SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------------------------------------------------
FORM 10-Q
(mark one)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarter Ended July 3, 1999
[ ] 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 Identification No.)
incorporation or organization)
8E Forge Parkway
Franklin, Massachusetts 02038
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 622-1000
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 such filing
requirements for the past 90 days. Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Class Outstanding at July 30, 1999
Common Stock, $.01 par value 8,051,626
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
THERMO VISION CORPORATION
Consolidated Balance Sheet
(Unaudited)
Assets
July 3, January 2,
(In thousands) 1999 1999
- ----------------------------------------------------------------------------------- ---------- ----------
Current Assets:
<S> <C> <C>
Cash and cash equivalents (includes $9,231 under repurchase agreement $ 198 $9,457
with affiliated company at January 2, 1999)
Advance to affiliate (Note 7) 6,767 -
Accounts receivable, less allowances of $335 and $246 5,966 5,487
Inventories:
Raw materials and supplies 5,535 5,090
Work in progress 608 585
Finished goods 1,755 2,156
Prepaid expenses 319 254
Prepaid income taxes 2,040 2,563
------- -------
23,188 25,592
------- -------
Property, Plant, and Equipment, at Cost 9,940 9,265
Less: Accumulated depreciation and amortization 4,036 3,410
------- -------
5,904 5,855
------- -------
Other Assets (Note 8) 2,579 836
------- -------
Cost in Excess of Net Assets of Acquired Companies (Note 5) 15,239 13,997
------- -------
$46,910 $46,280
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2
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THERMO VISION CORPORATION
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
July 3, January 2,
(In thousands except share amounts) 1999 1999
- ----------------------------------------------------------------------------------- ---------- ----------
Current Liabilities:
Notes payable and capital lease obligation (includes $3,947 due $ 4,875 $1,070
to Thermo Optek at July 3, 1999)
Accounts payable 2,805 2,335
Accrued payroll and employee benefits 975 912
Accrued installation and warranty expenses 482 346
Other accrued expenses (Note 5) 1,417 1,166
Due to Thermo Electron and affiliated companies 134 308
------- -------
10,688 6,137
------- -------
Deferred Income Taxes 217 217
------- -------
Long-term Obligations (includes $3,800 due to Thermo Electron in both 3,800 7,747
periods and $3,947 due to Thermo Optek at January 2, 1999)
------- -------
Shareholders' Investment:
Common stock, $.01 par value, 20,000,000 shares authorized; 81 80
8,051,576 and 8,048,276 shares issued and outstanding
Capital in excess of par value 28,040 28,031
Retained earnings 4,098 4,006
Deferred compensation (8) -
Accumulated other comprehensive items (Note 2) (6) 62
------- -------
32,205 32,179
------- -------
$46,910 $46,280
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
3
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THERMO VISION CORPORATION
Consolidated Statement of Income
(Unaudited)
Three Months Ended
July 3, July 4,
(In thousands except per share amounts) 1999 1998
- ----------------------------------------------------------------------------------- ----------- ----------
Revenues $ 9,919 $10,224
------- -------
Costs and Operating Expenses:
Cost of revenues 5,929 5,714
Selling, general, and administrative expenses 2,682 2,400
Research and development expenses 1,141 1,049
------- -------
9,752 9,163
------- -------
Operating Income 167 1,061
Interest Income 92 104
Interest Expense (12) (18)
Interest Expense, Related Party (98) (110)
------- -------
Income Before Provision for Income Taxes 149 1,037
Provision for Income Taxes 63 430
------- -------
Net Income $ 86 $ 607
======= =======
Basic and Diluted Earnings per Share (Note 3) $ .01 $ .08
======= =======
Weighted Average Shares (Note 3):
Basic 8,052 8,048
======= =======
Diluted 8,131 8,048
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
4
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THERMO VISION CORPORATION
Consolidated Statement of Income
(Unaudited)
Six Months Ended
July 3, July 4,
(In thousands except per share amounts) 1999 1998
- ----------------------------------------------------------------------------------- ----------- ----------
Revenues $19,115 $20,753
------- -------
Costs and Operating Expenses:
Cost of revenues 11,628 11,699
Selling, general, and administrative expenses 5,184 4,712
Research and development expenses 2,106 2,084
------- -------
18,918 18,495
------- -------
Operating Income 197 2,258
Interest Income 189 228
Interest Expense (27) (39)
Interest Expense, Related Party (200) (222)
------- -------
Income Before Provision for Income Taxes 159 2,225
Provision for Income Taxes 67 929
------- -------
Net Income $ 92 $ 1,296
======= =======
Basic and Diluted Earnings per Share (Note 3) $ .01 $ .16
======= =======
Weighted Average Shares (Note 3):
Basic 8,051 8,048
======= =======
Diluted 8,111 8,048
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
5
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THERMO VISION CORPORATION
Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended
July 3, July 4,
(In thousands) 1999 1998
- ----------------------------------------------------------------------------------- ----------- ----------
Operating Activities:
Net income $ 92 $ 1,296
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 955 774
Provision for losses on accounts receivable 61 -
Changes in current accounts, excluding the effects of acquisition:
Accounts receivable (398) 525
Inventories 207 (636)
Other current assets 605 164
Accounts payable 421 (774)
Other current liabilities 53 (490)
-------- -------
Net cash provided by operating activities 1,996 859
-------- -------
Investing Activities:
Acquisition (Note 5) (2,055) -
Advance for acquisition (Note 8) (1,000) -
Advances to affiliate, net (Note 7) (6,767) -
Purchases of property, plant, and equipment (516) (1,801)
Other (822) (169)
-------- -------
Net cash used in investing activities (11,160) (1,970)
-------- -------
Financing Activities:
Net decrease in short-term borrowings (89) (77)
Other - (121)
-------- -------
Net cash used in financing activities (89) (198)
-------- -------
Exchange Rate Effect on Cash (6) 2
-------- -------
Decrease in Cash and Cash Equivalents (9,259) (1,307)
Cash and Cash Equivalents at Beginning of Period 9,457 9,604
-------- -------
Cash and Cash Equivalents at End of Period $ 198 $ 8,297
======== =======
Noncash Activities:
Fair value of assets of acquired company $ 2,354 $ -
Cash paid for acquired company (2,055) -
-------- -------
Liabilities assumed of acquired company $ 299 $ -
======== =======
The accompanying notes are an integral part of these consolidated financial
statements.
6
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Notes to Consolidated Financial Statements
1. General
The interim consolidated financial statements presented have been prepared
by Thermo Vision Corporation (the Company) without audit and, in the opinion of
management, reflect all adjustments of a normal recurring nature necessary for a
fair statement of the financial position at July 3, 1999, the results of
operations for the three- and six-month periods ended July 3, 1999, and July 4,
1998, and the cash flows for the six-month periods ended July 3, 1999, and July
4, 1998. Interim results are not necessarily indicative of results for a full
year.
The consolidated balance sheet presented as of January 2, 1999, has been
derived from the consolidated financial statements that have been audited by the
Company's independent public accountants. The consolidated financial statements
and notes are presented as permitted by Form 10-Q and do not contain certain
information included in the annual financial statements and notes of the
Company. The consolidated financial statements and notes included herein should
be read in conjunction with the financial statements and notes included in the
Company's Annual Report on Form 10-K for the fiscal year ended January 2, 1999,
filed with the Securities and Exchange Commission.
2. Comprehensive Income
Comprehensive income combines net income and "other comprehensive items,"
which represents foreign currency translation adjustments, reported as a
component of shareholders' investment in the accompanying balance sheet. During
the second quarter of 1999 and 1998, the Company's comprehensive income totaled
$60,000 and $603,000, respectively. During the first six months of 1999 and
1998, the Company's comprehensive income totaled $24,000 and $1,310,000,
respectively.
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3. Earnings per Share
Basic and diluted earnings per share were calculated as follows:
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
July 3, July 4, July 3, July 4,
(In thousands except per share amounts) 1999 1998 1999 1998
- ------------------------------------------------------------- ---------- ----------- ---------- ----------
Basic
Net Income $ 86 $ 607 $ 92 $1,296
----- ------ ----- ------
Weighted Average Shares 8,052 8,048 8,051 8,048
----- ------ ----- ------
Basic Earnings per Share $ .01 $ .08 $ .01 $ .16
===== ====== ===== ======
Diluted
Net Income $ 86 $ 607 $ 92 $1,296
----- ------ ----- ------
Weighted Average Shares 8,052 8,048 8,051 8,048
Effect of Stock Options 79 - 60 -
----- ------ ----- ------
Weighted Average Shares, as Adjusted 8,131 8,048 8,111 8,048
----- ------ ----- ------
Diluted Earnings per Share $ .01 $ .08 $ .01 $ .16
===== ====== ===== ======
7
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3. Earnings per Share (continued)
The computation of diluted earnings per share for each period excludes the
effect of assuming the exercise of certain outstanding stock options because the
effect would be antidilutive. As of July 3, 1999, there were 172,000 of such
options outstanding, with exercise prices ranging from $7.29 to $7.50 per share.
4. Business Segment Information
Three Months Ended Six Months Ended
July 3, July 4, July 3, July 4,
(In thousands) 1999 1998 1999 1998
- ------------------------------------------------------------- ---------- ----------- ---------- ----------
Revenues:
Optically Based Instruments and Lasers $5,300 $ 5,861 $10,596 $12,333
Optical Components 2,765 2,335 4,953 4,595
Sensors and Imaging Systems 1,854 2,028 3,566 3,825
------ ------- ------ -------
$9,919 $10,224 $19,115 $20,753
====== ======= ======= =======
Income Before Provision for Income Taxes:
Optically Based Instruments and Lasers $ 554 $ 833 $1,107 $ 1,922
Optical Components 318 418 465 759
Sensors and Imaging Systems (400) 134 (775) 183
Corporate (a) (305) (324) (600) (606)
------ ------- ------ -------
Total operating income 167 1,061 197 2,258
Interest expense, net (18) (24) (38) (33)
------ ------- ------ -------
$ 149 $ 1,037 $ 159 $ 2,225
====== ======= ====== =======
(a) Primarily general and administrative expenses.
5. Acquisition
On February 1, 1999, the Company acquired the assets, subject to certain
liabilities, of Opticon Corporation (now called Thermo Vision Opticon
Corporation), a manufacturer of replicated optical components and assemblies,
for $2,055,000 in cash. This acquisition has been accounted for using the
purchase method of accounting and its results have been included in the
Company's results from the date of acquisition. The cost of this acquisition
exceeded the estimated fair value of the acquired net assets by $1,487,000,
which is being amortized over 40 years. Allocation of the purchase price for
this acquisition was based on an estimate of the fair value of the net assets
acquired and is subject to adjustment upon finalization of the purchase price
allocation. The Company has gathered no information that indicates the final
allocation will differ materially from the preliminary estimates. Pro forma
results have not been presented, as the results of the acquired business were
not material to the Company's results of operations.
The Company has undertaken restructuring activities at certain acquired
businesses. The Company's restructuring activities, which were accounted for in
accordance with Emerging Issues Task Force Pronouncement (EITF) 95-3, primarily
have included reductions in staffing levels and the abandonment of excess
facilities. In connection with these restructuring activities, as part of the
cost of acquisitions, the Company established reserves, primarily for severance
and excess facilities. In accordance with EITF 95-3, the Company finalizes its
restructuring plans no later than one year from the respective dates of the
acquisitions. Unresolved matters at July 3, 1999,
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5. Acquisition (continued)
primarily included completion of anticipated severances at Opticon. A summary of
the changes in accrued acquisition expenses, which are included in other accrued
expenses in the accompanying balance sheet, follows:
Abandonment
of Excess
(In thousands) Severance Facilities Total
- --------------------------------------------------------------- -------------- ------------- -------------
<S> <C> <C> <C>
Balance at January 2, 1999 $ 59 $ 6 $ 65
Reserves established 60 - 60
Usage (56) (6) (62)
Decrease due to finalization of restructuring plan, recorded (7) - (7)
as a decrease to cost in excess of net assets of acquired
companies
---- --- ----
Balance at July 3, 1999 $ 56 $ - $ 56
==== === ====
6. Proposed Merger
On May 24, 1999, Thermo Electron Corporation announced an expansion to a
previously proposed reorganization plan involving certain of Thermo Electron's
subsidiaries. Under this expanded plan, the Company may be taken private and
become a wholly owned subsidiary of Thermo Instrument Systems Inc. The
stockholders of the Company (other than Thermo Electron and Thermo Instrument)
would receive cash in exchange for their shares. In July, the Company's Board of
Directors unanimously approved a definitive merger agreement under which its
parent, Thermo Instrument, would acquire all of the outstanding Thermo Vision
common stock (other than shares held by Thermo Electron and Thermo Instrument)
for $7 per share in cash, without interest. For the transaction to be completed,
the Securities and Exchange Commission must review documents regarding the
proposed transaction, holders of a majority of outstanding Thermo Vision shares
(excluding Thermo Electron, Thermo Instrument, and the officers and directors of
the Company, Thermo Electron, and Thermo Instrument) must vote at a special
stockholders meeting to approve the proposed merger, and certain customary
conditions must be met.
On July 15, 1999, a lawsuit styled as a class action was filed by a
stockholder of the Company against Thermo Instrument and certain directors of
the Company in the Chancery Court of the State of Delaware. The complaint
alleges that the proposed Thermo Vision going private transaction would deprive
the Company's stockholders of the fair value of their shares of the Company's
common stock. The plaintiff is seeking injunctive and other appropriate relief,
although no specific amount of monetary damages were claimed.
7. Cash Management Arrangement
Effective June 1, 1999, the Company and Thermo Electron commenced use of a
new domestic cash management arrangement. Under the new arrangement, amounts
advanced to Thermo Electron by the Company for domestic cash management purposes
bear interest at the 30-day Dealer Commercial Paper Rate plus 50 basis points,
set at the beginning of each month. Thermo Electron is contractually required to
maintain cash, cash equivalents, and/or immediately available bank lines of
credit equal to at least 50% of all funds invested under this cash management
arrangement by all Thermo Electron subsidiaries other than wholly owned
subsidiaries. The Company has the contractual right to withdraw its funds
invested in the cash management arrangement upon 30 days' prior notice. Amounts
invested in this arrangement are included in "advance to affiliate" in the
accompanying balance sheet.
8. Subsequent Event
On July 16, 1999, the Company acquired the assets of the
non-telecommunications optical filter business of Corning OCA Corporation (OCA)
for $4,000,000 in cash. During the second quarter of 1999, the Company paid an
advance towards the purchase of OCA of $1,000,000, which is included in other
assets in the accompanying 1999 balance sheet. The remaining $3,000,000 was paid
on July 16, 1999. The acquisition will be accounted for using the purchase
method of accounting and its results will be included in the Company's results
from the date of acquisition.
9
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Item 2 - 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 under the heading "Forward-looking
Statements" in Exhibit 13 to the Company's Annual Report on Form 10-K for the
fiscal year ended January 2, 1999, filed with the Securities and Exchange
Commission.
Overview
The Company designs, manufactures, and markets a diverse array of
photonics products - light-based technologies that are embedded as "enabling
technologies" in a wide range of applications, including medical diagnostic and
analytical instrumentation; semiconductor manufacturing; X-ray imaging; and
physics, chemistry, and biology research.
The Company organizes and manages its business by individual functional
operating entity. The Company's businesses operate in three segments: Optically
Based Instruments and Lasers, Optical Components, and Sensors and Imaging
Systems. The Optically Based Instruments and Lasers segment, which consists of
the Company's Oriel Corporation, Laser Science, Inc. (LSI), and Thermo Vision
Colorado subsidiaries, manufactures low-cost analyzers that combine optical
components and signal processors used primarily in research, analytical, and
process applications such as semiconductor photolithography. In addition, this
segment manufactures pulsed nitrogen lasers, nitrogen laser accessories, pulsed
CO(2) lasers, and autosamplers sold as accessories to analytical instruments.
The Optical Components segment, which consists of the Company's recently
acquired Thermo Vision Opticon Corporation subsidiary (Note 5), its Corion
division, and its Hilger Crystals subsidiary, manufactures a variety of optical
components, including filters and crystals. The Company's optical components are
used primarily in medical and analytical instruments and X-ray baggage screening
for security purposes. In July 1999, this segment acquired the assets of the
non-telecommunications optical filter business of Corning OCA Corporation (Note
8).
The Sensors and Imaging Systems segment, which consists of the Company's
CentroVision, Inc. and CID Technologies Inc. (CIDTEC) subsidiaries, manufactures
sensors that are primarily used by manufacturers of medical diagnostic and
analytical instruments. This segment also designs and markets charge-injection
device (CID) sensors and CID camera systems.
Approximately 7% of the Company's 1998 revenues originated outside the
U.S. and approximately 28% of the Company's 1998 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 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
Second Quarter 1999 Compared With Second Quarter 1998
Revenues were $9.9 million in the second quarter of 1999, compared to
$10.2 million in the second quarter of 1998. Revenues increased $0.6 million due
to the inclusion of revenues from Thermo Vision Opticon, which was acquired in
February 1999. Optically Based Instruments and Lasers segment revenues decreased
$0.6 million, primarily as a result of continuing softness in the semiconductor
industry and the continuing economic uncertainty in
10
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Second Quarter 1999 Compared With Second Quarter 1998 (continued)
Asia. Excluding the acquisition of Thermo Vision Opticon, Optical Components
segment revenues decreased $0.2 million, primarily due to the completion of
shipments under Hilger's Stanford Linear Accelerator contract during the second
quarter of 1998. Sensors and Imaging System segment revenues decreased $0.2
million. An increase in revenues due to recently introduced dental imagers at
CIDTEC was more than offset by a decrease in revenues at CentroVision due to a
general decline in customer demand.
The gross profit margin decreased to 40% in the second quarter of 1999
from 44% in the second quarter of 1998. The decrease was primarily due to higher
cost of sales in the Sensors and Imaging Systems segment as a result of
continuing production startup costs related to CIDTEC's dental imager. The lower
gross profit margin arising from such costs contributed to an operating loss in
this segment in the 1999 period, compared with marginally profitable operations
in the 1998 period (Note 4). To a lesser extent, the gross profit margin
decreased due to the inclusion of results from Thermo Vision Opticon, which had
a gross margin of 29% during the period.
Selling, general, and administrative expenses as a percentage of revenues
increased to 27% in the second quarter of 1999 from 23% in the second quarter of
1998, primarily in the Optically Based Instruments and Lasers segment due to
decreased revenues and increased marketing expenses at Oriel. To a lesser
extent, the increase resulted from decreased revenues and increased building
maintenance costs in the Optical Components segment. Research and development
expenses were relatively unchanged at $1.1 million in 1999 and $1.0 million in
1998.
Interest income and related-party interest expense were unchanged at $0.1
million in the second quarter of 1999 and 1998.
The effective tax rate was 42% in the second quarter of 1999, compared
with 41% in the second quarter of 1998. The effective tax rate exceeded the
statutory federal income tax rate primarily due to the impact of nondeductible
amortization of cost in excess of net assets of acquired companies and state
income taxes.
First Six Months 1999 Compared With First Six Months 1998
Revenues were $19.1 million in the first six months of 1999, compared to
$20.8 million in the first six months of 1998. Revenues increased $1.0 million
due to the inclusion of revenues from Thermo Vision Opticon, which was acquired
in February 1999. Excluding the effect of the acquisition, revenues decreased
$2.6 million. Revenues decreased at all segments, primarily due to the reasons
discussed in the results of operations for the second quarter.
The gross profit margin decreased to 39% in the first six months of 1999
from 44% in the first six months of 1998. The decrease was primarily due to
higher cost of sales in the Sensors and Imaging Systems segment as discussed in
the results of operations for the second quarter of 1999.
Selling, general, and administrative expenses as a percentage of revenues
increased to 27% in the first six months of 1999 from 23% in the first six
months of 1998, primarily due to decreased revenues in the Optically Based
Instruments and Lasers and Optical Components segments. Selling, general, and
administrative expenses increased to $5.2 million in 1999 from $4.7 million in
1998, primarily due to the inclusion of $0.3 million of costs at Thermo Vision
Opticon and increased marketing expenses at Oriel. Research and development
expenses were unchanged at $2.1 million in 1999 and 1998.
Interest income and related-party interest were unchanged at $0.2 million
in the first six months of 1999 and 1998.
The effective tax rate was 42% in the first six months of 1999 and 1998.
The effective tax rate exceeded the statutory federal income tax rate primarily
due to the effect of nondeductible amortization of cost in excess of net assets
of acquired companies and state income taxes.
11
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Liquidity and Capital Resources
Consolidated working capital was $12.5 million at July 3, 1999, compared
with $19.5 million at January 2, 1999. Included in working capital are cash and
cash equivalents of $0.2 million at July 3, 1999, compared with $9.5 million at
January 2, 1999. In addition, as of July 3, 1999, the Company had $6.8 million
invested in an advance to affiliate. Prior to the use of a new domestic cash
management arrangement between the Company and Thermo Electron Corporation (Note
7), which became effective June 1, 1999, amounts invested with Thermo Electron
were included in cash and cash equivalents. In the first six months of 1999,
operating activities provided $2.0 million of cash, including a 1998 federal
income tax refund of $0.7 million.
Excluding advances to affiliate activity (Note 7), the Company's primary
investing activities during the first six months of 1999 were related to
acquisitions and capital expenditures. In February 1999, the Company purchased
Thermo Vision Opticon for $2.1 million in cash (Note 5). In May 1999, the
Company paid an advance of $1.0 million for the acquisition of the assets of the
non-telecommunications optical filter business of Corning OCA Corporation (OCA),
which was acquired in July 1999 for a total purchase price of $4.0 million in
cash (Note 8). The Company expended $0.5 million on purchases of property,
plant, and equipment, and plans to make capital expenditures of approximately
$2.9 million on such purchases during the remainder of 1999, including $1.9
million for additions related to the relocation of OCA to the Company's Corion
facility and $0.2 million for the purchase by Hilger of a building.
Hilger, the Company's foreign subsidiary, has a credit facility
arrangement for working capital needs. 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 and/or
short- or long-term borrowings from Thermo Instrument Systems Inc. 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 maturity
of the Company's debt to Thermo Optek Corporation in February 2000 and to Thermo
Electron in July 2000 could adversely affect the Company's liquidity. Excluding
debt to affiliates, the Company believes its existing resources are sufficient
to meet the capital requirements of its existing businesses for the foreseeable
future.
Year 2000
The following information constitutes a "Year 2000 Readiness Disclosure"
under the Year 2000 Information and Readiness Disclosure Act. The Company
continues to assess the potential impact of the year 2000 date recognition issue
on the Company's internal business systems, products, and operations. The
Company's year 2000 initiatives include (i) testing and upgrading significant
information technology systems and facilities; (ii) testing and developing
upgrades, if necessary, for the Company's current products and certain
discontinued products; (iii) assessing the year 2000 readiness of its key
suppliers and vendors; and (iv) developing a contingency plan.
The Company's State of Readiness
The Company has implemented a compliance program to ensure that its
critical information technology systems and non-information technology systems
will be ready for the year 2000. The first phase of the program, testing and
evaluating the Company's critical information technology systems and
non-information technology systems for year 2000 compliance, has largely been
completed. During phase one, the Company tested and evaluated its significant
computer systems, software applications, and related equipment for year 2000
compliance. The Company also evaluated the potential year 2000 impact on its
critical non-information technology systems, which efforts included testing the
year 2000 readiness of its manufacturing, utility, and telecommunications
systems at its critical facilities. The Company is currently in phase two of its
program, during which any material noncompliant systems or non-information
technology systems that were identified during phase one are prioritized and
remediated. Based on its evaluations of its critical non-information technology
systems, the Company does not believe any material upgrades or modifications are
required. The Company is currently upgrading or replacing its material
noncompliant information
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Year 2000 (continued)
technology systems, and this process was approximately 80% complete as of July
3, 1999. In many cases, such upgrades or replacements are being made in the
ordinary course of business, without accelerating previously scheduled upgrades
or replacements. The Company expects that all of its material information
technology systems and critical non-information technology systems will be year
2000 compliant by the end of 1999.
The Company has also implemented a compliance program to test and evaluate
the year 2000 readiness of the material products that it currently manufactures
and sells. Very few of the Company's products interface with computers and the
Company believes that all of its material products are year 2000 compliant.
However, there can be no assurance that the Company has identified all of the
year 2000 problems with its current products.
The Company is in the process of identifying and assessing the year 2000
readiness of key suppliers and vendors that are believed to be significant to
the Company's business operations. As part of this effort, the Company has
developed and has distributed questionnaires relating to year 2000 compliance to
its significant suppliers and vendors. To date, no significant supplier or
vendor has indicated that it believes its business operations will be materially
disrupted by the year 2000 issue. The Company has started to follow up with
significant suppliers and vendors that have not responded to the Company's
questionnaires. The Company has completed the majority of its assessment of
third-party risk, and expects to be substantially complete by the end of
September 1999.
Contingency Plan
The Company is developing a contingency plan that will allow its primary
business operations to continue despite disruptions due to year 2000 problems.
This plan may include identifying and securing other suppliers, increasing
inventories, and modifying production facilities and schedules. As the Company
continues to evaluate the year 2000 readiness of its business systems and
facilities, products and significant suppliers, and vendors, it will modify and
adjust its contingency plan as may be required. The Company expects to complete
its contingency plan by October 1999.
Estimated Costs to Address the Company's Year 2000 Issues
To date, costs incurred in connection with the year 2000 issue have not
been material. The Company does not expect total year 2000 remediation costs to
be material, but there can be no assurance that the Company will not encounter
unexpected costs or delays in achieving year 2000 compliance. Year 2000 costs
were funded from working capital. All internal costs and related external costs,
other than capital additions, related to year 2000 remediation have been and
will continue to be expensed as incurred. The Company does not track internal
costs incurred for its year 2000 compliance project. Such costs are principally
the related payroll costs for its information systems group.
Reasonably Likely Worst Case Scenario
At this point in time, the Company is not able to determine the most
reasonably likely worst case scenario to result from the year 2000 issue. One
possible worst case scenario would be that certain of the Company's material
suppliers or vendors experience business disruptions due to the year 2000 issue
and are unable to provide materials and services to the Company on time. The
Company's operations could be delayed or temporarily shut down, and it could be
unable to meet its obligations to customers in a timely fashion. The Company's
business, operations, and financial condition could be adversely affected in
amounts that cannot be reasonably estimated at this time. If the Company
believes that any of its key suppliers or vendors may not be year 2000 ready, it
will seek to identify and secure other suppliers or vendors as part of its
contingency plan.
13
<PAGE>
Year 2000 (continued)
Risks of the Company's Year 2000 Issues
While the Company is attempting to minimize any negative consequences
arising from the year 2000 issue, there can be no assurance that year 2000
problems will not have a material adverse impact on the Company's business,
operations, or financial condition. While the Company expects that upgrades to
its internal business systems will be completed in a timely fashion, there can
be no assurance that the Company will not encounter unexpected costs or delays.
Despite its efforts to ensure that its material current products are year 2000
compliant, the Company may see an increase in warranty and other claims,
especially those related to Company products that incorporate, or operate using,
third-party software or hardware. In addition, certain of the Company's older
products, which it no longer manufactures or sells, may not be year 2000
compliant, which may expose the Company to claims. As discussed above, if any of
the Company's material suppliers or vendors experience business disruptions due
to year 2000 issues, the Company might also be materially adversely affected.
There is expected to be a significant amount of litigation relating to the year
2000 issue and there can be no assurance that the Company will not incur
material costs in defending or bringing lawsuits. In addition, if any year 2000
issues are identified, there can be no assurance that the Company will be able
to retain qualified personnel to remedy such issues. Any unexpected costs or
delays arising from the year 2000 issue could have a material adverse impact on
the Company's business, operations, and financial condition in amounts that
cannot be reasonably estimated at this time.
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
The Company's exposure to market risk from changes in foreign currency
exchange rates has not changed materially from its exposure at year-end 1998.
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
On May 27, 1999, at the Annual Meeting of Shareholders, the shareholders
elected five incumbent directors to a one-year term expiring in 2000. The
directors elected at the meeting were: Dr. D. Allan Bromley, Dr. Elias P.
Gyftopoulos, Ms. Kristine Stotz Langdon, Mr. Earl R. Lewis, and Ms. Melissa F.
Riordan. Dr. Bromley, Ms. Langdon, and Ms. Riordan each received 7,698,771
shares voted in favor of his or her election and 8,718 shares voted against. Dr.
Gyftopoulos received 7,698,701 shares voted in favor of his election and 8,788
shares voted against. Mr. Lewis received 7,695,450 shares voted in favor of his
election and 12,039 shares voted against. No abstentions or broker nonvotes were
recorded on the election of directors.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
See Exhibit Index on the page immediately preceding exhibits.
(b) Reports on Form 8-K
On May 25, 1999, the Company filed a Current Report on Form 8-K, dated May
24, 1999, with respect to a proposed merger of the Company into its parent
corporation, Thermo Instrument Systems Inc.
On June 15, 1999, the Company filed a Current Report on Form 8-K, dated
June 15, 1999, with respect to the resignation of the Company's president and
chief executive officer.
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SIGNATURES
Pursuant to the requirements 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 as of the 10th day of August 1999.
THERMO VISION CORPORATION
/s/ Paul F. Kelleher
Paul F. Kelleher
Chief Accounting Officer
/s/ Theo Melas-Kyriazi
Theo Melas-Kyriazi
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
2.1 Purchase and Sale Agreement dated as of May 12, 1999, by and
between the Registrant and Corning OCA Corporation (filed as
Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed
July 28, 1999 [File No. 1-13391] and incorporated herein by
reference).
2.2 Amendment Agreement dated July 15, 1999, between the Registrant
and Corning OCA Corporation (filed as Exhibit 2.2 to the
Registrant's Current Report on Form 8-K filed July 28, 1999 [File
No. 1-13391] and incorporated herein by reference).
10.1 Master Cash Management, Guarantee Reimbursement and Loan
Agreement dated as of June 1, 1999, between the Registrant and
Thermo Electron Corporation.
10.2 Separation Agreement dated as of June 15, 1999, between the
Registrant and Kristine Stotz Langdon.
10.3 Amended and Restated Deferred Compensation Plan for Directors of
the Registrant.
10.4 Agreement and Plan of Merger dated as of July 13, 1999, by and
among Thermo Instrument Systems Inc., VIZ Acquisition Corporation,
and the Registrant (filed as Exhibit 2.1 to the Registrant's Current
Report on Form 8-K filed July 13, 1999 [File No. 1-13391] and
incorporated herein by reference).
27 Financial Data Schedule.
</TABLE>
MASTER CASH MANAGEMENT, GUARANTEE
REIMBURSEMENT AND LOAN AGREEMENT
This AGREEMENT is entered into as of the 1st day of June, 1999 by and
between Thermo Electron Corporation, a Delaware corporation ("Thermo Electron")
and Thermo Vision Corporation, a Delaware corporation (the "Subsidiary").
WITNESSETH:
WHEREAS, Thermo Electron and the Subsidiary are party to a Master
Repurchase Agreement, as amended and restated, which contains terms governing a
cash management arrangement between them and a Master Guarantee Reimbursement
and Loan Agreement, as amended and restated, which contains terms relating to
intercompany credit support and a short term borrowing facility;
WHEREAS, Thermo Electron and the Subsidiary desire to establish a new cash
management arrangement and short term borrowing facility between them in lieu of
the arrangements set forth in the Master Repurchase Agreement and the Master
Guarantee Reimbursement and Loan Agreement and also to consolidate the terms
relating to intercompany credit support in one agreement;
WHEREAS, the Subsidiary and other majority owned subsidiaries of Thermo
Electron that join in this Agreement (collectively, the "Majority-Owned
Subsidiaries") and their wholly-owned subsidiaries wish to enter into various
financial transactions, such as convertible or nonconvertible debt, loans,
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 Thermo Electron ("Credit Support
Obligations");
WHEREAS, the Majority Owned Subsidiaries and Thermo Electron 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 Thermo Electron (a "Parent Guarantee") or
without obtaining Credit Support Obligations from other Majority Owned
Subsidiaries;
WHEREAS, certain Majority Owned Subsidiaries ("Second Tier Majority Owned
Subsidiaries") may themselves be majority owned subsidiaries of other Majority
Owned Subsidiaries ("First Tier Majority Owned Subsidiaries");
WHEREAS, for various reasons, Parent Guarantees of a Second Tier Majority
Owned Subsidiary's Underlying Obligations may be demanded and given without the
respective First Tier Majority Owned Subsidiary also issuing a guarantee of such
Underlying Obligation;
WHEREAS, Thermo Electron may itself make a loan or provide other credit to
a Second Tier Majority Owned Subsidiary or its wholly-owned subsidiaries under
circumstances where the applicable First Tier Majority Owned Subsidiary does not
provide such credit; and
<PAGE>
WHEREAS, Thermo Electron 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, 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. Cash Management Arrangement. The Subsidiary directly, or through its
wholly-owned U.S. subsidiaries, may, from time to time, lend its excess cash to
Thermo Electron (a "Transaction"), on an unsecured basis, bearing interest at a
rate equal to the 30-day Dealer Commercial Paper Rate as reported in the Wall
Street Journal (the "DCP Rate") plus 50 basis points, which rate shall be
adjusted on the second business day of each fiscal month of the Subsidiary and
shall be in effect for the entirety of such fiscal month. The Subsidiary shall
institute a Transaction by depositing its excess cash in the Subsidiary's
concentration account at BankBoston Corporation ("BankBoston") or other bank
designated by Thermo Electron. At the end of each business day, the cash balance
deposited in the Subsidiary's concentration account shall be transferred to
Thermo Electron's intercompany account at BankBoston or other bank designated by
Thermo Electron. Thermo Electron shall indicate on its books the balance of the
Subsidiary's cash held by Thermo Electron under this arrangement. After each
fiscal month end, Thermo Electron shall provide the Subsidiary a report
indicating the Subsidiary's aggregate cash balance ("Excess Cash") held by
Thermo Electron hereunder. The Subsidiary shall have the right to withdraw all
or part of its Excess Cash upon 30 days' prior notice to Thermo Electron. Within
30 days of receipt of such withdrawal notice, Thermo Electron shall transfer the
portion of the Excess Cash requested for withdrawal to an account designated by
the Subsidiary. Thermo Electron shall maintain, at all times, cash, cash
equivalents and/or immediately available bank lines of credit equal to at least
50% of the cash balances of the Subsidiary and of all other participating
subsidiaries of Thermo Electron, other than wholly-owned subsidiaries of Thermo
Electron, held by Thermo Electron under this arrangement. Interest shall be
payable on the Excess Cash by Thermo Electron to the Subsidiary each fiscal
month in arrears. In addition, the Subsidiary's non-U.S. subsidiaries may, from
time to time, lend or advance their excess cash to Thermo Electron, on an
unsecured basis, bearing interest at rates set by Thermo Electron at the
beginning of each month, based to the extent practicable on comparable interest
rates generally available in the local jurisdiction of such participating
non-U.S. subsidiary. Further, Thermo Electron and such non-U.S. subsidiaries
participating in the cash management arrangement with Thermo Electron shall
establish mutually agreeable procedures governing such cash management
arrangement.
2. Loans and Advances. Upon request from the Subsidiary, Thermo Electron
may make loans and advances to the Subsidiary on a short-term, revolving credit
basis, from time to time, in such amounts as mutually determined by Thermo
Electron and the Subsidiary. The aggregate principal amount of such loans and
advances shall be reflected on the books and records of the Subsidiary and
Thermo Electron. All such loans and advances shall be on an unsecured basis
unless specifically provided otherwise in separate loan documents executed at
that time. The Subsidiary shall pay interest on the aggregate unpaid principal
amount of such loans from time to time outstanding at a rate equal to the DCP
Rate plus one hundred fifty (150) basis points, which rate shall be adjusted on
2
<PAGE>
the second business day of each fiscal month of the Subsidiary and shall be in
effect for the entirety of such fiscal month. If, however, one or more of the
Subsidiary's majority-owned U.S. subsidiaries (i.e., not wholly-owned) is also
participating in the cash management arrangement with Thermo Electron, then the
rate payable on the Subsidiary's outstanding principal balance shall be
calculated as follows: If the aggregate amount of the Subsidiary's
majority-owned U.S. subsidiaries' cash balances under the cash management
arrangement ("Majority-Owned Excess Cash") equals or exceeds the Subsidiary's
outstanding principal balance, then the Subsidiary shall pay interest on the
aggregate unpaid principal amount of such loans at a rate per annum equal to the
DCP Rate plus fifty (50) basis points. If the aggregate amount of the
Majority-Owned Excess Cash is less than the Subsidiary's outstanding principal
balance, then (A) the Subsidiary shall pay interest at a rate per annum equal to
the DCP Rate plus fifty (50) basis points on that portion of the unpaid
principal amount equal to the Majority-Owned Excess Cash, and (B) the Subsidiary
shall pay interest at a rate per annum equal to the DCP Rate plus one hundred
fifty (150) basis points on that portion of the unpaid principal amount equal to
(i) the Subsidiary's outstanding principal balance, minus (ii) the
Majority-Owned Excess Cash. The interest rates set forth in the prior two
sentences shall be adjusted on the second business day of each fiscal month of
the Subsidiary and shall be in effect for the entirety of such fiscal month.
Interest shall be computed on a 360-day basis. Interest is payable each fiscal
month in arrears. The aggregate principal amount outstanding shall be payable
within 30 days of demand by Thermo Electron. Overdue principal and interest
shall bear interest at a rate per annum equal to the rate of interest published
from time to time in the Wall Street Journal as the "prime rate" plus one
percent (1%). The principal and accrued interest may be paid by the Subsidiary
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. At the end of each business day, Thermo Electron shall apply the
balance of the Subsidiary's Excess Cash held by Thermo Electron under the cash
management arrangement toward the payment of any loans or advances to the
Subsidiary. Principal and interest shall be payable in lawful money of the
United States of America, in immediately available funds, at the principal
office of Thermo Electron or at such other place as Thermo Electron may
designate from time to time in writing to the Subsidiary. The unpaid principal
amount of any such borrowings, and accrued interest thereon, shall become
immediately due and payable, without demand, upon occurrence of any of the
following events:
(a) the failure of the Subsidiary to pay any amount due hereunder within
fifteen (15) days of the date when due;
(b) the failure of the Subsidiary to pay its debts as they become due, the
filing by or against the Subsidiary 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 Subsidiary 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 material property of
the Subsidiary;
(c) the sale by the Subsidiary of all or substantially all of its assets;
3
<PAGE>
(d) the merger or consolidation of the Subsidiary with or into any other
corporation in a transaction in which the Subsidiary is not the surviving
entity;
(e) the issuance of any writ of attachment, by trustee process or
otherwise, or any restraining order or injunction against or affecting the
person or property of the Subsidiary that is not removed, repealed or
dismissed within thirty (30) days of issuance and as a result has a
material adverse effect on the business, operations, assets or condition,
financial or otherwise, of the Subsidiary or its ability to discharge any
of its liabilities or obligations to Thermo Electron; and
(f) the suspension of the transaction of the usual business of the
Subsidiary.
3. Guarantee Arrangements.
(a) If Thermo Electron provides a Parent Guarantee of an Underlying
Obligation, and the beneficiary(ies) of the Parent Guarantee enforce the
Parent Guarantee, or Thermo Electron performs under the Parent Guarantee
for any other reason, then the Majority Owned Subsidiary that is
obligated, either directly or indirectly through a wholly-owned
subsidiary, under such Underlying Obligation shall indemnify and save
harmless Thermo Electron from any liability, cost, expense or damage
(including reasonable attorneys' fees) suffered by Thermo Electron as a
result of the Parent Guarantee. If the Underlying Obligation is issued by
a Second Tier Majority Owned Subsidiary or a wholly-owned subsidiary
thereof, and such Second Tier Majority Owned Subsidiary is unable to fully
indemnify Thermo Electron (because of the poor financial condition of such
Second Tier Majority Owned Subsidiary, or for any other reason), then the
First Tier Majority Owned Subsidiary that owns the majority of the stock
of such Second Tier Majority Owned Subsidiary shall indemnify and save
harmless Thermo Electron from any remaining liability, cost, expense or
damage (including reasonable attorneys' fees) suffered by Thermo Electron
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 Thermo Electron, 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 Thermo Electron 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. Nothwithstanding the
foregoing, in order to obtain the benefits of the indemnification
obligations of the First Tier Majority Owned Subsidiary set forth above in
this Section 3(a), Thermo Electron must have notified the First Tier
Majority Owned Subsidiary prior to guaranteeing the obligations of the
4
<PAGE>
Second Tier Majority Owned Subsidiary. If after five (5) business days,
Thermo Electron has not received from the First Tier Majority Owned
Subsidiary a notice of objection stating that the First Tier Majority
Owned Subsidiary objects to Thermo Electron guaranteeing the obligations
of the Second Tier Majority Owned Subsidiary, then Thermo Electron may
proceed to issue its guarantee of the Underlying Obligation and such
guarantee shall be subject to the benefits of the indemnification
obligations of the First Tier Majority Owned Subsidiary set forth above in
this Section 3(a). If Thermo Electron does receive such notice of
objection, then Thermo Electron's guarantee shall not be subject to the
indemnification obligations of the First Tier Majority Owned Subsidiary
set forth above in this Section 3(a).
(b) For purposes of this Agreement, the term "guarantee" shall include not
only a formal guarantee of an obligation, but also any other arrangement
where Thermo Electron is liable for the obligations of a Majority Owned
Subsidiary or its wholly-owned subsidiaries. Such other arrangements
include (a) representations, warranties and/or covenants or other
obligations joined in by Thermo Electron, whether on a joint or joint and
several basis, for the benefit of the Majority Owned Subsidiary or its
wholly-owned subsidiaries and (b) responsibility of Thermo Electron 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.
(c) Promptly after Thermo Electron receives notice that a beneficiary of a
Parent Guarantee is seeking to enforce such Parent Guarantee, Thermo
Electron 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, Thermo Electron will not perform
under the relevant Parent Guarantee unless and until, in Thermo Electron's
reasonable judgment, Thermo Electron is obligated under the terms of such
Parent Guarantee to perform. Subject to the foregoing, any dispute between
a Majority Owned Subsidiary or wholly-owned subsidiary thereof, as
applicable, and a beneficiary of a Parent Guarantee shall not affect such
Majority Owned Subsidiary's obligation to promptly indemnify Thermo
Electron 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
Thermo Electron. Thermo Electron shall have the right, at its own expense,
to contest the claim of such beneficiary. If Thermo Electron or the
subsidiary of Thermo Electron 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 Thermo Electron
or the subsidiary of Thermo Electron 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 Thermo Electron's
obligation to promptly indemnify the Majority Owned Subsidiary or its
wholly-owned subsidiary, as applicable, hereunder.
5
<PAGE>
(d) If Thermo Electron makes a loan or provides other credit ("Credit
Extension") to a Second Tier Majority Owned Subsidiary, the First Tier
Majority Owned Subsidiary that owns the majority of the stock of such
Second Tier Majority Owned Subsidiary hereby guarantees the Second Tier
Majority Owned Subsidiary's obligations to Thermo Electron thereunder.
Such guaranty shall be enforced only after Thermo Electron, in its
reasonable judgment, determines that the Second Tier Majority Owned
Subsidiary is unable to fully perform its obligations under the Credit
Extension. If Thermo Electron provides Credit Extension to a wholly-owned
subsidiary of a Second Tier Majority Owned Subsidiary, the Second Tier
Majority Owned Subsidiary hereby guarantees it wholly-owned subsidiary's
obligations to Thermo Electron thereunder and the First Tier Majority
Owned Subsidiary that owns the majority of the stock of such Second Tier
Majority Owned Subsidiary hereby guarantees the Second Tier Majority Owned
Subsidiary's obligations to Thermo Electron hereunder. Such guaranty by
the First Tier Majority Owned Subsidiary shall be enforced only after
Thermo Electron, in its reasonable judgment, determines that the Second
Tier Majority Owned Subsidiary is unable to fully perform its guaranty
obligation hereunder. Notwithstanding the foregoing, in order for a Credit
Extension to be deemed guaranteed by the First Tier Majority Owned
Subsidiary as set forth above in this Section 3(d), Thermo Electron must
have notified the First Tier Majority Owned Subsidiary prior to providing
the Credit Extension to the Second Tier Majority Owned Subsidiary. If
after five (5) business days, Thermo Electron has not received from the
First Tier Majority Owned Subsidiary a notice of objection stating that
the First Tier Majority Owned Subsidiary objects to Thermo Electron
providing a Credit Extension to the Second Tier Majority Owned Subsidiary,
then Thermo Electron may proceed to issue the Credit Extension to the
Second Tier Majority Owned Subsidiary and the First Tier Majority Owned
Subsidiary shall be deemed to have guaranteed such Credit Extension as set
forth above in this Section 3(d). If Thermo Electron does receive such
notice of objection, then Thermo Electron's Credit Extension shall not be
deemed guaranteed by the First Tier Majority Owned Subsidiary as set forth
in this Section 3(d).
(e) All payments required to be made under this Section 3 by a Majority
Owned Subsidiary or its wholly-owned subsidiaries, as applicable, shall be
made within two days after receipt of notice from Thermo Electron. All
payments required to be made under this Section 3 by Thermo Electron shall
be made within two days after receipt of notice from the Majority Owned
Subsidiary.
4. Waivers. No delay or omission on the part of either party in exercising
any right hereunder shall operate as a waiver of such right or of any other
right of the party, nor shall any delay, omission or waiver on any one occasion
be deemed a bar to or waiver of the same or any other right on any future
occasion. The Subsidiary hereby waives demand, notice of prepayment, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of the Subsidiary's obligations hereunder.
The Subsidiary hereby assents to any indulgence and any extension of time for
payment of any indebtedness hereunder granted or permitted by the party.
6
<PAGE>
5. Governing Law. 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 without giving effect to any choice of law
provision or rule that would cause the application of laws of any jurisdiction
other than the Commonwealth of Massachusetts.
6. Severability. Each provision and agreement herein shall be treated as
separate and independent from any other provision or agreement herein and shall
be enforceable notwithstanding the unenforceability of any such other provision
or agreement.
7. Non-assignability. The rights and obligations of the parties under this
Agreement shall not be assigned by either party without the prior written
consent of the other party. Subject to the foregoing, this Agreement shall be
binding upon and shall inure to the benefit of the parties and their respective
successors and assigns.
8. Other Agreements. The parties agree that, effective as of the date
hereof, each of the Master Repurchase Agreement, as amended and restated,
between the Subsidiary and Thermo Electron and the Master Guarantee
Reimbursement and Loan Agreement, as amended and restated, between the
Subsidiary and Thermo Electron, is hereby terminated and is of no further force
and effect.
7
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the date first above written.
THERMO ELECTRON CORPORATION
By: /s/ Theo Melas-Kyriazi
-----------------------------------
Title: Vice President & Chief Financial
Officer
THERMO VISION CORPORATION
By: /s/ Roger Herd
-----------------------------------
Title: President
8
[Thermo Electron Letterhead]
June 15, 1999
Kristine Stotz Langdon
225 Common Street
Dedham, Massachusetts 02026
Dear Kristine:
This letter confirms our agreement regarding your resignation as an
officer and director of Thermo Vision Corporation (the "Company") and any of its
subsidiaries or affiliates and your continuing employment as a non-officer
employee of the Company, or another business unit of Thermo Electron Corporation
("Thermo Electron") as reasonably designated by Thermo Electron in Waltham or
Franklin, Massachusetts.
1. Resignation: You hereby resign effective as of June 15, 1999 (the
"Resignation Date") all of your positions as an officer and director of the
Company and all of its subsidiaries and affiliates.
2. Continuation of Employment:
(a) Although you are resigning as an officer and director,
your employment with the Company in a non-executive position will continue
until Friday, November 26, 1999 (the "Employment Termination Date").
During the period from the Resignation Date through the Employment
Termination Date (the "Interim Period"), the Company shall pay to you, at
such times and at such intervals as the Company pays its employees in
general, your current base salary at a rate of $139,000 per annum. You
will not be entitled to earn a bonus for the Interim Period or any portion
thereof.
(b) During the Interim Period, you shall be entitled to participate
in the benefit programs that the Company establishes and makes available
from time to time to its non-executive employees to the extent that your
position, tenure, salary, age, health and other qualifications make you
eligible to participate.
(c) During the Interim Period, you may continue to use your current
leased vehicle and the Company shall continue to pay all associated lease
payments and automobile insurance during this period. You agree to return
the leased vehicle to the Company on the Employment Termination Date.
<PAGE>
Kristine Stotz Langdon
June 15, 1999
Page 2
(d) The Company retains the right to terminate your employment prior
to the Employment Termination Date for Cause, immediately upon notice to
you. "Cause" shall mean your (a) conviction of or entry of a plea of
guilty or nolo contendere to a felony or a misdemeanor involving material
fraud or dishonesty, (b) material fraud or dishonesty in the course of
your continuing employment by the Company, (c) gross misconduct that is
materially injurious to the Company or any of its subsidiaries or
affiliates, or (d) gross neglect of your material duties and
responsibilities as an employee of Thermo Electron or the Company. In the
event you are terminated for Cause, the Company shall pay to you the
compensation and benefits that would have otherwise been payable to you
through the last day of your actual employment as well as the amounts
specified in paragraphs 3, 4, 5, and 6 of this Agreement.
3. Severance Pay: On November 26, 1999, the Company will pay you a lump
sum severance payment of $139,000, representing one year's base salary.
4. Accrued Vacation: You will be paid for any of your accrued but unused
vacation as of the Employment Termination Date. You will cease to earn vacation
or other paid time off as of the Resignation Date.
5. Outplacement Services: The Company will reimburse you for expenses
actually incurred by you in connection with outplacement services up to an
aggregate amount of $15,000.
6. 1999 Bonus: On November 26, 1999, you will be paid a bonus of $22,500,
representing one-half of the 1999 calendar year reference bonus.
7. Full Payment: You agree that all payments to be provided to you under
paragraphs 2, 3, 4, 5, and 6 of this Agreement are in complete satisfaction of
any and all compensation due to you from the Company through the Employment
Termination Date.
8. Reference: Attached hereto is a letter of reference from Dr. George
Hatsopoulos. This letter will be provided upon your request in response to
inquiries by prospective employers concerning you, your employment or your
departure from the Company. Such letter shall be provided in lieu of any oral or
written comments by any officer or director of the Company or Thermo Electron in
response to such inquiries. Instructions to this effect will be displayed in
your personnel record. You will direct that all requests for information and
responses to be sent to Thermo Electron's Director of Human Resources.
9. Voice Mail: For the period from the Employment Termination Date through
March 31, 2000, your secretary or another secretary's voice on your voice mail
will state "Kristine Langdon left the company on November 26, 1999. She may be
reached at 781-329-6166 (or such other number designated by you)."
<PAGE>
Kristine Stotz Langdon
June 15, 1999
Page 3
10. Employee Benefit Programs: Your participation in all applicable
employee benefit programs of the Company shall cease as of the Employment
Termination Date in accordance with the terms of those programs. Beginning
November 27, 1999 through May 26, 2001, medical and dental coverages will
continue under COBRA. The Company will pay the entire monthly premium cost
associated with such coverage through May 26, 2001; provided, however, the
Company's obligation to provide such coverage under COBRA, including its
obligation to pay the monthly premium costs associated therewith, shall cease in
the event of your acceptance of a position with an employer who offers you
health care insurance. You will also have the option, at your sole expense, of
converting your basic (not supplemental) life insurance coverage to an
individual plan through Prudential. If interested, please let us know within
fifteen (15) days of the Employment Termination Date and conversion information
will be furnished to you. A conversion option is not available for short or long
term disability coverage.
11. Money Match Plus Plan: Your active participation in the Money Match
Plus Plan shall end on the Employment Termination Date. Information will be
provided to you regarding various election options available to you regarding
your account. Subject to compliance with all applicable legal requirements, the
Company agrees to cooperate with you and your advisors in the transfer of your
Money Match Plus Plan account balance to another plan or account designated by
you.
12. Stock Options: During the Interim Period, you will be entitled to
retain your current stock options in the Company and any of its subsidiaries or
affiliates, all of which shall continue to operate in accordance with their
respective terms. As of the Employment Termination Date, such options shall
cease vesting and no further lapsing of repurchase rights shall occur.
Subsequently, if you do not exercise your vested options within ninety (90) days
of your Employment Termination Date, your options will expire and be canceled,
and you will have no further rights with respect to your options.
13. Taxes: All payments by the Company under this Agreement will be
reduced by all taxes and other amounts that the Company is required to withhold
under applicable law and all other deductions authorized by you.
14. Company Property: On or before the Employment Termination Date, you
will return to the Company any and all documents, materials and information
related to the Company, or its subsidiaries, affiliates or businesses, and all
other property of the Company, including, without limitation, credit cards, the
leased company car, files, telephones, and personal computers in your possession
or control. Further, you agree that after the Employment Termination Date you
will not for any purpose attempt to access or use any computer or computer
network or system, including without limitation any electronic mail system, of
the Company or any of its subsidiaries or affiliates.
<PAGE>
Kristine Stotz Langdon
June 15, 1999
Page 4
15. Release: In exchange for the consideration described in paragraphs 3
and 6 hereof, you hereby release and discharge the Company, Thermo Electron and
their respective subsidiaries and affiliates, and each of their respective
current, former or future officers, directors, employees, shareholders, employee
benefit plans and plan administrators, agents, representatives and legal
predecessors and successors (the "Releasees") from all claims, liabilities and
causes of action, whether known or unknown, which you have, may have, or claim
to have against any of them as of the date hereof, including, without limitation
those based upon or arising out of your employment with the Company, Thermo
Electron or any of their respective subsidiaries or affiliates, the termination
of your employment and other relationships with the Company, Thermo Electron and
any of their subsidiaries or affiliates, your service as an officer or director
of the Company, Thermo Electron or any of their subsidiaries or affiliates, or
any of the Company's or Thermo Electron's policies, procedures or requirements;
provided, however, nothing in this Agreement is intended to, or shall have the
effect of terminating your rights to indemnification, if any, from the Company
pursuant to applicable law (including but not limited to Delaware corporate
law), the Certificate of Incorporation of the Company, the Indemnification
Agreement between you and the Company dated November 14, 1997 (the
"Indemnification Agreement"), or any insurance coverage available to you
pursuant to policies covering Thermo Electron and its subsidiaries and
affiliates, including the Company. You agree not to assert or file, or
participate in, encourage or instigate, any claim or lawsuit against the
Company, Thermo Electron or any of their subsidiaries or affiliates or any of
the other Releasees, including, but not limited to any claims arising from tort
or breach of contract, wrongful termination, fraudulent inducement of employment
or age, sex, race, disability or other discrimination under the Civil Rights Act
of 1964, as amended by the Civil Rights Act of 1991, the Fair Employment and
Housing Act, the Age Discrimination in Employment Act of 1967, as amended by the
Older Workers Benefit Protection Act of 1991, the Americans with Disabilities
Act, ERISA, or any other federal, state or local laws prohibiting discrimination
or under any other federal, state or local employment laws, each as amended and
in effect from time to time. You warrant that you have not filed or participated
in any lawsuits, complaints, claims, proceedings or charges against the Company,
Thermo Electron or any of their subsidiaries or affiliates or any of the other
Releasees with any local, state or federal court or agency.
YOU UNDERSTAND AND ACKNOWLEDGE THAT YOU HAVE BEEN ADVISED TO SEEK THE
ADVICE OF AN ATTORNEY PRIOR TO SIGNING THIS AGREEMENT AND RELEASE AND TO THE
EXTENT DESCRIBED HEREIN YOU ARE GIVING UP ANY LEGAL CLAIMS YOU HAVE AGAINST
COMPANY, THERMO ELECTRON AND THEIR SUBSIDIARIES AND AFFILIATES AND EACH OF THEIR
RESPECTIVE CURRENT, FORMER OR FUTURE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
REPRESENTATIVES, LEGAL PREDECESSORS AND SUCCESSORS BY SIGNING THIS AGREEMENT AND
RELEASE. YOU FURTHER UNDERSTAND THAT YOU MAY HAVE 21 DAYS TO CONSIDER THIS
AGREEMENT AND RELEASE, THAT YOU MAY REVOKE IT AT ANY TIME DURING THE SEVEN DAYS
AFTER YOU SIGN IT, AND THAT IT WILL NOT BECOME EFFECTIVE UNTIL THE 7-DAY
REVOCATION PERIOD HAS PASSED WITHOUT REVOCATION. YOU ACKNOWLEDGE THAT YOU FULLY
UNDERSTAND YOUR RIGHT TO TAKE 21 DAYS TO CONSIDER SIGNING THIS AGREEMENT AND
<PAGE>
Kristine Stotz Langdon
June 15, 1999
Page 5
RELEASE AND, AFTER HAVING SUFFICIENT TIME TO CONSIDER YOUR OPTIONS, YOU HEREBY
WAIVE YOUR RIGHT TO TAKE THE FULL 21-DAY PERIOD. YOU ACKNOWLEDGE THAT YOU ARE
SIGNING THIS AGREEMENT AND RELEASE KNOWINGLY, WILLINGLY AND VOLUNTARILY IN
EXCHANGE FOR THE CONSIDERATION DESCRIBED IN PARAGRAPHS 3 AND 6 OF THIS
AGREEMENT.
16. Restriction on Purchase or Sale of Common Stock: You understand and
acknowledge that you will continue to be a "Reporting Person," for purposes of
Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder, and you will remain subject to insider
trading regulations under the federal securities laws for a period of six months
following the Resignation Date and that during that period you are required to
preclear transactions in the Company and its affiliates' securities with the
Company's Stock Transaction Coordinator, Ms. Pauline I. Northern. You are also
urged to contact the Corporate Secretary of the Company, Ms. Sandra L. Lambert,
should you have any questions regarding compliance with the insider trading
regulations under the federal securities laws.
17. No Hiring. For the period beginning on the Resignation Date and ending
on November 26, 2000, you hereby agree you shall not, either directly or
indirectly as a stockholder, investor, partner, director, officer, employee or
otherwise, solicit or attempt to induce any employee of the Company or Thermo
Optek Corporation ("Optek"), or any of their respective subsidiaries or
affiliates (other than clerical or administrative personnel) to terminate his or
her employment with such entity, or attempt to induce any customer or supplier
of the Company, Thermo Electron or Optek or any of their respective subsidiaries
or affiliates to terminate its relationship with such entity.
18. Non-Disparagement: You agree that you will continue to support and
promote the interests of the Company, Thermo Electron and their respective
subsidiaries and affiliates and that you will not disparage the Company, Thermo
Electron or their respective subsidiaries or affiliates, or any of the people or
organizations connected with them, or do or say anything that harms their
interests or reputation. The Company agrees that it will cause the officers of
Thermo Electron, Optek, and the Company not to disparage you or otherwise do or
say anything that harms your reputation and that the Company shall be solely
responsible for any breach of the provisions contained in this paragraph 18 by
any such officers. Nothing in this paragraph 18 shall prevent the parties from
(i) complying with compulsory legal process or otherwise making disclosure in
connection with litigation or administrative proceedings, (ii) making such
disclosures as are necessary to obtain legal advice, (iii) making disclosures as
are required by federal, state or local regulatory authorities, and (iv) making
disclosures which by law are required or cannot be prohibited.
<PAGE>
Kristine Stotz Langdon
June 15, 1999
Page 6
19. Cooperation: You agree to reasonably cooperate with Thermo Electron
and the Company with respect to all matters arising during or related to your
employment, including but not limited to cooperation in connection with any
governmental investigation, litigation or regulatory or other proceeding which
may have arisen or which may arise following the signing of this Agreement.
20. Waiver of Jury Trial: Each of the parties hereby expressly, knowingly,
and voluntarily waives all benefit and advantage and any right to a trial by
jury, and each agrees that she or it will not at any time insist upon, or plead
or in any manner whatsoever claim a trial by jury in any action arising in
connection with this Agreement.
21. Entire Agreement: This Agreement contains the entire agreement between
you, the Company, Thermo Electron and their respective subsidiaries and
affiliates and replaces all prior and contemporaneous agreements, communications
and understandings, whether written or oral, with respect to your employment,
resignation, and termination of your employment and all related matters. This
Agreement will be governed by and interpreted in accordance with the laws of the
Commonwealth of Massachusetts without regard to choice of law provisions.
22. Severability: If one or more provisions of this Agreement are held to
be invalid or unenforceable under applicable law by any court of competent
jurisdiction, such provision or provisions shall be excluded from this Agreement
and replaced with a provision which is enforceable and comes closest to the
intent of the parties underlying the unenforceable provision or provisions. In
such event, all remaining provisions of this Agreement shall remain in full
force and effect. Any provisions held invalid or unenforceable only in part or
degree will remain in full force and effect to the extent not held invalid or
unenforceable.
23. Relief: In the event of breach of the provisions of this Agreement by
any party, in addition to any other rights that the other parties may have under
law or in equity, each party shall have the right to specific performance and
injunctive relief, it being acknowledged and agreed that money damages will not
provide an adequate remedy.
24. Successors and Assigns: No party hereto may assign any of its rights
under this Agreement without the prior written consent of the other party. This
Agreement is binding on each of the parties' permitted assigns, successors,
heirs, administrators and executors.
25. Company Information and Invention Agreement. You agree to execute and
comply with the terms of the Company Information and Invention Agreement, a copy
of which is attached hereto. Such agreement supercedes any prior agreement
covering the same subject matter that you may have signed with the Company or
any of its affiliates or subsidiaries.
26. Voluntary Agreement: In signing this Agreement, you give the Company
assurance that you have signed it voluntarily and with a full understanding of
its terms and that you have had sufficient opportunity to consider this
Agreement and to consult with anyone of your choosing before signing it.
<PAGE>
Kristine Stotz Langdon
June 15, 1999
Page 7
If the terms of this Agreement are acceptable to you, please sign and
return it to the undersigned. At the time you sign and return this Agreement, it
will take effect as a legally-binding agreement between you and the Company on
the basis set forth above.
THERMO VISION CORPORATION
By: /s/ Earl R. Lewis
--------------------------------
Name: Earl R. Lewis
Title: Chairman of the Board
THERMO ELECTRON CORPORATION
By: /s/ Anne Pol
--------------------------------
Name: Anne Pol
Title: Senior Vice President
Accepted and Agreed to:
/s/ Kristine Stotz Langdon
- --------------------------
Kristine Stotz Langdon
THERMO VISION CORPORATION
DEFERRED COMPENSATION PLAN FOR DIRECTORS
As amended and restated as of July 12, 1999
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 employee of the Company or any
subsidiary or parent of the Company, shall not be eligible to participate in
this Plan. Each election shall be made by notice in writing delivered to the
Secretary of the Company, in such form as the Secretary 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 Secretary of the Company.
Section 2. Establishment of Deferred Compensation Accounts. There shall be
established for each participant an account to be designated as that
participant's deferred compensation account.
Section 3. Allocations to Deferred Compensation Accounts. There shall be
allocated to each participant's deferred compensation account, as of the end of
each quarter, an amount equal to his or her fees for that quarter which that
participant shall have elected to have deferred pursuant to Section 1.
Section 4. Stock Units and Stock Unit Accounts. All amounts allocated to a
participant's deferred compensation account pursuant to Section 3 and Section 5
shall be converted, at the end of each quarter, into stock units by dividing the
accumulated balance in the deferred compensation account as of the end of that
quarter by the average last sale price per share of the Company's common stock
as reported in The Wall Street Journal, for the five business days up to and
including the last business day of that quarter. The number of stock units, so
determined, rounded to the nearest one-hundredth of a share, shall be credited
to a separate stock unit account to be established for the participant, and the
aggregate value thereof as of the last business day of that quarter shall 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. Adjustments in the Event of Certain Transactions. In the event of a
stock dividend, stock split or combination of shares, or other distribution with
respect to holders of Common Stock other than normal cash dividends, the number
of units then credited to a partipant's stock unit account shall be
appropriately adjusted on the same basis. In the event of any recapitalization,
merger or consolidation involving the Company, any transaction in which the
Company becomes a subsidiary of another entity, any sale or other disposition of
all or a substantial portion of the assets of the Company or any similar
transaction, as determined by the Board, the Board in its discretion may
terminate the Plan pursuant to Section 11.
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.
(b) The Company shall distribute to the participant sums in cash equal
to the balance credited to his or her deferred compensation account as of the
close of the fiscal year in which his or her deferral termination date occurs
plus such additional amounts as shall be credited thereto from time to time
thereafter pursuant to Section 5. The cash distribution shall be made on the
same dates as the annual distributions made pursuant to paragraph (a) above, and
each cash distribution shall consist of the entire balance credited to the
participant's deferred compensation account at the time of the annual
distribution.
If a participant's deferral termination date shall occur by reason of
his or her death or if he or she shall die after his or her deferral termination
date but prior to receipt of all distributions of stock and cash provided for in
this Section 8, all stock and cash remaining distributable hereunder shall be
distributed to such beneficiary as the participant shall have designated in
writing and filed with the Secretary of the Company or, in the absence of
designation, to the participant's personal representative. Such distributions
shall be made in the same manner and at the same intervals as they would have
been made to the participant had he or she continued to live.
Section 9. Participant's Rights Unsecured. The right of any participant to
receive distributions under Section 8 shall be an unsecured claim against the
general assets of the Company. The Company may but shall not be obligated to
acquire shares of its outstanding common stock from time to time in anticipation
of its obligation to make such distributions, but no participant shall have any
rights in or against any shares of stock so acquired by the Company. All such
stock shall constitute general assets of the Company and may be disposed of by
the Company at such time and for such purposes as it may deem appropriate.
Section 10. Termination of the Plan. The Plan shall terminate and full
distribution shall be made from all participants' deferred compensation accounts
and stock unit accounts upon any change of control of the Company. Either of the
following shall be deemed to be a change of control: (a) the occurrence, without
the prior approval of the Board of Directors, of the acquisition, directly or
indirectly, by any person of 50% or more of the outstanding common stock of
either the Company or its parent corporation, Thermo Instrument Systems Inc.
("Thermo Instrument"), or the beneficial owner of 25% or more of the outstanding
common stock of Thermo Electron Corporation ("Thermo Electron"), without the
prior approval of the prior directors of the Company, Thermo Instrument, or
Thermo Electron, as the case may be; (b) the failure of the prior directors to
constitute a majority of the Board of Directors of the Company, Thermo
Instrument or Thermo Electron, at any time within two years following any
electoral event. As used in this sentence and the preceding sentence, person
shall mean a natural person, an entity (together with an affiliate thereof, as
defined in Rule 405 under the Securities Act of 1933) or a group, as defined in
Rule 13d-5 under the Securities Exchange Act of 1934; prior directors shall mean
the persons serving on the Board of Directors immediately prior to any electoral
event; and electoral event shall mean any contested election of directors or any
tender or exchange offer for common stock of the Company, Thermo Instrument or
Thermo Electron by any person other than the Company, Thermo Instrument, Thermo
Electron or a subsidiary of any of the foregoing companies. The Board of
Directors at any time, at its discretion, may terminate the Plan. If the Board
of Directors terminates the Plan after any person or group of persons shall have
acquired or proposed to acquire control of the Company through the Board of
Directors, Thermo Instrument or Thermo Electron, full and prompt distribution
shall be made from all participants' deferred compensation accounts and stock
unit accounts. Otherwise, distributions in respect of credits to participants'
deferred compensation accounts and stock unit accounts as of the date of
termination shall be made in the manner and at the time prescribed in Section 8.
Section 11. Amendment and Termination of the Plan. The Board of Directors of the
Company may amend or terminate the Plan at any time and from time to time,
provided, however, that no amendment adversely 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. Upon termination of the Plan, the Company shall
be obligated to distribute to the participant either of the following as the
Board of Directors of the Company, in its sole discretion, may determine: (i)
the number of shares of the common stock of the Company which shall equal the
total number of units accumulated in the participant's stock unit account as of
the effective date of termination of the Plan or (ii) a sum in cash equal to the
balance credited to the participant's deferred compensation account as of the
effective date of termination of the Plan.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
VISION CORPORATION'S QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED JULY 3,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-01-2000
<PERIOD-END> JUL-03-1999
<CASH> 198
<SECURITIES> 0
<RECEIVABLES> 6,301
<ALLOWANCES> 335
<INVENTORY> 7,898
<CURRENT-ASSETS> 23,188
<PP&E> 9,940
<DEPRECIATION> 4,036
<TOTAL-ASSETS> 46,910
<CURRENT-LIABILITIES> 10,688
<BONDS> 0
0
0
<COMMON> 81
<OTHER-SE> 32,124
<TOTAL-LIABILITY-AND-EQUITY> 46,910
<SALES> 19,115
<TOTAL-REVENUES> 19,115
<CGS> 11,628
<TOTAL-COSTS> 11,628
<OTHER-EXPENSES> 2,106
<LOSS-PROVISION> 61
<INTEREST-EXPENSE> 227
<INCOME-PRETAX> 159
<INCOME-TAX> 67
<INCOME-CONTINUING> 92
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 92
<EPS-BASIC> 0.01
<EPS-DILUTED> 0.01
</TABLE>
