SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------------------------------
FORM 10-K
(mark one)
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended January 3, 1998.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Commission file number 1-13391
THERMO VISION CORPORATION
(Exact name of Registrant as specified in its charter)
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)
Registrant's telephone number, including area code: (781) 622-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
---------------------------- -----------------------------------------
Common Stock, $.01 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
the filing requirements for at least the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference into Part III of this Form
10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
Registrant as of January 30, 1998, was approximately $11,138,000.
As of January 30, 1998, the Registrant had 8,048,276 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the year
ended January 3, 1998, are incorporated by reference into Parts I and II.
Portions of the Registrant's definitive Proxy Statement for the Annual
Meeting of Shareholders to be held on June 1, 1998, are incorporated by
reference into Part III.
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PART I
Item 1. Business
(a) General Development of Business
Thermo Vision Corporation (the Company or the Registrant) designs,
manufactures, and markets a diverse array of photonics products --
light-based technologies for scientific and industrial applications --
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.
The Company was incorporated in November 1995 as a wholly owned
subsidiary of Thermo Optek Corporation, a publicly traded, majority-owned
subsidiary Thermo Instrument Systems Inc. The Company initially comprised
two businesses: Scientific Measurement Systems Inc. (now called Thermo
Vision Colorado), a manufacturer of optically based instruments, and CID
Technologies Inc. (CIDTEC), a manufacturer of sensors and cameras based
on proprietary charge-injection device (CID) technology. Since February
1996, the Company has acquired four businesses from unrelated third
parties that currently constitute the bulk of its operations. In February
1996, the Company acquired Oriel Corporation, 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 the assets of Corion
Corporation, a manufacturer of commercial optical filters, for
$5.1 million in cash. In February 1997, the Company acquired Laser
Science, Inc. (LSI), a manufacturer of nitrogen, tunable dye, and pulsed
CO(2) lasers, for $3.6 million in cash. In July 1997, the Company
acquired the assets of Centronic, Inc. (now called Centro Vision, Inc.),
a manufacturer of silicon photodiodes, for $3.8 million in cash. In
August 1997, the Company acquired the crystal-materials business (Hilger
Crystals Limited) of Hilger Analytical Limited, a wholly owned subsidiary
of Thermo Optek, for the assumption of $908,000 of Thermo Optek's
existing obligation under a line of credit. Hilger Crystals Limited
(Hilger) manufactures crystals used for X-ray scintillation and infrared
spectroscopy. Because the Company and Hilger were deemed for accounting
purposes to be 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 December 1997, the Company was "spun out" through a distribution
of all of its outstanding capital stock as a dividend to Thermo Optek
shareholders. Thermo Optek received a favorable private letter ruling
from the Internal Revenue Service stating that the distribution qualifies
as tax free. Thermo Vision is now a majority-owned public subsidiary of
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Thermo Instrument. Also in December 1997, the Company sold 1,139,491
shares of its common stock in an initial public offering, at $7.50 per
share for net proceeds of $7,033,000.
As of January 3, 1998, Thermo Instrument owned 6,299,552 shares of
the common stock of the Company, representing 78% of such stock
outstanding. Thermo Instrument develops, manufactures, markets, and
services instruments and software used for the identification and
quantification of complex molecular compounds and elements in gases,
liquids, and solids. Uses include pharmaceutical drug research and
clinical diagnostics, monitoring and measuring environmental pollutants,
industrial inspection, and test and control for quality assurance and
productivity improvement. In addition, Thermo Instrument develops,
manufactures, markets, and services equipment for the measurement,
preparation, storage, and automation of sample materials, and photonics
and vacuum components for original equipment manufacturers. As of January
3, 1998, Thermo Electron Corporation owned 102,349 shares of the common
stock of the Company, representing 1% of such stock outstanding. Thermo
Electron provides analytical and monitoring instruments; biomedical
products including heart-assist devices, respiratory-care equipment, and
mammography systems; paper recycling and papermaking equipment;
alternative-energy systems; and other specialized products. Thermo
Electron also provides industrial outsourcing, particularly in
environmental-liability management, laboratory analysis, and
metallurgical services, and conducts advanced-technology research and
development.
Forward-looking Statements
Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Annual Report
on Form 10-K. 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," "seeks," "estimates," and similar
expressions are intended to identify forward-looking statements. There
are a number of important factors that could cause the results of the
Company to differ materially from those indicated by such forward-looking
statements, including those detailed under the heading "Forward-looking
Statements" in the Registrant's 1997* Annual Report to Shareholders,
which statements are incorporated herein by reference.
(b) Financial Information About Industry Segments
The Company is engaged in one business segment: designing,
manufacturing, and marketing photonics products.
* References to 1997, 1996, and 1995 herein are for the fiscal years
ended January 3, 1998, December 28, 1996, and December 30, 1995,
respectively.
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(c) Description of Business
(i) Principal Products and Services
Photonics is the practical use of light. In many ways, photonics is
analogous to electronics. Photonic technologies use light to detect,
transmit, store, and process information, and to generate energy, as well
as to capture and display images. The basic unit of light is the photon,
while in electronics it is the electron. Because photons are massless and
travel faster than electrons, photonic devices can be made smaller and
significantly faster than electronic devices. For example, replacing
electronics (copper wire) with photonics (fiber-optic cable) boosts the
capacity of telecommunication transmission lines by a factor of 10,000.
Photonic components are the "enabling technology" in many familiar
consumer products, including CD-ROM players, digital cameras, displays on
laptop computers and calculators, and fiber optic cable for telephones,
cable television, and networked computer systems. In industry, photonics
"eyes" enable robots to "see." Photonics is also found in semiconductor
manufacturing as well as analytical and process-monitoring applications.
In medicine, photonics is at the core of diagnostic instrumentation,
laser microsurgery, and filmless real-time dental X-ray images.
The Company estimates that the growing worldwide photonics industry
currently totals approximately $15.5 billion. The industry is typically
classified in terms of technologies rather than end-user applications,
using the following six market segments. The Company offers products in
each of these categories:
Optical Components. Light sources, filters, crystals, prisms, lenses,
and precision mechanical-positioning devices are all optical components.
Primary applications for optical components include semiconductor
production, medical and analytical instruments, and telecommunications.
The Company offers a broad line of optical components designed for
specific applications and for use in modular systems.
Imaging Sensors and Systems. Imaging sensors detect photons and
produce a resultant electrical signal. An imaging system consists of a
sensor or an array of sensors connected to a recording and/or display
device. Applications of imaging sensors and systems include cameras for
filmless dental X-ray imaging and detectors for optical spectrometers
used in chemical analysis. The Company's sensors are designed to have
very high dynamic range at low light levels, which makes them attractive
in demanding spectroscopy and astronomy applications. The Company offers
a number of proprietary CID sensors based on its own designs and
customizes sensors to particular customer specifications. The Company
also designs and markets CID camera systems.
Lasers. A laser is a specialized light source that produces an
intense beam of highly monochromatic, coherent radiation, or light. The
Company designs, manufactures, and markets 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
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perform measurements. The Company's lasers are often used as the
ionization sources for matrix assisted laser desorption ionization-time
of flight (MALDI-TOF) mass spectrometers used to study proteins,
peptides, and other large biomolecules, as well as for the cutting of
samples mounted in a microscope.
Optically Based Instruments. Optically based instruments combine
optical components and signal processors and are used primarily in
analytical and process applications, such as the determination of correct
exposure time for photoresist development in photolithography,
identification of materials by their fluorescence lifetime, and the
quality testing of optical components. The Company focuses on the
development of low-cost analyzers that use standard photonics components
as building blocks designed to work together in multiple configurations
and to be easily modified to accommodate changing end-user requirements.
Optoelectronics. These devices convert light to electricity or
electricity to light. A familiar example is the silicon photodiode
detector, with uses ranging from orienting satellites toward the sun to
color recognition for paint matching. The Company customizes its
photodiodes for specific applications. The primary customers for the
Company's optoelectronic products are manufacturers of medical diagnostic
and analytical instruments.
Fiber Optics. Fiber optics are single or bundled fibers that transmit
light down their length. Fiber optics are used to economically move light
in optically based instruments and for remote sensing applications for
chemical testing in hostile environments. Most of the specialty fiber-
optic cable that the Company sells is used for remote sensing.
Sales and Marketing
The Company markets its products both in the U.S. and internationally
by means of technical catalogs, available in printed format and, in the
future, on CD-ROMs, as well as through Web sites and the dealer and
distributor networks of its subsidiaries and divisions. The Company sells
directly to larger OEM buyers through the direct sales forces of its
subsidiaries and divisions. The Company trains the members of its sales
forces on the technical aspects of its products so they are able to
respond to questions and otherwise support customers, dealers, and
distributors. The Company holds a minority equity interest in LOT-Oriel
Holding GmbH (LOT-Oriel), a large European distributor of photonics
products. A representative of the Company serves as a member of
LOT-Oriel's board of directors. The Company believes that its
relationship with LOT-Oriel enhances the Company's visibility in and
access to the European photonics market.
(ii) and (xi) New Products; Research and Development
The Company maintains active programs for the development of new
technologies and the enhancement of its existing products. In addition,
the Company seeks to develop new applications for its products and
technologies. The Company incurred research and development expenses of
$4,143,000, $3,499,000, and $743,000 in 1997, 1996, and 1995,
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respectively. In addition, the Company received $744,000, $532,000, and
$490,000 for customer-sponsored contract research and development
expenses in 1997, 1996, and 1995, respectively.
(iii) Raw Materials
The Company purchases the silicon wafers used in its CID sensors and
silicon photodiodes from third-party manufacturers that process the
wafers in accordance with the Company's designs and specifications. The
Company 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. The Company purchases
CID wafers from its existing supplier on a purchase-order basis and does
not have a formal supply arrangement with this company. The Company
believes that outsourcing the processing of these wafers enables it to
avoid the technological risks and significant capital costs associated
with maintaining its own wafer fabrication lines.
(iv) Patents, Licenses, and Trademarks
The Company's success depends in part on the strength and protection
of its proprietary methodologies and designs and other proprietary
intellectual rights. The Company's policy is to protect its intellectual
property rights and to apply for patent protection when appropriate. The
Company believes that its manufacturing know-how, particularly with
respect to its optical filters and crystals, provides it with a
competitive advantage.
The Company currently holds numerous issued U.S. patents expiring at
various dates ranging from 1999 to 2016. The Company also has a number of
applications pending for additional U.S. patents and a number of foreign
counterparts for its patents in various foreign countries. The Company
also has certain registered and other trademarks. In addition, the
Company has entered into license agreements with other companies pursuant
to which it grants or receives the rights to certain technology,
know-how, trademarks, or patents. Several of the Company's issued U.S.
patents pertain to its CID technology. In addition, the Company holds a
nonexclusive license to certain additional patents relating to CID
technology.
(v) Seasonal Influences
There are no significant seasonal influences on the Company's sales
of its products.
(vi) Working Capital Requirements
There are no special inventory requirements or credit terms extended
to customers that would have a material adverse effect on the Company's
working capital.
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(vii) Dependency on a Single Customer
No single customer accounted for more than 10% of the Company's total
revenues in any of the past three years.
(viii) Backlog
The Company's backlog of firm orders was $12.3 million and $9.2
million as of January 3, 1998, and December 28, 1996, respectively.
Certain of these orders are cancellable by the customer upon payment of a
cancellation charge. The Company believes that substantially all of the
backlog at January 3, 1998, will be shipped or completed during 1998.
(ix) Government Contracts
Not applicable.
(x) Competition
The photonics industry is highly competitive. The Company competes
with a number of companies, many of which have substantially greater
financial, marketing, and other resources than the Company. The Company's
principal competitors include Coherent, Inc.; Corning OCA Corporation;
the Bicron Business Unit of Saint-Gobain Industrial Ceramics, Inc.;
Melles-Griot, Inc.; Newport Corporation; Optical Coating Laboratory,
Inc.; Hamamatsu Corporation, a unit of Hamamatsu Photonic KK; and UDT
Sensors, Inc., an Opto-Sensors Company. The Company competes primarily in
each of the photonics market segments on the basis of technical
suitability, product performance, reliability, and price.
(xii) Environmental Protection Regulations
The Company believes that compliance by the Company with federal,
state, and local environmental protection regulations will not have a
material adverse effect on its capital expenditures, earnings, or
competitive position.
(xiii) Number of Employees
As of January 3, 1998, the Company employed 243 people.
(d) Financial Information About Exports by Domestic Operations and About
Foreign Operations
Financial information about exports by domestic operations and about
foreign operations is summarized in Note 8 to Consolidated Financial
Statements in the Registrant's 1997 Annual Report to Shareholders and is
incorporated herein by reference.
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(e) Executive Officers of the Registrant
Present Title (Year First Became
Name Age Executive Officer)
------------------- --- -------------------------------------
Kristine Stotz Langdon 39 President and Chief Executive Officer
(1995)
John N. Hatsopoulos 63 Chief Financial Officer and Senior
Vice President (1997)
Allen J. Smith 49 Vice President (1997)
Paul F. Kelleher 55 Chief Accounting Officer (1995)
Each executive officer serves until his or her successor is chosen or
appointed by the Board of Directors and qualified or until his or her
earlier resignation, death, or removal. Ms. Langdon has served as Chief
Executive Officer and President of the Company since its inception in
January 1995. Ms. Langdon served as Director of Business Development of
Thermo Jarrell Ash, a subsidiary of Thermo Optek, from April 1994 until
January 1995. Ms. Langdon was Special Assistant to the Presidents of
Thermo Electron and Thermo Instrument from August 1991 to April 1994. Mr.
Smith has been Vice President of the Company since August 1997 and
Chairman of Oriel since October 1994. Mr. Smith served Oriel in various
capacities, including Executive Vice President, Vice President, general
manager, and sales manager from February 1970 to October 1994. Messrs.
Hatsopoulos and Kelleher have held comparable positions for at least five
years with Thermo Instrument or Thermo Electron. Messrs. Hatsopoulos and
Kelleher are full-time employees of Thermo Electron but devote such time
to the affairs of the Company as the Company's needs reasonably require.
Item 2. Properties
The Company owns approximately 3,600 square feet of office and
manufacturing space in Grand Junction, Colorado. The Company leases
approximately 117,000 square feet of office and manufacturing space under
leases expiring from 1999 through 2008 in Massachusetts, Connecticut,
California, England, and New York. The Company believes that its
facilities are in good condition and are suitable and adequate to meet
current needs.
Item 3. Legal Proceedings
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
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PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
(a) Information concerning the market and market price for the
Registrant's common stock, $.01 par value, and dividend policy is
included under the sections labeled "Common Stock Market Information" and
"Dividend Policy" in the Registrant's 1997 Annual Report to Shareholders
and is incorporated herein by reference.
(b) The Company's Registration Statement on Form S-1 (File No.
333-38153) covering 1,236,250 shares of common stock, par value $.01 per
share, with an aggregate offering price of $9,272,000, was declared
effective by the Securities and Exchange Commission on December 10, 1997.
The offering commenced on December 10, 1997, and terminated on December
31, 1997. The managing underwriters were Fahnestock & Co. Inc. and HSBC
Securities, Inc. The Company sold 1,139,491 shares in the offering for an
aggregate offering price of $8,546,000. The Company's total expenses in
connection with the offering were $1,513,000, of which $598,000 was for
underwriting discounts and commissions and $915,000 was for other
expenses paid to persons other than directors or officers of the Company,
persons owning more than 10 percent of any class of equity securities of
the Company, or affiliates of the Company, except for $48,000 paid to
Thermo Electron, the Company's ultimate parent company, for certain
services rendered in connection with the offering. The Company's net
proceeds from the offering were $7,033,000. As of January 3, 1998, all of
such net proceeds had been invested in investment-grade interest or
dividend-bearing instruments pursuant to a repurchase agreement with
Thermo Electron whereby the Company in effect lends its excess cash to
Thermo Electron on a collateralized basis at market interest rates.
Item 6. Selected Financial Data
The information required under this item is included under the
sections labeled "Selected Financial Information" and "Dividend Policy"
in the Registrant's 1997 Annual Report to Shareholders and is
incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required under this item is included under the
heading "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Registrant's 1997 Annual Report to
Shareholders and is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The Registrant's Consolidated Financial Statements as of January 3,
1998, and Supplementary Data are included in the Registrant's 1997 Annual
Report to Shareholders and are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
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PART III
Item 10. Directors and Executive Officers of the Registrant
The information concerning directors required under this item is
incorporated herein by reference from the material contained under the
caption "Election of Directors" in the Registrant's definitive proxy
statement to be filed with the Securities and Exchange Commission
pursuant to Regulation 14A, not later than 120 days after the close of
the fiscal year. The information concerning delinquent filers pursuant to
Item 405 of Regulation S-K is incorporated herein by reference from the
material contained under the heading "Section 16(a) Beneficial Ownership
Reporting Compliance" under the caption "Stock Ownership" in the
Registrant's definitive proxy statement to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A, not later than 120
days after the close of the fiscal year.
Item 11. Executive Compensation
The information required under this item is incorporated herein by
reference from the material contained under the caption "Executive
Compensation" in the Registrant's definitive proxy statement to be filed
with the Securities and Exchange Commission pursuant to Regulation 14A,
not later than 120 days after the close of the fiscal year.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required under this item is incorporated herein by
reference from the material contained under the caption "Stock Ownership"
in the Registrant's definitive proxy statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A, not later
than 120 days after the close of the fiscal year.
Item 13. Certain Relationships and Related Transactions
The information required under this item is incorporated herein by
reference from the material contained under the caption "Relationship
with Affiliates" in the Registrant's definitive proxy statement to be
filed with the Securities and Exchange Commission pursuant to Regulation
14A, not later than 120 days after the close of the fiscal year.
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PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a,d) Financial Statements and Schedules
(1)The consolidated financial statements set forth in the list
below are filed as part of this Report.
(2) The consolidated financial statement schedule set forth in
the list below is filed as part of this Report.
(3)Exhibits filed herewith or incorporated herein by reference
are set forth in Item 14(c) below.
List of Financial Statements and Schedules Referenced in this
Item 14
Information incorporated by reference from Exhibit 13 filed
herewith:
Consolidated Statement of Income
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Consolidated Statement of Shareholders' Investment
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
Financial Statement Schedules filed herewith:
Schedule II: Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable
or not required, or because the required information is shown
either in the financial statements or in the notes thereto.
(b) Reports on Form 8-K
None.
(c) Exhibits
See Exhibit Index on the page immediately preceding exhibits.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 13, 1998 THERMO VISION CORPORATION
By: Kristine Stotz Langdon
-----------------------------
Kristine Stotz Langdon
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated below, as of March 13,
1998.
Signature Title
--------- -----
By: Kristine Stotz Langdon President, Chief Executive Officer,
---------------------------
Kristine Stotz Langdon and Director
By: John N. Hatsopoulos Chief Financial Officer, Senior
---------------------------
John N. Hatsopoulos Vice President, and Director
By: Paul F. Kelleher Chief Accounting Officer
---------------------------
Paul F. Kelleher
By: Earl R. Lewis Chairman of the Board and Director
---------------------------
Earl R. Lewis
By: D. Allan Bromley Director
---------------------------
D. Allan Bromley
By: Arvin H. Smith Director
---------------------------
Arvin H. Smith
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Report of Independent Public Accountants
To the Shareholders and Board of Directors of Thermo Vision Corporation:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in Thermo
Vision Corporation's Annual Report to Shareholders incorporated by
reference in this Form 10-K, and have issued our report thereon dated
February 17, 1998. Our audits were made for the purpose of forming an
opinion on those statements taken as a whole. The schedule listed in Item
14 on page 11 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 consolidated
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
February 17, 1998
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SCHEDULE II
THERMO VISION CORPORATION
Valuation and Qualifying Accounts
(In thousands)
Balance at Provision Accounts Balance
Beginning Charged to Accounts Written at End
of Year Expense Recovered Off Other(a) of Year
---------------------------------------------------------------------------
Allowance for
Doubtful Accounts
Year Ended
January 3, 1998 $266 $114 $ 2 $(84) $132 $430
Year Ended
December 28, 1996 $ 24 $174 $ - $(82) $150 $266
Year Ended
December 30, 1995 $ 10 $ 14 $ - $ - $ - $ 24
(a)Includes allowance of businesses acquired during the year as described
in Note 2 to Consolidated Financial Statements in the Registrant's 1997
Annual Report to Shareholders and the effect of foreign currency
translation.
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
2.1 Plan and Agreement of Distribution dated as of
December 15, 1997, between Thermo Optek Corporation
and the Registrant.
2.2 Asset Purchase Agreement dated as of January 23, 1996,
by and between the Registrant and Corion Corporation
(filed as Exhibit 2.2 to the Registrant's Registration
Statement on Form 10 [File No. 1-13391] and
incorporated herein by reference).
2.3 Purchase Agreement dated as of February 7, 1996, by
and between the Registrant and the shareholders and
option holders of Oriel Corporation as set forth
therein (filed as Exhibit 2.3 to the Registrant's
Registration Statement on Form 10 [File No. 1-13391
and incorporated herein by reference).
3.1 Amended and Restated Certificate of Incorporation of
the Registrant (filed as Exhibit 3.1 to the
Registrant's Registration Statement on Form 10 [File
No. 1-13391 and incorporated herein by reference).
3.2 Certificate of Amendment to Amended and Restated
Certificate of Incorporation of the Registrant dated
December 9, 1997.
3.3 Bylaws of the Registrant (filed as Exhibit 3.3 to the
Registrant's Registration Statement on Form 10 [File
No. 1-13391] and incorporated herein by reference).
10.1 Corporate Services Agreement dated as of November 14,
1997, between Thermo Electron Corporation 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 Tax Allocation Agreement dated as of November 14,
1997, between Thermo Electron and the Registrant.
10.4 Master Repurchase Agreement dated as of November 14,
1997, between Thermo Electron and the Registrant.
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
10.5 Master Guarantee Reimbursement and Loan Agreement
dated as of November 14, 1997, between Thermo Electron
and the Registrant (filed as Exhibit 10.38 to Thermo
Instrument's Annual Report on Form 10-K for the fiscal
year ended January 3, 1998 [File No. 1-9786] and
incorporated herein by reference).
10.6 Master Guarantee Reimbursement and Loan Agreement
dated as of November 24, 1997, between Thermo
Instrument Systems Inc. and the Registrant.
10.7 CID Contract Research and Development Agreement dated
October 1994 between Thermo Optek and the Registrant
(filed as Exhibit 10.8 to the Registrant's
Registration Statement on Form 10 [File No. 1-13391]
and incorporated herein by reference).
10.8 CID Supply Agreement effective as of December 15,
1997, between Thermo Optek and the Registrant.
10.9 Equity Incentive Plan of the Registrant.
In addition to the stock-based compensation plans of
the Registrant, the executive officers of the
Registrant may be granted awards under stock-based
compensation plans of Thermo Electron and Thermo
Instrument for services rendered to the Registrant or
such affiliated corporations. Such plans are
substantially similar to the Equity Incentive Plan of
the Registrant.
10.10 Deferred Compensation Plan for Directors of the
Registrant.
10.11 Form of Indemnification Agreement for Officers and
Directors of the Registrant.
10.12 Sublease Agreement dated as of September 1, 1997,
between the Registrant and Thermo Instrument (filed as
Exhibit 10.14 to the Registrant's Registration
Statement on Form 10 [File No. 1-13391] and
incorporated herein by reference).
10.13 Sublease Agreement effective as of February 1, 1984,
between Oriel Instruments Corporation and Osbrook
Associates Limited Partnership, as modified (filed as
Exhibit 10.15 to the Registrant's Registration
Statement on Form 10 [File No. 1-13391] and
incorporated herein by reference).
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
10.14 Agreement of Lease dated as of October 6, 1997,
between Oriel and 1608 Development Limited Partnership
(filed as Exhibit 10.21 to the Registrant's
Registration Statement on Form 10 [File No. 1-13391]
and incorporated herein by reference).
10.15 Tax Matters Agreement dated as of November 24, 1997,
between Thermo Optek and the Registrant.
10.16 $3.8 Million Principal Amount Promissory Note due
July 13, 2000, issued by the Registrant to Thermo
Electron (filed as Exhibit 10.16 to the Registrant's
Registration Statement on Form 10 [File No. 1-13391]
and incorporated herein by reference).
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 Thermo
Optek (filed as Exhibit 10.17 to the Registrant's
Registration Statement on Form 10 [File No. 1-13391]
and incorporated herein by reference).
10.18 Indemnification Agreement effective as of December 31,
1995, between the Registrant and Thermo Instrument
(filed as Exhibit 10.12 to the Registrant's
Registration Statement on Form 10 [File No. 1-13391]
and incorporated herein by reference).
13 Annual Report to Shareholders for the year ended
January 3, 1998 (only those portions incorporated
herein by reference).
21 Subsidiaries of the Registrant.
27 Financial Data Schedule.
EXHIBIT 2.1
PLAN AND AGREEMENT OF DISTRIBUTION
THIS PLAN AND AGREEMENT OF DISTRIBUTION (the "Agreement") is
made as of the 15th day of December, 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(and its
subsidiaries) shall not be deemed to be Affiliates of Vision (and
its subsidiaries), and vice versa, for purposes of this
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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.
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.
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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, whichThermo 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.
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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.
Tax Matters Agreement: the Tax Matters Agreement between
Optek and Vision, the proposed form of which is attached as
Exhibit C, 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
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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.
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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 1, 1998 (the "Charter
Transfer Restriction").
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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
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Vision Common Stock received in the Distribution.
(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
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Form 10; and (3) all Indemnifiable Losses arising from any breach
of or failure toperform 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
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Third-Party Claim in reasonable detail considering the
information provided to the Indemnitee.
(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
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pay the reasonable attorneys' fees and expenses of one law firm
representing the Indemnitees involved in each jurisdiction with
respect thereto.
(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.
ARTICLE VII
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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.
ARTICLE VIII
ACCESS TO INFORMATION AND SERVICES
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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.
8.5 Retention of Records. For a period of seven (7) years
following the Distribution Date, each of Optek and Vision shall
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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.
ARTICLE X
NO REPRESENTATIONS OR WARRANTIES
10.1 No Representations or Warranties. Vision acknowledges
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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.
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
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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
thisAgreement. 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 cases where they would so apply.
11.9 Successors and Assigns; No Third-Party Beneficiaries.
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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.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
THERMO OPTEK CORPORATION
By: /s/ Robert J. Rosenthal
--------------------------------
Name:
Title: President
THERMO VISION CORPORATION
By: /s/ Kristine Stotz Langdon
--------------------------------
Name:
Title: President
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, at a meeting held
on November 24, 1997, duly adopted resolutions, pursuant to
Section 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:
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"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 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 its
Secretary on this the 9th day of December, 1997.
THERMO VISION CORPORATION
By: /s/Sandra L. Lambert
---------------------------
Sandra L. Lambert,
Secretary
Exhibit 10.1
CORPORATE SERVICES AGREEMENT
THIS is an AGREEMENT dated as of the 14th day of November,
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).
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(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: 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
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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. 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.
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(d) Post-Termination Services . F ollowing 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.
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
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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: /s/John N. Hatsopoulos
----------------------------------------------------
Title: President
/s/Kristine Stotz Langdon
By:----------------------------------------------------
Title: President
Exhibit 10.3
TAX ALLOCATION AGREEMENT
THIS AGREEMENT is made as of November 14th, 1997 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.
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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.
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.
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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 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
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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.
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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: /s/John N. Hatsopoulos
-------------------------------
Title: President
----------------------------
THERMO VISION CORPORATION
By: /s/Kristine Stotz Langdon
------------------------------
Title: President
----------------------------
Exhibit 10.4
MASTER REPURCHASE AGREEMENT
AGREEMENT dated as of the 14th day of November, 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
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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;
(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
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(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.
(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
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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 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
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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 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
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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 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
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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.
(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.
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THERMO ELECTRON CORPORATION THERMO VISION CORPORATION
By: /s/John N. Hatsopoulos
------------------------------------------------
By: /s/Kristine S. Langdon
------------------------------------------------
John N. Hatsopoulos Kristine S. Langdon
Title: President Title: President
Exhibit 10.6
MASTER GUARANTEE REIMBURSEMENT
AND LOAN AGREEMENT
This AGREEMENT is entered into as of the 24th day of
November, 1997 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
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
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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 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 subsidiarie s. 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 subsidiarie s 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
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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 subsidiarie s, 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
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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
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.
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.
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By: /s/Earl R. Lewis
------------------------------
Title: President
THERMO VISION CORPORATION
By: /s/Kristine Stotz Langdon
------------------------------
Title: President
EXHIBIT 10.8
CID SUPPLY AGREEMENT
THIS CID SUPPLY AGREEMENT, effective as of the 15th day of
December, 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 asubsidiary 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
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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,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
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(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 Visionwithin thirty (30) days after
the receipt by Thermo Optek or its respective Affiliate of Thermo
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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 thisAgreement 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,
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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.
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
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<PAGE>
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
(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
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<PAGE>
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.
(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.
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(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
theobligation 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 termination of
this Agreement be liable to the other for compensation or damages
on account of the loss of profits or sales, or expenditures,
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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 toRobert 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 other electronic facsimile
transmission during normal business hours or by registered mail
or certified mail, return receipt requested, postage prepaid, in
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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.
(l) This Agreement may be executed in counterparts, each of
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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: /s/ Kristine Stotz Langdon
---------------------------------------
Name:
Title: President
By: /s/ Robert J. Rosenthal
----------------------------------------
Name:
Title: President
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SCHEDULE A
Prices
------
Product Price
------- -----
CID 38 $3,000
EXHIBIT 10.9
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").
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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.
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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.
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
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<PAGE>
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 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
PAGE
<PAGE>
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 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
PAGE
<PAGE>
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
<PAGE>
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.
PAGE
<PAGE>
(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
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
PAGE
<PAGE>
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
<PAGE>
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
---------------
PAGE
<PAGE>
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").
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
PAGE
<PAGE>
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 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
-------------------------
PAGE
<PAGE>
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.
EXHIBIT 10.10
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
PAGE
<PAGE>
average last sale price per share of the Company's common
stock as reported on in The Wall Street Journal,
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 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
--------- ----------------
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.
PAGE
<PAGE>
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, 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
PAGE
<PAGE>
die after his or her deferral termination date but prior to
receipt of al l 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 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.
PAGE
<PAGE>
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 amemendment
-------- -------
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.
Exhbit 10.11
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
<PAGE>
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
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3
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
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,
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4
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 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
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5
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, 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
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<PAGE>
6
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 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.
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7
(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
<PAGE>
8
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
PAGE
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9
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 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.
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10
(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 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
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11
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:
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12
(a) If to Indemnitee, to: The address shown beneath
his or her signature on
the last page hereof
(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:
Exhibit 10.15
TAX MATTERS AGREEMENT
THIS TAX MATTERS AGREEMENT (the "Agreement") is made as of
November 24th, 1997 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
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_2_
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.
"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
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_3_
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 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.
PAGE
<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 OPTEK CORPORATION
By: /s/Robert J. Rosenthal
-------------------------------
Title: President
----------------------------
THERMO VISION CORPORATION
By: /s/Kristine Stotz Langdon
-------------------------------
Title: President
----------------------------
Exhibit 13
THERMO VISION CORPORATION
Consolidated Financial Statements
1997
PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Consolidated Statement of Income
(In thousands except per share amounts) 1997 1996 1995
-----------------------------------------------------------------------
Revenues (Notes 7 and 8) $39,694 $30,434 $ 6,026
------- ------- -------
Costs and Operating Expenses:
Cost of revenues 22,151 17,066 3,482
Selling, general, and administrative
expenses (Note 7) 9,065 7,402 1,519
Research and development expenses 4,143 3,499 743
------- ------- -------
35,359 27,967 5,744
------- ------- -------
Operating Income 4,335 2,467 282
Interest Income 41 - -
Interest Expense (327) (44) (31)
------- ------- -------
Income Before Provision for Income Taxes 4,049 2,423 251
Provision for Income Taxes (Note 5) 1,701 1,005 104
------- ------- -------
Net Income $ 2,348 $ 1,418 $ 147
======= ======= =======
Basic and Diluted Earnings per Share
(Note 9) $ .34 $ .21 $ .02
======= ======= =======
Weighted Average Shares (Note 9):
Basic 6,983 6,909 6,909
======= ======= =======
Diluted 6,985 6,909 6,909
======= ======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
2PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Consolidated Balance Sheet
(In thousands except share amounts) 1997 1996
-----------------------------------------------------------------------
Assets
Current Assets:
Cash and cash equivalents $ 9,604 $ 306
Accounts receivable, less allowances of
$430 and $266 6,935 5,305
Inventories 8,301 6,404
Prepaid expenses 971 521
Prepaid income taxes (Note 5) 1,405 1,175
------- -------
27,216 13,711
------- -------
Property, Plant, and Equipment, at Cost, Net 4,757 3,901
------- -------
Other Assets 584 647
------- -------
Cost in Excess of Net Assets of Acquired Companies
(Note 2) 14,844 10,103
------- -------
$47,401 $28,362
======= =======
Liabilities and Shareholders' Investment
Current Liabilities:
Note payable and capital lease obligation (Note 7) $ 1,143 $ 866
Accounts payable 3,671 2,796
Accrued payroll and employee benefits 905 751
Other accrued expenses 1,681 929
Due to Thermo Electron and affiliated companies
(Note 7) 177 2,768
------- -------
7,577 8,110
------- -------
Deferred Income Taxes (Note 5) 22 -
------- -------
Long-term Obligations, Due to Thermo Optek and
Thermo Electron (Note 7) 7,747 -
------- -------
Commitments (Note 6)
Shareholders' Investment (Notes 3 and 4):
Common stock, $.01 par value, 20,000,000 shares
authorized; 8,048,276 and 6,783,783 shares
issued and outstanding 80 68
Capital in excess of par value 28,144 18,693
Retained earnings 3,785 1,437
Cumulative translation adjustment 46 54
------- -------
32,055 20,252
------- -------
$47,401 $28,362
======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
3PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Consolidated Statement of Cash Flows
(In thousands) 1997 1996 1995
------------------------------------------------------------------------
Operating Activities:
Net income $ 2,348 $ 1,418 $ 147
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 1,849 1,251 182
Provision for losses on accounts
receivable 114 174 14
Deferred income tax expense
(benefit) 514 (79) 31
Changes in current accounts,
excluding the effects of
acquisitions:
Accounts receivable (380) (732) 67
Inventories (631) 471 (301)
Other current assets (364) (253) (2)
Accounts payable 71 (174) (128)
Other current liabilities (210) (397) (136)
-------- -------- --------
Net cash provided by (used in)
operating activities 3,311 1,679 (126)
-------- -------- --------
Investing Activities:
Acquisitions, net of cash acquired
(Note 2) (7,345) (15,528) -
Purchases of property, plant, and
equipment (1,527) (1,450) (152)
Other, net - 92 -
-------- -------- --------
Net cash used in investing activities (8,872) (16,886) (152)
-------- -------- --------
Financing Activities:
Net proceeds from issuance of
Company common stock (Note 4) 7,033 - -
Net proceeds from issuance of notes
payable to Thermo Optek and
Thermo Electron (Notes 2 and 7) 7,747 - -
Transfer from parent company to
fund acquisitions - 16,870 -
Net increase (decrease) in
short-term borrowings from
Thermo Electron and affiliated
companies (2,591) 1,830 1
Net increase (decrease) in
short-term borrowings 240 (575) (65)
Net transfer (to) from parent
company 2,430 (2,785) 473
-------- -------- --------
Net cash provided by financing
activities $ 14,859 $ 15,340 $ 409
-------- -------- --------
4PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Consolidated Statement of Cash Flows (continued)
(In thousands) 1997 1996 1995
-----------------------------------------------------------------------
Exchange Rate Effect on Cash $ - $ 2 $ (10)
-------- -------- --------
Increase in Cash and Cash Equivalents 9,298 135 121
Cash and Cash Equivalents at
Beginning of Year 306 171 50
-------- -------- --------
Cash and Cash Equivalents at End
of Year $ 9,604 $ 306 $ 171
======== ======== ========
Cash Paid For:
Interest $ 265 $ 44 $ 31
Income taxes $ - $ 43 $ -
Noncash Activities:
Fair value of assets of acquired
companies $ 9,414 $ 22,480 $ -
Cash paid for acquired companies (7,400) (16,870) -
-------- -------- --------
Liabilities assumed of acquired
companies $ 2,014 $ 5,610 $ -
======== ======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
5PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Consolidated Statement of Shareholders' Investment
(In thousands) 1997 1996 1995
-----------------------------------------------------------------------
Common Stock, $.01 Par Value
Balance at beginning of year $ 68 $ 68 $ -
Issuance of Company common stock
(Note 4) 11 - -
Effect of stock split 1 - -
Capitalization of the Company - - 68
------- ------- -------
Balance at end of year 80 68 68
------- ------- -------
Capital in Excess of Par Value
Balance at beginning of year 18,693 4,608 -
Issuance of Company common stock
(Note 4) 7,022 - -
Effect of stock split (1) - -
Net transfer (to) from parent company 2,430 (2,785) -
Transfer from parent company to fund
acquisitions - 16,870 -
Capitalization of the Company - - 4,608
------- ------- -------
Balance at end of year 28,144 18,693 4,608
------- ------- -------
Retained Earnings
Balance at beginning of year 1,437 19 -
Net income after capitalization of
the Company 2,348 1,418 19
------- ------- -------
Balance at end of year 3,785 1,437 19
------- ------- -------
Cumulative Translation Adjustment
Balance at beginning of year 54 2 8
Translation adjustment (8) 52 (6)
------- ------- -------
Balance at end of year 46 54 2
------- ------- -------
Net Parent Company Investment
Balance at beginning of year - - 4,075
Net income before capitalization of the
Company - - 128
Net transfer from parent company - - 473
Capitalization of the Company - - (4,676)
------- ------- -------
Balance at end of year - - -
------- ------- -------
Total Shareholders' Investment $32,055 $20,252 $ 4,697
======= ======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
6PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
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 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 6,908,785
shares of the Company's common stock (adjusted to reflect a 55-for-54
stock split distributed in December 1997 in the form of a stock
dividend). The companies transferred were CID Technologies Inc. (CIDTEC)
and Scientific Measurement Systems Inc., (now called 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 2).
In December 1997, Thermo Optek, a 91%-owned publicly traded
subsidiary of Thermo Instrument Systems Inc., distributed to its
shareholders 100% of the Company's common stock in the form of a
dividend. Thermo Instrument is a publicly traded, majority-owned
subsidiary of Thermo Electron Corporation. As of January 3, 1998, Thermo
Instrument and Thermo Electron owned a total of 6,401,901 shares of the
Company's common stock, representing 79.5% of such stock outstanding.
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 1997, 1996, and 1995 are for the fiscal years
ended January 3, 1998, December 28, 1996, and December 30, 1995,
respectively. Fiscal year 1997 included 53 weeks; 1996 and 1995 each
included 52 weeks.
7PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Notes To Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
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.
Stock-based Compensation Plans
The Company applies Accounting Principles Board Opinion (APB) No. 25,
"Accounting for Stock Issued to Employees" and related interpretations in
accounting for its stock-based compensation plans (Note 3). Accordingly,
no accounting recognition is given to stock options granted at fair
market value until they are exercised. Upon exercise, net proceeds,
including tax benefits realized, are credited to equity.
Income Taxes
The Company, Thermo Optek, and Thermo Instrument entered into tax
allocation agreements under which the Company, Thermo Optek, and Thermo
Instrument were included in Thermo Electron's consolidated federal and
certain state income tax returns. The agreements provided that in years
in which the Company had taxable income, it would pay to Thermo Electron
amounts comparable to the taxes the Company would have paid if it had
filed separate tax returns. Subsequent to the Company's initial public
offering in December 1997, Thermo Instrument's equity ownership of the
Company was reduced below 80% and, as a result, the Company is required
to file its own federal and certain state income tax returns.
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
During the fourth quarter of 1997, the Company adopted SFAS No. 128,
"Earnings per Share" (Note 9). As a result, all previously reported
earnings per share have been restated; however, basic and diluted
earnings per share equals the Company's previously reported earnings per
share for the 1996 and 1995 periods. Basic earnings per share have been
computed by dividing net income by the weighted average number of shares
outstanding during the year. For periods prior to the Company's November
1995 capitalization, shares issued in connection with such capitalization
have been shown as outstanding for purposes of computing earnings per
share. Diluted earnings per share have been computed assuming the
exercise of stock options, as well as their related income tax effects.
Stock Splits
All share and per share information, except for share information in
the accompanying 1996 balance sheet, has been restated to reflect an
approximate 55-for-54 stock split, effected in the form of a stock
dividend, distributed in December 1997. The purpose of this stock split
was to preserve a distribution ratio of 14 shares of the Company's common
stock for each 100 shares of common stock held by Thermo Optek
shareholders as of the date that Thermo Optek distributed the Company's
common stock to its shareholders.
8PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Notes To Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
Cash and Cash Equivalents
As of January 3, 1998, $9,410,000 of the Company's cash equivalents
were invested in a repurchase agreement with Thermo Electron. Under this
agreement, the Company in effect lends excess cash to Thermo Electron,
which Thermo Electron collateralizes with investments principally
consisting of corporate notes, commercial paper, U.S. government-agency
securities, money market funds, and other marketable securities, in the
amount of at least 103% of such obligation. The Company's funds subject
to the repurchase agreement are readily convertible into cash by the
Company. The 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.
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:
(In thousands) 1997 1996
------------------------------------------------------------------------
Raw material and supplies $5,637 $3,142
Work in process 967 806
Finished goods 1,697 2,456
------ ------
$8,301 $6,404
====== ======
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, 30
years; machinery and equipment, 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:
(In thousands) 1997 1996
------------------------------------------------------------------------
Land and buildings $ 277 $ 277
Machinery and equipment 5,987 4,114
Leasehold improvements 932 554
------ ------
7,196 4,945
Less: Accumulated depreciation and amortization 2,439 1,044
------ ------
$4,757 $3,901
====== ======
9PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Notes To Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
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 1997 balance sheet.
The Company has an investment of less than 20% in Andor Technology
Limited. The carrying amount of the investment, which is being accounted
for under the cost method, is $84,000 in the accompanying 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 paid 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 $718,000 and $371,000 at year-end 1997 and
1996, respectively. The Company assesses the future useful life of this
asset whenever events or changes in circumstances indicate that the
current useful life has diminished. The Company considers the future
undiscounted cash flows of the acquired companies in assessing the
recoverability of this asset. If impairment has occurred, any excess of
carrying value over fair value is recorded as a loss.
Foreign Currency
All assets and liabilities of the Company's foreign subsidiary 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,
due to Thermo Electron and affiliated companies, and long-term
obligations due to Thermo Optek and Thermo Electron. The Company's
long-term obligations (Note 7) bear interest at a variable market rate
and therefore the carrying amounts approximate fair value. The carrying
amounts of the Company's remaining financial instruments approximate fair
value due to their short-term nature.
10PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Notes To Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
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.
2. Acquisitions
In August 1997, the Company acquired Hilger, a manufacturer of
crystals used for X-ray scintillation and infrared spectroscopy, from
Thermo Optek for the assumption of the short-term obligation discussed in
Note 7. Because the Company and Hilger were deemed for accounting
purposes to be 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, the results of operations of
Hilger are included for all periods presented.
In July 1997, the Company acquired the assets of Centronic, Inc. (now
called Centro Vision, Inc.), a manufacturer of silicon photodiodes, for
$3,800,000 in cash. The cost of this acquisition exceeded the estimated
fair market value of the acquired net assets by $2,307,000. To finance
this acquisition, the Company borrowed $3,800,000 from Thermo Electron
(Note 7).
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 CO2 lasers for
industry, medicine, education, and defense. The cost of this acquisition
exceeded the estimated fair market value of the acquired net assets by
$2,836,000. To finance this acquisition, the Company borrowed $3,600,000
from Thermo Optek (Note 7). 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 (Note 7).
In February 1996, the Company acquired Oriel Corporation, a
manufacturer and distributor of photonics components and instruments, for
$11,798,000 in cash and the assumption of $731,000 in debt, and the
assets of Corion Corporation, 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.
These acquisitions, except for Hilger, 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.
11PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Notes To Consolidated Financial Statements
2. Acquisitions (continued)
In October 1994, Thermo Instrument acquired CIDTEC, a manufacturer of
charge-injection devices used for image 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. 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 financial statements include the results of operations of
CIDTEC for all periods presented.
Based on unaudited data, the following table presents selected
financial information for the Company and the businesses acquired on a
pro forma basis, assuming the Company, Centro Vision, and LSI had been
combined since the beginning of 1996 and the Company, Oriel, and Corion
had been combined since the beginning of 1995.
(In thousands except per share amounts) 1997 1996 1995
-----------------------------------------------------------------------
Revenues $42,944 $43,428 $33,355
Net income 2,209 527 145
Basic and diluted earnings per share .32 .08 .02
The pro forma results are not necessarily indicative of future
operations or the actual results that would have occurred had the
acquisitions of Centro Vision and LSI been made at the beginning of 1996
or the acquisitions of Oriel and Corion been made at the beginning of
1995.
3. Employee Benefit Plans
Stock-based Compensation Plans
Stock Option Plans
------------------
In November 1997, the Company adopted a stock-based compensation plan
for its key employees, directors, and others, which permits the grant of
a variety 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. To date, only nonqualified stock
options have been awarded under this plan. The option recipients and the
terms of options granted under this plan are determined by the Board
Committee. Options granted to date became exercisable on March 10, 1998,
and are 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 lapse ratably over a five- to ten-year period, depending
on the term of the option, which generally ranges from seven to twelve
years.
12PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Notes To Consolidated Financial Statements
3. Employee Benefit Plans (continued)
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. 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.
A summary of the Company's stock option information for 1997 is as
follows:
1997
---------------------
Weighted
Number Average
of Exercise
(Shares in thousands) Shares Price
------------------------------------------------------------------------
Options outstanding, beginning of the year - $ -
Granted 303 7.50
---
Options outstanding, end of year 303 $7.50
=== =====
Options exercisable - $ -
=== =====
Options available for grant 397
===
As of January 3, 1998, the options outstanding were exercisable at
$7.50 and had a weighted average remaining contractual life of 6.8 years.
Employee Stock Purchase Program
-------------------------------
Substantially all of the Company's full-time U.S. employees are
eligible to participate in an employee stock purchase program sponsored
by Thermo Instrument. Under this program, 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.
13PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Notes To Consolidated Financial Statements
3. Employee Benefit Plans (continued)
Pro Forma Stock-based Compensation Expense
In October 1995, the Financial Accounting Standards Board issued SFAS
No. 123, "Accounting for Stock-based Compensation," which sets forth a
fair-value based method of recognizing stock-based compensation expense.
As permitted by SFAS No. 123, the Company has elected to continue to
apply APB No. 25 to account for its stock-based compensation plans. Had
compensation cost for awards granted in 1997 under the Company's
stock-based compensation plans been determined based on the fair value at
the grant dates consistent with the method set forth under SFAS No. 123,
the effect on the Company's net income and earnings per share would have
been as follows:
(In thousands except per share amounts) 1997
----------------------------------------------------------------------
Net income:
As reported $2,348
Pro forma 2,270
Basic and diluted earnings per share:
As reported .34
Pro forma .33
Compensation expense for options granted is reflected over the
vesting period; therefore, future pro forma compensation expense may be
greater as additional options are granted.
The weighted average fair value per share of options granted in 1997
was $2.69. The fair value of each option grant was estimated on the grant
date using the Black-Scholes option-pricing model with the following
weighted-average assumptions:
1997
----------------------------------------------------------------------
Volatility 28%
Risk-free interest rate 6.0%
Expected life of options 4.9 years
The Black-Scholes option-pricing model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option-pricing
models require the input of highly subjective assumptions including
expected stock price volatility. Because the Company's employee stock
options have characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single measure of
the fair value of its employee stock options.
14PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Notes To Consolidated Financial Statements
3. Employee Benefit Plans (continued)
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 $212,000, $182,000, and $39,000 in 1997, 1996, and
1995, respectively.
4. Common Stock
In December 1997, the Company sold 1,139,491 shares of its common
stock in an initial public offering at $7.50 per share for net proceeds
of $7,033,000.
At January 3, 1998, the Company had reserved 725,000 unissued shares
of its common stock for possible issuance under stock-based compensation
plans.
5. Income Taxes
The components of income before provision for income taxes are as
follows:
(In thousands) 1997 1996 1995
------------------------------------------------------------------------
Domestic $3,719 $2,186 $ 9
Foreign 330 237 242
------ ------ ------
$4,049 $2,423 $ 251
====== ====== ======
The components of the provision for income taxes are as follows:
(In thousands) 1997 1996 1995
------------------------------------------------------------------------
Currently payable:
Federal $ 904 $ 895 $ (11)
State 174 105 (1)
Foreign 109 84 85
------ ------ ------
1,187 1,084 73
------ ------ ------
Net deferred (prepaid):
Federal 424 (71) 28
State 90 (8) 3
------ ------ ------
514 (79) 31
------ ------ ------
$1,701 $1,005 $ 104
====== ====== ======
15PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Notes To Consolidated Financial Statements
5. Income Taxes (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:
(In thousands) 1997 1996 1995
------------------------------------------------------------------------
Provision for income taxes
at statutory rate $1,377 $ 824 $ 85
Increases (decreases) resulting from:
State income taxes, net of federal tax 174 64 1
Federal tax rate differential 3 3 3
Tax benefit of foreign sales
corporation (49) (5) (2)
Amortization of cost in excess of net
assets of acquired companies 103 80 16
Nondeductible expenses and other 93 39 1
------ ------ ------
$1,701 $1,005 $ 104
====== ====== ======
Prepaid income taxes and deferred income taxes in the accompanying
balance sheet consist of the following:
(In thousands) 1997 1996
------------------------------------------------------------------------
Prepaid income taxes:
Tax loss carryforwards $1,622 $ -
Reserves and accruals 499 229
Inventory basis difference 424 713
Accrued compensation 159 136
Other, net - 97
------ ------
2,704 1,175
Less: Valuation allowance 1,299 -
------ ------
$1,405 $1,175
====== ======
Deferred income taxes:
Fixed assets $ -
Intangible assets 22
------
$ 22
======
The valuation allowance increased by $1,299,000 because LSI, which
was acquired in 1997, had tax loss carryforwards that the Company is not
certain will be fully utilized. These losses of $4,700,000 are available
to offset future taxable income of LSI through the year 2008.
16PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Notes To Consolidated Financial Statements
5. Income Taxes (continued)
A provision has not been made for U.S. or additional foreign taxes on
$1,006,000 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.
6. 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 $659,000, $438,000, and
$120,000 in 1997, 1996, and 1995, respectively. Future minimum payments
due under noncancellable operating leases at January 3, 1998, are
$560,000 in 1998; $550,000 in 1999; $484,000 in 2000; $376,000 in 2001;
$398,000 in 2002; and $1,864,000 in 2003 and thereafter. Total future
minimum lease payments are $4,232,000. The Company also has operating
lease arrangements with related parties as discussed in Note 7.
7. 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 paid Thermo Electron
annually an amount equal to 1.0% of the Company's revenues in 1997 and
1996 and 1.2% of the Company's revenues in 1995. For these services, the
Company was charged $397,000, $304,000, and $72,000 in 1997, 1996, and
1995, respectively. Beginning in 1998, the Company will pay an annual fee
equal to 0.8% of the Company's revenues. The annual fee is reviewed and
adjusted annually by mutual agreement of the parties. 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. 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).
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 6, the Company
leases certain office and manufacturing space on a monthly basis from
Thermo Optek and Thermo Instrument. The accompanying statement of income
includes expenses from these arrangements of $238,000, $297,000, and
$91,000 in 1997, 1996, and 1995, respectively. Prior to January 1, 1997,
rent expense under these arrangements was determined as the Company's
17PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Notes To Consolidated Financial Statements
7. Related-party Transactions (continued)
allocated share of total occupancy expenses. Subsequently, the Company
pays fixed monthly rates. Effective for 1998, the annual rent under the
lease with Thermo Optek is $45,000. At January 3, 1998, future minimum
payments due under the lease with Thermo Instrument, which expires in
January 2006, are $213,000 in 1998; $223,000 in 1999; $234,000 in 2000;
$240,000 in 2001; $250,000 in 2002; and $835,000 in 2003 and thereafter.
Total future minimum lease payments are $1,995,000.
Long-term Obligations
The Company borrowed funds from Thermo Electron and Thermo Optek to
finance the acquisitions of certain companies (Note 2). In connection
with the July 1997 acquisition of Centro Vision, the Company borrowed
$3,800,000 from Thermo Electron pursuant to a promissory note due July
2000. In connection with the February 1997 acquisition of LSI and certain
related property additions, the Company borrowed $3,947,000 from Thermo
Optek pursuant to promissory notes due February 2000. These notes bear
interest at the 90-day Commercial Paper Composite Rate plus 25 basis
points, set at the beginning of each quarter. The interest rate for the
notes at year-end 1997 was 5.76%.
Short-term Obligation
Note payable in the accompanying balance sheet represents short-term
bank borrowings at the Company's foreign subsidiary. The Company has an
arrangement under which it may borrow on a bank line of credit
arrangement held by Thermo Optek. The interest rate for these borrowings
was 8.00% and 6.75% at year-end 1997 and 1996, respectively. Availability
to the Company under this line of credit totaled $2,042,000 as of January
3, 1998.
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 1997 and 1996 statements of income were
$2,122,000 and $1,952,000, respectively. Accounts receivable in the
accompanying balance sheet includes $608,000 and $442,000 due from LOT at
year-end 1997 and 1996, respectively.
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. In 1997 and 1996, the
Company recorded revenues of $91,000 and $15,000, respectively, under
this agreement.
Contract Research and Development
In 1997, 1996, and 1995, the Company recorded revenues of $80,000,
$188,000, and $418,000, respectively, from Thermo Optek for contract
research and development services related to components used in certain
products manufactured by Thermo Optek.
18PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Notes To Consolidated Financial Statements
7. Related-party Transactions (continued)
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 $2,013,000, $1,786,000, and
$2,514,000 in 1997, 1996, and 1995, respectively. Purchases of products
from such affiliated companies totaled $443,000, $971,000, and $1,465,000
in 1997, 1996, and 1995, respectively.
8. 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.
(In thousands) 1997 1996 1995
------------------------------------------------------------------------
Revenues:
United States $36,954 $28,780 $ 4,453
United Kingdom 2,740 1,654 1,573
------- ------- -------
$39,694 $30,434 $ 6,026
======= ======= =======
Income before provision for income
taxes:
United States (a) $ 3,939 $ 2,247 $ 59
United Kingdom 396 220 223
------- ------- -------
Operating income 4,335 2,467 282
Interest expense, net (286) (44) (31)
------- ------- -------
$ 4,049 $ 2,423 $ 251
======= ======= =======
Identifiable assets:
United States $44,836 $26,429 $ 5,476
United Kingdom 2,565 1,933 1,302
------- ------- -------
$47,401 $28,362 $ 6,778
======= ======= =======
Export revenues included in United
States revenues above (b):
Europe $ 5,321 $ 5,053 $ 140
Other 5,490 4,434 145
------- ------- -------
$10,811 $ 9,487 $ 285
======= ======= =======
(a) Includes corporate, general, and administrative expenses.
(b) In general, export sales are denominated in U.S. dollars.
19PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Notes To Consolidated Financial Statements
9. Earnings per Share
Basic and diluted earnings per share were calculated as follows:
(In thousands except per share amounts) 1997 1996 1995
-----------------------------------------------------------------------
Basic
Net income $ 2,348 $ 1,418 $ 147
------- ------- -------
Weighted average shares 6,983 6,909 6,909
------- ------- -------
Basic earnings per share $ .34 $ .21 $ .02
======= ======= =======
Diluted
Net income $ 2,348 $ 1,418 $ 147
------- ------- -------
Weighted average shares 6,983 6,909 6,909
Effect of stock options 2 - -
------- ------- -------
Weighted average shares, as adjusted 6,985 6,909 6,909
------- ------- -------
Diluted earnings per share $ .34 $ .21 $ .02
======= ======= =======
10. Unaudited Quarterly Information
(In thousands except per share amounts)
1997 First (a) Second Third (b) Fourth
-----------------------------------------------------------------------
Revenues $ 8,585 $ 9,225 $10,635 $11,249
Gross profit 3,759 4,089 4,806 4,889
Net income 528 566 608 646
Basic and diluted
earnings per share .08 .08 .09 .09
1996 First (c) Second Third Fourth
-----------------------------------------------------------------------
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
Basic and diluted
earnings per share .03 .07 .05 .05
(a) Reflects the February 1997 acquisition of LSI.
(b) Reflects the July 1997 acquisition of Centro Vision.
(c) Reflects the February 1996 acquisitions of Corion and Oriel.
20PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Report of Independent Public Accountants
To the Shareholders and Board of Directors of Thermo Vision Corporation:
We have audited the accompanying consolidated balance sheet of Thermo
Vision Corporation (a Delaware corporation and 78%-owned subsidiary of
Thermo Instrument Systems Inc.) and subsidiaries as of January 3, 1998,
and December 28, 1996, and the related consolidated statements of income,
cash flows, and shareholders' investment for each of the three years in
the period ended January 3, 1998. 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 January 3, 1998, and
December 28, 1996, and the results of their operations and their cash
flows for each of the three years in period ended January 3, 1998, in
conformity with generally accepted accounting principles.
Arthur Andersen LLP
Boston, Massachusetts
February 17, 1998
21PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Management's
Discussion and Analysis of Financial Condition and Results of Operations.
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," "seeks," "estimates," and similar expressions are
intended to identify forward-looking statements. There are a number of
important factors that could cause the results of the Company to differ
materially from those indicated by such forward-looking statements,
including those detailed immediately after this Management's Discussion
and Analysis of Financial Condition and Results of Operations under the
heading "Forward-looking Statements."
Overview
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 initially comprised two businesses: Scientific
Measurement Systems Inc. (now called Thermo Vision Colorado), a
manufacturer of optically based instruments, and CID Technologies Inc.
(CIDTEC), a manufacturer of sensors and cameras based on proprietary
charge-injection device (CID) technology. Since February 1996, the
Company has acquired four businesses from unrelated third parties that
currently constitute the bulk of its operations. In February 1996, the
Company acquired Oriel Corporation, a manufacturer and distributor of
photonics components and instruments, and Corion Corporation, a
manufacturer of commercial optical filters. In February 1997, the Company
acquired Laser Science, Inc. (LSI), a manufacturer of gas lasers. In July
1997, the Company acquired Centronic Inc. (now called Centro Vision,
Inc.), a manufacturer of silicon photodiodes. In addition, in August
1997, the Company acquired the crystal-materials business (Hilger) of
Hilger Analytical Limited, a wholly owned subsidiary of Thermo Optek
Corporation. Because the Company and Hilger were deemed for accounting
purposes to be under control of their common owner, Thermo Instrument
Systems Inc., the transaction has been accounted for at historical cost
in a manner similar to a pooling of interests. Accordingly, the results
of operations of Hilger are included for all periods presented. From the
time of the Company's incorporation in November 1995 to August 1997, the
crystal-materials business of Hilger Analytical was under the Company's
management.
Approximately 7% of the Company's 1997 revenues originated outside
the U.S. and approximately 27% of the Company's 1997 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 the Company's
U.S. operations are denominated in U.S. dollars. Although the Company
22PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Overview (continued)
seeks to charge its customers in the same currency as its operating
costs, the Company's financial performance and competitive position can
be affected by currency exchange rate fluctuations.
Results of Operations
1997 Compared With 1996
Revenues increased 30% to $39.7 million in 1997 from $30.4 million in
1996. Revenues increased $9.2 million due to the inclusion of revenues
from LSI, acquired in February 1997, and Centro Vision, acquired in July
1997, and the inclusion of revenues for the full year from Oriel and
Corion, acquired in February 1996. Revenues increased at Hilger due to
shipments under its Stanford Linear Accelerator contract, which commenced
in the second quarter of 1996. This increase was offset in part by lower
revenues at Oriel because the Company is no longer consolidating the
results of Andor Technology Limited (Note 1).
The gross profit margin was unchanged at 44% in 1997 and 1996.
Selling, general, and administrative expenses as a percentage of
revenues decreased to 23% in 1997 from 24% in 1996, due primarily to
lower selling and marketing expenses at Oriel during the year. Research
and development expenses increased to $4.1 million in 1997 from $3.5
million in 1996, due primarily to the inclusion of research and
development expenses at LSI and Centro Vision.
Interest expense of $0.3 million in 1997 primarily represents
interest incurred on the $3.6 million and $3.8 million promissory notes
issued to Thermo Optek and Thermo Electron Corporation, respectively, for
the acquisitions of LSI and Centro Vision, respectively.
The effective tax rate was 42% in 1997 and 41% in 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.
The Company is currently assessing the potential impact of the year
2000 on the processing of date-sensitive information by the Company's
computerized information systems and on products purchased by the
Company. The Company believes that its internal information systems are
either year 2000 compliant or will be so prior to the year 2000 without
incurring material costs. There can be no assurance, however, that the
Company will not experience unexpected costs and delays in achieving year
2000 compliance for its internal information systems, which could result
in a material adverse effect on the Company's future results of
operations.
The Company is presently assessing whether its key suppliers are
adequately addressing this issue and the effect this might have on the
Company. The Company has not completed its analysis and is unable to
conclude at this time that the year 2000 problem as it relates to
products purchased from key suppliers is not reasonably likely to have a
material adverse effect on the Company's future results of operations.
23PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
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 the Company'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 revenue 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.
Liquidity and Capital Resources
Consolidated working capital was $19.6 million at January 3, 1998,
compared with $5.6 million at December 28, 1996. Included in working
capital are cash and cash equivalents of $9.6 million at January 3, 1998,
compared with $0.3 million at December 28, 1996. In 1997, operating
activities provided $3.3 million of cash. The Company used $0.6 million
to fund an increase in inventory, primarily to support CIDTEC's new
dental imaging sensor, which was introduced in the first quarter of 1998.
The Company's investing activities used $8.9 million of cash during
1997, due primarily to $7.3 million, net of cash acquired, used to
acquire businesses (Note 2). The Company expended $1.5 million on
purchases of property, plant, and equipment during 1997 and plans to
expend approximately $1.9 million on such purchases during 1998.
The Company's financing activities provided $14.9 million of cash
during 1997, due primarily to borrowings of $7.7 million for acquisitions
(Note 2) and proceeds of $7.0 million from the Company's December 1997
initial public offering of common stock.
Hilger, the Company's foreign subsidiary, has a credit facility
arrangement for working capital needs (Note 7). Although the Company
generally expects to have positive cash flow from its existing
operations, the Company may require significant amounts of cash for any
acquisition of complementary businesses. The Company expects that it will
finance any such acquisitions through internal funds, additional debt or
equity financing from capital markets, or short- or long-term borrowings
from Thermo Instrument or Thermo Electron, although it has no agreement
with these companies to ensure that additional funds will be available on
acceptable terms or at all. The Company believes its existing resources
are sufficient to meet the capital requirements of its existing
businesses for the foreseeable future.
24PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Forward-looking Statements
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company wishes to caution
readers that the following important factors, among others, in some cases
have affected, and in the future could affect, the Company's actual
results and could cause its actual results in 1998 and beyond to differ
materially from those expressed in any forward-looking statements made
by, or on behalf of, the Company.
Risks Associated with Technological Change, Obsolescence, and the
Development and Acceptance of New Products. The market for the Company'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 the Company's products will not
become uncompetitive or obsolete. In addition, industry acceptance of new
applications for the Company's technologies developed by the Company 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
the Company's results of operations, financial condition, or business.
Risks Associated with Acquisition Strategy; No Assurance of a
Successful Acquisition Strategy. One of the Company's growth strategies
is to supplement its internal growth with the acquisition of businesses
and technologies that complement or augment the Company's existing
product lines. Since February 1996, the Company has acquired four
businesses from unrelated third parties that comprise the bulk of its
operations. Certain businesses that the Company 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 the
Company, the Company must successfully reduce expenses and improve market
penetration. No assurance can be given that the Company will be
successful in this regard. In many instances, acquisitions by the Company
will result in the Company 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 noncash 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 the Company will be able to complete pending or future
acquisitions. In order to finance any acquisitions, it may be necessary
for the Company to raise additional funds through additional public or
private financings. Any equity or debt financing, if available at all,
may be on terms which are not favorable to the Company and may result in
dilution to the Company's shareholders. In the past, a significant
portion of the funding for the Company's acquisitions has come from
Thermo Optek, Thermo Instrument, or Thermo Electron. Although Thermo
Electron and Thermo Instrument regularly fund acquisitions by their
25PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Forward-looking Statements
respective wholly and partially owned subsidiaries, neither Thermo
Electron nor Thermo Instrument has committed to fund any future
acquisitions by the Company. There can be no assurance that the Company
will be able to secure any such financing or that these factors will not
have a material adverse effect on the Company's results of operations,
financial condition, or business.
Intense Competition. The Company encounters and expects to continue
to encounter intense competition in the sale of its products. The Company
believes that the principal competitive factors affecting the market for
its products include product performance, price, reliability, and
customer service. The Company'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.; Hamamatsu Corporation, a
unit of Hamamatsu Photonic KK; and UDT Sensors, Inc., an Opto-Sensors
Company. Certain of these companies and certain of the Company's other
competitors have substantially greater financial, marketing, and other
resources than those of the Company. 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 the Company. 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 the Company'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 the Company's results of operations, financial
condition, or business.
Possible Adverse Impact of Significant International Sales. Sales
outside the United States account for a significant portion of the
Company's revenues, and the Company 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 the Company'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 the Company in foreign markets where payment for the Company'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 the Company's results of operations, financial condition, or
business.
26PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Forward-looking Statements
Risks Associated with Protection, Defense, and Use of Intellectual
Property. The Company 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 the
Company'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 the Company or that the claims
allowed under any issued patents will be sufficiently broad to protect
the Company's technology. In the absence of patent protection, the
Company may be vulnerable to competitors who attempt to copy the
Company's products or gain access to its trade secrets and know-how.
Proceedings initiated by the Company to protect its proprietary rights
could result in substantial costs to the Company. There can be no
assurance that competitors of the Company will not initiate litigation to
challenge the validity of the Company's patents or that they will not use
their resources to design comparable products that do not infringe the
Company's patents. There may also be pending or issued patents held by
parties not affiliated with the Company that relate to the Company's
products or technologies. The Company 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 the Company would prevail in any
such contest. The Company could incur substantial costs in defending
itself in suits brought against it or in suits in which the Company may
assert its patent rights against others. If the outcome of any such
litigation is unfavorable to the Company, the Company's results of
operations, financial condition, and business could be materially
adversely affected. In addition, the Company 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 the Company would have adequate remedies for any breach,
or that the Company's trade secrets will not otherwise become known or be
independently developed by competitors.
Potential Fluctuations in Quarterly Performance. The Company'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 the Company's operating expenses are based
on anticipated revenue levels and a high percentage of the Company'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.
Potential Impact of Year 2000 on Processing of Date-sensitive
Information. The Company is currently assessing the potential impact of
the year 2000 on the processing of date-sensitive information by the
Company's computerized information systems and on products purchased by
27PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Forward-looking Statements
the Company. The Company believes that its internal information systems
are either year 2000 compliant or will be so prior to the year 2000
without incurring material costs. There can be no assurance, however,
that the Company will not experience unexpected costs and delays in
achieving year 2000 compliance for its internal information systems,
which could result in a material adverse effect on the Company's future
results of operations.
The Company is presently assessing whether its key suppliers are
adequately addressing this issue and the effect this might have on the
Company. The Company has not completed its analysis and is unable to
conclude at this time that the year 2000 problem as it relates to
products purchased from key suppliers is not reasonably likely to have a
material adverse effect on the Company's future results of operations.
28PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Selected Financial Information
(In thousands except
per share amounts) 1997(a) 1996(b) 1995 1994 1993
-----------------------------------------------------------------------
Statement of Income
Data:
Revenues $39,694 $30,434 $ 6,026 $ 4,242 $ 2,397
Net income 2,348 1,418 147 146 66
Basic and diluted
earnings per share .34 .21 .02 .02 .01
Balance Sheet Data:
Working capital $19,639 $ 5,601 $ 570 $ (359) $ (673)
Total assets 47,401 28,362 6,778 6,776 2,059
Long-term obligations 7,747 - - - -
Shareholders'
investment 32,055 20,252 4,697 4,083 240
(a)Reflects the Company's December 1997 initial public offering of
common stock and the July 1997 and February 1997 acquisitions of
Centro Vision and LSI, respectively.
(b)Reflects the February 1996 acquisitions of Oriel and Corion.
29PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Common Stock Market Information
The Company's common stock is traded on the American Stock Exchange
under the symbol VIZ. The following table sets forth the high and low
sales prices of the Company's common stock since December 10, 1997, the
date the Company's common stock began trading on that exchange, as
reported in the consolidated transaction reporting system.
1997
---------------------
Quarter High Low
--------------------------------------------------------------------
Fourth $8 1/8 $7 1/2
As of January 30, 1998, the Company had 75 holders of record of its
common stock. This does not include holdings in street or nominee names.
The closing market price on the American Stock Exchange for the Company's
common stock on January 30, 1998, was $6 7/8 per share.
Shareholder Services
Shareholders of Thermo Vision Corporation who desire information
about the Company are invited to contact John N. Hatsopoulos, Chief
Financial Officer, Thermo Vision Corporation, 81 Wyman Street, P.O. Box
9046, Waltham, Massachusetts 02254-9046, (781) 622-1111. A mailing list
is maintained to enable shareholders whose stock is held in street name,
and other interested individuals, to receive quarterly reports, annual
reports, and press releases as quickly as possible. Distribution of
printed quarterly reports is limited to the second quarter only. All
material will be available from Thermo Electron's Internet site
(http://www.thermo.com/subsid/viz1.html).
Stock Transfer Agent
American Stock Transfer & Trust Company is the stock transfer agent
and maintains shareholder activity records. The agent will respond to
questions on issuance of stock certificates, change of ownership, lost
stock certificates, and change of address. For these and similar matters,
please direct inquiries to:
American Stock Transfer & Trust Company
Shareholder Services Department
40 Wall Street, 46th Floor
New York, New York 10005
(718) 921-8200
Dividend Policy
The Company has never paid cash dividends and does not expect to pay
cash dividends in the foreseeable future because its policy has been to
use earnings to finance expansion and growth. Payment of dividends will
rest within the discretion of the Board of Directors and will depend
upon, among other factors, the Company's earnings, capital requirements,
and financial condition.
30PAGE
<PAGE>
Thermo Vision Corporation 1997 Financial Statements
Form 10-K Report
A copy of the Annual Report on Form 10-K for the fiscal year ended
January 3, 1998, as filed with the Securities and Exchange Commission,
may be obtained at no charge by writing to John N. Hatsopoulos, Chief
Financial Officer, Thermo Vision Corporation, 81 Wyman Street, P.O. Box
9046, Waltham, Massachusetts 02254-9046.
Annual Meeting
The annual meeting of shareholders will be held on Monday, June 1,
1998, at 9 a.m. at the Hyatt Regency Hotel, Scottsdale, Arizona.
Exhibit 21
THERMO VISION CORPORATION
Subsidiaries of the Registrant
At February 20, 1998, the Registrant owned the following companies:
State or Registrant's
Jurisdiction % of
Name of Incorporation Ownership
-------------------------------- ------------------- ------------
Centro Vision, Inc. Delaware 100
CID Technologies Inc. New York 100
Hilger Crystals Limited United Kingdom 100
Laser Science, Inc. Delaware 100
Oriel Instruments Corporation Delaware 100
Oriel Foreign Sales Corporation U.S. Virgin Islands 100
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
VISION CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED JANUARY 3,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-END> JAN-03-1998
<CASH> 9,604
<SECURITIES> 0
<RECEIVABLES> 7,365
<ALLOWANCES> 430
<INVENTORY> 8,301
<CURRENT-ASSETS> 27,216
<PP&E> 7,196
<DEPRECIATION> 2,439
<TOTAL-ASSETS> 47,401
<CURRENT-LIABILITIES> 7,577
<BONDS> 0
0
0
<COMMON> 80
<OTHER-SE> 31,975
<TOTAL-LIABILITY-AND-EQUITY> 47,401
<SALES> 39,694
<TOTAL-REVENUES> 39,694
<CGS> 22,151
<TOTAL-COSTS> 22,151
<OTHER-EXPENSES> 4,143
<LOSS-PROVISION> 114
<INTEREST-EXPENSE> 327
<INCOME-PRETAX> 4,049
<INCOME-TAX> 1,701
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<DISCONTINUED> 0
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<NET-INCOME> 2,348
<EPS-PRIMARY> .34
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