capitalized terms used in this summary have the respective
meanings ascribed to them elsewhere in this Information Statement. Shareholders
are urged to read this Information Statement and the Annex hereto in their
entirety.
All share and per share data in this Information Statement have been
adjusted to give effect to all stock splits of Vision Common Stock and Optek
Common Stock effected prior to the date hereof, including (i) a three-for-two
split of the Optek Common Stock effected on April 11, 1996, in the form of a
stock dividend and (ii) a 4,845-for-one split of the Vision Common Stock
effected on August 27, 1997, in the form of a stock dividend and an approximate
7-for-5 split of the Vision Common Stock effected on November 14, 1997, in the
form of a stock dividend.
Distributing Company....... Thermo Optek Corporation, a Delaware corporation
("Optek"). As used in this Information Statement,
the term "Optek" refers to Optek and its
subsidiaries (other than Thermo Vision
Corporation and its subsidiaries) as of the
relevant date, unless the context otherwise
requires.
Distributed Company........ Thermo Vision Corporation, a Delaware corporation
("Vision"). As used in this Information
Statement, the term "Vision" refers to Thermo
Vision Corporation and its subsidiaries as of the
relevant date, unless the context otherwise
requires.
Vision..................... Vision designs, manufactures, and markets a diverse
array of photonics products, including optical
components, imaging sensors and systems, lasers,
optically based instruments, optoelectronics, and
fiber optics. The principal executive office of
Vision is located at 8E Forge Parkway, Franklin,
Massachusetts 02038 and its telephone number is
(508) 553-1689. See "The Company" and "Business."
Shares to be Distributed... Approximately 6,783,800 shares of Vision Common
Stock, which constitutes 100% of the Vision
Common Stock outstanding on the Record Date.
Immediately following consummation of the
Distribution, Thermo Instrument will own
approximately 93% of the outstanding shares of
Vision Common Stock. See "The
Distribution -- Manner of Effecting the
Distribution."
Charter Transfer
Restriction................ The shares of Vision Common Stock to be distributed
in the Distribution will be subject to the
Charter Transfer Restriction that prohibits the
sale, transfer, pledge, or other disposition of
such shares until the sooner to occur of (i) 60
days following the pricing of the IPO or (ii)
March 1, 1998. See "Description of Capital
Stock".
IPO........................ Vision has filed a registration statement on Form
S-1 with the Commission relating to the IPO,
which provides for an offering of approximately
1,075,000 shares of Vision Common Stock. Vision
expects to close the IPO immediately following
the Distribution. The shares of Vision Common
Stock to be issued in the IPO will not be subject
to the Charter Transfer Restriction. Following
the consummation of the IPO, Thermo Instrument
will own approximately 80% of the outstanding
shares of Vision Common Stock. See
"Introduction."
Record Date................ , 1997, subject to deferral by one day
for each day that the pricing of the IPO is
deferred beyond , 1997.
3
<PAGE> 8
Distribution Date.......... On or about , 1997, subject to deferral by
one day for each day that the pricing of the IPO
is deferred beyond , 1997.
Distribution............... On the Distribution Date, the Distribution Agent
(as defined below) will begin distributing
certificates representing Vision Common Stock to
Optek shareholders. Optek shareholders will not
be required to make any payment or to take any
other action to receive their Vision Common
Stock. The Distribution will not be effected
unless immediately thereafter the IPO is
consummated. See "The Distribution -- Manner of
Effecting the Distribution."
Distribution Ratio......... Fourteen shares of Vision Common Stock for each 100
shares of Optek Common Stock.
Distribution Agent......... American Stock Transfer & Trust Company.
Fractional Shares of Vision
Common Stock............. No fractional shares of Vision Common Stock will be
distributed. A cash payment will be made to Optek
shareholders otherwise entitled to a fractional
share of Vision Common Stock as a result of the
Distribution. See "The Distribution -- Manner of
Effecting the Distribution."
Trading Market............. Currently no public trading market for Vision
Common Stock exists. The Vision Common Stock has
been approved for listing on the AMEX under the
symbol "VIZ," subject to the condition that the
IPO is consummated immediately following the
consummation of the Distribution. It is possible
that a "when-issued" trading market in the Vision
Common Stock may develop prior to the Record
Date, although such trading is not expected to
occur because the shares of Vision Common Stock
to be distributed in the Distribution are subject
to the Charter Transfer Restriction. See "Listing
and Trading of Vision Common Stock."
Dividend Policy............ Vision currently does not intend to pay cash
dividends on the Vision Common Stock. See "Risk
Factors -- Absence of Dividends" and "Description
of Capital Stock -- Dividends."
Risk Factors............... The shares of Vision Common Stock to be issued in
the Distribution involve a high degree of risk.
Shareholders should consider and read carefully
the factors discussed under "Risk Factors."
Reasons for the
Distribution............... The Optek Board believes that the Distribution is
in the best interests of Optek, Vision and Optek
shareholders because it will, by creating two
separate public companies, improve both
companies' access to capital, improve the focus
of management and employees on the performance of
their respective businesses, and provide improved
management incentives directly linked to the
objective performance of each company's stock in
the public markets. See "The
Distribution -- Background and Reasons for the
Distribution."
Certain Federal Income Tax
Consequences............. Optek has received a favorable private letter
ruling from the IRS to the effect that the
Distribution qualifies as a "tax-free" spinoff
under Section 355 of the Internal Revenue Code of
1986, as amended (a "Section 355 Spinoff"). As a
Section 355 Spinoff, neither Optek nor its
shareholders will recognize gain or loss as a
result of the Distribution of Vision Common
Stock. See "Risk Factors" and "The Distribu-
4
<PAGE> 9
tion -- Certain Federal Income Tax Consequences
of the Distribution."
Relationship with Optek
after the Distribution..... In connection with the Distribution, Vision and
Optek have entered into or will enter into a
Distribution Agreement (the "Distribution
Agreement") and a Tax Matters Agreement (the "Tax
Matters Agreement") relating to the Distribution.
In addition, Vision and Optek are parties to a
Contract Research and Development Agreement (the
"CID Contract R&D Agreement") relating to the
development by Vision of certain charge-injection
device ("CID") sensors and systems, a Supply
Agreement (the "CID Supply Agreement") relating
to the supply by Vision to Optek of CID sensors
and a lease relating to office and manufacturing
space in Margate, England (the "Hilger Lease").
See "The Distribution -- Relationship Between
Optek and Vision After the Distribution" and
"Certain Transactions -- Other Relationships."
Relationship with Thermo
Electron, Thermo
Instrument, and other
Affiliates............... Effective as of the Distribution Date, Vision will
become a party to the Thermo Electron Corporate
Charter and a Corporate Services Agreement, a Tax
Allocation Agreement, a Master Guarantee
Reimbursement Agreement, and a Master Repurchase
Agreement with Thermo Electron and Vision will
become a party to a Master Guarantee
Reimbursement Agreement with Thermo Instrument.
See "Certain Transactions -- Relationship with
Thermo Electron and Thermo Instrument." In
addition, Vision and Thermo Instrument are
parties to a lease relating to office and
manufacturing space in Franklin, Massachusetts.
See "Certain Transactions -- Other
Relationships." Moreover, certain Thermo Electron
subsidiaries purchase Vision products and Vision
purchases products from certain Thermo Electron
subsidiaries. See "Certain Transactions -- Other
Relationships."
Vision Stock Option
Grants..................... Vision has adopted the Vision Equity Incentive Plan
(the "Vision EIP") and has reserved an aggregate
of 700,000 shares of Vision Common Stock for
issuance to employees and directors of Vision and
others pursuant thereto. Prior to the
Distribution Date, Vision plans to grant options
pursuant to the Vision EIP covering up to 350,000
shares of Vision Common Stock with exercise
prices equal to the fair market value of the
Vision Common Stock on the respective dates of
grant.
5
<PAGE> 10
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEAR(1) ENDED(1)(2)
----------------------------------------------- ----------------------------- PRO FORMA
1992 1993 SEPTEMBER 28, SEPTEMBER 27, COMBINED
(2)(3) (2)(3)(4) 1994(3) 1995 1996(5) 1996(5) 1997(6) 1996(7)
------ --------- ------- ------ ------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME
DATA:
Revenues.............. $ 755 $ 2,397 $4,242 $6,026 $30,434 $22,369 $28,445 $ 33,940
Gross Profit.......... 377 903 1,231 2,544 13,368 9,705 12,654 14,312
Operating Income
(Loss).............. (69) 239 261 282 2,467 1,839 3,110 831
Net Income (Loss)..... (71) 66 146 147 1,418 1,049 1,702 338
Earnings (Loss) per
Share(8)............ (.01) .01 .02 .02 .21 .15 .25 .05
Weighted Average
Shares(8)........... 6,784 6,784 6,784 6,784 6,784 6,784 6,784 6,784
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 27,
1997(2)(6)
-------------
<S> <C> <C>
BALANCE SHEET DATA:
Working Capital........................................................ $10,461
Total Assets........................................................... 38,698
Long-term Obligations.................................................. 7,747
Shareholder's Investment............................................... 23,379
</TABLE>
- ---------------
(1) All periods presented include the results of Thermo Vision Colorado.
(2) Derived from unaudited financial statements.
(3) Includes a pro rata share of equity in the losses of CIDTEC through the date
of the acquisition of its assets by Thermo Instrument in October 1994 and
the consolidated results of CIDTEC since October 1994.
(4) Includes the results of Hilger since its acquisition by Thermo Instrument in
July 1993.
(5) Includes the results of Oriel and Corion since their acquisition by Vision
in February 1996.
(6) Includes the results of LSI since its acquisition by Vision in February
1997.
(7) The pro forma combined statement of income data was derived from the pro
forma combined condensed statements of income included elsewhere in this
Information Statement. The pro forma combined statement of income data sets
forth the results of operations for the 1996 fiscal year as if the
acquisitions of Oriel and Corion had occurred on January 1, 1996.
(8) Pursuant to Securities and Exchange Commission requirements, earnings per
share have been presented for all periods. Weighted average shares for such
periods represent the 6,783,783 shares issued to Optek in connection with
the initial capitalization of Vision.
6
<PAGE> 11
THE COMPANY
Vision was incorporated in Delaware in November 1995 as a wholly owned
subsidiary of Optek. Vision initially was comprised of two businesses: CID
Technologies Inc., a manufacturer of CIDs used for imaging sensors and video
cameras ("CIDTEC"); and Scientific Measurement Systems Inc., a producer of
low-cost optically based components, instruments, and accessories, which now
conducts business under the name "Thermo Vision Colorado." Vision subsequently
acquired four additional businesses from unrelated third parties. In February
1996, Vision acquired Oriel Instruments Corporation, a manufacturer and
distributor of photonics components and instruments ("Oriel"), and the assets of
Corion Corporation, a manufacturer of commercial optical filters (Vision's
Corion division being referred to herein as "Corion"). In February 1997,
Vision acquired Laser Science, Inc., a manufacturer of gas lasers ("LSI"). In
July 1997, Vision acquired the assets of Centronic, Inc. ("Centronic"), a
manufacturer of silicon photodiodes, through Vision's Centro Vision, Inc.
("Centro Vision") subsidiary. In addition, in August 1997, Vision's wholly owned
subsidiary Hilger Crystals Limited ("Hilger") purchased the crystal-materials
business of Hilger Analytical Limited ("Hilger Analytical"), a wholly owned
subsidiary of Optek and manufacturer of crystals used for X-ray scintillation
and infrared spectroscopy. From the time of Vision's incorporation in November
1995, the crystal-materials business of Hilger Analytical has been under
Vision's management.
The principal executive office of Vision is located at 8E Forge Parkway,
Franklin, Massachusetts 02038 and its telephone number is (508) 553-1689.
INTRODUCTION
On , 1997 (the "Declaration Date"), the Optek Board
declared a dividend of 14 shares of Vision Common Stock for each 100 shares of
Optek Common Stock held of record on the Record Date. On the Distribution Date,
Optek will effect the Distribution by delivering all of the issued and
outstanding shares of Vision Common Stock to the Distribution Agent for transfer
and distribution to the holders of record of Optek Common Stock at the Record
Date. It is expected that certificates representing shares of Vision Common
Stock will be mailed to Optek shareholders on or about ,
1997, although the timing of the mailing will be delayed if the pricing of the
IPO is delayed. The shares of Vision Common Stock to be distributed in the
Distribution will be subject to the Charter Transfer Restriction. See
"Description of Capital Stock." The Distribution will not be effected unless
immediately thereafter the IPO is consummated. As a result of the Distribution,
100% of the outstanding shares of Vision Common Stock will be distributed to
Optek shareholders. Approximately 93% of such shares will be held by Thermo
Instrument. Following the Distribution, Optek's operations will consist of the
design, manufacture, marketing, and sale of instruments for elemental,
molecular, and materials analysis and characterization, and Vision's operations
will consist of the design, manufacture, marketing, and sale of optical
components, imaging sensors and systems, lasers, optically based instruments,
optoelectronics, and fiber optics.
Vision plans to issue and sell approximately 1,075,000 shares of Vision
Common Stock in the IPO. Vision anticipates using the net proceeds of the IPO
for general corporate purposes, including possible acquisitions and research and
development funding. Vision currently anticipates that Fahnestock & Co. Inc. and
HSBC Securities, Inc. will serve as managing underwriters in the IPO. Vision
filed a registration statement on Form S-1 with the Commission with respect to
the IPO on October 17, 1997, and expects to close the IPO in December 1997.
However, the IPO is contingent upon a number of factors, including consummation
of the Distribution, stock market conditions and Vision's and the managing
underwriters' determination as to the appropriate timing of such offering, and
there can be no assurance that the IPO will be consummated. Moreover, the number
of shares of Vision Common Stock to be sold in the IPO is subject to change
based on a number of factors, including the possible exercise by the
underwriters of their over-allotment option. The shares of Vision Common Stock
to be issued in the IPO will not be subject to the Charter Transfer Restriction.
The offering of the shares of Vision Common Stock in the IPO will be made only
by means of a prospectus complying with the requirements of the Securities Act
of 1933, as amended, and this Information Statement does not constitute an offer
to sell, or solicitation of an offer to buy, any shares of Vision Common Stock.
Optek shareholders of record with inquiries relating to the Distribution
should contact the Distribution Agent by telephone at (781) 921-8200 or Optek in
writing at Thermo Optek Corporation, 81 Wyman Street, P.O. Box 9046, Waltham,
Massachusetts 02254-9046, Attention: John N. Hatsopoulos, Chief Financial
Officer.
7
<PAGE> 12
THE DISTRIBUTION
BACKGROUND AND REASONS FOR THE DISTRIBUTION
Thermo Electron Spinout Strategy. Vision currently is a wholly owned
subsidiary of Optek. The Optek Common Stock is publicly traded on the AMEX.
Approximately 93% of such outstanding stock is owned by Thermo Instrument, and
approximately 7% is owned by the public. Thermo Instrument, a public company,
the stock of which is traded on the AMEX, is approximately 82%-owned by Thermo
Electron and approximately 18%-owned by the public. Thermo Electron is a widely
held public company, the stock of which is traded on the New York Stock
Exchange. Thermo Electron is the parent corporation of a group of corporations
which as of September 27, 1997, included 21 publicly traded subsidiaries in
which Thermo Electron directly or indirectly held a majority interest.
Thermo Electron has adopted a strategy of "spinning out" certain of its
businesses into separate subsidiaries and having these subsidiaries sell a
minority interest to outside investors. Thermo Electron believes that this
strategy provides additional motivation and incentives for management of the
subsidiaries through the establishment of subsidiary-level stock option
incentive programs, improved access to capital to support the subsidiaries'
growth, and the preservation and fostering of an entrepreneurial culture within
such subsidiaries. At the same time, as a result of this strategy, Thermo
Electron's wholly and majority-owned subsidiaries are able to draw on certain
centralized corporate, administrative, financial, tax, and other services that
would not be available to many independent companies of similar size. Several of
Thermo Electron's subsidiaries have in turn adopted this type of strategy and
have "spun out" subsidiaries of their own. Virtually all such transactions have
involved a sale of the common stock of the spunout company, with Thermo Electron
(or a subsidiary such as Thermo Instrument) retaining a majority interest of
such common stock (a "Spinout IPO"). See "Certain Transactions -- Relationship
with Thermo Electron and Thermo Instrument."
Distribution v. Spinout IPO. Although Optek was incorporated in August
1995 and Vision's business was included with Optek at that time, the rapid
growth of Vision, and the business exigencies that motivate the Distribution,
were not fully apparent when the decision to include Vision within Optek was
made. For the reasons described below, the Optek Board believes that the
proposed Distribution will better achieve the purposes of the Thermo Electron
spinout strategy than would a Spinout IPO of Vision by Optek.
The Optek Board believes that consummation of the Distribution rather than
a Spinout IPO of Vision will better achieve the business purposes that motivate
the Distribution. The Optek Board believes that (i) as a separate entity and not
a subsidiary of Optek, Vision will be able to maximize its own business without
being constrained by concerns about the effects on Optek's earnings, (ii)
Vision's ability to efficiently access capital markets will be improved if
Vision is spun off as a separate entity from Optek, (iii) management and
development of certain of Vision's technology will receive more focused
attention and resources as a result of the Distribution, and (iv) Thermo
Instrument, which is a much larger entity than Optek, will be able to tolerate a
higher degree of risk with respect to the operations of Vision than would Optek.
The Optek Board further believes that making Vision the first fourth tier
("great-grandchild") public subsidiary of Thermo Electron pursuant to a Spinout
IPO would create unnecessary and significant additional complexity in the Thermo
Electron corporate structure. As of September 27, 1997, the corporate structure
of the Thermo Electron family of corporations included 7 publicly held
first-tier subsidiaries of Thermo Electron ("children") and 14 publicly held
second-tier subsidiaries ("grandchildren"). This complexity makes it more
difficult for the stock markets, stock analysts, and investment advisers to
analyze and value these layers of corporations.
Reasons for the Distribution. Optek and Vision have different business
focuses and objectives. Optek is engaged in the instruments business and Vision
is engaged in the photonics products business. Optek is a worldwide leader in
the development, manufacture, and marketing of analytical instruments that use a
range of optical spectroscopy and other energy based techniques. These
instruments are used in the quantitative and qualitative chemical analysis of
elements and molecular compounds in a wide variety of solids, liquids and gases.
The photonics market in which Vision participates is divided into six distinct
segments: optical components, imaging sensors and systems, lasers, optically
based instruments, optoelectronics, and fiber
8
<PAGE> 13
optics. Vision operates in all six of these segments. In contrast, Optek offers
products principally in the optically based instruments segment of the photonics
market and in other closely aligned instruments markets. Optek's instruments
range in price from approximately $30,000 to $700,000. In contrast, most of
Vision's products range in price from approximately $0.10 to $12,000.
The Optek Board believes that the Distribution of Vision Common Stock by
Optek will serve to create and foster an entrepreneurial culture in and create
improved incentives for management of each of Optek and Vision. A principal
purpose for the Distribution is to allow Vision to grant its own stock options
to its management and directors. By creating two separate public companies, the
value of stock options granted to Optek's and Vision's respective managements
will more closely follow the business results those managers have achieved for
their separate companies. In addition, following the Distribution, Vision's
management will be subject to the visibility and public scrutiny of the public
market and, the Optek Board believes, will gain significant business experience
and skill as a result of managing a public company.
The Optek Board further believes that managerial, budgetary, and capital
resources will best be applied to each of Optek's and Vision's businesses by
separating these businesses. For example, the Optek Board believes that the
Distribution will facilitate Vision's ability to devote such resources as are
appropriate, based on factors particular to Vision's business, in maintaining
and expanding the distribution channels for its products. Optek's and Vision's
distribution channels differ because of differences in the nature of the buyers
of each company's products and in the prices of such products.
Potential investors in Vision, the Optek Board believes, will be confident
that as Vision's parent corporation, Thermo Instrument is large enough and
diverse enough to allow Vision the flexibility for Vision's management to pursue
its growth strategy, such as potential acquisitions or research and development,
without undue concern over the effect on its parent corporation's earnings. The
Optek Board also believes that Thermo Instrument is an appropriate and desirable
parent corporation of Vision because Thermo Instrument (i) has sufficient size
to support Vision (with 1996 revenue of $1.21 billion as compared to 1996
revenue of $351 million for Optek), (ii) has already adopted its own "spinout"
structure, (iii) has already created five publicly held subsidiaries, and thus
(iv) has positioned itself to permit its public subsidiaries to pursue their own
independent business objectives.
In addition, Vision has filed a registration statement on Form S-1 with the
Commission relating to the IPO, which provides for an offering of approximately
1,075,000 shares of Vision Common Stock. Vision expects to close the IPO
immediately following the Distribution. See "Introduction." The Optek Board
believes that the terms of the IPO will be more favorable than the terms Vision
could have obtained if Optek were not planning to effect the Distribution.
MANNER OF EFFECTING THE DISTRIBUTION
The general terms and conditions relating to the Distribution are set forth
in the Distribution Agreement and the Tax Matters Agreement between Optek and
Vision. Under the terms and conditions of the Distribution Agreement, Optek will
effect the Distribution by providing for the delivery of the Vision Common Stock
held by Optek to the Distribution Agent for distribution to the Optek
shareholders. The Distribution will be made on the basis of 14 shares of Vision
Common Stock for each 100 shares of Optek Common Stock held on the Record Date.
Certificates representing shares of Vision Common Stock are expected to be
mailed or delivered by American Stock Transfer & Trust Company (the
"Distribution Agent") on or about , 1997, subject to deferral by
one day for each day that the pricing of the IPO is deferred beyond ,
1997.
No fractional shares of Vision Common Stock will be received by Optek
shareholders. Fractional shares, if any, will be aggregated and sold, on behalf
of the shareholders entitled to receive such shares, by the Distribution Agent.
The Distribution Agent will use the net proceeds from the sale of fractional
shares to make cash payments to those shareholders otherwise entitled to receive
fractional shares in proportion to their respective interests in such fractional
shares.
Holders of Optek Common Stock will not be required to pay cash or any other
consideration for the Vision Common Stock received in the Distribution or to
surrender or exchange certificates representing shares of Optek Common Stock in
order to receive the Vision Common Stock. Holders of Optek Common Stock will
9
<PAGE> 14
continue to own their shares of Optek Common Stock and, if such shareholders
were shareholders of record on the Record Date, they will also receive shares of
Vision Common Stock. The Distribution will not otherwise change the number of,
or the rights associated with, outstanding shares of Optek Common Stock.
All shares of Vision Common Stock distributed to Optek shareholders in the
Distribution will be (i) fully paid and nonassessable and the holders thereof
will not be entitled to preemptive rights and (ii) subject to the Charter
Transfer Restriction. See "Description of Capital Stock."
ACCOUNTING TREATMENT OF THE DISTRIBUTION
The Distribution will be treated for accounting purposes as a payment of a
dividend of shares of Vision Common Stock to shareholders of Optek in the period
in which the Distribution is consummated.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION
Optek has received a favorable private letter ruling from the IRS (the "Tax
Ruling") substantially to the effect that, among other things, the Distribution
will qualify as a Section 355 Spinoff, and, in general, that for federal income
tax purposes:
(1) No gain or loss will be recognized by or be includable in the
income of a holder of Optek Common Stock solely as a result of the receipt
of Vision Common Stock in the Distribution.
(2) No gain or loss will be recognized by Optek, its subsidiaries, or
Vision upon the Distribution.
(3) The tax basis of Optek Common Stock held by a shareholder
immediately prior to the Distribution will be apportioned (based upon
relative market values on the Distribution Date) between such Optek Common
Stock and the Vision Common Stock received by such shareholder in the
Distribution.
(4) Assuming that the Optek Common Stock is held as a capital asset,
the holding period for the Vision Common Stock received in the Distribution
by a holder of Optek Common Stock will include the period during which such
Optek Common Stock was held.
The Distribution, although tax-free as of the Distribution Date, could be
rendered taxable as a result of subsequent actions or events. For a description
of subsequent actions or events that could render the Distribution taxable, see
"Risk Factors -- Risk of Loss of "Tax-Free" Treatment of Distribution." If the
Distribution were rendered taxable as a result of subsequent actions or events
(i) a corporate-level taxable gain would be recognized by the group of
corporations with which Optek and Vision file consolidated federal income tax
returns, generally equal to the amount by which the fair market value of the
Vision Common Stock distributed in the Distribution exceeded Optek's basis
therein, although the gain attributable to Thermo Instrument's ownership of
Optek (approximately 93%) would be deferred pursuant to the consolidated return
regulations until certain events occurred, including deconsolidation of Optek or
Thermo Instrument or the sale of the shares of Vision Common Stock received by
Thermo Instrument in the Distribution, (ii) each of Optek and Vision, as a
former member of that group, would be severally liable for the corporate-level
tax on such gain, and (iii) each holder of Optek Common Stock who receives
shares of Vision Common Stock in the Distribution would be treated as having
received a taxable dividend in an amount equal to the fair market value of the
Vision Common Stock received (assuming that Optek had sufficient current or
accumulated "earnings and profits"). Under the consolidated return regulations,
Thermo Instrument will be entitled to exclude 100% of such dividends received.
Under the Tax Matters Agreement, each of Optek and Vision agrees to indemnify
the other for certain taxes incurred with respect to the Distribution (and
related transactions) as a result of certain post-Distribution actions. These
indemnification obligations do not extend to shareholders of Optek.
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
PARTICULAR CONSEQUENCES TO THEM OF THE DISTRIBUTION, INCLUDING THE APPLICATION
OF STATE, LOCAL, AND FOREIGN TAX LAWS. SHAREHOLDERS ARE ALSO ADVISED TO FILE
WITH THE IRS THE FORM OF INFORMATION STATEMENT ANNEXED HERETO AS ANNEX A WITH
THE TAX RETURN COVERING THE PERIOD IN WHICH THE DISTRIBUTION OCCURS.
10
<PAGE> 15
VISION STOCK OPTION GRANTS
Vision has adopted the Vision EIP and has reserved an aggregate of 700,000
shares of Vision Common Stock for issuance to employees and directors of Vision
and others pursuant thereto. Prior to the Distribution Date, Vision plans to
grant options pursuant to the Vision EIP covering up to 350,000 shares of Vision
Common Stock with exercise prices equal to the fair market value of the Vision
Common Stock on the respective dates of grant.
RELATIONSHIP BETWEEN OPTEK AND VISION AFTER THE DISTRIBUTION
In connection with the Distribution, Optek and Vision have entered or will
enter into a Distribution Agreement, summarized below, and a Tax Matters
Agreement. See "The Distribution -- Certain Federal Income Tax Consequences of
the Distribution." In addition, Vision and Optek are parties to the CID Contract
R&D Agreement, the CID Supply Agreement which will be effective as of the
Distribution Date, and the Hilger Lease. See "Business -- Products -- Imaging
Sensors and Systems" and "Certain Transactions -- Other Relationships."
The Distribution Agreement provides for, among other things: (a) the
principal corporate transactions required to effect the Distribution, including,
among other things, the preparation of the Registration Statement on Form 10
registering the Vision Common Stock under the Exchange Act (the "Registration
Statement"), (b) the conditions thereto, and (c) certain other agreements
governing the relationship between Vision and Optek with respect to or resulting
from the Distribution. Subject to certain exceptions, the Distribution Agreement
also provides for certain cross-indemnification designed principally to place
financial responsibility for the liabilities of Vision's businesses with Vision
and financial responsibility for the liabilities of Optek's business with Optek.
The Distribution Agreement also provides for cross-indemnities in respect of
certain liabilities under the Exchange Act relating to the Registration
Statement.
For information relating to Vision's relationship with Thermo Electron,
Thermo Instrument, and other affiliates, see "Certain Transactions."
11
<PAGE> 16
RISK FACTORS
Holders of Optek Common Stock should be aware that the Distribution and
ownership of Vision Common Stock involve certain risks, including those
described below, which could adversely affect the value of their holdings.
Neither Optek nor Vision makes, nor is any other person authorized to make, any
representations as to the future market value of the Vision Common Stock.
Risks Associated with Technological Change, Obsolescence, and the
Development and Acceptance of New Products. The market for Vision's products is
characterized by rapid and significant technological change and evolving
industry standards. New product introductions responsive to these factors
require significant planning, design, development, and testing at the
technological, product, and manufacturing process levels, and may render
existing products and technologies uncompetitive or obsolete. There can be no
assurance that Vision's products will not become uncompetitive or obsolete. In
addition, industry acceptance of new applications for Vision's technologies
developed by Vision may be slow to develop due to, among other things, the
general unfamiliarity of users with new applications and technologies. There can
be no assurance that these factors will not have a material adverse effect on
Vision's results of operations, financial condition, or business.
Risks Associated with Acquisition Strategy; No Assurance of a Successful
Acquisition Strategy. Vision's growth strategy is to supplement its internal
growth with the acquisition of businesses and technologies that complement or
augment Vision's existing product lines. Since February 1996, Vision has
acquired four companies from unrelated third parties that comprise the bulk of
its operations. Certain businesses that Vision may seek to acquire in the future
may be marginally profitable or unprofitable. In order for any acquired
businesses to achieve the level of profitability desired by Vision, Vision must
successfully reduce expenses and improve market penetration. No assurance can be
given that Vision will be successful in this regard. In many instances,
acquisitions by Vision will result in Vision recording cost in excess of net
assets of acquired companies on its balance sheet. Such cost in excess of net
assets of acquired companies will be amortized as a non-cash expense over
specified periods. In addition, promising acquisitions are difficult to identify
and complete for a number of reasons, including competition among prospective
buyers and the need for regulatory approvals, including antitrust approvals.
These factors may adversely affect both the availability and price of
prospective acquisition targets. There can be no assurance that Vision will be
able to complete pending or future acquisitions. In order to finance any
acquisitions, it may be necessary for Vision to raise additional funds through
public or private financings. Any equity or debt financing, if available at all,
may be on terms which are not favorable to Vision and may result in dilution to
Vision shareholders. In the past, a significant portion of the funding for
Vision's acquisitions has come from Optek, Thermo Instrument, or Thermo
Electron. Although Thermo Electron and Thermo Instrument regularly fund
acquisitions by their respective wholly and partially owned subsidiaries,
neither Thermo Electron nor Thermo Instrument has committed to fund any future
acquisitions by Vision. There can be no assurance that Vision will be able to
secure any such financing or that these factors will not have a material adverse
effect on Vision's results of operations, financial condition, or business. See
"Business -- Strategy."
Intense Competition. Vision encounters and expects to continue to
encounter intense competition in the sale of its products. Vision believes that
the principal competitive factors affecting the market for its products include
product performance, price, reliability, and customer service. Vision's
principal competitors include Melles Griot, Inc.; Optical Coating Laboratory,
Inc.; Newport Corporation; Coherent, Inc.; Corning OCA Corporation; the Bicron
Business Unit of Saint-Gobain Industrial Ceramics, Inc.; and UDT Sensors, Inc.
Certain of these companies and certain of Vision's other competitors have
substantially greater financial, marketing, and other resources than those of
Vision. As a result, they may be able to adapt more quickly to new or emerging
technologies and changes in customer requirements or to devote greater resources
to the promotion and sale of their products than Vision. In addition,
competition could increase if new companies enter the market or if existing
competitors expand their product lines or intensify efforts within existing
product lines. There can be no assurance that Vision's current products,
products under development, or ability to discover new technologies will be
sufficient to enable it to compete effectively with its competitors. In
addition, there can be no assurance that these factors will not have a material
adverse effect on Vision's results of operations, financial condition, or
business. See "Business -- Competition."
12
<PAGE> 17
Possible Adverse Impact of Significant International Sales. Sales outside
the United States accounted for approximately 40%, 31%, 37%, and 34% of Vision's
revenues for the fiscal years ended December 31, 1994, December 30, 1995, and
December 28, 1996, and the nine months ended September 27, 1997, respectively,
and Vision expects that international sales will continue to account for a
significant portion of its revenues in the future. Sales to customers in foreign
countries are subject to a number of risks, including the following: agreements
may be difficult to enforce and receivables difficult to collect through a
foreign country's legal system; foreign customers may have longer payment
cycles; foreign countries could impose withholding taxes or otherwise tax
Vision's foreign income, impose tariffs, or adopt other restrictions on foreign
trade; fluctuations in exchange rates may affect product demand and adversely
affect the profitability in U.S. dollars of products provided by Vision in
foreign markets where payment for Vision's products is made in the local
currency; U.S. export licenses may be difficult to obtain and the protection of
intellectual property in foreign countries may be more difficult to enforce.
There can be no assurance that any of these factors will not have a material
adverse effect on Vision's results of operations, financial condition, or
business. See Note 7 to Vision's Consolidated Financial Statements for data for
Vision by geographical area.
Risks Associated with Protection, Defense, and Use of Intellectual
Property. Vision holds a number of patents relating to various aspects of its
products and believes that proprietary technical know-how is critical to many of
its products. Proprietary rights relating to Vision's products are protected
from unauthorized use by third parties only to the extent that they are covered
by valid and enforceable patents or are maintained in confidence as trade
secrets. There can be no assurance that patents will issue from any pending or
future patent applications owned by or licensed to Vision or that the claims
allowed under any issued patents will be sufficiently broad to protect Vision's
technology. In the absence of patent protection, Vision may be vulnerable to
competitors who attempt to copy Vision's products or gain access to its trade
secrets and know-how. Proceedings initiated by Vision to protect its proprietary
rights could result in substantial costs to Vision. There can be no assurance
that competitors of Vision will not initiate litigation to challenge the
validity of Vision's patents or that they will not use their resources to design
comparable products that do not infringe Vision's patents. There may also be
pending or issued patents held by parties not affiliated with Vision that relate
to Vision's products or technologies. Vision may need to acquire licenses to, or
contest the validity of, any such patents. There can be no assurance that any
license required under any such patent would be made available on acceptable
terms, if at all, or that Vision would prevail in any such contest. Vision could
incur substantial costs in defending itself in suits brought against it or in
suits in which Vision may assert its patent rights against others. If the
outcome of any such litigation is unfavorable to Vision, Vision's results of
operations, financial condition, or business could be materially adversely
affected. In addition, Vision relies on trade secrets and proprietary know-how
which it seeks to protect, in part, by confidentiality agreements with its
collaborators, employees, and consultants. There can be no assurance that these
agreements will not be breached, that Vision would have adequate remedies for
any breach, or that Vision's trade secrets will not otherwise become known or be
independently developed by competitors. See "Business -- Intellectual Property."
Dependence on Key Personnel. Vision's success depends to a significant
extent upon a number of key employees, including Kristine S. Langdon, Vision's
President and Chief Executive Officer, and other members of senior management.
The loss of the services of one or more of these key employees could have a
material adverse effect on Vision. Vision believes that its future success will
depend in part on its ability to attract, motivate, and retain highly skilled
technical, managerial, and marketing personnel. Competition for such personnel
is intense and there can be no assurance that Vision will be successful in
attracting, motivating, and retaining key personnel. See "Business -- Personnel"
and "Management."
Potential Fluctuations in Quarterly Performance. Vision's quarterly
operating results may vary significantly depending on a number of factors,
including the timing of product development and introduction, size, timing, and
shipment of individual orders, seasonality of revenue, foreign currency exchange
rates, the mix of products sold, and general economic conditions. Because
Vision's operating expenses are based on anticipated revenue levels and a high
percentage of Vision's expenses are fixed for the short term, a small variation
in the timing of recognition of revenue can cause significant variations in
operating results from quarter to quarter. For example, since the February 1996
acquisitions of Orial and Corion, Vision's quarterly revenues have
13
<PAGE> 18
ranged from a low of $8.1 million to a high of $10.6 million and its quarterly
net income has ranged from a low of $0.4 million to a high of $0.6 million. See
Note 9 to Vision's Consolidated Financial Statements for certain information
concerning Vision's quarterly operating results since the beginning of fiscal
1996.
Absence of Public Market; Possible Volatility of Stock Price; Possible
Delisting. Prior to the Distribution, there has been no public market for the
Vision Common Stock. It is possible that a "when-issued" trading market may
develop prior to the Record Date, although such trading is not expected to occur
because the shares of Vision Common Stock to be distributed in the Distribution
are subject to the Charter Transfer Restriction. See "Description of Capital
Stock." There can be no assurance regarding the prices at which the Vision
Common Stock will trade before or after the Distribution Date and the Charter
Transfer Restriction lapses. The market prices for securities of companies such
as Vision has historically been highly volatile. Announcements of technological
innovations or new commercial products by Vision or its competitors, disputes
concerning patent or proprietary rights, publicity regarding products under
development by Vision or its competitors, and economic and other external
factors, as well as period-to-period fluctuations in financial results, may have
a significant impact on the market price of Vision Common Stock and Vision's
results of operations, financial condition, or business.
The Vision Common Stock has been approved for listing on the AMEX under the
symbol "VIZ," subject to the condition that the IPO is consummated immediately
following the consummation of the Distribution. Vision will be subject to the
AMEX's maintenance requirements. A failure of Vision Common Stock to meet the
AMEX's maintenance requirements may result in a delisting of such securities. In
particular, Vision may have difficulty maintaining the minimum market
capitalization requirements of the AMEX because such capitalization is dependent
on the price at which the shares of Vision Common Stock trade from time to time.
The liquidity of securities not listed on an exchange or delisted securities,
which would probably trade in the over-the-counter markets, may be impaired, not
only in the number of shares that could be bought or sold, but also through
delays in the timing of transactions, reductions in securities analysts' and
media coverage of Vision, and lower prices than might otherwise be attained.
There can be no assurance that these factors will not have a material adverse
effect on Vision's results of operations, financial condition, or business.
Risk of Loss of "Tax-free" Treatment of Distribution. Although Optek
received the Tax Ruling stating that the Distribution will be considered
tax-free as of the Distribution Date, certain actions ("Post-Distribution Acts")
involving Vision, Optek, or their respective shareholders following the
Distribution Date could render the Distribution taxable. Any of the following
Post-Distribution Acts potentially could render the Distribution taxable: (i)
the transfer by Vision or Optek of a material portion of its assets (other than
a transfer of assets in the ordinary course of business); (ii) the merger of
Vision or Optek with or into another corporation in a transaction that does not
qualify as a tax-free reorganization under Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code"); (iii) the discontinuance by Vision or
Optek of a material portion of its historical business activities; (iv) the
conversion (or redemption or exchange) of the Vision Common Stock distributed in
the Distribution into or for any other stock, security, property, or cash; (v)
the issuance of additional shares of stock by Vision pursuant to negotiations,
agreements, plans, or arrangements entered into before the Distribution that
causes the shareholders who receive their shares of Vision Common Stock in the
Distribution to no longer have control of Vision within the meaning of Section
368(c) of the Code; (vi) transfers of stock of Vision and/or Optek by Vision's
shareholders of sufficient quantity to cause the historic shareholders of Optek
not to be considered to have maintained sufficient "continuity of proprietary
interest" in one or both of the companies; and (vii) the acquisition of a 50% or
greater interest in Optek or Vision pursuant to a plan (or deemed to be pursuant
to a plan) in existence on the Distribution Date. If the Distribution were
rendered taxable as a result of a Post-Distribution Act, then (x) the
corporate-level taxable gain would be recognized by the consolidated group of
which Thermo Electron is the parent, although the gain attributable to Thermo
Instrument's ownership of Optek (approximately 93%) would be deferred pursuant
to applicable consolidated return regulations (see "The Distribution -- Certain
Federal Income Tax Consequences of the Distribution"), (y) each of Optek and
Vision as a former member of that group, would be severally liable for the
corporate-level tax on such gain when such gain becomes taxable under the
consolidated return regulations, and (z) except in the case of an acquisition
described in clause (vii) of the preceding sentence, each holder of Optek Common
Stock who received shares of Vision Common Stock in
14
<PAGE> 19
the Distribution would be treated as having received a taxable dividend in an
amount equal to the fair market value of the Vision Common Stock received
(assuming that Optek had sufficient current or accumulated "earnings and
profits"). Under the consolidated return regulations, Thermo Instrument will be
entitled to exclude 100% of such dividends received. Under the Tax Matters
Agreement, each of Optek and Vision agrees to indemnify the other for certain
taxes incurred with respect to the Distribution as a result of its Post-
Distribution Acts. These indemnification obligations do not extend to
shareholders of Optek.
Potential Conflicts of Interest. Following the Distribution, for financial
reporting purposes, Vision's financial results will continue to be included in
Thermo Instrument's and Thermo Electron's consolidated financial statements.
Certain officers and directors of Vision, including John N. Hatsopoulos, Paul F.
Kelleher, Earl R. Lewis, and Arvin H. Smith, are also officers and directors of
Thermo Instrument, Thermo Electron and/or other subsidiaries of Thermo Electron.
These officers and directors will devote only a small portion of their working
time (anticipated to be less than 5% in the case of Messrs. Hatsopoulous,
Kelleher, and Smith and less than 10% in the case of Mr. Lewis) to the affairs
of Vision. Further, it is an essential element of Thermo Electron's career
development program that successful executives and managers be considered for
positions of increased responsibility anywhere within the Thermo Electron family
of companies. A number of Vision's executives and managers were promoted to
their present positions under this policy. There can be no assurance that
Vision's present executives and managers will not assume other positions within
the Thermo Electron family of companies, causing them to be unavailable to serve
Vision or to reduce the amount of time that they devote to the affairs of
Vision. The members of the Vision Board of Directors (the "Vision Board") and
the officers of Vision who are also affiliated with Thermo Instrument or Thermo
Electron will consider not only the short-term and the long-term impact of
operating decisions on Vision, but also the impact of such decisions on the
consolidated financial results of Thermo Instrument and Thermo Electron. In some
cases, the impact of such decisions could be disadvantageous to Vision while
advantageous to Thermo Instrument or Thermo Electron, or vice versa. For
example, conflicts may arise with respect to possible future acquisitions by
Vision of assets or businesses of Thermo Instrument or another Thermo Electron
affiliated company in which the purchase price to be paid by Vision is subject
to negotiation between Vision and Thermo Instrument or such other Thermo
Electron affiliated company. These negotiations will be subject to the potential
conflicts associated with related-party transactions. In addition, Vision's
operating flexibility may be limited because Vision is a party to various
agreements with Thermo Electron and sells products to and purchases products
from certain of Thermo Electron's other subsidiaries. There can be no assurance
that these factors will not have a material adverse effect on Vision's results
of operations, financial condition or business. See "Certain Transactions."
Control by Thermo Instrument. Following the Distribution, Vision's
shareholders will not have the right to cumulate votes for the election of
directors and Thermo Instrument, which will own approximately 93% of the voting
stock of Vision and which currently intends to maintain at least a majority
interest in Vision in the future, will have the power to elect the entire Vision
Board, and to approve or disapprove any corporate actions submitted to vote of
Vision's shareholders. There can be no assurance that these factors will not
have a material adverse effect on Vision's results of operations, financial
condition or business. See "Certain Transactions -- Relationship with Thermo
Electron and Thermo Instrument" and "Security Ownership of Certain Beneficial
Owners and Management."
Absence of Dividends. Vision anticipates that for the foreseeable future,
Vision's earnings, if any, will be retained for use in the business and that no
cash dividends will be paid on the Vision Common Stock. Declaration of dividends
on the Vision Common Stock will depend upon, among other things, future
earnings, the operating and financial condition of the Company, its capital
requirements, and general business conditions. See "Description of Capital Stock
- -- Dividends."
15
<PAGE> 20
LISTING AND TRADING OF VISION COMMON STOCK
Optek presently owns 100% of the outstanding shares of Vision Common Stock.
No trading prices are available with respect to such shares. The shares of
Vision Common Stock to be distributed to Optek shareholders in the Distribution
will be subject to the Charter Transfer Restriction, which prohibits the sale,
transfer, pledge, or other disposition of such shares until the sooner to occur
of (i) 60 days following the pricing of the IPO or (ii) March 1, 1998. See
"Description of Capital Stock." The Distribution will not be effected unless,
immediately thereafter the IPO is consummated. There can be no assurance as to
the price at which Optek Common Stock or Vision Common Stock may be traded after
the Distribution and the expiration of the Charter Transfer Restriction or
whether their initial combined price will be higher or lower than the price of
the Optek Common Stock prior to the Distribution. After the Distribution,
approximately 6,783,800 shares of Vision Common Stock will be issued and
outstanding.
Vision has filed a registration statement on Form S-1 with the Commission
relating to the IPO, which provides for an offering of approximately 1,075,000
shares of Vision Common Stock. Vision expects to close the IPO immediately
following the Distribution. Following the consummation of the IPO, Thermo
Instrument will own approximately 80% of the outstanding shares of Vision Common
Stock. See "Introduction."
Prior to the Distribution Date, Vision plans to grant options pursuant to
the Vision EIP to employees and directors of Vision and others covering up to
350,000 shares of Vision Common Stock with exercise prices equal to the fair
market value of the Vision Common Stock on the respective dates of grant. See
"Management -- Vision Stock Option Grants."
The Vision Common Stock has been approved for listing on the AMEX under the
symbol "VIZ," subject to the condition that the IPO's consummated immediately
following the consummation of the Distribution. Based on the expected number of
holders of Optek Common Stock of record as of the Record Date, Vision is
expected to initially have approximately 66 shareholders of record on the
Distribution Date. The Transfer Agent and Registrar for the Vision Common Stock
will be American Stock Transfer & Trust Company. There can be no assurance that
an active trading market in Vision Common Stock will develop or, if a market
does develop, at what prices Vision Common Stock will trade. See "Risk
Factors -- Absence of Public Market; Possible Volatility of Stock Price;
Possible Delisting."
The shares of Vision Common Stock will not trade on the AMEX on a
"when-issued" basis. However, it is possible that a "when-issued" trading market
in Vision Common Stock may develop prior to the Record Date, although such
trading is not expected to occur because of the Charter Transfer Restriction. A
"when-issued" trading market occurs when trading in shares begins prior to the
time stock certificates are actually available or issued.
Following the expiration of the Charter Transfer Restriction, the shares of
Vision Common Stock distributed to Optek shareholders will be freely
transferable, except for shares received by persons who may be deemed to be
"affiliates" of Vision under the Securities Act. Persons who may be deemed to be
affiliates of Vision after the Distribution generally include individuals or
entities that control, are controlled by, or are under common control with
Vision, and will include: (a) the directors and executive officers of Vision and
(b) Thermo Instrument. All of the shares of Vision Common Stock held by
affiliates of Vision may generally only be resold (i) in compliance with the
applicable provisions of Rule 144 under the Securities Act, (ii) under an
effective registration statement under the Securities Act, or (iii) pursuant to
an exemption from the registration requirements of the Securities Act.
Under Rule 144, an affiliate is entitled to sell, within any three-month
period, a number of shares of Vision Common Stock that does not exceed the
greater of 1% of the then outstanding shares of Vision Common Stock
(approximately 67,840 shares immediately after the Distribution) or the average
weekly trading volume of the Vision Common Stock during the four calendar weeks
preceding the date on which notice of such sale was filed under Rule 144,
provided certain requirements concerning availability of public information,
manner of sale, and notice of sale are satisfied.
In addition, the shares of Vision Common Stock distributed to Thermo
Instrument in the Distribution will be "restricted securities" under Rule 144.
As a result, Thermo Instrument will not be permitted to resell such shares
pursuant to Rule 144 during the one-year period following the Distribution Date.
16
<PAGE> 21
Upon consummation of the Distribution, affiliates of Vision will hold
approximately 6,412,000 shares of Vision Common Stock and Thermo Instrument will
hold approximately 6,300,000 of these shares of Vision Common Stock. Following
the Distribution Date, Vision will file with the Commission a Registration
Statement on Form S-8 to register under the Securities Act the 700,000 shares of
Vision Common Stock which have been reserved for issuance pursuant to the Vision
EIP. See "Management -- Vision Stock Option Grants."
17
<PAGE> 22
CAPITALIZATION
The following table sets forth the capitalization of Vision as of September
27, 1997. The following table does not reflect the effect of consummation of the
IPO. See "Introductions."
<TABLE>
<CAPTION>
(IN THOUSANDS,
EXCEPT SHARE AMOUNTS)
<S> <C>
Short-term Obligations:
Note payable............................................................ $ 729
Capital lease obligation................................................ 18
-------
$ 747
=======
Long-term Obligations, Due to Affiliates.................................. $ 7,747
-------
Shareholder's Investment:
Common stock, $.01 par value, 50,000,000 shares authorized;
6,783,783 shares issued and outstanding(1)(2)........................ 68
Capital in excess of par value.......................................... 20,137
Retained earnings....................................................... 3,139
Cumulative translation adjustment....................................... 35
-------
Total Shareholder's Investment....................................... 23,379
-------
Total Capitalization (Long-term Obligations and Shareholder's
Investment).................................................... $31,126
=======
</TABLE>
- ---------------
(1) Does not include 725,000 shares of Vision Common Stock reserved for issuance
under Vision's stock-based compensation plans. Prior to the Distribution
Date, Vision plans to grant options pursuant to the Vision EIP covering up
to 350,000 shares of Vision Common Stock with exercise prices equal to the
fair market value of the Vision Common Stock on the respective dates of
grant. See "Management -- Compensation of Directors," "-- Compensation of
Executive Officers," and "-- Vision Stock Option Grants."
(2) Reflects an increase in authorized shares and stock splits in the form of
dividends effected in August 1997 and November 1997.
18
<PAGE> 23
SELECTED FINANCIAL INFORMATION
The selected financial information presented below as of and for the fiscal
years ended December 30, 1995, and December 28, 1996, and for the fiscal year
ended December 31, 1994, has been derived from Vision's Consolidated Financial
Statements, which have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report included elsewhere in this Information
Statement. This information should be read in conjunction with Vision's
Consolidated Financial Statements and related notes included elsewhere in this
Information Statement. The selected financial information as of and for the
fiscal years ended January 2, 1993, and January 1, 1994, as of December 31,
1994, and as of and for the nine months ended September 28, 1996, and September
27, 1997, have not been audited but, in the opinion of Vision, includes all
adjustments (consisting only of normal, recurring adjustments) necessary to
present fairly such information in accordance with generally accepted accounting
principles applied on a consistent basis. The results of operations for the nine
months ended September 27, 1997, are not necessarily indicative of results for
the entire year.
<TABLE>
<CAPTION>
NINE MONTHS ENDED(1)
FISCAL YEAR(1) ----------------------------- PRO FORMA
-------------------------------------------------- SEPTEMBER 28, SEPTEMBER 27, COMBINED
1992(2) 1993(2)(3) 1994(2) 1995 1996(4) 1996(4) 1997(5) 1996(6)
------- ---------- ------- ------- ------- ------------- ------------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues.................... $ 755 $2,397 $4,242 $6,026 $30,434 $22,369 $28,445 $33,940
------ ------ ------ ------ ------- ------- ------- -------
Costs and Operating
Expenses:
Cost of revenues.......... 378 1,494 3,011 3,482 17,066 12,664 15,791 19,628
Selling, general, and
administrative
expenses................ 370 580 826 1,519 7,402 5,362 6,558 9,440
Research and development
expenses................ 76 84 144 743 3,499 2,504 2,986 4,041
------ ------ ------ ------ ------- ------- ------- -------
824 2,158 3,981 5,744 27,967 20,530 25,335 33,109
------ ------ ------ ------ ------- ------- ------- -------
Operating Income (Loss)..... (69) 239 261 282 2,467 1,839 3,110 831
Interest and Other Expense,
Net....................... 46 145 28 31 44 34 176 78
------ ------ ------ ------ ------- ------- ------- -------
Income (Loss) Before Income
Taxes..................... (115) 94 233 251 2,423 1,805 2,934 753
Income Tax Provision (Bene-
fit)...................... (44) 28 87 104 1,005 756 1,232 415
------ ------ ------ ------ ------- ------- ------- -------
Net Income (Loss)........... $ (71) $ 66 $ 146 $ 147 $1,418 $ 1,049 $ 1,702 $ 338
====== ====== ====== ====== ======= ======= ======= =======
Earnings (Loss) per
Share(7).................. $ (.01) $ .01 $ .02 $ .02 $ .21 $ .15 $ .25 $ .05
====== ====== ====== ====== ======= ======= ======= =======
Weighted Average
Shares(7)................. 6,784 6,784 6,784 6,784 6,784 6,784 6,784 6,784
====== ====== ====== ====== ======= ======= ======= =======
BALANCE SHEET DATA (AT END
OF PERIOD):
Working Capital............. $ (315) $ (673) $ (359) $ 570 $5,601 $ 5,916 $10,461
Total Assets................ 721 2,059 6,776 6,778 28,362 28,451 38,698
Long-term Obligations....... -- -- -- -- -- -- 7,747
Shareholder's Investment.... (61) 240 4,083 4,697 20,252 20,579 23,379
</TABLE>
- ---------------
(1) All periods presented include the results of ThermoVision Colorado.
(2) Includes a pro rata share of equity in the losses of CIDTEC through the date
of the acquisition of its assets by Thermo Instrument in October 1994 and
the consolidated results of CIDTEC since October 1994.
(3) Includes the results of Hilger since its acquisition by Thermo Instrument in
July 1993.
(4) Includes the results of Oriel and Corion since their acquisition by Vision
in February 1996.
(5) Includes the results of LSI since its acquisition by Vision in February
1997.
(6) The pro forma combined statement of income data was derived from the pro
forma combined condensed statements of income included elsewhere in this
Information Statement. The pro forma combined statement of income data sets
forth the results of operations for the 1996 fiscal year as if the
acquisitions of Oriel and Corion had occurred on January 1, 1996.
(7) Pursuant to Commission requirements, earnings per share have been presented
for all periods. Weighted average shares for such periods represent the
6,783,783 shares issued to Optek in connection with the initial
capitalization of Vision.
19
<PAGE> 24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Thermo Vision Corporation ("Vision") designs, manufactures, and markets a
diverse array of photonics products, including optical components, imaging
sensors and systems, lasers, optically based instruments, optoelectronics, and
fiber optics. Vision sells photonics products in multiple markets across a
number of industries for research, testing, detecting, and manufacturing
applications.
Results for Thermo Vision Colorado are included in the accompanying
financial statements for all periods. Thermo Vision Colorado manufactures
low-cost optically based components, instruments, and accessories. Since its
incorporation in November 1995 as a wholly owned subsidiary of Optek, Vision has
acquired four businesses from unrelated third parties that currently comprise
the bulk of its operations. In February 1996, Vision acquired Oriel, a
manufacturer and distributor of photonics components and instruments, for $11.8
million in cash and the assumption of $0.7 million in debt, and Corion, a
manufacturer of commercial optical filters, for $5.1 million in cash. Vision
obtained the cash portions of the purchase prices of its Oriel and Corion
acquisitions from Optek in the form of capital contributions. In February 1997,
Vision acquired LSI, a manufacturer of gas lasers, for $3.6 million in cash.
Vision borrowed $3.6 million from Optek to fund this acquisition. In July 1997,
Vision acquired Centronic, a manufacturer of silicon photodiodes, for $3.8
million in cash. Vision borrowed $3.8 million from Thermo Electron to fund this
acquisition.
In August 1997, Vision acquired the crystal-materials business of Hilger
Analytical, a wholly owned subsidiary of Optek, in consideration for the
assumption by Vision of $908,000 of Optek's existing obligation under a line of
credit. Because Vision and Hilger were deemed for accounting purposes to be
under control of their common owner, Thermo Instrument, the transaction has been
accounted for at historical cost in a manner similar to a pooling of interests.
Accordingly, all historical information presented includes the results of
operations of Hilger since 1993, the year in which it was acquired by Thermo
Instrument. From the time of Vision's incorporation in November 1995, the
crystal-materials business of Hilger Analytical has been under Vision's
management. All of Vision's other acquisitions were accounted for using the
purchase method of accounting. See "Certain Transactions -- Other
Relationships."
Approximately 5% of Vision's fiscal 1996 revenues originated outside the
U.S. and approximately 31% of Vision's fiscal 1996 revenues were exports from
the U.S. Revenues originating outside the U.S. represent revenues of Hilger.
Hilger's operations are located in the United Kingdom and principally sell in
the local currency. Exports from Vision's U.S. operations are denominated in
U.S. dollars. Although Vision seeks to charge its customers in the same currency
as its operating costs, Vision's financial performance and competitive position
can be affected by currency exchange rate fluctuations.
RESULTS OF OPERATIONS
Nine Months Ended September 27, 1997, Compared With Nine Months Ended
September 28, 1996
Revenues increased 27% to $28.4 million in the nine months ended September
27, 1997, from $22.4 million in the nine months ended September 28, 1996, due
primarily to the inclusion of revenues for the full nine-month period from Oriel
and Corion, acquired in February 1996, and the inclusion of revenues from LSI,
acquired in February 1997, and Centronic, acquired in July 1997. These
acquisitions added revenues of $5.2 million in 1997. Revenues from Vision's
existing operations increased $0.8 million, primarily due to increased revenues
at Hilger from shipments under its Stanford Linear Accelerator contract, which
commenced in the second quarter of 1996.
The gross profit margin increased slightly to 44% in the nine months ended
September 27, 1997, from 43% in the nine months ended September 28, 1996, due
primarily to improved margins at Corion resulting from manufacturing
efficiencies and cost reductions.
Selling, general, and administrative expenses as a percentage of revenues
decreased to 23% in the nine months ended September 27, 1997, from 24% in the
nine months ended September 28, 1996, due primarily to
20
<PAGE> 25
increased revenues at Oriel. Research and development expenses increased to $3.0
million in the nine months ended September 27, 1997, from $2.5 million in the
nine months ended September 28, 1996, due primarily to the inclusion of research
and development expenses at LSI.
Interest expense of $0.2 million in the nine months ended September 27,
1997, primarily represents interest incurred on the $3.6 million promissory note
issued to Optek for the purchase of LSI and the $3.8 million promissory note
issued to Thermo Electron for the purchase of Centronic.
The effective tax rate was 42% in the nine months ended September 27, 1997,
and September 28, 1996. The effective tax rates exceeded the statutory federal
income tax rate due primarily to the impact of nondeductible amortization of
cost in excess of net assets of acquired companies and state income taxes.
1996 Compared With 1995
Revenues increased to $30.4 million in 1996 from $6.0 million in 1995, due
primarily to the inclusion of $24.2 million of revenues from Oriel and Corion,
acquired in February 1996. Revenues from Vision's existing operations increased
$0.2 million, due primarily to the inclusion of a $0.5 million nonrecurring sale
at CIDTEC, offset in part by decreased revenues at Thermo Vision Colorado due to
lower demand.
The gross profit margin increased to 44% in 1996 from 42% in 1995, due
primarily to the inclusion of higher-margin revenues at Oriel, offset in part by
the inclusion of lower-margin revenues at Corion.
Selling, general, and administrative expenses as a percentage of revenues
decreased to 24% in 1996 from 25% in 1995, due primarily to lower costs as a
percentage of revenues at acquired businesses. Research and development expenses
increased to $3.5 million in 1996 from $0.7 million in 1995, due primarily to
the inclusion of $2.5 million of research and development expenses at acquired
businesses.
Interest expense in both periods represents interest incurred on short-term
borrowings at Hilger.
The effective tax rate was 41% in 1996 and 1995. The effective tax rates
exceeded the statutory federal income tax rate due primarily to the impact of
nondeductible amortization of cost in excess of net assets of acquired companies
in both years and state income taxes in 1996.
1995 Compared With 1994
Revenues increased 42% to $6.0 million in 1995 from $4.2 million in 1994,
due primarily to the inclusion of $1.7 million of revenues for the full period
from CIDTEC, acquired in October 1994.
The gross profit margin increased to 42% in 1995 from 29% in 1994, due
primarily to the inclusion of higher-margin revenues from CIDTEC for the full
period.
Selling, general, and administrative expenses as a percentage of revenues
increased to 25% in 1995 from 19% in 1994, due primarily to increased costs at
Thermo Vision Colorado for an advertising campaign completed in 1995. Research
and development expenses increased to $0.7 million in 1995 from $0.1 million in
1994, due primarily to the inclusion of research and development expenses at
CIDTEC.
Interest expense in both periods represents interest incurred on short-term
borrowings at Hilger.
The effective tax rate increased to 41% in 1995 from 37% in 1994. The
effective tax rates exceeded the statutory federal income tax rate due primarily
to the impact of nondeductible amortization of cost in excess of net assets of
acquired companies. The effective tax rate increased in 1995 due primarily to
higher nondeductible amortization of cost in excess of net assets of acquired
companies.
LIQUIDITY AND CAPITAL RESOURCES
Consolidated working capital was $10.5 million at September 27, 1997,
compared with $5.6 million at December 28, 1996. Included in working capital are
cash and cash equivalents of $0.2 million at September 27, 1997, compared with
$0.3 million at December 28, 1996. During the first nine months of 1997,
operating activities provided $2.6 million of cash.
21
<PAGE> 26
Investing activities used $8.5 million of cash during the first nine months
of 1997. In February 1997, Vision acquired LSI for $3.5 million in cash, net of
cash acquired. In July 1997, Vision acquired Centronic for $3.8 million in cash.
In August 1997, Vision acquired the crystal-materials business of Hilger
Analytical in consideration for the assumption by Vision of $0.9 million of
Optek's existing obligation under a line of credit. Vision expended $1.1 million
on purchases of property, plant, and equipment during the first nine months of
1997 and plans to expend approximately $0.4 million on such purchases during the
remainder of 1997. In addition, Oriel leases its facilities under an agreement
expiring in early 1998 and has leased new premises to which it plans to relocate
upon expiration of the lease. In connection with this relocation, Vision expects
to expend approximately $0.4 million in 1998 for leasehold improvements.
Vision's financing activities provided $5.8 million of cash during the
first nine months of 1997, due primarily to borrowings for acquisitions. In
February 1997, Vision borrowed $3.6 million from Optek to fund the acquisition
of LSI. In June 1997, Vision borrowed an additional $0.3 million from Optek to
fund certain property additions relating to its acquisition of LSI. Vision
issued promissory notes reflecting these borrowings to Optek payable in 2000 and
bearing interest at the 90-day Commercial Paper Composite Rate plus 25 basis
points, set at the beginning of each quarter. In July 1997, Vision borrowed $3.8
million from Thermo Electron to fund the acquisition of Centronic, pursuant to a
promissory note payable in 2000 and bearing interest at the 90-day Commercial
Paper Composite Rate plus 25 basis points, set at the beginning of each quarter.
During 1996, operating activities provided $1.7 million of cash. Cash
provided by Vision's operating results was limited in part by the use of $0.7
million in cash to fund an increase in accounts receivable, due primarily to a
nonrecurring sale at CIDTEC.
Investing activities used $16.9 million of cash during 1996. In February
1996, Vision acquired Oriel and Corion for $15.5 million in cash, net of cash
acquired. Vision expended $1.5 million on purchases of property, plant, and
equipment during 1996.
Vision's financing activities provided $15.3 million of cash in 1996,
primarily due to transfers from Optek to fund acquisitions, net of Vision's
transfer of cash to Optek.
Hilger, Vision's foreign subsidiary, has a credit facility arrangement for
working capital needs. See Note 6 to Vision's Consolidated Financial Statements.
Although Vision generally expects to have positive cash flow from its existing
operations, Vision may require significant amounts of cash for any acquisition
of complementary businesses. Vision expects that it will finance any such
acquisitions through a combination of the net proceeds from Vision's IPO, which
is expected to close immediately following the Distribution, internally
generated funds, additional debt or equity financing from capital markets, and
short- or long-term borrowings from Thermo Instrument or Thermo Electron,
although Vision has no agreement with these companies or other parties to ensure
that funds will be available on acceptable terms or at all. See "Risk Factors --
Risks Associated with Acquisitions Strategy; No Assurance of a Successful
Acquisition Strategy." Vision believes its existing resources are sufficient to
meet the capital requirements of its existing businesses for at least the next
24 months.
22
<PAGE> 27
BUSINESS
INTRODUCTION
Thermo Vision Corporation ("Vision") designs, manufactures, and markets a
diverse array of photonics products, including optical components, imaging
sensors and systems, lasers, optically based instruments, optoelectronics, and
fiber optics. Vision sells photonics products in multiple markets across a
number of industries for research, testing, detecting, and manufacturing
applications. Vision's products range from optical filters used in blood glucose
monitoring, to charge-injection devices ("CIDs") used in optical spectroscopy,
to specialty light sources used for quality assurance in semiconductor
photolithography. Many of Vision's customers are manufacturers that incorporate
Vision's products into medical and dental diagnostic instruments, analytical
instruments, equipment for semiconductor manufacturing, and X-ray screening
devices. Vision estimates that the current worldwide market for photonics
products of all types is approximately $15.5 billion.
Photonics technologies involve the creation and manipulation of light and
other forms of radiant or electromagnetic energy. Photonics technologies use
light to detect, transmit, store, and process information and to generate
energy, as well as to capture and display images. Because photons are massless,
travel at the speed of light, and do not generate heat in travel, photonics
technologies potentially offer many advantages over electronics technologies,
including greater speed and miniaturization. Photonics technologies have many
familiar applications, including supermarket scanners, compact discs, laser
printers, and telecommunications, which use fiber optic technology extensively.
Photonics technologies also play a central role in machine vision, semiconductor
photolithography, electronic imaging, and phototherapeutics.
There are three key elements in Vision's business strategy. First, in order
to expand the markets that it addresses, Vision creates new products and
applications by building on its core photonics technologies. For example, under
an exclusive supply arrangement with a customer, Vision has recently designed
and developed a sensor based on Vision's CID technology for use in the
customer's dental X-ray imaging system. Second, Vision focuses its marketing
efforts on reaching technical users of photonics products so that Vision's
products will be incorporated into product prototypes, ultimately resulting in
new supply relationships as the customers' products are commercialized. Vision
uses product catalogues, such as the well-known catalogues of Vision's Oriel
subsidiary, that provide detailed technical information in addition to product
specifications and highlights in order to maintain visibility with customers on
a cost-effective basis. In addition, Vision's subsidiaries and divisions
maintain networks of dealers and distributors both in the United States and in
over 35 foreign countries. Third, Vision continually monitors the photonics
industry to identify businesses with complementary products and technologies as
acquisition candidates. The photonics industry is highly fragmented, with
numerous competitors. Vision believes it is often more cost effective to target
an attractive market segment through the acquisition of established, smaller,
focused providers that enjoy favorable reputations and have developed
technological expertise than to enter the segment through internal product
development. Since February 1996, Vision has acquired four businesses from
unrelated third parties that currently comprise the bulk of its operations.
Vision offers products in all six segments of the photonics market.
Vision's principal product offerings in these segments are:
- Optical Components -- Light sources, optical filters, optical crystals,
and precision mechanical positioning devices used to create and
manipulate light.
- Imaging Sensors and Systems -- CID digital sensors and cameras used to
absorb photons and convert them into electrical charges that comprise an
image.
- Lasers -- Pulsed nitrogen and carbon dioxide ("CO(2)") lasers used as
light sources.
- Optically Based Instruments -- Modular spectrophotometers for physics
research, mercury analyzers for environmental testing, and
fluorescence-lifetime measurement instruments for biological research.
- Optoelectronics -- Silicon photodiode detectors for light sensing.
23
<PAGE> 28
- Fiber Optics -- Specialized fiber optic cables for remote sensing.
Vision develops and manufactures most of the products that it sells, although it
also distributes photonics products manufactured by third parties.
INDUSTRY OVERVIEW
Photonics involves the use of technologies to create, manipulate, and
measure light and other forms of radiant or electromagnetic energy, the basic
unit of which is the photon. Photons are the smallest units of energy by which
light is measured. They are massless and travel at the speed of light.
Photonics is directed at the portion of the electromagnetic spectrum
ranging from the ultraviolet through the infrared, including the relatively
narrow visible portion between the ultraviolet and infrared. Many substances
selectively emit or absorb energy at various wavelengths within this portion of
the electromagnetic spectrum. Photonics extends into the X-ray region of the
electromagnetic spectrum through the use of scintillators that convert X-rays
into lower-energy or longer-wavelength photons.
Photonics technologies use light to detect, transmit, store, and process
information and to generate energy, as well as to capture and display images.
High-power applications of photonics technologies include welding, surgery, and
industrial metal cutting. Low-power applications include information processing
and imaging. Other applications include medical diagnostic and analytical
instruments, as well as semiconductor production. Because photons are massless,
travel at the speed of light, and do not generate heat in travel, photonics
technologies potentially offer many advantages over electronic technologies,
including greater speed and miniaturization.
As a result of advances in photonics technologies stemming from U.S.
government funding of programs involving photonics as well as advances in
computer technologies, beginning in the mid 1980's a range of new commercial
applications for photonics technologies have emerged. Photonics technologies
have many familiar applications, including supermarket scanners, compact discs,
laser printers, and telecommunications, which use fiber optic technology
extensively. Photonics technologies also play a central role in laser surgery,
machine vision, semiconductor photolithography, electronic imaging, and
phototherapeutics. Additional applications for photonics technologies are being
developed at an increasing rate. In the commercial arena, the growth of the
photonics industry has been in significant part a function of the performance of
the industries that use photonics products, including the semiconductor and
medical diagnostic instrument industries. According to industry sources, over
4,000 companies engage in photonics-related businesses.
The photonics industry is divided into six segments based on applicable
technologies. Vision offers products in each of these industry segments.
- Optical Components. Optical components include light sources, filters,
crystals, prisms, lenses, detectors, and mechanical positioning devices.
These components are used to create, manipulate, and measure light in all
optically based systems. Primary applications for optical components
include semiconductor production, medical and analytical instruments, and
telecommunications. Vision estimates that the current worldwide market
for optical components is approximately $2.0 billion.
- Imaging Sensors and Systems. Imaging sensors are photosensitive
materials that absorb light and convert photons into an electrical
charge. An imaging system is photosensitive material that is
electronically connected to a recording and/or display device. The use of
these sensors and systems has grown rapidly following the introduction of
low-cost digital sensors that provide real-time images. For example,
according to industry sources, the 1996 worldwide market for
charge-coupled device ("CCD") imaging sensors, which are widely used for
consumer (camcorders), service (teleconferencing), and industry (machine
vision) applications, was approximately $700 million. Vision estimates
that the current worldwide market for imaging sensors and systems of all
types is approximately $2.5 billion.
- Lasers. Lasers are instruments that produce a brilliant beam of highly
monochromatic, coherent light. Lasers produce this light through
excitation of a gas or solid state material. The commercial
24
<PAGE> 29
applications for lasers have grown as advances in electronic and laser
technologies have enabled the production of smaller and less expensive
lasers that provide light over a wide spectral range. Lasers are used in
such products as CD-ROMs, surgical devices, telecommunications equipment,
and analytical instruments. Vision estimates that the current worldwide
market for lasers is approximately $2.5 billion.
- Optically Based Instruments. Optically based instruments combine of
optical components with signal processors and are used primarily in
analytical and medical diagnostic applications. These instruments range
from high-end flexible systems, such as elemental spectrometers, to
low-cost modular instruments used primarily by university and government
researchers. Vision estimates that the current worldwide market for
optically based instruments is approximately $2.0 billion.
- Optoelectronics. Optoelectronics are devices that function as
electrical-to-optical or optical-to-electrical converters. These devices
respond to light, emit or modify optical energy, or use optical energy
for their internal operations. A well-known example of an optoelectronic
device is the LED (light emitting diode) which is used in a wide variety
of applications, including consumer products (cellular phones and
calculators) and automotive products (center brake lights). These devices
have proliferated as a result of their low cost and small size. Vision
estimates that the current worldwide market for optoelectronic devices is
approximately $5.0 billion.
- Fiber Optics. Fiber optics are single or bundled fibers that reflect
light internally down their length. Specialized fibers made of different
materials have been developed to transmit light of particular
wavelengths, such as quartz fibers for use with ultraviolet light. Fiber
optics are primarily used to move light for telecommunications purposes.
In addition, fiber optics enable remote sensing by bringing light from an
instrument to a sample and routing the resulting signal to the detector.
As a result, fiber optics frequently are used for incoming material
inspection, process measurements, quality control of manufactured goods,
and testing in hostile environments and biological systems. Vision
estimates that the current worldwide market for fiber optics is
approximately $1.5 billion.
STRATEGY
Vision's goal is to become a leader in the photonics market. There are
three key elements in Vision's strategy to achieve this goal.
Create New Products and Applications by Building on Core Photonics
Technologies
Vision is expanding into new markets by building on its core technologies
to develop new products and applications. In order to reduce the development
costs borne by Vision and to obtain rapid market penetration, Vision often seeks
to undertake these development efforts on a collaborative basis with its
customers. For example, under an exclusive supply arrangement with a customer,
Vision has designed and developed a sensor based on Vision's CID technology for
use in the customer's dental X-ray imaging system. In other customer-sponsored
programs, Vision is developing a radiation-hardened, color CID camera for
inspection of nuclear facilities and a CID camera for use in aiming X-rays with
a high degree of precision at the cancerous area of a patient receiving
radiation therapy.
In 1996, building on its expertise in the design and manufacture of optical
components for incorporation into optical instrument subassemblies and modular
analytical instrument systems, Vision introduced its modular MIR 8000
spectrophotometer for physics research. While the MIR 8000 is a complete
spectrophotometer that can be configured to meet individual customer needs,
Vision also manufactures and sells all of the subsystems of this instrument
individually.
Market to Technical Users on a Cost-effective Basis
Because of the technical sophistication of many purchasers of Vision's
products and the low unit prices of many of these products, key aspects of
Vision's marketing strategy are to provide prospective purchasers with technical
information (in addition to product information) and to maintain visibility with
its customer base
25
<PAGE> 30
while limiting expensive one-on-one contact primarily to larger OEM customers.
Vision's Oriel Instruments Corporation subsidiary ("Oriel"), Corion division
("Corion"), and Centro Vision, Inc. subsidiary ("Centro Vision") pursue this
strategy through the use of catalogues that provide both detailed technical
information of interest to designers of systems that incorporate photonics
products and components and product specifications and highlights. Over the
years, Oriel's informative series of photonics product catalogues have become a
staple on engineers' and scientists' bookshelves. Vision plans to leverage these
well-established distribution channels by adding products of companies acquired
by Vision to the catalogues. Vision makes its catalogues widely available so
that designers will incorporate Vision's products into prototypes, ultimately
resulting in new supply relationships as the products are commercialized. In
addition, Vision's subsidiaries and divisions maintain networks of dealers and
distributors both in the United States and in over 35 foreign countries.
All seven Vision subsidiaries and divisions use Web sites to reach Vision's
large and technically sophisticated customer base. A number of Vision's Websites
include virtual catalogues that are easy to update and portions of which can be
directly downloaded by a potential customer. The academic and international
segments of Vision's customer base frequently access this source of information
about Vision's products. Vision plans to produce certain of its catalogues on
CD-ROMs in order to further reduce marketing costs.
Acquire Businesses with Complementary Products and Technologies
Vision plans to combine internal growth with the acquisition of businesses
with complementary products and technologies in all six segments of the
photonics industry. The photonics industry is highly fragmented, with numerous
competitors. Vision believes it is often more cost effective to target an
attractive market segment through the acquisition of established, smaller,
focused providers that enjoy favorable reputations and have developed
technological expertise than to enter the segment through internal product
development. Since February 1996, Vision has acquired four businesses from
unrelated third parties that currently comprise the bulk of its operations.
Since January 1, 1992, Thermo Electron Corporation ("Thermo Electron") and
its subsidiaries have acquired over 90 businesses, of which over 30 were
acquired by Thermo Instrument Systems Inc. ("Thermo Instrument") and its
subsidiaries. Consistent with the approach of Thermo Electron and Thermo
Instrument, Vision seeks to strengthen each business that it acquires, while at
the same time provide the acquired business with flexibility in determining how
to achieve the goals set by Vision. Vision seeks to reduce the overhead of
acquired businesses through centralization of legal, financial, and employee
benefit services and to realize cost savings through economies of scale in areas
such as advertising and trade show participation. Vision believes that this
approach has played an important role in enabling Vision to improve the
financial performance of the companies it has acquired. Moreover, Vision
believes that businesses that it acquires may be able to enhance their market
penetration through access to Vision's distribution channels, such as the Oriel
catalogues, and may benefit from product development or marketing collaborations
with Vision's existing businesses.
PRODUCTS
Vision's products consist of optical components, imaging sensors and
systems, lasers, optically based instruments, optoelectronics, and fiber optics.
Vision manufactures most of the products that it sells, although it also
distributes products manufactured by third parties.
Optical Components
Vision offers a broad line of optical components, including light sources,
filters, crystals, mirrors, prisms, lenses, and precision mechanical positioning
devices. These optical components are used to create and manipulate light. They
are manufactured for use in much of the electromagnetic spectrum, including
X-ray, ultraviolet, visible, and infrared. Vision designs its optical components
both for specific applications and for use in modular systems. Revenues from the
sale of optical components by Oriel, Corion, Hilger, and Thermo Vision Colorado
(including in fiscal 1996 the periods prior to their acquisition by Vision in
the case of Oriel and Corion) totalled approximately $25.2 million in fiscal
1996 and approximately $18.7 million for the nine months ended September 27,
1997.
26
<PAGE> 31
The primary optical components offered by Vision are:
Light Sources. Vision's Oriel subsidiary designs, manufactures, and
markets a broad range of continuous and pulsed light sources, including
laboratory light sources and specialty light sources for solar simulation and
photolithography. Vision's light sources produce light at a variety of energy
levels across the portion of the electromagnetic spectrum ranging from the
ultraviolet through the infrared. Vision also sells light source accessories
that complement its light source product line, including shutters, fiber optics,
relay optics, and safety equipment.
Vision's laboratory light source products include lamps, lamp housings, and
power supplies. Vision offers a variety of lamps, including xenon, mercury, and
quartz halogen. Vision's broad range of laboratory light source products allows
researchers and engineers to select a light source that provides the most
appropriate wattage and wavelength for a specific application. The primary
customers for Vision's laboratory light sources and accessories are
manufacturers of analytical instruments, semiconductor manufacturers, optical
equipment designers, and university and government researchers. Vision's
laboratory light sources range in price from approximately $150 to $7,500.
Vision's solar simulators are specially filtered arc sources that duplicate
all or part of the solar spectrum. Solar simulators are used to test the
efficacy of sunscreen products and photoinduced side effects of pharmaceuticals,
particularly new photoactivated drugs for the treatment of tumors. Scientists
also use Vision's solar simulators to test solar cells and to study the impact
of increased ultraviolet exposure on the biosystem, a field of growing interest
as a result of the damage that has occurred in the ozone layer. Semiconductor
manufacturers use Vision's deep ultraviolet photolithography light sources as
part of the etching process in the development and production of semiconductors.
Vision's solar simulator and photolithography light sources range in price from
approximately $8,000 to $100,000.
In 1996, Vision's Oriel subsidiary introduced a new instrument called
Accudose for use as a quality-assurance tool in semiconductor photolithography.
This instrument uses a deep ultraviolet light source to test the exact energy
dose for the proper exposure of photoresist, an expensive chemical used in
etching semiconductor chips. Vision believes that Accudose provides
semiconductor manufacturers with significant savings in product waste and
machine time and that demand for the product will increase as the semiconductor
industry continues to move to smaller line widths. The price of Accudose is
approximately $65,000.
Optical Filters. Vision designs, manufactures, and markets most of its
optical filters through its Corion division. Vision manufactures its optical
filters by precisely coating up to 100 layers of specified materials onto a
glass substrate and then carefully cutting the resulting plate into pieces.
Optical filters provide a low-cost method of screening all but a particular
wavelength of light. They also can be used to control and enhance light by
altering the transmission, reflection, and absorption of light's various
wavelengths to achieve a desired effect, such as wavelength selection,
antireflection, antiglare, or electromagnetic shielding. Optical filters are
often used together with a light source, a detector, mirrors, lenses, and prisms
in an optical system. The primary customers for Vision's optical filters are
manufacturers of medical diagnostic and analytical instruments. For example,
Vision's optical filters are used to isolate a particular wavelength of light in
medical instruments that detect and measure various substances, such as glucose,
DNA, proteins, cholesterol, and steroids, in blood and other bodily fluids.
Vision's filters are also used in agricultural applications such as sorting
fruit and grading rice. Vision's optical filter products range in price from
approximately $8 to $4,000.
Optical Crystals. Vision's Hilger Crystals Limited ("Hilger") subsidiary
manufactures and markets optical crystals. Vision manufactures its crystal
products through a process in which various types of salts are melted in a
furnace and then drawn and formed onto a seed crystal. Vision's crystals are
used primarily for scintillation (converting X-rays into photons that can be
detected and monitored by optical detectors) and infrared optical applications
(beam splitting). Manufacturers of X-ray baggage screening equipment are the
principal customers for Vision's crystals. Other customers include university
and government researchers. Vision recently began producing scintillator
crystals for the upgraded detector to be installed at the Stanford Linear
Accelerator ("SLAC"), a government-sponsored high-energy physics project. This
two-year contract commenced in 1996 and provides for payments of over $2.0
million, of which approximately $488,000 had
27
<PAGE> 32
been received by Vision through September 27, 1997. The crystals being supplied
to SLAC involve complex geometries and are significantly longer than crystals
normally produced by Vision. Vision's crystals range in price from approximately
$100 to $1,500.
Precision Mechanical Positioning Devices. Vision markets various devices
for precision placement of optical components, including optical tables, and
benches and related accessories, optical mounts, holders, and positioners. These
devices are used to stabilize, hold, and position various optical components,
including mirrors, prisms, polarizers, filters, lenses, sources, detectors, and
sample holders. Vision sells its precision mechanical-positioning devices to
individual researchers and increasingly to manufacturers of instruments used in
X-ray crystallography for pharmaceutical research and manufacturers of equipment
used in semiconductor manufacturing. Vision's precision mechanical positioning
devices range in price from $10 to $2,000.
Imaging Sensors and Systems
Vision's CID Technologies Inc. ("CIDTEC") subsidiary designs, assembles,
and markets imaging sensors and complete video camera systems based on its
proprietary CID technology. Vision's CID sensor is a silicon wafer that is
processed into a semiconductor device comprised of an array of light-sensing
elements known as pixels. When a CID image sensor is exposed to light, each
pixel absorbs photons and converts them into an electrical charge. These charges
in the pixels comprise an image which is then processed into a computer-readable
format. Vision's CID sensors are sensitive to the full range of the visible
light spectrum and into the shorter wavelengths of the ultraviolet and X-ray
regions. Vision's sensors can be designed to have very high dynamic range at low
light levels, which makes them attractive in demanding spectroscopy and
astronomy applications. Vision offers a number of proprietary sensors based on
its own designs and also customizes sensors to particular customer
specifications. Vision's CID camera systems are comprised of three main
components: a CID image sensor, video processing electronics, and a lens. The
camera's output is a digital electronic signal that is fed into a computer for
image-processing applications. Revenues from the sale of imaging sensors and
systems by CIDTEC totalled approximately $2.7 million in fiscal 1996 and
approximately $1.8 million for the nine months ended September 27, 1997.
Vision believes that its CID sensor has several advantages in comparison
with other semiconductor image detectors, particularly CCDs. In contrast with
CCD sensors, CID sensors are capable of randomly addressing individual pixels,
which improves the speed and quality of imaging. In low-light applications, such
as the detection of trace levels of an element by an optical spectrometer,
Vision's CID technology permits pixels to be queried repeatedly and
nondestructively to determine whether sufficient light has been collected to
produce the requisite information. In contrast, when a pixel is read in a CCD
sensor, the charge is destroyed and the CCD sensor must reacquire a charge
before it is read again. Moreover, CID sensors potentially have higher silicon
manufacturing yields than comparably sized CCD sensors because CIDs have simpler
pixel structures and because single pixel defects occurring in CIDs do not
adversely affect the entire row of pixels in which the defective pixel is
located. As a result, Vision believes that it may be possible to produce CID
sensors at a lower cost than CCD sensors in manufacturing runs of a comparable
scale. CID sensors also have superior resistance to radiation than CCD sensors,
which is an advantage in environments such as nuclear power plants and space
satellites. Finally, CID sensors have greater sensitivity to ultraviolet light
than CCDs.
Thermo Optek Corporation ("Optek") has used Vision's CID products in
Optek's optical spectrometers since 1992. Vision and Optek are parties to a
Supply Agreement (the "CID Supply Agreement") to be effective as of the
Distribution Date pursuant to which Vision has agreed to supply Optek with, and
Optek has agreed to purchase from Vision, all of Optek's requirements for CID
sensors for use in Optek's optical spectrometers. Under the CID Supply
Agreement, subject to certain limited exceptions, Vision is not permitted to
sell CID sensors to any other manufacturer of optical spectrometers. The CID
Supply Agreement expires in 2007. Vision believes that the terms of the CID
Supply Agreement are no less favorable than Vision could have obtained from an
unaffiliated third party. Vision's CID products also are used as the "eyes" in
certain machine vision (robotics) applications in industries such as automobile
manufacturing and meat packaging. Vision's CID sensors range in price from
approximately $1,250 to $6,000 and its CID cameras range in price from
approximately $2,500 to $35,000.
28
<PAGE> 33
Vision recently extended its CID technology to a new application by
developing a CID sensor for use in a dental X-ray imaging system. Vision
developed this sensor pursuant to an exclusive supply arrangement with a
customer. Vision expects to begin shipment of its CID sensor to this customer in
the fourth quarter of 1997. This customer recently received FDA marketing
approval in connection with the dental X-ray imaging system. The customer's
dental X-ray imaging system is designed to replace conventional dental X-ray
film by providing a real-time X-ray video image of a patient's teeth. Vision
believes that the customer's system will permit faster diagnosis, reduce patient
X-ray exposure, and eliminate the need for X-ray supply storage and disposal of
chemicals used in X-ray film processing.
Vision believes its CID technology will be applicable in several new
contexts that offer significant market potential. For example, the semiconductor
industry is developing integrated circuits with increasing circuit density and
smaller features. Machine vision systems used for inspection and process control
in the production of these types of circuits are moving to increasingly shorter
wavelengths (i.e., deeper into the ultraviolet) to "see" these very small
features. Vision's CID technology is well suited for this application because it
provides greater ultraviolet light sensitivity than competing technologies. In
addition, because CID sensors allow random access to individual pixels and small
subarrays of pixels within the full frame, Vision's CID sensors are particularly
useful in astronomy applications and may have application in communications
lasers, security systems, and teleconferencing equipment. For example, because
CID sensors can scan an entire room and quickly switch to reading only a certain
area of pixels that include the subject of interest, use of CID sensors in
teleconferencing applications might eliminate the need for mechanical camera
movement. Because CID technology offers greater radiation resistance than
competing technologies, CID based products also may be desirable for use in the
harsh conditions above the earth's atmosphere.
Vision contracts with third parties for the fabrication of the silicon
wafers used in Vision's CID sensors. These manufacturers follow Vision's
proprietary designs and specifications. Upon receipt of the silicon wafers from
the manufacturer, Vision probes the wafers for quality control and assurance
purposes, transfers the wafers to a clean room where they are cut into
individual devices, packages the devices with a ceramic backing, and wire bonds
them.
Lasers
Vision's Laser Science, Inc. ("LSI") and Oriel subsidiaries design,
manufacture, and market pulsed gas lasers. Vision's lasers are comprised of a
plasma cartridge in which gas is ionized, resonating mirrors, and a power
supply. Vision's laser product line consists of pulsed nitrogen lasers, nitrogen
laser accessories, and pulsed CO(2) lasers. Pulsed lasers are preferable to
continuous lasers in measurement applications because the break in the laser
beam provides discrete time segments in which to perform measurements. Revenues
from the sale of lasers and laser accessories by Oriel (including in fiscal 1996
the period prior to its acquisition by Vision) and LSI (which was an independent
company throughout fiscal 1996 and through February 17, 1997) totalled
approximately $4.2 million in fiscal 1996 and approximately $3.2 million for the
nine months ended September 27, 1997.
Nitrogen Lasers. Vision's pulsed nitrogen lasers use electrical energy to
excite nitrogen gas in order to produce ultraviolet light. The primary customers
for these lasers are manufacturers of matrix-assisted-laser-
desorption-ionization time-of-flight ("MALDI-TOF") mass spectrometers. Vision's
nitrogen lasers are employed as the ionizing source in these MALDI-TOF
spectrometers. MALDI-TOF spectrometers are used principally for biotechnology
research in academia, government, and the pharmaceutical industry. MALDI-TOF
spectrometers determine the molecular weights of proteins, peptides, and other
complex biomolecules by measuring the time required for an ionized molecule of
the substance to reach a detector. The measurement of time is converted into a
measurement of mass. Vision is the leading supplier of pulsed nitrogen lasers
for use in MALDI-TOF spectrometers. According to industry sources, worldwide
sales of MALDI-TOF spectrometers are estimated to increase at a rate of 20% per
year through 1999. Vision also sells its pulsed nitrogen lasers for
incorporation into instruments employed in homogeneous time-resolved
fluorescence, a new technology used in high-throughput drug screening and
clinical diagnostic applications. Vision's nitrogen lasers range in price from
approximately $4,500 to $5,500.
29
<PAGE> 34
Nitrogen Laser Accessories. Vision offers a line of optional accessories
to complement its pulsed nitrogen lasers. Vision believes that its expertise in
combining these accessories with its pulsed nitrogen lasers to configure laser
systems for specialized experiments is of particular value to the research
community. Among the most popular of these accessories are tunable dye modules
that can be used together with a Vision pulsed nitrogen laser to produce laser
light that is tunable over a range of visible wavelengths. Vision also offers
microscope adapters that couple Vision's pulsed nitrogen laser systems to a
variety of commercially available microscopes for experiments at the cellular
level or smaller. Laser systems including accessories, typically range in price
from approximately $9,200 to $19,000.
Pulsed CO(2) Lasers. Vision's LSI subsidiary designs, manufactures, and
markets pulsed CO(2) lasers. LSI developed considerable expertise in the field
of CO(2) lasers as a result of work performed by it for the U.S. government in
the 1980's and early 1990's. Vision's primary pulsed CO(2) laser product
offering is a compact sealed laser that provides an infrared light source that
broadens the variety of large molecules that can be studied with MALDI-TOF
spectrometers. This laser is priced at approximately $7,500.
Optically Based Instruments
Vision designs, manufactures, and markets a variety of optically based
instruments that perform measurement and analysis functions. Vision focuses on
the development of low-cost analyzers that are appropriate for distribution
through product catalogues, Web sites, and other indirect distribution channels.
These products use standard photonics components as building blocks that are
designed to work together in multiple configurations and to be easily modified
to accommodate changing end-user requirements. Revenues from the sale of
optically based instruments by Oriel (including in fiscal 1996 the period prior
to its acquisition by Vision) and Thermo Vision Colorado totalled approximately
$3.6 million in fiscal 1996 and approximately $2.6 million for the nine months
ended September 27, 1997.
Vision's principal optically based instrument products are:
MIR 8000. Vision's MIR 8000 is a modular spectrophotometer. Vision
designed the MIR 8000 for the physics research market. Uses of the MIR 8000
include evaluating the performance of laser diodes, detectors, and other optical
components. The MIR 8000 is comprised of subsystems so that it can be modified
to meet the requirements of each user. The subsystems of the MIR 8000 include: a
source chamber or a chamber for light-emitting samples; a scanner or
interferometer chamber containing a beamsplitter and fixed and moving mirrors; a
detector chamber; a data-acquisition system; and software modules for physics
applications such as mathematical modeling. The sources, scanners, detectors,
and software modules may be interchanged as experimental needs evolve. Vision
believes that the modular nature of the MIR 8000 is particularly appealing to
university, government, and photonics industry researchers who require
economical and highly flexible research tools. The MIR 8000 ranges in price from
approximately $16,400 to $21,000.
QS1E Mercury Analyzer. Vision's QS1E mercury analyzer is an instrument for
detecting the presence and level of mercury in water and bodily fluids.
Water-monitoring authorities and environmental laboratories use the QS1E to test
both drinking water and wastewater for compliance with government regulations
governing permissible levels of mercury. Other users include medical
laboratories, which test bodily fluids to determine exposure to mercury, and
researchers, who use the QS1E to examine foods and other biomatter to trace
mercury in the environment. The QS1E mercury analyzer sells for approximately
$15,000.
LifeSense. In 1997, Vision introduced its LifeSense low-cost,
fluorescence-lifetime sensor for the biological research market. LifeSense
excites a sample with a specific wavelength of light and measures the lifetime
of the resulting fluorescence in order to identify particular substances
contained in the sample. Vision's LifeSense instrument is operated from a
personal computer and consists of interchangeable modulated light sources,
including infrared diode lasers or blue or green light-emitting diodes, a sample
compartment, and a photodetector. Vision's LifeSense is used primarily in
medical, pharmaceutical, and other bioresearch applications, including detection
and identification of biological molecules in high-performance liquid
chromatography and capillary electrophoresis. LifeSense can use fiber optics for
remote sensing in bioprocess and process control applications. The price of
Vision's LifeSense instrument is approximately $20,000.
30
<PAGE> 35
Accessories. Through Thermo Vision Colorado, Vision offers a number of
accessories related to its optically based instruments, including autosamplers
that automatically insert a substance, tissue, or other sample into an
analytical instrument for testing or monitoring. Vision's autosamplers range in
price from approximately $2,000 to $5,000.
Optoelectronics
Through its Centro Vision subsidiary, Vision designs, assembles, and
markets silicon photodiode detectors for ultraviolet, visible, and near-infrared
applications. Silicon photodiodes are light-sensing elements constructed from
silicon wafers similar to those used in the manufacture of integrated circuits.
These devices differ from CID and CCD devices in that photodiodes are single
light sensors, while CID and CCD devices are an array of light sensors. Revenues
from the sale of optoelectronic devices by Centro Vision (which was an
independent company throughout fiscal 1996 and through July 5, 1997) totalled
approximately $5.5 million in fiscal 1996 and approximately $4.1 million for the
nine months ended September 27, 1997.
Vision customizes its photodiodes for specific applications by
incorporating particular materials into windows or filters placed in front of
the photodiodes. For example, because ordinary glass absorbs ultraviolet
wavelengths, Vision places a fused silica or ultraviolet transmitting window
over its photodiodes for ultraviolet-detection applications. Another type of
filter used by Vision modifies the normal silicon response to approximate the
spectral response of the human eye. In order to sense X-rays, Vision coats the
photodiode with scintillation crystals that convert X-ray radiation to
longer-wavelength radiation that can be detected by a silicon photodiode sensor.
To enhance a device's response at a desired wavelength, Vision applies an
antireflection coating directly to the silicon in some cases.
The primary customers for Vision's silicon photodiode detectors are
manufacturers of medical diagnostic and analytical instruments. In these
instruments, the Vision photodiode detectors are used to sense or measure the
light emitted by or passing through a sample. End-users employ these instruments
in applications such as blood oximetry (noninvasive monitoring of blood oxygen
saturation) and determination of various substances in bodily fluids. Vision
also offers photodiodes for use in a variety of space applications, such as in
NASA's sun trackers that are used to orient and stabilize satellites in orbit
and in the smoke sensors that have been approved for use in space station Alpha.
Other applications include monitoring ultraviolet sources in drinking water
purifiers that use ultraviolet radiation to kill impurities, computer security
code readers in financial institutions, "magic eye" door openers, stamp
detectors for the U.S. Post Office, and flame detectors in gas furnaces.
Vision's silicon photodiode detectors range in price from approximately $0.10 to
$2,000.
As with its CID sensors, Vision contracts with third parties for the
fabrication of the silicon wafers used in its photodiode sensors in accordance
with Vision's designs and specifications, and itself performs quality control
and assurance and product assembly.
Fiber Optics
Vision's Oriel subsidiary offers a line of specialty fiber optic cables for
the transmission of different wavelengths of light. Certain of these cables are
bifurcated to permit two-way transmittal of light or are bundled for special
applications. Most of the specialty fiber optic cable that Vision sells is used
for remote sensing applications. Vision's fiber optics products range in price
from approximately $30 per meter to $1,600 per meter. Revenues from the sale of
fiber optic cables by Oriel (including in fiscal 1996 the period prior to its
acquisition by Vision) totalled approximately $1.0 million in fiscal 1996 and
approximately $0.7 million for the nine months ended September 27, 1997.
RESEARCH AND DEVELOPMENT
Vision maintains active programs for the development of new technologies
and the enhancement of its existing products. In addition, Vision seeks to
develop new applications for its products and technologies. Vision incurred
research and development expenses of $144,000; $743,000; and $3,499,000 in 1994,
1995, and 1996, respectively. In addition, Vision received $28,000; $490,000;
and $532,000 for customer-sponsored contract research and development expenses
in 1994, 1995, and 1996, respectively. Vision's principal research
31
<PAGE> 36
and development projects in 1996 were directed at the development of its CID
sensor for use in a dental imaging system and the MIR 8000 modular
spectrophotometer and extending the life of its optical filter products by
increasing humidity resistance.
The current focus of Vision's research and development efforts include
developing a filter to isolate a particular ultraviolet wavelength from a
mercury lamp for use in semiconductor photolithography, continuing work on
extending the life of its optical filters through increased humidity resistance,
and improving the performance and reliability of its pulsed CO(2) laser
products.
Vision is seeking to leverage its CID technology by developing a
radiation-hardened, color CID camera for use in the inspection of nuclear power
plants. A customer is funding a portion of the costs of this project in exchange
for distribution rights in a specified territory. Vision believes that there may
be significant applications for color CID cameras in markets outside of nuclear
inspection. Because of the resistance of CID sensors to radiation, Vision also
is developing, in collaboration with a medical instrument manufacturer a CID
camera for use in aiming X-rays with a high degree of precision at the cancerous
area of a patient receiving radiation therapy.
SALES AND MARKETING
Vision markets its products both in the U.S. and internationally by means
of technical catalogues and through the dealer and distributor networks of its
subsidiaries and divisions. Vision sells directly to larger OEM buyers through
the direct sales forces of its subsidiaries and divisions. Vision trains the
members of its sales forces on the technical aspects of its products so that
they are able to respond to questions and otherwise support customers, dealers,
and distributors. Vision holds a minority equity interest in LOT-Oriel Holding
GmbH ("LOT-Oriel"), a large European distributor of photonics products. A
representative of Vision serves as a member of LOT-Oriel's Board of Directors.
Vision believes that its relationship with LOT-Oriel enhances Vision's
visibility in and access to the European photonics market. In fiscal 1994, 1995,
and 1996, international sales comprised approximately 40%, 31%, and 37%
respectively, of Vision's total product sales.
Vision's Oriel, Corion, and Centro Vision businesses produce catalogues
used by Vision in marketing and selling its photonics products. These catalogues
provide both detailed technical information of interest to designers of systems
that incorporate photonics products and components along with product
specifications and highlights. Over the years, Oriel's informative series of
photonics product catalogues have become a staple on engineers' and scientists'
bookshelves. Oriel mails its catalogues without charge to more than 85,000
potential customers worldwide. Vision makes its catalogues widely available so
that designers will incorporate Vision's products into prototypes, ultimately
resulting in new supply relationships as the products are commercialized.
All seven Vision subsidiaries and divisions use Web sites to reach Vision's
large and technically sophisticated customer base. A number of Vision's Web
sites include catalogues that are easy to update and portions of which can be
directly downloaded by a potential customer. Vision plans to produce certain
catalogues on CD-ROMs in order to further reduce marketing costs.
Vision's backlog was $11.4 million as of September 27, 1997, compared with
$7.4 million as of September 28, 1996. Vision includes in its backlog only
orders confirmed with a purchase order for products scheduled to be shipped
within one year.
MANUFACTURING AND RAW MATERIALS
Vision designs and manufacturers most of its products internally. Vision's
manufacturing processes are diverse and range from the purchase of raw materials
and the performance of significant processing in the case of the production of
filters by Corion and optical crystals by Hilger, to outsourcing manufacture of
primary components to third parties in the case of the production of CID sensors
by CIDTEC and photodiodes by Centro Vision, to assembly and testing of purchased
components in the case of optical sources by Oriel, lasers by LSI, and
autosamplers by Thermo Vision Colorado. Vision believes that its in-house
manufacturing and
32
<PAGE> 37
assembly capabilities allow it to achieve highly competitive delivery times and
significantly reduces its time to introduce new products to market.
Vision purchases the silicon wafers used in its CID sensors and silicon
photodiodes from third-party manufacturers that produce the wafers in accordance
with Vision's designs and specifications. Vision currently purchases CID wafers
from a single supplier, although it is exploring alternative sources of supply
and believes that a number of other qualified wafer fabricators are available.
Vision purchases CID wafers from its existing supplier on a purchase-order basis
and does not have a formal supply arrangement with this company. Vision believes
that outsourcing the production of these wafers enables it to avoid the
technological risks and significant capital costs associated with maintaining
its own fabrication lines.
INTELLECTUAL PROPERTY
Vision's success depends in part on the strength and protection of its
proprietary methodologies and designs and other proprietary intellectual rights.
Vision believes that its manufacturing know-how, particularly with respect to
its optical filters and crystals, provides it with a competitive advantage.
Vision relies upon a combination of patent, trade secret, nondisclosure and
other contractual arrangements, and copyright and trademark laws to protect its
proprietary rights. Vision seeks to limit access to and distribution of its
proprietary information. There can be no assurance that the steps taken by
Vision in this regard will be adequate to deter misappropriation of its
proprietary information, that Vision will be able to detect unauthorized use and
take appropriate steps to enforce its intellectual property rights, or that
competitors will not be able to develop similar technology independently.
Vision currently holds five issued U.S. patents expiring at various dates
ranging from 1999 to 2012. Vision also has six applications pending for
additional U.S. patents and a number of foreign counterparts for its patents in
various foreign countries. Vision also has certain registered and other
trademarks. In addition, Vision has entered into license agreements with other
companies pursuant to which it grants or receives the rights to certain
technology, know-how, or patents. Three of Vision's issued U.S. patents and four
of its U.S. patent applications pertain to its CID technology. In addition,
Vision holds a nonexclusive license to certain additional patents relating to
CID technology. See "Risk Factors -- Risks Associated with Protection, Defense,
and Use of Intellectual Property."
COMPETITION
The photonics industry is highly competitive. Vision competes with a number
of companies, many of which have substantially greater financial, marketing, and
other resources than Vision. Vision's principal competitors include
Melles-Griot, Inc.; Optical Coating Laboratory, Inc.; Newport Corporation;
Coherent, Inc.; Corning OCA Corporation; Bicron Business Unit of Saint-Gobain
Industrial Ceramics, Inc.; and UDT Sensors, Inc. Vision competes primarily in
each of the photonics market segments on the basis of product features,
performance, reliability, and price. Although Vision believes that its products
currently compete favorably with respect to such factors, there can be no
assurance that Vision can maintain its competitive position against current and
potential competitors, especially those with greater financial, manufacturing,
market, technical, and other competitive resources. Competition could increase
if new companies enter the market or if existing competitors expand their
product lines. See "Risk Factors -- Risks Associated with Technological Change,
Obsolescence, and the Development and Acceptance of New Products" and
"-- Intense Competition."
33
<PAGE> 38
FACILITIES
Vision's various businesses are operated from separate facilities, as set
forth in the table below. All of these facilities are used for manufacturing,
research and development, sales and marketing, and administration purposes.
<TABLE>
<CAPTION>
APPROXIMATE
LOCATION SQUARE FEET OWNED/LEASED LEASE EXPIRATION
----------------------------------- ----------- ------------ ----------------
<S> <C> <C> <C>
Franklin, MA....................... 40,400 Leased 2006
Grand Junction, CO................. 3,600 Owned --
Stratford, CT...................... 50,000 Leased 1998
Margate, England................... 15,000 Leased 2002
Liverpool, NY...................... 11,000 Leased 2006
Newbury Park, CA................... 18,400 Leased 1999
</TABLE>
With the exception of the Stratford, Connecticut, facility, Vision believes
that these facilities are adequate for its present operations and that suitable
additional space will be available as needed in the future. Vision has leased a
new facility in Stratford, Connecticut, to which it plans to relocate its Oriel
subsidiary's operations in the first quarter of 1998. The new premises consist
of approximately 30,000 square feet and the lease of these new premises will
expire in 2008.
PERSONNEL
As of September 27, 1997, Vision had a total of 237 employees of which 46
are engaged in research and development, 32 in sales and marketing, 115 in
manufacturing, and 44 in general administrative functions. To date, Vision has
been able to attract and retain the personnel required by its business, but
there can be no assurance that additional skilled personnel necessary to
successfully expand Vision's business and operations can be recruited and
retained. None of Vision's employees is subject to a collective bargaining
agreement, other than six employees of Hilger. Vision believes that its
relationships with employees are good.
LEGAL PROCEEDINGS
Vision is not a party to any litigation that it believes could have a
material adverse effect on Vision or its results of operations.
34
<PAGE> 39
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table provides information about the current executive
officers and directors of Vision as of September 27, 1997:
<TABLE>
<CAPTION>
NAME AGE POSITION
---------------------------------------------- --- -----------------------------------
<S> <C> <C>
Kristine S. Langdon........................... 38 President, Chief Executive Officer,
and Director
John N. Hatsopoulos........................... 63 Chief Financial Officer, Vice
President, and Director
Allen J. Smith................................ 49 Director Vice President
Allen J. Smith................................ 49 Vice President
Paul F. Kelleher.............................. 55 Chief Accounting Officer
Earl R. Lewis................................. 53 Chairman of the Board and Director
Dr. D. Allan Bromley(1)....................... 71 Director
Arvin H. Smith................................ 68 Director
</TABLE>
- ---------------
(1) Member of the Audit and Human Resources Committees
Kristine S. Langdon has been President, Chief Executive Officer, and a
director of Vision since its inception in November 1995. She served as President
of Thermo Jarrell Ash Corporation, a subsidiary of Optek that manufactures
elemental spectrometers, from January 1996 until October 1996 and has served as
Vice President of Optek since its inception in August 1995. Ms. Langdon was
Special Assistant to the Presidents of Thermo Electron and Thermo Instrument
from August 1991 to April 1994 and Director of Business Development of Thermo
Jarrell Ash Corporation from April 1994 until being named President and Chief
Executive Officer of that corporation. From 1987 to 1991, Ms. Langdon was
employed by McKinsey & Co., a management consulting firm, most recently as an
engagement manager.
John N. Hatsopoulos has been Chief Financial Officer, Vice President, and a
director of Vision since August 1997. Mr. Hatsopoulos has been Chief Financial
Officer, Vice President, and a director of Optek since its inception in August
1995. Mr. Hatsopoulos has been Chief Financial Officer and a Vice President of
Thermo Instrument since 1988. Mr. Hatsopoulos has been President of Thermo
Electron since January 1997, Chief Financial Officer of Thermo Electron since
1988, and was an Executive Vice President of Thermo Electron from 1986 until
January 1997. He is also a director of Thermo Electron and of Thermo Instrument,
Metrika Systems Corporation, Thermedics Detection Inc., Thermedics Inc, Thermo
Ecotek Corporation, Thermo Fibertek Inc., Thermo Power Corporation, Thermo
TerraTech Inc., and ThermoTrex Corporation, all of which are subsidiaries of
Thermo Electron, and of LOIS/USA Inc.
Allen J. Smith has been Vice President of Vision since August 1997 and
Chairman of Vision's Oriel subsidiary since October 1994. Mr. Smith served Oriel
in various capacities, including Executive Vice President, Vice President,
general manager, and sales and marketing manager from February 1970 to October
1994.
Paul F. Kelleher has been Chief Accounting Officer of Vision since its
inception in November 1995. Mr. Kelleher has been the Chief Accounting Officer
of Optek since its inception in August 1995 and of Thermo Instrument since its
inception in 1986. Mr. Kelleher has been Senior Vice President, Finance and
Administration of Thermo Electron since June 1997 and served as its Vice
President, Finance from 1987 to 1997, and as its Controller from 1982 to January
1996. He is also a director of ThermoLase Corporation, a subsidiary of Thermo
Electron.
Earl R. Lewis has been a director of Vision since its inception in November
1995. Mr. Lewis has been Chief Executive Officer and a director of Optek since
its inception in August 1995 and Chairman of the Board of Optek since April
1997. He also served as Optek's President from August 1995 to April 1997. Mr.
Lewis served as President of Thermo Jarrell Ash Corporation through December
1995, and for more than five years
35
<PAGE> 40
prior to that date. Mr. Lewis has been President and Chief Operating Officer of
Thermo Instrument since March 1997 and January 1996, respectively, was an
Executive Vice President of Thermo Instrument from January 1996 to March 1997,
and was a Vice President of Thermo Instrument from 1990 through 1995. Mr. Lewis
has been Vice President of Thermo Electron since September 1996. Mr. Lewis is
also a director of Metrika Systems Corporation, Thermo BioAnalysis Corporation,
ThermoQuest Corporation, and ThermoSpectra Corporation, all of which are
subsidiaries of Thermo Electron.
Dr. Allan Bromley has been a director of Vision since September 1997. Dr.
Bromley has held numerous positions at Yale University since 1960, including
Dean of Engineering since 1994, Sterling Professor of the Sciences since 1993,
Henry Ford II Professor of Physics from 1972 to 1993, Chairman of the Physics
Department from 1970 to 1977, and Founder and Director of the A.W. Wright
Nuclear Structure Laboratory from 1963 to 1989. He served in the Executive
Office of the President of the United States as Assistant to the President for
Science and Technology and as Director, Office of Science and Technology Policy,
from 1989 to 1993. He is also a director of numerous nonprofit organizations.
Dr. Bromley serves on many national scientific committees and panels, including
of the U.S. National Academy of Sciences, the American Academy of Arts and
Sciences, the American Physical Society, the American Institute of Physics, and
the Washington Advisory Group LLC, and has received numerous academic and
scientific awards and honors, including the National Medal of Science in 1988.
Arvin H. Smith has been a director of Vision since its inception in
November 1995. Mr. Smith has been a director of Optek since its inception in
August 1995. Mr. Smith has been the Chairman of the Board and Chief Executive
Officer of Thermo Instrument since March 1997 and 1986, respectively, has been a
director of Thermo Instrument since 1986 and was President of Thermo Instrument
from 1986 to March 1997. Mr. Smith has been an Executive Vice President of
Thermo Electron since 1991 and a Senior Vice President of Thermo Electron from
1986 to 1991. Mr. Smith is also a director of Metrika Systems Corporation,
Thermo BioAnalysis Corporation, Thermo Power Corporation, ThermoQuest
Corporation, and ThermoSpectra Corporation, all of which are subsidiaries of
Thermo Electron.
BOARD COMMITTEES
The Vision Board has established an Audit Committee and a Human Resources
Committee each composed solely of Dr. Bromley. The Audit Committee reviews the
scope of audits with Vision's independent public accountants and meets with them
for the purpose of reviewing the results of such audits subsequent to their
completion. The Human Resources Committee reviews the performance of senior
members of management, recommends executive compensation, and administers
Vision's stock option and other stock-based compensation plans. It is currently
anticipated that Vision will not establish a nominating committee of the Vision
Board.
COMPENSATION OF DIRECTORS
All directors who are not employees of Vision, Thermo Electron or another
company affiliated with Thermo Electron ("outside directors") will receive an
annual retainer of $2,000 and a fee of $1,000 per day for attending regular
meetings of the Vision Board, and $500 per day for participating in meetings of
the Vision Board held by means of conference telephone, and for participating in
certain meetings of committees of the Vision Board. Payment of directors fees is
expected to be made quarterly. Ms. Langdon and Messrs. Hatsopoulos, Lewis, and
Arvin H. Smith are all employees of Thermo Electron companies and do not receive
any cash compensation from Vision for their services as directors. Directors are
also reimbursed for reasonable out-of-pocket expenses incurred in attending
Vision Board or committee meetings.
Directors Deferred Compensation Plan. Under Vision's Deferred Compensation
Plan for Directors (the "Deferred Compensation Plan"), a director has the right
to defer receipt of his fees until he ceases to serve as a director, dies, or
retires from his principal occupation. In the event of a change in control or
proposed change in control of Vision that is not approved by the Vision Board,
deferred amounts become payable immediately. Either of the following is deemed
to be a change of control: (a) the occurrence, without the prior approval of the
Vision Board, of the acquisition, directly or indirectly, by any person of 50%
or more of the outstanding
36
<PAGE> 41
Vision Common Stock or the outstanding common stock of Thermo Instrument, or 25%
or more of the outstanding common stock of Thermo Electron, or (b) the failure
of the persons serving on the Vision Board immediately prior to any contested
election of directors, or any exchange offer or tender offer for the Vision
Common Stock, or the common stock of Thermo Instrument or Thermo Electron to
constitute a majority of the Vision Board at any time within two years following
any such event. Amounts deferred pursuant to the Deferred Compensation Plan are
valued at the end of each quarter as units of Vision Common Stock. When payable,
amounts deferred may be disbursed solely in shares of Vision Common Stock
accumulated under the Deferred Compensation Plan. Vision has reserved 25,000
shares of Vision Common Stock under this plan. The Deferred Compensation Plan
will not become effective until the Distribution Date. No units have been
accumulated under this plan.
STOCK OWNERSHIP POLICY FOR DIRECTORS
Vision has established a stock holding policy for directors. The stock
holding policy requires each director to hold a minimum of 1,000 shares of
Vision Common Stock. Directors will be requested to achieve this ownership level
by the 1999 Annual Meeting of Shareholders of Vision. This ownership level may
by achieved by purchases of shares of Vision Common Stock in the open market or
through the exercise of stock options. Directors who are also executive officers
of Vision are required to comply with a separate stock holding policy that has
been adopted for executive officers. See "Certain Transactions -- Relationship
with Thermo Electron and Thermo Instrument -- Stock Holding Policy and
Assistance Plan."
COMPENSATION OF EXECUTIVE OFFICERS
The following table summarizes compensation for services to Vision in all
capacities awarded to, earned by, or paid to Vision's Chief Executive Officer
and other most highly compensated executive officer for the fiscal year ended
December 28, 1996, and, in the case of the Chief Executive Officer only, for the
fiscal year ended December 30, 1995. No other executive officer of Vision who
held office at the end of fiscal 1996 met the definition of "highly compensated"
within the meaning of the Commission's executive compensation disclosure rules
for this period.
Vision is required to appoint certain executive officers and full-time
employees of Thermo Electron as executive officers of Vision, in accordance with
the Thermo Electron Corporate Charter. The compensation for these executive
officers is determined and paid entirely by Thermo Electron. The time and effort
devoted by these individuals to Vision's affairs is provided to Vision under the
Corporate Services Agreement between Vision and Thermo Electron. Accordingly,
the compensation for these individuals is not reported in the following table.
See "Certain Transactions -- Relationship With Thermo Electron and Thermo
Instrument."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------
SECURITIES
ANNUAL UNDERLYING
COMPENSATION OPTIONS
FISCAL -------------------- (NO. OF SHARES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AND COMPANY)(1) COMPENSATION(2)
- ------------------------------- ------ -------- ------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Kristine S. Langdon(3)......... 1996 $100,000 $40,000 75,000(TOC) $ 5,344
President and Chief Executive 1995 93,000 35,000 5,000(TMQ) 5,198
Officer
Allen J. Smith(4).............. 1996 98,932 30,000 22,500(TOC) 4,037
Vice President
</TABLE>
- ---------------
(1) No options to purchase shares of Vision Common Stock had been granted as of
October 17, 1997. See "Management -- Vision Stock Option Grants." The named
executive officers have been granted options to purchase common stock of
certain subsidiaries of Thermo Electron as part of Thermo Electron's stock
option program. Options have been granted to the Chief Executive Officer
during the last two fiscal years
37
<PAGE> 42
and the other named executive officer during the last fiscal year in the
following Thermo Electron companies: Optek (designated in the table as
"TOC") and ThermoQuest Corporation (designated in the table as "TMQ").
(2) Represents the amount of matching contributions made by the individual's
employer on behalf of named executive officers participating in the Thermo
Electron 401(k) plan.
(3) Ms. Langdon was appointed President and Chief Executive Officer of Vision in
November 1995. Reported in the table under "Annual Compensation" and "All
Other Compensation" are the total amounts paid in fiscal 1995 for her
service in all capacities to Thermo Electron, Optek, and Optek's
subsidiaries.
(4) Mr. Smith was appointed Vice President of Vision in August 1997. He has been
Chairman of Oriel, which was acquired by Vision in February 1996, since
October 1994. Reported in the table under "Annual Compensation" and "All
Other Compensation" is Mr. Smith's compensation for fiscal 1996 paid
subsequent to the acquisition of Oriel by Vision.
Stock Options Granted During Fiscal 1996
The following table sets forth certain information concerning individual
grants of stock options made during fiscal 1996 to Vision's Chief Executive
Officer and other named executive officer. It has not been the policy of Thermo
Electron companies in the past to grant stock appreciation rights, and no such
rights were granted during fiscal 1996.
OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF ANNUAL RATES OF STOCK
SHARES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(3)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION -----------------------
NAME GRANTED(1)(2) FISCAL 1996 SHARE DATE 5% 10%
- --------------------- ------------- ------------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Kristine S.
Langdon............ 75,000(TOC) 4.0%(4) $ 12.00 4/11/08 $716,250 $1,924,500
5,000(TMQ) 0.2%(4) 13.00 2/08/08 51,750 139,000
Allen J. Smith....... 22,500(TOC) 1.2%(4) 12.00 4/11/08 214,875 577,350
</TABLE>
- ---------------
(1) No options to purchase shares of Vision Common Stock had been granted as of
October 17, 1997. See "Management -- Vision Stock Option Grants."
(2) All of the options granted during the fiscal year are immediately
exercisable as of the end of the fiscal year. In all cases, the shares
acquired upon exercise are subject to repurchase by the granting corporation
at the exercise price if the optionee ceases to be employed by the granting
corporation or another Thermo Electron company. The granting corporation may
exercise its repurchase rights within six months after the termination of
the optionee's employment. For publicly traded companies, the repurchase
rights generally lapse ratably over a five- to ten-year period, depending on
the option term, which may vary from seven to twelve years, provided that
the optionee continues to be employed by the granting corporation or another
Thermo Electron company. For companies that are not publicly traded, the
repurchase rights lapse in their entirety on the ninth anniversary of the
grant date. The granting corporation may permit the holders of options to
exercise options and to satisfy tax withholding obligations by surrendering
shares equal in fair market value to the exercise price or withholding
obligation.
(3) The amounts shown on this table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These gains are based on assumed rates of stock appreciation of 5% and
10% compounded annually from the date the respective options were granted to
their expiration date. The gains shown are net of the option exercise price,
but do not include deductions for taxes or other expenses associated with
the exercise. Actual gains, if any, on stock option exercises will depend on
the future performance of the common stock of the granting corporation, the
optionee's continued employment through the option period, and the date on
which the options are exercised.
38
<PAGE> 43
(4) These options were granted under stock option plans maintained by Thermo
Electron or its subsidiaries other than Optek as part of Thermo Electron's
compensation program, and accordingly are reported as a percentage of total
options granted to employees of Thermo Electron and its subsidiaries.
Stock Options Exercised During Fiscal 1996 and Fiscal Year-end Option Values
The following table reports certain information regarding stock option
exercises during fiscal 1996 and outstanding stock options held at the end of
fiscal 1996 by Vision's Chief Executive Officer and other named executive
officer. No stock appreciation rights were exercised or were outstanding during
fiscal 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SHARES SECURITIES UNDERLYING IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE UNEXERCISED OPTIONS FISCAL YEAR-END
NAME COMPANY EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE(1) EXERCISABLE/UNEXERCISABLE(1)
- ---------------- -------------------------- ----------- -------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C> <C>
Kristine S.
Langdon(2).... Optek -- -- 75,000/-- --/--
ThermoQuest Corporation -- -- 5,000/-- --/--
ThermoSpectra Corporation -- -- 400/-- $750/--
Allen J.
Smith......... Optek -- -- 22,500/-- --/--
</TABLE>
- ---------------
(1) All of the options reported outstanding at the end of the fiscal year were
immediately exercisable. In all cases, the shares acquired upon exercise of
the options reported in the table are subject to repurchase by the granting
corporation at the exercise price if the optionee ceases to be employed by
such corporation or another Thermo Electron company. The granting
corporation may exercise its repurchase rights within six months after the
termination of the optionee's employment. For publicly traded companies, the
repurchase rights generally lapse ratably over a five- to ten-year period,
depending on the option term, which may vary from seven to twelve years,
provided that the optionee continues to be employed by the granting
corporation or another Thermo Electron company. For companies the shares of
which are not publicly traded, the repurchase rights generally lapse in
their entirety on the ninth anniversary of the grant date. The granting
corporation may permit the holder of such options to exercise options and to
satisfy tax-withholding obligations by surrendering shares equal in fair
market value to the exercise price or withholding obligation.
(2) Ms. Langdon has been an employee of Thermo Instrument since April 1, 1994,
and was named President of Vision in November 1995. Prior to April 1, 1994,
she was employed by Thermo Electron and holds unexercised options to
purchase shares of common stock of Thermo Electron and certain of its
subsidiaries other than Optek as compensation for her service to Thermo
Electron. These options are not reported in the table as they were granted
as compensation for service to other Thermo Electron companies and prior to
her service to Optek or Vision.
VISION STOCK OPTION GRANTS
Vision has adopted the Vision EIP and has reserved an aggregate of 700,000
shares of Vision Common Stock for issuance to employees and directors of Vision
and others pursuant thereto. Prior to the Distribution Date, Vision plans to
grant options pursuant to the Vision EIP covering up to 350,000 shares of Vision
Common Stock with exercise prices equal to the fair market value of the Vision
Common Stock on the respective dates of grant.
39
<PAGE> 44
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Optek currently owns all of the outstanding shares of Vision Common Stock.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as of June 28, 1997,
regarding the number of shares of Vision Common Stock expected to be distributed
on the Distribution Date to Thermo Instrument, which is the only person or
entity that is expected by Vision to own beneficially more than five percent of
the outstanding shares of Vision Common Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENTAGE OF OUTSTANDING
OF BENEFICIAL OWNER BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
- -------------------------------------------------------- ------------------ -------------------------
<S> <C> <C>
Thermo Instrument Systems Inc.(1)....................... 6,300,720 93%
860 West Airport Freeway
Suite 301
Hurst, Texas 76054
</TABLE>
- ---------------
(1) Thermo Electron beneficially owned approximately 83% of the common stock of
Thermo Instrument outstanding as of June 28, 1997. Accordingly, Thermo
Electron may be deemed to be a beneficial owner of the shares of Vision
Common Stock beneficially owned by Thermo Instrument following the
Distribution. Thermo Electron disclaims beneficial ownership of these
shares. Following the Distribution, Thermo Instrument will have the power to
elect all of the members of the Vision Board.
MANAGEMENT
The following table sets forth the number of shares of Vision Common Stock
expected to be distributed on the Distribution Date to, as well as the number of
shares of Thermo Instrument common stock and Thermo Electron common stock
beneficially owned as of June 28, 1997, by (i) each executive officer named in
the summary compensation table under the heading "Compensation of Executive
Officers," (ii) each director of Vision, and (iii) all of Vision's directors and
executive officers as a group, following the Distribution Date. The information
set forth below with respect to Vision Common Stock is based on certain
information known to Vision with respect to such persons' beneficial ownership
of shares of common stock of Optek as of June 28, 1997. The table assumes with
respect to the Vision Common Stock, that ownership of common stock of Optek by
such persons will not change before the Record Date of the Distribution.
While certain directors and executive officers of Vision are also directors
and executive officers of Thermo Instrument or its subsidiaries other than
Vision, all such persons disclaim beneficial ownership of the shares of the
Vision Common Stock to be distributed to Thermo Instrument.
<TABLE>
<CAPTION>
THERMO THERMO
NAME(1) VISION(2) INSTRUMENT(3) ELECTRON(4)
- -------------------------------------------------------- --------- ------------- ---------
<S> <C> <C> <C>
D. Allan Bromley........................................ 0 0 0
John N. Hatsopoulos..................................... 4,200 81,204 632,768
Kristine S. Langdon..................................... 70 7,417 16,452
Earl R. Lewis........................................... 4,060 178,233 124,184
Allen J. Smith.......................................... 0 0 0
Arvin H. Smith.......................................... 1,120 431,667 519,038
All directors and current executive officers as a group
(7 persons)........................................... 9,450 717,213 1,427,936
</TABLE>
- ---------------
(1) Except as reflected in the footnotes to this table, shares beneficially
owned consist of shares owned by the indicated person or by that person for
the benefit of minor children, and all share ownership includes sole voting
and investment power.
40
<PAGE> 45
(2) This table does not include options to purchase shares of Vision Common
Stock which will be granted prior to the Distribution Date. See
"Management -- Vision Stock Option Grants." Shares of Vision Common Stock
beneficially owned by Ms. Langdon include a total of 70 shares held by her
as custodian for two minor children. Shares of Vision Common Stock
beneficially owned by Earl R. Lewis include 350 shares owned by his spouse
and a total of 280 shares owned by two sons. Immediately following
consummation of the Distribution, it is expected that (i) Thermo Instrument
will beneficially own approximately 93% of the outstanding shares of Vision
Common Stock and (ii) the directors and executive officers of Vision will
not individually or as a group beneficially own more than 1% of the
outstanding shares of Vision Common Stock.
(3) Shares of the common stock of Thermo Instrument beneficially owned by Mr.
Hatsopoulos, Ms. Langdon, Mr. Lewis, Mr. Arvin H. Smith, and all directors
and executive officers as a group include 65,625; 7,124; 162,500; 234,375;
and 484,624 shares, respectively, that such person or group had the right to
acquire within 60 days after June 28, 1997, through the exercise of stock
options. Shares of the common stock of Thermo Instrument beneficially owned
by Mr. Hatsopoulos, Mr. Arvin H. Smith, and all directors and executive
officers as a group include 529; 530; and 1,455 shares, respectively,
allocated through June 28, 1997, to their respective accounts maintained
pursuant to Thermo Electron's employee stock ownership plan, of which the
trustees, who have investment power over its assets, are executive officers
of Thermo Electron (the "ESOP"). Shares beneficially owned by Ms. Langdon
include 293 shares held by her as custodian for two minor children. Shares
beneficially owned by Mr. Lewis include 2,390 shares held by Mr. Lewis'
spouse. The directors and executive officers of Vision did not individually
or as a group beneficially own more than 1% of the common stock of Thermo
Instrument outstanding as of June 28, 1997.
(4) The shares of the common stock of Thermo Electron shown in the table reflect
a three-for-two split of such stock distributed in June 1996 in the form of
a 50% stock dividend. Shares of the common stock of Thermo Electron
beneficially owned by Mr. Hatsopoulos, Ms. Langdon, Mr. Lewis, Mr. Arvin H.
Smith, and all directors and executive officers as a group include 535,685;
15,750; 121,536; 228,411; and 996,519 shares, respectively, that such person
or group has the right to acquire within 60 days of June 28, 1997, through
the exercise of stock options. Shares beneficially owned by Ms. Langdon
include 702 shares held by her as custodian for two minor children. Shares
of the common stock of Thermo Electron beneficially owned by Mr.
Hatsopoulos, Mr. Arvin H. Smith and all directors and executive officers as
a group include 1,934; 1,717; and 4,975 full shares, respectively, allocated
to accounts maintained pursuant to the ESOP. The directors and executive
officers of Vision did not individually or as a group beneficially own more
than 1% of the common stock of Thermo Electron outstanding as of June 28,
1997.
41
<PAGE> 46
CERTAIN TRANSACTIONS
The following is a description of the material terms of the agreements and
arrangements involving Vision and Thermo Electron, Thermo Instrument, Optek, and
other members of the Thermo Group (as defined below).
RELATIONSHIP WITH THERMO ELECTRON AND THERMO INSTRUMENT
Vision was organized in November 1995 as a wholly owned subsidiary of
Optek. Following consummation of the Distribution, Optek will own no shares of
Vision Common Stock and Thermo Instrument will own approximately 93% of the
outstanding shares of Vision Common Stock.
Thermo Electron has adopted a strategy of selling a minority interest in
subsidiary companies to outside investors as an important tool in its future
development. As part of this strategy, Thermo Electron and certain of its
subsidiaries have created privately and publicly held subsidiaries. After the
Distribution, Vision, together with five other companies, will exist as publicly
held, majority-owned subsidiaries of Thermo Instrument. From time to time,
Thermo Electron and its subsidiaries will create other majority-owned
subsidiaries as part of Thermo Electron's spinout strategy. (Vision and the
other Thermo Electron subsidiaries are hereinafter referred to as the "Thermo
Subsidiaries.")
Thermo Instrument develops, manufactures, and markets analytical
instruments used to detect and monitor air pollution, radioactivity, complex
chemical compounds and toxic metals, and other elements in a broad range of
liquids, gases, and solids. For its fiscal years ended December 31, 1994,
December 30, 1995, and December 28, 1996, Thermo Instrument had consolidated
revenues of $649,992,000; $782,662,000; and $1,209,362,000; respectively, and
consolidated net income of $60,220,000; $79,306,000; and $132,751,000;
respectively.
Thermo Electron and its subsidiaries develop, manufacture, and market
environmental monitoring and analysis instruments and manufacture biomedical
products, including heart-assist devices and mammography systems, papermaking
and recycling equipment, alternative-energy systems, and other specialized
products and technologies. Thermo Electron and its subsidiaries also provide
environmental and metallurgical services and conduct advanced technology
research and development. For its fiscal years ended December 31, 1994, December
30, 1995, and December 28, 1996, Thermo Electron had consolidated revenues of
$1,729,191,000; $2,270,291,000; and $2,932,558,000, respectively, and
consolidated net income of $104,711,000; $139,582,000; and $190,816,000;
respectively.
See "Risk Factors -- Potential Conflicts of Interest."
The Thermo Electron Corporate Charter. Thermo Electron and each of the
Thermo Subsidiaries, including Vision, recognize that the benefits and support
that derive from their affiliation are essential elements of their individual
performance. Accordingly, Thermo Electron and each of the Thermo Subsidiaries,
including Vision, has adopted the Thermo Electron Corporate Charter (the
"Charter") to define the relationships and delineate the nature of such
cooperation among themselves. The purpose of the Charter is to ensure that (1)
all of the companies and their shareholders are treated consistently and fairly,
(2) the scope and nature of the cooperation among the companies, and each
company's responsibilities, are adequately defined, (3) each company has access
to the combined resources and financial, managerial, and technological strengths
of the others, and (4) Thermo Electron and the Thermo Subsidiaries, in the
aggregate, are able to obtain the most favorable terms from outside parties.
To achieve these ends, the Charter identifies the general principles to be
followed by the companies, addresses the role and responsibilities of the
management of each company, provides for the sharing of group resources by the
companies, and provides for centralized administrative, banking, and credit
services to be performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by members, coordinating
the access of Thermo Electron and the Thermo Subsidiaries (the "Thermo Group")
to external financing sources, ensuring compliance with external financial
covenants and internal financial policies, assisting in the formulation of
long-range planning, and providing other banking and credit services. Pursuant
to the Charter, Thermo Electron may also provide guarantees of debt or other
42
<PAGE> 47
obligations of the Thermo Subsidiaries or may obtain external financing at the
parent level for the benefit of the Thermo Subsidiaries. In certain instances,
the Thermo Subsidiaries may provide credit support to, or on behalf of, the
consolidated entity or may obtain financing directly from external financing
sources. Under the Charter, Thermo Electron is responsible for determining that
the Thermo Group remains in compliance with all covenants imposed by external
financing sources, including covenants related to borrowings of Thermo Electron
or other members of the Thermo Group, and for apportioning such constraints
within the Thermo Group. In addition, Thermo Electron establishes certain
internal policies and procedures applicable to members of the Thermo Group. The
cost of the services provided by Thermo Electron to the Thermo Subsidiaries is
covered under existing corporate services agreements between Thermo Electron and
each of the Thermo Subsidiaries.
The Charter presently provides that it shall continue in effect so long as
Thermo Electron and at least one Thermo Subsidiary participate. The Charter may
be amended at any time by agreement of the participants. Any Thermo Subsidiary,
including Vision, can withdraw from participation in the Charter upon 30 days'
prior notice. In addition, Thermo Electron may terminate a subsidiary's
participation in the Charter in the event the subsidiary ceases to be controlled
by Thermo Electron or ceases to comply with the Charter or the policies and
procedures applicable to the Thermo Group. A withdrawal from the Charter
automatically terminates the corporate services agreement in effect between the
withdrawing company and Thermo Electron. The withdrawal from participation does
not terminate outstanding commitments to third parties made by the withdrawing
company, or by Thermo Electron or other members of the Thermo Group, prior to
the withdrawal. In addition, a withdrawing company is required to continue to
comply with all policies and procedures applicable to the Thermo Group and to
provide certain administrative functions mandated by Thermo Electron so long as
the withdrawing company is controlled by or affiliated with Thermo Electron.
Corporate Services Agreement. As provided in the Charter, Vision and
Thermo Electron have entered into a Corporate Services Agreement (the "Services
Agreement") under which Thermo Electron's corporate staff provides certain
administrative services, including certain legal advice and services, risk
management, employee benefit administration, tax advice and preparation of tax
returns, centralized cash management, and certain financial and other services
to Vision. Vision was assessed an annual fee equal to 1.25%, 1.2%, and 1.0% of
its revenues for these services in fiscal 1994, 1995, and 1996, respectively.
The fee is reviewed annually and may be changed by mutual agreement of Vision
and Thermo Electron. During fiscal 1994, 1995, and 1996, Thermo Electron
assessed Vision $53,000; $72,000; and $304,000; respectively.
Management believes that the charges under the Services Agreement are
reasonable and that the terms of the Services Agreement are fair to Vision. For
items such as employee benefit plans, insurance coverage, and other identifiable
costs, Thermo Electron charges Vision based on charges directly attributable to
Vision. The Services Agreement automatically renews for successive one-year
terms, unless canceled by Vision upon 30 days' prior written notice. In
addition, the Services Agreement terminates automatically in the event Vision
ceases to be a member of the Thermo Group or ceases to be a participant in the
Charter. In the event of a termination of the Services Agreement, Vision will be
required to pay a termination fee equal to the fee that was paid by Vision for
services under the Services Agreement for the nine-month period prior to
termination. Following termination, Thermo Electron may provide certain
administrative services on an as-requested basis by Vision or as required in
order to meet Vision's obligations under Thermo Electron's policies and
procedures. Thermo Electron will charge Vision a fee equal to the market rate
for comparable services if such services are provided to Vision following
termination.
Tax Allocation Agreement. The Tax Allocation Agreement between Vision and
Thermo Electron outlines the terms under which Vision is to be included in
Thermo Electron's consolidated Federal and state income tax returns. Under
current law, Vision will be included in such tax returns so long as Thermo
Electron owns at least 80% of the outstanding common stock of Thermo Instrument
and Thermo Instrument owns at least 80% of the outstanding Vision Common Stock.
In years in which Vision has taxable income, it will pay to Thermo Electron
amounts comparable to the taxes Vision would have paid if it had filed its own
separate-company tax returns. If Thermo Instrument's equity ownership of Vision
were to drop below 80%, Vision would file its own tax returns.
43
<PAGE> 48
Master Guarantee Reimbursement Agreement. Vision has entered into a Master
Guarantee Reimbursement Agreement with Thermo Electron which provides that
Vision will reimburse Thermo Electron for any costs it incurs in the event it is
required to pay third parties pursuant to any guarantees it issues on Vision's
behalf. Thermo Instrument has entered into a similar agreement with Thermo
Electron pursuant to which Thermo Instrument has guaranteed Vision's obligation
to so reimburse Thermo Electron. Vision has also entered into a Master Guarantee
Reimbursement Agreement with Thermo Instrument which provides that Vision will
reimburse Thermo Instrument for any costs it incurs in the event that Thermo
Instrument is required to pay Thermo Electron or any other party pursuant to any
guarantees issued on Vision's behalf.
Master Repurchase Agreement. Vision's cash equivalents are invested in a
Master Repurchase Agreement with Thermo Electron, pursuant to which Vision in
effect lends cash to Thermo Electron, which Thermo Electron collateralizes with
investments principally consisting of corporate notes, United States government-
agency securities, money market funds, commercial paper, and other marketable
securities, in the amount of at least 103% of such obligation. Vision's funds
subject to the Master Repurchase Agreement will be readily convertible into cash
by Vision and will have an original maturity of three months or less. The Master
Repurchase Agreement earns a rate based on the 90-day Commercial Paper Composite
Rate plus 25 basis points, set at the beginning of each quarter.
Stock Holding Policy and Assistance Plan. Vision has adopted a stock
holding policy which requires its executive officers to acquire and hold a
minimum number of shares of Vision Common Stock. This minimum ownership level
may be achieved by purchases of shares of Vision Common Stock in the open market
or through the exercise of stock options. In order to assist the executive
officers in complying with the policy, Vision also has adopted a stock holding
assistance plan under which it may make interest-free loans to certain key
employees, including its executive officers, to enable such employees to
purchase the Vision Common Stock.
OTHER RELATIONSHIPS
In August 1997, Vision's Hilger subsidiary purchased the crystal-materials
business of Hilger Analytical, a wholly owned subsidiary of Optek, in
consideration for the assumption by Vision of $908,000 of Optek's existing
obligation under a line of credit. The weighted average interest rate for
borrowings by Optek under the line of credit in fiscal 1995 and 1996 was 6.5%
and 6.75%, respectively. Vision's current obligation under the line of credit
bears interest at a rate of 6.75%.
In February 1997, in connection with its acquisition of LSI, Vision
borrowed $3.6 million from Optek pursuant to a promissory note (the "Laser
Science Note"). The Laser Science Note bears interest at the 90-day Commercial
Paper Composite Rate plus 25 basis points, set at the beginning of each quarter,
and has a term of approximately three years. In June 1997, Vision borrowed an
additional $347,000 from Optek pursuant to a promissory note (the "Franklin
Note") in order to finance the renovation of its Franklin, Massachusetts,
facility in connection with the LSI acquisition. The Franklin Note bears
interest at the 90-day Commercial Paper Composite Rate plus 25 basis points, set
at the beginning of each quarter, and has a term of approximately three years.
In July 1997, in connection with its acquisition of the Centronic business,
Vision borrowed $3.8 million from Thermo Electron pursuant to a promissory note
(the "Centronic Note"). The Centronic Note bears interest at the 90-day
Commercial Paper Composite Rate plus 25 basis points, set at the beginning of
each quarter, and has a term of approximately three years.
Vision and Optek are parties to the CID Contract R&D Agreement pursuant to
which Optek has contracted with Vision to develop certain CID sensors and
systems for use in optical spectroscopy products manufactured and sold by Optek.
Optek has paid Vision $672,000 under the CID Contract R&D Agreement from fiscal
1995 through the first nine months of fiscal 1997. Under the CID Contract R&D
Agreement, Optek owns the resulting technology. Optek has granted Vision an
exclusive, perpetual, fully paid license to such technology in all fields other
than optical spectroscopy. The CID Contract R&D Agreement expires in November
1997. In fiscal 1994, 1995, and 1996 and for the nine months ended September 27,
1997, Optek
44
<PAGE> 49
paid approximately $24,000; $418,000; and $188,000; and $287,000; respectively,
for research and development services performed by Vision in connection with CID
sensors and systems.
Vision has leased its office and manufacturing space in Franklin,
Massachusetts, from Thermo Instrument since March 1996. Vision's rent expense
under this lease is determined on the basis of its allocated share of total
occupancy expenses. Vision made lease payments to Thermo Instrument in fiscal
1996 of $197,000. Beginning in January 1997, Vision's annual rental expense
increased to $234,000. This lease expires in 2006.
Vision's Hilger subsidiary leases its office and manufacturing space in
Margate, England, from Optek. From January 1994 through August 1997, Vision's
rent expense under this lease was determined on the basis of its allocated share
of total occupancy expenses. Vision made lease payments to a subsidiary of
Thermo Instrument in fiscal 1994, 1995, and 1996 of $46,000; $91,000; and
$100,000; respectively. Effective September 1997, Hilger has leased this space
from Optek pursuant to the Hilger Lease for an annual rental fee of $43,200,
plus its pro rata share of certain related expenses. The Hilger Lease expires in
2002.
See "The Distribution -- Relationship Between Optek and Vision After The
Distribution" for a description of the Distribution Agreement between Vision and
Optek, "The Distribution -- Certain Federal Income Tax Consequences of the
Distribution" for a description of the Tax Matters Agreement between Vision and
Optek and "Business -- Products -- Imaging Sensors and Systems" for a
description of the CID Supply Agreement between Vision and Optek.
From time to time, Vision may transact business with other companies in the
Thermo Group in the ordinary course of business. In fiscal 1994, 1995, and 1996
and for the nine months ended September 27, 1997, Vision sold a total of
$1,290,000; $2,514,000; and $1,786,000 and $1,768,000; respectively, of products
to Thermo Electron subsidiaries and purchased a total of $211,000; $1,465,000;
and $971,000; and $357,000; respectively, of products from such companies.
Vision believes that the terms of the various transactions and agreements
described above were no less favorable than Vision could have obtained from
unaffiliated third parties.
RECENT SALES OF UNREGISTERED SECURITIES
In November 1995, Vision issued 6,783,783 shares of Vision Common Stock to
Optek in exchange for $10 at the time of incorporation of Vision. No person
acted as an underwriter with respect to this transaction. Vision relied on
Section 4(2) of the Securities Act for the exemption from the registration
requirements of the Securities Act because no public offering was involved. This
transaction represents the only sale by Vision of securities that were not
registered under the Securities Act since its incorporation in November 1995.
The Vision Board believes that Vision received fair value for the 6,783,783
shares of Vision Common Stock sold to Optek.
45
<PAGE> 50
DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
As of the date of this Information Statement, Vision has 50,000,000 shares
of Vision Common Stock authorized for issuance, of which 6,783,783 shares are
issued and outstanding and held by Optek. Each share of Vision Common Stock is
entitled to pro rata participation in distributions upon liquidation and to one
vote on all matters submitted to a vote of shareholders. Dividends may be paid
to the holders of Vision Common Stock when and if declared by the Vision Board
out of funds legally available therefor. Holders of Vision Common Stock have no
preemptive or similar rights. The outstanding shares of Vision Common Stock are,
and the shares to be distributed in the Distribution when issued will be,
legally issued, fully paid, and nonassessable.
Vision's Amended and Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), provides that all shares of Vision Common Stock
issued on or before the occurrence of the Distribution (the "Restricted Shares")
are subject to the following restriction: the holder shall not sell, assign,
transfer, pledge, hypothecate, or otherwise dispose of, by operation of law or
otherwise, any Restricted Shares (except that (i) Optek may distribute the
Restricted Shares to its shareholders in the Distribution, and (ii) the
Distribution Agent may sell fractions of Restricted Shares in order to provide
shareholders of Optek with cash in lieu of fractional Restricted Shares in the
Distribution), until the sooner to occur of (i) 60 days following the execution
of an underwriting agreement in connection with the IPO following the time at
which the registration statement with respect to such IPO is declared effective
by the Commission, or (ii) March 1, 1998. Because the closing of the IPO will
occur after the Distribution, the shares of Vision Common Stock to be issued in
the IPO will not be subject to the Charter Transfer Restriction.
DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS
The shares of Vision Common Stock have noncumulative voting rights, which
means that the holders of more than 50% of the shares voting can elect all the
directors if they so choose, and in such event, the holders of the remaining
shares cannot elect any directors. Upon completion of the Distribution, Thermo
Instrument (and Thermo Electron through its majority ownership of Thermo
Instrument) will continue to beneficially own at least a majority of the
outstanding Vision Common Stock, and will have the power to elect all of the
members of the Vision Board.
Vision's Certificate of Incorporation contains certain provisions permitted
under the General Corporation Law of Delaware relating to the liability of
directors. The provisions eliminate a director's liability for monetary damages
for a breach of fiduciary duty to the fullest extent permitted by the General
Corporation Law of Delaware. Vision's Certificate of Incorporation also contains
provisions to indemnify the directors and officers of Vision to the fullest
extent permitted by the General Corporation Law of Delaware. Vision believes
that these provisions will assist Vision in attracting and retaining qualified
individuals to serve as directors and officers.
DIVIDENDS
Vision anticipates that for the foreseeable future, Vision's earnings, if
any, will be retained for use in the business and that no cash dividends will be
paid on the Vision Common Stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Vision Common Stock is American
Stock Transfer & Trust Company.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Delaware General Corporation Law and Vision's Certificate of
Incorporation and By-Laws limit the monetary liability of directors to Vision
and to its shareholders and provide for indemnification of Vision's
46
<PAGE> 51
officers and directors for liabilities and expenses that they may incur in such
capacities. In general, officers and directors are indemnified with respect to
actions taken in good faith in a manner reasonably believed to be in, or not
opposed to, the best interests of Vision, and with respect to any criminal
action or proceeding, actions that the indemnitee had no reasonable cause to
believe were unlawful. Vision also has indemnification agreements with its
directors and officers that provide for the maximum indemnification allowed by
law. Reference is made to Vision's Certificate of Incorporation, By-Laws, and
Form of Indemnification Agreement for Officers and Directors which are filed as
exhibits to the registration statement of which this Information Statement is a
part.
Thermo Electron has an insurance policy which insures the directors and
officers of Thermo Electron and its subsidiaries, including Vision, against
certain liabilities which might be incurred in connection with the performance
of their duties.
Under the Distribution Agreement, Optek is obligated, under certain
circumstances, to indemnify directors and officers of Vision against certain
liabilities. Reference is made to the form of Distribution Agreement which is
filed as an exhibit to the registration statement of which this Information
Statement is a part.
EXPERTS
The financial statements included in the Information Statement have been
audited by Arthur Andersen LLP, independent public accountants, to the extent
and for the periods as indicted in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.
AVAILABLE INFORMATION
Following the Distribution, Vision will be required to comply with the
reporting requirements of the Exchange Act and will file annual, quarterly, and
other reports with the Commission. Vision will also be subject to the proxy
solicitation requirements of the Exchange Act and will furnish holders of Vision
Common Stock annual reports containing consolidated financial statements
prepared in accordance with generally accepted accounting principles and audited
and reported on, with an opinion expressed, by an independent public accounting
firm, as well as quarterly reports for the first three quarters of each fiscal
year containing unaudited financial information.
Vision has filed a registration statement on Form 10 with the Commission to
register the shares of Vision Common Stock to be issued on the Distribution Date
under the Exchange Act. This Information Statement does not contain all the
information set forth in the registration statement and the exhibits and
schedules thereto, as certain items are omitted in accordance with the rules and
regulations of the Commission. Reference is made to such registration statement
and the exhibits and schedules thereto, which may be inspected and copied, at
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices located at 7 World Trade Center, 13th Floor, New York, New York 10048
and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material also can be obtained at prescribed rates from the Public Reference
Section of the Commission at 450 Fifth Street, Washington, D.C. 20549. In
addition, Vision is required to file electronic versions of such material with
the Commission through the Commission's Electronic Data Gathering, Analysis and
Retrieval (EDGAR) system. The Commission maintains a World Wide Web site at
http://www.sec.gov that contains reports, proxy and information statements, and
other information regarding registrants that file electronically with the
Commission. Statements contained herein concerning the provisions of any
document are not necessarily complete and, in each instance, reference is made
to the copy of such document filed as an exhibit to the registration statement
or otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference.
TRADEMARKS
"CID(R)" is a registered trademark of Vision and "LifeSense(TM)," "MIR
8000(TM)," and "Accudose(TM)" are trademarks of Vision.
47
<PAGE> 52
THERMO VISION CORPORATION
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
THERMO VISION CORPORATION
Report of Independent Public Accountants............................................ F-2
Consolidated Statement of Income for the years ended December 31, 1994, December 30,
1995, and December 28, 1996, and for the nine months ended September 28, 1996,
and September 27, 1997........................................................... F-3
Consolidated Balance Sheet as of December 30, 1995, December 28, 1996, and September
27, 1997......................................................................... F-4
Consolidated Statement of Cash Flows for the years
ended December 31, 1994, December 30, 1995, and December 28, 1996, and for the
nine months ended September 28, 1996, and September 27, 1997..................... F-5
Consolidated Statement of Shareholder's Investment for the years ended December 31,
1994, December 30, 1995, and December 28, 1996, and for the nine months ended
September 27, 1997............................................................... F-6
Notes to Consolidated Financial Statements.......................................... F-7
ORIEL CORPORATION
Report of Independent Public Accountants............................................ F-17
Consolidated Statement of Operations for the years ended September 30, 1994, and
September 30, 1995, and for the three months ended December 31, 1994, and
December 31, 1995................................................................ F-18
Consolidated Balance Sheet as of September 30, 1995................................. F-19
Consolidated Statement of Cash Flows for the years ended September 30, 1994, and
September 30, 1995, and for the three months ended December 31, 1994, and
December 31, 1995................................................................ F-20
Consolidated Statement of Changes in Stockholders' Equity for the years ended
September 30, 1994, and September 30, 1995, and for the three months ended
December 31, 1995................................................................ F-21
Notes to Consolidated Financial Statements.......................................... F-22
CORION CORPORATION
Report of Independent Public Accountants............................................ F-27
Statement of Operations for the year ended December 31, 1995, and for the period
from January 1, 1996, through February 28, 1996.................................. F-28
Balance Sheet as of December 31, 1995............................................... F-29
Statement of Cash Flows for the year ended December 31, 1995, and for the period
from January 1, 1996, through February 28, 1996.................................. F-30
Statement of Stockholders' Equity for the year ended December 31, 1995, and for the
period from January 1, 1996, through February 28, 1996........................... F-31
Notes to Financial Statements....................................................... F-32
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION OF THERMO VISION CORPORATION, ORIEL
CORPORATION, AND CORION CORPORATION (UNAUDITED)
Pro Forma Combined Condensed Statement of Income for the year ended December 28,
1996............................................................................. F-36
Notes to Pro Forma Combined Condensed Statement of Income........................... F-37
</TABLE>
F-1
<PAGE> 53
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Thermo Vision Corporation:
We have audited the accompanying consolidated balance sheet of Thermo
Vision Corporation (a Delaware corporation and 100%-owned subsidiary of Thermo
Optek Corporation) and subsidiaries as of December 30, 1995, and December 28,
1996, and the related consolidated statements of income, cash flows, and
shareholder's investment for each of the three years in the period ended
December 28, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Thermo
Vision Corporation and subsidiaries as of December 30, 1995, and December 28,
1996, and the results of their operations and their cash flows for each of the
three years in period ended December 28, 1996, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
May 19, 1997 (except with
respect to certain matters
discussed in Note 8, as to
which the date is November 14, 1997)
F-2
<PAGE> 54
THERMO VISION CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-------------------------------
SEPTEMBER 28, SEPTEMBER 27,
1994 1995 1996 1996 1997
------ ------ ------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES (Notes 6 and 7)............. $4,242 $6,026 $30,434 $22,369 $28,445
------ ------ ------- ------- -------
Costs and Operating Expenses:
Cost of revenues................... 3,011 3,482 17,066 12,664 15,791
Selling, general, and
administrative expenses (Note
6).............................. 826 1,519 7,402 5,362 6,558
Research and development
expenses........................ 144 743 3,499 2,504 2,986
------ ------ ------- ------- -------
3,981 5,744 27,967 20,530 25,335
------ ------ ------- ------- -------
Operating Income..................... 261 282 2,467 1,839 3,110
Interest Income...................... -- -- -- -- 16
Interest Expense..................... (28) (31) (44) (34) (192)
------ ------ ------- ------- -------
Income Before Provision for Income
Taxes.............................. 233 251 2,423 1,805 2,934
Provision for Income Taxes (Note
4)................................. 87 104 1,005 756 1,232
------ ------ ------- ------- -------
NET INCOME........................... $ 146 $ 147 $ 1,418 $ 1,049 $ 1,702
====== ====== ======= ======= =======
EARNINGS PER SHARE................... $ .02 $ .02 $ .21 $ .15 $ .25
====== ====== ======= ======= =======
WEIGHTED AVERAGE SHARES.............. 6,784 6,784 6,784 6,784 6,784
====== ====== ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 55
THERMO VISION CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
SEPTEMBER
27,
1997
1995 1996 ------------
------ ------- (UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents..................................... $ 171 $ 306 $ 200
Accounts receivable, less allowances of $24, $266, and $369... 729 5,305 7,046
Inventories................................................... 1,301 6,404 7,931
Prepaid expenses.............................................. 34 521 812
Prepaid income taxes (Note 4)................................. 416 1,175 1,943
Due from Thermo Electron and affiliated companies (Note 6).... -- -- 101
------ ------- -------
2,651 13,711 18,033
------ ------- -------
Property, Plant, and Equipment, at Cost, Net.................... 606 3,901 4,715
------ ------- -------
Other Assets.................................................... -- 647 1,014
------ ------- -------
Cost in Excess of Net Assets of Acquired Companies (Note 2)..... 3,521 10,103 14,936
------ ------- -------
$6,778 $28,362 $ 38,698
====== ======= =======
LIABILITIES AND SHAREHOLDER'S INVESTMENT
Current Liabilities:
Note payable and capital lease obligation (Note 6)............ $ 650 $ 866 $ 747
Accounts payable.............................................. 255 2,796 4,517
Accrued payroll and employee benefits......................... 40 751 733
Other accrued expenses........................................ 198 929 1,575
Due to Thermo Electron and affiliated companies (Note 6)...... 938 2,768 --
------ ------- -------
2,081 8,110 7,572
------ ------- -------
Long-term Obligations, Due to Affiliates (Note 8)............... -- -- 7,747
------ ------- -------
Commitments (Note 5)
Shareholder's Investment (Note 3):
Common stock, $.01 par value, 50,000,000 shares authorized;
6,783,783 shares issued and outstanding.................... 68 68 68
Capital in excess of par value................................ 4,608 18,693 20,137
Retained earnings............................................. 19 1,437 3,139
Cumulative translation adjustment............................. 2 54 35
------ ------- -------
4,697 20,252 23,379
------ ------- -------
$6,778 $28,362 $ 38,698
====== ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 56
THERMO VISION CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
----------------------------
SEPTEMBER SEPTEMBER
28, 27,
1994 1995 1996 1996 1997
------ ----- -------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income..................................... $ 146 $ 147 $ 1,418 $ 1,049 $ 1,702
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization................ 87 182 1,251 879 1,298
Provision for losses on accounts
receivable................................ 10 14 174 186 42
Deferred income tax expense (benefit)........ (59) 31 (79) -- --
Changes in current accounts, excluding the
effects of acquisitions:
Accounts receivable....................... (216) 67 (732) (734) (425)
Inventories............................... (57) (301) 471 201 (268)
Other current assets...................... 9 (2) (253) (228) (201)
Accounts payable.......................... 219 (128) (174) (1,024) 920
Other current liabilities................. (209) (136) (397) (599) (515)
------ ----- -------- -------- -------
Net cash provided by (used in) operating
activities............................ (70) (126) 1,679 (270) 2,553
------ ----- -------- -------- -------
INVESTING ACTIVITIES:
Acquisitions, net of cash acquired (Note 2).... -- -- (15,528) (15,528) (7,345)
Purchases of property, plant, and equipment.... (96) (152) (1,450) (1,257) (1,142)
Other, net..................................... -- -- 92 117 --
------ ----- -------- -------- -------
Net cash used in investing activities... (96) (152) (16,886) (16,668) (8,487)
------ ----- -------- -------- -------
FINANCING ACTIVITIES:
Net proceeds from issuance of notes payable to
parent company............................... -- -- -- -- 7,747
Transfer from parent company to fund
acquisitions................................. -- -- 16,870 16,870 --
Net increase (decrease) in short-term
borrowings from Thermo Electron and
affiliates................................... 192 1 1,830 2,668 (2,868)
Net decrease in short-term borrowings.......... (230) (65) (575) (604) (116)
Net transfer (to) from parent company.......... 248 473 (2,785) (2,041) 1,444
Other.......................................... -- -- -- -- (379)
------ ----- -------- -------- -------
Net cash provided by financing
activities............................ 210 409 15,340 16,893 5,828
------ ----- -------- -------- -------
Exchange Rate Effect on Cash..................... (7) (10) 2 (1) --
------ ----- -------- -------- -------
Increase (Decrease) in Cash and Cash
Equivalents.................................... 37 121 135 (46) (106)
Cash and Cash Equivalents at Beginning of
Period......................................... 13 50 171 171 306
------ ----- -------- -------- -------
Cash and Cash Equivalents at End of Period....... $ 50 $ 171 $ 306 $ 125 $ 200
====== ===== ======== ======== =======
CASH PAID FOR:
Interest....................................... $ 28 $ 31 $ 44 $ 34 $ 52
====== ===== ======== ======== =======
Income taxes................................... $ -- $ -- $ 43 $ 38 $ --
====== ===== ======== ======== =======
NONCASH ACTIVITIES:
Transfer of acquired business from parent
company...................................... $3,401 $ -- $ -- $ -- $ --
====== ===== ======== ======== =======
Fair value of assets of acquired companies..... $ -- $ -- $ 22,480 $ 22,480 $ 9,414
Cash paid for acquired companies............... -- -- (16,870) (16,870) --
Notes payable to affiliates for acquired
companies.................................... -- -- -- -- (7,400)
------ ----- -------- -------- -------
Liabilities assumed of acquired companies.... $ -- $ -- $ 5,610 $ 5,610 $ 2,014
====== ===== ======== ======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 57
THERMO VISION CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDER'S INVESTMENT
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON
NET PARENT STOCK, CAPITAL IN CUMULATIVE
COMPANY $.01 PAR EXCESS OF RETAINED TRANSLATION
INVESTMENT VALUE PAR VALUE EARNINGS ADJUSTMENT
---------- -------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE JANUARY 1, 1994................ $ 280 $ -- $ -- $ -- $ (2)
Net income........................... 146 -- -- -- --
Transfer of acquired business from
parent company.................... 3,401 -- -- -- --
Net transfer from parent company..... 248 -- -- -- --
Translation adjustment............... -- -- -- -- 10
------- --- ------- ------ ---
BALANCE DECEMBER 31, 1994.............. 4,075 -- -- -- 8
Net income before capitalization of
the Company....................... 128 -- -- -- --
Net transfer from parent company..... 473 -- -- -- --
Capitalization of the Company........ (4,676) 68 4,608 -- --
Net income after capitalization of
the Company....................... -- -- -- 19 --
Translation adjustment............... -- -- -- -- (6)
------- --- ------- ------ ---
BALANCE DECEMBER 30, 1995.............. -- 68 4,608 19 2
Net income........................... -- -- -- 1,418 --
Transfer from parent company to fund
acquisitions of Oriel and
Corion............................ -- -- 16,870 -- --
Net transfer to parent company....... -- -- (2,785) -- --
Translation adjustment............... -- -- -- -- 52
------- --- ------- ------ ---
BALANCE DECEMBER 28, 1996.............. -- 68 18,693 1,437 54
(UNAUDITED)
Net income........................... -- -- -- 1,702 --
Net transfer from parent company..... -- -- 1,444 -- --
Translation adjustment............... -- -- -- -- (19)
------- --- ------- ------ ---
BALANCE SEPTEMBER 27, 1997............. $ -- $ 68 $20,137 $3,139 $ 35
======= === ======= ====== ===
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 58
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Thermo Vision Corporation ("the Company") designs, manufactures, and
markets a diverse array of photonics products, including optical components,
imaging sensors and systems, lasers, optically based instruments,
optoelectronics, and fiber optics. The Company sells photonics products in
multiple markets across a number of industries for research, testing, detecting,
and manufacturing applications. The Company's products range from optical
filters used in blood glucose monitoring, to charge-injection devices ("CIDs")
used in optical spectroscopy, to specialty light sources used for quality
assurance in semiconductor photolithography. Many of the Company's customers are
manufacturers that incorporate the Company's products into medical and dental
diagnostic instruments, analytical instruments, equipment for semiconductor
manufacturing, and X-ray screening devices.
Relationship with Thermo Optek Corporation, Thermo Instrument Systems Inc., and
Thermo Electron Corporation
The Company was incorporated in November 1995 as a wholly owned subsidiary
of Thermo Optek Corporation ("Thermo Optek") at which time Thermo Optek
transferred to the Company all of the assets, liabilities, and businesses of two
subsidiaries of Thermo Jarrell Ash ("TJA") in exchange for 6,783,783 shares of
the Company's common stock. The companies transferred were CID Technologies Inc.
("CIDTEC") and Scientific Measurement Systems Inc., which now conducts business
under the name "Thermo Vision Colorado." In August 1997, the Company acquired
the crystal-materials business ("Hilger") of Hilger Analytical Limited, a wholly
owned subsidiary of Thermo Optek, and accounted for the transaction at
historical cost in a manner similar to a pooling of interests (Note 8). As of
December 28, 1996, Thermo Optek was a 93%-owned publicly traded subsidiary of
Thermo Instrument Systems Inc. ("Thermo Instrument"). Thermo Instrument is a
publicly traded, majority-owned subsidiary of Thermo Electron Corporation
("Thermo Electron").
The accompanying financial statements include the assets, liabilities,
income, and expenses of the Company as included in Thermo Optek's consolidated
financial statements. The accompanying financial statements do not include
Thermo Optek's general corporate debt, which is used to finance operations of
all of its respective business segments, or an allocation of Thermo Optek's
interest expense.
Principles of Consolidation
The accompanying financial statements include the accounts of the Company
and its wholly owned subsidiaries. All material intercompany accounts and
transactions have been eliminated.
Fiscal Year
The Company has adopted a fiscal year ending the Saturday nearest December
31. References to 1994, 1995, and 1996 are for the fiscal years ended December
31, 1994, December 30, 1995, and December 28, 1996, respectively.
Revenue Recognition
The Company recognizes revenues upon shipment of its products. The Company
provides a reserve for its estimate of warranty and installation costs at the
time of shipment.
F-7
<PAGE> 59
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Income Taxes
The Company, Thermo Optek, and Thermo Instrument have tax allocation
agreements under which the Company, Thermo Optek, and Thermo Instrument are
included in Thermo Electron's consolidated federal and certain state income tax
returns. The agreements provide that in years in which the Company has taxable
income, it will pay to Thermo Electron amounts comparable to the taxes the
Company would have paid if it had filed separate tax returns. If Thermo
Instrument's beneficial equity ownership of the Company were to drop below 80%,
the Company would be required to file its own federal tax return.
In accordance with Statement of Financial Accounting Standards ("SFAS") No.
109, "Accounting for Income Taxes," the Company recognizes deferred income taxes
based on the expected future tax consequences of differences between the
financial statement basis and the tax basis of assets and liabilities,
calculated using enacted tax rates in effect for the year in which the
differences are expected to be reflected in the tax return.
Earnings per Share
Pursuant to Securities and Exchange Commission requirements, earnings per
share have been presented for all periods. Shares outstanding for such periods
represent the 6,783,783 shares issued to Thermo Optek in connection with the
initial capitalization of the Company.
Cash and Cash Equivalents
Prior to its incorporation, the cash receipts and disbursements of the
Company's domestic operations were combined with other Thermo Optek corporate
cash transactions and balances. Therefore, cash of the Company's domestic
operations through November 1995 is not included in the accompanying balance
sheet.
Inventories
Inventories are stated at the lower of cost (primarily on a first-in,
first-out basis) or market value and include materials, labor, and manufacturing
overhead. The components of inventories are as follows:
<TABLE>
<CAPTION>
1995 1996
------ ------
(IN THOUSANDS)
<S> <C> <C>
Raw materials and supplies................................. $ 919 $3,142
Work in process............................................ 70 806
Finished goods............................................. 312 2,456
---- ------
$1,301 $6,404
==== ======
</TABLE>
Property, Plant, and Equipment
The costs of additions and improvements are capitalized, while maintenance
and repairs are charged to expense as incurred. The Company provides for
depreciation and amortization using the straight-line method over the estimated
useful lives of the property as follows: buildings, 15 to 30 years; machinery
and equipment,
F-8
<PAGE> 60
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3 to 10 years; and leasehold improvements, the shorter of the term of the lease
or the life of the asset. Property, plant, and equipment consists of the
following:
<TABLE>
<CAPTION>
1995 1996
---- ------
(IN THOUSANDS)
<S> <C> <C>
Land and buildings.......................................... $226 $ 277
Machinery and equipment..................................... 582 4,114
Leasehold improvements...................................... -- 554
---- ------
808 4,945
Less: Accumulated depreciation and amortization............. 202 1,044
---- ------
$606 $3,901
==== ======
</TABLE>
Other Assets
Other assets in the accompanying balance sheet consists primarily of a 10%
ownership interest in LOT-Oriel Holding GmbH ("LOT"). The carrying amount of the
investment, which is being accounted for under the cost method, is $500,000 in
the accompanying balance sheet.
As of December 28, 1996, the Company has an investment of less than 20% in
Andor Technology Limited ("Andor"). The carrying amount of the investment, which
is being accounted for under the cost method, is $84,000 in the accompanying
1996 balance sheet. Prior to October 1996, the Company owned approximately 51%
of Andor, and Andor's results were consolidated with those of the Company.
During the third quarter of 1996, the Company reduced its ownership interest in
Andor in a transaction with Andor's other stockholders. In consideration for the
sale of a portion of its interest in Andor, the Company received approximately
$159,000 in cash and a $147,000 principal amount 8% note, which was repaid in
September 1997. Andor's results were not material to the Company's results of
operations.
Cost in Excess of Net Assets of Acquired Companies
The excess of cost over the fair value of net assets of acquired companies
is amortized using the straight-line method over 40 years. Accumulated
amortization was $115,000 and $371,000 at year-end 1995 and 1996, respectively.
Foreign Currency
All assets and liabilities of the Company's foreign subsidiaries are
translated at year-end exchange rates, and revenues and expenses are translated
at average exchange rates for the year in accordance with SFAS No. 52, "Foreign
Currency Translation." Resulting translation adjustments are reflected as a
separate component of shareholder's investment titled "Cumulative translation
adjustment." Foreign currency transaction gains and losses are included in the
accompanying statement of income and are not material for the three years
presented.
Fair Value of Financial Instruments
The Company's financial instruments consist primarily of cash and cash
equivalents, accounts receivable, note payable, accounts payable, and due to
Thermo Electron and affiliated companies. The carrying amounts of these
financial instruments approximate fair value due to their short-term nature.
Impairment of Long-lived Assets
The Company assesses the future useful life of its long-lived assets
whenever events or changes in circumstances indicate that the current useful
life has diminished. The Company considers the future
F-9
<PAGE> 61
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
undiscounted cash flows pertaining to such assets in assessing the
recoverability. If impairment has occurred, any excess of carrying value over
fair value is recorded as a loss.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Interim Financial Statements
The financial statements as of September 27, 1997, and for the nine-month
periods ended September 28, 1996, and September 27, 1997, are unaudited but, in
the opinion of management, reflect all adjustments of a normal recurring nature
necessary for a fair presentation of results for these interim periods. The
results of operations for the nine-month period ended September 27, 1997, are
not necessarily indicative of the results to be expected for the entire year.
2. ACQUISITIONS
In October 1994, Thermo Instrument acquired CIDTEC, a manufacturer of
charge-injection devices used for imaging sensors and video cameras, for
$3,401,000 in cash. The cost of this acquisition exceeded the estimated fair
market value of the acquired net assets by $2,889,000, which is being amortized
over 40 years. Thermo Instrument transferred the assets, liabilities, and
businesses of CIDTEC to Thermo Optek after its formation in August 1995. Thermo
Optek transferred the assets, liabilities, and businesses of CIDTEC to the
Company after its formation in November 1995. Because the Company, CIDTEC, and
Thermo Optek were deemed for accounting purposes to be under control of their
common majority owner, Thermo Instrument, the accompanying 1994 and 1995
historical information includes the results of operations of CIDTEC from October
1994, the date this business was acquired by Thermo Instrument.
In February 1996, the Company acquired Oriel Corporation ("Oriel"), a
manufacturer and distributor of photonics components and instruments, for
$11,798,000 in cash, and Corion Corporation ("Corion"), a manufacturer of
commercial optical filters, for $5,072,000 in cash. The cost of Oriel and Corion
exceeded the estimated fair market value of the acquired net assets by
$4,736,000 and $2,056,000, respectively, which are being amortized over 40
years. These acquisitions have been accounted for using the purchase method of
accounting, and their results of operations have been included in the
accompanying financial statements from the respective dates of acquisition.
Based on unaudited data, the following table presents selected financial
information for the Company, CIDTEC, Oriel, and Corion on a pro forma basis,
assuming the Company and CIDTEC had been combined since the beginning of 1994
and the Company, Oriel, and Corion had been combined since the beginning of
1995. Additional pro forma financial information for the Company, Oriel, and
Corion is included elsewhere in this Information Statement.
<TABLE>
<CAPTION>
1994 1995 1996
------ ------- -------
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
Revenues............................................. $5,366 $33,355 $33,940
Net income (loss).................................... (248) 145 532
Earnings (loss) per share............................ (.05) .03 .11
</TABLE>
F-10
<PAGE> 62
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The pro forma results are not necessarily indicative of future operations
or the actual results that would have occurred had the acquisition of CIDTEC
been made at the beginning of 1994 or the acquisitions of Oriel and Corion been
made at the beginning of 1995.
3. EMPLOYEE BENEFIT PLANS
Employee Stock Purchase Plan
Substantially all of the Company's full-time U.S. employees are eligible to
participate in an employee stock purchase plan sponsored by Thermo Instrument.
Under this plan, shares of Thermo Instrument's and Thermo Electron's common
stock can be purchased at the end of a 12-month plan year at 95% of the fair
market value at the beginning of the plan year, and the shares purchased are
subject to a six-month resale restriction. Prior to November 1, 1995, the
applicable shares of common stock could be purchased at 85% of the fair market
value at the beginning of the plan year, and the shares purchased were subject
to a one-year resale restriction. Shares are purchased through payroll
deductions of up to 10% of each participating employee's gross wages.
401(k) Savings Plans
Substantially all of the Company's full-time U.S. employees are eligible to
participate in Thermo Electron's 401(k) savings plan. Contributions to the
401(k) savings plans are made by both the employee and the Company. Company
contributions are based upon the level of employee contributions. For these
plans, the Company contributed and charged to expense $4,000; $39,000; and
$182,000 in 1994, 1995, and 1996, respectively.
4. INCOME TAXES
The components of income before provision for income taxes are as follows:
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Domestic............................................ $ 5 $ 9 $2,186
Foreign............................................. 228 242 237
---- ---- ------
$233 $251 $2,423
==== ==== ======
</TABLE>
The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Currently payable:
Federal........................................... $ 62 $(11) $ 895
State............................................. 7 (1) 105
Foreign........................................... 77 85 84
---- ---- ------
146 73 1,084
---- ---- ------
Net deferred (prepaid):
Federal........................................... (53) 28 (71)
State............................................. (6) 3 (8)
---- ---- ------
(59) 31 (79)
---- ---- ------
$ 87 $104 $1,005
==== ==== ======
</TABLE>
F-11
<PAGE> 63
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The provision for income taxes in the accompanying statement of income
differs from the provision calculated by applying the statutory federal income
tax rate of 34% to income before provision for income taxes due to the
following:
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Provision for income taxes at statutory rate................. $79 $ 85 $ 824
Increases (decreases) resulting from:
State income taxes, net of federal benefit................. 1 1 64
Foreign tax rate differential.............................. (1) 3 3
Tax benefit of foreign sales corporation................... -- (2) (5)
Amortization of cost in excess of net assets of acquired
companies............................................... 8 16 80
Nondeductible expenses and other........................... -- 1 39
--- ---- ------
$87 $104 $1,005
=== ==== ======
</TABLE>
Prepaid income taxes and deferred income taxes in the accompanying balance
sheet consist of the following:
<TABLE>
<CAPTION>
1995 1996
---- ------
(IN THOUSANDS)
<S> <C> <C>
Prepaid income taxes:
Reserves and other accruals............................... $ 47 $ 229
Inventory basis difference................................ 347 713
Accrued compensation...................................... 22 136
Other, net................................................ -- 97
---- ------
$416 $1,175
==== ======
Deferred income taxes:
Fixed assets.............................................. $ 20 $ 20
Intangible assets......................................... 25 25
---- ------
$ 45 $ 45
==== ======
</TABLE>
A provision has not been made for U.S. or additional foreign taxes on
$707,000 of undistributed earnings of the Company's foreign subsidiary that
could be subject to taxation if remitted to the U.S. because the Company plans
to keep this amount permanently reinvested overseas. The Company believes that
any additional U.S. tax liability due upon remittance of such earnings would be
immaterial due to available U.S. foreign tax credits.
5. COMMITMENTS
The Company leases portions of its office and operating facilities under
various operating lease arrangements. The accompanying statement of income
includes expenses from operating leases of $20,000; $120,000; and $438,000 in
1994, 1995, and 1996, respectively. Future minimum payments due under
noncancellable operating leases at December 28, 1996, are $450,000 in 1997;
$165,000 in 1998; $129,000 in 1999; $120,000 in 2000; $120,000 in 2001; and
$631,000 in 2002 and thereafter. Total future minimum lease payments are
$1,615,000. The Company also has operating lease arrangements with related
parties as discussed in Note 6.
F-12
<PAGE> 64
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. RELATED-PARTY TRANSACTIONS
Corporate Services Agreement
The Company and Thermo Electron have a corporate services agreement under
which Thermo Electron's corporate staff provides certain administrative
services, including certain legal advice and services, risk management, certain
employee benefit administration, tax advice and preparation of tax returns,
centralized cash management, and certain financial and other services, for which
the Company pays Thermo Electron annually an amount equal to 1.0% of the
Company's revenues. The Company paid an annual fee equal to 1.25% and 1.20% of
the Company's revenues in 1994 and 1995, respectively. The annual fee is
reviewed and adjusted annually by mutual agreement of the parties. For these
services, the Company was charged $53,000; $72,000; and $304,000 in 1994, 1995,
and 1996, respectively. The corporate services agreement is renewed annually but
can be terminated upon 30 days' prior notice by the Company or upon the
Company's withdrawal from the Thermo Electron Corporate Charter (the Thermo
Electron Corporate Charter defines the relationship among Thermo Electron and
its majority-owned subsidiaries). Management believes that the service fee
charged by Thermo Electron is reasonable and that such fees are representative
of the expenses the Company would have incurred on a stand-alone basis. For
additional items such as employee benefit plans, insurance coverage, and other
identifiable costs, Thermo Electron charges the Company based upon costs
attributable to the Company.
Operating Leases
In addition to the operating leases described in Note 5, the Company leases
certain office and manufacturing space on a monthly basis from Thermo Optek and
Thermo Instrument. Prior to January 1, 1997, rent expense under these
arrangements was determined as the Company's allocated share of total occupancy
expenses. Effective for 1997, the rent expense is $308,000. The accompanying
statement of income includes expenses from these arrangements of $46,000;
$91,000; and $297,000 in 1994, 1995, and 1996, respectively.
Short-term Obligation
Note payable in the accompanying balance sheet represents short-term bank
borrowings at the Company's foreign subsidiary of $650,000 and $866,000 at
year-end 1995 and 1996, respectively. The Company has an arrangement under which
it may borrow on a bank line of credit arrangement held by Thermo Optek. The
weighted average interest rate for these borrowings was 6.50% and 6.75% at
year-end 1995 and 1996, respectively. Availability to the Company under this
line of credit totaled $1,659,000 as of December 28, 1996.
Distribution Agreement with LOT
The Company has a distribution agreement with LOT which allows LOT to be
Oriel's primary distributor in certain parts of Europe. Sales to LOT included in
the accompanying 1996 statement of income were $1,952,000. Accounts receivable
in the accompanying 1996 balance sheet includes $442,000 due from LOT.
Trademark License and Royalty Agreement
In September 1996, the Company agreed to license the use of a trademark to
Andor in exchange for a fee equal to the greater of 3.3% of the net sales
revenue, as defined, from sales of products sold under the trade name, or 10,000
British pounds sterling. The accompanying 1996 statement of income includes
revenues of $15,000 recorded under this agreement.
F-13
<PAGE> 65
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Contract Research and Development
In 1994, 1995, and 1996, the Company recorded revenues of $24,000;
$418,000; and $188,000, respectively, from Thermo Optek for contract research
and development services related to components used in certain products
manufactured by Thermo Optek.
Other Related-party Transactions
The Company purchases and sells products in the ordinary course of business
with other companies affiliated with Thermo Instrument. Sales of products to
such affiliated companies totaled $1,290,000; $2,514,000; and $1,786,000 in
1994, 1995, and 1996, respectively. Purchases of products from such affiliated
companies totaled $211,000; $1,465,000; and $971,000 in 1994, 1995, and 1996,
respectively.
7. GEOGRAPHICAL INFORMATION
The Company is engaged in one business segment: designing, manufacturing,
and marketing photonics products. The following table shows data for the Company
by geographical area.
<TABLE>
<CAPTION>
1994 1995 1996
------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
United States................................................. $ 2,892 $ 4,453 $ 28,780
United Kingdom................................................ 1,350 1,573 1,654
------ ------ -------
$ 4,242 $ 6,026 $ 30,434
====== ====== =======
Income before provision for income taxes:
United States(a).............................................. $ 50 $ 59 $ 2,247
United Kingdom................................................ 211 223 220
------ ------ -------
Operating income.............................................. 261 282 2,467
Interest expense.............................................. 28 31 44
------ ------ -------
$ 233 $ 251 $ 2,423
====== ====== =======
Identifiable assets:
United States................................................. $ 5,585 $ 5,476 $ 26,429
United Kingdom................................................ 1,191 1,302 1,933
------ ------ -------
$ 6,776 $ 6,778 $ 28,362
====== ====== =======
Export revenues included in United States revenues above(b):
Europe........................................................ $ 154 $ 140 $ 5,053
Other......................................................... 201 145 4,434
------ ------ -------
$ 355 $ 285 $ 9,487
====== ====== =======
</TABLE>
- ---------------
(a) Includes corporate general and administrative expenses.
(b) In general, export sales are denominated in U.S. dollars.
8. SUBSEQUENT EVENTS
Acquisitions
In August 1997, the Company acquired Hilger from Thermo Optek for the
assumption of the short-term obligation discussed in Note 6. Because the Company
and Hilger were deemed for accounting purposes to be
F-14
<PAGE> 66
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
under control of their common owner, Thermo Optek, the transaction has been
accounted for at historical cost in a manner similar to a pooling of interests.
Accordingly, all historical information presented includes the results of
operations of Hilger since 1993, the year in which it was acquired by Thermo
Optek.
In July 1997, the Company acquired the assets of Centronic, Inc.
("Centronic"), a manufacturer of silicon photodiodes, for $3,800,000 in cash.
The acquisition was accounted for using the purchase method of accounting, and
the cost of this acquisition exceeded the estimated fair market value of the
acquired net assets by $2,307,000, which is being amortized over 40 years. To
finance this acquisition, the Company borrowed $3,800,000 from Thermo Electron
pursuant to a promissory note due July 2000, bearing interest at the 90-day
Commercial Paper Composite Rate plus 25 basis points, set at the beginning of
each quarter.
In February 1997, the Company acquired all the outstanding stock of Laser
Science, Inc. ("LSI") for $3,600,000 in cash. LSI is a manufacturer of nitrogen
and tunable dye lasers as well as pulsed CO(2) lasers for industry, medicine,
education, and defense. The acquisition was accounted for using the purchase
method of accounting, and the cost of this acquisition exceeded the estimated
fair market value of the acquired net assets by $2,836,000, which is being
amortized over 40 years. To finance this acquisition, the Company borrowed
$3,600,000 from Thermo Optek. In addition, the Company borrowed an additional
$347,000 from Thermo Optek to fund certain property additions made in connection
with the acquisition of LSI. These borrowings were made through the issuance of
promissory notes due February 2000, bearing interest at the 90-day Commercial
Paper Composite Rate plus 25 basis points, set at the beginning of each quarter.
As of September 27, 1997, the interest rate on the promissory notes was 5.87%.
Stock-based Compensation Plans
In November 1997, the Company adopted a stock-based compensation plan for
its key employees, directors, and others, which permits the grant of stock and
stock-based awards as determined by the human resources committee of the
Company's Board of Directors (the "Board Committee"), including restricted
stock, stock options, stock bonus shares or performance-based shares. The option
recipients and the terms of options granted under this plan are determined by
the Board Committee. Options granted generally vest and become immediately
exercisable on the sixth anniversary of the grant date unless the Company's
common stock becomes publicly traded prior to such date. In such an event,
options become exercisable 90 days after the Company becomes subject to the
Securities Exchange Act of 1934, but will be subject to certain transfer
restrictions and the right of the Company to repurchase shares issued upon
exercise of the options at the exercise price, upon certain events. The
restrictions and repurchase rights generally will be deemed to have lapsed
ratably over a five-year period after the first anniversary of the grant date.
Nonqualified stock options may be granted at any price determined by the Board
Committee, although incentive stock options must be granted at not less than the
fair market value of the Company's stock on the date of grant. As of November
14, 1997, no options have been granted under this plan. In addition to the
Company's stock-based compensation plans, certain officers and key employees may
also participate in the stock-based compensation plans of Thermo Electron and
Thermo Instrument.
Reserved Shares
As of November 14, 1997, the Company has reserved 725,000 unissued shares
of its common stock for possible issuance under stock-based compensation plans.
Stock Split
In August 1997, the Company declared and effected a 4,845-for-1 stock split
in the form of a stock dividend. In November 1997, the Company declared and
effected an approximate 7-for-5 stock split in the form of a stock dividend. All
share and per share information has been restated to reflect these stock splits.
F-15
<PAGE> 67
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. UNAUDITED QUARTERLY INFORMATION
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1996 FIRST(A) SECOND THIRD FOURTH
- -------------------------------------------------------- -------- ------ ------ ------
<S> <C> <C> <C> <C>
Revenues................................................ $5,237 $8,931 $8,201 $8,065
Gross profit............................................ 2,221 3,904 3,580 3,663
Net income.............................................. 201 480 368 369
Earnings per share...................................... .03 .07 .05 .05
</TABLE>
<TABLE>
<CAPTION>
1997 FIRST(B) SECOND THIRD(C)
- ------------------------------------------------------- -------- ------ -------
<S> <C> <C> <C> <C>
Revenues............................................... $8,585 $9,225 $10,635
Gross profit........................................... 3,759 4,089 4,806
Net income............................................. 528 566 608
Earnings per share..................................... .08 .08 .09
</TABLE>
- ---------------
(a) Reflects the February 1996 acquisitions of Corion and Oriel.
(b) Reflects the February 1997 acquisition of LSI.
(c) Reflects the July 1997 acquisition of Centronic.
F-16
<PAGE> 68
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
of Oriel Corporation:
We have audited the accompanying consolidated balance sheet of Oriel
Corporation (a Delaware corporation) and subsidiaries as of September 30, 1995,
and the related consolidated statements of operations, changes in stockholders'
equity, and cash flows for the two year period then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, based on our audits, the financial statements referred to
above present fairly, in all material respects, the financial position of Oriel
Corporation and subsidiaries as of September 30, 1995, and the results of their
operations and their cash flows for the two-year period then ended, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
November 1, 1995
F-17
<PAGE> 69
ORIEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
SEPTEMBER 30, DECEMBER 31,
------------------------- -----------------------
1994 1995 1994 1995
----------- ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net sales..................................... $16,206,925 $18,783,394 $3,991,662 $4,816,148
Cost of goods sold............................ 8,599,976 9,815,116 2,034,847 2,604,822
----------- ----------- ---------- ----------
Gross profit................................ 7,606,949 8,968,278 1,956,815 2,211,326
Expenses:
Selling, general, and administrative........ 4,735,509 4,960,236 1,251,373 1,317,695
Research and development.................... 2,037,168 2,706,932 674,549 770,541
----------- ----------- ---------- ----------
Income from operations................... 834,272 1,301,110 30,893 123,090
Other Expense:
Interest Expense, Net....................... 51,640 41,753 853 10,937
Other, Net.................................. 44,296 136,408 14,216 20,344
----------- ----------- ---------- ----------
Income Before Provision for Income Taxes and
Minority Interest in Net Earnings (Loss) of
Equity Investee............................. 738,336 1,122,949 15,824 91,809
Provision for Income Taxes.................... 368,000 328,000 9,705 25,904
----------- ----------- ---------- ----------
Income Before Minority Interest in Net
Earnings (Loss) of Equity Investee.......... 370,336 794,949 6,119 65,905
Minority Interest in Net Earnings (Loss) of
Equity Investee............................. -- 60,654 (3,288) 25,366
----------- ----------- ---------- ----------
Net Income.................................... $ 370,336 $ 734,295 $ 9,407 $ 40,539
=========== =========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-18
<PAGE> 70
ORIEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER DECEMBER
30, 31,
1995 1995
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents......................................... $ 271,874 $ 535,431
Accounts receivable, net of allowance for doubtful accounts of
approximately $77,000.......................................... 3,755,180 3,166,208
Inventories....................................................... 4,294,761 4,589,359
Prepaid expenses.................................................. 107,913 72,751
Deferred income taxes............................................. 235,000 235,000
----------- -----------
Total current assets...................................... 8,664,728 8,598,749
----------- -----------
Property, Plant, and Equipment, at Cost:
Machinery and equipment........................................... 2,494,728 2,632,547
Furniture and fixtures............................................ 1,051,817 1,059,274
Leasehold improvements............................................ 493,343 493,343
----------- -----------
4,039,888 4,185,164
Less: Accumulated depreciation and amortization................ (2,624,379) (2,761,542)
----------- -----------
1,415,509 1,423,622
----------- -----------
Other Assets:
Investments....................................................... 500,000 500,000
Catalogue costs................................................... 212,853 180,504
Goodwill.......................................................... 120,763 117,163
Other............................................................. 40,783 54,341
----------- -----------
874,399 852,008
----------- -----------
$10,954,636 $10,874,379
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Line of credit.................................................... $ 480,915 $ 429,749
Accounts payable.................................................. 1,607,384 1,571,061
Accrued liabilities............................................... 238,229 355,645
Accrued employee benefits......................................... 466,497 394,762
Income taxes payable.............................................. 92,750 --
----------- -----------
Total current liabilities................................. 2,885,775 2,751,217
----------- -----------
Benefits Payable.................................................... 52,282 52,282
----------- -----------
Deferred Income Taxes............................................... 41,000 41,000
----------- -----------
Minority Interest in Net Assets of Equity Investee.................. 267,674 293,040
----------- -----------
Commitments and Contingencies (Notes 1, 7, and 8)
Stockholders' Equity:
Common stock, $.01 par value, 5,000,000 shares authorized;
3,419,643 shares issued........................................ 34,197 34,197
Additional paid-in capital........................................ 4,945,931 4,945,931
Retained earnings................................................. 2,933,617 2,974,156
Cumulative translation adjustment................................. 3,937 (7,667)
Treasury stock, at cost........................................... (209,777) (209,777)
----------- -----------
7,707,905 7,736,840
----------- -----------
$10,954,636 $10,874,379
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-19
<PAGE> 71
ORIEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
SEPTEMBER 30, DECEMBER 31,
------------------------ ---------------------
1994 1995 1994 1995
----------- ---------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net income.................................... $ 370,336 $ 734,295 $ 9,407 $ 40,539
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization.............. 823,206 1,052,906 281,427 209,576
Deferred income taxes...................... (55,000) (4,000) -- --
Minority interest in net earnings (loss) of
Equity Investee.......................... -- 60,654 (3,288) 25,366
Change in assets and liabilities, net of
acquisition:
Accounts receivable...................... 58,158 (747,774) 472,525 588,972
Inventories.............................. (119,437) (238,453) (197,149) (294,598)
Prepaid expense and other current
assets................................ 15,460 (39,751) 31,941 35,162
Catalogue costs.......................... (134,876) (440,596) (191,720) (36,464)
Other assets............................. 9,208 10,137 12,673 (13,558)
Accounts payable and accrued
liabilities........................... 72,446 (5,373) (356,375) 9,358
Income taxes payable..................... 135,216 (84,291) -- (92,750)
Other liabilities........................ (9,564) (44,473) -- --
----------- --------- --------- ---------
Net cash provided by operating
activities.......................... 1,165,153 253,281 59,441 471,603
----------- --------- --------- ---------
Cash Flows from Investing Activities:
Purchase of property, plant, and equipment.... (408,137) (711,360) (220,949) (145,276)
Equity investment (Note 1).................... (7,776) -- -- --
----------- --------- --------- ---------
Net cash used in investing
activities.......................... (415,913) (711,360) (220,949) (145,276)
----------- --------- --------- ---------
Cash Flows from Financing Activities:
Net borrowings (repayments) on line of
credit..................................... (1,500,000) 480,915 -- (51,166)
Cumulative translation adjustment............. -- 3,937 (3,171) (11,604)
----------- --------- --------- ---------
Net cash provided by (used in)
financing activities................ (1,500,000) 484,852 (3,171) (62,770)
----------- --------- --------- ---------
Net Increase (Decrease) in Cash and Cash
Equivalents................................... (750,760) 26,773 (164,679) 263,557
Cash and Cash Equivalents, beginning of
period........................................ 995,861 245,101 245,101 271,874
----------- --------- --------- ---------
Cash and Cash Equivalents, end of period........ $ 245,101 $ 271,874 $ 80,422 $ 535,431
=========== ========= ========= =========
Supplemental Disclosure:
Cash paid during the period for:
Interest................................... $ 59,242 $ 46,958 $ -- $ --
=========== ========= ========= =========
Income taxes............................... $ 338,778 $ 390,469 $ 124,228 $ 125,204
=========== ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-20
<PAGE> 72
ORIEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL CUMULATIVE TREASURY STOCK TOTAL
------------------- PAID-IN RETAINED TRANSLATION -------------------- STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENT SHARES AMOUNT EQUITY
--------- ------- ---------- ---------- ---------- -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, September 30,
1993..................... 3,419,643 $34,197 $4,945,931 $1,828,986 $ -- (104,000) $(209,777) $ 6,599,337
Net income............... -- -- -- 370,336 -- -- -- 370,336
--------- ------- ---------- ---------- -------- -------- --------- ----------
Balance, September 30,
1994..................... 3,419,643 34,197 4,945,931 2,199,322 -- (104,000) (209,777) 6,969,673
Net income............... -- -- -- 734,295 -- -- -- 734,295
Translation adjustment... -- -- -- -- 3,937 -- -- 3,937
--------- ------- ---------- ---------- -------- -------- --------- ----------
Balance, September 30,
1995..................... 3,419,643 34,197 4,945,931 2,933,617 3,937 (104,000) (209,777) 7,707,905
(UNAUDITED)
Net income............... -- -- -- 40,539 -- -- -- 40,539
Translation adjustment... -- -- -- -- (11,604) -- -- (11,604)
--------- ------- ---------- ---------- -------- -------- --------- ----------
Balance, December 31,
1995..................... 3,419,643 $34,197 $4,945,931 $2,974,156 $ (7,667) (104,000) $(209,777) $ 7,736,840
========= ======= ========== ========== ======== ======== ========= ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-21
<PAGE> 73
ORIEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business and Acquisition
Oriel Corporation (the "Company") designs, manufactures, and distributes
precision products, light sources, monochromators, detection systems, and optics
for use in laser and medical research.
On September 27, 1994, the Company increased its holdings in Andor
Technology Limited ("Andor") from 25% to 51.25% (the "Acquisition") through the
purchase of newly issued shares of Andor for a commitment to fund $300,000 over
the following 27 months. As of September 30, 1995, $100,000 had been paid
related to this commitment. The Acquisition was accounted for as a purchase with
the excess of the acquisition cost over the fair value of Andor's net assets
($131,303) assigned to goodwill. Goodwill will be amortized over an estimated
ten year life.
The Company purchases one of its product lines from Andor. During fiscal
1994 and 1995, the Company purchased approximately $539,000 and $1,458,000,
respectively, from Andor.
Accounting Pronouncements
In December 1991, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures About
Fair Value of Financial Instruments," which extends existing fair value
disclosure practices for some instruments by requiring all entities to disclose
the fair value of financial instruments, both assets and liabilities recognized
and not recognized in the statement of financial position, for which it is
practicable to estimate fair value. If estimating fair value is not practicable,
this Statement requires disclosure of descriptive information pertinent to
estimating the value of a financial instrument. This Statement is effective for
fiscal 1996. There will be no impact on the Company's financial position or
results of operations as the standard relates to footnote disclosure only.
In March 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of," which
established criteria for the recognition and measurement of impairment loss
associated with long-lived assets. The Company will be required to adopt this
standard in fiscal 1997. The Company has yet to consider adoption of this
standard, however, it is not expected to have a material impact on the Company's
financial position or results of operations.
In October 1995, the FASB also issued SFAS No. 123, "Accounting for
Stock-Based Compensation," which established financial accounting and reporting
standards for stock-based employee compensation plans. Companies are encouraged,
rather than required, to adopt a new method that accounts for stock compensation
awards based on their fair value using an option pricing model. Companies that
do not adopt this new method will have to make pro forma disclosures of net
income as if the fair value based method of accounting required by SFAS No. 123
had been applied. The pro forma disclosures are required for fiscal 1996. The
fair value-based method of accounting, if adopted by the Company, is effective
for fiscal year 1997. The Company does not expect this standard to have a
material impact on the Company's financial position or results of operations
because the Company intends to only make pro forma disclosures to comply with
this pronouncement.
Consolidation
The accompanying consolidated financial statements include the accounts of
the Company, Oriel Foreign Sales Corporation, and Andor (since the Acquisition).
All significant intercompany accounts and transactions have been eliminated in
consolidation. The minority interest reflected in the consolidated balance sheet
represents the 48.75% of Andor which is owned by third parties.
Cash Equivalents
The Company considers all instruments with a maturity of three months or
less to be cash equivalents.
F-22
<PAGE> 74
ORIEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Inventories
The Company values its inventory at the lower of cost, using the first-in,
first-out method ("FIFO"), or market.
Property and Equipment
Property and equipment is recorded at cost and is depreciated, using the
straight-line method, over estimated useful lives of 3 to 8 years or, in the
case of leasehold improvements, over the shorter of the assets' useful life or
the term of the related lease.
Investments
The Company maintains a 10% ownership interest in LOT Holdings GmbH
("LOT"). The carrying amount of the investment, which is being accounted for
under the cost method, is $500,000 in the accompanying balance sheet.
The Company has entered into a distribution agreement with LOT which allows
LOT to be the Company's primary distributor in certain parts of Europe. Sales to
LOT for fiscal 1994 and 1995 were approximately $1,989,000 and $2,963,000,
respectively. The Company pays commissions to LOT on these sales and had
commissions payable of approximately $2,000 as of September 30, 1995, which is
included in the accompanying consolidated balance sheet. As of September 30,
1995, the Company had approximately $549,000 due from LOT for purchases from the
Company which are included in accounts receivable in the accompanying
consolidated balance sheet.
Catalogue Costs
Costs associated with the Company's sales catalogues are deferred and
amortized on a straight line basis over the estimated useful life of the
catalogues of between one and one-and-a-half years.
Benefits Payable
The Company provides certain medical and dental benefits for two previous
employees and their dependents. The estimated cost of such benefits is accrued
and reflected as deferred benefits payable in the accompanying consolidated
balance sheet.
Concentrations of Credit Risk
Financial instruments which potentially subject the Company to
concentration of credit risk consist principally of temporary cash investments
and trade receivables. The Company holds principally all of its cash and cash
equivalents in one bank. Other than amounts due from LOT described above,
concentrations of credit risk with respect to trade receivables are limited due
to the large number of customers comprising the Company's customer base, which
primarily includes numerous universities and research and development ventures
in countries worldwide. The Company requires certain international customers to
furnish letters of credit. Management does not believe significant
concentrations of credit risk other than those due from LOT existed at September
30, 1995.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the
F-23
<PAGE> 75
ORIEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Interim Financial Statements
The financial statements for the three-month periods ended December 31,
1994, and 1995 are unaudited but, in the opinion of management, reflect all
adjustments of a normal recurring nature necessary for a fair presentation of
results for these interim periods. The results of operations for the three month
period ended December 31, 1995, are not necessarily indicative of the results to
be expected for the entire year.
2. COMMON STOCK SUBJECT TO ISSUANCE
In connection with the 1994 acquisition of Andor stock (see Note 1), the
Company entered into an agreement with Andor whereby the remaining 48.25% of
outstanding stock of Andor would be converted into common stock of the Company.
The percentage of outstanding Company stock to be issued to Andor stockholders
in connection with this agreement would be based on the 1997 net revenue of
Andor, as defined, and would range from 10% to 60% based on net sales of
$3,000,000 to $15,000,000, respectively. This agreement was cancelled in
connection with the acquisition of the Company described in Note 8.
3. LINE OF CREDIT
In January 1995, the Company renegotiated its line of credit. Available
borrowings under the new agreement are limited to the lesser of (a) $2,000,000
or (b) 80% of eligible accounts receivable and the lesser of 25% of the value of
eligible inventory up to a maximum of $700,000. All outstanding borrowings bear
interest at prime. This line of credit expires on February 28, 1997. The use of
proceeds is for working capital purposes.
The Company is prohibited from merging or consolidating with or into any
other company nor can the Company purchase a material portion of any other
company. Since the Company has signed a letter of intent to be acquired by
another business and intends on completing this sale or another sale should this
transaction not be completed (see Note 8), the Company expects to be in default
of this covenant. As such, the outstanding borrowings against this line of
credit have been classified as currently payable in the accompanying balance
sheet.
The loan agreement also contains certain financial covenants which must be
met quarterly. In addition, the line of credit agreement contains a provision
whereby outstanding borrowings can be deemed to be currently due and payable if
the Company experiences a material adverse change, as defined, in its business
operations.
The line of credit is secured by a first priority security interest on all
assets of the Company and all letters of credit. As of September 30, 1995, the
Company had outstanding borrowings of $480,915 against this line of credit.
4. INCOME TAXES
The Company follows SFAS No. 109, "Accounting for Income Taxes," under
which the Company uses an asset and liability approach to recognize deferred tax
assets and liabilities for the future tax consequences of items that have
already been recognized in its financial statements and tax returns.
F-24
<PAGE> 76
ORIEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The provision for income taxes for fiscal 1994 and 1995 is as follows:
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Current:
Federal.............................................. $363,000 $297,000
State................................................ 60,000 35,000
-------- --------
423,000 332,000
Deferred:
Federal.............................................. (50,000) (3,000)
State................................................ (5,000) (1,000)
-------- --------
$368,000 $328,000
======== ========
</TABLE>
The provision for income taxes in the accompanying statement of income
differs from the provision calculated by applying the statutory federal income
tax rate of 34% to income before provision for income taxes due to the
following:
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Provision for income taxes at statutory rate................... $251,000 $382,000
Increases (decreases) resulting from:
State income taxes, net of federal benefit................... 36,000 23,000
Foreign tax rate differential................................ 19,000 11,000
Tax benefit of foreign sales corporation..................... (6,000) (20,000)
Other reserves and credits................................... 32,000 (78,000)
Amortization of cost in excess of net assets of acquired
companies................................................. 32,000 --
Nondeductible expenses....................................... 4,000 10,000
-------- --------
$368,000 $328,000
======== ========
</TABLE>
The appropriate tax effect of the temporary difference giving rise to the
Company's deferred tax assets and liabilities at September 30, 1995, result
primarily from allowances for doubtful accounts, inventory items, accrued
warranty, accrued vacation, deferred compensation, and different book and tax
treatments of depreciation. As of September 30, 1995, the Company had aggregate
deferred tax assets of $299,000, which was partially offset by a valuation
allowance of $27,000, and aggregate deferred tax liabilities of $78,000.
The Company also has foreign tax credit carryforwards of approximately
$19,000 at September 30, 1995, which are available to reduce future taxes on
foreign source income, if any, and which expire through 1996.
5. STOCK OPTION PLAN
The Company has established an employee Stock Option Plan which authorizes
the granting of options to purchase up to 450,000 shares of the Company's common
stock. Options are granted for a term of ten years, and are generally
exercisable at the rate of 2% per month commencing at the date of grant.
Additionally, a resolution was passed whereby all issued options are exercisable
in conjunction with any sale of the Company (see Note 8).
F-25
<PAGE> 77
ORIEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Information with respect to outstanding stock options is as follows:
<TABLE>
<CAPTION>
EXERCISE
SHARES PRICE
------- ----------
<S> <C> <C>
September 30, 1993.................................... 222,500 $2.00-2.12
Canceled............................................ (12,500) 2.00-2.12
------- ----------
September 30, 1994.................................... 210,000 2.00-2.12
Issued.............................................. 148,000 2.00-2.12
------- ----------
September 30, 1995.................................... 358,000 $2.00-2.12
======= ==========
</TABLE>
6. PROFIT SHARING PLAN
The Company has a profit sharing plan which was established for all
full-time U.S. employees and which provides for discretionary Company
contributions. Included in the accompanying statements of operations is
approximately $120,000 and $125,000 related to the Company's discretionary
contributions for fiscal 1994 and 1995, respectively.
7. COMMITMENTS
The Company leases offices and plant and equipment for various periods
through 2000. The approximate minimum annual rental commitments for the next
five years and thereafter are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
----------------------------------------------------------
<S> <C>
1996...................................................... $333,000
1997...................................................... 317,000
1998...................................................... 118,000
1999...................................................... 16,000
2000...................................................... 16,000
--------
$800,000
========
</TABLE>
Rent expense for fiscal 1994 and 1995 was approximately $290,000 and
$342,000, respectively.
8. SUBSEQUENT EVENT
On February 20, 1996, all of the outstanding capital stock of the Company
was acquired by Thermo Vision Corporation, a wholly owned subsidiary of Thermo
Optek Corporation, for $11,798,000 in cash.
F-26
<PAGE> 78
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
of Corion Corporation:
We have audited the accompanying balance sheet of Corion Corporation as of
December 31, 1995, and the related statements of operations, changes in
stockholders' equity, and cash flows for 1995 and the period from January 1,
1996, through February 29, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Corion Corporation as of
December 31, 1995, and its results of operations and cash flows for 1995 and the
period from January 1, 1996, through February 29, 1996, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
November 12, 1996
F-27
<PAGE> 79
CORION CORPORATION
STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JANUARY 1, 1996
THROUGH
1995 FEBRUARY 29, 1996
------- -----------------
<S> <C> <C>
Net sales (Note 9)................................................... $ 8,546 $ 968
Cost of goods sold................................................... (6,679) (506)
------- -----
Gross profit....................................................... 1,867 462
Selling, general, and administrative expense......................... 1,751 308
Research and development expense..................................... 415 83
------- -----
Income (loss) from operations...................................... (299) 71
Interest Income...................................................... 7 3
Interest Expense..................................................... (319) (46)
Other Expense, Net................................................... (34) --
------- -----
Net Income (Loss).................................................... $ (645) $ 28
======= =====
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-28
<PAGE> 80
CORION CORPORATION
BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
1995
-------
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents......................................................... $ 479
Trade accounts receivable, less allowance for doubtful accounts of $50............ 1,157
Other receivables................................................................. 101
Inventories....................................................................... 1,204
Other current assets.............................................................. 164
------
3,105
------
Property and Equipment.............................................................. 5,216
Less: Accumulated depreciation.................................................... 3,714
------
1,502
------
$ 4,607
======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Note payable...................................................................... $ 1,616
Accounts payable.................................................................. 403
Accrued expenses.................................................................. 366
------
2,385
------
Long-term Note Payable.............................................................. 1,000
------
Commitments (Notes 5 and 7)
Stockholders' Equity (Notes 6 and 7):
Class A voting common stock, $1.00 par value, 1,000,000 shares authorized; 494,570
shares issued and outstanding.................................................. 495
Class B nonvoting common stock, $.10 par value, 3,000,000 shares authorized;
1,483,710 shares issued and outstanding........................................ 148
Retained earnings................................................................. 579
------
1,222
------
$ 4,607
======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-29
<PAGE> 81
CORION CORPORATION
STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JANUARY 1, 1996
THROUGH
1995 FEBRUARY 29, 1996
----- -----------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss)................................................... $(645) $ 28
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization.................................... 369 60
Provision for doubtful accounts.................................. 52 --
Loss on sale of property and equipment........................... 2 --
Changes in assets and liabilities:
Trade accounts receivable...................................... 419 407
Inventories.................................................... 894 (168)
Other current assets........................................... 20 (15)
Accounts payable............................................... (438) (101)
Accrued expenses............................................... 98 (113)
----- -----
Net cash provided by operating activities................... 771 98
----- -----
Cash Flows from Investing Activities:
Additions to property and equipment................................. (40) (8)
Proceeds from sale of property and equipment........................ 1 --
----- -----
Net cash used in investing activities....................... (39) (8)
----- -----
Cash Flows from Financing Activities:
Repayments of notes payable......................................... (480) (89)
----- -----
Net cash used in financing activities....................... (480) (89)
----- -----
Net Increase in Cash and Cash Equivalents............................. 252 1
Cash and Cash Equivalents at Beginning of Period...................... 227 479
----- -----
Cash and Cash Equivalents at End of Period............................ $ 479 $ 480
===== =====
Supplemental Disclosure:
Cash paid during the period for:
Interest......................................................... $ 310 $ 59
===== =====
Income taxes..................................................... $ 9 $ --
===== =====
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-30
<PAGE> 82
CORION CORPORATION
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK TOTAL
------------------- RETAINED STOCKHOLDERS'
CLASS A CLASS B EARNINGS EQUITY
------- ------- -------- -------------
<S> <C> <C> <C> <C>
Balance December 31, 1994........................... $ 495 $ 148 $1,224 $ 1,867
Net loss.......................................... -- -- (645) (645)
---- ---- ------ ------
Balance December 31, 1995........................... 495 148 579 1,222
Net income........................................ -- -- 28 28
---- ---- ------ ------
Balance February 29, 1996........................... $ 495 $ 148 $ 607 $ 1,250
==== ==== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-31
<PAGE> 83
CORION CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Corion Corporation (the "Company") is engaged in the manufacturing and
marketing of optical filters and other coated optical products.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all
short-term investments with an original maturity date of three months or less to
be cash equivalents.
Inventories
Inventories are stated at the lower of cost or market, cost being
determined by the first-in, first-out ("FIFO") method.
Property and Equipment
Property, plant, and equipment are stated at cost. Depreciation is
calculated on the straight-line method over the estimated useful lives of the
assets. Leasehold improvements are amortized on the straight-line method over
the shorter of the lease term or estimated useful life of the asset.
Income Taxes
The Company is an S corporation for federal tax reporting purposes. Under
the applicable S corporation provisions, the Company does not incur federal
income taxes at the corporate level as such taxes are an obligation of the
stockholders. The Company does provide for state income taxes as necessary.
In accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("Statement 109"), deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-32
<PAGE> 84
CORION CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
2. INVENTORIES
Inventories consist of:
<TABLE>
<CAPTION>
1995
--------------
(IN THOUSANDS)
<S> <C>
Raw materials.................................................. $ 182
Work in process................................................ 626
Finished goods................................................. 396
-----
$1,204
=====
</TABLE>
3. PROPERTY AND EQUIPMENT
Property and equipment consists of:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIVES
1995 ------------
--------------
(IN THOUSANDS)
<S> <C> <C>
Machinery and equipment............................ $4,860 4-12 years
Furniture and fixtures............................. 152 5 years
Leasehold improvements............................. 204 4 years
------
$5,216
======
</TABLE>
4. NOTES PAYABLE
Notes payable consists of the following:
<TABLE>
<CAPTION>
1995
--------------
(IN THOUSANDS)
<S> <C>
Note payable to bank with interest at the corporate base rate plus 1%
(9.50% at December 31, 1995), secured by all assets of the Company... $1,616
Subordinated notes payable to stockholders, interest at 15%, payable
semiannually, principal payable in full on January 1, 2002........... 1,000
------
Total notes payable............................................... 2,616
Less currently payable................................................. 1,616
------
Long-term notes payable........................................... $1,000
======
</TABLE>
The $1,616,000 note payable, which is contractually based on monthly
payments of principal and interest, requires the maintenance of certain minimum
levels of working capital and net worth and includes other covenants which,
among other items, restrict the Company's ability to borrow, pay dividends, and
make investments. At February 29, 1996, the Company was not in compliance with
certain of such covenants and had not obtained waivers from the lending bank.
However, this note was repaid in connection with the February 29, 1996, sale of
substantially all of the assets and certain liabilities of the Company, as
described in Note 10. Accordingly, this note payable is classified as a current
liability in the accompanying balance sheet.
5. LEASE COMMITMENTS
The Company leases its building from a trust, the primary beneficiaries of
which include certain principal stockholders and officers of the Company. The
building is leased under a rental agreement which expires on November 1, 1999.
The agreement provides for adjustments upwards on certain dates by a factor
equal to the change in the Consumer Price Index from August 1, 1984, to each of
the adjustment dates. The Company also
F-33
<PAGE> 85
CORION CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
leases vehicles and office equipment under leases expiring at various dates
through February 1998. Minimum lease commitments under all operating leases are
as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1996................................................... $ 283
1997................................................... 283
1998................................................... 278
1999................................................... 230
------
Total........................................ $1,074
======
</TABLE>
Rent expense under operating leases amounted to $305,000 and $50,000 for
1995 and the period from January 1, 1996, through February 29, 1996,
respectively. Of these amounts, approximately $271,000 and $45,000 was paid to
the trust in 1995 and the period from January 1, 1996, through February 29,
1996, respectively.
6. STOCKHOLDERS' EQUITY
Stock Option Plan
On November 9, 1989, the board of directors approved the 1989 Stock Option
Plan (the "Plan"), which provides that key employees may be granted nonqualified
stock options, enabling them to purchase shares of the Company's stock at a
price not less than 80% of the fair market value of the stock on the date of
grant. Subsequently, on May 20, 1992, and on October 27, 1993, the board amended
the Plan to increase the total number of shares which may be issued under the
Plan to 16,500 shares of Class A common stock and 49,500 shares of Class B
common stock, and to allow the administrative committee to determine at the time
of grant to make the options exercisable over various periods from the date of
grant including immediately upon the date of grant. A summary of the Company's
stock option information as of December 31, 1995, is as follows:
<TABLE>
<CAPTION>
CLASS OF NUMBER OF RANGE OF OPTION
COMMON STOCK SHARES PRICES PER SHARE
------------ --------- ----------------
<S> <C> <C> <C>
Outstanding............................. A 7,500 $ .82 - 1.58
Exercisable............................. A 7,500 .82 - 1.58
Outstanding............................. B 36,500 .78 - 1.58
Exercisable............................. B 22,500 .78 - 1.58
</TABLE>
Data concerning outstanding and exercisable options as of February 29,
1996, is not materially different from the data presented for December 31, 1995.
7. COMMON STOCK PURCHASE AGREEMENTS
The Company has entered into stock purchase agreements with various
officers of the Company which state that in the event of the officer's death,
the Company will purchase all outstanding shares of common stock owned by the
officer tendered by his legal representative. The purchase price has been
established at 1.075 times the adjusted net book value of such shares as shown
on the balance sheet of the Company as of the last day of the calendar quarter
immediately preceding the individual's death.
8. PROFIT-SHARING AND SAVINGS PLAN
The Company has a profit-sharing and savings plan covering substantially
all employees who have met eligibility requirements. The Company may contribute
any amount as determined by the board of directors under the profit-sharing
plan. In addition, to encourage employee saving, the Company had adopted a
practice of matching employee contributions up to $400 per plan year. Total
profit-sharing plan expenses, including
F-34
<PAGE> 86
CORION CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
administrative expenses and matching and discretionary grants for 1995 and the
period from January 1, 1996, through February 29, 1996, were $29,000 and $5,000,
respectively.
9. SIGNIFICANT CUSTOMERS
Net sales from government related contracts were approximately 33% of total
net sales in 1995 and were less than 10% of total net sales in the period from
January 1, 1996, through February 29, 1996. In addition, one commercial customer
accounted for approximately 11% of total net sales in the period from January 1,
1996, through February 29, 1996.
10. SUBSEQUENT EVENT
On February 29, 1996, the Company was sold to Thermo Vision Corporation.
F-35
<PAGE> 87
THERMO VISION CORPORATION
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 28, 1996
(UNAUDITED)
In February 1996, Thermo Vision Corporation ("the Company") acquired Oriel
Corporation ("Oriel"), a manufacturer and distributor of photonics components
and instruments, for $11.8 million in cash, and Corion Corporation ("Corion"), a
manufacturer of commercial optical filters, for $5.1 million in cash. These
acquisitions have been accounted for using the purchase method of accounting,
and their results of operations have been included in the accompanying financial
statements from the respective dates of acquisition.
The following unaudited pro forma combined condensed statement of income
sets forth the results of operations for the year ended December 28, 1996, as if
the acquisitions of Oriel and Corion had occurred on January 1, 1996. Oriel and
Corion's historical statements of income represent their results for the period
from January 1, 1996, through February 20, 1996, and February 29, 1996, the
respective dates of acquisition by the Company. Oriel's historical statement of
income for the period from January 1, 1996, to February 20, 1996, includes
$581,000 of nonrecurring compensation costs incurred in connection with its
acquisition by the Company. The pro forma results of operations are not
necessarily indicative of future operations or the actual results that would
have occurred had the acquisitions of Oriel and Corion been made on January 1,
1996. This statement should be read in conjunction with the accompanying notes
and the respective historical financial statements and related notes of the
Company, Oriel, and Corion appearing elsewhere in this Information Statement.
<TABLE>
<CAPTION>
HISTORICAL
------------------------------ PRO FORMA
THERMO -------------------------
VISION ORIEL CORION ADJUSTMENTS COMBINED
------- ------- ------ ------------ --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Revenues................................ $30,434 $ 2,538 $968 $ -- $33,940
------- ------- ---- ---- ------
Costs and Operating Expenses:
Cost of revenues...................... 17,066 2,056 506 -- 19,628
Selling, general, and administrative
expenses........................... 7,402 1,667 308 63 9,440
Research and development expenses..... 3,499 459 83 -- 4,041
------- ------- ---- ---- ------
27,967 4,182 897 63 33,109
------- ------- ---- ---- ------
Operating Income (Loss)................. 2,467 (1,644) 71 (63) 831
Interest Income......................... -- -- 3 -- 3
Interest Expense........................ (44) (5) (46) 46 (49)
Other Expense........................... -- (32) -- -- (32)
------- ------- ---- ---- ------
Income (Loss) Before Provision (Benefit)
for Income Taxes...................... 2,423 (1,681) 28 (17) 753
Provision (Benefit) for Income Taxes.... 1,005 (602) -- 12 415
------- ------- ---- ---- ------
Net Income (Loss)....................... $ 1,418 $(1,079) $ 28 $(29) $ 338
======= ======= ==== ==== ======
Earnings per Share...................... $ .21 $ .05
======= ======
Weighted Average Shares................. 6,784 6,784
======= ======
</TABLE>
F-36
<PAGE> 88
THERMO VISION CORPORATION
NOTES TO PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(UNAUDITED)
NOTE 1 -- PRO FORMA ADJUSTMENTS TO PRO FORMA COMBINED CONDENSED STATEMENT OF
INCOME FOR THE YEAR ENDED DECEMBER 28, 1996 (IN THOUSANDS, EXCEPT IN
TEXT)
<TABLE>
<CAPTION>
DEBIT
(CREDIT)
--------
<S> <C>
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Service fee of 1.0% of the revenues of Oriel and Corion for services provided under
a services agreement between the Company and Thermo Electron...................... $ 35
Amortization over 40 years of $4,736,000 and $2,056,000 of "Cost in excess of net
assets of acquired companies" created by the acquisitions of Oriel and Corion,
respectively...................................................................... 28
----
63
----
INTEREST EXPENSE
Reduction in Corion interest expense incurred on notes payable to related parties
that were not purchased by the Company............................................ (46)
----
PROVISION FOR INCOME TAXES
Income tax expense on earnings of Corion calculated at the Company's statutory
income tax rate of 40%............................................................ 11
Income tax benefit associated with the adjustments above (excluding amortization of
cost in excess of net assets of Oriel), calculated at the Company's statutory
income tax rate of 40%............................................................ 1
----
12
----
</TABLE>
F-37
<PAGE> 89
ANNEX A
SAMPLE FORM OF INFORMATION STATEMENT
TO BE PROVIDED TO INTERNAL REVENUE SERVICE BY SHAREHOLDERS
Note: Attachment to 1997 federal income tax return of shareholders
Statement of shareholders receiving a distribution of stock in Thermo
Vision Corporation (a controlled corporation), pursuant to Treas. Reg. sec.
1.355-5(b).
1. The undersigned, a shareholder owning shares of Thermo Optek
Corporation as of , 1997, received a distribution of stock in a
controlled corporation that qualifies under sec. 355 pursuant to a private
letter ruling received by Thermo Optek Corporation from the Internal Revenue
Service.
2. The name and addresses of the corporations involved are:
Thermo Optek Corporation
8E Forge Parkway
Franklin, Massachusetts 02038 (Distributing Corporation)
Thermo Vision Corporation
8E Forge Parkway
Franklin, Massachusetts 02038 (Controlled Corporation)
3. No stock or securities in Thermo Optek Corporation were surrendered by
the undersigned.
4. shares of Thermo Vision Corporation were received
constituting only common shares in such corporation.
5. No cash or other property was received by the undersigned in connection
with the distribution except for $ representing a cash payment in lieu
of fractional shares.
Shareholder
--------------------------------------
SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISORS AS TO THE SPECIFIC TAX
CONSEQUENCES OF THE DISTRIBUTION UPON THEM.
A-1
<PAGE> 90
II. INFORMATION NOT INCLUDED IN INFORMATION STATEMENT
ITEM 15. FINANCIAL STATEMENT SCHEDULES AND EXHIBITS
(a) Financial Statement Schedules
Financial Statement Schedule as of December 28, 1996, and the Report of
Independent Public Accountants on such schedule are included in this
Registration Statement. All other schedules are omitted because they
are not applicable or are not required under Regulation S-X.
(b) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- ------------------------------------------------------------------------------------
<C> <S>
2.1 Form of Plan and Agreement of Distribution between Thermo Optek Corporation
("Optek") and the Registrant.
2.2 Asset Purchase Agreement dated as of January 23, 1996, by and between the Registrant
and Corion Corporation. Pursuant to Item 601(b)(2) of Regulation S-K, schedules to
this Agreement have been omitted. The Registrant hereby undertakes to furnish
supplementally a copy of such schedules to the Commission upon request.
2.3 Purchase Agreement dated as of February 7, 1996, by and between the Registrant and
the shareholders and optionholders of Oriel Corporation as set forth therein.
Pursuant to Item 601(b)(2) of Regulation S-K, schedules to this Agreement have been
omitted. The Registrant hereby undertakes to furnish supplementally a copy of such
schedules to the Commission upon request.
3.1 Amended and Restated Certificate of Incorporation of the Registrant.
3.2 Form of Certificate of Amendment to Amended and Restated Certificate of
Incorporation of the Registrant.
3.3 Bylaws of the Registrant.
4.1 Specimen Common Stock Certificate of the Registrant.
10.1 Form of Corporate Services Agreement between Thermo Electron Corporation ("Thermo
Electron") and the Registrant.
10.2 Thermo Electron Corporate Charter, as amended and restated, effective January 3,
1993 (filed as Exhibit 10.1 to Thermo Electron's Annual Report on Form 10-K for the
fiscal year ended January 3, 1993 [File No. 1-8002] and incorporated herein by
reference).
10.3 Form of Tax Allocation Agreement between Thermo Electron and the Registrant.
10.4 Form of Master Repurchase Agreement between Thermo Electron and the Registrant.
10.5 Form of Master Guarantee Reimbursement Agreement between Thermo Electron and the
Registrant.
10.6 Form of Master Guarantee Reimbursement Agreement between Thermo Instrument Systems
Inc. ("Thermo Instrument") and the Registrant.
10.7 Form of Tax Matters Agreement between Optek and the Registrant.
10.8 CID Contract Research and Development Agreement dated October 1994 between Optek and
the Registrant.
10.9 Form of CID Supply Agreement between Optek and the Registrant.
10.10 Form of Equity Incentive Plan of the Registrant.
10.11 Form of Deferred Compensation Plan for Directors of the Registrant.
10.12 Indemnification Agreement effective as of December 31, 1995, between the Registrant
and Thermo Instrument.
10.13 Form of Indemnification Agreement for Officers and Directors of the Registrant.
10.14 Sublease Agreement dated as of September 1, 1997, between the Registrant and Thermo
Instrument.
10.15 Sublease Agreement effective as of February 1, 1984, between Oriel Instruments
Corporation and Osbrook Associates Limited Partnership, as modified.
10.16 $3.8 Million Principal Amount Promissory Note due July 13, 2000, issued by the
Registrant to Thermo Electron.
</TABLE>
II-1
<PAGE> 91
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- ------------------------------------------------------------------------------------
<C> <S>
10.17 $3.6 Million Principal Amount Promissory Note and $347,438 Principal Amount
Promissory Note, both due February 18, 2000, issued by the Registrant to Optek.
10.18 Optek Equity Incentive Plan (filed as Exhibit 10.6 to Optek's Registration Statement
on Form S-1 [File No. 333-03630], and incorporated herein by reference).
10.19 Thermo Instrument -- ThermoSpectra Corporation Nonqualified Stock Option Plan (filed
as Exhibit 10.51 to Thermo Instrument's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994, [File No. 1-9786] and incorporated herein be
reference).
10.20 Thermo Instrument -- ThermoQuest Corporation Nonqualified Stock Option Plan (filed
as Exhibit 10.65 to Thermo Cardiosystems' Annual Report on Form 10-K for the fiscal
year ended December 30, 1995, [File No. 1-10114] and incorporated herein by
reference).
10.21 Agreement of Lease dated as of October 6, 1997, between Oriel Instruments
Corporation and 1608 Development Limited Partnership.
21.1 Subsidiaries of the Registrant.
27.1 Financial Data Schedule.
</TABLE>
II-2
<PAGE> 92
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this Amendment No. 1 to Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized.
THERMO VISION CORPORATION
By: /s/ KRISTINE S. LANGDON
------------------------------------
Name: Kristine S. Langdon
Title: President and Chief Executive
Officer
Date: November 17, 1997
II-3
<PAGE> 93
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Thermo Vision Corporation:
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of Thermo Vision Corporation included in
Thermo Vision Corporation's Form 10 and have issued our report thereon dated May
19, 1997. Our audits were made for the purpose of forming an opinion on the
basic consolidated financial statements taken as a whole. Thermo Vision
Corporation's schedule of Valuation and Qualifying Accounts, included in
Schedule II on page S-2, is the responsibility of the Company's management and
is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic consolidated financial
statements. This schedule has been subjected to the auditing procedures applied
in the audits of the basic consolidated financial statements and, in our
opinion, fairly states, in all material respects, the financial data required to
be set forth therein in relation to the basic consolidated financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
May 19, 1997
S-1
<PAGE> 94
SCHEDULE II
THERMO VISION CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT PROVISION BALANCE
BEGINNING CHARGED TO ACCOUNTS AT END
OF YEAR EXPENSE WRITTEN OFF OTHER(a) OF YEAR
---------- ---------- ----------- -------- -------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1994
Allowance for Doubtful Accounts...... $ -- $ 10 $ -- $ -- $ 10
YEAR ENDED DECEMBER 30, 1995
Allowance for Doubtful Accounts...... $ 10 $ 14 $ -- $ -- $ 24
YEAR ENDED DECEMBER 28, 1996
Allowance for Doubtful Accounts...... $ 24 $174 $ (82) $150 $ 266
</TABLE>
- ---------------
(a) Includes allowance of businesses acquired during the year as described in
Note 2 to Consolidated Financial Statements.
S-2
<PAGE> 95
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
- ------- -------------------------------------------------------------------------- ------------
<C> <S> <C>
2.1 Form of Plan and Agreement of Distribution between Thermo Optek
Corporation ("Optek") and the Registrant. ................................
2.2 Asset Purchase Agreement dated as of January 23, 1996, by and between the
Registrant and Corion Corporation. Pursuant to Item 601(b)(2) of
Regulation S-K, schedules to this Agreement have been omitted. The
Registrant hereby undertakes to furnish supplementally a copy of such
schedules to the Commission upon request. ................................
2.3 Purchase Agreement dated as of February 7, 1996, by and between the
Registrant and the shareholders and optionholders of Oriel Corporation as
set forth therein. Pursuant to Item 601(b)(2) of Regulation S-K, schedules
to this Agreement have been omitted. The Registrant hereby undertakes to
furnish supplementally a copy of such schedules to the Commission upon
request. .................................................................
3.1 Amended and Restated Certificate of Incorporation of the Registrant. .....
3.2 Form of Certificate of Amendment to Amended and Restated Certificate of
Incorporation of the Registrant. .........................................
3.3 Bylaws of the Registrant. ................................................
4.1 Specimen Common Stock Certificate of the Registrant. .....................
10.1 Form of Corporate Services Agreement between Thermo Electron Corporation
("Thermo Electron") and the Registrant. ..................................
10.2 Thermo Electron Corporate Charter, as amended and restated, effective
January 3, 1993 (filed as Exhibit 10.1 to Thermo Electron's Annual Report
on Form 10-K for the fiscal year ended January 3, 1993 [File No. 1-8002]
and incorporated herein by reference). ...................................
10.3 Form of Tax Allocation Agreement between Thermo Electron and the
Registrant. ..............................................................
10.4 Form of Master Repurchase Agreement between Thermo Electron and the
Registrant. ..............................................................
10.5 Form of Master Guarantee Reimbursement Agreement between Thermo Electron
and the Registrant. ......................................................
10.6 Form of Master Guarantee Reimbursement Agreement between Thermo Instrument
Systems Inc. ("Thermo Instrument") and the Registrant. ...................
10.7 Form of Tax Matters Agreement between Optek and the Registrant. ..........
10.8 CID Contract Research and Development Agreement dated October 1994 between
Optek and the Registrant. ................................................
10.9 Form of CID Supply Agreement between Optek and the Registrant. ...........
10.10 Form of Equity Incentive Plan of the Registrant. .........................
10.11 Form of Deferred Compensation Plan for Directors of the Registrant. ......
10.12 Indemnification Agreement effective as of December 31, 1995, between the
Registrant and Thermo Instrument. ........................................
10.13 Form of Indemnification Agreement for Officers and Directors of the
Registrant. ..............................................................
10.14 Sublease Agreement dated as of September 1, 1997, between the Registrant
and Thermo Instrument. ...................................................
10.15 Sublease Agreement effective as of February 1, 1984, between Oriel
Instruments Corporation and Osbrook Associates Limited Partnership, as
modified. ................................................................
10.16 $3.8 Million Principal Amount Promissory Note due July 13, 2000, issued by
the Registrant to Thermo Electron. .......................................
10.17 $3.6 Million Principal Amount Promissory Note and $347,438 Principal
Amount Promissory Note, both due February 18, 2000, issued by the
Registrant to Optek. .....................................................
10.18 Optek Equity Incentive Plan (filed as Exhibit 10.6 to Optek's Registration
Statement on Form S-1 [File No. 333-03630], and incorporated herein by
reference). ..............................................................
</TABLE>
<PAGE> 96
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
- ------- -------------------------------------------------------------------------- ------------
<C> <S> <C>
10.19 Thermo Instrument -- ThermoSpectra Corporation Nonqualified Stock Option
Plan (filed as Exhibit 10.51 to Thermo Instrument's Annual Report on Form
10-K for the fiscal year ended December 31, 1994, [File No. 1-9786] and
incorporated herein be reference). .......................................
10.20 Thermo Instrument -- ThermoQuest Corporation Nonqualified Stock Option
Plan (filed as Exhibit 10.65 to Thermo Cardiosystems' Annual Report on
Form 10-K for the fiscal year ended December 30, 1995, [File No. 1-10114]
and incorporated herein by reference). ...................................
10.21 Agreement of Lease dated as of October 6, 1997, between Oriel Instruments
Corporation and 1608 Development Limited Partnership. ....................
21.1 Subsidiaries of the Registrant. ..........................................
27.1 Financial Data Schedule. .................................................
</TABLE>
<PAGE> 1
Exhibit 2.1
PLAN AND AGREEMENT OF DISTRIBUTION
THIS PLAN AND AGREEMENT OF DISTRIBUTION (the "Agreement") is made as of the
_____ day of __________, 1997, between Thermo Optek Corporation, Inc., a
Delaware corporation ("Optek"), and Thermo Vision Corporation, a Delaware
corporation ("Vision").
RECITALS
--------
WHEREAS, Optek is the holder of approximately 6,783,800 shares of Common
Stock, $.01 par value per share, of Vision ("Vision Common Stock"), comprising
100% of the issued and outstanding shares of Vision Common Stock; and
WHEREAS, Optek has contributed certain technology and certain assets to
Vision and intends to make other arrangements to establish Vision as a separate
enterprise for the purpose of engaging in the photonics business, including the
design, manufacture and sale of optical components, imaging sensors and systems,
lasers, optically based instruments, optoelectronics and fiber optics; and
WHEREAS, it is the intention of Optek to distribute all of the issued and
outstanding shares of Vision Common Stock held by Optek to the stockholders of
Optek (the "Distribution"); and
WHEREAS, Optek and Vision have determined that it is necessary and
desirable to set forth the principal corporate transactions required to effect
the Distribution and to set forth other agreements that will govern certain
other matters following such Distribution.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
made herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 GENERAL. As used in this Agreement and the Exhibits hereto, the
following terms shall have the following meanings:
ACTION: any action, claim, suit, litigation, arbitration, inquiry,
subpoena, discovery request, proceeding or investigation by or before any court
or grand jury, any governmental or other regulatory or administrative agency or
commission or any arbitration tribunal.
AFFILIATE: with respect to any specified person, a person that, directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, such specified person; provided, however, that
Optek
<PAGE> 2
(and its subsidiaries) shall not be deemed to be Affiliates of Vision (and its
subsidiaries), and vice versa, for purposes of this Agreement.
AGENT: American Stock Transfer & Trust Company, the distribution agent
appointed by Optek to distribute the shares of Vision Common Stock in connection
with the Distribution.
ANCILLARY AGREEMENTS: all of the agreements, instruments, understandings,
assignments or other arrangements entered into in connection with the
transactions contemplated hereby, including, without limitation, the Thermo
Electron Corporate Charter, the Corporate Services Agreement, the Tax Allocation
Agreement, the Master Guarantee Reimbursement Agreements, the Master Repurchase
Agreement, the CID Supply Agreement and the Tax Matters Agreement.
CID: Charge-injection device.
CID SUPPLY AGREEMENT: the agreement between Optek and Vision pursuant to
which Vision has agreed to supply Optek with and Optek has agreed to purchase
from Vision, all of Optek's requirements for CID sensors for use in Optek's
optical spectrometers.
CODE: the Internal Revenue Code of 1986, as amended.
COMMISSION: the Securities and Exchange Commission.
CORPORATE SERVICES AGREEMENT: the agreement between Thermo Electron and
Vision providing for Thermo Electron's provision to Vision of various
administrative services, including certain legal advice and services, risk
management, employee benefit administration, tax advice and preparation of tax
returns, centralized cash management and certain financial and other services.
DISTRIBUTION: as defined in the Recitals.
DISTRIBUTION DATE: the date of effecting the Distribution, as determined by
the Optek Board.
DISTRIBUTION RECORD DATE: the date determined by the Optek Board as of
which the holders of Optek Common Stock and their respective stock holdings
shall be determined for purposes of distributing Vision Common Stock to such
Optek stockholders.
EXCHANGE ACT: the Securities Exchange Act of 1934, as amended.
-2-
<PAGE> 3
FORM 10: the Registration Statement on Form 10 to be filed by Vision with
the Commission to effect the registration of the Vision Common Stock pursuant to
the Exchange Act.
GROUP: the Optek Group or the Vision Group.
INDEMNIFIABLE LOSSES: all losses, Liabilities, damages, claims, demands,
judgments or settlements of any nature or kind, known or unknown, fixed,
accrued, absolute or contingent, liquidated or unliquidated, including all
reasonable costs and expenses (legal, accounting or otherwise as such costs are
incurred) relating thereto, suffered (and not actually reimbursed by insurance
proceeds) by an Indemnitee, including any reasonable costs or expenses of
enforcing any indemnity hereunder.
INDEMNIFYING PARTY: a Person who or which is obligated under this Agreement
to provide indemnification.
INDEMNITEE: a Person who or which may seek indemnification under this
Agreement.
INFORMATION STATEMENT: the Information Statement, constituting a part of
the Form 10, in the form to be distributed to the holders of Optek Common Stock
as of the Distribution Record Date in connection with the Distribution, and as
it may be amended or supplemented subsequent to such dissemination.
LIABILITIES: any and all debts, liabilities and obligations, absolute or
contingent, mature or unmature, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising (unless otherwise specified in
this Agreement), including all costs and expenses relating thereto, and those
debts, liabilities and obligations arising under any law, rule, regulation,
Action, threatened Action, order or consent decree of any governmental entity or
any award of any arbitrator of any kind, and those arising under any contract,
commitment or undertaking.
MASTER GUARANTEE REIMBURSEMENT AGREEMENTS: (i) the agreement between Thermo
Electron and Vision providing that Vision is required to reimburse Thermo
Electron for any costs Thermo Electron incurs in the event that Thermo Electron
is required to pay third parties pursuant to any guarantees Thermo Electron
issues on Vision's behalf and (ii) the agreement between Thermo Instrument and
Vision providing that Vision is required to reimburse Thermo Instrument for any
costs Thermo Instrument incurs in the event that Thermo Instrument is required
to pay Thermo Electron or any third party pursuant to any guarantees Thermo
Instrument issues on Vision's behalf.
MASTER REPURCHASE AGREEMENT: the agreement between Thermo Electron and
Vision pursuant to which Vision in effect lends cash to Thermo Electron, which
-3-
<PAGE> 4
Thermo Electron collateralizes with investments principally consisting of
corporate notes, United States government-agency securities, money market funds,
commercial paper and other marketable securities, in the amount of at least 103%
of such obligation.
OPTEK BOARD: the Board of Directors of Optek.
OPTEK BUSINESS: all of the businesses and operations conducted at any time,
whether prior to, on or after the Distribution Date, by any member of the Optek
Group, other than the Vision Business.
OPTEK COMMON STOCK: the Common Stock, $.01 par value per share, of Optek.
OPTEK GROUP: Optek and the Optek Subsidiaries.
OPTEK INDEMNITIES: Optek, each Affiliate of Optek and each of their
respective Representatives and each of the heirs, executors, successors and
assigns of any of the foregoing.
OPTEK SUBSIDIARIES: all Subsidiaries of Optek, other than Vision and the
Vision Subsidiaries.
PERSON: an individual, a partnership, a joint venture, a corporation, a
limited liability company, a trust, an unincorporated organization or a
government or any department or agency thereof.
REPRESENTATIVE: with respect to any Person, any of such Person's directors,
officers, employees, agents, consultants, advisors, accountants, attorneys and
representatives.
SECURITIES ACT: the Securities Act of 1933, as amended.
SUBSIDIARY: with respect to any specified Person, any corporation or other
legal entity of which such Person or any of its Subsidiaries controls or owns,
directly or indirectly, more than 50% of the stock or other equity interest
entitled to vote on the election of members to the board of directors or similar
governing body; provided, however, that for purposes of this Agreement, Vision
and the Vision Subsidiaries shall not be deemed to be Subsidiaries of Optek or
any of the Optek Subsidiaries.
TAX ALLOCATION AGREEMENT: the agreement between Thermo Electron and Vision
providing the terms under which Vision will be included in Thermo Electron's
consolidated Federal and state income tax returns.
-4-
<PAGE> 5
TAX MATTERS AGREEMENT: the Tax Matters Agreement between Optek and Vision
providing for, among other things, the allocation of certain liabilities with
respect to federal, state and local income taxes and the procedures for filing
returns with respect to such taxes.
THERMO ELECTRON: Thermo Electron Corporation, a Delaware corporation and
the ultimate parent corporation of Optek and Vision.
THERMO ELECTRON CORPORATE CHARTER: the charter defining the relationships,
nature of cooperations and benefits and support to be shared among Thermo
Electron and its subsidiaries.
THIRD-PARTY CLAIM: any claim, suit, arbitration, injury, proceeding or
investigation by or before any court, any governmental or other regulatory or
administrative agency or commission or any arbitration tribunal asserted by a
Person who or which is neither a party hereto nor an Affiliate of a party
hereto.
VISION ASSETS: all of the assets owned by any member of the Vision Group
immediately prior to the Distribution Date, excluding items to be retained by
any member of the Optek Group pursuant to the Ancillary Agreements.
VISION BOARD: the Board of Directors of Vision.
VISION BUSINESS: all of the businesses and operations conducted at any
time, whether prior to, on or after the Distribution Date, by any member of the
Vision Group.
VISION COMMON STOCK: as defined in the Recitals.
VISION GROUP: Vision and the Vision Subsidiaries.
VISION INDEMNITEES: Vision, each Affiliate of Vision and each of their
respective Representatives and each of the heirs, executors, successors and
assigns of any of the foregoing.
VISION SUBSIDIARY: all Subsidiaries of Vision.
-5-
<PAGE> 6
ARTICLE II
ACKNOWLEDGMENT OF MATERIAL FACTS
--------------------------------
2.1 ORGANIZATION. Optek and Vision acknowledge that each is duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with requisite corporate power to own their respective properties and
assets and to carry on their respective businesses as presently conducted or
contemplated. Optek is the owner of all (approximately 6,783,800) of the issued
and outstanding shares of Vision Common Stock.
ARTICLE III
PRELIMINARY ACTION
------------------
3.1 COOPERATION PRIOR TO THE DISTRIBUTION.
--------------------------------------
(a) ANCILLARY AGREEMENTS. Optek and Vision shall use their respective
best efforts to cause, on or before the Distribution Date, the execution and
delivery by Optek and Vision, or their respective Affiliates, of the Ancillary
Agreements and any other agreements, instruments or other documents deemed
necessary or desirable by the applicable parties to establish and govern their
post-Distribution relationships.
(b) FORM 10. Optek and Vision have prepared, and Vision has filed with
the Commission, the Form 10, which includes the Information Statement, setting
forth appropriate disclosure concerning Vision, the Distribution and any other
appropriate matters required to be stated therein. Optek and Vision shall use
their respective reasonable efforts to cause the Form 10 to become effective
under the Exchange Act, and thereafter Optek or its agent shall promptly mail
the Information Statement to all of the appropriate holders of Optek Common
Stock.
(c) LISTING. Optek and Vision shall prepare, and Vision shall file and
pursue, an application to effect the listing of the Vision Common Stock on the
American Stock Exchange.
(d) CHARTER TRANSFER RESTRICTION. Vision shall prepare and file with
the office of the Secretary of State of the State of Delaware an amendment to
Vision's Certificate of Incorporation, as amended (the "Charter Amendment"),
that prohibits the sale, transfer or other disposition of the shares of Vision
Common Stock to be distributed in the Distribution (other than the sale of
fractional shares by the Agent), until the sooner to occur of (i) 60 days
following the pricing of Vision's proposed initial underwritten public offering
of Vision Common Stock (the "IPO") or (ii) March 31, 1998 (the "Charter Transfer
Restriction").
-6-
<PAGE> 7
3.2 CONSENTS. Each party hereto understands and agrees that no party
hereto is, in this Agreement or in any other agreement or document contemplated
by this Agreement or otherwise, representing or warranting in any way that the
obtaining of any consents or approvals, the execution and delivery of any
agreements or the making of any filings or applications contemplated by this
Agreement will satisfy the provisions of any or all applicable agreements or the
requirements of any or all applicable laws or judgments except as expressly
represented, warranted or covenanted herein or in the Ancillary Agreements.
Notwithstanding the foregoing, the parties shall use reasonable efforts to
obtain all consents and approvals, to enter into all agreements and to make all
filings and applications which may be required for the consummation of the
transactions contemplated by this Agreement, including, without limitation, all
applicable regulatory filings or consents under federal or state laws and all
necessary consents, approvals, agreements, filings and applications.
ARTICLE IV
THE DISTRIBUTION
----------------
4.1 THE DISTRIBUTION.
(a) Prior to the Distribution Date, Optek shall deliver to Vision the
certificates for the approximate 6,783,800 shares of Vision Common Stock owned
by Optek, and Vision shall cancel such certificates. In exchange therefor, and
upon receipt from the Agent of a certificate as to the number of shares of Optek
Common Stock outstanding as of the Distribution Record Date, Vision shall
deliver to the Agent on the Distribution Date on behalf of Optek and for the
benefit of the holders of record of Optek Common Stock as of the Distribution
Record Date, an omnibus stock certificate representing in the aggregate 14
shares of Vision Common Stock for every 100 shares of Optek Common Stock
outstanding as of the Distribution Record Date. Effective as of 9:00 a.m.,
Boston Time, on the date of the delivery of such omnibus stock certificate to
the Agent, ownership of the Vision Common Stock held by Optek shall pass to
Optek's stockholders. Optek shall instruct the Agent to distribute, beginning on
or promptly following the Distribution Date, to such holders of Optek Common
Stock on the Distribution Record Date, certificates representing 14 shares of
Vision Common Stock for every 100 shares of Optek Common Stock outstanding as of
the Distribution Record Date. Vision agrees to provide to the Agent sufficient
certificates in such denominations as the Agent may request in order to effect
the Distribution. All of the shares of Vision Common Stock issued in the
Distribution shall be fully paid, nonassessable and free of preemptive rights.
In addition, all such shares (other than fractional shares sold by the Agent in
accordance with Section 4.1(b) below) shall be subject to the Charter Transfer
Restriction. Holders of Optek Common Stock shall not be required to pay cash or
other consideration for the Vision Common Stock received in the Distribution.
-7-
<PAGE> 8
(b) No fractional shares of Vision Common Stock will be received by
Optek stockholders. Fractional shares, if any, will be aggregated and sold, on
behalf of the stockholders entitled to receive such shares, by the Agent. The
Agent will use the net proceeds from the sale of fractional shares to make cash
payments to those stockholders otherwise entitled to receive fractional shares
in proportion to their respective interests in such fractional shares.
(c) The Distribution shall not be effected unless immediately
thereafter the IPO is consummated.
4.2 OPTEK BOARD ACTION.
(a) The Optek Board shall establish in its sole discretion and in
accordance with all applicable rules of the American Stock Exchange, the
Distribution Record Date, the Distribution Date, the date on which certificates
representing Vision Common Stock shall be mailed to holders of Optek Common
Stock and all appropriate procedures in connection with the Distribution.
(b) In its sole discretion for any reason, the Optek Board may rescind
the declaration of the Distribution, and after the declaration and until the
Distribution Date, the Optek Board may postpone, withdraw, cancel or abandon the
Distribution for any reason and simultaneously terminate this Agreement and the
Ancillary Agreements.
ARTICLE V
SURVIVAL, ASSUMPTION AND INDEMNIFICATION
----------------------------------------
5.1 SURVIVAL OF AGREEMENTS. All covenants and agreements of the
parties hereto contained in this Agreement shall survive the Distribution Date.
5.2 ASSUMPTION AND INDEMNIFICATION. (a) Except as specifically
otherwise provided in the Ancillary Agreements, Optek shall indemnify, defend
and hold harmless the Vision Indemnitees from and against (1) all Indemnifiable
Losses arising from or relating to the Optek Business, whether such
Indemnifiable Losses relate to events, occurrences or circumstances occurring or
existing, or whether such Indemnifiable Losses are asserted, before or after the
Distribution Date; (2) all Indemnifiable Losses incurred by Vision as a
consequence of any misstatement or omission of a material fact with respect to
Optek based on information supplied by Optek in any documents or filings
prepared for purposes of compliance or qualification under applicable securities
laws in connection with the Distribution, and related transactions, including
without limitation, the Information Statement and the Form 10; and (3) all
Indemnifiable Losses arising from any breach of or failure to
-8-
<PAGE> 9
perform any obligation on the part of any member of Optek Group contained in
this Agreement or any of the Ancillary Agreements.
(b) Except as specifically otherwise provided in the Ancillary
Agreements, Vision shall indemnify, defend and hold harmless the Optek
Indemnitees from and against (1) all Indemnifiable Losses arising from or
relating to the Vision Business, whether such Indemnifiable Losses relate to
events, occurrences or circumstances occurring or existing, or whether such
Indemnifiable Losses are asserted, before or after the Distribution Date; (2)
all Indemnifiable Losses incurred by Optek as a consequence of any misstatement
or omission of a material fact with respect to Vision based on information
supplied by Vision in any documents or filings prepared for purposes of
compliance or qualification under applicable securities laws in connection with
the Distribution and related transactions, including without limitation, the
Information Statement and the Form 10; and (3) all Indemnifiable Losses arising
from any breach of or failure to perform any obligation on the part of any
member of the Vision Group contained in this Agreement or any of the Ancillary
Agreements.
(c) If any Indemnifiable Loss arises from or relates to both the Optek
Business and the Vision Business, Optek shall indemnify the Vision Indemnitees
against any portion of such Indemnifiable Loss that pertains more directly to
the Optek Business than to the Vision Business, and Vision shall indemnify the
Optek Indemnitees against any portion of such Indemnifiable Loss that pertains
more directly to the Vision Business than to the Optek Business.
(d) Notwithstanding anything to the contrary set forth herein,
indemnification relating to any arrangements between any member of the Optek
Group and any member of the Vision Group (or any unit of the Vision Business)
for the provision after the Distribution of goods and services in the ordinary
course shall be governed by the terms of such arrangements and not by this
Section.
5.3 PROCEDURES FOR INDEMNIFICATION FOR THIRD-PARTY CLAIMS. (a) Vision
shall, and shall cause the other Vision Indemnitees to, notify Optek in writing
promptly after learning of any Third-Party Claim for which any Vision Indemnitee
intends to seek indemnification from Optek under this Agreement. Optek shall,
and shall cause the other Optek Indemnitees to, notify Vision in writing
promptly after learning of any Third-Party Claim for which any Optek Indemnitee
intends to seek indemnification from Vision under this Agreement. The failure of
any Indemnitee to give such notice shall not relieve any Indemnifying Party of
its obligations under this Article V except to the extent that such Indemnifying
Party or its Affiliate is actually prejudiced by such failure to give notice.
Such notice shall describe such Third-Party Claim in reasonable detail
considering the information provided to the Indemnitee.
-9-
<PAGE> 10
(b) Except as otherwise provided in subsection (c) of this Section, an
Indemnifying Party may, by notice to the Indemnitee and to Vision, if Optek is
the Indemnifying Party, or to Optek, if Vision is the Indemnifying Party, at any
time after receipt by such Indemnifying Party of such Indemnitee's notice of a
Third-Party Claim, undertake (itself or through another member of its Group) the
defense or settlement of such Third-Party Claim. If an Indemnifying Party
undertakes the defense of any Third-Party Claim, such Indemnifying Party shall
thereby admit its obligation to indemnify the Indemnitee against such
Third-Party Claim, and such Indemnifying Party shall control the investigation
and defense or settlement thereof, except that such Indemnifying Party shall not
require any Indemnitee, without its prior written consent, to take or refrain
from taking any action in connection with such Third-Party Claim, or make any
public statement, which such Indemnitee reasonably considers to be against its
interest, nor shall the Indemnifying Party, without the prior written consent of
the Indemnitee and of Vision, if the Indemnitee is a Vision Indemnitee, or of
Optek, if the Indemnitee is an Optek Indemnitee, consent to any settlement that
does not include as a part thereof an unconditional release of the Indemnitees
from liability with respect to such Third-Party Claim or that requires the
Indemnitee or any of its Representatives or Affiliates to make any payment that
is not fully indemnified under this Agreement or to submit to any non-monetary
remedy; and subject to the Indemnifying Party's control rights, as specified
herein, the Indemnitees may participate in such investigation and defense, at
their own expense.
(c) With respect to any Third-Party Claim, if there is a material
conflict of interest between the Indemnifying Party and the Indemnitees
involved, neither the Indemnifying Party nor the Indemnitees shall be entitled
to control the defense or settlement thereof. If an Indemnitee notifies an
Indemnifying Party of Third-Party Claim pursuant to this Article V, and the
Indemnifying Party does not take control of the defense or settlement thereof,
or prior to the time that it does so take control, neither the Indemnifying
Party nor the Indemnitees shall be entitled to control the defense or settlement
thereof. In any such event, the Indemnifying Parties and the Indemnitees
involved shall each be entitled to conduct their own investigation and defense,
but the parties shall cooperate to conduct such investigation and defense as
efficiently as possible. No Indemnitee may compromise or settle any Third-Party
Claim described in this subsection as to which indemnification from an
Indemnifying Party has or will be sought under this Agreement without the prior
written consent of such Indemnifying Party.
(d) If an Indemnifying Party is required to indemnify any Indemnitees
with respect to a Third-Party Claim described in subsection (c) of this Section
5.3, such Indemnifying Party shall pay the reasonable attorneys' fees and
expenses of one law firm representing the Indemnitees involved in each
jurisdiction with respect thereto.
-10-
<PAGE> 11
(e) Vision shall, and shall cause the other Vision Indemnitees to, and
Optek shall, and shall cause the other Optek Indemnitees to, make available to
each other, their counsel and other Representatives, all information and
documents reasonably available to them which relate to any Third-Party Claim,
and otherwise cooperate as may reasonably be required in connection with the
investigation, defense and settlement thereof.
5.4 REMEDIES CUMULATIVE. The remedies provided in this Article VI shall
be cumulative and shall not preclude assertion by any Indemnitee of any other
rights or the seeking of any other remedies against any Indemnifying Party.
However, the procedures set forth in Section 5.3 shall be the exclusive
procedures governing any indemnity action brought under this Agreement or
otherwise and relating to a Third-Party Claim, except as otherwise specifically
provided in any of the Ancillary Agreements.
ARTICLE VI
ADDITIONAL ASSURANCES
---------------------
6.1 MUTUAL ASSURANCES. Optek and Vision agree to cooperate with respect
to the implementation of this Agreement and the Ancillary Agreements and to
execute such further documents and instruments as may be necessary to confirm
the transactions contemplated hereby. Such cooperation may include joint
meetings with corporate partners, suppliers, customers and others to assure the
orderly transition of the business and assets contemplated hereby; provided,
however, that nothing herein shall be deemed to obligate either Optek or Vision
to take any action or reach any understandings which may violate any applicable
laws. Optek and Vision agree that they will not take any action inconsistent
with the facts and representations set forth in the "no-action letter" request
filed with the Commission in connection with the Distribution and will use
their best efforts to cause such facts to remain true and correct and, if
either Optek or Vision shall take any such inconsistent action, or fail to use
such best efforts, it will indemnify the other party for any expense or
Liability incurred as a consequence thereof. Optek and Vision also agree that
the Distribution is intended to qualify under Section 355 of the Code, and that
the characterization of the transactions contemplated hereunder for tax
purposes and the liability of the parties for taxes shall be governed by the
Tax Matters Agreement. Except as otherwise specifically provided herein or as
agreed between the parties from time to time, Optek and Vision shall bear their
own expenses associated with the Distribution.
-11-
<PAGE> 12
ARTICLE VII
CONDITIONS TO EFFECTIVENESS OF DISTRIBUTION
-------------------------------------------
The Distribution shall be subject to the implementation of the portions of
this Agreement which are contemplated to become effective prior to the
Distribution and to the satisfaction or waiver of the following conditions:
7.1 BOARD APPROVAL. This Agreement and the Ancillary Agreements
(including exhibits and schedules) shall have been approved by the Optek Board
and the Vision Board and shall have been executed and delivered by appropriate
officers of Optek and Vision.
7.2 SECURITIES LAWS COMPLIANCE. The transactions contemplated hereby
shall be in compliance with applicable federal and state securities laws.
7.3 FORM 10 EFFECTIVE. The Form 10 shall have become effective under
the Exchange Act.
7.4 CONSENTS. Optek shall have received such consents, and shall have
received executed copies of such agreements or amendments of agreements, as it
shall deem necessary in connection with the completion of the transaction
contemplated by this Agreement.
7.5 CHARTER AMENDMENT. The Charter Amendment containing the Charter
Transfer Restriction shall have been filed with the office of the Secretary of
State of the State of Delaware and shall have become effective under Delaware
law.
7.6 OTHER INSTRUMENTS. All action and other documents and instruments
deemed necessary or advisable in connection with the transactions contemplated
hereby shall have been taken or executed, as the case may be, in form and
substance satisfactory to Optek and Vision.
7.7 LEGAL PROCEEDINGS. No legal proceedings affecting or arising out
of the transactions contemplated hereby or which could otherwise affect Optek or
Vision in a materially adverse manner shall have been commenced or threatened
against Optek, Vision or the directors or officers of either Optek or Vision.
7.8 MATERIAL CHANGES. No material adverse change shall have occurred
with respect to Optek or Vision, the securities markets or general economic or
financial conditions which shall, in the reasonable judgment of Optek and
Vision, make the transactions contemplated by this Agreement inadvisable.
-12-
<PAGE> 13
ARTICLE VIII
ACCESS TO INFORMATION AND SERVICES
----------------------------------
8.1 PROVISION OF CORPORATE RECORDS. Upon Vision's request, Optek
shall arrange as soon as practicable following the Distribution Date for the
delivery to Vision of existing corporate records in the possession of Optek
relating to the business and assets to be transferred to Vision, together with
all active agreements and any active litigation files relating to the business,
except to the extent such items are already in the possession of Vision. Such
records shall be the property of Vision but shall be available to Optek for
review and duplication until Optek shall notify Vision in writing that such
records are no longer of use to Optek.
8.2 ACCESS TO INFORMATION. From and after the Distribution Date,
Optek shall afford to Vision and its authorized accountants, counsel and other
designated representatives reasonable access (including using reasonable efforts
to give access to persons or firms possessing information) and duplicating
rights during normal business hours to all records, books, contracts,
instruments, computer data and other data and information (collectively,
"Information") within Optek's possession relating to Vision's business, insofar
as such access is reasonably required by Vision. Vision shall afford to Optek
and its authorized accountants, counsel and other designated representatives
reasonable access (including using reasonable efforts to give access to persons
or firms possessing Information) and duplicating rights during normal business
hours to Information within Vision's possession relating to Optek's business as
constituted after the Distribution, insofar as such access is reasonably
required by Optek. Information may be requested under this Article VIII for,
without limitation, audit, accounting, claims, litigation and tax purposes, as
well as for purposes of fulfilling disclosure and reporting obligations and for
performing the transactions contemplated in this Agreement and the Ancillary
Agreements.
8.3 PRODUCTION OF WITNESSES. At all times from and after the
Distribution Date, each of Optek and Vision shall use reasonable efforts to make
available to the other, upon written request, its officers, directors, employees
and agents as witnesses to the extent that such persons may reasonably be
required in connection with legal, administrative or other proceedings in which
the requesting party may from time to time be involved.
8.4 REIMBURSEMENT. Except to the extent otherwise contemplated by any
Ancillary Agreement, a party providing Information to the other party under this
Article VIII shall be entitled to receive from the recipient, upon the
presentation of invoices therefor, payments for such amounts, relating to
supplies, disbursements and other out-of-pocket expenses, as may be reasonably
incurred in providing such Information.
-13-
<PAGE> 14
8.5 RETENTION OF RECORDS. For a period of seven (7) years following
the Distribution Date, each of Optek and Vision shall retain all Information
relating to the other, except as otherwise required by law or set forth in an
Ancillary Agreement or except to the extent that such Information is in the
public domain or in the possession of the other party; provided, that, after the
expiration of such retention period, such Information shall not be destroyed or
otherwise disposed of at any time, unless, prior to such destruction or
disposal, (i) the party proposing to destroy or otherwise dispose of such
Information shall provide no less than ninety (90) days' prior written notice to
the other, specifying in reasonable detail the Information proposed to be
destroyed or disposed of and (ii) if a recipient of such notice shall request in
writing prior to the scheduled date for such destruction or disposal that any of
the Information proposed to be destroyed or disposed of be delivered to such
requesting party, the party proposing the destruction or disposal shall promptly
arrange for the delivery of such of the Information as was requested, at the
expense of the party requesting such Information.
8.6 CONFIDENTIALITY. Subject to any contrary requirement of law and
the right of each party to enforce its rights hereunder in any legal action,
each party shall keep strictly confidential, and shall cause its employees and
agents to keep strictly confidential, any Information of or concerning the other
party which it or any of its agents or employees may acquire pursuant to, or in
the course of performing its obligations under, any provisions of this Agreement
or any Ancillary Agreement; provided, however, that such obligation to maintain
confidentiality shall not apply to Information which: (i) at the time of
disclosure was in the public domain, not as a result of improper acts by the
receiving party; (ii) was already independently in the possession of the
receiving party at the time of disclosure; or (iii) is received by the receiving
party from a third party who did not receive such Information from the
disclosing party under an obligation of confidentiality.
ARTICLE IX
COVENANTS
---------
9.1 LISTING. Vision hereby agrees to use its reasonable efforts to
effect and maintain the listing of the Vision Common Stock on the American Stock
Exchange.
9.2 ANCILLARY AGREEMENTS. The parties agree that they shall comply
with and provide all services and take any and all actions required to be
provided or taken by the terms of any and all of the Ancillary Agreements
following the Distribution.
-14-
<PAGE> 15
ARTICLE X
NO REPRESENTATIONS OR WARRANTIES
--------------------------------
10.1 NO REPRESENTATIONS OR WARRANTIES. Vision acknowledges that, prior
to the date of this Agreement, it has had primary responsibility for the
operation and management of the Vision Business and Optek acknowledges that,
prior to the date of this Agreement, it has had primary responsibility for the
operation and management of the Optek Business. Vision understands and agrees
that no member of the Optek Group is, in this Agreement or in any other
agreement or document, representing or warranting to Vision or any member of the
Vision Group in any way as to the Vision Assets, the Vision Business or the
Liabilities of the Vision Group or as to any consents or approvals required in
connection with the consummation of the transactions contemplated by this
Agreement, it being agreed and understood that Vision and each member of the
Vision group shall bear the economic and legal risk that conveyances of the
Vision Assets shall prove to be insufficient, that the title of any member of
the Vision group to any Vision Assets shall be other than good and marketable
and free from encumbrances or that results from the failure of Vision or any
member of the Vision Group to obtain any consents or approvals relating to the
Vision Business required in connection with the consummation of the transactions
contemplated by this Agreement.
ARTICLE XI
MISCELLANEOUS
-------------
11.1 GOVERNING LAW. This Agreement shall be governed by the laws of
the State of Delaware.
11.2 CONSTRUCTION. Each provision of this Agreement shall be
interpreted in a manner to be effective and valid to the fullest extent
permissible under applicable law. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions of
this Agreement which shall remain in full force and effect.
11.3 COUNTERPARTS. This Agreement may be executed in counterparts, all
of which shall be considered one and the same agreement.
11.4 EXHIBITS. Exhibits to this Agreement shall be deemed to be an
integral part hereof, and schedules or exhibits to such Exhibits shall be deemed
to be an integral part thereof. Except as otherwise specifically provided
therein, all provisions of this Article XI shall apply to each agreement
constituting an Ancillary Agreement or to which reference is made herein.
-15-
<PAGE> 16
11.5 AMENDMENTS; WAIVERS. This Agreement may be amended or modified
only in writing executed on behalf of Optek and Vision. No waiver shall operate
to waive any further or future act and no failure to object of forbearance shall
operate as a waiver.
11.6 NOTICES. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given (i) on the date of service if served personally on the party to whom
notice is given, (ii) on the day of transmission if sent via facsimile
transmission to the facsimile number given below, provided telephonic
confirmation of receipt is obtained promptly after completion of transmission,
(iii) on the business day after delivery to an overnight courier service or the
Express mail service maintained by the United States Postal Service, provided
receipt of delivery has been confirmed, or (iv) on the fifth day after mailing,
if mailed by registered or certified mail, postage prepaid, properly addressed
and return-receipt requested, in all cases to the parties as follows:
Thermo Optek Corporation
8E Forge Parkway
Franklin, MA 02038
Attention: Chief Executive Officer
Telephone: (508) 528-0551
Telecopier: (508) 541-0551
or to:
Thermo Vision Corporation
8E Forge Parkway
Franklin, MA 02038
Attention: Chief Executive Officer
Telephone: (508) 553-1689
Telecopier: (508) 553-1742
11.7 SUCCESSORS AND ASSIGNS. This Agreement and any of the rights and
obligations of each party hereunder shall not be assigned, in whole or in part,
without the prior written consent of the other party, which consent shall not be
unreasonably withheld, provided that either party may sell, assign, transfer,
delegate or otherwise dispose of its rights and obligations hereunder in
connection with its merger or consolidation or the sale of substantially all of
its assets. This Agreement shall be binding upon the parties and their
respective successors and assigns to the extent such assignments are in
accordance with this Section 11.7.
11.8 INTERPRETATION. The Article and Section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this
-16-
<PAGE> 17
Agreement. As used in this Agreement, the term "person" shall mean and include
an individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof. Whenever any words are used herein in the masculine gender, they shall
be construed as though they were also used in the feminine gender in all
caswhere they would so apply.
11.9 SUCCESSORS AND ASSIGNS; NO THIRD-PARTY BENEFICIARIES. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their successors and permitted assigns,
but neither this Agreement nor any of the rights, interests and obligations
hereunder shall be assigned by any party hereto without the prior written
consent of the other party. Except for the provisions of Sections 5.2 and 5.3
relating to Indemnitees, which are also for the benefit of the Indemnitees, this
Agreement is solely for the benefit of the parties hereto and their Subsidiaries
and Affiliates and is not intended to confer upon any other Persons any rights
or remedies hereunder.
[remainder of page intentionally left blank]
-17-
<PAGE> 18
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
THERMO OPTEK CORPORATION
By: ______________________________
Name: ____________________________
Title: ___________________________
THERMO VISION CORPORATION
By: ______________________________
Name: ____________________________
Title: ___________________________
-18-
<PAGE> 1
Exhibit 2.2
EXECUTED VERSION
ASSET PURCHASE AGREEMENT
DATED AS OF JANUARY 23, 1996
BY AND AMONG
CORION CORPORATION
(as Seller)
and
THERMO VISION CORPORATION
(as Purchaser)
<PAGE> 2
ASSET PURCHASE AGREEMENT
THIS AGREEMENT, dated as of January 23, 1996, is made by and among Corion
Corporation, a Massachusetts corporation (the "Seller") and Thermo Vision
Corporation, a Delaware corporation (the "Purchaser").
W I T N E S S E T H :
WHEREAS, the Company desires to sell substantially all of the assets of the
Company for the consideration hereinafter set forth, all upon the terms and
conditions hereinafter set forth; and
WHEREAS, the Purchaser desires to purchase such assets upon such terms and
conditions;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements herein contained and other valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto, intending to be
legally bound, do hereby covenant and agree as follows:
ARTICLE I
THE TRANSACTION
1.01 SALE AND PURCHASE OF ASSETS.
(a) ASSETS TO BE PURCHASED. At the Closing referred to in Section 1.04
hereof (the "Closing"), the Seller will sell, convey, transfer, assign and
deliver or cause to be sold, conveyed, transferred, assigned and delivered to
the Purchaser, and the Purchaser will purchase from the Seller, for the purchase
price specified in Section 1.02 and subject to the terms and conditions hereof,
the "Assets," as hereinafter defined. Subject to Section 1.01(b) below, the term
"Assets" shall mean all of the Seller's right, title and interest in and to all
tangible and intangible personal property, wheresoever situated and whether or
not specifically referred to herein or in any instrument or conveyance delivered
pursuant hereto, used or useful in the business of the Seller (the "Business")
including, without limitation, the tangible and intangible personal property
described below in this Section 1.01(a), and the other assets described below in
this Section 1.01(a):
(i) INVENTORIES. All of the Seller's inventories of raw
materials, work in process, finished products and resale merchandise, scrap
inventory, expendable manufacturing supplies and similar items (the
"Inventories");
(ii) MACHINERY AND EQUIPMENT. All of the Seller's machinery and
equipment, wherever located, for the manufacture, production, assembly,
handling, distribution and sale of its products, together with the spare parts
inventories and all manufacturing or
1
<PAGE> 3
production tools and maintenance supplies pertaining thereto, including, without
limitation (A) all such machinery, equipment, spare parts inventories,
manufacturing or production tools and maintenance supplies physically located at
or on any of the premises currently occupied by the Seller (the "Premises") and
(B) the equipment described in Schedule 1.01(a)(ii) of the disclosure statement
delivered by the Seller in connection herewith ("Disclosure Statement");
(iii) FURNITURE AND FIXTURES. All of the Seller's office
furniture, office equipment and office supplies and computer hardware,
including, without limitation, all such office furniture, office equipment and
supplies and computer hardware physically located at or on any of the Premises;
(iv) PERSONAL AND REAL PROPERTY LEASES. All right, title and
interest of the Seller under (A) leases for personal property included in the
Assumed Liabilities (as defined in Section 1.03(a) of this Agreement) as set
forth on Schedule 1.01(a)(iv) of the Disclosure Statement, and (B) those certain
month-to-month leases for (I) storage space located at 12 Brook Street,
Holliston, Massachusetts and (II) the Seller's sales office in the United
Kingdom;
(v) INTELLECTUAL PROPERTY. All right, title and interest in,
under or to all patents, trademarks, service marks, copyrights, trade names,
logos, and applications therefor listed or described in Schedule 2.09 of the
Disclosure Statement;
(vi) TECHNICAL INFORMATION. All inventions, discoveries (whether
patentable or unpatentable), processes, designs, know-how, trade secrets,
proprietary data, technology and other intellectual property of all kinds owned
by or licensed to the Seller, including, without limitation, all drawings,
plans, specifications, processes, patterns, dies, designs, blueprints, records,
data, product development records, production outlines, information, or
knowledge and procedures relating to any of such intellectual property;
(vii) CONTRACT RIGHTS AND MISCELLANEOUS INTANGIBLES. All right,
title and interest of the Seller in, under and to all sales, distribution and
purchase agreements, and all other agreements, contracts, sales orders, backlog,
and commitments to which the Seller is a party (collectively, the "Contracts"),
and in, under and to all equipment lists, parts lists, computer tapes and discs,
systems and programs, and proprietary software that pertain to the Assets and
the operation and use thereof;
(viii) MOTOR VEHICLES. All of the Seller's cars, trucks and other
motor vehicles, as listed or described on Schedule 1.01(a)(viii) of the
Disclosure Statement;
(ix) BOOKS AND RECORDS. All general books of account, books of
original entry and other records physically located at the Premises and all
other general books of account, books of original entry and other records of the
Seller, wherever located, that the Seller is required to retain pursuant to any
statute, rule or regulation (it being understood that the Seller may retain
copies of such books and records to facilitate the winding up of its affairs);
2
<PAGE> 4
(x) LICENSES. All existing permits, licenses, regulatory
approvals and franchises of or from any national, regional, state or local
government or authority relating to the Business, as set forth on Schedule
1.01(a)(x) of the Disclosure Statement;
(xi) MISCELLANEOUS SUPPLIES. All of the Seller's catalogs,
brochures, product literature, printed materials, shipping and packaging
materials and labels, cartons and shipping containers, pallets, shipping
equipment, graphics, art work, photographic film, slides, negatives, color
separations, printer's and photographer's plates and so-called "camera ready
materials" and sales and advertising materials; and
(xii) ACCOUNTS RECEIVABLE. All accounts and notes receivable of
the Seller existing on the Closing Date (the "Accounts Receivable");
(b) RETAINED ASSETS. Notwithstanding anything contained in Section
1.01(a) to the contrary, the Seller shall retain and the Assets shall not
include any of the following assets (the "Retained Assets"):
(i) all of the Assets of the Seller which shall have been
transferred or disposed of prior to the Closing Date in transactions conducted
in the ordinary course of business (including, without limitation, those set
forth on Schedule 2.07(f) of the Disclosure Statement);
(ii) all cash, cash in banks, cash equivalents, deposits,
investments, securities, funds, certificates of deposit, drafts, checks and
similar instruments of the Seller outstanding and in existence on the Closing
Date;
(iii) all Assets in the possession of the Seller but owned by
third parties, other than third party owned assets that, under generally
accepted accounting principles, are appropriate to be reflected on the Balance
Sheet (as defined in Section 1.03) as Assets, subject to any third party rights
in respect of the same being reflected thereon as liabilities of the Seller;
(iv) Assets that are not assignable to the Purchaser as a matter
of law;
(v) any shares of capital stock of any corporation;
(vi) any foreign currency agreement to which the Seller is a
party;
(vii) all leasehold improvements;
(viii) the lease relating to the premises at 73 Jeffrey Avenue,
Holliston, Massachusetts 01746 and any other leases of real property in which
Seller has an interest except as specifically set forth in Section 1.04(a)(iv);
(ix) all of Seller's insurance policies; and
3
<PAGE> 5
(x) any Assets set forth on Schedule 1.01(b) of the Disclosure
Statement.
1.02 PURCHASE PRICE.
(a) DETERMINATION AND PAYMENT. The aggregate purchase price to be paid
to the Seller by the Purchaser for the Assets shall be an amount equal to the
sum of (i) the net tangible assets of the Seller (which term shall be deemed to
include the Seller's accounts receivable and the Seller's software) as set forth
on the balance sheet for the Seller at December 31, 1995 (such amount is
referred to herein as the "Adjustment Amount"), and (ii) $1,490,000 (such sum is
referred to herein as the "Base Purchase Price"), plus the assumption of certain
liabilities of the Seller as hereinafter provided, and subject to adjustment as
set forth below. From the Base Purchase Price, $350,000 (the "Escrow Amount")
will be withheld by the Purchaser pursuant to the escrow agreement among the
parties and BayBank, N.A., as Escrow Agent, attached hereto as EXHIBIT A.
(b) PURCHASE PRICE ADJUSTMENT. The Base Purchase Price shall be
subject to adjustment after the Closing Date as follows. By no later than
February 5, 1996, the Seller shall prepare and deliver to the Purchaser an
unaudited statement of the net tangible assets of the Seller as of December 31,
1995 (the "December Net Asset Statement"). For purposes of this Agreement, the
net tangible assets of the Seller shall mean the tangible Assets minus the
Assumed Liabilities (as defined in Section 1.03) determined in accordance with
generally accepted accounting principles applied on a consistent basis with the
Balance Sheet (as defined in Section 1.03(a)) both as to classification of items
and methodology for determining amounts; PROVIDED, HOWEVER, that (i)
amortization and depreciation of fixtures and equipment shall be terminated as
of August 31, 1995, (ii) the reserve for bad debts shown on the Balance Sheet
will be reversed, (iii) a warranty reserve equal to $40,000 will be established,
(iv) there shall be no accrual for liabilities which are not being assumed by
the Purchaser, (v) adjustments regarding reserves for excess and obsolete
inventory shall be made in accordance with the Thermo Electron Corporation
Policy/Procedure Statement dated October 1, 1993, as interpreted pursuant to the
memorandum from Ken Pihl to David Carls dated October 26, 1995 which is attached
hereto as part of the Disclosure Statement, and (vi) the December Net Asset
Statement shall reflect normal year-end adjustments consistent with past
practice. In the event that the Purchaser disputes the December Net Asset
Statement, the Purchaser shall notify the Seller in writing of the amount,
nature and basis of such dispute on or before February 22, 1996 (the "Dispute
Notice"). The parties shall use their best efforts to resolve the dispute on or
prior to February 29, 1996. If they are unable to agree upon a resolution of the
dispute within such period, then either party may terminate this Agreement by
notice to the other party. At the Closing, the Base Purchase Price shall be
adjusted as follows (as so adjusted, the "Adjusted Purchase Price"):
(i) if the net tangible assets of the Seller as shown on the final
December Net Asset Statement are less than the Adjustment Amount,
the amount of the deficiency shall be subtracted from the Base
Purchase Price; and
4
<PAGE> 6
(ii) if the net tangible assets of the Seller as shown on the December
Net Asset Statement are greater than the Adjustment Amount, the
excess shall be added to the Base Purchase Price.
If no adjustment is made pursuant to this subsection (b), the Adjusted Purchase
Price shall be the Base Purchase Price.
(c) OPERATING ADJUSTMENT. The parties intend that the Seller operate
the Business for the account of the Purchaser for the period commencing December
31, 1995 (the "Effective Date"). Accordingly, as an additional purchase price
adjustment, the Adjusted Purchase Price shall be further adjusted as follows (as
so adjusted, the "Final Purchase Price"). By no later than 10 business days
following the Closing Date, the Seller shall prepare and deliver to the
Purchaser a statement of the net cash generated or consumed by the Business (the
"Operating Statement") between the Effective Date and the Closing Date. It is
understood and agreed by the parties hereto that the Operating Statement shall
be computed by the Seller without taking into consideration any cash consumed by
the Business due to (i) the payment of any liabilities of the Business which are
not Assumed Liabilities, and (ii) any transaction relating to assets of the
Business which are not Assets being purchased by the Purchaser (it being
understood that lease payments and insurance policy premiums shall be included
in computing the operating Statement). In the event the Purchaser disputes the
Operating Statement, the Purchaser shall notify the Seller in writing of the
amount, nature and basis of such dispute within 5 business days after delivery
of the Operating Statement (the "Operating Adjustment Dispute Notice"). The
parties shall use their best efforts to resolve the dispute within 10 days after
delivery of the Operating Adjustment Dispute Notice. If they are unable to agree
upon a resolution of the dispute within such 10-day period, the dispute shall be
submitted to Deloitte & Touche for resolution. The determination of such
accountants as to the resolution of any dispute shall be binding and conclusive
upon all parties hereto. The fees and expenses of such accountants shall be
shared equally by the Seller and the Purchaser. Immediately upon the expiration
of the 10-day period for giving the Operating Adjustment Dispute Notice (if no
Operating Adjustment Dispute Notice is given), or immediately upon the
resolution of disputes, if any, the Adjusted Purchase Price shall be reduced by
the net amount of any cash generated by the Business between the Effective Date
and the Closing Date, or increased by the net amount of any cash consumed by the
Business between the Effective Date and the Closing Date. Any amounts due to the
Purchaser or the Seller pursuant to this subsection (c) shall be payable no
later than three business days following the date of determination of the
Adjusted Purchase Price. All such amounts shall be paid in cash, by cashiers or
certified check or by wire transfer of immediately available funds to an account
designated by the party receiving payment.
(d) ALLOCATION OF PURCHASE PRICE. The Base Purchase Price shall be
allocated among the Assets and the Assumed Liabilities as the parties shall
agree on or prior to the Closing Date. The Seller and the Purchaser each will
report the federal, state, provincial, foreign and local income and other tax
consequences of the purchase and sale contemplated hereby in a manner consistent
with such allocation and will not take any position inconsistent therewith upon
examination of any tax return, in any refund claim, in any litigation, or
otherwise. If the Base Purchase Price is adjusted pursuant to Section 1.02(b) or
(c) hereof, such allocation shall be
5
<PAGE> 7
appropriately modified by the parties to reflect increases or decreases in the
various categories which give rise to such adjustment.
1.03 ASSUMPTION OF LIABILITIES. (a) Subject to the terms and conditions
contained in this Agreement, at the Closing the Purchaser will assume and agree
to pay or perform, or cause to be paid or performed, only those liabilities and
obligations of the Seller (whether created or accrued before or after the
Closing) that: (i) are reflected (but only to the extent so reflected) on the
balance sheet for the Seller at November 30, 1995, attached hereto as EXHIBIT B
(the "Balance Sheet"), except for any such liabilities which are Excluded
Liabilities as defined in Section 1.03(b) and except for any such liabilities
discharged since the date of the Balance Sheet; (ii) have been incurred by the
Seller since the date of the Balance Sheet, but only to the extent such
liabilities have been incurred in the ordinary course of business consistent
with past practice; (iii) arise after the date hereof (the "Signing Date") under
any contract, lease, license, permit or other agreement assigned to the
Purchaser pursuant hereto; or (iv) arise out of (A) warranty obligations
undertaken by the Seller with respect to products shipped or sold, or services
rendered, prior to the Closing or (B) the product recalls set forth on Schedule
2.20(d) of the Disclosure Statement (such obligations and liabilities being
referred to herein as the "Assumed Liabilities").
(b) EXCLUDED LIABILITIES. Notwithstanding anything to the contrary
contained in Section 1.03(a) of this Agreement, the Purchaser shall not assume,
agree to pay, perform, discharge or be liable with respect to any liabilities,
obligations or claims of Seller other than the Assumed Liabilities (all such
other liabilities or obligations referred to collectively herein as the
"Excluded Liabilities"). The Excluded Liabilities shall include, but shall not
be limited to:
(i) any and all liabilities, damages, losses and expenses
(including, without limitation, attorney's fees) ("Losses") incurred by the
Purchaser arising out of: (A) any actual or alleged release of any Materials of
Environmental Concern (as defined in Section 2.14) into the environment (I)
relating to the operation of the Business prior to the Closing or (II) at any
site owned or operated by the Seller whether prior to or after the Closing or
(III) to which any Materials of Environmental Concern were actually or allegedly
transported by or on behalf of the Seller prior to or after the Closing; or (B)
the actual or alleged violation of any Environmental Law (as defined in Section
2.14) by the Seller commencing prior to or after the Closing;
(ii) any legal suit, action or proceeding of any kind (it being
understood that such terms shall not include the cost of fulfilling warranty
obligations which are Assumed Liabilities hereunder) filed and commenced against
the Seller prior to the Closing, or the commencement of which was threatened
prior to the Closing, including, without limitation, the proceedings set forth
on Schedule 1.03(b)(ii) of the Disclosure Schedule (the "Excluded Litigation");
(iii) any liability, whether direct or indirect, for federal,
state, local, foreign and provincial or other income, capital gains, property
transfer, payroll, withholding, excise, sales, use, use and occupancy, business
and occupation, mercantile, real estate, personal property, value added, capital
stock, franchise or other taxes and estimated taxes relating thereto (including
6
<PAGE> 8
interest, penalties and additions to such taxes) with respect to any taxable
periods ending on or before the Effective Date and the portion ending on the
Effective Date of any taxable period that begins before but has not ended on the
Effective Date, including, without limitation, any accruals for deferred taxes;
(iv) any overdraft facility, bank credit line or third party
indebtedness for money borrowed to the extent not reflected on the Balance
Sheet;
(v) all of the Seller's indebtedness to Shawmut Bank;
(vi) the Subordinated Notes of the Seller due 2002 held by David
Carls, Frank Mascis and Kenneth Pihl;
(vii) subject to Section 4.03(c), (A) any claims against, or
liabilities or obligations of or in connection with, any Plans (as defined in
Section 4.03) not specifically assumed by the Purchaser pursuant to this
Agreement, (B) any claims for severance pay, termination pay, redundancy pay,
pay in lieu of notice or any other claim for similar compensation or damages
relating to the termination of any employee prior to the Closing (including,
without limitation, the Chen arbitration and the Wagner MCAD dispute) or (C) any
claims for compensation or bonuses by any employee for or relating to services
rendered prior to the Closing (provided, however, that such claims for
compensation or bonuses shall be deemed to be Assumed Liabilities to the extent
they arise in the ordinary course of the Business in the period between the
Effective Date and the Closing); provided that the foregoing clauses (B) and (C)
shall not include claims for severance, termination or redundancy pay or pay in
lieu of notice relating to the termination of any Transferred Employee (as
defined in Section 4.03) on or after the Closing;
(viii) any claim (including, without limitation, claims alleging
death or injury to persons or damage to property), whether based in tort,
contract or otherwise resulting from or caused by any product shipped or sold,
or service provided, by the Seller prior to the Closing (it being understood
that the cost of fulfilling warranty obligations of the Business arising prior
to Closing shall be an Assumed Liability hereunder);
(ix) any claim, suit or proceeding relating to the actual or
alleged infringement commencing prior to the Closing by the Seller of the
intellectual property rights of any third party;
(x) all amounts due to or accrued on behalf of KPMG Peat Marwick,
the Seller's auditors;
(xi) liabilities or obligations under foreign currency contracts
to which the Seller is a party; and
(xii) agreements relating to the sale or other disposition of any
Assets (other than inventory sold in the ordinary course of business) prior to
Closing.
7
<PAGE> 9
1.04 CLOSING.
(a) GENERAL. The Closing of the sale and purchase of the Assets
contemplated by this Agreement (the "Closing") shall take place on February 29,
1996, or at such earlier time as the parties mutually agree. The date on which
the Closing occurs is referred to herein as the "Closing Date."
(b) DELIVERIES AND PROCEEDINGS AT CLOSING.
(i) DELIVERIES BY THE SELLER. The Seller will deliver to the
Purchaser such bills of sale and other instruments of conveyance, transfer and
assignment, dated the Closing Date and in form and substance reasonably
satisfactory to Purchaser's counsel, as shall in the judgment of such counsel be
sufficient to vest in the Purchaser all of the Seller's right, title and
interest in and to the Assets. In addition to the foregoing, the obligations of
the Purchaser to consummate the transactions contemplated hereby are subject to
the satisfaction, on or before the Closing, of the following conditions (unless
waived in writing by the Purchaser):
(A) CONSENTS. Any governmental authority having jurisdiction
over the Seller, the Purchaser or the Assets, or any other person in any
contractual or other relationship with the Seller, to the extent that its
consent or approval is required by applicable law or regulation or any
applicable contract or other instrument for the performance of this Agreement or
the consummation of the transactions contemplated hereby or for the continuation
of any material existing contractual relationship, shall have granted any
necessary consent or approval; PROVIDED, HOWEVER, that it shall not be a
condition to closing that consents to the transfer to Purchaser of Seller's
right, title and interest in and to the contracts set forth on Schedule 2.02 of
the Disclosure Statement (other than items 2 and 3 thereon) shall have been
received.
(B) PERMITS AND APPROVALS. Any and all consents, permits
approvals or other actions of any person, jurisdiction or authority required in
the reasonable opinion of the Purchaser for lawful consummation of the
transactions contemplated hereby shall have been obtained, and shall be in full
force and effect, and no such consent, permit, approval or other action shall
contain any provision that in the reasonable judgment of the Purchaser is unduly
burdensome.
(C) GOOD STANDING CERTIFICATES. The Seller shall have
delivered to the Purchaser a long-form corporate good standing certificate from
its jurisdiction of incorporation and good standing certificates from each
jurisdiction in which the Seller is qualified to transact business.
(D) LEGAL OPINION. The Purchaser shall have received an
opinion of Hill & Barlow, counsel to the Seller, dated the Closing Date and in
form reasonably satisfactory to Purchaser and its counsel.
8
<PAGE> 10
(E) NO LITIGATION. No legal action or other proceedings to
restrain or prohibit the consummation of the transactions contemplated by this
Agreement shall be pending or threatened.
(F) ESCROW AGREEMENT. The Escrow Agreement shall have been
executed by the parties hereto and shall be in full force and effect.
(G) CONSULTING AGREEMENTS. The Purchaser and each of David
Carls shall have entered into a consulting agreement in the form attached hereto
as EXHIBIT C.
(H) NONCOMPETITION AND CONFIDENTIALITY AGREEMENTS. The
Purchaser and each of David Carls and Frank Mascis shall have entered into a
noncompetition and confidentiality agreement in the form attached hereto as
EXHIBITS D AND E, respectively.
(I) PERSONAL GUARANTEES. The Purchaser and each of David
Carls and Frank Mascis shall have entered into a personal guarantee agreement in
the form attached hereto as EXHIBITS F AND G, respectively (the "Personal
Guarantees").
(J) MATTERS REGARDING MICHAEL MASCIS. The Seller and Michael
Mascis shall have entered into an amendment (in form and substance reasonably
satisfactory to the Purchaser) to the Employment Agreement between them pursuant
to which (i) Mr. Mascis' employment by the Seller shall be terminated effective
on or before the Closing, and (ii) any severance payments to be made to Mr.
Mascis pursuant to such termination shall be made prior to the Closing.
(K) FINANCING STATEMENTS. The Seller shall have delivered to
the Purchaser executed termination statements on Form UCC-3 (or other
appropriate forms) terminating all security interests of record with respect to
the Seller's assets being transferred to the Purchaser hereunder.
(L) DOCUMENTS SATISFACTORY. The form and substance of all
legal matters contemplated herein and of all papers used or delivered hereunder
shall be reasonably acceptable to the Purchaser, and the Purchaser shall have
received all documents that it may have reasonably requested in connection with
the transactions contemplated hereby, in form and substance reasonably
satisfactory to it.
(ii) DELIVERIES BY THE PURCHASER. The Purchaser will deliver to
the Seller by wire transfer the cash payment specified in Section 1.02(a)
hereof, and such instruments of assumption of liabilities, dated the Closing
Date and in form and substance reasonably satisfactory to the Seller's counsel,
as shall in the judgment of such counsel be sufficient to vest in the Purchaser
the obligations to satisfy and discharge the Assumed Liabilities. In addition to
the foregoing, the obligations of the Seller to consummate the transactions
contemplated hereby are subject to the satisfaction, on or before the Closing,
of the following conditions (unless waived in writing by the Seller):
9
<PAGE> 11
(A) CONSENTS. Any governmental authority having jurisdiction
over the Seller, or any other person in any significant contractual or other
relationship with the Seller, to the extent that its consent or approval is
required by applicable law or regulation or any applicable contract or other
instrument for the performance of this Agreement by the Seller or the
consummation of the transactions contemplated hereby by the Seller shall have
granted any necessary consent or approval.
(B) PERMITS AND APPROVALS. Any and all consents, permits
approvals or other actions of any person, jurisdiction or authority required in
the reasonable opinion of counsel to the Seller for lawful consummation of the
transactions contemplated hereby shall have been obtained, and shall be in full
force and effect, and no such consent, permit, approval or other action shall
contain any provision that in the reasonable judgment of such counsel is unduly
burdensome.
(C) LEGAL OPINION. The Seller shall have received an opinion
of the General Counsel of the Purchaser, dated the Closing Date and in form
reasonably satisfactory to Seller and its counsel.
(D) NO LITIGATION. No legal action or other proceedings to
restrain or prohibit the consummation of the transactions contemplated by this
Agreement shall be pending or threatened.
(E) DOCUMENTS SATISFACTORY. The form and substance of all
legal matters contemplated herein and of all papers used or delivered hereunder
shall be reasonably acceptable to the Seller and its counsel, and the Seller
shall have received all documents that it may have reasonably requested in
connection with the transactions contemplated hereby, in form and substance
reasonably satisfactory to it.
1.05 ADDITIONAL ACTION TO ASSURE TRANSFERS. Nothing in this Agreement shall
be construed to assign any contract, right, commitment, agreement, permit,
franchise, or claim included in the Assets (individually, a "Purchased Contract
Right") which is by its terms or by law nonassignable without the consent of the
other party or parties thereto, unless such consent shall have been given, or as
to which all the remedies for the enforcement thereof enjoyed by the Seller
would not, as a matter of law, pass to the Purchaser as an incident of the
assignments provided for by this Agreement. In order, however, to provide the
Purchaser the full realization and value of every Purchased Contract Right of
the character described above, the Seller at and after the Closing will, at the
request and under the direction of the Purchaser and in the name of the Seller
or otherwise as the Purchaser shall specify, take or cause to be taken all such
action (including, without limitation, the appointment of the Purchaser as
attorney-in-fact for the Seller, but with powers limited to the specific
purposes contemplated hereby) and do or cause to be done all such things as
shall in the reasonable opinion of the Purchaser or its counsel be necessary or
proper to (a) assure that the rights of the Seller under all Purchased Contract
Rights shall be preserved for the benefit of the Purchaser, and (b) facilitate
receipt by the Purchaser of the consideration to which the Seller would
otherwise be entitled in and under all Purchased
10
<PAGE> 12
Contract Rights, which consideration shall be held for the benefit of, and shall
be delivered to, the Purchaser. In order to accomplish the foregoing, the Seller
may designate the Purchaser as subcontractor to perform obligations of the
Seller under Purchased Contract Rights. Nothing in this Section shall in any way
diminish the obligations hereunder of the Seller to use its best efforts to
obtain all consents and approvals and to take all such other actions prior to or
at Closing as are necessary to enable the Seller to convey or assign valid title
to all the Assets to the Purchaser. In no event shall the Seller be required to
make any payment relating to obtaining such consents and approvals.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller represents and warrants to the Purchaser that, except as set
forth in a schedule (specifically identifying the relevant Section of this
Article II) to the Disclosure Statement:
2.01 ORGANIZATION AND GOOD STANDING. The Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has all requisite corporate power and
authority to own or lease the properties and assets to be transferred by it
hereunder, to carry on the Business currently conducted by it as and where now
being conducted and to enter into this Agreement and to perform its obligations
hereunder. The Seller is duly qualified and in good standing as a foreign
corporation and duly authorized to do business in all jurisdictions wherein the
character of the properties owned or leased by it or the nature of the
activities thereof makes such qualification necessary, except where the failure
to so qualify would not have a material adverse effect upon the Business as
carried on by the Seller. The Seller has no subsidiaries and is not a partner or
joint venturer with any other person or entity.
2.02 AUTHORIZATION AND ENFORCEABILITY. The Seller has full right, power,
capacity and authority to execute, deliver and perform this Agreement and the
other agreements, documents and certificates executed and delivered by it
pursuant to this Agreement and to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance by the Seller of
this Agreement and of each instrument to be executed and delivered by the Seller
pursuant hereto (a) have been duly and validly authorized by all necessary
corporate actions on the part of the Seller, (b) will not contravene any
provision of the governing instruments of the Seller, nor violate any provision
of law, rule, ordinance or regulation or any order, judgment or decree
applicable to the Seller, (c) except as disclosed in Schedule 2.02 of the
Disclosure Statement, will not, with or without the giving of notice or the
lapse of time, or both, constitute a breach of or default under, require the
consent or approval of any other party to, or cause the acceleration of any
obligation under, any agreement or instrument to which the Seller is a party or
by which the Assets are bound, (d) will not result in the creation or imposition
of any lien, encumbrance, charge, claim or restriction upon any of the Assets,
and (e) will not result in the loss of or require the repayment of any
government grant, subsidy or tax credit. This Agreement has been duly executed
and delivered by the Seller, and the Agreement and each of the instruments to be
executed and delivered by them pursuant hereto shall constitute the legal, valid
and binding obligations of the Seller, enforceable in accordance with their
respective terms.
11
<PAGE> 13
2.03 TITLE TO ASSETS; BOOKS AND RECORDS. Except as disclosed in Schedule
2.03 of the Disclosure Statement, the Seller has good title to all of the Assets
which it purports to own, and a valid leasehold or licensed interest in all of
the Assets which it purports to lease or license, in each case subject to no
mortgage, attachment, lien, pledge, option, title retention, conditional sale or
other security interest, restriction, claim, charge or other encumbrance of any
kind, and has the complete and unrestricted right to sell assign, transfer,
convey and deliver such Assets to the Purchaser at the Closing without any
restrictions of any kind. All liens set forth on Schedule 2.03 shall be
discharged at or prior to Closing.
2.04 LITIGATION. Except as disclosed in Schedule 2.04 of the Disclosure
Statement, the Seller is not engaged in, or a party to, or, to the Seller's
knowledge, threatened with, any claim or legal action or other proceeding before
any court, any arbitrator of any kind or any administrative agency, or any
governmental investigation, which seeks to prevent the execution, delivery or
performance of this Agreement or which affects the Business or any of the
Assets. Except as disclosed in Schedule 2.04 of the Disclosure Statement, there
is no (a) outstanding order, ruling, injunction, judgment, writ, decree or
stipulation, or (b) ongoing litigation (other than the Excluded Litigation), to
which the Seller is a party or by which any of the Assets are bound or which
would affect the Business or any of the Assets.
2.05 BROKERS. The Seller has not made any agreement or taken any other
action which might cause any person or entity to become entitled to a broker's
fee, finder's fee or commission from the Purchaser as a result of the
transactions contemplated by this Agreement.
2.06 FINANCIAL STATEMENTS. Schedule 2.06 of the Disclosure Statement sets
forth (a) the unaudited balance sheet of the Seller as of November 30, 1995 and
the unaudited statement of operations and retained earnings of the Seller for
the eleven-month period then ended, and (b) the audited balance sheet of the
Seller as of December 31, 1994, December 31, 1993 and December 31, 1992, and the
audited statements of operations and retained earnings, and statement of cash
flows of the Seller for the twelve-month periods then ended, together with a
report of KPMG Peat Marwick thereon (the "Financial Statements"). Except as set
forth on Schedule 2.06 of the Disclosure Schedule, the Financial Statements
fairly present the financial condition of the Seller as at the dates specified
and the results of operations for the periods then ended, and have been prepared
in accordance with United States generally accepted accounting principles
applied on a consistent basis with previous years both as to classification of
items and amounts (except as may be indicated therein or in the notes thereto,
and subject to normal year-end adjustments and the lack of footnotes in the case
of the interim financial statements).
2.07 NO CHANGES. Except as disclosed on Schedule 2.07(a) of the Disclosure
Statement, since the date of the Balance Sheet (November 30, 1995), there has
not been:
(a) Any material adverse change in the financial or other condition,
results of operation, assets or liabilities of the Business;
12
<PAGE> 14
(b) Any damage, destruction or loss (whether or not covered by
insurance) to property which materially and adversely affects the condition
(financial or otherwise), results of operation, assets, liabilities or prospects
of the Business;
(c) Any increase in the compensation or benefits payable or to become
payable by the Seller to any of its employees or officers, or any bonus
arrangement made with any thereof, except for ordinary increases for
non-management employees in accordance with prior practices;
(d) To the Seller's knowledge, any statute, rule, regulation,
ordinance, order or government policy adopted, which is specifically applicable
to the Seller's business (and not businesses in general), which may adversely
affect the Business or any of the Assets;
(e) Any material reduction in the rate of, or aggregate gross margins
associated with, bookings or orders for the commercial products and services of
the Business, or any material deterioration in the commercial backlog level of
the Business;
(f) Any sale, assignment, transfer or other disposition of any
tangible asset used in the Business, except in the ordinary course of business,
or any sale, assignment, lease, transfer or other disposition of any patent,
trademark, trade name, brand name, copyright, license or other intangible asset
used in the Business;
(g) Any amendment, termination or waiver of any material right
belonging to the Seller, including with respect to government contracts;
(h) Any strike, labor dispute or any other event, development or
condition of any character relating to the Seller's employees and adversely
affecting the Business or the Assets;
(i) Any declaration, setting aside or payment of any dividend, or
other distribution, in respect of the Seller's capital stock, or any direct or
indirect redemption, purchase or other acquisition of such stock;
(j) Any mortgage, lien, attachment, pledge, encumbrance or security
interest created on any asset, tangible or intangible, of the Seller, or
assumed, either by the Seller or by others, with respect to any such asset,
except for liens for taxes not yet due, and for equipment leases and purchase
money security interests entered into in the ordinary course of business;
(k) Any indebtedness or other liability or obligation (whether
absolute, accrued, contingent or otherwise) incurred, or other transaction
(except that reflected in this Agreement) engaged in by the Seller, except in
the ordinary course of business consistent with past practice;
(l) Any transaction or contract with a Shareholder, a director or
officer of the Seller, or a member of any such person's family, including a
loan, change of employment conditions, change of pension rights or bonus; or
13
<PAGE> 15
(m) Any other action or event not in the ordinary course of business.
2.08 PURCHASE AND SALE COMMITMENTS. The outstanding purchase commitments
included in the Assumed Liabilities are not in excess of the normal, ordinary
and usual requirements of the Business, and the aggregate of the contract prices
under such outstanding purchase commitments is not so excessive when compared
with current market prices for the relevant commodities or services that a loss
is likely to result. There are no suppliers of goods or services to the Business
with respect to which practical alternative sources of supply, or comparable
products, are not available on commercially reasonable terms and conditions.
2.09 INTELLECTUAL PROPERTY. The Seller owns the patents, patent rights,
registered trademarks, trade names and unregistered trademarks listed or
described in Schedule 2.09 of the Disclosure Statement, free and clear of any
encumbrance, lien, claim or right of others. The conduct of the Business does
not infringe any patent, trademark, trade name, copyright or other intellectual
property right of any other person. The Seller has never received any claim or
demand, or notice of any proceeding of any kind, alleging any such infringement,
nor, to the Seller's knowledge, has any such claim, demand or proceeding been
threatened. The conduct of the Business does not utilize any patent, trademark,
trade name, copyright, trade secret, vendor or customer list which is not
included in the Assets. Except as disclosed in Schedule 2.09 of the Disclosure
Statement, the Seller is not aware of any infringement or unauthorized use by a
third party of any copyright, patent, patent right, registered trademark, trade
name or unregistered trademark listed or described in said Schedule 2.09 or of
any other invention, technology, technical know-how, process, design, trade
secret, vendor or customer list or other intellectual property included in the
Assets.
2.10 LABOR RELATIONS. Except as disclosed on Schedule 2.10 of the
Disclosure Statement, (a) no employee of the Seller is represented by any union
or other labor organization, and the Seller is not a party to any collective
bargaining agreement with any labor union or other labor organization with
respect to any employee of the Seller; (b) there is no unfair labor practice
complaint pending or threatened relating to any such employee, nor has any such
complaint been pending or threatened at any time during the last three years;
(c) there is no labor strike, dispute, slow down or stoppage actually pending or
threatened on the part of any such employee which would affect the Business, nor
has any such event occurred or been threatened at any time during the last three
years; (d) there is no grievance, arbitration, charge or other proceeding
arising from or relating to complaints made or filed by any such employee
against the Seller, nor has any such grievance, arbitration, charge or other
proceeding been made or filed at any time during the last three years; and (e)
no private agreement restricts the ability of the Purchaser to relocate, close
or terminate any of the operations or facilities of the Business.
2.11 GOVERNMENTAL CONSENTS. No consent, approval or authorization of, or
registration or filing with, any governmental authority or other regulatory
agency is required by the Seller in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby.
14
<PAGE> 16
2.12 CONTRACTS.
(a) Schedule 2.12(a) of the Disclosure Statement contains a list of
all contracts, commitments, agreements, sales and purchase orders and other
obligations relating to the Business which are Assets or Assumed Liabilities
(including any and all amendments thereto), to which the Seller is a party or by
which the Seller or any of the Assets may be bound, and which involves unpaid or
unperformed aggregate obligations by either the Seller or a third party of more
than $20,000, or which otherwise materially affects the Business (each, a
"Material Contract").
(b) Except as set forth on Schedule 2.12(b) of the Disclosure
Statement, the Seller has made available to the Purchaser a true, correct and
complete copy of each such Material Contract.
2.13 ACCOUNTS RECEIVABLE. Except as set forth on Schedule 2.13 of the
Disclosure Statement, all of the Accounts Receivable have arisen in the ordinary
course of business and are in the process of collection.
2.14 ENVIRONMENTAL MATTERS.
(a) There is no pending or, to Seller's knowledge, threatened civil or
criminal litigation, written notice of violation, formal administrative
proceeding or investigation, inquiry or information request by any governmental
authority under any Environmental Law (as defined below) involving or relating
to the Business. Set forth in Schedule 2.14 of the Disclosure Schedule is a list
of all of the solid and hazardous waste transporters and treatment, storage and
disposal facilities that have been utilized by the Seller within the past five
years. The Seller has not received written notice of any liability under any
Environmental Law of any such transporter or facility.
(b) For purposes of this Agreement: (i) "Environmental Law" means any
federal, state, foreign or local law or statute, or any rule or regulation
implementing such law or statute, in each case existing and in effect on the
date hereof relating to pollution or protection of the environment, including,
without limitation, any statute or regulation pertaining to (A) treatment,
storage, disposal, generation or transportation of Materials of Environmental
Concern (as defined below); (B) air, water and noise pollution; (C) groundwater
and soil contamination; (D) the release or threatened release into the
environment of hazardous substances, or solid or hazardous waste, including,
without limitation, emissions, discharges, injections, spills, escapes or
dumping of Materials of Environmental Concern; (E) the protection of wildlife,
marine sanctuaries and wetlands, including without limitation all endangered and
threatened species; (F) above ground or underground storage tanks, vessels and
containers; (G) abandoned, disposed or discarded barrels, tanks, vessels,
containers and other closed receptacles; and (H) manufacture, processing, use,
distribution, treatment, storage, disposal, transportation or handling of
Materials of Environmental Concern; (ii) the terms "release" and "environment"
shall have the meaning set forth in the federal Comprehensive Environmental
Compensation, Liability and Response Act of 1980, as amended ("CERCLA"); and
(iii) "Materials of Environmental Concern" means any pollutants or
15
<PAGE> 17
contaminants, hazardous substances (as such term is defined under CERCLA), solid
wastes and hazardous wastes (as such terms are defined under the federal
Resources Conservation and Recovery Act of 1976, as amended), radioactive
materials, toxic materials, oil or petroleum and petroleum products.
2.15 GOVERNMENTAL REGULATION. There is no fact or circumstance known to the
Seller relating to governmental regulation which would prevent or materially
limit or restrict the Purchaser from continuing to operate the Business in the
manner in which it is presently conducted by the Seller. There are no disputes
pending between the Seller and any governmental authority about the operations
of the Business as presently being conducted.
2.16 NATURE OF ASSETS. Except as disclosed in Schedule 2.16 of the
Disclosure Statement, there has not been excluded from the Assets any assets,
properties or rights which are necessary to the operation of the Business.
2.17 NO UNDISCLOSED LIABILITIES; NO EXISTING DEFAULTS. The Seller has no
liabilities or obligations of any nature other than those shown on the Balance
Sheet and those which have arisen since the date of the Balance Sheet in the
ordinary course of business which are not in the aggregate or individually
material. As used in the preceding sentence, the term "liability" includes any
indebtedness, claim, loss , damage, deficiency (including deferred income tax),
cost, expense, guaranty or responsibility, whether known or unknown, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated, asserted or
unasserted, due or to become due, or otherwise. Except as set forth in Schedule
2.20(c) of the Disclosure Statement, the Seller is not in default or violation,
and there exists no condition or event which, after notice or lapse of time or
both, would constitute such a default or violation, under any commitment,
contract, agreement, license, lease or other instrument, whether written or
oral, by which any of the Assets is bound or to which the Purchaser will become
subject as an Assumed Liability.
2.18 EMPLOYEES. (A) Set forth on Schedule 2.18 of the Disclosure Statement
is a list of all employees of the Seller as of the date hereof (the "Business
Employees"), their respective dates of hire and their respective dates of birth.
Except as indicated by an asterisk on said Schedule 2.18, no Business Employee
has advised any officer of the Seller that he or she intends to terminate
employment with the Business or not to accept employment by the Purchaser.
Schedule 2.18 of the Disclosure Statement also sets forth for each Business
Employee such person's current salary, date of last adjustment in salary, and
date and amount of most recent bonus.
(b) Schedule 2.18 of the Disclosure Statement also lists all employee
benefit plans (as defined in Section 3(3) of ERISA), and all compensation plans,
agreements or arrangements, including, without limitation, insurance coverage,
disability benefits, bonus, deferred compensation, incentive compensation,
severance or termination pay, severance benefit plan, post-retirement
compensation, change in control compensation, death benefit, stock purchase,
phantom stock, stock appreciation and stock option plans or arrangements and
vacation, maintained or contributed to by or on behalf of the Seller (the
"Plans"). The Seller does not provide medical coverage under the Seller's
medical and dental plans for former employees of the
16
<PAGE> 18
Business who have retired. All Plans of the Seller have been administered in
compliance with their terms, ERISA and, where applicable, the requirements of
the Internal Revenue Code (the "Code"). Each Plan that meets or purports to meet
the requirements of Code Section 401(a) (a "Qualified Plan") has received a
favorable determination letter from the Internal Revenue Service ("IRS") and no
event has occurred and no condition exists which could reasonably be expected to
result in the revocation of any such determination. The Seller has heretofore
delivered to the Purchaser true and complete copies or accurate written
descriptions of all of the Plans. Except as described in Schedule 2.18 of the
Disclosure Statement: (i) there are no inquiries or investigations by the IRS,
the U.S. Department of Labor, no termination proceedings and no actions, suits
or claims pending or, to the knowledge of the Seller, threatened against any
Qualified Plan or the assets thereof; and (ii) no act or omission has occurred
and no condition exists with respect to any employee benefit plan maintained by
the Seller or any ERISA Affiliate that would subject the Seller or the Assets to
any fine, penalty, tax or liability of any kind imposed under ERISA or the Code.
2.19 PRINCIPAL CUSTOMERS. Set forth on Schedule 2.19 of the Disclosure
Statement is a list of the 25 largest customers of the Business.
2.20 MATTERS RELATING TO THE PRODUCTS OF THE BUSINESS.
(a) BACKLOG. Schedule 2.20(a) of the Disclosure Statement contains an
accurate list of all commercial (non-military) purchase orders for the Seller's
services and products that comprise the Seller's backlog as of the Effective
Date. The aggregate amount of such backlog is not less than $900,000. All such
purchase orders and any quotations for work which are outstanding as of the date
of this Agreement contain terms and conditions that are consistent with the
Seller's practices over the past year.
(b) PRODUCT QUALITY. Except as set forth in Schedule 2.20(b) of the
Disclosure Statement, since January 1, 1995, there has not existed any return of
shipments by customers, cancellation of purchase orders, rejection of products
by customers or claims by customers for allowances that would indicate a problem
with respect to the quality of any products sold by the Seller. Since January 1,
1995, no products sold by the Seller have been authorized to be returned or
rejected by the Purchaser which products have not, in either case, been returned
to and accepted by the Seller prior to the Closing, except as disclosed in said
Schedule 2.20(b) and except for such returns and rejections of items occurring
in the normal course of business and not exceeding $50,000 in the aggregate.
(c) PRODUCT WARRANTIES. A statement of the current standard product
warranty used for each of the catalog products of the Seller is set forth on
Schedule 2.20(c) of the Disclosure Statement.
(d) RECALLS. Except as set forth on Schedule 2.20(d) of the Disclosure
Statement, there is no basis for the recall, withdrawal or suspension of any
approval by any governmental regulatory agency with respect to any product or
service sold or proposed to be sold by the Seller. Except as set forth on
Schedule 2.20(d), none of the products or services of
17
<PAGE> 19
the Seller is the subject of any recall proceedings, no such proceedings have
been threatened, and no product or service of the Seller has ever been recalled.
(e) INVENTORY. Except as set forth in Schedule 2.20(e) of the
Disclosure Schedule, (i) all inventory of the Seller, whether or not reflected
on the Balance Sheet, consists of a quality and quantity usable and salable in
the ordinary course of business, except for obsolete items and items of
below-standard quality, all of which have been written off or written down to
net realizable value in the Balance Sheet or on the accounting records of the
Seller as of the Closing Date, as the case may be, (ii) all inventories not
written off have been priced at the lower of cost or market value on a FIFO
basis, and (iii) the quantities of each item of inventory (whether raw
materials, work-in-progress, or finished goods) are not excessive, but are
reasonable in the present circumstances of the Business.
2.21 FIXED ASSETS. Except as set forth on Schedule 2.07(a) of the
Disclosure Statement, all of the fixed assets of the Business are in normal
operating condition and repair, including normal wear and tear and occasional
breakdowns in the ordinary course of business. Normal maintenance has been
performed with respect to such fixed assets.
2.22 NO TERMINATION OF RELATIONSHIPS. The Seller is not aware that any
material relationship between the Business and a distributor, customer,
supplier, employee or other person will be terminated or adversely affected as a
result of the execution of this Agreement or the consummation of the
transactions contemplated hereby.
2.23 INSURANCE. Schedule 2.23 of the Disclosure Schedule sets forth a list
(including the name of the insurer, the name of the policy holder, the name of
each insured, the policy number and periods of coverage, the scope of coverage
and a description of any retroactive premium adjustments or other loss-sharing
arrangements) of all policies of fire, theft, casualty, liability, burglary,
fidelity, workers compensation, business interruption, environmental, product
liability, automobile and other insurance under which the Seller is a party, a
named insured or otherwise the beneficiary of coverage. The Seller has not
received any notice from the insurer under any such policy disclaiming coverage,
reserving rights with respect to a particular claim or such policy in general,
or canceling or materially amending any such policy. All premiums due and
payable for such insurance policies have been duly paid, and such policies or
extensions or renewals thereof in such amounts will be outstanding and duly in
full force without interruption until the Closing Date. To the Seller's
knowledge, there exists no unusual condition or circumstance with respect to the
Business or the Assets which would cause the Purchaser's insurance carrier(s) to
charge the Purchaser premiums in excess of the premiums such carrier(s) would
have charged but for such unusual condition or circumstance.
2.24 TAXES. The Seller has prepared and duly and timely filed all federal,
state, local or foreign tax and other returns and reports which were required to
be filed, in respect of all income, franchise, excise, sales, use, property
(real and personal), payroll and other taxes, levies, imposts, duties, license
and registration fees, charges or withholdings of any nature whatsoever
("Taxes") applicable to the Seller, and has paid all Taxes shown as due on such
returns or for which an assessment has been received, except where the same are
being contested in good faith.
18
<PAGE> 20
The Seller has delivered to the Purchaser true and complete copies of the Tax
returns of the Seller for the past three years. None of the federal, state,
local or foreign Tax returns of the Seller have been audited or examined by the
governmental department or agency having jurisdiction, nor has any deficiency
for any Tax with respect to the Seller been asserted which remains unpaid. No
waivers of any statutes of limitation are in effect in respect of any Taxes of
the Seller. The Seller has never filed a consolidated income tax return with any
other company or entity. The Seller will not have any liability for Taxes, or
for any interest, penalties or fines in respect thereof, for or in respect of
any Tax period commencing prior to the Closing, except to the extent reflected
on the Closing Net Asset Statement. The Seller has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder, or other third
party. There are no security interests in any of the Assets that arose in
connection with any failure (or alleged failure) by the Seller to pay any Tax.
2.25 ACCOUNTING FOR GOVERNMENT CONTRACTS. The pricing terms for all of the
Seller's current contracts with the U.S. Government are on a fixed-price basis.
The Seller has never entered into any contract with the U.S. Government on an
allocation of costs or accounting for cost basis, such that the Cost Accounting
Standards, as promulgated by the Cost Accounting Standards Board, would be
applicable to such contract.
2.26 COMPLIANCE WITH LAWS. Except as disclosed in Schedule 2.26 of the
Disclosure Statement, the conduct of the Business, as now conducted, complies in
all material respects with all applicable governmental laws, ordinances,
regulations, rules or orders. The Seller has not received any complaint from any
governmental authority, and none is threatened, alleging that the Seller has
violated any such law, ordinance, regulation, order or policy.
2.27 STATEMENTS TRUE AND CORRECT; FURTHER REPRESENTATIONS AND WARRANTIES.
The statements contained herein or in any written documents prepared and
delivered by or on behalf of the Seller pursuant to the terms hereof are true
and correct in all material respects, and such documents do not omit any fact
required to be stated herein or therein or necessary to make the statements
contained herein or therein, in the light of the circumstances under which they
were made, not misleading.
2.28 REPRESENTATIONS AND WARRANTIES SEPARATE. Each individual
representation and warranty contained herein shall be interpreted and enforced
separately, notwithstanding potentially overlapping subject matters. No
representation or warranty contained herein shall be construed as limiting any
other representation or warranty contained herein.
19
<PAGE> 21
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents and warrants to the Seller as follows:
3.01 ORGANIZATION AND GOOD STANDING. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all corporate power and authority to enter into this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby.
3.02 AUTHORIZATION. The execution, delivery and performance by the
Purchaser of this Agreement and of each instrument to be executed and delivered
by the Purchaser hereunder has been duly and validly authorized by all necessary
corporate actions on the part of the Purchaser, will not contravene any
provision of the governing instruments of the Purchaser, nor violate any
provision of law, rule or regulation or any order, judgment or decree applicable
to the Purchaser, and will not, with or without the giving of notice or the
lapse of time, or both, constitute a breach of or default under, or require the
consent or approval of any other party to, any agreement or instrument to which
the Purchaser is a party or by which its property may be bound or affected.
3.03 VALIDITY AND ENFORCEABILITY. This Agreement has been, and all
instruments to be executed and delivered by the Purchaser hereunder shall be,
duly and validly authorized, executed and delivered by the Purchaser and shall
constitute legal, valid and binding obligations of the Purchaser, enforceable in
accordance with their respective terms.
3.04 LITIGATION. The Purchaser is not engaged in, or a party to, or
threatened with, any claim or legal action or other proceeding before any court,
any arbitrator of any kind or any administrative agency, or any governmental
investigation, which seeks to prevent the execution, delivery or performance of
this Agreement, nor does any basis for any such claim or legal action or other
proceeding or governmental investigation exist. There is no order, notice,
claim, litigation, proceeding or investigation by or before any court or
governmental agency pending or threatened against or affecting the Purchaser,
the outcome of which may adversely affect the ability of the Purchaser to
perform its obligations under this Agreement or to consummate the transactions
contemplated hereunder.
3.05 BROKERS. The Purchaser has not made any agreement or taken any other
action which may cause anyone to become entitled to a broker's fee, finder's fee
or commission from the Seller as a result of the transactions contemplated by
this Agreement.
3.06 GOVERNMENTAL CONSENTS. No consent, approval or authorization of, or
registration or filing with, any governmental authority or other regulatory
agency is required by the Purchaser in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby.
20
<PAGE> 22
ARTICLE IV
CERTAIN COVENANTS
4.01 COSTS AND EXPENSES. Each party hereto shall pay all of its own
respective expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including (a) all costs and expenses stated
herein to be borne by a party and (b) all accounting and legal fees and closing
and settlement charges.
4.02 FURTHER ASSURANCES; COLLECTION OF ACCOUNTS RECEIVABLE.
(a) The Seller shall deliver to the Purchaser, from time to time and
at any time after the Closing, promptly after a request therefor and without
further payment by the Purchaser to the Seller, such instruments of assignment
and transfer, conveyances, bills of sale and other documents as the Purchaser
may reasonably request (and which, if practicable, the Purchaser will prepare)
in order to effect or evidence the transfer to the Purchaser of all of the
Seller's right, title, and interest in and to the Assets or to collect, and
reduce to the possession of the Purchaser, the Assets.
(b) The Purchaser shall deliver to the Seller, from time to time, and
at any time after the Closing, promptly after a request therefor and without
payment by the Seller to the Purchaser, such instruments of assumption as the
Seller may reasonably request (and which, if practicable, the Seller will
prepare) in order to effect or evidence the assumption by the Purchaser of the
Assumed Liabilities.
(c) (i) The Seller agrees that it shall forward promptly to the
Purchaser any moneys, checks or instruments received by it after the Closing
Date with respect to the Accounts Receivable, and shall provide to the Purchaser
such reasonable assistance as the Purchaser may request with respect to the
collection of any such Accounts Receivable, provided the Purchaser shall pay the
reasonable out-of-pocket expenses of the Seller and its officers, directors and
employees incurred in providing such assistance. For a period of six months
after the Closing Date (the "Collection Period"), the Purchaser shall use the
same efforts to collect the Accounts Receivable as it uses with respect to its
own receivables. All amounts received by the Purchaser from each account debtor
shall be allocated to the oldest outstanding receivable of such account debtor
which is not being contested by such account debtor, unless a payment is
specifically allocated by an account debtor to a particular receivable in
connection with a dispute. The Purchaser may, but shall not be obligated to, use
a collection agency or commence legal actions in connection with such collection
efforts. The Purchaser will use its best efforts to take no action which would
impair the collectability in full of the Accounts Receivable. Promptly after the
expiration of the Collection Period, the Purchaser shall give notice to the
Seller designating those Accounts Receivable which have not been collected as of
the end of the Collection Period and which the Purchaser wishes the Seller to
purchase. Within ten days after the receipt of such
21
<PAGE> 23
notice from the Purchaser, the Seller shall purchase such designated Accounts
Receivable then remaining unpaid (without recourse to the Purchaser, and free
and clear of any liens or encumbrances thereon created by or attributable to the
Purchaser) for a purchase price equal to the unpaid principal balance thereof.
(ii) Upon the Seller's repurchase of any unpaid Account
Receivable, the Purchaser shall promptly deliver to the Seller any tangible
evidence of such Account Receivable then in the possession of the Purchaser or
under its control but in any event the Purchaser shall preserve and make
available to the Seller all documentation in relation to such Account
Receivables received by the Purchaser from the Seller at Closing. The Purchaser
will reasonably cooperate, at the Seller's expense, with the Seller in
collecting any Accounts Receivable which are repurchased by the Seller;
provided, however, that the foregoing shall not require the Purchaser to be a
party to any action brought by the Seller to collect such Accounts Receivable
unless the conveyance of the Account Receivable to the Seller is ineffective and
the Purchaser is deemed to hold title thereto. Any sums received in respect of
Accounts Receivable shall be credited to the oldest outstanding receivable of
such account debtor which is not being contested by such account debtor (unless
a payment is specifically allocated by an account debtor to a particular
receivable in connection with a dispute), and Purchaser shall promptly transmit
to Seller any such sums which are thus credited to Accounts Receivable after
their repurchase by Seller.
4.03 EMPLOYMENT AND EMPLOYEE BENEFITS.
(a) OFFER OF EMPLOYMENT. Except as otherwise set forth herein, the
Purchaser shall offer full time employment to all full time employees of the
Seller as of the Closing Date and (except as required by law) who are not then
absent due to serious bodily injury, long-term sickness or disability, layoff or
leave of absence; PROVIDED, HOWEVER, that David Carls shall not be offered such
employment and shall instead receive payments of (i) $47,218 and (ii) full
payment for his accrued vacation time ($12,358 assuming that the Closing takes
place on February 29, 1996), from Purchaser at the Closing. Such employment
shall be at will and not at less than the current cash compensation level of
each such employee. Employees who accept such offered employment are herein
collectively referred to as the "Transferred Employees". The Purchaser shall
afford to all Transferred Employees credit for all of their years of employment
with the Seller in the determination of (i) vesting and other rights under the
Purchaser's benefits programs and (ii) any severance payment made in connection
with a termination following the Closing Date (which terminations the Purchaser
reserve the absolute right to make in its discretion). The Seller shall
indemnify and hold the Purchaser harmless against any severance payments or
other obligations (including, without limitation, any liability for wrongful
discharge) that may be due by reason of (x) termination of employment of any
employees of the Seller who are not Transferred Employees whether or not such
termination occurred before or after the Closing Date, and (y) the sale of the
Business to the Purchaser being considered a constructive termination of
employment for Transferred Employees.
(b) NO THIRD PARTY RIGHTS. Nothing contained in this Agreement shall,
under any circumstances whatsoever, be construed as, expressly or impliedly,
constituting or creating any employment contract, offer of employment, promise
of continuing employment, promise of
22
<PAGE> 24
employee benefits, or other obligation of any other kind of or by the Purchaser,
to, or in favor of, any employees or consultants of the Seller, and the
Purchaser expressly disclaims any and all liability to any such third party
arising out of this Agreement.
(c) EMPLOYEE BENEFITS. Contingent upon the occurrence of the Closing:
(i) GENERAL. Subject to this Section 4.03(c), each Transferred
Employee initially shall be provided with benefits, in the aggregate,
on a basis substantially consistent with the Purchaser's normal
practice for its existing comparable employees. The Purchaser shall
not be constrained by this Agreement from terminating the employment
of any Transferred Employee or from modifying or terminating any
benefit plan or program or other terms or conditions of employment at
any time or from time to time.
(ii) 401(k) PLAN. Effective as of the Closing Date, the Seller
shall cause each Transferred Employee to become fully vested in his or
her account balance under the Seller's Retirement Savings Plan (the
"Seller's 401(k) Plan"). The Purchaser shall take all action necessary
and appropriate to extend coverage, effective as soon as possible
after the Closing, under the Thermo Electron Corporation Money Match
Plus 401(k) Plan (the "Purchaser's 401(k) Plan") to the Transferred
Employees. Such Transferred Employees shall be credited under the
Purchaser's 401(k) Plan, for eligibility and vesting purposes, with
the service credited under the terms of the Seller's 401(k) Plan. The
Seller shall provide the Purchaser with all such information as is
necessary for the Purchaser to carry out its obligations under the
foregoing sentences. The Seller shall cause any and all contributions
that are required under the Seller's 401(k) Plan for the period prior
to the Closing Date to be made prior to distribution to Transferred
Employees or rollover to the Purchaser's 401(k) Plan. The Purchaser
shall allow the Transferred Employees to make direct cash rollovers
under Section 402(c) of the Code of their account balances from the
Seller's 401(k) Plan to the Purchaser's 401(k) Plan. The Purchaser
shall not assume the Seller's 401(k) Plan or any liability thereof.
The Seller agrees to take all appropriate steps necessary to terminate
the Seller's 401(k) Plan as soon as practicable following the Closing.
(iii) WELFARE PLANS.
(A) WELFARE BENEFIT PLAN CONTINUATION. Effective as of the
Closing Date, (I) the Seller shall cause each Transferred
Employee to cease to participate in each welfare benefit plan
sponsored by Seller (the "Seller's Welfare Plans") and (II) the
Purchaser shall cause each Transferred Employee to be covered by
the welfare benefit plans required to be provided by the
Purchaser to the Transferred Employees in accordance with Section
4.03(c)(i) of this Agreement except as otherwise provided in this
clause (iii). The Purchaser shall have no responsibility or
liability for medical or dental claims for employees (and/or
their dependents) who are terminated employees as of the Closing
Date and are currently receiving
23
<PAGE> 25
or are eligible to receive continuation of medical coverage under
one or more of Seller's Welfare Plans under Section 4980B of the
Code and Part 6 of Subtitle B of Title I of ERISA.
(B) LONG-TERM DISABILITY BENEFITS. Employees and previous
employees of the Seller eligible to receive long-term disability
benefits pursuant to Seller's long-term disability benefits plan
(whether such eligibility arises prior to or after the Closing)
shall continue to receive such benefits pursuant to the terms of
such plan, and the Purchaser shall have no liability therefor.
(C) MEDICAL AND DENTAL BENEFITS. The Seller shall remain
liable for claims for medical and dental benefits incurred by
employees (and their respective covered dependents) of the Seller
(active or inactive) and by terminated employees previously
employed by the Seller (and their respective covered dependents)
under the Seller's medical and dental plan(s) with respect to
services and treatment rendered (i.e., claims incurred) prior to
the Closing Date. The Purchaser shall cause each of the
Transferred Employees (and their respective covered dependents)
to be covered immediately after the Closing under medical and
dental plans consistent with the Purchaser's existing plans.
These employees will be granted credit under the Purchaser's
medical and dental plans, for the year during which the Closing
Date occurs, with any deductible already incurred by such
Transferred Employees for such year under the plans of the Seller
and with any other out-of-pocket expenses that count against any
maximum out-of-pocket expense provision of Seller's or
Purchaser's medical or dental plan for such year. The Seller
agrees to provide this data to the Purchaser as soon as
practicable after the Closing Date. The Purchaser shall cause
there to be waived any pre-existing condition restrictions under
the Purchaser's medical and dental plans to the extent necessary
to provide immediate coverage under the Purchaser's medical and
dental plans to Transferred Employees (and their respective
covered dependents) who were previously covered under the
Seller's medical and dental plans.
(D) W-2 FORMS. As permitted by Revenue Procedure 84-77, the
Purchaser shall be responsible to provide the Transferred
Employees with a statement on Form W-2 covering calendar year
1996. The Seller shall provide the Purchaser with all records
concerning 1996 compensation and withholding, through the Closing
Date, for each Transferred Employee.
4.04 CORPORATE IDENTITY.
(a) CORION NAMES. The Seller acknowledges that, as of and following
the Closing, the Purchaser shall have the absolute and exclusive proprietary
right to all names, marks, trade names and trademarks incorporating "Corion" or
any derivative or variation thereof or any distinctive mark associated therewith
(collectively, "Corion Names") and to all corporate symbols or logos
incorporating "Corion" or any derivative or variation thereof or any distinctive
mark associated therewith (collectively, "Corion Logos"), and that all rights
thereto and the goodwill
24
<PAGE> 26
represented thereby and pertaining thereto are being transferred to the
Purchaser. From and after the Closing Date, the Seller will not use any Corion
Name or Corion Logo in or on any of its literature, sales materials or products
or otherwise in connection with the sale of any products or services.
(b) SELLER'S NAME CHANGE. As promptly as practicable following the
Closing Date, the Seller shall prepare and file with the Secretary of State of
the Commonwealth of Massachusetts all documents and instruments necessary to
change the Seller's corporate name to one bearing no resemblance to "Corion
Corporation".
4.05 RECORDS AND FILES; ACCESS.
(a) RECORDS AND FILES. For a period of seven years (or such longer
period as may be required by law or as may be reasonably requested by the
Purchaser as a result of audits, tax contests or pending disputes) from the
Closing Date, (i) the Seller shall not dispose of or destroy any of their
business records and files to the extent they relate primarily to the Business
without first offering to turn over possession thereof to the Purchaser, by
written notice at least 60 days prior to the proposed date of such disposition
or destruction; (ii) the Seller shall allow the Purchaser and its
representatives access to such records and files, during normal working hours at
its principal place of business or at any location where such records or files
are stored; and (iii) the Purchaser shall have the right, at its own expense, to
make copies of any such records and files; provided, however, that any such
access or copying shall be had or done in such manner so as not to unreasonably
interfere with normal conduct of the Seller's business. For a period of seven
years (or such longer period as may be required by law or as may be reasonably
requested by the Seller as a result of audits, tax contests or pending disputes)
from the Closing Date, (i) the Purchaser shall not dispose of or destroy any of
their business records or files to the extent they relate primarily to the
Business as conducted prior to the Closing Date without first offering to turn
over possession thereof to the Seller, by written notice at least 60 days prior
to the proposed date of such disposition or destruction; (ii) the Purchaser
shall allow the Seller and its representatives access to such records and files
during normal working hours at its principal place of business or at any
location where such records and files are stored; and (iii) the Seller shall
have the right, at its own expense, to make copies of any such records and
files; provided, however, that any such access or copying shall be had or done
in such manner so as not to unreasonably interfere with the normal conduct of
the Purchaser's business.
(b) ACCESS. The Seller and the Purchaser shall use their best efforts
to afford the other access to (i) in the case of the Seller, employees of the
Seller (if any) who remain employees of the Seller following the Closing Date
but are familiar with the Business and (ii) in the case of the Purchaser,
Transferred Employees, as such other shall reasonably request for its proper
corporate purposes, including, without limitation, the defense of legal
proceedings or the preparation and audit of tax returns. Such access may include
interviews or attendance at depositions or legal proceedings; provided, however,
that in any event all out-of-pocket expenses (excluding wage and salaries)
reasonably incurred by any party in connection with this Section 4.05(b) shall
be paid or promptly reimbursed by the party requesting such services.
25
<PAGE> 27
(c) PERSONNEL. The Purchaser shall make available to the Seller the
services of the Transferred Employees to provide such assistance to the Seller
as may be reasonably required to permit the Seller to prepare its final tax
returns and financial statements, and to facilitate the Seller's orderly winding
up of its affairs.
4.06 PROPRIETARY INFORMATION; CONFIDENTIALITY.
(a) At all times subsequent to the Signing Date, the Seller shall hold
in confidence all knowledge and information of a secret or confidential nature
with respect to the Business ("Proprietary Business Information") and shall not
disclose, publish or make use of the same without the consent of the Purchaser.
(b) At all times subsequent to the Signing Date, the Seller shall hold
in confidence all knowledge and information of a secret or confidential nature
supplied to it by the Purchaser for its evaluation of the transactions
contemplated by this Agreement (such information, excluding the Proprietary
Business Information, which shall be governed by Section 4.06(a), the
"Evaluation Information").
(c) The obligations of the Seller under this Section 4.06 shall not
apply to any Proprietary Business Information or Evaluation Information which:
(i) shall have become public knowledge other than by breach of
this Agreement by the Seller or any of its Affiliates;
(ii) is required to be disclosed by legal process or by any
applicable law, rule or regulation of any governmental or regulatory body or
stock exchange;
(iii) becomes available to the Seller from a source other than
the Purchaser or its representatives or agents;
(iv) was known by the Seller prior to its receipt from the Seller
or from its representatives or agents;
(v) has been or is subsequently developed independently by the
Seller; or
(vi) is disclosed more than five years after the date of this
Agreement.
4.07 NO SOLICITATION OR HIRING OF FORMER EMPLOYEES. For a period of three
years after the Closing Date, neither the Seller nor an entity controlled by the
Seller shall, without the prior written consent of the Purchaser, solicit any
Transferred Employee to terminate his or her employment with the Purchaser or to
become an employee of the Seller or any such entity.
26
<PAGE> 28
4.08 NONCOMPETITION AGREEMENT.
(a) UNDERTAKING. For a period of three years after the Closing Date,
neither the Seller nor an entity controlled by the Seller shall, directly or
indirectly, develop, manufacture, market, sell or resell, anywhere in the world,
any product which competes with any product manufactured, sold or developed by
the Business as of the Closing Date.
(b) INTERPRETATION AND REMEDIES. The parties hereto agree that the
duration and geographic scope of the noncompetition provision set forth in this
Section 4.08 are reasonable. In the event that any court of competent
jurisdiction determines that the duration or the geographic scope, or both, are
unreasonable and that such provision is to that extent unenforceable, the
parties hereto agree that the provision shall remain in full force and effect
for the greatest time period and in the greatest area that would not render it
unenforceable. The parties intend that this noncompetition provision shall be
deemed to be a series of separate covenants, one for each and every county of
each and every state of the United States of America and each and every
political subdivision of each and every country outside the United States of
America where this provision is intended to be effective. The Seller agrees that
damages are an inadequate remedy for any breach of this provision and that the
Purchaser shall, whether or not it is pursuing any potential remedies at law, be
entitled to equitable relief in the form of preliminary and permanent
injunctions without bond or other security upon any actual or threatened breach
of this noncompetition provision.
4.09 COOPERATION IN LITIGATION. Except to the extent the Seller liquidates
following the Closing, each party hereto will fully cooperate with the other
party in the defense or prosecution of any litigation or proceeding which may be
instituted hereafter against or by such party relating to or arising out of the
conduct of the Business prior to or after the Closing Date (other than
litigation arising out of the transactions contemplated by this Agreement). The
party requesting such cooperation shall pay the out-of-pocket expenses
(including legal fees and disbursements) of the party providing such cooperation
and of its officers, directors, employees and agents reasonably incurred in
connection with providing such cooperation, but shall not be responsible to
reimburse the party providing such cooperation for such party's time spent in
such cooperation or the salaries or costs of fringe benefits or similar expenses
paid by the party providing such cooperation to its officers, directors,
employees and agents while assisting in the defense or prosecution of any such
litigation or proceeding.
4.10 REMOVAL OF ASSETS; CONDITION OF PREMISES WHEN SURRENDERED.
(a) REMOVAL OF ASSETS. Within two weeks following the Closing Date,
the Purchaser shall have removed the Assets from the Premises. For each day
thereafter on which any Assets remain on the Premises (unless there is a good
faith dispute as to whether any items remaining on the Premises constitute a
part of the Assets), the Purchaser shall pay to the Seller liquidated damages of
$716.22 per day. Except as set forth in Section 4.10(b), the Seller agrees that
such
27
<PAGE> 29
liquidated damages shall be the total amount of damages to which Seller shall be
entitled as a result of such Assets remaining on the Premises.
(b) CONDITION OF PREMISES. The Premises shall be left by the Purchaser
in broom-clean condition in the same repair as exists on the Closing Date, with
all utilities stubbed or tied off in a safe and secure manner, damage by
casualty which is not the fault of the Purchaser or taking excepted. The
Purchaser hereby agrees to repair promptly any and all damage caused by the
removal of the Assets from the Premises. Any Assets not so removed shall be
deemed abandoned and may be removed and disposed of by the Seller in such manner
as the Seller shall determine, and Purchaser shall pay the costs and expenses
incurred by Seller in effecting such removal and disposition.
4.11 PRECLOSING COVENANTS. The Seller and Purchaser agree as follows with
respect to the period of time between the Signing Date and the Closing Date:
(a) GENERAL. Each of the Seller and the Purchaser will use its best
efforts to take all actions and do all things necessary, proper or advisable in
order to consummate and make effective the transactions contemplated by this
Agreement.
(b) OPERATION OF BUSINESS. The Seller will not engage in any practice,
take any action, or enter into any transaction other than in the ordinary course
of business consistent with its past custom and practice, except as otherwise
authorized in writing by the Purchaser. Except with respect to any act of force
majeure, the Seller will keep its business and property substantially intact,
including its present operations, equipment, working conditions, and
relationships with licensors, suppliers, customers, and employees.
(c) FULL ACCESS. The Seller will permit representatives of the
Purchaser to have full access at all reasonable times, and in a manner so as not
to interfere with the normal business operations of the Seller, to all premises,
properties, personnel, books, records, contracts, and documents of or pertaining
to the Seller. The Purchaser will treat as confidential and hold as such any
information concerning the Business which it receives from the Seller.
(d) PURCHASER'S APPROVAL OF CERTAIN TRANSACTIONS. Except as may be
otherwise required under this Agreement, from the date hereof to the Closing,
the Seller will not do any of the following without the prior approval of the
Purchaser:
(i) Incur or permit the incurrence of any obligation or other
liability in excess of $35,000;
(ii) Enter into any Material Contract (as defined in Section
2.12);
(iii) Voluntarily permit to be incurred any encumbrance of the
Assets, other than encumbrances existing on the date hereof;
28
<PAGE> 30
(iv) Increase the rate of compensation by more than 5 percent for
any of the employees, or otherwise enter into or alter any employment,
consulting, or service agreement affecting the Business;
(v) Enter into any agreement for, or consummate, any sale, lease,
abandonment or other disposition of any Assets other than the
Inventories; or
(vi) Enter into any transaction other than in the ordinary course
of business.
(e) ADVANCE OF FUNDS BY PURCHASER. If requested by the Seller, but
only to the extent the Business consumes cash, the Purchaser will advance cash
to the Seller on an interest-free basis to fund the Seller's operations between
the Signing Date and the Closing Date. The amount of such advance will be due
and payable by the Seller to the Purchaser on the earlier of the Closing Date or
six months after the termination, for any reason, of this Agreement.
4.12 POSTCLOSING COVENANTS. It is understood and agreed by the parties
that, if the Seller is liquidated in connection with the winding up of its
affairs prior to the fulfillment of all of its or the Purchaser's obligations
hereunder, the Seller shall, prior to such liquidation, designate one its
shareholders to be the sole representative of the Seller in all matters
pertaining hereto, with full power of attorney to act on behalf of the other
shareholders. Seller shall notify the Purchaser promptly of such designation.
ARTICLE V
INDEMNIFICATION
5.01 INDEMNIFICATION BY THE SELLER. Subject to the provisions of Section
5.02, the Purchaser, upon demand, shall be indemnified by the Seller for the
full amount of all Damages (as defined in Section 5.05 below) suffered by the
Purchaser as a direct or indirect result of:
(i) the inaccuracy of any representation or warranty made by the
Seller in or pursuant to this Agreement;
(ii) any failure by the Seller to perform any obligation or
comply with any covenant or agreement specified herein or in any other document
executed at the Closing;
(iii) any claim asserted with respect to the Excluded Liabilities
and any other liabilities, obligations or claims that are not Assumed
Liabilities;
(iv) the failure of the Seller to obtain the protections afforded
by compliance with the notification and other requirements of the bulk sales
laws in force in the jurisdictions in which such laws may be applicable to
either the Seller or the transactions contemplated by this Agreement; and
29
<PAGE> 31
(v) any liability of any kind, arising directly or indirectly out
of a default under, or a breach of, any contract or commitment of any kind by
the Seller prior to the Closing (it being understood that the cost of fulfilling
warranty obligations of the Business arising prior to the Closing shall not be
deemed to be such a liability).
The Purchaser shall give the Seller prompt written notice of any claim,
action or proceeding by a third party which is reasonably likely to result in a
claim for indemnification under this Section 5.01. Unless such claim, action or
proceeding is one which, if adversely determined, would have a materially
adverse impact (in the reasonable judgment of Purchaser) on the Purchaser's
liability in another proceeding, goodwill or reputation or on the future conduct
by the Purchaser of its business or on its Tax or accounting positions, the
Seller shall have the right, at its expense, to defend, contest, protest or
otherwise control the resolution of any such claim, action or proceeding. In
such case, the Seller shall keep the Purchaser apprised of material developments
with respect to any such claim, action or proceeding, and the Purchaser shall
have the right to consult with the Seller and to participate therein, subject to
the Seller's right of control thereof, at Purchaser's expense and with counsel
selected by the Purchaser. If the Seller shall notify the Purchaser (which
notification shall be in writing) that the Seller has elected to assume any such
defense, contest or protest, the Seller shall not be liable to the Purchaser
hereunder for any legal or other expense subsequently incurred by the Purchaser
in connection therewith.
5.02 LIMITATION OF SELLER'S LIABILITY. The right of the Purchaser to be
indemnified pursuant to Section 5.01(i):
(i) shall not apply until the sum of the Damages suffered by the
Purchaser on a cumulative basis equals or exceeds $55,000, provided that if and
when such Damages on a cumulative basis equal or exceed $55,000, the Purchaser
shall be entitled to recover 100% of the Damages suffered;
(ii) shall apply to claims based solely on representations and
warranties in Article II only if asserted by the Purchaser before the expiration
of the survival period set forth in Section 6.01.
In no event shall the Seller be liable to the Purchaser pursuant to this
Article V for Damages in excess of $2,225,000 (including the $350,000 placed
into escrow pursuant to the Escrow Agreement).
5.03 INDEMNIFICATION BY THE PURCHASER. Subject to the provisions of Section
5.04, the Seller, upon demand, shall be indemnified by the Purchaser for the
full amount of all Damages suffered by the Seller as a direct or indirect result
of:
(i) the inaccuracy of any representation or warranty made by the
Purchaser in or pursuant to this Agreement;
30
<PAGE> 32
(ii) any failure by the Purchaser to perform any obligation or
comply with any covenant or agreement of the Purchaser specified herein or in
any other document executed at the Closing; and
(iii) any claim asserted with respect to the Assumed Liabilities.
The Seller shall give the Purchaser prompt written notice of any claim,
action or proceeding by a third party which is reasonably likely to result in a
claim for indemnification under this Section 5.03. Unless such claim, action or
proceeding is one which, if adversely determined, would have a materially
adverse impact (in the reasonable judgment of Seller) on the Seller's liability
in another proceeding, goodwill or reputation or on the future conduct by the
Seller of its business or on its Tax or accounting positions, the Purchaser
shall have the right, at its expense, to defend, contest, protest or otherwise
control the resolution of any such claim, action or proceeding. In such case,
the Purchaser shall keep the Seller and the Shareholders apprised of material
developments with respect to any such claim, action or proceeding and the Seller
shall have the right to consult with the Purchaser and to participate therein,
subject to the Purchaser's right of control thereof, at its expense and with
counsel selected by it. If the Purchaser shall notify the Seller that the
Purchaser has elected to assume any such defense, contest or protest, the
Purchaser shall not be liable to the Seller hereunder for any legal or other
expense subsequently incurred by the Seller in connection therewith.
5.04 LIMITATION OF PURCHASER'S LIABILITY. The right of the Seller to be
indemnified pursuant to Section 5.03(i):
(i) shall not apply until the sum of the Damages suffered by the
Seller on a cumulative basis equals or exceeds $55,000 provided that, if and
when such Damages on a cumulative basis equal or exceed $55,000, the Seller
shall be entitled to recover 100% of the Damages suffered; and
(ii) shall apply to claims based solely on representations and
warranties in Article III only if asserted by the Seller and the Shareholders
before the expiration of the survival period set forth in Section 6.01.
In no event shall the Purchaser be liable to the Seller pursuant to this
Article V for Damages in excess of $2,225,000.
5.05 DEFINITION OF "DAMAGES". For purposes of this Article V, the term
"Damages" shall be determined and computed by reference to the effect of the
compensable event on the party or parties entitled thereto, and shall be deemed
to include (i) all losses, liabilities, expenses or costs incurred by such party
or parties, including, without limitation, amounts paid in settlement, interest,
court costs, costs of investigators, fees and expenses of attorneys,
accountants, financial advisors and other experts, and (ii) interest at a rate
per annum equal to that announced from time to time by First National Bank of
Boston as its "base rate" (or the legal rate of interest, if lower) from the
date 90 days after written notice of any such claim for indemnification is given
to the party from whom indemnification may be sought, or if an
31
<PAGE> 33
unliquidated claim, from such later date as the claim is liquidated, to the date
full indemnification is made therefor.
5.06 SOLE REMEDY. The sole remedy of the Purchaser for any and all claims
of the nature described in Section 5.01, and the sole remedy of the Seller for
any and all claims of the nature described in Section 5.03, shall be the
indemnities and the limitations thereon set forth in this Article V; PROVIDED,
HOWEVER, that the provisions of this Section 5.06 shall not in any way effect
the validity of the Personal Guarantees.
ARTICLE V(A)
CONDITIONS
5A.01 CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The obligation of the
Purchaser to consummate the transactions to be performed by and in connection
with the Closing is subject to satisfaction of the following conditions (any and
all of which may be waived by the Purchaser):
(a) The representations and warranties set forth in Article II, (other
than those set forth in Section 2.04, 2.07 (a), (d), (e), (h) and (m), 2.08,
2.12, 2.14, 2.15, 2.17 (first sentence), 2.18, 2.19, 2.20 and 2.22), shall be
true and correct at and as of the Closing Date, and Purchaser shall have
received from Seller a certificate dated the Closing Date and executed by an
officer of Seller certifying that such representations and warranties are true
and correct as of the Closing Date;
(b) The Seller shall have performed and complied with all of its
covenants hereunder through the Closing;
(c) No action, suit, or proceeding shall be pending before any court
or administrative agency of any federal, state, or local jurisdiction wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would prevent
the consummation of the transactions contemplated by this Agreement, or would
affect adversely the right of the Purchaser to acquire the Assets; and
(d) The Seller shall have delivered to the Purchaser the documents and
instruments described in Section 1.04(b)(i).
5A.02 CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligation of the Seller
to consummate the transactions to be performed by and in connection with the
Closing is subject to satisfaction of the following conditions (any and all of
which may be waived by the Seller):
32
<PAGE> 34
(a) The representations and warranties set forth in Article III shall
be true and correct at and as of the Closing Date, and Seller shall have
received from Purchaser a certificate dated the Closing Date and executed by an
officer of Purchaser certifying that such representations and warranties are
true and correct as of the Closing Date;
(b) The Purchaser shall have performed and complied with all of its
covenants hereunder through the Closing;
(c) No action, suit, or proceeding shall be pending before any court
or administrative agency of any federal, state, or local jurisdiction wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would prevent
the consummation of the transactions contemplated by this Agreement, or would
affect adversely the right of the Seller to acquire the Assets; and
(d) The Purchaser shall have delivered to the Seller the documents and
instruments described in Section 1.04(b)(ii).
ARTICLE VI
MISCELLANEOUS
6.01 SURVIVAL OF REPRESENTATIONS. All representations and warranties set
forth in Article II with respect to the Seller and in Article III with respect
to the Purchaser shall survive the Closing for a period of eighteen months after
the Closing, except for those in Sections 2.01, 2.02, 2.03, 2.11, 2.14, 2.18(b),
2.24, 3.01, 3.02, 3.03 and 3.06, which shall survive the Closing until 90 days
after such time as claims with respect thereto shall be barred by the applicable
statutes of limitation. No investigation by or on behalf of the parties hereto,
whether before or after the Closing, shall be deemed to alter or limit any of
the representations or warranties referred to in the preceding sentence or shall
be used as a basis for any defense to any claim made with respect thereto.
6.02 SCOPE, AMENDMENT AND WAIVER. This Agreement (including the Exhibits
hereto and the Disclosure Statement) and other agreements executed
contemporaneously herewith represent the entire understanding of the parties
with respect to the subject matters thereof and any previous agreements or
understandings between the parties regarding the subject matters thereof
(including, without limitation, the Letter of Intent among the parties dated
June 29, 1995 and any confidentiality agreements executed by the parties prior
to the date hereof) are merged into and superseded by this Agreement and such
other agreements. Without limiting the generality of the foregoing, any previous
confidentiality agreement between the Seller and the Purchaser is hereby
expressly terminated. This Agreement cannot be modified, amended or changed, nor
may compliance with any provision hereof be waived, except by an instrument in
writing executed by the party against whom enforcement of such modification,
amendment, change or waiver is sought. Any waiver by a party of the breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any other breach of such provision or
33
<PAGE> 35
of any breach of any other provision of this Agreement. The failure of a party
to insist upon strict compliance with any provision of this Agreement at any
time shall not deprive such party of the right to insist upon strict compliance
with such provision at any other time or of the right to insist upon strict
compliance with any other provision hereof at any time.
6.03 COMMUNICATIONS. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given or made and received
(i) upon delivery, if personally delivered, (ii) on the day actually received,
if sent by facsimile transmission (with delivery confirmed), or (iii) one
business day after being sent, if sent by overnight courier (with delivery
confirmed), to the parties at the following addresses:
(a) if to the Seller, to:
Frank Mascis
332 Charlemagne Boulevard, Apt. H201
Naples, FL 33962
Fax Number: (813) 793-4675 (please telephone first)
and
David Carls
42 Cutting Cross Way
Wayland, MA 01778
Fax Number: (508) 358-0043
with a copy to:
Hill & Barlow
One International Place
100 Oliver Street
Boston, MA 02110
Attention: Terry Mahoney, Esq.
Fax Number: (617) 428-3500
(b) if to the Purchaser, to:
Thermo Vision Corporation
27 Forge Parkway
Franklin, MA 02038
Attention: President
Fax Number: (508) 520-1732
34
<PAGE> 36
with a copy to:
Thermo Electron Corporation
81 Wyman Street
P. O. Box 9046
Waltham, Massachusetts 02254-9046
Attention: General Counsel
Fax Number: (617) 622-1283
or to such other address or addresses as may hereafter be furnished by any party
to the other parties hereto.
6.04 GOVERNING LAW. This Agreement shall be governed by the law of the
Commonwealth of Massachusetts applicable to agreements made and to be performed
wholly within such jurisdiction, without regard to the conflicts of laws
provisions thereof. The party or parties prevailing in any suit, action or
proceeding arising out of or relating to this Agreement shall be entitled to the
payment in full by the opposing party or parties thereto of all of the costs and
expenses, including reasonable attorneys' fees, incurred by the prevailing party
or parties in bringing or defending such suit, action or proceeding.
6.05 JURISDICTION AND VENUE. Any legal suit, action, or proceeding arising
out of or relating in any way to this Agreement, any other agreement or
instrument contemplated herein or the transactions contemplated hereby,
including but not limited to actions seeking specific performance of the terms
of this Agreement, actions for indemnity, actions seeking declaratory relief
regarding the terms of this Agreement or actions for breach of this Agreement,
shall be institute exclusively in the United States District Court for the
Eastern District of Massachusetts, United States of America, or if such court
shall not have subject matter jurisdiction over such action, a court of general
jurisdiction of the Commonwealth of Massachusetts located in the City of Boston.
Each party hereby waives any objection whatsoever that it may have now or
hereafter to the laying of the venue of any such suit, action or proceeding
exclusively in such courts, and irrevocably submits to the exclusive
jurisdiction thereof in any such suit, action or proceeding.
6.06 PARTIES IN INTEREST. Except as hereinafter contemplated, this
Agreement and the respective rights and obligations of the parties hereunder may
not be assigned by any party without the prior written consent of all of the
other parties. Notwithstanding the foregoing, nothing herein contained shall
prohibit the assignment by the Purchaser of certain or all of its rights
hereunder to one or more Affiliates of the Purchaser, nor shall any assignment
by operation of law in connection with the merger, consolidation or dissolution
of any party hereto be prohibited. Subject to the foregoing, this Agreement
shall bind and inure to the benefit of the parties hereto and their respective
successors and assigns.
35
<PAGE> 37
6.07 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.08 HEADINGS. The headings of the Articles, Sections and Subsections of
this Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
6.09 NO THIRD PARTY BENEFICIARY RIGHTS. This Agreement is not intended to
and shall not be construed to give any person or entity other than the parties
signatory hereto any interest or rights (including, without limitation, any
third party beneficiary rights) with respect to or in connection with any
agreement or provision contained herein or contemplated hereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
CORION CORPORATION
By: /s/ David H. Carls
--------------------------------
Title: President
THERMO VISION CORPORATION
By: /s/ Kristine A. Langdon
--------------------------------
Title: President
36
<PAGE> 1
Exhibit 2.3
EXECUTED VERSION
PURCHASE AGREEMENT
between
THERMO VISION CORPORATION
and
THE SHAREHOLDERS AND OPTIONHOLDERS OF ORIEL CORPORATION
AS SET FORTH HEREIN
Dated as of February 7, 1996
<PAGE> 2
PURCHASE AGREEMENT
This purchase agreement ("Agreement") is made as of February 7, 1996 by and
between Thermo Vision Corporation, a Delaware corporation ("Buyer") and the
individuals and entities set forth on the signature pages hereof (the
"Sellers").
RECITALS
Sellers collectively own (a) 3,315,643 shares (the "Shares") of the common
stock, par value $.01 per share, of Oriel Corporation, a Delaware corporation
(the "Company"), which constitute all of the issued and outstanding shares of
common stock of Company and (b) options (the "Options") to purchase up to
358,000 shares of such common stock (the Sellers holding Options are sometimes
referred to herein as the "Optionholders"). Sellers owning Shares desire to
sell, and Buyer desires to purchase, the Shares for the consideration and on the
terms set forth in this Agreement. Sellers holding Options desire that such
Options be canceled in exchange for the consideration and on the terms set forth
in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"Acquired Companies"-- the Company and its Subsidiaries, collectively.
"Adjustment Amount"-- as defined in Section 2.5.
"Andor"-- Andor Technology Limited, a limited liability corporation
organized under the laws of Northern Ireland, of which the Company owns 51.25%
of the outstanding capital stock.
"Applicable Contract"-- any Contract (a) under which any Acquired Company
has or may acquire any rights, (b) under which any Acquired Company has or may
become subject to any obligation or liability, or (c) by which any Acquired
Company or any of the assets owned or used by any Acquired Company is or may
become bound.
"Attorneys"-- as defined in Section 11.10.
"Balance Sheet"-- as defined in Section 3.4.
1
<PAGE> 3
"Best Efforts"-- the efforts that a prudent Person desirous of achieving a
result would use in similar circumstances to ensure that such result is achieved
as expeditiously as possible; provided, however, that a Person required to use
his Best Efforts under this Agreement will not be required to take actions that
would result in a materially adverse change in the benefits to such Person of
this Agreement and the Contemplated Transactions.
"Breach"-- a "Breach" of a representation, warranty, covenant, obligation,
or other provision of this Agreement or any instrument delivered pursuant to
this Agreement will be deemed to have occurred if there is or has been (a) any
inaccuracy in or breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision, or (b) any
claim (by any Person) or other occurrence or circumstance that is or was
inconsistent with such representation, warranty, covenant, obligation, or other
provision, and the term "Breach" means any such inaccuracy, breach, failure,
claim, occurrence, or circumstance.
"Buyer"-- as defined in the first paragraph of this Agreement.
"CERCLA"-- the United States Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Sec. 9601 et seq., as amended.
"Closing"-- as defined in Section 2.3.
"Closing Date"-- the date and time as of which the Closing actually takes
place.
"Code"-- the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"Company"-- as defined in the second paragraph of this Agreement.
"Consent"-- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contemplated Transactions"-- all of the transactions contemplated by this
Agreement, including:
(a) the sale of the Shares by Sellers to Buyer and the purchase of the
Shares by Buyer from Sellers;
(b) the cancellation of the Options in exchange for the receipt of the
consideration set forth on ANNEX C hereto;
(c) the execution, delivery, and performance of the Sellers' Releases
and the Escrow Agreement; and
(d) the performance by Buyer and Sellers of their respective covenants
and obligations under this Agreement.
2
<PAGE> 4
"Contract"-- any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"Damages"-- as defined in Section 10.2.
"Disclosure Letter"-- the disclosure letter delivered by Sellers to Buyer
concurrently with the execution and delivery of this Agreement and attached
hereto as ANNEX A, which ANNEX A is incorporated herein by this reference as if
set forth in its entirety herein.
"Encumbrance"-- any charge, claim, community property interest, condition,
lien, option, pledge, security interest, right of first refusal, or restriction
of any kind, including any restriction on use, voting (in the case of any
security), transfer, receipt of income, or exercise of any other attribute of
ownership.
"Environment"-- soil, land, surface or subsurface strata, surface waters
(including navigable waters and ocean waters), groundwater, drinking water
supply, stream sediments, ambient air (including indoor air), plant and animal
life, and any other environmental medium or natural resource.
"Environmental, Health and Safety Liabilities"-- any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law, Occupational Safety and Health Law, a contract or other
obligation relating to:
(a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and
health, and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
remedial, or inspection costs and expenses arising under Environmental Law
or Occupational Safety and Health Law;
(c) cleanup costs or corrective action, including any cleanup,
removal, containment, or other remediation or response actions ("Cleanup")
required by applicable Environmental Law or Occupational Safety and Health
Law; or
(d) any other compliance, corrective, or remedial measures required
under Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial," and "response action" shall have the meaning
given such terms in CERCLA.
"Environmental Law"-- Legal Requirements relating to any environmental
matters or conditions.
3
<PAGE> 5
"ERISA"-- the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Escrow Agreement"-- as defined in Section 2.4.
"Facilities"-- any real property, leaseholds, or other interests currently
or formerly owned or operated by any Acquired Company (or any predecessor
Person) and any buildings, plants, structures, or equipment currently or
formerly owned, leased, or operated by any Acquired Company (or any predecessor
Person).
"GAAP"-- United States generally accepted accounting principles (or, in the
case of the financial statements of Andor, United Kingdom generally accepted
accounting principles), in each case, applied on a basis consistent with the
basis on which the Balance Sheet and the other financial statements referred to
in Section 3.4 were prepared.
"Governmental Authorization"-- any consent, license, permit, waiver, or
other authorization issued, granted, given, or otherwise made available by or
under the authority of any Governmental Body or pursuant to any Legal
Requirement.
"Governmental Body"-- any:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government; or
(c) body exercising, or entitled or purporting to exercise, any
administrative, executive, judicial (including court), legislative, police,
regulatory, or taxing authority or power of any nature.
"Hazardous Activity"-- the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment, or use (including any withdrawal or other
use of groundwater) of Hazardous Materials in, on, under, about, or from the
Facilities or any part thereof into the Environment.
"Hazardous Materials"-- any substance that is, as of the Closing Date,
listed, deemed, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any admixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos containing materials.
"HSR Act"-- the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, or any successor law, and regulations and rules issued pursuant to that
Act or any successor law.
"Indemnified Persons"-- as defined in Section 10.2.
4
<PAGE> 6
"Intellectual Property Assets"-- as defined in Section 3.22.
"Interim Balance Sheet"-- as defined in Section 3.4.
"IRS"-- the United States Internal Revenue Service or any successor agency,
and, to the extent relevant, the United States Department of the Treasury.
"Knowledge"-- a Person (that is an individual) will be deemed to have
"Knowledge" of a particular fact or other matter if such Person is actually
aware of such fact or other matter. A Person (other than an individual) will be
deemed to have "Knowledge" of a particular fact or other matter if any
individual who is serving as a director, officer, partner, executor, or trustee
of such Person (or in any similar capacity) has Knowledge of such fact or other
matter.
"Legal Requirement"-- any federal, state, local, municipal, foreign or
international law, ordinance, regulation, statute, or treaty, including common
law.
"Occupational Safety and Health Law"-- any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards.
"Order"-- any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business"-- an action taken by a Person will be deemed
to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of
such Person; and
(b) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority), is not required to be specifically authorized by the
parent company (if any) of such Person, and does not require any other
separate or special authorization of any nature.
"Organizational Documents"-- (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
"Person"-- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, or other entity or
Governmental Body.
5
<PAGE> 7
"Plan"-- as defined in Section 3.13.
"Proceeding"-- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Related Person"-- as applied to any Person means any other Person directly
or indirectly controlling, controlled by or under common control with that
Person.
"Release"-- as defined in CERCLA.
"Representative"-- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"Securities Act"-- the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"Sellers"-- as defined in the first paragraph of this Agreement.
"Sellers' Proportion" -- shall mean, as to each Seller, the respective
decimal amounts set forth opposite each Seller's name on ANNEX C under the
heading "Seller's Proportion".
"Sellers' Releases"-- as defined in Section 2.4.
"Shares"-- as defined in the second paragraph of this Agreement.
"Subsidiary"-- with respect to any Person (the "Owner"), any corporation or
other Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries; when
used without reference to a particular Person, "Subsidiary" means a Subsidiary
of the Company. For all purposes of this Agreement, Andor shall be considered to
be a Subsidiary of the Company.
"Tax"-- any tax (including without limitation any income, capital gains,
gross receipts, license, payroll, employment, excise severance, stamp,
occupation, premium, windfall profits, environmental (including without
limitation taxes under Code Section 59A), customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax or other fiscal charges of any kind whatsoever, including any fine,
interest, penalty, or addition thereto, whether disputed or not), imposed,
assessed, or
6
<PAGE> 8
collected by or under the authority of any Governmental Body or payable pursuant
to any tax-sharing agreement or any other Contract relating to the sharing or
payment of any such tax.
"Tax Return"-- any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including without limitation
any schedule or attachment thereto, and any amendment thereof.
"Threat of Release"-- a substantial likelihood of a Release that may
require action in order to prevent or mitigate damage to the Environment that
may result from such Release.
"Threatened"-- a claim, Proceeding, dispute, action, or other matter will
be deemed to have been "Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in writing), or
if any other event has occurred or any other circumstance exists that would
lead a Person to conclude that such a claim, Proceeding, action or other matter
is likely to be asserted, commenced, taken, or otherwise pursued in the future.
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 SHARES AND OPTIONS. Subject to the terms and conditions of this
Agreement, at the Closing, (a) the Shareholders will sell and transfer to Buyer,
and Buyer will purchase from the Shareholders, the Shares, and (b) the Options
will be canceled and exchanged for the right to receive the consideration set
forth under the caption "Option Spread" opposite each Optionholder's name on
ANNEX C hereto.
2.2 PURCHASE PRICE. The purchase price (the "Purchase Price") for the
Shares and shares subject to the Options will be $11,779,000 (disbursed as set
forth below). After the Closing Date, the Purchase Price shall be adjusted as
set forth in Sections 2.5 and 2.6.
2.3 CLOSING. The purchase and sale provided for in this Agreement (the
"Closing") will take place at the offices of Thermo Electron Corporation at 81
Wyman Street, Waltham, Massachusetts at 10:00 a.m. (local time) on the date
hereof, or at such other time and place as the parties may mutually agree.
2.4 CLOSING OBLIGATIONS. At the Closing:
(a) Sellers will deliver to Buyer:
(i) certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers), with signatures guaranteed
by a commercial bank or by a member firm of the New York Stock
Exchange, for transfer to Buyer;
(ii) releases in the form of ANNEX B executed by Sellers
(collectively, "Sellers' Releases"); and
7
<PAGE> 9
(iii) if the Closing occurs on a date other than the actual date
of execution hereof, a certificate executed by Sellers representing
and warranting to Buyer that each of Sellers' representations and
warranties in this Agreement is accurate in all respects as of the
Closing Date as if made on the Closing Date (Sellers' execution of
this Agreement constituing their representation that the same are
accurate in all respects as of the date of actual execution hereof);
and
(b) Buyer will deliver to Sellers:
(i) the amount or the aggregate amount set forth opposite each
Seller's name on ANNEX C hereto under the heading "Distributable to
Seller on Closing Date" (minus, in the case of the Optionholders,
applicable withholding taxes), paid by means of bank cashier's or
certified check or by wire transfer to the accounts specified in such
ANNEX C (it being understood that (A) Buyer will wire to an account
designated by DeMuth, Folger & Terhune the aggregate payment to be
made to all Sellers who are entitled to receive less than $100,000 on
the Closing Date, and DeMuth, Folger & Terhune shall, as soon as
reasonably practicable, distribute checks to each such Seller in the
amount such Seller is entitled to receive and (B) payments to Sellers
which are subject to deduction of withholding and employment taxes
shall be paid as promptly as practicable following the Closing);
(ii) the sum of $1,177,900 to the escrow agent referred to in
Section 2.4(c) by bank cashier's or certified check or by wire
transfer; and
(iii) if the Closing occurs on a date other than the date hereof,
a certificate executed by Buyer to the effect that each of Buyer's
representations and warranties in this Agreement is accurate in all
respects as of the Closing Date as if made on the Closing Date.
It is further understood and agreed that, from the full Purchase Price
payable by Buyer at the Closing, there shall be deducted the aggregate amount
set forth on ANNEX C under the heading "Option Price Payable", which amount
represents the exercise price which would have been payable by each Optionholder
if each such Optionholder had exercised his or her Options. Such deduction shall
be reflected in the Closing Net Worth Statement in the manner set forth in
Section 2.6. In addition, an aggregate of $250,000 of the Purchase Price shall
be placed in escrow and held in an account designated by DeMuth, Folger &
Terhune (and subject to its exclusive control) for purposes of adjusting the
Closing Net Worth Statement to reflect certain expenses of the transactions
contemplated hereby.
(c) Buyer and Sellers will enter into an escrow agreement in the form
of ANNEX D (the "Escrow Agreement") attached hereto.
2.5 ADJUSTMENT AMOUNT. The Adjustment Amount (which may be a positive or
negative number) will be equal to the amount by which (a) the consolidated net
worth of the
8
<PAGE> 10
Acquired Companies as of the Closing Date determined in accordance with GAAP
(and pursuant to the procedures set forth in Section 2.6) is less than or
exceeds (b) $7,736,905.
2.6 ADJUSTMENT PROCEDURE.
(a) Buyer will prepare, within thirty days following the Closing Date,
a statement of the consolidated net worth ("Closing Net Worth Statement")
of the Acquired Companies as of January 31, 1996, and shall deliver such
statement to the Attorneys. For purposes of this Agreement, "consolidated
net worth" shall mean the difference between the Acquired Companies' assets
and their liabilities, determined in accordance with GAAP (provided,
however, that (i) the aggregate amount set forth in ANNEX C under the
heading "Option Price Payable" shall be deemed to be an asset of the
Acquired Companies on the Closing Net Worth Statement and (ii) the fees,
expenses and bonuses payable by the Company pursuant to Section 11.1 hereof
shall be reflected as liabilities on the Closing Net Worth Statement. If
within fifteen days following delivery of the Closing Net Worth Statement,
the Attorneys have not given Buyer notice of their objection to the Closing
Net Worth Statement (such notice must contain a statement of the basis of
such Seller's objection), then the consolidated net worth reflected in the
Closing Net Worth Statement will be used in computing the Adjustment
Amount. If the Attorneys give such notice of objection, then the issues in
dispute will be submitted to an audit partner, experienced in auditing
companies in a businesses similar to that of the Acquired Companies, in an
office of Deloitte & Touche, certified public accountants, located in New
York, Massachusetts or Connecticut (the "Accountants"), for resolution. If
issues in dispute are submitted to the Accountants for resolution, (i) all
parties will furnish to the Accountants such work papers and other
documents and information relating to the disputed issues as the
Accountants may request and are available to that party or its Subsidiaries
(or its independent public accountants), and will be afforded the
opportunity to present to the Accountants any material relating to the
determination and to discuss the determination with the Accountants, (ii)
the determination by the Accountants, as set forth in a notice delivered to
both parties by the Accountants, will be binding and conclusive on the
parties, and (iii) Buyer and the Sellers (as a group) will each bear 50% of
the fees of the Accountants for such determination.
(b) On the tenth business day following the final determination of the
Adjustment Amount, if the Purchase Price is greater than the aggregate of
the payments made pursuant to Section 2.4(b), Buyer will pay the difference
to Sellers, and if the Purchase Price is less than such aggregate amount,
Sellers will, severally according to their respective Sellers' Proportions,
and not jointly, pay the difference to Buyer. All payments will be made
together with interest at the prime rate as reported from time to time in
the WALL STREET JOURNAL compounded daily beginning on the Closing Date and
ending on the date of payment. Payments shall be made in immediately
available funds. Payments to Sellers shall be made in the manner and will
be allocated in the proportions set forth on ANNEX C. Payments to Buyer
must be made by wire transfer to such bank account as Buyer shall specify.
It is understood and agreed by all parties hereto that any payments to
9
<PAGE> 11
Buyer pursuant to this Section 2.6 shall not be made with funds escrowed
pursuant to the Escrow Agreement.
2.7 MATTERS REGARDING OPTIONS. Each Optionholder, by his or her execution
and delivery of this Agreement, consents to the cancellation of his or her
Options in exchange for the consideration contemplated herein, and acknowledges
and agrees that, from and after the date hereof, all documents and agreements
granting or otherwise relating to such Options shall be null and void and of no
further force and effect.
2.8 EMPLOYEE BENEFITS. Buyer currently intends to maintain all material
Plans (as defined in Section 3.13) of the Acquired Companies without significant
modification after the Closing. Notwithstanding the foregoing, Buyer expressly
reserves the right to modify or terminate any Plan at any time or from time to
time after the Closing. Except as may be otherwise required by Legal
Requirements, Buyer will give employees of the Acquired Companies credit for
service to the Acquired Companies prior to the Closing Date when such employees
become eligible for participation in any of the Buyer's benefit plans which have
vesting or length of service requirements.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller, severally in proportion to such Seller's respective Sellers'
Proportion, and not jointly, represents and warrants to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING.
(a) Part 3.1 of the Disclosure Letter contains a complete and accurate
list for each Acquired Company of its name, its jurisdiction of
incorporation, other jurisdictions in which it is authorized to do
business, and its capitalization (including the identity of each
stockholder and the number of shares held by each). Each Acquired Company
is a corporation duly organized, validly existing, and in good standing
under the laws of its jurisdiction of incorporation, with full corporate
power and authority to conduct its business as it is now being conducted,
to own or use the properties and assets that it purports to own or use, and
to perform all its obligations under Applicable Contracts. Each Acquired
Company is duly qualified to do business as a foreign corporation and is in
good standing under the laws of each state or other jurisdiction in which
either the ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it, requires such qualification,
except where the failure to be so qualified would not have a material
adverse effect on the results of operations or the financial condition of
any of the Acquired Companies.
(b) Sellers have delivered to Buyer copies of the Organizational
Documents of each Acquired Company, as currently in effect.
10
<PAGE> 12
3.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of such Seller, enforceable against such Seller in accordance
with its terms. Upon the execution and delivery by such Seller of the
Escrow Agreement and its Seller's Release, (together, the "Seller's Closing
Documents"), such Seller's Closing Documents will constitute the legal,
valid, and binding obligations of such Seller, enforceable against such
Seller in accordance with their respective terms. Such Seller has the
absolute and unrestricted right, power, authority, and capacity to execute
and deliver this Agreement and such Seller's Closing Documents and to
perform such Seller's obligations under this Agreement and such Seller's
Closing Documents.
(b) Except as set forth in Part 3.2 of the Disclosure Letter, neither
the execution and delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly or
indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A)
any provision of the Organizational Documents of the Acquired
Companies, or (B) any resolution adopted by the board of directors or
the stockholders of any Acquired Company;
(ii) contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to challenge any
of the Contemplated Transactions or to exercise any remedy or obtain
any relief under, any Legal Requirement or any Order to which any
Acquired Company or such Seller, or any of the assets owned or used by
any Acquired Company, may be subject;
(iii) contravene, conflict with, or result in a violation of any
of the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by any Acquired Company or
that is necessary for the business of, or any of the assets owned or
used by, any Acquired Company;
(iv) cause Buyer or any Acquired Company to become subject to, or
to become liable for the payment of, any Tax;
(v) contravene, conflict with, or result in a violation or breach
of any provision of, or give any Person the right to declare a default
or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable
Contract;
11
<PAGE> 13
(vi) result in the imposition or creation of any Encumbrance upon
or with respect to any of the assets owned or used by any Acquired
Company; or
(vii) entitle any employee or other person to severance or other
payments by an Acquired Company or create any other obligation to an
employee, including any increase in benefits.
Except as set forth in Part 3.2 of the Disclosure Letter, no Seller or
Acquired Company is or will be required to give any notice to or obtain any
Consent from any Person in connection with the execution and delivery of
this Agreement or the consummation or performance of any of the
Contemplated Transactions.
3.3 CAPITALIZATION. The authorized equity securities of the Company
consists of 5,000,000 shares of common stock, par value $.01 per share, of which
3,315,643 shares are issued and outstanding and constitute the Shares. Each
Seller is and will be on the Closing Date the record and beneficial owner and
holder of the Shares set forth opposite his, her or its name on ANNEX C hereto,
free and clear of all Encumbrances. The transfer of the Shares to Buyer pursuant
to this Agreement will vest in Buyer full title to the Shares, free and clear of
all Encumbrances whatsoever, other than any Encumbrances created by Buyer.
Except as set forth in Part 3.3 of the Disclosure Letter, with the exception of
the Shares (which are owned by Sellers), all of the outstanding equity
securities and other securities of each Acquired Company are owned of record and
beneficially by one or more of the Acquired Companies, free and clear of all
Encumbrances. Except as set forth in Part 3.3 of the Disclosure Letter, no
legend or other reference to any purported Encumbrance appears upon any
certificate representing equity securities of any Acquired Company. All of the
outstanding equity securities of each Acquired Company have been duly authorized
and validly issued and are fully paid and nonassessable. All repurchases or
redemptions by an Acquired Company of any of its securities were made in
compliance with all Legal Requirements. Except as set forth in Part 3.3 of the
Disclosure Letter, there are no Contracts relating to the issuance, sale,
purchase, voting or transfer of any equity securities or other securities of any
Acquired Company, including options, warrants, convertible instruments or other
rights or obligations. Except as set forth in Part 3.3 of the Disclosure Letter,
no Acquired Company owns, or has any Contract to acquire, any equity securities
or other securities of any Person or any direct or indirect equity or ownership
interest in any other business, and no Acquired Company is subject to any
obligation, contingent or otherwise, to provide funds to or make any investment
in any Person.
3.4 FINANCIAL STATEMENTS. Sellers have delivered to Buyer: (a) the
unaudited consolidated balance sheet of the Acquired Companies as at December
31, 1995 (the "Interim Balance Sheet"), and the related unaudited consolidated
statements of income, changes in stockholders' equity, and cash flows, for the
three-month period then ended; (b) a consolidated balance sheet of the Acquired
Companies as at September 30, 1995 (including the notes thereto, the "Balance
Sheet"), September 30, 1994 and September 30, 1993, and the related consolidated
statements of income, changes in stockholders' equity, and cash flows for the
fiscal years then ended, together with the reports thereon of Arthur Andersen
LLP, independent certified public accountants; (c) the unaudited consolidated
balance sheet of Andor as at November 30, 1995 and
12
<PAGE> 14
the related unaudited consolidated statements of income, changes in
stockholders' equity, and cash flows, for the two-month period then ended and
(d) a consolidated balance sheet of Andor as at September 30, 1995, July 31,
1994 and July 31, 1993, and the related consolidated statements of income,
changes in stockholders' equity, and cash flows for the fiscal years then ended,
together with the reports thereon of Coopers & Lybrand, independent certified
public accountants. Such financial statements and notes fairly present the
financial condition and the results of operations, changes in stockholders'
equity, and cash flows, of the Acquired Companies as at the respective dates of
and for the periods referred to in such financial statements, all in accordance
with GAAP, subject, in the case of interim financial statements, to normal
recurring year-end adjustments (the effect of which will not, individually or in
the aggregate, be materially adverse) and the absence of notes (that, if
presented, would not differ materially from those included in the Balance
Sheet). The financial statements referred to in this Section 3.4 reflect the
consistent application of such accounting principles throughout the periods
involved, except as disclosed in the notes to such financial statements. No
financial statements of any Person other than the Acquired Companies are
required by GAAP to be included in the consolidated financial statements of the
Company.
3.5 BOOKS AND RECORDS. The books of account, minute books, stock record
books, and other records of the Acquired Companies, all of which have been made
available to Buyer, are complete and correct. The minute books of the Acquired
Companies contain accurate and complete records of all meetings held of, and
corporate action taken by, the stockholders, the Boards of Directors, and
committees of the Boards of Directors of the Acquired Companies, and no meeting
of any such stockholders, Board of Directors, or committee has been held for
which minutes have not been prepared and are not contained in such minute books.
At the Closing, all of those books and records will be delivered to the Buyer.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES. Part 3.6 of the Disclosure Letter
contains a complete and accurate list of all real property, leaseholds, or other
interests therein owned by any Acquired Company. Sellers have delivered or made
available to Buyer copies of the deeds and other instruments (as recorded) by
which the Acquired Companies acquired such real property and interests, and
copies of all title insurance policies, opinions, abstracts, and surveys in the
possession of Sellers or the Acquired Companies and relating to such property or
interests. The Acquired Companies own (with good and marketable title in the
case of real property, subject only to the matters permitted by this section)
all the properties and assets (whether real, personal, or mixed and whether
tangible or intangible) that they purport to own located in the Facilities or
reflected as owned in the books and records of the Acquired Companies, including
all of the properties and assets reflected in the Balance Sheet and the Interim
Balance Sheet (except for assets held under capitalized leases disclosed in Part
3.6 of the Disclosure Letter and personal property sold since the date of the
Balance Sheet and the Interim Balance Sheet, as the case may be, in the Ordinary
Course of Business), and all of the properties and assets purchased or otherwise
acquired by the Acquired Companies since the date of the Balance Sheet (except
for personal property acquired and sold since the date of the Balance Sheet in
the Ordinary Course of Business and consistent with past practice). Such
subsequently purchased or acquired properties and assets (other than any such
properties or assets acquired in the Ordinary Course of Business having a value
of less than $10,000) are listed in Part 3.6 of the Disclosure Letter. All
properties
13
<PAGE> 15
and assets reflected in the Balance Sheet and the Interim Balance Sheet are free
and clear of all Encumbrances and are not, in the case of real property, subject
to any rights of way, building use restrictions, exceptions, variances,
reservations, or limitations of any nature except, with respect to all such
properties and assets, (a) mortgages or security interests shown on the Balance
Sheet or the Interim Balance Sheet as securing specified liabilities or
obligations, with respect to which no default (or event that, with notice or
lapse of time or both, would constitute a default) exists, (b) mortgages or
security interests incurred in connection with the purchase of property or
assets after the date of the Interim Balance Sheet (such mortgages and security
interests being limited to the property or assets so acquired), with respect to
which no default (or event that, with notice or lapse of time or both, would
constitute a default) exists, (c) liens for current taxes not yet due, and (d)
with respect to real property, (i) minor imperfections of title, if any, none of
which is substantial in amount, materially detracts from the value or impairs
the use of the property subject thereto, or impairs the operations of any
Acquired Company, and (ii) zoning laws and other land use restrictions that do
not impair the present or anticipated use of the property subject thereto. All
buildings, plants, and structures owned by the Acquired Companies lie wholly
within the boundaries of the real property owned by the Acquired Companies and
do not encroach upon the property of, or otherwise conflict with the property of
any other Person.
3.7 CONDITION AND SUFFICIENCY OF ASSETS. Except as set forth in Part 3.7 of
the Disclosure Letter, the buildings, plants, structures, and equipment of the
Acquired Companies are structurally sound, are in good operating condition and
repair, and are adequate for the uses to which they are being put, and none of
such buildings, plants, structures, or equipment is in need of maintenance or
repairs except for ordinary, routine maintenance and repairs that are not
material in nature or cost. The building, plants, structures, and equipment of
the Acquired Companies are sufficient for the continued conduct of the Acquired
Companies' businesses after the Closing in substantially the same manner as
conducted prior to the Closing.
3.8 ACCOUNTS RECEIVABLE. All accounts receivable of the Acquired Companies
that are reflected on the Interim Balance Sheet, the Closing Net Worth Statement
or on the accounting records of the Acquired Companies as of the Closing Date
(collectively, the "Accounts Receivable") represent or will represent valid
obligations arising from sales actually made or services actually performed in
the Ordinary Course of Business. Unless paid prior to the Closing Date and
except as set forth on Part 3.8 of the Disclosure Letter, the Accounts
Receivable are or will be as of the Closing Date current and collectible net of
the respective reserves shown on the Interim Balance Sheet, the Closing Net
Worth Statement or on the accounting records of the Acquired Companies as of the
Closing Date. There is no contest, claim, or right of set-off under any Contract
with any maker of an Accounts Receivable relating to the amount or validity of
such Accounts Receivable.
3.9 INVENTORY. All inventory of the Acquired Companies, whether or not
reflected in the Interim Balance Sheet, consists of a quality and quantity
usable and salable in the Ordinary Course of Business, except for obsolete items
and items of below-standard quality, all of which have been written off or
written down in accordance with the customary practice of the Acquired Companies
to net realizable value in the Interim Balance Sheet or (with respect to
inventory acquired after the date of the Interim Balance Sheet) on the
accounting records of the Acquired
14
<PAGE> 16
Companies as of the Closing Date, as the case may be. All inventories not
written off have been priced at the lower of cost or net realizable value on a
first in, first out basis. The quantities of each item of inventory (whether raw
materials, work-in-process, or finished goods) are not excessive, but are
reasonable in the present circumstances of the Acquired Companies based upon
their customary practice.
3.10 NO UNDISCLOSED LIABILITIES. Except as set forth in Part 3.10 of the
Disclosure Letter, the Acquired Companies have no liabilities or obligations of
any nature (whether known or unknown and whether or not absolute, accrued,
contingent, or otherwise) except for liabilities or obligations reflected or
reserved against in the Interim Balance Sheet and current liabilities incurred
in the Ordinary Course of Business since the respective dates thereof.
3.11 TAXES. Except as set forth in Part 3.11 of the Disclosure Letter:
(a) The Acquired Companies have accurately prepared and duly and
timely filed all Tax Returns that they were required to file. All such Tax
Returns were correct and complete in all material respects. All Taxes owed
by the Acquired Companies have been paid when due, other than those being
contested in good faith and where adequate reserves (determined in
accordance with GAAP) have been established therefor. None of the Acquired
Companies is currently the beneficiary of any extension of time within
which to file any Tax Return. No claim or inquiry with respect to any
material amount of Taxes has ever been made by an authority in a
jurisdiction where any of the Acquired Companies did not file Tax Returns
that it is or may be subject to any Tax by that jurisdiction. There are no
liens or other security interests on any of the assets of any of the
Acquired Companies that arose in connection with any failure (or alleged
failure) to pay any Tax. None of the Acquired Companies has ever filed a
consolidated return with another company.
(b) Without limiting the generality of the foregoing, the Acquired
Companies have withheld or collected and duly paid all Taxes required to
have been withheld or collected and paid in connection with payments to
foreign persons, sales and use Tax or value added Tax obligations, and
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other person.
(c) None of the Sellers nor any of the Acquired Companies nor any
director or officer or employee responsible for Tax matters of any of the
Acquired Companies expects any authority to assess any additional Taxes for
any period for which Tax Returns have been filed. There is no dispute or
claim concerning any Tax liability of any of the Acquired Companies either
(A) claimed or raised by any authority or (B) as to which any of the
Sellers or any of the Acquired Companies or any director or officer or
employee responsible for Tax matters of any of the Acquired Companies has
Knowledge based upon personal contact with any agent of such authority.
(d) Part 3.11 of the Disclosure Letter lists all federal, state,
local, and foreign income Tax Returns filed with respect to any of the
Acquired Companies for taxable
15
<PAGE> 17
periods ended on or after December 31, 1992, indicates those Tax Returns
that have been audited, and indicates those Tax Returns that currently are
the subject of audit. No deficiencies for any Tax have been asserted
against any of the Acquired Companies which have not yet been paid in full.
(e) The Sellers have delivered to the Buyer true and complete copies
of the income, franchise, excise, sales, use, property and employment Tax
Returns filed by the Acquired Companies since December 31, 1992, together
with all examination reports and statements of deficiencies assessed,
proposed in writing to be assessed against, or agreed to by the Acquired
Companies.
(f) All Taxes of the Acquired Companies attributable to Tax periods or
portions thereof ending on or prior to the Closing Date, including Taxes
that may become payable by the Acquired Companies in future periods in
respect of any transactions or sales occurring on or prior to the Closing
Date, that have not yet been paid have, in the aggregate, been adequately
reflected as a liability on the books of the Acquired Companies in
accordance with GAAP.
(g) None of the Acquired Companies have been or are being currently
audited or examined by any governmental authority, nor have any
deficiencies for any Tax been asserted against any of the Acquired
Companies which have not been paid in full.
(h) There are no outstanding agreements or waivers extending the
statute of limitations applicable to any Taxes or any Tax Return of any of
the Acquired Companies for any period.
(i) None of the Acquired Companies has filed a consent under Code
Section 341(f) concerning collapsible corporations. None of the Acquired
Companies has made any payments, is obligated to make any payments, or is a
party to any agreement that could obligate it to make any payments that
will be an "excess parachute payment" under Code Section 280G. None of the
Acquired Companies has been a United States real property holding
corporation within the meaning of Code Section 897(c)(2) during the
applicable period specified in Code Section 897(c)(1)(A)(ii). None of the
Acquired Companies has been a passive foreign investment company as defined
in Code Sections 1291-1297. Each of the Acquired Companies has disclosed on
its federal income Tax Returns all positions taken therein that could give
rise to a substantial understatement of federal income Tax within the
meaning of Code Section 6662. None of the Acquired Companies is a party to
any Tax allocation or sharing agreement. None of the Acquired Companies has
any liability for any Taxes of any person (other than such Acquired
Company) under Treas. Reg. ss. 1.1502-6 (or any similar provision of
federal, state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
(j) Part 3.11 of the Disclosure Letter sets forth the following
information with respect to each of the Acquired Companies as of the most
recent practicable date: (a) the tax basis of the Acquired Company in its
assets; (B) the basis of the Company in the stock
16
<PAGE> 18
of Andor (or the amount of any excess loss account); (C) the amount of any
net operating loss, net capital loss, unused investment or other credit,
unused foreign tax, or excess charitable contribution allocable to the
Acquired Company; and (D) the amount of gain or loss deferred for Tax
purposes allocable to the Acquired Company arising out of any intercompany
transaction.
3.12 NO MATERIAL ADVERSE CHANGE. Since the date of the Interim Balance
Sheet, there has not been any material adverse change in the business,
operations, properties, prospects, assets, or condition of any Acquired Company,
and no event has occurred or circumstance exists that may result in such a
material adverse change.
3.13 EMPLOYEE BENEFITS. (a) Part 3.13 of the Disclosure Letter lists all
employee benefit plans (as defined in Section 3(3) of ERISA), and all
compensation plans, agreements or arrangements, including, without limitation,
insurance coverage, disability benefits, bonus, deferred compensation, incentive
compensation, severance or termination pay, post-retirement compensation, change
in control compensation, death benefit, stock purchase, phantom stock, stock
appreciation and stock option plans or arrangements and vacation, maintained or
contributed to by or on behalf of the Acquired Companies applicable to employees
of the Acquired Companies employed in the U.S. (the "Plans"). Each Plan that
meets or purports to meet the requirements of Code Section 401(a) (a "Qualified
Plan") has received a favorable determination letter from the IRS and no event
has occurred and no condition exists which could reasonably be expected to
result in the revocation of any such determination. Each of the Plans has been
administered in compliance with its terms and the requirements of all applicable
laws and regulations, including, without limitation, ERISA and the Code, and all
required contributions to each Plan have been made. The Sellers have heretofore
delivered to the Buyer true and complete copies of all of the Plans and, where
applicable, related trusts and contracts, including all amendments. No Plan,
plan documentation or agreement, summary plan description or other written
communication distributed generally to employees of the Acquired Companies by
its terms prohibits the amendment or termination of any Plan.
(b) Except as described in Part 3.13 of the Disclosure Letter, there are no
inquiries or investigations by the IRS, the U.S. Department of Labor, no
termination proceedings and no actions, suits or claims pending or, to the
Knowledge of the Sellers or any Acquired Company, threatened against any
Qualified Plan (or against any Acquired Company with respect thereto) or the
assets thereof.
(c) No Acquired Company has ever maintained an employee benefit plan
subject to Section 412 of the Code or Title IV of ERISA.
(d) No Acquired Company, nor any other person or entity that, together with
an Acquired Company, would be treated as a single employer under Code Section
414 (an "ERISA Affiliate") contributes to, has within the past five years had an
obligation to contribute to, or is subject to a liability to, a "multi-employer
plan" as defined in Section 4001(a)(3) of ERISA.
17
<PAGE> 19
(e) Except as set forth in Part 3.13 of the Disclosure Letter, there are no
unfunded obligations under any Plan providing benefits after termination of
employment to any employee or former employee of the Business (or to any
beneficiary of any such employee or former employee), including, but not limited
to, retiree health coverage and deferred compensation, but excluding
continuation of health coverage required to be continued under Section 4980B of
the Code and insurance conversion privileges under state law.
(f) Except as set forth in Part 3.13 of the Disclosure Letter, no act or
omission has occurred and no condition exists with respect to any employee
benefit plan maintained by any Acquired Company or any ERISA Affiliate that
would subject any Acquired Company to any fine, penalty, tax or liability of any
kind imposed under ERISA or the Code.
(g) Part 3.13 of the Disclosure Letter lists each: (i) agreement, plan or
arrangement under which any person may receive payments from an Acquired Company
with respect to any employee of an Acquired Company, that may be subject to the
tax imposed by Section 4999 of the Code or included in the determination of such
person's "parachute payment" under Section 280G of the Code; and (ii) agreement
or plan binding any Acquired Company, including without limitation any stock
option plan, stock appreciation right plan, restricted stock plan, stock
purchase plan, severance benefit plan or employee benefit plan, any of the
benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.
3.13A FOREIGN EMPLOYEE BENEFITS. Part 3.13A of the Disclosure Letter lists
(a) each retirement plan that is not statutorily required (disregarding for this
purpose the United Kingdom statutory requirement for any contracted-out schemes
to provide guaranteed minimum pensions under the United Kingdom Pension Schemes
Act 1993) that is maintained or contributed to by or on behalf of any Acquired
Company located in the U.K. (a "Foreign Retirement Plan") and (b) each welfare
benefit plan that is not required by statute or applicable national
industry-wide agreement maintained or contributed to by or on behalf of any
Acquired Company located in the U.K. (a "U.K. Welfare Plan"). Except as set
forth in Part 3.13A of the Disclosure Letter, each such U.K. Retirement Plan and
U.K. Welfare Plan (collectively, the "Foreign Plans") is fully funded, has been
administered in compliance with its terms and the requirements of all applicable
laws and regulations, and all required contributions to each Foreign Plan have
been made. The books and records of the Acquired Companies accurately reflect
the obligations and liabilities of the Acquired Companies under the Foreign
Plans. Sellers have heretofore delivered to Buyer true and complete copies of
all of the written Foreign Plans and written summaries of the oral Foreign Plans
and, where applicable, related trusts and contracts, including all amendments.
There are no inquiries or investigations by any foreign governmental authority,
no termination proceedings and no actions, suits or claims (other than claims
for benefits) pending or, to the Knowledge of the Sellers or any Acquired
Company, threatened against any Foreign Plan (or any Acquired Company with
respect thereto) or the assets thereof. Except as set forth in Part 3.13A of the
Disclosure Statement, there are no unfunded obligations under any Foreign Plan
providing benefits after termination of employment to any employee or former
employee of an Acquired Company (or to any beneficiary of any such employee or
former employee), including, but not
18
<PAGE> 20
limited to, retiree health coverage and deferred compensation, but excluding
insurance conversion privileges under applicable foreign law. No Foreign Plan,
plan documentation or agreement, summary plan description or other written
communication distributed generally to employees of the Acquired Companies by
its terms prohibits the amendment or termination of any such Foreign Plan. All
reports, forms and other documents required to be filed with any governmental
authority with respect to each Foreign Plan have been timely filed and are
complete and accurate.
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.
(a) Except as set forth in Part 3.14 of the Disclosure Letter:
(i) each Acquired Company is, and at all times since December 31,
1990 has been, in compliance with each Legal Requirement that is or
was applicable to it or to the conduct or operation of its business or
the ownership or use of any of its assets;
(ii) no event has occurred or circumstance exists that (with or
without notice or lapse of time) (A) may constitute or result in a
violation by any Acquired Company of, or a failure on the part of any
Acquired Company to comply with, any Legal Requirement, or (B) may
give rise to any obligation on the part of any Acquired Company to
undertake, or to bear all or any portion of the cost of, any remedial
action of any nature; and
(iii) no Acquired Company has received, at any time since
December 31, 1990 any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding (A)
any actual, alleged, possible, or potential violation of, or failure
to comply with, any Legal Requirement, or (B) any actual, alleged,
possible, or potential obligation on the part of any Acquired Company
to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature.
(b) Part 3.14 of the Disclosure Letter contains a complete and
accurate list of each Governmental Authorization that is held by any
Acquired Company or that otherwise relates to the business of, or to any of
the assets owned or used by, any Acquired Company. Each Governmental
Authorization listed or required to be listed in Part 3.14 of the
Disclosure Letter is valid and in full force and effect. Except as set
forth in Part 3.14 of the Disclosure Letter:
(i) each Acquired Company is, and at all times since December 31,
1990 has been, in full compliance with all of the terms and
requirements of each Governmental Authorization identified in Part
3.14 of the Disclosure Letter;
(ii) no event has occurred or circumstance exists that may (with
or without notice or lapse of time) (A) constitute or result directly
or indirectly in a violation of or a failure to comply with any term
or requirement of any
19
<PAGE> 21
Governmental Authorization listed or required to be listed in Part
3.14 of the Disclosure Letter, or (B) result directly or indirectly in
the revocation, withdrawal, suspension, cancellation, or termination
of, or any modification to, any Governmental Authorization listed or
required to be listed in Part 3.14 of the Disclosure Letter;
(iii) no Acquired Company has received, at any time since
December 31, 1990, any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding (A)
any actual, alleged, possible, or potential violation of or failure to
comply with any term or requirement of any Governmental Authorization,
or (B) any actual, proposed, possible, or potential revocation,
withdrawal, suspension, cancellation, termination of, or modification
to any Governmental Authorization; and
(iv) all applications required to have been filed for the renewal
of the Governmental Authorizations listed or required to be listed in
Part 3.14 of the Disclosure Letter have been duly filed on a timely
basis with the appropriate Governmental Bodies, and all other filings
required to have been made with respect to such Governmental
Authorizations have been duly made on a timely basis with the
appropriate Governmental Bodies. The Governmental Authorizations
listed in Part 3.14 of the Disclosure Letter collectively constitute
all of the Governmental Authorizations necessary to permit the
Acquired Companies to lawfully conduct and operate their businesses in
the manner they currently conduct and own such businesses and to
permit the Acquired Companies to own and use their assets in the
manner in which they currently own and use such assets.
3.15 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 3.15 of the Disclosure Letter, there
is no pending Proceeding:
(i) that has been commenced by or against any Acquired Company or
that otherwise relates to or may affect the business of, or any of the
assets owned or used by, any Acquired Company; or
(ii) that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To the Knowledge of Sellers, (1) no such
Proceeding has been Threatened, and (2) no event has occurred or
circumstance exists that may give rise to or serve as a basis for the
commencement of any such Proceeding. Sellers have made available to
Buyer copies of all pleadings, correspondence, and other documents
relating to each Proceeding listed in Part 3.15 of the Disclosure
Letter. The Proceedings listed in Part 3.15 of the Disclosure Letter
will not have a material adverse effect on the business, operations,
assets, condition, or prospects of any Acquired Company.
20
<PAGE> 22
(b) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) there is no Order to which any of the Acquired Companies, or
any of the assets owned or used by any Acquired Company, is subject;
and
(ii) to the Knowledge of Sellers, no officer, director, agent, or
employee of any Acquired Company is subject to any Order that
prohibits such officer, director, agent, or employee from engaging in
or continuing any conduct, activity, or practice relating to the
business of any Acquired Company.
(c) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) each Acquired Company is, and at all times since December 31,
1990 has been, in full compliance with all of the terms and
requirements of each Order to which it, or any of the assets owned or
used by it, is or has been subject;
(ii) no event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a
violation of or failure to comply with any term or requirement of any
Order to which any Acquired Company, or any of the assets owned or
used by any Acquired Company, is subject; and
(iii) no Acquired Company has received, at any time since
December 31, 1990, any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding any
actual, alleged, possible, or potential violation of, or failure to
comply with, any term or requirement of any Order to which any
Acquired Company, or any of the assets owned or used by any Acquired
Company, is or has been subject.
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in Part
3.16 of the Disclosure Letter, since the date of the Interim Balance Sheet, the
Acquired Companies have conducted their businesses only in the Ordinary Course
of Business and there has not been any:
(a) change in any Acquired Company's authorized or issued capital
stock; grant of any stock option or right to purchase shares of capital
stock of any Acquired Company; issuance of any security convertible into
such capital stock; grant of any registration rights; purchase, redemption,
retirement, or other acquisition by any Acquired Company of any shares of
any such capital stock; or declaration or payment of any dividend or other
distribution or payment in respect of shares of capital stock;
(b) amendment to the Organizational Documents of any Acquired
Company;
(c) payment or increase by any Acquired Company of any bonuses,
salaries, commissions or other compensation to any stockholder, director,
officer, or (except in the
21
<PAGE> 23
Ordinary Course of Business) employee or entry into any employment,
severance, or similar Contract with any director, officer, or employee;
(d) adoption of, or increase in the payments to or benefits under,
any profit sharing, bonus, deferred compensation, savings, insurance,
pension, retirement, or other employee benefit plan for or with any
employees of any Acquired Company;
(e) damage to or destruction or loss of any asset or property of any
Acquired Company, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial condition,
or prospects of the Acquired Companies, taken as a whole;
(f) entry into, termination of, or receipt of notice of termination
of (i) any license, distributorship, dealer, sales representative, joint
venture, credit, or similar agreement, or (ii) any Contract or transaction
involving a total remaining commitment by any Acquired Company of at least
$100,000;
(g) sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or property of any
Acquired Company or mortgage, pledge, or imposition of any lien or other
encumbrance on any material asset or property of any Acquired Company,
including the sale, lease, or other disposition of any of the Intellectual
Property Assets;
(h) cancellation or waiver of any claims or rights with a value to
any Acquired Company in excess of $50,000;
(i) change in the accounting methods used by any Acquired Company;
(j) material adverse change in the financial condition, assets,
liabilities, earnings, business or prospects of the Acquired Companies;
(k) any Contract or other transaction with a Seller or a Seller's
Related Persons;
(l) indebtedness or other liability or obligation (whether absolute,
accrued, contingent or otherwise) incurred, or other transaction (except
that reflected in this Agreement) engaged in, by an Acquired Company,
except those in the Ordinary Course of Business which are individually, and
in the aggregate to one group of related parties, less than $50,000 in
amount;
(m) obligation or liability discharged or satisfied by an Acquired
Company, except items included in current liabilities shown on the Balance
Sheet and current liabilities incurred since the date of the Balance Sheet
in the Ordinary Course of Business which are individually, and in the
aggregate to one group of related parties, less than $100,000 in amount;
22
<PAGE> 24
(n) material reduction in the rate of firm bookings or orders for an
Acquired Company's products and services, or any material deterioration in
the backlog level of an Acquired Company at the end of each calendar month
over the twelve months prior to the execution of this Agreement;
(o) disclosure of any proprietary information belonging to an
Acquired Company, except as required by law or by agreement existing on the
date of this Agreement; or
(p) agreement, whether oral or written, by any Acquired Company to do
any of the foregoing.
3.17 CONTRACTS; NO DEFAULTS.
(a) Part 3.17(a) of the Disclosure Letter contains a complete and
accurate list, and Sellers have delivered to Buyer true and complete copies
(or, in the case of oral agreements, a complete and accurate description),
of:
(i) each Applicable Contract that involves performance of
services or delivery of goods or materials by any Acquired Company of
an amount or value reasonably estimated to be in excess of $100,000;
(ii) each Applicable Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or receipts
of any Acquired Company reasonably estimated to be in excess of
$100,000;
(iii) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable
Contract affecting the ownership of, leasing of, title to, use of, or
any leasehold or other interest in, any real or personal property
(except personal property leases and installment and conditional sales
agreements having a value per item or aggregate payments of less than
$50,000 and with terms of less than one year);
(iv) each licensing agreement or other Applicable Contract with
respect to patents, trademarks, copyrights, or other intellectual
property;
(vi) each collective bargaining agreement and other Applicable
Contract to or with any labor union or other employee representative
of a group of employees relating to wages, hours, and other conditions
of employment;
(vi) each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses,
costs, or liabilities by any Acquired Company with any other Person;
23
<PAGE> 25
(vii) each Applicable Contract containing covenants that in any
way purport to restrict any Acquired Company's business activity or
limit the freedom of any Acquired Company to engage in any line of
business or to compete with any Person;
(viii) each Applicable Contract providing for payments to or by
any Person based on sales, purchases, or profits, other than direct
payments for goods;
(ix) each power of attorney that is currently effective and
outstanding;
(x) each Applicable Contract entered into other than in the
Ordinary Course of Business that contains or provides for an express
undertaking by any Acquired Company to be responsible for
consequential damages;
(xi) each Applicable Contract for capital expenditures in excess
of $100,000;
(xii) each written guaranty and or other similar undertaking with
respect to contractual performance extended by any Acquired Company
other than in the Ordinary Course of Business;
(xiii) each sales representative, distributorship or other
agreement providing for the distribution or marketing of products (i)
under which revenue to the Acquired Companies during the year ended
September 30, 1995 exceeded $100,000 or (ii) which is not terminable
by an Acquired Company which is a party thereto without penalty or
breach upon no more than six months prior notice to the other party
thereto;
(xiv) any agreement concluded within the past five years relating
to the acquisition or disposition of significant assets, businesses or
companies other than in the Ordinary Course of Business (whether by
sale of assets, sale of stock, merger or otherwise);
(xv) any agreement with or commitment to a current or former
employee of an Acquired Company, including employment agreements;
(xvi) any other arrangement under which the consequences of a
default or termination would have a material adverse effect on the
Acquired Companies, or which gives or could give any other party
thereto the right to cause the Contemplated Transactions to be
rescinded following consummation; and
(xvii) each amendment, supplement, and modification (whether oral
or written) in respect of any of the foregoing.
24
<PAGE> 26
(b) Except as set forth in Part 3.17(b) of the Disclosure Letter, to
the Knowledge of Sellers and the Acquired Companies, no officer, director,
agent, employee, consultant, or contractor of any Acquired Company is bound
by any Contract that purports to limit the ability of such officer,
director, agent, employee, consultant, or contractor to (A) engage in or
continue any conduct, activity, or practice relating to the business of any
Acquired Company, or (B) assign to any Acquired Company or to any other
Person any rights to any invention, improvement, or discovery.
(c) Except as set forth in Part 3.17(c) of the Disclosure Letter,
each Contract identified in Part 3.17(a) of the Disclosure Letter is in
full force and effect and is valid and enforceable in accordance with its
terms.
(d) Except as set forth in Part 3.17(d) of the Disclosure Letter:
(i) each Acquired Company is, and at all times since December 31,
1990, has been, in compliance with all applicable terms and
requirements of each Contract under which such Acquired Company has or
had any obligation or liability or by which such Acquired Company or
any of the assets owned or used by such Acquired Company is or was
bound;
(ii) each other Person that has any obligation or liability under
any Contract under which an Acquired Company has any rights is, and,
to the Acquired Companies' Knowledge, at all times since December 31,
1990 has been, in full compliance with all applicable terms and
requirements of such Contract;
(iii) no event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict with, or
result in a violation or breach of, or give any Acquired Company or
other Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract; and
(iv) no Acquired Company has given to or received from any other
Person, at any time since December 31, 1990, any notice or other
communication (whether oral or written) regarding any actual, alleged,
possible, or potential violation or breach of, or default under, any
Contract.
(e) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to
any Acquired Company under current or completed Contracts with any Person
having the contractual or statutory right to demand or require such
renegotiation and, to the Knowledge of Sellers and the Acquired Companies,
no such Person has made written demand for such renegotiation.
(f) The Contracts relating to the sale, design, manufacture, or
provision of products or services by the Acquired Companies have been
entered into by the applicable Acquired Company in the Ordinary Course of
Business and, to the Acquired Companies'
25
<PAGE> 27
Knowledge, without the commission of any act alone or in concert with any
other Person, or any consideration having been paid or promised, that is or
would be in violation of any Legal Requirement.
3.18 INSURANCE.
(a) Sellers have delivered to Buyer:
(i) true and complete copies of all policies of insurance to
which any Acquired Company is a party or under which any Acquired
Company, or any director of any Acquired Company, is or has been
covered at any time within the five years preceding the date of this
Agreement;
(ii) true and complete copies of all pending applications for
policies of insurance; and
(iii) any statement by the auditor of any Acquired Company's
financial statements with regard to the adequacy of such entity's
coverage or of the reserves for claims.
(b) Part 3.18(b) of the Disclosure Letter describes:
(i) any self-insurance arrangement by or affecting any Acquired
Company, including any reserves established thereunder;
(ii) any contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk by any Acquired
Company; and
(iii) all obligations of the Acquired Companies to provide
coverage to third parties (for example, under leases or service
agreements) and identifies the policy under which such coverage is
provided.
(c) Part 3.18(c) of the Disclosure Letter sets forth, by year, for
the current policy year and each of the five preceding policy years:
(i) a summary of the loss experience under each policy;
(ii) a statement describing each claim under an insurance policy
for an amount in excess of $10,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer, type of
insurance, and period of coverage; and
26
<PAGE> 28
(C) the amount and a brief description of the claim; and
(iii) a statement describing the loss experience for all claims
over $100,000 that were self-insured, including the number and
aggregate cost of such claims.
(d) Except as set forth on Part 3.18(d) of the Disclosure Letter:
(i) All policies to which any Acquired Company is a party or
that provide coverage to any Acquired Company or director thereof:
(A) are valid, outstanding, and enforceable;
(B) taken together, provide adequate insurance coverage for
the assets and the operations of the Acquired Companies for all
risks normally insured against by a Person carrying on the same
business or businesses as the Acquired Companies;
(C) are sufficient for compliance with all Legal
Requirements and Contracts to which any Acquired Company is a
party or by which any of them is bound; and
(D) will continue in full force and effect following the
consummation of the Contemplated Transactions.
(ii) No Seller (with regard to any Acquired Company) or Acquired
Company has received (A) any refusal of coverage or any notice that a
defense will be afforded with reservation of rights, or (B) any notice
of cancellation or any other indication that any insurance policy is
no longer in full force or effect or that the issuer of any policy is
not willing or able to perform its obligations thereunder.
(iii) The Acquired Companies have paid all premiums due, and have
otherwise performed all of their respective obligations, under each
policy to which any Acquired Company is a party or that provides
coverage to any Acquired Company or director thereof.
(iv) The Acquired Companies have given notice to the insurer of
all claims that may be insured thereby.
3.19 ENVIRONMENTAL MATTERS. Except as set forth in Part 3.19 of the
Disclosure Letter:
(a) Each Acquired Company is, and at all times prior to the date
hereof has been, in compliance with, and has not been and is not in
violation of or liable under, any Environmental Law. No Acquired Company
has any reasonable basis to expect, nor has any of them or any other Person
for whose conduct they are responsible received, any
27
<PAGE> 29
actual or Threatened order, notice, or other communication from (i) any
Governmental Body or private citizen acting in the public interest, or (ii)
the current or prior owner or operator of any Facilities, of any actual or
potential violation or failure to comply with any Environmental Law, or of
any actual or Threatened obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect to any of the
Facilities or any other properties or assets (whether real, personal, or
mixed) in which any Acquired Company has had an interest, or with respect
to any property or Facility at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used, or processed
by any Acquired Company, or any other Person for whose conduct they are
responsible, or from which Hazardous Materials have been transported,
treated, stored, handled, transferred, disposed, recycled, or received.
(b) There are no pending or, to the Knowledge of Sellers and the
Acquired Companies, Threatened claims or Encumbrances resulting from any
Environmental, Health, and Safety Liabilities or arising under or pursuant
to any Environmental Law, with respect to or affecting any of the
Facilities or any other properties and assets (whether real, personal, or
mixed) in which any Acquired Company has an interest.
(c) No Seller nor any Acquired Company has any reasonable basis to
expect, nor has any of them or any other Person for whose conduct they are
responsible, received, any Order, notice, inquiry, warning, citation,
summons or directive that relates to Hazardous Activity, Hazardous
Materials, or any alleged, actual, or potential violation or failure to
comply with any Environmental Law, or of any alleged, actual, or potential
obligation to undertake or bear the cost of any Environmental, Health, and
Safety Liabilities with respect to any of the Facilities or any other
properties or assets (whether real, personal, or mixed) in which any
Acquired Company had an interest, or with respect to any property or
facility to which Hazardous Materials generated, manufactured, refined,
transferred, imported, used, or processed by any Acquired Company or any
other Person for whose conduct they are or may be held responsible, have
been transported, treated, stored, handled, transferred, disposed,
recycled, or received.
(d) No Seller nor any Acquired Company, nor any other Person for whose
conduct they are held responsible, has any Environmental, Health, and
Safety Liabilities with respect to the Facilities or any other properties
and assets (whether real, personal, or mixed) in which any Acquired Company
(or any predecessor) has an interest, or at any property geologically or
hydrologically adjoining the Facilities or any such other property or
assets.
(e) There are no Hazardous Materials present on or in the Environment
at the Facilities (except Hazardous Materials used in the Ordinary Course
of Business by the Acquired Companies which are described in the
environmental studies which have been delivered to the Buyer) or to the
Sellers' knowledge at any geologically or hydrologically adjoining
property, including any Hazardous Materials contained in barrels, above or
underground storage tanks, landfills, land deposits, dumps, equipment
(whether moveable or fixed) or other containers, either temporary or
permanent, and deposited or located in
28
<PAGE> 30
land, water, sumps, or any other part of the Facilities or such adjoining
property, or incorporated into any structure therein or thereon. No Seller
nor any Acquired Company nor any other Person for whose conduct they are
responsible, nor to the Knowledge of Sellers and the Acquired Companies,
any other Person, has permitted or conducted, or is aware of, any Hazardous
Activity conducted with respect to the Facilities (except Hazardous
Activities related to the use of Hazardous Materials used in the Ordinary
Course of Business by the Acquired Companies which are described in the
environmental studies which have been delivered to the Buyer) or any other
properties or assets (whether real, personal, or mixed) in which any
Acquired Company has or had an interest except in compliance with all
applicable Environmental Laws.
(f) There has been no Release or, to the Knowledge of any of the
Sellers or Acquired Companies, Threat of Release, of any Hazardous
Materials at, from or by the Facilities or at any other locations where any
Hazardous Materials were generated, manufactured, refined, transferred,
transported, produced, imported, used, or processed at, from or by the
Facilities, or at, from or by any other properties and assets (whether
real, personal, or mixed) in which any Acquired Company has or had an
interest, or to the Knowledge of any of the Sellers or Acquired Companies
any geologically or hydrologically adjoining property, whether by Sellers,
any Acquired Company, or any other Person.
(g) Sellers have delivered to Buyer true and complete copies and
results of any reports, audits, investigations, studies, analyses, tests,
or monitoring results possessed or initiated by Sellers or any Acquired
Company pertaining to Hazardous Materials or Hazardous Activities in, on,
or under the Facilities, or concerning compliance by any Acquired Company,
or any other Person for whose conduct they are responsible, with
Environmental Laws or Occupational Safety and Health Laws. Part 3.19 of the
Disclosure Letter sets forth a list of all current and former contracts,
arrangements or agreements between any Acquired Company and (i) any solid
and hazardous waste transporters and (ii) any treatment, storage and
disposal facilities.
(h) Without limiting the generality of the foregoing paragraphs of
this Section 3.19, none of the Acquired Companies (i) is in violation of
any of the following United Kingdom Laws and Regulations: the Clean Air Act
1993; the Control of Pollution Act 1974; the Health and Safety at Work etc.
Act 1974; the Water Act 1989; and the Environmental Protection Act 1990;
and all statutory instruments, regulations and orders made under each of
the foregoing, and (ii) produces or uses any substances, or uses any
processes in the manufacture or processing of its products, which are
currently proscribed by the United Kingdom Secretary of State for the
Environment, the United Kingdom Inspectorate of Pollution, the United
Kingdom National Rivers Authority or any United Kingdom local authority
under any applicable Environmental Law.
29
<PAGE> 31
3.20 EMPLOYEES.
(a) Part 3.20 of the Disclosure Letter contains a complete and
accurate list of the following information for each employee or director of
the Acquired Companies, including each employee on leave of absence or
layoff status: employer; name; job title; current compensation and date of
hire. It also contains a complete and accurate list of all employees
terminated by any Acquired Company in the 90-day period immediately prior
to the date of this Agreement.
(b) No former or current employee or current or former director of any
Acquired Company is a party to, or is otherwise bound by, any agreement or
arrangement, including any confidentiality, noncompetition, or proprietary
rights agreement, between such employee or director and any other Person
("Proprietary Rights Agreement") that in any way adversely affected,
affects, or will affect (i) the performance of his duties as an employee or
director of the Acquired Companies, or (ii) the ability of any Acquired
Company to conduct its business. To Sellers' Knowledge, no director,
officer, or other key employee of any Acquired Company intends to terminate
his employment with such Acquired Company.
(c) Part 3.20 of the Disclosure Letter also contains a complete and
list of the following information for each retired employee or director of
the Acquired Companies, or their dependents, receiving benefits or
scheduled to receive benefits in the future: name, pension benefit, pension
option election, retiree medical insurance coverage, retiree life insurance
coverage, and other benefits, if any.
3.21 LABOR DISPUTES; COMPLIANCE. Since the respective dates of their
incorporation, no Acquired Company has been or is a party to any collective
bargaining or other labor Contract. Since June 30, 1995, there has not been,
there is not presently pending or existing, and to Sellers' Knowledge there is
not Threatened, any strike, slowdown, picketing, work stoppage, labor
arbitration or proceeding in respect of the grievance of any employee,
application or complaint filed by an employee or union with the National Labor
Relations Board or any comparable Governmental Body, organizational activity, or
other labor dispute against or affecting any of the Acquired Companies or their
premises, and no application for certification of a collective bargaining agent
is pending or to Sellers' and the Acquired Companies' Knowledge is Threatened.
To Sellers' Knowledge, no event has occurred or circumstance exists that could
provide the basis for any work stoppage or other labor dispute. There is no
lockout of any employees by any Acquired Company, and no such action is
contemplated by any Acquired Company. Each Acquired Company has complied in all
respects with all Legal Requirements relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes, occupational
safety and health, and plant closing. No Acquired Company is liable for the
payment of any taxes, fines, penalties, or other amounts, however designated,
for failure to comply with any of the foregoing Legal Requirements.
30
<PAGE> 32
3.22 INTELLECTUAL PROPERTY.
(a) Intellectual Property Assets. The term "Intellectual Property
Assets" includes:
(i) the name "Oriel", all fictional business names, trading
names, registered and unregistered trademarks, service marks, and
applications (collectively, "Marks");
(ii) all patents and patent applications (collectively,
"Patents");
(iii) all copyrights in both published works and unpublished
works that are relevant to the Acquired Companies' businesses
(collectively, "Copyrights"); and
(iv) all know-how, trade secrets, confidential information,
software, technical information, process technology, plans, drawings,
and blue prints which are not publicly available (collectively, "Trade
Secrets");
owned, used, or licensed by any Acquired Company as licensee or licensor.
(b) Agreements. Part 3.22(b) of the Disclosure Letter contains a
complete and accurate list and summary description, including any
royalties paid or received by the Acquired Companies, of all agreements
relating to the Intellectual Property Assets to which any Acquired Company
is a party or by which any Acquired Company is bound, except for any
license implied by the sale of a product and common software programs with
a value of less than $10,000. There are no outstanding and, to Sellers'
Knowledge, no Threatened disputes or disagreements with respect to any
such agreement.
(c) Know-How Necessary for the Business. Except as disclosed in
Part 3.22 of the Disclosure Letter:
(i) The Intellectual Property Assets are all those necessary
for the operation of the Acquired Companies' businesses as they
are currently conducted. One or more of the Acquired Companies is
the owner of all right, title, and interest in and to each of the
Intellectual Property Assets, free and clear of all Encumbrances
and other adverse claims, and has the right to use without
payment to a third party all of the Intellectual Property Assets.
(ii) All employees of each Acquired Company have executed
written agreements with one or more of the Acquired Companies
that assign to one or more of the Acquired Companies all rights
to any inventions, improvements, discoveries, or information
relating to the business of any Acquired Company. To Sellers'
Knowledge, no employee of any Acquired Company has entered into
any agreement that restricts or limits in any way the scope or
type of work in which the
31
<PAGE> 33
employee may be engaged or requires the employee to transfer,
assign, or disclose information concerning his work to anyone
other than one or more of the Acquired Companies.
(d) Patents. Except as disclosed in Part 3.22(d) of the
Disclosure Letter:
(i) Part 3.22(d) of the Disclosure Letter contains a
complete and accurate list of all Patents. One or more of the
Acquired Companies is the owner of all right, title, and interest
in and to each of the Patents, free and clear of all Encumbrances
and other adverse claims.
(ii) All of the Patents are currently in compliance with
formal legal requirements (including payment of filing,
examination, and maintenance fees and proofs of working or use),
are valid and enforceable, and are not subject to any maintenance
fees or taxes or actions falling due within ninety days after the
Closing Date.
(iii) No Patent has been or is now involved in any
interference, reissue, reexamination, or opposing proceeding. To
Sellers' Knowledge, there is no potentially interfering patent or
patent application of any third party.
(iv) No Patent is infringed or, to Sellers' and the Acquired
Companies' Knowledge, has been challenged or threatened in any
way. None of the products manufactured and sold, nor any process,
know-how or technology used, by any Acquired Company infringes or
is alleged to infringe any patent or other proprietary right of
any other Person.
(e) Trademarks. Except as disclosed in Part 3.22(e) of the
Disclosure Letter:
(i) Part 3.22(e) of the Disclosure Letter contains a
complete and accurate list and summary description of all Marks.
One or more of the Acquired Companies is the owner of all right,
title, and interest in and to each of the Marks, free and clear
of all Encumbrances and other adverse claims.
(ii) All Marks have been registered with the United States
Patent and Trademark Office and are currently in compliance with
all formal legal requirements (including the timely
post-registration filing of affidavits of use and
incontestability and renewal applications), are valid and
enforceable, and are not subject to any maintenance fees or Taxes
or actions falling due within ninety days after the Closing Date.
(iii) No Mark has been or is now involved in any opposition,
invalidation, or cancellation and, to Sellers' and the Acquired
Companies' Knowledge, no such action is Threatened with the
respect to any of the Marks.
32
<PAGE> 34
(iv) To Sellers' and the Acquired Companies' Knowledge,
there is no potentially interfering trademark or trademark
application of any third party.
(v) To Sellers' and the Acquired Companies' Knowledge, no
Mark is infringed or has been challenged or threatened in any
way. None of the Marks used by any Acquired Company infringes or
is alleged to infringe any trade name, trademark, or service mark
of any third party.
(f) Copyrights. Except as disclosed in Part 3.22(f) of the
Disclosure Letter:
(i) Part 3.22(f) of the Disclosure Letter contains a
complete and accurate list of all Copyrights. One or more of the
Acquired Companies is the owner of all right, title, and interest
in and to each of the Copyrights, free and clear of all
Encumbrances and other adverse claims.
(ii) All the Copyrights have been registered and are
currently in compliance with formal legal requirements, are valid
and enforceable, and are not subject to any maintenance fees or
Taxes or actions falling due within ninety days after the date of
Closing.
(iii) No Copyright is infringed or, to Sellers' and the
Acquired Companies' Knowledge, has been challenged or threatened
in any way. None of the subject mater of any of the Copyrights
infringes or is alleged to infringe any copyright of any third
party.
(g) Trade Secrets.
(i) The Acquired Companies have taken reasonable precautions
to protect the secrecy, confidentiality, and value of their Trade
Secrets.
(ii) One or more of the Acquired Companies has good title
and an absolute (but not necessarily exclusive) right to use the
Trade Secrets. The Trade Secrets are not part of the public
knowledge or literature, and, to Sellers' and the Acquired
Companies' Knowledge, have not been used, divulged, or
appropriated either for the benefit of any Person (other than one
or more of the Acquired Companies) or to the detriment of the
Acquired Companies. No Trade Secret is subject to any adverse
claim or has been challenged or threatened in any way.
3.23 CERTAIN PAYMENTS. No Acquired Company or director, officer, agent, or
employee of any Acquired Company, or any other Person associated with or acting
for or on behalf of any Acquired Company, has directly or indirectly (a) made
any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or
other payment to any Person, private or public, regardless of form, whether in
money, property, or services (i) to obtain favorable treatment in securing
business, (ii) to pay for favorable treatment for business secured, or (iii) to
obtain special concessions or for special concessions already obtained, for or
in respect of any Acquired
33
<PAGE> 35
Company or any Affiliate of an Acquired Company, or (b) established or
maintained any fund or asset that has not been recorded in the books and records
of the Acquired Companies.
3.24 DISCLOSURE. No representation or warranty of Sellers in this Agreement
and no statement in the Disclosure Letter omits to state a material fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
3.25 RELATIONSHIPS WITH RELATED PERSONS. No Seller or any Related Person of
a Seller or of any Acquired Company owns, or since the first day of the next to
last completed fiscal year of the Acquired Companies has owned, of record or as
beneficial owner, an equity interest or any other financial or profit interest
in any Person that has (i) had business dealings or a financial interest in any
transaction with any Acquired Company, or (ii) engaged in competition with any
Acquired Company with respect to any line of the products or services of such
Acquired Company (a "Competing Business") in any market presently served by such
Acquired Company except for ownership of less than one percent of the
outstanding capital stock of any Competing Business that is publicly traded on
any recognized exchange or in the over-the-counter market. Except as set forth
in Part 3.25 of the Disclosure Letter, no Seller or any Related Person of a
Seller or of any Acquired Company is a party to any Contract with, or has any
claim or right against, any Acquired Company.
3.26 BROKERS OR FINDERS. Other than the engagement by the Company of
Bowles, Hollowell & Co. (whose fees and expenses shall be borne by the Company
to the extent they are accrued as a liability on the Closing Net Worth
Statement, and otherwise borne exclusively by the Sellers), Sellers and their
agents have incurred no obligation or liability, contingent or otherwise for
brokerage or finders' fees or agents' commissions or other similar payment in
connection with this Agreement.
3.27 RECALLS. There is no basis for the recall, withdrawal, or suspension
of any Governmental Authorization with respect to any product or service sold or
proposed to be sold by an Acquired Company. None of the products or services of
an Acquired Company is subject to any recall proceedings and no such proceedings
have been Threatened. Since January 1, 1990, no product or service of an
Acquired Company has been recalled due to possible product liability exposure.
3.28 NO TERMINATION OF RELATIONSHIP. Except as set forth on Part 3.28 of
the Disclosure Letter, as of the date hereof, neither the Sellers nor any
Acquired Company is aware that any relationship between an Acquired Company and
a distributor, customer, supplier, lender, employee or other person may be
terminated or adversely affected as a result of the execution of this Agreement
or the performance of the Contemplated Transactions.
3.29 BACKLOG. Part 3.29 of the Disclosure Letter contains (a) an accurate
list of all firm purchase orders and commitments for the Company's services and
products that make up the Company's backlog as of January 22, 1996, as well as
the sum of such backlog, and (b) an accurate list of all firm purchase orders
and commitments for Andor's services and products that make up Andor's backlog
as of January 23, 1996, as well as the sum of such backlog. All such
34
<PAGE> 36
orders and commitments and any quotations for work which are outstanding at that
time contain terms and conditions that are consistent with the past practice of
the Acquired Companies over the past year.
3.30 PRODUCT WARRANTIES. A statement of the current standard product
warranty used for each of the products of the Acquired Companies is set forth on
Part 3.30 of the Disclosure Letter. Part 3.30 of the Disclosure Letter also
lists and accurately summarizes any and all other product warranties made by or
on behalf of the Acquired Companies which deviate materially from the current
standard product warranty and which remain in effect on the date hereof, or
pursuant to which an Acquired Company has any remaining obligations.
3.31 [Intentionally Omitted]
3.32 CUSTOMERS AND SUPPLIERS. To the Company's and Andor's Knowledge, no
unfilled customer orders or commitments obligating any Acquired Company to
process, manufacture or deliver products or perform services, which orders or
commitments are material, individually or in the aggregate, to such Acquired
Company will result in a material loss to the business of such Acquired Company
upon completion of performance. No purchase orders or commitments of any
Acquired Company, which orders or commitments are material, individually or in
the aggregate, are materially in excess of normal requirements for such Acquired
Company, nor are prices provided therein materially in excess of current market
prices for the products or services to be provided thereunder. No material
supplier of an Acquired Company has indicated within the past year that it will
stop, or materially decrease the rate of, supplying materials, products, or
services to such Acquired Company and no material customer of such Acquired
Company has indicated within the past year that it will stop, or materially
decrease the rate of, buying materials, products or services from such Acquired
Company. Part 3.32 of the Disclosure Letter sets forth a list of (a) each
customer that accounted for more than 1% of the revenues of an Acquired Company
during the last fiscal year and (b) each supplier that is the sole supplier of
any significant product or component to an Acquired Company. Except as set forth
on Part 3.32 of the Disclosure Letter, there are no suppliers to an Acquired
Company of significant goods or services with respect to which practical
alternative sources of supply, or comparable products, are not available on
comparable terms and conditions.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware,
with full corporate power and authority to conduct its business as it is now
being conducted, to own or use the properties and assets that it purports to own
or use, and to perform all of its obligations under this Agreement.
35
<PAGE> 37
4.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its
terms. Upon the execution and delivery by Buyer of the Escrow Agreement,
the Escrow Agreement will constitute the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its
terms. Buyer has the absolute and unrestricted right, power, and authority
to execute and deliver this Agreement and the Escrow Agreement and to
perform its obligations under this Agreement and the Escrow Agreement.
(b) Neither the execution and delivery of this Agreement by Buyer nor
the consummation or performance of any of the Contemplated Transactions by
Buyer will give any Person the right to prevent, delay, or otherwise
interfere with any of the Contemplated Transactions pursuant to:
(i) any provision of Buyer's Organizational Documents;
(ii) any resolution adopted by the board of directors or the
stockholders of Buyer;
(iii) any Legal Requirement or Order to which Buyer may be
subject; or
(iv) any Contract to which Buyer is a party or by which Buyer may
be bound.
Buyer is not and will not be required to obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
4.3 CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To Buyer's Knowledge, no such Proceeding has been
Threatened.
4.4 BROKERS AND FINDERS. Buyer and its officers and agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.
5. [Intentionally Omitted]
6. [Intentionally Omitted]
36
<PAGE> 38
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS. All of Sellers' representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must be accurate as of
the date of this Agreement.
7.2 SELLERS' PERFORMANCE. All of the covenants and obligations that each
Seller is required to perform or to comply with pursuant to this Agreement at or
prior to the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been duly performed and
complied. All record and beneficial owners of Shares and all holders of Options
shall have executed this Agreement.
7.3 CONSENTS. Each of the Consents identified in Part 3.2 of the
Disclosure Letter must have been obtained and must be in full force and effect.
7.4 ADDITIONAL DOCUMENTS. Sellers must have caused the following documents
to be delivered to Buyer:
(a) an opinion of Reboul, MacMurray, Hewitt, Maynard, & Kristol, dated
the Closing Date, in the form of ANNEX E and an opinion of Levett, Rockwood
& Sanders, dated the Closing Date, in the form attached hereto as ANNEX F;
and
(b) such other documents as Buyer may reasonably request for the
purpose of (i) enabling its counsel to provide the opinion referred to in
Section 8.4(a), (ii) evidencing the accuracy of any of Sellers'
representations and warranties, (iii) evidencing the performance by any
Seller of, or the compliance by any Seller with, any covenant or obligation
required to be performed or complied with by such Seller, (iv) evidencing
the satisfaction of any condition referred to in this Section 7, or (v)
otherwise facilitating the consummation or performance of any of the
Contemplated Transactions.
7.5 NO PROCEEDINGS. There must not have been commenced or Threatened
against Buyer, or against any Person affiliated with Buyer, any Proceeding (a)
involving any challenge to, or seeking damages or other relief in connection
with, any of the Contemplated Transactions, or (b) that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with any of the
Contemplated Transactions.
7.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS. There must not
have been made or Threatened by any Person any claim asserting that such Person
(a) is the holder or the beneficial owner of, or has the right to acquire or to
obtain beneficial ownership of, any stock
37
<PAGE> 39
of, or any other voting, equity, or ownership interest in, any of the Acquired
Companies, or (b) is entitled to all or any portion of the Purchase Price
payable for the Shares and the Options.
7.7 NO PROHIBITION. Neither the consummation nor the performance of any of
the Contemplated Transactions will, directly or indirectly (with or without
notice or lapse of time), materially contravene, or conflict with, or result in
a material violation of, or cause Buyer or any Person affiliated with Buyer to
suffer any material adverse consequence under, (a) any applicable Legal
Requirement or Order, or (b) any Legal Requirement or Order that has been
published, introduced, or otherwise proposed by or before any Governmental Body.
7.8 AGREEMENTS REGARDING ANDOR. Buyer and Andor shall have entered into a
mutually agreeable letter of intent providing for the repurchase by Andor of a
percentage of its common stock held by the Company.
7.9 PAYMENT OF INDEBTEDNESS OF RELATED PERSONS. Each Seller shall have
caused all indebtedness of any Related Person of such Seller to any Acquired
Company to be paid in full prior to Closing.
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the other actions
required to be taken by Sellers at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by Sellers, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS. All of Buyer's representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must be accurate as of
the date of this Agreement.
8.2 BUYER'S PERFORMANCE. All of the covenants and obligations that Buyer
is required to perform or to comply with pursuant to this Agreement at or prior
to the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been performed and complied
with.
8.3 CONSENTS. Each of the Consents identified in Part 3.2 of the
Disclosure Letter must have been obtained and must be in full force and effect.
8.4 ADDITIONAL DOCUMENTS. Buyer must have caused the following documents
to be delivered to Sellers:
(a) an opinion of Seth H. Hoogasian, Buyer's General Counsel, dated
the Closing Date, in the form of ANNEX G; and
(b) such other documents as Sellers may reasonably request for the
purpose of (i) enabling their counsel to provide the opinion referred to in
Section 7.4(a), (ii) evidencing the accuracy of any representation or
warranty of Buyer, (iii) evidencing the
38
<PAGE> 40
performance by Buyer of, or the compliance by Buyer with, any covenant or
obligation required to be performed or complied with by Buyer, (ii)
evidencing the satisfaction of any condition referred to in this Section 8,
or (v) otherwise facilitating the consummation of any of the Contemplated
Transactions.
8.5 NO INJUNCTION. There must not be in effect any Legal Requirement or
any injunction or other Order that (a) prohibits the sale of the Shares by
Sellers to Buyer, and (b) has been adopted or issued, or has otherwise become
effective, since the date of this Agreement.
9. [Intentionally Omitted]
10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL. All representations, warranties, covenants, and obligations
in this Agreement, the Disclosure Letter and any other certificate or document
delivered pursuant to this Agreement will survive the Closing; PROVIDED,
HOWEVER, that the representations and warranties referenced in Section 10.4
shall expire on the respective dates by which notification of claims for
indemnification in respect thereof must be given pursuant to such section. The
right to indemnification, reimbursement, or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to any such representation, warranty,
covenant, or obligation.
10.2 INDEMNIFICATION AND REIMBURSEMENT BY SELLERS. Each Seller, severally
in proportion to its Seller's Proportion, and not jointly, will indemnify and
hold harmless Buyer, the Acquired Companies, and their respective
Representatives, stockholders, controlling persons, and affiliates
(collectively, the "Indemnified Persons"), and will reimburse the Indemnified
Persons, for any loss, liability, claim, damage, expense (including costs of
investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not involving a third-party claim (collectively, "Damages"),
arising from or in connection with:
(a) any Breach of any representation or warranty made by such Seller
in this Agreement, the Disclosure Letter or any other certificate or
document delivered by Sellers pursuant to this Agreement;
(b) any Breach by such Seller of any covenant or obligation of such
Seller in this Agreement;
(c) any Proceeding involving an Acquired Company resulting from
events occurring prior to the Closing;
(d) any product liability claims relating to any product shipped,
manufactured or sold by, or any services provided by, any Acquired Company
prior to the Closing Date; or
39
<PAGE> 41
(e) any claims by any retired or former employee of an Acquired
Company whose employment terminated prior to the Closing;
(f) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with a Seller or any Acquired
Company (or any Person acting on their behalf) in connection with any of
the Contemplated Transactions;
(g) notwithstanding the disclosure set forth in Part 3.19 of the
Disclosure Letter, any Environmental, Health, and Safety Liabilities
arising out of or relating to: (i) (A) the ownership, operation, or
condition at any time on or prior to the Closing Date of the Facilities or
any other properties and assets (whether real, personal, or mixed and
whether tangible or intangible) in which any Acquired Company has or had an
interest, or (B) any Hazardous Materials or other contaminants that were
present on the Facilities or such other properties and assets at any time
on or prior to the Closing Date; or (ii) (A) any Hazardous Materials or
other contaminants, wherever located, that were, or were allegedly,
generated, transported, stored, treated, Released, or otherwise handled by
any Acquired Company or by any other Person for whose conduct they are held
responsible at any time on or prior to the Closing Date, or (B) any
Hazardous Activities that were, or were allegedly, conducted by any
Acquired Company or by any other Person for whose conduct they are
responsible; or
(h) any bodily injury (including illness, disability, and death, and
regardless of when any such bodily injury occurred, was incurred, or
manifested itself), personal injury, property damage (including trespass,
nuisance, wrongful eviction, and deprivation of the use of real property),
or other damage of or to any Person, including any employee or former
employee of any Acquired Company or any other Person for whose conduct an
Acquired Company is responsible, in any way arising from or allegedly
arising from any Hazardous Activity conducted or allegedly conducted with
respect to the Facilities or the operation of the Acquired Companies prior
to the Closing Date, or from Hazardous Material that was (i) present or
suspected to be present on or before the Closing Date on or at the
Facilities (or present or suspected to be present on any other property, if
such Hazardous Material emanated or allegedly emanated from any of the
Facilities and was present or suspected to be present on any of the
Facilities on or prior to the Closing Date) or (ii) Released or allegedly
Released by any Acquired Company or any other Person for whose conduct they
are or may be held responsible, at any time on or prior to the Closing
Date;
PROVIDED, HOWEVER, that in the case of indemnification for Damages incurred by
Andor, the Sellers shall only be liable to Andor for 51.25% of the full amount
of Damages sustained by Andor.
10.3 INDEMNIFICATION AND REIMBURSEMENT BY BUYER. Buyer will indemnify and
hold harmless Sellers, and will reimburse Sellers, for any Damages arising from
or in connection with (a) any Breach of any representation or warranty made by
Buyer in this Agreement or in any certificate delivered by Buyer pursuant to
this Agreement, (b) any Breach by Buyer of any
40
<PAGE> 42
covenant or obligation of Buyer in this Agreement, or (c) any claim by any
Person for brokerage or finder's fees or commissions or similar payments based
upon any agreement or understanding alleged to have been made by such Person
with Buyer (or any Person acting on its behalf) in connection with any of the
Contemplated Transactions.
10.4 TIME LIMITATIONS. If the Closing occurs, Sellers will have no
liability for indemnification with respect to (i) any representation or warranty
in Section 3, other than those in Sections 3.2(a), 3.3, 3.11, 3.13 and 3.19, and
(ii) paragraphs (c), (d), (e), (f) or (h) of Section 10.2, unless on or before
the first anniversary of the Closing Date Sellers are given notice of claim
specifying the factual basis of that claim in reasonable detail to the extent
then known by Buyer. A claim with respect to Sections 3.2(a) and 3.3 may be made
at any time. A claim with respect to Section 3.19 or paragraph (g) of Section
10.2 must be made on or before the third anniversary of the Closing Date. A
claim with respect to Section 3.11 or 3.13 must be made prior to the date which
is 90 days following the applicable statute of limitations relating to the
liability underlying such claim. If the Closing occurs, Buyer will have no
liability for indemnification with respect to any representation or warranty in
Section 4 unless on or before the first anniversary of the Closing Date Buyer is
given notice of a claim specifying the factual basis of that claim in reasonable
detail to the extent then known by Sellers.
10.5 LIMITATIONS ON AMOUNT - SELLERS. Sellers will have no liability for
indemnification with respect to the matters described in Section 10.2 unless the
amount of Damages related to any single claim (with all claims arising out of
the same or similar circumstances being treated as a single claim) is in excess
of $10,000, and until the total of all Damages exceeding such $10,000 threshold
exceeds $150,000; PROVIDED, HOWEVER, that (i) after such thresholds are met
Sellers shall be liable from the first dollar of Damages, and (ii) the aggregate
liability of the Sellers for breaches of representations and warranties (other
than representations and warranties contained in Sections 3.2(a) and 3.3) shall
be limited to $1,177,900 (which amount is being placed in escrow pursuant to the
Escrow Agreement). The liability of each Seller for breaches of representations
and warranties contained in Section 3.2(a) and 3.3 shall be limited to the
adjusted Purchase Price received by such Seller.
10.6 LIMITATIONS ON AMOUNT -- BUYER. Buyer will have no liability for
indemnification with respect to the matters described in Section 10.3 unless the
amount of Damages related to any single claim (with all claims arising out of
the same or similar circumstances being treated as a single claim) is in excess
of $10,000, and until the total of all Damages exceeding such $10,000 threshold
exceeds $150,000; PROVIDED, HOWEVER, that (i) after such thresholds are met
Buyer shall be liable from the first dollar of Damages, and (ii) the aggregate
liability of Buyer for breaches of representations and warranties (other than
breaches of representations and warranties contained in Sections 4.1 and 4.2)
shall be limited to $1,175,000.
10.7 PROCEDURES FOR INDEMNIFICATION -- THIRD PARTY CLAIMS.
(a) Promptly after receipt by an indemnified party under Section 10.2
or Section 10.3 of notice of the commencement of any Proceeding against it,
such indemnified party will, if a claim is to be made against an
indemnifying party under such
41
<PAGE> 43
Section, give notice to the indemnifying party of the commencement of such
claim, but the failure to notify the indemnifying party will not relieve
the indemnifying party of any liability that it may have to any indemnified
party, except to the extent that the indemnifying party demonstrates that
the defense of such action is prejudiced by the indemnifying party's
failure to give such notice. In the case of the Sellers, notice to the
Attorneys shall constitute notice to all Sellers.
(b) If any Proceeding referred to in Section 10.7(a) is brought
against an indemnified party and it gives notice to the indemnifying party
of the commencement of such Proceeding, the indemnifying party will, unless
the claim involves Taxes, be entitled to participate in such Proceeding
and, to the extent that it wishes (unless (i) the indemnifying party is
also a party to such Proceeding and the indemnified party determines in
good faith that joint representation would be inappropriate, or (ii) the
indemnifying party fails to provide reasonable assurance to the indemnified
party of its financial capacity to defend such Proceeding and provide
indemnification with respect to such Proceeding), to assume the defense of
such Proceeding with counsel reasonably satisfactory to the indemnified
party and, after notice from the indemnifying party to the indemnified
party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such
defense, be liable to the indemnified party under this Section 10 for any
fees of other counsel with respect to the defense of such Proceeding, in
each case subsequently incurred by the indemnified party in connection with
the defense of such Proceeding. In the case of indemnification of Sellers,
in no event shall Buyer be liable for the costs and expenses of more than
one counsel per Proceeding. If the indemnifying party assumes the defense
of a Proceeding, (i) it will be conclusively established for purposes of
this Agreement that the claims made in that Proceeding are within the scope
of and subject to indemnification; (ii) no compromise or settlement of such
claims may be effected by the indemnifying party without the indemnified
party's consent unless (A) there is no finding or admission of any
violation of Legal Requirements or any violation of the rights of any
Person and no effect on any other claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages
that are paid in full by the indemnifying party; and (iii) the indemnifying
party will have no liability with respect to any compromise or settlement
of such claims effected without its consent. If notice is given to an
indemnifying party of the commencement of any Proceeding and the
indemnifying party does not, within ten days after the indemnified party's
notice is given, give notice to the indemnified party of its election to
assume the defense of such Proceeding, the indemnifying party will be bound
by any determination made in such Proceeding or any compromise or
settlement effected by the indemnified party. Notwithstanding the
foregoing, if a customer or a supplier of an Acquired Company asserts that
the Buyer is liable to such customer or supplier for a monetary or other
obligation which may constitute or result in Damages for which the Buyer
may be entitled to indemnification pursuant to this Section 10 and the
Buyer reasonably determines that it has a valid business reason to fulfill
such obligations, then (i) the Buyer shall be entitled to satisfy such
obligation without prior notice to or consent from the Sellers, (ii) the
Buyer may make a claim for indemnification pursuant to this Section 10 and
(iii) the Buyer shall be reimbursed, in accordance with the provisions of
this Section
42
<PAGE> 44
10, for any such Damages for which it is entitled to indemnification
pursuant to the provisions of this Section 10; PROVIDED, HOWEVER, that if
the Buyer makes a claim for indemnification in accordance with this
sentence the Sellers shall not be deemed to have waived any defense to such
claim by the Buyer, notwithstanding the Buyer's prior satisfaction of the
obligation for which indemnification is sought, and it shall not be a
defense to the Buyer's claim for indemnification that the Buyer has
satisfied the obligation for which indemnification is sought.
(c) Notwithstanding the foregoing, if a Proceeding involves Taxes or
if an indemnified party determines in good faith that there is a reasonable
probability that a Proceeding may adversely affect it or its affiliates
other than as a result of monetary damages for which it would be entitled
to indemnification under this Agreement, the indemnified party may, by
notice to the indemnifying party, assume the exclusive right to defend,
compromise, or settle such Proceeding, but the indemnifying party will not
be bound by any determination of a Proceeding so defended or any compromise
or settlement effected without its consent (which may not be unreasonably
withheld).
(d) Sellers hereby consent to the non-exclusive jurisdiction of any
court in which a Proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this
Agreement with respect to such Proceeding or the matters alleged therein,
and agree that process may be served on Sellers with respect to such a
claim anywhere in the world.
10.8 PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought, subject to the time
and other limitations set forth in this Article 10.
11. GENERAL PROVISIONS
11.1 EXPENSES. Except as otherwise expressly provided in this Agreement,
each party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants. The Company will pay all amounts
payable (a) to Bowles, Hollowell & Co. and to the Sellers' and the Acquired
Companies' counsel and accountants in connection with this Agreement and the
Contemplated Transactions and (b) to certain officers and employees of the
Company pursuant to closing bonuses designated by DeMuth, Folger & Terhune,
PROVIDED, HOWEVER, that the Company shall only be obligated to pay such fees,
expenses and bonuses to the extent that they are reflected on the Closing Net
Worth Statement, with appropriate documentation relating to such fees and
expenses delivered to Buyer.
11.2 PUBLIC ANNOUNCEMENTS. Any public announcement or similar publicity
with respect to this Agreement or the Contemplated Transactions will be issued,
if at all, at such time and in such manner as Buyer determines. Unless consented
to by Buyer in advance or required by Legal Requirements, prior to the Closing
Sellers shall, and shall cause the Acquired Companies to, keep
43
<PAGE> 45
this Agreement strictly confidential and may not make any disclosure of this
Agreement to any Person. Sellers and Buyer will consult with each other
concerning the means by which the Acquired Companies' employees, customers, and
suppliers and others having dealings with the Acquired Companies will be
informed of the Contemplated Transactions, and Buyer will have the right to be
present for any such communication.
11.3 CONFIDENTIALITY. Between the date of this Agreement and the Closing
Date, Buyer and Sellers will maintain in confidence, and will cause the
directors, officers, employees, agents and advisors of Sellers, Buyer and
Acquired Companies, and their respective Related Persons, to maintain in
confidence, any written, oral, or other information obtained in confidence from
another party or an Acquired Company in connection with this Agreement or the
Contemplated Transactions, unless (a) such information is already known to such
party or to others not (to such party's Knowledge) bound by a duty of
confidentiality or such information become publicly available through no fault
of such party, (b) the use of such information is necessary in making any filing
or obtaining any consent or approval required for the consummation of the
Contemplated Transactions, or (c) the furnishing or use of such information is
required by or necessary or appropriate in connection with legal proceedings. If
the Contemplated Transactions are not consummated, each party will return or
destroy as much of such written information as the other party may reasonably
request.
Sellers acknowledge and agree that (i) they have obtained and may in the
future obtain confidential and proprietary information about an Acquired Company
including, but not limited to, business plans, strategies, customer lists, and
financial and statistical information and (ii) they will not, and will cause
their Related Persons not to, disclose, directly or indirectly, such information
or use it for any purpose other than for such Acquired Company's benefit. The
obligations of confidentiality in this paragraph shall not apply to any
information which (A) is or becomes generally available to the public other than
as a breach of this Agreement by a party having a legal right to make such
disclosure (e.g., other than employees, auditors and other); or (B) is required
to be disclosed in compliance with applicable law or legal process.
11.4 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when actually received or if earlier, one day after deposit with a
nationally recognized overnight delivery service, charges prepaid, or three days
after deposit in the U.S. mail by certified mail, return receipt requested,
postage prepaid, in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers a
party may designate by notice to the other parties):
If to a Seller, to the Attorneys in care of:
DeMuth, Folger & Terhune
Glenpointe Center East, 5th Floor
300 Frank W. Burr Boulevard
Teaneck, New Jersey 07666
Attention: Thomas W. Folger
Telecopy No. (201) 836-5666
44
<PAGE> 46
with a copy to:
Reboul MacMurray Hewitt Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
Attention: John Maynard, Esq.
Telecopy No. (212) 841-5725
If to the Buyer, to:
Thermo Vision Corporation
27 Forge Parkway
Franklin, Massachusetts 02038
Attention: President
Telecopy No. (508) 520-1732
with a copy to:
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254-9046
Attention: General Counsel
Telecopy No. (617) 622-1283
11.5 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of, this Agreement
may be brought against any of the parties in the courts of the Commonwealth of
Massachusetts, County of Suffolk or, if it has or can acquire jurisdiction, in
the United States District Court for the Eastern District of Massachusetts and
each of the parties consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein. Process in any action or proceeding referred to
in the preceding sentence may be served on any party anywhere in the world.
11.6 FURTHER ASSURANCES. The parties agree (a) to furnish upon request to
each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
11.7 WAIVER. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by
45
<PAGE> 47
applicable law, (a) no claim or right arising out of this Agreement or the
documents referred to in this Agreement can be discharged by one party, in whole
or in part, by a waiver or renunciation of the claim or right unless in writing
signed by the other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and (c) no
notice to or demand on one party will be deemed to be a waiver of any obligation
of such party or of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.
11.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all prior
agreements between the parties with respect to its subject matter (including the
letter of intent between Buyer and Sellers dated October 17, 1995, as amended)
and constitutes (along with the documents referred to in this Agreement) a
complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not be amended
except by a written agreement executed by the party to be charged with the
amendment.
11.9 ASSIGNMENTS, SUCCESSORS, AND THIRD-PARTY RIGHTS. Neither party may
assign any of its rights under this Agreement without the prior consent of the
other parties except that Buyer may assign any of its rights under this
Agreement to any Subsidiary of Buyer. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns.
11.10 ACTION BY SELLERS; APPOINTMENT OF AGENT. By his, her or its execution
of this Agreement, each of the Sellers hereby constitutes and appoints Thomas W.
Folger and Donald D. DeMuth (the "Attorneys") as his, her or its true and lawful
attorney-in-fact, with full power of substitution, and with power to act in his,
her or its name and behalf, on all matters pertaining to this Agreement, or any
instrument, certificate or other document to be executed and delivered pursuant
hereto or thereto, and hereby authorizes the Attorneys to execute and deliver
such agreements, instruments, certificates and other documents, including,
without limitation, amendments to this Agreement, and to take such other action
as the Attorneys may deem necessary, desirable, advisable or convenient. The
power-of-attorney granted hereby, being coupled with an interest, is
irrevocable, shall survive the death, insanity, incapacity, dissolution,
liquidation or other winding-up of any Seller, may be exercised by the Attorneys
on behalf of all of the Sellers, and shall survive the delivery of an assignment
by a Seller of the whole or any portion of his, her or its interest in the
Company.
11.11 SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
46
<PAGE> 48
11.12 SECTION HEADINGS; CONSTRUCTION. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Sections" refer to the corresponding
Sections of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
11.13 TIME OF ESSENCE. With regard to all dates and time periods set forth
or referred to in this Agreement, time is of the essence.
11.14 GOVERNING LAW. This Agreement will be governed by and construed under
the laws of the State of New York without regard to conflicts of laws
principles.
11.15 RELIEF. In the event of a breach of the provisions of this Agreement
by a Seller, in addition to any other rights and remedies that Buyer may have
under law or in equity, Buyer shall have the right to specific performance and
injunctive relief, it being acknowledged and agreed that money damages will not
provide an adequate remedy. In the event litigation is maintained by a party to
this Agreement against any other party to enforce this Agreement or to seek any
remedy for breach, then the party prevailing in such litigation shall be
entitled to recover from the non-prevailing party reasonable attorneys' fees and
costs of suit.
11.16 CERTAIN ENVIRONMENTAL MATTERS. Buyer will provide the Attorneys with
copies of all reports, applications and other documents pertaining to the
premises occupied by the Company in Stratford, Connecticut filed with the
Connecticut Department of Environmental Protection (the "DEP"), and will provide
the Attorneys and their advisors a period of not less than twenty days to review
and comment on such documents prior to any filing. In connection with any such
review, the Attorneys shall have the right to hire environmental consultants and
to have the reasonable fees and expenses of such consultants paid from funds
held pursuant to the Escrow Agreement, up to a maximum of $10,000. With respect
to those environmental matters disclosed to the DEP on the Form III and the
Environmental Condition Assessment Form to be submitted therewith, Buyer and
Oriel shall only be entitled to recover Damages for remediation actually
required as a result of such filing pursuant to a remediation plan approved by
the DEP. In addition, Buyer will use, and will cause Oriel to use, its
commercial best efforts to minimize the scope of and any expenses of remediation
of such premises for which Sellers would be liable pursuant to this Agreement.
11.17 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[remainder of page intentionally left blank]
47
<PAGE> 49
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
BUYER:
THERMO VISION CORPORATION
By: /s/ Kristine A. Langdon
------------------------------------
Name: Kristine A. Langdon
Title: President
SELLERS:
DEMUTH, FOLGER & TERHUNE
By: DFT Partners, its General Partner
/s/ Thomas W. Folger
---------------------------------------
General Partner
THE SCOTTISH INVESTMENT
TRUST PLC
By: /s/ M. Harding
------------------------------------
Name: M. Harding
Title: Secretary
TURLOCK CORPORATION N.V.
By: /s/ Mohammed Younes
------------------------------------
Name: Mohammed Younes
Title: Director, Turlock Group
48
<PAGE> 50
LEVY FAMILY TRUST
By: /s/ Kenneth Levy
------------------------------------
Name: Kenneth Levy
Title: Trustee
/s/ Thomas A. Rosse
---------------------------------------
Thomas A. Rosse
/s/ Robert F. Goldhammer
---------------------------------------
Robert F. Goldhammer
/s/ Mohammed S. Younes
---------------------------------------
Mohammed S. Younes
/s/ Allen J. Smith
---------------------------------------
Allen J. Smith
/s/ William J. Malin
---------------------------------------
William J. Malin
/s/ Eugene S. Arthurs
---------------------------------------
Eugene G. Arthurs
/s/ Nicky Botticelli
---------------------------------------
Nicky Botticelli
/s/ William N. Brown
---------------------------------------
William N. Brown, Sr.
/s/ John H. G. Knight
---------------------------------------
John H. G. Knight
49
<PAGE> 51
/s/ Domenic Assalone
---------------------------------------
Domenic Assalone
/s/ David Beaubien
---------------------------------------
David Beaubien
/s/ John C. Donohue
---------------------------------------
John Donohue
/s/ Zbigniew Drozdowicz
---------------------------------------
Zbigniew Drozdowicz
/s/ Nancy Fernandes
---------------------------------------
Nancy Fernandes
/s/ Michael Galbicsek
---------------------------------------
Michael Galbicsek
/s/ David L. Gordon
---------------------------------------
David Gordon
/s/ Joseph Guerra
---------------------------------------
Joseph Guerra
/s/ Paul Heidemann
---------------------------------------
Paul Heidemann
/s/ Benjamin Slootskin
---------------------------------------
Benjamin Slootskin
/s/ Devaunshi Sampat
---------------------------------------
Devaunshi Sampat
50
<PAGE> 52
/s/ Iain Drummund
---------------------------------------
Iain Drummund
/s/ George Buzel
---------------------------------------
George Buzel
/s/ Eugene Marino
---------------------------------------
Eugene Marino
/s/ David M. Reiber
---------------------------------------
David M. Reiber
51
<PAGE> 1
Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
THERMO VISION CORPORATION
THERMO VISION CORPORATION, a corporation organized and existing under the
laws of the State of Delaware, hereby certifies as follows:
1. The name of the Corporation is Thermo Vision Corporation. The date of
filing of its original Certificate of Incorporation with the Secretary of State
was November 14, 1995. An Amendment to the Certificate of Incorporation was
filed with the Secretary of State on August 26, 1997.
2. That Article FOURTH of the Certificate of Incorporation of the
Corporation, as amended, is hereby further amended to increase the number of
authorized shares of capital stock, par value $.01, of the Corporation from 20
million shares to 50 million shares and that such amendment is hereby effected
by deleting said Article in its entirety and inserting the following in
substitution therefor:
"FOURTH: The total number of shares of capital stock which the Corporation
shall have authority to issue is fifty million (50,000,000), and the par
value of each of such shares is one cent ($.01), amounting in the aggregate
to five hundred thousand dollars ($500,000) of capital stock."
3. That the Board of Directors of the Corporation by unanimous written
consent dated as of November 13, 1997, duly adopted the following resolutions:
RESOLVED: That it is in the best interests of the Corporation that the
number of authorized shares of capital stock, $.01 par value, of
the Corporation be increased from 20 million shares to 50 million
shares; that, upon the approval of such increase by the
Corporation's stockholders, the Corporation's Certificate of
Incorporation be amended and restated to reflect such approval;
and that the proper officers of the Corporation be, and each of
them hereby is, authorized, empowered and directed to execute on
behalf of the Corporation an Amended and Restated Certificate of
Incorporation to reflect such increase and restatement, and to
file, or cause to be filed, such Amended and Restated Certificate
of Incorporation with the Secretary of State of the State of
Delaware.
RESOLVED: That the Board of Directors recommend to the stockholders of the
Corporation approval of an amendment to the Corporation's
Certificate of Incorporation to increase the authorized shares of
the Corporation's capital stock from 20 million shares to 50
million shares.
1
<PAGE> 2
4. That the amendment to the Corporation's Certificate of Incorporation to
increase the number of authorized shares of capital stock of the Corporation
from 20 million to 50 million was duly adopted by the sole stockholder of the
corporation in accordance with Sections 228, 242 and 245 of the General
Corporation Law of the State of Delaware.
5. Except as set forth above, this Amended and Restated Certificate of
Incorporation only restates and integrates and does not further amend the
provisions of the Certificate of Incorporation of this Corporation as heretofore
amended and there is no discrepancy between those provisions and the provisions
of this Amended and Restated Certificate of Incorporation. This Amended and
Restated Certificate of Incorporation was duly adopted pursuant to Section 245
of the General Corporation Law of the State of Delaware.
6. The text of the Certificate of Incorporation as amended heretofore is
hereby amended and restated to read as herein set forth in full:
"AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
THERMO VISION CORPORATION
FIRST: The name of the corporation is:
Thermo Vision Corporation
SECOND: The address of its registered office in the State of Delaware is
1209 Orange Street, in the City of Wilmington, County of New Castle. The name of
its registered agent at such address is The Corporation Trust Company.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of capital stock which the Corporation
shall have authority to issue is fifty million (50,000,000), and the par value
of each of such shares is one cent ($.01), amounting in the aggregate to five
hundred thousand dollars ($500,000) of capital stock.
FIFTH: The corporation is to have perpetual existence.
SIXTH: The private property of the stockholders shall not be subject to the
payment of the corporation debts to any extent whatever.
2
<PAGE> 3
SEVENTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the corporation and for defining
and regulating the powers of the corporation and its directors and stockholders
and are in the furtherance and not in limitation of the powers conferred upon
the corporation by statute:
(a) The by-laws of the corporation may fix and alter, or provide the
manner for fixing and altering, the number of directors constituting the
whole Board. In case of any vacancy on the Board of Directors or any
increase in the number of directors constituting the whole Board, the
vacancies shall be filled by the directors or by the stockholders at the
time having voting power, as may be prescribed in the by-laws. Directors
need not be stockholders of the corporation, and the election of directors
need not be by ballot.
(b) The Board of Directors shall have the power and authority:
(1) to make, alter or repeal by-laws of the corporation,
subject only to such limitation, if any, as may be from time to time
imposed by law or by the by-laws; and
(2) to the full extent permitted or not prohibited by law, and
without the consent of or other action by the stockholders, to
authorize or create mortgages, pledges or other liens or encumbrances
upon any or all of the assets, real, personal or mixed, and
franchises of the corporation, including after-acquired property, and
to exercise all of the powers of the corporation in connection
therewith; and
(3) subject to any provision of the by-laws, to determine
whether, to what extent, at what times and places and under what
conditions and regulations the accounts, books and papers of the
corporation (other than the stock ledger), or any of them, shall be
open to the inspection of the stockholders, and no stockholder shall
have any right to inspect any account, book or paper of the
corporation except as conferred by statute or authorized by the
by-laws or by the Board of Directors.
EIGHTH: Meetings of stockholders may be held outside the State of Delaware,
if the by-laws so provide. The books of the corporation may be kept outside of
the State of Delaware at such place or places as may be designated from time to
time by the Board of Directors or in the by-laws of the corporation.
NINTH: The corporation shall indemnify each director and officer of the
corporation, his heirs, executors and administrators, and may indemnify each
employee and agent of the corporation, his heirs, executors, administrators and
all other persons whom the corporation is authorized to indemnify under the
provisions of the General Corporation Law of the State of Delaware, to the
maximum extent permitted by law (a) against all expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with any action, suit or proceeding, whether
civil, criminal, administrative or investigative (except an action by or in the
right of the corporation), or in connection with any
3
<PAGE> 4
appeal therein, or otherwise, and (b) against all expenses (including attorney's
fees) actually and reasonably incurred by him in connection with the defense or
settlement of any action or suit by or in the right of the corporation, or
otherwise; and no provision of this Article Ninth is intended to be construed as
limiting, prohibiting, denying or abrogating any of the general or specific
powers or rights conferred by the General Corporation Law of the State of
Delaware upon the corporation to furnish, or upon any court to award, such
indemnification, or indemnification as otherwise authorized pursuant to the
General Corporation Law of the State of Delaware or any other law now or
hereafter in effect.
The Board of Directors of the corporation may, in its discretion, authorize
the corporation to purchase and maintain insurance on behalf of any person who
is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or incurred by him in any
such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the foregoing paragraph of this Article Ninth.
TENTH: To the maximum extent that Delaware law in effect from time to time
permits limitation of the liability of directors, no director of the corporation
shall be liable to the corporation or its stockholders for money damages.
Neither the amendment nor repeal of this Article, nor the adoption or amendment
of any other provision of the corporation's Certificate of Incorporation or
by-laws inconsistent with this Article, shall apply to or affect in any respect
the applicability of the preceding sentence with respect to any act or failure
to act which occurred prior to such amendment, repeal or adoption. The
limitation on liability provided by this Article applies to events occurring at
the time a person serves as a director of the corporation whether or not such
person is a director at the time of any proceeding in which liability is
asserted.
ELEVENTH: The corporation reserves the right to amend, alter, change or
repeal any provisions contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation."
IN WITNESS WHEREOF, said Thermo Vision Corporation has caused this
certificate to be signed by Sandra L. Lambert, its Secretary, this 14th day of
November, 1997.
THERMO VISION CORPORATION
By: /s/ Sandra L. Lambert
----------------------------
Sandra L. Lambert, Secretary
4
<PAGE> 1
Exhibit 3.2
CERTIFICATE OF AMENDMENT
TO
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
THERMO VISION CORPORATION
Pursuant to Section 242 of the
Corporation Law of The State of Delaware
----------------------------------------
THERMO VISION CORPORATION (hereinafter called the "Corporation"), organized
and existing under and by virtue of the General Corporation Law of the State of
Delaware (the "General Corporation Law"), does hereby certify as follows:
The Board of Directors of the Corporation, pursuant to written action in
lieu of a meeting, duly adopted resolutions, pursuant to Sections 141(f) and 242
of the General Corporation Law, setting forth an amendment to the Amended and
Restated Certificate of Incorporation of the Corporation and declaring said
amendment to be advisable. The stockholders of the Corporation duly approved
said proposed amendment by written consent in accordance with Sections 228(a)
and 242 of the General Corporation Law, and written notice of such consent has
been given to all stockholders who have not consented in writing to said
amendment. The resolutions setting forth the amendment are as follows:
RESOLVED: That Article FOURTH of the Amended and Restated Certificate of
Incorporation of the Corporation be and hereby is deleted in its
entirety and the following new Article FOURTH shall be inserted
in lieu thereof:
"FOURTH: (a) The total number of shares of capital stock which
the Corporation shall have the authority to issue is fifty
million (50,000,000), and the par value of each of such shares is
<PAGE> 2
one cent ($.01), amounting in the aggregate to five hundred
thousand dollars ($500,000) of capital stock.
(b) All shares of capital stock of the Corporation issued by
the Corporation upon or before occurrence of the dividend (the
"Distribution") of such shares of capital stock by Thermo Optek
Corporation, a Delaware corporation, to its shareholders (the
"Restricted Shares") shall be subject to the following
restriction:
The holder shall not sell, assign, transfer, pledge, hypothecate
or otherwise dispose of, by operation of law or otherwise, any
Restricted Shares (except that (i) Thermo Optek Corporation may
distribute the Restricted Shares to its shareholders in the
Distribution and (ii) the Corporation's Distribution agent may
sell fractions of Restricted Shares in order to provide
shareholders of Thermo Optek Corporation with cash in lieu of
fractional Restricted Shares in the Distribution), until the
sooner to occur of (i) 60 days following the date of execution of
an underwriting agreement in connection with the Corporation's
initial underwritten public offering following the date on which
the Registration Statement with respect to such offering is
declared effective by the Securities and Exchange Commission or
(ii) March 1, 1998 (the "Transfer Restriction").
For purposes of clarifying the scope of the Transfer Restriction,
all shares of capital stock of the Corporation issued by the
Corporation after the Distribution shall not be subject to the
Transfer Restriction."
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed and this Certificate of Amendment to the Certificate of Incorporation,
as amended, to be signed by Sandra L. Lambert, its Secretary, on this the ___
day of ___________________, 1997.
THERMO VISION CORPORATION
By:_______________________________
Sandra L. Lambert, Secretary
-2-
<PAGE> 1
Exhibit 3.3
THERMO VISION CORPORATION
BY-LAWS
TABLE OF CONTENTS
Article I - General ................................................ 1
Section 1.1. Offices ......................................... 1
Section 1.2. Seal ............................................ 1
Section 1.3. Fiscal Year ..................................... 1
Article II - Stockholders .......................................... 1
Section 2.1. Place of Meetings ............................... 1
Section 2.2. Annual Meeting .................................. 1
Section 2.3. Quorum .......................................... 1
Section 2.4. Right to Vote; Proxies .......................... 2
Section 2.5. Voting .......................................... 2
Section 2.6. Notice of Annual Meetings ....................... 2
Section 2.7. Stockholders' List .............................. 2
Section 2.8. Special Meetings ................................ 2
Section 2.9. Notice of Special Meetings ...................... 3
Section 2.10. Inspectors ..................................... 3
Section 2.11. Stockholders' Action by Consent ................ 3
Article III - Directors ............................................ 3
Section 3.1. Number of Directors ............................. 3
Section 3.2. Change in Number of Directors; Vacancies ........ 4
Section 3.3. Resignation ..................................... 4
Section 3.4. Removal ......................................... 4
Section 3.5. Place of Meetings and Books ..................... 4
Section 3.6. General Powers .................................. 4
Section 3.7. Executive Committee ............................. 4
Section 3.8. Other Committees ................................ 4
Section 3.9. Powers Denied to Committees ..................... 5
Section 3.10. Substitute Committee Member .................... 5
Section 3.11. Compensation of Directors ...................... 5
Section 3.12. Annual Meeting ................................. 5
(i)
<PAGE> 2
Section 3.13. Regular Meetings ............................... 5
Section 3.14. Special Meetings ............................... 5
Section 3.15. Quorum ......................................... 5
Section 3.16. Telephonic Participation in Meetings ........... 6
Section 3.17. Action by Consent .............................. 6
Article IV - Officers .............................................. 6
Section 4.1. Selection; Statutory Officers ................... 6
Section 4.2. Time of Election ................................ 6
Section 4.3. Additional Officers ............................. 6
Section 4.4. Terms of Office ................................. 6
Section 4.5. Compensation of Officers ........................ 6
Section 4.6. Chairman of the Board ........................... 7
Section 4.7. President ....................................... 7
Section 4.8. Vice-Presidents ................................. 7
Section 4.9. Treasurer ....................................... 7
Section 4.10. Secretary ...................................... 7
Section 4.11. Assistant Secretary ............................ 8
Section 4.12. Assistant Treasurer ............................ 8
Section 4.13. Subordinate Officers ........................... 8
Article V - Stock .................................................. 8
Section 5.1. Stock ........................................... 8
Section 5.2. Fractional Share Interests ...................... 9
Section 5.3. Transfers of Stock .............................. 9
Section 5.4. Record Date ..................................... 9
Section 5.5. Transfer Agent and Registrar .................... 10
Section 5.6. Dividends ....................................... 10
1. Power to Declare ...................................... 10
2. Reserves .............................................. 10
Section 5.7. Lost, Stolen or Destroyed Certificates .......... 10
Section 5.8. Inspection of Books ............................. 10
Article VI - Miscellaneous Management Provisions ................... 10
Section 6.1. Checks, Drafts and Notes ........................ 10
Section 6.2 Notices ......................................... 11
Section 6.3. Conflict of Interest ............................ 11
(ii)
<PAGE> 3
Section 6.4. Voting of Securities Owned by this Corporation .. 11
Article VII - Amendments ........................................... 12
Section 7.1. Amendments ...................................... 12
(iii)
<PAGE> 4
THERMO VISION CORPORATION
BY-LAWS
ARTICLE I - GENERAL
SECTION 1.1. OFFICES. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware. The Corporation may also
have offices at such other places both within and without the State of Delaware
as the Board of Directors may from time to time determine or the business of the
Corporation may require.
SECTION 1.2. SEAL. The seal of the Corporation shall be in the form
approved by the Board of Directors.
SECTION 1.3. FISCAL YEAR. The fiscal year of the Corporation shall end on
the Saturday closest to December 31 of each year.
ARTICLE II - STOCKHOLDERS
SECTION 2.1. PLACE OF MEETINGS. All meetings of the stockholders shall be
held at such place within or without the State of Delaware as may be designated
from time to time by the Board of Directors or the President or, if not so
designated, at the registered office of the Corporation.
SECTION 2.2. ANNUAL MEETING. The annual meeting of stockholders for the
election of directors and for the transaction of such other business as may
properly be brought before the meeting shall be held on a date to be fixed by
the Board of Directors, the Chairman of the Board, if any, or the President
(which date shall not be a legal holiday in the place where the meeting is to be
held) at the time and place to be fixed by the Board of Directors, the Chairman
of the Board, if any, or the President and stated in the notice of the meeting.
If no annual meeting is held in accordance with the foregoing provisions, the
Board of Directors shall cause the meeting to be held as soon thereafter as
convenient. If no annual meeting is held in accordance with the foregoing
provisions, a special meeting may be held in lieu of the annual meeting, and any
action taken at that special meeting shall have the same effect as if it had
been taken at the annual meeting, and in such case all references in these
by-laws to the annual meeting of the stockholders shall be deemed to refer to
such special meeting.
SECTION 2.3. QUORUM. At all meetings of the stockholders the holders of a
majority of the stock issued and outstanding and entitled to vote thereat,
present in person or represented by proxy, shall constitute a quorum requisite
for the transaction of business except as otherwise provided by law, by the
Certificate of Incorporation or by these by-laws. If, however, such majority
shall not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or by proxy, by a
majority vote, shall have the power to adjourn the meeting from time to time
without notice other than announcement at the meeting
1
<PAGE> 5
until the requisite amount of voting stock shall be present. If the adjournment
is for more than thirty (30) days, or if after the adjournment a new record date
is fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting. At such
adjourned meeting, at which the requisite amount of voting stock shall be
represented, any business may be transacted which might have been transacted if
the meeting had been held as originally called.
SECTION 2.4. RIGHT TO VOTE; PROXIES. Each stockholder having the right to
vote at any meeting shall be entitled to one vote for each share of stock held
by him. Any stockholder entitled to vote at any meeting of stockholders may vote
either in person or by proxy, but no proxy which is dated more than three years
prior to the meeting at which it is offered shall confer the right to vote
thereat unless the proxy provides that it shall be effective for a longer
period. Every proxy shall be in writing, subscribed by a stockholder or his duly
authorized attorney in fact, and dated, but need not be sealed, witnessed, or
acknowledged.
SECTION 2.5 VOTING. At all meetings of stockholders all questions, except
as otherwise expressly provided for by statute, the Certificate of Incorporation
or these by-laws, shall be determined by a majority vote of the stockholders
present in person or represented by proxy. Except as otherwise expressly
provided by law, the Certificate of Incorporation or these by-laws, at all
meetings of stockholders the voting shall be by voice vote, but any stockholder
qualified to vote on the matter in question may demand a stock vote, by shares
of stock, upon such question, whereupon such stock vote shall be taken by
ballot, each of which shall state the name of the stockholder voting and the
number of shares voted by him, and, if such ballot be cast by a proxy, it shall
also state the name of the proxy. All elections of directors shall be decided in
accordance with Article NINTH of the Certificate of Incorporation.
SECTION 2.6. NOTICE OF ANNUAL MEETINGS. Written notice of the annual
meeting of the stockholders shall be mailed to each stockholder entitled to vote
thereat at such address as appears on the stock books of the Corporation at
least ten (10) days (and not more than sixty (60) days) prior to the meeting. It
shall be the duty of every stockholder to furnish to the Secretary of the
Corporation or to the transfer agent, if any, of the class of stock owned by
him, his post office address and to notify said Secretary or transfer agent of
any change therein.
SECTION 2.7. STOCKHOLDERS' LIST. A complete list of the stockholders
entitled to vote at any meeting of stockholders, arranged in alphabetical order
and showing the address of each stockholder, and the number of shares registered
in the name of each stockholder, shall be prepared by the Secretary and filed
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held, at least ten days before such meeting,
and shall at all times during the usual hours for business, and during the whole
time of said election, be open to the examination of any stockholder for a
purpose germane to the meeting.
SECTION 2.8. SPECIAL MEETINGS. Special meetings of the stockholders for any
purpose or purposes, unless otherwise provided by statute, may be called by the
Board of Directors, the Chairman of the Board, if any, the President or any Vice
President.
2
<PAGE> 6
SECTION 2.9. NOTICE OF SPECIAL MEETINGS. Written notice of a special
meeting of stockholders, stating the time and place and object thereof shall be
mailed, postage prepaid, not less than ten (10) nor more than sixty (60) days
before such meeting, to each stockholder entitled to vote thereat, at such
address as appears on the books of the corporation. No business may be
transacted at such meeting except that referred to in said notice, or in a
supplemental notice given also in compliance with the provisions hereof, or such
other business as may be germane or supplementary to that stated in said notice
or notices.
SECTION 2.10. INSPECTORS. One or more inspectors may be appointed by the
Board of Directors before or at any meeting of stockholders, or, if no such
appointment shall have been made, the presiding officer may make such
appointment at the meeting. At the meeting for which the inspector or inspectors
are appointed, he or they shall open and close the polls, receive and take
charge of the proxies and ballots, and decide all questions touching on the
qualifications of voters, the validity of proxies and the acceptance and
rejection of votes. If any inspector previously appointed shall fail to attend
or refuse or be unable to serve, the presiding officer shall appoint an
inspector in his place.
SECTION 2.11. STOCKHOLDERS' ACTION BY CONSENT. Whenever the vote of
stockholders at a meeting thereof is required or permitted to be taken in
connection with any corporate action by any provisions of the statutes, the
Certificate of Incorporation, or these by-laws, the meeting and vote of
stockholders may be dispensed with, and any corporate action upon which a vote
of stockholders is required or permitted may be taken with the written consent
of stockholders having not less than 50% of all of the stock entitled to vote
upon the action if a meeting were held; PROVIDED that in no case shall the
written consent be by holders having less than the minimum percentage of the
total vote required by statute for the proposed corporate action and provided
that prompt notice be given to all stockholders of the taking of such corporate
action without a meeting and by less than unanimous consent.
ARTICLE III - DIRECTORS
SECTION 3.1. NUMBER OF DIRECTORS. Except as otherwise provided by law, the
Certificate of Incorporation or these by-laws, the property and business of the
Corporation shall be managed by or under the direction of a board of not less
than one nor more than thirteen directors. Within the limits specified, the
number of directors shall be determined by resolution of the Board of Directors
or by the stockholders at the annual meeting. Directors need not be
stockholders, residents of Delaware or citizens of the United States. The
directors shall be elected by ballot at the annual meeting of the stockholders
and each director shall be elected to serve until his successor shall be elected
and shall qualify or until his earlier resignation or removal; PROVIDED that in
the event of failure to hold such meeting or to hold such election at such
meeting, such election may be held at any special meeting of the stockholders
called for that purpose. If the office of any director becomes vacant by reason
of death, resignation, disqualification, removal, failure to elect, or
otherwise, the remaining directors, although more or less than a quorum, by a
majority vote of such remaining directors may elect a successor or successors
who shall hold office for the unexpired term.
3
<PAGE> 7
SECTION 3.2. CHANGE IN NUMBER OF DIRECTORS; VACANCIES. The maximum number
of directors may be increased by an amendment to these by-laws adopted by a
majority vote of the Board of Directors or by a majority vote of the capital
stock having voting power, and if the number of directors is so increased by
action of the Board of Directors or of the stockholders or otherwise, then the
additional directors may be elected in the manner provided above for the filling
of vacancies in the Board of Directors or at the annual meeting of stockholders
or at a special meeting called for that purpose.
SECTION 3.3. RESIGNATION. Any director of this Corporation may resign at
any time by giving written notice to the Chairman of the Board, if any, the
President or the Secretary of the Corporation. Such resignation shall take
effect at the time specified therein, at the time of receipt if no time is
specified therein and at the time of acceptance if the effectiveness of such
resignation is conditioned upon its acceptance. Unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
SECTION 3.4. REMOVAL. Any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors.
SECTION 3.5. PLACE OF MEETINGS AND BOOKS. The Board of Directors may hold
their meetings and keep the books of the Corporation outside the State of
Delaware, at such places as they may from time to time determine.
SECTION 3.6. GENERAL POWERS. In addition to the powers and authority
expressly conferred upon them by these by-laws, the board may exercise all such
powers of the Corporation and do all such lawful acts and things as are not by
statute or by the Certificate of Incorporation or by these by-laws directed or
required to be exercised or done by the stockholders.
SECTION 3.7. EXECUTIVE COMMITTEE. There may be an executive committee of
one or more directors designated by resolution passed by a majority of the whole
board. The act of a majority of the members of such committee shall be the act
of the committee. Said committee may meet at stated times or on notice to all by
any of their own number, and shall have and may exercise those powers of the
Board of Directors in the management of the business affairs of the Company as
are provided by law and may authorize the seal of the Corporation to be affixed
to all papers which may require it. Vacancies in the membership of the committee
shall be filled by the Board of Directors at a regular meeting or at a special
meeting called for that purpose.
SECTION 3.8. OTHER COMMITTEES. The Board of Directors may also designate
one or more committees in addition to the executive committee, by resolution or
resolutions passed by a majority of the whole board; such committee or
committees shall consist of one or more directors of the Corporation, and to the
extent provided in the resolution or resolutions designating them, shall have
and may exercise specific powers of the Board of Directors in the management of
the business and affairs of the Corporation to the extent permitted by statute
and shall have power to authorize the seal of the Corporation to be affixed to
all papers which may require it. Such
4
<PAGE> 8
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the Board of Directors.
SECTION 3.9. POWERS DENIED TO COMMITTEES. Committees of the Board of
Directors shall not, in any event, have any power or authority to amend the
Certificate of Incorporation, adopt an agreement of merger or consolidation,
recommend to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommend to the
stockholders a dissolution of the Corporation or a revocation or a dissolution
or to amend the by-laws of the Corporation. Further, committees of the Board of
Directors shall not have any power or authority to declare a dividend or to
authorize the issuance of stock.
SECTION 3.10. SUBSTITUTE COMMITTEE MEMBER. In the absence or on the
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of such absent or disqualified
member. Any committee shall keep regular minutes of its proceedings and report
the same to the board as may be required by the board.
SECTION 3.11. COMPENSATION OF DIRECTORS. The Board of Directors shall have
the power to fix the compensation of directors and members of committees of the
Board. The directors may be paid their expenses, if any, of attendance at each
meeting of the Board of Directors and may be paid a fixed sum for attendance at
each meeting of the board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending committee meetings.
SECTION 3.12. ANNUAL MEETING. The newly elected board may meet at such
place and time as shall be fixed and announced by the presiding officer at the
annual meeting of stockholders, for the purpose of organization or otherwise,
and no further notice of such meeting shall be necessary to the newly elected
directors in order legally to constitute the meeting, provided a quorum shall be
present, or they may meet at such place and time as shall be stated in a notice
given to such directors two (2) days prior to such meeting, or as shall be fixed
by the consent in writing of all the directors.
SECTION 3.13. REGULAR MEETINGS. Regular meetings of the board may be held
without notice at such time and place as shall from time to time be determined
by the board.
SECTION 3.14. SPECIAL MEETINGS. Special meetings of the board may be called
by the Chairman of the Board, if any, or the President, on two (2) days' notice
to each director, or such shorter period of time before the meeting as will
nonetheless be sufficient for the convenient assembly of the directors so
notified; special meetings shall be called by the Secretary in like manner and
on like notice, on the written request of two or more directors.
SECTION 3.15. QUORUM. At all meetings of the Board of Directors, a majority
of the total number of directors shall be necessary and sufficient to constitute
a quorum for the transaction of
5
<PAGE> 9
business, and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors, except as
may be otherwise specifically permitted or provided by statute, or by the
Certificate of Incorporation, or by these by-laws. If at any meeting of the
board there shall be less than a quorum present, a majority of those present may
adjourn the meeting from time to time until a quorum is obtained, and no further
notice thereof need be given other than by announcement at said meeting which
shall be so adjourned.
SECTION 3.16. TELEPHONIC PARTICIPATION IN MEETINGS. Members of the Board of
Directors or any committee designated by such board may participate in a meeting
of the board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
section shall constitute presence in person at such meeting.
SECTION 3.17. ACTION BY CONSENT. Unless otherwise restricted by the
Certificate of Incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if written consent thereto is signed by all
members of the board or of such committee as the case may be and such written
consent is filed with the minutes of proceedings of the board or committee.
ARTICLE IV - OFFICERS
SECTION 4.1. SELECTION; STATUTORY OFFICERS. The officers of the Corporation
shall be chosen by the Board of Directors. There shall be a President, a
Secretary and a Treasurer, and there may be a Chairman of the Board of
Directors, one or more Vice Presidents, one or more Assistant Secretaries, and
one or more Assistant Treasurers, as the Board of Directors may elect. Any
number of offices may be held by the same person, except that the offices of
President and Secretary shall not be held by the same person simultaneously.
SECTION 4.2. TIME OF ELECTION. The officers above named shall be chosen by
the Board of Directors at its first meeting after each annual meeting of
stockholders. None of said officers need be a director.
SECTION 4.3. ADDITIONAL OFFICERS. The board may appoint such other officers
and agents as it shall deem necessary, who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
SECTION 4.4. TERMS OF OFFICE. Each officer of the Corporation shall hold
office until his successor is chosen and qualified, or until his earlier
resignation or removal. Any officer elected or appointed by the Board of
Directors may be removed at any time by the Board of Directors.
SECTION 4.5. COMPENSATION OF OFFICERS. The Board of Directors shall have
power to fix the compensation of all officers of the Corporation. It may
authorize any officer, upon whom the power of appointing subordinate officers
may have been conferred, to fix the compensation of such subordinate officers.
6
<PAGE> 10
SECTION 4.6. CHAIRMAN OF THE BOARD. The Chairman of the Board of Directors
shall preside at all meetings of the stockholders and directors, and shall have
such other duties as may be assigned to him from time to time by the Board of
Directors.
SECTION 4.7. PRESIDENT. Unless the Board of Directors otherwise determines,
the President shall be the chief executive officer and head of the Corporation.
Unless there is a Chairman of the Board, the President shall preside at all
meetings of directors and stockholders. Under the supervision of the Board of
Directors and of the executive committee, the President shall have the general
control and management of its business and affairs, subject, however, to the
right of the Board of Directors and of the executive committee to confer any
specific power, except such as may be by statute exclusively conferred on the
President, upon any other officer or officers of the Corporation. The President
shall perform and do all acts and things incident to the position of President
and such other duties as may be assigned to him from time to time by the Board
of Directors or the executive committee.
SECTION 4.8. VICE-PRESIDENTS. The Vice-Presidents shall perform such of the
duties of the President on behalf of the Corporation as may be respectively
assigned to them from time to time by the Board of Directors or by the executive
committee or by the President. The Board of Directors or the executive committee
may designate one of the Vice-Presidents as the Executive Vice-President, and in
the absence or inability of the President to act, such powers and discharge all
of the duties of the President, subject to the control of the board and of the
executive committee.
SECTION 4.9. TREASURER. The Treasurer shall have the care and custody of
all the funds and securities of the Corporation which may come into his hands as
Treasurer, and the power and authority to endorse checks, drafts and other
instruments for the payment of money for deposit or collection when necessary or
proper and to deposit the same to the credit of the Corporation in such bank or
banks or depository as the Board of Directors or the executive committee, or the
officers or agents to whom the Board of Directors or the executive committee may
delegate such authority, may designate, and he may endorse all commercial
documents requiring endorsements for or on behalf of the Corporation. He may
sign all receipts and vouchers for the payments made to the Corporation. He
shall render an account of his transactions to the Board of Directors or to the
executive committee as often as the board or the committee shall require the
same. He shall enter regularly in the books to be kept by him for that purpose
full and adequate account of all moneys received and paid by him on account of
the Corporation. He shall perform all acts incident to the position of
Treasurer, subject to the control of the Board of Directors and of the executive
committee. He shall when requested, pursuant to vote of the Board of Directors
or the executive committee, give a bond to the Corporation conditioned for the
faithful performance of his duties, the expense of which bond shall be borne by
the Corporation.
SECTION 4.10. SECRETARY. The Secretary shall keep the minutes of all
meetings of the Board of Directors and of the stockholders; he shall attend to
the giving and serving of all notices of the Corporation. Except as otherwise
ordered by the Board of Directors or the executive committee, he shall attest
the seal of the Corporation upon all contracts and instruments executed under
such seal and shall affix the seal of the Corporation thereto and to all
certificates of shares
7
<PAGE> 11
of the Capital Stock. He shall have charge of the stock certificate book,
transfer book and stock ledger, and such other books and papers as the Board of
Directors or the executive committee may direct. He shall, in general, perform
all the duties of Secretary, subject to the control of the Board of Directors
and of the executive committee.
SECTION 4.11. ASSISTANT SECRETARY. The Board of Directors or any two of the
officers of the Corporation acting jointly may appoint or remove one or more
Assistant Secretaries of the Corporation. Any Assistant Secretary upon his
appointment shall perform such duties of the Secretary, and also any and all
such other duties as the executive committee or the Board of Directors or the
President or the Executive Vice-President or the Treasurer or the Secretary may
designate.
SECTION 4.12. ASSISTANT TREASURER. The Board of Directors or any two of the
officers of the Corporation acting jointly may appoint or remove one or more
Assistant Treasurers of the Corporation. Any Assistant Treasurer upon his
appointment shall perform such of the duties of the Treasurer, and also any and
all such other duties as the executive committee or the Board of Directors or
the President or the Executive Vice-President or the Treasurer or the Secretary
may designate.
SECTION 4.13. SUBORDINATE OFFICERS. The Board of Directors may select such
subordinate officers as it may deem desirable. Each such officer shall hold
office for such period, have such authority, and perform such duties as the
Board of Directors may prescribe. The Board of Directors may, from time to time,
authorize any officer to appoint and remove subordinate officers and to
prescribe the powers and duties thereof.
ARTICLE V - STOCK
SECTION 5.1. STOCK. Each stockholder shall be entitled to a certificate or
certificates of stock of the Corporation in such form as the Board of Directors
may from time to time prescribe. The certificates of stock of the Corporation
shall be numbered and shall be entered in the books of the Corporation as they
are issued. They shall certify the holder's name and number and class of shares
and shall be signed by both of (a) either the President or a Vice-President, and
(b) any one of the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary, and shall be sealed with the corporate seal of the
Corporation. If such certificate is countersigned (1) by a transfer agent other
than the Corporation or its employee, or, (2) by a registrar other than the
Corporation or its employee, the signature of the officers of the Corporation
and the corporate seal may be facsimiles. In case any officer or officers who
shall have signed, or whose facsimile signature or signatures shall have been
used on, any such certificate or certificates shall cease to be such officer or
officers of the Corporation, whether because of death, resignation or otherwise,
before such certificate or certificates shall have been delivered by the
Corporation, such certificate or certificates may nevertheless be adopted by the
Corporation and be issued and delivered as though the person or persons who
signed such certificate or certificates or whose facsimile signature shall have
been used thereon had not ceased to be such officer or officers of the
Corporation.
8
<PAGE> 12
SECTION 5.2. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not
be required to, issue fraction of a share. If the corporation does not issue
fractions of a share, it shall (a) arrange for the disposition of fractional
interests by those entitled thereto, (b) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such fractions are
determined, or (c) issue scrip or warrants in registered or bearer form which
shall entitle the holder to receive a certificate for a full share upon the
surrender of such scrip or warrants aggregating a full share. A certificate for
a fractional share shall, but scrip or warrants shall not unless otherwise
provided therein, entitle the holder to exercise voting rights, to receive
dividends thereon, and to participate in any of the assets of the corporation in
the event of liquidation. The Board of Directors may cause scrip or warrants to
be issued subject to the conditions that they shall become void if not exchanged
for certificates representing full shares before a specified date, or subject to
the conditions that the shares for which scrip or warrants are exchangeable may
be sold by the corporation and the proceeds thereof distributed to the holders
of scrip or warrants, or subject to any other conditions which the Board of
Directors may impose.
SECTION 5.3. TRANSFERS OF STOCK. Subject to any transfer restrictions then
in force, the shares of stock of the Corporation shall be transferable only upon
its books by the holders thereof in person or by their duly authorized attorneys
or legal representatives and upon such transfer the old certificates shall be
surrendered to the Corporation by the delivery thereof to the person in charge
of the stock and transfer books and ledgers or to such other person as the
directors may designate by whom they shall be cancelled and new certificates
shall thereupon be issued. The Corporation shall be entitled to treat the holder
of record of any share or shares of stock as the holder in fact thereof and
accordingly shall not be bound to recognize any equitable or other claim to or
interest in such share on the part of any other person whether or not it shall
have express or other notice thereof save as expressly provided by the laws of
Delaware.
SECTION 5.4. RECORD DATE. For the purpose of determining the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or the allotment of any rights, or entitled to exercise any rights
in respect of any change, conversion, or exchange of stock or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which shall not be more than sixty (60) days nor less than ten (10) days
before the date of such meeting, nor more than sixty (60) days prior to any
other action. If no such record date is fixed by the Board of Directors, the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held; the record date for determining stockholders entitled to express consent
to corporate action in writing without a meeting, when no prior action by the
Board of Directors is necessary, shall be the day on which the first written
consent is expressed; and the record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at any meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
9
<PAGE> 13
SECTION 5.5. TRANSFER AGENT AND REGISTRAR. The Board of Directors may
appoint one or more transfer agents or transfer clerks and one or more
registrars and may require all certificates of stock to bear the signature or
signatures of any of them.
SECTION 5.6. DIVIDENDS.
1. POWER TO DECLARE. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation,
if any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the Certificate
of Incorporation and the laws of Delaware.
2. RESERVES. Before payment of any dividend, there may be set aside
out of any funds of the Corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion,
think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the directors shall think
conducive to the interest of the Corporation, and the directors may modify
or abolish any such reserve in the manner in which it was created.
SECTION 5.7. LOST, STOLEN, OR DESTROYED CERTIFICATES. No certificates for
shares of stock of the Corporation shall be issued in place of any certificate
alleged to have been lost, stolen or destroyed, except upon production of such
evidence of the loss, theft or destruction and upon indemnification of the
Corporation and its agents to such extent and in such manner as the Board of
Directors may from time to time prescribe.
SECTION 5.8. INSPECTION OF BOOKS. The stockholders of the Corporation, by a
majority vote at any meeting of stockholders duly called, or in case the
stockholders shall fail to act, the Board of Directors shall have power from
time to time to determine whether and to what extent and at what times and
places and under what conditions and regulations the accounts and books of the
Corporation (other than the stock ledger) or any of them, shall be open to
inspection of stockholders; and no stockholder shall have any right to inspect
any account or book or document of the Corporation except as conferred by
statute or authorized by the Board of Directors or by a resolution of the
stockholders.
ARTICLE VI - MISCELLANEOUS MANAGEMENT PROVISIONS
SECTION 6.1. CHECKS, DRAFTS AND NOTES. All checks, drafts or orders for the
payment of money, and all notes and acceptances of the Corporation shall be
signed by such officer or officers, agent or agents as the Board of Directors
may designate.
10
<PAGE> 14
SECTION 6.2 NOTICES.
1. Notices to directors may, and notices to stockholders shall, be in
writing and delivered personally or mailed to the directors or stockholders
at their addresses appearing on the books of the Corporation. Notice by
mail shall be deemed to be given at the time when the same shall be mailed.
Notice to directors may also be given by telegram or orally, by telephone
or in person.
2. Whenever any notice is required to be given under the provisions of
the statutes or of the Certificate of Incorporation of the Corporation or
of these by-laws, a written waiver of notice, signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting except when the
person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
SECTION 6.3. CONFLICT OF INTEREST. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the board of or committee thereof which
authorized the contract or transaction, or solely because his or their votes are
counted for such purpose, provided that the material facts as to his
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee and the board or committee
in good faith authorizes the contract or transaction by the affirmative vote of
a majority of the disinterested directors, even though the disinterested
directors be less than a quorum or provided that the contract or transaction is
otherwise authorized in accordance with the laws of Delaware. Common or
interested directors may be counted in determining the presence of a quorum at a
meeting of the Board of Directors or of a committee which authorizes the
contract of transaction.
SECTION 6.4. VOTING OF SECURITIES OWNED BY THIS CORPORATION. Subject always
to the specific directions of the Board of Directors, (a) any shares or other
securities issued by any other Corporation and owned or controlled by this
Corporation may be voted in person at any meeting of security holders of such
other corporation by the President of this Corporation if he is present at such
meeting, or in his absence by the Treasurer of this Corporation if he is present
at such meeting, and (b) whenever, in the judgment of the President, it is
desirable for this corporation to execute a proxy or written consent in respect
to any shares or other securities issued by any other Corporation and owned by
this Corporation, such proxy or consent shall be executed in the name of this
Corporation by the President, without the necessity of any authorization by the
Board of Directors, affixation of corporate seal or countersignature or
attestation by another officer, provided that if the President is unable to
execute such proxy or consent by reason of sickness, absence from the United
States or other similar cause, the Treasurer may execute such proxy or
11
<PAGE> 15
consent. Any person or persons designated in the manner above stated as the
proxy or proxies of this Corporation shall have full right, power and authority
to vote the shares or other securities issued by such other corporation and
owned by this Corporation the same as such shares or other securities might be
voted by this Corporation.
ARTICLE VII - AMENDMENTS
SECTION 7.1. AMENDMENTS. The by-laws of the Corporation may be altered,
amended or repealed at any meeting of the Board of Directors upon notice thereof
in accordance with these by-laws, or at any meeting of the stockholders by the
vote of the holders of the majority of the stock issued and outstanding and
entitled to vote at such meeting, in accordance with the provisions of the
Certificate of Incorporation of the corporation and of the laws of Delaware.
12
<PAGE> 1
EXHIBIT 4.1
[FRONT OF STOCK CERTIFICATE]
THERMO VISION CORPORATION
VIZ
COMMON STOCK PAR Incorporated under the laws of the COMMON STOCK
VALUE $.01 State of Delaware
CUSIP 883600 10 8
SEE REVERSE SIDE
FOR CERTAIN
DEFINITIONS
This certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, $.01 PAR VALUE, OF
THERMO VISION CORPORATION
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this Certificate properly
endorsed. The Certificate and the shares represented hereby are issued under and
shall be subject to the laws of the State of Delaware and all the provisions of
the Certificate of Incorporation and the By-Laws of the Corporation, and all the
amendments from time to time made thereto. This Certificate is not valid unless
countersigned and registered by the Transfer Agent and Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
Dated:
[THERMO VISION CORPORATION]
[ Corporate Seal ]
Secretary President and Chief Executive Officer
<PAGE> 2
[BACK OF STOCK CERTIFICATE]
THERMO VISION CORPORATION
This Corporation will furnish without charge to each stockholder who so
requests, a copy of the designations, powers, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights. Any such requests may be addressed to the Secretary of the
Corporation.
The following abbreviations when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
-----------------------------
(Cust) (Minor)
TEN ENT - as tenants by the entities Under Uniform Gifts to Minors
JT TEN - as joint tenants with right of Act__________________________
survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above
list.
For value received, _____________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE)
________________________________________________________________________________
_____________________________________________________________Shares of the Stock
represented by the within Certificate, and do hereby irrevocably constitute and
appoint______________________________________________________________Attorney to
transfer the said Stock on the books of the within-named Corporation with full
power of substitution in the premises.
Dated_________________________ ________________________________________
Signature
________________________________________
THE SIGNATURES TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN
EVERY PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATSOEVER.
<PAGE> 1
EXHIBIT 10.1
CORPORATE SERVICES AGREEMENT
THIS IS AN AGREEMENT dated as of the day of , 1997 between
Thermo Electron Corporation, a Delaware corporation ("Thermo"), and Thermo
Vision Corporation ("Subsidiary"), a Delaware corporation.
PRELIMINARY STATEMENT
Subsidiary desires to obtain administrative and other services from
Thermo and Thermo is willing to furnish or make such services available to
Subsidiary.
By this Agreement, Thermo and Subsidiary desire to set forth the basis
for Thermo's providing services of the type referred to herein.
AGREEMENTS
IT IS MUTUALLY agreed by the parties hereto as follows:
1. SERVICES
1.1 Beginning on the date of this Agreement, Thermo, through its
corporate staff, will provide or otherwise make available to Subsidiary certain
general corporate services, including but not limited to accounting, tax,
corporate communications, legal, financial and other administrative staff
functions, and arrange for administration of insurance and employee benefit
programs. The services will include the following:
(a) ACCOUNTING AND SECURITIES COMPLIANCE RELATED SERVICES.
Maintenance of corporate records, assistance, if and when necessary, in
preparation of Securities and Exchange Commission filings, including without
limitation registration statements, Forms 10-K, 10-Q and 8-K, assistance in the
preparation of Proxies and Proxy Statements and the solicitation of Proxies, and
assistance in the preparation of the Annual and Quarterly Reports to
Stockholders, maintenance of internal audit support services and review of
compliance with financial and accounting procedures.
(b) TAX RELATED SERVICES. Preparation of Federal tax returns,
preparation of state and local tax returns (including income tax returns), tax
research and planning and assistance on tax audits (Federal, state and local).
(c) INSURANCE AND EMPLOYEE BENEFIT RELATED SERVICES. Arranging for
liability, property and casualty, and other normal business insurance coverage.
Support for product, worker safety and environmental programs (Subsidiary
acknowledges that principal responsibility for compliance rests with the
Subsidiary). Administration of Subsidiary's employee participation in employee
benefit plans sponsored by Thermo and insurance programs such as the following:
1
<PAGE> 2
401(k) plan, group medical insurance, group life insurance, employee stock
purchase plan and various stock options plans. Filing of all required reports
under ERISA for employee benefit plans sponsored by Thermo.
(d) CORPORATE RECORD KEEPING SERVICES. Maintenance of corporate
records, including without limitation, maintenance of minutes of meetings of the
Boards of Directors and Stockholders, supervision of transfer agent and
registration functions, coordination of stock repurchase programs, and tracking
of stock issuances and reserved shares.
(e) Services in addition to those enumerated in subsections 1.1(a)
through 1.1(d) above including, but not limited to, routine legal and other
administrative activities, Corporate information and treasury and other
financial services as reasonably requested by Subsidiary.
1.2 For performing general services of the types described above in
Paragraph 1.1, Thermo will initially charge Subsidiary an annual fixed fee equal
to 1.0% of the gross revenues of Subsidiary for the fiscal year in which such
services are performed (such amount to be prorated on a daily basis for any
partial year), which fee is intended to compensate Thermo for Subsidiary's pro
rata share of the aggregate costs actually incurred by Thermo in connection with
the provision of such services to all recipients thereof. The fee set forth in
the preceding sentence may be adjusted from time to time by mutual agreement of
Thermo and Subsidiary.
1.3 In addition to the foregoing services, certain specific services
are made available to Subsidiary by Thermo on an as-requested basis. These may
include, but are not limited to, services specifically requested by Subsidiary
or services which, in Thermo's judgment, are not routine administrative services
or create unusual burdens or demands on Thermo's resources, such as litigation
support, acquisition and offering support services (including legal services),
corporate development, tax audit support or public or investor relations
services other than routine shareholder communications. Thermo will charge
Subsidiary the costs actually incurred (including overhead and general
administrative expenses) for such services that are requested by Subsidiary and
supplied by Thermo.
1.4 The charges for services pursuant to Subsections 1.2 and 1.3
above will be determined and payable no less frequently than on a quarterly
basis. The charges will be due when billed and shall be paid no later than 30
days from the date of billing.
1.5 When services of the type described above in this Section 1 are
provided by outside providers to Subsidiary or, in connection with the provision
of such services out-of-pocket costs are incurred such as travel, the cost
thereof will be paid by Subsidiary. To the extent that Subsidiary is billed by
the provider directly, Subsidiary shall pay the bill directly. If Thermo is
billed for such services, Thermo may pay the bill and charge Subsidiary the
amount of the bill or forward the bill to Subsidiary for payment by Subsidiary.
2
<PAGE> 3
2. SUBSIDIARY'S DIRECTORS AND OFFICERS. Nothing contained herein
will be construed to relieve the directors or officers of Subsidiary from the
performance of their respective duties or to limit the exercise of their powers
in accordance with the charter or By-Laws of Subsidiary or in accordance with
any applicable statute or regulation.
3. LIABILITIES. In furnishing Subsidiary with management advice and
other services as herein provided, neither Thermo nor any of its officers,
directors or agents shall be liable to Subsidiary or its creditors or
shareholders for errors of judgment or for anything except willful malfeasance,
bad faith or gross negligence in the performance of their duties or reckless
disregard of their obligations and duties under the terms of this Agreement. The
provisions of this Agreement are for the sole benefit of Thermo and Subsidiary
and will not, except to the extent otherwise expressly stated herein, inure to
the benefit of any third party.
4. TERM.
(a) TERM. The initial term of this Agreement shall begin on the date
of this Agreement and continue through the end of the current fiscal year. This
Agreement shall automatically renew at the end of the initial term for
successive one-year terms until terminated in accordance with Subsection (b)
below.
(b) TERMINATION. This Agreement may be terminated by Subsidiary at
any time on thirty days prior notice to Thermo. In addition, this Agreement
shall automatically terminate without any further action by either party on the
date the Subsidiary ceases to be a member of the Thermo Group or a participant
in the Thermo Electron Corporate Charter.
(c) TERMINATION FEE. In the event of a termination of this Agreement,
Subsidiary shall pay to Thermo its pro rata fee pursuant to Section 1.2 for the
year in which the termination takes effect plus a termination fee equal to the
fee payable under Section 1.2 for the most recent nine consecutive months.
(d) POST-TERMINATION SERVICES. Following a termination of this
Agreement, corporate administrative services of the kind provided under the
Agreement may continue to be provided to Subsidiary on an as-requested basis by
the Subsidiary or as required in the event it is not practicable for the
Subsidiary to provide such services or it is otherwise unable to identify
another source to provide such services (as would be the case of administration
of employee benefit plans and insurance programs sponsored by Thermo and in
which Subsidiary's employees participate) or as otherwise required by Thermo
acting in its capacity as majority stockholder of Subsidiary. In the event such
services are provided by Thermo to Subsidiary, Subsidiary shall be charged by
Thermo a fee equal to the market rate for comparable services charged by
third-party vendors. Such fee will be charged monthly and payable by Subsidiary
within thirty days. The obligations of Subsidiary set forth in this Section 4(d)
shall survive the termination of this Agreement.
5. STATUS. Thermo shall be deemed to be an independent contractor
and, except as expressly provided or authorized in this Agreement, shall have no
authority to act for or represent Subsidiary.
3
<PAGE> 4
6. OTHER ACTIVITIES OF THERMO. Subsidiary recognizes that Thermo now
renders and may continue to render management and other services to other
companies that may or may not have policies and conduct activities similar to
those of Subsidiary. Thermo shall be free to render such advice and other
services, and Subsidiary hereby consents thereto. Thermo shall not be required
to devote full time and attention to the performance of its duties under this
Agreement, but shall devote only so much of its time and attention as it deems
reasonable or necessary to perform the services required hereunder.
7. NOTICES. All notices, billings, requests, demands, approvals,
consents, and other communications which are required or may be given under this
Agreement shall be in writing and will be deemed to have been duly given if
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid to the parties at their respective addresses set
forth below:
IF TO SUBSIDIARY: IF TO THERMO:
Thermo Vision Corporation Thermo Electron Corporation
8E Forge Parkway 81 Wyman Street
Franklin, Massachusetts 02038 Waltham, Massachusetts 02254
Attention: President Attention: Chief Executive Officer
8. NO ASSIGNMENT. This Agreement shall not be assignable except with
the prior written consent of the other party to this Agreement.
9. APPLICABLE LAW. This Agreement shall be governed by and construed
under the laws of the Commonwealth of Massachusetts applicable to contracts made
and to be performed therein.
10. PARAGRAPH TITLES. The paragraph titles used in this Agreement are
for convenience of reference only and will not be considered in the
interpretation or construction of any of the provisions thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as a sealed instrument by their duly authorized officers as of the date
first above written.
THERMO ELECTRON CORPORATION THERMO VISION CORPORATION
By:________________________ By:______________________
Title: Title:
4
<PAGE> 1
EXHIBIT 10.3
TAX ALLOCATION AGREEMENT
THIS AGREEMENT is made as of [date] between Thermo Electron
Corporation, a Delaware corporation ("TMO"), and Thermo Vision Corporation, a
Delaware corporation ("Vision" - The term "Vision" shall refer to Vision and
those of its subsidiaries that are members of an affiliate group of corporations
including Vision within the meaning of Section 1504(a) of the Internal Revenue
Code of 1986, as amended (the "Code")).
PRELIMINARY STATEMENT
TMO is the parent of an affiliate group of corporations (including
Vision) within the meaning of Section 1504(a) of the Code (the "Thermo Group").
The Thermo Group has elected to file a consolidated return for federal income
tax purposes.
By this Agreement, the parties desire to set forth the understanding
they have reached with respect to the filing of the consolidated United States
federal income tax returns and state income tax returns. Foreign tax returns are
not subject to this Agreement.
AGREEMENTS
IT IS MUTUALLY agreed by the parties hereto as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1. The Term "TMO Group" means the group of corporations of
which TMO is common parent and with which TMO files an affiliated consolidated
federal income tax return, excluding Vision and subsidiaries of Vision that may
exist now or in the future. For purposes of this Agreement, the TMO Group shall
be treated as a single corporate entity. The TMO Group and Vision and its
subsidiaries, respectively, are sometimes herein referred to collectively as the
"Two Companies" or the "Companies." This Agreement anticipates that TMO will set
aside and retain certain sums calculated as provided herein. All reference to
TMO paying sums to itself pursuant to this Agreement shall be satisfied by TMO
setting aside sums in respect of the obligations established under this
Agreement.
1.2. The paragraph titles used herein are for convenience of
reference only and will not be considered in the interpretation or construction
of any of the provisions hereof. Words may be construed in the singular or the
plural as the context requires.
2. TAX RETURNS.
2.1. FEDERAL TAX RETURNS. TMO as the common parent will
prepare and file or cause to be prepared and filed federal income tax returns on
a consolidated basis, for the TMO Group and Vision and its subsidiaries for all
fiscal periods as to which a consolidated return is appropriate in accordance
with the terms of this Agreement.
<PAGE> 2
2.2. STATE TAX RETURNS. TMO as the common parent will
prepare and file or cause to be filed state income tax returns on a combined,
consolidated, unitary, or other method that TMO believes will result in a lower
overall tax liability to the Two Companies. In the event that said state tax
returns shall be filed, the provisions of sections 1 through 11 hereof shall
apply, MUTATIS MUTANDIS (the necessary changes being made) to the allocation,
preparation, filing and payment related to such state taxes and tax returns.
Vision will reimburse TMO for Vision's portion of the tax. Such reimbursement
will be the tax Vision would have paid on a separate return basis, but only if
it was required to file a return in that state.
3. TIME OF PAYMENT OF FEDERAL OBLIGATIONS TO TMO. The obligations
of the Companies for Federal income tax payments will be determined and paid as
follows:
(a) Not later than the 15th day after the end of the
fourth, sixth, ninth and twelfth months of each consolidated taxable year of
TMO, TMO will make a reasonable determination (consistent with the provisions of
Section 6655 of the Code) of the separate federal income tax liability that each
Company would be required to pay as estimated payments on a separate return
basis for that period. Each Company shall pay to TMO the amount of such
liability within ten days.
(b) After the end of TMO's fourth accounting quarter and
before the 15th day of the third month thereafter, each Company will promptly
pay to TMO the entire amounts estimated to be due and payable under such
Company's federal income tax return as if filed on a separate return basis, less
all amounts previously paid with respect to that year pursuant to subparagraph
(a) of this Paragraph 3.
(c) If upon the filing of the consolidated income tax
return, a revised calculation is made in the manner set forth in subparagraph
(b) of this Paragraph 3, and it is determined that either Company has paid to
TMO with respect to the consolidated taxable year an amount greater than that
required by Paragraph 3(b), then that excess will be promptly paid by TMO to
that Company.
4. TAX OBLIGATIONS OF TMO. TMO will pay the consolidated tax
liabilities of the Companies arising from filing a consolidated federal income
tax return.
5. PAYMENT OF FUNDS BY TMO. After the end of TMO's fourth quarter
and before the 15th day of the third month thereafter, if in any year Vision
incurs a loss, TMO shall pay to Vision a sum equal to the amount of benefit
realized by members of the TMO Group (other than Vision) that is attributable to
the loss incurred by Vision.
6. CHANGES IN PRIOR YEAR'S TAX LIABILITIES. In the event that the
consolidated tax liability or the separate tax liability referred to in
Paragraphs 3, 4 and 5 hereof for any year for which a consolidated tax return
for the two Companies was filed is or would be increased or decreased by reason
of filing an amended return or returns (including carry-back claims), or by
reason of the examination of the returns by the Internal Revenue Service, the
amounts of payments under Paragraphs 3, 4 or 5, as the case may be, for each
such year will be recomputed by TMO to reflect the adjustments to taxable income
and tax credits for the taxable year and interest or penalties, if any. In
accordance with those recomputations, additional sums will be paid by the
Companies to TMO or paid by TMO to the Companies regardless of whether a member
has become a Departing Member (as defined in Paragraph 8 hereof) subsequent to
the taxable year of recomputation.
7. NEW MEMBERS. The Companies agree that if, subsequent to the
execution of this Agreement, TMO becomes the parent, as that term is used in
Section 1504 of the Code, of one or
2
<PAGE> 3
more subsidiary corporations, in addition to Vision, then each newly acquired
subsidiary corporation may become a separate party to this Agreement by
consenting in writing to be bound by its provisions, effective immediately upon
its delivery to TMO, but the income, deductions and tax credits of the newly
acquired subsidiary corporations will first be included in the consolidated
federal income tax return as required by the Code.
8. DEPARTING MEMBERS.
8.1. The term "Departing Member," as used herein, will mean
a Company that is no longer permitted under the Code to be included in the
consolidated federal income tax return.
8.2. In applying this Agreement to a Departing Member for
the final taxable year in which its income, deductions, and tax credits are
required to be included in the consolidated federal income tax return: (i) the
amount required to be paid by a Departing Member under the provisions of
Paragraph 3 hereof and (ii) the amount that the Departing Member is entitled to
receive under the provisions of Paragraph 4 hereof, will be determined by taking
into account the income, deductions and tax credits of the Departing Member only
for the fractional part of such year as the Departing Member was a member of the
consolidated group and included in the consolidated federal income tax return.
8.3. After the filing of the consolidated federal income tax
return for the last taxable year that the Departing Member was included therein,
the Departing Member will be informed of the amount of consolidated carry-overs
as of the end of the taxable year or period which are attributable to the
Departing Member, as provided by Treasury Regulations Section 1.1502-79 or
otherwise, including the agreement of the parties.
9. DETERMINATION OF SUMS DUE FROM AND PAYABLE TO MEMBERS. TMO
will determine the sums due from and payable to the Companies under the
provisions of this Agreement (including the determination for purposes of
Paragraph 6 hereof). The Companies agree to provide TMO with such information as
may reasonably be necessary to make these determinations. Issues arising in the
course of the determinations that are not expressly provided for in this
Agreement will be resolved in an equitable manner.
10. TAX CONTROVERSIES. If a consolidated federal income tax return
for any taxable year during which this Agreement is in effect is examined by the
Internal Revenue Service, the examination, as well as any other matters relating
to that tax return, including any tax litigation, will be handled solely by TMO.
Vision will cooperate with TMO and to this end will execute protests, petitions,
and any other documents as TMO determines to be necessary or appropriate. The
cost and expense of TMO's handling of a tax controversy, including legal and
accounting fees, will be allocated to and paid by the Company to whom the tax
controversy relates. If the tax controversy relates to both Companies, the cost
and expense will be allocated between the Companies in the proportion that each
Company's potential additional tax liability bears to the total potential
additional tax liability of both Companies (determined in accordance with
Paragraph 6 hereto and assuming that the tax controversy is resolved in favor of
the Internal Revenue Service) for the taxable year on issue. If the tax
controversy encompasses more than one taxable year, TMO will first allocate the
cost and expense to each taxable year in the proportion that the potential
additional tax liability for each taxable year bears to the total potential
additional tax liability for the taxable years in issue.
11. EFFECTIVE DATE. This Agreement shall be effective beginning
as of the date of this Agreement, and will continue on a year-to-year basis
thereafter with respect to Vision for so long as Vision is permitted to file a
consolidated federal income tax return with TMO.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
THERMO ELECTRON CORPORATION
By: _______________________
Title: ____________________
THERMO VISION CORPORATION
By: _______________________
Title: ____________________
4
<PAGE> 1
EXHIBIT 10.4
MASTER REPURCHASE AGREEMENT
AGREEMENT dated as of the ___________ day of _____________ 1997
between Thermo Electron Corporation, a Delaware corporation ("Seller"), and
Thermo Vision Corporation, a Delaware corporation (the "Buyer").
1. APPLICABILITY
From time to time Buyer and Seller may enter into transactions in which
Seller agrees to transfer to Buyer certain securities and/or financial
instruments ("Securities") against the transfer of funds by Buyer, with a
simultaneous agreement by Buyer to transfer to Seller such Securities on demand,
against the transfer of funds by Seller. Each such transaction shall be referred
to herein as a "Transaction" and shall be governed by this Agreement, unless
otherwise agreed in writing.
2. DEFINITIONS
(a) "Act of Insolvency", with respect to either party (i) the
commencement by such party as debtor of any case or proceeding under any
bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law,
or such party seeking the appointment of a receiver, trustee, custodian or
similar official for such party or any substantial part of its property; or (ii)
the commencement of any such case or proceeding against such party, or another
seeking such an appointment, which (A) is consented to or not timely contested
by such party, (B) results in the entry of an order for relief, such an
appointment or the entry of an order having a similar effect, or (C) is not
dismissed within 15 days; or (iii) the making by a party of a general assignment
for the benefit of creditors; or (iv) the admission in writing by a party of
such party's inability to pay such party's debts as they become due;
(b) "Additional Purchased Securities", Securities provided by Seller
to Buyer pursuant to Paragraph 4(a) hereof;
(c) "Income", with respect to any Security at any time, any principal
thereof then payable and all interest, dividends or other distributions thereon;
(d) "Market Value", with respect to any Securities as of any date,
the price for such Securities on such date obtained from a generally recognized
source agreed to by the parties or the most recent closing bid quotation from
such a source, plus accrued Income to the extent not included therein (other
than any Income transferred to Seller pursuant to Paragraph 6 hereof) as of such
date (unless contrary to market practice for such Securities);
(e) "Other Buyers", third parties that have entered into an agreement
with Seller that is substantially similar to this Agreement;
<PAGE> 2
(f) "Pricing Rate", a rate equal to the Commercial Paper Composite
rate for 30-day maturities provided by Merrill Lynch, Pierce, Fenner & Smith
Incorporated (or, if such rate is not available, a substantially equivalent rate
agreed to by Buyer and Seller) plus 25 basis points, which rate shall be
adjusted on the first business day of each fiscal quarter and shall be in effect
for the entirety such fiscal quarter;
(g) "Purchase Price", the price at which Purchased Securities are
transferred by Seller to Buyer;
(h) "Purchased Securities", the Securities transferred by Seller to
Buyer in a Transaction hereunder, and any Securities substituted therefor in
accordance with Paragraph 9 hereof. The term "Purchased Securities" with respect
to any Transaction at any time also shall include Additional Purchase Securities
transferred pursuant to Paragraph 4(a) and shall exclude Securities returned
pursuant to Paragraph 4(b);
(i) "Repurchase Collateral Account", a book account maintained by
Seller containing, among other Securities, the Purchased Securities; and
(j) "Repurchase Price", for any Purchased Security, an amount equal
to the Purchase Price paid by Buyer to Seller for such Purchased Security.
3. TRANSACTIONS
(a) A Transaction may be initiated by Buyer upon the transfer of the
Purchase Price to Seller's account. Upon such transfer, Seller shall transfer to
Buyer Purchased Securities having a Market Value equal to 103% of the Purchase
Price.
(b) Purchased Securities shall be held in custody for Buyer by Seller
in the Repurchase Collateral Account. Seller shall indicate on its books for
such account Buyer's ownership of the Purchased Securities. Upon reasonable
request from Buyer, Seller shall provide Buyer with a complete list of Purchased
Securities owned by Buyer.
(c) Upon demand by Buyer or Seller, Seller shall repurchase from
Buyer, and Buyer shall sell to Seller, for the Repurchase Price all or any part
of the Purchased Securities then owned by Buyer.
4. MARGIN MAINTENANCE
(a) If at any time the aggregate Market Value of all Purchased
Securities then owned by Buyer is less than 103% of the aggregate Repurchase
Price for such Purchased Securities, then Seller shall transfer to Buyer
additional Securities ("Additional Purchased Securities"), so that the aggregate
Market Value of such Purchased Securities, including any such Additional
Purchased Securities, will thereupon equal or exceed 103% of such aggregate
Repurchase Price.
2
<PAGE> 3
(b) If at any time the aggregate Market Value of all Purchased
Securities then owned by Buyer exceeds 103% of the aggregate Repurchase Price
for such Purchased Securities, then Seller may transfer Purchased Securities to
Seller, so that the aggregate Market Value of such Purchased Securities will
thereupon not exceed 103% of such aggregate Repurchase Price.
5. INTEREST PAYMENTS
If during any fiscal month Buyer owned Purchased Securities, then on
the first day of the next following fiscal month Seller shall pay to Buyer an
amount equal to the sum of the aggregate Repurchase Prices of the Purchased
Securities owned by Buyer at the close of each day during the preceding fiscal
month divided by the number of days in such month and the product multiplied by
the Pricing Rate times the number of days in such month divided by 360.
6. INCOME PAYMENTS AND VOTING RIGHTS
Where a particular Transaction's term extends over an Income payment
date on the Purchased Securities subject to that Transaction, Buyer shall, on
the date such Income is payable, transfer to Seller an amount equal to such
Income payment or payments with respect to any Purchased Securities subject to
such Transaction. Seller shall retain all voting rights with respect to
Purchased Securities sold to Buyer under this Agreement.
7. SECURITY INTEREST
Although the parties intend that all Transactions hereunder be sales
and purchases and not loans, in the event any such Transactions are deemed to be
loans, Seller shall be deemed to have pledged to Buyer as security for the
performance by Seller of its obligations under each such Transaction and this
Agreement, and shall be deemed to have granted to Buyer a security interest in,
all of the Purchased Securities with respect to all Transactions hereunder and
all proceeds thereof.
8. PAYMENT AND TRANSFER
Unless otherwise mutually agreed, all transfers of funds hereunder
shall be in immediately available funds. As used herein with respect to
Securities, "transfer" is intended to have the same meaning as when used in
Section 8-313 of the Massachusetts Uniform Commercial Code or, where applicable,
in any federal regulation governing transfers of the Securities.
9. SUBSTITUTION
Buyer hereby grants Seller the authority to manage, in Seller's sole
discretion, the Purchased Securities held in custody for Buyer by Seller in the
Repurchase Collateral Account. Buyer expressly agrees that Seller may (i)
substitute other Securities for any Purchased Securities and (ii) commingle
Purchased Securities with other Securities held in the Repurchase Collateral
Account. Substitutions shall be made by transfer to Buyer of such other
Securities and transfer to Seller of the Purchased Securities for which
substitution is being made. After substitution, the
3
<PAGE> 4
substituted Securities shall be deemed to be Purchased Securities. Securities
which are substituted for Purchased Securities shall have a Market Value at the
time of substitution equal to or greater than the Market Value of the Purchase
Securities for which such Securities were substituted.
10. REPRESENTATIONS
Each of Buyer and Seller represents and warrants to the other that (i)
it is duly authorized to execute and deliver this Agreement, to enter into the
Transactions contemplated hereunder and to perform its obligations hereunder and
has taken all necessary action to authorize such execution, delivery and
performance, (ii) the person signing this Agreement on its behalf is duly
authorized to do so on its behalf, (iii) it has obtained all authorizations of
any governmental body required in connection with this Agreement and the
Transactions hereunder and such authorizations are in full force and effect and
(iv) the execution, delivery and performance of this Agreement and the
Transactions hereunder will not violate any law, ordinance, charter, by-law or
rule applicable to it or any agreement by which it is bound or by which any of
its assets are affected. On the date for any Transaction Buyer and Seller shall
each be deemed to repeat all the foregoing representations made by it.
11. EVENTS OF DEFAULT
In the event that (i) Seller fails to repurchase or Buyer fails to
transfer Purchased Securities upon demand for repurchase from either Buyer or
Seller, (ii) Seller or Buyer fails, after one business day's notice, to comply
with Paragraph 4 hereof, (iii) Buyer fails to make payment to Seller pursuant to
Paragraph 6 hereof, (iv) Seller fails to comply with Paragraph 5 hereof, (v) an
Act of Insolvency occurs with respect to Seller or Buyer, (vi) any
representation made by Seller or Buyer shall have been incorrect or untrue in
any material respect when made or repeated or deemed to have been made or
repeated, or (vii) Seller or Buyer shall admit to the other its inability to, or
its intention not to, perform any of its obligations hereunder (each an "Event
of Default"):
(a) At the option of the nondefaulting party, exercised by written
notice to the defaulting party (which option shall be deemed to have been
exercised, even if no notice is given, immediately upon the occurrence of any
Act of Insolvency), Seller shall become obligated to repurchase, and Buyer shall
become obligated to sell, all Purchased Securities then owned by Buyer for the
Repurchase Price of such Purchased Securities.
(b) If Seller is the defaulting party and Buyer exercises or is
deemed to have exercised the option referred to in subparagraph (a) of this
Paragraph, (i) the Seller's obligations hereunder to repurchase all Purchased
Securities in such Transactions shall thereupon become immediately due and
payable, (ii) all Income paid after such exercise or deemed exercise shall be
retained by Buyer and applied to the aggregate unpaid Repurchase Prices owed by
Seller, and (iii) Seller shall immediately deliver to Buyer any Purchased
Securities subject to such Transactions then in Seller's possession.
(c) In all Transactions in which Buyer is the defaulting party, upon
tender by Seller of payment of the aggregate Repurchase Prices for all such
Transactions, Buyer's right, title and
4
<PAGE> 5
interest in all Purchased Securities subject to such Transactions shall be
deemed transferred to Seller, and Buyer shall deliver all such Purchased
Securities to Seller.
(d) After one business day's notice to the defaulting party (which
notice need not be given if an Act of Insolvency shall have occurred, and which
may be the notice given under subparagraph (a) of this Paragraph or the notice
referred to in clause (ii) of the first sentence of this Paragraph), the
nondefaulting party may:
(i) as to Transactions in which Seller is the defaulting
party, (A) immediately sell, in a recognized market at such price or prices as
Buyer may reasonably deem satisfactory, any or all Purchased Securities subject
to such Transactions and apply the proceeds thereof to the aggregate unpaid
Repurchase Prices and any other amounts owing by Seller hereunder or (B) in its
sole discretion elect, in lieu of selling all or a portion of such Purchased
Securities, to give Seller credit for such Purchased Securities in an amount
equal to the price therefor on such date, obtained from a generally recognized
source or the most recent closing bid quotation from such a source, against the
aggregate unpaid Repurchase Prices and any other amounts owing by Seller
hereunder; and
(ii) as to Transactions in which Buyer is the defaulting
party, (A) purchase securities ("Replacement Securities") of the same class and
amount as any Purchased Securities that are not delivered by Buyer to Seller as
required hereunder or (B) in its sole discretion elect, in lieu of purchasing
Replacement Securities, to be deemed to have purchased Replacement Securities at
the price therefor on such date, obtained from a generally recognized source or
the most recent closing bid quotation from such a source.
(e) As to Transactions in which Buyer is the defaulting party , Buyer
shall be liable to Seller (i) with respect to Purchased Securities (other than
Additional Purchased Securities), for any excess of the price paid (or deemed
paid) by Seller for Replacement Securities therefor over the Repurchase Price
for such Purchased Securities and (ii) with respect to Additional Purchased
Securities, for the price paid (or deemed paid) by Seller for the Replacement
Securities therefor.
(f) The defaulting party shall be liable to the nondefaulting party
for the amount of all reasonable legal or other expenses incurred by the
nondefaulting party in connection with or as a consequence of an Event of
Default.
(g) The nondefaulting party shall have, in addition to its rights
hereunder, any rights otherwise available to it under any other agreement or
applicable law.
12. SINGLE AGREEMENT
Buyer and Seller acknowledge that, and have entered hereinto and will
enter into each Transaction hereunder in consideration of and in reliance upon
the fact that, all Transactions hereunder constitute a single business and
contractual relationship and have been made in consideration of each other.
Accordingly, each of Buyer and Seller agrees (i) to perform all of its
obligations in respect of each Transaction hereunder, and that a default in the
performance of any
5
<PAGE> 6
such obligations shall constitute a default by it in respect of all Transactions
hereunder, (ii) that each of them shall be entitled to set off claims and apply
property held by them in respect of any Transaction against obligations owing to
them in respect of any other Transactions hereunder and (iii) that payments,
deliveries and other transfers made by either of them in respect of any
Transaction shall be deemed to have been made in consideration of payments,
deliveries and other transfers in respect of any other Transactions hereunder,
and the obligations to make any such payments, deliveries and other transfers
may be applied against each other and netted.
13. ENTIRE AGREEMENT; SEVERABILITY
This Agreement shall supersede any existing agreements between the
parties containing general terms and conditions for repurchase transactions.
Each provision and agreement and agreement herein shall be treated as separate
and independent from any other provision or agreement herein and shall be
enforceable notwithstanding the unenforceability of any such other provision or
agreement.
14. NON-ASSIGNABILITY; TERMINATION
The rights and obligations of the parties under this Agreement and
under any Transactions shall not be assigned by either party without the prior
written consent of the other party. Subject to the foregoing, this Agreement and
any Transactions shall be binding upon and shall inure to the benefit of the
parties and their respective successors and assigns. This Agreement may be
canceled by either party upon giving written notice to the other, except that
this Agreement shall, notwithstanding such notice, remain applicable to any
Transactions then outstanding.
15. GOVERNING LAW
This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts without giving effect to the conflict of law principles thereof.
16. NO WAIVERS, ETC.
No express or implied waiver of any Event of Default by either party
shall constitute a waiver of any other Event of Default and no exercise of any
remedy hereunder by any party shall constitute a waiver of its right to exercise
any other remedy hereunder. No modification or waiver of any provision of this
Agreement and no consent by any party to a departure herefrom shall be effective
unless and until such shall be in writing and duly executed by both of the
parties hereto.
19. INTENT
(a) The parties recognize that each Transaction is a "repurchase
agreement" as that term is defined in Section 101 of Title 11 of the United
States Code, as amended (except insofar as the type of Securities subject to
such Transaction or the term of such Transaction would render such definition
inapplicable), and a "securities contract" as that term is defined in
Section 741 of Title 11 of the United States Code, as amended.
6
<PAGE> 7
(b) It is understood that either party's right to liquidate
Securities delivered to it in connection with Transactions hereunder or to
exercise any other remedies pursuant to Paragraph 11 hereof, is a contractual
right to liquidate such Transaction as described in Sections 555 and 559 of
Title 11 of the United States Code, as amended.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THERMO ELECTRON CORPORATION THERMO VISION CORPORATION
By:______________________________ By:______________________
(Signature) (Signature)
(Print Name) (Print Name)
Title: Title:
7
<PAGE> 1
EXHIBIT 10.5
MASTER GUARANTEE REIMBURSEMENT
AND LOAN AGREEMENT
This AGREEMENT is entered into as of the day of by and among
Thermo Electron Corporation (the "Parent") and those of its subsidiaries that
join in this Agreement by executing the signature page hereto (the "Majority
Owned Subsidiaries").
WITNESSETH:
WHEREAS, the Majority Owned Subsidiaries and their wholly-owned
subsidiaries wish to enter into various financial transactions, such as
convertible or nonconvertible debt, loans, and equity offerings, and other
contractual arrangements with third parties (the "Underlying Obligations") and
may provide credit support to, on behalf of or for the benefit of, other
subsidiaries of the Parent ("Credit Support Obligations");
WHEREAS, the Majority Owned Subsidiaries and the Parent acknowledge that
the Majority Owned Subsidiaries and their wholly-owned subsidiaries may be
unable to enter into many kinds of Underlying Obligations without a guarantee of
their performance thereunder from the Parent (a "Parent Guarantee") or without
obtaining Credit Support Obligations from other Majority Owned Subsidiaries;
WHEREAS, the Majority Owned Subsidiaries and their wholly-owned
subsidiaries may borrow funds from the Parent, and the Parent may loan funds or
provide credit to the Majority Owned Subsidiaries and their wholly-owned
subsidiaries, on a short-term and unsecured basis;
WHEREAS, certain Majority Owned Subsidiaries ("Second Tier Majority Owned
Subsidiaries ") may themselves be majority owned subsidiaries of other Majority
Owned Subsidiaries ("First Tier Majority Owned Subsidiaries");
WHEREAS, for various reasons, Parent Guarantees of a Second Tier Majority
Owned Subsidiary's Underlying Obligations may be demanded and given without the
respective First Tier Majority Owned Subsidiary also issuing a guarantee of such
Underlying Obligation;
WHEREAS, the Parent may itself make a loan or provide other credit to a
Second Tier Majority Owned Subsidiary or its wholly-owned subsidiaries under
circumstances where the applicable First Tier Majority Owned Subsidiary does not
provide such credit; and
WHEREAS, the Parent is willing to consider continuing to issue Parent
Guarantees and providing credit, and the Majority Owned Subsidiaries are willing
to consider continuing to provide Credit Support Obligations and to borrow
funds, on the terms and conditions set forth below;
<PAGE> 2
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each party hereto, the parties agree as follows:
1. If the Parent provides a Parent Guarantee of an Underlying Obligation, and
the beneficiary(ies) of the Parent Guarantee enforce the Parent Guarantee,
or the Parent performs under the Parent Guarantee for any other reason,
then the Majority Owned Subsidiary that is obligated, either directly or
indirectly through a wholly-owned subsidiary, under such Underlying
Obligation shall indemnify and save harmless the Parent from any liability,
cost, expense or damage (including reasonable attorneys' fees) suffered by
the Parent as a result of the Parent Guarantee. If the Underlying
Obligation is issued by a Second Tier Majority Owned Subsidiary or a
wholly-owned subsidiary thereof, and such Second Tier Majority Owned
Subsidiary is unable to fully indemnify the Parent (because of the poor
financial condition of such Second Tier Majority Owned Subsidiary, or for
any other reason), then the First Tier Majority Owned Subsidiary that owns
the majority of the stock of such Second Tier Majority Owned Subsidiary
shall indemnify and save harmless the Parent from any remaining liability,
cost, expense or damage (including reasonable attorneys' fees) suffered by
the Parent as a result of the Parent Guarantee. If a Majority Owned
Subsidiary or a wholly-owned subsidiary thereof provides a Credit Support
Obligation for any subsidiary of the Parent, other than a subsidiary of
such Majority Owned Subsidiary, and the beneficiary(ies) of the Credit
Support Obligation enforce the Credit Support Obligation, or the Majority
Owned Subsidiary or its wholly-owned subsidiary performs under the Credit
Support Obligation for any other reason, then the Parent shall indemnify
and save harmless the Majority Owned Subsidiary or its wholly-owned
subsidiary, as applicable, from any liability, cost, expense or damage
(including reasonable attorneys' fees) suffered by the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, as a result of
the Credit Support Obligation. Without limiting the foregoing, Credit
Support Obligations include the deposit of funds by a Majority Owned
Subsidiary or a wholly-owned subsidiary thereof in a credit arrangement
with a banking facility whereby such funds are available to the banking
facility as collateral for overdraft obligations of other Majority Owned
Subsidiaries or their subsidiaries also participating in the credit
arrangement with such banking facility.
2. For purposes of this Agreement, the term "guarantee" shall include not only
a formal guarantee of an obligation, but also any other arrangement where
the Parent is liable for the obligations of a Majority Owned Subsidiary or
its wholly-owned subsidiaries. Such other arrangements include (a)
representations, warranties and/or covenants or other obligations joined in
by the Parent, whether on a joint or joint and several basis, for the
benefit of the Majority Owned Subsidiary or its wholly-owned subsidiaries
and (b) responsibility of the Parent by operation of law for the acts and
omissions of the Majority Owned Subsidiary or its wholly-owned
subsidiaries, including controlling person liability under securities and
other laws.
3. Promptly after the Parent receives notice that a beneficiary of a Parent
Guarantee is seeking to enforce such Parent Guarantee, the Parent shall
notify the Majority Owned
<PAGE> 3
Subsidiary(s) obligated, either directly or indirectly through a
wholly-owned subsidiary, under the relevant Underlying Obligation. Such
Majority Owned Subsidiary(s) or wholly-owned subsidiary thereof, as
applicable, shall have the right, at its own expense, to contest the claim
of such beneficiary. If a Majority Owned Subsidiary or wholly-owned
subsidiary thereof, as applicable, is contesting the claim of such
beneficiary, the Parent will not perform under the relevant Parent
Guarantee unless and until, in the Parent's reasonable judgment, the Parent
is obligated under the terms of such Parent Guarantee to perform. Subject
to the foregoing, any dispute between a Majority Owned Subsidiary or
wholly-owned subsidiary thereof, as applicable, and a beneficiary of a
Parent Guarantee shall not affect such Majority Owned Subsidiary's
obligation to promptly indemnify the Parent hereunder. Promptly after a
Majority Owned Subsidiary or wholly-owned subsidiary thereof, as
applicable, receives notice that a beneficiary of a Credit Support
Obligation is seeking to enforce such Credit Support Obligation, the
Majority Owned Subsidiary shall notify the Parent. The Parent shall have
the right, at its own expense, to contest the claim of such beneficiary. If
the Parent or the subsidiary of the Parent on whose behalf the Credit
Support Obligation is given is contesting the claim of such beneficiary,
the Majority Owned Subsidiary or wholly-owned subsidiary thereof, as
applicable, will not perform under the relevant Credit Support Obligation
unless and until, in the Majority Owned Subsidiary's reasonable judgment,
the Majority Owned Subsidiary or wholly-owned subsidiary thereof, as
applicable, is obligated under the terms of such Credit Support Obligation
to perform. Subject to the foregoing, any dispute between the Parent or the
subsidiary of the Parent on whose behalf the Credit Support Obligation was
given, on the one hand, and a beneficiary of a Credit Support Obligation,
on the other, shall not affect the Parent's obligation to promptly
indemnify the Majority Owned Subsidiary or its wholly-owned subsidiary, as
applicable, hereunder.
4. Upon the request of a Majority Owned Subsidiary, the Parent may make loans
and advances to the Majority Owned Subsidiary or its wholly-owned
subsidiaries on a short-term, revolving credit basis, from time to time in
such amounts as mutually determined by the Parent and the Majority Owned
Subsidiary. The aggregate principal amount of such loans and advances shall
be reflected on the books and records of the Majority Owned Subsidiary (or
wholly-owned subsidiary, as applicable) and the Parent. All such loans and
advances shall be on an unsecured basis unless specifically provided
otherwise in loan documents executed at that time. The Majority Owned
Subsidiary or its wholly-owned subsidiaries, as applicable, shall pay
interest on the aggregate unpaid principal amount of such loans from time
to time outstanding at a rate ("Interest Rate") equal to the rate of the
Commercial Paper Composite Rate for 90-day maturities as reported by
Merrill Lynch Capital Markets, as an average of the last five business days
of such Majority Owned Subsidiary's latest fiscal quarter then ended, plus
twenty-five (25) basis points. The Interest Rate shall be adjusted on the
first business day of each fiscal quarter of such Majority Owned Subsidiary
pursuant to the Interest Rate formula contained in the preceding sentence
and shall be in effect for the entirety of such fiscal quarter. Interest
shall be computed on a 360-day basis. The aggregate principal amount
outstanding and accrued interest thereon shall be payable on demand. The
principal and accrued interest may be paid by the Majority Owned
Subsidiaries or their wholly-owned
<PAGE> 4
subsidiaries, as applicable, at any time or from time to time, in whole or
in part, without premium or penalty. All payments shall be applied first to
accrued interest and then to principal. Principal and interest shall be
payable in lawful money of the United States of America, in immediately
available funds, at the principal office of the Parent or at such other
place as the Parent may designate from time to time in writing to the
Majority Owned Subsidiary. The unpaid principal amount of any such
borrowings, and accrued interest thereon, shall become immediately due and
payable, without demand, upon the failure of the Majority Owned Subsidiary
or its wholly-owned subsidiary, as applicable, to pay its debts as they
become due, the insolvency of the Majority Owned Subsidiary or its
wholly-owned subsidiary, as applicable, the filing by or against the
Majority Owned Subsidiary or its wholly-owned subsidiary, as applicable, of
any petition under the U.S. Bankruptcy Code (or the filing of any similar
petition under the insolvency law of any jurisdiction), or the making by
the Majority Owned Subsidiary or its wholly-owned subsidiary, as
applicable, of an assignment or trust mortgage for the benefit of creditors
or the appointment of a receiver, custodian or similar agent with respect
to, or the taking by any such person of possession of, any property of the
Majority Owned Subsidiary or its wholly-owned subsidiary, as applicable. In
case any payments of principal and interest shall not be paid when due, the
Majority Owned Subsidiary or its wholly-owned subsidiary, as applicable,
further promises to pay all cost of collection, including reasonable
attorneys' fees.
5. If the Parent makes a loan or provides other credit ("Credit Extension") to
a Second Tier Majority Owned Subsidiary, the First Tier Majority Owned
Subsidiary that owns the majority of the stock of such Second Tier Majority
Owned Subsidiary hereby guarantees the Second Tier Majority Owned
Subsidiary's obligations to the Parent thereunder. Such guaranty shall be
enforced only after the Parent, in its reasonable judgment, determines that
the Second Tier Majority Owned Subsidiary is unable to fully perform its
obligations under the Credit Extension. If the Parent provides Credit
Extension to a wholly-owned subsidiary of a Second Tier Majority Owned
Subsidiary, the Second Tier Majority Owned Subsidiary hereby guarantees it
wholly-owned subsidiary's obligations to the Parent thereunder and the
First Tier Majority Owned Subsidiary that owns the majority of the stock of
such Second Tier Majority Owned Subsidiary hereby guarantees the Second
Tier Majority Owned Subsidiary's obligations to the Parent hereunder. Such
guaranty by the First Tier Majority Owned Subsidiary shall be enforced only
after the Parent, in its reasonable judgment, determines that the Second
Tier Majority Owned Subsidiary is unable to fully perform its guaranty
obligation hereunder.
6. All payments required to be made by a Majority Owned Subsidiary or its
wholly-owned subsidiaries, as applicable, shall be made within two days
after receipt of notice from the Parent. All payments required to be made
by the Parent shall be made within two days after receipt of notice from
the Majority Owned Subsidiary.
7. This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts applicable to contracts made and
performed therein.
<PAGE> 5
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the date first above written.
THERMO ELECTRON CORPORATION
By:
--------------------------------------
Title:
THERMO VISION CORPORATION
By:
--------------------------------------
Title:
<PAGE> 1
EXHIBIT 10.6
MASTER GUARANTEE REIMBURSEMENT
AND LOAN AGREEMENT
This AGREEMENT is entered into as of the day of by and among
Thermo Instrument Systems Inc. (the "Parent") and those of its subsidiaries that
join in this Agreement by executing the signature page hereto (the "Majority
Owned Subsidiaries").
WITNESSETH:
WHEREAS, the Majority Owned Subsidiaries and their wholly-owned
subsidiaries wish to enter into various financial transactions, such as
convertible or nonconvertible debt, loans, and equity offerings, and other
contractual arrangements with third parties (the "Underlying Obligations") and
may provide credit support to, on behalf of or for the benefit of, other
subsidiaries of the Parent ("Credit Support Obligations");
WHEREAS, the Majority Owned Subsidiaries and the Parent acknowledge that
the Majority Owned Subsidiaries and their wholly-owned subsidiaries may be
unable to enter into many kinds of Underlying Obligations without a guarantee of
their performance thereunder from the Parent (a "Parent Guarantee") or without
obtaining Credit Support Obligations from other Majority Owned Subsidiaries;
WHEREAS, the Majority Owned Subsidiaries and their wholly-owned
subsidiaries may borrow funds from the Parent, and the Parent may loan funds or
provide credit to the Majority Owned Subsidiaries and their wholly-owned
subsidiaries, on a short-term and unsecured basis; and
WHEREAS, the Parent is willing to consider continuing to issue Parent
Guarantees and providing credit, and the Majority Owned Subsidiaries are willing
to consider continuing to provide Credit Support Obligations and to borrow
funds, on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each party hereto, the parties agree as follows:
1. If the Parent provides a Parent Guarantee of an Underlying Obligation, and
the beneficiary(ies) of the Parent Guarantee enforce the Parent Guarantee,
or the Parent performs under the Parent Guarantee for any other reason,
then the Majority Owned Subsidiary that is obligated, either directly or
indirectly through a wholly-owned subsidiary, under such Underlying
Obligation shall indemnify and save harmless the Parent from any liability,
cost, expense or damage (including reasonable attorneys' fees) suffered by
the Parent as a result of the Parent Guarantee. If a Majority Owned
Subsidiary or a
<PAGE> 2
wholly-owned subsidiary thereof provides a Credit Support Obligation for
any subsidiary of the Parent, other than a subsidiary of such Majority
Owned Subsidiary, and the beneficiary(ies) of the Credit Support Obligation
enforce the Credit Support Obligation, or the Majority Owned Subsidiary or
its wholly-owned subsidiary performs under the Credit Support Obligation
for any other reason, then the Parent shall indemnify and save harmless the
Majority Owned Subsidiary or its wholly-owned subsidiary, as applicable,
from any liability, cost, expense or damage (including reasonable
attorneys' fees) suffered by the Majority Owned Subsidiary or its
wholly-owned subsidiary, as applicable, as a result of the Credit Support
Obligation. Without limiting the foregoing, Credit Support Obligations
include the deposit of funds by a Majority Owned Subsidiary or a
wholly-owned subsidiary thereof in a credit arrangement with a banking
facility whereby such funds are available to the banking facility as
collateral for overdraft obligations of other Majority Owned Subsidiaries
or their subsidiaries also participating in the credit arrangement with
such banking facility.
2. For purposes of this Agreement, the term "guarantee" shall include not only
a formal guarantee of an obligation, but also any other arrangement where
the Parent is liable for the obligations of a Majority Owned Subsidiary or
its wholly-owned subsidiaries. Such other arrangements include (a)
representations, warranties and/or covenants or other obligations joined in
by the Parent, whether on a joint or joint and several basis, for the
benefit of the Majority Owned Subsidiary or its wholly-owned subsidiaries
and (b) responsibility of the Parent by operation of law for the acts and
omissions of the Majority Owned Subsidiary or its wholly-owned
subsidiaries, including controlling person liability under securities and
other laws.
3. Promptly after the Parent receives notice that a beneficiary of a Parent
Guarantee is seeking to enforce such Parent Guarantee, the Parent shall
notify the Majority Owned Subsidiary(s) obligated, either directly or
indirectly through a wholly-owned subsidiary, under the relevant Underlying
Obligation. Such Majority Owned Subsidiary(s) or wholly-owned subsidiary
thereof, as applicable, shall have the right, at its own expense, to
contest the claim of such beneficiary. If a Majority Owned Subsidiary or
wholly-owned subsidiary thereof, as applicable, is contesting the claim of
such beneficiary, the Parent will not perform under the relevant Parent
Guarantee unless and until, in the Parent's reasonable judgment, the Parent
is obligated under the terms of such Parent Guarantee to perform. Subject
to the foregoing, any dispute between a Majority Owned Subsidiary or
wholly-owned subsidiary thereof, as applicable, and a beneficiary of a
Parent Guarantee shall not affect such Majority Owned Subsidiary's
obligation to promptly indemnify the Parent hereunder. Promptly after a
Majority Owned Subsidiary or wholly-owned subsidiary thereof, as
applicable, receives notice that a beneficiary of a Credit Support
Obligation is seeking to enforce such Credit Support Obligation, the
Majority Owned Subsidiary shall notify the Parent. The Parent shall have
the right, at its own expense, to contest the claim of such beneficiary. If
the Parent or the subsidiary of the Parent on whose behalf the Credit
Support Obligation is given is contesting the claim of such beneficiary,
the Majority Owned Subsidiary or wholly-owned subsidiary thereof, as
applicable, will not perform under the relevant Credit Support Obligation
unless and until,
<PAGE> 3
in the Majority Owned Subsidiary's reasonable judgment, the Majority Owned
Subsidiary or wholly-owned subsidiary thereof, as applicable, is obligated
under the terms of such Credit Support Obligation to perform. Subject to
the foregoing, any dispute between the Parent or the subsidiary of the
Parent on whose behalf the Credit Support Obligation was given, on the one
hand, and a beneficiary of a Credit Support Obligation, on the other, shall
not affect the Parent's obligation to promptly indemnify the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, hereunder.
4. Upon the request of a Majority Owned Subsidiary, the Parent may make loans
and advances to the Majority Owned Subsidiary or its wholly-owned
subsidiaries on a short-term, revolving credit basis, from time to time in
such amounts as mutually determined by the Parent and the Majority Owned
Subsidiary. The aggregate principal amount of such loans and advances shall
be reflected on the books and records of the Majority Owned Subsidiary (or
wholly-owned subsidiary, as applicable) and the Parent. All such loans and
advances shall be on an unsecured basis unless specifically provided
otherwise in loan documents executed at that time. The Majority Owned
Subsidiary or its wholly-owned subsidiaries, as applicable, shall pay
interest on the aggregate unpaid principal amount of such loans from time
to time outstanding at a rate ("Interest Rate") equal to the rate of the
Commercial Paper Composite Rate for 90-day maturities as reported by
Merrill Lynch Capital Markets, as an average of the last five business days
of such Majority Owned Subsidiary's latest fiscal quarter then ended, plus
twenty-five (25) basis points. The Interest Rate shall be adjusted on the
first business day of each fiscal quarter of such Majority Owned Subsidiary
pursuant to the Interest Rate formula contained in the preceding sentence
and shall be in effect for the entirety of such fiscal quarter. Interest
shall be computed on a 360-day basis. The aggregate principal amount
outstanding and accrued interest thereon shall be payable on demand. The
principal and accrued interest may be paid by the Majority Owned
Subsidiaries or their wholly-owned subsidiaries, as applicable, at any time
or from time to time, in whole or in part, without premium or penalty. All
payments shall be applied first to accrued interest and then to principal.
Principal and interest shall be payable in lawful money of the United
States of America, in immediately available funds, at the principal office
of the Parent or at such other place as the Parent may designate from time
to time in writing to the Majority Owned Subsidiary. The unpaid principal
amount of any such borrowings, and accrued interest thereon, shall become
immediately due and payable, without demand, upon the failure of the
Majority Owned Subsidiary or its wholly-owned subsidiary, as applicable, to
pay its debts as they become due, the insolvency of the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, the filing by or
against the Majority Owned Subsidiary or its wholly-owned subsidiary, as
applicable, of any petition under the U.S. Bankruptcy Code (or the filing
of any similar petition under the insolvency law of any jurisdiction), or
the making by the Majority Owned Subsidiary or its wholly-owned subsidiary,
as applicable, of an assignment or trust mortgage for the benefit of
creditors or the appointment of a receiver, custodian or similar agent with
respect to, or the taking by any such person of possession of, any property
of the Majority Owned Subsidiary or its wholly-owned subsidiary, as
applicable. In case any payments of principal and interest shall not be
paid when due, the Majority Owned Subsidiary or its wholly-owned
<PAGE> 4
subsidiary, as applicable, further promises to pay all cost of collection,
including reasonable attorneys' fees.
5. All payments required to be made by a Majority Owned Subsidiary or its
wholly-owned subsidiaries, as applicable, shall be made within two days
after receipt of notice from the Parent. All payments required to be made
by the Parent shall be made within two days after receipt of notice from
the Majority Owned Subsidiary.
6. This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts applicable to contracts made and
performed therein.
<PAGE> 5
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the date first above written.
THERMO INSTRUMENT SYSTEMS INC.
By:
--------------------------------------
Title:
THERMO VISION CORPORATION
By:
--------------------------------------
Title:
<PAGE> 1
EXHIBIT 10.7
TAX MATTERS AGREEMENT
THIS TAX MATTERS AGREEMENT (the "Agreement") is made as of [date] by
and among Thermo Optek Corporation, a Delaware corporation ("Optek" and,
together with its subsidiaries existing immediately following the Distribution,
the "Optek Group"), and Thermo Vision Corporation, a Delaware corporation and a
100%-owned subsidiary of Optek ("Vision" and, together with its subsidiaries
existing immediately following the Distribution, the "Vision Group").
WHEREAS, Optek and Vision have entered into a Plan and Agreement of
Distribution dated as of [date] (the "Distribution Agreement") providing for the
distribution of all of the Vision stock owned by Optek to Optek's shareholders
in accordance with the Distribution Agreement (the "Distribution");
WHEREAS, prior to and following the Distribution, the Optek Group and
the Vision Group will both be part of an affiliated group of corporations (the
"Thermo Group") of which Thermo Electron Corporation, a Delaware corporation
("Thermo Electron"), is the common parent, within the meaning of Section 1504(a)
of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, Optek has entered into a Tax Allocation Agreement with Thermo
Electron with respect to the allocation of taxes among members of the affiliated
group filing a consolidated United States federal income tax return, and Vision
will enter into a substantially similar Tax Allocation Agreement with Thermo
Electron; and
WHEREAS, Optek and Vision desire to set forth their agreement regarding
the allocation between Optek and Vision of all liabilities and benefits relating
to or affecting Taxes (as defined below) paid or payable by either of them with
respect to the Distribution.
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained in this Agreement, the parties hereby agree as follows:
1. DEFINITIONS.
"Tax" means any federal, state, local or foreign income, profits,
alternative or add-on minimum, severance, sales, use, service, service use, ad
valorem, gross receipts, license, value added, franchise, transfer, recording,
real estate, withholding, payroll, employment, excise, occupation, unemployment
insurance, social security, business license, business organization, stamp,
environmental, premium or property tax, or any other tax, governmental fee or
other like assessment or charge of any kind whatsoever, together with any
related interest, penalties and additions to any such tax, imposed by any taxing
authority upon Optek, the Optek Group, Vision, the Vision Group, Thermo
Electron, the Thermo Group, or any of their respective members or divisions or
branches.
<PAGE> 2
-2-
"Restructuring Tax" means any Taxes, other than Transaction Taxes,
to the extent that such Taxes would not have been incurred but for the
consummation of the transactions contemplated by the Distribution Agreement.
"Transaction Taxes" means any sales, use, transfer, real estate
transfer, recording or other similar Taxes incurred in connection with
consummation of the transactions contemplated by the Distribution Agreement.
2. RESPONSIBILITY FOR RESTRUCTURING TAXES.
a. RESPONSIBILITY OF OPTEK GROUP. Optek and any successor
corporation shall be responsible for, and shall indemnify and hold harmless
Vision and each member of the Vision Group and the other members of the Thermo
Group from, all liability, loss, cost, expense or damage in any way occasioned
by any Restructuring Taxes which are directly or indirectly attributable to one
or more of the following described events or transactions occurring after the
Distribution Date with respect to Optek or any successor corporation: a
reorganization, consolidation or merger; the sale or other disposition of Optek
Assets other than in the ordinary course of business; Optek ceasing to conduct
an active trade or business; the acquisition or disposition of shares of stock
of Optek by any person or persons; the redemption or repurchase of shares of its
stock by Optek or any successor; the recapitalization or other reclassification
of the shares of Optek or any successor; the complete or partial liquidation of
Optek or any successor; the exercisability, transferability or repurchase of
rights distributed pursuant to a stock purchase rights plan; or any other act or
omission of Optek which results in failure to comply with each representation
and statement made to the IRS in connection with the rulings received with
respect to the Distribution.
b. RESPONSIBILITY OF VISION GROUP. Vision and any successor
corporation shall be responsible for, and shall indemnify and hold harmless
Optek and each member of the Optek Group and the other members of the Thermo
Group from, all liability, loss, cost, expense or damage in any way occasioned
by any Restructuring Taxes which are directly or indirectly attributable to one
or more of the following described events or transactions occurring after the
Distribution Date with respect to Vision or any successor corporation: a
reorganization, consolidation or merger; the sale or other disposition of Vision
Assets other than in the ordinary course of business; Vision ceasing to conduct
an active trade or business; the acquisition or disposition of shares of stock
of Vision by any person or persons; the redemption or repurchase of shares of
its stock by Vision or any successor; the recapitalization or other
reclassification of the shares of Vision or any successor; the complete or
partial liquidation of Vision or any successor; the exercisability,
transferability or repurchase of rights distributed pursuant to a stock purchase
rights plan; or any other act or omission of Vision which results in failure to
comply with each representation and statement made to the IRS in connection with
the rulings received with respect to the Distribution.
c. JOINT RESPONSIBILITY OF OPTEK GROUP AND VISION GROUP. If any
Restructuring Taxes should arise for which neither Optek nor Vision is
responsible under Section 2.02(a) or Section 2.02(b), respectively, each of
Optek and Vision shall be responsible for 50 percent of such Restructuring
Taxes, and each party shall indemnify, defend and hold harmless the
<PAGE> 3
-3-
other party and each member of their respective Groups from and against all
liability, cost, expense or damage in any way occasioned by such Restructuring
Taxes.
3. MISCELLANEOUS.
a. Expenses. Unless otherwise expressly provided in this
Agreement, each party shall bear any and all expenses that arise from its
obligations under this Agreement.
b. Entire Agreement. This Agreement constitutes the entire
agreement of the parties concerning the subject matter hereof.
c. Term. This Agreement shall commence on the date first stated
above, and shall continue in effect for ten years.
d. Successors and Assigns. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
and their respective successors and assigns.
e. Amendments. This Agreement may not be modified or amended
except by an agreement in writing, signed by the parties hereto.
f. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original and all of which together shall
be deemed to be one and the same instrument.
g. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic substantive laws of The Commonwealth
of Massachusetts without regard to any choice or conflict of law rule or
provision that would result in the application of the domestic substantive laws
of any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
THERMO OPTEK CORPORATION
By: _____________________________
Title: __________________________
THERMO VISION CORPORATION
By: _____________________________
Title: __________________________
<PAGE> 1
Exhibit 10.8
CID CONTRACT RESEARCH AND DEVELOPMENT AGREEMENT
This Agreement is made as of October 14, 1994 (the "Effective Date") by and
between THERMO JARRELL ASH CORPORATION, a Delaware corporation having offices at
8E Forge Parkway, Franklin, Massachusetts 02038, Telecopy No. 508-520-1732
("TJA") and CID TECHNOLOGIES INC. a Delaware corporation having offices at 101
Commerce Boulevard, Liverpool, New York 13088, Telecopy No. 315-451-9421
("CIDTEC").
The parties agree as follows:
1. CERTAIN DEFINITIONS.
1.1 "DEVICES" means charge injection devices ("CID") sensors satisfying
specifications agreed to in writing by CIDTEC and TJA hereunder.
1.2 "DEVICE RIGHTS" means the Devices, the Specifications and all
Intellectual Property therein which arise after the Effective Date, as the
Devices are designed, developed and tested pursuant to this Agreement.
1.3 "INTELLECTUAL PROPERTY" shall mean all patent, copyright, trademark and
trade secret rights and all other intellectual and industrial property rights
anywhere in the world, and all applications, registrations, divisions and
continuations thereof, and all associated goodwill.
1.4 "SPECIFICATIONS" shall mean the specifications for Devices to be
developed by CIDTEC and TJA hereunder. The Specifications may contain drawings,
dimensions, functional specifications, design criteria, performance criteria and
other information and requirements defining the Devices.
2. DEVICE DEVELOPMENT.
2.1 AGREEING UPON SCOPE OF DEVELOPMENT WORK. From time to time during the
term hereof, TJA may provide to CIDTEC proposed specifications, milestones and
payments for the development of a device. Upon the mutual written agreement of
CIDTEC and TJA, such development shall be conducted pursuant to this Agreement.
2.2 TIMETABLE FOR WORK. CIDTEC shall design and develop each Device in
accordance with the written agreements of CIDTEC and TJA. In the event that
CIDTEC does not satisfy any agreed-upon milestone by the applicable date, then
TJA will be relieved of its obligation to make any payment associated with such
milestone
1
<PAGE> 2
until such milestone is met, but CIDTEC shall not be relieved of its obligation
to satisfy such milestone, or any subsequent milestones. In the event that
CIDTEC fails to comply with any agreed-upon milestone by the 90th day after the
applicable date, then TJA shall have the right to cancel CIDTEC's development of
the applicable Device in accordance with Section 2.5 below.
2.3 DEVELOPMENT PAYMENTS. Subject to Section 2.5, TJA will pay to CIDTEC
the agreed-upon amounts at the stipulated times in consideration of CIDTEC's
development of such Device.
2.4 CHANGE ORDERS. TJA shall have the right, from time to time, to submit
to CIDTEC written requests for modifications to their written agreement with
respect to a Device ("Change Orders"). CIDTEC and TJA shall discuss in good
faith such modifications. CIDTEC shall have no obligation to undertake any work
based on a Change Order unless and until the parties have agreed upon such
modifications.
2.5 CANCELLATION OF DEVELOPMENT. Upon cancellation by TJA of CIDTEC's
development of a Device as described in Sections 2.2 above, TJA shall have no
further payment obligations with respect to the canceled Device; provided,
however, that the license back of the Device Rights (as described in Section 4.2
below) for such Device to CIDTEC (and any related patent license to TJA under
Section 4.3(c) below) shall survive any such cancellation. If TJA cancels
development of the Initial Device pursuant to this Article 2, this Agreement
shall be automatically terminated upon such cancellation.
3. WARRANTIES.
3.1 WARRANTIES. CIDTEC hereby warrants to TJA that, during the term of
this Agreement:
(a) To the best of CIDTEC's information and belief, after due
investigation, CIDTEC has all necessary rights, authority and Intellectual
Property to manufacture, use and sell the Devices and to assign to TJA the
rights assigned hereunder.
(b) CIDTEC is and will be in compliance with all applicable federal,
state and local laws, rules and regulations, and all orders and directives
of courts and other government agencies and bodies, relating to the Devices
and their development and testing.
(c) Any persons and inventors who have ever had an interest in the
inventions and technology underlying the Device Rights have, to the best of
CIDTEC's information and belief after due investigation, irrevocably
assigned all their rights in and to such Device Rights to CIDTEC.
2
<PAGE> 3
3.2 LIMITATION OF WARRANTY. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN
OR IN WRITING BY CIDTEC, CIDTEC MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
TITLE AND NON-INFRINGEMENT, WITH REGARD TO THE DEVICES.
4. INTELLECTUAL PROPERTY.
4.1 ASSIGNMENT. CIDTEC hereby irrevocably assigns to TJA all right, title
and interest in and to the Device Rights.
4.2 LICENSE BACK. Upon the assignment of the Device Rights to TJA, TJA
grants to CIDTEC an exclusive, perpetual, worldwide, fully-paid right and
license (with the right to grant sublicenses) to practice the Device Rights in
order to make, use and sell Devices in all fields other than ICP, ICP-MS, AA and
Arc-Spark of the types manufactured by Thermo Optek.
4.3 PATENT PROSECUTION.
(a) Except as is provided in Section 4.3(c) below, TJA shall have the
sole and exclusive right and option, at its expense, to seek or continue to
seek or maintain patent protection or other government approval on any
Device in any country and to file for, procure, maintain and enforce
patents in any country on any Device Rights.
(b) CIDTEC shall make available to TJA or its authorized attorneys,
agents or representatives, such of its employees whom TJA in its reasonable
judgement deems necessary in order to assist it in obtaining patent
protection for the Device Rights. CIDTEC shall, without charge, sign or use
its best efforts to have signed all legal documents necessary for TJA to
file and prosecute patent applications or for TJA to obtain or maintain
patents.
(c) In the event that TJA notifies CIDTEC that TJA elects not to seek
patent protection for the Device Rights in any country, CIDTEC shall have
the right, at its own expense, to seek such patent protection in such
country and CIDTEC shall be the owner of any patents issuing in such
country on such Device Rights. TJA shall have an exclusive, perpetual,
worldwide, fully-paid right and license (with the right to grant
sublicenses) to practice those patents in order to make, use and sell
Devices in the fields of ICP, ICP-MS, AA and Arc-Spark of the types
manufactured by Thermo Optek.
3
<PAGE> 4
5. CONFIDENTIALITY.
5.1 DEFINITION. TJA and CIDTEC agree that certain information supplied by
each (the "Disclosing Party") to the other (the "Receiving Party") during the
course of this Agreement may be proprietary, secret or confidential to the
Disclosing Party, including (without limitation) customer data, business
practices, product plans, techniques, know-how or other confidential or
proprietary information ("Confidential Information"). Unless otherwise specified
herein, Confidential Information shall not include information previously known
by the Receiving Party free of any confidentiality obligation, independently
developed by the Receiving Party, disclosed to the Receiving Party by a third
party having no obligation to keep such information confidential, or known or
disclosed to the public or generally known to persons engaged in the respective
businesses of TJA or CIDTEC through no fault of the Receiving Party. CIDTEC
acknowledges that, notwithstanding the foregoing exceptions, all trade secrets,
know-how, procedures, methods and designs developed or known by CIDTEC relating
specifically to the design, manufacture and sale of the Devices and the Device
Rights shall be treated by CIDTEC as, and shall be deemed to constitute, the
Confidential Information of TJA.
5.2 TREATMENT. All Confidential Information of the Disclosing Party shall
be held in confidence by the Receiving Party following the date of disclosure
and shall be used only for the purposes set forth in this Agreement unless the
Disclosing Party provides prior written consent, or unless the disclosure of
such information is required by law or order of a court or governmental agency
(such disclosure to be made only after consultation with the Disclosing Party).
Either party may disclose Confidential Information of the other party to its
consultants or affiliates if necessary in connection with the performance of its
obligations hereunder or as otherwise contemplated hereby, provided that such
consultants and affiliates are bound in writing to maintain the confidentiality
of such Confidential Information to at least the extent provided in this Article
5. All Confidential Information shall be maintained in secure premises by the
Receiving Party, and the Receiving Party shall take all appropriate measures to
prevent the unauthorized disclosure thereof.
6. TERM AND TERMINATION
6.1 TERM. This Agreement shall become effective as of the Effective Date
and shall, unless earlier terminated in accordance with this Agreement, remain
in full force and effect until December 15, 1997.
6.2 TERMINATION.
(a) Breach. Except as otherwise provided herein, either party may
terminate this Agreement upon notice to the other party if the other party
has committed a material breach of any provision of this Agreement and such
breach has
4
<PAGE> 5
remained uncured for 30 days following notification of such breach given to the
breaching party.
(b) Critical Event. Either party may terminate this Agreement
immediately and without any requirement of notice if the other party files
for or consents to a general assignment for the benefit of creditors, files
a petition in bankruptcy or liquidation, is adjudicated bankrupt or
insolvent under the laws of any jurisdiction for the general benefit of
creditors of an insolvent or financially troubled debtor, or if a petition
in bankruptcy or liquidation is filed against the other party, or if the
other party otherwise ceases to do business, is liquidated, wound up or has
substantially all of its assets distributed to its owners, or publicly
announces its intention to do any of the foregoing.
6.3 EFFECTS OF EXPIRATION OR TERMINATION. Upon expiration or termination of
this Agreement, all rights and obligations of the parties shall immediately
terminate, except as set forth below:
(a) All amounts then accrued and owing to CIDTEC shall survive.
(c) The provisions of Articles 3, 4 and 5 and Sections 6.3 and 7.5 of
this Agreement shall survive.
7. GENERAL
7.1 COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed the original but all of which shall constitute one
and the same instrument.
7.2 NO WAIVER. The failure of either party to enforce at any time any of
the provisions hereof shall not be a waiver of that party's right thereafter to
enforce any such provisions or to enforce any other provisions of the Agreement.
7.3 SEVERABILITY. In the event any provision or term of this Agreement
shall be held by a court to be illegal or unenforceable, all of the other terms
and provisions hereof shall remain in full force and effect. The parties shall
work together to agree upon a replacement provision or term which realizes the
intent of such illegal or unenforceable provision or term as closely as
possible.
7.4 RELATIONSHIP. The relationship created between the parties hereto is
that of independent contractors, and neither party nor any of its employees,
subdistributors, customers, nor agents shall be deemed to be representatives,
agents, or employees of the other parties for any purpose whatsoever, nor shall
they or any of them have any authority or right to assume or create any
obligation of any kind or nature, express or implied, on behalf of the other
party.
5
<PAGE> 6
7.5 CHOICE OF LAW. This Agreement shall be construed and determined in
accordance with the laws of the Commonwealth of Massachusetts, without regard to
its choice of law principles.
7.6 ASSIGNMENT. Neither party may assign this Agreement or any of its
rights or obligations hereunder without the prior written consent of the other
party, except that either party may assign this Agreement without such consent
in connection with: (a) the sale of all or substantially all of its business or
assets; or (b) an assignment to any business entity controlling, controlled by
or under common control with such assigning party. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their permitted
successors and assigns.
7.7 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof and supersedes all prior
negotiations, understandings and agreements between the parties regarding the
subject matter of this Agreement. This Agreement may not be amended except by
written agreement executed by the parties.
7.8 DESCRIPTIVE HEADINGS. The descriptive headings contained in this
Agreement are for convenience only and are not to be used in the construction or
interpretation of this Agreement.
Signed, sealed and delivered by a duly authorized representative of each
party hereto under seal as of the date below written.
THERMO JARRELL ASH CORPORATION CID TECHNOLOGIES INC
By: /s/ Earl R. Lewis By: /s/ Kristine Langdon
------------------------------ -----------------------------
Name: Earl R. Lewis Name: Kristine Langdon
6
<PAGE> 1
Exhibit 10.9
CID SUPPLY AGREEMENT
THIS CID SUPPLY AGREEMENT, effective as of the ___ day of ________, 1997
(the "Effective Date"), is between THERMO VISION CORPORATION, a Delaware
corporation having offices at 8E Forge Parkway, Franklin, Massachusetts 02038,
Telecopy No. 508-553-1742 ("Thermo Vision") and THERMO OPTEK CORPORATION, a
Delaware corporation having offices at 8E Forge Parkway, Franklin, Massachusetts
02038, Telecopy No. 508-541-0140 ("Thermo Optek") regarding the supply by Thermo
Vision of certain products to be purchased by Thermo Optek and its affiliates.
NOW, THEREFORE, in consideration of the mutual promises, terms and
conditions hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Thermo Vision and
Thermo Optek (the "Parties") do hereby agree as follows:
For the purposes of this Agreement, an "Affiliate" of a Party means an
individual or business entity controlling, controlled by or under common control
with such Party, with control meaning a 50% or more ownership interest.
1. THERMO VISION'S SUPPLY OF PRODUCTS.
(a) Thermo Vision hereby agrees to sell the Products to Thermo Optek and
its Affiliates, in accordance with the terms and conditions of this Agreement.
Subject to Paragraph 1(g)(ii) hereof, Thermo Vision agrees not to sell the
Products to any other party which manufactures optical spectrometers of the
types manufactured by Thermo Optek. "Products" means all charge injection
devices ("CID") sensors manufactured by or on behalf of Thermo Vision for:
(i) optical spectrometers, including without limitation ICP, ICP-MS,
AA and Arc-Spark; or
(ii) raman spectrometers and other analytical instruments, if after
the Effective Date but during the term of this Agreement Thermo
Vision and Thermo Optek (A) enter into a research, development
and supply agreement with respect to raman spectrometers or other
analytical instruments; and (B) agree on pricing for such raman
spectrometers or other analytical instruments.
(b) The Products shall also be deemed to include any modifications or
improvements to the CID sensors described above which Thermo Vision or a
1
<PAGE> 2
subsidiary of Thermo Vision may develop or manufacture, or cause to be developed
or manufactured, during the term of this Agreement, PROVIDED, HOWEVER, that all
such modifications and improvements shall have been approved by Thermo Optek
prior to inclusion in the CID sensors in order to insure compatibility with
Thermo Optek applications.
(c) As soon as practicable after the Effective Date, Thermo Optek shall
provide to Thermo Vision a non-binding forecast for the next 12 calendar months
of the anticipated requirements of Thermo Optek and its Affiliates for the
Products and indicating the likely delivery dates to be requested. Thermo Optek
shall update this forecast each calendar quarter on a rolling basis.
(d) Thermo Optek and its Affiliates shall thereafter from time to time
place firm orders with Thermo Vision at least 6 months before the requested
delivery date by the transmittal to Thermo Vision of written orders on Thermo
Optek's regular purchase order forms, which shall be deemed accepted upon Thermo
Vision's written acceptance thereof. Such purchase orders shall identify the
Products ordered, the quantities ordered, requested delivery date(s) and any
export information required to enable Thermo Vision to fill the order.
(e) Unless Thermo Optek or its Affiliate requests otherwise, all Products
ordered shall be packed for shipment and storage in accordance with Thermo
Vision's standard commercial practices. It is the obligation of Thermo Optek or
such Affiliate to notify Thermo Vision and obtain Thermo Vision's consent to any
special packaging requirements (which shall be at the expense of Thermo Optek or
such Affiliate). The terms and conditions of this Paragraph 1(e) shall be
reviewed by the Parties on an annual basis and are subject to change based on
the mutual agreement of the Parties.
(f) In the event of any discrepancy between any purchase order and this
Agreement, the terms of this Agreement shall govern.
(g) During the term of this Agreement, Thermo Optek shall purchase all of
its requirements of Products from Thermo Vision, and Thermo Optek shall cause
all of its Affiliates to purchase all of their requirements of Products from
Thermo Vision; PROVIDED, HOWEVER that:
(i) Thermo Optek and its Affiliates shall have the right to make a
Product themselves (using their own or third-party technology) or purchase
a Product from a third party, if: (A) Thermo Vision does not accept a firm
order placed by Thermo Optek or such Affiliate for such Product with a
requested delivery date at least 6 months after the date on which Thermo
Optek or such Affiliate placed such order; or (B) such Product previously
delivered by Thermo Vision was repeatedly found not to conform to the
agreed-upon specifications for such Product,
2
<PAGE> 3
or Thermo Vision repeatedly and materially failed to deliver such Product
on or before the requested delivery dates (unless such failure is due to
causes beyond Thermo Vision's control) and
(ii) Thermo Vision shall have the right to sell a Product to a third
party for use in such third party's optical spectrometers, raman
spectrometers or other analytical instruments (the "Third Party
Instruments") if: (A) as of the Effective Date hereof, Thermo Optek (1) is
not using such Product in its optical spectrometers, raman spectrometers or
other analytical instruments, respectively, which are similar to the Third
Party Instruments, or (2) does not offer optical spectrometers, raman
spectrometers or other analytical instruments, respectively, which are
similar to the Third Party Instruments, (B) prior to the execution by
Thermo Vision of an agreement to sell such Product to such third party (the
"Third Party Agreement"), Thermo Vision provides written notice to Thermo
Optek setting forth the material terms and conditions of the Third Party
Agreement, including without limitation, the price per Product, the
quantity of Product to be sold and the term of the Third Party Agreement
(the "Third Party Notice") and (C) within 30 days after receipt by Thermo
Optek of the Third Party Notice, Thermo Vision has not received from Thermo
Optek Thermo Optek's written agreement to purchase such Product from Thermo
Vision for use in Thermo Optek's optical spectrometers, raman spectrometers
or other analytical instruments, as the case may be, on substantially the
same terms as those contained in the Third Party Agreement. By way of
illustration and assuming all other conditions set forth in Paragraph
1(g)(ii) are satisfied, Thermo Vision shall be permitted to sell a Product
to a third party for use in such third party's raman spectrometers if
Thermo Optek purchases such Product from Thermo Vision solely for use in
Thermo Optek's optical spectrometers and other analytical instruments.
2. COMPENSATION FOR SUPPLY.
(a) For each Product purchased by Thermo Optek or one of its Affiliates
hereunder, Thermo Vision shall be paid the price indicated in Schedule A hereto.
The price of each such Product shall be reviewed by the Parties on an annual
basis and is subject to adjustment based on the mutual agreement of the Parties.
With respect to modifications or improvements to CID sensors which are included
in the definition of Products in accordance with Paragraph 1(b) above, Thermo
Vision shall establish a price for each such new Product which is reasonable in
light of the manufacturing cost and performance of such new Product relative to
the most closely related existing Product. For each Product purchased by
Affiliates of Thermo Optek hereunder, such Affiliates and Thermo Optek shall be
jointly and severally liable for the payment of the price of such Product to
Thermo Vision.
(b) Each payment for Products shall be made by check in good funds to the
order of Thermo Vision or its Affiliates, and shall be delivered to Thermo
Vision
3
<PAGE> 4
within thirty (30) days after the receipt by Thermo Optek or its respective
Affiliate of Thermo Vision's invoice for such payment.
3. DELIVERY AND WAREHOUSING.
(a) All deliveries of Products shall be ex works the place of manufacture
of such Products. It shall be the responsibility of Thermo Optek or its
respective Affiliate to arrange and pay for all transportation, insurance and
other charges incurred after Thermo Vision's tender of the Products at such
location.
(b) Upon agreement of the Parties and payment of any of Thermo Vision's
expenses therefor, the Products may be delivered to Thermo Vision's warehouse
facility for storage. Thermo Optek shall thereupon pay such storage and handling
fees as are within the customary industry practice.
(c) The terms and conditions of Paragraphs 3(a) and (b) shall be reviewed
by the Parties on an annual basis and are subject to change based on the mutual
agreement of the Parties.
(d) Thermo Vision shall be responsible for preparing invoices and shipping
documents for Thermo Optek or its respective Affiliate in respect of Products
purchased hereunder; PROVIDED, HOWEVER, that Thermo Vision shall submit its
invoice for Products no earlier than the date on which Thermo Vision (i) makes
such Products available to a common carrier for pick up at such Product's place
of manufacture or (ii) delivers such Products to Thermo Vision's warehouse
facility for storage pursuant to the agreement of the Parties.
(e) Thermo Vision agrees to use reasonable efforts to meet the requested
delivery dates set forth in accepted purchase orders, but does not warrant that
any specified delivery date will be met. Thermo Vision assumes no responsibility
or liability for any loss or damage incurred by Thermo Optek or its Affiliates
by reason of a delay in a requested delivery date, inability to ship or any of
the reasons set forth in Paragraph 5 below.
4. PASSAGE OF TITLE. Beneficial ownership of, title and risk of loss to the
Products shall pass to Thermo Optek or its Affiliates, as the case may be, when
such Products are picked up by a common carrier at the Product's place of
manufacture or delivered to Thermo Vision's warehouse facility for storage
pursuant to the agreement of the Parties. The terms and conditions of this
Paragraph 4 shall be reviewed by the Parties on an annual basis and are subject
to change based on the mutual agreement of the Parties.
5. FORCE MAJEURE. Except for obligations of payment, each Party shall be
excused for any delay or failure to fulfill any of their respective obligations
under this
4
<PAGE> 5
Agreement if such failure or delay is caused by any circumstances or event
beyond the reasonable control of the Party, including without limitation any act
of God, accident, explosion, fire, storm, earthquake, flood, drought, peril of
the sea, riot, embargo, war or foreign, federal, state, provincial or municipal
order of general application, seizure, requisition or allocation, any failure or
delay of transportation, shortage of or inability to obtain supplies, equipment,
fuel or labor.
6. PRODUCT WARRANTY AND LIMITATIONS ON LIABILITY.
(a) Thermo Vision warrants that upon delivery the Products will conform to
the specifications which the Parties agree to in writing from time to time (the
"Specifications"); PROVIDED, HOWEVER, that Thermo Vision shall not be liable for
any losses of Thermo Optek that arise due to misuse or mishandling of the
Products, as reasonably determined by Thermo Vision. Thermo Vision's sole
obligation with respect to claims of non-conformance made by Thermo Optek or its
Affiliates shall be, at Thermo Vision's sole discretion, to either: (i) remedy
the non-conformance by repair or replacement; or (ii) refund of the price paid
for the Products involved. Any claims by Thermo Optek or its Affiliates under
this warranty with respect to Products must be made to Thermo Vision in writing
within 6 months after Thermo Vision tenders such Products or delivers such
Products to Thermo Vision's warehouse facility for storage pursuant to the
agreement of the Parties, as the case may be. The terms and conditions of this
Paragraphs 6(a) shall be reviewed by the Parties on an annual basis and are
subject to change based on the mutual agreement of the Parties.
(b) EXCEPT AS STATED ABOVE, THERMO VISION DISCLAIMS ALL WARRANTIES OF ANY
KIND, WHETHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO THE PRODUCTS,
INCLUDING ALL WARRANTIES OF TITLE AND IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
(c) EXCEPT FOR PRODUCT LIABILITY CLAIMS BROUGHT BY UNAFFILIATED THIRD
PARTIES WHICH ARISE FROM THE PRODUCTS NOT CONFORMING TO THE SPECIFICATIONS,
THERMO VISION'S LIABILITY FOR DAMAGES TO THERMO OPTEK OR ITS AFFILIATES FOR ANY
CAUSE WHATSOEVER, REGARDLESS OF THE FORM OF ANY CLAIM OR ACTION, SHALL NOT
EXCEED THE PRICE PAID BY THERMO OPTEK OR ITS AFFILIATE FOR THE PRODUCT INVOLVED.
(d) THERMO VISION SHALL IN NO EVENT BE LIABLE TO THERMO OPTEK OR ANY THIRD
PARTY FOR ANY DAMAGES RESULTING FROM LOSS OF PROFITS, OR FOR ANY SPECIAL,
INCIDENTAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES ARISING OUT OF, OR IN CONNECTION
WITH, THE USE, MANUFACTURE OR SALE OF THE PRODUCTS.
5
<PAGE> 6
7. CONFIDENTIALITY. Each Party acknowledges and agrees that in the course of
its performance of this Agreement confidential technology, trade secrets or
other proprietary information relating to the development, manufacture and sale
of the Products (hereinafter "Confidential Information") may be made known or
made available to the other party. Accordingly, during and after the term of
this Agreement, each Party hereby represents and agrees to the following:
(a) that each Party (the "disclosing Party") has a proprietary interest in
its own Confidential Information. During and after the term of this Agreement,
all disclosures by the disclosing Party of its Confidential Information to the
other Party (the "receiving Party"), its agents and employees shall be held in
strict confidence by the receiving Party, which shall disclose such Confidential
Information only to those of its agents and employees to whom it is necessary in
order to properly carry out their duties as limited by the terms and conditions
hereof. During and after the term of this Agreement, the receiving Party shall
not use the Confidential Information of the disclosing Party except for the
purposes of the receiving Party exercising its rights and carrying out its
duties hereunder. The provision of this Paragraph 7 shall also apply to any
sublicensees, consultants or subcontractors during and after the term of this
Agreement, that the receiving Party may sublicense or engage in connection with
this Agreement. Each receiving Party shall take necessary steps to ensure that
its employees respect the terms of this Paragraph 7.
(b) that notwithstanding anything contained in this Agreement to the
contrary, the receiving Party shall not be liable for a disclosure of the
disclosing Party's Confidential Information if the information so disclosed:
(i) was in the public domain at the time it was disclosed by the
disclosing Party to the receiving Party, or becomes part of the public
domain thereafter through no fault of the receiving Party; or
(ii) was known to or contained in the records of the receiving Party
at the time of disclosure by the disclosing Party to the receiving Party
and can be so demonstrated; or
(iii) becomes known to the receiving Party from a source other than
the disclosing Party without breach of such source's confidentiality
obligation, if any, to the disclosing Party and can be so demonstrated; or
(iv) was required to be disclosed under legal or administrative
process, provided that the receiving Party has given the disclosing Party
no less than ten (10) days prior written notice of the receiving Party's
intention to make a disclosure pursuant to this Paragraph 7(b)(iv).
8. INTELLECTUAL PROPERTY WARRANTY; INDEMNIFICATION.
6
<PAGE> 7
(a) With respect to Paragraph 1(a)(ii) above, Thermo Optek represents and
warrants to Thermo Vision that if CID sensors for raman spectrometers are added
to the definition of Products, Thermo Optek shall have the full right to use
under written agreements, all patents, copyrights, trademarks, trade secrets and
other intellectual property rights (the "Intellectual Property Rights") which
will be required in order to permit Thermo Vision to manufacture such Products.
Upon adding such sensors to the definition of Products, Thermo Optek shall grant
Thermo Vision and its Affiliates and subcontractors a worldwide, exclusive,
royalty-free license to use such Intellectual Property Rights during the term of
this Agreement for the sole purpose of manufacturing such Products for sale to
Thermo Optek and/or its Affiliates pursuant to this Agreement.
(b) Thermo Vision represents and warrants to Thermo Optek that it owns, or
has the full right to use under written agreements, all Intellectual Property
Rights which will be used or practiced in order for Thermo Vision to manufacture
and sell the Products described in Paragraph 1(a)(i) above. Thermo Vision has no
knowledge of any infringement of any Intellectual Property Right of any third
party which will arise out of or be incident to Thermo Vision's use of such
Intellectual Property Rights to manufacture and sell such Products.
(c) In the event of any claim, charge, suit or proceeding by any third
party against either Party alleging infringement or violation of any
Intellectual Property Rights pursuant to this Agreement, the other Party shall
cooperate fully in the defense of any such claim, charge, suit or proceeding. In
the event that the actions of one Party shall be determined to have solely
resulted in such allegation(s), that Party shall indemnify and hold the other
Party harmless from and against any loss arising out of such claim, charge, suit
or proceeding, not to exceed the amounts paid by the other Party to the such
third party.
(d) Notwithstanding anything contained in this Paragraph 8 to the contrary,
neither Party (the "indemnifying Party") shall have any obligation to the other
Party (the "indemnified Party") hereunder with respect to an infringement claim
which arises from: (i) any combination by the indemnified Party or any of its
Affiliates of the Products with another product not supplied by the indemnifying
Party, where such infringement would not have occurred but for such combination;
(ii) the adaptation or modification of the Products not performed by the
indemnifying Party, where such infringement would not have occurred but for such
adaptation or modification; (iii) the misuse of the Products or the use of the
Products in an application for which it was not designed, where such
infringement would not have occurred but for such use or misuse; or (iv) a claim
based on intellectual property rights owned by the indemnified Party or any of
its Affiliates.
9. TERMINATION.
7
<PAGE> 8
(a) The term of this Agreement shall commence on the date hereof and shall
continue, unless sooner terminated as set forth below, until the tenth
anniversary of the Effective Date.
(b) In the event of breach of any provision of this Agreement, the
breaching Party shall have thirty (30) days after written notice thereof by the
non-breaching Party within which to cure such breach. In the event such breach
has not been cured within such period of time, the non-breaching Party may on
notice to the breaching Party terminate this Agreement.
(c) Either Party may terminate this Agreement on notice to the other Party
in the event the other Party suffers a business failure, including becoming the
subject of a petition filed for relief under any bankruptcy or insolvency law,
which is not dismissed within sixty (60) days of its filing; any general
arrangement with its creditors; or any liquidation, termination or cessation of
its business.
10. EFFECT OF TERMINATION.
(a) Upon the sooner to occur of (i) expiration of this Agreement or (ii)
six months after termination of this Agreement, Thermo Vision shall immediately
terminate production of the Products described in Paragraph 1 above and each
Party shall promptly terminate all use of any Confidential Information of the
other Party.
(b) Upon expiration or termination of this Agreement, as the case may be,
each Party shall, at the request of the other Party, either promptly return to
the other Party or dispose of all of the other Party's Confidential Information
in any form whatsoever which it may have in its possession, custody or control
(whether direct or indirect).
(c) Upon expiration or termination of this Agreement, as the case may be,
Thermo Optek shall, at the request of Thermo Vision, repurchase all or any
portion of Thermo Vision's then existing finished goods inventory of the
Products. All finished Products shall be purchased at the price then in effect
for such Products. In the event that Thermo Optek fails to purchase all of such
inventory pursuant hereto within fourteen (14) days after the expiration or
termination of this Agreement, Thermo Vision shall have the right to sell or
dispose of such inventory, in whatever manner it seems fit, without liability to
Thermo Optek for any reason, including without limitation infringement of any
intellectual property rights of Thermo Optek.
(d) Upon expiration or termination of this Agreement, as the case may be,
Thermo Optek and its Affiliates shall not be released from their obligations to
pay any sums then owing to Thermo Vision and neither Party shall be released
from the obligation to perform any other duty or to discharge any other
liability that has been incurred prior thereto. Subject to the foregoing,
neither Party shall by reason of the
8
<PAGE> 9
termination of this Agreement be liable to the other for compensation or damages
on account of the loss of profits or sales, or expenditures, investments or
commitments in connection therewith.
11. MISCELLANEOUS.
(a) No Party shall assign any or all of its rights or obligations hereunder
to any third party without first obtaining the written consent thereto of the
other Party, which consent shall not be unreasonably withheld or delayed;
PROVIDED, HOWEVER, that in the event of an assignment to an Affiliate of a Party
or to a purchaser of all or substantially all of the assets or stock of a Party,
through merger, consolidation, sale or otherwise, no such consent shall be
required, if the assignee agrees to be bound by the terms hereof within five (5)
days after such assignment. The terms and provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Parties and their respective
successors and permitted assigns. Any reference to a Party shall be deemed to
include the successors thereto and permitted assigns thereof.
(b) This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts, without regard to principles of
conflicts of law and without regard to the United Nations Convention on
Contracts for the International Sale of Goods.
(c) No amendment, modification, waiver, termination or discharge of any
provision of this Agreement, nor consent to any departure by either Party
therefrom, shall be effective unless the same shall be in writing specifically
identifying this Agreement and the provision intended to be amended, modified,
waived, terminated or discharged and signed by both Parties, and each such
amendment, modification, waiver, termination or discharge shall be effective
only in the specific instance and for the specific purpose for which given. No
provision of this Agreement shall be varied, contradicted or explained by any
oral agreements, course of dealing or performance or any other matter not set
forth in an agreement in writing and signed by both Parties.
(d) Nothing herein contained shall be deemed to create a joint venture,
agency, partnership or employer-employee relationship between the Parties
hereto. Neither Party shall have any power to enter into any contracts or
commitments in the name of, or on behalf of, the other Party, or to bind the
other Party in any respect whatsoever.
(e) All notices, requests and other communications to a Party shall be in
writing (including telecopy or similar electronic transmissions), shall be
addressed to Robert J. Rosenthal on behalf of Thermo Optek or to Kristine S.
Langdon on behalf of Thermo Vision, respectively, and shall be personally
delivered or sent by telecopy or
9
<PAGE> 10
other electronic facsimile transmission during normal business hours or by
registered mail or certified mail, return receipt requested, postage prepaid, in
each case to the respective address and telecopy numbers specified above (or to
such other individual, address or telecopy numbers as may be specified in
writing to the other Party hereto from time to time). Any notice or
communication given in conformity with this Paragraph 11 (e) shall be deemed to
be effective when received by the addressee, if delivered by hand, telecopy or
other electronic facsimile transmission, and three (3) days after mailing, if
mailed.
(f) This Agreement constitutes, on and as of the date hereof, the entire
agreement of the Parties with respect to the subject matter hereof, and all
prior or contemporaneous understandings or agreements, whether written or oral,
between the Parties with respect to the subject matter hereof are hereby
superseded in their entirety.
(g) If any provision hereof should be held invalid, illegal or
unenforceable in any respect in any jurisdiction, then, to the fullest extent
permitted by law: (i) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the Parties hereto as nearly as may be possible; and (ii)
such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction. To the
extent permitted by applicable law, each Party hereby waives any provision of
law that would render any provision hereof prohibited or unenforceable in any
respect.
(h) No failure on the part of either Party to exercise and no delay in
exercising any right, power, remedy or privilege under this Agreement, or
provided by statute or at law or in equity or otherwise, shall impair, prejudice
or constitute a waiver of any such right, power, remedy or privilege or be
construed as a waiver of any breach of this Agreement or as an acquiescence
therein, nor shall any single or partial exercise of any such right, power,
remedy or privilege preclude any other or further exercise thereof or the
exercise of any other right, power, remedy or privilege.
(i) Notwithstanding anything else in this Agreement to the contrary, the
Parties agree that Paragraphs 6, 7, 8, 10 and 11 shall survive the termination
or expiration of this Agreement, as the case may be.
(j) Each Party covenants and agrees that all of its activities under or
pursuant to this Agreement shall comply in all material respects with all
applicable laws, rules and regulations.
(k) Headings used herein are for convenience only and shall not in any way
affect the construction of, or be taken into consideration interpreting, this
Agreement.
10
<PAGE> 11
(l) This Agreement may be executed in counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original,
and all of which counterparts, taken together, shall constitute one and the same
instrument.
IN WITNESS WHEREOF the Parties hereto have executed this Agreement as an
instrument under seal by their duly authorized officers.
THERMO VISION CORPORATION THERMO OPTEK CORPORATION
By:___________________________ By:_________________________
Name: Name:
Title: Title:
11
<PAGE> 12
SCHEDULE A
Prices
------
Product Price
------- -----
CID 38 $3,000
12
<PAGE> 1
Exhibit 10.10
PLAN NO. [ ]
FORM OF
THERMO VISION CORPORATION
EQUITY INCENTIVE PLAN
1. PURPOSE
The purpose of this Equity Incentive Plan (the "Plan") is to secure for
Thermo Vision Corporation (the "Company") and its Stockholders the benefits
arising from capital stock ownership by employees, officers and Directors of,
and consultants to, the Company and its subsidiaries or other persons who are
expected to make significant contributions to the future growth and success of
the Company and its subsidiaries. The Plan is intended to accomplish these goals
by enabling the Company to offer such persons equity-based interests,
equity-based incentives or performance-based stock incentives in the Company, or
any combination thereof ("Awards").
2. ADMINISTRATION
The Plan will be administered by the Board of Directors of the Company (the
"Board"). The Board shall have full power to interpret and administer the Plan,
to prescribe, amend and rescind rules and regulations relating to the Plan and
Awards, and full authority to select the persons to whom Awards will be granted
("Participants"), determine the type and amount of Awards to be granted to
Participants (including any combination of Awards), determine the terms and
conditions of Awards granted under the Plan (including terms and conditions
relating to events of merger, consolidation, dissolution and liquidation, change
of control, vesting, forfeiture, restrictions, dividends and interest, if any,
on deferred amounts), waive compliance by a participant with any obligation to
be performed by him or her under an Award, waive any term or condition of an
Award, cancel an existing Award in whole or in part with the consent of a
Participant, grant replacement Awards, accelerate the vesting or lapse of any
restrictions of any Award and adopt the form of instruments evidencing Awards
under the Plan and change such forms from time to time. Any interpretation by
the Board of the terms and provisions of the Plan or any Award thereunder and
the administration thereof, and all action taken by the Board, shall be final,
binding and conclusive on all parties and any person claiming under or through
any party. No Director shall be liable for any action or determination made in
good faith. The Board may, to the full extent permitted by law, delegate any or
all of its responsibilities under the Plan to a committee (the "Committee")
appointed by the Board and consisting of one or more members of the Board, each
of whom shall be deemed a "non-employee director" within the meaning of Rule
16b-3 (or any successor rule) of the Securities Exchange Act of 1934 (the
"Exchange Act").
<PAGE> 2
2
3. EFFECTIVE DATE
The Plan shall be effective as of the date first approved by the Board of
Directors, subject to the approval of the Plan by the Corporation's
Stockholders. Grants of Awards under the Plan made prior to such approval shall
be effective when made (unless otherwise specified by the Board at the time of
grant), but shall be conditioned on and subject to such approval of the Plan.
4. SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 10.6, the total number of
shares of the common stock, $.01 par value per share, of the Company (the
"Common Stock"), reserved and available for distribution under the Plan shall be
700,000 shares. Such shares may consist, in whole or in part, of authorized and
unissued shares or treasury shares.
If any Award of shares of Common Stock requiring exercise by the
Participant for delivery of such shares terminates without having been exercised
in full, is forfeited or is otherwise terminated without a payment being made to
the Participant in the form of Common Stock, or if any shares of Common Stock
subject to restrictions are repurchased by the Company pursuant to the terms of
any Award or are otherwise reacquired by the Company to satisfy obligations
arising by virtue of any Award, such shares shall be available for distribution
in connection with future Awards under the Plan.
5. ELIGIBILITY
Employees, officers and Directors of, and consultants to, the Company and
its subsidiaries, or other persons who are expected to make significant
contributions to the future growth and success of the Company and its
subsidiaries shall be eligible to receive Awards under the Plan. The Board, or
other appropriate committee or person to the extent permitted pursuant to the
last sentence of Section 2, shall from time to time select from among such
eligible persons those who will receive Awards under the Plan.
6. TYPES OF AWARDS
The Board may offer Awards under the Plan in any form of equity-based
interest, equity-based incentive or performance-based stock incentive in Common
Stock of the Company or any combination thereof. The type, terms and conditions
and restrictions of an Award shall be determined by the Board at the time such
Award is made to a Participant; provided however that the maximum number of
shares permitted to be granted under any Award or combination of Awards to any
participant during any one calendar year may not exceed 1% of the shares of
Common Stock outstanding at the beginning of such calendar year.
An Award shall be made at the time specified by the Board and shall be
subject to such conditions or restrictions as may be imposed by the Board and
shall conform to the general rules applicable under the Plan as well as any
special rules then applicable under federal tax laws or regulations or the
federal securities laws relating to the type of Award granted.
<PAGE> 3
3
Without limiting the foregoing, Awards may take the following forms and
shall be subject to the following rules and conditions:
6.1 OPTIONS
An option is an Award that entitles the holder on exercise thereof to
purchase Common Stock at a specified exercise price. Options granted under the
Plan may be either incentive stock options ("incentive stock options") that meet
the requirements of Section 422A of the Internal Revenue Code of 1986, as
amended (the "Code"), or options that are not intended to meet the requirements
of Section 422A ("non-statutory options").
6.1.1 OPTION PRICE. The price at which Common Stock may be purchased upon
exercise of an option shall be determined by the Board, PROVIDED HOWEVER, the
exercise price shall not be less than 85% of the then fair market value per
share of Common Stock.
6.1.2 OPTION GRANTS. The granting of an option shall take place at the time
specified by the Board. Options shall be evidenced by option agreements. Such
agreements shall conform to the requirements of the Plan, and may contain such
other provisions (including but not limited to vesting and forfeiture
provisions, acceleration, change of control, protection in the event of merger,
consolidations, dissolutions and liquidations) as the Board shall deem
advisable. Option agreements shall expressly state whether an option grant is
intended to qualify as an incentive stock option or non-statutory option.
6.1.3 OPTION PERIOD. An option will become exercisable at such time or
times (which may be immediately or in such installments as the Board shall
determine) and on such terms and conditions as the Board shall specify. The
option agreements shall specify the terms and conditions applicable in the event
of an option holder's termination of employment during the option's term.
Any exercise of an option must be in writing, signed by the proper person
and delivered or mailed to the Company, accompanied by (1) any additional
documents required by the Board and (2) payment in full in accordance with
Section 6.1.4 for the number of shares for which the option is exercised.
6.1.4 PAYMENT OF EXERCISE PRICE. Stock purchased on exercise of an option
shall be paid for as follows: (1) in cash or by check (subject to such
guidelines as the Company may establish for this purpose), bank draft or money
order payable to the order of the Company or (2) if so permitted by the
instrument evidencing the option (or in the case of a non-statutory option, by
the Board at or after grant of the option), (i) through the delivery of shares
of Common Stock that have been outstanding for at least six months (unless the
Board expressly approves a shorter period) and that have a fair market value
(determined in accordance with procedures prescribed by the Board) equal to the
exercise price, (ii) by delivery of a promissory note of the option holder to
the Company, payable on such terms as are specified by the Board, (iii) by
delivery of an unconditional and irrevocable undertaking by a broker to deliver
promptly to the Company
<PAGE> 4
4
sufficient funds to pay the exercise price, or (iv) by any combination of the
permissible forms of payment.
6.1.5 BUYOUT PROVISION. The Board may at any time offer to buy out for a
payment in cash, shares of Common Stock, deferred stock or restricted stock, an
option previously granted, based on such terms and conditions as the Board shall
establish and communicate to the option holder at the time that such offer is
made.
6.1.6 SPECIAL RULES FOR INCENTIVE STOCK OPTIONS. Each provision of the Plan
and each option agreement evidencing an incentive stock option shall be
construed so that each incentive stock option shall be an incentive stock option
as defined in Section 422A of the Code or any statutory provision that may
replace such Section, and any provisions thereof that cannot be so construed
shall be disregarded. Instruments evidencing incentive stock options must
contain such provisions as are required under applicable provisions of the Code.
Incentive stock options may be granted only to employees of the Company and its
subsidiaries. The exercise price of an incentive stock option shall not be less
than 100% (110% in the case of an incentive stock option granted to a more than
ten percent Stockholder of the Company) of the fair market value of the Common
Stock on the date of grant, as determined by the Board. An incentive stock
option may not be granted after the tenth anniversary of the date on which the
Plan was adopted by the Board and the latest date on which an incentive stock
option may be exercised shall be the tenth anniversary (fifth anniversary, in
the case of any incentive stock option granted to a more than ten percent
Stockholder of the Company) of the date of grant, as determined by the Board.
6.2 RESTRICTED AND UNRESTRICTED STOCK
An Award of restricted stock entitles the recipient thereof to acquire
shares of Common Stock upon payment of the purchase price subject to
restrictions specified in the instrument evidencing the Award.
6.2.1 RESTRICTED STOCK AWARDS. Awards of restricted stock shall be
evidenced by restricted stock agreements. Such agreements shall conform to the
requirements of the Plan, and may contain such other provisions (including
restriction and forfeiture provisions, change of control, protection in the
event of mergers, consolidations, dissolutions and liquidations) as the Board
shall deem advisable.
6.2.2 RESTRICTIONS. Until the restrictions specified in a restricted stock
agreement shall lapse, restricted stock may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of, and upon certain conditions
specified in the restricted stock agreement, must be resold to the Company for
the price, if any, specified in such agreement. The restrictions shall lapse at
such time or times, and on such conditions, as the Board may specify. The Board
may at any time accelerate the time at which the restrictions on all or any part
of the shares shall lapse.
6.2.3 RIGHTS AS A STOCKHOLDER. A Participant who acquires shares of
restricted stock will have all of the rights of a Stockholder with respect to
such shares including the right to receive dividends and to vote such shares.
Unless the Board otherwise determines, certificates
<PAGE> 5
5
evidencing shares of restricted stock will remain in the possession of the
Company until such shares are free of all restrictions under the Plan.
6.2.4 PURCHASE PRICE. The purchase price of shares of restricted stock
shall be determined by the Board, in its sole discretion, but such price may not
be less than the par value of such shares.
6.2.5 OTHER AWARDS SETTLED WITH RESTRICTED STOCK. The Board may provide
that any or all the Common Stock delivered pursuant to an Award will be
restricted stock.
6.2.6 UNRESTRICTED STOCK. The Board may, in its sole discretion, sell to
any Participant shares of Common Stock free of restrictions under the Plan for a
price determined by the Board, but which may not be less than the par value per
share of the Common Stock.
6.3 DEFERRED STOCK
6.3.1 DEFERRED STOCK AWARD. A deferred stock Award entitles the recipient
to receive shares of deferred stock which is Common Stock to be delivered in the
future. Delivery of the Common Stock will take place at such time or times, and
on such conditions, as the Board may specify. The Board may at any time
accelerate the time at which delivery of all or any part of the Common Stock
will take place.
6.3.2 OTHER AWARDS SETTLED WITH DEFERRED STOCK. The Board may, at the time
any Award described in this Section 6 is granted, provide that, at the time
Common Stock would otherwise be delivered pursuant to the Award, the Participant
will instead receive an instrument evidencing the right to future delivery of
deferred stock.
6.4 PERFORMANCE AWARDS
6.4.1 PERFORMANCE AWARDS. A performance Award entitles the recipient to
receive, without payment, an Amount, in cash or Common Stock or a combination
thereof (such form to be determined by the Board), following the attainment of
performance goals. Performance goals may be related to personal performance,
corporate performance, departmental performance or any other category of
performance deemed by the Board to be important to the success of the Company.
The Board will determine the performance goals, the period or periods during
which performance is to be measured and all other terms and conditions
applicable to the Award.
6.4.2 OTHER AWARDS SUBJECT TO PERFORMANCE CONDITIONS. The Board may, at the
time any Award described in this Section 6 is granted, impose the condition (in
addition to any conditions specified or authorized in this Section 6 of the
Plan) that performance goals be met prior to the Participant's realization of
any payment or benefit under the Award.
<PAGE> 6
6
7. PURCHASE PRICE AND PAYMENT
Except as otherwise provided in the Plan, the purchase price of Common
Stock to be acquired pursuant to an Award shall be the price determined by the
Board, provided that such price shall not be less than the par value of the
Common Stock. Except as otherwise provided in the Plan, the Board may determine
the method of payment of the exercise price or purchase price of an Award
granted under the Plan and the form of payment. The Board may determine that all
or any part of the purchase price of Common Stock pursuant to an Award has been
satisfied by past services rendered by the Participant. The Board may agree at
any time, upon request of the Participant, to defer the date on which any
payment under an Award will be made.
8. LOANS AND SUPPLEMENTAL GRANTS
The Company may make a loan to a Participant, either on or after the grant
to the Participant of any Award, in connection with the purchase of Common Stock
under the Award or with the payment of any obligation incurred or recognized as
a result of the Award. The Board will have full authority to decide whether the
loan is to be secured or unsecured or with or without recourse against the
borrower, the terms on which the loan is to be repaid and the conditions, if
any, under which it may be forgiven.
In connection with any Award, the Board may at the time such Award is made
or at a later date, provide for and make a cash payment to the participant not
to exceed an amount equal to (a) the amount of any federal, state and local
income tax or ordinary income for which the Participant will be liable with
respect to the Award, plus (b) an additional amount on a grossed-up basis
necessary to make him or her whole after tax, discharging all the participant's
income tax liabilities arising from all payments under the Plan.
9. CHANGE IN CONTROL
9.1 IMPACT OF EVENT
In the event of a "Change in Control" as defined in Section 9.2, the
following provisions shall apply, unless the agreement evidencing the Award
otherwise provides:
(a) Any stock options or other stock-based Awards awarded under the
Plan that were not previously exercisable and vested shall become
fully exercisable and vested.
(b) Awards of restricted stock and other stock-based Awards subject to
restrictions and to the extent not fully vested, shall become fully
vested and all such restrictions shall lapse so that shares issued
pursuant to such Awards shall be free of restrictions.
(c) Deferral limitations and conditions that relate solely to the
passage of time, continued employment or affiliation, will be waived
and removed as to deferred stock Awards and performance Awards.
Performance of other conditions (other than conditions relating solely
to the passage of time, continued employment or affiliation) will
continue to apply
<PAGE> 7
7
unless otherwise provided in the agreement evidencing the Awards or in
any other agreement between the Participant and the Company or unless
otherwise agreed by the Board.
9.2 DEFINITION OF "CHANGE IN CONTROL"
"Change in Control" means any one of the following events: (i) when, any
Person is or becomes the beneficial owner (as defined in Section 13(d) of the
Exchange Act and the Rules and Regulations thereunder), together with all
Affiliates and Associates (as such terms are used in Rule 12b-2 of the General
Rules and Regulations of the Exchange Act) of such Person, directly or
indirectly, of 50% or more of the outstanding Common Stock of the Company or its
parent corporation, Thermo Instrument Systems Inc. ("Thermo Instrument"), or the
beneficial owner of 25% or more of the outstanding common stock of Thermo
Electron Corporation ("Thermo Electron"), without the prior approval of the
Prior Directors of the applicable issuer, (ii) the failure of the Prior
Directors to constitute a majority of the Board of Directors of the Company,
Thermo Instrument or Thermo Electron, as the case may be, at any time within two
years following any Electoral Event, or (iii) any other event that the Prior
Directors shall determine constitutes an effective change in the control of the
Company, Thermo Instrument or Thermo Electron. As used in the preceding
sentence, the following capitalized terms shall have the respective meanings set
forth below:
(a) "Person" shall include any natural person, any entity, any
"affiliate" of any such natural person or entity as such term is
defined in Rule 405 under the Securities Act of 1933 and any "group"
(within the meaning of such term in Rule 13d-5 under the Exchange
Act);
(b) "Prior Directors" shall mean the persons sitting on the Company's,
Thermo Instrument's or Thermo Electron's Board of Directors, as the
case may be, immediately prior to any Electoral Event (or, if there
has been no Electoral Event, those persons sitting on the applicable
Board of Directors on the date of this Agreement) and any future
director of the Company, Thermo Instrument or Thermo Electron who has
been nominated or elected by a majority of the Prior Directors who are
then members of the Board of Directors of the Company, Thermo
Instrument or Thermo Electron, as the case may be; and
(c) "Electoral Event" shall mean any contested election of Directors,
or any tender or exchange offer for the Company's, Thermo Instrument's
or Thermo Electron's Common Stock, not approved by the Prior
Directors, by any Person other than the Company, Thermo Instrument,
Thermo Electron or a majority-owned subsidiary of Thermo Electron.
<PAGE> 8
8
10. GENERAL PROVISIONS
10.1 DOCUMENTATION OF AWARDS
Awards will be evidenced by written instruments, which may differ among
Participants, prescribed by the Board from time to time. Such instruments may be
in the form of agreements to be executed by both the Participant and the Company
or certificates, letters or similar instruments which need not be executed by
the participant but acceptance of which will evidence agreement to the terms
thereof. Such instruments shall conform to the requirements of the Plan and may
contain such other provisions (including provisions relating to events of
merger, consolidation, dissolution and liquidations, change of control and
restrictions affecting either the agreement or the Common Stock issued
thereunder), as the Board deems advisable.
10.2 RIGHTS AS A STOCKHOLDER
Except as specifically provided by the Plan or the instrument evidencing
the Award, the receipt of an Award will not give a Participant rights as a
Stockholder with respect to any shares covered by an Award until the date of
issue of a stock certificate to the participant for such shares.
10.3 CONDITIONS ON DELIVERY OF STOCK
The Company will not be obligated to deliver any shares of Common Stock
pursuant to the Plan or to remove any restriction from shares previously
delivered under the Plan (a) until all conditions of the Award have been
satisfied or removed, (b) until, in the opinion of the Company's counsel, all
applicable federal and state laws and regulations have been complied with, (c)
if the outstanding Common Stock is at the time listed on any stock exchange,
until the shares have been listed or authorized to be listed on such exchange
upon official notice of issuance, and (d) until all other legal matters in
connection with the issuance and delivery of such shares have been approved by
the Company's counsel. If the sale of Common Stock has not been registered under
the Securities Act of 1933, as amended, the Company may require, as a condition
to exercise of the Award, such representations or agreements as counsel for the
Company may consider appropriate to avoid violation of such act and may require
that the certificates evidencing such Common Stock bear an appropriate legend
restricting transfer.
If an Award is exercised by the participant's legal representative, the
Company will be under no obligation to deliver Common Stock pursuant to such
exercise until the Company is satisfied as to the authority of such
representative.
10.4 TAX WITHHOLDING
The Company will withhold from any cash payment made pursuant to an Award
an amount sufficient to satisfy all federal, state and local withholding tax
requirements (the "withholding requirements").
<PAGE> 9
9
In the case of an Award pursuant to which Common Stock may be delivered,
the Board will have the right to require that the participant or other
appropriate person remit to the Company an amount sufficient to satisfy the
withholding requirements, or make other arrangements satisfactory to the Board
with regard to such requirements, prior to the delivery of any Common Stock. If
and to the extent that such withholding is required, the Board may permit the
participant or such other person to elect at such time and in such manner as the
Board provides to have the Company hold back from the shares to be delivered, or
to deliver to the Company, Common Stock having a value calculated to satisfy the
withholding requirement.
10.5 NONTRANSFERABILITY OF AWARDS
Except as may be authorized by the Board, in its sole discretion, no Award
(other than an Award in the form of an outright transfer of cash or Common Stock
not subject to any restrictions) may be transferred other than by will or the
laws of descent and distribution, and during a Participant's lifetime an Award
requiring exercise may be exercised only by him or her (or in the event of
incapacity, the person or persons properly appointed to act on his or her
behalf). The Board may, in its discretion, determine the extent to which Awards
granted to a Participant shall be transferable, and such provisions permitting
or acknowledging transfer shall be set forth in the written agreement evidencing
the Award executed and delivered by or on behalf of the Company and the
Participant.
10.6 ADJUSTMENTS IN THE EVENT OF CERTAIN TRANSACTIONS
(a) In the event of a stock dividend, stock split or combination of shares,
the Board will make (i) appropriate adjustments to the maximum number of shares
that may be delivered under the Plan under Section 4 above, and (ii) appropriate
adjustments to the number and kind of shares of stock or securities subject to
Awards then outstanding or subsequently granted, any exercise prices relating to
Awards and any other provisions of Awards affected by such change.
(b) The Board may also make appropriate adjustments to take into account
material changes in law or in accounting practices or principles, mergers,
consolidations, acquisitions, dispositions, repurchases or similar corporate
transactions, recapitalizations or other change in the Company's capitalization,
or other distribution with respect to common Stockholders other than normal cash
dividends, or any other event, if it is determined by the Board that adjustments
are appropriate to avoid distortion in the operation of the Plan, but no such
adjustments other than those required by law may adversely affect the rights of
any Participant (without the Participant's consent) under any Award previously
granted.
10.7 EMPLOYMENT RIGHTS
Neither the adoption of the Plan nor the grant of Awards will confer upon
any person any right to continued employment with the Company or any subsidiary
or interfere in any way with the right of the Company or subsidiary to terminate
any employment relationship at any time or to increase or decrease the
compensation of such person. Except as specifically provided by the Board in any
particular case, the loss of existing or potential profit in Awards granted
under the
<PAGE> 10
10
Plan will not constitute an element of damages in the event of termination of an
employment relationship even if the termination is in violation of an obligation
of the Company to the employee.
Whether an authorized leave of absence, or absence in military or
government service, shall constitute termination of employment shall be
determined by the Board at the time. For purposes of this Plan, transfer of
employment between the Company and its subsidiaries shall not be deemed
termination of employment.
10.8 OTHER EMPLOYEE BENEFITS
The value of an Award granted to a Participant who is an employee, and the
amount of any compensation deemed to be received by an employee as a result of
any exercise or purchase of Common Stock pursuant to an Award or sale of shares
received under the Plan, will not constitute "earnings" or "compensation" with
respect to which any other employee benefits of such employee are determined,
including without limitation benefits under any pension, stock ownership, stock
purchase, life insurance, medical, health, disability or salary continuation
plan.
10.9 LEGAL HOLIDAYS
If any day on or before which action under the Plan must be taken falls on
a Saturday, Sunday or legal holiday, such action may be taken on the next
succeeding day not a Saturday, Sunday or legal holiday.
10.10 FOREIGN NATIONALS
Without amending the Plan, Awards may be granted to persons who are foreign
nationals or employed outside the United States or both, on such terms and
conditions different from those specified in the Plan, as may, in the judgment
of the Board, be necessary or desirable to further the purpose of the Plan.
11. TERMINATION AND AMENDMENT
The Plan shall remain in full force and effect until terminated by the
Board. Subject to the last sentence of this Section 11, the Board may at any
time or times amend the Plan or any outstanding Award for any purpose that may
at the time be permitted by law, or may at any time terminate the Plan as to any
further grants of Awards. No amendment, unless approved by the Stockholders,
shall be effective if it would cause the Plan to fail to satisfy the
requirements of the federal tax law or regulation relating to incentive stock
options or the requirements of Rule 16b-3 (or any successor rule) of the
Exchange Act. No amendment of the Plan or any agreement evidencing Awards under
the Plan may adversely affect the rights of any participant under any Award
previously granted without such participant's consent.
<PAGE> 1
Exhibit 10.11
FORM OF
THERMO VISION CORPORATION
DEFERRED COMPENSATION PLAN FOR DIRECTORS
SECTION 1. PARTICIPATION. Any director of Thermo Vision Corporation (the
"Company") may elect to have such percentage as he or she may specify of the
fees otherwise payable to him or her deferred and paid to him or her as provided
in this Plan. A director who is also an officer of the Company or its parent
corporation, Thermo Electron Corporation, shall not be eligible to participate
in this Plan. Each election shall be made by notice in writing delivered to the
Clerk of the Company, in such form as the Clerk shall designate, and each
election shall be applicable only with respect to fees earned subsequent to the
date of the election for the period designated in the form. The term
"participant" as used herein refers to any director who shall have made an
election. No participant may defer the receipt of any fees to be earned after
the later to occur of either (a) the date on which the participant shall retire
from or otherwise cease to engage in his or her principal occupation or
employment or (b) the date on which he or she shall cease to be a director of
the Company, or such earlier date as the Board of Directors of the Company, with
the participant's consent, may designate (the "deferral termination date"). In
the event that the participant's deferral termination date is the date on which
he or she ceases to engage in his or her principal occupation or employment, the
participant or a personal representative shall advise the Company of that date
by written notice delivered to the Clerk of the Company.
SECTION 2. ESTABLISHMENT OF DEFERRED COMPENSATION ACCOUNTS. There shall be
established for each participant an account to be designated as that
participant's deferred compensation account.
SECTION 3. ALLOCATIONS TO DEFERRED COMPENSATION ACCOUNTS. There shall be
allocated to each participant's deferred compensation account, as of the end of
each quarter, an amount equal to his or her fees for that quarter which that
participant shall have elected to have deferred pursuant to Section 1.
SECTION 4. STOCK UNITS AND STOCK UNIT ACCOUNTS. All amounts allocated to a
participant's deferred compensation account pursuant to Section 3 and Section 5
shall be converted, at the end of each quarter, into stock units by dividing the
accumulated balance in the deferred compensation account as of the end of that
quarter by the average last sale price per share of the Company's common stock
as reported on in THE WALL STREET JOURNAL, for the five business days up to and
including the last business day of that quarter. The number of stock units, so
determined, rounded to the nearest one-hundredth of a share, shall be credited
to a separate stock unit account to be established for the participant, and the
aggregate value thereof as of the last business day of that quarter shall
<PAGE> 2
2
be charged to the participant's deferred compensation account. No amounts
credited to the participant's deferred compensation account pursuant to Section
5 subsequent to the close of the fiscal year in which occurs the participant's
deferral termination date shall be converted into stock units. Any such amount
shall be distributed in cash as provided in Section 8. A maximum number of
25,000 shares of the Company's common stock may be represented by stock units
credited under this Plan, subject to proportionate adjustment in the event of
any stock dividend, stock split or other capital change affecting the Company's
common stock.
SECTION 5. CASH DIVIDEND CREDITS. Additional credits shall be made to a
participant's deferred compensation account, until all distributions shall have
been made from the participant's stock unit account, in amounts equal to the
cash dividends (or the fair market value of dividends paid in property other
than dividends payable in common stock of the Company) which the participant
would have received from time to time had he or she been the owner on the record
dates for the payment of such dividends of the number of shares of the Company's
common stock equal to the number of units in his or her stock unit account on
those dates.
SECTION 6. STOCK DIVIDEND CREDITS. Additional credits shall be made to a
participant's stock unit account, until all distributions shall have been made
from the participant's stock unit account, of a number of units equal to the
number of shares of the Company's common stock, rounded to the nearest
one-hundredth share, which the participant would have received from time to time
as stock dividends had he or she been the owner on the record dates for the
payments of such stock dividends of the number of units of the Company's common
stock equal to the number of units credited to his or her stock unit account on
those dates.
SECTION 7. RECAPITALIZATION. If, as a result of a recapitalization of the
Company (including a stock split), the Company's outstanding shares of common
stock shall be changed into a greater or smaller number of shares, the number of
units then credited to a participant's stock unit account shall be appropriately
adjusted on the same basis.
SECTION 8. DISTRIBUTION OF STOCK AND CASH AFTER PARTICIPANT'S DEFERRAL
TERMINATION DATE. When a participant's deferral termination date shall occur,
the Company shall become obligated to make the distributions prescribed in the
following paragraphs (a) and (b).
(a) The Company shall distribute to the participant the number of shares of
the common stock of the Company which shall equal the total number of units
accumulated in his or her stock unit account as of the close of the fiscal year
in which the participant's deferral termination date occurs. Such distribution
of stock shall be made in ten annual installments, unless, at least six months
prior to his or her deferral termination date, the participant shall have
elected, by notice in writing filed with the Secretary of the Company, to have
such distribution made in five annual installments. In either such case,
<PAGE> 3
3
the installments shall be of as nearly equal number of shares as practicable,
adjusted to reflect any changes pursuant to Sections 6 and 7 in the number of
units remaining in the participant's stock unit account. The first such
installment shall be distributed within 60 days after the close of the fiscal
year in which the participant's deferral termination date occurs. The remaining
installments shall be distributed at annual intervals thereafter. Anything
herein to the contrary notwithstanding, the Company shall have the option, if
its Board of Directors shall by resolution so determine, in lieu of making
distribution in ten or five annual installments as set forth above, with the
participant's consent, to distribute stock or any remaining installments thereof
in a single distribution at any time following the close of the fiscal year in
which the participant's deferral termination date occurs. Distribution of stock
made hereunder may be made from shares of common stock held in the treasury
and/or from shares of authorized but previously unissued shares of common stock.
All distributions under the plan shall be completed not later than December 31,
2025.
(b) The Company shall distribute to the participant sums in cash equal to
the balance credited to his or her deferred compensation account as of the close
of the fiscal year in which his or her deferral termination date occurs plus
such additional amounts as shall be credited thereto from time to time
thereafter pursuant to Section 5. The cash distribution shall be made on the
same dates as the annual distributions made pursuant to paragraph (a) above, and
each cash distribution shall consist of the entire balance credited to the
participant's deferred compensation account at the time of the annual
distribution.
If a participant's deferral termination date shall occur by reason of his
or her death or if he or she shall die after his or her deferral termination
date but prior to receipt of all distributions of stock and cash provided for in
this Section 8, all stock and cash remaining distributable hereunder shall be
distributed to such beneficiary as the participant shall have designated in
writing and filed with the Secretary of the Company or, in the absence of
designation, to the participant's personal representative. Such distributions
shall be made in the same manner and at the same intervals as they would have
been made to the participant had he or she continued to live.
SECTION 9. PARTICIPANT'S RIGHTS UNSECURED. The right of any participant to
receive distributions under Section 8 shall be an unsecured claim against the
general assets of the Company. The Company may but shall not be obligated to
acquire shares of its outstanding common stock from time to time in anticipation
of its obligation to make such distributions, but no participant shall have any
rights in or against any shares of stock so acquired by the Company. All such
stock shall constitute general assets of the Company and may be disposed of by
the Company at such time and for such purposes as it may deem appropriate.
SECTION 10. TERMINATION OF THE PLAN. The Plan shall terminate and full
distribution shall be made from all participants' deferred compensation accounts
and stock unit accounts upon any change of control of the Company. Either of the
following shall be
<PAGE> 4
4
deemed to be a change of control: (a) the occurrence, without the prior approval
of the Board of Directors, of the acquisition, directly or indirectly, by any
person of 50% or more of the outstanding common stock of either the Company or
its parent corporation, Thermo Instrument Systems Inc. ("Thermo Instrument"), or
the beneficial owner of 25% or more of the outstanding common stock of Thermo
Electron Corporation ("Thermo Electron"), without the prior approval of the
prior directors of the Company, Thermo Instrument, or Thermo Electron, as the
case may be; (b) the failure of the prior directors to constitute a majority of
the Board of Directors of the Company, Thermo Instrument or Thermo Electron, at
any time within two years following any electoral event. As used in this
sentence and the preceding sentence, person shall mean a natural person, an
entity (together with an affiliate thereof, as defined in Rule 405 under the
Securities Act of 1933) or a group, as defined in Rule 13d-5 under the
Securities Exchange Act of 1934; prior directors shall mean the persons serving
on the Board of Directors immediately prior to any electoral event; and
electoral event shall mean any contested election of directors or any tender or
exchange offer for common stock of the Company, Thermo Instrument or Thermo
Electron by any person other than the Company, Thermo Instrument, Thermo
Electron or a subsidiary of any of the foregoing companies. The Board of
Directors at any time, at its discretion, may terminate the Plan. If the Board
of Directors terminates the Plan after any person or group of persons shall have
acquired or proposed to acquire control of the Company through the Board of
Directors, Thermo Instrument or Thermo Electron, full and prompt distribution
shall be made from all participants' deferred compensation accounts and stock
unit accounts. Otherwise, distributions in respect of credits to participants'
deferred compensation accounts and stock unit accounts as of the date of
termination shall be made in the manner and at the time prescribed in Section 8.
SECTION 11. AMENDMENT OF THE PLAN. The Board of Directors of the Company may
amend the Plan at any time and from time to time, PROVIDED, HOWEVER, that no
amendment affecting credits already made to any participant's deferred
compensation account or stock unit account may be made without the consent of
that participant or, if that participant has died, that participant's
beneficiary.
SECTION 12. EFFECTIVE DATE OF THE PLAN. The Plan shall become effective
commencing upon the date the U. S. Securities and Exchange Commission shall have
declared effective the registration of shares of the Company's Common Stock in
an underwritten public offering pursuant to the Securities Act of 1933, as
amended.
<PAGE> 1
EXHIBIT 10.12
INDEMNIFICATION AGREEMENT
This AGREEMENT is effective as of December 31, 1995 by and between
Thermo Instrument Systems Inc., a Delaware corporation ("THI"), and Thermo
Vision Corporation, a Delaware corporation ("Vision").
WHEREAS, Vision is a wholly owned subsidiary of Thermo Optek
Corporation ("Optek"), which is a wholly owned subsidiary THI;
WHEREAS, THI owns all of the outstanding stock of CID Technologies Inc.
("CID"), Nicolet Instrument Corporation ("Nicolet"), and Thermo Jarrell Ash
Corporation ("TJA"), and TJA owns all of the outstanding stock of Scientific
Measurement Systems Inc. ("SMS");
WHEREAS, effective as of the date hereof, THI plans to contribute the
stock of TJA and CID to Nicolet, whereas Nicolet intends to contribute the stock
of TJA and CID to Optek, whereas TJA plans to distribute the stock of SMS to
Optek, and whereas Optek intends to contribute the stock of CID and SMS to
Vision; and
WHEREAS, in connection therewith, THI is willing to indemnify and hold
harmless Vision as set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein, the parties hereto hereby agree as follows:
1. INDEMNIFICATION BY THI.
(a) THI agrees to indemnify and hold harmless Vision from any
and all claims, damages, losses (including diminution in value), liabilities,
costs and expenses (including, without limitation, settlement costs and any
reasonable legal, accounting or other expenses for investigating or defending
any actions or threatened actions) (collectively "Losses") incurred by Vision
relating solely to the acts or omissions, or related to conduct, of CID or SMS
prior to December 31, 1995.
(b) Whenever any claim shall arise for indemnification hereunder,
Vision shall promptly notify THI of the claim and, when known, the facts
constituting the basis for such claim. In the event of any such claim for
indemnification hereunder resulting from or in connection with any claim or
legal proceedings by a third-party, the notice to THI shall specify, if known,
the amount or an estimate of the amount of the liability arising therefrom.
Vision shall not settle or compromise any claim by a third party for which
Vision is entitled to indemnification hereunder without the prior consent of
THI, unless suit shall have been instituted against Vision and THI shall not
have taken control of such suit after notification thereof as provided in
Paragraph 1(c) of this Agreement.
<PAGE> 2
(c) In connection with any claim giving rise to indemnity
hereunder resulting from or arising out of any claim or legal proceeding by a
person who is not a party to this Agreement, THI at its sole cost and expense
may, upon notice to Vision, assume the defense of any such claim or legal
proceeding if it acknowledges to Vision its obligations to indemnify Vision with
respect to all such elements of such claim. Vision shall be entitled to
participate in (but not control) the defense of any such action, with its
counsel and at its own expense. If THI does not assume the defense of any such
claim or litigation resulting therefrom within 30 days after the date THI is
notified of such claim pursuant to Paragraph 1(b) hereof, (i) Vision may defend
against such claim or litigation, after giving notice of the same to THI, on
such terms as are appropriate in Vision's reasonable judgment, and (ii) THI
shall be entitled to participate in (but not control) the defense of such
action, with its counsel and at its own expense.
2. MISCELLANEOUS.
(a) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that THI and Vision may not assign their respective obligations hereunder
without the prior written consent of the other party. Any assignment in
contravention of this provision shall be void.
(b) This Agreement represents the entire understanding and
agreement between the parties hereto with respect to the subject matter hereof.
This Agreement may be amended or modified only by a written instrument executed
by THI and Vision.
(c) Any notice or other communication shall be in writing and
shall be personally delivered, or sent by overnight or second day courier or by
first class mail, return receipt requested, to the party to whom such notice or
other communication is to be given or made at such party's address set forth
below, or to such other address as such party shall designate by written notice
to the other party as follows:
If to THI:
Thermo Instrument Systems Inc.
504 Airport Road,
Post Office Box 2108
Santa Fe, New Mexico 87504
With a copy to:
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254
Attention: General Counsel
<PAGE> 3
If to Vision:
Thermo Vision Corporation
8E Forge Parkway
Franklin, Massachusetts 02038
Attn: President
With a copy to:
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254
Attention: General Counsel
provided that any notice of change of address, and any notice or other
communication given otherwise than as specified above shall be effective only
upon receipt; and further that any presumption of receipt by the addressee shall
be inoperable during the period of any interruption in Postal Service.
(d) This Agreement shall be governed and construed in accordance
with the laws of the State of Delaware.
(e) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(f) This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which shall be one
and the same document.
(g) This Agreement is the joint work product of the parties
hereto, and, therefore, in the case of an ambiguity no inference shall be drawn
to the detriment of either party.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first above written.
THERMO INSTRUMENT SYSTEMS INC. THERMO VISION CORPORATION
By: /s/ Arvin H. Smith By: /s/ Kristine A. Langdon
--------------------------- ------------------------
Title: President Title: President
----------------------- --------------------
<PAGE> 1
Exhibit 10.13
FORM OF
THERMO VISION CORPORATION
INDEMNIFICATION AGREEMENT
-------------------------
This Agreement, made and entered into this ** day of **, 1997,
("Agreement"), by and between Thermo Vision Corporation, a Delaware corporation
(the "Company"), and *** ("Indemnitee"):
WHEREAS, highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors or in other capacities unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of their
service to, and activities on behalf of, the corporation;
WHEREAS, uncertainties relating to the continued availability of adequate
directors and officers liability insurance ("D&O Insurance") and the
uncertainties relating to indemnification have increased the difficulty of
attracting and retaining such persons;
WHEREAS, the Board of Directors of the Company (the "Board") has determined
that the difficulty in attracting and retaining such persons is detrimental to
the best interests of the Company's stockholders and that the Company should act
to assure such persons that there will be increased certainty of such protection
in the future;
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified;
WHEREAS, Indemnitee is willing to serve, continue to serve and/or to take
on additional service for or on behalf of the Company on the condition that he
be so indemnified and that such indemnification be so guaranteed.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
1. SERVICES BY INDEMNITEE. Indemnitee agrees to serve or continue to serve
as a Director of the Company. This agreement shall not impose any obligation on
the Indemnitee or the Company to continue the Indemnitee's position with the
Company beyond any period otherwise applicable.
<PAGE> 2
2
2. INDEMNITY. The Company shall indemnify, and shall advance Expenses (as
hereinafter defined) to, Indemnitee as provided in this Agreement and to the
fullest extent permitted by law.
3. GENERAL. Indemnitee shall be entitled to the rights of indemnification
provided in this Section 3 if, by reason of his Corporate Status (as hereinafter
defined), he is, or is threatened to be made, a party to any threatened,
pending, or completed action, suit, arbitration, alternative dispute resolution
mechanism, investigation, administrative hearing or other proceeding whether
civil, criminal, administrative or investigative. Pursuant to this Section 3,
Indemnitee shall be indemnified against Expenses, judgments, penalties, fines
and amounts paid in settlement incurred by him or on his behalf in connection
with such action, suit, arbitration, alternative dispute resolution mechanism,
investigation, administrative hearing or other proceeding whether civil,
criminal, administrative or investigative or any claim, issue or matter therein,
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful.
4. PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. In the case of any action
or suit by or in the right of the Company, indemnification shall be made only
(i) for Expenses or (ii) in respect of any claim, issue or matter as to which
Indemnitee shall have been adjudged to be liable to the Company if such
indemnification is permitted by Delaware law; provided, however, that
indemnification against Expenses shall nevertheless be made by the Company in
such event to the extent that the Court of Chancery of the State of Delaware, or
the court in which such action or suit shall have been brought or is pending,
shall determine to be proper despite the adjudication of liability but in view
of all the circumstances of the case.
5. INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY
SUCCESSFUL. Notwithstanding any other provision of this Agreement, to the extent
that Indemnitee is, by reason of his Corporate Status, a party to and is
successful, on the merits or otherwise, in any action, suit, arbitration,
alternative dispute resolution mechanism, investigation, administrative hearing
or other proceeding whether civil, criminal, administrative or investigative, he
shall be indemnified against all Expenses incurred by him or on his behalf in
connection therewith. If Indemnitee is not wholly successful but is successful,
on the merits or otherwise, as to one or more but less than all claims, issues
or matters in such action, suit, arbitration, alternative dispute resolution
mechanism, investigation, administrative hearing or other proceeding whether
civil, criminal, administrative or investigative, the Company shall indemnify
Indemnitee against all Expenses incurred by him or on his behalf in connection
with each successfully resolved claim, issue or matter. For purposes of this
Section and without limitation, the termination of any claim, issue or matter by
dismissal, or withdrawal, with or without prejudice, shall be deemed to be a
successful result as to such claim, issue or matter.
6. ADVANCE OF EXPENSES. The Company shall advance all Expenses incurred by
or on behalf of Indemnitee in connection with any action, suit, arbitration,
alternative dispute resolution mechanism, investigation, administrative hearing
or any other proceeding whether civil, criminal, administrative or investigative
within twenty (20) days after the receipt by the
<PAGE> 3
3
Company of a statement or statements from Indemnitee requesting such advance or
advances from time to time, whether prior to or after final disposition of such
action, suit, arbitration, alternative dispute resolution mechanism,
investigation, administrative hearing or any other proceeding whether civil,
criminal, administrative or investigative. Such statement or statements shall
reasonably evidence the Expenses incurred by Indemnitee and shall include or be
preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay
any Expenses advanced if it shall ultimately be determined that Indemnitee is
not entitled to be indemnified against such Expenses, which undertaking shall be
accepted by or on behalf of the Company without reference to the financial
ability of Indemnitee to make repayment.
7. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.
(a) To obtain indemnification under this Agreement, Indemnitee shall submit
to the Company a written request, including therein or therewith such
documentation and information as is reasonably available to Indemnitee and is
reasonably necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board in writing that
Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification pursuant to
Section 7(a) hereof, a determination, if required by applicable law, with
respect to Indemnitee's entitlement thereto shall be made in the specific case:
(i) if a Change in Control (as hereinafter defined) shall have occurred, by
Independent Counsel (as hereinafter defined) in a written opinion to the Board,
a copy of which shall be delivered to Indemnitee (unless Indemnitee shall
request that such determination be made by the Board or the Stockholders, in
which case the determination shall be made in the manner provided below in
clauses (ii) or (iii)); (ii) if a Change of Control shall not have occurred,
(A) by the Board by a majority vote of a quorum consisting of Disinterested
Directors (as hereinafter defined), or (B) if a quorum of the Board consisting
of Disinterested Directors is not obtainable or, even if obtainable, such
quorum of Disinterested Directors so directs, by Independent Counsel in a
written opinion to the Board, a copy of which shall be delivered to Indemnitee
or (C) by the Stockholders of the Company; or (iii) as provided in Section 8(b)
of this Agreement; and, if it is so determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within ten (10) days after
such determination. Indemnitee shall cooperate with the person, persons or
entity making such determination with respect to Indemnitee's entitlement to
indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information that is not
privileged or otherwise protected from disclosure and that is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or expenses (including attorneys' fees and disbursements) incurred by
Indemnitee in so cooperating shall be borne by the Company (irrespective of the
determination as to Indemnitee's entitlement to indemnification) and the
Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
(c) In the event the determination of entitlement to indemnification is to
be made by Independent Counsel pursuant to Section 7(b) of this Agreement, the
Independent Counsel shall
<PAGE> 4
4
be selected as provided in this Section 7(c). If a Change of Control shall not
have occurred, the Independent Counsel shall be selected by the Board, and the
Company shall give written notice to Indemnitee advising him of the identity of
the Independent Counsel so selected. If a Change of Control shall have occurred,
the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall
request that such selection be made by the Board, in which event the preceding
sentence shall apply), and Indemnitee shall give written notice to the Company
advising it of the identity of the Independent Counsel so selected. In either
event, Indemnitee or the Company, as the case may be, may, within 7 days after
such written notice of selection shall have been given, deliver to the Company
or to Indemnitee, as the case may be, a written objection to such selection.
Such objection may be asserted only on the ground that the Independent Counsel
so selected does not meet the requirements of "Independent Counsel" as defined
in Section 14 of this Agreement, and the objection shall set forth with
particularity the factual basis of such assertion. If such written objection is
made, the Independent Counsel so selected may not serve as Independent Counsel
unless and until a court has determined that such objection is without merit.
If, within twenty (20) days after submission by Indemnitee of a written request
for indemnification pursuant to Section 7(a) hereof, no Independent Counsel
shall have been selected or if selected, shall have been objected to, in
accordance with this Section 7(c), either the Company or Indemnitee may petition
the Court of Chancery of the State of Delaware or other court of competent
jurisdiction for resolution of any objection which shall have been made by the
Company or Indemnitee to the other's selection of independent counsel and/or for
the appointment as independent counsel of a person selected by the Court or by
such other person as the Court shall designate, and the person with respect to
whom an objection is favorably resolved or the person so appointed shall act as
Independent Counsel under Section 7(b) hereof. The Company shall pay reasonable
fees and expenses of Independent Counsel incurred by such Independent Counsel in
connection with acting pursuant to Section 7(b) hereof. The Company shall pay
any and all reasonable fees and expenses incident to the procedures of this
Section 7(c), regardless of the manner in which such Independent Counsel was
selected or appointed. Upon the due commencement of any judicial proceeding or
arbitration pursuant to Section 9(a)(iii) of this Agreement, Independent Counsel
shall be discharged and relieved of any further responsibility in such capacity
(subject to the applicable standards of professional conduct then prevailing).
8. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.
(a) If a Change of Control shall have occurred, in making a determination
with respect to entitlement to indemnification hereunder, the person, persons or
entity making such determination shall presume that Indemnitee is entitled to
indemnification under this Agreement if Indemnitee has submitted a request for
indemnification in accordance with Section 7(a) of this Agreement, and the
Company shall have the burden of proof to overcome that presumption in
connection with the making by any person, persons or entity of any determination
contrary to that presumption.
(b) If the person, persons or entity empowered or selected under Section 7
of this Agreement to determine whether Indemnitee is entitled to indemnification
shall not have made such determination within sixty (60) days after receipt by
the Company of the request therefor,
<PAGE> 5
5
the requisite determination of entitlement to indemnification shall be deemed to
have been made and Indemnitee shall be entitled to such indemnification, absent
(i) a misstatement by Indemnitee of a material fact, or an omission of a
material fact necessary to make Indemnitee's statement not materially
misleading, in connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law; provided, however,
that such 60-day period may be extended for a reasonable time, not to exceed an
additional thirty (30) days, if the person, persons or entity making the
determination with respect to entitlement to indemnification in good faith
requires such additional time for the obtaining or evaluating of documentation
and/or information relating thereto; and provided, further, that the foregoing
provisions of this Section 8(b) shall not apply (i) if the determination of
entitlement to indemnification is to be made by the stockholders pursuant to
Section 7(b) of this Agreement and if (A) within fifteen (15) days after receipt
by the Company of the request for such determination the Board has resolved to
submit such determination to the stockholders for their consideration at an
annual meeting thereof to be held within seventy-five (75) days after such
receipt and such determination is made thereat, or (B) a special meeting of
stockholders is called within fifteen (15) days after such receipt for the
purpose of making such determination, such meeting is held for such purpose
within sixty (60) days after having been so called and such determination is
made thereat, or (ii) if the determination of entitlement to indemnification is
to be made by Independent Counsel pursuant to Section 7(b) of this Agreement.
(c) The termination of any action, suit, arbitration, alternative dispute
resolution mechanism, investigation, administrative hearing or other proceeding
whether civil, criminal, administrative or investigative or of any claim, issue
or matter therein by judgment, order, settlement or conviction, or upon a plea
of nolo contendere or its equivalent, shall not (except as otherwise expressly
provided in this Agreement) of itself adversely affect the right of Indemnitee
to indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal action or
proceeding, that Indemnitee had reasonable cause to believe that his conduct was
unlawful.
9. REMEDIES OF INDEMNITEE.
(a) In the event that (i) a determination is made pursuant to Section 7 of
this Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 6
of this Agreement, (iii) the determination of entitlement to indemnification is
to be made by Independent Counsel pursuant to Section 7(b) of this Agreement and
such determination shall not have been made and delivered in a written opinion
within ninety (90) days after receipt by the Company of the request for
indemnification, (iv) payment of indemnification is not made pursuant to Section
5 of this Agreement within ten (10) days after receipt by the Company of a
written request therefor, or (v) payment of indemnification is not made within
ten (10) days after a determination has been made that Indemnitee is entitled to
indemnification or such determination is deemed to have been made pursuant to
Section 8 of this Agreement, Indemnitee shall be entitled to an adjudication in
an appropriate court of the State of Delaware, or in any other court of
competent jurisdiction, of his entitlement to such indemnification or
advancement of Expenses. Alternatively, Indemnitee, at
<PAGE> 6
6
his option, may seek an award in arbitration to be conducted by a single
arbitrator pursuant to the rules of the American Arbitration Association.
Indemnitee shall commence such proceeding seeking an adjudication or an award in
arbitration within one hundred eighty (180) days following the date on which
Indemnitee first has the right to commence such proceeding pursuant to this
Section 9(a). The Company shall not oppose Indemnitee's right to seek any such
adjudication or award in arbitration.
(b) In the event that a determination shall have been made pursuant to
Section 7 of this Agreement that Indemnitee is not entitled to indemnification,
any judicial proceeding or arbitration commenced pursuant to this Section 9
shall be conducted in all respects as a de novo trial, or arbitration, on the
merits and Indemnitee shall not be prejudiced by reason of that adverse
determination. If a Change of Control shall have occurred, in any judicial
proceeding or arbitration commenced pursuant to this Section 9 the Company shall
have the burden of proving that Indemnitee is not entitled to indemnification or
advancement of Expenses, as the case may be.
(c) If a determination shall have been made or deemed to have been made
pursuant to Section 7 or 8 of this Agreement that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination in any
judicial proceeding or arbitration commenced pursuant to this Section 9, absent
(i) a misstatement by Indemnitee of a material fact, or an omission of a
material fact necessary to make Indemnitee's statement not materially
misleading, in connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law.
(d) The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 9 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement.
(e) In the event that Indemnitee, pursuant to this Section 9, seeks a
judicial adjudication of or an award in arbitration to enforce his rights under,
or to recover damages for breach of, this Agreement, Indemnitee shall be
entitled to recover from the Company, and shall be indemnified by the Company
against, any and all expenses (of the types described in the definition of
Expenses in Section 14 of this Agreement) actually and reasonably incurred by
him in such judicial adjudication or arbitration, but only if he prevails
therein. If it shall be determined in said judicial adjudication or arbitration
that Indemnitee is entitled to receive part but not all of the indemnification
or advancement of expenses sought, the expenses incurred by Indemnitee in
connection with such judicial adjudication or arbitration shall be appropriately
prorated.
10. SECURITY. To the extent requested by the Indemnitee and approved by the
Board, the Company may at any time and from time to time provide security to the
Indemnitee for the Company's obligations hereunder through an irrevocable bank
line of credit, funded trust or other collateral. Any such security, once
provided to the Indemnitee, may not be revoked or released without the prior
written consent of Indemnitee.
<PAGE> 7
7
11. NON-EXCLUSIVITY; DURATION OF AGREEMENT; INSURANCE; SUBROGATION.
(a) The rights of indemnification and to receive advancement of Expenses as
provided by this Agreement shall not be deemed exclusive of any other rights to
which Indemnitee may at any time be entitled under applicable law, the Company's
certificate of incorporation or by-laws, any other agreement, a vote of
stockholders or a resolution of directors, or otherwise. This Agreement shall
continue until and terminate upon the later of: (a) ten (10) years after the
date that Indemnitee shall have ceased to serve as a Director of the Company or
fiduciary of any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise which Indemnitee served at the request of the
Company; or (b) the final termination of all pending actions, suits,
arbitrations, alternative dispute resolution mechanisms, investigations,
administrative hearings or other proceedings whether civil, criminal,
administrative or investigative in respect of which Indemnitee is granted rights
of indemnification or advancement of expenses hereunder and of any proceeding
commenced by Indemnitee pursuant to Section 9 of this Agreement relating
thereto. This Agreement shall be binding upon the Company and its successors and
assigns and shall inure to the benefit of Indemnitee and his heirs, executors
and administrators.
(b) To the extent that the Company maintains D&O Insurance, Indemnitee
shall be covered by such D&O Insurance in accordance with its terms to the
maximum extent of the coverage available for any Director under such policy or
policies.
(c) In the event of any payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and take all action necessary
to secure such rights, including execution of such documents as are necessary to
enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
12. SEVERABILITY; REFORMATION. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including without limitation, each portion of any
Section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and (b) to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, each portion of any Section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested by the provision held invalid, illegal or unenforceable.
13. EXCEPTION TO RIGHT OF INDEMNIFICATION OR ADVANCEMENT OF EXPENSES.
Notwithstanding any other provision of this Agreement, Indemnitee shall not be
entitled to
<PAGE> 8
8
indemnification or advancement of Expenses under this Agreement with respect to
any action, suit or proceeding, or any claim therein, initiated, brought or made
by him (i) against the Company, unless a Change in Control shall have occurred,
or (ii) against any person other than the Company, unless approved in advance by
the Board.
14. DEFINITIONS. For purposes of this Agreement:
(a) "Change in Control" means a change in control of the Company of a
nature that would be required to be reported in response to Item 5(f)
of Schedule 14A of Regulation 14A (or in response to any similar item
on any similar schedule or form) promulgated under the Securities
Exchange Act of 1934 (the "Act"), whether or not the Company is then
subject to such reporting requirement; provided, however, that,
without limitation, such a Change in Control shall be deemed to have
occurred if (i) any "person" (as such term is used in Section 13(d)
and 14(d) of the Act) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Act), directly or indirectly, of securities of
the Company representing 20% or more of the combined voting power of
the Company's then outstanding securities without the prior approval
of at least two-thirds of the members of the Board in office
immediately prior to such person attaining such percentage interest;
(ii) the Company is a party to a merger, consolidation, sale of assets
or other reorganization, or a proxy contest, as a consequence of which
members of the Board in office immediately prior to such transaction
or event constitute less than a majority of the Board thereafter; or
(iii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board (including for this
purpose any new director whose election or nomination for election by
the Company's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who were directors at
the beginning of such period) cease for any reason to constitute at
least a majority of the Board.
(b) "Corporate Status" describes the status of a person who is or was
or has agreed to become a director of the Company, or is or was an
officer or fiduciary of the Company or of any other corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise which such person is or was serving at the request of the
Company.
(c) "Disinterested Director" means a director of the Company who is
not and was not a party to the action, suit, arbitration, alternative
dispute resolution mechanism, investigation, administrative hearing or
any other proceeding whether civil, criminal, administrative or
investigative in respect of which indemnification is sought by
Indemnitee.
(d) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, travel
expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees, and all other disbursements
or expenses of the types customarily incurred in connection with
prosecuting, defending, preparing to prosecute or defend or
investigating an action, suit, arbitration, alternative
<PAGE> 9
9
dispute resolution mechanism, investigation, administrative hearing or
any other proceeding whether civil, criminal, administrative or
investigative.
(e) "Independent Counsel" means a law firm, or a member of a law firm,
that is experienced in matters of corporation law and neither
currently is, nor in the past five years has been, retained to
represent: (i) the Company or Indemnitee in any matter material to
either such party or (ii) any other party to the action, suit,
arbitration, alternative dispute resolution mechanism, investigation,
administrative hearing or any other proceeding whether civil,
criminal, administrative or investigative giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the term
"Independent Counsel" shall not include any person who, under the
applicable standards of professional conduct then prevailing, would
have a conflict of interest in representing either the Company or
Indemnitee in an action to determine Indemnitee's Rights under this
Agreement.
15. HEADINGS. The headings of the paragraphs of this Agreement are inserted
for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
16. MODIFICATION AND WAIVER. This Agreement may be amended from time to
time to reflect changes in Delaware law or for other reasons. No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.
17. NOTICE BY INDEMNITEE. Indemnitee agrees promptly to notify the Company
in writing upon being served with any summons, citation, subpoena, complaint,
indictment, information or other document relating to any matter which may be
subject to indemnification or advancement of Expenses covered hereunder;
provided, however, that the failure to give any such notice shall not disqualify
the indemnitee from indemnification hereunder.
18. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
(i) delivered by hand and receipted for by the party to whom said notice or
other communication shall have been directed, or (ii) mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed:
(a) If to Indemnitee, to: The address shown beneath
his or her signature on
the last page hereof
<PAGE> 10
10
(b) If to the Company, to: Thermo Vision Corporation
c/o Thermo Electron Corporation
81 Wyman Street
P.O. Box 9046
Waltham, MA 02254-9046
Attn: Corporate Secretary
or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.
19. GOVERNING LAW. The parties agree that this Agreement shall be governed
by, and construed and enforced in accordance with, the laws of the State of
Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
Attest: THERMO VISION CORPORATION
By: _______________________________ By: __________________________
Sandra L. Lambert Kristine S. Langdon
Secretary Chief Executive Officer
INDEMNITEE
_______________________________
Address:
_______________________________
<PAGE> 1
EXHIBIT 10.14
SUBLEASE
THIS SUBLEASE ("Sublease") is made as of September 1, 1997 (the "Effective
Date"), by and between THERMO INSTRUMENT SYSTEMS INC., a Delaware corporation
("Sublandlord"), and THERMO VISION CORPORATION, a Delaware corporation
("Subtenant").
W I T N E S S E T H:
WHEREAS, pursuant to the terms of that certain Lease dated February 1, 1996
(as the same may have been amended, the "Master Lease"), by and between MGI 8
Forge Park, Inc. ("Master Landlord"), successor-in-interest to Prudential Realty
Acquisition Fund II Limited Partnership, and Sublandlord, Master Landlord
currently leases to Sublandlord the approximately eight (8) acre parcel of land
shown on EXHIBIT A to the Master Lease (the "Lot") and the one story building
containing 100,000 net square feet constructed thereon (the "Building"), known
and numbered as 8 Forge Park, Franklin, Massachusetts (the "Master Premises");
and
WHEREAS, Sublandlord desires to sublease to Subtenant a portion of the
Building consisting of approximately 40,410 net square feet of floor area (the
"Sublease Premises"), as more particularly shown on EXHIBIT A attached hereto
and incorporated herein by this reference;
NOW, THEREFORE, for and in consideration of the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEMISE OF SUBLEASE PREMISES. Sublandlord hereby subleases to Subtenant
the Sublease Premises, upon the terms and subject to the conditions hereinafter
set forth or incorporated herein by reference. Subtenant shall have, as
appurtenant to the Sublease Premises, the non-exclusive right to use the
streets, drainage and utilities now or hereafter constructed within the 340 acre
parcel known as Forge Park, Franklin, Massachusetts, to the same extent and in
the same manner as Sublandlord is allowed to do so under Section 2.1 of the
Master Lease.
2. TERM. The term of this Sublease shall be for a period commencing on
the Effective Date set forth above and continuing through and including January
31, 2006 (the "Term").
1
<PAGE> 2
3. ANNUAL FIXED RENT. Subtenant shall pay to Sublandlord, in lawful money
of the United States, without any set-off or deduction whatsoever, annual fixed
rent (the "Annual Fixed Rent") at the following rates:
<TABLE>
<CAPTION>
Annual Fixed
Rent Rate Monthly
Period (per square foot) Installment
------ ----------------- -----------
<S> <C> <C>
9/1/97 - 1/31/98 $5.00 $16,837.50
2/1/98 - 1/31/99 $5.25 $17,679.38
2/1/99 - 1/31/00 $5.50 $18,521.25
2/1/00 - 1/31/01 $5.75 $19,363.13
2/1/01 - 1/31/02 $5.90 $19,868.25
</TABLE>
The Annual Fixed Rent shall be payable in twelve (12) equal monthly installments
in advance on the first day of each calendar month during the Term hereof. In
the event that the Term expires, or this Sublease is otherwise terminated in
accordance with its terms, on a date other than the last day of a calendar
month, the final monthly installment of Annual Fixed Rent shall be pro rated
accordingly on a per diem basis. All payments of Annual Fixed Rent, additional
rent and other charges under this Sublease shall be made to Sublandlord at its
address set forth in Section 20 below, or at such other address or addresses as
Sublandlord may from time to time designate. Annual Fixed Rent and any other
sums due hereunder not paid by the due date shall bear interest and be subject
to late payment fees, all in accordance with the provisions of Section 7.7 of
the Master Lease.
4. ADDITIONAL RENT.
4.1 Subtenant shall pay to Sublandlord, as additional rent,
Subtenant's Pro Rata Share (as hereinafter defined) of all Additional Rent
payable by Sublandlord under Article IV of the Master Lease, except for (i)
utility charges, which shall be payable in accordance with the provisions of
Section 4.3 below, and (ii) insurance premiums, which shall be payable in
accordance with the provisions of Section 4.4 below. For purposes of this
Sublease, Subtenant's Pro Rata Share shall be a percentage equal to the ratio of
the total net square footage of the Sublease Premises to the total net square
footage of the Building.
4.2 If Sublandlord shall obtain any abatement, refund or rebate in
real estate taxes or assessments theretofore paid by Subtenant under this
Sublease, Sublandlord shall promptly forward to Subtenant Subtenant's Pro Rata
Share of the same, less Subtenant's Pro Rata Share of the cost incurred by
Sublandlord, if any, in obtaining the same.
4.3 Subtenant shall pay to Sublandlord an amount equal to seventy
percent (70%) of all charges for water, sewer, gas, electricity and other
utilities and services used or consumed in the 70,000 square foot area of the
Building occupied by Sublandlord, Subtenant and Thermo Optek Corporation.
Notwithstanding the foregoing, Subtenant agrees to pay directly to the supplier
thereof all charges for telephone services used by Subtenant.
2
<PAGE> 3
4.4 Subtenant further agrees to pay to Sublandlord, as additional
rent, Subtenant's Pro Rata Share of the cost incurred by Sublandlord in
maintaining the all risk property insurance coverage on the Building as required
by Section 4.4.2.1(c) of the Master Lease.
4.5 Payment of all additional rent under this Article 4 shall be made
by Subtenant to Sublandlord within thirty-five (35) days after demand therefor.
5. INSURANCE.
5.1 Subtenant shall take out and maintain throughout the Term the
following insurance:
5.1.1 Comprehensive general liability insurance insuring against
claims and demands for any injury to person or damage to property
which may be claimed to have occurred on the Sublease Premises or on
the sidewalk or ways adjoining the Building, in amounts which shall be
at least equal to the limits required to be maintained by Sublandlord
with respect to its comprehensive liability insurance under Section
4.4.2.1(a) of the Master Lease. Such insurance shall name Sublandlord
and Master Landlord as additional insureds (except to the extent of
the negligence or willful misconduct of Sublandlord or Master
Landlord, as the case may be, and their respective agents, employees,
representatives or contractors).
5.1.2 Worker's compensation insurance with statutory limits
covering all of Subtenant's employees working on the Sublease
Premises.
5.2 All policies for insurance required under the provisions of
Section 5.1 above shall be obtained from responsible companies qualified to do
business in the Commonwealth of Massachusetts and in good standing therein, with
a Best's rating of "A-" or better. Subtenant agrees to furnish Sublandlord and
Master Landlord upon execution of this Sublease with certificates of all such
insurance, and of each renewal policy at least thirty (30) days prior to the
expiration of the policy it renews. Each policy under Section 5.1.1 above shall
be noncancellable with respect to the interest of Sublandlord and Master
Landlord without at least thirty (30) days' prior written notice.
5.3 Notwithstanding anything to the contrary contained in this
Sublease, Sublandlord and Subtenant each hereby waives all rights of recovery
against the other party, and such other party's insurance carrier (by way of
subrogation or otherwise), for all losses or damages to the Sublease Premises
and/or the Master Premises, any improvements thereon or any personal property of
either party therein, to the extent such waiver does not invalidate the
insurance coverage of either party and to the extent such losses or damages are
covered by insurance the damaged party is required to carry hereunder or
otherwise elects to maintain; provided, however, that the foregoing waiver by
either party shall not apply with respect to any loss or damage to the extent
caused by the negligence or willful misconduct of the other party, its agents,
employees, representatives or contractors.
3
<PAGE> 4
6. USE. Subtenant agrees to use and occupy the Sublease Premises solely
for the Permitted Uses set forth in Section 1.1 of the Master Lease.
7. REPAIR AND MAINTENANCE. Sublandlord shall perform the maintenance and
repair obligations with respect to the Building and the Lot as set forth in
Section 5.1.3.1 of the Master Lease. Subtenant shall pay to Sublandlord, within
thirty-five (35) days after demand therefor, Subtenant's Pro Rata Share of the
cost incurred by Sublandlord in performing such obligations, including without
limitation the cost incurred by Sublandlord in maintaining service contracts for
the heating and air-conditioning systems pursuant to Section 5.1.3.1 of the
Master Lease. Notwithstanding anything to the contrary contained herein, (i)
Subtenant shall be responsible for the full cost of all repairs to the Lot and
the Building (including without limitation the roof and structural components)
to the extent necessitated by Subtenant's negligence or willful misconduct, and
(ii) Subtenant shall be solely responsible for janitorial cleaning of the
Sublease Premises and garbage and trash disposal therefrom.
8. INDEMNIFICATION.
8.1 RECIPROCAL INDEMNIFICATION OF SUBLANDLORD AND SUBTENANT.
(a) Subtenant shall indemnify, defend with competent and
experienced counsel and hold harmless Sublandlord from and against any and all
damages, liabilities, actions, causes of action, suits, claims, demands, losses,
costs and expenses (including without limitation reasonable attorneys' fees and
disbursements and court costs) to the extent arising from or in connection with
the negligence or willful misconduct of Subtenant, its agents, employees,
representatives or contractors.
(b) Sublandlord shall indemnify, defend with competent and
experienced counsel and hold harmless Subtenant, its subsidiaries and
affiliates, and their respective officers, directors, shareholders and
employees, from and against any and all damages, liabilities, actions, causes of
action, suits, claims, demands, losses, costs and expenses (including without
limitation reasonable attorneys' fees and disbursements and court costs) to the
extent arising from or in connection with the negligence or willful misconduct
of Sublandlord, its agents, employees, representatives or contractors.
(c) The party seeking indemnification under this Section (the
"Indemnified Party") shall provide prompt written notice of any third party
claim to the party from whom indemnification is sought (the "Indemnifying
Party"). The Indemnifying Party shall have the right to assume exclusive control
of the defense of such claim or, at the option of the Indemnifying Party, to
settle the same. The Indemnified Party agrees to cooperate reasonably with the
Indemnifying Party in connection with the performance of the Indemnifying
Party's obligations under this Section.
(d) Notwithstanding anything to the contrary contained in this
Sublease, neither party hereto shall be liable to the other for any indirect,
special, consequential or
4
<PAGE> 5
incidental damages (including without limitation loss of profits, loss of use or
loss of goodwill) regardless of (i) the negligence (either sole or concurrent)
of either party or (ii) whether either party has been informed of the
possibility of such damages. It is expressly understood and agreed that damages
payable by either party to Master Landlord shall be deemed to constitute direct
damages of such party.
8.2 INDEMNIFICATION BY SUBTENANT OF MASTER LANDLORD. Subtenant agrees
to defend, save harmless and indemnify Master Landlord to the same extent as
Sublandlord is required to do so under the provisions of Section 5.1.5 of the
Master Lease; provided, however, that all references therein to (i) "Tenant"
shall be replaced with "Subtenant" and (ii) "Premises" shall be replaced with
"Sublease Premises."
9. SUBLANDLORD'S RIGHT TO ENTER. Subtenant agrees to permit Sublandlord
and its agents to enter into the Sublease Premises at reasonable times and upon
reasonable notice to examine the Sublease Premises and make repairs and
replacements pursuant to the terms of this Sublease. Except in the event of
emergency, Sublandlord, or any person acting under Sublandlord, shall be
accompanied while entering the Sublease Premises by a representative, agent or
employee of Subtenant, which representative, agent or employee Subtenant shall
make available promptly upon request.
10. CASUALTY OR TAKING. If the whole or any part of the Sublease Premises
shall be damaged by fire or other casualty or taken by any public authority or
for any public use, and the Master Lease is not terminated on account thereof,
this Sublease shall remain in full force and effect and Annual Fixed Rent and
all other charges payable hereunder shall not abate unless there is an abatement
of Annual Fixed Rent and Additional Rent under the terms of the Master Lease,
and then only to the extent such abatement is allocable to the Sublease
Premises.
11. ALTERATIONS. Subtenant shall not make any alterations, additions or
improvements to the Sublease Premises without the prior written consent of
Sublandlord, which consent will not be unreasonably withheld; provided, however,
that it is understood and agreed that the granting of Sublandlord's consent
under this Article 11 with respect to any proposed alteration, addition or
improvement shall be conditioned upon Sublandlord's receipt of Master Landlord's
consent to the same, to the extent required by the terms of the Master Lease,
and further provided that the making by Subtenant of any such alteration,
addition or improvement shall be in compliance with all applicable provisions of
the Master Lease. At the time of the giving of its consent to any proposed
alteration, addition or improvement, Sublandlord shall notify Subtenant whether
or not Subtenant shall be required to remove such alteration, addition or
improvement upon the expiration or earlier termination of this Sublease.
Subtenant shall be required to repair, at Subtenant's expense, all damage caused
by any such removal. Master Landlord shall have the right to inspect at
reasonable times any work performed by or on behalf of Subtenant.
5
<PAGE> 6
12. ASSIGNMENT AND SUBLETTING.
12.1 Subtenant, for itself, its successors and assigns, expressly
covenants that it shall not assign, whether by operation of law or otherwise, or
pledge or otherwise encumber this Sublease, or sublet all or any part of the
Sublease Premises, without obtaining the prior written consent of Sublandlord.
Sublandlord reserves the right to transfer and assign its interest in and to
this Sublease to any entity or person who shall succeed to Sublandlord's
interest in and to the Master Lease.
12.2 Notwithstanding the foregoing provisions of this Article 12,
Subtenant shall have the right, without Sublandlord's consent, to assign this
Sublease or sublet any portion or all of the Sublease Premises to any
corporation controlled by Subtenant (any such assignee or subtenant being
hereinafter sometimes referred to as a "Permitted Transferee").
12.3 No assignment or sublease, whether or not approved, and no
indulgence granted by Sublandlord to any assignee or subtenant, shall in any way
impair the continuing primary liability of Subtenant hereunder, and no approval
in a particular instance shall be deemed to be a waiver of the obligation to
obtain Sublandlord's approval in any other case.
12.4 If for any assignment or sublease to any party other than a
Permitted Transferee Subtenant receives rent or other consideration, either
initially or over the term of such assignment or sublease, in excess of the
Annual Fixed Rent and additional rent called for hereunder, or in case of any
sublease of a part of the Sublease Premises, in excess of the portion of such
Annual Fixed Rent and additional rent which is fairly allocable to said part,
after appropriate adjustments to assure that all other payments called for
hereunder are appropriately taken into account, Subtenant shall pay to
Sublandlord as additional rent an amount equal to fifty percent (50%) of such
excess promptly after its receipt by Subtenant. In computing such excess,
leasehold improvements made by Subtenant in connection with such further
subletting or assignment shall be amortized on a straight-line basis over the
term of the sublease or assignment, and all brokerage, legal and other
reasonable costs incurred by Subtenant shall be deducted immediately.
13. SUBORDINATION. This Sublease shall be fully subordinate to (i) the
Master Lease and all extensions or modifications thereof and (ii) any holder of
a mortgage (as defined in Section 8.1 of the Master Lease) on the Sublease
Premises or any part thereof. The foregoing provisions shall be self-operative
and no further instrument of subordination shall be necessary; provided,
however, that Subtenant agrees to execute any and all documents or instruments
required by Master Landlord under the Master Lease, or the holder of any such
mortgage, or their respective counsel, to evidence such subordination. A true
and complete copy of the Master Lease is attached hereto as EXHIBIT B. The
provisions of the Master Lease are incorporated herein by reference, as they
relate to the Term hereof and to the Sublease Premises, with the same force and
effect as if they were fully set forth herein, except as to those matters
otherwise provided for herein and except for the following provisions: Sections
1.1 (except for the definitions of "Permitted Uses" and "Public Liability
Insurance Limits"), 2.2, 3.1, 3.2, 3.3 (the parenthetical only), 3.4, 4.1, 4.2.1
(the last paragraph only), 4.2.2.3, 4.2.2.4, 4.2.3, 4.4.2.1 (except for (i)
6
<PAGE> 7
Section 4.4.2.1(a), but only to the extent applicable to Section 5.1 of this
Sublease, and (ii) Section 4.4.2.1(c), but only to the extent applicable to
Section 4.4 of this Sublease) 5.1.9, 5.2.1, 9.7, 9.9 and 9.10. Subtenant hereby
assumes, and covenants and agrees to perform, all of the obligations of the
tenant under the Master Lease to the extent such obligations are incorporated
herein by reference and relate to the Sublease Premises during the Term hereof.
To the extent that any provision in the Master Lease incorporated herein by
reference conflicts with any provisions of this Sublease, the provisions of this
Sublease shall be controlling. Sublandlord agrees to perform its obligations as
tenant under the Master Lease, except to the extent such obligations are assumed
by Subtenant hereunder. If for any reason the term of the Master Lease is
terminated prior to the expiration date of this Sublease, this Sublease shall
thereupon terminate, and Sublandlord shall not be liable to Subtenant by reason
thereof.
14. COVENANTS REGARDING MASTER LEASE.
14.1 Subtenant covenants and agrees not to do or permit to be done any
act of commission or omission which would constitute a violation or default
under the Master Lease.
14.2 Each party hereto promptly shall deliver to the other party
copies of all notices, requests, demands or other communications which relate to
the Sublease Premises or the use or occupancy thereof after receipt of the same
from Master Landlord or others.
14.3 Sublandlord shall not incur any liability whatsoever to Subtenant
for any injury, loss, damage (whether direct, consequential or incidental) or
inconvenience incurred or suffered by Subtenant as a result of the exercise by
Master Landlord of any of the rights reserved to Master Landlord under the
Master Lease, nor shall such exercise constitute a constructive eviction or
default by Sublandlord hereunder, except to the extent, if any, such injury,
loss, damage or inconvenience is the result of the negligence or willful
misconduct of Sublandlord.
15. REPRESENTATIONS. Subtenant represents that it has made a thorough
examination and inspection of the Sublease Premises and is familiar with the
condition thereof. Subtenant hereby agrees that it is entering into this
Sublease without any representations or warranties by Sublandlord, its agents,
representatives, employees, servants, brokers or any other person as to the
present or future condition of the Sublease Premises or the appurtenances
thereto or any improvements therein or thereon. It is agreed that Subtenant does
and will accept the Sublease Premises "as is" and Sublandlord shall have no
obligation to perform any work therein except as expressly set forth in this
Sublease.
16. QUIET ENJOYMENT. Subject to the provisions of this Sublease,
Subtenant, upon paying the Annual Fixed Rent and all other sums and charges
herein provided, and observing and keeping all covenants, agreements and
conditions of this Sublease on its part to be observed and kept, shall quietly
have and enjoy the Sublease Premises during the Term of this Sublease.
7
<PAGE> 8
17. HOLDING OVER. Subtenant covenants that it will vacate the Sublease
Premises immediately upon the expiration or sooner termination of this Sublease.
If Subtenant shall remain in possession of the Sublease Premises or any part
thereof after the expiration or prior termination of the Term hereof, the
parties agree that no such holding over by Subtenant shall operate to extend or
renew this Sublease, and that any such holding over shall be construed as a
tenancy-at-will at one hundred fifty percent (150%) of the Annual Fixed Rent (on
a per diem basis) in effect when such holding over shall have commenced, and
such tenancy shall otherwise be subject to all the terms, conditions, covenants
and agreements of this Sublease. Subtenant further agrees to pay to Sublandlord
any additional amounts payable by Sublandlord to Master Landlord under the
Master Lease by reason of any such holding over by Subtenant.
18. DEFAULT.
18.1 In the event that Subtenant shall default in the payment of
Annual Fixed Rent, additional rent or any other charge payable hereunder, or
shall default in the performance or observance of any of the terms, conditions
and covenants of this Sublease, Sublandlord, in addition to and not in
limitation of any rights otherwise available to it, shall have the same rights
and remedies with respect to such default as are provided to Master Landlord
under the Master Lease with respect to defaults by the tenant thereunder, with
the same force and effect as though all such provisions relating to any such
default or defaults were set forth herein in their entirety, and Subtenant shall
have all of the obligations of the tenant under the Master Lease with respect to
such default or defaults.
18.2 In the event of a default by Subtenant in the performance of any
of its non-monetary obligations hereunder, Sublandlord may, at its option, at
any time thereafter and without waiving any other remedies for such default
contained herein or in the Master Lease as incorporated herein or at law or in
equity, give written notice to Subtenant that if such default is not cured
within ten (10) days after receipt of such notice by Subtenant, Sublandlord may
cure such default for the account of Subtenant, and any amount paid or incurred
by Sublandlord in so doing shall be deemed paid or incurred for the account of
Subtenant and Subtenant agrees promptly to reimburse Sublandlord therefor and
save Sublandlord harmless therefrom; provided, however, that Sublandlord may
cure any such default as aforesaid prior to the expiration of any waiting period
if reasonably necessary to protect Sublandlord's interest under the Master Lease
or to prevent injury or damage to persons or property.
19. ATTORNMENT. Notwithstanding anything to the contrary contained herein,
to the full extent required by Master Landlord, Subtenant shall attorn to Master
Landlord for the duration of the Term of this Sublease, as the same may be
extended, if the Master Lease is terminated for any reason.
20. NOTICES. Whenever, by the terms of this Sublease, notice, demand or
other communication shall or may be given to either party, the same shall be in
writing and addressed:
8
<PAGE> 9
If to Sublandlord:
Thermo Instrument Systems Inc.
8 East Forge Parkway
Franklin, Massachusetts 02038
Attention: President & COO
With a copy to:
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254
Attention: General Counsel
If to Subtenant:
Thermo Vision Corporation
8 East Forge Parkway
Franklin, Massachusetts 02038
Attention: President & COO
With a copy to:
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254
Attention: General Counsel
or to such other address or addresses as shall from time to time be designated
by written notice by either party to the other as herein provided. All notices
shall be hand-delivered or shall be sent by registered or certified mail,
postage pre-paid and return receipt requested, or by Federal Express or other
comparable service providing proof of delivery, and shall be deemed duly given
and received (i) if mailed, on the third business day following the mailing
thereof or (ii) if hand-delivered or sent by courier, the date of its receipt
(or if such day is not a business day, the next succeeding business day).
21. YIELD UP. At the expiration of the Term or earlier termination of this
Sublease, Subtenant shall surrender to Sublandlord all keys to the Sublease
Premises, remove all of its trade fixtures and personal property in the Sublease
Premises, remove all alterations, additions and improvements required to be
removed by this Sublease, remove all of Subtenant's signs wherever located,
repair all damage caused by such removal and yield up the Sublease Premises
(including all alterations, additions and improvements required to remain in the
Sublease Premises in accordance with Article 11 above), free of rubbish and
debris and in the same good order and repair in which Subtenant is obligated to
keep and maintain the Sublease Premises by the provisions of this Sublease,
reasonable wear and tear and damage by casualty or taking excepted.
9
<PAGE> 10
Any property not so removed shall be deemed abandoned and may be removed and
disposed of by Sublandlord in such manner as Sublandlord shall determine and
Subtenant shall pay Sublandlord the entire costs and expense incurred by
Sublandlord in effecting such removal and disposition and in making any
incidental repairs and replacements to the Sublease Premises.
22. ENVIRONMENTAL INDEMNIFICATION.
22.1 Subtenant agrees to indemnify, defend and hold harmless
Sublandlord from and against any and all liabilities, losses, damages, suits,
actions, causes of action, costs, expenses (including without limitation
reasonable attorneys' fees and disbursements and court costs), penalties, fines,
demands, judgments, claims or liens (including without limitation liens or
claims imposed under any so-called "Superfund" or other environmental
legislation) arising from or in connection with the use, storage, release or
discharge by Subtenant of Hazardous Materials (as hereinafter defined) on the
Sublease Premises and/or the Master Premises. Subtenant shall have the right to
assume exclusive control of the defense of any such suit, action or claim, and
Sublandlord agrees to cooperate reasonably with Subtenant in the performance by
Subtenant of its obligations under this Section.
22.2 Sublandlord agrees to indemnify, defend and hold harmless
Subtenant from and against any and all liabilities, losses, damages, suits,
actions, causes of action, costs, expenses (including without limitation
reasonable attorneys' fees and disbursements and court costs), penalties, fines,
demands, judgments, claims or liens (including without limitation claims or
liens imposed under any so-called "Superfund" or other environmental
legislation) arising from or in connection with the presence at the time of
Subtenant's taking possession of the Sublease Premises of Hazardous Materials
on, or the subsequent removal thereof from, the Master Premises (including
without limitation the Sublease Premises). Sublandlord shall have the right to
assume exclusive control of the defense of any such suit, action or claim, and
Subtenant agrees to cooperate reasonably with Sublandlord in the performance by
Sublandlord of its obligations under this Section.
22.3 For purposes of this Article 22, the term "Hazardous Materials"
shall include without limitation any petroleum product, any flammable, explosive
or radioactive material, or any hazardous or toxic waste, substance or material,
including without limitation substances defined as "hazardous substances",
"hazardous materials," "solid waste" or "toxic substances" under any applicable
laws relating to hazardous or toxic materials and substances, air pollution
(including noise and odors), water pollution, liquid and solid waste,
pesticides, drinking water, community and employee health, environmental land
use management, stormwater, sediment control, nuisances, radiation, wetlands,
endangered species, environmental permitting and petroleum products, which laws
may include, but not be limited to, the Federal Insecticide, Fungicide, and
Rodenticide Act, as amended; the Toxic Substances Control Act; the Clean Water
Act; the National Environmental Policy Act, as amended; the Solid Waste Disposal
Act, as amended; the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986; the Hazardous Materials Transportation Act, as
amended; the Resource Conservation and Recovery Act, as amended; the Clean Air
Act, as amended; the Emergency Planning and Community
10
<PAGE> 11
Right-to-Know Act, as amended; the Occupational Safety and Health Act, as
amended; comparable state laws; and all rules and regulations promulgated
pursuant to such laws and ordinances.
23. CONSENTS. Sublandlord's refusal to consent to or approve any matter or
thing, whenever Sublandlord's consent or approval is required under this
Sublease or under the Master Lease as incorporated herein, shall be deemed
reasonable if Master Landlord has refused or failed to give its consent to such
matter or thing. Subtenant agrees to reimburse Sublandlord upon demand for any
expenses which Sublandlord is required to pay to Master Landlord in connection
with obtaining the consent of Master Landlord to any proposed action by
Subtenant.
24. MISCELLANEOUS.
24.1 GOVERNING LAWS. This Sublease shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts.
24.2 ENTIRE AGREEMENT. This Sublease constitutes the entire agreement
between Sublandlord and Subtenant with respect to the subject matter hereof and
supersedes and replaces in its entirety the existing Sublease Agreement between
Sublandlord and Subtenant dated as of September 1, 1997, which existing Sublease
Agreement is hereby rendered null and void. This Sublease shall not be
supplemented, amended, varied or modified in any manner except by an instrument
in writing signed by both parties.
24.3 WAIVER. No delay or omission on the part of either party to this
Sublease in requiring performance by the other party or in exercising any right
hereunder shall operate as a waiver of any provision hereof or of any right
hereunder, and the waiver, omission or delay in requiring performance or
exercising any right hereunder on any one occasion shall not be construed as a
bar to or waiver of such performance or right on any future occasion.
24.4 REMEDIES CUMULATIVE. Any and all rights and remedies which either
party may have under this Sublease, at law or in equity, shall be cumulative and
shall not be deemed inconsistent with each other, and any two or more of all
such rights and remedies may be exercised at the same time insofar as permitted
by law.
24.5 BROKER. Each of the parties hereto represents and warrants to the
other that there are no claims for brokerage commissions or finder's fees in
connection with this Sublease. Each party shall indemnify and hold harmless the
other party from and against any and all claims for brokerage fees, commissions
or other charges arising from the dealings of the indemnifying party in
connection with this Sublease.
24.6 SURVIVAL. It is understood and agreed that the provisions of
Articles 8 and 22 above shall survive the expiration or earlier termination of
this Sublease.
24.7 PERSONAL PROPERTY. All furnishings, fixtures, equipment, effects
and personal property of every kind, nature and description of Subtenant, and of
all persons claiming
11
<PAGE> 12
by, through or under Subtenant, which, during the Term of this Sublease or any
occupancy of the Sublease Premises by Subtenant, or anyone claiming by, through
or under Subtenant, may be on the Sublease Premises or elsewhere in the Master
Premises, shall at the sole risk and hazard of Subtenant and, if the whole or
any part thereof shall be destroyed or damaged by fire, water or otherwise, or
by the leakage or bursting of water pipes, steam pipes or other pipes, by theft,
or from any other cause, no part of said loss or damage is to be charged to or
borne by Sublandlord except to the extent caused by the negligence or willful
misconduct of Sublandlord, its agents, employees, representatives or
contractors.
24.8 HEADINGS. Article and Section headings and the organization of
this Sublease are for descriptive purposes only and shall not control or alter
the meaning of this Sublease.
24.9 SUCCESSORS AND ASSIGNS. This Sublease shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
24.10 AUTHORITY. The individuals executing this Sublease hereby
represent and warrant that they are empowered and duly authorized to so execute
this Sublease on behalf of the parties they represent.
IN WITNESS WHEREOF, the parties hereto have executed this Sublease under
seal as of the date first set forth above.
SUBLANDLORD:
THERMO INSTRUMENT SYSTEMS INC.,
a Delaware corporation
By: /s/ Earl R. Lewis
-------------------------------------
Earl R. Lewis
President & COO
SUBTENANT:
THERMO VISION CORPORATION,
a Delaware corporation
By: /s/ Kristine S. Langdon
-------------------------------------
Kristine S. Langdon
President & CEO
12
<PAGE> 13
8 FORGE PARK
Franklin, Massachusetts
Lease
by and between
Prudential Realty Acquisition
Fund II Limited Partnership, Landlord
and
Thermo Instrument Systems Inc., Tenant
dated as of February 1, 1996
<PAGE> 14
LEASE
ARTICLE I
REFERENCE DATA
1.1 SUBJECTS REFERRED TO. Each reference in this Lease to any of the
following subjects shall be construed to incorporate the data stated for that
subject in this Section 1.1.
Date of this Lease: February 1, 1996
Premises: The approximately eight (8) acre parcel of land (the "Lot")
shown on Exhibit A and the one story building containing 100,000 net square feet
constructed thereon (the "Building"), located at Forge Park, Franklin,
Massachusetts, and known as 8 Forge Park. The Lot and Building are collectively
referred to as the "Premises".
<TABLE>
<S> <C>
Landlord: Prudential Realty Acquisition Fund II Limited
Partnership, a Delaware Limited Partnership
Original Address of Landlord: c/o Prudential Real Estate Investors, 57 JFK
Parkway, Short Hills, New Jersey 07078
Tenant: Thermo Instrument Systems Inc., a Delaware
corporation
Original Address of Tenant: 8 Forge Park, Franklin, Massachusetts 02038
Basic Term: Ten (10) years
Term Commencement Date: February 1, 1996
Annual Fixed Rent Rates:
</TABLE>
<TABLE>
<CAPTION>
Rate Yearly Payment Monthly Payment
---- -------------- ---------------
<S> <C> <C> <C>
Year 1: $4.75 $475,000.00 $39,583.33
Year 2: 5.00 500,000.00 41,666.67
Year 3: 5.25 525,000.00 43,750.00
Year 4: 5.50 550,000.00 45,833.33
Year 5: 5.75 575,000.00 47,916.67
Year 6: 5.90 590,000.00 49,166.67
Year 7: 6.15 615,000.00 51,250.00
Year 8: 6.40 640,000.00 53,333.33
Year 9: 6.65 665,000.00 55,416.67
Year 10: 6.90 690,000.00 57,500.00
</TABLE>
<PAGE> 15
Permitted Uses: Light manufacturing, research and development and
general office use.
Public Liability Insurance Limits (per occurrence):
Bodily Injury and Property Damage: $3,000,000 per occurrence
or greater amounts as required pursuant to the provisions of
Section 4.4.2.1.
Broker(s): Lynch, Murphy Walsh & Partners
1.2 EXHIBITS. The Exhibits listed below in this section are
incorporated in this Lease by reference and are to be construed as a part of
this Lease.
EXHIBIT A: Site Plan showing the Premises
EXHIBIT A-1: Legal Description of Land
EXHIBIT A-2: Title Exceptions
EXHIBIT B: Omitted
EXHIBIT C: Forge Park Covenants and Restrictions
ARTICLE II
PREMISES AND TERM
2.1 PREMISES. Landlord hereby leases and demises to Tenant and
Tenant hereby leases from Landlord, subject to and with the benefit of the
terms, covenants, conditions and provisions of this Lease, the Premises. The
Premises shall include, as appurtenant to the land described on Exhibit A-1 on
which the Building is constructed, in common with other users of Forge Park, (a)
the right, to use all streets, drainage and utilities now or hereafter
constructed within the 340 acre parcel known as Forge Park, Franklin,
Massachusetts ("Forge Park") for all purposes for which public roads in the Town
of Franklin may be used including, without limitation, rights of pedestrians and
vehicular access and the right to connect with and utilize any and all water,
sewer, storm drain, gas, electrical, telephone or other public utility now or
hereafter located in such roadway adjacent to the Premises. Landlord represents
that there exists current rights and easements appurtenant to the Premises
required for providing water, sewer, storm drainage, telephone, electric and gas
service to the Premises adequate for the current uses and operations.
2
<PAGE> 16
Landlord represents and warrants that it is the fee simple owner of the
Premises and the Appurtenant Easements listed on Exhibit A-1 subject only to the
title matters set forth in the title insurance policy attached as Exhibit A-2.
If at any time during the Term of this Lease, as the same may be extended,
applicable law shall not permit the use of the Premises for the Permitted Uses
hereunder, Tenant, without waiving any other rights Tenant may have on account
thereof, may terminate this Lease upon no less than thirty (30) days' prior
written notice to Landlord.
2.2 TERM. TO HAVE AND TO HOLD for a term of ten (10) years
beginning on February 1, 1996 (the "Term").
2.3 INTENTIONALLY OMITTED
2.4 INTENTIONALLY OMITTED
ARTICLE III
IMPROVEMENTS
3.1 CONDITION OF THE PREMISES. Tenant accepts the Premises in
their current condition as of the Commencement Date. Landlord agrees to provide
Tenant a Tenant Allowance in the amount of $82,000.00 for Tenant improvements
and refurbishment. Landlord further agrees to provide Tenant with a $4,000.00
ADA Improvement Allowance to provide for ADA improvements to the Building
washrooms to make the washrooms handicapped accessible as required by state and
federal requirements. Both the Tenant Allowance and the ADA Improvement
Allowance will be paid to Tenant within thirty (30) days of the execution and
delivery hereof. Tenant agrees promptly thereafter to cause the handicapped
improvements to be installed in a good and workmanlike manner in accordance with
all applicable codes, rules and regulations.
3.2 TENANT WORK. All leasehold improvement and other Tenant
refurbishment work performed on the Premises whether paid for with the Tenant
Allowance or otherwise, shall be the responsibility of Tenant and shall be
performed in a good and workmanlike manner in accordance with applicable codes
(the "Tenant Work").
3
<PAGE> 17
All improvements and alterations and changes and additions (except for
Tenant Work or subsequent alterations paid for by Tenant, which shall be real
property owned by Tenant during the Term) shall be part of the Building. Any
Tenant Work or subsequent alterations, improvements, changes and additions
provided or paid for by Tenant may be removed by Tenant at the expiration of the
Term (provided Tenant repairs any damage caused by such removal or, at Tenant's
election, remain as part of the Premises. With respect to improvements,
alterations, changes or additions for which Landlord's consent is required
hereunder, the foregoing election shall be exercised when consent is requested.
3.3 GENERAL PROVISIONS APPLICABLE TO CONSTRUCTION. All
construction work required or permitted by this Lease, whether by Landlord or
Tenant, shall be done in a good and workmanlike manner using new, first quality
materials (except that Tenant's Work may include previously utilized materials
designated by Tenant from Tenant's prior facilities) and in compliance with all
applicable laws and all lawful ordinances, regulations and orders of
governmental authority and insurers of the Building. Either party may inspect
the work of the other at reasonable times and shall give notice of observed
defects.
3.4 CONSTRUCTION REPRESENTATIVES. Each party shall, from time to
time, designate in writing an individual to the other party to review the plans
and specifications in connection with any alterations or improvement project(s)
undertaken by either party at the Premises for which consent of the other party
is required under this Lease and authorizes the other party to rely upon the
approval or other actions of such individual in connection with such activity.
ARTICLE IV
RENT
4.1 THE FIXED RENT. Tenant covenants and agrees to pay rent to
Landlord at the Original Address of Landlord or at such other place or to such
other person or entity as Landlord may, by no less than thirty (30) days' prior
notice to Tenant from time to time direct, at the rate ("Annual Fixed Rent
Rates") set forth in Article 1 in equal monthly installments equal to 1/12th of
the Annual Fixed Rent Rate in advance on the first day of each calendar month
included in the Term; and for any portion of a calendar month at the beginning
or end of the Term, at that rate payable in advance for such portion.
4.2 ADDITIONAL RENT. In order that the Fixed Rent shall be
absolutely net to Landlord (except to the extent expressly otherwise provided in
this Lease), Tenant covenants and agrees to pay, as Additional Rent, taxes,
municipal or state betterment assessments, insurance costs and utility charges
with respect to the Premises as provided in this Section 4.2. In no event,
however, shall Additional Rent include (i) betterment assessments or utility
charges with respect to the installation, modification, or replacement of the
Appurtenant Easements in Forge Park arising during the Basic Term or (ii)
betterment assessments or utility charges with respect to the development of
Forge Park.
4
<PAGE> 18
4.2.1 REAL ESTATE TAXES. Tenant shall pay directly to the
taxing authority the portion allocable to the Premises of: (i) all taxes,
assessments (special or otherwise), levies, fees, water and sewer rents and
charges, general and special, ordinary and extraordinary, foreseen and
unforeseen, which are, at any time prior to or during the Term hereof, imposed
or levied upon or assessed against (A) the Premises, (B) any Fixed Rent,
Additional Rent or other sum payable hereunder or (C) this Lease, or the
leasehold estate hereby created, or which arise in respect of the operation,
possession or use of the Premises by Tenant; (ii) all gross receipts or similar
taxes imposed or levied upon, assessed against or measured by any Fixed Rent,
Additional Rent or other sum payable hereunder; (iii) all sales, value added,
use and similar taxes at any time levied, assessed or payable on account of the
leasing or use of the Premises by Tenant; and (iv) all charges for utilities
furnished to the Premises which may become a lien on the Premises (collectively
"taxes and assessments" or if singular "tax or assessment"). For each tax or
assessment period, or installment period thereof, wholly included in the Term
,all such payments shall be made by Tenant not later than five (5) days before
the last date on which the same may be paid without interest or penalty,
provided that Landlord shall forward to Tenant a copy of all applicable tax
bills promptly after receipt by Landlord thereof and in any event, not less
than 20 days before the last date on which the same may be paid without
interest or penalty. For any fraction of a tax or assessment period, or
installment period thereof, included in the Term at the beginning or end
thereof, Tenant shall pay to Landlord, within 10 days after receipt of invoice
therefor, together with a copy of the applicable bill from the taxing
authority, the fraction of taxes and assessments so levied or assessed or
becoming payable which is allocable to such included period.
Nothing contained in this Lease shall, however, require Tenant to pay
any income taxes, excess profits taxes, excise taxes, franchise taxes, estate,
gift, succession, inheritance or transfer taxes provided, however, that if at
any time during the Term the present system of ad valorem taxation of real
property shall be changed so that in lieu of the whole or any part of the ad
valorem tax on real property, there shall be assessed on Landlord a capital levy
or other tax on the gross rents received with respect to the Lot and Building,
or both, or a federal, state, county, municipal, or other local income,
franchise, excise or similar tax, assessment, levy or charge (distinct from any
now in effect) measured by or based in whole or in part, upon gross rents, then
any and all of such taxes, assessments, levies or charges, to the extent so
measured or based ("Substitute Taxes"), shall be payable by Tenant; provided,
however, Tenant's obligation with respect to the aforesaid Substitute Taxes
shall be limited to the amount thereof as computed at the rates that would be
payable if the Premises were the only property of Landlord. Landlord shall
furnish to Tenant a copy of any notice of any public, special or betterment
assessment received by Landlord concerning the Premises. Notwithstanding
anything to the contrary contained in this Lease, in the event that Tenant is
obligated to pay any portion of any betterment or special assessment, Tenant's
payments shall be calculated as if such assessment were amortized on a
straight-line basis consistent with generally accepted accounting principles,
consistently applied ("GAAP"), such that Tenant shall pay a total amount equal
to its share of such assessment multiplied by a fraction, the
5
<PAGE> 19
numerator of which is the number of years remaining in the Term and the
denominator of which is the greater of (a) the number of years in the entire
Term or (b) the number of years for amortization indicated by GAAP.
Tenant shall have the right to prosecute an abatement or otherwise
contest any such tax or assessment, but only if Tenant shall first have given
Landlord written notice of Tenant's intention to do so and Landlord shall not
have advised Tenant, by written notice to Tenant within ten (10) days after
Tenant's notice, that Landlord will prosecute such abatement or contest. Tenant
shall prosecute any such abatement or contest at its own expense and shall not
discontinue the same without giving Landlord a reasonable opportunity to be
substituted therein at Landlord's expense. Tenant shall respond to all of
Landlord's reasonable inquiries as to the status of any such abatement
proceeding or contest, and Tenant shall not settle the same without Landlord's
prior written consent, which shall not be unreasonably withheld or delayed.
Tenant's expenses of the same shall be deducted from the proceeds of any such
abatement or contest. If Landlord shall obtain any abatement, refund or rebate
in real estate taxes or assessments theretofore paid by Tenant under this Lease,
Landlord shall promptly forward to Tenant the same, less the cost incurred by
Landlord in obtaining the same. Nothing in this paragraph shall relieve Tenant
of its obligation to make all payments required under this Section 4.2.1 and
when required hereunder.
4.2.2 INSURANCE.
4.4.2.1 INSURANCE TAKEN OUT BY TENANT. Tenant shall, as
Additional Rent, take out and maintain throughout the Term, the following
insurance:
(a) Comprehensive liability insurance
indemnifying Landlord (as an additional insured as provided below) and Tenant
against all claims and demands for any injury to person or property which may be
claimed to have occurred on the Premises or on the sidewalk or ways adjoining
the Premises, in amounts which shall, at the beginning of the Term, be at least
equal to $3,000,000 per combined single limit per occurrence, and, from time to
time during the Term, shall be for higher limits, if any, as are customarily
carried in the area in which the Premises are located on property similar to the
Premises and used for similar purpose and of which Tenant has received thirty
(30) days advance written notice from Landlord, which insurance shall name
Landlord as an additional insured (except to the extent of the negligence or
willful misconduct of Landlord, its agents, employees, representatives or
contractors);
(b) Worker's compensation insurance with
statutory limits covering all of Tenant's employees working on the Premises;
(c) All risk property insurance, with repair or
replacement coverage (with an agreed amount endorsement) insuring the Building
and one year's rent and real estate taxes, it being agreed that the initial
replacement value of the Building is $5,000,000, which
6
<PAGE> 20
all risk property insurance shall include coverage against loss or damage from
sprinklers and from leakage or explosions or cracking of boilers, pipes carrying
steam or water, or both, pressure vessels or similar apparatus. Insurance
against such other hazards and in such amounts as may from time to time be
customarily carried with respect to premises similar in character, location and
use to the Premises, to the extent the same is commercially reasonable.
4.2.2.3 CERTAIN REQUIREMENTS APPLICABLE TO INSURANCE
POLICIES. Policies for insurance provided for under the provisions of Section
4.2.2.1(c) and (d) shall, in case of loss to the Premises, name Landlord as an
additional named insured and be first payable to the holders of any mortgages on
the Premises under a standard mortgagee's endorsement. All policies for
insurance required under the provisions of Section 4.2.2 shall be obtained from
responsible companies qualified to do business in the Commonwealth of
Massachusetts and in good standing therein, with a Best's rating of "A-" or
better. Tenant agrees to furnish Landlord with certificates of all such
insurance which Tenant is obligated to obtain pursuant to Section 4.2.2.1 prior
to the beginning of the Term hereof and of each renewal policy at least thirty
(30) days prior to the expiration of the policy it renews. Each such policy
shall be noncancellable with respect to the interest of Landlord and such
mortgagees without at least thirty (30) days' written notice thereto.
4.2.2.4 WAIVER OF SUBROGATION. All insurance which is carried
by either party with respect to the Premises or to furniture, furnishings,
fixtures or equipment therein or alterations or improvements thereto, whether or
not required, shall include provisions which either designate the other party as
one of the insured or deny to the insurer acquisition by subrogation of rights
of recovery against the other party to the extent such rights have been waived
by the insured party prior to occurrence of loss or injury, insofar as, and to
the extent that such provisions may be effective without making it impossible to
obtain insurance coverage from responsible companies qualified to do business in
the Commonwealth of Massachusetts (even though extra premium may result
therefrom) and without voiding the insurance coverage in force between the
insurer and the insured party. In the event that extra premium is payable by
either party as a result of this provision, the other party shall reimburse the
party paying such premium the amount of such extra premium. If at the request of
one party, this non-subrogation provision is waived, then the obligation of
reimbursement shall cease for such period of time as such waiver shall be
effective, but nothing contained in this Section 4.2.2.4 shall derogate from or
otherwise affect releases elsewhere herein contained of either party for claims.
Each party shall be entitled to have certificates of any policies containing
such provisions. Each party hereby waives all rights of recovery against the
other for loss or injury against which the waiving party is protected by
insurance containing said provisions, reserving, however, any rights with
respect to any excess of loss or injury over the amount recovered by such
insurance. Notwithstanding anything to the contrary contained herein, in no
event shall the foregoing provisions of this Section 4.2.2.4 operate as a waiver
by either party with respect to any loss, damage or injury to the extent caused
by the negligence or willful misconduct of the other party, its agents,
employees, representatives or contractors.
7
<PAGE> 21
4.2.3 UTILITIES. Tenant shall pay directly to the proper authorities
charged with the collection thereof all charges for water, sewer, gas,
electricity, telephone and other utilities or services used or consumed on the
Premises, whether called charge, tax, assessment, fee or otherwise, including,
without limitation, water and sewer use charges and taxes, if any, all such
charges to be paid as the same from time to time become due.
ARTICLE V
TENANT'S ADDITIONAL COVENANTS
5.1 AFFIRMATIVE COVENANTS. Tenant covenants at its expense at all
times during the Term and for such further time as Tenant occupies the Premises
or any part thereof:
5.1.1 PERFORM OBLIGATIONS. To perform in a timely manner
all of the obligations of Tenant set forth in this Lease; and to pay when due
the Fixed Rent and Additional Rent and all charges, rates and other sums which
by the terms of this Lease are to be paid by Tenant.
5.1.2 USE. To use the Premises only for the Permitted Uses.
5.1.3.1 REPAIR AND MAINTENANCE. Subject to Article VI and
Section 5.1.3.2, to keep the Premises, including, without limitation, all
Tenant's improvements, all heating, plumbing, electrical, air-conditioning,
mechanical and other fixtures and equipment now or hereafter on the Premises,
and the grounds, driveways and parking lot, in good order, condition and repair
and at least as good order, condition and repair as they are in on the
Commencement Date or may be put in during the Term, reasonable use and wear only
excepted; to keep in a safe secure and sanitary condition all trash and rubbish
temporarily stored at the Premises; to make all repairs and replacements and to
do all other work necessary for the foregoing purposes; and to make all repairs
to roof and structural components of the Premises to the extent necessitated by
Tenant's willful misconduct or negligence. Notwithstanding anything to the
contrary in this Lease, in no event shall Tenant be obligated to make any
repairs or replacements which would constitute items of expense properly
chargeable to "capital account" under GAAP or which are required as the result
of the negligence or willful misconduct of Landlord, its agents, employees,
representatives or contractors, or the failure of Landlord to perform any of its
obligations under this Lease, all of which repairs and replacements shall be
made by Landlord at Landlord's sole cost and expense. To the extent not
performed by Tenant's own personnel, Tenant shall secure, pay for and keep in
force contracts with appropriate and reputable service companies providing for
the regular maintenance of the heating and air-conditioning systems and copies
of such contracts shall be furnished to Landlord. It is further agreed that the
exception of reasonable use and wear shall not apply so as to permit Tenant to
keep the Premises in anything less than a safe, useable condition in good and
tenantlike repair.
8
<PAGE> 22
5.1.3.2 LANDLORD'S MAINTENANCE OBLIGATION. Subject to Article
VI, Landlord covenants and agrees that it shall, at all times at its own cost
and expense, keep the roof (including without limitation the decking, gutters
and downspouts), foundation, exterior walls, load-bearing interior walls,
structural components and all underground utility lines, pipes and plumbing of
the Building in good order, condition and repair and at least as good order,
condition and repair as they are in on the Commencement Date hereof or may be
put in during the Term, reasonable use and wear and Tenant's obligations under
Article 5.1.3.1 only excepted.
5.1.4 COMPLIANCE WITH LAW AND INSURANCE REQUIREMENTS. To
make all repairs, alterations, additions or replacements to the Premises
reasonably required by any law or ordinance or any order or regulation of any
public authority due to a unique use of the Premises by Tenant and not generally
applicable to buildings of the type and age of the Building; to keep the
Premises equipped with all safety appliances so required; to pay all municipal
county, or state taxes assessed against the leasehold interest hereunder, or
against personal property of any kind on or about the Premises; not to dump,
flush, or in any way introduce any Hazardous Substances into the sewage or other
waste disposal system serving the Premises; to generate, store or dispose of
Hazardous Substances in or on the Premises or dispose of Hazardous Substance
from the Premises to any other location only in compliance with the Resource
Conservation and Recovery Act of 1976, as amended, 42 U.S.C. ss.6901 et seq.,
the Massachusetts Hazardous Waste Management Act, M.G.L. c.21C, as amended, the
Massachusetts Oil and Hazardous Material Release Prevention and Response Act,
M.G.L. c.21E, as amended, and all other applicable codes, regulations,
ordinances and laws; to notify Landlord of any incident which would require the
filing of a notice under Chapter 232 of the Acts of 1982; and to comply with the
orders and regulations of all governmental authorities with respect to zoning
building, fire, health and other codes, regulations, ordinances or laws
applicable to the Premises, except that Tenant may defer compliance so long as
the validity of any such law, ordinance, order or regulation shall be contested
by Tenant in good faith and by appropriate legal proceedings, if Tenant first
gives Landlord appropriate assurance against any loss, cost or expense on
account thereof. "Hazardous Substances" as used in this paragraph shall mean
"Hazardous Substances" as defined in the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended, 42 U.S.C. ss.9601 and the
Massachusetts Oil and Hazardous Materials Release Prevention and Response Act,
M.G.L. C.21E and regulations adopted pursuant to said Act. Tenant shall provide
Landlord with such information legally required by governmental authorities as
Landlord may reasonably request from time to time with respect to compliance
with this Section 5.1.4.
Tenant also covenants and agrees to comply promptly with the reasonable
recommendations of any insurer, foreseen or unforeseen, ordinary as well as
extraordinary, which may be applicable to the Premises, by reason of Tenant's
particular and specific manner of use thereof, provided that such
recommendations do not present a material financial burden to Tenant. In the
event Tenant does not comply with the recommendations of any insurer, Tenant
shall be liable for payment of any increase in the amount of any insurance
premium
9
<PAGE> 23
caused by any such non-compliance; provided, however, in no event shall any
activity be conducted by Tenant on the Premises which may give rise to any
cancellation of any insurance Policy or make any insurance unobtainable.
5.1.5 INDEMNITY. To defend, with competent and experienced
counsel all actions against Landlord, any partner, trustee, stockholder,
officer, director, employee or beneficiary of Landlord, holders of mortgages
secured by the Premises and any other party having an interest in the Premises
(Indemnified Parties) with respect to and to pay, protect, indemnify and save
harmless, to the extent permitted by law, all Indemnified Parties from and
against, any and all liabilities, losses, damages, costs, expenses (including
reasonable attorneys' fees and expenses), causes of action, suits, claims,
demands or judgments of any nature (a) to which any Indemnified Party is subject
because of the negligence or willful misconduct of Tenant before or during the
Term, or (b) arising from injury to or death of any person, or damage to or loss
of property, on the Premises to the extent caused by the negligence or willful
misconduct of Tenant before or during the Term except to the extent caused by
the negligence or willful misconduct of Landlord or its servants or agents.
5.1.6 LANDLORD'S RIGHT TO ENTER. To permit Landlord and its
agents to enter into the Premises at reasonable times and upon reasonable notice
to examine the Premises, make such repairs and replacements pursuant to the
terms of this Lease and show the Premises to prospective purchasers and lenders,
and, during the last year of the Term, to show the Premises to prospective
tenants and to keep affixed in suitable places notices of availability of the
Premises. Except in the event of emergency, Landlord, or any person acting under
Landlord, shall be accompanied while entering the Premises by a representative,
agent or employee of Tenant, which representative, agent or employee Tenant
shall make available promptly upon request.
5.1.7 PERSONAL PROPERTY AT TENANT'S RISK. All of the
furnishings, fixtures, equipment, effects and property of every kind, nature and
description of Tenant and of all persons claiming by, through or under Tenant
which, during the continuance of this Lease or any occupancy of the Premises by
Tenant or anyone claiming under Tenant, may be on the Premises, shall, as
between the parties, be at the sole risk and hazard of Tenant and if the whole
or any part destroyed or damaged by fire, water or other leakage or bursting of
water pipes, steam pipes, or other pipes by theft or from any other cause, no
part of said loss or damage is to be charged to or to be borne by Landlord,
except that Landlord shall in no event be indemnified or held harmless or
exonerated from any liability to Tenant or to any other person, for injury,
loss, damage or liability to the extent caused by the negligence or willful
misconduct of Landlord, its agents, employees, representatives or contractors,
or to the extent otherwise prohibited by law.
5.1.8 PREVAILING PARTIES. If any action at law or in
equity is brought to enforce or interpret the provisions of this Lease, the
prevailing party in such action shall be
10
<PAGE> 24
entitled to reimbursement of the reasonable attorneys' fees and disbursements
and court costs incurred by said prevailing party in connection with such
action.
5.1.9 YIELD UP. At the expiration of the Term or earlier
termination of this Lease: to surrender all keys to the Premises, to remove all
of its trade fixtures and personal property in the Premises (except as set forth
in Section 3.2), to remove all Tenant's signs wherever located, to repair all
damage caused by such removal and to yield up the Premises (including all
improvements and alterations made by Tenant and not removed except for trade
fixtures), free of rubbish and debris and in the same good order and repair in
which Tenant is obligated to keep and maintain the Premises by the provisions of
this Lease, reasonable wear and tear and damage by casualty or taking excepted.
Any property not so removed shall be deemed abandoned and may be removed and
disposed of by Landlord in such manner as Landlord shall determine and Tenant
shall pay Landlord the entire cost and expense incurred by it in effecting such
removal and disposition and in making any incidental repairs and replacements to
the Premises.
5.1.10 ESTOPPEL CERTIFICATE. Upon not less than twenty (20)
days' prior notice by Landlord, to execute, acknowledge and deliver to Landlord
a statement in writing certifying whether this Lease is unmodified and in full
force and effect and that except as stated therein Tenant has no knowledge of
any defenses, offsets or counterclaims against its obligations to pay the Fixed
Rent and Additional Rent and any other charges and to perform its other
covenants under this Lease (or, if there have been any modifications that the
same is in full force and effect as modified and stating the modifications and,
if there are any defenses, offsets or counterclaims, setting them forth in
reasonable detail), the dates to which the Fixed Rent and Additional Rent and
other charges have been paid and a statement that to Tenant's knowledge,
Landlord is not in default hereunder (or if in default, the nature of such
default, in reasonable detail). Any such statement delivered pursuant to this
Section 5.1.10 may be relied upon by any prospective purchaser or mortgagee of
the Premises, or any prospective assignee of any such mortgage.
5.1.11 EXPENSES RE CONSENTS. Each party shall reimburse the
other promptly on demand for all reasonable legal expenses (not to exceed
$1,000.00 in any instance) incurred in connection with all requests by the
reimbursing party for consent or approval hereunder.
5.1.12 PARK RESTRICTIONS. To comply with the Forge Park
Covenants and Restrictions as set forth in Exhibit C, as the same may be amended
from time to time to provide for the beneficial operation of Forge park,
provided that such amendments do not materially interfere with Tenant's right of
use and enjoyment of the Premises pursuant to this Lease.
5.1.13 HOLDING OVER. Tenant covenants that it will vacate
the Premises immediately upon the expiration or sooner termination of this
Lease. If the Tenant retains possession of the Premises or any part thereof
after the termination of the Term, the Tenant
11
<PAGE> 25
shall pay the Landlord Holdover Rent at 150% the monthly rate specified in
Section 1 for the time the Tenant thus remains in possession. The provisions of
this Section do not exclude or limit Landlord's rights or remedies for holding
over beyond the expiration of the Term of this Lease.
5.2 NEGATIVE COVENANTS. Tenant covenants at all times during the
Term and for such further time as Tenant occupies the Premises or any part
thereof:
5.2.1 ASSIGNMENT AND SUBLETTING. Not to assign this Lease
or to sublease all or any part of the Premises; provided however, that Tenant
may, without Landlord's consent, assign this Lease or sublet any portion or all
of the Premises to (i) any corporation, partnership, trust, association or other
business organization directly or indirectly controlling, controlled by or under
common control with Tenant, or (ii) to any successor by merger, consolidation or
acquisition of all or substantially all of the assets of Tenant, (any such
assignee or subtenant being hereinafter sometimes referred to as a "Permitted
Transferee". No assignment or sublease, whether or not approved, and no
indulgence granted by Landlord to any assignee or sublessee, shall in any way
impair the continuing primary liability (which after an assignment shall be
joint and several with the assignee) of Tenant hereunder, and no approval in a
particular instance shall be deemed to be a waiver of the obligation to obtain
Landlord's approval in any other case.
Notwithstanding the preceding paragraph, Landlord agrees not to
unreasonably withhold or delay its consent to a sublease of all or any portion
of the Premises. Any proposed assignment or subleasing shall be presumed
reasonable and shall conclusively be deemed reasonable unless Landlord objects
in writing, stating the relevant grounds, within ten (10) business days after
such proposal is made by Tenant. Tenant shall promptly provide such information
concerning the proposed sublessee or assignee as Landlord reasonably requests.
If for any assignment or sublease to any party other than a Permitted
Transferee Tenant receives rent or other consideration, either initially or over
the term of the assignment or sublease, in excess of the rent called for
hereunder, or in case of sublease of part, in excess of such rent fairly
allocable to the part, after appropriate adjustments to assure that all other
payments called for hereunder are appropriately taken into account, Tenant shall
pay to Landlord as Additional Rent 50% of such excess of such payment of rent or
other consideration received by Tenant promptly after its receipt. In computing
such excess, subleasehold improvements made by Tenant shall be amortized on a
straight-line basis over the term of the sublease or assignment and all
brokerage, legal and other reasonable costs incurred by Tenant shall be deducted
immediately.
5.2.2 OVERLOADING AND NUISANCE. Not to injure, overload,
deface or otherwise harm the Premises; nor commit any nuisance; nor permit the
emission of any objectionable noise, vibration or odor; nor make, allow or
suffer any waste; not make any use
12
<PAGE> 26
of the Premises which is contrary to any law or ordinance or which will
invalidate any of Tenant's insurance required hereunder.
ARTICLE VI
CASUALTY OR TAKING
6.1 TERMINATION. In case during the Term more than twenty-five
(25%) percent of the floor area of the Building or more than twenty-five (25%)
percent of the parking spaces appurtenant to the Premises, or such portion of
the Lot comprising the Premises which shall make continued use of the Building
impracticable, shall be (i) damaged by fire or casualty such that Landlord is
unable, or otherwise fails, to notify Tenant within thirty (30) days thereafter
that such damage is reasonably estimated to be restored within 210 days after
the casualty or (ii) taken by any public authority or for any public use
(hereinafter referred to as the "Termination Event"), then this Lease may be
terminated at the election of Landlord or Tenant. Such election, which may be
made notwithstanding the fact that Landlord's entire interest may have been
divested, shall be made by the giving of notice by the terminating party within
forty-five (45) days after the Casualty or Taking.
6.2 RESTORATION. If neither party exercises said election, or if a
casualty or taking other than a Termination Event occurs, this Lease shall
continue in force and a just proportion of the rent reserved, according to the
nature and extent of the damages sustained by the Premises, shall be abated from
the date of the casualty or taking until the Premises, or what may remain
thereof, shall be put by Landlord in the same condition existing immediately
prior to such casualty or taking (or, in the case of a taking, as nearly as
practicable to such condition) subject to zoning and building laws or ordinances
then in existence, which, unless Landlord has exercised its option to terminate
pursuant to Section 6.1, Landlord covenants to do with reasonable diligence at
Landlord's expense, provided that Landlord's obligations with respect to
restoration shall not require Landlord to expend more than the net proceeds of
insurance recovered or damages awarded for such casualty or taking. "Net
proceeds of insurance recovered or damages awarded" refers to the gross amount
of such insurance or damages less the reasonable expenses of Landlord in
connection with the collection of the same, including without limitation, fees
and expenses for legal and appraisal services. If such damage is not so repaired
within 210 days of such casualty or taking (subject to Section 9.5 but in no
event more than 240 days after such casualty), upon notice given within the
following thirty (30) days, Tenant may terminate this Lease.
6.3 AWARD. Irrespective of the form in which recovery may be had
by law, all rights to damages or compensation for the Building and the Land
shall belong to Landlord in all cases. Tenant hereby grants to Landlord all of
Tenant's rights to such damages and compensation, and covenants to deliver such
further assignments thereof as Landlord may from time to time reasonably
request, except that Tenant expressly reserves the right to
13
<PAGE> 27
petition the taking authority for a separate award applicable to Tenant's
personal property and relocation costs.
ARTICLE VII
DEFAULTS
7.1 EVENTS OF DEFAULT. (a) If Tenant shall default in the
performance of any of its obligations to pay the Fixed Rent or Additional Rent
hereunder and if such default shall continue for five (5) days after notice from
Landlord designating such default or if within thirty (30) days after notice
from Landlord to Tenant specifying any other default or defaults Tenant has not
commenced diligently to correct the default or defaults so specified or has not
thereafter diligently pursued such correction to completion, or (b) if any
assignment for the benefit of creditors shall be made by Tenant, or (c) if
Tenant's leasehold interest shall be taken on execution or other process of law
in any action against Tenant, or (d) if a lien or other involuntary encumbrance
is filed against Tenant's leasehold interest, and is not discharged within
twenty (20) days after written notice thereof by Landlord to Tenant, or (e) if a
petition is filed by Tenant for liquidation, or for reorganization or an
arrangement or any other relief under any provision of the Bankruptcy Code as
then in force and effect, or (f) if an involuntary petition under any of the
provisions of said Bankruptcy Code is filed against Tenant and such involuntary
petition is not dismissed within sixty (60) days thereafter, then, and in any of
such cases, Landlord and the agents and servants of Landlord lawfully may, in
addition to and not in derogation of any remedies for any preceding breach of
covenant, immediately or at any time thereafter and without demand or notice and
with or without process of law enter into and upon the Premises or any part
thereof in the name of the whole or mail a notice of termination addressed to
Tenant, and repossess the same as of Landlord's former estate and expel Tenant
and those claiming through or under Tenant and remove its and their effects
without being deemed guilty of any manner of trespass and without prejudice to
any remedies which might otherwise be used for arrears of rent or prior breach
of covenant and upon such entry or mailing as aforesaid, this Lease shall
terminate Tenant hereby waiving all statutory rights (including without
limitation rights of redemption, if any) to the extent such rights may be
lawfully waived and Landlord, without notice to Tenant, may store Tenant's
effects, and those of any person claiming through or under Tenant at the expense
and risk of Tenant, and, if Landlord so elects, may sell such effects at public
auction or private sale and apply the net proceeds to the payment of all sums
due to Landlord from Tenant, if any, and pay over the balance, if any, to
Tenant.
7.2 REMEDIES. In the event that this Lease is terminated under any
of the provisions contained in Section 7.1 or shall be otherwise terminated for
breach of any obligation of Tenant, Tenant covenants to pay punctually to
Landlord all sums and to perform all the obligations which Tenant covenants in
this Lease to pay and to perform in the same manner and to the same extent and
at the same time as if this Lease had not been terminated. In
14
<PAGE> 28
calculating the amounts to be paid by Tenant pursuant to the next preceding
sentence, Tenant shall be credited with any amount paid to Landlord as
compensation as in this Section 7.2 provided and also with the net proceeds of
any rent obtained by Landlord by reletting the Premises, after deducting all
Landlord's reasonable expenses in connection with such reletting, including
without limitation, all repossession costs, brokerage commissions, fees for
legal services and expenses of preparing the Premises for such reletting (less
any sums paid to Landlord by the new tenant with respect thereto), it being
agreed by Tenant that Landlord may (i) relet the Premises or any part or parts
thereof, for a term or terms which may, at Landlord's option, be equal to or
less than or exceed the period which would otherwise have constituted the
balance of the Term and may grant such concessions and free rent as Landlord, in
its reasonable judgment, considers advisable or necessary to relet the same and
(ii) make such alterations, repairs and decorations in the Premises as Landlord,
in its reasonable judgment, considers advisable or necessary to relet same, and
no action of Landlord in accordance with the foregoing or failure to relet or to
collect rent under reletting shall operate or be construed to release or reduce
Tenant's liability as aforesaid. Landlord agrees to use reasonable efforts to
relet the Premises promptly.
If at any time after termination of this Lease, Tenant defaults in
making the payments required in the paragraph immediately above, and in lieu of
any other damages or indemnity and in lieu of full recovery by Landlord of all
sums payable under all the foregoing provisions of this Section 7.2, Landlord
may, by notice to Tenant, elect to recover, and Tenant shall thereupon pay, as
liquidated damages, an amount equal to the aggregate of the Fixed Rent and
Additional Rent accrued in the twelve (12) months (or the number of months
remaining in the term at the time of Tenant's default if less than twelve (12))
ended next prior to such termination, plus the amount of rent of any kind
accrued and unpaid at the time of termination and less the amount of any
recovery by Landlord under the foregoing provisions of this Section 7.2 up to
the time of payment of such liquidated damages.
Nothing contained in this Lease shall, however, limit or prejudice the
right of Landlord to prove for and obtain in proceedings for bankruptcy or
insolvency by reason of the termination of this Lease, an amount equal to the
maximum allowed by any statute or rule of law in effect at the time when, and
governing the proceedings in which, the damages are to be proved, whether or not
the amount be greater than, equal to, or less than the amount of the loss or
damages referred to above.
7.3 REMEDIES CUMULATIVE. Any and all rights and remedies which
either party has under this Lease, and at law and equity, shall be cumulative
and shall not be deemed inconsistent with each other, and any two or more of all
such rights and remedies may be exercised at the same time insofar as permitted
by law.
7.4 LANDLORD'S RIGHT TO CURE DEFAULTS. Landlord may, but shall not
be obligated to, cure, at any time following ten (10) days' prior notice to
Tenant (except in cases of emergency when no notice shall be required) any
default by Tenant under this Lease; and
15
<PAGE> 29
whenever Landlord so elects, all costs and expenses incurred by Landlord,
including reasonable attorneys' fees, in curing a default, shall be paid by
Tenant to Landlord as Additional Rent on demand, together with interest thereon
at the rate provided in Section 7.7 from the date of payment by Landlord to the
date of payment by Tenant. Notwithstanding the foregoing, in the event of an
emergency, Landlord agrees to use reasonable efforts to notify Tenant promptly.
7.5 EFFECT OF WAIVERS OF DEFAULT. Any consent or permission by
either party to any act or omission which otherwise would be a breach of any
covenant or condition herein, or any waiver by either party of the breach of any
covenant or condition herein, shall not in any way be held or construed (unless
expressly so declared) to operate so as to impair the continuing obligation of
any covenant or condition herein, or otherwise, except as to the specific
instance, operate to permit similar acts or omissions.
The failure of either party to seek redress for violation of, or to
insist upon the strict performance of, any covenant or condition of this Lease
shall not be deemed a waiver of such violation nor prevent a subsequent act,
which would have originally constituted a violation, from having all the force
and effect of an original violation. The receipt by Landlord of Rent with
knowledge of the breach of any covenant of this Lease shall not be deemed to
have been a waiver of such breach by Landlord. No consent or waiver, express or
implied, by either party to or of any breach of any agreement or duty shall be
construed as a waiver or consent to or of any other breach of the same or any
other agreement or duty.
7.6 NO ACCORD AND SATISFACTION. No acceptance by Landlord of a
lesser sum than the Fixed Rent, Additional Rent or any other charge then due
shall be deemed to be other than on account of the earliest installment of such
rent or charge due, unless Landlord elects by notice to Tenant to credit such
sum against the most recent installment due, nor shall any endorsement or
statement on any check or any letter accompanying any check or payment as rent
or other charge be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of such installment or pursue any other remedy in this Lease provided.
7.7 INTEREST ON OVERDUE SUMS. If Tenant fails to pay Fixed Rent,
Additional Rent and other charges payable by Tenant to Landlord within two
business days after the due date thereof (without regard to any requirement of
notice from Landlord or any period of grace allowed to Tenant under this Lease
before Landlord is allowed to exercise any extraordinary remedy on account
thereof), the amount so unpaid shall, from and after the second such occurrence
in any given year, bear interest at a rate (the "Delinquency Rate") equal to
three percent (3%) in excess of the Prime Rate as published in the Wall Street
Journal, from time to time in effect or, if such rate is in excess of any
maximum interest rate permissible under applicable law, the Delinquency Rate
shall be the maximum interest rate permitted under applicable law, commencing
with the due date and continuing through the day preceding the date on which
payment of such delinquent payment with interest thereon is paid.
16
<PAGE> 30
ARTICLE VIII
MORTGAGES
8.1 RIGHTS OF MORTGAGE HOLDERS. The word "mortgage" as used herein
includes mortgages, deeds of trust or other similar instruments evidencing other
voluntary liens or encumbrances, and modifications, consolidations, extensions,
renewals, replacements and substitutes thereof. The word "holder" shall mean a
mortgagee, and any subsequent holder or holders of a mortgage. Until the holder
of a mortgage shall enter and take possession of the Premises for the purpose of
foreclosure, such holder shall have only such rights of Landlord as are
necessary to preserve the integrity of this Lease as security. Upon entry and
taking possession of the Premises for the purpose of foreclosure, such holder
shall have all the rights of Landlord. Notwithstanding any other provision of
this Lease to the contrary, no such holder of a mortgage shall be liable either
as mortgagee or as assignee, to perform, or be liable in damages for failure to
perform, any of the obligations of Landlord unless and until such holder shall
enter and take possession of the Premises for the purpose of foreclosure, and
such holder shall not in any event be liable to perform or for failure to
perform the obligations of Landlord under Article 3. Upon entry for the purpose
of foreclosure, such holder shall be liable to perform all of the obligations of
Landlord (except for the obligations under Article 3), subject to and with the
benefit of the provisions of this Lease, provided that a discontinuance of any
foreclosure proceeding shall be deemed a conveyance under said provisions to the
owner of the equity of the Premises. No Fixed Rent, Additional Rent or any other
charge shall be paid more than thirty (30) days prior to the due dates thereof
and payments made in violation of this provision shall (except to the extent
that such payments are actually received by a mortgagee in possession or in the
process of foreclosing its mortgage) be a nullity as against such mortgagee and
Tenant shall be liable for the amount of such payments to such mortgagee.
The covenants and agreements contained in this Lease with respect to
the rights, powers and benefits of a holder of a mortgage (including, without
limitation, the covenants and agreements contained in this Section 8.1)
constitute a continuing offer to any person, corporation or other entity, which
by accepting a mortgage subject to this Lease, assumes (i) the obligations
herein set forth with respect to such holder and (ii) the obligation to release
proceeds for restoration pursuant to Section 6.2, provided that no default by
Tenant hereunder has occurred and continues beyond the applicable notice and
grace periods and that such proceeds are sufficient for restoration in
accordance with Section 6.2. Such holder hereby constitutes a party of this
Lease as an obligee hereunder to the same extent as though its name were written
hereon as such; and such holder shall be entitled to enforce such provisions in
its own name. Tenant agrees on request of Landlord to execute and deliver from
time to time any agreement which may be necessary to implement the provisions of
this Section 8.1.
17
<PAGE> 31
In the event of any act or omission by the Landlord which would give
the Tenant the right to terminate this Lease or to claim a partial or total
eviction, the Tenant shall not exercise any such right (a) until it shall have
given written notice of such act or omission to the holder of any deed of trust
or mortgage encumbering the Premises whose name and address shall have been
furnished to the Tenant in writing, at the last address so furnished, and (b)
until a reasonable period of time for remedying such an act or omission shall
have elapsed following the giving of such notice, provided that following the
giving of such notice the Landlord or said holder shall, with reasonable
diligence, have commenced and continued to remedy such act or omission or to
cause the same to be rendered.
In the event any proceedings are brought for the foreclosure of, or in
the event of exercise of the power of sale under, any mortgage or deed of trust
now or hereafter encumbering the Premises or any part thereof, Tenant shall
agree to and shall attorn to the purchaser upon such foreclosure or sale or upon
any grant of a deed in lieu of foreclosure, and recognize such purchaser as the
Landlord under this Lease if so requested by such purchaser.
8.2 SUPERIORITY OF LEASE; OPTION TO SUBORDINATE. Unless Landlord
exercises the option set forth below in this Section 8.2, this Lease shall be
superior to and shall not be subordinate to any mortgage or other voluntary lien
or other encumbrance on the Premises. Landlord shall have the option to
subordinate this Lease to any mortgage of the Premises provided that the holder
of record thereof enters into an agreement with Tenant by the terms of which
such holder will agree (a) to recognize all of the rights of Tenant under this
Lease, (b) to perform Landlord's obligations hereunder arising after the date of
such holder's acquisition of title as hereinafter described, and (c) to accept
Tenant as tenant of the Premises under the terms and conditions of this Lease in
the event of acquisition of title by such holder through foreclosure proceedings
or otherwise and Tenant will agree to recognize the holder of such mortgage as
Landlord in such event, which agreement shall be made expressly to bind and
inure to the benefit of the successors and assigns of Tenant and of the holder
and upon anyone purchasing said Premises at any foreclosure sale. Tenant and
Landlord agree to execute and deliver any appropriate instruments necessary to
carry out the agreements contained in this Section 8.2. Landlord represents that
as of the date of execution of this Lease, that there is no mortgage on the
Premises.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 NOTICES FROM ONE PARTY TO THE OTHER. All notices required or
permitted hereunder shall be in writing and addressed, if to the Tenant, at the
Original Address of Tenant or such other address as Tenant shall have last
designated by notice in writing to Landlord, with a copy to Thermo Electron
Corporation, 81 Wyman Street, Waltham, Massachusetts 02254, Attention: General
Counsel, and, if to Landlord, at the Original Address
18
<PAGE> 32
of Landlord or such other address as Landlord shall have last designated by
notice in writing to Tenant. Any notice shall be deemed duly given three (3)
business days after mailing to such address postage prepaid, registered or
certified mail, return receipt requested, or when delivered to such address by
hand.
9.2 QUIET ENJOYMENT. Landlord agrees, so long as Tenant is not in
default hereunder beyond the expiration of all applicable notice and cure
periods, Tenant shall and may peaceably and quietly have, hold and enjoy the
Premises during the Term without any manner of hindrance or molestation from
Landlord or anyone claiming under Landlord subject, however, to the terms of
this Lease.
9.3 LEASE NOT TO BE RECORDED. Tenant agrees that it will not
record this Lease. Both parties shall, upon the request of either, execute and
deliver a notice of this Lease in such form, if any, as may be permitted by
applicable statute. If this Lease is terminated before the Term Expiration Date,
the parties shall execute, deliver and record an instrument acknowledging such
fact and the actual date of termination of this Lease, and Tenant hereby
appoints Landlord its attorney-in-fact, coupled with an interest, with full
power of substitution to execute such instrument for the sole purpose of
terminating this Lease of record.
9.4 BIND AND INURE; LIMITATION OF LANDLORD'S LIABILITY. The
obligations of this Lease shall run with the land, and this Lease shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. No owner of the Premises shall be liable under this
Lease except for breaches of Landlord's obligations occurring while owner of the
Premises. The obligation of Landlord shall be binding upon the assets of
Landlord which comprise the Premises but not upon other assets of Landlord. No
individual partner, trustee, stockholder, officer, director, employee or
beneficiary of Landlord shall be personally liable under this Lease and Tenant
shall look solely to Landlord's interest in the Premises in pursuit of its
remedies upon an event of default hereunder, and the general assets of Landlord
and its individual partners, trustees, stockholders, officers, employees or
beneficiaries of Landlord shall not be subject to levy, execution or other
enforcement procedure for the satisfaction of the remedies of Tenant; provided
that the foregoing provisions of this sentence shall not constitute a waiver of
any obligation evidenced by this Lease and provided further that the foregoing
provisions of this sentence shall not limit the right of Tenant to name Landlord
or any individual partner or trustee thereof as party defendant in any action or
suit in connection with this Lease so long as no personal money judgment shall
be asked for or taken against any individual partner, trustee, stockholder,
officer, employee or beneficiary of Landlord.
9.5 ACTS OF GOD. In any case where either party hereto is required
to do, any act, delays caused by or resulting from acts of God, war, civil
commotion, fire, flood or other casualty, unusual labor difficulties, unusual
shortages of labor, materials or equipment, government regulations, unusually
severe weather, or other causes beyond such party's reasonable control shall not
be completed, whether such time be designated by a fixed date, a
19
<PAGE> 33
fixed time or a "reasonable time", and such time shall be deemed to be extended
by the period of such delay.
9.6 LANDLORD'S DEFAULT. Landlord shall not be deemed to be in
default in performance of any of its obligations hereunder unless it shall fail
to perform such obligations and such failure shall continue for a period of
thirty (30) days or such additional time as is reasonably required to correct
any such default after notice has been given by Tenant to Landlord specifying
the nature of Landlord's alleged default, provided Landlord has commenced to
cure such default within said thirty (30)-day period and thereafter diligently
prosecutes such cure to completion. Tenant shall have no right to terminate this
Lease for any default by Landlord hereunder and no right, for any such default,
to offset or counterclaim against any rent due hereunder.
In the event Landlord fails to act to cure any default of which it has
been given notice and opportunity to cure as provided in the immediately
preceding paragraph, Tenant may cure such default and recover from Landlord for
the reasonable costs and expenses incurred by Tenant in curing such default.
9.7 BROKERS. Each party warrants and represents to the other that
it has had no dealings with any broker or agent in connection with this Lease
other than the Broker(s) set forth in Article I and covenants to defend with
competent and experienced counsel, hold harmless and indemnify the other party
from and against any and all cost, expense or liability for any compensation,
commissions and charges claimed by any broker or agent other than the Broker(s)
set forth in Article I with respect to the indemnifying party's dealings in
connection with this Lease or the negotiation thereof. The fees and commissions
of the Broker(s) set forth in Article I shall be paid by Landlord.
9.8 APPLICABLE LAW AND CONSTRUCTION. This Lease shall be governed
by and construed in accordance with the laws of the Commonwealth of
Massachusetts. If any term, covenant, condition or provision of this Lease or
the application thereof to any person or circumstances shall be declared
invalid, or unenforceable by the final ruling of a court of competent
jurisdiction having final review, the remaining terms, covenants, conditions and
provisions of this Lease and their application to persons or circumstances shall
not be affected thereby and shall continue to be enforced and recognized as
valid agreements of the parties, and in the place of such invalid or
unenforceable provision, there shall be substituted a like, but valid and
enforceable provision which comports to the findings of the aforesaid court and
most nearly accomplishes the original intention of the parties.
There are no prior oral or written agreements between Landlord and
Tenant affecting this Lease. This Lease may be amended and the provisions hereof
may be waived or modified, only by instruments in writing executed by Landlord
and Tenant.
20
<PAGE> 34
The titles of the several Articles and Sections contained herein are
for convenience only and shall not be considered in construing this Lease.
Unless repugnant to the context, the words "Landlord" and "Tenant"
appearing in this Lease shall be construed to mean those named above and their
respective heirs, executors, administrators, successors and assigns, and those
claiming through or under them respectively. If there be more than one tenant,
the obligations imposed by this Lease upon Tenant shall be joint and several.
9.9 SUBMISSION NOT AN OFFER. The submission of a draft of this
Lease or a summary of some or all of its provisions does not constitute an offer
to lease or demise the Premises, it being understood and agreed that neither
Landlord nor Tenant shall be legally bound with respect to the leasing of the
Premises unless and until this Lease has been executed by both Landlord and
Tenant and a fully executed copy delivered.
9.10 EXISTING LEASE. The existing lease dated February 27, 1987 by
and between Forge Park Limited Partnership as Landlord whose interest has been
assigned to Landlord, and Tenant shall, upon the execution and delivery of this
Lease, be terminated effective January 31, 1996 as to all unaccrued obligations
of either party.
9.11 INDEMNIFICATION BY LANDLORD. Subject to Section 9.4 hereof,
Landlord shall indemnify, defend with competent and experienced counsel and hold
harmless Tenant, its parent, subsidiaries and affiliates, and their respective
officers, directors, shareholders and employees, from and against any and all
damages, liabilities, actions, causes of action, suits, claims, demands, losses,
costs and expenses (including without limitation reasonable attorneys' fees and
disbursements and court costs) to the extent arising during the Term hereof from
or in connection with the negligence or willful misconduct of Landlord, its
agents, employees, representatives or contractors. The provisions of this
Section 9.12 shall survive the expiration or earlier termination of this Lease.
WITNESS the execution hereof under seal on the day and year first above
written.
TENANT:
THERMO INSTRUMENT SYSTEMS INC.
By: /s/ Earl R. Lewis
------------------------------------
Its: Executive Vice President &
Chief Operating Officer
21
<PAGE> 35
LANDLORD:
PRUDENTIAL REALTY ACQUISITION
FUND II LIMITED PARTNERSHIP
By: Prudential Realty Partnerships, Inc.
------------------------------------
Its: General Partner
By: /s/ Kevin R. Smith
------------------------------------
Kevin R. Smith, Vice President
22
<PAGE> 36
EXHIBIT A
AND
EXHIBIT A-1
DESCRIPTION OF PREMISES
Lot 6 on a Plan entitled "Subdivision Plan of Land in Franklin, MA
(Norfolk County) Being a Subdivision of Lot 26 shown on Land Court Plan 7594-5
Scale 1 inch = 100 Feet Date: October 31, 1986"
The portion of such plan showing Lot 6 is attached hereto.
<PAGE> 37
LOT 5
UNREGISTERED A=644,526:SQ FT
REGISTERED A=173,257:SQ FT
-----------------------------
TOTAL A=817,783:SQ FT
A=18774:ACRES
N/F
JAMES R. ALLEN, THOMAS M. ALPERIN
WILLIAM E. BALSINGER, SEYMOUR BASKIN AND
JOHN P. BOLLIG; TRUSTEES OF FORGE PARK REALTY TRUST
[Plot Plan of Property]
<PAGE> 38
EXHIBIT A-2
1. Terms and provisions of Forge Park Covenants and Restrictions.
2. Slope easement for the benefit of Ten Forge Park as shown on
Exhibit A-1.
3. Future creation of a 12 foot sewer and utility easement along the
Westerly side of locus and 20 foot sewer and utility easement along the
Easterly side of locus.
4. Easement granted by said Trustees to New England Telephone and
Telegraph Company filed with said Registry District as Document No.
501367 on September 17, 1986, recorded with said Deeds as Instrument
No. 106968 (Book , Page ).
5. Order of Land Court to approve submission of definitive subdivision
plan, Case No. 7594-S dated February 12, 1987, filed with said Registry
District on February 20, 1987 as Document No. 514581.
<PAGE> 39
EXHIBIT C
FORGE PARK COVENANTS AND RESTRICTIONS
COVENANTS AND RESTRICTIONS
TO BE SET FORTH IN DEED OF THE PREMISES
The premises are conveyed subject to the following restrictions hereby
imposed for the exclusive benefit of the Grantors and their successors in trust
as owners of the benefitted land hereinafter described and of such of those
successors in title to any portions of the benefitted land, if any, to whom the
right to enforce these restrictions may hereafter be expressly granted of
record:
1. DESIGN REVIEW AND APPROVAL
In order to achieve continuity and compatibility of architecture,
landscaping, and site development, all plans pertaining to building
and site design (including layout, parking capacity, landscaping,
drainage, utilities, lighting, signs, and subsequent alterations and
additions) are subject to review and prior written approval by the
Grantors or such successors. Such plans shall conform to master
development plans for Forge Park (master drainage, definitive
subdivision, and utility infrastructure plans) except with written
consent from the Grantors or such successors.
The design review process is intended to facilitate the development and
coordination of building plans in addition to the enforcement of these
protective restrictions. All plans will be reviewed by the Grantors or
such successors within thirty (30) days from submission. Upon
completion of construction in accordance with approved plans, the
Grantors or such successors, upon request, shall execute an instrument
in recordable form approving such construction.
2. USES ALLOWED
No uses will be made of the premises except for the purposes of office,
light industry, manufacturing, research and development, warehousing
and distribution, hotel, conference/educational training, child care,
fitness, telecommunications transmission, and limited retail uses in
compliance with the local zoning by-laws and regulations. Any other
uses must be approved by the Grantors or such successors. No use shall
be offensive to the neighborhood by reason of odor, fumes, dust, smoke,
noise or pollution, nor hazardous by reason of
<PAGE> 40
danger of fire, explosion, or improper use and storage of hazardous
waste materials.
3. DEVELOPMENT DENSITY
Minimum setbacks for buildings shall be fifty (50) feet from all street
lines; thirty (30) feet from side property lines; and thirty (30) feet
from rear property lines. Front yard (50 foot setback) shall be
maintained as a 75% landscaped area with only paved driveways and
sidewalks allowed. For side and rear yards, fifteen (15) foot setback
lines will be maintained as landscaped areas with the exception of 25%
of such area allowed for paved driveways and sidewalks. Minimum fifty
(50) foot setback and landscaped areas will be maintained for land
abutting residentially zoned property.
5. BUILDING EXTERIOR
To maintain a quality standard of construction and appearance, the
exterior walls of each building are to be constructed of brick,
architectural concrete block, architectural pre-cast concrete,
procelain enamel or similar metal panels, or other comparable material
approved by the Grantor or such successors. Building roofs will be
flat, with a slope of no more than one foot per twenty-four (24) lineal
feet. All rooftop structures or equipment shall be screened, so as not
to be visible from public view. With approval of the Grantors or such
successors, the requirement of screening may be waived if rooftop
equipment is organized in a consistent pattern and painted a uniform
color so as to present an inoffensive roofscape. All equipment mounted
at grade shall be architecturally related to its surroundings and
screened with landscaping or approved fencing material.
6. LOADING DOCKS
Loading docks will not be permitted to face any street or primary
access roadways within Forge Park. Where necessary, structural buffers
and/or landscaping shall be provided to screen loading areas from
public view.
7. PARKING AREAS
Parking areas shall be surfaced with bituminous concrete, concrete,
brick, or approved equal. Curbing will be provided to control drainage
runoff from parking areas. Type VB vertical granite curb will be
provided at curb cuts on the public way. No on-street parking will be
permitted. Parking of vehicles shall only be permitted on paved areas.
<PAGE> 41
8. OPEN STORAGE
Open storage shall be permitted provided such storage is located to the
rear of the front line of the principal building, shall not exceed
fourteen (14) feet in height and shall be screened from public view by
substantial means, such as an ornamental wall or approved fencing
erected in such a way as not to make the exterior appearance of the
building or views from adjacent buildings unacceptable. Plans for open
storage will be submitted for approval by the Grantors or such
successors.
9. LIGHTING
Walkways and parking areas shall be adequately lighted. No exterior
lighting shall be mounted higher than twenty-five (25) feet above
finished grade, and lighting sources shall be shielded to prevent
excessive glare. Building mounted lighting is not permitted for
illumination of yards to the front and street side of buildings.
Properties adjacent to residential areas will design lighting plans in
order to minimize lighting impact and glare on residential areas. In
all cases, lighting shall not spill beyond site boundaries. Lighting
source shall be metal halide, fluorescent, incandescent, or mercury
vapor.
10. UTILITY SERVICE LINES
All utility service lines shall be placed underground.
11. SIGNAGE
The purpose of signage standard is to ensure a consistency of park
signage and enhance the visual unity and clarity of the park
environment. Building/site identification signs must conform to park
standards. All signs within individual sites shall be internally
consistent. All signs will be reviewed for approval by the Grantors or
their successors.
ATTACHED TO STRUCTURES
Signs shall not extend above the roof line of the structure or
wall to which the sign is attached. The area of the sign will
be no greater than twenty percent (20%) of the exterior wall
area. The height of the letters will be limited to five (5)
feet. Signs shall not extend greater than eighteen (18) inches
from the building wall.
FREE STANDING SIGNS
Free standing signs may be used for business identification,
directional purposes and traffic control. Signs shall be
limited to ten (10) feet in
<PAGE> 42
height and sixty (60) square feet. Where possible, such signs
shall be coordinated with park signed system standards.
ILLUMINATION
Illuminating signs must be restrained in order not to detract
from the aesthetics of the park. Flashing and moving signs are
not permitted.
DIRECTIONAL SIGNS
All signs employed for directional purposes (i.e., parking,
shipping, and receiving, etc.) shall be no greater than four
(4) square feet and shall be installed no closer than
twenty-five (25) feet inside of public right of way lines.
12. BUILDING MAINTENANCE
Reasonable care shall be taken to maintain all structures, landscaping,
and site improvements in accordance with their condition as of the
completion of construction. In the event there is a partial or total
destruction of a structure or other improvements, the owner of the
structure shall commence and proceed as soon as practicable, but in no
case later than six (6) months after the event, either: (1) to rebuild
the damaged structure and/or improvements, or (2) to demolish the
damaged structure and/or improvements and to restore the premises as
much as practicable to their condition prior to construction.
13. CONDITION OF PREMISES
If property is unimproved, grass and weeds must be kept cut below ten
(10) inches. If property is improved, it must be landscaped within six
(6) months upon completion of construction (or no later than is
practicable based on weather and growing conditions) according to a
plan approved by the Grantors or such successors. Landscaping shall be
designed to provide a park-like setting for the buildings and to screen
parking, loading, and road areas. Minimum standards for trees include:
street trees 2 inches caliper, evergreen trees 4 feet - 6 feet height,
and deciduous ornamental and screening trees 2 inches caliper.
All grounds will be maintained in first-class condition suitable to a
quality industrial park. If, in the opinion of the Grantors or such
successors, property is poorly maintained, and after thirty (30) days
prior notice to the owner, the Grantors or their successors reserve the
right to enter upon the premises and to
<PAGE> 43
maintain the same in proper condition at the owner's expense.
14. The premises shall not be subdivided without the express approval of
the Grantors or such successors.
These restrictions shall remain in effect until January 1, 2017 and may
be extended for successive periods of twenty (20) years each pursuant to General
Laws, Chapter 184, Section 27, as the same may be amended.
Approvals may be given, and these restrictions waived in particular
respects, only by an instrument in writing signed by the Grantors or their
successors in trust, as long as they are owners of any portion of the benefitted
land hereinafter referred to, or their successors in title to whom the exclusive
benefit of these restrictions may hereafter have been expressly granted of
record, or by any agent to whom authority therefor may have been delegated by
the Grantors or such successors by instrument duly recorded, and such
instrument, whether or not recorded, shall be binding on all persons succeeding
to the benefit of these restrictions. The completion for more than six (6)
months of any construction, other than exterior signs, driveways, parking areas,
grading and landscaping, shall be conclusive evidence of approval or waiver
unless suit for enforcement has been theretofore commenced and notice thereof
theretofore recorded appropriately to affect the record title to the premises
and any such construction may be repaired or replaced in case of damage or
destruction. No owner shall be responsible except for violations occurring on
his land while owner.
No general or common scheme shall be implied in favor of the owned
premises nor shall the Grantors be under any duty or obligation to enforce any
restrictions which may be imposed on other premises within Forge Park.
The Grantors benefitted land consists of the registered and
unregistered land in Franklin, Norfolk County, Massachusetts owned by the
Grantors shown on a plan entitled: "Plan of Land in Franklin, Mass.", dated
October 30, 1980, by Schofield Brothers, Inc. recorded with the Norfolk
Registry of Deeds in Plan Book 286 as Plan No. 1071 of 1980.
<PAGE> 44
ASSIGNMENT OF LEASE
This ASSIGNMENT (this "Assignment") is made as of the 30th day of August,
1996, by and between Prudential Realty Acquisition Fund II Limited Partnership,
a Delaware limited partnership having a principal place of business at 751 Broad
Street, Newark, New Jersey ("Seller"), and MGI 8 Forge Park, Inc., a
Massachusetts corporation having a principal place of business at c/o MGI
PROPERTIES, One Winthrop Square, Boston, Massachusetts 02110 ("Buyer").
Buyer is today purchasing from Seller the land, with buildings and
improvements thereon, known as 8 Forge Park, Franklin, Massachusetts, more
particularly described in EXHIBIT A attached hereto (the "Premises"). In
consideration of such purchase and the conveyance of the Premises by Seller and
other valuable consideration, the receipt and sufficiency of which are mutually
acknowledged, the parties agree as set forth below.
Seller hereby assigns to Buyer, without recourse, all of Seller's right,
title and interest as landlord in the lease dated February 1, 1996, by and
between Seller as landlord and Thermo Instrument Systems, Inc. as tenant (the
"Lease"); and as owner of the Premises in all licenses, permits and approvals of
governmental authorities with respect to the Premises (the "Permits"), with
respect to the period from and after the date of this Assignment. Buyer hereby
accepts the foregoing assignment and assumes and agrees to perform all
obligations of the landlord under the Lease and all obligations of the owner of
the Premises under the Permits, with respect to the period from and after the
date of this Assignment.
Seller makes no representation or warranty whatsoever with respect to the
Lease and Permits.
Seller hereby agrees to indemnify the Buyer against and hold the Buyer
harmless from all costs, claims, and liabilities of the landlord under the Lease
arising with respect to the period prior to the date of this Assignment, and the
Buyer hereby agrees to indemnify the Seller against and hold the Seller harmless
from all costs, claims, and liabilities of the landlord under the Lease arising
with respect to the period from and after the date of this Assignment.
[Remainder of Page Intentionally Left Blank]
<PAGE> 45
IN WITNESS WHEREOF, the Buyer and the Seller have caused this Assignment to
be executed under seal by their duly authorized representatives as of the day
and year first above written.
SELLER
PRUDENTIAL REALTY ACQUISITION
FUND II LIMITED PARTNERSHIP
PRUDENTIAL REALTY
PARTNERSHIP, INC., its General Partner
By: /s/ Gary H. Picone
-----------------------------------
Name: Gary H. Picone
Title: Vice President
BUYER
By: /s/ Karl W. Waller
-----------------------------------
Name: Karl W. Waller
Title: SVP
-2-
<PAGE> 1
Exhibit 10.15
SUBLEASE AGREEMENT
SUBLEASE, effective as of February 1, 1984, between ORIEL CORPORATION,
having an address at 250 Long Beach Boulevard, Stratford, Connecticut
(hereinafter called the "Lessee") and OSBROOK ASSOCIATES LIMITED PARTNERSHIP,
having an address at 250 Long Beach Boulevard, Stratford, Connecticut
(hereinafter collectively called the "Lessor").
PREFACE
A lease was executed on and as of November 1 , 1975, between
Bardford-Connecticut Associates (together with its successors and assigns,
hereinafter the "Original Lessor"), as lessor, and Krautkramer-Branson, Inc.
("KBI"), as lessee, by the terms of which certain real property located at 250
Long Beach Boulevard, Stratford, Connecticut, more fully described in Schedule A
hereto was leased to KBI for a term of 20 years, commencing on November 1, 1975
and ending on November 30, 1995, subject to certain renewal options (Notice of
said lease was recorded at Volume 503, page 14 of the Stratford Land Records in
the County of Fairfield and State of Connecticut) (the "Lease").
An assignment of the Lease from KBI to Oriel Corporation was executed on
February 21, 1983 to take effect on May 1, 1983 at 12:01 a.m. (said assignment
was recorded at Volume 578, page 611 of the Stratford Land Records). Oriel
Corporation in turn subleased a portion of the real property described on
Schedule A hereto to KBI pursuant to a Sublease Agreement dated as of May 1,
1983 (the "Original Sublease").
Oriel Corporation reassigned the Lease to Roger Gilbert, Jr. and Marion
M. Gilbert pursuant to, a Reassignment of Lease dated September 30, 1983
recorded at Volume 586, page 401 (the "Reassignment"). Roger and Marion Gilbert
assigned their interest in the Lease to the Lessor as a contribution to capital
by Assignment dated January 6, 1984 recorded in the Stratford
1
<PAGE> 2
Land Records at Volume 589, page 672.
Lessor has acquired the fee interest in the Property by deed dated
January 9, 1984 from Smith-Bridge Associates recorded in the Stratford Land
Records at Volume 589, page 669.
LEASE TERMS
WHEREAS, Lessor now desires to sublease the Property (as hereinafter
defined) to the extent set forth herein, and Lessee desires to accept the
sublease thereof;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein expressed, and subject to the provision of the Original Sublease:
ARTICLE I
DEMISE OF PREMISES
In consideration of the rents and covenants herein stipulated to be paid
and performed, Lessor hereby demises and lets to Lessee, and Lessee hereby
accepts the demise and lets from Lessor, for the respective terms hereinafter
described, the premises consisting of (i) the parcel of land described in
Schedule A hereto, (ii) all improvements constructed and to be constructed on
said parcel and (iii) all easements, rights and appurtenances relating to said
parcel upon the terms and conditions hereinafter specified (such premises being
herein called the "Property").
ARTICLE II
CERTAIN DEFINITIONS; SUBLEASE MAY BE CONVERTED
The term "Mortgage", "Mortgagee" and "Note" shall have the respective
meanings set forth in the Lease (as defined above). In the event that the Note
is paid in full and the Mortgage is discharged and Lessor is then the fee owner
at such time, the interests of Osbrook Associates as lessor and lessee under
said Lease shall be deemed to have merged, the Lease to have terminated
2
<PAGE> 3
and the provisions in this Sublease requiring Lessee to comply with the terms of
the Mortgage and the Lease shall no longer apply and, at such time, this
Sublease shall be deemed to be a lease directly from the Lessor as fee owner.
ARTICLE III
TITLE AND CONDITION
The Property is demised and sublet subject to (a) the rights of any
parties in possession thereof, including KBI under the original Sublease, and
the existing state of the title thereof as of the commencement of the term of
this Sublease, (b) any state of facts which an accurate survey or physical
inspection thereof might show, and (c) all zoning regulations, restrictions,
rules and ordinances, building restrictions and other laws and regulations now
in effect or hereafter adopted by any governmental authority having
jurisdiction. The buildings, structures and other improvements located on the
Property are subleased to and accepted by Lessee in their present condition,
without representation or warranty by Lessor.
ARTICLE IV
USE OF PROPERTY; QUIET ENJOYMENT
4.1. Lessee may occupy and use the Property for any lawful purpose.
4.2. If and so long as there shall be no default under this Sublease
and Lessee shall observe and perform all covenants, agreements and obligations
required by it to be observed and performed hereunder, Lessor warrants peaceful
and quiet occupation and enjoyment of the Property by Lessee; provided, that
Lessor, Original Lessor and their respective agents may enter upon and examine
the Property at reasonable times. Any failure by Lessor to comply with the
foregoing covenant shall not give Lessee any right to cancel or terminate this
Sublease, or to
3
<PAGE> 4
abate, reduce or make deduction from or offset against any Basic Rent, as
hereinafter defined, or additional rent or other sums payable under this
Sublease, or to fail to perform or observe any other covenants, agreements or
obligations of Lessee hereunder.
ARTICLE V
TERM OF LEASE; RENEWAL
5.1 The initial term of the Sublease shall begin on February 1, 1984
and, unless extended as provided in this Article V or in Article XII, shall end
at midnight on January 31, 1998 or shall end on the date upon which said term
may be canceled or terminated pursuant to any of the conditions or covenants of
this Sublease or pursuant to law. The 14 year term of this Sublease for the
period February 1, 1984 through January 31, 1998, unless extended as provided in
Article XII shall be known as the "Unmodified Primary Term".
5.2. Provided this Sublease shall be in full force and effect, Lessee
shall have the right and option to extend this Sublease for two consecutive
extended terms of five years (the "Extended Terms") unless and until this
Sublease shall be sooner terminated pursuant to the terms of this Sublease. The
first such Extended Term shall commence on the day immediately following the
date on which the Primary Unmodified Term shall end, or in the event that the
term of the Sublease is extended pursuant to Article XII, on the day immediately
following the date of expiration of such extended term. The first Extended Term
shall end at midnight of the day immediately preceding the fifth anniversary of
the commencement of the first Extended Term. The second Extended Term shall
commence on the day immediately following the date the first Extended Term
expires and shall end on midnight on the day immediately preceding the fifth
anniversary of the commencement of the second Extended Term. LESSEE SHALL
EXERCISE EACH SUCH
4
<PAGE> 5
OPTION TO EXTEND THIS SUBLEASE BY GIVING NOTICE IN WRITING TO LESSOR AT LEAST
180 DAYS PRIOR TO THE END OF THE TERM OF THIS SUBLEASE THEN IN EFFECT provided,
however, that if the fair rental value has not yet been established pursuant to
Section 6.2 hereof, Lessee shall have one additional month to give notice of its
intent to exercise the option. Notwithstanding the foregoing, Lessee shall not
forfeit its option to extend this Sublease by failure to give notice within the
specified time period(s) unless Lessor has given written notice of not less than
thirty (30) days and not greater than sixty (60) days that Lessee must make an
election whether or not to extend this Sublease. If Lessor has not given such
notice at least thirty days before the expiration of the term then in effect and
Lessee has not notified Lessor whether or not Lessee elects to extend the term,
then if Lessee has not removed itself from the Property by the end of such term
then in effect, this Sublease shall automatically be extended for an Extended
Term as though Lessee had given timely notice of its election to extend the
term. If Lessor gives timely notice (at least thirty days before the expiration
of the term then in effect) to Lessee as required by this Section 5.2 and Lessee
does not notify Lessor of its election to extend the term within the later of
(a) thirty days of such notice from Lessor or (b) the time period specified
above in this Section 5.2 for Lessee to give notice, then this Sublease shall
automatically terminate at the end of the term of this Sublease then in effect
and Lessee shall have no further option to extend this Sublease. If Lessee does
give timely written notice to Lessor that Lessee elects to extend the term of
this Sublease, such notice shall automatically extend this Sublease for an
Extended Term and no instrument of renewal need be executed. Except as provided
in this Section 5.2 Lessee's holding over after the expiration of the term shall
not act to extend the term of this Sublease.
5
<PAGE> 6
ARTICLE VI
RENT
6.1. BASIC RENT. Lessee covenants to pay to Lessor, as installments of
rent for the Property during the Primary Unmodified Term of this Sublease (the
"Basic Rent"):
(a) FOR THE PERIOD COMMENCING FEBRUARY 1, 1984 AND ENDING
JANUARY 31, 1989: the sum of $350,000.04 per annum payable in
equal monthly installments of $29,166.67 commencing on February 1,
1984 and payable on the lst day of each month thereafter;
(b) FOR THE PERIOD COMMENCING FEBRUARY 1, 1989 AND ENDING
JANUARY 31, 1994: subject to the "Cap" as defined in Section 6.2,
the greater of 350,000.04 per annum or the "fair rental value" of
the Property to be determined as provided in Section 6.2 below,
such greater amount to be payable in equal monthly installments
commencing on February 1, 1989 and payable on the lst day of each
month thereafter;
(c) FOR THE PERIOD COMMENCING FEBRUARY 1, 1994 AND ENDING
JANUARY 31, 1998: subject to the "Cap" as defined in Section 6.2,
the greater of $350,000.04 per annum or the "fair rental value" of
the property to be determined as provided in paragraph 6.2 below,
such greater amount to be payable in equal monthly installments
commencing on February 1, 1994 and payable on the lst day of each
month thereafter.
6.2. FAIR RENTAL VALUE; CAP ON RENT. The "fair rental value" as
referenced in Sections 6.1(b) and 6.1(c) of this Sublease shall be the fair
rental value of the Property as determined
6
<PAGE> 7
December 1988 and December 1994 respectively (not including any net additions of
building or parking space paid for by Lessee, if any, subsequent to the
commencement of this Sublease). If the Lessor and Lessee are unable to agree as
to the fair rental value at such time(s) and if the Lessor claims the fair
rental value exceeds $350,000.04 per annum, then the Lessor and the Lessee shall
each appoint one licensed real estate appraiser who shall jointly attempt to
determine and agree upon the fair rental value. If they are unable to agree and
one of them has determined that the fair rental value exceeds $350,000.04 per
annum then (a) the fair rental value shall be the average of the two appraisals
if the difference between them is not greater than five percent of the lower
appraisal or (b) if the appraisals are not within said five percent of one
another then the appraisers shall together select a third licensed appraiser who
shall make a determination of fair rental value after reviewing the reports of
the first two appraisers and after doing such independent research as he deems
appropriate. The value determined by the third appraiser shall control if it
falls between the values set by the other two appointed appraisers and if not,
whichever value determined by the first two appraisers is closest in amount to
the third appraisal shall control. Each party shall pay the cost of its
appraiser and the parties shall share equally the cost of the third appraiser.
Notwithstanding the foregoing provisions of this Section 6.2, the Basic rent
shall not exceed a certain limit (the "Cap") which shall be determined as
follows: The Cap for the five year period of this Sublease commencing February
1, 1989 shall be the initial amount of annual Basic Rent ($350,000.04) (the
"Initial Rent") increased as of December 1, 1988 by the percentage increase in
the Consumer Price Index as published by the U.S. Department of Labor for the
New York area (the "Index") from February 1, 1984 through December 1, 1988. The
Cap for the four year period of this Sublease commencing February 1, 1994 shall
be the
7
<PAGE> 8
Initial Rent increased as of December 1, 1993 by the percentage increase in the
Index from February 1, 1984 through December 1, 1993. Under no circumstances
shall the Cap apply to reduce the rent below the Initial Rent.
6.3. ADDITIONAL RENT. During the term of this Sublease, including
during the period of any renewals or extensions, Lessee covenants to pay and
discharge when the same shall become due, as additional rent, all other amounts
which Lessee assumes or agrees to pay or discharge pursuant to this Sublease,
together with every fine, penalty, interest and cost which may be added for
non-payment or late payment thereof. Lessee shall also pay to Lessor, on demand,
as additional rent, interest at the rate of 13-3/4% per annum on all overdue
installments of Basic Rent and on all overdue amounts of additional rent
relating to obligations which Lessor shall have paid on behalf of Lessee, in
either case, from the due date thereof until paid in full.
6.4. RENT DURING RENEWAL PERIOD. In the event that the Lessee exercises
its option to extend this Sublease pursuant to Article V the Basic Rent for
such renewal period(s) shall be the "fair rental value" of the property
(excluding any net additions of building or parking space paid for by Lessee).
Fair rental value for each of the five year extensions shall be determined as
of seven months before the commencement of each such renewal period (in order
to allow Lessee sufficient time to elect to renew this Sublease) in the same
manner as provided in Section 6.2 except that no maximum or cap shall be placed
on the fair rental value. In addition to the Basic Rent, Lessee shall pay and
does covenant to pay all additional rent required to be paid by the terms of
this Sublease.
6.5. WHERE RENT TO BE PAID. Lessee agrees to pay the installments of
rent provided for in Sections 6.1, 6.2 and 6.4 and as may be provided pursuant
to Article XII of this Sublease at
8
<PAGE> 9
Lessor's address at 250 Long Beach Boulevard, Stratford, Connecticut or at such
other place within the continental United States or to such other person as
Lessor from time to time may designate to Lessee in writing, in lawful money of
the United States of America.
ARTICLE VII
NET LEASE; NON-TERMINABILITY
7.1. This is a net lease, and Lessee shall pay all costs, taxes,
assessments and other expenses of every character, foreseen or unforeseen, for
the payment of which Lessor or Lessee is or shall become liable by reason of its
estate or interest in the Property, or which are connected with or arise out of
the possession, use, occupancy, maintenance, repair or rebuilding of the
Property or any portion thereof including, without limitation, those
specifically referred to in this Sublease. Notwithstanding the foregoing Lessee
shall not be made liable by this Section for any personal injury or property
damage caused by Lessor in carrying out its responsibilities under Articles 12,
13 or 14 herein. Further, this Section 7.1 shall not apply so as to make Lessee
liable for any breaches of the terms of this Sublease by Lessor. Basic Rent,
additional rent and all other sums payable hereunder by Lessee shall be paid
without notice or demand, and without setoff, counterclaim, abatement,
suspension, deduction or defense. Lessee shall not be obligated by this Sublease
to pay the organizational expenses or general management expenses of the Lessor
nor to pay the cost of title insurance procured to benefit the Lessor or any
mortgagee from whom Lessor shall borrow money. Lessee shall also not be required
to pay the cost of any conveyance taxes or recording fees in connection with the
transfer of title from Smith-Bridge Associates to Lessor.
7.2. Lessee agrees that it will remain obligated under this Sublease in
accordance with its terms, and that it will not take any action to terminate,
rescind or avoid this Sublease,
9
<PAGE> 10
notwithstanding (i) the bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding-up or other proceeding affecting
Original Lessor or Lessor or any assignee of Original Lessor or by any court in
any such proceeding, (ii) any action with respect to the Lease or this Sublease
which may be taken by any trustee or receiver of Original Lessor or Lessor or of
any assignee of Original Lessor or Lessor in any such proceeding or by any court
in any such proceeding or (iii) any default under or proceeding to enforce the
Mortgage.
7.3. Lessee waives all rights which may now or hereafter be conferred
by law (i) to quit, terminate or surrender this Sublease or the Property or any
part thereof or (ii) to any abatement, suspension, deferment or reduction of the
Basic Rent, additional rent or any other sums payable under this Sublease,
except as otherwise expressly provided herein.
ARTICLE VIII
TAXES AND ASSESSMENTS; COMPLIANCE WITH LAW
8.1. Lessee shall pay, when due: (i) all taxes, assessments (including
assessments for benefits from public works or improvements, whether or not begun
or completed prior to the commencement of the term of this Sublease and whether
or not to be completed within said term), levies, fees, water and sewer rents
and charges, and all other governmental charges, general and special, ordinary
and extraordinary, and whether or not the same shall have been within the
express contemplation of the parties hereto, together with any interest and
penalties thereon, which are, at any time, imposed or levied upon or assessed
against Original Lessor or Lessor or the Property or any party thereof, or any
Basic Rent, any additional rent reserved or payable hereunder or any other sums
payable by Lessee hereunder, or upon this Sublease or the leasehold estate
hereby created or which arises in respect of the operation, possession,
occupancy or use
10
<PAGE> 11
thereof, or upon the gross receipts from the Property or from the earnings
arising from the use or occupancy thereof, or which arise in respect of the use
or occupancy of the Property or any part thereof, or the lien of or interest of
the Mortgagee, or of any holder of the Note, in the Property, and all sales and
use taxes which may be levied or assessed against or payable by Original Lessor
or Lessor or Lessee on account of the acquisition, leasing or use of the
Property or any portion thereof and (ii) all charges for water, gas, light,
heat, telephone, electricity, power and other utility and communications
services rendered or used on or about the Property. Notwithstanding the
foregoing provisions of this Section 8.1, Lessee shall not be required to pay
any franchise, corporate, estate, inheritance, succession, transfer, income,
profits or revenue taxes of original Lessor or Lessor (other than any gross
receipts or similar taxes imposed or levied upon, assessed against or measured
by the Basic Rent, additional rent or any other sums payable by Lessee
hereunder) unless any such tax, assessment, charge or levy is imposed or levied
upon or assessed against Original Lessor or Lessor in substitution for, in place
of or as a supplement to any other tax, assessment, charge or levy referred to
in this Section 8.1.
8.2 Lessee shall, at its expense, comply with, and shall cause the
Property to comply with, all governmental statutes, laws, rules, orders,
regulations and ordinances affecting the Property or any part thereof, or the
use thereof, including those which require the making of any structural,
unforeseen or extraordinary changes, whether or not any of the same, which may
hereafter be enacted, involve a change of policy on the part of the governmental
body enacting the same. Notwithstanding the foregoing provisions of this Section
8.2; Lessor shall initially have the responsibility to cause any repairs or
restorations of the Property required to be -performed by Lessor under Articles
XIII or XIV, or improvements which Lessor agrees to make pursuant to
11
<PAGE> 12
Article XII, to comply with all applicable governmental statutes, laws, rules,
order and regulations and thereafter such responsibility shall shift to Lessee.
Less-ee shall, at its expense, comply with the requirements of all policies of
insurance which at any time may be in force with respect to the Property and
with the provisions of all contracts, agreements and restrictions affecting the
Property or any part thereof or the ownership, occupancy or use thereof.
ARTICLE IX
LIENS
Lessee shall remove and discharge promptly, at its expense, all liens,
encumbrances and charges on the Property or any interest therein which arise out
of the ownership, possession, use,, occupancy, maintenance, repair or rebuilding
of the Property or by reason of labor or materials furnished or claimed to have
been furnished to Lessee at Lessee's request, but excluding Permitted Exceptions
as defined in the Mortgage. This Article IX shall not apply to repairs or
restorations by Lessor pursuant to Articles XIII or XIV or to repairs made by
Lessor on behalf of Lessee pursuant to Article XI which repairs Lessee claims
were not necessary or if necessary, were excessive and unreasonable. Disputes
between Lessor and Lessee concerning such liens may be submitted by Lessor or
Lessee to commercial arbitration.
ARTICLE X
INDEMNIFICATION
Lessee shall pay, and shall and does hereby indemnify, protect and hold
Lessor harmless from and against, any and all liabilities, losses, damages,
costs, expenses (including all reasonable attorney's fees and expenses of
Lessor), causes of action, suits, claims, demands or judgments of any nature
whatsoever arising from (i) Lessee's use of the Property, (ii) any injury to, or
the death
12
<PAGE> 13
of, any person, or any damage to property on the Property or upon adjoining
sidewalks, streets or ways, or in any manner growing out of or connected with
the use, non-use, condition or occupation of the Property or any part thereof or
resulting from the conditions thereof or of adjoining sidewalks, streets or
ways, except such indemnification shall not apply when such injuries occur in
connection with repairs or restoration ,being made by Lessor pursuant to Article
XIII or XIV, or in connection with the making of any improvements by Lessor
which Lessor agrees to make pursuant to Article XII, (iii) the violation by
Lessee of any agreement or condition of this Sublease, (iv) any contest
permitted by Article XVII and (v) the violation by Lessee of any contract or
agreement to which Lessee is a party, or any restriction, statute, law,
ordinance or regulation, in each case affecting the Property or any part
thereof, or the ownership, occupancy or use thereof.
ARTICLE XI
MAINTENANCE AND REPAIR
11.1. Lessee shall, at its expense, keep and maintain the Property in
good repair and condition, except that in no event shall Lessee be obligated to
make those major repairs or restorations which would otherwise be Lessor's
obligation under Article XIII or XIV provided Lessee has given reasonable notice
to Lessor that Lessor is responsible for such repairs or restorations under
Article XIII or XIV. It is the intent of this Article that Lessee will be
responsible for and paying for general maintenance and ordinary repairs (such as
repairing roof leaks, broken windows, furnace repairs, etc.). Lessor shall only
be responsible for causing repairs or restorations to be made involving
significant damage to the Property but not for ultimately bearing the cost of
such repairs or restorations. Lessor's direct cost, as incurred, in making such
13
<PAGE> 14
repairs or restorations not covered by insurance, shall be paid by Lessee within
30 days after demand is made by Lessor in writing, which demand shall include
reasonable itemization of such costs. Disputes over the reasonableness of such
expenses may be submitted to commercial arbitration. In the event damage occurs
to the Property which Lessee believes should be the responsibility of Lessor to
repair pursuant to Articles XIII or XIV Lessee shall promptly notify Lessor and
if Lessor and Lessee cannot agree who is responsible for making such repair it
shall initially be Lessee's responsibility to make the repairs at least as
necessary to prevent further damage to the premises or injury to others and then
the dispute may be resolved by commercial arbitration (except that in no event
shall the ultimate cost of such repairs or restoration be shifted to Lessor). If
Lessor claims that Lessee is not properly maintaining the Property or is not
making repairs which are the obligation of Lessee and Lessee disputes the claim,
Lessor shall have no right to make such repairs on behalf of Lessee unless
emergency repairs must be made to protect the Property from additional damage or
to protect the persons therein from harm. Disputes as to whether necessary
repairs are being made by the appropriate party in a timely fashion may be
submitted by either party to commercial arbitration and the rights of the
parties decided therein.
ARTICLE XII
ALTERATIONS AND CONDITIONS; PURCHASE BY LESSEE
EXTENSION OF LEASE TERM
12.1. LESSEE IMPROVEMENTS. Lessee may, at its expense and with the
consent of Lessor which consent shall not be unreasonably withheld or delayed,
make additions to and alterations of the improvements to the Property, and make
substitutions and replacements therefor, provided, that (i) the market value and
fair rental value of the Property shall not thereby be lessened, (ii) the
14
<PAGE> 15
foregoing actions shall be performed in a good and workmanlike manner, (iii)
such additions, alterations, substitutions and replacements shall be
expeditiously completed in compliance with all laws, ordinances, orders, rules,
regulations and requirements applicable thereto and (iv) the character and
useful life of the Property shall not be diminished. All work done in connection
with each such addition, alteration, substitution or replacement shall comply
with the requirements of any insurance policy required to be maintained by
Lessee hereunder and with the orders, rules and regulations of the National Fire
Protection Association, or any other body exercising similar functions. Lessee
shall promptly pay all costs and expenses of each such addition, alteration,
substitution or replacement and shall discharge all liens filed against the
Property arising out of the same. Lessee shall procure and pay for all permits
and licenses required in connection with any such addition, alteration,
substitution or replacement.
12.2. LESSEE IMPROVEMENTS. Lessee may, at its expense and with the
consent of Lessor which consent shall not unreasonably be withheld or delayed,
(i) construct upon the Property any additional buildings, structures or other
improvements and (ii) install, assemble or place upon the Property any items of
machinery, equipment, personal property or trade fixtures used or useful in
Lessee's business, in each case upon compliance with all the terms and
conditions set forth in Section 12.1. All such buildings, structures and other
improvements shall be subject to the Lease (if still in effect), this Sublease
and to the lien of the Mortgage (if still in effect) and any subsequent
mortgage. Such machinery, equipment, personal property or trade fixtures shall
be and remain the property of Lessee. Lessee may remove the same from the
Property at any time prior to the expiration or earlier termination of this
Sublease, provided that Lessee shall be required to repair any damage to the
Property resulting from such removal. Any buildings,
15
<PAGE> 16
structures and other improvements which, under the laws of the state of
Connecticut, become a part of the realty when constructed, shall remain the
property of Original Lessor.
12.3. IMPROVEMENTS REQUESTED BY LESSEE; EXTENSION OF LEASE; PURCHASE
OPTION. Lessee may at any time during the first twelve years of the term of this
Sublease request Lessor to construct at Lessor's expense additional improvements
or additions to the improvements on the Property provided that the additions to
improvements or additional improvements shall add, net, at least 10,000 square
feet of floor space and provided that such additions or improvements as proposed
would comply with all laws including zoning laws and other applicable
regulations and provided that the market value and fair rental -value of the
Property would not be lessened by such additional improvements or additions. At
the time of making such request Lessee shall provide Lessor with, at Lessee's
expense, preliminary drawings of the proposed additions or additional
improvements prepared by an architect together with a reasonably detailed
estimate of the cost of construction from a reputable builder or architect. Such
request by Lessee shall also include an agreement by Lessee to execute and
deliver (i) an amendment to this Sublease so that the remaining term would be
fifteen years (in addition to Lessee's option to extend the Sublease for two
consecutive five year terms provided in Article V) from the date a preliminary
certificate of use and occupancy is issued for the addition or additional
improvement and which would increase the Basic Rent by an amount at least
sufficient to pay when due all interest and principal on any indebtedness of
Lessor issued to pay the cost of such additional improvement or addition. Lessor
may, even before Lessor and Lessee discuss the terms on which such construction
would proceed, refuse to agree to construct the additions or additional
improvements and in such case then Lessee may, at its option, purchase the
Property in the manner provided in this Section 12.3.
16
<PAGE> 17
If Lessor does not initially refuse to agree to Lessee's request for such
construction by Lessor, then it shall be Lessee's obligation (if Lessee desires
to proceed with its request) to locate, at its expense but with Lessor's
cooperation, a reputable lender(s) willing to provide non-recourse financing,
(both construction loan and permanent loan financing), for at least 85% of the
cost of the proposed construction on a loan to be one hundred percent (100%)
amortized over a term not to exceed fifteen years. Upon receipt by Lessor of the
request from Lessee in compliance with this Section 12.3 and of a commitment
letter(s) from the proposed lender(s) satisfying the requirements of this
Section 12.3, Lessor shall enter into good faith negotiations with Lessee with
respect to the increase in rent, which increase in all events must be sufficient
to finance such construction and which is fair and reasonable in the light of
then existing conditions and with respect to any other amendments reasonably
necessary in connection with the proposed construction. If Lessor and Lessee are
able to agree on the terms of such amendments to this Sublease, and provided
Lessor can obtain any consents required from any holder of a mortgage on the
Property, then such amendments to the Sublease shall be made , including the
extension of the term and Lessor shall proceed' with the construction on the
terms agreed to by Lessor and Lessee. if Lessor and Lessee cannot agree on such
terms within 60 days after Lessor's receipt of the lender commitments) or if
Lessor otherwise refuses to. construct such additions or additional improvements
(unless due to the refusal of a holder of a mortgage on the property to allow
such construction), Lessee may, at its option if the Lessee shall not then be in
default under this Sublease, give notice to Lessor of Lessee's election to
terminate this Sublease at a date occurring at least 90 days after such notice
is given and to purchase the Property on said date from Lessor at a price to be
determined in accord with Section 12.4.
17
<PAGE> 18
12.4. PURCHASE PRICE. If the Lessee gives notice of its election to
terminate this Sublease and to purchase the Property as provided in paragraph
12.3 Lessor shall enter into good faith negotiations with Lessee, within 20 days
of receipt of such notice, with respect to the purchase price to be paid by
Lessee for the Property and Lessee shall continue to pay all rent, as before,
until the date of closing. If they cannot agree within 45 days of the date
Lessor received Lessee's notice of intent to terminate and purchase, the
purchase price shall be the fair market value of the Property, not including any
improvements made at Lessee's expense, determined as follows: Lessor and Lessee
shall each appoint one licensed real estate appraiser who shall jointly attempt
to determine and agree upon such fair market value of the Property. If they are
unable to agree then each appraiser shall set one value and the purchase price
shall be the average of the two appraisals if the difference between them is not
greater than five percent of the lower appraisal. If the appraisals are not
within said five percent of one another then the two appraisers shall together
select a third licensed appraiser who shall make a determination of fair market
value after reviewing the reports of the first two appraisers and after doing
such independent research as he deems appropriate. The value determined by the
third appraiser shall control if it falls between the values set by the other
two appointed appraisers and, if not, whichever value determined by the first
two appraisers is closest in amount to the third appraisal shall control. If a
determination of the purchase price is made by appraisers (i.e. other than by
Lessor and Lessee agreement) Lessee shall have the option within 15 days of the
date on which Lessee is notified of such determination to reimburse Lessor for
its share of the costs of the appraiser(s) and to revoke its notice of
termination and intent to purchase and, in such case this Sublease shall
continue in effect as though Lessee had not requested Lessor to construct
additions to the Property. Such notice of
18
<PAGE> 19
revocation shall be in writing and shall include Lessee's agreement to pay the
Lessor's appraisal expenses. In the event that the Lessor and Lessee agree on
the purchase price or if the purchase price is set by appraisals and Lessee
fails to timely revoke its notice of termination and intent to purchase, then
the Lessee shall purchase, and the Lessor shall transfer the property in
accordance with Section 12.5 hereof on the date specified by Lessee in its
notice of intent to terminate the Sublease and to purchase the Property.
12.5. PROCEDURE UPON PURCHASE. In the event of a purchase of the
Property by Lessee pursuant to Section 12.3 hereof, Lessor shall not be
obligated to give any better title thereto than existed at the commencement of
the term of this Sublease, and Lessee shall accept such title free, however, of
any mortgages unless Lessee elects to take subject to such mortgages. On the
date of purchase of the Property by Lessee pursuant to Section 12.3, Lessee
shall pay to Lessor, by certified or cashiers check at such place as Lessor
shall designate in the State of Connecticut, the purchase price therefor
together with all Basic Rent, additional rent and other sums then due and
payable under this Sublease, and Lessor shall thereupon deliver to Lessee an
appropriate deed which shall transfer at least the title described in this
Section 12.5. There shall be no proration of taxes, assessments or utility costs
or other expenses which otherwise would be the obligation of Lessee under this
Sublease. Lessee shall pay all recording fees in connection with the transfer
and Lessor and Lessee shall equally share the cost of any state, federal or
local conveyance charges or taxes whether imposed by law on Lessor or on Lessee.
Upon completion of such purchase, but not prior thereto (regardless of the
reason for any delay or inability which may occur in consummating such purchase
and whether or not such delay or inability is due to the fault of the Lessor),
this Sublease shall terminate. In the event of the termination of this Sublease,
the
19
<PAGE> 20
liabilities of Lessee, actual or contingent, under this Sublease which arose
prior to such termination shall survive such termination.
ARTICLE XIII
DAMAGE OR DESTRUCTION
13.1. If the Property shall be totally, or substantially totally,
damaged or destroyed or rendered completely, or substantially completely,
untenantable on account of fire, casualty or other cause Lessee shall have the
right to terminate this Sublease upon (30) thirty days written notice by giving
notice to Lessor within sixty (60) days of the event causing such substantial or
total destruction. If Lessee terminates this Sublease pursuant to this Section,
Lessee shall have no obligation to pay for repairs pursuant to Article XI or
this Article XIII. Until the effective date of such termination, Lessee shall
continue to pay all rent and additional rent without abatement. If Lessee does
not give timely notice of its intent to terminate the Sublease pursuant to this
Section 13.1 the Sublease shall remain in full force and effect without
abatement of rent or additional rent.
13.2. If the Property or part thereof shall be partially or totally
damaged or destroyed by fire casualty or other cause, whether or not caused by
the fault or neglect of Lessee, and Lessee has not elected to terminate this
Sublease pursuant to Section 13.1 hereof, then provided the insurance proceeds
are adequate to fully cover such expense, Lessor shall promptly repair the
damage and restore, replace and rebuild the Property with reasonable dispatch
and continuity after notice to it of the damage or destruction; provided however
that Lessor shall not be required to repair or replace Lessee's property. if the
insurance proceeds are not adequate to cover such expense of repair and
rebuilding, then Lessee shall promptly pay the reasonable cost of repair and
rebuilding in excess of the insurance proceeds and Lessor may require adequate
assurances from
20
<PAGE> 21
Lessee that such costs will be paid before Lessor proceeds with such repair or
restoration. Provided such assurances are made, Lessor shall promptly repair the
damage as if the insurance proceeds were adequate. Except as provided in Section
13.1 hereof, the rent and additional rent shall not abate or terminate by reason
of damage or destruction of the Property.
13.3. In the event insurance proceeds are not adequate to cover the cost
of restoration or repair as provided in this Article 13 and provided Lessee has
not elected to terminate this Sublease pursuant to Section 13.1 hereof, Lessor
shall notify Lessee and shall keep Lessee reasonably advised of the progress of
the repairs and restoration and the cost thereof in excess of insurance coverage
and, shall allow Lessee reasonable access to all invoices, and estimates
concerning the construction work. In the event Lessor demands payment from
Lessee pursuant to this Article 13, and Lessee disputes its obligation to pay
hereunder, for example, because the charges were excessive and unreasonable or
because the repairs exceed those necessary to reasonably restore the
improvements to their prior condition, then the dispute may be submitted to
commercial arbitration by either party.
13.4. In the event of the termination of this Sublease pursuant to the
provisions of this Article, this Sublease shall expire as fully and completely
on the date fixed in such notice of termination as if that were the date
definitely fixed for the expiration of this Sublease, but the basic rent and
additional rent shall be apportioned and shall be paid up to the date of such
damage or destruction, and any prepaid rent shall be refunded to Lessee.
13.5. No damages, compensation or claim shall be payable by Lessor for
inconvenience, loss of business or annoyance arising from any repair or
restoration of any portion of the Property. Lessor shall use its best efforts to
effect such repair or restoration required by this
21
<PAGE> 22
Article promptly and in such manner as not unreasonably to interfere with
Lessee's occupancy.
ARTICLE XIV
CONDEMNATION
14.1. If, during the term of this Sublease, there shall be a total
taking or "constructive total taking" (as hereinafter defined) of the fee title
to the Property in condemnation proceedings or by any right of eminent domain,
this Sublease shall terminate as of the date title vests pursuant to such taking
and the Basic Rent, additional rent and other charges payable by Lessee shall be
apportioned and paid to the date of such taking.
For the purpose of this Article XIV, the term "CONSTRUCTIVE TOTAL TAKING"
shall mean a taking of such scope that the portion of Property not taken is
insufficient to permit the restoration of the then-existing building or
improvements so as to constitute same as a complete rentable building reasonably
useful to Lessee.
14.2. In the event this Sublease shall be terminated as a result of any
such total taking or constructive total taking, the total award or awards for
said total taking, less reasonable respective fees and expenses of Lessor and
Lessee incurred in connection with the determination and collection of such
award or awards (said net amount being hereinafter referred to as the "AWARD"),
shall be apportioned and paid in the following order of priority:
(i) Lessor shall be entitled to receive, as the first and prior
share in and to the Award, but subject to the right of any fee mortgagee
to receive or share in the Award under the terms of any fee mortgage, a
sum equal to the value of the part of the Property so taken (including
the diminution in value of Lessor's interest under this Lease) as of the
date of taking, plus consequential damages, if any, to the part of the
Property not so
22
<PAGE> 23
taken. If the Award separately specifies the amount of such value, such
specification shall govern; otherwise, Lessor and Lessee shall agree on
such value, and, if they cannot agree, such value shall be determined by
commercial arbitration.
(ii) If any proceeds remain, Lessee shall then be entitled to
receive the value, at the time of the taking, of Lessee's leasehold
interest under this Sublease (including the value of any improvements
constructed by and at the expense of the Lessee.
(iii) Lessor shall then be entitled to receive the entire balance
of the Award.
14.3. If, during the term of this Lease, there shall be less than a
total taking or less than a constructive total taking (herein called a "PARTIAL
TAKING") of the Property in condemnation proceedings or by any right of eminent
domain, this Lease shall not terminate, and Lessee shall, subject to the
provisions of Article 14 hereof, continue to perform and observe all of the
terms, covenants and conditions of this Sublease as though such taking had not
occurred, provided, however, that the Basic Rent shall be reduced in proportion
to the percentage of the leaseable space (of the buildings other than those paid
for by Lessee, if any, pursuant to Sections 12.1 or 12.2) so taken and not
restored or replaced in the course of the work required under Section 14.4. In
such event, the Award shall be apportioned and paid in the following order of
priority:
(i) Lessor shall be entitled to receive, as a first and prior
share in and to the Award, but subject to the right of any fee mortgagee
to receive or share in the Award under the terms of any fee mortgage, a
sum equal to the value of the part of the Property so taken (.including
the diminution in value of Lessor's interest under this Lease) as of the
date of taking, plus consequential damages, if any, to the part of the
Property not so taken. If the Award separately specifies the amount of
such value, such specification shall
23
<PAGE> 24
govern; otherwise, Lessor and Lessee shall agree on such value, and, if
they cannot agree, such value shall be determined by commercial
arbitration.
(ii) That portion of the Award representing compensation for the
diminution in value, at the time of taking, of Lessee's leasehold
interest under this Sublease (including the value of the part of the
Building or any Improvements constructed on the Property by and at the
expense of Lessee and so taken), plus consequential damages, if any, to
Lessee's leasehold interest or to the part of the Building and any
Improvements not so taken, shall be payable to Lessee.
14.4. If, during the term of this Sublease, there shall be a partial
taking of the Property, Lessor shall promptly restore and replace that portion
of the buildings) and improvements not so taken to a complete architectural unit
or units (as the case may be) of substantially the same usefulness, design and
construction, having regard to the taking, as immediately before such taking. If
the cost of such repairs and restoration exceeds the amount of the portion of
such Award received by Lessor, the balance of such cost shall be paid solely by
Lessee. If the amount of any such Award exceeds the cost of such repairs or
restoration, a fraction, the numerator of which is the number of whole years of
the term of this Lease which shall have elapsed at the time of such taking and
the denominator of which is the entire term of this Sublease (not including any
renewal or extension thereof) of such excess shall be paid to Lessor (Lessee
hereby unconditionally and irrevocably assigning to Lessor any right, title and
interest Lessee may have in and to any such portion of the Award).
14.5. Lessee further agrees that, if the whole or any part of the
Property or of Lessee's interest under this Sublease shall be taken or condemned
by any competent authority for its or
24
<PAGE> 25
their temporary use or occupancy, this Sublease shall not terminate by reason
thereof and Lessee shall continue to pay, in the manner and at the times herein
specified, the full amounts of the Basic Rent, additional Rent, and any other
charges payable by Lessee hereunder, and, except only to the extent that Lessee
may be prevented from so doing pursuant to the terms of the order of the
condemning authority, to perform and observe all of the other terms, covenants,
conditions and obligations of this Sublease as though such taking had not
occurred. In the event of any such temporary taking, Lessee shall be entitled to
receive the entire amount of any Award made for such taking, whether paid by way
of damages, rent or otherwise, unless such period of temporary use or occupancy
shall extend beyond the term of this Sublease or earlier expiration or
termination of this Sublease, in which case such Award shall be apportioned
between Lessor and Lessee as of the date of such expiration or termination.
Lessee covenants that, upon the termination of any such period of temporary use
or occupancy, Lessee shall (at Lessee's sole cost and expense) restore the
Property, the Building and the Improvements, as nearly as may be reasonably
possible, to the condition in which same existed immediately prior to such
taking, provided the termination of such period occurs on or prior to the end of
the term of this Sublease or earlier expiration or termination of this Sublease.
If the Award for such temporary use is paid in a lump sum, it shall be deposited
in the joint names of Lessor and Lessee in a Connecticut lending institution and
they shall join in appropriate withdrawals from such fund. If the parties cannot
agree thereon, the selection of the lending institution shall be determined by
Lessee and the propriety of any withdrawals by commercial arbitration.
14.6. The provisions of this Article 14 shall survive the expiration or
termination of this Sublease.
25
<PAGE> 26
ARTICLE XV
INSURANCE; AGREEMENT NOT TO SUE FOR DAMAGES COVERED BY INSURANCE
15.1. Lessee shall maintain, at its expense, insurance on the Property
of the following character:
(i) Insurance against loss or damage by fire, lightning and
other risks from time to time included under "extended coverage"
policies, in amounts sufficient to prevent Lessor or Lessee from becoming
a co-insurer of any loss under the applicable policies, but, in any
event, in amounts not less than 100% of the full insurable value of the
Property. The term "full insurable value", as used herein, means the
actual replacement value.
(ii) General public liability insurance against claims for
bodily injury, death or property damage occurring on, in or about the
Property and the adjoining street, sidewalks and passageways, such
insurance to afford protection to Lessor of not less than 6 million
dollars with respect to bodily injury or to property damage.
(iii) Workmen's compensation insurance covering all persons
employed by Lessee in connection with any work done on or about the
Property.
(iv) Explosion insurance in respect of steam or pressure boilers
or similar apparatus located on the Property, if any, in such amount as
Lessor may reasonably request, but not less than $500,000.
(v) Flood insurance, if available and if requested by Lessor or
any holder of a mortgage on the Property, in a reasonable amount as may
be determined by Lessor or such mortgage holder to protect the Lessor and
any mortgagee from risk of loss due to flooding.
(vi) Upon reasonable notice from Lessor, such other insurance on
the Property in
26
<PAGE> 27
such amounts and against such other insurable hazards which at the time
is customarily maintained from time to time with respect to properties in
the vicinity of, and similar in character and occupancy to, the Property,
or as is customarily maintained from time to time by Lessee with respect
to similar properties owned by it.
15.2. Lessor may require Lessee, upon reasonable notice, to increase the
dollar amount of coverage required by Section 15.1 provided that Lessor may not
require a percentage increase in coverage in excess of the percentage rise in
the general Consumer Price Index for the United States (as published by the U.S.
Department of Labor) from the date this Sublease is executed to the date of such
demand by Lessor for an increase in the amount of coverage.
15.3. The insurance referred to in Section 15.1 shall be written by
reputable insurance companies of recognized financial standing, authorized to
conduct insurance business in the state of Connecticut and reasonably acceptable
to the Mortgagee and any subsequent or additional mortgagee, and such insurance
shall name as the insured parties thereunder, except to the extent prohibited by
law, Original Lessor, Lessor and Lessee, and any mortgagee as their respective
interests may appear. Original Lessor and Lessor shall not be required to
prosecute any claim or contest any such settlement. In such event, Lessee may
bring such prosecution or contest in the name of Original Lessor, Lessor or
Lessee or any or all of them, and Lessor will join therein at Lessee's written
request, upon the receipt by Lessor of an indemnity from Lessee against all
costs, liabilities and expenses in connection with such prosecution or contest.
15.4. Insurance claims by reason of damage to or destruction of any
portion of the Property shall be adjusted by Lessee, but Original Lessor and
Lessor shall have the right to join with Lessee in adjusting any such loss. The
entire amount of any proceeds paid pursuant to such
27
<PAGE> 28
claims shall be applied pursuant to Section 13 of this sublease.
15.5. Every insurance policy referred to in Section 15.1 shall bear a
first mortgagee endorsement in favor of the Mortgagee or any subsequent
mortgagee; and any loss under any such policy shall be made payable to the
Mortgagee or such subsequent mortgagee and if none, shall be payable to Lessor,
provided that any recoveries under any of said policies shall be applied by the
Mortgagee or subsequent mortgagee in the manner provided in Section 13. Every
policy which Lessee is obligated to carry under the terms of Section 15.1 shall
contain an agreement by the insurer that it will not cancel such policy except
after 10 days' prior written notice to Lessor and the Mortgagee or subsequent
mortgagee, and that any loss otherwise payable thereunder shall be payable
notwithstanding any act of negligence of Lessor or Lessee which might, absent
such agreement, result in a forfeiture of all or a part of such insurance
payment and notwithstanding (i) the occupation or use of the Property for
purposes more hazardous than permitted by the terms of such policy, (ii) any
foreclosure or other action or proceeding taken by the Mortgagee or subsequent
mortgagee pursuant to any provision of the Mortgage or subsequent mortgagee upon
the happening of an Event of Default, as defined therein or (iii) any change in
title or ownership of the Property, and that the insurance company issuing the
same shall have no right of subrogation against Lessee or Lessor.
15.6. Lessee shall deliver to Original Lessor and Lessor (with copies
thereof to the Mortgagee), promptly after the execution and delivery of this
Sublease, the original or duplicate policies, or the riders thereto, or
certificates of the insurers evidencing all the insurance which is required to
be maintained by Lessee hereunder, and Lessee shall, within 30 days prior to the
expiration of any such insurance, deliver (with copies thereof to the Mortgagee)
policies or riders
28
<PAGE> 29
or other certificates evidencing the renewal thereof. Should Lessee fail to
effect, maintain or renew any insurance provided for in this Article XV, or to
pay the premium therefor, or to deliver to Original Lessor or Lessor any of such
policies or certificates, then and in any of said events Lessor, at its option,
but without obligation so to do, may procure such insurance. Any sums expended
by Lessor to procure such insurance shall be additional rent hereunder and shall
be repaid by Lessee within 5 days following the date on which such expenditure
shall be made by Lessor.
15.7. Lessee shall not obtain or carry separate insurance concurrent in
form or contributing in the event of loss with that required in this Article XV
to be furnished by Lessee unless Original Lessor and Lessor are included therein
as named insureds, with loss payable as provided in this Sublease and with a
Mortgagee, or subsequent mortgagee as applicable, endorsement as provided in
Section 15.5 of the Sublease. Lessee shall immediately notify Original Lessor
and Lessor whenever any such separate insurance is obtained and shall deliver to
original Lessor and Lessor the Policies or certificates evidencing the same.
15.8. Anything contained in this Article XV to the contrary
notwithstanding, any and all insurance which Lessee is obligated to carry
pursuant to Section 15.1 may be carried under a "blanket" policy or policies
covering other properties or liabilities of Lessee, provided, that such
"blanket" policy or policies otherwise comply with the provisions of this
Article XV.
15.9. Any insurance proceeds made payable to Lessor for repairs made by
Lessee shall promptly be paid over to Lessee. Should Lessee receive any
insurance proceeds with respect to repairs made by, or to be made by, Lessor,
Lessee shall promptly pay over such proceeds to Lessor.
29
<PAGE> 30
15.10. Lessor and Lessee agree that neither shall sue or make claim
against the other for damages to the extent that the damaged party is reimbursed
for such damages by insurance. This provision shall not prohibit claims which
are not covered by insurance or for damages in excess of the amount of insurance
reimbursement.
ARTICLE XVI
ASSIGNMENT AND SUBLETTING
Lessee may only assign this Sublease or sublet the Property or any
portion thereof with the consent of Lessor, which consent may not unreasonably
be withheld or delayed, and with the consent of any holder of a mortgage on the
Property if such consent is required by the terms of such mortgage.
ARTICLE XVII
PERMITTED CONTESTS
Lessee shall not be required, nor shall Lessor have the right, to pay-,
discharge or remove any tax, charge, levy, assessment or lien, or any other
imposition or encumbrance on or against the Property so long as Lessee shall, at
its cost and expense, contest the existence,, amount or validity thereof by
appropriate proceedings which shall operate to prevent the collection or
satisfaction of the tax, charge, levy, assessment or lien, or other imposition
or encumbrance so contested, and the sale of the Property or any portion thereof
to satisfy the same and which shall not affect the timely payment in full of all
Basic Rent or any use or disposition thereof by Lessor; provided, however, that
Lessee shall have given such security as may be demanded by Lessor to insure
such payment and to prevent any sale or forfeiture of the Property or any
portion thereof by reason of such nonpayment, and, provided, further, that
Lessor would not be in any danger of
30
<PAGE> 31
criminal liability by reason of such nonpayment.
ARTICLE XVIII
CONDITIONAL LIMITATIONS; DEFAULT PROVISIONS
18.1. Any of the following occurrences or acts shall constitute an Event
of Default under this Sublease: (i) if Lessee, at any time during the
continuance of this Sublease (and regardless of the pendency of any bankruptcy,
reorganization, receivership, insolvency or other proceedings, in law, in
equity, or before any administrative tribunal, which have or might have the
effect of preventing Lessee from complying with the terms of this Sublease),
shall (1) fail to make any payment when due of Basic Rent, additional rent or
other sum herein required to be paid by Lessee and such failure shall continue
for a period of 10 days after delivery by Lessor of written notice to Lessee
that any such payment has become due and that failure to pay within 10 days of
receipt of the notice may result in termination of this Sublease and other
liability, or (2) fail to observe or perform any other provision hereof for 15
days after Lessor shall have given to Lessee notice of such failure (provided
that, in the case of any default referred to in this clause (2) which cannot
with diligence be cured within such 15-day period, if Lessee shall proceed
promptly to cure the same and thereafter shall prosecute the curing of such
default with diligence, then, upon receipt by Lessor of a certificate from the
President or a Vice President of Lessee stating the reason that such default
cannot be cured within 15 days and stating that Lessee is proceeding with
diligence to cure such default, the time within which such failure may be cured
shall be extended for such period as may be necessary to complete the curing of
the same with diligence); or (ii) if Lessee shall file a petition in bankruptcy
or for reorganization or for an arrangement pursuant to any present or future
federal or state bankruptcy law or under any similar federal or state law, or
31
<PAGE> 32
shall be adjudicated a bankrupt or insolvent or shall make an assignment for the
benefit of its creditors or if a petition or answer proposing the adjudication
of Lessee as a bankrupt or its reorganization under any present or future
federal or state bankruptcy law or any similar federal or state law shall be
filed in any court and such petition or answer shall not be discharged or denied
within 90 days after the filing thereof, or (iii) if a receiver, trustee or
liquidator of Lessee or of all or substantially all of the assets of Lessee or
of the Property shall be appointed in any proceeding brought by Lessee, or if
any such receiver, trustee or liquidator shall be appointed in any proceeding
brought against Lessee and shall not be discharged within 60 days after such
appointment, or if Lessee shall consent diligence be cured within such 15-day
period, if Lessee shall proceed promptly to cure the same and thereafter shall
prosecute the curing of such default with diligence, then, upon receipt by
Lessor of a certificate from the President or a Vice President of Lessee stating
the reason that such default cannot be cured within 15 days and stating that
Lessee is proceeding with diligence to cure such default, the time within which
such failure may be cured shall be extended for such period as may be necessary
to complete the curing of the same with diligence); or (ii) if Lessee shall file
a petition in bankruptcy or for reorganization or for an arrangement pursuant to
any present or future federal or state bankruptcy law or under any similar
federal or state law, or shall be adjudicated a bankrupt or insolvent or shall
make an assignment for the benefit of its creditors or if a petition or answer
proposing the adjudication of Lessee as a bankrupt or its reorganization under
any present or future federal or state bankruptcy law or any similar federal or
state law shall be filed in any court and such petition or answer shall not be
discharged or denied within 90 days after the filing thereof, or (iii) if a
receiver, trustee or liquidator of Lessee or of all or substantially all of the
assets of Lessee or of the Property shall be
32
<PAGE> 33
appointed in any proceeding brought by Lessee, or if any such receiver, trustee
or liquidator shall be appointed in any proceeding brought against Lessee and
shall not be discharged within 60 days after such appointment, or if Lessee
shall consent to or acquiesce in such appointment; or (iv) if an Event of
Default (as defined in the Lease if the Lease is then in effect) shall have
happened and be continuing; or (v) if any representation or warranty of Lessee
contained herein, or in any document or certificate given in connection with the
execution hereof, shall prove to be incorrect in any material respect as of the
time when the same shall have been made.
18.2. If an Event of Default shall have happened and be continuing,
Lessor shall have the right, at its election, then or at any time thereafter
while such Event of Default shall continue, to give Lessee written notice of
Lessor's intention to terminate the term of this Sublease on a date specified in
such notice. Upon the giving of such notice, the term of this Sublease and the
estate hereby granted shall expire and terminate on such date as fully and
completely and with the same effect as if such date were the date herein before
fixed for the expiration of the term of this Sublease then in effect, and all
rights of Lessee hereunder shall expire and terminate, but Lessee shall remain
liable as hereinafter provided.
18.3. If an Event of Default shall have happened and be continuing,
Lessor shall have the immediate right, whether or not the term of this Sublease
shall have been terminated pursuant to Section 18.2, to re-enter and repossess
the Property or any part thereof by summary proceedings, ejectment or otherwise
and the right to remove all persons and property therefrom. Lessor shall be
under no liability for or by reason of any such entry, repossession or removal.
No such re-entry or taking of possession of the Property by Lessor shall be
construed as an election on Lessor's part to terminate the term of this Sublease
unless a written notice of such intention be
33
<PAGE> 34
given to Lessee pursuant to Section 18.2 or unless the termination of this
Sublease be decreed by a court or competent jurisdiction.
18.4. At any time or from time to time after the repossession of the
Property or any part thereof pursuant to Section 18.3, whether or not the term
of this Sublease then in effect shall have been terminated pursuant to Section
18.2, Lessor may (and shall make a good faith effort to) relet the Property or
any part thereof for the account of Lessee for such term or terms (which may be
greater or less than the period which would otherwise have constituted the
balance of the term of this Sublease) and on such conditions (which may include
concessions or free rent) and for such uses as Lessor, in its absolute
discretion, may determine, and Lessor may collect and receive any rents payable
by reason of such reletting. Lessor shall not be responsible or liable for any
failure to relet the Property, provided there has been a good faith effort to
relet, or any part thereof or for any failure to collect any rent due upon any
such reletting.
18.5. No expiration or termination of the terms of this Sublease, by
operation of law or otherwise, and no repossession of the Property or any part
thereof and no reletting of the Property or any part thereof for the account of
Lessee in the exercise of Lessor's rights in accordance with Section 18.2 shall
relieve Lessee of its liabilities and obligations hereunder, all of which shall
survive such expiration, termination, repossession or reletting.
18.6. In the event of any expiration or termination of this Sublease or
repossession of the Property or any part thereof by reason of the occurrence of
an Event of Default, Lessee shall pay to Lessor the Basic Rent, additional rent
and other sums required to be paid by Lessee to and including the date of such
expiration, termination or repossession; and, thereafter, Lessee shall, until
the end of what would have been the term of this Sublease then in effect in the
absence of such expiration, termination or repossession, and whether or not the
Property or any party thereof shall have been relet, be liable to Lessor for,
and shall pay to Lessor, as liquidated and agreed current damages, the Basic
Rent, additional rent and other sums which would be payable under this Sublease
by Lessee in the absence of
34
<PAGE> 35
such expiration, termination or repossession, less the net proceeds, if any, of
any reletting effected for the account of Lessee pursuant to Section 18.2, after
deducting from such proceeds all Lessor's expenses in connection with such
reletting on the days on which the Basic Rent would have been payable under this
Sublease in the absence of such expiration, termination or repossession, and
Lessor shall be entitled to recover the same from Lessee on each such day.
18.7. At any time after such expiration or termination of this Sublease
or repossession of the Property or any part thereof by reason of the occurrence
of an Event of Default, whether or not Lessor shall have collected any current
damages pursuant to Section 18.6, Lessor shall be entitled to recover from
Lessee, and Lessee shall pay to Lessor on demand, as and for liquidated and
agreed final damages for Lessee's default and in lieu of all current damages
beyond the date of such demand (it being agreed that it would be impracticable
or extremely difficult to fix the actual damages), an amount equal to the
excess, if any, of (a) Basic Rent, additional rent and other sums which would be
payable under this Sublease for the term in effect from the date of such demand,
(or, if it be earlier, the date to which Lessee shall have satisfied in full its
obligations under Section 18.6 to pay current damages) for what would be the
then unexpired terms of this Sublease in the absence of such expiration,
termination or repossession, discounted at the rate of 13-3/4% per annum, over
(b) the then fair net rental value of the Property for the same period,
discounted at a like rate. If any statute or rule of law shall validly limit the
amount of such liquidated final
35
<PAGE> 36
damages to less than the amount above agreed upon, Lessor shall be entitled to
the maximum amount allowable under such statute or rule or law.
18.8. The words "enter", "re-enter", or "re-entry", as used in this
Article XVIII, are not restricted to their technical legal meaning.
ARTICLE XIX
ADDITIONAL RIGHTS OF LESSOR
19.1. No right or remedy herein conferred upon or reserved to Lessor is
intended to be exclusive of any other right or remedy, and each and every right
and remedy shall be cumulative and in addition to any other right or remedy
given hereunder or now or hereafter existing at law or in equity or by statute.
The failure of Lessor to insist at any time upon the strict performance of any
covenant or agreement, or to exercise any option, right, power or remedy
contained in this Sublease shall not be construed as a waiver or a
relinquishment thereof for the future. A receipt by Lessor of any Basic Rent,
any additional rent or any other sum payable hereunder, with knowledge of the
breach of any covenant or agreement contained in this Sublease, shall not be
deemed a waiver of such breach, and no waiver by Lessor of any provision of this
Sublease shall be deemed to have been made unless expressed in writing and
signed by Lessor.
19.2. In the event Lessee shall be in default in the performance of any
of its obligations under this Sublease, and such default shall cause Lessor to
be in default under the Lease, and an action shall be brought for the
enforcement of the Lease or of this Sublease in which it shall be determined
that Lessee was in default hereunder or Lessor was in default under the Lease,
Lessee shall pay to Lessor all the expenses incurred in connection therewith,
including any expenses of Original Lessor required to be paid by Lessor pursuant
to the Lease, and including reasonable
36
<PAGE> 37
attorney's fees. In the event Lessor shall, without fault on its part, be made a
party to any litigation commenced against Lessee, if Lessee, at its expense,
shall fail to provide Lessor with counsel reasonably satisfactory to Lessor,
Lessee shall pay all costs and reasonable attorney's fees incurred or paid by
Lessor in connection with such litigation.
ARTICLE XX
NOTICES, DEMANDS AND OTHER INSTRUMENTS
All notices, demands, requests, consents, approvals and other instruments
required or permitted to be given pursuant to the terms of this Sublease shall
be in writing and shall be deemed to have been properly given if sent by
registered or certified mail, postage prepaid, addressed to Lessee or Lessor, as
the case may be, at its address first above set forth or at such other address
as may be specified from time to time. Notices by Lessor to Lessee shall be
addressed specifically to an officer (by name) of the Lessee corporation and
notices by Lessee to Lessor shall be addressed specifically to a general partner
(by name) of Lessor. Notices shall be deemed received on the date of actual
receipt by the appropriate addressee.
ARTICLE XXI
NO MERGER
There shall be no merger of this Sublease or of the leasehold estate
hereby created with the fee estate in the Property or any part thereof by reason
of the fact that the same person may acquire or hold, directly or indirectly,
the Lease, this Sublease or the leasehold estate thereby or hereby created or
any interest in the Lease or this Sublease or in any such leasehold estate as
well as the fee estate in the Property or any interest in such fee estate.
37
<PAGE> 38
ARTICLE XXII
SURRENDER
Upon the expiration or earlier termination of this Sublease, Lessee shall
peaceably leave and surrender the Property to Lessor in the same condition in
which the Property was originally received from Lessor at the commencement of
this Sublease, except as repaired, rebuilt, restored, altered, or added to as
permitted or required by any provision of this Sublease and except for ordinary
wear and tear and except for repairs which Lessor is obligated to make under
Articles XIII or XIV hereof. Lessee shall remove from the Property on or prior
to such expiration or earlier termination, all property situated thereon which
is not owned by Original Lessor or Lessor, and, at its expense, shall, on or
prior to such expiration or earlier termination, repair any damage caused by
such removal. Property not so removed shall become the property of Original
Lessor which may thereafter cause such property to be removed from the Property
and disposed of.
ARTICLE XXIII
SEPARABILITY
Each and every covenant and agreement contained in this Sublease is, and
shall be construed to be, a separate and independent covenant and agreement, and
the breach of any such covenant or agreement by Lessor shall not discharge or
relieve Lessee from its obligations to perform the same. If any term or
Provision of this Sublease or the application thereof to any person or
circumstances shall to any extent be invalid and unenforceable, the remainder of
this Sublease, or the application of such term or provision to persons or
circumstances other than those as to which it is invalid or unenforceable, shall
not be affected thereby, and each term and provision of this Sublease shall be
valid and shall be enforced to the extent permitted by law.
38
<PAGE> 39
ARTICLE XXIV
BINDING EFFECT
All of the covenants, conditions and obligations contained in this
Sublease shall be binding upon and inure to the benefit of the respective
successors and assigns of Lessor and Lessee to the same extent as if each
successor and assign were in each case named as a party to this Sublease. This
Sublease may not be changed, modified or discharged except by a writing signed
by Lessor and Lessee.
ARTICLE XXV
HEADINGS
The headings to the various paragraphs of this Sublease have been
inserted for convenient reference only and shall not to any extent have the
effect of modifying, amending or changing the express terms and provisions of
this Sublease.
ARTICLE XXVI
GOVERNING LAW
This Sublease shall be governed by and interpreted under the law of the
State of Connecticut.
ARTICLE XXVII
SUBLEASE
This is a sublease although Lessor's interest in the premises is both as
fee owner and as assignee and tenant under the Lease, which Lease has been
assigned to Lessee and reassigned to Lessor, as set forth more fully above.
Except as otherwise provided herein, this Sublease is
39
<PAGE> 40
expressly made subject to all the terms and conditions of the Lease while the
Lease is in effect and Lessee agrees to use the Property in accordance with the
terms of the Lease and not do or omit to do anything which will breach any of
the terms thereof.
ARTICLE XXVIII
CHANGES IN LEASE REQUIRED FOR FINANCING
If in connection with obtaining financing respecting the fee of the
Property, a lender shall request reasonable modifications or additions to this
Sublease as a condition to such financing, neither Lessor-nor Lessee will
unreasonably withhold or delay its consent thereto provided that such
modifications do not change the substantive terms of this Sublease or increase
or diminish the Basic Rent or other charge or charges or other monetary or
substantive rights of Lessor or Lessee hereunder.
ARTICLE XXIX
SUBORDINATION AND NONDISTURBANCE
29.1. This Sublease shall be subject and subordinate to all mortgages
which may now or hereafter affect the Property and to all renewals,
modification, consolidations, replacements and extensions thereof.
29.2.(a) The provisions of Section 29.1 shall be subject to the condition
that so long as no Event of Default exists as would entitle Lessor to terminate
this Sublease or dispossess Lessee, Lessee shall not be named or joined in any
action or proceeding to foreclose any such mortgage and this Sublease shall not
be terminated, nor Lessee's use, possession or enjoyment of the Property
interfered with, nor the leasehold estate or any rights of Lessee granted by the
Sublease affected in any manner; and in the event the holder of any mortgage
becomes the owner of the
40
<PAGE> 41
fee, or in the event of the sale of the Property as a result of any action or
proceeding to foreclose any such mortgage, this Sublease shall continue in full
force and effect as a direct lease between Lessee and the then owner of the fee,
upon all of the terms, covenants and conditions set forth in this sublease.
29.2.(b) The holder of any mortgage covering the Property shall have the right,
by written notice to Lessee, to elect that its mortgage shall be subordinate to
this Sublease and to record a copy of said notice in the Stratford Land Records.
29.3. The provisions of this Article shall be self-operative and no
further instrument of subordination shall be required by the holders of any
interest to which this Sublease is subordinate. Each party agrees, however.
whenever requested to do so, upon reasonable notice to it by the other, to
execute such instruments confirmatory of the provisions of this Article XXIX as
the party requesting the same may reasonably require.
29.4. Lessor agrees that within thirty (30) days after the placing of
any mortgage covering the Property, Lessor will procure and deliver to Lessee an
appropriate nondisturbance agreement from each such mortgagee.
ARTICLE XXX
ESTOPPEL CERTIFICATE
Each party agrees, at any time and from time to time, as requested by the
other, upon not less than ten (10) days prior notice, to execute and deliver
without cost or expense to the other party a statement certifying that this
Sublease is unmodified and in full force and effect (or if there have been
modifications, that the same is in full force and effect as modified and stating
the modifications), certifying the dates to which the fixed rent and additional
rent have been paid, and stating whether or not, to the best knowledge of the
certifying party, the other party is in default
41
<PAGE> 42
in performance of any of its obligations under this Sublease, and if so,
specifying each such default of which the certifying party may have knowledge,
it being intended that any such statement delivered pursuant thereto may be
relied upon by any other person with whom the party requesting the certification
may be dealing.
ARTICLE XXXI
ARBITRATION
31.1. The parties hereto shall not have been deemed to have agreed to
determination of any dispute arising out of this Sublease by arbitration unless
determination in such manner shall have been specifically and unequivocally
provided for in this Sublease and in no other case or cases.
31.2. Every dispute between the parties which is expressly provided in
this Sublease to be determined by arbitration shall be resolved in the manner
provided in this Article.
31.3. Any party requesting arbitration shall do so by giving notice to
that effect to the other party. Any arbitration hereunder shall be conducted
before three arbitrators appointed by the American Arbitration Association in
accordance with the Commercial Arbitration Rules of said Association, as now
existing or hereafter amended, and judgment upon the award rendered by the
arbitrators may be entered in any Court having jurisdiction thereof. The
submission to arbitration, as provided in this Article, shall be a condition
precedent to the resort to litigation by either party with respect to any
controversy or claim required to be submitted to arbitration pursuant to the
provisions of this Sublease.
The venue of any such arbitration proceeding shall be Stratford,
Connecticut.
31.4. The fees and expenses of the arbitrators and all other expenses of
the arbitration
42
<PAGE> 43
shall be borne by the parties equally. However, each party shall bear the
expense of its own counsel, experts and presentation of proof.
IN WITNESS WHEREOF, intending to be legally bound hereby, Lessor and
Lessee have signed and sealed this instrument as of the date first written
above.
ORIEL CORPORATION
Attest:
By: /s/ Allen Smith
-----------------------------------
Executive Vice President
/s/ Syliva P. Strikir
- ----------------------------------
Corporate Secretary
/s/ Geraldine Williams
- ----------------------------------
OSBROOK ASSOCIATES
LIMITED PARTNERSHIP
witnesses /s/ Joan Reim By: /s/ Roger Gilbert, Jr..
------------------------ -----------------------------------
Roger Gilbert, Jr.
/s/ Nancy A. Mesgares General Partner
------------------------
43
<PAGE> 44
Modification
of
"SUBLEASE AGREEMENT"
and
"OPTION TO PURCHASE
and
RIGHT OF FIRST OFFER AGREEMENT"
The parties to this "Agreement" are: Osbrook Associates Limited
Partnership ("Landlord"), a Connecticut limited partnership, acting herein by
its duly-authorized general partner; and
Oriel Corporation ("Tenant"), a Connecticut corporation, acting herein by
its duly-authorized Executive Vice Presidents and Members of its Office of
President.
The Landlord and Tenant (collectively, the "Parties") intend by this
Agreement, to amend and modify the following documents, but the terms of this
Agreement shall enure to the benefit of and/or shall be binding upon any
existing mortgagee of the "Property" (as defined in the "Sublease" (as
hereinafter defined)) only when, as and if such mortgagee shall have so elected
(to have same so enure, or to so be binding, or both) in a writing recorded in
the Stratford, Connecticut, Land Records:
A. The "SUBLEASE AGREEMENT" between the Parties, "effective as of
February 1, 1984", a notice of which is believed to have been recorded in the
Stratford, Connecticut, Land Records (the "Sublease"); and
B. The "OPTION TO PURCHASE and RIGHT OF FIRST OFFER AGREEMENT"
between the parties, "made and entered into this 22nd day of May, 1987:, which
is believed to have been recorded in said Stratford Land Records (the "Option").
In consideration of the covenants and agreements of the Parties set forth
in this Agreement, the Parties agree as follows:
1. The Sublease is amended as follows:
a. subsection 6.1 (b) is amended to add, at the end thereof,
the following:
"Notwithstanding the foregoing portions of this subsection
(b), the Basic Rent for the portion of the Unmodified
Primary Term which
<PAGE> 45
occurs between the first day of the first month which
follows the execution, by both parties, of the Agreement
adding this sentence to this Sublease (the "Modification
Date") and January 31, 1994, shall be at the annual rate of
Two Hundred and Ninety Thousand Dollars ($290,000.00),
payable in equal monthly installments commending on the
Modification Date and payable on the 1st day of each month
thereafter during the period in question";
b. subsection 6.1(c) is amended to add, at the end thereof,
the following:
"Notwithstanding the foregoing portions of this subsection
(c), so long as the named Tenant, Oriel Corporation (or its
successor, which is conducting the business operations
formerly carried on by Oriel Corporation) is occupying the
Property pursuant to this Sublease, the Basic Rent for the
portion of the Unmodified Primary Term which occurs between
February 1, 1994, and January 31, 1998, shall be at the
annual rate of: (1) Two Hundred and Ninety Thousand Dollars
($290,000.00), payable in equal monthly installments
commencing on February 1, 1994, and payable on the 1st day
of each month thereafter during the period in questions;
plus (2) one percent (1%) of the amount by which the net
sales (I.E., gross sales, less returns of items the
proceeds from the sale of which were formerly included in
gross sales for the purpose of calculating whether any
payment was due the Landlord) of Oriel Corporation (or its
successor, which is conducting the business operations
formerly carried on by Oriel Corporation) exceed
$18,000,000 during any fiscal year (of Oriel Corporation
(or its said successor)) which is included in the period in
question, or a PRO RATA portion of $18,000,000 during any
partial fiscal year (of Oriel Corporation (or its said
successor)) which is included in the period in question; as
used in this sentence, net sales shall not include those of
separate operating divisions or
2
<PAGE> 46
subsidiaries of Oriel Corporation (or its said successor),
whose primary operations are housed at locations other than
the Property, but, in connection with such net sales, Oriel
Corporation (or its said successor) shall not manipulate
the locus of gross sales or returns among locations, with
the result that payments to Landlord pursuant to this
sentence are reduced; within sixty (60) days after the end
of each such fiscal year, Oriel Corporation (or its said
successor) shall provide Landlord with a statement,
certified by an officer of Oriel Corporation (or its said
successor), setting forth the net sales for the period in
question, together with any payment to Landlord shown
thereby to be due; and Landlord and Landlord's agents, at
reasonable times and on reasonable notice, shall have
access to the books and records, on which said statement is
based, to verify the accuracy thereof.";
c. Section 6.4. is amended to add, between the second-last
sentence and the last sentence thereof, the following:
"Notwithstanding the foregoing portions of this Section
6.4, any determination of "fair rental value" shall not (x)
result in a Basic Rent which is less in amount than Three
Hundred and Fifty Thousand Dollars ($350,000) per annum
and/or (y) reduce, in any way, any of Lessee's obligations
to pay any and all additional rent required by the terms of
this Sublease."
d. Section 12.3 is amended to add, at the end thereof, the
following:
"This Section 12.3 shall not be binding upon any present or
future first mortgagee of the Property (or such mortgagee's
heirs, or successors, or assigns) which may take title to
the Property or to any party (or such party's heirs, or
successors, or assigns) whose title is derived through the
foreclosure of a first mortgage of the Property."
3
<PAGE> 47
e. Section 12.4 is amended to add, between the fifth and sixth
sentences thereof, the following:
"Notwithstanding the foregoing portions of this Section
12.4, the fair market value of the Property shall in no
event be less than all principal, interest and other sums
then due on any first mortgage encumbering the Property,
provided that said principal of said first mortgage does
not exceed (x) $2,125,460.00 plus (y) such out-of-pocket
amounts (if any) expended by Lessor in refinancing the
first mortgage encumbering the Property as of July 1,
1991."
f. The first sentence of Section 13.1 is amended to read as
follows:
"If the Property shall be totally, or substantially
totally, damaged or destroyed or rendered completely, or
substantially completely, untenantable, on account of fire,
casualty or other cause, with the result that the damage,
destruction or tenantability cannot be repaired or restored
within six (6) months after the last day of the sixty (60)
day period hereinafter mentioned in this sentence, Lessee
shall have the right to terminate this Sublease, upon
thirty (30) days' written notice, by giving notice to
Lessor within sixty (60) days of the date on which the
event causing such substantial or total destruction
occurred."
g. Section 14.2 is amended to read as follows:
"14.2. In the event this Sublease shall be terminated as a
result of any such total taking or constructive total
taking (and, for the purposes of this Sublease, a total
taking or a constructive total taking shall mean a taking
of the Property as renders the remaining portion of the
Property incapable of allowing Tenant's pre-taking use of
the Property to substantially the same extent as before the
taking), the total award or awards for said taking, less
reasonable respective fees and expenses of Lessor and
Lessee incurred in
4
<PAGE> 48
connection with the determination and collection with the
determination and collection of such award or awards (said
net amount being hereinafter referred to as the "AWARD"),
shall be apportioned and paid in the following order of
priority:
(i) Up to the full amount then due under the
mortgage held by it, any first mortgagee of the fee of the
Property shall be paid such amount of the Award as said
first mortgagee may require.
(ii) If any proceeds remain, Lessor shall then be
entitled to receive a sum equal to the difference, if any,
between the amount required by the first fee mortgagee
pursuant to subsection (i) next above and the value of the
part of the Property so taken (including the diminution in
value of Lessor's interest under this Lease) as of the date
of taking, plus consequential damages, if any, to the part
of the Property not so taken. If the Award separately
specifies the amount of such value, such specification
shall govern; otherwise, Lessor and Lessee shall agree on
such value, and, if they cannot agree, such value shall be
determined by commercial arbitration.
(iii) If any proceeds remain, Lessee shall then be
entitled to receive the value, at the time of the taking,
of Lessee's leasehold interest under this Sublease
(including the value of any improvements constructed by and
at the expense of the Lessee).
(iv) Lessor shall then be entitled to receive the
entire balance of the Award."
h. The second sentence of Section 14.3 is amended to read as
follows:
"In such event, the Award shall be apportioned and
paid in the following order of priority:
(i) Up to the full amount then due under the
mortgage held by it, any first mortgagee of the fee of the
Property shall be paid such amount of the Award as said
mortgagee may require.
(ii) If any proceeds remain, Lessor shall then be
entitled to receive a
5
<PAGE> 49
sum equal to the difference, if any, between the amount
required by the first fee mortgagee pursuant to subsection
(i) next above and the value of the part of the Property so
taken (including the diminution in value of Lessor's
interest under this Lease) as of the date of taking, plus
consequential damages, if any, to the part of the Property
not so taken. If the Award separately specifies the amount
of such value, such specification shall govern; otherwise,
Lessor and Lessee shall agree on such value, and, if they
cannot agree, such value shall be determined by commercial
arbitration.
(iii) If any proceeds remain, that portion of the
Award representing compensation for the diminution in
value, at the time of taking, of Lessee's leasehold
interest under this Sublease (including the value of the
part of the Building or any Improvements constructed on the
Property by and at the expense of Lessee and so taken),
plus consequential damages, if any, to Lessee's leasehold
interest or to the part of the Building and any
Improvements not so taken, shall be payable to Lessee.
(iv) Lessor shall then be entitled to receive the
entire balance of the Award."
(i) The second sentence of Section 14.4 is amended to read as
follows:
"If the cost of such repairs and restoration exceeds the
amount of the portion(s) of such Award received by any fee
mortgagee and/or Lessor, the balance of such cost shall be
paid solely by Lessee."
(j) Article XX is amended to add, at the end thereof, the
following:
"Notwithstanding the foregoing portions of this Article XX,
from and after July 1, 1991, the Lessor's address, unless
and until another address may be specified, shall be 20
Harstrom Place, Norwalk, Connecticut 06853."
2. The Option is amended as follows:
a. Section 3 is amended so that the fifth and sixth lines
thereof read as follows:
"in accordance with the procedures set forth in the second
through sixth sentences of paragraph 12.4 of the Sublease
Agreement (but"
6
<PAGE> 50
b. subsection 5(a) is amended to read as follows:
"if to Osbrook, at 20 Harstrom Place, Norwalk, Connecticut
06853, Attention: Roger Gilbert, Jr.; and"
c. A new Section 9 is hereby added to the Option, following
the end of Section 8, as follows:
"Section 9. FIRST MORTGAGES.
"Provided that the principal amount of the first mortgage
in question is not in excess of "$X" (as hereinafter
defined), this Agreement shall be subject and subordinate
to all first mortgages which may now or hereafter affect
the Property and to all renewals, modifications,
consolidations, replacements and extensions thereof. If the
principal amount of any first mortgage (whether a
single-property mortgage or a so-called "blanket mortgage")
is in excess of $X, this Agreement shall not be subject or
subordinate to said mortgage, and Osbrook agrees not to
execute any such mortgage (single-property or "blanket")
for a principal amount in excess of $X without the prior,
written consent of Oriel. As used herein, "$X" shall mean
the sum of (x) $2,125,460.00 plus (y) such out-of-pocket
amounts (if any) expended by Osbrook in refinancing the
first mortgage encumbering the Property as of July 1, 1991.
The provisions of this Section shall be self-operative and
no further instrument of subordination shall be required by
the holders of any interest to which this Agreement is
subordinate. Each party agrees, however, whenever requested
to do so, upon reasonable notice to it by the other, to
execute such instruments confirmatory of the provisions of
this Section 9 as the party requesting the same may
reasonably require."
3. The Parties agree that neither this Agreement, nor anything
contained in the Sublease, or the Option, or both, shall ever (a) create a
partnership or joint venture relationship between Landlord and Tenant and/or (b)
require Landlord to refinance any mortgage encumbering the Property if (1) the
Landlord can only refinance on a so-called "recourse basis" (I.E., with
liability, for all or part of the mortgage debt, of Landlord,
7
<PAGE> 51
Landlord's partners or the successors, or heirs, of Landlord, Landlord's
partners or any of them) or (2) the debt service, following such refinancing and
in connection therewith (including, without limitation, interest on a current
basis and any required periodic repayments of part of the principal), would
exceed the Basic Rent then payable pursuant to the Sublease.
Except to the extent above amended and modified by this Agreement, the
Parties ratify, confirm and affirm the Sublease and the Option as of the dates
of their respective executions of this Agreement. This Agreement shall enure to
the benefit of and bind the parties and their respective successors and assigns.
In Witness Whereof, Landlord has hereunto caused Landlord's hand and seal
to be set on September 30, 1991, and Tenant has hereunto caused Tenant's hand
and seal to be set on September 30, 1991.
Witnesses:
Osbrook Associates
Limited Associates
/s/ Illegible by /s/ Roger Gilbert, Jr.,
- ---------------------------- ---------------------------------
Roger Gilbert, Jr.,
/s/ Illegible its General Partner
- ----------------------------
/s/ Robert M. St. John Oriel Corporation
- ----------------------------
/s/ Jane E. Mangold by /s/ Allen J. Smith
- ---------------------------- ---------------------------------
Allen J. Smith, Executive
/s/ Robert M. St. John Vice President and Member
- ---------------------------- of the Office of President
/s/ Jane E. Mangold by /s/ Eugene S. Arthurs
- ---------------------------- ---------------------------------
Eugene S. Arthurs,
Executive Vice President
and Member of the Office
of President
8
<PAGE> 52
STATE OF CONNECTICUT )
) ss: Stamford September 30, 1991
COUNTY OF FAIRFIELD )
Personally appeared, Osbrook Associates Limited Partnership, by Roger
Gilbert, Jr., its General Partner, signer and sealer of the foregoing
instrument, and acknowledged the same to be his free act and deed, and the free
act and deed of said Partnership, before me.
Notary /s/ Donna Fahijco
Seal -----------------------------------
Here Notary Public
My Commission Expires: 3/31/97
STATE OF CONNECTICUT )
) ss: Stratford September 30, 1991
COUNTY OF FAIRFIELD )
Personally appeared, Oriel Corporation, by Eugene G. Arthurs and Allen J.
Smith, both Executive Vice Presidents and Members of its office of President,
signers and sealers of the foregoing instrument, and acknowledged the same to be
their free act and deed, and the free act and deed of said Corporation, before
me.
Notary /s/ Robert M. St. John
Seal -----------------------------------
Here Notary Public
My Commission Expires: 3/31/92
9
<PAGE> 1
Exhibit 10.16
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT, AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
PLEDGED, MORTGAGED, HYPOTHECATED OR OTHERWISE TRANSFERRED (1) WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING THESE SECURITIES OR (2)
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
THERMO VISION CORPORATION
Promissory Note Due July 13, 2000
Waltham, Massachusetts
July 14, 1997
For value received, Thermo Vision Corporation, a corporation (the
"Company"), hereby promises to pay to Thermo Electron Corporation (hereinafter
referred to as the "Payee"), or registered assigns, on July 13, 2000, as
described below, the principal sum of three million eight hundred thousand
dollars ($3,800,000) or such part thereof as then remains unpaid, to pay
interest from the date hereof on the whole amount of said principal sum
remaining from time to time unpaid at a rate per annum equal to the rate of the
Commercial Paper Composite Rate for 90-day maturities as reported by Merrill
Lynch Capital Markets, as an average of the last five business days of the
Company's latest fiscal quarter then ended, plus twenty-five (25) basis points,
which rate shall be adjusted on the first business day of each fiscal quarter of
the Company and shall be in effect for the entirety of such fiscal quarter, such
interest to be payable in arrears on the first day of each fiscal quarter of the
Company during the term set forth herein, until the whole amount of the
principal hereof remaining unpaid shall become due and payable, and to pay
interest on all overdue principal and interest at a rate per annum equal to the
rate of interest announced from time to time by BankBoston Corporation at its
head office in Boston, Massachusetts as its "base rate" plus one percent (1%).
Principal and all accrued but unpaid interest shall be repaid on July 13, 2000.
Principal and interest shall be payable in lawful money of the United States of
America, in immediately available funds, at the principal office of the Payee or
at such other place as the legal holder may designate from time to time in
writing to the Company. Interest shall be computed on an actual 360-day basis.
This Note may be prepaid at any time or from time to time, in whole or in
part, without any premium or penalty. All prepayments shall be applied first to
accrued interest and then to principal.
<PAGE> 2
The then unpaid principal amount of, and interest outstanding on, this Note
shall be and become immediately due and payable without notice or demand, at the
option of the holder hereof, upon the occurrence of any of the following events:
(a) the failure of the Company to pay any amount due hereunder within
ten (10) days of the date when due;
(b) any representation, warranty or statement made or furnished to the
Payee by the Company in connection with this Note or the transaction from
which it arises shall prove to have been false or misleading in any
material respect as of the date when made or furnished;
(c) the failure of the Company to pay its debts as they become due,
the insolvency of the Company, the filing by or against the Company of any
petition under the U.S. Bankruptcy Code (or the filing of any similar
petition under the insolvency law of any jurisdiction), or the making by
the Company of an assignment or trust mortgage for the benefit of creditors
or the appointment of a receiver, custodian or similar agent with respect
to, or the taking by any such person of possession of, any property of the
Company;
(d) the sale by the Company of all or substantially all of its assets;
(e) the merger or consolidation of the Company with or into any other
corporation in a transaction in which the Company is not the surviving
entity;
(f) the issuance of any writ of attachment, by trustee process or
otherwise, or any restraining order or injunction not removed, repealed or
dismissed within thirty (30) days of issuance, against or affecting the
person or property of the Company or any liability or obligation of the
Company to the holder hereof; and
(g) the suspension of the transaction of the usual business of the
Company.
Upon surrender of this Note for transfer or exchange, a new Note or new
Notes of the same tenor dated the date to which interest has been paid on the
surrendered Note and in an aggregate principal amount equal to the unpaid
principal amount of the Note so surrendered will be issued to, and registered in
the name of, the transferee or transferees. The Company may treat the person in
whose name this Note is registered as the owner hereof for the purpose of
receiving payment and for all other purposes.
In case any payment herein provided for shall not be paid when due, the
Company further promises to pay all cost of collection, including all reasonable
attorneys' fees.
2
<PAGE> 3
No delay or omission on the part of the Payee in exercising any right
hereunder shall operate as a waiver of such right or of any other right of the
Payee, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion. The
Company hereby waives presentment, demand, notice of prepayment, protest and all
other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note. The undersigned hereby assents
to any indulgence and any extension of time for payment of any indebtedness
evidenced hereby granted or permitted by the Payee.
This Note shall be governed by and construed in accordance with, the laws
of the Commonwealth of Massachusetts and shall have the effect of a sealed
instrument.
THERMO VISION CORPORATION
By: /s/ Kristine Langdon
------------------------
Kristine Langdon
President
[Corporate Seal]
Attest:
/s/ Sandra L. Lambert
- ---------------------
Sandra L. Lambert
Secretary
cc: Seth Hoogasian
Maureen Jacobs
Sandra Lambert
Karen Levin
Andy Pilla
Gina Silvestri
Chris Vinchesi
Beverly Webster
3
<PAGE> 1
EXHIBIT 10.17
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT, AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
PLEDGED, MORTGAGED, HYPOTHECATED OR OTHERWISE TRANSFERRED (1) WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING THESE SECURITIES OR (2)
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
LASER SCIENCE ACQUISITION CORP.
Promissory Note Due February 18, 2000
Franklin, Massachusetts
February 21, 1997
For value received, Laser Science Acquisition Corp., a Delaware
corporation (the "Company"), hereby promises to pay to Thermo Optek Corporation
(hereinafter referred to as the "Payee"), or registered assigns, on February 18,
2000, as described below, the principal sum of three million six hundred
thousand dollars ($3,600,000) or such part thereof as then remains unpaid, to
pay interest from the date hereof on the whole amount of said principal sum
remaining from time to time unpaid at a rate per annum equal to the rate of the
Commercial Paper Composite Rate for 90-day maturities as reported by Merrill
Lynch Capital Markets, as an average of the last five business days of the
Company's latest fiscal quarter then ended, plus twenty-five (25) basis points,
which rate shall be adjusted on the first business day of each fiscal quarter of
the Company and shall be in effect for the entirety of such fiscal quarter, such
interest to be payable in arrears on the first day of each fiscal quarter of the
Company during the term set forth herein, until the whole amount of the
principal hereof remaining unpaid shall become due and payable, and to pay
interest on all overdue principal and interest at a rate per annum equal to the
rate of interest announced from time to time by BankBoston Corporation at its
head office in Boston, Massachusetts as its "base rate" plus one percent (1%).
Principal and all accrued but unpaid interest shall be repaid on February 18,
2000. Principal and interest shall be payable in lawful money of the United
States of America, in immediately available funds, at the principal office of
the Payee or at such other place as the legal holder may designate from time to
time in writing to the Company. Interest shall be computed on an actual 360-day
basis.
This Note may be prepaid at any time or from time to time, in whole or
in part, without any premium or penalty. All prepayments shall be applied first
to accrued interest and then to principal.
1
<PAGE> 2
The then unpaid principal amount of, and interest outstanding on, this
Note shall be and become immediately due and payable without notice or demand,
at the option of the holder hereof, upon the occurrence of any of the following
events:
(a) the failure of the Company to pay any amount due hereunder
within ten (10) days of the date when due;
(b) any representation, warranty or statement made or furnished
to the Payee by the Company in connection with this Note or the
transaction from which it arises shall prove to have been false or
misleading in any material respect as of the date when made or
furnished;
(c) the failure of the Company to pay its debts as they become
due, the insolvency of the Company, the filing by or against the
Company of any petition under the U.S. Bankruptcy Code (or the filing
of any similar petition under the insolvency law of any jurisdiction),
or the making by the Company of an assignment or trust mortgage for the
benefit of creditors or the appointment of a receiver, custodian or
similar agent with respect to, or the taking by any such person of
possession of, any property of the Company;
(d) the sale by the Company of all or substantially all of its
assets;
(e) the merger or consolidation of the Company with or into any
other corporation in a transaction in which the Company is not the
surviving entity;
(f) the issuance of any writ of attachment, by trustee process
or otherwise, or any restraining order or injunction not removed,
repealed or dismissed within thirty (30) days of issuance, against or
affecting the person or property of the Company or any liability or
obligation of the Company to the holder hereof; and
(g) the suspension of the transaction of the usual business of
the Company.
Upon surrender of this Note for transfer or exchange, a new Note or new
Notes of the same tenor dated the date to which interest has been paid on the
surrendered Note and in an aggregate principal amount equal to the unpaid
principal amount of the Note so surrendered will be issued to, and registered in
the name of, the transferee or transferees. The Company may treat the person in
whose name this Note is registered as the owner hereof for the purpose of
receiving payment and for all other purposes.
In case any payment herein provided for shall not be paid when due, the
Company further promises to pay all cost of collection, including all reasonable
attorneys' fees.
2
<PAGE> 3
No delay or omission on the part of the Payee in exercising any right
hereunder shall operate as a waiver of such right or of any other right of the
Payee, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion. The
Company hereby waives presentment, demand, notice of prepayment, protest and all
other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note. The undersigned hereby assents
to any indulgence and any extension of time for payment of any indebtedness
evidenced hereby granted or permitted by the Payee.
This Note shall be governed by and construed in accordance with, the
laws of the Commonwealth of Massachusetts and shall have the effect of a sealed
instrument.
LASER SCIENCE ACQUISITION CORP.
By: /s/ Kristine Langdon
---------------------------
Kristine Langdon
President
[Corporate Seal]
Attest:
/s/ Sandra L. Lambert
- ---------------------
Sandra L. Lambert
Secretary
cc: Seth Hoogasian
Maureen Jacobs
Sandra Lambert
Karen Levin
Andy Pilla
Gina Silvestri
Chris Vinchesi
Beverly Webster
3
<PAGE> 4
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT, AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
PLEDGED, MORTGAGED, HYPOTHECATED OR OTHERWISE TRANSFERRED (1) WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING THESE SECURITIES OR (2)
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
THERMO VISION CORPORATION
Promissory Note Due February 18, 2000
Franklin, Massachusetts
June 27, 1997
For value received, Thermo Vision, a Delaware corporation (the
"Company"), hereby promises to pay to Thermo Optek Corporation (hereinafter
referred to as the "Payee"), or registered assigns, on February 18, 2000, as
described below, the principal sum of three hundred forty seven thousand four
hundred thirty eight dollars ($347,438) or such part thereof as then remains
unpaid, to pay interest from the date hereof on the whole amount of said
principal sum remaining from time to time unpaid at a rate per annum equal to
the rate of the Commercial Paper Composite Rate for 90-day maturities as
reported by Merrill Lynch Capital Markets, as an average of the last five
business days of the Company's latest fiscal quarter then ended, plus
twenty-five (25) basis points, which rate shall be adjusted on the first
business day of each fiscal quarter of the Company and shall be in effect for
the entirety of such fiscal quarter, such interest to be payable in arrears on
the first day of each fiscal quarter of the Company during the term set forth
herein, until the whole amount of the principal hereof remaining unpaid shall
become due and payable, and to pay interest on all overdue principal and
interest at a rate per annum equal to the rate of interest announced from time
to time by BankBoston Corporation at its head office in Boston, Massachusetts as
its "base rate" plus one percent (1%). Principal and all accrued but unpaid
interest shall be repaid on February 18, 2000. Principal and interest shall be
payable in lawful money of the United States of America, in immediately
available funds, at the principal office of the Payee or at such other place as
the legal holder may designate from time to time in writing to the Company.
Interest shall be computed on an actual 360-day basis.
This Note may be prepaid at any time or from time to time, in whole or
in part, without any premium or penalty. All prepayments shall be applied first
to accrued interest and then to principal.
4
<PAGE> 5
The then unpaid principal amount of, and interest outstanding on, this
Note shall be and become immediately due and payable without notice or demand,
at the option of the holder hereof, upon the occurrence of any of the following
events:
(a) the failure of the Company to pay any amount due hereunder
within ten (10) days of the date when due;
(b) any representation, warranty or statement made or furnished to
the Payee by the Company in connection with this Note or the
transaction from which it arises shall prove to have been false or
misleading in any material respect as of the date when made or
furnished;
(c) the failure of the Company to pay its debts as they become
due, the insolvency of the Company, the filing by or against the
Company of any petition under the U.S. Bankruptcy Code (or the filing
of any similar petition under the insolvency law of any jurisdiction),
or the making by the Company of an assignment or trust mortgage for the
benefit of creditors or the appointment of a receiver, custodian or
similar agent with respect to, or the taking by any such person of
possession of, any property of the Company;
(d) the sale by the Company of all or substantially all of its
assets;
(e) the merger or consolidation of the Company with or into any
other corporation in a transaction in which the Company is not the
surviving entity;
(f) the issuance of any writ of attachment, by trustee process
or otherwise, or any restraining order or injunction not removed,
repealed or dismissed within thirty (30) days of issuance, against
or affecting the person or property of the Company or any
liability or obligation of the Company to the holder hereof; and
(g) the suspension of the transaction of the usual business of
the Company.
Upon surrender of this Note for transfer or exchange, a new Note or new
Notes of the same tenor dated the date to which interest has been paid on the
surrendered Note and in an aggregate principal amount equal to the unpaid
principal amount of the Note so surrendered will be issued to, and registered in
the name of, the transferee or transferees. The Company may treat the person in
whose name this Note is registered as the owner hereof for the purpose of
receiving payment and for all other purposes.
In case any payment herein provided for shall not be paid when due, the
Company further promises to pay all cost of collection, including all reasonable
attorneys' fees.
5
<PAGE> 6
No delay or omission on the part of the Payee in exercising any right
hereunder shall operate as a waiver of such right or of any other right of the
Payee, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion. The
Company hereby waives presentment, demand, notice of prepayment, protest and all
other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note. The undersigned hereby assents
to any indulgence and any extension of time for payment of any indebtedness
evidenced hereby granted or permitted by the Payee.
This Note shall be governed by and construed in accordance with, the
laws of the Commonwealth of Massachusetts and shall have the effect of a sealed
instrument.
THERMO VISION CORPORATION
By: /s/ Kristine Langdon
---------------------
Kristine Langdon
President
[Corporate Seal]
Attest:
/s/ Sandra L. Lambert
- ---------------------
Sandra L. Lambert
Secretary
cc: Seth Hoogasian
Maureen Jacobs
Sandra Lambert
Karen Levin
Andy Pilla
Gina Silvestri
Chris Vinchesi
Beverly Webster
6
<PAGE> 1
Exhibit 10.21
AGREEMENT of LEASE, made as of this 6th day of October, 1997, between
1608 DEVELOPMENT LIMITED PARTNERSHIP, a Connecticut limited partnership with an
office at 150 Long Beach Boulevard, Stratford, Connecticut, hereinafter referred
to as Owner, and ORIEL INSTRUMENTS CORPORATION, a Delaware Corporation, with an
office at 250 Long Beach Boulevard, Stratford, Connecticut hereinafter referred
to as Tenant.
WITNESSETH:
Owner hereby leases to Tenant and Tenant hereby hires from Owner approximately
31,700 rentable square feet of space in the building known as 150 LONG BEACH
BOULEVARD, Stratford, Connecticut which demised premises constitute the entire
building and are more specifically set forth in the floor plan annexed hereto as
Exhibit A, for the term of ten (10) years (or until such term shall sooner cease
and expire as hereinafter provided) as set forth in Article 33 hereof at the
annual rate specified in Article 63 hereof, which Tenant agrees to pay in equal
monthly installments in advance on the first day but no later than the tenth day
of each month during said term, at the office of Owner or such other place as
Owner may designate, without any setoff or deduction whatsoever except as
specifically otherwise set forth herein. The terms "premises," "leased
premises," and "demised premises" shall all mean and constitute the entire
building, including the addition, located at 150 Long Beach Boulevard,
Stratford, Connecticut. Owner represents that it has good, marketable title to
the building known as 150 Long Beach Boulevard and full authority to enter into
this lease. The building known as 150 Long Beach Boulevard is the Demised
Premises and the adjacent driveways, parking areas, and landscaped areas
constitute the common areas. During the term of this Lease and any extension
period thereof, Tenant is hereby granted a nonexclusive easement, but an
exclusive easement for parking and loading as set forth in Article 37 of this
lease, over these common areas for ingress and egress to and from the public
street known as Long Beach Boulevard and the building. This easement shall
expire or terminate simultaneously with this Lease. The Demised Premises and
common areas are a part of Stratford Executive Park, which is comprised of
similar buildings in the Lordship Boulevard area of Stratford, Connecticut,
which buildings are managed by Owner.
The parties hereto, for themselves, their heirs, distributees,
executors, administrators, legal representatives, successors and permitted
assigns, hereby covenant as follows:
1. Peaceful Possession: The Owner covenants that the Tenant, on paying
the said rental and performing the covenants and conditions in this lease
contained, shall and may peaceably and quietly have, hold and enjoy the demised
premises for the term aforesaid.
2. Purpose: The Tenant covenants and agrees that the demised premises
may be used for general offices, assembly, manufacturing and research together
with a machine shop for the Tenant's named business and for no other purpose,
including, without limitation, operation of business of manufacturing
instruments and components for electro-optic research, provided such use is in
accordance with the Certificate of Occupancy for the building, and Tenant agrees
not to use or permit the premises to be used for any other purpose without the
prior written consent of the Owner, not to be unreasonably withheld or delayed.
Owner represents that the Premises may lawfully be used for said purposes.
3. Default in Payment of Rent: The Tenant shall, without any previous
demand therefor, pay to the Owner, or its agent, the said rent at the times and
in the manner above provided. In the event of the non-payment of said rent, or
any installment thereof, at the times and in the manner above provided, and if
the same shall remain in default for ten (10) days after notice, or if the
Tenant shall be dispossessed for non-payment of rent, as set forth in section 18
hereof or if the leased premises shall be deserted or vacated and
<PAGE> 2
Tenant is in default beyond any applicable cure period, the Owner or its agents
shall have the right to and may enter the said premises either by force or
otherwise, without being liable for any prosecution or damages therefor, and may
relet the premises and receive the rent therefore, upon such terms as shall be
satisfactory to the Owner, and all rights of the Tenant to repossess the
premises under this lease shall be forfeited. Such re-entry by the Owner shall
not operate to release the Tenant from any rent to be paid or covenants to be
performed hereunder during the full term of this lease. For the purpose of
reletting, the Owner shall be authorized to make such repairs or alterations in
or to the leased premises as may be necessary to place the same in similar order
and condition as of the date hereof. The Tenant shall be liable to the Owner for
the cost of such repairs or alterations, and all expenses of such reletting.
If the sum realized or to be realized from the reletting is insufficient to
satisfy the monthly or term rent provided in this lease, the Owner, at its
option, may require the Tenant to pay such deficiency month by month, The Tenant
shall not be entitled to any surplus accruing as a result of the reletting. The
Tenant agrees to pay, as additional rent, all attorney's fees and other expenses
incurred by the Owner in enforcing any of the obligations under this lease.
4. Condition of Premises, Repairs and Alterations: The Tenant shall
keep the demised premises in the same good condition as of the date hereof,
reasonable wear and tear and damage by casualty and condemnation excepted, and
shall, paint the said premises as may be necessary to keep them in the same good
condition as of date hereof. Tenant shall at its expense, make all repairs of
any nature to the demised premises or the building caused by the negligence of
Tenant, its servants, employees, invitees or licensees or caused by the moving
of Tenant's fixtures, furniture or equipment. The Tenant shall quit and
surrender the premises at the end of the demised term in the same good condition
as of the date hereof as the reasonable use thereof will permit, reasonable wear
and tear and damage by casualty and condemnation excepted. The Tenant shall not
make any material alterations, additions, or improvements to said premises
without the prior written consent of the Owner, not to be unreasonably withheld
or delayed. Tenant shall, at its expense, prior to making any permitted
alterations, obtain all permits, approvals and certificates required by any
applicable governmental entities and upon completion obtain certificates of
final approval thereof and develop duplicates of all such permits, approvals and
certificates to Owner. All erections, alterations, additions and improvements,
whether temporary or permanent in character, which may be made upon the premises
either by the Owner or the Tenant, except furniture, personal property, shielded
CE test room, or moveable trade fixtures installed at the expense of the Tenant,
shall be the property of the Owner and shall remain upon and be surrendered with
the premises as a part thereof at the termination of this lease, without
compensation to the Tenant, unless Owner, at the time of approval of the
alterations, elects to relinquish Owner's right thereto and to have all or some
of them removed by Tenant, in which event the same shall be removed from the
demised premises by Tenant prior to the expiration of this lease, at Tenant's
expense. Tenant shall repair any damage due to any such removal and all property
remaining in the premises at the end of the term after Tenant's removal shall be
deemed abandoned and may, at Owner's election, either be retained as Owner's
property or removed from the premises by Owner, at Tenant's expense. The Tenant
further agrees to keep said premises and all parts thereof in a clean and
sanitary condition and free from trash, inflammable material and other
objectionable matter. If Tenant fails, after ten business days written notice,
to proceed with due diligence to make repairs as required hereby, the same may
be made by Owner at Tenant's expense, which shall be collectible as additional
rent. Owner shall have no liability to Tenant with respect to the failure or
delay in making repairs to the demised premises or the building or to any
fixtures or equipment contained therein except as otherwise provided in this
lease. The term "material" shall mean those alterations, additions, or
improvements to the premises which
2
<PAGE> 3
cost in excess of $50,000.00 and which are structural in nature. This section
shall not apply to Tenant's initial improvements to the premises as described
herein.
5. Liability of Owner: The Owner shall not be responsible for the loss
of or damage to property, or injury to persons, occurring in or about the
demised premises, by reason of any existing or future condition, in said demised
premises or the property of which the premises are a part, or for the acts,
omissions or negligence of other persons or tenants in and about the said
property except for Owner's, its agents, servants, and licensees' negligence or
except as otherwise set forth herein. The Tenant agrees to indemnify and save
the Owner harmless from all claims and liability for losses of or damage to
property, or injuries to persons occurring in or about the demised premises
except for claims arising from Owner's, its agents, invitees, servants, and
licensees' negligence:
a. Owner warrants and represents that, as of the Term Commencement Date
(which shall be sixteen (16) weeks after Lease execution), (i) the premises
shall be in compliance with all applicable laws, codes, ordinances, orders,
rules and regulations of any governmental or other public authority, (ii) all
electrical, plumbing, lighting, fire protection and heating, ventilation and air
conditioning systems shall be in good condition and repair, and (iii) there
shall be no restrictions or other legal impediments, either imposed by law
(including without limitation applicable zoning and building codes or
ordinances) or by instrument, which would prevent the use of the premises for
the permitted uses hereunder. If at any time during the Term, as the same may be
extended, applicable law shall not permit the use of the premises as aforesaid,
then Tenant, without waiving any other right Tenant may have on account thereof,
may terminate this Lease upon no less than thirty (30) days written notice to
Owner.
b. Owner shall indemnify, defend hold harmless Oriel, its parent,
subsidiaries, divisions, and affiliates, and their respective officers,
directors, shareholders and employees, from and against any and all damages,
liabilities, actions, causes of action, suits, claims, demands, losses, costs
and expenses (including without limitation reasonable attorneys' fees and
disbursements and court costs) to the extent arising from or in connection with
the negligence or willful misconduct of Owner, its agents, employees,
representatives or contractors.
The party seeking indemnification under this Lease (the "Indemnified
Party") shall provide prompt written notice of any thirty party claim to the
party from whom such indemnification is sought (the "Indemnifying Party"). The
Indemnifying Party shall have the right to assume exclusive control of the
defense of such claim or, at the option of the Indemnifying Party, to settle the
same. The Indemnified Party agrees to cooperate reasonably with the Indemnifying
Party in connection with the performance of the Indemnifying Party's
indemnification obligations under this Lease. In the event that the Indemnifying
Party fails to perform such obligations, the Indemnified Party shall have the
right to perform such obligations at the Indemnifying Party's reasonable
expense.
Notwithstanding anything to the contrary contained in this Agreement,
in no event shall either party be liable for any indirect, special,
consequential or incidental damages (including without limitation damages for
loss of use of facilities or equipment, loss of revenue, loss of profits or loss
of goodwill), regardless of whether such party (i) has been informed of the
possibility of such damages or (ii) is negligent.
6. Services and Utilities: Owner shall cause utilities and services
to be furnished to the demised premises for the benefit of the Tenant and paid
for as follows: water, by the Tenant; gas by the Tenant; electricity by the
Tenant; heat by the Tenant; refrigeration by the Tenant; and hot water by the
Tenant. The Owner shall not be liable for any interruption or delay in any of
the above services for any reason except for Owner's
3
<PAGE> 4
negligence. All utilities furnished to the demised premises are separately
metered and serve the demised premises exclusively. Owner shall put bills in
Tenant's name prior to the Commencement Date. Tenant's obligation to pay bills
shall not begin until the Commencement Date.
7. Right to Inspect and Exhibit: Upon prior advance notice the Owner,
or its agents, shall have the right to enter the demised premises at reasonable
hours in the presence of Tenant and with minimal interference to Tenant's
business to run telephone or other wires, or to make such repairs, additions or
alterations as it shall deem necessary for the safety, preservation or
restoration of the improvements, or for the safety or convenience of the
occupants or users thereof (there being no obligation, however, on the part of
the Owner to make any such repairs, additions or alterations except as otherwise
set forth herein), or to exhibit the same to prospective purchasers and put upon
the premises a suitable "For Sale" sign. For six months prior to the expiration
of the demised term, the Owner, or its agents, may similarly exhibit the
premises in accordance with the terms of the preceding sentence to prospective
tenants, and may place the usual "To Let" signs thereon.
8. Damage or Destruction
8.1 If all or a portion of the premises is damaged by fire or other
casualty, Owner will give Tenant written notice ("Owner's Repair Notice") of the
time which will be needed to repair such damage, as determined by Owner in its
reasonable discretion, and the election (if any) which Owner has made according
to this Article 8. Such notice will be given before the 60th day (the "notice
date") after the fire or other casualty. If Owner fails to give Tenant Owner's
Repair Notice within sixty (60) days after the fire or other casualty, Tenant
may notify Owner that Owner's Repair Notice has not been given, and Tenant may
terminate this Lease if Owner fails to give Owner's Repair Notice within ten
(10) days after this reminder notice is received by Owner. To exercise this
termination right, Tenant must give Owner notice of termination at any time
after the expiration of said ten (10) day period but before Owner's Repair
Notice is given.
8.2 If all or a portion of the Premises is damaged by fire or other
casualty to an extent which may be repaired within one hundred eighty (180) days
after the notice date, as reasonably determined by Owner and Tenant, Owner will
promptly begin to repair the damage after the notice date and will diligently
pursue the completion of such repair. In that event, this Lease will continue in
full force and effect except that Annual Fixed Rent and Additional Rent, as
defined in Article 63d., will be abated on a pro rata basis from the date of the
damage until the date of the substantial completion of such repairs (the "repair
period") based on the proportion of the rentable area of the Building Tenant is
unable to use during the repair period. Notwithstanding the foregoing, if a
repair that Owner determined could be made within one hundred eighty (180) days
after the notice date is not substantially completed within said one hundred
eighty (180) day period, Tenant may terminate this Lease upon notice to Owner
given at any time after the expiration of said one hundred eighty (180) day
period, but before the repair is substantially completed; provided, however,
that Owner may nullify Tenant's termination if Owner substantially completes the
repair within thirty (30) days after receipt of Tenant's termination notice.
Tenant's termination notice shall state that this Lease will terminate thirty
(30) days after Owner's receipt of the notice unless Owner substantially
completes the repair within said thirty (30) day period.
8.3 If all or a portion of the Premises is damaged by fire or other
casualty to an extent that may not be repaired within one hundred eighty (180)
days after the notice date, as reasonably determined by Owner, and the damage
materially impairs Tenant's use of the Premises, then (i) Owner may cancel this
Lease by written notice given to Tenant on or before the notice date or (ii)
Tenant may cancel this Lease by written notice given to
4
<PAGE> 5
Owner within thirty (30) days after Owner's delivery of a written notice that
the repairs cannot be made within such one hundred eighty (180) day period. If
either party cancels this Lease in accordance with the preceding sentence, this
Lease shall terminate thirty (30) days after the date of the cancellation
notice. If neither Owner nor Tenant so elects to cancel this Lease, Owner will
diligently proceed to repair the Premises, and Annual Fixed Rent and Additional
Rent will be abated on a pro rata basis during the repair period based on the
proportion of the rentable area of the Building Tenant is unable to use during
the repair period. Notwithstanding the foregoing, if a repair to be made in
accordance with this Section 8.3 is not substantially completed within two
hundred ten (210) days after the notice date (or within such longer time period
as is specified in Owner's Repair Notice), Tenant may terminate this Lease upon
notice to Owner given at any time after the expiration of said two hundred ten
(210) day period (or the expiration of such longer time period as is specified
in Owner's Repair Notice), but before the repair is substantially completed;
provided, however, that Owner may nullify Tenant's termination if Owner
substantially completes the repair within thirty (30) days after receipt of
Tenant's termination notice. Tenant's termination notice shall state that this
Lease will terminate thirty (30) days after Owner's receipt of the notice unless
Owner unless Owner substantially completes the repair within said thirty (30)
day period.
8.4 Tenant shall be responsible for the repair or replacement of all of
Tenant's personal property that is damaged or destroyed.
8.5 Time is of the essence in this Section 8.
9. Observation of Laws, Ordinances, Rules and Regulations: The Tenant
agrees to observe and comply with all laws, ordinances, rules and regulations of
the Federal, State, County and Municipal authorities applicable to the business
to be conducted by the Tenant in the demised premises. As clarification to the
proceeding section, Tenant shall comply with all laws which are particular to
Tenant's specific use of the premises (but not to the premises itself). The
Tenant agrees not to do or permit anything to be done in said premises, or keep
anything therein, which will obstruct or interfere with the rights of other
tenants, or conflict with the regulations of the Fire Department or with any
insurance policy upon said improvements or any part thereof. In the event of any
increase in insurance premiums resulting from the Tenant's occupancy of the
premises, or from any act or omission on the part of the Tenant, the Tenant
agrees to pay said increase in insurance premiums on the improvements or
contents thereof as additional rent. As set forth in this lease, Owner shall be
responsible at Owner's sole expense for capital improvements necessary to keep
the building in good order and repair and necessary to keep the building in
compliance with all laws, ordinances, rules and regulations of federal, state,
country and municipal authorities.
10. Subordination to Mortgages and Deeds of Trust: This Lease is
subject and is hereby subordinated to all present and future mortgages, deeds of
trust and other encumbrances affecting the demised premises or the property of
which said premises are a part. Tenant agrees to execute, at no expense to
Owner, any instrument which may be deemed necessary or desirable by Owner to
further effect the subordination of this Lease to any such mortgage, deed of
trust or encumbrance. Tenant shall attorn to the holder of any mortgage
acquiring title by virtue of a conveyance or through foreclosure proceedings.
Anything herein to the contrary notwithstanding, the subordination of this Lease
to future mortgages will be conditioned upon Tenant receiving from the mortgagee
a subordination, nondisturbance and attornment agreement substantially in the
form of Exhibit "E" hereto, or such other form as may be the standard form used
by the mortgagee and reasonably acceptable to Tenant. Owner represents that
there is no Mortgagee or Ground Lessee of record.
5
<PAGE> 6
11. Rules and Regulations of Owner: The rules and regulations regarding
the demised premises as set forth in Article 56, hereof, as well as any other
and further reasonable rules and regulations which shall be made by the Owner,
shall be observed by the Tenant and by the Tenant's employees, agents and
customers. The Owner reserves the right to rescind any presently existing rules
applicable to the demised premises, and to make such other and further
reasonable rules and regulations as, in its judgment, may from time to time be
desirable for the safety, care and cleanliness of the premises, and for the
preservation of good order therein, which rules, when so made and notice thereof
given to the Tenant, shall have the same force and effect as if originally made
a part of this lease. Such other and further rules shall not, however, be
inconsistent with the proper and rightful enjoyment by the Tenant of the demised
premises or derogate from Tenant's rights hereunder. Owner shall enforce
uniformly the rules and regulations in the Stratford Executive Park and
provisions of any other lease but Owner shall not be liable to Tenant for any
violation of same by Owner or by any other tenant, their respective servants,
agents, invitees or licensees.
12. Violation of Covenants, Forfeiture of Lease, Re-entry by Owner: In
case of violation by the Tenant of any of the covenants, agreements and
conditions of this lease, or of the rules and regulations now or hereafter to be
reasonably established by the Owner, and upon failure to discontinue such
violation within thirty (30) days after written notice thereof given to the
Tenant or as long as Tenant is diligently proceeding to cure, such longer period
if such violation is incapable of curing within thirty (30) days, this lease
shall thenceforth, at the option of the Owner, become null and void, and the
Owner may re-enter without further notice or demand. The rent in such case shall
become due, be apportioned and paid on and up to the day of such re-entry, and
the Tenant shall be liable for all loss or damage resulting from such violation
as aforesaid. No waiver by the Owner of any violation or breach of condition by
the Tenant shall constitute or be construed as a waiver of any other violation
or breach of condition, nor shall lapse of time after breach of condition by the
Tenant before the Owner shall exercise its option under this paragraph operate
to defeat the right of the Owner to declare this lease null and void and to
re-enter upon the demised premises after the said breach or violation. If there
shall be an event of default under this lease at the date fixed for the
commencement of any renewal or extension period, Owner may cancel such renewal
or extension by written notice to Tenant.
13. Notices: All notices and demands, legal or otherwise, incidental to
this lease, or the occupation of the demised premises, shall be in writing. If
the Owner or its agent desires to give or serve upon the Tenant any notice or
demand, it shall be sufficient to send a copy thereof by certified mail,
addressed to the Tenant at 150 Long Beach Boulevard, Stratford, CT 06497,
Attention: Allen Smith, with a copy to: Thermo Electron Corporation, 81 Wyman
Street, PO Box 9046, Waltham, MA 02254, Attention: General Counsel. Notices from
the Tenant to the Owner shall be sent by certified mail or delivered to the
Owner at the place hereinbefore designated or to such party or place as the
Owner may from time to time designate in writing. Notices shall be deemed
delivered three (3) days after deposit in the US Mail.
14. Bankruptcy, Insolvency, Assignment for Benefit of Creditors: It is
further agreed that if at any time during the term of this lease the Tenant
shall make any assignment for the benefit of creditors, or be decreed insolvent
or bankrupt according to law, or if a receiver shall be appointed for the Tenant
and not dismissed within ninety (90) days, then Tenant shall be deemed in
default hereunder and the Owner may, at its option terminate this lease,
exercise of such option to be evidenced by notice to that effect served upon the
assignee, receiver, trustee or other person in charge of the liquidation of the
property of the Tenant or the Tenant's estate and Tenant, but such termination
shall not release or discharge any payment of rent payable hereunder and then
6
<PAGE> 7
accrued, or any liability then accrued by reason of any agreement or covenant
herein contained on the part of the Tenant, or the Tenant's legal
representatives.
15. Eminent Domain
15.1 A taking of all or any part of the Premises under the exercise of
the right of condemnation or eminent domain is referred to hereafter as a
"Taking". The date upon which the condemnation authority takes possession of the
portion of the Premises Taken is referred to hereafter as the "Taking Date". In
this Article, the "Taken" means that the Premises have been subject to a Taking.
15.2 If all of the Premises are Taken, (a) this Lease shall terminate
on the Taking Date, and (b) the Annual Fixed Rent, Additional Rent and other
charges payable by Tenant hereunder shall be apportioned and paid to the Taking
Date.
15.3 If (i) more than twenty-five (25%) percent of the rentable area of
the Building is Taken, (ii) more than twenty-five (25%) percent of the parking
spaces on the Premises is Taken, or (iii) access to the Premises is
substantially impaired because of a Taking, then Owner or Tenant may terminate
this Lease by written notice to other party given within thirty (30) days after
the Taking Date. If either party elects to terminate this Lease in accordance
with the preceding sentence, the Annual Fixed Rent, Additional Rent and other
charges payable by Tenant hereunder shall be apportioned and paid to the Taking
Date.
15.4 If a Taking occurs and this Lease is not terminated, this Lease
shall continue unaffected, except that (i) the Annual Fixed Rent shall be
reduced as of the Taking Date to the Annual Fixed Rent in effect immediately
before the Taking multiplied by the fraction, the numerator of which shall be
the value of the untaken portion of the Premises (valued after the Taking and
any restoration) and the denominator of which shall be the value of the Premises
immediately prior to the Taking, (ii) Tenant shall continue to pay all
Additional Rent due with respect to the remaining Premises, (iii) Owner and
Tenant shall make any adjustments needed between them as a result of any
overpayment or underpayment of Additional Rent and Annual Fixed Rent with
respect to the portion of the Premises that has been Taken, and (iv) Owner shall
make appropriate alterations, in its reasonable judgment to the Premises to
restore the Premises as nearly as practicable to their condition before the
Taking, but Owner shall only be required to expend for this purpose any
condemnation proceeds that Owner receives.
15.5 Tenant shall neither have nor make any claim whatsoever for any
award or payment for the Premises or any part thereof, and in any event Tenant
shall neither have nor make any claim whatsoever for any award or payment for
the value of Tenant's leasehold under this Lease or for the value of the
unexpired Term. Notwithstanding the foregoing, Tenant will have the right to
assert a claim against the condemning authority in a separate action for
Tenant's moving expenses, trade fixtures and any unamortized alterations paid
for by Tenant.
15.6 If Owner becomes aware of a condemnation proceeding pertaining to
the Premises, Owner shall promptly give notice thereof to Tenant. Subject to any
applicable procedural rules, Owner, Tenant and their counsel may both appear in
the proceeding.
15.7 Time is of the essence in this Section 15.
16. Lease Provisions Not Exclusive: The rights and remedies of Owner
set forth herein are not intended to be exclusive but as additional to all
rights and remedies the Owner would otherwise have by law.
7
<PAGE> 8
17. Limitation re: Default in Rent: Notwithstanding anything to the
contrary herein (i) Tenant shall not be deemed in default in the payment of
Annual Fixed Rent unless Tenant fails to pay the same when due and thereafter
cure such default within ten (10) days after notice of such default from Owner;
provided, however, that if Owner shall have given two such notices in any
calendar year, any subsequent failure by Tenant, during such calendar year, to
pay Annual Fixed Rent on the due date thereof shall be deemed an immediate
default hereunder without any requirement of notice nor opportunity to cure, and
(ii) Tenant shall not be deemed in default in the payment of any additional rent
due hereunder unless Tenant fails to pay the same when due and thereafter cure
such default within ten (10) days after notice of such default from Owner;
provided, however, that if Owner shall have given two such notices in any
calendar year, any subsequent failure by Tenant, during such calendar year, to
pay fixed additional rent on the due date thereof shall be deemed an immediate
default hereunder without any requirement of notice nor opportunity to cure.
18. Remedies of Owner: In the case of any default, re-entry, expiration
and/or dispossess by summary proceedings or otherwise, (a) the rent, and
additional rent, shall become due thereupon and be paid up to the time of such
re-entry, dispossess and/or expiration, (b) Owner may relet the premises or any
part or parts thereof, either in the name of Owner or otherwise, for a term or
terms, which may at Owner's option be less than or exceed the period which would
otherwise have constituted the balance of the term of this lease and may grant
concessions or free rent or charge a higher rental than that in this lease, (c)
Tenant or the legal representatives of Tenant shall also pay Owner as damages
for the failure of Tenant to observe and perform said Tenant's covenants herein
contained, any deficiency between the rent hereby reserved and/or covenanted to
be paid and the net amount, if any, of the rents collected on account of the
subsequent lease or leases of the demised premises for each month of the period
which would otherwise have constituted the balance of the term of this lease.
The failure of Owner to re-let the premises or any part or parts thereof shall
not release or affect Tenant's liability for damages. In computing such damages
there shall be added to the said deficiency such expenses as Owner may incur in
connection with re-letting, such as legal expenses, attorneys' fees, brokerage,
advertising and for keeping the demised premises in good order or for preparing
the same for re-letting. Any such damages shall be paid in monthly installments
by Tenant on the rent day specified in this lease and any suit brought to
collect the amount of the deficiency for any month shall not prejudice in any
way the rights of Owner to collect the deficiency for any subsequent month by a
similar proceeding. Owner, in putting the demised premises in good order or
preparing the same for re-rental may, at Owner's option, make such reasonable
alterations, repairs, replacements, and/or decorations in the demised premises
as Owner, in Owner's sole judgment, considers advisable and necessary for the
purpose of re-letting the demised premises, and the making of such alterations,
repairs, replacements, and/or decorations shall not operate or be construed to
release Tenant from liability hereunder as aforesaid. Owner agrees to mitigate
damages.
Owner shall in no event be liable in any way whatsoever for failure to re-let
the demised premises, or in the event that the demised premises are re-let, for
failure to collect the rent thereof under such re-letting, and in no event shall
Tenant be entitled to receive any excess, if any, of such net rents collected
over the sums payable by Tenant to Owner hereunder. In the event of a default by
Tenant of any of the covenants or provisions hereof, Owner shall have the right
of injunction and the right to invoke any remedy allowed at law or in equity as
if re-entry, summary proceedings and other remedies were not herein provided
for. Mention in this lease of any particular remedy, shall not preclude Owner
from any other remedy, in law or in equity.
19. Fees and Expenses: If Tenant or Owner shall default in the
observance or performance of any term or covenant on Tenant's or Owner's part to
be observed or
8
<PAGE> 9
performed under or by virtue of any of the terms or provisions in any article of
this lease, then, unless otherwise provided elsewhere in this lease Tenant or
Owner may, not less than ten (10) days (or such longer period as set forth
herein) after notice to Tenant or Owner (except in cases of emergency) and
Tenant's or Owner's failure to cure such default within such ten (10) day period
(or such longer period as set forth herein), or at any time thereafter perform
the obligation of Tenant or Owner thereunder. If Owner or Tenant, in connection
with the foregoing or in connection with any default by Tenant or Owner
hereunder, makes any expenditures or incurs any obligations for the payment of
money, including but not limited to reasonable attorney's fees, in instituting,
prosecuting or defending any action or proceedings, then Tenant or Owner will
reimburse Tenant or Owner for such sums so paid or obligations incurred with
interest and costs. The foregoing expenses incurred by reason of Tenant's or
Owner's default shall be paid to Tenant or Owner within thirty (30) days of
rendition of any bill or statement to Tenant or Owner therefor. If the lease
term shall have expired at the time of making such expenditures or incurring
such obligations, such sums shall be recoverable by Owner or Tenant as damages.
All sums paid to Owner shall be deemed additional rent.
20. No Representations by Owner: Owner or Owner's Agents have made no
representations, warrantees or promises with respect to the Demised Premises or
common areas except as herein expressly set forth.
21. End of Term: Upon the expiration or other termination of the term
of this lease, Tenant shall quit and surrender to Owner the demised premises,
broom clean, in the same good order and condition as delivered to Tenant,
ordinary wear and damages which Tenant is not required to repair as provided
elsewhere in this lease excepted, damages by casualty and condemnation excepted,
and Tenant shall remove all its property from the demised premises. Tenant's
obligation to observe or perform this covenant shall survive the expiration or
other termination of this lease. If the last day of the term of this Lease or
any renewal thereof, falls on Sunday, this lease shall expire at noon on the
preceding Saturday unless it be a legal holiday in which case it shall expire at
noon on the preceding business day.
22. Intentionally omitted.
23. No Waiver: The failure of Owner to seek redress for violation of,
or to insist upon the strict performance of any covenant or condition of this
lease or of any of the Rules or Regulations, set forth or hereafter adopted by
Owner, shall not prevent a subsequent act which would have originally
constituted a violation from having all the force and effect of an original
violation. The failure of Tenant to seek redress for violation of, or to insist
upon the strict performance of any covenant or condition of this lease to be
observed or performed by Owner shall not prevent a subsequent act which would
have originally constituted a violation from having all the force and effect of
an original violation. The receipt by Owner of rent with knowledge of the breach
of any covenant of this lease shall not be deemed a waiver of such breach and no
provision of this lease shall be deemed to have been waived by Owner unless such
waiver be in writing signed by Owner. No payment by Tenant or receipt by Owner
of a lesser amount than the monthly rent herein stipulated shall be deemed to be
other than on account of the earliest stipulated rent, nor shall any endorsement
or statement of any check or any letter accompanying any check or payment as
rent be deemed an accord and satisfaction, and Owner may accept such check or
payment without prejudice to Owner's right to recover the balance of such rent
or pursue any other remedy in this lease provided. All checks tendered to Owner
as and for the rent of the demised premises shall be deemed payments for the
account of Tenant. Acceptance by Owner of rent from anyone other than Tenant
shall not be deemed to operate as an attornment to Owner by the payor of such
rent or as a consent by Owner to an assignment or subletting by Tenant of the
demised premises to such payor, or as a modification of the provisions of this
lease. No act or thing done by
9
<PAGE> 10
Owner or Owner's agents during the term hereby demised shall be deemed an
acceptance of a surrender of said premises and no agreement to accept such
surrender shall be valid unless in writing signed by Owner. No employee of Owner
or Owner's agent shall have any power to accept the keys of said premises prior
to the termination of the lease and the delivery of keys to any such agent or
employee shall not operate as a termination of the lease or a surrender of the
premises.
24. Waiver of Trial by Jury: It is mutually agreed by and between Owner
and Tenant that the respective parties hereto shall and they hereby do waive
trial by jury in any action, proceeding or counterclaim brought by either of the
parties against the other (except for personal injury or property damage) on any
matters whatsoever arising out of or in any way connected with this lease, the
relationship of Owner and Tenant, Tenant's use of or occupancy of said premises,
and any emergency statutory or any other statutory remedy.
25. Force Majeure: If Owner or Tenant is unable to fulfill any of its
obligations under this Lease (except for Tenant's obligations to pay Rent
hereunder) or is prevented or delayed from doing so by reason of strikes or
labor troubles or any other legitimate cause beyond Owner's or Tenant's control,
including governmental preemption in connection with a national emergency or by
reason of any rule, order or regulation of any federal, state or municipal
government or agency or any board, bureau, commission, department or body
thereof, or by reason of the conditions of supply and demand which have been or
are affected by way of hostilities or other similar or dissimilar emergency
(collectively, "Force Majeure Delays"), Owner's or Tenant's obligation to
perform shall be delayed by the number of days of Force Majeure Delays which
shall not exceed sixty (60) days.
26. Water and Sewer Charges: Upon the Term Commencement Date, Owner
shall contact the Bridgeport Hydraulic Company and transfer the account for
water usage of the premises to Tenant and Tenant shall be responsible for paying
bills from the Bridgeport Hydraulic Company or its successor as of the
Commencement Date of this lease, throughout the term of this lease and
throughout any extension term. The meter number for this account is 50613042.
Tenant agrees to pay for water consumed, as shown on said meter as and when
bills are rendered, and on default in making such payment Owner may pay such
charges and collect the same from Tenant, as additional rent. Tenant covenants
and agrees to pay, as additional rent, the sewer rent, charge or any other tax,
rent, levy or charge which now or hereafter is assessed, imposed or a lien upon
the demised premises or the realty of which they are part pursuant to law, order
or regulation made or issued in connection with the use, consumption,
maintenance or supply of water, water system or sewage or sewage connection or
system; however, Tenant shall not be required to pay any such amounts with
respect to the period of one year from the Commencement Date. Independently of
and in addition to any of the remedies reserved to Owner hereinabove or
elsewhere in this lease, Owner may sue for and collect any monies to be paid by
Tenant or paid by Owner for any of the reasons or purposes hereinabove set
forth.
27. Sprinklers: The sprinkler system originally installed by Owner in
the demised premises was installed in accordance with all applicable laws and
regulations, and anything elsewhere in this lease to the contrary
notwithstanding, if any bureau, department or official of the federal, state or
local government recommend or require any changes, modifications, alterations,
or additional sprinkler heads or other equipment be made or supplied in an
existing sprinkler system by reason of Tenant's particular business, or the
location of Tenant's partitions, trade fixtures, or other contents of the
demised premises. As clarification to the preceding sentence, Tenant shall, at
Tenant's expense, promptly make such sprinkler system installations, changes,
modifications, alterations, and supply additional sprinkler heads or other
equipment necessitated by its
10
<PAGE> 11
particular use of the Premises whether the work involved shall be structural or
non-structural in nature. If Tenant's business necessitates additional
monitoring, Tenant shall pay to Owner as additional rent, Tenant's portion of
the contract price for any additional sprinkler supervisory service and any
additional sprinkler alarm service. However, if during the term of this lease,
or, if Tenant extends the term of this lease as provided herein, during the
final year of any extension thereof, as the case may be, Tenant shall be
required to perform any work under this Article, Tenant shall not be required to
pay the cost thereof in an amount greater than a fraction of such cost, the
numerator of which shall equal the number of days remaining in the term and the
denominator of which shall equal 3,650 (plus number of days in extended term).
Notwithstanding anything to the contrary contained herein, Owner shall maintain
at its expense the sprinkler systems and modify, alter, or change the sprinkler
system if required in accordance with all applicable laws and regulations that
are not due to or the result of Tenants particular business or wall and fixture
locations.
28. Services: Owner reserves the right to stop service of the heating,
plumbing and electric systems, when necessary by reason of accident, or
emergency , for repairs, alterations, replacements or improvements, in the
reasonable judgment of Owner desirable or necessary to be made, until said
repairs, alterations, replacements or improvements shall have been completed
only if minimal interference with Tenant's business operations and advance
notice is given to Tenant and Tenant consents to such interruption except in the
case of emergency.
29. Captions: The Captions are inserted only as a matter of convenience
and for reference and in no way define, limit or describe the scope of this
lease or the intent of any provision hereof.
30. Intentionally Omitted
31. Estoppel Certificate: Tenant, at any time, and from time to time,
within thirty (30) days after notice from Owner, shall execute, acknowledge and
deliver to Owner, and/or to any other person, firm or corporation specified by
Owner, a certification concerning the status of this Lease and Tenant's
occupancy of the demised premises, including without limitation that this Lease
is unmodified in full force and effect (or, if there have been modifications,
that the same is in full force and effect as modified and stating the
modifications), stating the dates to which the rent and additional rent have
been paid, and stating whether or not there exists any default by Owner under
this Lease, and, if so, specifying each such default. See Exhibit "F".
32. Successors and Assigns: The covenants, conditions and agreements
contained in this Lease shall bind and inure to the benefit of Owner and Tenant
and their respective heirs, distributees, executors, administrators, successors,
and permitted assigns.
33. Commencement and Expiration of Term: Subject to the provisions of
Article 63, the term of this Lease and the annual fixed rental and additional
rent payable hereunder shall commence on a date (herein called the "Commencement
Date") which shall be sixteen (16) weeks after the lease is signed and fully
executed, and shall end ten (10) years from the Commencement Date, except that
if such expiration date shall be on any day other than the last day of the
calendar month, the term of the lease shall be extended to and shall expire on
the last day of such calendar month, which ending date is herein called the
"Expiration Date" or shall end on such earlier date upon which said term may
expire or be canceled or terminated pursuant to any of the conditions or
covenants of this lease or pursuant to law. In no event shall the Commencement
Date occur prior to December 5, 1997. The rent billing date shall be the first
of the month. If the Commencement Date falls on a date other than the first of
the month, the initial rent invoice shall be prorated accordingly. Promptly
after commencement of the term of this
11
<PAGE> 12
lease the parties shall enter into a supplementary agreement confirming the
Commencement Date and Expiration Date of the term of this lease.
34. Broker: Tenant represents to Owner and Owner represents to Tenant
that in the negotiation of this Lease it dealt with no real estate broker or
salesman except RICHARD F. GRETSCH, JR. of COMMERCIAL AND INDUSTRIAL REAL ESTATE
BROKERAGE. Owner shall compensate such broker pursuant to separate agreement.
Each party hereby agrees to indemnify the other party and hold the other
harmless from any and all losses, damages and expenses arising out of any
inaccuracy of the above representation, including court costs and reasonable
attorney's fees. Owner shall have no liability for brokerage commissions arising
out of a permitted sublease by Tenant, and Tenant shall and does hereby
indemnify Owner and hold it harmless from any and all liability for brokerage
commissions arising out of any such sublease for brokers retained by Tenant.
35. Number of Parking Spaces: Owner agrees to make available to Tenant
for its sole exclusive use the following parking spaces:
(a) 104 spaces for employees, visitors, and invitees which shall be not
more than 250 yards from an entrance to Tenant's premises.
These spaces shall be provided in accordance with the terms and conditions of
Article 37 herein and shown on Exhibit "A".
36. Taxes: (a) Commencing on the Commencement Date, Tenant agrees to
pay as additional rent one hundred (100%) percent of the real estate tax for the
period of occupancy, which may be imposed upon the land and building for the
Town of Stratford's Tax Parcel Identification Number 0987200 of which the
demised premises are a part. One hundred (100%) percent is the proportion which
the rentable area of the demised premises bears to the rentable area of the
building of which it is a part. This amount shall be paid whether same results
from a higher tax rate, or (except as set forth above) an increase in the
assessed valuation of the property of which the demised premises are a part, or
both. A tax bill and records of the taxing authority shall be sufficient
evidence of the amount of taxes and be used for calculations of the amount to be
paid by Tenant. Tenant shall pay such additional rent within thirty (30) days
after receipt of bill for such rent from Owner. Owner shall furnish to Tenant
pertinent copies of tax bills which form the basis for such additional rent
promptly upon written request of Tenant. Attached as Exhibit "G", is a copy of
the tax bill for the October 1, 1996 Grand List.
(b) In addition to the taxes payable by the Tenant pursuant to the
preceding Article 36 (a), Tenant agrees to pay, as additional rent, any
increases in real estate taxes which are based on an increase in the assessed
value resulting from physical improvements to the demised premises made by
Tenant, which improvements include the items included in Owner's Work, as set
forth in Article 63 hereof.
(c) If any other tax or assessment shall be levied by the Town, County
or other Municipal authority in lieu of the aforesaid taxes, or in addition to
the aforesaid taxes, and same shall be considered a real estate tax, then the
increase payable hereunder shall apply to such new or additional tax. Owner
agrees to pay tax bills when due to not prejudice the right of Tenant to file
any tax abatements. Tenant shall have the right to contest any tax assessment
and commence a legal proceeding against the authority having the assessment
jurisdiction. Owner shall sign any reasonable abatement application or any other
reasonable legal documents required to file for an abatement and any appeal of
the denial thereof.
(d) After the first five (5) years of the lease term or any extension
term, notwithstanding anything to the contrary, the cost of a "Shared
Assessment" (as defined
12
<PAGE> 13
below) that is not warranted by Tenant's particular use of the Premises shall be
allocated between Owner and Tenant as follows: Tenant's share shall equal the
total amount of the Shared Assessment multiplied by a fraction, the numerator of
which shall be the number of months remaining in the Term on the date of the
assessment and the denominator of which shall be the number of months in the
useful life of the improvement for which the assessment was made (but this
fraction shall not be greater than 1/1.) Owner's share shall be the balance of
the amount of the Shared Assessment. For an assessment to be a Shared
Assessment, each of the following conditions must apply: (i) the assessment must
be for: (a) an improvement benefiting the Premises that has a useful life of
more than one (1) year, (b) special assessment related to sewer, water or taxes
and (ii) the amount of the assessment must exceed $5,000.
Nothing in this Lease shall require Tenant to pay any federal, state or
municipal business, income or excess profits or gross receipts taxes assessed
against Owner, or any federal, state or municipal estate, succession,
inheritance or transfer taxes of Owner, or corporation franchise taxes imposed
upon any corporate owner of the fee of the Premises. Owner represents and
warrants to Tenant that, as of the date hereof (i) there are not past due taxes,
and (ii) there are no pending abatements or tax appeals relating to the
Premises. Owner shall timely remit to the appropriate taxing authority any taxes
that are Owner's responsibility to pay under this Article.
37. Parking: As shown on Exhibit "D", the parking areas for trucks and
delivery vehicles made available in front of loading docks or loading areas are
not to be considered parking spaces but are provided solely for the efficient
loading and unloading of goods. Owner hereby grants to Tenant the right to use
those loading areas and docking areas as shown on Exhibit D, which loading areas
and docking areas are for the sole and exclusive use of Tenant. It is intended
that Tenant shall have the right for its own use of not more than the spaces
designated in Article 35 hereof, but if Tenant, its agents, employees, licenses
or invitees actually use more than said number of spaces on a regular basis,
Owner shall have the option of either requiring Tenant to pay to Owner
THIRTY-FIVE ($35.00) DOLLARS per month for each additional space so used during
the term hereof, or to cause Tenant to immediately cease and desist from so
using said additional spaces.
Tenant, its agents, servants, employees or invitees shall not cause or
permit any of its automobiles, trucks or other motor vehicles to be parked
overnight anywhere within Stratford Executive Park, except as permitted above.
It shall be the obligation of Tenant to insure that its officers and
employees will park in the areas so designated and will not obstruct the areas
of other tenants nor park along road sides and other areas not specifically
designated for parking. Owner shall have the right to use any lawful means to
enforce the parking regulations which have been promulgated in accordance with
the terms of this Lease, including but not limited to, the rules contained
hereinbelow.
38. Common Area Charge: Tenant shall pay as additional rent hereunder
(on a pro-rata monthly basis) an amount equal to $1.84 per square foot (or, viz,
$58,328 per lease year, the first lease year commencing on the Commencement Date
and ending one year thereafter and each subsequent lease year beginning on the
anniversary date of the prior lease year and ending one year thereafter), to
cover the cost to Owner of the expenses of common area maintenance. These
expenses include structural maintenance and repairs, insurance, snow plowing and
sanding parking areas, landscape maintenance, sprinkler system maintenance and
repairs, management, and administration. Commencing with the first anniversary
after the Commencement Date and annually thereafter, Tenant's Common Area
Charges shall be increased by an amount equal to $1.84 multiplied by the one (1)
year percentage of increase, if any, in the most recent
13
<PAGE> 14
Revised Consumer Price Index published closest to each anniversary date of the
prior lease year by the Bureau of Labor Statistics of the United States
Department of Labor for all urban wage earners and clerical workers - U.S. city
average (or any successor or substitute index appropriately adjusted) (1967
equals 100). For example, if the lease Commencement Date is December 1, 1997,
then for the first calculation (additional rent due for lease year two per
article 38) multiply $1.84 by a fraction, the denominator of which is fixed for
all calculations shall be the Index number for November, 1997 and the numerator
shall be the Index number for November, 1998. From the result of this
computation, there shall be deducted $1.84 and the difference shall be the
additional rent to be paid pursuant to this article. For the second calculation
(additional rent due for lease year three (3) per article 38), multiply $1.84 by
a fraction, the denominator or which is the Index number for November 1997 and
the numerator shall be the Index number for November 1999. From the result of
this computation, there shall be deducted $1.84 and the difference shall be the
additional rent to be paid pursuant to this article. Until the increase under
this paragraph is computed and a statement thereof is furnished to Tenant by
Owner, Tenant agrees to continue to pay the then current Common Area Charge
attributable to Tenant's annual share of common area charges as previously
determined under this paragraph. Within thirty (30) days following receipt of
the Owner's statement of the recomputed common area charge, Tenant shall pay any
increase for any prior months in the current lease year and shall thereafter pay
any monthly increases until the next recomputation of such charges. Any such
increase shall be considered additional rent hereunder. If publication of the
Consumer Price Index shall be discontinued, the parties hereto shall thereafter
accept comparable statistics on the cost of living as computed and published by
any comparable agency of the United States Government or any subdivision
thereof, or if no such statistics are available, comparable statistics published
by a financial periodical of recognized authority to be reasonably selected by
Owner and reasonably agreed to by Tenant. In the event of (i) use of comparable
statistics in place of the Consumer Price Index, as described above, or (ii) the
publication of the Index at other than monthly intervals, revisions shall be
made in the method of computation set forth in this Article 38 as the
circumstances may require to carry out the intent of this Article.
39. Insurance: 1. (a) Liability Insurance - Tenant agrees to provide
and keep in force comprehensive general public liability insurance against
claims arising out of the operation and control of the premises, in limits of
not less than $2,000,000.00 combined bodily injury and property damage. Owner
may periodically review, but not more often than once every two years the
adequacy of such coverage and to the extent commercially reasonable shall have
the right to require Tenant to increase the coverage equal to the amount of
coverage customarily carried by owners and/or tenants of similar buildings in
similar locations in the Stratford/Bridgeport area. Tenant has the right to
increase its deductibles to amounts that are considered prudent in the Fairfield
County area of Connecticut. The original of any such policy or certificate
thereof shall be delivered to the Owner showing that Owner has been named as an
additional insured except to extent of Owner's negligence or willful misconduct,
and renewals thereof shall be delivered to the Owner at least five (5) days
before the expiration of any existing policy. All such insurance shall be with
companies of recognized responsibility licensed to do business in the State of
Connecticut and shall provide that same may not be canceled by the carrier
without at least ten (10) days prior written notice to each insured. If Tenant
shall not deliver evidence of the existence of such insurance as required
herein, Owner may procure such insurance, at Tenant's expense, and Tenant shall,
on demand, reimburse Owner, as additional rent, for the cost thereof.
(b) Any failure on Tenant's part to promptly dispose of Tenant's
rubbish or accumulations of flammable material on the premises may have the
effect of increasing the insurance rate on the building and involve the Tenant
herein with additional liability.
14
<PAGE> 15
(c) Tenant shall be responsible for any increase in Owner's insurance
premium specifically caused by any subtenant of Tenant. The preceding sentence
shall not be deemed to be an implication that Owner consents to any subleasing
of the premises unless otherwise permitted in this lease.
(d) Tenant shall have the right to provide for its insurance under any
blanket policy carried by Tenant.
2. (i) During the term of this Lease, Owner shall maintain standard
commercial general liability insurance or equivalent form with a limit of not
less than $3,000,000 each occurrence. If such insurance contains a general
aggregate limit, it shall apply separately to this Lease or be no less than two
times the occurrence limit. Such insurance shall also: (i) include Tenant, its
officers and employees as insureds with respect to this Lease (such coverage not
to contain any special limitations on the scope of its protection afforded to
the prior listed insureds); and (ii) be primary with respect to any negligent
acts of Owner to any insurance or self-insurance programs covering the Tenant,
its officers and employees.
(ii) During the term of this Lease, Owner shall maintain all risk
property insurance on the Building, the Premises including all improvements,
alterations, additions or improvements made by it or Tenant during the Term, and
the Common Areas, insuring 100% of the replacement value thereof. All policies
shall provide protection against any peril included within the classification
"Fire and Extended Coverage" together with insurance against flood or water
damage, sprinkler damage, vandalism, explosion and malicious mischief.
(iii) During the term of this Lease, Owner shall maintain workers'
compensation insurance with statutory limits and employers' liability insurance
with limits of not less than $1,000,000 each accident.
(iv) Insurance to be carried by either party shall be maintained
with an insurer(s) holding a Best Rating of B+ or higher.
A Certificate of the insurer evidencing the existence and amount
of each required insurance policy shall be delivered by each party to the other
before the date Tenant is first given the right of possession of the Premises,
and thereafter within thirty (30) days after any written demand. No such policy
shall be cancelable except after thirty (30) days written notice to Owner and
Tenant. Each party shall furnish the other with proof of renewal or qualified
replacement policies at least ten (10) days before expiration of the original.
All coverages required under this Lease shall be maintained for the duration of
this Lease.
40. Owner's Obligations: (a) Notwithstanding anything contained herein
to the contrary in Article 4 hereof, the Tenant shall not be obligated to make
any repairs to the roof, foundation, all exterior utility lines, exterior walls,
load-bearing interior walls, common areas, parking and loading dock areas,
repairs mandated by law or any structural defects not caused by Tenant's
particular use of the premises (collectively, "Structural Repairs") unless said
repairs are made necessary by the omission, negligence or misconduct of Tenant
or Tenant's servants, employees, invitees or licensees. Owner shall perform at
its expense all Structural Repairs not required to be made by Tenant under this
subparagraph 40 (a). Tenant shall notify Owner of the same. If, within twenty
(20) days after such notice Owner fails to complete such repairs (or, if such
repairs are of a nature that they cannot reasonably be completed within such
twenty (20) day period, Owner fails to commence such repairs within such twenty
(20) day period and thereafter diligently prosecute the same to completion),
then Tenant may cause such repairs to be made at Owner's reasonable expense. If
Owner in good faith disputes its obligation to make
15
<PAGE> 16
any repair, such dispute shall be resolved by arbitration in Bridgeport,
Connecticut under the auspices and rules of the American Arbitration
Association. Tenant's right to cure set forth in the previous sentence shall be
subject to any such arbitration proceeding.
(b) Owner shall clean and remove snow and ice (or, if the removal of
ice is not reasonably possible, salt and sand the same) except that Tenant shall
remove snow and ice at Tenant's entrances and on any walkways solely for
Tenant's pedestrian use, or on any steps or stoops or platforms leading to
Tenant's premises.
(c) Owner shall not be obligated to remove snow from areas in the
vicinity of Tenant's entrances or loading areas which were obstructed by a
parked vehicle at the time Owner's snow removal equipment was servicing the
area. Owner shall not be obligated to institute snow plowing unless the
accumulation exceeds one (1) inch.
(d) Owner shall not be required, unless otherwise agreed to in writing,
to furnish any service during hours other than those set forth in this Lease.
(e) Owner shall maintain at its expense the access roads and parking
areas in good order and repair. Tenant shall perform, at its expense, any
necessary repairs and maintenance with respect to the loading dock serving the
demised premises.
(f) Owner shall comply, at its expense, with those laws, ordinances,
rules and regulations (collectively, "Laws and Ordinances") applicable to the
building or the use and occupancy thereof, which Laws and Ordinances neither
Tenant nor any other occupant of the building is obligated to comply with.
41. Tenant's Obligations: (a) Tenant agrees not to employ any
contractor in connection with any services, provisions, alterations or
maintenance, unless Owner has first consented in writing to the contractor
(which consent shall not be unreasonably withheld or delayed), it being the
intention of Owner to limit the number of such contractors employed in the
Stratford Executive Park. Owner's disapproval of any contractor selected by
Tenant must be accompanied by the designation of two or more contractors
acceptable to Owner, whose prices must be reasonably competitive. In the event
Owner does not approve or disapprove Tenant's contractor within seven (7)
business days after receipt of written request therefor, then the contractor so
selected by Tenant shall be deemed to have been approved by Owner.
(b) With respect to any work to be performed by the Tenant on the
demised premises, in addition to any other limitations set forth in this Lease,
Owner does not consent to the reservation of any title by any conditional vendor
or secured party to any property which may be affixed to the realty so as to
become a part thereof, wholly or in any portion without material injury to the
freehold.
(c) Tenant shall within a reasonable time period remove snow, litter or
debris from the walkways, steps, leading from the common areas to Tenant's
entrances, exits and loading areas provided such walkways and steps are for the
sole use of Tenant.
(d) Tenant agrees, at its sole cost and expense, and throughout the
term of this Lease, to maintain in working order (including changing of filters
at least four (4) times per year), repair where necessary, the heating and air
conditioning units and systems by using reputable heating and air conditioning
contractors on a systematic basis, reasonably acceptable to Owner. Tenant shall
submit on demand evidence of its maintenance contracts, as aforesaid. Tenant's
obligations under this subparagraph (d) shall be conditioned upon Owner's
initial installation of heating and air conditioning equipment meeting the
criteria of Exhibits B and C hereto. Owner represents and warrants that the HVAC
systems serving the Building will be on the Commencement Date in good
16
<PAGE> 17
working order and repair. During the term of the Lease, Tenant agrees to make
repairs to the HVAC systems, not covered by Owner's warranty, so long as Tenant
shall not pay for a repair for any one HVAC unit which costs more than
$5,000.00. Any repair to one unit which costs more than $5,000.00 shall be a
shared capital replacement. Owner, however, shall be responsible for the
replacement of the HVAC systems and the replacement cost ("shared capital
replacement") shall be amortized over the life of the equipment and shall be
paid for as follows: Tenant's share shall equal the total cost of the shared
capital replacement multiplied by a fraction, the numerator which shall be the
number of months remaining in the Term (together with the number of months in
any exercised options to extend the Term) , at the time the shared capital
replacement is made and the denominator of which shall be the number of months
in the useful life of the shared capital replacement. Owner's share shall be the
balance of the cost. Each party shall pay its share of the cost of a shared
capital replacement directly to the contractor in accordance with the payment
terms in the contract. If Owner and Tenant fails to pay its share of the shared
capital replacement within thirty (30) days after their respective share is due,
than that party shall be in default of its lease obligations. In addition,
Tenant shall be allowed access to the roof to make any repairs to the HVAC
systems which are required by the terms of this Lease, it being agreed that this
access shall not require Tenant to make any repairs except those which are
specifically specified in the Lease. Upon the Lease Execution Date, Owner shall
provide Tenant with access to the Premises so that Tenant may make reasonable
repairs, additions and improvements to the Premises which Owner approves of by
execution of this Lease.
(e) Tenant agrees to purchase gas and electricity or any other fuel or
source of energy at any time being supplied to the demised premises from the
public utility company or the appropriate vendor servicing the demised premises
and shall pay directly to the applicable utility company or the appropriate
vendor the consumption of electricity and gas or other fuel referred to above.
Except for Owner's negligence or willful misconduct, Owner shall not in any way
be liable or responsible to Tenant for any loss or damage or expense which
Tenant may sustain or incur if either the quantity or character of electrical or
other such service is changed or is no longer available or suitable for Tenant's
requirements, where such change is due to circumstances beyond Owner's control.
Owner's responsibility shall be solely limited to the repair of any lines or
pipes serving the demised premises, the repair of which may be the
responsibility of Owner under the terms of this lease except for Tenant's
negligence or willful misconduct. In no event shall Owner be held responsible
for any failure on the part of the utility company to repair or service its
lines if such repair is not the Owner's responsibility or involves the line or
property of the utility company.
(f) Owner shall have the right to purchase energy or energy sources
other than those available for the public utility company or companies serving
the premises provided that such changes are mandated by public authority. Where
such allocation is not on a metered basis, but on a rent inclusion basis, the
allocation payable by Tenant shall be established by Owner's duly qualified
professional engineer. In the event Tenant disputes any such allocation, Tenant
may employ a reputable consultant to make a survey of the cost of such energy to
the demised premises. The determination of such consultant shall be promptly
submitted to Owner. If Owner's and Tenant's consultants cannot mutually agree as
to the cost of such energy, the matter shall be submitted to arbitration in
accordance with the rules of the American Arbitration Association. Pending
determination of such consultants' reports Tenant shall continue to pay the
charges as billed by Owner. Each party shall pay the cost of its own consultant.
Any final adjustment shall be made at the time of the arbitration award. Owner
shall not in any way be liable or responsible to Tenant for any loss or damage
or expense which Tenant may sustain or incur if either the quantity or character
of the energy to the building is changed or is no longer available or suitable
for Tenant's requirements, except that Owner shall
17
<PAGE> 18
diligently pursue such remedies as are reasonably consistent with the other
terms of this Lease, and as are reasonably within Owner's control.
(g) Tenant shall, at Tenant's expense, keep the demised premises clean
and in order, reasonable wear and tear and damage by casualty excepted, to the
reasonable satisfaction of Owner, and for that purpose shall employ the person
or persons, or corporations approved by Owner in accordance with
subparagraph 41(a) hereof.
(h) In addition to the provisions of subparagraph 41 (c), Tenant shall
pay the cost of removal of any of Tenant's refuse and rubbish from the building.
Tenant shall independently contract for the removal of such refuse and rubbish.
(i) Window coverings are for the Tenant's account and are discretionary
except where the demised premises front onto a roadway facing the front
entranceway of Tenant's premises. Where Tenant's industrial, as opposed to
office uses, are visible from the roadway, then in such event Tenant shall,
throughout the term of this Lease, provide draperies, blinds, or other suitable
coverage reasonably satisfactory to Owner on any windows so located except along
the rear drive.
(j) Tenant shall keep all interior sides of the windows in the demised
premises reasonably clean. However, Tenant shall not be required to clean
windows more often than once every year. Owner shall be required to clean the
outside of the windows no more than twice each year.
(k) Tenant shall replace, at the expense of Tenant, any and all plate
and other glass damaged or broken from any cause whatsoever in and/or around the
demised premises, and insure and keep insured at Tenant's expense all plate and
other glass in the demised premises for and in the name of Owner excepting,
however, Owner's negligence or misconduct. If such insurance cannot be obtained
at reasonable rates, Tenant may self-insure.
(l) Tenant will make application for telephone service directly to the
telephone company. Owner does not initiate or provide said service.
(m) Tenant shall pay the bills for lighting Tenant's entrances, loading
areas, common areas serving the Premises, and parking areas which Owner warrants
are separately metered.
42. Notwithstanding any other provisions contained in the instant Lease
herein to the contrary, Owner shall have the right, at any time (when, in
Owner's reasonable judgment,) the demised premises become substantially vacant,
to enter upon same for the purposes of preventative maintenance or otherwise,
whether or not Tenant has furnished the Owner with a key to the demised premises
prior thereto. If no key has been furnished by Tenant to Owner, and Owner is
required to break the existing lock or locks and insert new locks therein,
Tenant shall reimburse Owner for the cost thereof and same shall be deemed
additional rent due hereunder.
Owner shall furnish Tenant with keys to the demised premises at or
prior to the lease execution date so that Tenant may make reasonable repairs,
additions and improvements to the Premises which Owner approves of by execution
of this Lease per the provisions of Article 47.
Tenant shall continue to maintain the demised premises so as to prevent
damage thereto until the later of lease expiration or the date Tenant vacates
and surrenders the demised premises. Without limiting the foregoing Tenant shall
continue to supply heat
18
<PAGE> 19
and electricity to demised premises, together with all other utilities as
reasonably determined by Owner.
GENERAL
43. It is understood and agreed that this Lease is submitted to the
Tenant for signature with the understanding that it shall not bind the Owner or
Tenant unless and until it has been executed by the Owner and Tenant and
delivered to the Tenant or Tenant's attorney.
44. Intentionally Omitted
45. Any striking out or deletion of any portion of this Lease was done
as a matter of convenience for the purpose of execution, and the language
omitted is not to be given any effect whatsoever in construing this Lease.
46. Intentionally omitted.
47. Preparation for Occupancy and Possession: (a) The demised premises
shall be completed and prepared for Tenant's occupancy in a good workmanship
manner, and subject to the provisions of Article 63 hereto. Tenant and its
contractor shall be entitled to access to the demised premises prior to the
completion of Owner's work only so long as Tenant, its contractor and
subcontractors work in conformity with and do not materially interfere, in
Owner's reasonable judgment, with Owner, its contractors or subcontractors in
the completion of Owner's work
Owner may withdraw the license granted to Tenant to perform any work within the
demised premises pursuant to this subparagraph upon twenty-four (24) hours
written notice to Tenant in the event the Tenant's work interferes with Owner's
work and provided that Tenant does not cause a cessation of such interference
within such 24 hour period. Worker's Compensation, public liability insurance
and property damage insurance, all in amounts and with companies reasonably
satisfactory to the Owner shall be maintained by Tenant and/or its contractors
and subcontractors and certificates of such insurance shall be furnished to the
Owner prior to the commencement of any Tenant work. Tenant's selection of all
contractors and subcontractors must be in conformance with Article 41.
(b) The demised premises shall be deemed to be "substantially
completed" on the date on which Owner's work as shown on Exhibit "D" has been
completed and reasonably accepted by Tenant as complete notwithstanding the fact
minor or insubstantial details of construction, mechanical adjustment or
decoration remain to be performed, the noncompletion of which would not
materially interfere with Tenant's ability to begin Tenant's work as shown on
Exhibit "J". Within thirty (30) days after possession of the demised premises is
tendered following substantial completion of Owner's Work, Tenant shall provide
a punch list to Owner of items of Owner's Work requiring correction, and Owner
shall use best efforts to correct the items appearing on Tenant's punch list
within thirty (30) days thereafter with minimum interference with Tenant's use
of premises. All understandings and agreements heretofore made between the
parties hereto are merged in this contract, which alone fully and completely
expresses the agreement between Owner and Tenant and any executory agreement
hereafter made shall be ineffective to change, modify, discharge or effect an
abandonment of it in whole or in part, unless such executory agreement is in
writing and signed by the party against whom enforcement of the change,
modification, discharge or abandonment is sought. Owner shall guarantee the
work, shown on Exhibit's "B", "C" and "D", be responsible for and be obligated
to repair any of its work for a period of two (2) years after the Commencement
Date and latent defects during the lease term.
19
<PAGE> 20
(c) If the substantial completion of the demised premises is delayed by
reason of: (i) any act or omission of Tenant or any of its employees, agents or
contractors, including the failure of Tenant to comply with any of its
obligations under the work specifications; or (ii) any failure of Tenant or any
of its employees, agents, or contractors (not due to any act or omission of
Owner or any of its employees, agents or contractors) to execute Tenant's work
with reasonable speed and diligence; or (iii) any material changes by Tenant in
its drawings or specifications or any material changes or substitutions
requested by Tenant, then the demised premises shall be deemed substantially
completed on the date when they would have been substantially completed but for
such delay.
(d) Owner agrees to reasonably cooperate with Tenant in securing the
Certificate of Occupancy for the Premises.
48. Tenant may apply to Owner for the installation of signage. Such
requests shall be accompanied by a sketch showing the sign desired, its size,
type and manner of mounting specifying the materials and finishes employed in
the manufacture of same. Approval by Owner shall not constitute approval for
purposes of complying with rules and regulations of any public agencies
applicable. Owner will cooperate with Tenant in seeking any sign permits. It
shall be Tenant's obligation to secure such permissions or permits at Tenant's
expense. All approvals of Owner are not to be unreasonably withheld or delayed.
Owner authorizes Tenant to apply for any sign permits.
49. Whenever reference is made herein to public halls, elevators,
corridors, etc. and if none such are present on or about the premises demised
herein then such references shall have no relevance to the terms herein.
50. Wherever reference is made in this Lease to "business days", such
business days shall exclude also all days observed by unions having jurisdiction
over employees of Owner, Owner's managing agent, or Owner's cleaning contractor
as legal holidays.
51. The terms and provisions of this lease shall be construed in
accordance with and governed by the laws of the State of Connecticut.
52. Intentionally Omitted.
53. Mechanic's Liens: Tenant will not permit, during the term hereby
granted, any mechanic's or other lien or order for payment of work, labor,
services, or materials furnished or to be furnished to, attach to or affect the
demised premises or any portion thereof, and agrees that no such lien or order
shall under any circumstances attach to or affect the fee, leasehold or other
estate of the Owner herein, or the building. The Tenant's obligation to keep the
demised premises in repair, and its right to make alterations therein, if any,
shall not be construed as the consent of the Owner to the furnishing of any such
work, labor or materials within the meaning of any present or future lien law.
Notice is hereby given that the Tenant has no power, authority or right to do
any act which may create, or be the foundation for, any lien upon the fee or
leasehold estate of the Owner in the demised premises or upon the land or
building of which they are a part of the improvements now erected or hereafter
to be erected upon the demised premises or the land or building of which the
demised premises are a part; and if any such mechanic's or other lien or order
shall be filed against the demised premises or the land or building of which the
demised premises are a part, the Tenant shall, within thirty (30) days
thereafter, discharge said lien or order by payment, deposit or by bond fixed in
a proper proceeding according to law. If the Tenant shall fail to take such
action, or shall not cause such lien or order to be discharged within thirty
(30) days after the filing thereof, the Owner may pay the amount of such lien or
discharge the same by deposit or bond or in any other manner according to law,
and pay any judgment recovered in any action to establish or foreclose such lien
or order, and any amount so paid, together with
20
<PAGE> 21
the reasonable expenses incurred by the Owner, including all reasonable
attorney's fees and disbursements incurred in any defense of any such action,
bonding or other proceeding, shall be deemed additional rent.
54. Wherever reference is made to the building or the Stratford
Executive Park, it shall mean the building or the Executive Park in which the
demised premises are located.
55. Work Specifications: The plans prepared by Owner in accordance with
Article 63 hereof are subject to revision based on the rules and regulations of
such reviewing agencies as the local board of inspectors, the state labor
department, OSHA and related agencies. Any changes in door swings, arrangements
of exits and/or passages mandated by such agencies shall be binding on Owner and
Tenant as if they had been incorporated into the original plans as attached
hereto unless Tenant can propose an alternative change that is acceptable to the
authority mandating the changes.
Owner shall have the right to add exits, entrances or passageways
whenever necessary to comply with present or future regulation by applicable
public authority. Tenant shall pay the cost thereof where the requirement for
such addition is due solely to Tenant's special use of premises and not the use
of premises in general.
56. RULES AND REGULATIONS: The following Rules and Regulations are
uniformly and consistently enforced throughout the Stratford Executive Park.
A. Tenant and its officers, employees, agents, customers and invitees
shall have the right, in common with Owner and all others to whom Owner has
granted or may hereafter grant rights, to use the common areas as designated
from time to time by Owner subject to such reasonable rules and regulations as
Owner may, from time to time, impose including the designation of special areas
in which cars, trucks and other vehicles owned by the Tenant, its officers,
employees, agents, customers and invitees (including customers, shippers, etc.)
must be parked. Tenant shall, upon request, promptly furnish to Owner the
license number of the cars and trucks operated by Tenant, its officers and
employees. Tenant shall not at any time interfere with the rights of Owner,
their officers, employees, agents, customers and invitees to use any part of the
parking areas and other common areas not specifically allocated to Tenant.
B. At Owner's sole cost and expense, without limiting the provisions of
Paragraph 35, Owner may promulgate such rules and regulations with regard to the
use of common areas to prevent the loss to Owner of exclusive control over said
area.
C. It shall be Tenant's responsibility to keep the loading areas free
of all refuse and debris and to arrange promptly for removal of any such
materials which are not removed as part of Tenant's regular refuse removal
contract. If Tenant fails to remove substances such as, but not limited to
miscellaneous lumber, pallets, crates, packing materials, barrels or drums, etc.
Owner shall have the right upon ten (10) days written notice to remove or to
arrange for the removal of such substances, and to charge Tenant the reasonable
cost thereof, which shall constitute additional rent under the terms of this
Lease. Tenant shall promptly repair any damages to structures, paved areas and
other common areas which have been damaged by Tenant, its agents, employees,
servants or licensees. Tenant shall not store any goods outside the building.
Tenant can use the loading area to park its storage trailer.
D. Upon vacating the premises, Tenant shall surrender to Owner
originals or duplicate copies of all contracts and invoices in Tenant's
possession for mechanical maintenance, services for heating and air conditioning
equipment, including dates of service and nature of service performed. No
security deposit (if then on deposit with Owner) shall be returnable until
Tenant has complied with the conditions hereinabove.
21
<PAGE> 22
Nothing contained in this paragraph, however, shall be deemed to give Tenant the
right to bind Owner in any way, and no service contract shall run beyond the
term of this Lease as same may be terminated hereunder unless consented to in
writing by Owner.
E. Tenant shall, subject to the other applicable terms of this Lease,
remove, on vacating the premises, any private telephone systems, communicating
systems or security systems unless Owner has specifically consented in writing
to their remaining on the premises.
F. Wherever Tenant shall have affixed wall coverings, wall fixtures
such as wall shelving, hooks, pictures, etc. to the walls and shall have
covered, obscured or penetrated Owners standard painted finish, Tenant shall be
responsible, upon removal from the premises, to leave behind a wall surface that
is intact, generally acceptable in color or type, and if not easily repaintable,
shall be removed and the surface restored to a paintable condition. Where such
wall coverings are serviceable or repairable they may be left in place.
G. Tenant shall, upon vacating the premises, promptly surrender to
Owner l keys to the premises. If keys have not been returned, Tenant shall be
liable for the cost to Owner of replacing locks and keys.
H. Notwithstanding anything contained in Article 4 hereof, Tenant may
make nonstructural repairs without Owner's consent and may, if approved by Owner
in writing, which approval shall not be unreasonably withheld, delayed or
conditioned, make interior structural alterations provided Tenant complies with
all of the following conditions with respect to any such alteration costing in
excess of $50,000.00:
1. Tenant furnishes Owner a plan of the proposed alterations prior
to construction for Owner's prior written approval;
2. Tenant furnished Owner with an "as built" plan upon completion
of alterations;
3. Tenant will obtain all governmental permits and pay all
applicable governmental fees;
4. Tenant will use only contractors reasonably approved by Owner
and duly licensed for such work where applicable;
5. Tenant will perform all alterations in a good and workmanlike
manner in accordance with standards at least equivalent to the standard
prevailing in the building or buildings of which the demised premises form a
part.
6. Tenant accepts full responsibility for any changes in
sprinklers, passages, legal exits, etc. which may be necessitated solely by such
alterations and shall not do any work which shall adversely affect the remainder
of the building of which the demised premises form a part;
7. Should such alterations result in any change in assessment due
to the improvements made, Tenant will pay all such additional taxes as may
become due on account of such alterations or improvements as set forth in
Article 36 (c);
8. Upon vacating the space, Tenant agrees to remove such
alterations and to reconstitute the premises to the condition in which they were
delivered, normal wear and tear excepted, if so requested by Owner unless Owner
has waived this requirement in writing;
22
<PAGE> 23
9. In the event Tenant shall be authorized by Owner to remove any
partitions, Tenant shall be responsible for any repairs to be specifically
authorized to remove said partitions, whether installed by Owner or Tenant. Such
partitions shall be deemed part of the realty and shall not be removed. Nothing
herein contained shall prevent Owner, however, from requiring Tenant to remove
any installation installed by or on behalf of Tenant of whatever nature
whatsoever;
10. Except in the event of an emergency and as permitted by Section
41d, Tenant shall not make any installation on or through the roof, nor shall
Tenant or Tenant's agents enter upon the roof or place objects thereon without
the specific written permission of Owner. Owner makes no representation, implied
or expressed, as to the load bearing capacity of the roof at any one point, and
Tenant shall be responsible for any construction, reconstruction or
reinforcement necessary to make the roof suitable for Tenant's installation
purposes. Tenant shall, however, not be responsible for any construction,
reconstruction or reinforcement on the roof if repairs are required of Tenant
under this Lease, it being agreed that Owner has represented that the roof is
capable of supporting HVAC equipment necessary to maintain the building with
ample heat and air conditioning.
I. If carpeting is furnished by Owner and if credit has been given
towards such carpeting for the omission of the standard vinyl composite floor
tile, then, in that event, even though Tenant may have contributed toward the
cost of the carpeting, the carpeting will remain the property of the Owner.
Where Tenant has paid for carpeting in full, and where such carpeting is
installed on the top of standard vinyl composite tile, Tenant may remove
carpeting upon vacating the premises provided all tackless installation strips
are removed, all floor tile has been repaired or replaced as necessary, and all
vinyl base or other floor base has been reset to the level of the tile floor,
repairing whatever wall or floor damage or repainting may be necessary. Wherever
carpeting is installed by the Tenant, by Tenant's contractors or at Tenant's
direction, no carpeting shall be installed with an integral foam rubber backing,
nor shall carpeting be installed by gluing or other forms of cementing directly
to the floor. Where such carpeting is installed in contravention to this
provision, Tenant shall be liable for the costs of removing such glues or
cements and reconstituting the floor to its original condition, and recovering
with acceptable carpet installed in an acceptable manner, or with 1/8" vinyl
composite tile satisfactory to Owner.
J. The water and wash closets and plumbing fixtures shall not be used
for any purpose other than those for which they were designed or constructed and
no sweepings, rubbish, rags, acids or other substances shall be deposited
therein, and the expense of any breakage, stoppage or damage resulting from the
violation of this rule shall be borne by the tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.
K. Tenant shall not sweep or throw or permit to be swept or thrown from
the demised premises any dirt or other substances out of the doors or stairways
or loading docks of the building.
Tenant shall not bring or permit to be brought or kept in or on the
demised premises any illegal amounts of flammable, combustible or explosive
fluid, material, chemical or substance, or cause or permit any odors of cooking
or other processes, or any unusual or other objectionable odors to permeate in
or emanate from the demised premises.
L. Tenant's use of electric current shall not exceed the capacity of
the then existing feeders to the building or the risers or wiring installation
and Tenant may not use any electrical equipment which, in Owner's reasonable
opinion, will overload such installations.
23
<PAGE> 24
57. If the Tenant intends to remain in possession of the premises
beyond the termination of the Lease term herein, the Tenant shall give written
notice, by Certified Mail, Return Receipt Requested, to the Owner to such effect
at least ninety (90) days prior to the date on which Tenant expects to vacate
the premises. For the time period which constitutes the holdover tenancy, the
monthly rental shall be one hundred fifty (150%) percent of the total monthly
rent paid during the last month of the Lease term herein. Subsequent to the
first ninety (90) days of the holdover period the rental shall be that which the
Owner shall determine from time to time not to exceed two hundred (200%)
percent.
58. Tenant shall look solely to the interest of the Owner in the
building for the satisfaction of Tenant's remedies, and no other property or
assets of the Owner shall be subject to levy, execution or other enforcement
procedure for the satisfaction of Tenant's remedies. For the purposes of this
Article 58, "the interest of the Owner in the building" shall be deemed to
include Owner's interest in the proceeds of a sale of the building or in
insurance and/or condemnation proceeds arising out of a casualty to or taking of
the building.
59. Intentionally omitted.
60. Any provision of this lease which requires Owner not to
unreasonably withhold its consent or approval shall never be the basis for an
award of damages or give rise to a right of setoff or termination to Tenant, but
may be the basis for a declaratory judgment or specific injunction with respect
to the matter in question.
61. If Tenant shall fail to pay when due any installment of Annual
Fixed Rental or any additional rent Tenant shall pay on the tenth day after the
due date thereof a late charge equal to five (5%) percent of the unpaid amount.
In addition, if Tenant shall fail to pay within fifteen (15) days after the due
date, any installment of fixed annual rental or any additional rent, Tenant
shall pay interest thereon at an annual rate equal to two percent above the rate
designated as its prime rate by Fleet Bank CT. (or its successor) as of the due
date, such interest being payable for the period from the due date to the date
of payment. Such interest shall be deemed additional rent.
62. Security Deposit: Upon the Term Commencement Date, Tenant shall
deliver to Owner, an irrevocable Letter of Credit, in the amount of $35,000 as
security for the payment, performance and observance by Tenant, of the terms,
conditions, and provisions of this Lease. Tenant's failure to deliver the Letter
of Credit within thirty (30) days after the date due shall be deemed a default
by Tenant hereunder. Tenant shall have the right at any time during the Term of
this Lease to substitute cash for the Letter of Credit in which case the Letter
of Credit shall be returned to Tenant simultaneously with Tenant's delivery of
the cash security deposit. The Letter of Credit shall be in the form and
substance of the sample letter of credit attached hereto as Exhibit "H", name
the Owner as its beneficiary, and expire no sooner than the termination of this
Lease. If the initial term of the Letter of Credit will expire sooner than the
termination date of this lease, Tenant shall, from time to time as necessary,
renew or extend the original letter of credit and any subsequent letter of
credit not less than ten (10) days prior to its stated expiration date. If
Tenant fails to furnish such renewal or replacement Letter of Credit prior to
the stated expiration date of the Letter of Credit, then held by Owner, Owner
may draw upon such Letter of Credit and hold the proceeds thereof as a security
deposit pursuant to the terms of this Article. Owner may, from time to time,
without prejudice to any other remedy, use all or a portion of the security
deposit to make good any arrearages of rent, to repair damages to the Premises
caused by Tenant or otherwise to satisfy any other covenant or obligation of
Tenant hereunder. If Owner transfers its interest in the premises during the
Lease Term, Owner shall assign the security deposit to the transferee.
24
<PAGE> 25
The security deposit, whether a Letter of Credit or cash, shall be
returned to Tenant within five (5) days after the Termination Date of this Lease
provided there is no event of default hereunder.
63. Owner's Work, Fixed Rent, and Tenant's Work: (a) Upon execution of
this Lease by Tenant and Owner, Owner shall cause work to be performed by Owner
in the demised premises as shown on Exhibit D. Owner shall perform the work
called for on Exhibit "D", and shall diligently proceed to complete the same
according to the following schedule: The existing 27,700 square foot building
interior demolition work shall be completed by Owner in three (3) weeks and
after completion available for Tenant to begin Tenant's work. The 4,000 square
foot addition shall be of the same design and quality as the existing building
and shall be completed by Owner in eight (8) weeks and after completion,
available for Tenant to begin Tenant's work. The Building and the 4,000 square
foot addition will function as one building. Owner's work shall be performed in
accordance with the specifications and conditions set forth in Exhibits B, C,
and D hereto.
(b) Should Owner fail to complete its work on time, Owner shall deliver
a written notice to Tenant on the date Owner's work should have been completed
advising Tenant of the "Revised Completion Date." Should the Revised Completion
Date exceed five (5) days beyond the time periods specified in Article 63.(a)
then the Commencement Date of this lease shall be delayed for the same number of
days beyond the original time periods specified in Article 63.(a). Should Owner
fail to deliver the premises to Tenant per Article 63.(a) after sixty (60) days
of delays which delays were not caused by any Force Majeure Delays, then Tenant
shall have the right to terminate this lease.
(c) Upon execution of this Lease by Owner and subject to the provisions
of Article 63.(a), Tenant shall cause plans to be prepared and cause work to be
performed by Tenant at Tenant's sole cost and expense in the demised premises.
These plans shall be called Exhibit "J". Exhibit "J" shall be subject to Owner's
approval, which shall not be unreasonably withheld, delayed or conditioned. If
Owner has not disapproved by notice to Tenant (with specifics) Exhibit "J"
within five (5) business days after receipt thereof, Exhibit "J" shall be deemed
approved by Owner. Tenant shall perform the work call for on Exhibit "J" and
shall diligently proceed to complete the same after approval of Exhibit "J" by
Owner. Tenant shall complete its work per the provisions of Article 56. H,
numbers 1, 2, 3, 4, 5, 6, and 7 along with all other applicable provisions of
this Lease.
(d) The annual fixed rent payable hereunder shall be as follows, with
the first lease year commencing on the Commencement Date and each subsequent
lease year commencing on the first day of the thirteenth month thereafter:
<TABLE>
<CAPTION>
Annual Fixed Rent Additional Rent Lease Year(s)
- ----------------- --------------- -------------
<S> <C> <C>
$198,125 plus additional rent per Articles 36 and 38 1
$198,125 plus additional rent per Articles 36 and 38 2
$198,125 plus additional rent per Articles 36 and 38 3
$198,125 plus additional rent per Articles 36 and 38 4
$198,125 plus additional rent per Articles 36, 38 & 69 5
$198,125 plus additional rent per Articles 36, 38 & 69 6
$198,125 plus additional rent per Articles 36, 38 & 69 7
$198,125 plus additional rent per Articles 36, 38 & 69 8
$198,125 plus additional rent per Articles 36, 38 & 69 9
$198,125 plus additional rent per Articles 36, 38 & 69 10
</TABLE>
Upon substantial completion of Owner's work, Tenant will pay to Owner
$21,371.08 thirty (30) days after notice, which represents Tenant's first
monthly rent obligation for the first lease year of the initial term hereof.
25
<PAGE> 26
64. Provided there is no Event of Default under this Lease at the time
of exercise of any Option Term or at the Commencement of the Option Term, Tenant
shall have two separate options to extend the term of this Lease for a period of
five (5) years each from the date upon which it would otherwise expire upon the
following terms and conditions:
The first option may be exercised only by written notice by Tenant to
Owner at least ninety (90) days prior to expiration of the base term of this
Lease and the second option may be exercised by written notice by Tenant to
Owner at least one hundred eighty (180) days prior to the expiration of the
First Option Term of this Lease.
64.A. FIRST OPTION TERM. Tenant shall have an option to extend the term
of this Lease for an additional period of five (5) years (first option term)
(Years 11-15) from the date upon which it would otherwise expire, upon the same
terms and conditions as herein provided, except that (i) Owner shall have no
obligation to perform any work in the demised premises except as otherwise set
forth herein and (ii) the Annual Fixed Rental for each year of the first option
term shall be the greater of (x), the Annual Fixed Rental for lease year 10 and
(y), the Fair Rental Value of the premises for like office, research and testing
space with ancillary assembly space.
64.B. During this option term, additional rental payments for Tenant's
pro-rata share of taxes and common area maintenance under Articles 36 and 38 of
this lease shall continue to be computed as if the initial lease term had been
15 years.
64.C. SECOND OPTION TERM. Tenant shall have an option to extend the
term of this Lease for an additional period of five (5) years (second option
term) (Years 16-20 from the date upon which it would otherwise expire, upon the
same terms and conditions as herein provided, except that (i) Owner shall have
no obligation to perform any work in the demised premises except as otherwise
set forth herein and (ii) the Annual Fixed Rental for each year of the second
option term shall be the greater of (x) the Annual Fixed Rental for lease year
15 and (y) the Fair Rental Value of the premises for like office, research and
testing space with ancillary assembly space.
64.D. SECOND OPTION TERM. During this option term, additional rental
payments for Tenant's pro-rata share of taxes and common area maintenance under
Articles 36 and 38 of this lease shall continue to be computed as if the initial
lease term had been 20 years.
64.E. FAIR RENTAL VALUE. The initial determination of Fair Rental Value
for like kind office, research and testing space with ancillary assembly space
shall be made by Owner. Owner shall give notice to Tenant of the proposed Fair
Rental Value at least four months prior to the commencement of the option term.
If Owner and Tenant shall fail to agree upon the Fair Rental Value proposed by
Owner within sixty (60) days, then Owner and Tenant each shall give notice to
the other setting forth the name and address of an arbitrator designated by the
party giving such notice. If either party shall fail to give notice of such
designation within five days of such notice, then the arbitrator chosen shall
make the determination alone. If two arbitrators shall have been designated,
such two arbitrators shall make their determinations of Fair Rental Value for
like kind office, research and testing space with ancillary assembly space in
writing and give notice thereof to each other and to Owner and Tenant. Such two
arbitrators shall have thirty days after the receipt of notice of each other's
determinations to confer with each other and to attempt to reach agreement as to
the determination of Fair Rental Value. If such two arbitrators shall concur as
to the determination of Fair Rental Value, such concurrence shall be final and
binding upon Owner and Tenant. If such two arbitrators shall fail to concur,
then such two arbitrators shall immediately designate a third arbitrator, who
shall satisfy the requirements set forth herein for an arbitrator. All
arbitrators designate or chosen hereunder shall be commercial real estate
appraisers,
26
<PAGE> 27
brokers or consultants who shall have had at least ten (10) years continuous
experience in the business of commercial real estate in Fairfield County,
Connecticut. The third arbitrator shall conduct such hearings and investigations
as he may deem appropriate and shall, within thirty (30) days after his
selection, choose one of the determinations of the two arbitrators originally
selected by the parties, and that choice by the third arbitrator shall be
binding upon Owner and Tenant. The determination rendered in accordance with the
provisions of this paragraph shall be final and binding in fixing Fair Rental
Value. The arbitrators shall not have the power to add to, modify or change any
of the provisions of this Lease. Each party shall pay its own expenses in
connection with any arbitration under this paragraph, including the expenses and
fees of any arbitrator selected by it in accordance with the provisions of this
paragraph. The parties shall share equally the fees and expenses of the third
arbitrator, if any, selected under this paragraph. If the two arbitrators
selected by the parties shall fail to agree upon the designation of a third
arbitrator within five business days, then either party may apply to the
American Arbitration Association or any successor thereto having jurisdiction
for the designation of such third arbitrator.
64.F. If for any reason Year Eleven Rent or Year Sixteen Rent shall not
have been determined prior to the commencement of the option term, then until
such Year Eleven Rent or Year Sixteen Rent shall have been finally determined,
the interim Annual Fixed Rental payable hereunder shall equal 100% of the sum of
the Annual Fixed Rental payable by Tenant as of the expiration of the initial
lease term. Once the Year Eleven Rent or Year Sixteen Rent has been determined,
the same shall be payable as of the commencement of the Option Term, and any
necessary adjustment in the amount of the rents therefor paid by Tenant shall be
made within thirty (30) days by Owner.
65. If the demised premises are totally damaged or rendered wholly
unusable by fire or other casualty within the last year of the initial term or
any extended term, Tenant may elect to terminate this lease by notice to Owner
written within sixty (60) days after such casualty; whereupon this lease shall
expire as if the termination date had occurred effective as of the date of
casualty and Tenant shall forthwith quit, surrender and vacate the demised
premises without prejudice, however, to Owner's rights and remedies against
Tenant hereunder prior to such termination and any rent owing shall be paid to
the date of casualty. If Tenant does not terminate the Lease, Owner shall
restore the Premises in accordance with the casualty provisions of the Lease set
forth in Article 8.
66. In the event that Tenant shall desire to sublet the demised
premises or to permit the same to be occupied by any person other than Tenant,
its officers or employees, in its entirety, Tenant shall submit in writing to
Owner the name of the proposed subtenant or occupant, the nature of and
character of its business, the terms and conditions of the proposed subletting,
reasonable and necessary information as to the financial responsibility and
standing of the proposed subtenant and such other information as Owner may
reasonably request. Owner shall not unreasonably withhold or delay its consent
to the proposed subletting. No such consent by Owner to Tenant's subletting
shall constitute a release by Owner of Tenant's obligations under this Lease,
and no such consent shall be deemed to permit subtenant to further sublet any or
all of the demised premises. In no event shall Tenant be permitted to advertise
the demised premises at a rental less than the prevailing or reasonable rental
for similar space at the time of the execution of such sublease. Tenant shall
have the herein right to sublet the demised premises provided Tenant is not then
in default beyond any applicable cure period under the terms and conditions of
this lease. The word "surrender" as used above shall imply that if Owner accepts
such surrender, Tenant shall thereafter be relieved of any further obligations
under this Lease. Tenant shall not sublet any portion of the premises nor
assign, mortgage or encumber this lease without the prior written consent of
Owner in each instance without consent of Owner not to be unreasonably withheld
or delayed.
27
<PAGE> 28
67. Except in case of emergency, any entry by Owner into the demised
premises as permitted hereunder shall be made subject to the provisions of
Article 7 of this Lease.
68: ENVIRONMENTAL REQUIREMENTS FOR HAZARDOUS WASTE AND MATERIALS:
A. No activity shall be undertaken on the demised premises or property of which
it is a part ("Premises") by Tenant which would cause (i) the premises to become
a hazardous waste treatment, storage or disposal facility in violation of the
Solid Waste Disposal Act, as amended, 42 U.S.C. 6901 et seq., as the same may be
amended, from time to time ("RCRA"), or any similar state laws, regulations or
local ordinances, (ii) a release or threatened release of any hazardous
substance from the premises which would cause Owner to incur response costs
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, 42 U.S.C. 9601-9657, as the same may be amended from time
to time ("CERCLA"), or any similar state laws, regulations or local ordinances,
(iii) the discharge of Hazardous Materials into any waters of the United States,
or the emission of any air pollutant, in violation of either the Clean Water
Act, as amended, 33 U.S.C. 1251 et seq., or the Clean Air Act, as amended, 42
U.S.A. 7401, et seq., or any similar state laws, regulations or local
ordinances, or (iv) the manufacture, processing, distribution in commerce, use,
or disposal of any chemical substance or mixture in violation of the Toxic
Substances Control Act, 15 U.S.C. Section 2601, et seq. (the "Act");
B. Tenant and Owner shall comply strictly and in all respects with the
requirements of the Environmental Laws and shall notify the other promptly in
the event of any violation of Environmental Laws, as defined above in Article
68.A upon the Premises, and shall promptly forward to the other copies of all
orders, notices, permits, applications or other communications and reports in
connection with any such violation or any other matters relating to the
Environmental Laws as they may affect the Premises;
C. In connection with Tenant's use of the building and with respect to any
violation caused by Tenant, its agents, employees, servants or licenses of laws
governing the use of the Premises by Tenant, Tenant shall indemnify Owner and
hold Owner harmless from and against all loss, liability, damage and expense,
including reasonable attorney's fees, suffered or incurred by Owner, its
successors or assigns (i) under or on account of Tenant's violation of the
Environmental Laws, including the assertion of any lien thereunder; and (ii) the
use, generation, treatment or storage or disposal of any Hazardous Materials by
Tenant, its agents, employees, servants, or licenses;
D. Owner agrees to indemnify, defend and hold harmless Tenant, its parent,
subsidiaries, divisions and affiliates, and their respective officers,
directors, shareholders and employees, from and against any and all liabilities,
losses, damages, suits, actions, causes of action, costs, expenses (including
without limitation reasonable attorneys' fees and disbursements and court
costs), penalties, fines, demands, judgments, claims or liens (including without
limitation liens or claims imposed under any so-called "Superfund" or other
environmental legislation) arising from or in connection with the presence at,
over or under the Property of all Hazardous Materials, excepting, however, any
Hazardous Materials brought onto the Property by Tenant, or the subsequent
removal thereof from, the Property. For purposes of this Lease, Hazardous
Materials shall mean substances defined as "hazardous substances", "toxic
substances", "oil" or "hazardous waste" in The Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended; The
Federal Hazardous Materials Transportation Act, as amended; and all state,
federal and local laws regulating Hazardous Materials as such substances are
defined in the regulations adopted and publications promulgated pursuant to said
laws, but shall not include those substances or products used in amounts and for
purposes approved by governmental authorities or those typically used, stored,
generated or
28
<PAGE> 29
disposed of in a facility of this type provided such substances have been and
are used, stored, generated or disposed of in compliance with all environmental
laws. Owner represents and warrants that the Premises are free of Hazardous
Materials as of the date hereof. In the event of any violation of Environmental
laws by Tenant affecting the premises, if Tenant shall fail to comply with any
of the requirements of the Environmental Laws, Owner may at its election, but
without the obligation to do so, give such notices and/or cause such work to be
performed at the premises and/or take any and all other actions as Owner shall
deem necessary or advisable in order to remedy said violation or cure said
failure of compliance, and any amounts paid as a result thereof, together with
interest thereon at the interest rate after default set forth in the Lease from
the date of payment by Owner, shall be immediately due and payable by Tenant to
Owner as additional rent and shall to the extent permitted by law have the
benefit of any lien hereby created as a part of this Lease. The occurrence,
presence or discharge of any Hazardous Materials by Tenant shall not constitute
an Event of Default under this Lease so long as Tenant complies with the
requirements of Environmental Laws as provided above and has not caused the
presence or discharge of Hazardous Materials in violation of Environmental Laws.
Should a discharge of Hazardous Materials occur on the Premises which by
Environmental Law requires Tenant or reasonably warrants Tenant to perform
testing, then upon receiving Owner's consent which shall not be unreasonably
withheld, conditioned or delayed, Tenant shall perform the testing. Tenant
agrees to restore any areas of the Land and Premises affected by such testing to
the grade which existed immediately prior to such testing and indemnify, defend,
and hold harmless Owner from any loss or damage from its testing on the
Property.
Whenever the Environmental Law statute or regulation requires the
"owner or operator" to obtain a permit that is due to Tenant's particular use of
the Premises, Tenant shall do such act or obtain such permit at its sole cost
and expense, it being the intention of the parties hereto that Owner shall be
free of all expenses and obligations arising from or in connection with
compliance therewith and that Tenant shall fulfill all such obligations and pay
all such expenses.
The Tenant and Owner shall promptly notify the other in writing of any
order or pending or threatened action by any regulatory agency or other
governmental body, or any claims made by any third party, relating to Hazardous
Materials on, or emanations from, the premises, and shall promptly furnish the
other with copies of any correspondence of legal pleadings in connection
therewith. In addition, the Owner and Tenant shall have the right, but shall not
be obligated, to notify any state, federal or local governmental authority of
information which may come to its attention with respect to Hazardous Materials
on or emanating from the premises and Tenant irrevocably releases Owner from any
claims of loss, damage, liability, expense or injury relating to or arising
from, directly or indirectly, any such disclosure.
Following (i) any spill affecting the premises caused by Tenant, (ii)
any violation of the Environmental Laws with respect to the premises caused by
Tenant, (iii) any order, action or threatened action by any regulatory agency or
other governmental body, or any claim made by any third party, relating to
Hazardous Materials on, or emanations from the premises caused by Tenant, (iv)
or at any time following the occurrence of an Event of Default by Tenant with
respect to Paragraph 68, the Owner may require the Tenant to provide the Owner,
at the expense of the Tenant, an inspection or audit of the premises, prepared
by a qualified consultant reasonably approved by Owner, certifying as to the
presence or absence of Hazardous Materials, or to permit the Owner to so inspect
or audit the premises at the Tenant's expense, and Tenant hereby grants Owner,
its employees, agents, and independent contractors, the right to enter upon the
premises for the purpose of conducting tests, soil borings, the installation of
monitoring wells and such other tests as Owner deems reasonably necessary or
desirable. Owner agrees to restore the Building (including Premises) and any
areas on the Land and Premises affected by such testing to
29
<PAGE> 30
the grade which existed immediately prior to such testing and indemnify, defend,
and hold harmless Tenant, its parent, subsidiaries, divisions and affiliates
from any loss or damage from its entry onto the Property.
The party seeking indemnification under this Lease (the "Indemnified
Party") shall provide prompt written notice of any third party claim to the
party from whom such indemnification is sought (the "Indemnification Party").
The Indemnifying Party shall have the right to assume exclusive control of the
defense of such claim or, at the option of the Indemnifying Party, to settle the
same. The Indemnified Party agrees to cooperate reasonably with the Indemnifying
Party in connection with the performance of the Indemnifying Party's
indemnification obligations under this Lease. In the event that the Indemnifying
Party fails to perform such obligations, the Indemnified Party shall have the
right to do so at the Indemnifying Party's expense.
Notwithstanding anything to the contrary contained in this Agreement,
in no event shall either party be liable for any indirect, special,
consequential or incidental damages (including without limitation damages for
loss of use of facilities or equipment, loss of revenue, loss of profits or loss
of goodwill), regardless of whether such party (i) has been informed of the
possibility of such damages or (ii) is negligent.
E. Survival of Lease Expiration. Tenant and Owner agrees that each and every
provision of these provisions shall survive the expiration or earlier
termination of the term of this lease, the parties hereto expressly
acknowledging and agreeing that Owner and Tenant would not enter into this lease
but for the provisions of these provisions and the aforesaid survival thereof.
69. "Cost of Living Increase"
69.1 In addition to the Annual Fixed Rent, and additional rent, which
the Tenant has agreed to pay hereunder, Tenant shall also pay, as additional
rent, each year after lease year 4, such amount as is determined in accordance
with the provisions of this Article 69.
(i) Commencing with the beginning of the fifth year of the lease
term and every year thereafter during the original term only, the Base Rent
(which is defined in lease year five to be $198,125 and each following year to
be the sum of $198,125 and all additional rent due per Article 69 prior to the
time of the current Cost of Living Increase calculation), shall be increased by
the one (1) year percentage change in the Consumer Price Index (CPI) for New
York, New York Northeaster New Jersey (all items), (the "Index"), by multiplying
the then current Base Rent by a fraction, the denominator of which shall be the
Index number for the twelfth month of lease year three and every year thereafter
and the numerator of which shall be the Index number for the twelfth month of
lease year four and every lease year thereafter. From the result of this
computation there shall be deducted the then current Base Rent and the
difference shall be the additional rent to be paid pursuant to this article. As
clarification to the preceding, the formula to be used for the Cost of Living
Increase shall be calculated as follows: For example, if the lease Commencement
Date is December 1, 1997, then for the first calculation (additional rent due
for lease year five per article 69), the denominator shall be the index number
for November of the year 2000 and the numerator shall be the index number for
November of the year 2001 and the Base Rent equals $198,125. For the second
calculation (additional rent due for lease year six per this Article 69) the
denominator shall be the index number for November of the year 2001 and the
numerator shall be the index number for November of the year 2002 and the Base
Rent equals the sum of $198,125 and the additional rent due per this article for
lease year five. The Base Rent increase shall not exceed a three (3%) percent
increase in any one year period. If such Index is no longer available, a
substitute equivalent Index shall be employed. If the Owner and
30
<PAGE> 31
Tenant cannot agree upon a substitute equivalent Index, the American Appraisal
Association shall be called upon to designate the Index. The cost attendant
thereto shall be divided equally between Owner and Tenant.
(ii) The Owner shall, within a reasonable time after computing
such increase, give the Tenant notice of the increase so determined. Any dispute
between the parties as to any such computation shall be determined by
arbitration.
(iii) No adjustments or recomputations retroactive or otherwise,
shall be made because of any revision which shall later be made in the first
published figure for any month.
(iv) Such additional rent shall be paid in twelve (12) equal
payments to Owner within thirty (30) days after Owner has billed Tenant
therefor.
(v) The balance of this additional rent shall be paid in monthly
installments together with the fixed rent payable for said month.
70. Additional Provisions:
a. Notwithstanding anything to the contrary contained in this Lease,
Tenant shall have the right to make, without Owner's consent, an assignment of
this Lease or subletting of all or any portion of the premises to (a) a parent,
subsidiary, affiliate or division of Tenant, (b) any entity with which or into
which Tenant may consolidate or merge, or (c) any entity acquiring all or
substantially all of the assets of Tenant. Tenant must remain liable.
b. Notwithstanding anything to the contrary contained herein, in no
event shall Tenant be obligated to make any repairs or replacements which would
constitute items of expense which are required as the result of the negligence
or willful misconduct of Owner, its agents, employees, representatives or
contractors, or the failure of Owner to perform any of its obligations under
this Lease, all of which repairs and replacements shall be made by Owner at
Owner's sole cost and expense. Owner shall maintain, at its sole cost and
expense, the foundation, floorslab, exterior walls, load-bearing interior walls,
steel frame, structural portions, roof, gutters, downspouts of the Building,
common areas, parking areas, as well as all utility lines, pipes and plumbing,
serving but located outside of the Building (including all underground utility
lines, pipes and plumbing that are not the responsibility of any utility
company), in good, clean and safe repair, order and condition. Owner shall make
all repairs and replacements without, to the extent practicable, interfering
with the conduct of Tenant's business.
c. Notwithstanding anything to the contrary contained in this Lease,
Owner and Tenant each hereby waives all rights of recovery against the other
party, and such other party's insurance carrier (by way of subrogation or
otherwise), for all losses or damages to the premises, any improvements thereon
or any personal property of either party therein, to the extent such waiver does
not invalidate the insurance coverage of either party and to the extent such
losses or damages are covered by insurance the damaged party is required to
carry hereunder or otherwise elects to maintain; provided, however, that the
foregoing waiver by either party shall not apply with respect to any loss or
damage to the extent caused by the negligence or willful misconduct of the other
party, its agents, employees, representatives or contractors.
d. In addition to the foregoing, Tenant and Owner shall enter into a
Notice of Lease which will be recorded with the Registry of Deeds in which the
Building is located.
31
<PAGE> 32
IN WITNESS WHEREOF, Owner and Tenant have respectively signed and sealed this
lease as of the day and year first above written.
FOR: 1608 DEVELOPMENT LIMITED PARTNERSHIP
------------------------------------
Stratford Executive Park, Inc.
Managing General Partner
BY: /s/ James R. Caissy Date: 10/6/97
-------------------------------- ---------
James R. Caissy
Its: President
FOR: ORIEL INSTRUMENTS CORPORATION
------------------------------------
BY: /s/ Allen Smith Date: 10/6/97
-------------------------------- ---------
Its: Chairman
STATE OF CONNECTICUT)
) ss: Stratford
COUNTY OF FAIRFIELD )
On this 6th day of October, 1997, before me personally appeared
Allen Smith signer and sealer of the foregoing instrument and acknowledged the
same to be his free act and deed, before me as a duly authorized officer of
Oriel Instruments Corporation.
IN WITNESS WHEREOF, I hereunder set my hand and official seal.
/s/ Eileen S. King
- ----------------------
Eileen S. King
Notary Public
My Commission Expires:
Feb. 28, 2002
32
<PAGE> 33
EXHIBIT B
STRATFORD EXECUTIVE PARK
BUILDING STANDARD WORK LETTER
STRATFORD EXECUTIVE PARK consists of attractive campus-type office and flexible
use buildings, with continuous windows framed in architectural metal,
accentuated with brick columns and panels. Glass front entrance doors are
provided as necessary. Discretely concealed loading docks and delivery doors are
provided in the rear of the building. Parking in provided along the front office
elevation and in the rear delivery areas. The entire perimeter is attractively
landscaped. Grounds and the building roof and structure will be maintained by
the Owner.
<TABLE>
<S> <C>
WINDOWS: Solar-bronze tinted double-glazed insulating glass set in
Duranodic bronze square tubing.
FLOOR SLAB: Concrete slab on grade with wire mesh reinforcement. Load
capacity 300 lbs/psf +/-.
INTERIOR: Per Exhibit "J".
DOORS: Per Exhibit "J".
CEILINGS: Per Exhibit "J".
LIGHTING: Per Exhibit "J".
OUTLETS: Per Exhibit "J".
SWITCHES: Per Exhibit "J".
PLUMBING: Overhead copper water lines. Underground plastic storm drains
and plastic sanitary sewer lines.
FLOORS: Per Exhibit "J".
COLUMNS: Structural steel. Average bay size: 45' x 50'.
LAVATORIES: Per Exhibit "J".
HVAC: Office areas: combination rooftop heating and air conditioning
units with full ducted delivery system. Heating is gas fired.
PAINTING: Per Exhibit "J".
ELECTRIC
SERVICE: 4 wire, 3 phase, 120/208 volt service. Separate meter
installed on premises.
</TABLE>
33
<PAGE> 34
<TABLE>
<S> <C>
GAS SERVICE: Heat supplied by gas unit; separate meter or sub-meter
installed on premises.
HOT WATER: Individual electrical hot water heater.
SPRINKLER
SYSTEM: Automatic wet pipe system installed throughout with water flow
tamper, and low temperature alarms monitored twenty-four (24)
hours a day, throughout each year.
CEILING
HEIGHT: Office area hung ceiling: approximately 9'6". Unfinished
areas: to joists, 14'6" clear +/-.
DELIVERY
SYSTEM: Docks and/or Drive-in Doors.
ENTRANCES: Individual aluminum glass entry door in office area.
ROOFING: Four-ply Owens Corning Permaply R System or equal, consisting
of 1-7/8" Fiberglass insulation, Fiberglass base sheet,
and three plys of Fiberglass fabric laminated with
hot asphalt.
</TABLE>
The following items pertinent to tenant's space are not furnished by Owner and
will be at Tenant's initiative and expense.
<TABLE>
<S> <C>
TELEPHONES: Tenant shall make arrangements for installation of telephone
service. Owner will not provide or initiate such service.
ENTRY ALARM
SYSTEM: Tenant shall make arrangements for installation of alarm
system, or use of any existing one already on the premises.
WINDOW
COVERING: Tenant will provide own blinds or curtains. Air conditioning
specifications are based on availability of blinds or curtains.
OPTIONAL ITEMS: Wall, ceiling and floor finishes other than standard,
including accent colors, and more than one color per room.
Glass and sound conditioned partitions. Extra width and full
height doors. Dedicated electric circuits. Electric outlets
other than in office areas.
</TABLE>
34
<PAGE> 35
EXHIBIT C
WORK SPECIFICATIONS
BUILDING
The entire building is heated and air conditioned by roof-mounted combination
heating/cooling units and a duct system to maintain, for heating, 70 degree F.
inside when outside temperature is 0 degree F., with a maximum wind velocity of
15 MPH and, for cooling inside 80 degree F. dry bulb with a 50% relative
humidity when outside temperature is 95 degree F. dry bulb and 75 degree F. wet
bulb. Air conditioning specifications are designed on the basis of doors and
windows being closed, as well as all areas in the air conditioned premises being
provided with venetian blinds, shades or drapes which shall be closed, depending
on the position of the sun.
ELECTRIC SERVICE
Electric service furnished to the premises shall be 1,600 Amperes 120/208V, 3
phase 4 wire.
FLOOR LOAD
Floors are rated for a maximum load of 300 lbs. per square foot. (Specify if
more than one floor load).
REST ROOMS
Per Exhibit "J".
35
<PAGE> 36
EXHIBIT "E"
SUBORDINATION, NON-DISTURBANCE AND
ATTORNMENT AGREEMENT
AGREEMENT dated the _____ day of _____________, 199__, between_________
_____________________________________________, ("MORTGAGEE"), and______________,
_______________________________________, ("TENANT").
RECITALS:
A. Tenant has entered into a certain lease (the "LEASE") dated ______
with __________________________________ as lessor ("LANDLORD"), covering certain
premises known as _________________________________________ (the "PREMISES") and
located in _________________________________________(the "PROPERTY"); and
B. Mortgagee has made or has agreed to make a mortgage loan in the
amount of _____________ (the "MORTGAGE") to Landlord, secured by the Property,
and the parties desire to set forth their agreement herein.
NOW, THEREFORE, in consideration of the mutual covenants herein, the
parties hereby agree as follows:
1. The Lease is and shall be subject and subordinate to the Mortgage
and to all renewals, modifications, consolidations, replacements and extensions
thereof, to the full extent of amounts secured thereby and interest thereon.
2. Tenant shall attorn to and recognize any purchaser at a foreclosure
sale under the Mortgage, any transferee who acquires the Property by deed in
lieu of foreclosure, and the successors and assigns of such purchaser(s), as its
landlord for the unexpired balance (and any extensions, if exercised) of the
term of the Lease upon the same terms and conditions set forth in the Lease.
3. If it becomes necessary to foreclose the Mortgage, Mortgagee will
not terminate the Lease nor join Tenant in summary or foreclosure proceedings so
long as Tenant is not in default under any of the terms, covenants, or
conditions of the Lease at such time. Mortgagee will recognize the Tenant, as
lessee under the lease, if it should succeed to the interest of the Landlord so
long as Tenant is not in default under any of the terms, covenants, or
conditions of the Lease at such time.
4. If Mortgagee succeeds to the interest of Landlord under the Lease,
Mortgagee shall not be: (a) liable for any act or omission of any prior landlord
(including Landlord); (b) liable for the return of any security deposit; (c)
subject to any offsets or defenses which Tenant might have against any prior
landlord (including Landlord); (d) bound by any rent or additional rent which
Tenant might have paid for more than the current month to any prior landlord
(including Landlord); (e) bound by any amendment or modification of the Lease
made without its consent;
36
<PAGE> 37
5. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their successors and assigns.
6. Tenant shall give Mortgagee, by certified mail, a copy of any notice
of default served upon the Landlord, to be sent to the address of Mortgagee
indicated below. If Landlord shall have failed to cure such default within the
time provided for in the Lease, then Mortgagee shall have an additional 30 days
within which to cure such default, or if such default cannot be cured within
that time, then such additional time as may be necessary to cure such default
if, within such 30 days Mortgagee has commenced and is diligently pursuing the
remedies necessary to cure such default (including, but not limited to,
commencement of foreclosure proceedings, of necessary to effect such cure), in
which event the Lease shall not be terminated while such remedies are being so
diligently pursued. Mortgagee's notice address is ______________________________
______________________________________________________________.
7. Tenant acknowledges that it has notice that the Lease and the rent
and all sums due thereunder have been assigned to Mortgagee as part of the
security for the obligations secured by the Mortgage. In the event Mortgagee
notifies Tenant of an event of default under the Mortgage and demands that
Tenant pay its rent and all other sums due under the Lease to Mortgagee, Tenant
will honor such demand and pay its rent and all other sums due under the Lease
to Mortgagee and Landlord hereby consents.
8. With respect to any options for additional space and any option to
extend or renew provided to Tenant under the Lease, Mortgagee shall recognize
the same if Tenant is entitled thereto under the Lease after the date on which
Mortgagee succeeds as Landlord under the Lease by virtue of foreclosure or deed
in lieu of foreclosure or Mortgagee takes possession of the Premises; provided,
however, that Mortgagee shall not be responsible for any acts of any prior
landlord under the Lease, or the act of any tenant, subtenant or other party
which prevents Mortgagee from complying with the provisions hereof, and Tenant
shall have no right to cancel the Lease or to make any claims against Mortgagee
on account of such acts.
9. This Agreement may not be modified orally or in any manner than by
an agreement in writing signed by the parties hereto or their respective
successors in interest. This Agreement shall inure to the benefit of and be
binding upon the parties hereto, their respective heirs, personal
representatives, successors and assigns, and any purchaser or purchasers at
foreclosure of the Property or any portion thereof, and their respective heirs,
personal representatives, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed these presents as
of the day and year first above written.
Mortgagee:__________________________________
By:_________________________________________
Its:
Tenant:_____________________________________
By:_________________________________________
Its:
37
<PAGE> 38
EXHIBIT "F"
TENANT ESTOPPEL CERTIFICATE
TO: __________________________________________________________ ("LENDER") and/or
whom else it may concern:
THIS IS TO CERTIFY THAT:
1. The undersigned is the lessee ("TENANT") under that certain lease dated
________________________, 19__ ( the "LEASE") by and between ___________________
as lessor ("LANDLORD") Tenant, covering those certain premises commonly known
and designated as ________________________________ ("PREMISES").
2. The Lease has not been modified, changed, altered, assigned,
supplemented or amended in any respect (except as indicated below; if none,
state "NONE"). The Lease is not in default and is valid and in full force and
effect on the date hereof. The Lease is the only lease or agreement between
Tenant and Landlord affecting or relating to the Premises. The Lease represents
the entire agreement between Landlord and Tenant with respect to the Premises.
________________________________________________________________________________
________________________________________________________________________________
3. Tenant is not entitled to, and has made no agreement(s) with Landlord
or its agents or employees concerning free rent, partial rent, rebate of rent
payments, credit or offset or deduction in rent, or any other type of rental
concession, including without limitation, lease support payments or lease
buy-outs (except as indicated below; in none, state "NONE").
________________________________________________________________________________
________________________________________________________________________________
4. Tenant has accepted and now occupies the Premises, and is and has been
open for business since ____________, 19__. The Lease term began ______________,
19__. The termination date of the present term of the Lease, excluding
unexercised renewals, is _______________, 19__.
5. Tenant has paid rent for the Premises for the period up to and
including _____________,19__. The fixed minimum rent is $___________. Additional
rent (including Tenant's share of tax increases and cost of living increases)
payable by Tenant presently is $_________ per month. No such rent has been paid
more than one (1) month in advance of its due date, except as indicated below
(if none, state "NONE"). Tenant's security deposit is $__________ .
________________________________________________________________________________
________________________________________________________________________________
6. No event has occurred and no condition exists which, with the giving of
notice or the lapse of time or both, will constitute a default under the Lease.
Tenant has no existing defenses or offsets against the enforcement of this Lease
by Landlord.
7. Tenant has received payment or credit for tenant improvement work in
the total amount of $_________ (or if other than cash, describe below; if none,
state
38
<PAGE> 39
"NONE"). All conditions under this Lease to be performed by Landlord have
been satisfied. All required contributions by Landlord to Tenant on account of
Tenant's tenant improvements have been received by Tenant.
________________________________________________________________________________
________________________________________________________________________________
8. The Lease contains, and Tenant has, no outstanding options or rights of
first refusal to purchase the Premises or any part thereof all or any part of
the real property of which the Premises are a part.
9. No actions, whether voluntary or otherwise, are pending against Tenant
or any general partner of Tenant under the bankruptcy laws of the United States
or any state thereof.
10. Tenant has not sublet the Premises to any sublessee and has not
assigned any of its rights under the Lease, except as indicated below (if none,
state "NONE"). No one except Tenant and its employees occupies the Premises.
11. The address for notices to be sent to Tenant is as set forth in the
Lease.
12. To the best of Tenant's knowledge, the use, maintenance or operation of
the Premises complies with, and will at all times comply with, all applicable
federal, state, county or local statutes, laws, rules and regulations of any
governmental authorities relating to environmental, health or safety matters
(being hereinafter collectively referred to as the Environmental Laws).
13. The Premises have not been used and Tenant does not plan to use the
Premises for any activities which, directly or indirectly, involve the use,
generation, treatment, storage, transportation or disposal of any petroleum
product or any toxic or hazardous chemical, material, substance, pollutant or
waste.
14. Tenant has not received any notices, written or oral, of violation of
any Environmental Law or of any allegation which, if true, would contradict
anything contained herein and there are no writs, injunctions, decrees, orders
or judgments outstanding, no lawsuits, claims, proceedings or investigations
pending or threatened, relating to the use, maintenance or operation of the
Premises, nor is Tenant aware of a basis for any such proceeding.
15. Tenant acknowledges that all the interest of Landlord in and to the
Lease has been duly assigned to Lender, and that pursuant to the terms thereof,
all rent payments under the Lease shall continue to be paid to Landlord in
accordance with the terms of the Lease unless and until Tenant is notified
otherwise in writing by Lender or its successors or assigns.
It is particularly noted that:
(1) Under the provisions of this assignment, the Lease cannot be
terminated (either directly or by the exercise of any option which
could lead to termination) or modified in any of its terms, or
consent be given to the release of any party having liability
thereon, without the prior written consent of Lender or its
successors or assigns, and without such consent, no rent may be
collected or accepted more than one (1) month in advance.
39
<PAGE> 40
(2) The interest of Landlord in the Lease has been assigned to Lender
for the purposes specified in the assignment. Lender, or its
successors or assigns, assumes no duty, liability or obligation
whatever under the Lease or any extension or renewal thereof.
(3) Any notices sent to Lender should be sent by certified mail and
addressed to:
___________________________________
___________________________________
___________________________________
16. Tenant agrees to give any Mortgagee and/or Trust Deed Holders
("Mortgagee"), by certified mail, a copy of any notice of default served upon
Landlord, provided that prior to such notice Tenant has been notified in writing
(by way of Notice of Assignment of Rents and Leases, or otherwise), of the
address of such Mortgagee. Tenant further agrees that if Landlord shall have
failed to cure such default within the time provided for in this Lease, then the
Mortgagee shall have an additional 60 days within which to cure such default or
if such default cannot be cured within that time, then such additional time as
may be necessary to cure such default shall be granted if within such 60 days
Mortgagee has commenced and is diligently pursuing the remedies necessary to
cure such default (including but not limited to, commencement of foreclosure
proceedings, if necessary to effect such cure), in which event the Lease shall
not be terminated while such remedies are being so diligently pursued.
17. This certification is made to induce Lender to make certain fundings,
knowing that Lender relies upon the truth of this certification in disbursing
said funds.
18. The undersigned is authorized to execute this Estoppel Certificate on
behalf of Tenant.
Signed and dated this ____ day of _______________, 19__.
TENANT: ________________________________________
By: ________________________________________
Its:
40
<PAGE> 41
EXHIBIT "A"
[DRAWING OF FLOOR PLAN]
41
<PAGE> 42
EXHIBIT "D"
[DRAWING OF FLOOR PLAN]
Owner's Work
1. remove all existing walls, fixtures, and all nonstructural elements in the
existing 27,700 square foot building as shown.
2. construct a 4,000 square foot addition as shown which includes: main
sprinkler piping, one 200 amp electric panel, one 10 ton roof-top hvac unit.
Tenant's Work
1. all modifications, alterations, and additions to the 27,700 square foot
building and the 4,000 square foot addition per Exhibit "J".
42
<PAGE> 43
EXHIBIT "G"
<TABLE>
<S> <C>
-------------------
TOWN OF STRATFORD CT FOR RECEIPT
REAL ESTATE TAX BILL RETURN WITH PAYMENT
-------------------
- ----------------------------------------------------------------------------------------------------------------
LIST NUMBER ON GRAND LIST OF PROP DESC. 150 LONG BEACH BLVD
96 RE0976603 OCT 1, 1996 I.D. NUMBER 0987200 1031-0299
- ----------------------------------------------------------------------------------------------------------------
TOTAL TAX DUE MILL GROSS ASSESSMENT
$ 37,525.95 RATE 32.49 1,155,000
- ----------------------------------------------------------------------------------------------------------------
FIRST PAYMENT DUE SECOND PAYMENT DUE ADJUSTMENTS EXEMPTION
JULY 1, 1997 JANUARY 1, 1988
NET ASSESSMENT
$ 18,762.98 $ 18,762.97 1,155,000
- ----------------------------------------------- -------------------------------------------
OFFICE USE ONLY
1608 DEVELOPMENT LTD PARTNERSHIP
150 LONG BEACH BLVD
STRATFORD CT 06497-7148
-------------------
TOWN OF STRATFORD CT OFFICE COPY
REAL ESTATE TAX BILL RETURN WITH PAYMENT
-------------------
- ----------------------------------------------------------------------------------------------------------------
LIST NUMBER ON GRAND LIST OF PROP DESC. 150 LONG BEACH BLVD
96 RE0976603 OCT 1, 1996 I.D. NUMBER 0987200 1031-0299
- ----------------------------------------------------------------------------------------------------------------
TOTAL TAX DUE MILL GROSS ASSESSMENT
$ 37,525.95 RATE 32.49 1,155,000
- ----------------------------------------------------------------------------------------------------------------
FIRST PAYMENT DUE SECOND PAYMENT DUE ADJUSTMENTS EXEMPTION
JULY 1, 1997 JANUARY 1, 1988
NET ASSESSMENT
$ 18,762.98 $ 18,762.97 1,155,000
- ----------------------------------------------- -------------------------------------------
OFFICE USE ONLY
1608 DEVELOPMENT LTD PARTNERSHIP
150 LONG BEACH BLVD
STRATFORD CT 06497-7148
</TABLE>
43
<PAGE> 44
EXHIBIT "H"
FORM OF LETTER OF CREDIT
------------------------
ADVISED BY: AIRBORNE EXPRESS ISSUANCE DATE:
THROUGH: DIRECT
BENEFICIARY/LANDLORD: IRREVOCABLE STANDBY
LETTER OF CREDIT
NO.
CREDIT AMOUNT:
APPLICANT/ACCOUNTEE/TENANT: USD
DATE AND PLACE OF
EXPIRY:
AT OUR COUNTERS
IN:
LADIES AND GENTLEMEN:
WE HEREBY ISSUE OUR IRREVOCABLE STANDBY LETTER OF CREDIT IN YOUR FAVOR
FOR THE ACCOUNT OF THE APPLICANT FOR AN AGGREGATE AMOUNT NOT TO EXCEED
/100 US DOLLARS AVAILABLE FOR PAYMENT BY PRESENTATION OF YOUR
DRAFT(S) DRAWN ON OURSELVES AT SIGHT, AND ACCOMPANIED BY THE FOLLOWING
DOCUMENTS:
1. YOUR STATEMENT/CERTIFICATE, ON YOUR LETTERHEAD, SIGNED BY A PERSON
PURPORTING TO BE YOUR AUTHORIZED OFFICER/OFFICIAL/REPRESENTATIVE, APPROPRIATELY
COMPLETED IN THE FOLLOWING FORM:
"THE UNDERSIGNED AN AUTHORIZED OFFICER/OFFICIAL/REPRESENTATIVE OF
"LANDLORD", HEREBY CERTIFIES WITH REGARD TO STATE STREET BANK STANDBY LETTER OF
CREDIT NO. THAT THE AMOUNT DRAWN HEREUNDER REPRESENTS THE AMOUNT
PRESENTLY DUE AND OWING TO LANDLORD UNDER THAT CERTAIN LEASE AGREEMENT
("LEASE") EXECUTED BY AND BETWEEN LANDLORD AND THE "TENANT" AND FURTHER
CERTIFIES EITHER THAT
A. A DEFAULT UNDER THE LEASE EXISTS AND HAS CONTINUED UNCURED BEYOND ALL
APPLICABLE GRACE PERIODS, THAT ALL NOTICES REQUIRED UNDER THE LEASE WITH REGARD
THERETO HAVE BEEN DULY GIVEN,
OR
B. WE ARE IN RECEIPT OF BANK NOTICE OF NON-EXTENSION OF THEIR
LETTER OF CREDIT NO. , AND THE TENANT HAS FAILED TO PROVIDE A REPLACEMENT
LETTER OF CREDIT ACCEPTABLE TO LANDLORD AS REQUIRED UNDER THE LEASE."
2. THE ORIGINAL OF THIS LETTER OF CREDIT (FOR ENDORSEMENT OF DRAWING),
WHICH WILL BE RETURNED UNLESS CREDIT IS FULLY UTILIZED.
PARTIAL DRAWINGS ARE PERMITTED.
<PAGE> 45
PAGE TWO OF L/C NO.
DRAFT(S) MUST INDICATE THE NAME OF THE ISSUING BANK, THE LETTER OF CREDIT
NUMBER AND MUST BE PRESENTED AT THIS OFFICE, (THE ADDRESS SPECIFIED BELOW.)
IT IS A CONDITION OF THIS LETTER OF CREDIT THAT IT SHALL BE DEEMED
AUTOMATICALLY EXTENDED WITHOUT AMENDMENT FOR AN ADDITIONAL PERIOD OF ONE YEAR
FROM THE PRESENT OR EACH FUTURE EXPIRATION DATE HEREOF, BUT NOT BEYOND
UNLESS AT LEAST FORTY FIVE (45) DAYS PRIOR TO ANY SUCH EXPIRATION DATE WE
NOTIFY YOU BY CERTIFIED MAIL, THAT WE ELECT NOT TO EXTEND THIS LETTER OF CREDIT
FOR ANY SUCH ADDITIONAL PERIOD. UPON RECEIPT BY YOU OF SUCH NOTICE, YOU MAY
DRAW HEREUNDER YOUR DRAFT(S) AT SIGHT ON OURSELVES FOR THE THEN FULL AMOUNT OF
THIS LETTER OF CREDIT ACCOMPANIED BY YOUR STATEMENT AS SPECIFIED ABOVE.
THIS LETTER OF CREDIT IS TRANSFERABLE IN ITS ENTIRETY, BUT NOT IN PART
AND MAY BE SUCCESSFULLY TRANSFERRED TO ANY TRANSFEREE WHO SUCCEEDED YOU AS
LANDLORD. IF IT IS YOUR INTENTION TO TRANSFER YOUR INTEREST HEREUNDER, KINDLY
RETURN THE CREDIT INSTRUMENT TO US FOR APPROPRIATE ENDORSEMENT AND FURNISH US
WITH YOUR INSTRUCTIONS. PLEASE NOTE YOUR SIGNATURE ON YOUR REQUEST FOR TRANSFER
MUST BE AUTHENTICATED BY YOUR BANK. OUR TRANSFER FEE OF 1/4 OF 1% MINIMUM USD
150.00 MUST BE PAID BY YOU FOR THE TRANSFER. (TRANSFER FORM IS ATTACHED.) IN THE
EVENT OF TRANSFER ALL REQUIRED DOCUMENTS MUST BE EXECUTED BY THE TRANSFEREE.
THIS LETTER OF CREDIT SETS FORTH IN FULL THE TERMS OF OUR OBLIGATIONS TO
YOU, AND OUR UNDERTAKING SHALL NOT IN ANY WAY BE AMENDED OR AMPLIFIED BY
REFERENCE TO ANY DOCUMENTS, INSTRUMENTS OR ANY AGREEMENT REFERRED TO HEREIN OR
TO WHICH THIS LETTER OF CREDIT RELATES, AND SUCH REFERENCE, IF ANY, SHALL NOT
BE DEEMED TO INCORPORATE HEREIN BY REFERENCE ANY DOCUMENT, INSTRUMENT OR
AGREEMENT.
EXCEPT AS OTHERWISE EXPRESSLY STATED HEREIN, THIS LETTER OF CREDIT IS
SUBJECT TO THE "UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS,
INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION N.500 (1993 REVISION)".
WE ENGAGE WITH YOU THAT ALL DRAFT(S) DRAWN UNDER AND IN COMPLIANCE WITH
THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT SHALL BE DULY HONORED ON
PRESENTATION TO US AT OUR OFFICE AT STREET.
ATTN:
VERY TRULY YOURS,
<PAGE> 1
Exhibit 21.1
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
NAME OF SUBSIDIARY JURISDICTION OF NAME UNDER WHICH
INCORPORATION OR SUBSIDIARY DOES
ORGANIZATION BUSINESS
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Centro Vision, Inc. Delaware Centro Vision, Inc.
- --------------------------------------------------------------------------------------------------------
CID Technologies Inc. New York CID Technologies Inc.
- --------------------------------------------------------------------------------------------------------
Hilger Crystals Limited United Kingdom Hilger Crystals Limited
- --------------------------------------------------------------------------------------------------------
Laser Science, Inc. Delaware Laser Science, Inc.
- --------------------------------------------------------------------------------------------------------
Oriel Instruments Delaware Oriel Instruments
Corporation Corporation
- --------------------------------------------------------------------------------------------------------
Oriel Foreign Sales U.S. Virgin Islands Oriel Foreign Sales
Corporation Corporation
- --------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMOVISION
CORPORATION'S REGISTRATION STATEMENT ON FORM 10 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REGISTRATION STATEMENT.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C> <C>
<PERIOD-TYPE> 6-MOS YEAR
<FISCAL-YEAR-END> JAN-03-1998 DEC-28-1996
<PERIOD-START> DEC-29-1996 DEC-31-1995
<PERIOD-END> JUN-28-1997 DEC-28-1996
<EXCHANGE-RATE> 1 1
<CASH> 194 306
<SECURITIES> 0 0
<RECEIVABLES> 5,774 5,571
<ALLOWANCES> 276 266
<INVENTORY> 6,783 6,404
<CURRENT-ASSETS> 15,157 13,711
<PP&E> 5,964 4,945
<DEPRECIATION> 1,666 1,044
<TOTAL-ASSETS> 33,123 28,362
<CURRENT-LIABILITIES> 5,934 8,110
<BONDS> 0 0
0 0
0 0
<COMMON> 48 48
<OTHER-SE> 23,194 20,204
<TOTAL-LIABILITY-AND-EQUITY> 33,123 28,362
<SALES> 17,810 30,434
<TOTAL-REVENUES> 17,810 30,434
<CGS> 9,962 17,066
<TOTAL-COSTS> 9,962 17,066
<OTHER-EXPENSES> 1,867 3,499
<LOSS-PROVISION> 17 174
<INTEREST-EXPENSE> 110 44
<INCOME-PRETAX> 1,885 2,423
<INCOME-TAX> 791 1,005
<INCOME-CONTINUING> 1,094 1,418
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,094 1,418
<EPS-PRIMARY> .23 .29
<EPS-DILUTED> 0 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
VISION CORPORATION'S AMENDMENT NO. 1 ON FORM 10/A AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REGISTRATION STATEMENT.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-START> DEC-29-1996
<PERIOD-END> SEP-27-1997
<EXCHANGE-RATE> 1
<CASH> 200
<SECURITIES> 0
<RECEIVABLES> 7,415
<ALLOWANCES> 369
<INVENTORY> 7,931
<CURRENT-ASSETS> 18,033
<PP&E> 6,794
<DEPRECIATION> 2,079
<TOTAL-ASSETS> 38,698
<CURRENT-LIABILITIES> 7,572
<BONDS> 0
0
0
<COMMON> 68
<OTHER-SE> 23,311
<TOTAL-LIABILITY-AND-EQUITY> 38,698
<SALES> 28,445
<TOTAL-REVENUES> 28,445
<CGS> 15,791
<TOTAL-COSTS> 15,791
<OTHER-EXPENSES> 2,986
<LOSS-PROVISION> 42
<INTEREST-EXPENSE> 192
<INCOME-PRETAX> 2,934
<INCOME-TAX> 1,232
<INCOME-CONTINUING> 1,702
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,702
<EPS-PRIMARY> .25<F1>
<EPS-DILUTED> 0
<FN>
<F1>Reflects an approximate seven-for-five stock split effective November 14,
1997. Previously filed financial data schedules will not be restated.
</FN>
</TABLE>
