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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF 1934)
Thermo Vision Corporation
(Name of Issuer)
Thermo Vision Corporation
VIZ Acquisition Corporation
Thermo Instrument Systems Inc.
Thermo Electron Corporation
(Name of Person(s) Filing Statement)
Common Stock, par value $.01 per share
(Title of Class of Securities)
883600 10 8
(CUSIP Number of Class of Securities)
Sandra L. Lambert, Secretary
Thermo Vision Corporation
c/o Thermo Electron Corporation
81 Wyman Street
P.O. Box 9046
Waltham, Massachusetts 02454-9046
(781) 622-1000
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Person(s) Filing Statement)
with a copy to:
Seth H. Hoogasian, General Counsel
Thermo Vision Corporation
c/o Thermo Electron Corporation
81 Wyman Street
P.O. Box 9046
Waltham, Massachusetts 02454-9046
(781) 622-1000
This statement is filed in connection with (check the appropriate box):
a. [X] The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C, or Rule 13e-3(c) under the
Securities Exchange Act of 1934.
b. The filing of a registration statement under the Securities Act of 1933.
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c. A tender offer.
d. None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies. /X/
Calculation of Filing Fee
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<CAPTION>
- --------------------------------------------------------------------------------
Transaction Value* Amount of Filing Fee
- --------------------------------------------------------------------------------
<S> <C>
$10,625,874 $2,126
- --------------------------------------------------------------------------------
</TABLE>
* Solely for purposes of calculating the filing fee. Assumes purchase of
1,517,982 shares of Common Stock, par value $.01 per share, of Thermo Vision
Corporation at $7.00 per share.
/X/ Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount previously paid: $2,126
Form or registration no.: Preliminary Proxy Statement on Schedule 14A
Filing party: Thermo Vision Corporation
Date filed: September 2, 1999
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This Rule 13e-3 Transaction Statement (the "Statement") is being filed in
connection with the filing by Thermo Vision Corporation ("Thermo Vision" or the
"Company") with the Securities and Exchange Commission (the "Commission") on
September 2, 1999 of a Proxy Statement on Schedule 14A (as amended, the "Proxy
Statement") in connection with a special meeting of the stockholders of Thermo
Vision. At such meeting, the stockholders of Thermo Vision will vote upon the
approval of an Agreement and Plan of Merger dated as of August 25, 1999 (the
"Merger Agreement") by and among Thermo Instrument Systems Inc. ("Thermo
Instrument"), VIZ Acquisition Corporation (the "Merger Sub") and Thermo Vision,
pursuant to which the Merger Sub, a wholly owned subsidiary of Thermo
Instrument, will be merged with and into Thermo Vision.
The following cross reference sheet is being supplied pursuant to General
Instruction F to Schedule 13E-3 and shows the location in the Proxy Statement of
the information required to be included in response to the items of this
Statement. The information in the Proxy Statement that is attached hereto as
Exhibit (d)(3), including all appendices thereto, is hereby expressly
incorporated herein by reference and the responses to each item are qualified in
their entirety by the provisions of the Proxy Statement.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
ITEM IN SCHEDULE 13E-3 CAPTION OR LOCATION IN THE PROXY STATEMENT
<S> <C>
Item 1(a)........................................... "Introduction;" "Summary - Purpose of the Special Meeting;" "- Parties to the
Merger"
Item 1(b)........................................... "Introduction;" "Summary - Purpose of the Special Meeting;" "- Record Date
and Quorum;" "- Market Prices of Common Stock and Dividends;" "The Special
Meeting - Record Date and Quorum Requirement"
Item 1(c) .......................................... "Summary - Market Prices of Common Stock and Dividends"
Item 1(d) .......................................... "Summary - Market Prices of Common Stock and Dividends;" "The Merger -
Covenants"
Item 1(e)........................................... "Appendix D - Information Concerning Transactions in the Common Stock of the
Company"
Item 1(f)........................................... "Appendix D - Information Concerning Transactions in the Common Stock of the
Company"
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Item 2(a) - (c)...................................... "Summary - Parties to the Merger;" "Business of the Company;" "Management;"
"Certain Information Concerning the Merger Sub, Thermo Instrument and Thermo
Electron;" "Appendix C - Information Concerning Directors and Executive
Officers of the Company, Thermo Instrument, the Merger Sub and Thermo
Electron"
Item 2(d)............................................ "Management;" "Appendix C - Information Concerning Directors and Executive
Officers of the Company, Thermo Instrument, the Merger Sub and Thermo
Electron"
Item 2(e) ........................................... Not applicable
Item 2(f)............................................ Not applicable
Item 2(g)............................................ "Appendix C - Information Concerning Directors and Executive Officers of the
Company, Thermo Instrument, the Merger Sub and Thermo Electron"
Item 3(a)(1)......................................... "Certain Transactions"
Item 3(a)(2) - 3 (b) ................................ "Summary - The Merger;" "- The Board's Recommendation;" "- Purpose and
Reasons of Thermo Instrument and Thermo Electron for the Merger;" "Special
Factors - Background of the Merger;" "- The Board's Recommendation;"
"- Purpose and Reasons of Thermo Instrument and Thermo Electron for the
Merger;" "Certain Transactions;" "Appendix D - Information Concerning
Transactions in the Common Stock of the Company"
Item 4(a) ........................................... "Introduction;" "Summary - The Merger;" "- Effective Time of the Merger and
Payment for Shares;" "- Assumption of Thermo Vision Stock Options by Thermo
Instrument;" "- Conflicts of Interest;" "- Certain Effects of the Merger;"
"- Conditions to the Merger, Termination and Expenses;" "Special Factors -
Conflicts of Interest;" "- Certain Effects of the Merger;" "The Merger;"
"Appendix A - Agreement and Plan of Merger"
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Item 4(b)............................................ "Introduction;" "Summary - Purpose of the Special Meeting;" "-The Merger;"
"The Merger - Conversion of Securities;" "- Deferred Compensation Plan for
Directors;" "Federal Income Tax Consequences;" "Appendix A - Agreement and
Plan of Merger"
Item 5(a)............................................ "Special Factors - Conduct of Thermo Vision's Business After the Merger"
Item 5(b)............................................ "Special Factors - Conduct of Thermo Vision's Business After the Merger"
Item 5(c)............................................ "Introduction;" "Special Factors - Conflicts of Interest;" " - Conduct of
Thermo Vision's Business After the Merger"
Item 5(d) ........................................... "Summary - Certain Effects of the Merger;" "Special Factors - Certain Effects
of the Merger;" "The Merger - Conversion of Securities"
Item 5(e)............................................ "Summary - Certain Effects of the Merger;" "Special Factors - Certain Effects
of the Merger;" "- Conduct of Thermo Vision's Business After the Merger"
Item 5(f) ........................................... "Summary - Certain Effects of the Merger;" "Special Factors - Certain Effects
of the Merger"
Item 5(g) ........................................... "Summary - Certain Effects of the Merger;" "Special Factors - Certain Effects
of the Merger"
Item 6(a) ........................................... "Summary - The Merger;" "The Merger - Source of Funds"
Item 6(b)............................................ "Summary -Conflicts of Interest;" "Special Factors - Conflicts of Interest;"
"The Merger - Expenses"
Item 6(c)............................................ Not applicable
Item 6(d)............................................ Not applicable
Item 7(a) - (c)...................................... "Summary - The Merger;" "- The Board's Recommendation;" "- Purpose and
Reasons of Thermo Instrument and Thermo Electron for the Merger;" "Special
Factors - Background of the
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Merger;" "- The Board's Recommendation;" "-Financial Analysis;" " - Purpose
and Reasons of Thermo Instrument and Thermo Electron for the Merger"
Item 7(d) ........................................... "Summary - The Merger;" "- Assumption of Thermo Vision Stock Options by
Thermo Instrument;" "- Conflicts of Interest;" "- Certain Effects of the
Merger;" "- Federal Income Tax Consequences;" "Special Factors - Conflicts of
Interest;" "- Certain Effects of the Merger;" "- Conduct of Thermo Vision's
Business After the Merger;" "The Merger - Conversion of Securities;"
"- Assumption of Thermo Vision Stock Options by Thermo Instrument;"
"- Deferred Compensation Plan for Directors;" "Federal Income Tax
Consequences"
Item 8(a) ........................................... "Summary - The Board's Recommendation;" " - Position of Thermo Instrument and
Thermo Electron as to Fairness of the Merger;" "Special Factors - The Board's
Recommendation;" "- Position of Thermo Instrument and Thermo Electron as to
Fairness of the Merger"
Item 8(b) ........................................... "Summary - The Board's Recommendation;" " - Position of Thermo Instrument and
Thermo Electron as to Fairness of the Merger;" "Special Factors - Background
of the Merger;" "- The Board's Recommendation;" "-Financial Analysis;"
"- Position of Thermo Instrument and Thermo Electron as to Fairness of the
Merger"
Item 8(c) ........................................... "Introduction;" "Summary - Vote Required and Revocation of Proxies;" "The
Special Meeting - Voting Procedures"
Item 8(d)............................................ "Special Factors - Background of the Merger;" "- Financial Analysis"
Item 8(e)............................................ "Summary - The Board's Recommendation;" "Special Factors - The Board's
Recommendation"
Item 8(f)............................................ Not applicable
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Item 9(a)............................................ "Special Factors - Background of the Merger;" "-Financial Analysis"
Item 9(b) - (c) ..................................... Not applicable
Item 10(a) .......................................... "Introduction;" "Summary - Vote Required and Revocation of Proxies;" "- The
Board's Recommendation;" "- Conflicts of Interest;" "Special Factors -
Purpose and Reasons of Thermo Instrument and Thermo Electron for the Merger;"
"- Conflicts of Interest;" "The Special Meeting - Voting Procedures;"
"Security Ownership of Certain Beneficial Owners and Management;" "Appendix D
- Information Concerning Transactions in the Common Stock of the Company"
Item 10(b)........................................... "Appendix D - Information Concerning Transactions in the Common Stock of the
Company"
Item 11 ............................................. "Introduction;" "Summary - Vote Required and Revocation of Proxies;" "- The
Merger;" "The Special Meeting - Voting Procedures;" "The Merger;" "Appendix A
- Agreement and Plan of Merger"
Item 12(a)........................................... "Introduction;" "Summary - Vote Required and Revocation of Proxies;" "The
Special Meeting - Voting Procedures;" "Appendix C - Information Concerning
Directors and Executive Officers of the Company, Thermo Instrument, the
Merger Sub and Thermo Electron"
Item 12(b)........................................... "Summary - The Board's Recommendation;" "- Position of Thermo Instrument and
Thermo Electron as to Fairness of the Merger;" "Special Factors -The Board's
Recommendation;" "- Position of Thermo Instrument and Thermo Electron as to
Fairness of the Merger"
Item 13(a)........................................... "Summary - Rights of Dissenting Stockholders;" "The Special Meeting - Voting
Procedures;" "Rights of Dissenting Stockholders;" "Appendix B
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
- Text of Section 262 of the General Corporation Law of the State of
Delaware"
Item 13(b)........................................... Not applicable
Item 13(c)........................................... Not applicable
Item 14(a)........................................... "Selected Financial Information and Ratio of Earnings to Fixed Charges;"
"Consolidated Financial Statements"
Item 14(b)........................................... Not applicable
Item 15(a)........................................... "The Special Meeting - Proxy Solicitation"
Item 15(b)........................................... Not applicable
Item 16 ............................................. Entirety of Proxy Statement
Item 17(a)........................................... Not applicable
Item 17(b)........................................... Not applicable
Item 17(c) .......................................... Agreement and Plan of Merger dated as of August 25, 1999 by and among Thermo
Instrument Systems Inc., VIZ Acquisition Corporation and Thermo Vision
Corporation (included as Appendix A to the Proxy Statement)
Item 17(d)(1)........................................ Preliminary Copy of Letter to Stockholders
Item 17(d)(2) ....................................... Preliminary Copy of Notice of Special Meeting of Stockholders
Item 17(d)(3) ....................................... Preliminary Proxy Statement
Item 17(d)(4) ....................................... Form of Proxy
Item 17(e) .......................................... Text of Section 262 of the General Corporation Law of the State of Delaware
(included as Appendix B to the Proxy Statement)
Item 17(f) ......................................... Preliminary Proxy Statement
ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION.
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(a) The information set forth in the sections entitled "Introduction,"
"Summary - Purpose of the Special Meeting" and "- Parties to the Merger" of the
Proxy Statement is incorporated herein by reference.
(b) The information set forth in the sections entitled "Introduction,"
"Summary - Purpose of the Special Meeting," "- Record Date and Quorum," "-
Market Prices of Common Stock and Dividends" and "The Special Meeting - Record
Date and Quorum Requirement" of the Proxy Statement is incorporated herein by
reference.
(c) The information set forth in the section entitled "Summary -
Market Prices of Common Stock and Dividends" of the Proxy Statement is
incorporated herein by reference.
(d) The information set forth in the sections entitled "Summary -
Market Prices of Common Stock and Dividends" and "The Merger - Covenants" of the
Proxy Statement is incorporated herein by reference.
(e) The information set forth in Appendix D of the Proxy Statement is
incorporated herein by reference.
(f) The information set forth in Appendix D of the Proxy Statement is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
This statement is being filed jointly by the Company (which is the
issuer of the class of equity securities that is the subject of the Rule 13e-3
transaction), the Merger Sub, Thermo Instrument and Thermo Electron.
(a) - (c) The information set forth in the sections entitled "Summary
- - Parties to the Merger," "Business of the Company," "Management" and "Certain
Information Concerning the Merger Sub, Thermo Instrument and Thermo Electron,"
and in Appendix C of the Proxy Statement is incorporated herein by reference.
(d) The information set forth in the section entitled "Management,"
and in Appendix C of the Proxy Statement is incorporated herein by reference.
(e) During the last five years, none of the Company, the Merger Sub,
Thermo Instrument or Thermo Electron, nor (to the knowledge of each of the
Company, the Merger Sub, Thermo Instrument or Thermo Electron, respectively) any
executive officer or director of the Company, the Merger Sub, Thermo Instrument
or Thermo Electron, respectively, has been convicted in a criminal proceeding
(excluding traffic violations and similar misdemeanors).
(f) During the last five years, none of the Company, the Merger Sub,
Thermo Instrument or Thermo Electron, nor (to the knowledge of each of the
Company, the Merger Sub, Thermo Instrument or Thermo Electron, respectively) any
executive officer or director of the Company, the Merger Sub, Thermo Instrument
or Thermo Electron, respectively, has been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction which resulted in a
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judgment, decree or final order (i) enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or (ii) finding a violation with respect to such laws.
(g) The information set forth in Appendix C of the Proxy Statement is
incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
(a) (1) The information set forth in the section entitled "Certain
Transactions" of the Proxy Statement is incorporated herein by reference.
(a) (2) - (b) The information set forth in the sections entitled
"Summary - The Merger," "- The Board's Recommendation," "- Purpose and Reasons
of Thermo Instrument and Thermo Electron for the Merger," "Special Factors -
Background of the Merger," "- The Board's Recommendation," "- Purpose and
Reasons of Thermo Instrument and Thermo Electron for the Merger" and "Certain
Transactions," and in Appendix D of the Proxy Statement is incorporated herein
by reference.
ITEM 4. TERMS OF THE TRANSACTION.
(a) The information set forth in the sections entitled "Introduction,"
"Summary - The Merger," "- Effective Time of the Merger and Payment for Shares,"
"- Assumption of Thermo Vision Stock Options by Thermo Instrument," "- Conflicts
of Interest," "- Certain Effects of the Merger," "- Conditions to the Merger,
Termination and Expenses," "Special Factors - Conflicts of Interest," "- Certain
Effects of the Merger" and "The Merger," and in Appendix A of the Proxy
Statement is incorporated herein by reference.
(b) The information set forth in the sections entitled "Introduction,"
"Summary - Purpose of the Special Meeting," "- The Merger," "The Merger -
Conversion of Securities," "- Deferred Compensation Plan for Directors" and
"Federal Income Tax Consequences," and Appendix A of the Proxy Statement is
incorporated herein by reference.
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ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.
(a) The information set forth in the section entitled "Special Factors
- - Conduct of Thermo Vision's Business After the Merger" of the Proxy Statement
is incorporated herein by reference.
(b) The information set forth in the section entitled "Special Factors
- - Conduct of Thermo Vision's Business After the Merger" of the Proxy Statement
is incorporated herein by reference.
(c) The information set forth in the sections entitled "Introduction,"
"Special Factors - Conflicts of Interest" and " - Conduct of Thermo Vision's
Business After the Merger" of the Proxy Statement is incorporated herein by
reference.
(d) The information set forth in the sections entitled "Summary -
Certain Effects of the Merger," "Special Factors - Certain Effects of the
Merger," and "The Merger - Conversion of Securities" of the Proxy Statement is
incorporated herein by reference.
(e) The information set forth in the sections entitled "Summary -
Certain Effects of the Merger," "Special Factors - Certain Effects of the
Merger" and "- Conduct of Thermo Vision's Business After the Merger" of the
Proxy Statement is incorporated herein by reference.
(f) The information set forth in the sections entitled "Summary -
Certain Effects of the Merger" and "Special Factors - Certain Effects of the
Merger" of the Proxy Statement is incorporated herein by reference.
(g) The information set forth in the sections entitled "Summary -
Certain Effects of the Merger" and "Special Factors - Certain Effects of the
Merger" of the Proxy Statement is incorporated herein by reference.
ITEM 6. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in the sections entitled "Summary - The
Merger" and "The Merger - Source of Funds" of the Proxy Statement is
incorporated herein by reference.
(b) The information set forth in the sections entitled "Summary -
Conflicts of Interest," "Special Factors - Conflicts of Interest" and
"The Merger - Expenses" of the Proxy Statement is incorporated herein by
reference.
(c) Not applicable.
(d) Not applicable.
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ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS.
(a) - (c) The information set forth in the sections entitled "Summary
- - The Merger," "- The Board's Recommendation;" "- Purpose and Reasons of Thermo
Instrument and Thermo Electron for the Merger," "Special Factors - Background of
the Merger," "- The Board's Recommendation," "- Financial Analysis" and
"- Purpose and Reasons of Thermo Instrument and Thermo Electron for the Merger"
of the Proxy Statement is incorporated herein by reference.
(d) The information set forth in the sections entitled "Summary -The
Merger," "- Assumption of Thermo Vision Stock Options by Thermo Instrument,"
"- Conflicts of Interest," "- Certain Effects of the Merger," "- Federal Income
Tax Consequences," "Special Factors - Conflicts of Interest," "Certain Effects
of the Merger," "- Conduct of Thermo Vision's Business After the Merger," "The
Merger - Conversion of Securities," "- Assumption of Thermo Vision Stock Options
by Thermo Instrument," "- Deferred Compensation Plan for Directors" and "Federal
Income Tax Consequences" of the Proxy Statement is incorporated herein by
reference.
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a) The information set forth in the sections entitled "Summary - The
Board's Recommendation," "- Position of Thermo Instrument and Thermo Electron as
to Fairness of the Merger," "Special Factors - The Board's Recommendation" and
"- Position of Thermo Instrument and Thermo Electron as to Fairness of the
Merger" of the Proxy Statement is incorporated herein by reference.
(b) The information set forth in the sections entitled "Summary - The
Board's Recommendation," "- Position of Thermo Instrument and Thermo Electron as
to Fairness of the Merger," "Special Factors - Background of the Merger,"
" - The Board's Recommendation," "- Financial Analysis" and "- Position of
Thermo Instrument and Thermo Electron as to Fairness of the Merger" of the Proxy
Statement is incorporated herein by reference.
(c) The information set forth in the sections entitled "Introduction,"
"Summary - Vote Required and Revocation of Proxies" and "The Special Meeting -
Voting Procedures" of the Proxy Statement is incorporated herein by reference.
(d) The information set forth in the sections entitled "Special
Factors - Background of the Merger," and "- Financial Analysis," of the
Proxy Statement is incorporated herein by reference.
(e) The information set forth in the sections entitled "Summary - The
Board's Recommendation" and "Special Factors - The Board's Recommendation" of
the Proxy Statement is incorporated herein by reference.
(f) Not applicable.
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ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
(a) The information set forth in the sections entitled "Special
Factors - Background of the Merger" and "- Financial Analysis" of the Proxy
Statement is incorporated herein by reference.
(b) Not applicable.
(c) Not applicable.
ITEM 10. INTEREST IN SECURITIES OF THE ISSUER.
(a) The information set forth in the sections entitled "Introduction,"
"Summary - Vote Required and Revocation of Proxies," "- The Board's
Recommendation," "- Conflicts of Interest," "Special Factors - Purpose and
Reasons of Thermo Instrument and Thermo Electron for the Merger," "- Conflicts
of Interest," "The Special Meeting - Voting Procedures" and "Security Ownership
of Certain Beneficial Owners and Management," and in Appendix D of the Proxy
Statement is incorporated herein by reference.
(b) The information set forth in Appendix D of the Proxy Statement is
incorporated herein by reference.
ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S
SECURITIES.
The information set forth in the sections entitled "Introduction,"
"Summary - Vote Required and Revocation of Proxies," "- The Merger," "The
Special Meeting - Voting Procedures" and "The Merger," and in Appendix A of the
Proxy Statement is incorporated herein by reference.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO
THE TRANSACTION.
(a) The information set forth in the sections entitled "Introduction,"
"Summary - Vote Required and Revocation of Proxies" and "The Special Meeting -
Voting Procedures," and in Appendix C of the Proxy Statement is incorporated
herein by reference.
(b) The information set forth in the sections entitled "Summary - The
Board's Recommendation," "- Position of Thermo Instrument and Thermo Electron as
to Fairness of the Merger," "Special Factors - The Board's Recommendation" and
"- Position of Thermo Instrument and Thermo Electron as to Fairness of the
Merger" of the Proxy Statement is incorporated herein by reference.
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ITEM 13. OTHER PROVISIONS OF THE TRANSACTION.
(a) The information set forth in the sections entitled "Summary
- -Rights of Dissenting Stockholders," "The Special Meeting - Voting Procedures"
and "Rights of Dissenting Stockholders," and in Appendix B of the Proxy
Statement is incorporated herein by reference.
(b) Not applicable.
(c) Not applicable.
ITEM 14. FINANCIAL INFORMATION.
(a) The information set forth in the sections entitled "Selected
Financial Information and Ratio of Earnings to Fixed Charges" and "Consolidated
Financial Statements" of the Proxy Statement is incorporated herein by
reference.
(b) Not applicable.
ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED.
(a) The information set forth in the section entitled "The Special
Meeting - Proxy Solicitation" of the Proxy Statement is incorporated herein by
reference.
(b) Not applicable.
ITEM 16. ADDITIONAL INFORMATION.
The entirety of the Proxy Statement is incorporated herein by
reference.
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Agreement and Plan of Merger dated as of August 25, 1999 by and
among Thermo Instrument Systems Inc., VIZ Acquisition Corporation and Thermo
Vision Corporation, (included as Appendix A to the preliminary Proxy Statement,
which is filed herewith as Exhibit (d)(3)).
(d)(1) Preliminary Copy of Letter to Stockholders.
(d)(2) Preliminary Copy of Notice of Special Meeting of
Stockholders.
(d)(3) Preliminary Proxy Statement.
(d)(4) Form of Proxy.
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(e) Text of Section 262 of the General Corporation Law of the State of
Delaware (included as Appendix B to the preliminary Proxy Statement, which is
filed herewith as Exhibit (d)(3)).
(f) Preliminary Proxy Statement (see Exhibit (d)(3)).
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SIGNATURES
After due inquiry and to the best of his knowledge and belief, each of
the undersigned certifies that the information set forth in this Statement is
true, complete and correct.
THERMO VISION CORPORATION
Dated: September 2, 1999 By: /s/ Roger Herd
-----------------------------------------
Name: Roger Herd
Title: President
VIZ ACQUISITION CORPORATION
Dated: September 2, 1999 By: /s/ Earl R. Lewis
-----------------------------------------
Name: Earl R. Lewis
Title: President
THERMO INSTRUMENT SYSTEMS INC.
Dated: September 2, 1999 By: /s/ Earl R. Lewis
-----------------------------------------
Name: Earl R. Lewis
Title: President and Chief Executive Officer
THERMO ELECTRON CORPORATION
Dated: September 2, 1999 By: /s/ Theo Melas-Kyriazi
-----------------------------------------
Name: Theo Melas-Kyriazi
Title: Vice President and
Chief Financial Officer
<PAGE> 17
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
99.17(c) Agreement and Plan of Merger dated as of August
25, 1999 by and among Thermo Instrument Systems
Inc., VIZ Acquisition Corporation and Thermo Vision
Corporation, (included as Appendix A to the
preliminary Proxy Statement, which is filed herewith
as Exhibit 99.17(d)(3)).
99.17(d)(1) Preliminary Copy of Letter to Stockholders.
99.17(d)(2) Preliminary Copy of Notice of Special Meeting of
Stockholders.
99.17(d)(3) Preliminary Proxy Statement.
99.17(d)(4) Form of Proxy.
99.17(e) Text of Section 262 of the General Corporation Law
of the State of Delaware (included as Appendix B to
the preliminary Proxy Statement, which is filed
herewith as Exhibit 99.17(d)(3)).
99.17(f) Preliminary Proxy Statement (see Exhibit
99.17(d)(3)).
<PAGE> 1
[VIZ LOGO]
, 1999
8 EAST FORGE PARKWAY
FRANKLIN, MASSACHUSETTS 02038
Dear Stockholder:
I am pleased to invite you to a Special Meeting of the stockholders of
Thermo Vision Corporation ("Thermo Vision") at which you will be asked to
approve an Agreement and Plan of Merger dated as of August 25, 1999 (the "Merger
Agreement") by and among Thermo Vision, Thermo Instrument Systems Inc., the
parent company of Thermo Vision ("Thermo Instrument"), and VIZ Acquisition
Corporation, a newly formed subsidiary of Thermo Instrument (the "Merger Sub").
The Special Meeting will take place at 10:00 a.m. on ,
, 1999 at the offices of Thermo Electron Corporation, 81 Wyman
Street, Waltham, Massachusetts 02454.
Under the terms of the Merger Agreement, Merger Sub would merge with and
into Thermo Vision, with Thermo Vision being the surviving corporation (the
"Merger"). Each issued and outstanding share of Thermo Vision common stock
(other than shares held by Thermo Instrument, Thermo Electron Corporation
("Thermo Electron") and stockholders who are entitled to and who have perfected
their dissenters' rights under Delaware law) would be converted into the right
to receive $7.00 in cash, without interest. Thermo Vision would become a private
company and a wholly owned subsidiary of Thermo Instrument and Thermo Electron.
The Merger is more fully described in the Merger Agreement, which is attached as
Appendix A to the enclosed Proxy Statement. If you choose to dissent from
approval of the Merger Agreement and wish to seek appraisal of the fair value of
your shares of Thermo Vision common stock, please refer to the sections of the
Proxy Statement regarding the rights of dissenting stockholders under Delaware
law.
Thermo Vision's Board of Directors believes that the proposed Merger is
both substantively and procedurally fair to the stockholders, including the
public stockholders, of Thermo Vision, and unanimously recommends that
stockholders vote "FOR" approval of the Merger Agreement. In considering the
recommendation of the Board of Directors with respect to the Merger Agreement,
stockholders should be aware that three of the four members of the Thermo Vision
Board of Directors are either directors of Thermo Instrument or Thermo Electron,
or are current or former employees of Thermo Electron or its affiliates, and
thus have interests that are in addition to, or different from, your interests
as stockholders of Thermo Vision.
Delaware law requires that a majority of the outstanding shares of Thermo
Vision common stock entitled to vote at the Special Meeting vote in favor of the
Merger Agreement for the Merger Agreement to be approved. Thermo Instrument,
which owns approximately 78% of Thermo Vision's outstanding common stock, and
Thermo Electron, which owns approximately 3% of Thermo Vision's outstanding
common stock, intend to vote their shares in favor of the Merger Agreement, thus
assuring that the Merger Agreement will be approved. However, under the Merger
Agreement, approval of the Merger also requires the affirmative vote of a
majority of the outstanding shares of the common stock of Thermo Vision voted at
the Special Meeting that are not owned by Thermo Instrument, Thermo Electron or
the officers and directors of Thermo Vision, Thermo Instrument, or Thermo
Electron. Only stockholders of record at the close of business on ,
1999 will receive notice of and be able to vote at the Special Meeting or any
adjournment or adjournments thereof.
The accompanying Proxy Statement provides you with a summary of the
proposed Merger and additional information about the parties involved and their
interests. Please give all this information your careful attention. You can also
obtain other information about Thermo Vision, Thermo Instrument and Thermo
Electron from documents filed with the Securities and Exchange Commission.
<PAGE> 2
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE TAKE THE TIME
TO VOTE BY COMPLETING AND MAILING THE ENCLOSED PROXY CARD TO US TODAY. IF YOU
DATE, SIGN AND MAIL YOUR PROXY CARD WITHOUT INDICATING HOW YOU WISH TO VOTE,
YOUR PROXY WILL BE COUNTED AS A VOTE IN FAVOR OF APPROVAL OF THE MERGER
AGREEMENT. YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES THAT
YOU OWN.
Your Board of Directors believes that the transaction with Thermo
Instrument is in the best interests of Thermo Vision and its stockholders,
including its public stockholders, and has unanimously approved it. Your Board
of Directors unanimously recommends that stockholders vote for the approval of
the Merger Agreement. On behalf of the Board of Directors, I urge you to sign,
date and return the enclosed Proxy Card today.
Please do not send any stock certificates to us now. If the Merger
Agreement is approved, we will send you instructions concerning the surrender of
your shares.
Thank you for your interest and participation.
Yours very truly,
/s/ ROGER HERD
------------------------------------
ROGER HERD
President
<PAGE> 1
VIZ LOGO
NOTICE OF SPECIAL MEETING
, 1999
To the Holders of the Common Stock of
THERMO VISION CORPORATION
I am pleased to give you notice of and cordially invite you to attend in
person or by proxy the Special Meeting of the stockholders of Thermo Vision
Corporation, a Delaware corporation (the "Company" or "Thermo Vision"), which
will be held on , , 1999, at 10:00 a.m., at the
offices of Thermo Electron Corporation, 81 Wyman Street, Waltham, Massachusetts
02454, and at any adjournment or adjournments thereof (the "Special Meeting").
At the Special Meeting, stockholders will:
1. Consider and vote on a proposal to approve an Agreement and Plan of
Merger dated as of August 25, 1999 (the "Merger Agreement") pursuant to
which VIZ Acquisition Corporation, a newly formed company (the "Merger
Sub"), will be merged with and into Thermo Vision (the "Merger"). Upon
the Merger, each stockholder of the Company (other than stockholders
who perfect their dissenters' rights, Thermo Instrument Systems Inc.
("Thermo Instrument") and Thermo Electron Corporation) will become
entitled to receive $7.00 in cash, without interest, for each
outstanding share of common stock, $.01 par value, of the Company (the
"Common Stock") owned by such stockholder immediately prior to the
effective time of the Merger. A copy of the Merger Agreement is
attached as Appendix A to and is described in the accompanying Proxy
Statement.
2. Transact such other business as may properly come before the Special
Meeting.
Only stockholders of record at the close of business on , 1999
will receive notice of and be able to vote at the Special Meeting.
The accompanying Proxy Statement describes the Merger Agreement, the
proposed Merger and the actions to be taken in connection with the Merger. The
Company's Bylaws require that the holders of a majority of the outstanding
shares of Common Stock entitled to vote be present or represented by proxy at
the Special Meeting in order to constitute a quorum for the transaction of
business. It is important that your shares be represented at the Special Meeting
regardless of the number of shares you hold. Whether or not you are able to be
present in person, please sign and return promptly the enclosed Proxy Card in
the accompanying envelope, which requires no postage if mailed in the United
States. You may revoke your proxy in the manner described in the accompanying
Proxy Statement at any time before it is voted at the Special Meeting.
Stockholders who properly demand appraisal prior to the stockholder vote at
the Special Meeting, who do not vote in favor of adoption of the Merger
Agreement and who otherwise comply with the provisions of Section 262 of the
General Corporation Law of the State of Delaware (the "DGCL") will be entitled,
if the Merger is completed, to statutory appraisal of the fair value of their
shares of Common Stock. See "RIGHTS OF DISSENTING STOCKHOLDERS" in the
accompanying Proxy Statement and the full text of Section 262 of the DGCL, which
is attached as Appendix B to and is described in the accompanying Proxy
Statement, for a description of the procedures that you must follow in order to
exercise your appraisal rights.
This Notice, the Proxy Card and Proxy Statement enclosed herewith are sent
to you by order of the Board of Directors.
SANDRA L. LAMBERT
Secretary
<PAGE> 2
WHETHER OR NOT YOU PLAN TO ATTEND, IT IS IMPORTANT THAT YOUR SHARES ARE
REPRESENTED AT THE SPECIAL MEETING. TO APPROVE AND ADOPT THE MERGER AGREEMENT,
THE AFFIRMATIVE VOTE OF (I) A MAJORITY OF THE OUTSTANDING SHARES OF COMMON STOCK
ENTITLED TO VOTE THEREON AND (II) A MAJORITY OF THE OUTSTANDING SHARES OF COMMON
STOCK THAT ARE VOTED AT THE SPECIAL MEETING BY STOCKHOLDERS OTHER THAN THERMO
INSTRUMENT, THERMO ELECTRON CORPORATION AND THE DIRECTORS AND OFFICERS OF THE
COMPANY, THERMO INSTRUMENT AND THERMO ELECTRON CORPORATION (THE "PUBLIC
STOCKHOLDERS") IS REQUIRED. YOU ARE REQUESTED TO PROMPTLY COMPLETE, SIGN AND
DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENVELOPE PROVIDED. YOU MAY
REVOKE YOUR PROXY AT ANY TIME PRIOR TO ITS EXERCISE IN THE MANNER DESCRIBED IN
THE ATTACHED PROXY STATEMENT. ANY STOCKHOLDER PRESENT AT THE SPECIAL MEETING MAY
REVOKE SUCH HOLDER'S PROXY AND VOTE PERSONALLY ON THE MERGER AGREEMENT AT THE
SPECIAL MEETING.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT. IN CONSIDERING THE RECOMMENDATION OF THE BOARD
OF DIRECTORS WITH RESPECT TO THE MERGER, THE PUBLIC STOCKHOLDERS SHOULD BE AWARE
THAT CERTAIN OFFICERS AND DIRECTORS OF THE COMPANY HAVE CERTAIN INTERESTS THAT
ARE IN ADDITION TO, OR DIFFERENT FROM, THE INTERESTS OF THE PUBLIC STOCKHOLDERS.
SEE "SPECIAL FACTORS -- CONFLICTS OF INTEREST."
IF A PROPERLY EXECUTED PROXY CARD IS SUBMITTED AND NO INSTRUCTIONS ARE
GIVEN, THE SHARES OF COMMON STOCK REPRESENTED BY THAT PROXY WILL BE VOTED "FOR"
APPROVAL OF THE MERGER AGREEMENT.
PLEASE DO NOT SEND YOUR STOCK CERTIFICATES TO THE COMPANY OR THE TRANSFER AGENT
AT THIS TIME.
<PAGE> 1
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is being furnished to the stockholders of Thermo
Vision Corporation, a Delaware corporation (the "Company" or "Thermo Vision"),
in connection with the solicitation by its Board of Directors (the "Board" or
the "Board of Directors") of proxies to be used at a Special Meeting of
stockholders to be held on , , 1999, at 10:00 a.m., at the
offices of Thermo Electron Corporation, 81 Wyman Street, Waltham, Massachusetts
02454, and at any adjournment or adjournments thereof (the "Special Meeting"). A
committee of the Board of Directors has fixed the close of business on
, 1999 as the record date (the "Record Date") for the determination
of stockholders entitled to notice of, and to vote at, the Special Meeting.
The Special Meeting has been called to consider and vote on a proposal to
approve an Agreement and Plan of Merger dated as of August 25, 1999 (the "Merger
Agreement"), which is attached to this Proxy Statement as Appendix A. Pursuant
to the Merger Agreement, VIZ Acquisition Corporation (the "Merger Sub"), a newly
formed Delaware corporation, will be merged with and into Thermo Vision (the
"Merger"), with Thermo Vision being the surviving corporation (the "Surviving
Corporation"). Thermo Vision is a majority-owned subsidiary of Thermo Instrument
Systems Inc., a Delaware corporation ("Thermo Instrument"), which in turn is a
majority-owned subsidiary of Thermo Electron Corporation, a Delaware corporation
("Thermo Electron"). The Merger Sub is jointly owned by Thermo Instrument and
Thermo Electron, and was organized by Thermo Instrument and Thermo Electron
solely to facilitate the Merger.
In the Merger, each outstanding share of common stock, $.01 par value, of
Thermo Vision (the "Common Stock") (other than shares held by stockholders who
are entitled to and who have perfected their Dissenters' Rights (as defined
below), shares held by Thermo Vision in treasury and shares held by Thermo
Instrument and Thermo Electron) will be canceled and converted automatically
into the right to receive $7.00 in cash, payable to the holder thereof, without
interest. See "THE MERGER." On May 21, 1999, the last trading day prior to the
date Thermo Electron first publicly announced a proposal (with no price having
been determined) to take Thermo Vision private, the closing price per share of
Common Stock reported in the consolidated transaction reporting system was
$4.00. On July 12, 1999, the last trading day prior to the public announcement
of the financial terms of the proposed Merger, the closing price per share of
Common Stock reported in the consolidated transaction reporting system was
$5.50. On , 1999, the last trading day prior to the printing of this
Proxy Statement, the closing price per share of Common Stock reported in the
consolidated transaction reporting system was $ .
The directors and officers of Thermo Vision immediately prior to the Merger
shall be the initial directors and officers of the Surviving Corporation;
however, Thermo Instrument intends to appoint a board of directors comprised
solely of members of the Surviving Corporation's and Thermo Instrument's
management after the Merger. All options to purchase Common Stock immediately
prior to the Merger shall be assumed by Thermo Instrument and converted into
options to purchase the common stock, $.10 par value, of Thermo Instrument. See
"THE MERGER -- Assumption of Thermo Vision Stock Options by Thermo Instrument."
Under Delaware law, approval of the Merger Agreement at the Special Meeting
will require the affirmative vote of holders of a majority of the outstanding
shares of Common Stock entitled to vote at the Special Meeting. Thermo
Instrument, which owns approximately 78% of the outstanding Common Stock, and
Thermo Electron, which owns approximately 3% of the outstanding Common Stock,
intend to vote their shares in favor of the Merger Agreement, thus assuring that
the Merger Agreement will be approved for purposes of Delaware law. However,
pursuant to the Merger Agreement, approval of the Merger will also require the
affirmative vote of a majority of the outstanding shares of Common Stock that
are voted at the Special Meeting by stockholders other than Thermo Instrument,
Thermo Electron and the directors and officers of the Company, Thermo Instrument
and Thermo Electron (the "Public Stockholders").
<PAGE> 2
The Board of Directors recommends that stockholders vote "FOR" approval and
adoption of the Merger Agreement. In considering the recommendation of the Board
of Directors with respect to the Merger, the Public Stockholders should be aware
that certain officers and directors of the Company have certain interests that
are in addition to, or different from, the interests of the Public Stockholders.
See "SPECIAL FACTORS -- Conflicts of Interest."
Stockholders should read and consider carefully the information contained
in this Proxy Statement. The consummation of the Merger is subject to certain
conditions. Accordingly, even if the stockholders approve the Merger, there can
be no assurance that the Merger will be consummated. This Proxy Statement, the
Notice of Special Meeting and the enclosed Proxy Card are first being mailed to
stockholders of the Company on or about , 1999.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
2
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER...................... 5
SUMMARY..................................................... 8
Date, Time and Place of the Special Meeting............... 8
Purpose of the Special Meeting............................ 8
Record Date and Quorum.................................... 8
Vote Required and Revocation of Proxies................... 8
Parties to the Merger..................................... 9
The Merger................................................ 10
Effective Time of the Merger and Payment for Shares....... 10
Assumption of Thermo Vision Stock Options by Thermo
Instrument............................................. 10
The Board's Recommendation................................ 11
Purpose and Reasons of Thermo Instrument and Thermo
Electron for the Merger................................ 11
Position of Thermo Instrument and Thermo Electron as to
Fairness of the Merger................................. 12
Conflicts of Interest..................................... 13
Certain Effects of the Merger............................. 13
Stockholder Litigation.................................... 14
Conditions to the Merger, Termination and Expenses........ 14
Federal Income Tax Consequences........................... 15
Rights of Dissenting Stockholders......................... 15
Accounting Treatment...................................... 15
Market Prices of Common Stock and Dividends............... 16
SPECIAL FACTORS............................................. 17
Background of the Merger.................................. 17
The Board's Recommendation................................ 19
Financial Analysis........................................ 22
Purpose and Reasons of Thermo Instrument and Thermo
Electron for the Merger................................ 25
Position of Thermo Instrument and Thermo Electron as to
Fairness of the Merger................................. 26
Conflicts of Interest..................................... 26
Certain Effects of the Merger............................. 27
Conduct of Thermo Vision's Business After the Merger...... 28
Conduct of Thermo Vision's Business if the Merger is Not
Consummated............................................ 28
Stockholder Litigation.................................... 28
THE SPECIAL MEETING......................................... 30
Proxy Solicitation........................................ 30
Record Date and Quorum Requirement........................ 30
Voting Procedures......................................... 30
Voting and Revocation of Proxies.......................... 31
Effective Time............................................ 31
THE MERGER.................................................. 32
Conversion of Securities.................................. 32
Assumption of Thermo Vision Stock Options by Thermo
Instrument............................................. 33
Deferred Compensation Plan for Directors.................. 33
Transfer of Shares........................................ 33
Conditions................................................ 33
Representations and Warranties............................ 34
Covenants................................................. 35
Indemnification and Insurance............................. 36
Termination, Amendment and Waiver......................... 36
Source of Funds........................................... 37
Expenses.................................................. 37
Accounting Treatment...................................... 37
Regulatory Approvals...................................... 37
RIGHTS OF DISSENTING STOCKHOLDERS........................... 38
FEDERAL INCOME TAX CONSEQUENCES............................. 41
</TABLE>
3
<PAGE> 4
<TABLE>
<S> <C>
BUSINESS OF THE COMPANY..................................... 42
Overview.................................................. 42
Principal Products and Services........................... 42
New Products; Research and Development.................... 44
Raw Materials............................................. 44
Patents, Licenses and Trademarks.......................... 44
Seasonal Influences....................................... 44
Working Capital Requirements.............................. 45
Dependency on a Single Customer........................... 45
Backlog................................................... 45
Government Contracts...................................... 45
Competition............................................... 45
Environmental Protection Regulations...................... 45
Number of Employees....................................... 45
Properties................................................ 46
SELECTED FINANCIAL INFORMATION and RATIO OF EARNINGS TO
FIXED CHARGES............................................. 47
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................. 48
Overview.................................................. 48
Results of Operations..................................... 48
Liquidity and Capital Resources........................... 50
Market Risk............................................... 51
Year 2000................................................. 51
CERTAIN PROJECTED FINANCIAL DATA............................ 53
Projections............................................... 55
RISK FACTORS................................................ 56
MANAGEMENT.................................................. 60
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................ 62
Principal Stockholder..................................... 62
Management................................................ 62
CERTAIN TRANSACTIONS........................................ 64
CERTAIN INFORMATION CONCERNING THE MERGER SUB, THERMO
INSTRUMENT AND THERMO ELECTRON............................ 67
The Merger Sub............................................ 67
Thermo Instrument......................................... 67
Thermo Electron........................................... 67
INDEPENDENT PUBLIC ACCOUNTANTS.............................. 67
STOCKHOLDER PROPOSALS....................................... 67
ADDITIONAL INFORMATION...................................... 68
AVAILABLE INFORMATION....................................... 68
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS.................. F-1
APPENDICES
APPENDIX A -- Agreement and Plan of Merger.................. A-1
APPENDIX B -- Text of Section 262 of the General Corporation
Law of the State of Delaware.............................. B-1
APPENDIX C -- Information Concerning Directors and Executive
Officers of the Company, Thermo Instrument,
the Merger Sub and Thermo Electron............ C-1
APPENDIX D -- Information Concerning Transactions in the
Common Stock of the Company................... D-1
</TABLE>
4
<PAGE> 5
QUESTIONS AND ANSWERS ABOUT THE MERGER
1. WHEN AND WHERE IS THE THERMO VISION SPECIAL MEETING?
The Thermo Vision Special Meeting will take place on , ,
1999, at 10:00 a.m., at the offices of Thermo Electron Corporation, 81 Wyman
Street, Waltham, Massachusetts 02454.
2. WHAT PROPOSALS ARE THERMO VISION STOCKHOLDERS VOTING ON?
Thermo Vision stockholders are being asked to approve the Merger Agreement.
The Merger Agreement provides that a subsidiary of Thermo Instrument will merge
with and into Thermo Vision and, as a result, Thermo Instrument and Thermo
Electron will collectively own all of the outstanding Common Stock of Thermo
Vision.
3. WHAT WILL THERMO VISION STOCKHOLDERS RECEIVE IN THE MERGER?
In the Merger, Thermo Vision stockholders will receive $7.00 in cash per
share of Common Stock. The amount of cash consideration to be paid to Thermo
Vision stockholders will equal approximately $10.6 million in the aggregate.
On May 21, 1999, the last trading day prior to the date Thermo Electron
first publicly announced a proposal (with no price having been determined) to
take Thermo Vision private, the closing price of the Common Stock reported in
the consolidated transaction reporting system was $4.00. On July 12, 1999, the
last trading day prior to the public announcement of the financial terms of the
proposed Merger, the closing price of the Common Stock reported in the
consolidated transaction reporting system was $5.50. On , 1999, the
last trading day prior to the printing of this Proxy Statement, the closing
price of the Common Stock reported in the consolidated transaction reporting
system was $ .
4. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER?
For federal income tax purposes, each stockholder's receipt of $7.00 per
share in the Merger will be treated as a taxable sale of the holder's Common
Stock. Each stockholder's gain or loss per share will equal the difference
between $7.00 and the stockholder's basis in the share of Common Stock. Thermo
Vision stockholders should consult their tax advisors for a full understanding
of the tax consequences of the Merger. No gain or loss for federal income tax
purposes will be recognized by Thermo Vision, Thermo Instrument or the Merger
Sub by reason of the Merger.
5. WHY IS THERMO VISION'S BOARD OF DIRECTORS RECOMMENDING APPROVAL OF THE
MERGER AGREEMENT?
Thermo Vision's Board of Directors believes that the proposed transaction
is fair to, and in the best interests of, Thermo Vision and its stockholders,
including the Public Stockholders.
6. WHAT RIGHTS DO STOCKHOLDERS HAVE IF THEY OPPOSE THE MERGER?
Stockholders who wish to dissent from the Merger may seek appraisal of the
fair value of their shares, but only if they strictly comply with all of the
procedures under Delaware law that are summarized on pages 38-39 of this Proxy
Statement.
7. WHAT STOCKHOLDER VOTE IS REQUIRED TO APPROVE THE MERGER AGREEMENT?
Under Delaware law, a majority of the outstanding shares of Common Stock
entitled to vote must vote to approve the Merger Agreement. Thermo Instrument
and Thermo Electron collectively own approximately 81% of the outstanding Common
Stock, and intend to vote in favor of approval of the Merger Agreement.
Accordingly, the vote approving the Merger Agreement is assured for Delaware law
purposes. Approval of the Merger will also require the affirmative vote of a
majority of the outstanding shares of Common Stock voted at the Special Meeting
by stockholders other than Thermo Instrument, Thermo Electron and the officers
and directors of Thermo Vision, Thermo Instrument and Thermo Electron.
5
<PAGE> 6
8. WHAT HAPPENS IF I DO NOT INSTRUCT A BROKER HOLDING MY SHARES AS TO HOW TO
VOTE THEM OR I ABSTAIN FROM VOTING?
If your shares are held by a broker as nominee, your broker will not be
able to vote your shares without instructions from you. If your broker is unable
to vote your shares or if you abstain, it will have the effect of voting against
approval of the Merger Agreement under Delaware law; however, Thermo Instrument
and Thermo Electron own sufficient shares to satisfy the Delaware law voting
requirement for approval of the Merger Agreement. The Merger Agreement also
requires approval of the outstanding shares voted at the Special Meeting by
stockholders other than Thermo Instrument, Thermo Electron and the officers and
directors of Thermo Vision, Thermo Instrument and Thermo Electron. With respect
to this voting requirement, broker non-votes and abstentions are not counted as
votes cast at the Special Meeting and therefore will reduce the number, but not
the percentage, of the affirmative votes necessary for approval of the Merger.
In other words, abstentions and broker non-votes will have no effect on the
outcome of the minority vote at the Special Meeting.
9. WHO IS ENTITLED TO VOTE?
Holders of record of Common Stock at the close of business on
, 1999, the record date for the Special Meeting, are entitled to
vote at the Special Meeting.
10. WHEN IS THE MERGER EXPECTED TO BE COMPLETED?
We are working to complete all aspects of the Merger as quickly as
possible. If the Merger Agreement is approved by the stockholders, we currently
expect the Merger to be completed by December 31, 1999.
11. WHAT DO I NEED TO DO NOW?
After you have carefully read this Proxy Statement, please complete, sign
and mail your Proxy Card in the enclosed return envelope as soon as possible.
That way, your shares can be represented at the Special Meeting. If your shares
are held by a broker as nominee, you should receive a Proxy Card from your
broker.
Thermo Vision stockholders must return their Proxy Cards before the Special
Meeting in order for their votes to be counted at the Special Meeting.
12. CAN I CHANGE MY VOTE AFTER I HAVE MAILED IN MY SIGNED PROXY CARD?
You may change your vote at any time before the vote takes place at the
Special Meeting. To do so, you can attend the Special Meeting and vote in
person, you can complete and send a new Proxy Card with a later date or you can
send a written notice stating you would like to revoke your proxy. The notice
should be sent to: Thermo Vision Corporation, c/o Thermo Electron Corporation,
81 Wyman Street, P.O. Box 9046, Waltham, Massachusetts 02454-9046, Attention:
Corporate Secretary.
13. SHOULD I SEND IN MY THERMO VISION STOCK CERTIFICATES NOW?
No. You should continue to hold your certificates for Common Stock. If the
Merger Agreement is approved, you will receive a package containing instructions
on how to exchange your shares of Common Stock for cash.
14. WHAT WILL HAPPEN TO THE THERMO VISION STOCK OPTIONS?
Options to purchase Common Stock outstanding on the effective date of the
Merger, whether or not then exercisable, will be assumed by Thermo Instrument
and converted into options to purchase the common stock of Thermo Instrument.
6
<PAGE> 7
15. WHO SHOULD I CALL IF I HAVE ANY ADDITIONAL QUESTIONS?
You should call Thermo Vision Investor Relations at (781) 622-1111.
16. WHAT OTHER MATTERS WILL BE VOTED ON AT THE SPECIAL MEETING?
We do not expect to ask you to vote on any other matters at the Special
Meeting. If you are voting by proxy, however, we ask that you give the proxies
listed in the Proxy Card the power to act in their discretion upon any other
matters that may come before the Special Meeting.
7
<PAGE> 8
SUMMARY
The following is a summary of certain information contained elsewhere in
this Proxy Statement. Reference is made to, and this Summary is qualified in its
entirety by, the more detailed information contained elsewhere or incorporated
by reference in this Proxy Statement. Stockholders should read this Proxy
Statement and its appendices in their entirety before voting.
DATE, TIME AND PLACE OF THE SPECIAL MEETING
The Special Meeting of stockholders of Thermo Vision Corporation, a
Delaware corporation (the "Company" or "Thermo Vision"), will be held on
, , 1999, at 10:00 a.m., at the offices of Thermo
Electron Corporation, 81 Wyman Street, Waltham, Massachusetts 02454.
PURPOSE OF THE SPECIAL MEETING
At the Special Meeting, the stockholders of the Company will consider and
vote on a proposal to approve an Agreement and Plan of Merger dated as of August
25, 1999 (the "Merger Agreement"), which is attached to this Proxy Statement as
Appendix A. The Merger Agreement provides that VIZ Acquisition Corporation (the
"Merger Sub"), a newly formed Delaware corporation that is a subsidiary of
Thermo Instrument Systems Inc., a Delaware corporation ("Thermo Instrument"),
would merge with and into Thermo Vision (the "Merger"). Thermo Vision would be
the surviving corporation (the "Surviving Corporation") in the Merger, and each
outstanding share of common stock, $.01 par value, of Thermo Vision (the "Common
Stock"), other than shares held by stockholders who are entitled to and who have
perfected their Dissenters' Rights (as defined below), shares held by Thermo
Vision in treasury and shares held by Thermo Instrument and Thermo Electron
Corporation, a Delaware corporation ("Thermo Electron"), will be converted
automatically into the right to receive $7.00 in cash, payable to the holders
thereof, without interest (the "Cash Merger Consideration"). See "THE MERGER."
RECORD DATE AND QUORUM
A committee of the Board of Directors of the Company (the "Board" or the
"Board of Directors") has fixed the close of business on , 1999 as
the record date (the "Record Date") for the determination of stockholders
entitled to notice of, and to vote at, the Special Meeting. Each holder of
record of Common Stock at the close of business on the Record Date is entitled
to one vote for each share then held on each matter submitted to a vote of
stockholders. At the close of business on the Record Date, there were
shares of Common Stock outstanding, of which
shares were held by stockholders of the Company other than Thermo Instrument,
Thermo Electron and the directors and officers of the Company, Thermo Instrument
and Thermo Electron (the "Public Stockholders"). The holders of a majority of
the outstanding shares of Common Stock entitled to vote at the Special Meeting
must be present in person or represented by proxy to constitute a quorum for the
transaction of business. Abstentions will be counted as shares present and
entitled to vote for purposes of determining whether a quorum exists; however,
broker non-votes will not be counted as shares present and entitled to vote for
purposes of determining whether a quorum exists. See "THE SPECIAL MEETING --
Record Date and Quorum Requirement."
VOTE REQUIRED AND REVOCATION OF PROXIES
Under Delaware law, holders of a majority of the outstanding shares of
Common Stock entitled to vote at the Special Meeting must vote to approve the
Merger Agreement. For the purposes of this vote, a failure to vote, a vote to
abstain and a broker non-vote will each have the same legal effect as a vote
cast against approval of the Merger Agreement. Thermo Instrument, which owns
approximately 78% of the outstanding Common Stock, and Thermo Electron, which
owns approximately 3% of the outstanding Common Stock, own enough shares of
Common Stock to vote to approve the Merger Agreement under Delaware law without
the vote of any other holders of Common Stock and intend to vote their shares in
favor of the Merger Agreement. However, the Merger Agreement also requires the
affirmative vote of a
8
<PAGE> 9
majority of the outstanding shares of Common Stock that are voted at the Special
Meeting by the Public Stockholders. For purposes of this vote, abstentions and
broker non-votes will reduce the absolute number, but not the percentage, of
affirmative votes necessary to approve the Merger. In other words, abstentions
and broker non-votes will not be included in the determination of the outcome of
the vote of the Public Stockholders. See "THE SPECIAL MEETING -- Voting
Procedures."
A stockholder who returns a Proxy Card may revoke the proxy at any time
before the stockholder's shares are voted at the Special Meeting. The proxy may
be revoked by written notice to the Secretary of the Company received prior to
the Special Meeting, by executing and returning a later-dated Proxy Card or by
voting by ballot at the Special Meeting. See "THE SPECIAL MEETING -- Voting and
Revocation of Proxies."
If a properly executed Proxy Card is submitted and no instructions are
given, the shares of Common Stock represented by that proxy will be voted "FOR"
the approval of the proposed Merger Agreement.
PARTIES TO THE MERGER
The Company
The Company designs, manufactures, and markets a diverse array of photonics
products, which are light-based technologies 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 Instruments Corporation and Laser Science,
Inc. subsidiaries and its Thermo Vision Colorado division, manufactures
analyzers that combine optical components and signal processors, which are 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 Corion division and its
Hilger Crystals Limited and Thermo Vision Opticon Corporation subsidiaries,
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 for a purchase price of $4,000,000. The
Sensors and Imaging Systems segment, which consists of the Company's Centro
Vision, Inc. and CID Technologies Inc. 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.
The principal executive offices of the Company are located at 8 East Forge
Parkway, Franklin, Massachusetts 02038, and its telephone number is (508)
553-5000. See "BUSINESS OF THE COMPANY."
The Merger Sub
The Merger Sub is a newly formed Delaware corporation organized at the
direction of Thermo Instrument for the sole purpose of effecting the Merger and
has not conducted any prior business.
The principal executive offices of the Merger Sub are located at 81 Wyman
Street, P.O. Box 9046, Waltham, Massachusetts 02454-9046, and its telephone
number is (781) 622-1000. See "CERTAIN INFORMATION CONCERNING THE MERGER SUB,
THERMO INSTRUMENT AND THERMO ELECTRON."
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<PAGE> 10
Thermo Instrument
Thermo Instrument develops, manufactures and markets analytical instruments
used to identify complex chemical compounds, toxic metals and other elements in
a broad range of liquids and solids. Thermo Instrument also develops and
manufactures instruments used to monitor radioactivity and air pollution; life
sciences instruments and consumables; and imaging, inspection, measurement and
control instruments. These products are used for multiple applications in a
range of industries, including industrial processing, food and beverage
production, life sciences research and medical diagnostics.
The principal executive offices of Thermo Instrument are located at 81
Wyman Street, P.O. Box 9046, Waltham, Massachusetts 02454-9046, and its
telephone number is (781) 622-1000. See "CERTAIN INFORMATION CONCERNING THE
MERGER SUB, THERMO INSTRUMENT AND THERMO ELECTRON."
THE MERGER
The Merger Agreement provides that subject to satisfaction of certain
conditions, the Merger Sub will be merged with and into Thermo Vision, and that
following the Merger, the separate existence of the Merger Sub will cease and
Thermo Vision will continue as the Surviving Corporation. At the effective time
of the Merger, which shall be the date and time of filing of the Certificate of
Merger with the Secretary of State of the State of Delaware (the "Effective
Time") (and the date on which the Effective Time occurs being the "Effective
Date"), and subject to the terms and conditions set forth in the Merger
Agreement, each share of issued and outstanding Common Stock (other than shares
as to which Dissenters' Rights (as defined below) are properly perfected and not
withdrawn, shares held by Thermo Vision in treasury and shares held by Thermo
Instrument and Thermo Electron) will, by virtue of the Merger, be canceled and
converted into the right to receive the Cash Merger Consideration. As a result
of the Merger, Thermo Vision's Common Stock will no longer be publicly traded
and will be 100% owned by Thermo Instrument and Thermo Electron. The aggregate
consideration payable in the Merger, assuming no Dissenters' Rights (as defined
below) are exercised, is approximately $10.6 million. See "THE MERGER."
EFFECTIVE TIME OF THE MERGER AND PAYMENT FOR SHARES
The Effective Time is currently expected to occur as soon as practicable
after the Special Meeting, subject to approval of the Merger Agreement at the
Special Meeting and satisfaction or waiver of the terms and conditions of the
Merger Agreement. See "-- Conditions to the Merger, Termination and Expenses"
and "THE MERGER -- Conditions." Detailed instructions with regard to the
surrender of stock certificates, together with a letter of transmittal, will be
forwarded to stockholders by the Company's transfer agent, American Stock
Transfer & Trust Company (the "Payment Agent"), promptly following the Effective
Time. Stockholders should not submit their stock certificates to the Payment
Agent until they have received such materials. The Payment Agent will send
payment of the Cash Merger Consideration to stockholders as promptly as
practicable following receipt by the Payment Agent of their stock certificates
and other required documents. No interest will be paid or accrued on the cash
payable upon the surrender of stock certificates. See "THE MERGER -- Conversion
of Securities." Stockholders should not send any stock certificates to the
Company or the Payment Agent at this time.
ASSUMPTION OF THERMO VISION STOCK OPTIONS BY THERMO INSTRUMENT
At the Effective Time, each outstanding option to purchase shares of Common
Stock (each, a "Thermo Vision Stock Option") under the Thermo Vision Equity
Incentive Plan (the "Thermo Vision Stock Option Plan"), whether or not
exercisable, will be assumed by Thermo Instrument. Each Thermo Vision Stock
Option so assumed by Thermo Instrument will continue to have, and be subject to,
the same terms and conditions set forth in the Thermo Vision Stock Option Plan
immediately prior to the Effective Time, except that (i) each Thermo Vision
Stock Option will be exercisable (or will become exercisable in accordance with
its terms) for that number of whole shares of common stock, $.10 par value per
share, of
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<PAGE> 11
Thermo Instrument ("Thermo Instrument Common Stock") equal to the product of the
number of shares of Common Stock that were issuable upon exercise of such Thermo
Vision Stock Option immediately prior to the Effective Time multiplied by a
fraction (the "Exchange Ratio"), the numerator of which is the Cash Merger
Consideration and the denominator of which is the closing price (the "Closing
Price") of Thermo Instrument Common Stock on the day immediately preceding the
Effective Date as reported in the consolidated transaction reporting system,
rounded down to the nearest whole number of shares of Thermo Instrument Common
Stock, and (ii) the per share exercise price for the shares of Thermo Instrument
Common Stock issuable upon exercise of each such assumed Thermo Vision Stock
Option will be equal to the quotient determined by dividing the exercise price
per share of Common Stock at which such Thermo Vision Stock Option was
exercisable immediately prior to the Effective Time by the Exchange Ratio,
rounded up to the nearest whole cent.
At the Effective Time, each outstanding option to purchase shares of Common
Stock (each a "Thermo Vision ESPP Stock Option") under the Thermo Vision
Employees' Stock Purchase Plan (the "Thermo Vision ESPP") will also be assumed
by Thermo Instrument. Each Thermo Vision ESPP Stock Option so assumed by Thermo
Instrument will continue to have, and be subject to, the same terms and
conditions as set forth in the Thermo Vision ESPP immediately prior to the
Effective Time except that (i) the assumed option shall be exercisable for
shares of Thermo Instrument Common Stock; (ii) the purchase price per share of
Thermo Instrument Common Stock shall be the lower of (a) 85% of (x) the per
share market value of the Common Stock on the grant date of the option divided
by (y) the Exchange Ratio, with the resulting price rounded up to the nearest
whole cent, and (b) 85% of the market value of Thermo Instrument Common Stock as
of the exercise date of the option; and (iii) the $25,000 limit under Section
9.2(i) of the Thermo Vision ESPP shall be applied by taking into account Thermo
Instrument's assumption of the Thermo Vision ESPP Stock Options in accordance
with Section 423(b)(8) of the Internal Revenue Code of 1986, as amended, and
applicable regulations. See "THE MERGER -- Assumption of Thermo Vision Stock
Options by Thermo Instrument."
THE BOARD'S RECOMMENDATION
On July 12, 1999, the Board of Directors held a meeting to consider and
discuss the proposed transaction. At the meeting the Board reviewed and
evaluated a financial analysis prepared by the chief financial officer of the
Company, Thermo Instrument and Thermo Electron and his staff and discussed and
analyzed the terms of the proposed Merger Agreement. Following this discussion,
the Board of Directors unanimously approved the Merger Agreement, declared its
advisability and recommended that the stockholders of the Company approve the
Merger Agreement. See "SPECIAL FACTORS - Financial Analysis." In connection with
its recommendation, the Board determined that the Merger Agreement was both
substantively and procedurally fair to the Public Stockholders. In reaching its
decision to recommend approval of the Merger Agreement, the Board also
considered factors set forth elsewhere in this Proxy Statement. See "SPECIAL
FACTORS -- The Board's Recommendation."
In considering the recommendation of the Board of Directors with respect to
the Merger, the Public Stockholders should be aware that certain officers and
directors of the Company have certain interests that are in addition to, or
different from, the interests of the Public Stockholders. See "SPECIAL FACTORS
- -- Conflicts of Interest."
The Board unanimously recommends that the Thermo Vision stockholders vote
"FOR" approval of the Merger Agreement.
PURPOSE AND REASONS OF THERMO INSTRUMENT AND THERMO ELECTRON FOR THE MERGER
The purpose of Thermo Instrument and Thermo Electron for engaging in the
transactions contemplated by the Merger Agreement is for Thermo Instrument to
acquire all of the outstanding shares of Common Stock, other than the shares
held by Thermo Electron. In determining to acquire such shares of Common Stock
at this time, Thermo Instrument and Thermo Electron considered the following
factors: (i) recent public capital market trends affecting micro-cap companies;
(ii) the latest market trends in the
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<PAGE> 12
product markets in which the Company competes, primarily the cyclicality of the
semiconductor industry; (iii) the debt owed by the Company to, primarily, Thermo
Electron; (iv) the reduction in the amount of public information available to
competitors about Thermo Vision's business that would result from the
termination of the Company's obligations under the reporting requirements of the
Securities and Exchange Commission (the "Commission"), (v) the elimination of
additional burdens on management associated with public reporting and other
tasks resulting from the Company's public company status; (vi) the decrease in
costs, particularly those associated with being a public company; and (vii) the
greater flexibility that the Company's management would have to focus on
long-term business goals, as opposed to quarterly earnings, as a non-reporting
company.
Thermo Instrument also considered the advantages and disadvantages of
certain alternatives to taking Thermo Vision private, including leaving Thermo
Vision as a public majority-owned subsidiary of Thermo Instrument. Thermo
Instrument considered the number of Thermo Vision shares held by the Public
Stockholders, recent trends in the price of the Common Stock and the relative
lack of liquidity for the Common Stock. Thermo Instrument also reviewed the net
overall cost of the transaction and its benefits. Thermo Instrument also
explored alternative uses for the cash proposed to be used for this transaction.
After consideration of these various factors, Thermo Instrument decided to make
a proposal to Thermo Vision to acquire for cash, through a merger, all of the
outstanding shares of Common Stock that it and Thermo Electron did not own at a
price of $7.00 per share, which represented a premium of (i) approximately 75%
over the closing price of the Common Stock reported in the consolidated
transaction reporting system on May 21, 1999, the last trading day immediately
prior to Thermo Electron's first public announcement of a proposal (with no
price having been determined) to take Thermo Vision private and (ii)
approximately 27% over the closing price of the Common Stock reported in the
consolidated transaction reporting system on July 12, 1999, the last trading day
immediately prior to the public announcement of the financial terms of Thermo
Instrument's proposal. Thermo Instrument proposed to structure the transaction
as a cash merger in order to transfer ownership of the equity interest in the
Company in a single transaction and provide the stockholders other than Thermo
Instrument and Thermo Electron with prompt payment in cash in exchange for their
shares. See "SPECIAL FACTORS -- Purpose and Reasons of Thermo Instrument and
Thermo Electron for the Merger."
Thermo Electron beneficially owns, in the aggregate, directly and
indirectly through Thermo Instrument, approximately 81% of the outstanding
Common Stock. See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT -- Principal Stockholder."
POSITION OF THERMO INSTRUMENT AND THERMO ELECTRON AS TO FAIRNESS OF THE MERGER
Thermo Instrument and Thermo Electron considered the analyses and findings
of the Thermo Vision Board (i) with respect to the fairness, from a financial
point of view, of the consideration of $7.00 per share in cash payable under the
Merger Agreement to the Public Stockholders (see "SPECIAL FACTORS -- Financial
Analysis") and (ii) with respect to the fairness of the terms of the Merger
Agreement to the Public Stockholders (see "SPECIAL FACTORS -- The Board's
Recommendation"). As of the date of the Merger Agreement, each of Thermo
Instrument and Thermo Electron adopted the analyses and findings of the Thermo
Vision Board with respect to the fairness of the Merger. Based on the analyses
and findings of the Thermo Vision Board, Thermo Instrument and Thermo Electron
believe that the Merger is both procedurally and substantively fair to the
Public Stockholders and that the Cash Merger Consideration is fair to the Public
Stockholders from a financial point of view. Neither Thermo Instrument nor
Thermo Electron attached specific weights to any factors in reaching its
respective belief as to fairness. Thermo Instrument and Thermo Electron are not
making any recommendation as to how the Public Stockholders should vote on the
Merger Agreement. See "SPECIAL FACTORS -- Position of Thermo Instrument and
Thermo Electron as to Fairness of the Merger."
The Public Stockholders should be aware that certain officers and directors
of Thermo Instrument and Thermo Electron are also officers and directors of the
Company and have certain interests that are in addition to, or different from,
the interests of the Public Stockholders. See "SPECIAL FACTORS -- Conflicts of
Interest." Thermo Instrument and Thermo Electron considered these potential
conflicts of
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<PAGE> 13
interest and based in part thereon, Thermo Instrument's proposed offer was
conditioned on, among other things, the approval of the Merger Agreement by an
affirmative vote of a majority of the Public Stockholders voting on the
transaction at the Special Meeting. See "THE MERGER - Conditions."
CONFLICTS OF INTEREST
In considering the recommendation of the Board with respect to the Merger,
the Public Stockholders should be aware that certain officers and directors of
Thermo Vision have interests in connection with the Merger that present them
with actual or potential conflicts of interest, which are described in more
detail under "SPECIAL FACTORS -- Conflicts of Interest."
The Thermo Vision Directors and Executive Officers
The members of the Board of Directors and executive officers of Thermo
Vision own in the aggregate 24,460 shares of Common Stock and will receive a
payment for their shares of Common Stock in the aggregate amount of $171,220
upon consummation of the Merger. In addition, such Board members and executive
officers hold options to acquire an aggregate of 156,000 shares of Common Stock,
with exercise prices ranging from $2.73 to $7.50, which will be assumed by
Thermo Instrument and converted into options to acquire shares of Thermo
Instrument Common Stock on the same terms as all the other holders of Thermo
Vision Stock Options. See "THE MERGER -- Assumption of Thermo Vision Stock
Options by Thermo Instrument." Further, deferred units equal to 601 shares of
Common Stock have accumulated under the Company's deferred compensation plan for
directors for the benefit of Dr. Elias P. Gyftopoulos, which units will be
converted into the right to receive the Cash Merger Consideration per unit for
an aggregate cash payment of $4,207. See "THE MERGER -- Deferred Compensation
Plan for Directors." Such Board members and executive officers also beneficially
own shares of common stock of Thermo Instrument and Thermo Electron as set forth
in more detail under "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT -- Management." Further, certain members of the Board and certain
executive officers hold directorship or officer positions with Thermo Instrument
and/or Thermo Electron. See "MANAGEMENT."
Indemnification and Insurance
The Merger Agreement provides that for a period of six years after the
Effective Time, Thermo Instrument will, and will cause the Surviving Corporation
to, fulfill and honor in all respects the indemnification obligations of Thermo
Vision, pursuant to Thermo Vision's Certificate of Incorporation and Bylaws,
each as in effect immediately prior to the Effective Time, to those individuals
who were directors or officers of Thermo Vision at the Effective Time. In
addition, the directors and officers of the Company will be provided with
continuing directors' and officers' liability insurance coverage for a period of
six years following the Merger, subject to certain limitations. See "SPECIAL
FACTORS -- Conflicts of Interest" and "THE MERGER -- Indemnification and
Insurance."
CERTAIN EFFECTS OF THE MERGER
As a result of the Merger, the entire equity interest in the Company will
be beneficially owned by Thermo Electron, directly and indirectly through Thermo
Instrument. Thermo Electron and Thermo Instrument will have complete control
over the conduct of the Company's business and will have 100% interest in the
net book value and net earnings of the Company and any future increases in the
value of the Company. Thermo Instrument's and Thermo Electron's combined
ownership of the Company prior to the transaction contemplated herein aggregated
approximately 81%. Upon completion of this transaction, Thermo Instrument's and
Thermo Electron's aggregate interest in the Company's net book value of
$32,205,000 on July 3, 1999 and net earnings of $221,000 and $92,000 for the
year ended January 2, 1999 and the six months ended July 3, 1999, respectively,
would increase from approximately 81% of such amounts to 100% of such amounts.
The Public Stockholders will no longer have any interest in, and will not be
stockholders of, Thermo Vision and therefore will not participate in Thermo
Vision's future earnings and potential growth and will no longer bear the risk
of any decreases in the value of the Company.
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<PAGE> 14
Instead, the stockholders of the Company other than Thermo Instrument, Thermo
Electron and holders who perfect their Dissenters' Rights (as defined below)
will have the right to receive the Cash Merger Consideration for each share
held.
In addition, the Common Stock will no longer be traded on the American
Stock Exchange (the "AMEX") and price quotations with respect to sales of shares
in the public market will no longer be available. The registration of the Common
Stock under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), will be terminated, and this termination will eliminate the Company's
obligation to file periodic financial and other information with the Commission
and will make most other provisions of the Exchange Act inapplicable. See
"SPECIAL FACTORS -- Certain Effects of the Merger."
STOCKHOLDER LITIGATION
On July 15, 1999, a putative class action was filed in the Court of
Chancery of the State of Delaware in and for New Castle County by a stockholder
of the Company. The complaint names the Company, Thermo Instrument and certain
directors of the Company as defendants and alleges, among other things, that the
defendants violated their fiduciary and other common law duties owed to the
plaintiff and the other stockholders of the Company other than the named
defendants and the affiliates of the named defendants because the proposed price
of $7.00 per share to be paid to the Company's stockholders under the terms of
the proposed Merger Agreement is allegedly unfair and grossly inadequate. The
complaint requests that the Court of Chancery declare that the action is a
proper class action, direct that the defendants account to the plaintiff and the
other members of the putative class for all damages to be suffered by them and
account for all profits and any special benefits Thermo Instrument obtains as a
result of the alleged wrongdoing of the defendants, award attorneys' fees and
costs, and grant such other relief as may be just and proper. See SPECIAL
FACTORS - Stockholder Litigation."
CONDITIONS TO THE MERGER, TERMINATION AND EXPENSES
Each party's obligation to effect the Merger is subject to satisfaction of
a number of conditions, including with respect to one or both parties: (i) the
Merger Agreement shall have been approved and adopted by the affirmative vote of
(a) the holders of a majority of the outstanding shares of Common Stock entitled
to vote thereon in accordance with the provisions of Section 251 of the General
Corporation Law of the State of Delaware (the "DGCL") and (b) the majority of
the outstanding shares of Common Stock voted at the Special Meeting by the
Public Stockholders; (ii) no court, administrative agency or commission or other
governmental or regulatory body or authority or instrumentality shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order that is in effect and that
has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger; (iii) the representations and warranties of the
parties shall be true and correct in all material respects as of the Effective
Time, except as permitted by the Merger Agreement; and (iv) each of the parties
shall have performed or complied in all material respects with all agreements
and covenants required by the Merger Agreement to be performed by them on or
prior to the Effective Time. Certain conditions that have not been satisfied may
be waived by the other party. See "THE MERGER -- Conditions." Even if the
stockholders approve the Merger Agreement, there can be no assurance that the
Merger will be consummated.
At any time prior to the Effective Time, whether before or after approval
of the Merger Agreement by the stockholders of Thermo Vision, the Merger
Agreement may be terminated by the mutual written consent of the board of
directors of the Merger Sub and the Board of Directors of Thermo Vision. In
addition, either the Merger Sub or Thermo Vision, in accordance with the
provisions of the Merger Agreement, may terminate the Merger Agreement prior to
the Effective Time, whether before or after approval of the Merger Agreement by
the stockholders of Thermo Vision, if (i) the Merger has not been consummated by
December 31, 1999, subject to certain exceptions, (ii) a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
issues an order, decree or ruling or takes any other action enjoining,
restraining or otherwise prohibiting the Merger and such order, decree or ruling
is final and nonappealable or (iii) the approval of the stockholders of Thermo
Vision necessary to
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<PAGE> 15
consummate the Merger has not been obtained, subject to certain exceptions. See
"THE MERGER -- Termination, Amendment and Waiver."
In addition, the Merger Sub may terminate the Merger Agreement prior to the
Effective Time, whether before or after approval of the Merger Agreement by the
stockholders of Thermo Vision, if Thermo Vision breaches any representation,
warranty, covenant or agreement and fails to cure such breach within ten
business days after written notice of such breach from the Merger Sub. Thermo
Vision may terminate the Merger Agreement prior to the Effective Time, whether
before or after approval of the Merger Agreement by the stockholders of Thermo
Vision, if (i) Thermo Vision's Board of Directors determines in good faith, on
advice from outside legal counsel, that the Board's fiduciary duties under
applicable law require it to do so or (ii) Thermo Instrument or Merger Sub
breaches any representation, warranty, covenant or agreement and fails to cure
such breach within ten business days after written notice of such breach from
Thermo Vision. See "THE MERGER -- Termination, Amendment and Waiver."
Each of the parties has agreed to pay its own costs and expenses in
connection with the Merger Agreement, whether or not the Merger is consummated.
See "THE MERGER -- Expenses."
FEDERAL INCOME TAX CONSEQUENCES
For federal income tax purposes, the receipt of the Cash Merger
Consideration by holders of Common Stock pursuant to the Merger will be a
taxable sale of the holder's Common Stock. All holders of Common Stock should
consult their tax advisors to determine the effect of the Merger under federal,
state, local and foreign tax laws. See "FEDERAL INCOME TAX CONSEQUENCES."
RIGHTS OF DISSENTING STOCKHOLDERS
Any stockholder of Thermo Vision who does not vote in favor of the proposal
to approve the Merger Agreement and who complies strictly with the applicable
provisions of Section 262 of the DGCL has the right to dissent and be paid cash
for the fair value of such holder's shares of Common Stock ("Dissenters'
Rights"). The applicable provisions of Section 262 of the DGCL are attached to
this Proxy Statement as Appendix B. To perfect Dissenters' Rights with respect
to the Merger, a Thermo Vision stockholder must follow the procedures set forth
therein precisely. These procedures are summarized in this Proxy Statement under
"RIGHTS OF DISSENTING STOCKHOLDERS."
Shares of Common Stock held by persons properly exercising Dissenters'
Rights will not be converted into the Cash Merger Consideration in the Merger
and after the Effective Time will represent only the right to receive such
consideration as is determined to be due such dissenting stockholder pursuant to
Section 262 of the DGCL. If after the Effective Time any dissenting stockholder
(i) fails to perfect or loses such right to payment or appraisal pursuant to
Section 262 of the DGCL or (ii) withdraws such demand for appraisal within 60
days after the Effective Date pursuant to Section 262 of the DGCL, each share of
Common Stock of such stockholder shall be treated as a share that had been
converted as of the Effective Time into the right to receive the Cash Merger
Consideration.
ACCOUNTING TREATMENT
The Merger will be accounted for as the acquisition of a minority interest
by Thermo Instrument, using the purchase method of accounting.
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<PAGE> 16
MARKET PRICES OF COMMON STOCK AND DIVIDENDS
The Common Stock is traded on the AMEX (symbol: VIZ). The following table
sets forth, for the periods indicated, the high and low sales prices of the
Company's Common Stock as reported in the consolidated transaction reporting
system.
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
1997
Fourth Quarter (12/10/97 - 01/03/98)........................ $ 8.50 $ 7.50
1998
First Quarter............................................... 8.0625 5.625
Second Quarter.............................................. 7.625 6.8125
Third Quarter............................................... 7.125 2.6875
Fourth Quarter.............................................. 3.1875 2.0625
1999
First Quarter............................................... 4.75 2.75
Second Quarter.............................................. 6.50 2.75
Third Quarter (through September 1, 1999)................... 6.75 5.375
</TABLE>
On May 21, 1999, the last trading day prior to the date Thermo Electron
first publicly announced a proposal (with no price having been determined) to
take Thermo Vision private, the high, low and closing sales price per share of
Common Stock reported in the consolidated transaction reporting system was
$4.00. On July 12, 1999, the last trading day prior to the public announcement
of the financial terms of the proposed Merger, the high, low and closing sales
price per share of Common Stock reported in the consolidated transaction
reporting system was $5.75, $5.50 and $5.50, respectively. On ,
1999, the last trading day prior to the printing of this Proxy Statement, the
high, low and closing sales price per share of Common Stock reported in the
consolidated transaction reporting system was $ , $ and
$ , respectively.
As of , 1999, there were holders of record of
Common Stock and approximately persons or entities holding in
nominee name.
The Company has never paid any cash dividends on its Common Stock. Pursuant
to the Merger Agreement, the Company has agreed not to pay any dividends on the
Common Stock prior to the earlier of the termination of the Merger Agreement or
the Effective Time.
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SPECIAL FACTORS
BACKGROUND OF THE MERGER
During the beginning of May 1999, Thermo Instrument's and Thermo Electron's
senior management initially considered Thermo Instrument's acquisition of the
minority stockholder interest in Thermo Vision in connection with a proposed
revision to the previously announced corporate reorganization of Thermo Electron
and certain of its subsidiaries. Thermo Instrument's and Thermo Electron's
management examined several factors, including the financial performance and
profitability of Thermo Vision, uncertainty regarding Thermo Vision's future
growth prospects, the potential benefits to Thermo Vision's business if it were
to become part of a larger business unit, and the cyclicality of one of the
Company's primary industries, the semiconductor industry. Thermo Instrument and
Thermo Electron also considered the following factors: (i) recent public capital
market trends affecting micro-cap companies; (ii) the latest market trends in
the product markets in which the Company competes, primarily the cyclicality of
the semiconductor industry; (iii) the debt owed by the Company to, primarily,
Thermo Electron; (iv) the reduction in the amount of public information
available to competitors about Thermo Vision's business that would result from
the termination of the Company's obligations under the Commission's reporting
requirements; (v) the elimination of additional burdens on management associated
with public reporting and other tasks resulting from the Company's public
company status; (vi) the decrease in costs, particularly those associated with
being a public company and (vii) the greater flexibility that the Company's
management would have to focus on long-term business goals, as opposed to
quarterly earnings, as a non-reporting company. Thermo Instrument and Thermo
Electron also considered the relatively low volume of trading in the Common
Stock and considered that the Merger would result in immediate, enhanced
liquidity for the Public Stockholders. Management of Thermo Electron also
considered that acquiring the minority stockholder interest in Thermo Vision
would advance the goal of Thermo Electron's proposed corporate reorganization to
reduce the number of majority-owned, public subsidiaries of Thermo Electron.
Management of Thermo Instrument and Thermo Electron also considered recent
trends in the price of the Common Stock, although Thermo Vision's current stock
price was not a significant factor in the timing of Thermo Instrument's or
Thermo Electron's decision to propose acquiring the minority stockholder
interest in Thermo Vision. In mid-May 1999, management of Thermo Instrument and
Thermo Electron decided to propose to their respective boards of directors that
Thermo Instrument make an offer to acquire all of the shares of Common Stock
that Thermo Instrument and Thermo Electron did not already own, for either cash
or shares of Thermo Instrument common stock.
On May 20 and 21, 1999, the board of directors of Thermo Electron held a
special meeting at which Thermo Electron's and Thermo Instrument's management
presented the proposal for Thermo Instrument to acquire all of the shares of
Common Stock that Thermo Instrument and Thermo Electron did not already own, as
a part of the proposed corporate reorganization of Thermo Electron and certain
of its subsidiaries. The Thermo Electron board of directors discussed several
factors presented by management regarding this proposal, including the factors
described in the preceding paragraph. The Thermo Electron board of directors
also considered the relatively low volume of trading in the Common Stock and
considered that the Merger would result in immediate, enhanced liquidity for the
Public Stockholders. In addition, the Thermo Electron board of directors
considered the advantages and disadvantages of certain alternatives to acquiring
the minority stockholder interest in Thermo Vision, including leaving Thermo
Vision as a majority-owned, public subsidiary of Thermo Instrument. The Thermo
Electron board of directors also discussed the fact that acquiring the minority
stockholder interest in Thermo Vision would advance the goal of Thermo
Electron's proposed corporate reorganization to reduce the number of Thermo
Electron's majority-owned, public subsidiaries. After consideration of these
various factors, Thermo Electron's board of directors authorized further
revisions to its corporate reorganization plan, including taking Thermo Vision
private through Thermo Instrument's acquisition for cash of all of the shares of
Thermo Vision that Thermo Instrument and Thermo Electron did not already own.
On May 21, 1999, the board of directors of Thermo Instrument held a meeting
at which the proposed plan to acquire the minority stockholder interest in
Thermo Vision was presented and discussed. Thermo
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<PAGE> 18
Instrument's management reviewed the considerations set forth above and
recommended that Thermo Instrument move forward with a proposed transaction to
acquire the minority stockholder interest in Thermo Vision. Thermo Instrument's
board discussed (i) recent public capital market trends affecting micro-cap
companies; (ii) the latest market trends in the product markets in which the
Company competes, primarily the cyclicality of the semiconductor industry; (iii)
the debt owed by the Company to, primarily, Thermo Electron; (iv) the reduction
in the amount of public information available to competitors about Thermo
Vision's business that would result from the termination of the Company's
obligations under the Commission's reporting requirements; (v) the elimination
of additional burdens on management associated with public reporting and other
tasks resulting from the Company's public company status; (vi) the decrease in
costs, particularly those associated with being a public company and (vii) the
greater flexibility that the Company's management would have to focus on
long-term business goals, as opposed to quarterly earnings, as a non-reporting
company. Thermo Instrument's board also considered the relatively low volume of
trading in the Common Stock and considered that the Merger would result in
immediate, enhanced liquidity for the Public Stockholders. In addition, Thermo
Instrument reviewed the net overall cost of the transaction and explored
alternative uses for the cash proposed to be used for this transaction. After
discussing the advantages and disadvantages of acquiring the minority
stockholder interest in Thermo Vision, Thermo Instrument's board authorized
taking Thermo Vision private through Thermo Instrument's acquisition of all of
the shares of Thermo Vision that Thermo Instrument and Thermo Electron did not
already own for a per share cash price to be agreed upon by Thermo Instrument
and Thermo Vision. On May 24, 1999, Thermo Electron issued a press release
announcing its expanded reorganization plan, which included a proposal to take
Thermo Vision private.
On June 8, 1999, the board of directors of Thermo Instrument held a meeting
at which the proposed plan to acquire the minority stockholder interest in
Thermo Vision was discussed further. Thermo Instrument's management reviewed the
considerations set forth above and recommended that Thermo Instrument and Thermo
Electron continue to move forward with a proposed transaction to acquire the
minority stockholder interest in Thermo Vision. The board of directors of Thermo
Instrument considered the possibility of conditioning its proposal on the
Company appointing a committee of directors who were not directors of Thermo
Electron or Thermo Instrument to act on behalf and in the interests of the
Public Stockholders in evaluating the merits and negotiating the terms of any
proposed transaction with Thermo Instrument. The board of directors of Thermo
Instrument noted that there was currently only one independent director of
Thermo Vision and that the task of such a committee would be demanding for a
single member committee. The Thermo Instrument board also discussed the costs
associated with forming such a committee, including the cost of engaging
independent legal and financial advisors, relative to the size of the
transaction. The board of directors of Thermo Instrument next considered whether
there were other means by which the interests of the Public Stockholders could
be represented. The board of directors discussed the possibility of conditioning
the proposed Merger on obtaining the affirmative vote of a majority of the
outstanding shares of Common Stock to be voted by the Public Stockholders at a
special meeting of the stockholders convened to consider the Merger. The board
of directors of Thermo Instrument acknowledged that if the Merger was structured
with such a prerequisite, then the decision as to whether the per-share price
was fair and to proceed with the Merger would ultimately be in the hands of the
Public Stockholders. The board of Thermo Instrument concluded that the
combination of an enhanced price per share premium and the requirement of the
vote of a majority of the Public Stockholders would be appropriate to safeguard
the interests of the Public Stockholders and ensure the entire fairness of the
Merger. In addition, Thermo Instrument reviewed the net overall cost of the
transaction and explored alternative uses for the cash proposed to be used for
the transaction. After consideration of these various factors, the Thermo
Instrument board authorized Thermo Instrument management to make an offer to the
Thermo Vision Board to acquire, through a merger, all of the outstanding shares
of Thermo Vision Common Stock that Thermo Instrument and Thermo Electron did not
already own for a $7.00 per share cash price, and the Thermo Instrument board
authorized its management to negotiate a transaction with Thermo Vision
including, as a condition to the Merger, that the Merger Agreement be approved
by a majority of the shares of Common Stock owned by the Public Stockholders
voted at a special meeting called to vote on approval of the Merger Agreement.
18
<PAGE> 19
On June 14, 1999, Thermo Vision's Board held a meeting at which Thermo
Instrument's proposed offer to purchase the shares of Common Stock owned by
stockholders for $7.00 per share in cash, without interest, was confirmed. The
Board discussed the merits of appointing a committee of directors who were not
directors of Thermo Electron or Thermo Instrument to act on behalf and in the
interests of the Public Stockholders in evaluating the merits and negotiating
the terms of the proposed transaction with Thermo Instrument. The Board noted
that it currently had only one independent director, and that the task of such a
committee would be demanding for a single member committee. In addition, the
Board discussed the costs associated with forming such a committee, including
the cost of engaging independent legal and financial advisors, relative to the
size of the transaction. The Board concluded that the requirement of the vote of
a majority of the Public Stockholders would be appropriate to safeguard the
interests of the Public Stockholders and ensure the entire fairness of the
Merger, without the need for a special committee.
On July 12, 1999, Thermo Vision's Board held a meeting during which all
members were present in person. At such meeting the Board:
- Reviewed Thermo Vision's business plan, growth strategies and historic
operating and financial performance;
- Reviewed a financial analysis of Thermo Vision and the proposed
transaction prepared by the chief financial officer of Thermo Electron,
Thermo Instrument and the Company and his staff for the purpose of
determining valuation parameters for Thermo Vision; and
- Evaluated the terms and conditions of the proposed Merger Agreement,
including the requirement that a majority of the shares of Common Stock
owned by the Public Stockholders voting at a special stockholder meeting
approve the Merger and the $7.00 per share price offered by Thermo
Instrument.
The Board discussed certain projected financial data prepared by the
Company's management (the "Projections") and noted that the Projections included
an assumption that the Company's operating margins in the future periods would
be substantially greater than actual historical operating margins. See "CERTAIN
PROJECTED FINANCIAL DATA." The Board reviewed a financial analysis of the
Company and the proposed transaction with Thermo Instrument which was prepared
by Mr. Theo Melas-Kyriazi, the chief financial officer of Thermo Electron,
Thermo Instrument and the Company, and his staff (the "CFO's Office"). The Board
discussed the appropriateness of the various analyses performed by the CFO's
Office and noted that the analyses were substantially similar in scope and
process to the analyses performed by investment banks in valuing businesses and
that such analyses did, therefore, conform with current practices. The Board
concluded that the price proposed was fair to the Public Stockholders,
unanimously approved the Merger Agreement in the form presented at the meeting,
declared its advisability and recommended that the stockholders vote in favor of
the proposed Merger.
On July 13, 1999, Thermo Vision issued a press release announcing that its
Board had approved the Merger Agreement with Thermo Instrument. The Merger
Agreement was executed by the parties on July 13, 1999, and was amended and
restated as of August 25, 1999 to reflect certain immaterial changes.
THE BOARD'S RECOMMENDATION
The Board believes that the terms of the Merger are fair to, and in the
best interests of, the Public Stockholders. In reaching this conclusion, the
Board has determined that the Merger is both substantively and procedurally fair
to the Public Stockholders. Accordingly, the Thermo Vision Board has unanimously
approved the Merger Agreement, declared its advisability and unanimously
recommends its approval by the stockholders.
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<PAGE> 20
In reaching its decision to approve the Merger Agreement and recommend its
approval to the stockholders, the Thermo Vision Board considered the following
factors, which constitute all of the material factors considered by the Board:
- The current and historical market prices of the Common Stock. The Board
considered the declining per share price of the Common Stock prior to the
time of Thermo Instrument's offer, the possibility that the price would
remain depressed and the premium that $7.00 per share offered over such
price.
- Information concerning the financial performance, condition, business
operations and prospects of Thermo Vision. The Board considered the
historical, current and potential future performance of Thermo Vision and
determined that the price per share offered by Thermo Instrument was a
substantial premium to the Public Stockholders, given the current
performance and the uncertainty of future performance of Thermo Vision.
- The effects of the Merger on the Public Stockholders, including the
premium over the market price of the Common Stock immediately prior to
the public announcement of the transaction and the financial terms of
Thermo Instrument's proposal. The Board noted that the $7.00 per share
price proposed by Thermo Instrument represented premiums of approximately
143%, 75% and 75% over the closing per share price on dates four weeks,
one week and one day, respectively, prior to the first public
announcement of Thermo Instrument's merger proposal (with no price having
been determined) on May 24, 1999. The Board also concluded that the $7.00
per share price proposed by Thermo Instrument, which also represented
premiums of approximately 17%, 27% and 27% over the closing per share
price on dates four weeks, one week and one day, respectively, prior to
the first public announcement of the financial terms of the proposal on
July 13, 1999, would enable the Public Stockholders to obtain a higher
price for their stock than would otherwise be available in the market at
that time. The purchase by Thermo Instrument would also eliminate the
exposure of the Public Stockholders to any future or continued declines
in the price of the Common Stock.
- Terms of the Merger Agreement. The terms of the Merger Agreement,
including (i) the amount and form of the consideration, (ii) the limited
number of conditions to the obligations of Thermo Instrument, including
the lack of a financing condition, (iii) the right of the Thermo Vision
Board to terminate the Merger Agreement if the Board determines, on the
advice of outside legal counsel, that the Board's fiduciary duties under
applicable law to the Thermo Vision stockholders require it to do so, and
(iv) the absence of a termination fee in the event Thermo Vision
terminates the Merger Agreement. The Board believed that the foregoing
made the consummation of the transaction more likely than it would be if
more significant conditions were placed on the completion of the
transaction or if Thermo Instrument did not have the independent
financial resources to complete the transaction. Further, the Board
believed that the ability of the Board to terminate the Merger Agreement
without payment of a termination fee in the event its fiduciary duties to
the Thermo Vision stockholders required it to do so provided the Board
the freedom to protect the interests of the Public Stockholders.
- Current market trends in the industries in which Thermo Vision competes,
primarily the semiconductor industry. The Board considered the fact that
the semiconductor industry suffered a serious decline as a result of
unstable Asian economic conditions and general volatility in this
industry, and the fact that, while the industry has recovered somewhat
during the first two quarters of 1999, conditions remain volatile.
- The financial performance of Thermo Vision, including uncertainty
regarding its future growth prospects. The Board determined that the
Merger would shift the risk of the future financial performance of Thermo
Vision from the Public Stockholders, who do not have the power to control
Thermo Vision, entirely to Thermo Instrument, which does have the power
to control Thermo Vision and is in a better position to manage and bear
that risk.
20
<PAGE> 21
- The requirement that the Merger be approved by a majority of the Public
Stockholders. The Board believed that the opportunity of the Thermo
Vision stockholders to vote on the Merger and the requirement that the
Merger be approved by a majority of the stockholders present and voting
at the Special Meeting other than Thermo Instrument, Thermo Electron and
the officers and directors of the Company, Thermo Instrument and Thermo
Electron would enable the Public Stockholders to independently determine
the desirability and fairness of the Merger and would appropriately place
the decision of whether to complete the Merger with the Public
Stockholders.
- The market price and relative lack of liquidity for the Common Stock and
the liquidity that would be realized by stockholders from the all-cash
offer. The Board believed that the liquidity to be realized by the
stockholders would be beneficial to such stockholders since Thermo
Instrument's and Thermo Electron's combined significant ownership of the
Common Stock (i) resulted in a relatively small public float that
necessarily limited the amount of trading in the Common Stock and (ii)
decreased the likelihood that a proposal to acquire the Common Stock
would be made by an independent entity without the consent of Thermo
Instrument.
- The unavailability of a third party buyer for the Company. Thermo
Instrument and Thermo Electron stated their current intention to retain
their majority holdings in the Company, which foreclosed the opportunity
to consider an alternative transaction with a third party purchaser of
the Company or otherwise provide liquidity to the Public Stockholders.
- The determination that the consideration of $7.00 per share in cash is
fair from a financial point of view to the stockholders including the
Public Stockholders. The Board reviewed the financial analyses, including
analyses of comparable companies and discounted cash flows that assume
Thermo Vision will continue as a going concern, and found them to be
reasonable and concluded that the price offered by Thermo Instrument was
fair from a financial point of view to the Public Stockholders based, in
part, on the analyses performed.
- The positive aspects of the Company, including its high quality products,
highly regarded management team, leading market position in certain
product areas, diversified customer base and strong existing product
portfolio. The Board believed that these aspects were potential
contributors to the future success of Thermo Vision and weighed in favor
of continuing Thermo Vision as an independent entity. However, these
positive aspects were offset by the many other considerations listed
above.
In determining that the Merger is fair to the stockholders, including the
Public Stockholders, the Board considered the above factors as a whole and did
not assign specific or relative weights to them. In the view of the Board, each
of the factors listed above, except as otherwise indicated, reinforced the
Board's belief that the transaction was in the best interests of the
stockholders, including the Public Stockholders.
The Board did not consider the Cash Merger Consideration as compared to any
implied liquidation value because it was not contemplated that the Company be
liquidated, whether or not the Merger were completed.
THE THERMO VISION BOARD, BY A UNANIMOUS VOTE, HAS APPROVED THE MERGER
AGREEMENT, BELIEVES THAT THE TERMS OF THE MERGER ARE FAIR TO THE PUBLIC
STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE TO APPROVE
THE MERGER AGREEMENT.
In considering the recommendation of the Board with respect to the Merger
Agreement, stockholders should be aware that certain members of the Board have
certain interests in the Merger that are different from, or in addition to, the
interests of stockholders generally and that represent actual or potential
conflicts of interest. The Board was aware of these interests and considered
them, among other matters, in approving the Merger Agreement. See "-- Conflicts
of Interest."
In order to aid its evaluation of the Company and the assessment of the
fairness, from a financial point of view, of the consideration of $7.00 per
share in cash payable to the Public Stockholders pursuant to the Merger
Agreement, the Board reviewed certain projected financial data prepared by the
Company's management. See "CERTAIN PROJECTED FINANCIAL DATA."
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<PAGE> 22
FINANCIAL ANALYSIS
The Board analyzed, from a financial point of view, the consideration to be
received by the Public Stockholders of the Company pursuant to the proposed
transaction with Thermo Instrument. The Board of Directors reached the
conclusion that the consideration to be received pursuant to the proposed
transaction was fair, from a financial point of view, to the Public Stockholders
of the Company. The Board does not intend to reconsider its analysis unless:
- there is a material modification to the terms of the proposed
consideration or other material amendment to the Merger Agreement that
the Board determines would be reasonably likely to impact the overall
fairness of the transaction to the Public Stockholders;
- a material event occurs that the Board determines would be reasonably
likely to have affected the Board's determination after taking into
account such event; or
- the Board determines that its fiduciary duties require it to do so.
As of the date of this Proxy Statement, there has been no change in the
terms of the proposed consideration and there has been no material event that
the Board believes would be reasonably likely to affect the Board's
determination.
In conducting its investigation and analysis and in arriving at its
opinion, the Board reviewed such information and took into account such
financial and economic factors as it deemed relevant and material under the
circumstances, including the financial analysis prepared by the CFO's Office.
The Board requested that the financial analysis be as similar as practicable to
the analysis undertaken by independent financial advisors in valuing companies
for similar transactions, and in particular similar to the analysis prepared in
connection with other going private transactions comprising Thermo Electron's
restructuring plan. The material actions the CFO's Office undertook in its
analysis were as follows:
- reviewed internal financial information concerning the business and
operations of Thermo Vision;
- compared the historical market prices and trading activity of Thermo
Vision Common Stock with those of other publicly traded companies that
the CFO's Office deemed relevant;
- compared the financial position and operating results of Thermo Vision
with those of other publicly traded companies that the CFO's Office
deemed relevant;
- compared the proposed financial terms of the Merger with the financial
terms of other merger and acquisition transactions that the CFO's Office
deemed relevant; and
- held discussions with members of Thermo Vision's senior management
concerning the Company's historical and current financial condition and
operating results, as well as the future prospects of the Company.
The CFO's Office did not take into account any effect on the Company from
its acquisition, in July 1999, of the assets of the non-telecommunications
optical filter business of Corning OCA Corporation for $4 million. In addition,
as a part of its analysis, the CFO's Office did not solicit third party
indications of interest in acquiring Thermo Vision. All of the information that
was material to the CFO's Office's analysis is set forth above.
In considering the recommendation of the Board of Directors with respect to
the Merger and the analysis prepared by the CFO's Office, the Public
Stockholders should be aware that Mr. Melas-Kyriazi may have certain interests
that are in addition to, or different from, the interests of the Public
Stockholders. See " -- Conflicts of Interest."
Summary of Analyses
The following is a summary of the material financial analyses prepared by
the CFO's Office and reviewed by the Board in connection with reaching its
determination.
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<PAGE> 23
Analysis of Thermo Vision's Valuation Premium. The CFO's Office compared
the premium to be received by the stockholders of Thermo Vision as represented
by the proposed consideration of $7.00 per share in cash to the closing prices
of the Common Stock on the last trading dates one day, one week and four weeks
prior to the date of the public announcement of the merger proposal (with no
price having been determined) (May 24, 1999) and the date of the public
announcement of the proposal including the price (July 13, 1999).
The CFO's Office reviewed 19 selected acquisitions that occurred between
June 1994 and January 1999 of a remaining minority interest (ranging from 10.0%
to 48.1% of the shares outstanding prior to the acquisition) in public companies
in various industries that went private as a result of the transaction. The
CFO's Office noted that the Thermo Vision transaction represents a remaining
minority interest transaction. The CFO's Office further noted that an
acquisition of a remaining minority interest differs from an acquisition of a
100% interest. In a 100% interest acquisition, the acquiring company purchases,
and the financial terms of the transaction reflect, a control premium. The
acquisition of a remaining minority interest in a public company does not,
generally, involve a control premium. The CFO's Office's analysis produced the
following average and median premiums over the one day, one week and four weeks
prior stock price in the comparable transactions as compared to the premiums in
the proposed transaction:
<TABLE>
<CAPTION>
ONE DAY PRIOR ONE WEEK PRIOR FOUR WEEKS PRIOR
------------- -------------- ----------------
<S> <C> <C> <C>
Average...................................... 19.6% 19.7% 17.9%
Median....................................... 17.5% 17.4% 15.9%
Thermo Vision (prior to announcement of
proposal, with no price announced)......... 75.0% 75.0% 143.0%
Thermo Vision (prior to announcement of
price)..................................... 27.0% 27.0% 17.0%
</TABLE>
Analysis of Selected Publicly Traded Companies Comparable to Thermo Vision.
The CFO's Office reviewed publicly available financial information as of the
most recently reported period and stock market information for publicly traded
companies that the CFO's Office regarded as competing in the same markets as
Thermo Vision. The CFO's Office noted that the profile of the Company's business
in aggregate is unique and that none of these companies is identical to Thermo
Vision, but in the aggregate they provide reasonable comparable data for
analysis. This group of peer companies is identical to the group that the lead
underwriter for the Company's initial public offering in late 1997 used as
comparable in their valuation analysis at the time of the Company's initial
public offering. The CFO's Office compared the financial characteristics of the
Company to the following companies:
<TABLE>
<S> <C>
Zygo Corp. Cognex Corp.
Coherent Inc. Optical Coating Laboratory, Inc.
Newport Corporation Uniphase Corp.
Galileo Corporation Schick Tech. Inc.
SDL Inc. Laser Power Corp.
Cymer Inc. CyberOptics Corp.
II-VI Inc. Excel Tech. Inc.
X-Rite Inc.
</TABLE>
For each comparable company, the CFO's Office reviewed the following
financial multiples: (i) a price to earnings ("P/E") multiple based on actual
1998 earnings per share ("EPS"); (ii) a P/E multiple based on estimated 1999
EPS; (iii) a P/E multiple based on estimated 2000 EPS; (iv) a price to tangible
book value multiple ("P/B"); (v) enterprise value (market capitalization plus
debt minus cash) divided by revenues for the last twelve months ended December
31, 1998 ("LTM"); (vi) enterprise value divided by LTM earnings before interest,
taxes, depreciation and amortization ("EBITDA"); and (vii) enterprise value
divided by LTM earnings before interest and taxes ("EBIT").
The CFO's Office then reviewed the implied equity value for the Company
based on the median of these comparable multiples and financial data for the
Company's latest twelve months ending April 3, 1999. The Company's LTM EBITDA
and LTM EBIT were adjusted to exclude restructuring charges and
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<PAGE> 24
inventory write-off charges. In the case of LTM revenues, LTM EBITDA and LTM
EBIT, the CFO's Office calculated the implied equity value of the Company by
adding the Company's cash balance ($8,152,000) and subtracting the amount of
outstanding debt ($8,651,000) of the Company, each as of April 3, 1999, to the
enterprise value. The resulting amounts were then divided by the number of
outstanding shares of Common Stock as of April 30, 1999.
The following table sets forth the calculation of implied equity values:
<TABLE>
<CAPTION>
MEDIAN MULTIPLE
(ROUNDED) OF COMPANY IMPLIED COMPANY IMPLIED EQUITY
VALUATION PARAMETER COMPARABLE COMPANIES FINANCIAL DATA EQUITY VALUES VALUE PER SHARE
------------------- -------------------- -------------- --------------- ---------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
Calendar 1998 P/E................ 15.23x $ 221 $ 3,367 $0.42
Estimated 1999 P/E............... 14.67x $ 1,662 $24,389 $3.03
Estimated 2000 P/E............... 12.85x $ 2,964 $38,078 $4.73
Tangible Book Value.............. 3.58x $16,784 $60,029 $7.46
LTM Revenues..................... 1.2x $36,633 $43,651 $5.42
LTM EBITDA....................... 9.1x $ 3,253 $29,108 $3.62
LTM EBIT......................... 10.9x $ 1,596 $16,929 $2.10
</TABLE>
The CFO's Office compared the implied per share prices resulting from the
comparison with the selected multiples as set forth above to the proposed
consideration of $7.00 per share.
Analysis of Selected Comparable 100% Acquisition Transactions. The CFO's
Office reviewed 7 acquisition transactions that the CFO's Office deemed
relevant. The transactions were 100% acquisitions and were chosen based on a
review of acquired companies that possessed general business, operating and
financial characteristics representative of companies in the industries in which
Thermo Vision's divisions operate. The CFO's Office noted that none of the
selected transactions reviewed were identical to the proposed transaction and
that, accordingly, the analysis of comparable transactions necessarily involves
complex consideration and judgments concerning differences in financial and
operating characteristics of Thermo Vision and other factors that would affect
the acquisition value of comparable transactions including, among others, the
general market conditions prevailing in the equity capital markets at the time
of such transactions.
For each comparable transaction, the CFO's Office calculated multiples of
enterprise value to LTM revenues, LTM EBITDA (if available) and LTM EBIT (if
available). The CFO's Office then calculated the implied enterprise value of
Thermo Vision based upon the respective means of these multiples. The Company's
LTM EBIT and LTM EBITDA were adjusted to exclude restructuring charges and
inventory write-off charges. The CFO's Office then calculated the implied equity
value by adding the Company's cash balance ($8,152,000) and subtracting the
amount of outstanding debt ($8,651,000) of the Company, each as of April 3,
1999. The resulting amounts were divided by the number of outstanding shares of
Common Stock as of April 30, 1999. These calculations produced per share values
of $1.94, $3.25 and $5.79 based upon the Company's LTM EBITDA, LTM EBIT and LTM
revenues for the last twelve months ending April 3, 1999, respectively. While
the CFO's Office noted that values associated with 100% acquisitions differed
from those in a remaining minority interest acquisition such as the proposed
transaction, the CFO's Office compared these per share values to the proposed
consideration of $7.00.
Discounted Cash Flow Analysis. The CFO's Office performed a discounted cash
flow analysis of Thermo Vision. Thermo Vision's projections for 1999 through
2003 were used to calculate the present value of the Company's projected cash
flows over this period, without taking into account any potential cost savings
and efficiencies that may be realized following the Merger. In addition, three
different "terminal" values (projected values for the Company in 2003) were
calculated by multiplying the Company's projected 2003 earnings before interest
and after taxes ("EBIAT"), EBITDA and EBIT, by selected multiples. A range of
equity values for the Company was then determined by adding the Company's
current cash to, and subtracting the Company's current debt from, each of the
present value of cash flows and the present value of each terminal value. In
calculating the present values of cash flows and terminal values, the projected
cash flows and terminal values were each discounted at annual rates of 15% to
20%, which represent estimates of the Company's weighted average cost of
capital. Selection of an
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<PAGE> 25
appropriate discount rate is an inherently subjective process and is affected by
numerous factors. The results of these calculations were as follows (all numbers
except common stock prices in thousands):
<TABLE>
<CAPTION>
PRESENT VALUE OF PRESENT VALUE OF
TERMINAL VALUE TERMINAL VALUE RANGE OF EQUITY RANGE OF COMMON
MULTIPLES DISCOUNTED 15% DISCOUNTED 20% VALUES* STOCK PRICES
--------- ---------------- ---------------- ----------------- ---------------
<S> <C> <C> <C> <C>
EBIAT (12x)**.................... $41,083 $33,922 $52,666 - $44,116 $6.54 - $5.48
EBIT (8x)**...................... $43,792 $36,160 $55,375 - $46,353 $6.88 - $5.76
EBITDA (7x)**.................... $45,827 $37,840 $57,410 - $48,034 $7.13 - $5.97
</TABLE>
- ---------------
* Includes a present value of cash flows in the period 1999 to 2003 of $12,082
(using a 15% discount) and $10,693 (using a 20% discount), a cash balance of
$8,152, and debt of $8,651 as of April 3, 1999.
** Indicates the multiple used in calculating the terminal value of the
Company.
The CFO's Office noted that the per share present values in its discounted
cash flow analysis represented values attributable to a 100% acquisition. As
such, these values included a control premium that was not comparable to this
remaining minority interest transaction. The CFO's Office compared the above
present values per share to the proposed consideration of $7.00 per share. The
CFO's Office also compared these present values per share to the per share
values of $1.94 to $5.79 derived from its analysis of comparable merger and
acquisition transactions involving 100% acquisitions.
The foregoing summary does not purport to be a complete description of the
analyses performed by the CFO's Office. The CFO's Office believes that its
analyses must be considered as a whole, and that selecting portions of such
analysis without considering all analyses and factors would create an incomplete
view of the processes underlying its conclusion. The CFO's Office did not
attempt to assign specific weights to particular analyses. However, there were
no specific factors reviewed by the CFO's Office that did not support its
conclusion. Any estimates contained in the CFO's Office's analyses are not
necessarily indicative of actual values, which may be significantly more or less
favorable than as set forth therein. Estimates of values of companies do not
purport to be appraisals or necessarily to reflect the prices at which companies
may actually be sold.
PURPOSE AND REASONS OF THERMO INSTRUMENT AND THERMO ELECTRON FOR THE MERGER
The purpose of Thermo Instrument and Thermo Electron for engaging in the
transactions contemplated by the Merger Agreement is for Thermo Instrument to
acquire all of the outstanding shares of Common Stock, other than the shares
held by Thermo Electron. In determining to acquire such shares of Common Stock
at this time, Thermo Instrument and Thermo Electron considered the following
factors: (i) recent public capital market trends affecting micro-cap companies;
(ii) the latest market trends in the markets in which the Company competes,
primarily the cyclicality of the semiconductor industry; (iii) the debt owed by
the Company to, primarily, Thermo Electron; (iv) the reduction in the amount of
public information available to competitors about Thermo Vision's business that
would result from the termination of the Company's separate Commission reporting
requirements; (v) the elimination of additional burdens on management associated
with public reporting and other tasks resulting from the Company's public
company status; (vi) the decrease in costs, particularly those associated with
being a public company; and (vii) the greater flexibility that the Company's
management would have to focus on long-term business goals, as opposed to
quarterly earnings, as a non-reporting company.
Thermo Instrument also considered the advantages and disadvantages of
certain alternatives to taking Thermo Vision private, including leaving Thermo
Vision as a public majority-owned subsidiary of Thermo Instrument. Thermo
Instrument considered the number of Thermo Vision shares held by the Public
Stockholders, recent trends in the price of the Common Stock and the relative
lack of liquidity for the Common Stock. Thermo Instrument also reviewed the net
overall cost of the transaction and its benefits. Thermo Instrument also
explored alternative uses for the cash proposed to be used for this transaction.
After consideration of these various factors, Thermo Instrument decided to make
a proposal to Thermo Vision to acquire for cash, through a merger, all of the
outstanding shares of Common Stock that it and Thermo Electron did not own at a
price of $7.00 per share, which represented a premium of (i) approximately 75%
over the closing price of the Common Stock reported in the consolidated
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<PAGE> 26
transaction reporting system on May 21, 1999, the last trading day immediately
prior to Thermo Electron's first public announcement of a proposal (with no
price having been determined) to take Thermo Vision private and (ii)
approximately 27% over the closing price of the Common Stock reported in the
consolidated transaction reporting system on July 12, 1999, the trading day
immediately prior to the public announcement of the financial terms of Thermo
Instrument's proposal. Thermo Instrument proposed to structure the transaction
as a cash merger in order to transfer ownership of the equity interest in the
Company in a single transaction and provide the stockholders other than Thermo
Instrument and Thermo Electron with prompt payment in cash in exchange for their
shares.
Thermo Electron beneficially owns, in the aggregate, directly and
indirectly through Thermo Instrument, approximately 81% of the outstanding
Common Stock. See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT -- Principal Stockholder."
POSITION OF THERMO INSTRUMENT AND THERMO ELECTRON AS TO FAIRNESS OF THE MERGER
Thermo Instrument and Thermo Electron considered the analyses and findings
of the Thermo Vision Board (i) with respect to the fairness, from a financial
point of view, of the consideration of $7.00 per share in cash payable under the
Merger Agreement to the Public Stockholders (see "-- Financial Analysis") and
(ii) with respect to the fairness of the terms of the Merger Agreement to the
Public Stockholders (see "-- The Board's Recommendation"). As of the date of the
Merger Agreement, each of Thermo Instrument and Thermo Electron adopted the
analyses and findings of the Thermo Vision Board with respect to the fairness of
the Merger. Based on the analyses and findings of the Thermo Vision Board,
Thermo Instrument and Thermo Electron believe that the Merger is both
procedurally and substantively fair to the Public Stockholders and that the Cash
Merger Consideration is fair to the Public Stockholders from a financial point
of view. Neither Thermo Instrument nor Thermo Electron attached specific weights
to any factors in reaching its respective belief as to fairness. Thermo
Instrument and Thermo Electron are not making any recommendation as to how the
Public Stockholders should vote on the Merger Agreement.
Certain officers and directors of Thermo Instrument and Thermo Electron are
also officers and directors of the Company and have certain interests that are
in addition to, or different from, the interests of the Public Stockholders. See
"-- Conflicts of Interest." Thermo Instrument and Thermo Electron considered
these potential conflicts of interest and based in part thereon, Thermo
Instrument's proposed offer was conditioned on, among other things, the approval
of the Merger Agreement by the majority of the outstanding shares of Common
Stock voted at the Special Meeting by the Public Stockholders.
CONFLICTS OF INTEREST
In considering the recommendation of the Board with respect to the Merger,
the Public Stockholders should be aware that certain officers and directors of
Thermo Vision have interests in connection with the Merger that present them
with actual or potential conflicts of interest, as summarized below. The Board
was aware of these interests and did not view them either positively or
negatively, but considered them among the other matters described above under
"-- The Board's Recommendation."
Following consummation of the Merger, the current officers and directors of
Thermo Vision will continue as the initial officers and directors of the
Surviving Corporation; however, Thermo Instrument intends to appoint a board of
directors comprised solely of members of the Surviving Corporation's and Thermo
Instrument's management after the Merger. Officers and directors who own Common
Stock will receive the Cash Merger Consideration on the same terms as all the
other stockholders.
The Thermo Vision Directors and Executive Officers
The members of the Board of Directors and executive officers of Thermo
Vision own in the aggregate 24,460 shares of Common Stock and will receive a
payment for their shares of Common Stock in the aggregate amount of $171,220
upon consummation of the Merger. In addition, such Board members and executive
officers hold options to acquire an aggregate of 156,000 shares of Common Stock,
with exercise
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prices ranging from $2.73 to $7.50, which will be assumed by Thermo Instrument
and converted into options to acquire shares of Thermo Instrument Common Stock
on the same terms as all the other holders of Thermo Vision Stock Options. See
"THE MERGER -- Assumption of Thermo Vision Stock Options by Thermo Instrument."
Further, deferred units equal to 601 shares of Common Stock have accumulated
under the Company's deferred compensation plan for directors for the benefit of
Dr. Elias P. Gyftopoulos, which units will be converted into the right to
receive the Cash Merger Consideration per unit for an aggregate cash payment of
$4,207. See "THE MERGER -- Deferred Compensation Plan for Directors." See
"SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -- Management,"
for information regarding beneficial ownership by the Board and executive
officers of Common Stock and common stock of Thermo Instrument and Thermo
Electron.
Further, certain members of the Board and certain executive officers hold
directorship or officer positions with Thermo Instrument and/or Thermo Electron.
Mr. Melas-Kyriazi, the chief financial officer of the Company, is also the chief
financial officer of Thermo Instrument and is a vice president and the chief
financial officer of Thermo Electron. Mr. Kelleher, the chief accounting officer
of the Company, is also the chief accounting officer of Thermo Instrument and is
the senior vice president, finance and administration, of Thermo Electron. Dr.
Gyftopoulos, a director of the Company, is also a director of Thermo Electron.
Mr. Lewis, the chairman of the Board of Directors, is also president, chief
executive officer and a director of Thermo Instrument and is chief operating
officer, measurement and detection, of Thermo Electron. For a further
description of such positions and of positions such individuals may have with
certain other affiliates of Thermo Electron, see "MANAGEMENT" and the
information contained in Appendix D to this Proxy Statement.
Indemnification and Insurance
The Merger Agreement provides that for a period of six years after the
Effective Time, Thermo Instrument will, and will cause the Surviving Corporation
to, fulfill and honor in all respects the indemnification obligations of Thermo
Vision, pursuant to Thermo Vision's Certificate of Incorporation and Bylaws,
each as in effect immediately prior to the Effective Time, to those individuals
who were directors or officers of Thermo Vision at the Effective Time. The
Surviving Corporation's Certificate of Incorporation and Bylaws will contain the
provisions with respect to indemnification and elimination of liability for
monetary damages currently set forth in Thermo Vision's Certificate of
Incorporation and Bylaws, and such provisions will not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights of those individuals who were
directors or officers of Thermo Vision at the Effective Time, unless such
modification is required by law. See "THE MERGER -- Indemnification and
Insurance."
In addition, Thermo Instrument will cause the Surviving Corporation, either
directly or through participation in Thermo Electron's umbrella policy, to
maintain in effect, for a period of six years after the Effective Time, a
directors' and officers' liability insurance policy covering the Thermo Vision
directors and officers who, at the Effective Time, were then covered by Thermo
Electron's liability insurance policy, with coverage providing substantially the
same amount and scope as such directors' and officers' existing coverage.
However, in no event will the Surviving Corporation be required to pay premiums
for such insurance in excess of 175% of the current annual premiums, as adjusted
for inflation each year, allocable to and paid by Thermo Vision. See "THE
MERGER -- Indemnification and Insurance."
CERTAIN EFFECTS OF THE MERGER
As a result of the Merger, the entire equity interest in the Company will
be beneficially owned by Thermo Electron, directly and indirectly through Thermo
Instrument. Thermo Electron and Thermo Instrument will have complete control
over the conduct of the Company's business and will have 100% interest in the
net book value and net earnings of the Company and any future increases in the
value of the Company. Thermo Instrument's and Thermo Electron's combined
ownership of the Company prior to the transaction contemplated herein aggregated
approximately 81%. Upon completion of this transaction, Thermo Instrument's and
Thermo Electron's aggregate interest in the Company's net book value of
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$32,205,000 on July 3, 1999 and net earnings of $221,000 and $92,000 for the
year ended January 2, 1999 and the six months ended July 3, 1999, respectively,
would increase from approximately 81% of such amounts to 100% of such amounts.
The Public Stockholders will no longer have any interest in, and will not be
stockholders of, Thermo Vision and therefore will not participate in Thermo
Vision's future earnings and potential growth and will no longer bear the risk
of any decreases in the value of the Company. Instead, the stockholders of the
Company other than Thermo Instrument, Thermo Electron and holders who perfect
their Dissenters' Rights will have the right to receive the Cash Merger
Consideration for each share held.
In addition, upon consummation of the Merger, the Common Stock will no
longer be traded on the AMEX, price quotations with respect to sales of shares
in the public market will no longer be available and the registration of the
Common Stock under the Exchange Act will be terminated. The termination of
registration of the Common Stock under the Exchange Act will eliminate the
Company's obligation to file periodic financial and other information with the
Commission and will make most of the provisions of the Exchange Act, such as the
short-swing profit recovery provisions of Section 16(b) and the requirement of
furnishing a proxy or information statement in connection with stockholders'
meetings, no longer applicable. The Company will also no longer be subject to
the going-private disclosure obligations of Rule 13e-3 promulgated under the
Exchange Act.
For federal income tax purposes, the receipt of the Cash Merger
Consideration by holders of Common Stock pursuant to the Merger will be a
taxable sale of the holder's Common Stock. See "FEDERAL INCOME TAX
CONSEQUENCES."
CONDUCT OF THERMO VISION'S BUSINESS AFTER THE MERGER
Thermo Vision, Thermo Instrument and Thermo Electron are continuing to
evaluate Thermo Vision's business, assets, practices, operations, properties,
corporate structure, capitalization, management and personnel and discuss what
changes, if any, will be desirable. Subject to the foregoing, for the
foreseeable future, Thermo Instrument and Thermo Electron expect that the
day-to-day business and operations of Thermo Vision will be conducted
substantially as they are currently being conducted by Thermo Vision. Thermo
Instrument and Thermo Electron are considering the sale of certain Thermo Vision
businesses, but do not currently have any commitment or agreement for any such
sales. Additionally, Thermo Electron and Thermo Instrument do not currently
contemplate any material change in the composition of Thermo Vision's current
management except that Thermo Instrument intends to appoint a board of directors
comprised solely of members of the Surviving Corporation's and Thermo
Instrument's management after the Merger.
CONDUCT OF THERMO VISION'S BUSINESS IF THE MERGER IS NOT CONSUMMATED
If the Merger is not consummated, the Board of Directors expects that the
Company's current management will continue to operate the Company's business
substantially as presently operated, except with respect to certain businesses
that are being considered for sale. See "-- Conduct of Thermo Vision's Business
after the Merger."
STOCKHOLDER LITIGATION
On July 15, 1999, a putative class action was filed in the Court of
Chancery of the State of Delaware in and for New Castle County by a stockholder
of the Company (the "Action"). The complaint in the Action names the Company,
Thermo Instrument and certain directors of the Company as defendants and
alleges, among other things, that the Company's directors violated their
fiduciary and other common law duties that they owed to all stockholders of the
Company other than the named defendants and the affiliates of the named
defendants because the proposed price of $7.00 per share to be paid to the
Company's stockholders under the terms of the proposed Merger Agreement is
unfair and grossly inadequate. The complaint requests that the Court of
Chancery, among other things, declare that the Action is a proper class action
and direct the defendants to account to the plaintiff and the other members
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of the putative class for all damages to be suffered by them and account for all
profits and special benefits Thermo Instrument obtains as a result of the
alleged wrongdoing of the defendants, award attorneys' fees and costs, and grant
such other and further relief as may be just and proper.
The parties' obligations to proceed with the Merger will not be relieved if
the Action is still pending immediately prior to the Effective Time unless a
court order or injunction is in effect prohibiting consummation of the Merger.
See "THE MERGER -- Conditions."
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THE SPECIAL MEETING
PROXY SOLICITATION
This Proxy Statement is being delivered to Thermo Vision's stockholders in
connection with the solicitation by the Board of proxies to be voted at the
Special Meeting to be held on , , 1999 at 10:00 a.m.,
local time, at the offices of Thermo Electron Corporation, 81 Wyman Street,
Waltham, Massachusetts 02454. All expenses incurred in connection with
solicitation of the enclosed proxy will be paid by the Company. Officers,
directors and regular employees of the Company, who will receive no additional
compensation for their services, may solicit proxies by telephone or personal
call. The Company has requested brokers and nominees who hold stock in their
names to furnish this proxy material to their customers and the Company will
reimburse such brokers and nominees for their related out-of-pocket expenses.
This Proxy Statement and the accompanying Proxy Card are first being mailed to
stockholders of the Company on or about , 1999.
RECORD DATE AND QUORUM REQUIREMENT
A committee of the Board has fixed the close of business on
, 1999 as the Record Date for the determination of stockholders
entitled to notice of, and to vote at, the Special Meeting. Each holder of
record of Common Stock at the close of business on the Record Date is entitled
to one vote for each share then held on each matter submitted to a vote of
stockholders. At the close of business on the Record Date, there were
shares of Common Stock issued and outstanding held by
holders of record and by approximately persons or
entities holding in nominee name.
The holders of a majority of the outstanding shares entitled to vote at the
Special Meeting must be present in person or represented by proxy to constitute
a quorum for the transaction of business. Abstentions will be counted as shares
present or represented at the Special Meeting for purposes of determining
whether a quorum exists. If you hold your shares of Common Stock through a
broker, bank or other nominee, generally the nominee may only vote the Common
Stock that it holds for you in accordance with your instructions. However, if it
has not timely received your instructions, the nominee may only vote on matters
for which it has discretionary voting authority. Brokers will not have
discretionary voting authority with respect to the proposal to approve the
Merger Agreement. If a nominee cannot vote on a particular matter because it
does not have discretionary voting authority, this is a "broker non-vote" on
that matter. Broker non-votes will not be counted as shares present and entitled
to vote for purposes of determining the presence or absence of a quorum for the
transaction of business at the Special Meeting.
VOTING PROCEDURES
Under Delaware law, holders of a majority of the outstanding shares of
Common Stock entitled to vote at the Special Meeting must vote to approve the
Merger Agreement. The Merger Agreement is attached to this Proxy Statement as
Appendix A. For the purposes of the vote required under Delaware law, a failure
to vote, a vote to abstain and a broker non-vote will each have the same legal
effect as a vote cast against approval of the Merger Agreement. Thermo
Instrument, which owns approximately 78% of the outstanding Common Stock, and
Thermo Electron, which owns approximately 3% of the outstanding Common Stock,
own enough shares of Common Stock to vote to approve the Merger under Delaware
law without the vote of the Public Stockholders and intend to vote their shares
in favor of the Merger Agreement. However, the Merger Agreement also requires
the affirmative vote of a majority of the outstanding shares of Common Stock
that are voted at the Special Meeting by the Public Stockholders. For purposes
of the vote of the Public Stockholders, abstentions and broker non-votes will
reduce the absolute number, but not the percentage, of affirmative votes
necessary to approve the Merger. In other words, abstentions and broker
non-votes will not be included in the determination of the outcome of the vote
of the Public Stockholders.
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If a properly executed Proxy Card is submitted and no instructions are
given, the shares of Common Stock represented by that Proxy Card will be voted
"FOR" approval of the proposed Merger Agreement.
Under Delaware law, holders of Common Stock who comply with certain notice
requirements, do not vote in favor of the Merger Agreement and comply with
certain other procedures will have the right to dissent and to be paid cash for
the fair value of their shares as finally determined in accordance with the
procedures under Delaware law. The fair value, as finally determined, may be
more or less than the consideration to be received by other stockholders of
Thermo Vision under the terms of the Merger Agreement. Failure to follow such
procedures under Delaware law precisely will result in the loss of Dissenters'
Rights. See "RIGHTS OF DISSENTING STOCKHOLDERS."
VOTING AND REVOCATION OF PROXIES
A stockholder giving a proxy has the power to revoke it at any time before
it is exercised by (i) filing with the Secretary of Thermo Vision an instrument
revoking it, (ii) submitting a duly executed proxy bearing a later date or (iii)
voting in person at the Special Meeting. Subject to such revocation, all shares
represented by each properly executed proxy received by the Secretary of Thermo
Vision will be voted in accordance with the instructions indicated thereon, and
if no instructions are indicated, will be voted to approve the Merger Agreement.
The shares represented by the accompanying Proxy Card and entitled to vote will
be voted if the Proxy Card is properly signed and received by the Secretary of
the Company prior to the Special Meeting.
EFFECTIVE TIME
The Merger will be effective as soon as practicable following stockholder
approval of the Merger Agreement at the Special Meeting and satisfaction or
waiver of the terms and conditions set forth in the Merger Agreement, and upon
the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware. See "THE MERGER -- Conditions."
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THE MERGER
The Merger Agreement provides that the Merger Sub, a newly formed Delaware
corporation that is a subsidiary of Thermo Instrument, will be merged with and
into Thermo Vision, and that following the Merger, the separate existence of the
Merger Sub will cease and Thermo Vision will continue as the Surviving
Corporation.
The terms of and conditions to the Merger are contained in the Merger
Agreement that is included in full as Appendix A to this Proxy Statement and is
incorporated herein by reference. The discussion in this Proxy Statement of the
Merger, and the summary description of all material terms of the Merger
Agreement that is contained in this section, are subject to and qualified in
their entirety by reference to the more complete information set forth in the
Merger Agreement.
CONVERSION OF SECURITIES
At the Effective Time, subject to the terms, conditions and procedures set
forth in the Merger Agreement, each share of Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares held by stockholders
exercising Dissenters' Rights, shares held in treasury by Thermo Vision and
shares held by Thermo Instrument and Thermo Electron) will, by virtue of the
Merger, be converted into the right to receive the Cash Merger Consideration.
Except for the right to receive the Cash Merger Consideration, from and after
the Effective Time, all shares (other than shares held by stockholders
exercising Dissenters' Rights), by virtue of the Merger and without any action
on the part of the holders, will no longer be outstanding and will be canceled
and retired and will cease to exist. Each holder of a stock certificate formerly
representing any shares (other than shares held by stockholders exercising
Dissenters' Rights), will after the Effective Time cease to have any rights with
respect to such shares other than the right to receive the Cash Merger
Consideration for such shares upon surrender of the stock certificate.
No interest will be paid or accrued on the amount payable upon the
surrender of any stock certificate. Payment to be made to a person other than
the registered holder of the stock certificate surrendered is conditioned upon
the stock certificate so surrendered being properly endorsed and otherwise in
proper form for transfer, as determined by the Payment Agent. Further, the
person requesting such payment will be required to pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of the stock certificate surrendered or establish to the satisfaction of
the Payment Agent that such tax has been paid or is not payable. Six months
following the Effective Date, Thermo Instrument may require the Payment Agent to
deliver to it any funds made available to the Payment Agent that have not been
disbursed to holders of stock certificates formerly representing shares
outstanding prior to the Effective Time. After such time, holders of Thermo
Vision stock certificates will be entitled to look to Thermo Instrument only as
general creditors with respect to cash payable upon due surrender of their stock
certificates. Notwithstanding the foregoing, neither the Payment Agent nor any
party to the Merger Agreement will be liable to any holder of stock certificates
formerly representing shares for any amount paid to a public official pursuant
to any applicable abandoned property, escheat or similar law.
At the Effective Time, each share of the Merger Sub's common stock that is
issued and outstanding immediately prior to the Effective Time held by Thermo
Electron and Thermo Instrument will, by virtue of the Merger, be converted at
the Effective Time into one fully paid and nonassessable share of common stock
of the Surviving Corporation. All shares held in treasury by Thermo Vision
immediately prior to the Effective Time will, at the Effective Time, cease to be
outstanding, be canceled and retired without payment of any consideration
therefor and cease to exist. Shares of Common Stock held by persons properly
exercising Dissenters' Rights will not be converted into the Cash Merger
Consideration in the Merger and after the Effective Time will represent only the
right to receive such consideration as is determined to be due such dissenting
stockholder pursuant to Section 262 of the DGCL. See "RIGHTS OF DISSENTING
STOCKHOLDERS."
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ASSUMPTION OF THERMO VISION STOCK OPTIONS BY THERMO INSTRUMENT
Thermo Vision has, from time to time, issued options to acquire Common
Stock pursuant to the Thermo Vision Stock Option Plan. At the Effective Time,
each outstanding Thermo Vision Stock Option under the Thermo Vision Stock Option
Plan, whether or not exercisable, will be assumed by Thermo Instrument. Each
Thermo Vision Stock Option so assumed by Thermo Instrument will continue to
have, and be subject to, the same terms and conditions set forth in the Thermo
Vision Stock Option Plan immediately prior to the Effective Time, except that
(i) each Thermo Vision Stock Option will be exercisable (or will become
exercisable in accordance with its terms) for that number of whole shares of
Thermo Instrument Common Stock equal to the product of the number of shares of
Common Stock that were issuable upon exercise of such Thermo Vision Stock Option
immediately prior to the Effective Time multiplied by the Exchange Ratio (as
defined below), rounded down to the nearest whole number of shares of Thermo
Instrument Common Stock, and (ii) the per share exercise price for the shares of
Thermo Instrument Common Stock issuable upon exercise of such assumed Thermo
Vision Stock Option will be equal to the quotient determined by dividing the
exercise price per share of Common Stock at which such Thermo Vision Stock
Option was exercisable immediately prior to the Effective Time by the Exchange
Ratio, rounded up to the nearest whole cent. The "Exchange Ratio" is a fraction,
the numerator of which is the Cash Merger Consideration and the denominator of
which is the closing price of Thermo Instrument Common Stock on the day
immediately preceding the Effective Date as reported in the consolidated
transaction reporting system, rounded down to the nearest whole number of shares
of Thermo Instrument Common Stock.
At the Effective Time, each outstanding option to purchase shares of Common
Stock (each a "Thermo Vision ESPP Stock Option") under the Thermo Vision
Employees' Stock Purchase Plan (the "Thermo Vision ESPP") will also be assumed
by Thermo Instrument. Each Thermo Vision ESPP Stock Option so assumed by Thermo
Instrument will continue to have, and be subject to, the same terms and
conditions as set forth in the Thermo Vision ESPP immediately prior to the
Effective Time except that (i) the assumed option shall be exercisable for
shares of Thermo Instrument Common Stock; (ii) the purchase price per share of
Thermo Instrument Common Stock shall be the lower of (a) 85% of (x) the per
share market value of the Common Stock on the grant date of the option divided
by (y) the Exchange Ratio, with the resulting price rounded up to the nearest
whole cent, and (b) 85% of the market value of Thermo Instrument Common Stock as
of the exercise date of the option; and (iii) the $25,000 limit under Section
9.2(i) of the Thermo Vision ESPP shall be applied by taking into account Thermo
Instrument's assumption of the Thermo Vision ESPP Stock Options in accordance
with Section 423(b)(8) of the Internal Revenue Code of 1986, as amended, and
applicable regulations.
DEFERRED COMPENSATION PLAN FOR DIRECTORS
At the Effective Time, the Thermo Vision deferred compensation plan for
directors (the "Deferred Compensation Plan") will terminate, and Thermo Vision
will distribute to each participant the sum in cash equal to the balance of
stock units credited to his deferred compensation account under the Deferred
Compensation Plan as of the Effective Time multiplied by the Cash Merger
Consideration.
TRANSFER OF SHARES
Shares of Common Stock will not be transferred on the stock transfer books
at or after the Effective Time. If certificates representing such shares are
presented to Thermo Vision after the Effective Time, such shares will be
canceled and exchanged for the Cash Merger Consideration.
CONDITIONS
Each party's obligation to effect the Merger is subject to the satisfaction
of each of the following conditions at or prior to the Effective Time:
(i) the Merger Agreement and the transactions contemplated therein shall
have been approved and adopted by the affirmative vote of (a) the
holders of a majority of the outstanding shares of
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Common Stock entitled to vote thereon in accordance with the DGCL and
(b) the majority of the outstanding shares of Common Stock voted at
the Special Meeting by the Public Stockholders; and
(ii) no court, administrative agency or commission or other governmental
or regulatory body or authority or instrumentality shall have
enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other order that
is in effect and that has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger.
The obligations of Thermo Vision to effect the Merger are subject to the
satisfaction of each of the following conditions at or prior to the Effective
Time, unless waived in writing by Thermo Vision:
(i) the representations and warranties of the Merger Sub and Thermo
Instrument in the Merger Agreement shall be true and correct in all
material respects on and as if made at the Effective Time, except as
otherwise permitted by the Merger Agreement;
(ii) the Merger Sub and Thermo Instrument shall have performed or complied
in all material respects with all agreements and covenants required
by the Merger Agreement to be performed or complied with by them at
or prior to the Effective Time; and
(iii) Thermo Vision shall have received a certificate of the President,
Chief Executive Officer or Vice President of Thermo Instrument
certifying to the effect of above clauses (i) and (ii).
The obligations of the Merger Sub and Thermo Instrument to effect the
Merger are subject to the satisfaction of each of the following conditions at or
prior to the Effective Time, unless waived in writing by Thermo Instrument:
(i) the representations and warranties of Thermo Vision in the Merger
Agreement shall be true and correct in all material respects on and as
if made at the Effective Time, except as otherwise permitted by the
Merger Agreement;
(ii) Thermo Vision shall have performed or complied in all material
respects with all agreements and covenants required by the Merger
Agreement to be performed or complied with by it on or prior to the
Effective Time; and
(iii) Thermo Instrument shall have received a certificate of the
President, Chief Executive Officer or Vice President of Thermo
Vision certifying to the effect of above clauses (i) and (ii).
REPRESENTATIONS AND WARRANTIES
Thermo Vision has made representations and warranties in the Merger
Agreement regarding, among other things, its organization and good standing,
authority to enter into the Merger Agreement and consummate the transactions
contemplated thereby, its capitalization, requisite governmental and other
consents and approvals, and the content and submission of forms and reports
required to be filed by Thermo Vision with the Commission.
Thermo Instrument and the Merger Sub have made representations and
warranties in the Merger Agreement regarding, among other things, their
organization and good standing, authority to enter the Merger Agreement and
consummate the transactions contemplated thereby, adequacy of Thermo
Instrument's financial resources to pay the Cash Merger Consideration, accuracy
of information supplied by Thermo Instrument for submission on forms and reports
required to be filed by Thermo Vision with the Commission, and requisite
governmental and other consents and approvals.
The representations and warranties of the parties in the Merger Agreement
will expire upon consummation of the Merger. After such expiration, none of the
parties to the Merger Agreement or their respective officers, directors or
principals will have any liability for any such representations or warranties.
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COVENANTS
In the Merger Agreement, Thermo Vision has agreed that during the period
from the date of the Merger Agreement and continuing until the earlier of
termination of the Merger Agreement or the Effective Time, Thermo Vision will
carry on its business in the usual, regular and ordinary course, substantially
consistent with past practice and will not, without the prior consent of Thermo
Instrument, or unless otherwise permitted by the Merger Agreement:
(i) waive any stock repurchase rights, accelerate, amend or change the
period of exercisability of options or restricted stock, or reprice
options granted under any employee, consultant or director stock
plans or authorize cash payments in exchange for any options
granted under any of such plans;
(ii) enter into any material partnership arrangements, joint development
agreements or strategic alliances;
(iii) grant any severance or termination pay to any officer or employee
except payments in amounts consistent with past practices or
pursuant to written agreements outstanding, or existing policies,
or adopt any new severance plan;
(iv) declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any capital
stock or split, combine or reclassify any capital stock or issue or
authorize the issuance of any other securities in respect of, in
lieu of or in substitution for any capital stock;
(v) issue, deliver, sell, authorize or propose the issuance, delivery or
sale of, any shares of its capital stock or any securities
convertible into shares of capital stock, or subscriptions, rights,
warrants or options to acquire any shares of capital stock or any
securities convertible into shares of capital stock, or enter into
other agreements or commitments of any character obligating it to
issue any such shares or convertible securities, other than the
issuance of shares of Common Stock pursuant to the exercise of stock
options therefor;
(vi) cause, permit or propose any amendments to its Certificate of
Incorporation or Bylaws;
(vii) acquire or agree to acquire by merging or consolidating with, or by
purchasing any equity interest in or a material portion of the
assets of, or by any other manner, any other business or any
corporation, partnership interest, association or other business
organization or division thereof, or otherwise acquire or agree to
acquire any assets or enter into any joint ventures, strategic
partnerships or alliances;
(viii) sell, lease, license, encumber or otherwise dispose of any
properties or assets that are material, individually or in the
aggregate, to the business of Thermo Vision;
(ix) incur any indebtedness for borrowed money (other than ordinary
course trade payables or pursuant to existing credit facilities in
the ordinary course of business) or guarantee any such indebtedness
or issue or sell any debt securities or warrants or guarantee any
debt securities of others;
(x) adopt or amend any employee benefit or stock purchase or option
plan, or enter into any employment contract, pay any special bonus
or special remuneration to any director or employee, or increase the
salaries or wage rates of its officers or employees, except
increases in amounts consistent with past practice;
(xi) pay, discharge or satisfy any claim, liability or obligation, other
than the payment, discharge or satisfaction in the ordinary course
of business;
(xii) make any grant of exclusive rights to any third party; or
(xiii) agree in writing or otherwise to take any of the actions described
above.
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INDEMNIFICATION AND INSURANCE
The Merger Agreement provides that for a period of six years after the
Effective Time, Thermo Instrument will, and will cause the Surviving Corporation
to, fulfill and honor in all respects the indemnification obligations of Thermo
Vision, pursuant to Thermo Vision's Certificate of Incorporation and Bylaws,
each as in effect immediately prior to the Effective Time, to those individuals
who were directors or officers of Thermo Vision at the Effective Time. The
Surviving Corporation's Certificate of Incorporation and Bylaws will contain the
provisions with respect to indemnification and elimination of liability for
monetary damages currently set forth in Thermo Vision's Certificate of
Incorporation and Bylaws, and such provisions will not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights of those individuals who were
directors or officers of Thermo Vision at the Effective Time, unless such
modification is required by law.
In addition, Thermo Instrument will cause the Surviving Corporation, either
directly or through participation in Thermo Electron's umbrella policy, to
maintain in effect, for a period of six years after the Effective Time, a
directors' and officers' liability insurance policy covering the Thermo Vision
directors and officers who, at the Effective Time, were then covered by Thermo
Electron's liability insurance policy, with coverage providing substantially the
same amount and scope as such directors' and officers' existing coverage.
However, in no event will the Surviving Corporation be required to pay premiums
for such insurance in excess of 175% of the current annual premiums, as adjusted
for inflation each year, allocable to and paid by Thermo Vision.
TERMINATION, AMENDMENT AND WAIVER
At any time prior to the Effective Time, whether before or after approval
of the Merger Agreement by the stockholders of Thermo Vision, the Merger
Agreement may be terminated by the mutual written consent of the board of
directors of the Merger Sub and the Board of Directors of Thermo Vision.
In addition, either the Merger Sub or Thermo Vision, in accordance with the
provisions of the Merger Agreement, may terminate the Merger Agreement prior to
the Effective Time, whether before or after approval of the Merger Agreement by
the stockholders of Thermo Vision, if (i) the Merger has not been consummated by
December 31, 1999, unless such party's action or inaction constitutes a breach
of the Merger Agreement and has been a principal cause of or resulted in the
failure of the Merger to be consummated, (ii) a court of competent jurisdiction
or governmental, regulatory or administrative agency or commission issues an
order, decree or ruling or takes any other action enjoining, restraining or
otherwise prohibiting the Merger and such order, decree, ruling or action is
final and nonappealable or (iii) the approval of the stockholders of Thermo
Vision necessary to consummate the Merger has not been obtained, unless such
party's action or inaction constitutes a breach of the Merger Agreement and has
been the principal cause of or resulted in the failure to obtain the requisite
stockholder approval to consummate the Merger.
In addition, the Merger Sub may terminate the Merger Agreement prior to the
Effective Time, whether before or after approval of the Merger Agreement by the
stockholders of Thermo Vision, if Thermo Vision breaches any representation,
warranty, covenant or agreement and fails to cure such breach within ten
business days after written notice of such breach from the Merger Sub.
Thermo Vision may terminate the Merger Agreement prior to the Effective
Time, whether before or after approval of the Merger Agreement by the
stockholders of Thermo Vision, if (i) Thermo Vision's Board of Directors
determines in good faith, on the advice of outside legal counsel, that the
Board's fiduciary duties under applicable law require it to do so or (ii) Thermo
Instrument or Merger Sub breaches any representation, warranty, covenant or
agreement and fails to cure such breach within ten business days after written
notice of such breach from Thermo Vision.
Subject to the provisions of applicable law, the Merger Agreement may be
amended by the parties thereto at any time by written agreement of the parties.
36
<PAGE> 37
SOURCE OF FUNDS
The aggregate consideration payable in the Merger is approximately $10.6
million. Thermo Instrument intends to finance the Merger entirely from cash on
hand.
EXPENSES
The parties have agreed to pay their own costs and expenses in connection
with the Merger Agreement and the transactions contemplated thereby. Assuming
the Merger is consummated, the estimated costs and fees in connection with the
Merger and the related transactions that will be paid by Thermo Vision are as
follows:
<TABLE>
<CAPTION>
COST OR FEE ESTIMATED AMOUNT
----------- ----------------
<S> <C>
Accounting fees......................................... $ 15,000
Printing and mailing fees............................... 150,000
Commission filing fees.................................. 2,126
Other regulatory filing fees............................ 5,000
Miscellaneous........................................... 2,874
--------
$175,000
========
</TABLE>
ACCOUNTING TREATMENT
The Merger will be accounted for as the acquisition of a minority interest
by Thermo Instrument, using the purchase method of accounting.
REGULATORY APPROVALS
No federal or state regulatory approvals are required to be obtained that
have not already been obtained, nor any regulatory requirements complied with,
in connection with the consummation of the Merger by any party to the Merger
Agreement, except for (i) the requirements of the DGCL in connection with
stockholder approvals and consummation of the Merger and (ii) the requirements
of the federal securities laws.
37
<PAGE> 38
RIGHTS OF DISSENTING STOCKHOLDERS
Under the DGCL, record holders of shares of Common Stock who follow the
procedures set forth in Section 262 and who have not voted in favor of the
Merger Agreement will be entitled to have their shares of Common Stock appraised
by the Court of Chancery of the State of Delaware and to receive payment of the
fair value of such shares together with a fair rate of interest, if any, as
determined by such court. The fair value as determined by the Delaware court is
exclusive of any element of value arising from the accomplishment or expectation
of the Merger. The following is a summary of certain of the provisions of
Section 262 of the DGCL and is qualified in its entirety by reference to the
full text of Section 262, a copy of which is attached hereto as Appendix B.
Under Section 262, where a merger agreement is to be submitted for approval
and adoption at a meeting of stockholders, as in the case of the Special
Meeting, not less than 20 calendar days prior to the meeting, the Company must
notify each of the holders of Common Stock at the close of business on the
Record Date that such appraisal rights are available and include in each such
notice a copy of Section 262. This Proxy Statement constitutes such notice. Any
stockholder wishing to exercise appraisal rights should review the following
discussion and Appendix B carefully because failure to timely and properly
comply with the procedures specified in Section 262 will result in the loss of
appraisal rights under the DGCL.
A holder of shares of Common Stock wishing to exercise appraisal rights
must deliver to the Company, before the vote on the approval and adoption of the
Merger Agreement at the Special Meeting, a written demand for appraisal of such
holder's shares of Common Stock. Such demand will be sufficient if it reasonably
informs the Company of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of his shares. A proxy or vote against
the Merger Agreement will not constitute such a demand. In addition, a holder of
shares of Common Stock wishing to exercise appraisal rights must hold of record
such shares on the date the written demand for appraisal is made and must
continue to hold such shares through the Effective Time.
Only a holder of record of shares of Common Stock is entitled to assert
appraisal rights for the shares of Common Stock registered in that holder's
name. A demand for appraisal should be executed by or on behalf of the holder of
record fully and correctly, as the holder's name appears on the stock
certificates. Holders of Common Stock who hold their shares in brokerage
accounts or other nominee forms and wish to exercise appraisal rights should
consult with their brokers to determine the appropriate procedures for the
making of a demand for appraisal by such nominee. All written demands for
appraisal of Common Stock should be sent or delivered to Sandra L. Lambert,
Secretary, Thermo Vision Corporation, c/o Thermo Electron Corporation, 81 Wyman
Street, P.O. Box 9046, Waltham, Massachusetts 02454-9046, so as to be received
before the vote on the approval and adoption of the Merger Agreement at the
Special Meeting.
If the shares of Common Stock are owned of record in a fiduciary capacity,
such as by a trustee, guardian or custodian, execution of the demand should be
made in that capacity, and if the shares of Common Stock are owned of record by
more than one person, as in a joint tenancy or tenancy in common, the demand
should be executed by or on behalf of all joint owners. An authorized agent,
including one or more joint owners, may execute a demand for appraisal on behalf
of a holder of record; however, the agent must identify the record owner or
owners and expressly disclose the fact that, in executing the demand, the agent
is agent for such owner or owners. A record holder such as a broker holding
Common Stock as nominee for several beneficial owners may exercise appraisal
rights with respect to the Common Stock held for one or more beneficial owners
while not exercising such rights with respect to the Common Stock held for other
beneficial owners; in such case, the written demand should set forth the number
of shares as to which appraisal is sought and where no number of shares is
expressly mentioned the demand will be presumed to cover all Common Stock held
in the name of the record owner.
38
<PAGE> 39
Within 10 calendar days after the Effective Time, the Company, as the
Surviving Corporation in the Merger, must send a notice as to the effectiveness
of the Merger to each person who has satisfied the appropriate provisions of
Section 262 and who has not voted in favor of the Merger Agreement. Within 120
calendar days after the Effective Time, the Company, or any stockholder entitled
to appraisal rights under Section 262 and who has complied with the foregoing
procedures, may file a petition in the Delaware Court of Chancery demanding a
determination of the fair value of the shares of all such stockholders. The
Company is not under any obligation, and has no present intention, to file a
petition with respect to the appraisal of the fair value of the shares of Common
Stock. Accordingly, it is the obligation of the stockholders to initiate all
necessary action to perfect their appraisal rights within the time prescribed in
Section 262.
Within 120 calendar days after the Effective Time, any stockholder of
record who has complied with the requirements for exercise of appraisal rights
will be entitled, upon written request, to receive from the Company a statement
setting forth the aggregate number of shares of Common Stock with respect to
which demands for appraisal have been received and the aggregate number of
holders of such shares. Such statement must be mailed within 10 calendar days
after a written request therefor has been received by the Company.
If a petition for an appraisal is timely filed, after a hearing on such
petition, the Delaware Court of Chancery will determine the stockholders
entitled to appraisal rights and will appraise the fair value of the shares of
Common Stock, exclusive of any element of value arising from the accomplishment
or expectation of the Merger, together with a fair rate of interest, if any, to
be paid upon the amount determined to be the fair value. Holders considering
seeking appraisal should be aware that the fair value of their shares of Common
Stock as determined under Section 262 could be more than, the same as or less
than the amount per share that they would otherwise receive if they did not seek
appraisal of their shares of Common Stock. The Delaware Supreme Court has stated
that "proof of value by any techniques or methods that are generally considered
acceptable in the financial community and otherwise admissible in court" should
be considered in the appraisal proceedings. In addition, Delaware courts have
decided that the statutory appraisal remedy, depending on factual circumstances,
may or may not be a dissenter's exclusive remedy. The Court will also determine
the amount of interest, if any, to be paid upon the amounts to be received by
persons whose shares of Common Stock have been appraised. The costs of the
action may be determined by the Court and taxed upon the parties as the Court
deems equitable. The Court may also order that all or a portion of the expenses
incurred by any holder of shares of Common Stock in connection with an
appraisal, including, without limitation, reasonable attorneys' fees and the
fees and expenses of experts used in the appraisal proceeding, be charged pro
rata against the value of all the shares of Common Stock entitled to appraisal.
The Court may require stockholders who have demanded an appraisal and who
hold Common Stock represented by certificates to submit their certificates of
Common Stock to the Court for notation thereon of the pendency of the appraisal
proceedings. If any stockholder fails to comply with such direction, the Court
may dismiss the proceedings as to such stockholder.
Any stockholder who has duly demanded an appraisal in compliance with
Section 262 will not, after the Effective Time, be entitled to vote the shares
of Common Stock subject to such demand for any purpose or be entitled to the
payment of dividends or other distributions on those shares (except dividends or
other distributions payable to holders of record of shares of Common Stock as of
a date prior to the Effective Time).
If any stockholder who demands appraisal of shares under Section 262 fails
to perfect, or effectively withdraws or loses, the right to appraisal, as
provided in the DGCL, the shares of Common Stock of such holder will be
converted into the right to receive the Cash Merger Consideration in accordance
with the Merger Agreement, without interest. A stockholder will fail to perfect,
or effectively lose, the right to appraisal if no petition for appraisal is
filed within 120 calendar days after the Effective Time. A stockholder may
withdraw a demand for appraisal by delivering to the Company a written
withdrawal of
39
<PAGE> 40
the demand for appraisal and acceptance of the Merger, except that any such
attempt to withdraw made more than 60 calendar days after the Effective Time
will require the written approval of the Company. Once a petition for appraisal
has been filed, such appraisal proceeding may not be dismissed as to any
stockholder without the approval of the Court.
For federal income tax purposes, stockholders who receive cash for their
shares of Common Stock upon exercise of Dissenters' Rights will realize taxable
gain or loss. See "FEDERAL INCOME TAX CONSEQUENCES."
40
<PAGE> 41
FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the material federal income tax
considerations relevant to the Merger. This discussion is based on currently
existing provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), existing and proposed Treasury Regulations thereunder and current
administrative rulings and court decisions, all of which are subject to change.
Any such change, which may or may not be retroactive, could alter the tax
consequences to the holders of Common Stock as described herein. Special tax
consequences not described below may be applicable to particular classes of
taxpayers, including financial institutions, broker-dealers, persons who are not
citizens or residents of the United States or who are foreign corporations,
foreign partnerships or foreign estates or trusts as to the United States and
holders who acquired their stock through the exercise of an employee stock
option or otherwise as compensation. In addition, the following discussion does
not include any discussion of any state, local or foreign tax consequences that
may result from the Merger.
THIS TAX DISCUSSION IS BASED UPON PRESENT UNITED STATES FEDERAL INCOME TAX
LAW. EACH HOLDER OF COMMON STOCK SHOULD CONSULT SUCH HOLDER'S OWN TAX ADVISOR AS
TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO SUCH HOLDER, INCLUDING THE
APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL AND OTHER TAX LAWS AND THE
POSSIBLE EFFECT OF CHANGES IN SUCH TAX LAWS.
For federal income tax purposes, the receipt of the Cash Merger
Consideration by holders of Common Stock pursuant to the Merger will be a
taxable sale of the holder's Common Stock. Each holder's gain or loss with
respect to a share will equal the difference between $7.00 and the holder's
basis in the share of Common Stock. Such gain or loss generally will be a
capital gain or loss provided that the holder has held the Common Stock as a
capital asset. Capital gain or loss will be treated as long-term capital gain or
loss if the holder has held the Common Stock for more than one year, and will be
treated as short-term capital gain or loss if the holder has held the Common
Stock for one year or less.
A holder of Common Stock may be subject to backup withholding at the rate
of 31% with respect to Cash Merger Consideration received pursuant to the
Merger, unless the holder (a) is a corporation or comes within certain other
exempt categories and, when required, adequately demonstrates this fact, or (b)
provides a correct taxpayer identification number ("TIN"), certifies as to no
loss of exemption from backup withholding, and otherwise complies with
applicable requirements of the backup withholding rules. To prevent the
possibility of backup withholding, each holder must provide the Payment Agent
with his or her correct TIN by completing a Form W-9 or Substitute Form W-9 or,
in the case of exempt foreign persons, with certain other information by
completing the appropriate Form W-8 or Substitute Form W-8. A holder of Common
Stock who does not provide the above information may be subject to penalties
imposed by the Internal Revenue Service (the "IRS"), as well as backup
withholding. Any amount withheld under these rules will be creditable against
the holder's federal income tax liability. Thermo Instrument (or its agent) will
report to the holders of Common Stock and the IRS the amount of any "reportable
payments," as defined in Section 3406 of the Code, and the amount of tax, if
any, withheld with respect thereto.
Neither the Company, Merger Sub nor Thermo Instrument will recognize gain
or loss for federal income tax purposes as a result of the Merger.
41
<PAGE> 42
BUSINESS OF THE COMPANY
OVERVIEW
The Company designs, manufactures, and markets a diverse array of photonics
products, which are light-based technologies 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 Company was incorporated in November 1995 as a wholly owned subsidiary
of Thermo Optek Corporation ("Thermo Optek"), a publicly traded, majority-owned
subsidiary of Thermo Instrument. In December 1997, the Company was "spun out"
through a distribution of all of its outstanding capital stock as a tax-free
dividend to Thermo Optek shareholders. Thermo Vision is now a majority-owned
public subsidiary of Thermo Instrument.
On July 16, 1999, the Company acquired the non-telecommunications thin-film
optical filter business of Corning OCA Corporation from Corning OCA Corporation
for a purchase price of $4 million. This business manufactures optical filters
and assemblies in the ultra-violet, visible, near infrared and infrared portions
of the electromagnetic spectrum. Common applications for the manufactured
filters are clinical chemistry, scientific instruments, bar code scanners, color
measurement, intrusion detection, laser protection and process control
equipment.
PRINCIPAL PRODUCTS AND SERVICES
The Company organizes and manages its business by individual functional
operating entity, each of which is engaged in designing, manufacturing and
marketing products for the photonics industry. Photonics is in many ways
analogous to electronics. Both are used to detect, transmit, store, and process
information, and to generate energy, as well as to capture and display images.
Photonics, however, has two primary advantages over electronics- greater speed
and smaller size. As a result, a thin fiber optic cable (photonic) can transmit
10,000 times more information than a copper wire (electronic).
Optically Based Instruments and Lasers
The Company's Optically Based Instruments and Lasers segment is comprised
of its Oriel Instruments Corporation and Laser Science, Inc. subsidiaries and
its Thermo Vision Colorado division.
The Optically Based Instruments and Lasers segment manufactures analyzers
that combine optical components and signal processors, which are used primarily
in research, analytical, and process applications, such as the determination of
correct exposure time for photoresist development in photolithography,
identification of materials by their fluorescence lifetime, and the quality
testing of optical components. The Company focuses on the development of
low-cost analyzers that use standard photonics components as building blocks
designed to work together in multiple configurations and to be easily modified
to accommodate changing end-user requirements. For example, the Company's
monochromators, which divide white light into its component wavelengths, are one
of the basic building blocks for spectroscopic research and analytical
instruments.
This segment also includes pulsed nitrogen lasers, nitrogen laser
accessories, pulsed CO(2) lasers, and autosamplers, which the Company designs,
manufactures, and markets as accessories to analytical instruments. Pulsed
lasers are preferable to continuous lasers in measurement applications because
the break in the laser beam provides discrete time segments in which to perform
measurements. The Company's lasers are often used as the ionization sources for
matrix assisted laser desorption ionization-time of flight (MALDI-TOF) mass
spectrometers used to study proteins, peptides, and other large biomolecules, as
well as for the cutting of samples mounted in a microscope.
Revenues from sales of optically based instruments and lasers represented
61%, 66% and 69% of the Company's total revenues in 1998, 1997 and 1996,
respectively. See Note 9 to the Company's
42
<PAGE> 43
Consolidated Financial Statements included elsewhere within this Proxy Statement
for financial information relating to business segments and geographical
information.
Optical Components
The Company's Optical Components segment is comprised of its Thermo Vision
Opticon Corporation and Hilger Crystals Limited subsidiaries and its Corion
division.
This segment manufactures a variety of optical components, including
filters and crystals. Primary applications for optical components include
medical and analytical instruments and X-ray baggage screening for security
purposes. The Company offers a broad line of optical components designed for
specific applications and for use in modular systems. In July 1999, this segment
acquired the assets of the non-telecommunications optical filter business of
Corning OCA Corporation, which manufactures optical filters and assemblies in
the ultra-violet, visible, near infrared and infrared and IR portions of the
electromagnetic spectrum.
Revenues from sales of optical components represented 21%, 21% and 22% of
the Company's total revenues in 1998, 1997 and 1996, respectively. See Note 9 to
the Company's Consolidated Financial Statements included elsewhere within this
Proxy Statement for financial information relating to business segments and
geographical information.
Sensors and Imaging Systems
The Company's Sensors and Imaging Systems segment is comprised of its
Centro Vision, Inc. and CID Technologies Inc. subsidiaries.
This segment manufactures sensors that are primarily used by manufacturers
of medical diagnostic and analytical instruments. Sensors detect photons and
produce a resultant electrical signal. An imaging system consists of a sensor or
an array of sensors connected to a recording and/or display device. Applications
of sensors and imaging systems include cameras for filmless dental X-ray imaging
and detectors for optical spectrometers used in chemical analysis. The Company's
imaging sensors can be designed to have very high dynamic range at low light
levels, which makes them attractive in demanding spectroscopy and astronomy
applications. The Company offers a number of proprietary charge-injection device
("CID") sensors based on its own designs and also customizes sensors to
particular customer specifications. The Company also designs and markets CID
camera systems.
The Company's sensors convert light to electricity or electricity to light.
A familiar example is the silicon photodiode detector, with uses ranging from
orienting satellites toward the sun to color recognition for paint matching. The
Company customizes its photodiodes for specific applications.
Revenues from sales of sensors and imaging systems represented 18%, 13% and
9% of the Company's total revenues in 1998, 1997 and 1996, respectively. See
Note 9 to the Company's Consolidated Financial Statements included elsewhere
within this Proxy Statement for financial information relating to business
segments and geographical information.
Sales and Marketing
The Company markets its products both in the U.S. and internationally by
means of technical catalogs, available in printed format, as well as through Web
sites and the dealer and distributor networks of its subsidiaries and divisions.
The Company sells directly to larger OEM buyers through the direct sales forces
of its subsidiaries and divisions. The Company trains the members of its sales
forces on the technical aspects of its products so they are able to respond to
questions and otherwise support customers, dealers, and distributors. The
Company holds a minority equity interest in LOT-Oriel Holding GmbH
("LOT-Oriel"), a large European distributor of photonics products. A Company
representative serves as a member of LOT-Oriel's board of directors. The Company
believes that its relationship with LOT-Oriel enhances the Company's visibility
in and access to the European photonics market.
43
<PAGE> 44
NEW PRODUCTS; RESEARCH AND DEVELOPMENT
The Company maintains active programs for the development of new
technologies and the enhancement of its existing products. In addition, the
Company seeks to develop new applications for its products and technologies. The
Company incurred research and development expenses of $4,233,000, $4,143,000,
and $3,499,000 in 1998, 1997, and 1996, respectively. In addition, for
customer-sponsored contract research and development expenses, the Company
received $338,000, $744,000, and $532,000 in 1998, 1997, and 1996, respectively.
RAW MATERIALS
The Company purchases the silicon wafers used in its CID sensor and silicon
photodiodes from third-party suppliers. After purchase, the silicon wafers are
shipped to fabricators to be processed in accordance with the Company's designs
and specifications. Historically, a single fabricator was employed to process
silicon wafers. In 1998, the Company experienced problems with this fabricator
when the processed silicon wafers did not meet anticipated process yields. The
lower yields hampered the Company's ability to meet orders for its products. The
Company qualified and has begun purchasing processed silicon wafers for certain
of the Company's products from a second fabricator and has started the process
of qualifying a third fabricator to process silicon wafers for certain of the
Company's other products. The Company continues to work with the original
fabricator to increase the yields of the processed silicon wafers. The original
fabricator was recently acquired by a third party that the Company believes will
provide additional resources and commitment necessary to continue to improve
yields. The Company purchases CID wafers from its existing supplier on a
purchase-order basis and does not have a formal supply arrangement with these
companies. The Company believes that outsourcing the processing of these wafers
enables it to avoid the technological risks and significant capital costs
associated with maintaining its own wafer-fabrication lines.
Except for those discussed above, raw materials, components, and supplies
purchased by the Company are generally either available from a number of
different suppliers or from alternative sources that could be developed without
a material adverse effect on the Company. To date, the Company has experienced
no difficulties in obtaining these materials.
PATENTS, LICENSES, AND TRADEMARKS
The Company's success depends in part on the strength and protection of its
proprietary methodologies and designs and other proprietary intellectual rights.
The Company's policy is to protect its intellectual property rights and to apply
for patent protection when appropriate. The Company believes that its
manufacturing know-how, particularly with respect to its optical filters and
crystals, provides it with a competitive advantage.
The Company currently holds numerous issued U.S. patents expiring at
various dates ranging from 1999 to 2016. The Company also has a number of
applications pending for additional U.S. patents and a number of foreign
counterparts for its patents in various foreign countries. The Company does not
believe the expiration of any single patent will materially impact the Company's
competitive position. The Company also has certain registered and other
trademarks. In addition, the Company has entered into license agreements with
other companies pursuant to which it grants or receives the rights to certain
technology, know-how, trademarks, or patents. Several of the Company's issued
U.S. patents pertain to its CID technology. In addition, the Company holds a
nonexclusive license to certain additional patents relating to CID technology.
SEASONAL INFLUENCES
There are no significant seasonal influences on the Company's sales of its
products.
44
<PAGE> 45
WORKING CAPITAL REQUIREMENTS
There are no special inventory requirements or credit terms extended to
customers that would have a material adverse effect on the Company's working
capital.
DEPENDENCY ON A SINGLE CUSTOMER
No single customer accounted for more than 10% of the Company's total
revenues in any of the past three years.
BACKLOG
The Company's backlog of firm orders at year-end 1998 and 1997 was as
follows:
<TABLE>
<CAPTION>
1998 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Optical Components.......................................... $ 1,885 $ 2,324
Sensors and Imaging Systems................................. 4,222 4,377
Optically Based Instruments and Lasers...................... 4,552 5,559
------- -------
$10,659 $12,260
------- -------
</TABLE>
Certain of these orders are cancellable by the customer upon payment of a
cancellation charge. The Company believes that substantially all of the backlog
as of January 2, 1999, will be shipped or completed during 1999. The $0.5
million decrease in the Optical Components backlog is primarily due to the
completion of the Stanford Linear Accelerator Contract in 1998. The $1.0 million
decrease in the Optically Based Instruments and Lasers segment backlog is
primarily due to a slowdown in the semiconductor industry.
GOVERNMENT CONTRACTS
The Company has no material portion of its business that is subject to
renegotiation of profits or termination of contracts or subcontracts at the
election of the government.
COMPETITION
The photonics industry is highly competitive. Photonics has historically
been a fragmented market, comprising more than 4,000 competitors around the
world. The Company competes with a number of companies that have substantially
greater financial, marketing, and other resources than the Company. The Company
competes in each of its three photonics segments primarily on the basis of
technical suitability, product performance, reliability, and price. The
Company's principal competitors are: Optical Coating Laboratory, Inc. and the
Bicron business unit of Saint-Gobain Industrial Ceramics, Inc. (in the Optical
Components segment); UDT Sensors, Inc., an Opto-Sensors Company; Dalsa
Corporation; and Cohu, Inc. (in the Sensors and Imaging Systems segment); and
Roper Scientific, Inc.; Acton Research Corporation; the ISA unit of Horiba
Instruments, Inc.; Hamamatsu Corporation, a unit of Hamamatsu Photonic KK;
Newport Corporation; and Coherent, Inc. (in the Optically Based Instruments and
Lasers segment).
ENVIRONMENTAL PROTECTION REGULATIONS
The Company believes that compliance by the Company with federal, state,
and local environmental protection regulations will not have a material adverse
effect on its capital expenditures, earnings, or competitive position.
NUMBER OF EMPLOYEES
As of September 1, 1999, the Company employed approximately 290 people.
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<PAGE> 46
PROPERTIES
The Company believes that its facilities are in good condition and are
suitable and adequate for its present operations. With respect to leases
expiring in the near future, in the event the Company does not renew such
leases, the Company believes suitable alternate space is available for lease on
acceptable terms. The Company's material physical properties are as follows,
divided by segment:
Optically Based Instruments and Lasers
The Company leases approximately 44,900 square feet of office, engineering,
and manufacturing space in Connecticut and Massachusetts under leases expiring
in 2008 and 2006, respectively. In addition, the Company owns approximately
3,600 square feet of office and manufacturing space in Colorado.
Optical Components
The Company leases approximately 27,600 square feet of office, engineering,
and manufacturing space in Massachusetts under a lease expiring in 2006. The
Company owns approximately 15,600 square feet of office and manufacturing space
in England.
Sensors and Imaging Systems
The Company leases approximately 30,300 square feet of office, engineering,
and manufacturing space in California and New York under leases expiring in 2004
and 2006, respectively.
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<PAGE> 47
SELECTED FINANCIAL INFORMATION
AND
RATIO OF EARNINGS TO FIXED CHARGES
The selected financial information presented below as of and for the years
ended January 2, 1999, and January 3, 1998, and for the year ended December 28,
1996, has been derived from the Company's Consolidated Financial Statements,
which have been audited by Arthur Andersen LLP, independent public accountants,
as indicated in their report included elsewhere in this Proxy Statement. The
selected financial information presented below as of December 28, 1996, as of
and for the year ended December 30, 1995, and for the year ended December 31,
1994, has been derived from the Company's Consolidated Financial Statements,
which have been audited by Arthur Andersen LLP, but have not been included or
incorporated by reference herein. This information should be read in conjunction
with the Company's Consolidated Financial Statements and related notes included
elsewhere in this Proxy Statement. The selected financial information as of
December 31, 1994, and for the six months ended July 3, 1999, and July 4, 1998,
has not been audited but, in the opinion of the Company, includes all
adjustments (consisting only of normal, recurring adjustments) necessary to
present fairly such information in accordance with generally accepted accounting
principles applied on a consistent basis. The results of operations for the six
months ended July 3, 1999, are not necessarily indicative of results for the
entire year.
<TABLE>
<CAPTION>
PRO FORMA
COMBINED(1)
-----------------
SIX SIX MONTHS
MONTHS ENDED
ENDED -----------------
JULY 3, JULY 3, JULY 4,
1999 1998 1999(2) 1998 1998 1997(3) 1996(4) 1995 1994
------- ------- ------- ------- ------- ------- ------- ------ ------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA
Revenues................... $21,584 $45,275 $19,115 $20,753 $37,966 $39,694 $30,434 $6,026 $4,242
Net Income................. 309 2,053 92 1,296 221 2,348 1,418 147 146
Basic and Diluted Earnings
per Share................ .04 .26 .01 .16 .03 .34 .21 .02 .02
BALANCE SHEET DATA (AT END
OF PERIOD)
Working Capital............ $ 9,390 $12,500 $19,618 $19,455 $19,639 $ 5,601 $ 570 $ (359)
Total Assets............... 47,060 46,910 47,470 46,280 47,401 28,362 6,778 6,776
Long-term Obligations...... 3,800 3,800 7,747 7,747 7,747 - - -
Shareholders' Investment... 32,205 32,205 33,244 32,179 32,055 20,252 4,697 4,083
OTHER DATA
Book Value per Share....... $ 4.00 $ 4.00 $ 4.13 $ 4.00 $ 3.98 $ 2.99 $ .69 $ .60
Cash Dividends Declared per
Share.................... -- -- -- -- -- -- -- --
RATIO OF EARNINGS TO FIXED
CHARGES (5)................ 1.43 6.36 1.58 7.47 9.38 3.48 5.66
</TABLE>
- ---------------
(1) The pro forma combined statement of income data was derived from the pro
forma combined condensed statement of income included elsewhere in this
Proxy Statement. The pro forma combined statement of income data sets forth
the results of operations for fiscal year 1998 and the six months ended July
3, 1999, as if the acquisition of the non-telecommunications optical filter
business of Corning OCA Corporation (OCA) had occurred as of July 3, 1999.
The pro forma combined balance sheet information is derived from the pro
forma combined condensed balance sheet included elsewhere in this Proxy
Statement, and was prepared as if the payment of $4.0 million by the Company
to Corning OCA Corporation for OCA had occurred at the beginning of 1998.
(2) Reflects the February 1999 acquisition of Opticon Corporation.
(3) Reflects the Company's December 1997 initial public offering of common stock
and the July 1997 and February 1997 acquisitions of Centronic, Inc. and
Laser Science, Inc., respectively.
(4) Reflects the February 1996 acquisitions of Oriel Instruments Corporation and
Corion Corporation.
(5) For purposes of computing the ratios of earnings to fixed charges,
"earnings" represent income before provision for income taxes, plus fixed
charges. "Fixed charges" consist of interest on indebtedness and one-third
of rental expense, which is deemed to be the interest component of such
rental expense.
47
<PAGE> 48
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 Instruments Corporation ("Oriel") and Laser Science, Inc.
("LSI") subsidiaries and its Thermo Vision Colorado division, 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 Corion
division and its Hilger Crystals Limited 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 February and July 1999, this segment
acquired the assets of Opticon Corporation (now called Thermo Vision Opticon)
and the non-telecommunications optical filter business of Corning OCA
Corporation, respectively (See Note 12 to the Company's Consolidated Financial
Statements included elsewhere in this Proxy Statement).
The Sensors and Imaging Systems segment, which consists of the Company's
Centro Vision, 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 Crystals
Limited ("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
First Six Months 1999 Compared With First Six Months 1998
Revenues were $19.1 million in the first six months of 1999, compared with
$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. Optically Based Instruments and Lasers segment revenues
decreased $1.7 million, primarily as a result of continuing softness in the
semiconductor industry and the continuing economic uncertainty in Asia.
Excluding the acquisition of Thermo Vision Opticon, Optical Components segment
revenues decreased $0.7 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 $0.3 million. An
increase in revenues due to recently introduced dental imagers at CIDTEC was
more than offset by a decrease in revenues at Centro Vision due to a general
decline in customer demand.
48
<PAGE> 49
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 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. 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
32% during the period.
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.
1998 COMPARED WITH 1997
Revenues decreased to $38.0 million in 1998 from $39.7 million in 1997.
Revenues increased $3.2 million due to the inclusion of revenues for the full
period from Centro Vision, acquired in July 1997, and LSI, acquired in February
1997. Excluding the impact of acquisitions, revenues decreased $4.9 million.
Excluding acquisitions, Optically Based Instruments and Lasers segment revenues
decreased $3.8 million, primarily as a result of a slowdown in the semiconductor
industry during 1998 and the economic crisis in Asia. Excluding acquisitions,
Sensors and Imaging Systems segment revenues decreased $0.9 million, primarily
due to the loss of a customer. Sales to this customer in 1997 were approximately
$0.8 million. There were no sales to this customer in 1998.
The gross profit margin decreased to 37% in 1998 from 44% in 1997,
primarily due to inventory provisions of $2.2 million (See Note 3 to the
Company's Consolidated Financial Statements included elsewhere in this Proxy
Statement). The Sensors and Imaging Systems segment recorded inventory
provisions of $1.6 million, which primarily relate to a provision for yields
from outsourced wafer production that were lower than had been anticipated and
inventories considered to be in excess based on current customer demand. The
Optically Based Instruments and Lasers segment recorded inventory provisions of
$0.6 million, which primarily relate to reserves for discontinued products and
inventories considered to be in excess based on current customer demand.
Exclusive of the inventory provisions, the gross profit margin was 43% in 1998,
compared with 44% in 1997. The decrease was primarily due to higher cost of
sales in the Sensors and Imaging Systems segment as a result of initial
production startup costs related to CIDTEC's dental imager.
Selling, general, and administrative expenses as a percentage of revenues
increased to 25% in 1998 from 23% in 1997, primarily due to public reporting
costs incurred in 1998 that were not incurred in 1997. Research and development
expenses were relatively unchanged at $4.2 million in 1998 and $4.1 million in
1997.
During the third quarter of 1998, the Optically Based Instruments segment
recorded restructuring costs of $40,000 related to the termination of 10
employees (See Note 3 to the Company's Consolidated Financial Statements
included elsewhere in this Proxy Statement).
As a result of the inventory provisions and decline in sales, the Sensors
and Imaging Systems segment incurred an operating loss in 1998 compared with
profitable operations in 1997.
49
<PAGE> 50
Interest income increased to $0.5 million in 1998 from $41,000 in 1997,
primarily due to higher average invested balances as a result of proceeds from
the Company's December 1997 initial public offering. Related-party interest
expense increased to $0.4 million in 1998 from $0.3 million in 1997, primarily
due to the July 1997 issuance of a $3.8 million note payable to Thermo Electron
Corporation for the acquisition of Centro Vision.
The effective tax rate was 55% in 1998, compared with 42% in 1997. The
effective tax rates 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. The effective tax rate increased
primarily due to the higher relative impact of nondeductible amortization of
cost in excess of net assets of acquired companies.
1997 COMPARED WITH 1996
Revenues increased 30% to $39.7 million in 1997 from $30.4 million in 1996.
Revenues increased $9.2 million due to the inclusion of revenues from LSI,
acquired in February 1997, and Centro Vision, acquired in July 1997, and the
inclusion of revenues for the full year from Oriel and Corion, acquired in
February 1996. Optical Components segment revenues increased, primarily due to
shipments under Hilger's Stanford Linear Accelerator contract, which commenced
in the second quarter of 1996. This increase was offset in part by lower
Optically Based Instruments and Lasers segment revenues, primarily because the
Company is no longer consolidating the results of Andor Technology Limited (See
Note 1 to the Company's Consolidated Financial Statements included elsewhere in
this Proxy Statement).
The gross profit margin was unchanged at 44% in 1997 and 1996.
Selling, general, and administrative expenses as a percentage of revenues
decreased to 23% in 1997 from 24% in 1996, primarily due to lower selling and
marketing expenses in the Optically Based Instruments and Lasers segment.
Research and development expenses increased to $4.1 million in 1997 from $3.5
million in 1996, primarily due to the inclusion of research and development
expenses at LSI and Centro Vision.
Interest expense of $0.3 million in 1997 primarily represents interest
incurred on the $3.6 million and $3.8 million promissory notes issued to Thermo
Optek Corporation and Thermo Electron, respectively, for the acquisitions of LSI
and Centro Vision, respectively.
The effective tax rate was 42% in 1997 and 41% in 1996. The effective tax
rates exceeded the statutory federal income tax rate primarily due to the impact
of nondeductible amortization of cost in excess of net assets of acquired
companies and state income taxes.
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 (See Note 12 to
the Company's Consolidated Financial Statements included elsewhere in this Proxy
Statement), 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 advance to affiliate activity, 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 (See Note 12 to the Company's Consolidated
Financial Statements included elsewhere in this Proxy Statement). 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
50
<PAGE> 51
price of $4.0 million in cash (See Note 12 to the Company's Consolidated
Financial Statements included elsewhere in this Proxy Statement). 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.
In 1998, operating activities provided $2.6 million of cash. A decrease in
accounts receivable provided $1.5 million of cash, primarily as a result of
lower sales volume in the Optically Based Instruments and Lasers segment. The
Company used cash of $0.9 million to fund an increase in inventories, primarily
to support increased demand for sensors in the Sensors and Imaging Systems
segment and for Optical Components segment raw material requirements. The
Company used $1.5 million to reduce accounts payable in each of its segments.
During 1998, the Company's investing activities used $2.5 million of cash.
The Company expended $2.3 million on purchases of property, plant, and equipment
during 1998, including leasehold improvements at Oriel's new facility.
Hilger, the Company's foreign subsidiary, has a credit facility arrangement
for working capital needs (See Note 8 to the Company's Consolidated Financial
Statements included elsewhere in this Proxy Statement). 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 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 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.
MARKET RISK
The Company is exposed to market risk from changes in foreign currency
exchange rates, which could affect its future results of operations and
financial condition. The Company manages its exposure to this risk through its
regular operating and financing activities.
The Company generally views its investment in foreign subsidiaries with a
functional currency other than the Company's reporting currency as long-term.
The Company's investment in foreign subsidiaries is sensitive to fluctuations in
foreign currency exchange rates. The functional currencies of the Company's
foreign subsidiaries are principally denominated in British pounds sterling. The
effect of a change in foreign exchange rates on the Company's net investment in
foreign subsidiaries is recorded as a separate component of shareholders'
investment. A 10% depreciation in year-end 1998 functional currencies, relative
to the U.S. dollar, would result in a $0.1 million reduction of shareholders'
investment.
The Company's exposure at July 3, 1999, to market risk from changes in
foreign currency exchange rates has not changed materially from its exposure at
year-end 1998.
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.
51
<PAGE> 52
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 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.
52
<PAGE> 53
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.
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.
CERTAIN PROJECTED FINANCIAL DATA
The Company does not, as a matter of course, make public forecasts or
projections as to future sales, earnings or other income statement data, cash
flows or balance sheet and financial position information. However, in order to
aid the evaluation of the Company by the Board and the Board's assessment of the
fairness, from a financial point of view, of the consideration of $7.00 per
share in cash payable to the Public Stockholders pursuant to the Merger
Agreement, the Company, in July 1999, furnished the Board with certain
projections (the "Projections") prepared by the Company's management. The
following summary of the Projections is included in this Proxy Statement solely
because the Projections were made available to the CFO's Office and to the
Board. The Projections do not reflect any of the effects of the Merger or other
changes that may in the future be deemed appropriate concerning the Company and
its assets, business, operations, properties, policies, corporate structure,
capitalization and management in light of the circumstances then existing. The
Company has not updated the Projections to reflect changes that have occurred
since their preparation. The Company believes that the assumptions were
reasonable at the time the Projections were prepared, given the information
known by management at such time.
The Projections were not prepared with a view toward public disclosure or
compliance with published guidelines of the Commission or the American Institute
of Certified Public Accountants regarding forward-looking information or
generally accepted accounting principles. Neither the Company's independent
auditors, nor any other independent accountants, have compiled, examined or
performed any procedures with respect to the prospective financial information
contained in the Projections, nor have they expressed any opinion or given any
form of assurance on such information or its achievability, and assume
53
<PAGE> 54
no responsibility for, and disclaim any association with, such prospective
financial information. Furthermore, the Projections necessarily make numerous
assumptions, some (but not all) of which are set forth below and many of which
are beyond the control of the Company and may prove not to have been, or may no
longer be, accurate. Additionally, this information, except as otherwise
indicated, does not reflect revised prospects for the Company's businesses,
changes in general business and economic conditions, or any other transaction or
event that has occurred or that may occur and that was not anticipated at the
time such information was prepared. Accordingly, such information is not
necessarily indicative of current values or future performance, which may be
significantly more favorable or less favorable than as set forth below, and
should not be regarded as a representation that they will be achieved.
THE PROJECTIONS ARE NOT GUARANTEES OF PERFORMANCE. THEY INVOLVE RISKS,
UNCERTAINTIES AND ASSUMPTIONS. THE FUTURE RESULTS AND STOCKHOLDER VALUE OF THE
COMPANY MAY MATERIALLY DIFFER FROM THOSE EXPRESSED IN THE PROJECTIONS. MANY OF
THE FACTORS THAT WILL DETERMINE THESE RESULTS AND VALUES ARE BEYOND THE
COMPANY'S ABILITY TO CONTROL OR PREDICT. STOCKHOLDERS ARE CAUTIONED NOT TO PLACE
UNDUE RELIANCE ON THE PROJECTIONS. THERE CAN BE NO ASSURANCE THAT THE
PROJECTIONS WILL BE REALIZED OR THAT THE COMPANY'S FUTURE FINANCIAL RESULTS WILL
NOT MATERIALLY VARY FROM THE PROJECTIONS. THE COMPANY DOES NOT INTEND TO UPDATE
OR REVISE THE PROJECTIONS.
The projected results for fiscal 1999 set forth in the Projections were
based upon actual results through March, 1999 and management forecasts for the
remainder of Fiscal 1999.
54
<PAGE> 55
PROJECTIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR
-----------------------------------------------
1999(P) 2000(P) 2001(P) 2002(P) 2003(P)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
REVENUES......................................... $44,224 $50,866 $56,325 $61,162 $66,941
Costs and Operating Expenses:
Cost of Revenues............................... 26,979 30,064 32,732 35,056 37,683
Operating Expenses............................. 14,914 15,747 16,847 17,816 19,008
------- ------- ------- ------- -------
41,893 45,811 49,579 52,872 56,691
------- ------- ------- ------- -------
Operating Income................................. 2,331 5,055 6,746 8,290 10,250
Interest Income.................................. 397 420 470 520 570
Interest Expense................................. (489) (154) (154) (159) (160)
------- ------- ------- ------- -------
Income Before Provision for Income Taxes......... 2,239 5,321 7,062 8,651 10,660
Provision for Income Taxes....................... 1,120 2,394 3,126 3,800 4,651
------- ------- ------- ------- -------
Net Income....................................... $ 1,119 $ 2,927 $ 3,936 $ 4,851 $ 6,009
======= ======= ======= ======= =======
SELECTED BALANCE SHEET DATA
Accounts Receivable, Net......................... $ 7,192 $ 7,687 $ 8,226 $ 9,058 $ 9,507
Inventories...................................... 7,993 8,120 8,536 8,901 9,357
Prepaid Income Taxes and Other Current Assets.... 3,415 3,131 2,884 2,634 2,752
------- ------- ------- ------- -------
Total Current Assets Excluding Cash and
Investments.................................... 18,600 18,938 19,646 20,593 21,616
Property, Plant and Equipment:
Balance, beginning of year..................... 5,855 6,244 6,263 6,347 6,361
Additions...................................... 1,585 1,382 1,545 1,583 1,721
Depreciation expense........................... (1,397) (1,363) (1,461) (1,569) (1,577)
Other.......................................... 201 -- -- -- --
------- ------- ------- ------- -------
Balance, end of year........................... 6,244 6,263 6,347 6,361 6,505
Cost in Excess of Net Assets of Acquired
Companies...................................... 15,034 14,599 14,163 13,726 13,293
</TABLE>
55
<PAGE> 56
RISK FACTORS
The Company wishes to caution readers that the following important factors,
among others, in some cases have affected, and in the future could affect, the
Company's actual results and could cause its actual results in the remainder of
fiscal 1999 and beyond to differ materially from those expressed in any forward-
looking statements made by, or on behalf of, the Company.
Risks Associated with Technological Change, Obsolescence, and the
Development and Acceptance of New Products. The market for the Company's
products is characterized by rapid and significant technological change and
evolving industry standards. New product introductions responsive to these
factors require significant planning, design, development, and testing at the
technological, product, and manufacturing process levels, and may render
existing products and technologies uncompetitive or obsolete. There can be no
assurance that the Company's products will not become uncompetitive or obsolete.
In addition, industry acceptance of new applications for the Company's
technologies developed by the Company may be slow to develop due to, among other
things, the general unfamiliarity of users with new applications and
technologies. There can be no assurance that these factors will not have a
material adverse effect on the Company's results of operations, financial
condition, or business.
Risks Associated with Acquisition Strategy; No Assurance of a Successful
Acquisition Strategy. One of the Company's growth strategies is to supplement
its internal growth with the acquisition of businesses and technologies that
complement or augment the Company's existing product lines. Since February 1996,
the Company has acquired six businesses from unrelated third parties that
constitute the bulk of its operations. Certain businesses that the Company may
seek to acquire in the future may be marginally profitable or unprofitable. In
order for any acquired businesses to achieve the level of profitability desired
by the Company, the Company must successfully reduce expenses and improve market
penetration. No assurance can be given that the Company will be successful in
this regard. In many instances, acquisitions by the Company will result in the
Company recording cost in excess of net assets of acquired companies on its
balance sheet. Such cost in excess of net assets of acquired companies will be
amortized as a noncash expense over specified periods. In addition, promising
acquisitions are difficult to identify and complete for a number of reasons,
including competition among prospective buyers and the need for regulatory
approvals, including antitrust approvals. These factors may adversely affect
both the availability and price of prospective acquisition targets. There can be
no assurance that the Company will be able to complete pending or future
acquisitions. In order to finance any acquisitions, it may be necessary for the
Company to raise additional funds through additional public or private
financings. Any equity or debt financing, if available at all, may be on terms
that are not favorable to the Company and may result in dilution to the
Company's shareholders. In the past, a significant portion of the funding for
the Company's acquisitions has come from Thermo Optek, Thermo Instrument, or
Thermo Electron. Although Thermo Electron and Thermo Instrument regularly fund
acquisitions by their respective wholly and partially owned subsidiaries,
neither Thermo Electron nor Thermo Instrument has committed to fund any future
acquisitions by the Company. There can be no assurance that the Company will be
able to secure any such financing or that these factors will not have a material
adverse effect on the Company's results of operations, financial condition, or
business.
Intense Competition. The Company encounters and expects to continue to
encounter intense competition in the sale of its products. The Company believes
that the principal competitive factors affecting the market for its products
include product performance, price, reliability, and customer service. The
Company's principal competitors include Optical Coating Laboratory, Inc.;
Newport Corporation; Coherent, Inc.; the Bicron business unit of Saint-Gobain
Industrial Ceramics, Inc.; UDT Sensors, Inc., an Opto-Sensors Company; Dalsa
Corporation; Cohu, Inc.; Roper Scientific, Inc.; Acton Research Corporation; the
ISA unit of Horiba Instruments, Inc.; and Hamamatsu Corporation, a unit of
Hamamatsu Photonic KK. Certain of these companies and certain of the Company's
other competitors have substantially greater financial, marketing, and other
resources than those of the Company. As a result, they may be able to adapt more
quickly to new or emerging technologies and changes in customer requirements or
to devote greater resources to the promotion and sale of their products than the
Company. In addition, competition could increase if new companies enter the
market or if existing competitors
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<PAGE> 57
expand their product lines or intensify efforts within existing product lines.
There can be no assurance that the Company's current products, products under
development, or ability to discover new technologies will be sufficient to
enable it to compete effectively with its competitors. In addition, there can be
no assurance that these factors will not have a material adverse effect on the
Company's results of operations, financial condition, or business.
Possible Adverse Impact of Significant International Sales. Sales outside
the United States account for a significant portion of the Company's revenues,
and the Company expects that international sales will continue to account for a
significant portion of its revenues in the future. Sales to customers in foreign
countries are subject to a number of risks, including the following: agreements
may be difficult to enforce and receivables difficult to collect through a
foreign country's legal system; foreign customers may have longer payment
cycles; foreign countries could impose withholding taxes or otherwise tax the
Company's foreign income, impose tariffs, or adopt other restrictions on foreign
trade; fluctuations in exchange rates may affect product demand and adversely
affect the profitability in U.S. dollars of products provided by the Company in
foreign markets where payment for the Company's products is made in the local
currency; and U.S. export licenses may be difficult to obtain and the protection
of intellectual property in foreign countries may be more difficult to enforce.
There can be no assurance that any of these factors will not have a material
adverse effect on the Company's results of operations, financial condition, or
business. A portion of the Company's revenues is derived from exports to Asia.
Certain countries in Asia have been experiencing a severe economic crisis, which
has been characterized by sharply reduced economic activity and liquidity,
highly volatile foreign-currency-exchange and interest rates, and unstable stock
markets. The Company's export sales to Asia may continue to be adversely
affected by the unstable economic conditions there, which may continue to
adversely affect the Company's results of operations, financial condition, or
business.
Risks Associated with Suppliers and Vendors. Historically the Company has
relied on a single vendor to process the silicon wafers used in its CID sensors
and silicon photodiodes. In 1998, the Company experienced problems with this
fabricator when the processed silicon wafers did not meet anticipated process
yields. The lower yields hampered the Company's ability to meet orders for its
products. The Company qualified and has begun purchasing processed silicon
wafers for certain of the Company's products from a second fabricator and has
started the process of qualifying a third fabricator to process silicon wafers
for certain of the Company's other products. There can be no assurance that
wafers obtained from these other suppliers will not exhibit similar yield
problems or that other issues affecting these suppliers will not adversely
impact the adequate supply of wafers to the Company. The Company continues to
work with the original fabricator to increase the yields of the processed
silicon wafers. The original fabricator was recently acquired by a third party
that the Company believes will provide additional resources and commitment
necessary to continue to improve yields. There can be no assurance that the
wafers supplied by this original fabricator will meet design specifications or
that other issues affecting this supplier will not adversely impact the Company.
Risks Associated with Protection, Defense, and Use of Intellectual
Property. The Company holds a number of patents relating to various aspects of
its products and believes that proprietary technical know-how is critical to
many of its products. Proprietary rights relating to the Company's products are
protected from unauthorized use by third parties only to the extent that they
are covered by valid and enforceable patents or are maintained in confidence as
trade secrets. There can be no assurance that patents will issue from any
pending or future patent applications owned by or licensed to the Company or
that the claims allowed under any issued patents will be sufficiently broad to
protect the Company's technology. In the absence of patent protection, the
Company may be vulnerable to competitors who attempt to copy the Company's
products or gain access to its trade secrets and know-how. Proceedings initiated
by the Company to protect its proprietary rights could result in substantial
costs to the Company. There can be no assurance that competitors of the Company
will not initiate litigation to challenge the validity of the Company's patents
or that they will not use their resources to design comparable products that do
not infringe the Company's patents. There may also be pending or issued patents
held by parties not affiliated with the Company that relate to the Company's
products or technologies. The Company may need to
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<PAGE> 58
acquire licenses to, or contest the validity of, any such patents. There can be
no assurance that any license required under any such patent would be made
available on acceptable terms, if at all, or that the Company would prevail in
any such contest. The Company could incur substantial costs in defending itself
in suits brought against it or in suits in which the Company may assert its
patent rights against others. If the outcome of any such litigation is
unfavorable to the Company, the Company's results of operations, financial
condition, and business could be materially adversely affected. Further, the
laws of some foreign jurisdictions do not protect the Company's proprietary
rights to the same extent as the laws of the United States and there can be no
assurance that the available protections will be adequate. In addition, the
Company relies on trade secrets and proprietary know-how which it seeks to
protect, in part, by confidentiality agreements with its collaborators,
employees, and consultants. There can be no assurance that these agreements will
not be breached, that the Company would have adequate remedies for any breach,
or that the Company's trade secrets will not otherwise become known or be
independently developed by competitors.
Dependence on Semiconductor Industry; Industry Volatility. A significant
portion of the Company's total revenues is attributable to the sale of products
and related services to customers in the semiconductor industry. The
semiconductor industry has historically been cyclical and is characterized by
sudden and sharp changes in supply and demand. Demand for the Company's products
and services within the semiconductor industry is dependent upon, among other
factors, the level of capital spending by semiconductor companies. The
semiconductor industry recently experienced a downturn in demand for its
products as a result of the economic crisis in Asia, excess manufacturing
capacity, and slowdowns in sales of high-end personal computers. Many
semiconductor manufacturers have delayed construction or expansion of their
production facilities in response to the foregoing conditions. These conditions
materially adversely affected the Company's business and results of operations.
Further decreases in semiconductor industry activities could continue to
adversely affect the demand for the Company's products and related services,
which could continue to materially adversely affect the Company's results of
operations, financial condition, and business. During the first two quarters of
1999, the semiconductor industry has shown some increased activity, but not to
the levels experienced prior to this most recent slowdown. Continued
fluctuations in the semiconductor industry could have a significant adverse
effect upon the demand for the Company's products and related services, which
would materially adversely affect the Company's business and future results of
operations.
Uncertainty of Growth. Certain of the markets in which the Company
competes have been flat or declining over the past several years. The Company
has identified a number of strategies it believes will allow it to grow its
business, including acquiring complementary businesses, developing new
applications for its technologies and strengthening its presence in selected
geographic markets. No assurance can be given that the Company will be able to
successfully implement these strategies, or that these strategies will result in
growth of the Company's business.
Risks Associated with Cash Management Arrangement with Thermo
Electron. The Company participates in a cash management arrangement with Thermo
Electron. Under this cash management arrangement, the Company lends its excess
cash to Thermo Electron on an unsecured basis. The Company has the contractual
right to withdraw its funds invested in the cash management arrangement upon 30
days' prior notice. 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 the cash management arrangement by all
Thermo Electron subsidiaries other than wholly owned subsidiaries. The funds are
held on an unsecured basis and therefore are subject to the credit risk of
Thermo Electron. The Company's ability to receive its cash upon notice of
withdrawal could be adversely affected if participants in the cash management
arrangement demand withdrawal of their funds in an aggregate amount in excess of
the 50% reserve required to be maintained by Thermo Electron. In the event of a
bankruptcy of Thermo Electron, the Company would be treated as an unsecured
creditor and its right to receive funds from the bankruptcy estate would be
subordinated to secured creditors and would be treated on a pari passu basis
with all other unsecured creditors. Further, all cash withdrawn by the Company
from the cash management arrangement within one year before the bankruptcy would
be subject to rescission. The
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<PAGE> 59
inability of Thermo Electron to return the Company's cash on a timely basis or
at all could have a material adverse effect on the Company's results of
operations and financial position.
Potential Impact of Year 2000 on Processing of Date-Sensitive
Information. The Company is currently assessing the potential impact of the
year 2000 on the processing of date-sensitive information by the Company's
computerized information technology and non-information technology systems and
on products sold as well as products purchased by the Company. See "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- Year
2000."
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MANAGEMENT
The current directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Roger Herd.......................................... 62 President
Theo Melas-Kyriazi.................................. 40 Chief Financial Officer
Paul F. Kelleher.................................... 57 Chief Accounting Officer
Allen J. Smith...................................... 51 Vice President
Earl R. Lewis....................................... 55 Director and Chairman of the Board
D. Allan Bromley.................................... 73 Director
Elias P. Gyftopoulos................................ 72 Director
Melissa F. Riordan.................................. 43 Director
</TABLE>
All of the Company's directors are elected annually by the stockholders and
hold office until their respective successors are duly elected and qualified.
Executive officers are elected annually by the Board of Directors and serve at
its discretion.
Roger Herd was appointed president of the Company upon the resignation of
Kristine Stotz Langdon as president and chief executive officer, effective June
15, 1999. Mr. Herd has been Vice President of Thermo Optek Corporation ("Thermo
Optek"), an affiliate of Thermo Electron that manufactures and markets
analytical instrumentation based upon energy and light measurements, and systems
for surface-analysis characterization and preparation, since January 1998. In
addition, Mr. Herd has been Managing Director of VG Systems Limited, a
manufacturer of instrumentation and equipment for material and surface science
analysis and a wholly owned subsidiary of Thermo Optek, since April 1996. Mr.
Herd was Manager of International Business Development for Thermo Instrument
from April 1994 to April 1996, and prior to April 1994, was Managing Director of
Thermo Instrument Australia PTY Ltd.
Theo Melas-Kyriazi has been chief financial officer of the Company since
January 1999. Mr. Melas-Kyriazi has been chief financial officer of Thermo
Electron since January 1999 and a vice president since March 1998. Mr.
Melas-Kyriazi has been chief financial officer of Thermo Instrument since
January 1999. Mr. Melas-Kyriazi was treasurer of Thermo Instrument and Thermo
Electron from 1988 to August 1994. From August 1994 through March 1998, he
served as the president and chief executive officer of ThermoSpectra Corporation
("ThermoSpectra"), an affiliate of Thermo Electron, which manufactures precision
imaging, inspection, temperature control and test and measurement instruments.
Mr. Melas-Kyriazi is also a director of the following affiliates of Thermo
Electron: ThermoSpectra and ThermoRetec Corporation.
Paul F. Kelleher has been the chief accounting officer of the Company since
its inception in November 1995. He has been the senior vice president, finance
and administration, of Thermo Electron since June 1997, and served as its vice
president, finance from 1987 until 1997. Mr. Kelleher served as Thermo
Electron's controller from 1982 until January 1996. He is a director of
ThermoLase Corporation, an affiliate of Thermo Electron. Mr. Kelleher also
serves as the chief accounting officer of Thermo Instrument.
Allen J. Smith was appointed vice president of the Company in August 1997.
He has been chairman of Oriel Corporation, a manufacturer and marketer of light
sources, monochromators, spectrographs, fiber optics and other items for the
photonics industry, which was acquired by the Company from Thermo Optek in
February 1996, since October 1994. Mr. Smith served Oriel Corporation in various
capacities, including Executive Vice President, Vice President, General Manager,
and Sales Manager from February 1970 to October 1994.
Earl R. Lewis has been a director of the Company since its inception in
November 1995. Mr. Lewis has been a director and chief executive officer of
Thermo Instrument since January 1998, and has been president of Thermo
Instrument since March 1997. He was the chief operating officer of Thermo
Instrument from January 1996 to January 1998. Prior to that time, he was an
executive vice president of Thermo Instrument from January 1996 to March 1997, a
senior vice president from January 1994 to
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<PAGE> 61
January 1996, and a vice president from March 1992 to January 1994. Prior to his
appointment as Thermo Instrument's chief executive officer, Mr. Lewis was also
the chief executive officer of Thermo Optek from its inception in August 1995 to
January 1998 and was the president of its predecessor, Thermo Jarrell Ash
Corporation, for more than five years prior to 1995. Mr. Lewis became the chief
operating officer, measurement and detection of Thermo Electron in September
1998, and had been a vice president of Thermo Electron since September 1996. Mr.
Lewis is also a director of SpectRx Inc. and the following affiliates of Thermo
Electron: FLIR Systems Inc., Metrika Systems Corporation, ONIX Systems Inc.,
Spectra-Physics Lasers, Inc., Thermo BioAnalysis Corporation, Thermo Optek,
ThermoQuest Corporation, and ThermoSpectra.
D. Allan Bromley has been a director of the Company since September 1997.
Dr. Bromley has been Sterling Professor of the Sciences, Yale University, since
1993 and has also served as Dean of Engineering at Yale University since 1994.
Prior to 1993, he served as the Henry Ford II Professor of Physics at Yale
University for over 20 years. From 1989 to 1993, he served as the Assistant to
the President for Science and Technology, and Director, Office of Science and
Technology Policy of the Executive Office of the White House.
Elias P. Gyftopoulos has been a director of the Company since April 1998.
He is Professor Emeritus at the Massachusetts Institute of Technology, where he
was the Ford Professor of Mechanical Engineering and of Nuclear Engineering for
more than 20 years until his retirement in 1996. Dr. Gyftopoulos is also a
director of Thermo Electron and the following affiliates of Thermo Electron:
Thermo BioAnalysis Corporation, Thermo Cardiosystems Inc., ThermoLase
Corporation, ThermoRetec Corporation,
ThermoSpectra and Trex Medical Corporation.
Melissa F. Riordan has been a director of the Company since October 1998.
She served as the treasurer of Thermo Electron from 1997 until 1998. From 1988
to 1997, Ms. Riordan was a stockbroker at NatWest Securities Corp. Ms. Riordan
is also a director of ThermoLase Corporation, an affiliate of Thermo Electron.
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<PAGE> 62
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDER
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of June 30, 1999 with respect to the only person
that was known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENTAGE OF OUTSTANDING
OF BENEFICIAL OWNER BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
------------------- ------------------ -------------------------
<S> <C> <C>
Thermo Electron Corporation (1)......................... 6,533,644 81.1%
81 Wyman Street
Waltham, MA 02454-9046
</TABLE>
- ---------------
(1) Thermo Electron beneficially owned 81.1% of the Common Stock outstanding as
of June 30, 1999, of which approximately 78.2% is owned through Thermo
Instrument and approximately 2.9% is owned directly. Thermo Electron,
through Thermo Instrument, has the power to elect all of the members of the
Company's Board of Directors. After the Merger, Thermo Electron will
beneficially own 100% of the outstanding Common Stock.
MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock, as
well as the common stock of Thermo Instrument and Thermo Electron, as of June
30, 1999, with respect to (i) each director of the Company, (ii) the former
chief executive officer of the Company and other executive officers of the
Company who, during the last completed fiscal year of the Company, met the
definition of "highly compensated" within the meaning of the Commission's
executive compensation disclosure rules (collectively, the "named executive
officers") and (iii) all directors and current executive officers as a group.
While certain directors and executive officers of the Company are also
directors and executive officers of Thermo Electron or its subsidiaries other
than the Company, all such persons disclaim beneficial ownership of the shares
of Common Stock owned by Thermo Instrument or by Thermo Electron, as the case
may be.
<TABLE>
<CAPTION>
THERMO VISION THERMO INSTRUMENT THERMO ELECTRON
CORPORATION(2) SYSTEMS INC.(3) CORPORATION(4)
---------------------- ---------------------- ----------------------
NUMBER OF PERCENTAGE NUMBER OF PERCENTAGE NUMBER OF PERCENTAGE
NAME(1) SHARES OF CLASS SHARES OF CLASS SHARES OF CLASS
------- --------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
D. Allan Bromley................. 16,000 * 0 * 0 *
Elias P. Gyftopoulos............. 16,601 * 57,743 * 71,698 *
Roger Herd....................... 140 * 111,194 * 53,538 *
Kristine Stotz Langdon (5)....... 137,110 1.7% 16,233 * 13,302 *
Earl R. Lewis.................... 42,720 * 338,250 * 204,878 *
Melissa F. Riordan............... 2,000 * 0 30,000 *
Allen J. Smith................... 27,000 * 0 2,000 *
All directors and current
executive officers as a group
(8 persons).................... 181,061 2.2% 580,809 * 877,144 *
</TABLE>
- ---------------
* Reflects ownership of less than 1.0% of the outstanding common stock.
(1) Except as reflected in the footnotes to this table, shares beneficially
owned consist of shares owned by the indicated person or by that person for
the benefit of minor children, and all share ownership includes sole voting
and investment power.
(2) The shares of Common Stock beneficially owned by Dr. Bromley, Dr.
Gyftopoulos, Ms. Langdon, Mr. Lewis, Ms. Riordan, Mr. Smith and all
directors and current executive officers as a group include
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<PAGE> 63
15,000, 15,000, 135,000, 25,000, 2,000, 27,000 and 156,000 shares,
respectively, that such person or group had the right to acquire within 60
days of June 30, 1999, through the exercise of stock options. Shares
beneficially owned by Dr. Gyftopoulos include 601 shares allocated through
July 3, 1999, to his account maintained under the Company's Deferred
Compensation Plan for Directors. Shares beneficially owned by Ms. Langdon
include 2,110 shares held by her minor children. Shares beneficially owned
by Mr. Lewis include 350 shares held by his spouse. Other than Ms. Langdon,
who owned approximately 1.7% of the Common Stock outstanding as of June 30,
1999, no director or named executive officer beneficially owned more than
1.0% of the Common Stock outstanding as of June 30, 1999; all directors and
current executive officers as a group beneficially owned 2.2% of the Common
Stock outstanding as of such date.
(3) Shares of the common stock of Thermo Instrument beneficially owned by Dr.
Gyftopoulos, Mr. Herd, Ms. Langdon, Mr. Lewis and all directors and current
executive officers as a group include 11,946, 34,375, 15,858, 322,085 and
431,451 shares, respectively, that such person or group had the right to
acquire within 60 days of June 30, 1999, through the exercise of stock
options. Shares of the common stock of Thermo Instrument beneficially owned
by all directors and current executive officers as a group include 963
shares allocated through June 30, 1999, to their respective accounts
maintained pursuant to Thermo Electron's employee stock ownership plan (the
"ESOP"), of which the trustees, who have investment power over its assets,
are executive officers of Thermo Electron. Shares beneficially owned by Mr.
Lewis include 2,987 shares held by his spouse. No director or named
executive officer beneficially owned more than 1.0% of the common stock of
Thermo Instrument outstanding as of June 30, 1999; all directors and current
executive officers as a group did not beneficially own more than 1.0% of the
common stock of Thermo Instrument outstanding as of such date.
(4) The shares of the common stock of Thermo Electron beneficially owned by Dr.
Gyftopoulos, Mr. Herd, Ms. Langdon, Mr. Lewis, Ms. Riordan, Mr. Smith and
all directors and current executive officers as a group include 8,625,
11,962, 12,600, 202,350, 25,000 and 691,735 shares, respectively, that such
person or group had the right to acquire within 60 days of June 30, 1999,
through the exercise of stock options. Shares of the common stock of Thermo
Electron beneficially owned by all directors and current executive officers
as a group include 2,497 shares allocated through June 30, 1999, to accounts
maintained pursuant to the ESOP. Shares beneficially owned by Dr.
Gyftopoulos include 494 shares allocated through July 3, 1999 to Dr.
Gyftopoulos' account maintained pursuant to Thermo Electron's deferred
compensation plan for directors. No director or named executive officer
beneficially owned more than 1.0% of the common stock of Thermo Electron
outstanding as of June 30, 1999; all directors and current executive
officers as a group did not beneficially own more than 1.0% of the common
stock of Thermo Electron outstanding as of such date.
(5) Kristine Stotz Langdon resigned as president and chief executive officer of
the Company effective June 15, 1999.
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<PAGE> 64
CERTAIN TRANSACTIONS
Thermo Electron has, from time to time, caused certain subsidiaries to sell
minority interests to investors, resulting in several majority-owned, private
and publicly held subsidiaries. Thermo Instrument has created the Company as a
majority-owned publicly held subsidiary. The Company and such other
majority-owned Thermo Electron subsidiaries are hereinafter referred to as the
"Thermo Subsidiaries."
Thermo Electron and each of the Thermo Subsidiaries recognize that the
benefits and support that derive from their affiliation are essential elements
of their individual performance. Accordingly, Thermo Electron and each of the
Thermo Subsidiaries, including the Company, have adopted the Thermo Electron
Corporate Charter (the "Charter") to define the relationships and delineate the
nature of such cooperation among themselves. The purpose of the Charter is to
ensure that (1) all of the companies and their stockholders are treated
consistently and fairly, (2) the scope and nature of the cooperation among the
companies, and each company's responsibilities, are adequately defined, (3) each
company has access to the combined resources and financial, managerial and
technological strengths of the others, and (4) Thermo Electron and the Thermo
Subsidiaries, in the aggregate, are able to obtain the most favorable terms from
outside parties.
To achieve these ends, the Charter identifies the general principles to be
followed by the companies, addresses the role and responsibilities of the
management of each company, provides for the sharing of group resources by the
companies and provides for centralized administrative, banking and credit
services to be performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by members, coordinating
the access of Thermo Electron and the Thermo Subsidiaries (the "Thermo Group")
to external financing sources, ensuring compliance with external financial
covenants and internal financial policies, assisting in the formulation of
long-range planning and providing other banking and credit services. Pursuant to
the Charter, Thermo Electron may also provide guarantees of debt or other
obligations of the Thermo Subsidiaries or may obtain external financing at the
parent level for the benefit of the Thermo Subsidiaries. In certain instances,
the Thermo Subsidiaries may provide credit support to, or on behalf of, the
consolidated entity or may obtain financing directly from external financing
sources. Under the Charter, Thermo Electron is responsible for determining that
the Thermo Group remains in compliance with all covenants imposed by external
financing sources, including covenants related to borrowings of Thermo Electron
or other members of the Thermo Group, and for apportioning such constraints
within the Thermo Group. In addition, Thermo Electron establishes certain
internal policies and procedures applicable to members of the Thermo Group. The
cost of the services provided by Thermo Electron to the Thermo Subsidiaries is
covered under existing corporate services agreements between Thermo Electron and
the Thermo Subsidiaries.
The Charter currently provides that it shall continue in effect so long as
Thermo Electron and at least one Thermo Subsidiary participate. The Charter may
be amended at any time by agreement of the participants. Any Thermo Subsidiary,
including the Company, can withdraw from participation in the Charter upon 30
days' prior notice. In addition, Thermo Electron may terminate a subsidiary's
participation in the Charter in the event the subsidiary ceases to be controlled
by Thermo Electron or ceases to comply with the Charter or the policies and
procedures applicable to the Thermo Group. A withdrawal from the Charter
automatically terminates the corporate services agreement and tax allocation
agreement (if any) in effect between the withdrawing company and Thermo
Electron. The withdrawal from participation does not terminate outstanding
commitments to third parties made by the withdrawing company, or by Thermo
Electron or other members of the Thermo Group, prior to the withdrawal. In
addition, a withdrawing company is required to continue to comply with all
policies and procedures applicable to the Thermo Group and to provide certain
administrative functions mandated by Thermo Electron so long as the withdrawing
company is controlled by or affiliated with Thermo Electron.
As provided in the Charter, the Company and Thermo Electron have entered
into a Corporate Services Agreement (the "Services Agreement") under which
Thermo Electron's corporate staff provides certain administrative services,
including general legal advice and services, risk management, employee benefit
administration, tax advice and preparation of tax returns, centralized cash
management and certain
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<PAGE> 65
financial and other services to the Company. The Company was assessed an annual
fee equal to 1.0% and 0.8% of the Company's revenues for these services in
fiscal 1997 and 1998, respectively. The annual fee has remained at 0.8% of the
Company's total revenues in fiscal 1999. The fee is reviewed annually and may be
changed by mutual agreement of the Company and Thermo Electron. During fiscal
1997, fiscal 1998 and the six months ended July 3, 1999, Thermo Electron
assessed the Company $397,000, $304,000 and $153,000 in fees under the Services
Agreement. Management believes that the charges under the Services Agreement are
reasonable and that the terms of the Services Agreement are fair to the Company.
In fiscal 1997, fiscal 1998 and the six months ended July 3, 1999, the Company
paid Thermo Electron an additional $73,000, $29,000 and $24,000 for certain
administrative services required by the Company that were not covered by the
Services Agreement. The Services Agreement automatically renews for successive
one-year terms, unless canceled by the Company upon 30 days' prior notice. In
addition, the Services Agreement terminates automatically in the event the
Company ceases to be a member of the Thermo Group or ceases to be a participant
in the Charter. In the event of a termination of the Services Agreement, the
Company will be required to pay a termination fee equal to the fee that was paid
by the Company for services under the Services Agreement for the nine-month
period prior to termination. Following termination, Thermo Electron may provide
certain administrative services on an as-requested basis by the Company or as
required in order to meet the Company's obligations under Thermo Electron's
policies and procedures. Thermo Electron will charge the Company a fee equal to
the market rate for comparable services if such services are provided to the
Company following termination.
The Company has entered into a Tax Allocation Agreement with Thermo
Electron that outlines the terms under which the Company will be included in
Thermo Electron's consolidated Federal and state income tax returns. Under
current law, the Company will be included in such tax returns so long as Thermo
Electron owns at least 80% of the outstanding common stock of Thermo Instrument,
and Thermo Instrument and Thermo Electron collectively own at least 80% of the
outstanding Common Stock of the Company. In years in which the Company has
taxable income, it will pay to Thermo Electron amounts comparable to the taxes
the Company would have paid if it had filed its own separate company tax
returns. If Thermo Instrument's and Thermo Electron's equity ownership of the
Company were to drop below 80%, the Company would file its own tax returns. In
1997 and 1998, the Company was not included in Thermo Electron's consolidated
Federal and state tax returns because Thermo Instrument and Thermo Electron did
not collectively own at least 80% of the outstanding Common Stock of the
Company. In 1999, because Thermo Instrument's and Thermo Electron's combined
equity ownership of the Company now exceeds 80%, the Company will be included in
Thermo Electron's consolidated tax returns and will be assessed for amounts due
to Thermo Electron in accordance with the Tax Allocation Agreement.
From time to time, the Company may transact business with other companies
in the Thermo Group. During fiscal 1997, fiscal 1998 and the six months ended
July 3, 1999, these transactions included the following:
In February 1997, in connection with its acquisition of Laser Science, Inc.
("LSI"), the Company borrowed $3.6 million from Thermo Optek Corporation
("Thermo Optek") pursuant to a promissory note. In June 1997, the Company
borrowed an additional $347,000 from Thermo Optek pursuant to a promissory note
in order to finance the renovation of its Franklin, Massachusetts facility in
connection with the LSI acquisition. In July 1997, in connection with its
acquisition of Centro Vision, Inc., the Company borrowed $3.8 million from
Thermo Electron pursuant to a promissory note. Each of these notes bears
interest at the 90-day Commercial Paper Composite Rate plus 25 basis points, set
at the beginning of each quarter, and has a term of approximately three years.
The Company and Thermo Optek are parties to a Supply Agreement (the "CID
Supply Agreement") pursuant to which the Company has agreed to supply Thermo
Optek with, and Thermo Optek has agreed to purchase from the Company, all of
Thermo Optek's requirements for CID sensors for use in Thermo Optek's optical
spectrometers. Under the CID Supply Agreement, the Company is not permitted to
sell CID sensors to any other manufacturer of optical spectrometers. The CID
Supply Agreement expires in 2007. In fiscal 1997, fiscal 1998 and the six months
ended July 3, 1999, the Company sold approximately $700,000, $775,000, and
$613,000, respectively, of products under the CID Supply Agreement.
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<PAGE> 66
The Company has leased its office and manufacturing space in Franklin,
Massachusetts from Thermo Instrument since March 1996. The Company's rent
expense under this lease is determined on the basis of its allocated share of
total occupancy expenses. The Company made lease payments to Thermo Instrument
in fiscal 1997, fiscal 1998 and the six months ended July 3, 1999 of $187,000,
$211,000 and $110,000, respectively. This lease expires in 2006.
The Company's Hilger Crystals Ltd. ("Hilger") subsidiary leases its office
and manufacturing space in Margate, England, from Thermo Optek. Through August
1997, the Company's rent expense under this lease was determined on the basis of
its allocated share of total occupancy expenses. In fiscal 1997, the Company
made lease payments to Thermo Optek of $51,000. Effective in fiscal 1998, Hilger
leased this space from Thermo Optek for an annual rental fee of $45,000, plus
its pro rata share of certain related expenses. In 1999 Hilger purchased the
building from Thermo Optek for approximately $167,000. The purchase price was
based on the book value of the building recorded on Thermo Optek's books. The
Company made lease payments to Thermo Optek in fiscal 1998 of $51,000 under this
arrangement.
In fiscal 1997, the Company sold an additional $2,013,000 of products to
Thermo Electron subsidiaries and purchased a total of $443,000 of products from
such companies. In fiscal 1998, the Company sold an additional $1,689,000 of
products to Thermo Electron subsidiaries and purchased a total of $162,000 of
products from such companies. During the first six months of fiscal 1999, the
Company sold an additional $843,000 of products to Thermo Electron subsidiaries
and purchased a total of $82,000 of products from such companies.
The Company, along with certain other Thermo Subsidiaries, participates in
a notional pool arrangement with Barclays Bank, which includes, as of July 3,
1999, a $72,360,052 credit facility. The Company has access to $1,576,300 under
this credit facility. Only U.K.-based Thermo Subsidiaries participate in this
arrangement. Under this arrangement the Bank notionally combines the positive
and negative cash balances held by the participants to calculate the net
interest yield/expense for the group. The benefit derived from this arrangement
is then allocated based on balances attributable to the respective participants.
Thermo Electron guarantees all of the obligations of each participant in this
arrangement. As of July 3, 1999, the Company had a negative cash balance of
approximately $925,291, based on an exchange rate of $1.5763/GBP 1.00 as of July
3, 1999. For the six months ended July 3, 1999, the average annual interest rate
earned on GBP deposits by participants in this credit arrangement was
approximately 5.61% and the average annual interest rate paid on overdrafts was
approximately 6.0%.
As of July 3, 1999, $6,767,000 of the Company's cash equivalents were
invested in a cash management arrangement with Thermo Electron, which was
effective June 1, 1999. Under the cash management arrangement, the Company lends
its excess cash to Thermo Electron and has the contractual right to withdraw its
invested funds upon 30 days' prior notice. 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 the
arrangement by all Thermo Electron subsidiaries other than wholly-owned
subsidiaries. The Company's funds invested in the cash management arrangement
earn a rate equal to the 30-day Dealer Commercial Paper Rate as reported in The
Wall Street Journal plus 50 basis points, set at the beginning of each month.
As of July 3, 1999, the Company owed Thermo Electron and its other
subsidiaries an aggregate of $134,000, excluding the promissory notes described
above, for amounts due under the Services Agreement and related administrative
charges, for other products and services and for miscellaneous items, net of
amounts owed to the Company by Thermo Electron and its other subsidiaries for
products, services and for miscellaneous items. The largest amount of such net
indebtedness owed by the Company to Thermo Electron and its other subsidiaries
since January 3, 1998, was $654,000. These amounts do not bear interest and are
expected to be paid in the normal course of business.
66
<PAGE> 67
CERTAIN INFORMATION CONCERNING THE MERGER SUB,
THERMO INSTRUMENT AND THERMO ELECTRON
THE MERGER SUB
The Merger Sub is a newly-formed Delaware corporation organized at the
direction of Thermo Instrument for the sole purpose of facilitating the Merger
and has not conducted any prior business.
The principal executive offices of the Merger Sub are located at 81 Wyman
Street, P.O. Box 9046, Waltham, Massachusetts 02454-9046, and its telephone
number is (781) 622-1000.
THERMO INSTRUMENT
Thermo Instrument develops, manufactures and markets analytical instruments
used to identify complex chemical compounds, toxic metals and other elements in
a broad range of liquids and solids. Thermo Instrument also develops and
manufactures instruments used to monitor radioactivity and air pollution; life
sciences instruments and consumables; and imaging, inspection, measurement and
control instruments. These products are used for multiple applications in a
range of industries, including industrial processing, food and beverage
production, life sciences research and medical diagnostics.
The principal executive offices of Thermo Instrument are located at 81
Wyman Street, P.O. Box 9046, Waltham, Massachusetts 02454-9046, and its
telephone number is (781) 622-1000.
THERMO ELECTRON
Thermo Electron develops, manufactures and markets monitoring, analytical
and biomedical instrumentation; biomedical products including heart-assist
devices, respiratory-care equipment and mammography systems; paper recycling and
papermaking equipment; alternative-energy systems and clean fuels; industrial
process equipment; and other specialized products. Thermo Electron also provides
a range of services that include industrial outsourcing, particularly in
environmental-liability management, laboratory analysis and metallurgical
processing; and conducts advanced-technology research and development.
The principal executive offices of Thermo Electron are located at 81 Wyman
Street, P.O. Box 9046, Waltham, Massachusetts 02454-9046, and its telephone
number is (781) 622-1000.
INDEPENDENT PUBLIC ACCOUNTANTS
The financial statements of the Company and the non-telecommunications
optical filter business of Corning OCA Corporation included in this Proxy
Statement have been audited by Arthur Andersen LLP, independent public
accountants, as stated in their reports. Representatives of Arthur Andersen LLP
are not expected to be at the Special Meeting.
STOCKHOLDER PROPOSALS
If the Merger is not completed, Thermo Vision will hold an Annual Meeting
of Stockholders in 2000. Proposals of stockholders intended to be included in
the proxy statement and form of proxy relating to the 2000 Annual Meeting of the
Stockholders of Thermo Vision must be received by the Company for inclusion in
the proxy statement and form of proxy no later than December 11, 1999. Notices
of stockholder proposals submitted outside the processes of Rule 14a-8 under the
Exchange Act (relating to proposals to be presented at the meeting but not
included in the Company's proxy statement and form of proxy), will be considered
untimely, and thus the Company's proxy may confer discretionary voting authority
on the persons named in the proxy with regard to such proposals, if received
after March 1, 2000.
67
<PAGE> 68
ADDITIONAL INFORMATION
Pursuant to the requirements of Section 13(e) of the Exchange Act, and Rule
13e-3 promulgated thereunder, the Company, as issuer of the class of equity
securities that is the subject of the Rule 13e-3 transaction, together with the
Merger Sub, Thermo Instrument and Thermo Electron, have filed a Schedule 13E-3
with the Commission with respect to the transactions contemplated by the Merger
Agreement. As permitted by the rules and regulations of the Commission, this
Proxy Statement omits certain information, exhibits and undertakings contained
in the Schedule 13E-3. Such additional information can be inspected at and
obtained from the Commission in the manner set forth below under "AVAILABLE
INFORMATION."
Statements contained in this Proxy Statement as to the contents of any
contract or other document referred to herein or therein are not necessarily
complete and in each instance reference is made to such contract or other
document filed as an exhibit to the Schedule 13E-3 or such other document, and
each such statement shall be deemed qualified in its entirety by such reference.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements, and other
information with the Commission. The reports, proxy statements, and other
information filed with the Commission can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington D.C. 20549 and at the following Regional Offices of
the Commission: 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and
7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material can be obtained at prescribed rates from the Public Reference Room of
the Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549. The public may obtain information on the operation of the Public
Reference Room by calling the Commission at 1-800-SEC-0330. The Commission
maintains a World Wide Web site on the Internet at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission, including
the Company. The same information is also available on the Internet at
http://www.FreeEDGAR.com. The Common Stock is listed on the AMEX, and such
material that relates to the Company may also be inspected at the offices of the
American Stock Exchange, Inc., 86 Trinity Place, New York, New York 10006-1881.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROXY STATEMENT, IN CONNECTION WITH THE MERGER, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MAY NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THERMO INSTRUMENT, THERMO ELECTRON OR THE MERGER SUB. THE
DELIVERY OF THIS PROXY STATEMENT SHALL NOT IMPLY THAT THERE HAS BEEN NO CHANGE
IN THE AFFAIRS OF THE COMPANY, THE MERGER SUB, THERMO INSTRUMENT AND THERMO
ELECTRON SINCE THE DATE HEREOF OR THAT THE INFORMATION IN THIS PROXY STATEMENT
OR IN THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN IS CURRENT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THEREOF.
68
<PAGE> 69
THERMO VISION CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THERMO VISION CORPORATION
Report of Independent Public Accountants.................... F-2
Consolidated Statement of Income for the six months ended
July 3, 1999, and July 4, 1998, and the years ended
January 2, 1999, January 3, 1998, and December 28, 1996... F-3
Consolidated Balance Sheet as of July 3, 1999, January 2,
1999, and January 3, 1998................................. F-4
Consolidated Statement of Cash Flows for the six months
ended July 3, 1999, and July 4, 1998, and the years ended
January 2, 1999, January 3, 1998, and December 28, 1996... F-5
Consolidated Statement of Comprehensive Income and
Shareholders' Investment for the six months ended July 3,
1999, and the years ended January 2, 1999, January 3,
1998, and December 28, 1996............................... F-6
Notes to Consolidated Financial Statements.................. F-7
NON-TELECOMMUNICATIONS OPTICAL FILTER BUSINESS OF CORNING
OCA CORPORATION
Report of Independent Public Accountants.................... F-24
Statement of Revenues and Direct Costs and Expenses for the
six months ended June 30, 1999 and 1998, the month ended
January 31, 1999, the twelve months ended December 31,
1998, and the eight months ended December 31, 1997........ F-25
Statement of Assets Acquired and Liabilities Assumed as of
July 16, 1999............................................. F-26
Notes to Financial Statements............................... F-27
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION OF THERMO
VISION CORPORATION AND THE NON-TELECOMMUNICATIONS OPTICAL
FILTER BUSINESS OF CORNING OCA CORPORATION (UNAUDITED).... F-29
Pro Forma Combined Condensed Statement of Income for the
six months ended July 3, 1999.......................... F-30
Pro Forma Combined Condensed Statement of Income for the
year ended January 2, 1999............................. F-31
Pro Forma Combined Condensed Balance Sheet as of July 3,
1999................................................... F-32
Notes to Pro Forma Combined Condensed Financial
Statements............................................. F-33
</TABLE>
F-1
<PAGE> 70
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of Thermo Vision Corporation:
We have audited the accompanying consolidated balance sheet of Thermo
Vision Corporation (a Delaware corporation and 78%-owned subsidiary of Thermo
Instrument Systems Inc.) and subsidiaries as of January 2, 1999, and January 3,
1998, and the related consolidated statements of income, cash flows, and
comprehensive income and shareholders' investment for each of the three years in
the period ended January 2, 1999. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Thermo
Vision Corporation and subsidiaries as of January 2, 1999, and January 3, 1998,
and the results of their operations and their cash flows for each of the three
years in the period ended January 2, 1999, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 16, 1999 (except with
respect to certain matters discussed
in Note 12, as to which the date is
July 16, 1999)
F-2
<PAGE> 71
THERMO VISION CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
----------------- --------------------------------------
JULY 3, JULY 4, JANUARY 2, JANUARY 3, DECEMBER 28,
1999 1998 1999 1998 1996
------- ------- ---------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES (Notes 8 and 9)...................... $19,115 $20,753 $37,966 $39,694 $30,434
------- ------- ------- ------- -------
Costs and Operating Expenses:
Cost of revenues (Note 3)................... 11,628 11,699 23,769 22,151 17,066
Selling, general, and administrative
expenses (Note 8)........................ 5,184 4,712 9,370 9,065 7,402
Research and development expenses........... 2,106 2,084 4,233 4,143 3,499
Restructuring costs (Note 3)................ -- -- 40 -- --
------- ------- ------- ------- -------
18,918 18,495 37,412 35,359 27,967
------- ------- ------- ------- -------
Operating Income.............................. 197 2,258 554 4,335 2,467
Interest Income............................... 189 228 455 41 --
Interest Expense.............................. (27) (39) (75) (66) (44)
Interest Expense, Related Party (Note 8)...... (200) (222) (446) (261) --
------- ------- ------- ------- -------
Income Before Provision for Income Taxes...... 159 2,225 488 4,049 2,423
Provision for Income Taxes (Note 6)........... 67 929 267 1,701 1,005
------- ------- ------- ------- -------
NET INCOME.................................... $ 92 $ 1,296 $ 221 $ 2,348 $ 1,418
======= ======= ======= ======= =======
BASIC AND DILUTED EARNINGS PER SHARE (Note
10)......................................... $ .01 $ .16 $ .03 $ .34 $ .21
======= ======= ======= ======= =======
WEIGHTED AVERAGE SHARES (Note 10)
Basic....................................... 8,051 8,048 8,048 6,983 6,909
======= ======= ======= ======= =======
Diluted..................................... 8,111 8,048 8,049 6,985 6,909
======= ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 72
THERMO VISION CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
JULY 3, JANUARY 2, JANUARY 3,
1999 1999 1998
------------ ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents (includes $9,231 and $9,410
under repurchase agreement with affiliated company in
1998 and 1997, respectively)........................... $ 198 $ 9,457 $ 9,604
Advance to affiliate (Note 12)............................ 6,767 -- --
Accounts receivable, less allowances of $335, $246, and
$430................................................... 5,966 5,487 6,935
Inventories............................................... 7,898 7,831 8,301
Prepaid expenses.......................................... 319 254 971
Prepaid and refundable income taxes (Note 6).............. 2,040 2,563 1,405
------- ------- -------
23,188 25,592 27,216
------- ------- -------
Property, Plant, and Equipment, at Cost, Net................ 5,904 5,855 4,757
------- ------- -------
Other Assets (Note 12)...................................... 2,579 836 584
------- ------- -------
Cost in Excess of Net Assets of Acquired Companies
(Notes 2 and 12).......................................... 15,239 13,997 14,844
------- ------- -------
$46,910 $46,280 $47,401
======= ======= =======
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Note payable and capital lease obligation (includes $3,947
due to Thermo Optek in 1999; Note 8)................... $ 4,875 $ 1,070 $ 1,143
Accounts payable.......................................... 2,805 2,335 3,671
Accrued payroll and employee benefits..................... 975 912 905
Accrued installation and warranty expenses................ 482 346 232
Other accrued expenses (Note 2)........................... 1,417 1,166 1,449
Due to Thermo Electron and affiliated companies (Note
8)..................................................... 134 308 177
------- ------- -------
10,688 6,137 7,577
------- ------- -------
Deferred Income Taxes (Note 6).............................. 217 217 22
------- ------- -------
Long-term Obligations (includes $3,800 due to Thermo
Electron in
all periods and $3,947 due to Thermo Optek in 1998 and
1997; Note 8)............................................. 3,800 7,747 7,747
------- ------- -------
Commitments (Note 7)
Shareholders' Investment (Notes 4 and 5):
Common stock, $.01 par value, 20,000,000 shares
authorized; 8,051,576, 8,048,276, and 8,048,276 shares
issued and outstanding................................. 81 80 80
Capital in excess of par value............................ 28,040 28,031 28,144
Retained earnings......................................... 4,098 4,006 3,785
Deferred compensation..................................... (8) -- --
Accumulated other comprehensive items..................... (6) 62 46
------- ------- -------
32,205 32,179 32,055
------- ------- -------
$46,910 $46,280 $47,401
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 73
THERMO VISION CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
------------------ --------------------------------------
JULY 3, JULY 4, JANUARY 2, JANUARY 3, DECEMBER 28,
1999 1998 1999 1998 1996
-------- ------- ---------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income............................................. $ 92 $ 1,296 $ 221 $ 2,348 $ 1,418
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization........................ 955 774 1,568 1,849 1,251
Provision for losses on accounts receivable.......... 61 -- 17 114 174
Deferred income tax expense (benefit)................ -- -- 309 514 (79)
Other noncash expenses (Note 3)...................... -- -- 2,167 -- --
Changes in current accounts, excluding the effects of
acquisitions:
Accounts receivable............................... (398) 525 1,509 (380) (732)
Inventories....................................... 207 (636) (908) (631) 471
Other current assets.............................. 605 164 (820) (364) (253)
Accounts payable.................................. 421 (774) (1,537) 71 (174)
Other current liabilities......................... 53 (490) 64 (210) (397)
-------- ------- ------- ------- --------
Net cash provided by operating activities................ 1,996 859 2,590 3,311 1,679
-------- ------- ------- ------- --------
INVESTING ACTIVITIES
Acquisitions, net of cash acquired (Notes 2 and 12).... (2,055) -- -- (7,345) (15,528)
Advance for acquisition (Note 12)...................... (1,000) -- -- -- --
Advances to affiliate, net (Note 12)................... (6,767) -- -- -- --
Purchases of property, plant, and equipment............ (516) (1,801) (2,270) (1,527) (1,450)
Other, net............................................. (822) (169) (252) -- 92
-------- ------- ------- ------- --------
Net cash used in investing activities.................... (11,160) (1,970) (2,522) (8,872) (16,886)
-------- ------- ------- ------- --------
FINANCING ACTIVITIES
Net increase (decrease) in short-term borrowings....... (89) (77) (95) 240 (575)
Net proceeds from issuance of Company common stock
(Note 5)............................................. -- -- -- 7,033 --
Net proceeds from issuance of notes payable to Thermo
Electron and Thermo Optek (Notes 2 and 8)............ -- -- -- 7,747 --
Transfer from parent company to fund acquisitions...... -- -- -- -- 16,870
Net increase (decrease) in short-term borrowings from
Thermo Electron and affiliated companies............. -- -- -- (2,591) 1,830
Net transfer (to) from parent company.................. -- -- -- 2,430 (2,785)
Other.................................................. -- (121) (121) -- --
-------- ------- ------- ------- --------
Net cash provided by (used in) financing activities...... (89) (198) (216) 14,859 15,340
-------- ------- ------- ------- --------
Exchange Rate Effect on Cash............................. (6) 2 1 -- 2
-------- ------- ------- ------- --------
Increase (Decrease) in Cash and Cash Equivalents......... (9,259) (1,307) (147) 9,298 135
Cash and Cash Equivalents at Beginning of Period......... 9,457 9,604 9,604 306 171
-------- ------- ------- ------- --------
Cash and Cash Equivalents at End of Period............... $ 198 $ 8,297 $ 9,457 $ 9,604 $ 306
======== ======= ======= ======= ========
CASH PAID FOR
Interest............................................... $ 124 $ 323 $ 527 $ 265 $ 44
Income taxes........................................... $ 561 $ 717 $ 1,077 $ -- $ 43
NONCASH ACTIVITIES
Fair value of assets of acquired companies............. $ 2,354 $ -- $ -- $ 9,414 $ 22,480
Cash paid for acquired companies....................... (2,055) -- -- (7,400) (16,870)
-------- ------- ------- ------- --------
Liabilities assumed of acquired companies............ $ 299 $ -- $ -- $ 2,014 $ 5,610
======== ======= ======= ======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 74
THERMO VISION CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
AND SHAREHOLDERS' INVESTMENT
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED --------------------------------------
JULY 3, JANUARY 2, JANUARY 3, DECEMBER 28,
1999 1999 1998 1996
----------- ---------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
COMPREHENSIVE INCOME
Net Income.......................................... $ 92 $ 221 $ 2,348 $ 1,418
------- ------- ------- -------
Other Comprehensive Items:
Foreign currency translation adjustment........... (68) 16 (8) 52
------- ------- ------- -------
$ 24 $ 237 $ 2,340 $ 1,470
======= ======= ======= =======
SHAREHOLDERS' INVESTMENT
Common Stock, $.01 Par Value:
Balance at beginning of period.................... $ 80 $ 80 $ 68 $ 68
Activity under employees' stock plans............. 1 -- -- --
Issuance of Company common stock (Note 5)......... -- -- 11 --
Effect of stock split............................. -- -- 1 --
------- ------- ------- -------
Balance at end of period.......................... 81 80 80 68
------- ------- ------- -------
Capital in Excess of Par Value:
Balance at beginning of period.................... 28,031 28,144 18,693 4,608
Activity under employees' stock plans............. 9 -- -- --
Issuance of Company common stock (Note 5)......... -- (121) 7,022 --
Tax benefit related to employees' and directors'
stock plans.................................... -- 8 -- --
Effect of stock split............................. -- -- (1) --
Net transfer (to) from parent company............. -- -- 2,430 (2,785)
Transfer from parent company to fund
acquisitions................................... -- -- -- 16,870
------- ------- ------- -------
Balance at end of period.......................... 28,040 28,031 28,144 18,693
------- ------- ------- -------
Retained Earnings:
Balance at beginning of period.................... 4,006 3,785 1,437 19
Net income........................................ 92 221 2,348 1,418
------- ------- ------- -------
Balance at end of period.......................... 4,098 4,006 3,785 1,437
------- ------- ------- -------
Deferred Compensation:
Balance at beginning of period.................... -- -- -- --
Activity under employees' stock plans............. (8) -- -- --
------- ------- ------- -------
Balance at end of period.......................... (8) -- -- --
------- ------- ------- -------
Accumulated Other Comprehensive Items:
Balance at beginning of period.................... 62 46 54 2
Other comprehensive items, net.................... (68) 16 (8) 52
------- ------- ------- -------
Balance at end of period.......................... (6) 62 46 54
------- ------- ------- -------
$32,205 $32,179 $32,055 $20,252
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 75
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Thermo Vision Corporation (the Company) designs, manufactures, and markets
a diverse array of photonics products - 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.
Relationship with Thermo Optek Corporation, Thermo Instrument Systems Inc., and
Thermo Electron Corporation
The Company was incorporated in November 1995 as a wholly owned subsidiary
of Thermo Optek Corporation at which time Thermo Optek transferred to the
Company all of the assets, liabilities, and businesses of two subsidiaries of
Thermo Jarrell Ash (TJA) in exchange for 6,908,785 shares of the Company's
common stock (adjusted to reflect a 55-for-54 stock split distributed in
December 1997 in the form of a stock dividend). The companies transferred were
CID Technologies Inc. (CIDTEC) and Scientific Measurement Systems Inc., (now
called Thermo Vision Colorado). In August 1997, the Company acquired the
crystal-materials business (Hilger) of Hilger Analytical Limited, a wholly owned
subsidiary of Thermo Optek, and accounted for the transaction at historical cost
in a manner similar to a pooling of interests (Note 2).
In December 1997, Thermo Optek, a 91%-owned publicly traded subsidiary of
Thermo Instrument Systems Inc., distributed to its shareholders 100% of the
Company's common stock in the form of a dividend. Thermo Instrument is an
85%-owned subsidiary of Thermo Electron Corporation. As of January 2, 1999,
Thermo Instrument and Thermo Electron owned a total of 6,401,844 shares of the
Company's common stock, representing 79.5% of such stock outstanding.
Principles of Consolidation
The accompanying financial statements include the accounts of the Company
and its wholly owned subsidiaries. All material intercompany accounts and
transactions have been eliminated.
Fiscal Year
The Company has adopted a fiscal year ending the Saturday nearest December
31. References to 1998, 1997, and 1996 are for the fiscal years ended January 2,
1999, January 3, 1998, and December 28, 1996, respectively. Fiscal 1998 and 1996
included 52 weeks; 1997 included 53 weeks.
Revenue Recognition
The Company recognizes revenues upon shipment of its products. The Company
provides a reserve for its estimate of warranty and installation costs at the
time of shipment.
Stock-based Compensation Plans
The Company applies Accounting Principles Board Opinion (APB) No. 25,
"Accounting for Stock Issued to Employees" and related interpretations in
accounting for its stock-based compensation plans (Note 4). Accordingly, no
accounting recognition is given to stock options granted at fair market value
until they are exercised. Upon exercise, net proceeds, including tax benefits
realized, are credited to shareholders' investment.
F-7
<PAGE> 76
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Income Taxes
The Company, Thermo Optek, and Thermo Instrument entered into tax
allocation agreements under which the Company, Thermo Optek, and Thermo
Instrument were included in Thermo Electron's consolidated federal and certain
state income tax returns. The agreements provided that in years in which the
Company had taxable income, it would pay to Thermo Electron amounts comparable
to the taxes the Company would have paid if it had filed separate tax returns.
Subsequent to the Company's initial public offering in December 1997, Thermo
Instrument's equity ownership of the Company was reduced below 80% and, as a
result, the Company is required to file its own federal and certain state income
tax returns.
In accordance with Statement of Financial Accounting Standards (SFAS) No.
109, "Accounting for Income Taxes," the Company recognizes deferred income taxes
based on the expected future tax consequences of differences between the
financial statement basis and the tax basis of assets and liabilities,
calculated using enacted tax rates in effect for the year in which the
differences are expected to be reflected in the tax return.
Earnings per Share
Basic earnings per share have been computed by dividing net income by the
weighted average number of shares outstanding during the year. Diluted earnings
per share have been computed assuming the exercise of stock options, as well as
their related income tax effects.
Stock Splits
All share and per share information has been restated to reflect an
approximate 55-for-54 stock split, effected in the form of a stock dividend,
distributed in December 1997. The purpose of this stock split was to preserve a
distribution ratio of 14 shares of the Company's common stock for each 100
shares of common stock held by Thermo Optek shareholders as of the date that
Thermo Optek distributed the Company's common stock to its shareholders.
Cash and Cash Equivalents
As of year-end 1998 and 1997, $9,231,000 and $9,410,000 of the Company's
cash equivalents were invested in a repurchase agreement with Thermo Electron.
Under this agreement, the Company in effect lends excess cash to Thermo
Electron, which Thermo Electron collateralizes with investments principally
consisting of corporate notes, U.S. government-agency securities, commercial
paper, money market funds, and other marketable securities, in the amount of at
least 103% of such obligation. The Company's funds subject to the repurchase
agreement are readily convertible into cash by the Company. The repurchase
agreement earns a rate based on the 90-day Commercial Paper Composite Rate plus
25 basis points, set at the beginning of each quarter (Note 12).
Inventories
Inventories are stated at the lower of cost (primarily on a first-in,
first-out basis) or market value and include materials, labor, and manufacturing
overhead. The components of inventories are:
<TABLE>
<CAPTION>
1998 1997
------ ------
(IN THOUSANDS)
<S> <C> <C>
Raw Materials and Supplies............................. $5,090 $5,637
Work in Process........................................ 585 967
Finished Goods......................................... 2,156 1,697
------ ------
$7,831 $8,301
====== ======
</TABLE>
F-8
<PAGE> 77
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company periodically reviews the quantities of inventories on hand and
compares these amounts to expected usage of each particular product or product
line. The Company records as a charge to cost of revenues any amounts required
to reduce the carrying value of inventories to net realizable value.
Property, Plant, and Equipment
The costs of additions and improvements are capitalized, while maintenance
and repairs are charged to expense as incurred. The Company provides for
depreciation and amortization using the straight-line method over the estimated
useful lives of the property as follows: buildings, 35 years; machinery and
equipment, 3 to 10 years; and leasehold improvements, the shorter of the term of
the lease or the life of the asset. Property, plant, and equipment consists of:
<TABLE>
<CAPTION>
1998 1997
------ ------
(IN THOUSANDS)
<S> <C> <C>
Land and Buildings..................................... $ 277 $ 277
Machinery and Equipment................................ 6,994 5,987
Leasehold Improvements................................. 1,994 932
------ ------
9,265 7,196
Less: Accumulated Depreciation and Amortization........ 3,410 2,439
------ ------
$5,855 $4,757
====== ======
</TABLE>
Other Assets
Other assets in the accompanying balance sheet includes a 10% ownership
interest in LOT-Oriel Holding GmbH (LOT). The carrying amount of the investment,
which is being accounted for under the cost method, is $500,000 in the
accompanying balance sheet.
The Company has an investment of less than 20% in Andor Technology Limited.
The carrying amount of the investment, which is being accounted for under the
cost method, is $84,000 in the accompanying balance sheet. Prior to October
1996, the Company owned approximately 51% of Andor, and Andor's results were
consolidated with those of the Company. During the third quarter of 1996, the
Company reduced its ownership interest in Andor in a transaction with Andor's
other stockholders. In consideration for the sale of a portion of its interest
in Andor, the Company received approximately $159,000 in cash and a $147,000
principal amount 8% note, which was paid in September 1997. Andor's results were
not material to the Company's results of operations.
Cost in Excess of Net Assets of Acquired Companies
The excess of cost over the fair value of net assets of acquired companies
is amortized using the straight-line method over 40 years. Accumulated
amortization was $1,107,000 and $718,000 at year-end 1998 and 1997,
respectively. The Company assesses the future useful life of this asset whenever
events or changes in circumstances indicate that the current useful life has
diminished. The Company considers the future undiscounted cash flows of the
acquired companies in assessing the recoverability of this asset. If impairment
has occurred, any excess of carrying value over fair value is recorded as a
loss.
Foreign Currency
All assets and liabilities of the Company's foreign subsidiary are
translated at year-end exchange rates, and revenues and expenses are translated
at average exchange rates for the year in accordance with SFAS No. 52, "Foreign
Currency Translation." Resulting translation adjustments are reflected in the
"Accumulated other comprehensive items" component of shareholders' investment.
Foreign currency
F-9
<PAGE> 78
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
transaction gains and losses are included in the accompanying statement of
income and are not material for the three years presented.
Comprehensive Income
During the first quarter of 1998, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income." This pronouncement sets forth requirements for
disclosure of the Company's comprehensive income and accumulated other
comprehensive items. In general, comprehensive income combines net income and
other comprehensive items, net, which represents foreign currency translation
adjustments, reported as a component of shareholders' investment in the
accompanying balance sheet. At year-end 1998 and 1997, the balance of
accumulated other comprehensive items represents the Company's cumulative
translation adjustment.
Fair Value of Financial Instruments
The Company's financial instruments consist primarily of cash and cash
equivalents, accounts receivable, note payable, accounts payable, due to Thermo
Electron and affiliated companies, and long-term obligations due to Thermo
Electron and Thermo Optek. The Company's long-term obligations (Note 8) bear
interest at a variable market rate and, therefore, the carrying amounts
approximate fair value. The carrying amounts of the Company's remaining
financial instruments approximate fair value due to their short-term nature.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Presentation
Certain amounts in 1997 and 1996 have been reclassified to conform to the
presentation in the 1998 financial statements.
Interim Financial Statements
The financial statements as of July 3, 1999, and for the six-month periods
ended July 3, 1999, and July 4, 1998, are unaudited but, in the opinion of
management, reflect all adjustments of a normal recurring nature necessary for a
fair presentation of results for these interim periods. The results of
operations for the six-month period ended July 3, 1999, are not necessarily
indicative of the results to be expected for the entire year.
2. ACQUISITIONS
In August 1997, the Company acquired Hilger, a manufacturer of crystals
used for X-ray scintillation and infrared spectroscopy, from Thermo Optek for
the assumption of the short-term obligation discussed in Note 8. Because the
Company and Hilger were deemed for accounting purposes to be under control of
their common owner, Thermo Optek, the transaction has been accounted for at
historical cost in a manner similar to a pooling of interests. Accordingly, the
results of operations of Hilger are included for all periods presented.
F-10
<PAGE> 79
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In July 1997, the Company acquired the assets of Centronic, Inc. (now
called Centro Vision, Inc.), a manufacturer of silicon photodiodes, for
$3,800,000 in cash. The cost of this acquisition exceeded the estimated fair
market value of the acquired net assets by $2,307,000. To finance this
acquisition, the Company borrowed $3,800,000 from Thermo Electron (Note 8).
In February 1997, the Company acquired all the outstanding stock of Laser
Science, Inc. (LSI) for $3,600,000 in cash. LSI is a manufacturer of nitrogen
and tunable dye lasers as well as pulsed CO(2) lasers for industry, medicine,
education, and defense. The cost of this acquisition exceeded the estimated fair
market value of the acquired net assets by $2,836,000. To finance this
acquisition, the Company borrowed $3,600,000 from Thermo Optek (Note 8). In
addition, the Company borrowed an additional $347,000 from Thermo Optek to fund
certain property additions made in connection with the acquisition of LSI (Note
8).
In February 1996, the Company acquired Oriel Instruments Corporation, a
manufacturer and distributor of photonics components and instruments, for
$11,798,000 in cash and the assumption of $731,000 in debt, and the assets of
Corion Corporation, a manufacturer of commercial optical filters, for $5,072,000
in cash. The cost of Oriel and Corion exceeded the estimated fair market value
of the acquired net assets by $4,736,000 and $2,056,000, respectively.
These acquisitions, except for Hilger, have been accounted for using the
purchase method of accounting, and their results of operations have been
included in the accompanying financial statements from the respective dates of
acquisition.
In connection with these acquisitions, the Company has undertaken
restructuring activities at the 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 the acquisitions, the Company
established reserves as detailed below, 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, primarily included completion
of anticipated severances at Opticon.
A summary of the changes in accrued acquisition expenses is:
<TABLE>
<CAPTION>
ABANDONMENT
OF EXCESS
SEVERANCE FACILITIES OTHER TOTAL
--------- ----------- ----- -----
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 30, 1995......................... $ -- $ 80 $ 20 $ 100
Reserves established............................... 286 460 -- 746
Usage.............................................. (150) (328) (3) (481)
Decrease due to finalization of restructuring plan,
recorded as a decrease to cost in excess of net
assets of acquired companies.................... (61) -- -- (61)
----- ----- ---- -----
BALANCE AT DECEMBER 28, 1996......................... 75 212 17 304
Reserves established............................... 325 25 75 425
Usage.............................................. (102) (96) (17) (215)
Decrease due to finalization of restructuring plan,
recorded as a decrease to cost in excess of net
assets of acquired companies.................... (46) -- -- (46)
----- ----- ---- -----
BALANCE AT JANUARY 3, 1998........................... $ 252 $ 141 $ 75 $ 468
</TABLE>
F-11
<PAGE> 80
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
ABANDONMENT
OF EXCESS
SEVERANCE FACILITIES OTHER TOTAL
--------- ----------- ----- -----
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Usage.............................................. $ (97) $(125) $(49) $(271)
Decrease due to finalization of restructuring plan,
recorded as a decrease to cost in excess of net
assets of acquired companies.................... (96) (10) (26) (132)
----- ----- ---- -----
BALANCE AT JANUARY 2, 1999........................... 59 6 -- 65
(UNAUDITED)
Reserves established (Note 12)..................... 60 -- -- 60
Usage.............................................. (56) (6) -- (62)
Decrease due to finalization of restructuring plan,
recorded as a decrease to cost in excess of net
assets of acquired companies.................... (7) -- -- (7)
----- ----- ---- -----
BALANCE AT JULY 3, 1999.............................. $ 56 $ -- $ -- $ 56
===== ===== ==== =====
</TABLE>
Accrued acquisition expenses are included in other accrued expenses in the
accompanying balance sheet.
Based on unaudited data, the following table presents selected financial
information for the Company and the businesses acquired on a pro forma basis,
assuming the Company, Centro Vision, LSI, Oriel, and Corion had been combined
since the beginning of 1996.
<TABLE>
<CAPTION>
1997 1996
-------- --------
(IN THOUSANDS EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C>
Revenues............................................. $42,944 $43,428
Net Income........................................... 2,209 527
Basic and Diluted Earnings per Share................. .32 .08
</TABLE>
The pro forma results are not necessarily indicative of future operations
or the actual results that would have occurred had these acquisitions been made
at the beginning of 1996.
3. RESTRUCTURING AND RELATED COSTS
During 1998, the Company recorded restructuring and related costs of
$2,207,000. Restructuring costs of $40,000, which were accounted for in
accordance with EITF 94-3, related to severance costs for 10 employees across
several functions, all of whom were terminated in 1998. The Company also
recorded inventory provisions of $2,167,000. The inventory provisions are
included in cost of revenues in the accompanying statement of income and
primarily relate to reserves for discontinued products and inventories
considered excess based on current customer demand. In addition, the provisions
include a component for yields from outsourced wafer production that were lower
than had been anticipated.
4. EMPLOYEE BENEFIT PLANS
Stock-based Compensation Plans
Stock Option Plans
The Company has a stock-based compensation plan for its key employees,
directors, and others, which permits the grant of a variety of stock and
stock-based awards as determined by the human resources committee of the
Company's Board of Directors (the Board Committee), including restricted stock,
stock options, stock bonus shares, or performance-based shares. The option
recipients and the terms of options
F-12
<PAGE> 81
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
granted under this plan are determined by the Board Committee. As of year-end
1998, only nonqualified stock options have been awarded under this plan.
Generally, options granted to date are exercisable immediately, but are subject
to certain transfer restrictions and the right of the Company to repurchase
shares issued upon exercise of the options at the exercise price, upon certain
events. The restrictions and repurchase rights generally lapse ratably over a
one- to ten-year period, depending on the term of the option, which generally
ranges from five to twelve years. Nonqualified stock options may be granted at
any price determined by the Board Committee, although incentive stock options
must be granted at not less than the fair market value of the Company's stock on
the date of grant. In addition to the Company's stock-based compensation plans,
certain officers and key employees may also participate in the stock-based
compensation plans of Thermo Electron and Thermo Instrument.
In November 1998, the Company's employees, excluding its officers and
directors, were offered the opportunity to exchange previously granted options
to purchase shares of Company common stock for an amount of options equal to
half of the number of options previously held, exercisable at a price equal to
the fair market value at the time of the exchange offer. Holders of options to
acquire 127,000 shares at a weighted average exercise price of $7.50 per share
elected to participate in this exchange and, as a result, received options to
purchase 64,000 shares of Company common stock at $2.29 per share, which are
included in the 1998 grants in the table below. The other terms of the new
options are the same as the exchanged options except that the holders may not
sell shares purchased pursuant to such new options for six months from the
exchange date. The options exchanged were canceled by the Company.
A summary of the Company's stock option activity is:
<TABLE>
<CAPTION>
1998 1997
------------------ ------------------
WEIGHTED WEIGHTED
NUMBER AVERAGE NUMBER AVERAGE
OF EXERCISE OF EXERCISE
SHARES PRICE SHARES PRICE
------ -------- ------ --------
(SHARES IN THOUSANDS)
<S> <C> <C> <C> <C>
Options Outstanding, Beginning of Year................. 303 $7.50 -- $ --
Granted.............................................. 281 3.06 303 7.50
Forfeited............................................ (27) 7.50 -- --
Canceled due to exchange............................. (127) 7.50 -- --
---- ---
Options Outstanding, End of Year....................... 430 $4.59 303 $7.50
==== ===== === =====
Options Exercisable.................................... 430 $4.59 -- $ --
==== ===== === =====
Options Available for Grant............................ 270 397
==== ===
</TABLE>
A summary of the status of the Company's stock options at January 2, 1999,
is:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING AND EXERCISABLE
----------------------------------------------
NUMBER WEIGHTED WEIGHTED
OF AVERAGE AVERAGE
SHARES REMAINING EXERCISE
RANGE OF EXERCISE PRICES (IN THOUSANDS) CONTRACTUAL LIFE PRICE
- ------------------------ -------------- ---------------- --------
<S> <C> <C> <C>
$2.29 - $3.59........................................ 256 5.3 years $2.62
6.21 - 7.50........................................ 174 5.9 years 7.48
---
$2.29 - $7.50........................................ 430 5.8 years $4.59
===
</TABLE>
Employee Stock Purchase Program
Substantially all of the Company's full-time U.S. employees are eligible to
participate in an employee stock purchase program sponsored by the Company and
Thermo Electron, under which employees can purchase shares of the Company's and
Thermo Electron's common stock. Prior to November 1, 1998, the
F-13
<PAGE> 82
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
program was sponsored by Thermo Instrument and Thermo Electron. Prior to the
1998 program year, the applicable shares of common stock could be purchased at
the end of a 12-month period at 95% of the fair market value at the beginning of
the period, and the shares purchased were subject to a six-month resale
restriction. Effective November 1, 1998, the applicable shares of common stock
may be purchased at 85% of the lower of the fair market value at the beginning
or end of the period, and the shares purchased are subject to a one-year resale
restriction. Shares are purchased through payroll deductions of up to 10% of
each participating employee's gross wages. No shares have been issued under this
program.
Pro Forma Stock-based Compensation Expense
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-based Compensation," which sets forth a fair-value
based method of recognizing stock-based compensation expense. As permitted by
SFAS No. 123, the Company has elected to continue to apply APB No. 25 to account
for its stock-based compensation plans. Had compensation cost for awards granted
under the Company's stock-based compensation plans been determined based on the
fair value at the grant dates consistent with the method set forth under SFAS
No. 123, the effect on the Company's net income and earnings per share would
have been:
<TABLE>
<CAPTION>
1998 1997
----- -------
(IN THOUSANDS
EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C>
Net Income:
As reported............................................... $221 $2,348
Pro forma................................................. 30 2,270
Basic and Diluted Earnings per Share:
As reported............................................... .03 .34
Pro forma................................................. -- .33
</TABLE>
Compensation expense for options granted is reflected over the vesting
period; therefore, future pro forma compensation expense may be greater as
additional options are granted.
The weighted average fair value per share of options granted was $0.91 and
$2.69 in 1998 and 1997, respectively. The fair value of each option grant was
estimated on the grant date using the Black-Scholes option-pricing model with
the following weighted-average assumptions:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Volatility.................................................. 30% 28%
Risk-free Interest Rate..................................... 4.7% 6.0%
Expected Life of Options.................................... 3.5 years 4.9 years
</TABLE>
The Black-Scholes option-pricing model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option-pricing models require the input of
highly subjective assumptions including expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
401(k) Savings Plans
Substantially all of the Company's full-time U.S. employees are eligible to
participate in Thermo Electron's 401(k) savings plan. Contributions to the
401(k) savings plan are made by both the employee
F-14
<PAGE> 83
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
and the Company. Company contributions are based upon the level of employee
contributions. For these plans, the Company contributed and charged to expense
$320,000, $212,000, and $182,000 in 1998, 1997, and 1996, respectively.
5. COMMON STOCK
In December 1997, the Company sold 1,139,491 shares of its common stock in
an initial public offering at $7.50 per share for net proceeds of $7,033,000.
At January 2, 1999, the Company had reserved 775,000 unissued shares of its
common stock for possible issuance under stock-based compensation plans.
6. INCOME TAXES
The components of income before provision for income taxes are:
<TABLE>
<CAPTION>
1998 1997 1996
---- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Domestic........................................... $238 $3,719 $2,186
Foreign............................................ 250 330 237
---- ------ ------
$488 $4,049 $2,423
==== ====== ======
</TABLE>
The components of the provision for income taxes are:
<TABLE>
<CAPTION>
1998 1997 1996
---- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Currently Payable (Receivable):
Federal.......................................... $(65) $ 904 $ 895
State............................................ (60) 174 105
Foreign.......................................... 83 109 84
---- ------ ------
(42) 1,187 1,084
---- ------ ------
Net Deferred (Prepaid):
Federal.......................................... 245 424 (71)
State............................................ 64 90 (8)
---- ------ ------
309 514 (79)
---- ------ ------
$267 $1,701 $1,005
==== ====== ======
</TABLE>
The Company receives a tax deduction upon exercise of nonqualified stock
options by employees for the difference between the exercise price and the
market price of the underlying common stock on the date of exercise. The
provision for income taxes that is currently payable does not reflect $8,000 of
such benefits that have been allocated to capital in excess of par value in
1998.
F-15
<PAGE> 84
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The provision for income taxes in the accompanying statement of income
differs from the provision calculated by applying the statutory federal income
tax rate of 34% to income before provision for income taxes due to:
<TABLE>
<CAPTION>
1998 1997 1996
---- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Provision for Income Taxes at Statutory Rate....... $166 $1,377 $ 824
Increases (Decreases) Resulting From:
State income taxes, net of federal tax........... 3 174 64
Foreign tax rate and tax loss differential....... (2) 3 3
Tax benefit of foreign sales corporation......... (60) (49) (5)
Amortization of cost in excess of net assets of
acquired companies............................ 98 103 80
Nondeductible expenses and other................. 62 93 39
---- ------ ------
$267 $1,701 $1,005
==== ====== ======
</TABLE>
Prepaid income taxes and deferred income taxes in the accompanying balance
sheet consist of:
<TABLE>
<CAPTION>
1998 1997
------ ------
(IN THOUSANDS)
<S> <C> <C>
Prepaid Income Taxes:
Tax loss carryforwards................................... $ 258 $ 258
Reserves and accruals.................................... 291 822
Inventory basis difference............................... 895 424
Accrued compensation..................................... 295 159
Other, net............................................... 1 --
------ ------
1,740 1,663
Less: Valuation allowance................................ 258 258
------ ------
$1,482 $1,405
====== ======
Deferred Income Taxes:
Fixed and intangible assets.............................. $ 154 $ 22
Other, net............................................... 63 --
------ ------
$ 217 $ 22
====== ======
</TABLE>
LSI has $737,000 of federal tax net loss carryforwards, which will begin to
expire in 1999 and are subject to the limitations of U.S. Internal Revenue Code
Section 382, which limits the utilization of the net operating loss
carryforwards to a deduction of approximately $197,000 per year with any unused
portion of this annual limitation carried forward to future years. The valuation
allowance relates to uncertainty surrounding the utilization of this
carryforward.
A provision has not been made for U.S. or additional foreign taxes on
$1,165,000 of undistributed earnings of the Company's foreign subsidiary that
could be subject to taxation if remitted to the U.S. because the Company plans
to keep this amount permanently reinvested overseas.
7. COMMITMENTS
The Company leases portions of its office and operating facilities under
various operating lease arrangements. The accompanying statement of income
includes expenses from operating leases of $681,000, $659,000, and $438,000 in
1998, 1997, and 1996, respectively. Future minimum payments due under
noncancelable operating leases at January 2, 1999, are $538,000 in 1999;
$553,000 in 2000; $522,000 in 2001; $531,000 in 2002; $573,000 in 2003; and
$1,700,000 in 2004 and thereafter. Total future
F-16
<PAGE> 85
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
minimum lease payments are $4,417,000. The Company also has operating lease
arrangements with related parties as discussed in Note 8.
8. RELATED-PARTY TRANSACTIONS
Corporate Services Agreement
The Company and Thermo Electron have a corporate services agreement under
which Thermo Electron's corporate staff provides certain administrative
services, including certain legal advice and services, risk management, certain
employee benefit administration, tax advice and preparation of tax returns,
centralized cash management, and certain financial and other services, for which
the Company currently pays Thermo Electron annually an amount equal to 0.8% of
the Company's revenues. In 1997 and 1996, the Company paid an amount equal to
1.0% of the Company's revenues. For these services, the Company was charged
$304,000, $397,000, and $304,000 in 1998, 1997, and 1996, respectively. The fee
is reviewed and adjusted annually by mutual agreement of the parties. Management
believes that the service fee charged by Thermo Electron is reasonable and that
such fees are representative of the expenses the Company would have incurred on
a stand-alone basis. The corporate services agreement is renewed annually but
can be terminated upon 30 days' prior notice by the Company or upon the
Company's withdrawal from the Thermo Electron Corporate Charter (the Thermo
Electron Corporate Charter defines the relationship among Thermo Electron and
its majority-owned subsidiaries). For additional items such as employee benefit
plans, insurance coverage, and other identifiable costs, Thermo Electron charges
the Company based upon costs attributable to the Company.
Operating Leases
In addition to the operating leases described in Note 7, the Company leases
certain office and manufacturing space on a monthly basis from Thermo Optek and
Thermo Instrument. The accompanying statement of income includes expenses from
these arrangements of $262,000, $238,000, and $297,000 in 1998, 1997, and 1996,
respectively. Prior to January 1, 1997, rent expense under these arrangements
was determined as the Company's allocated share of total occupancy expenses.
Subsequently, the Company pays fixed monthly rates. In 1999, the Company plans
to purchase the building previously leased from Thermo Optek for $165,000 in
cash. At January 2, 1999, future minimum payments due under the lease with
Thermo Instrument, which expires in January 2006, are $220,000 in 1999; $230,000
in 2000; $236,000 in 2001; $246,000 in 2002; $256,000 in 2003; and $542,000 in
2004 and thereafter. Total future minimum lease payments are $1,730,000.
Short-term Obligation
Note payable in the accompanying balance sheet represents short-term bank
borrowings at the Company's foreign subsidiary. Prior to 1998, the Company had
an arrangement under which it could borrow on a bank line of credit arrangement
held by Thermo Optek. In 1998, the Company established its own 1,000,000 British
pounds sterling line of credit facility. The interest rate for these borrowings
was 7.25% and 8.00% at year-end 1998 and 1997, respectively. Availability to the
Company under this line of credit totaled $588,000 as of January 2, 1999.
Borrowings under the line of credit are guaranteed by Thermo Electron.
Long-term Obligations
The Company borrowed funds from Thermo Electron and Thermo Optek to finance
the acquisitions of certain companies (Note 2). In connection with the July 1997
acquisition of Centro Vision, the Company borrowed $3,800,000 from Thermo
Electron pursuant to a promissory note due July 2000. In connection with the
February 1997 acquisition of LSI and certain related property additions, the
Company
F-17
<PAGE> 86
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
borrowed $3,947,000 from Thermo Optek pursuant to promissory notes due February
2000. These notes bear interest at the 90-day Commercial Paper Composite Rate
plus 25 basis points, set at the beginning of each quarter. The interest rate
for the notes at year-end 1998 and 1997 was 5.36% and 5.76%, respectively.
Distribution Agreement with LOT
The Company has a distribution agreement with LOT which allows LOT to be
Oriel's primary distributor in certain parts of Europe. Sales to LOT included in
the accompanying 1998, 1997, and 1996 statements of income were $1,982,000,
$2,122,000, and $1,952,000, respectively. Accounts receivable in the
accompanying balance sheet includes $405,000, and $608,000 due from LOT at
year-end 1998 and 1997, respectively.
Trademark License and Royalty Agreement
In September 1996, the Company agreed to license the use of a trademark to
Andor in exchange for a fee equal to the greater of 3.3% of the net sales
revenue, as defined, from sales of products sold under the trade name, or 10,000
British pounds sterling. In 1998, 1997, and 1996, the Company recorded revenues
of $81,000, $91,000, and $15,000, respectively, under this agreement.
Contract Research and Development
In 1997 and 1996, the Company recorded revenues of $80,000 and $188,000,
respectively, from Thermo Optek for contract research and development services
related to components used in certain products manufactured by Thermo Optek. No
such revenues were recorded in 1998.
Other Related-party Transactions
The Company purchases and sells products in the ordinary course of business
with other companies affiliated with Thermo Instrument. Sales of products to
such affiliated companies totaled $1,689,000, $2,013,000, and $1,786,000 in
1998, 1997, and 1996, respectively. Purchases of products from such affiliated
companies totaled $162,000, $443,000, and $971,000 in 1998, 1997, 1996,
respectively.
Repurchase Agreement
The Company invests excess cash in arrangements with Thermo Electron as
discussed in Notes 1 and 12.
9. BUSINESS SEGMENT AND GEOGRAPHICAL INFORMATION
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. In classifying operational entities into a particular segment, the
Company aggregates businesses with similar economic characteristics, products
and services, production processes, customers, and methods of distribution.
The Optically Based Instruments and Lasers segment, which consists of the
Company's Oriel, 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 Corion
division and Hilger subsidiary, manufactures a variety of optical components,
including filters and crystals. The Company's
F-18
<PAGE> 87
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
optical components are used primarily in medical and analytical instruments and
X-ray baggage screening for security purposes.
The Sensors and Imaging Systems segment, which consists of the Company's
CentroVision and 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.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------
JULY 3, JULY 4,
1999 1998 1998 1997 1996
------- ------- ------- ------- -------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BUSINESS SEGMENT INFORMATION
Revenues:
Optically Based Instruments and
Lasers.............................. $10,596 $12,333 $23,154 $26,203 $21,125
Optical Components..................... 4,953 4,595 8,152 8,306 6,562
Sensors and Imaging Systems............ 3,566 3,825 6,660 5,185 2,747
------- ------- ------- ------- -------
$19,115 $20,753 $37,966 $39,694 $30,434
======= ======= ======= ======= =======
Income Before Provision for Income Taxes:
Optically Based Instruments and
Lasers.............................. $ 1,107 $ 1,922 $ 2,657 $ 3,753 $ 1,596
Optical Components..................... 465 759 1,029 1,121 621
Sensors and Imaging Systems............ (775) 183 (1,992) 193 333
Corporate(a)........................... (600) (606) (1,140) (732) (83)
------- ------- ------- ------- -------
Total operating income................. 197 2,258 554 4,335 2,467
Interest expense, net.................. (38) (33) (66) (286) (44)
------- ------- ------- ------- -------
$ 159 $ 2,225 $ 488 $ 4,049 $ 2,423
======= ======= ======= ======= =======
</TABLE>
<TABLE>
<S> <C> <C> <C>
Total Assets:
Optically Based Instruments and Lasers.................... $18,900 $20,680 $16,509
Optical Components........................................ 7,743 7,859 7,334
Sensors and Imaging Systems............................... 9,414 9,563 4,510
Corporate(b).............................................. 10,223 9,299 9
------- ------- -------
$46,280 $47,401 $28,362
======= ======= =======
Depreciation and Amortization:
Optically Based Instruments and Lasers.................... $ 718 $ 911 $ 776
Optical Components........................................ 452 644 293
Sensors and Imaging Systems............................... 391 292 182
Corporate................................................. 7 2 --
------- ------- -------
$ 1,568 $ 1,849 $ 1,251
======= ======= =======
</TABLE>
F-19
<PAGE> 88
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<S> <C> <C> <C>
Capital Expenditures:
Optically Based Instruments and Lasers.................... $ 1,342 $ 690 $ 317
Optical Components........................................ 395 423 1,073
Sensors and Imaging Systems............................... 519 401 49
Corporate................................................. 14 13 11
------- ------- -------
$ 2,270 $ 1,527 $ 1,450
======= ======= =======
GEOGRAPHICAL INFORMATION
Revenues(c):
United States............................................. $35,532 $36,954 $28,780
United Kingdom............................................ 2,434 2,740 1,654
------- ------- -------
$37,966 $39,694 $30,434
======= ======= =======
Long-lived Assets(d):
United States............................................. $ 5,282 $ 4,290 $ 3,372
United Kingdom............................................ 573 467 529
------- ------- -------
$ 5,855 $ 4,757 $ 3,901
======= ======= =======
Export Revenues Included in United States Revenues
Above(e).................................................. $10,544 $10,811 $ 9,487
======= ======= =======
</TABLE>
- ---------------
(a) Primarily corporate general and administrative expenses.
(b) Primarily cash and cash equivalents.
(c) Revenues are attributed to countries based on selling location.
(d) Includes property, plant, and equipment, net and other long-term tangible
assets.
(e) In general, export revenues are denominated in U.S. dollars.
F-20
<PAGE> 89
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. EARNINGS PER SHARE
Basic and diluted earnings per share were calculated as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------
JULY 3, JULY 4,
1999 1998 1998 1997 1996
------- ------- ------ ------ ------
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
BASIC
Net Income.................................... $ 92 $1,296 $ 221 $2,348 $1,418
------ ------ ------ ------ ------
Weighted Average Shares....................... 8,051 8,048 8,048 6,983 6,909
------ ------ ------ ------ ------
Basic Earnings per Share...................... $ .01 $ .16 $ .03 $ .34 $ .21
====== ====== ====== ====== ======
DILUTED
Net Income.................................... $ 92 $1,296 $ 221 $2,348 $1,418
------ ------ ------ ------ ------
Weighted Average Shares....................... 8,051 8,048 8,048 6,983 6,909
Effect of Stock Options....................... 60 -- 1 2 --
------ ------ ------ ------ ------
Weighted Average Shares, as Adjusted.......... 8,111 8,048 8,049 6,985 6,909
------ ------ ------ ------ ------
Diluted Earnings per Share.................... $ .01 $ .16 $ .03 $ .34 $ .21
====== ====== ====== ====== ======
</TABLE>
The computation of diluted earnings per share for 1998 excludes the effect
of assuming the exercise of certain outstanding stock options because the effect
would be antidilutive. As of January 2, 1999, there were 366,100 of such options
outstanding, with exercise prices ranging from $2.73 to $7.50 per share.
11. UNAUDITED QUARTERLY INFORMATION
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
------- ------- ------- -------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
1998
Revenues............................................ $10,529 $10,224 $ 9,046 $ 8,167
Gross Profit........................................ 4,544 4,510 1,718 3,425
Net Income (Loss)................................... 689 607 (1,079) 4
Basic and Diluted Earnings (Loss) per Share......... .09 .08 (.13) --
</TABLE>
<TABLE>
<CAPTION>
FIRST(A) SECOND THIRD(B) FOURTH
-------- ------- -------- -------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
1997
Revenues............................................ $ 8,585 $ 9,225 $10,635 $11,249
Gross Profit........................................ 3,759 4,089 4,806 4,889
Net Income.......................................... 528 566 608 646
Basic and Diluted Earnings per Share................ .08 .08 .09 .09
</TABLE>
- ---------------
(a) Reflects the February 1997 acquisition of LSI.
(b) Reflects the July 1997 acquisition of Centro Vision.
F-21
<PAGE> 90
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
12. SUBSEQUENT EVENTS
Proposed Merger
On May 24, 1999, Thermo Electron 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. 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 $7.00 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.
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.
Acquisitions
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.
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. OCA is engaged in the development, manufacturing, and
marketing of optical filters and assemblies in the ultra violet, visible, near
F-22
<PAGE> 91
THERMO VISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
infrared, and infrared portions of the electromagnetic spectrum. 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 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.
F-23
<PAGE> 92
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Corning OCA Corporation:
We have audited the accompanying Statement of Revenues and Direct Costs and
Expenses of the Non-telecommunications Optical Filter Business of Corning OCA
Corporation for the eight-month period ended December 31, 1997, the twelve-month
period ended December 31, 1998, and the month ended January 30, 1999 and the
Statement of Assets Acquired and Liabilities Assumed as of July 16, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
These statements have been prepared for purposes of complying with the
rules and regulations of the Securities and Exchange Commission (for inclusion
in the Proxy Statement of Thermo Vision Corporation) as described in Note 3, and
are not intended to be a complete presentation of the income statement and
assets and liabilities of the Non-telecommunications Optical Filter Business of
Corning OCA Corporation.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the revenues and direct costs and expenses of the
Non-telecommunications Optical Filter Business of Corning OCA Corporation for
the eight-month period ended December 31, 1997, the twelve-month period ended
December 31, 1998, and the month ended January 30, 1999, and the assets acquired
and liabilities assumed as of July 16, 1999, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
August 27, 1999
F-24
<PAGE> 93
NON-TELECOMMUNICATIONS OPTICAL FILTER BUSINESS OF
CORNING OCA CORPORATION
STATEMENT OF REVENUES AND DIRECT COSTS AND EXPENSES
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED MONTH TWELVE MONTHS EIGHT MONTHS
-------------------- ENDED ENDED ENDED
JUNE 30, JUNE 30, JANUARY 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998 1997
-------- -------- ----------- ------------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues.......................... $2,469 $3,583 $417 $7,309 $4,727
------ ------ ---- ------ ------
Direct Costs and Expenses:
Direct materials................ 534 426 74 869 922
Direct labor.................... 477 451 85 1,072 846
------ ------ ---- ------ ------
1,011 877 159 1,941 1,768
------ ------ ---- ------ ------
Excess of Revenues Over Direct
Costs and Expenses.............. $1,458 $2,706 $258 $5,368 $2,959
====== ====== ==== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-25
<PAGE> 94
NON-TELECOMMUNICATIONS OPTICAL FILTER BUSINESS OF
CORNING OCA CORPORATION
STATEMENT OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
AS OF JULY 16, 1999
(IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS ACQUIRED
Inventories:
Raw materials and supplies................................ $ 175
Work in process........................................... 378
Finished goods............................................ 487
------
1,040
------
Plant and Equipment......................................... 645
------
Intangible Asset............................................ 315
------
Cost in Excess of Net Assets of Acquired Company............ 2,150
------
$4,150
======
LIABILITIES ASSUMED
Accrued Expenses............................................ $ 150
Parent Company Investment................................... 4,000
------
$4,150
======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-26
<PAGE> 95
NON-TELECOMMUNICATIONS OPTICAL FILTER BUSINESS OF
CORNING OCA CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE BUSINESS
The non-telecommunications optical filter business of Corning OCA
Corporation is engaged in the development, manufacturing, and marketing of
optical filters and assemblies in the ultra violet, visible, near infrared, and
infrared portions of the electromagnetic spectrum. Common applications for these
filters are clinical chemistry, scientific instruments, bar code scanners, color
measurement, intrusion detection, laser protection, and process control
equipment. Prior to its acquisition by Thermo Vision Corporation (the Company),
the business operated as a fully integrated unit of Corning OCA Corporation.
2. DESCRIPTION OF THE TRANSACTION
Pursuant to a Purchase Agreement dated July 16, 1999, the Company acquired
certain assets of the non-telecommunications optical filter business of Corning
OCA Corporation (OCA) for $4,000,000 in cash. This acquisition has been
accounted for using the purchase method of accounting. The cost of this
acquisition exceeded the estimated fair value of the acquired net assets by
$2,150,000, which will be amortized over 40 years. Allocation of the purchase
price was based on an estimate of the fair value of the net assets acquired.
3. BASIS OF PRESENTATION
The non-telecommunications business was operated and managed by Corning OCA
Corporation with other similar businesses utilizing shared resources and,
accordingly, it was not possible to prepare separate full financial statements,
including a statement of cash flows, for the acquired business. Additionally,
any attempt to prepare financial statements for the business would require
numerous subjective allocations, which may not accurately reflect the actual
historical results of the business acquired. As a result, the accompanying
statement of revenue and direct costs and expenses and statement of assets
acquired and liabilities assumed have been prepared in lieu of full financial
statements to satisfy the requirements of Securities and Exchange Commission
Rule 3-05 of Regulation S-X.
For the purpose of these financial statements, direct costs include direct
material and direct labor. These statements exclude costs normally incurred in a
business, including overhead, general and administrative expenses, research and
development expenses, and provisions for taxes. The financial information in
these statements is not necessarily indicative of the prospective financial
condition or results of the business due to expected changes within the business
as a result of the merger of its operations with those of the Company. These
changes include relocation of the acquired business to facilities currently
leased by the Company and integration of its operations with those of another of
the Company's business units.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
OCA recognizes revenue upon shipment of its products.
Inventories
Finished goods are recorded at estimated selling prices less costs to sell
and a reasonable profit allowance for the selling effort of the Company.
Work-in-process inventories are valued at the selling price of the finished
goods less costs to complete, costs to sell, and a reasonable profit allowance
for the manufacturing and selling efforts of the Company. Raw materials are
recorded at current replacement cost.
F-27
<PAGE> 96
NON-TELECOMMUNICATIONS OPTICAL FILTER BUSINESS OF
CORNING OCA CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Plant and Equipment
Plant and equipment is recorded at estimated current replacement cost for
similar equipment based on a third-party appraisal obtained by the Company.
Intangible Asset
Intangible asset in the accompanying statement of assets acquired and
liabilities assumed represents a license agreement with OCA under which the
Company will receive a royalty-free non-exclusive license to certain technology
used by the acquired business. The asset is recorded at its estimated current
value, which was determined based on the present value of the future costs that
would have been expended by the Company to obtain such a license. This
intangible asset is being amortized over 10 years, the life of the agreement.
Cost in Excess of Net Assets of Acquired Company
The excess of the purchase price over the fair value of the acquired net
assets is recorded as cost in excess of net assets of acquired company in the
accompanying statement of assets acquired and liabilities assumed and is being
amortized over 40 years.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
5. ACQUISITION
In April 1997, Corning Corporation purchased the telecommunications and
non-telecommunications optical filter business of Optical Corporation of America
as part of a larger acquisition, which included the acquisition of three
businesses. Books and records of these businesses prior to this acquisition are
not available and, therefore, the accompanying statement of revenues and direct
costs and expenses has been presented from the date of the acquisition.
F-28
<PAGE> 97
THERMO VISION CORPORATION
PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
On July 16, 1999, Thermo Vision Corporation (the Company) acquired the
non-telecommunications optical filter business of Corning OCA Corporation (OCA)
for $4.0 million in cash. This acquisition will be accounted for using the
purchase method of accounting and its results of operations will be included in
the Company's results from the date of acquisition.
The following unaudited pro forma combined condensed statements of income
set forth the Company's results of operations for the six months ended July 3,
1999, and the year ended January 2, 1999, as if the acquisition of OCA had
occurred at the beginning of 1998. OCA's historical results included in the
accompanying pro forma combined condensed statements of income represent its
revenues and direct costs and expenses for the first six months of 1999 and the
full year 1998, and exclude certain operating expenses of OCA. As a result, the
pro forma results of operations are not necessarily indicative of future
operations or the actual results that would have occurred had the acquisition of
OCA been made at the beginning of 1998. The following unaudited pro forma
combined condensed balance sheet sets forth the financial position as of July 3,
1999, as if the purchase of OCA had occurred on July 3, 1999. OCA's balance
sheet represents the assets acquired and liabilities assumed by the Company as
of July 16, 1999. These statements should be read in conjunction with the
accompanying notes and the respective historical financial statements and
related notes of the Company and OCA appearing elsewhere in this Proxy
Statement.
F-29
<PAGE> 98
THERMO VISION CORPORATION
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
SIX MONTHS ENDED JULY 3, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------- ----------------------
THERMO
VISION OCA ADJUSTMENTS COMBINED
------- ------ ----------- --------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues............................................ $19,115 $2,469 $ -- $21,584
------- ------ ------- -------
Costs and Operating Expenses:
Cost of revenues.................................. 11,628 1,011 716 13,355
Selling, general, and administrative expenses..... 5,184 -- 172 5,356
Research and development expenses................. 2,106 -- 95 2,201
------- ------ ------- -------
18,918 1,011 983 20,912
------- ------ ------- -------
Operating Income.................................... 197 1,458 (983) 672
Interest Income..................................... 189 -- (102) 87
Interest Expense.................................... (227) -- -- (227)
------- ------ ------- -------
Income Before Provision for Income Taxes............ 159 1,458 (1,085) 532
Provision for Income Taxes.......................... 67 -- 156 223
------- ------ ------- -------
Net Income.......................................... $ 92 $1,458 $(1,241) $ 309
======= ====== ======= =======
Basic and Diluted Earnings per Share................ $ .01 $ .04
======= =======
Weighted Average Shares:
Basic............................................. 8,051 8,051
======= =======
Diluted........................................... 8,111 8,111
======= =======
</TABLE>
F-30
<PAGE> 99
THERMO VISION CORPORATION
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
YEAR ENDED JANUARY 2, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------- -----------------------
THERMO
VISION OCA ADJUSTMENTS COMBINED
------- ------ ----------- --------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues.......................................... $37,966 $7,309 $ -- $45,275
------- ------ ------- -------
Costs and Operating Expenses:
Cost of revenues................................ 23,769 1,941 1,432 27,142
Selling, general, and administrative expenses... 9,370 -- 361 9,731
Research and development expenses............... 4,233 -- 190 4,423
Restructuring costs............................. 40 -- -- 40
------- ------ ------- -------
37,412 1,941 1,983 41,336
------- ------ ------- -------
Operating Income.................................. 554 5,368 (1,983) 3,939
Interest Income................................... 455 -- (225) 230
Interest Expense.................................. (521) -- -- (521)
------- ------ ------- -------
Income Before Provision for Income Taxes.......... 488 5,368 (2,208) 3,648
Provision for Income Taxes........................ 267 -- 1,328 1,595
------- ------ ------- -------
Net Income........................................ $ 221 $5,368 $(3,536) $ 2,053
======= ====== ======= =======
Basic and Diluted Earnings per Share.............. $ .03 $ .26
======= =======
Weighted Average Shares:
Basic........................................... 8,048 8,048
======= =======
Diluted......................................... 8,049 8,049
======= =======
</TABLE>
F-31
<PAGE> 100
THERMO VISION CORPORATION
PRO FORMA COMBINED CONDENSED BALANCE SHEET
JULY 3, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------- -----------------------
THERMO
VISION OCA ADJUSTMENTS COMBINED
------- ------ ----------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents....................... $ 198 $ -- $ -- $ 198
Advance to affiliate............................ 6,767 -- (4,000) 2,767
Accounts receivable, net........................ 5,966 -- -- 5,966
Inventories..................................... 7,898 1,040 -- 8,938
Prepaid expenses................................ 319 -- -- 319
Prepaid and refundable income taxes............. 2,040 -- -- 2,040
------- ------ ------- -------
23,188 1,040 (4,000) 20,228
------- ------ ------- -------
Property, Plant, and Equipment, at Cost, Net...... 5,904 645 -- 6,549
------- ------ ------- -------
Other Assets...................................... 2,579 315 -- 2,894
------- ------ ------- -------
Cost in Excess of Net Assets of Acquired
Companies....................................... 15,239 2,150 17,389
------- ------ ------- -------
$46,910 $4,150 $(4,000) $47,060
======= ====== ======= =======
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Note payable and capital lease obligation....... $ 4,875 $ -- $ -- $ 4,875
Accounts payable................................ 2,805 -- -- 2,805
Other current liabilities....................... 3,008 150 -- 3,158
------- ------ ------- -------
10,688 150 -- 10,838
------- ------ ------- -------
Deferred Income Taxes............................. 217 -- -- 217
------- ------ ------- -------
Long-term Obligations............................. 3,800 -- -- 3,800
------- ------ ------- -------
Shareholders' Investment:
Common stock.................................... 81 -- -- 81
Capital in excess of par value.................. 28,040 -- -- 28,040
Retained earnings............................... 4,098 -- -- 4,098
Deferred compensation........................... (8) -- -- (8)
Accumulated other comprehensive items........... (6) -- -- (6)
Parent company investment....................... -- 4,000 (4,000) --
------- ------ ------- -------
32,205 4,000 (4,000) 32,205
------- ------ ------- -------
$46,910 $4,150 $(4,000) $47,060
======= ====== ======= =======
</TABLE>
F-32
<PAGE> 101
THERMO VISION CORPORATION
PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- PRO FORMA ADJUSTMENTS TO PRO FORM COMBINED CONDENSED STATEMENTS OF
INCOME
(In thousands except in text)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JULY 3, 1999 JANUARY 2, 1999
---------------- ---------------
DEBIT (CREDIT)
<S> <C> <C>
COST OF REVENUES
Salaries for indirect manufacturing employees of acquired
business.................................................. $ 457 $ 914
Depreciation of leasehold improvements and equipment over
the assets' estimated useful lives of 6 years and 5 years,
respectively.............................................. 198 397
Rent, utilities, and real estate tax expense for additional
facilities leased for acquired business................... 61 121
----- ------
716 1,432
----- ------
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Salaries for selling, general, and administrative employees
of acquired business...................................... 109 217
Service fee of 0.8% of the revenues of OCA for services
provided under a services agreement between the Company
and Thermo Electron Corporation........................... 20 58
Amortization over 10 years of intangible asset valued at
$315,000.................................................. 16 32
Amortization over 40 years of $2,150,000 of cost in excess
of net assets of acquired companies created by the
acquisition of OCA........................................ 27 54
----- ------
172 361
----- ------
RESEARCH AND DEVELOPMENT EXPENSES
Salaries for research and development employees of acquired
business.................................................. 95 190
----- ------
INTEREST INCOME
Decrease in interest income as a result of the use of
$4,000,000 of cash to fund the acquisition of OCA,
calculated using an average interest rate of 5.10% and
5.63% for the six months ended July 3, 1999, and the year
ended January 2, 1999, respectively....................... 102 225
----- ------
PROVISION FOR INCOME TAXES
Income tax expense on earnings of OCA, calculated at the
Company's incremental income tax rate of 42%.............. 612 2,255
Income tax benefit associated with the adjustments above,
calculated at the Company's incremental income tax rate of
42%....................................................... (456) (927)
----- ------
156 1,328
----- ------
</TABLE>
NOTE 2 -- PRO FORMA ADJUSTMENTS TO PRO FORMA COMBINED CONDENSED BALANCE SHEET AS
OF JULY 3, 1999
(In thousands except in text)
<TABLE>
<CAPTION>
DEBIT
(CREDIT)
--------------
<S> <C>
ADVANCE TO AFFILIATE
Decrease in advance to affiliate as a result of the use of
$4,000,000 to fund the acquisition of OCA................. $(4,000)
-------
PARENT COMPANY INVESTMENT
Eliminate the Company's investment in OCA as a result of
consolidation............................................. 4,000
-------
</TABLE>
F-33
<PAGE> 102
APPENDIX A
MERGER AGREEMENT
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
THERMO INSTRUMENT SYSTEMS INC.
VIZ ACQUISITION CORPORATION
AND
THERMO VISION CORPORATION
DATED AS OF AUGUST 25, 1999
<PAGE> 103
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
This AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (the "Agreement")
dated as of August 25, 1999 is by and among Thermo Instrument Systems Inc., a
Delaware corporation ("Thermo Instrument"), VIZ Acquisition Corporation, a
Delaware corporation and a jointly owned subsidiary of Thermo Instrument and
Thermo Electron Corporation ("Merger Sub"), and Thermo Vision Corporation, a
Delaware corporation ("Thermo Vision").
RECITALS
A. Thermo Instrument, Merger Sub and Thermo Vision have entered into an
Agreement and Plan of Merger dated as of July 13, 1999 (the "July Agreement").
B. Thermo Instrument, Merger Sub and Thermo Vision each desire to amend and
restate the July Agreement to make certain changes thereto.
C. Thermo Instrument and its parent, Thermo Electron Corporation ("Thermo
Electron"), own approximately 78% and 3%, respectively, of the outstanding
shares of common stock, par value $.01 per share, of Thermo Vision (the "Thermo
Vision Common Stock"), and Thermo Instrument desires to acquire the remaining
outstanding shares of Thermo Vision Common Stock.
D. Thermo Instrument and Thermo Electron Corporation have formed the Merger
Sub as a subsidiary with the intent of causing it to merge with Thermo Vision,
as described in this Agreement.
E. Upon the terms and subject to the conditions of this Agreement and in
accordance with the Delaware General Corporation Law (the "DGCL"), Thermo
Instrument and Thermo Vision will enter into a business combination transaction
pursuant to which Merger Sub will merge with and into Thermo Vision (the
"Merger").
F. The Board of Directors of Thermo Instrument (i) has determined that the
Merger is consistent with and in furtherance of the long-term business strategy
of Thermo Instrument, and (ii) has approved this Agreement, the Merger and the
other transactions contemplated by this Agreement.
G. The Board of Directors of Thermo Vision (i) has determined that the
Merger is consistent with and in furtherance of the long-term business strategy
of Thermo Vision and fair to, and in the best interests of, Thermo Vision and
its stockholders including the minority stockholders, (ii) has approved and
declared advisable this Agreement, the Merger and the other transactions
contemplated by this Agreement and (iii) has recommended the approval of this
Agreement by the stockholders of Thermo Vision.
H. Thermo Instrument, Thermo Vision and Merger Sub desire to make certain
representations and warranties and other agreements in connection with the
Merger.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
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ARTICLE I
THE MERGER
1.1. THE MERGER. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the DGCL, Merger Sub shall be merged with and into
Thermo Vision, the separate corporate existence of Merger Sub shall cease and
Thermo Vision shall continue as the surviving corporation. Thermo Vision as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "Surviving Corporation."
1.2. EFFECTIVE TIME; CLOSING. Subject to the provisions of this Agreement,
the Surviving Corporation shall cause the Merger to be consummated by filing a
Certificate of Merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware in accordance with the relevant provisions of the DGCL
(the time of such filing, or such later time as may be agreed in writing by the
parties and specified in the Certificate of Merger, being the "Effective Time"
and the date on which the Effective Time occurs being the "Effective Date") as
soon as practicable on the Closing Date (as herein defined). Unless the context
otherwise requires, the term "Agreement" as used herein refers collectively to
this Agreement and the Certificate of Merger. The closing of the Merger (the
"Closing") shall take place at the executive offices of Thermo Electron at a
time and date to be specified by the parties, which shall be no later than the
second business day after the satisfaction or waiver of the conditions set forth
in Article VI, or at such other time, date and location as the parties hereto
agree in writing (the "Closing Date"). At the Closing, (i) Thermo Vision shall
deliver to Thermo Instrument the various certificates and instruments required
under Article VI, (ii) Thermo Instrument and Merger Sub shall deliver to Thermo
Vision the various certificates and instruments required under Article VI and
(iii) Thermo Vision shall execute and file the Certificate of Merger with the
Secretary of State of the State of Delaware.
1.3. EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of the
DGCL. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time all the property, rights, privileges, powers and franchises
of Thermo Vision and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of Thermo Vision and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
1.4. CERTIFICATE OF INCORPORATION; BYLAWS.
(a) At the Effective Time, the Restated Certificate of Incorporation of
Thermo Vision, as in effect immediately prior to the Effective Time, shall be
the Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Restated Certificate of Incorporation.
(b) The Bylaws of Thermo Vision, as in effect immediately prior to the
Effective Time, shall be, at the Effective Time, the Bylaws of the Surviving
Corporation until thereafter amended.
1.5. DIRECTORS AND OFFICERS. The directors of Thermo Vision immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, to serve until their respective successors are duly elected or
appointed and qualified. The officers of Thermo Vision immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, to serve
until their successors are duly elected or appointed and qualified.
1.6. EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, Thermo Vision or the
holders of any of the following securities:
(a) Conversion of Thermo Vision Common Stock. Subject to Sections
1.6(d) and 1.10, each share of Thermo Vision Common Stock issued and
outstanding immediately prior to the Effective Time will be automatically
converted into the right to receive Seven Dollars ($7.00) in cash (the
"Exchange Price"). As of the Effective Time, all such shares of Thermo
Vision Common Stock shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each holder of a
certificate representing any such shares of Thermo Vision Common Stock
shall
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cease to have any rights with respect thereto, except the right to receive
the Exchange Price upon surrender of the certificate representing such
share of Thermo Vision Common Stock in the manner provided in Section 1.7
(or in the case of a lost, stolen or destroyed certificate, upon delivery
of an affidavit (and bond, if required) in the manner provided in Section
1.9 hereof).
(b) Stock Options. All options to purchase Thermo Vision Common Stock
then outstanding under Thermo Vision's Equity Incentive Plan (the "Thermo
Vision Stock Option Plan"), shall be converted into options to purchase
Thermo Instrument common stock, par value $.10 per share ("Thermo
Instrument Common Stock"), in accordance with Section 5.8 hereof.
(c) Capital Stock of Merger Sub. Each share of common stock, par
value $.01 per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time shall be converted into and become one fully
paid and nonassessable share of common stock, par value $0.01 per share, of
the Surviving Corporation.
(d) Treasury Stock; Affiliate Stock. Notwithstanding any other
provision of this Agreement, each share of Thermo Vision Common Stock
issued and outstanding and owned by Thermo Instrument and Thermo Electron
or any wholly owned subsidiary of Thermo Instrument or Thermo Electron, and
all treasury shares held by Thermo Vision and all shares owned by any
wholly owned subsidiary of Thermo Vision immediately prior to the Effective
Time shall cease to be outstanding, and shall automatically be cancelled
and retired without payment of any consideration therefor, cash or
otherwise, and cease to exist.
(e) Adjustments to Exchange Price. The Exchange Price shall be
adjusted to reflect fully the effect of any stock split, reverse stock
split, stock dividend (including any dividend or distribution of securities
convertible into Thermo Vision Common Stock), recapitalization or other
like change without receipt of consideration with respect to Thermo Vision
Common Stock occurring on or after the date hereof and prior to the
Effective Time.
1.7. SURRENDER OF CERTIFICATES.
(a) Payment Agent. Thermo Instrument shall authorize one or more
persons to act as the payment agent (the "Payment Agent") in the Merger.
(b) Thermo Instrument to Provide Exchange Consideration. Immediately
prior to the Effective Time, Thermo Instrument shall deposit with the
Payment Agent, in trust for the benefit of the holders of certificates (the
"Certificates") representing shares of Thermo Vision Common Stock converted
pursuant to Section 1.6(a) for payment in accordance with this Article I,
cash in an amount equal to the product of the Exchange Price multiplied by
the number of shares of Thermo Vision Common Stock entitled to conversion
for payment pursuant to Section 1.6(a).
(c) Exchange Procedures. Promptly after, and in no event more than
five days after, the Effective Time, Thermo Instrument shall cause the
Payment Agent to mail to each holder of record (as of the Effective Time)
of a Certificate (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Payment Agent and
shall be in such form and have such other provisions as Thermo Instrument
may reasonably specify) and (ii) instructions for effecting the exchange of
the Certificates for the Exchange Price. Upon surrender of a Certificate
for cancellation to the Payment Agent or to such other agent or agents as
may be appointed by Thermo Instrument, together with such letter of
transmittal duly completed and validly executed in accordance with the
instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefor payment of the Exchange Price multiplied by
the number of shares of Thermo Vision Common Stock represented by such
Certificate, without interest, and the Certificate so surrendered shall
forthwith be cancelled. Until so surrendered, each outstanding Certificate
will be deemed from and after the Effective Time, for all corporate
purposes, to evidence only the right to receive payment of the Exchange
Price for each share of Thermo Vision Common Stock represented on such
Certificate.
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<PAGE> 106
(d) Transfers of Ownership. If payment of the Exchange Price is to be
made to any person other than the person in whose name the Certificate
surrendered in exchange therefor is registered, it will be a condition of
such payment that the Certificate so surrendered will be properly endorsed
and otherwise in proper form for transfer and that the person requesting
such payment will have paid to Thermo Instrument or any agent designated by
it any transfer or other taxes required by reason of payment to a person
other than the registered holder of the Certificate surrendered, or
established to the satisfaction of Thermo Instrument or any agent
designated by it that such tax has been paid or is not payable.
(e) No Liability. Notwithstanding anything to the contrary in this
Section 1.7, neither the Payment Agent, Thermo Instrument, the Surviving
Corporation nor any party hereto shall be liable to a holder of shares of
Thermo Vision Common Stock for any amount properly paid to a public
official pursuant to any applicable abandoned property, escheat or similar
law.
(f) Responsibility; Term. The Payment Agent shall make the payments
referred to in Section 1.6(a) out of the funds supplied by Thermo
Instrument. Promptly following the date that is six months after the
Effective Date, the Payment Agent shall, upon request by Thermo Instrument,
deliver to Thermo Instrument all cash, Certificates and other documents in
its possession relating to the transactions described in this Agreement,
and the Payment Agent's duties shall terminate. Thereafter, each holder of
a Certificate formerly representing shares of Thermo Vision Common Stock
may surrender such Certificate to Thermo Instrument and (subject to
applicable abandoned property, escheat and similar laws) receive in
exchange therefor the Exchange Price multiplied by the number of shares of
Thermo Vision Common Stock represented by such Certificate, without any
interest thereon, but shall have no greater rights against Thermo
Instrument than as may be accorded to general creditors of Thermo
Instrument under applicable law.
1.8. NO FURTHER OWNERSHIP RIGHTS IN THERMO VISION COMMON STOCK. All
amounts paid upon the surrender of shares of Thermo Vision Common Stock in
accordance with the terms hereof shall be deemed to have been paid in full
satisfaction of all rights pertaining to such shares of Thermo Vision Common
Stock, and there shall be no further registration of transfers on the records of
the Surviving Corporation of shares of Thermo Vision Common Stock that were
outstanding immediately prior to the Effective Time. If after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be cancelled and exchanged for rights to receive the applicable
aggregate Exchange Price as provided in this Article I.
1.9. LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any Certificates
shall have been lost, stolen or destroyed, the Payment Agent shall pay the
aggregate Exchange Price in respect of such lost, stolen or destroyed
Certificates, upon the making of an affidavit of that fact by the holder
thereof; provided, however, that, as a condition precedent to the payment
thereof, the owner of such lost, stolen or destroyed Certificates shall deliver
a bond in such sum as Thermo Instrument or the Payment Agent may reasonably
direct as indemnity against any claim that may be made against Thermo Instrument
or the Payment Agent with respect to the Certificates alleged to have been lost,
stolen or destroyed, unless Thermo Instrument waives such requirement in
writing.
1.10. DISSENTING SHARES. Notwithstanding any other provision of this
Agreement, shares of Thermo Vision Common Stock that are outstanding immediately
prior to the Effective Time and which are held by stockholders (i) who have not
voted in favor of or consented to the Merger, (ii) who shall have demanded
properly in writing appraisal of such shares in accordance with DGCL Section 262
and (iii) who shall not have withdrawn such demand or otherwise forfeited
appraisal rights (collectively, the "Dissenting Shares") shall not be converted
into or represent the right to receive the Exchange Price. Such stockholders
shall, as of the Effective Time, cease to retain any rights with respect to the
Thermo Vision Common Stock, except as provided in the DGCL, including the right
to receive payment of the appraised value of the shares held by them in
accordance with the provisions of Section 262, provided that all Dissenting
Shares held by stockholders (i) who shall have failed to perfect or lost their
rights to appraisal of such shares under Section 262, or (ii) who have withdrawn
their demand for appraisal within 60 days after the
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<PAGE> 107
Effective Date and accept the terms offered upon the Merger in accordance with
Section 262(e), shall thereupon be, or be deemed to have been, converted into
and to have become exchangeable, as of the Effective Time, for the right to
receive, without any interest thereon, the Exchange Price, upon surrender, in
the manner provided in Section 1.7, of the Certificates that formerly evidenced
such shares without the prior consent of Thermo Instrument.
1.11. TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Thermo Vision and Merger Sub, the officers and directors of
Thermo Vision and Merger Sub are fully authorized in the name of their
respective corporations or otherwise to take, and will take, all such lawful and
necessary action, so long as such action is consistent with this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THERMO VISION
Thermo Vision represents and warrants to Thermo Instrument and Merger Sub
as follows:
2.1. ORGANIZATION OF THERMO VISION. Thermo Vision and each of its
subsidiaries is a corporation or other legal entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, has the corporate or similar power to own, lease
and operate its property and to carry on its business as now being conducted and
as proposed by Thermo Vision to be conducted, and is duly qualified to do
business and is in good standing as a foreign corporation or other legal entity
in each jurisdiction in which the failure to be so qualified would have a
material adverse effect on Thermo Vision.
2.2. THERMO VISION CAPITAL STRUCTURE. The authorized capital stock of
Thermo Vision consists of 20,000,000 shares of Common Stock, par value $.01 per
share, of which there were 8,051,576 shares issued and outstanding as of May 31,
1999. All outstanding shares of Thermo Vision Common Stock are duly authorized,
validly issued, fully paid and non-assessable and are not subject to preemptive
rights created by statute, the Restated Certificate of Incorporation or Bylaws
of Thermo Vision or any agreement or document to which Thermo Vision is a party
or by which it is bound. As of June 15, 1999, an aggregate of 700,000 shares of
Thermo Vision Common Stock, net of exercises, were reserved for issuance to
employees, consultants and non-employee directors pursuant to the Thermo Vision
Stock Option Plan, under which options are outstanding for an aggregate of
530,400 shares. All shares of Thermo Vision Common Stock subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, would be duly authorized,
validly issued, fully paid and nonassessable.
2.3. AUTHORITY.
(a) Thermo Vision has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Thermo Vision, subject only to
the adoption of this Agreement by Thermo Vision's stockholders and the
filing and recording of the Certificate of Merger pursuant to the DGCL.
Under the DGCL, Thermo Vision's stockholders may adopt this Agreement by
vote of the holders of a majority of the outstanding shares of Thermo
Vision Common Stock. This Agreement has been duly executed and delivered by
Thermo Vision, and assuming the due authorization, execution and delivery
by Thermo Instrument and Merger Sub, constitutes the valid and binding
obligation of Thermo Vision, enforceable in accordance with its terms. The
execution and delivery of this Agreement by Thermo Vision do not, and the
performance of this Agreement by Thermo Vision will not, (i) conflict with
or violate the Restated Certificate of Incorporation or Bylaws of Thermo
Vision, (ii) subject to obtaining the adoption by Thermo Vision's
stockholders of
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<PAGE> 108
this Agreement as contemplated in Section 5.2 and compliance with the
requirements set forth in Section 2.3(b) below, conflict with or violate
any law, rule, regulation, order, judgment or decree applicable to Thermo
Vision or any of its material subsidiaries or by which its or their
respective properties is bound, or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair the rights of Thermo Vision or
alter the rights or obligations of any third party under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or encumbrance on any of the properties or
assets of Thermo Vision or any of its material subsidiaries pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Thermo Vision
or any of its material subsidiaries is a party or by which Thermo Vision or
any of its material subsidiaries or its or any of their properties are
bound or affected, except, with respect to clauses (ii) and (iii), for any
such conflicts, violations, defaults or other occurrences that would not
have a material adverse effect on Thermo Vision or the Surviving
Corporation.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any court, administrative agency or commission
or other governmental or regulatory body or authority or instrumentality
("Governmental Entity") is required by or with respect to Thermo Vision in
connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, except for (i) the
filing of the Certificate of Merger with the Secretary of State of
Delaware, (ii) the filing of the Proxy Statement (as defined in Section
5.1) and the Schedule 13E-3 (as defined in Section 5.1) with the U.S.
Securities and Exchange Commission ("SEC") in accordance with the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and (iii)
such other consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and
state securities laws.
2.4. BOARD APPROVAL. The Board of Directors of Thermo Vision has, as of
the date of this Agreement, unanimously (i) adopted a resolution approving this
Agreement and declaring its advisability, (ii) determined that the Merger is
fair to, and in the best interests of, Thermo Vision and its stockholders
including its minority stockholders, and (iii) determined to recommend that the
stockholders of Thermo Vision approve this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THERMO INSTRUMENT AND MERGER SUB
Thermo Instrument and Merger Sub represent and warrant to Thermo Vision as
follows:
3.1. ORGANIZATION. Thermo Instrument is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, each has the corporate power
to own, lease and operate its property and to carry on its business as now being
conducted and as proposed to be conducted, and is duly qualified to do business
and in good standing as a foreign corporation in each jurisdiction in which the
failure to be so qualified would have a material adverse effect on Thermo
Instrument or Merger Sub, respectively.
3.2. AUTHORITY.
(a) Each of Thermo Instrument and Merger Sub has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the
part of Thermo Instrument and Merger Sub, subject only to the filing and
recording of the Certificate of Merger pursuant to the DGCL. This Agreement
has been duly executed and delivered by each of Thermo Instrument and
Merger Sub and, assuming the due authorization, execution and delivery of
this Agreement by Thermo Vision, this Agreement constitutes the valid and
binding obligation of each of Thermo
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<PAGE> 109
Instrument and Merger Sub, enforceable in accordance with its terms. The
execution and delivery of this Agreement by each of Thermo Instrument and
Merger Sub do not, and the performance of this Agreement by each of Thermo
Instrument and Merger Sub will not, (i) conflict with or violate the
Restated Certificate of Incorporation or Bylaws of Thermo Instrument or the
Certificate of Incorporation or Bylaws of Merger Sub, (ii) subject to
compliance with the requirements set forth in Section 3.2(b) below,
conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to Thermo Instrument or any of its material subsidiaries
(including Merger Sub, but excluding Thermo Vision and its subsidiaries) or
by which its or any of their respective properties are bound or affected,
or (iii) result in any breach of or constitute a default (or an event that
with notice or lapse of time or both would become a default) under, or
impair Thermo Instrument's rights or alter the rights or obligations of any
third party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of Thermo Instrument or any
of its material subsidiaries (including Merger Sub, but excluding Thermo
Vision and its subsidiaries) pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Thermo Instrument or any of its material
subsidiaries (including Merger Sub, but excluding Thermo Vision and its
subsidiaries) is a party or by which Thermo Instrument or any of its
material subsidiaries (including Merger Sub, but excluding Thermo Vision
and its subsidiaries) or its or any of their respective properties are
bound or affected, except, with respect to clauses (ii) and (iii), for any
such conflicts, violations, defaults or other occurrences that would not
have a material adverse effect on Thermo Instrument or Merger Sub,
respectively.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any Governmental Entity is required by or with
respect to Thermo Instrument or Merger Sub in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of the Certificate of Merger
with the Secretary of State of Delaware, (ii) the filing of the Schedule
13E-3 (as defined in Section 5.1) with the SEC in accordance with the
Exchange Act, and (iii) such other consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required
under applicable federal and state securities laws.
3.3. FINANCIAL RESOURCES. Thermo Instrument has the financial resources to
consummate the transactions contemplated by this Agreement and to pay the
consideration in the Merger provided for in Section 1.6(a).
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1. CONDUCT OF BUSINESS BY THERMO VISION. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, Thermo Vision shall,
except as otherwise contemplated by this Agreement or consented to by Thermo
Instrument, carry on its business in the usual, regular and ordinary course, in
substantially the same manner as heretofore conducted, pay its debts and taxes
when due subject to good faith disputes over such debts or taxes, pay or perform
other material obligations when due, and use its commercially reasonable efforts
consistent with past practices and policies to preserve intact its present
business organization, keep available the services of its present officers and
employees and preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others with which it has business
dealings.
4.2. CERTAIN ACTIONS BY THERMO VISION. In addition, notwithstanding
Section 4.1 above, without the prior consent of Thermo Instrument, Thermo Vision
shall not do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or change
the period of exercisability of options or restricted stock, or reprice
options granted under any employee, consultant or director stock plans or
authorize cash payments in exchange for any options granted under any of
such plans;
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(b) Enter into any material partnership arrangements, joint
development agreements or strategic alliances;
(c) Grant any severance or termination pay to any officer or employee
except payments in amounts consistent with past practices or pursuant to
written agreements outstanding, or policies existing, on the date hereof,
or adopt any new severance plan;
(d) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any capital stock or
split, combine or reclassify any capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for any capital stock;
(e) Issue, deliver, sell, authorize or propose the issuance, delivery
or sale of, any shares of capital stock or any securities convertible into
shares of capital stock, or subscriptions, rights, warrants or options to
acquire any shares of capital stock or any securities convertible into
shares of capital stock, or enter into other agreements or commitments of
any character obligating it to issue any such shares or convertible
securities, other than the issuance of shares of Thermo Vision Common Stock
pursuant to the exercise of stock options therefor;
(f) Cause, permit or propose any amendments to its Restated
Certificate of Incorporation or Bylaws;
(g) Acquire or agree to acquire by merging or consolidating with, or
by purchasing any equity interest in or a material portion of the assets
of, or by any other manner, any business or any corporation, partnership
interest, association or other business organization or division thereof,
or otherwise acquire or agree to acquire any assets or enter into any joint
ventures, strategic partnerships or alliances;
(h) Sell, lease, license, encumber or otherwise dispose of any
properties or assets that are material, individually or in the aggregate,
to the business of Thermo Vision;
(i) Incur any indebtedness for borrowed money (other than ordinary
course trade payables or pursuant to existing credit facilities in the
ordinary course of business) or guarantee any such indebtedness or issue or
sell any debt securities or warrants or guarantee any debt securities of
others;
(j) Adopt or amend any employee benefit or stock purchase or option
plan, or enter into any employment contract, pay any special bonus or
special remuneration to any director or employee, or increase the salaries
or wage rates of its officers or employees, except increases in amounts
consistent with policies and past practices;
(k) Pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business;
(l) Make any grant of exclusive rights to any third party; or
(m) Agree in writing or otherwise to take any of the actions
described in this Section 4.2.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1. SCHEDULE 13E-3; PROXY STATEMENT; OTHER FILINGS.
(a) Thermo Vision agrees that the information supplied by Thermo
Vision for inclusion or incorporation by reference in the Rule 13e-3
Transaction Statement on Schedule 13E-3 (such Schedule, as amended or
supplemented, is referred to herein as the "Schedule 13E-3") or the proxy
statement to be sent to the stockholders of Thermo Vision in connection
with the meeting of Thermo Vision's stockholders to consider the adoption
of this Agreement and approval of the Merger (the
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"Thermo Vision Stockholders' Meeting") (such proxy statement, as amended or
supplemented, is referred to herein as the "Proxy Statement") shall not, on
the date the Proxy Statement is first mailed to Thermo Vision's
stockholders and at the time of the Thermo Vision Stockholders' Meeting,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not false or misleading; or omit to state any material fact necessary
to correct any statement in any earlier written communication with respect
to the solicitation of proxies for the Thermo Vision Stockholders' Meeting
or the Schedule 13E-3 that has become false or misleading.
(b) Thermo Electron, Thermo Instrument and Merger Sub agree that the
information supplied by Thermo Electron, Thermo Instrument and Merger Sub
for inclusion in the Schedule 13E-3 and the Proxy Statement shall not, on
the date the Proxy Statement is first mailed to Thermo Vision's
stockholders, and at the time of the Thermo Vision Stockholders' Meeting,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not false or misleading; or omit to state any material fact necessary
to correct any statement in any earlier written communication with respect
to the solicitation of proxies for the Thermo Vision Stockholders' Meeting
or the Schedule 13E-3 that has become false or misleading.
(c) As promptly as practicable after the execution of this Agreement,
Thermo Electron, Thermo Instrument and Thermo Vision will jointly prepare
and file with the SEC the Schedule 13E-3 and the Proxy Statement. Thermo
Electron, Thermo Instrument and Thermo Vision will cause the Schedule 13E-3
and the Proxy Statement to be mailed to stockholders of Thermo Vision at
the earliest practicable time. Each party will notify the other promptly
upon the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff or any other government officials for
amendments or supplements to the Schedule 13E-3 or the Proxy Statement or
any other filing or for additional information and will supply the other
party with copies of all correspondence between such party or any of its
representatives, on the one hand, and the SEC, or its staff or any other
government officials, on the other hand, with respect to the Proxy
Statement, the Schedule 13E-3 or the Merger. Whenever any event occurs that
is required to be set forth in an amendment or supplement to the Schedule
13E-3 or the Proxy Statement, the relevant party will promptly inform the
other party of such occurrence and cooperate in filing with the SEC or its
staff or any other government officials, and/or mailing to stockholders of
Thermo Vision, such amendment or supplement.
(d) The Proxy Statement will include the recommendation of the Board
of Directors of Thermo Vision in favor of approval of this Agreement
(except that the Board of Directors of Thermo Vision may withdraw, modify
or refrain from making such recommendation to the extent that the Board
determines in good faith that the Board's fiduciary duties under applicable
law require it to do so).
5.2. MEETING OF THERMO VISION STOCKHOLDERS. Promptly after the date
hereof, Thermo Vision will take all action necessary in accordance with the DGCL
and its Restated Certificate of Incorporation and Bylaws to convene the Thermo
Vision Stockholders' Meeting to be held as promptly as practicable for the
purpose of voting upon this Agreement. Unless otherwise required by the
fiduciary duties of the Thermo Vision Board of Directors, Thermo Vision will use
its best efforts to solicit from its stockholders proxies in favor of the
approval of this Agreement and the Merger, and will take all other action
necessary or advisable to secure the vote or consent of its stockholders
required by the DGCL to obtain such approvals. Each of Thermo Instrument and
Thermo Electron shall vote, or cause to be voted, all of the Thermo Vision
Common Stock then owned by it and any of its subsidiaries in favor of the
approval of this Agreement and the Merger.
5.3. ACCESS TO INFORMATION. Thermo Vision will afford Thermo Instrument
and its accountants, counsel and other representatives reasonable access during
normal business hours to the properties, books, records and personnel of Thermo
Vision during the period prior to the Effective Time to obtain all
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information concerning the business, including the status of product development
efforts, properties, results of operations and personnel of Thermo Vision, as
Thermo Instrument may reasonably request. Thermo Instrument agrees that it will,
and will cause its representatives and agents to, keep all such information
confidential and will not, and will cause its representatives or agents not to,
use any information obtained pursuant to this Section 5.3 for any purpose
unrelated to the consummation of the transactions contemplated by this
Agreement. Notwithstanding the foregoing, Thermo Instrument shall not be
required to keep confidential any information (i) which is or becomes generally
available to the public, other than by wrongful disclosure by Thermo Instrument
or Merger Sub in violation of this Agreement, (ii) which was available to Thermo
Instrument on a nonconfidential basis prior to disclosure to Thermo Instrument,
or (iii) which becomes available to Thermo Instrument on a nonconfidential basis
from a source other than Thermo Vision.
5.4. PUBLIC DISCLOSURE. Thermo Instrument and Thermo Vision will consult
with each other before issuing any press release or otherwise making any public
statement with respect to the Merger or this Agreement and will not issue any
such press release or make any such public statement prior to such consultation,
except as may be required by law or any listing agreement with a national
securities exchange.
5.5. LEGAL REQUIREMENTS. Each of Thermo Instrument, Merger Sub and Thermo
Vision will take all reasonable actions necessary or desirable to comply
promptly with all legal requirements that may be imposed on them with respect to
the consummation of the transactions contemplated by this Agreement (including
furnishing all information required in connection with approvals of or filings
with any Governmental Entity, and including using its reasonable best efforts to
defend any litigation prompted hereby) and will promptly cooperate with and
furnish information to any party hereto necessary in connection with any such
requirements imposed upon any of them or their respective subsidiaries in
connection with the consummation of the transactions contemplated by this
Agreement.
5.6. NOTIFICATION OF CERTAIN MATTERS. Thermo Instrument and Merger Sub
will give prompt notice to Thermo Vision, and Thermo Vision will give prompt
notice to Thermo Instrument, of the occurrence, or failure to occur, of any
event, which occurrence or failure to occur would be reasonably likely to cause
(a) any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date of this Agreement
to the Effective Time, or (b) any material failure of Thermo Instrument and
Merger Sub or Thermo Vision, as the case may be, or of any officer, director,
employee or agent thereof, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement.
Notwithstanding the above, the delivery of any notice pursuant to this section
will not limit or otherwise affect the remedies available hereunder to the party
receiving such notice or the conditions to such party's obligation to consummate
the Merger.
5.7. BEST EFFORTS AND FURTHER ASSURANCES. Subject to the respective rights
and obligations of Thermo Instrument and Thermo Vision under this Agreement,
each of the parties to this Agreement will use its reasonable best efforts to
effectuate the Merger and the other transactions contemplated hereby and to
fulfill and cause to be fulfilled the conditions to closing under this
Agreement, it being understood that such efforts shall not include any
obligation to settle any litigation prompted hereby. Each party hereto, at the
reasonable request of another party hereto, will execute and deliver such other
instruments and do and perform such other acts and things as may be reasonably
necessary or desirable for effecting completely the consummation of the
transactions contemplated hereby.
5.8. STOCK OPTION AND EMPLOYEE STOCK PURCHASE PLANS.
(a) At the Effective Time, each outstanding option to purchase shares
of Thermo Vision Common Stock (each a "Thermo Vision Stock Option") under
the Thermo Vision Stock Option Plan, whether or not exercisable, will be
assumed by Thermo Instrument. Each Thermo Vision Stock Option so assumed by
Thermo Instrument under this Agreement will continue to have, and be
subject to, the same terms and conditions set forth in the applicable
Thermo Vision Stock Option Plan immediately prior to the Effective Time
(including, without limitation, any repurchase rights), except that (i)
each Thermo Vision Stock Option will be exercisable (or will become
exercisable in
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accordance with its terms) for that number of whole shares of Thermo
Instrument Common Stock equal to the product of the number of shares of
Thermo Vision Common Stock that were issuable upon exercise of such Thermo
Vision Stock Option immediately prior to the Effective Time multiplied by a
fraction (the "Exchange Ratio"), the numerator of which is the Exchange
Price and the denominator of which is the closing price of the Thermo
Instrument Common Stock on the day immediately preceding the Effective Date
as reported in the consolidated transaction reporting system, rounded down
to the nearest whole number of shares of Thermo Instrument Common Stock,
and (ii) the per share exercise price for the shares of Thermo Instrument
Common Stock issuable upon exercise of such assumed Thermo Vision Stock
Option will be equal to the quotient determined by dividing the exercise
price per share of Thermo Vision Common Stock at which such Thermo Vision
Stock Option was exercisable immediately prior to the Effective Time by the
Exchange Ratio, rounded up to the nearest whole cent. After the Effective
Time, Thermo Instrument will issue to each holder of an outstanding Thermo
Vision Stock Option a notice describing the foregoing assumption of such
Thermo Vision Stock Option by Thermo Instrument.
(b) At the Effective Time, each outstanding option to purchase shares
of Thermo Vision Common Stock (each, a "Thermo Vision ESPP Stock Option")
under the Thermo Vision Employees' Stock Purchase Plan ("Thermo Vision
ESPP") will be assumed by Thermo Instrument. Each Thermo Vision ESPP Stock
Option so assumed by Thermo Instrument will continue to have, and be
subject to, the same terms and conditions as are set forth in the Thermo
Vision ESPP immediately prior to the Effective Time except that (i) the
assumed option shall be exercisable for shares of Thermo Instrument Common
Stock; (ii) the purchase price per share of Thermo Instrument Common Stock
shall be the lower of (A) eighty-five percent (85%) of (x) the per-share
Market Value of Thermo Vision Common Stock on the Grant Date divided by (y)
the Exchange Ratio, with the resulting price rounded up to the nearest
whole cent, and (B) eighty-five percent (85%) of the Market Value of Thermo
Instrument Common Stock as of the Exercise Date; and (iii) the $25,000
limit under Section 9.2(i) of the Thermo Vision ESPP shall be applied by
taking into account Thermo Instrument's assumption of the Thermo Vision
ESPP Stock Options in accordance with Section 423(b)(8) of the Internal
Revenue Code of 1986, as amended, and applicable regulations. For purposes
of this subsection, "Market Value," "Grant Date," and "Exercise Date" shall
have the meaning given them in the Thermo Vision ESPP.
(c) Thermo Instrument will reserve sufficient shares of Thermo
Instrument Common Stock for issuance under this Section 5.8.
5.9. THERMO INSTRUMENT FORM S-8. Thermo Instrument agrees to file no
later than the Closing Date, a registration statement on Form S-8 or, if
possible, an amendment to Thermo Instrument's then effective registration
statement on Form S-8, for (i) the shares of Thermo Instrument Common Stock
issuable with respect to the assumed Thermo Vision Stock Options and (ii) for
the shares of Thermo Instrument Common Stock issuable with respect to the
assumed Thermo Vision ESPP Stock Options, and shall, in each case, keep such
registration statement effective for so long as any such options remain
outstanding; provided however, that in the event the Closing Date occurs on or
prior to October 31, 1999, Thermo Instrument shall make the filing required with
respect to the shares of Thermo Instrument Common Stock issuable with respect to
the assumed Thermo Vision ESPP Stock Options no later than October 31, 1999.
5.10. INDEMNIFICATION; INSURANCE.
(a) From and for a period of six (6) years after the Effective Time,
Thermo Instrument will and will cause the Surviving Corporation to fulfill
and honor in all respects the indemnification obligations of Thermo Vision
pursuant to the provisions of the Restated Certificate of Incorporation and
the Bylaws of Thermo Vision as in effect immediately prior to the Effective
Time. The Certificate of Incorporation and Bylaws of the Surviving
Corporation will contain the provisions with respect to indemnification and
elimination of liability for monetary damages set forth in the Restated
Certificate of Incorporation and Bylaws of Thermo Vision, which provisions
will not be amended, repealed or
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otherwise modified for a period of six (6) years from the Effective Time in
any manner that would adversely affect the rights thereunder of individuals
who, at the Effective Time, were directors or officers of Thermo Vision,
unless such modification is required by law.
(b) For a period of six (6) years after the Effective Time, Thermo
Instrument shall cause the Surviving Corporation to, either directly or
through participation in Thermo Electron's umbrella policy, maintain in
effect a directors' and officers' liability insurance policy covering those
Thermo Vision directors and officers currently covered by Thermo Electron's
liability insurance policy with coverage providing substantially the same
amount and scope as existing coverage for such Thermo Vision directors and
officers (which coverage may be an endorsement extending the period in
which claims may be made under such existing policy); provided, however,
that in no event shall the Surviving Corporation be required to expend to
maintain or procure insurance coverage pursuant to this Section 5.10,
directly or through participation in Thermo Electron's policy, an amount
per annum in excess of 175% of the current annual premiums, as adjusted for
inflation each year, allocable and payable by Thermo Vision (the "Maximum
Premium") with respect to such insurance, or, if the cost of such insurance
exceeds the Maximum Premium, the maximum amount of coverage that can be
purchased or maintained for the Maximum Premium.
5.11. DEFERRED COMPENSATION PLAN. At the Effective Time, the Thermo
Vision deferred compensation plan for directors (the "Deferred Compensation
Plan") will terminate, and Thermo Vision will distribute to each participant the
sum in cash equal to the balance of stock units credited to his or her deferred
compensation account under the Deferred Compensation Plan as of the Effective
Time multiplied by the Exchange Price.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1. CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Stockholder Approval. This Agreement shall have been (i) approved
and adopted by the requisite vote under the DGCL by the stockholders of
Thermo Vision, and (ii) approved by the affirmative vote of a majority of
the outstanding shares of Thermo Vision Common Stock that are voted at the
Thermo Vision Stockholders' Meeting (other than shares of Thermo Vision
Common Stock held by Thermo Instrument, Thermo Electron and the officers
and directors of Thermo Vision, Thermo Instrument and Thermo Electron).
(b) No Order. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive
order, decree, injunction or other order (whether temporary, preliminary or
permanent) which is in effect and which has the effect of making the Merger
illegal or otherwise prohibiting consummation of the Merger.
6.2. ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF THERMO VISION. The
obligations of Thermo Vision to consummate and effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of each of the
following conditions, any of which may be waived, in writing, exclusively by
Thermo Vision:
(a) Representations and Warranties. The representations and
warranties of Thermo Instrument and Merger Sub contained in this Agreement
shall be true and correct on and as of the Effective Time, except for
changes contemplated by this Agreement and except for those representations
and warranties that address matters only as of a particular date (which
shall remain true and correct as of such particular date), with the same
force and effect as if made on and as if made at the Effective Time,
except, in all such cases, where the failure to be so true and correct
would not have a material adverse effect on Thermo Instrument; and Thermo
Vision shall have received a certificate to such
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effect signed on behalf of Thermo Instrument by the President, the Chief
Executive Officer or a Vice President of Thermo Instrument; and
(b) Agreements and Covenants. Thermo Instrument and Merger Sub shall
have performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by
them on or prior to the Effective Time, and Thermo Vision shall have
received a certificate to such effect signed on behalf of Thermo Instrument
by the President, the Chief Executive Officer or a Vice President of Thermo
Instrument.
6.3. ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF THERMO INSTRUMENT AND
MERGER SUB. The obligations of Thermo Instrument and Merger Sub to consummate
and effect the Merger shall be subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, any of which may be waived,
in writing, exclusively by Thermo Instrument:
(a) Representations and Warranties. The representations and
warranties of Thermo Vision contained in this Agreement shall be true and
correct on and as of the Effective Time, except for changes contemplated by
this Agreement and except for those representations and warranties that
address matters only as of a particular date (which shall remain true and
correct as of such particular date), with the same force and effect as if
made on and as if made at the Effective Time, except, in all such cases,
where the failure to be so true and correct would not have a material
adverse effect on Thermo Vision; and Thermo Instrument and Merger Sub shall
have received a certificate to such effect signed on behalf of Thermo
Vision by the President, the Chief Executive Officer or a Vice President of
Thermo Vision; and
(b) Agreements and Covenants. Thermo Vision shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time, and Thermo Instrument shall have received a
certificate to such effect signed on behalf of Thermo Vision by the
President, the Chief Executive Officer or a Vice President of Thermo
Vision.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1. TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time of the Merger, whether before or after approval of this
Agreement by the stockholders of Thermo Vision:
(a) by mutual written consent duly authorized by the Boards of
Directors of Merger Sub and Thermo Vision;
(b) by either Thermo Vision or Merger Sub if the Merger shall not have
been consummated by December 31, 1999; provided, however, that the right to
terminate this Agreement under this Section 7.1(b) shall not be available
to any party whose action or failure to act has been a principal cause of
or resulted in the failure of the Merger to occur on or before such date if
such action or failure to act constitutes a breach of this Agreement;
(c) by either Thermo Vision or Merger Sub if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken any other
action (an "Order"), in any case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger, which order,
decree or ruling is final and nonappealable;
(d) by either Thermo Vision or Merger Sub if the required approvals of
the stockholders of Thermo Vision contemplated by Section 6.1(a) of this
Agreement shall not have been obtained by reason of the failure to obtain
the required vote upon a vote taken at a meeting of stockholders duly
convened therefor or at any adjournment thereof (provided, however, that
the right to terminate this Agreement under this Section 7.1(d) shall not
be available to Thermo Vision where the failure to
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obtain stockholder approval of Thermo Vision shall have been caused by the
action or failure to act of Thermo Vision in breach of this Agreement and
the right to terminate this Agreement under this Section 7.1(d) shall not
be available to Merger Sub where the failure to obtain the requisite vote
by the stockholders of Thermo Vision shall have been caused by the failure
of Thermo Instrument or Thermo Electron to vote their respective shares of
Thermo Vision Common Stock in favor of the Merger and this Agreement);
(e) by Thermo Vision if the Thermo Vision Board of Directors
determines in good faith upon advice of outside legal counsel that the
Board's fiduciary duties under applicable law require it to do so;
(f) by Thermo Vision, upon a breach of any representation, warranty,
covenant or agreement on the part of Thermo Instrument or Merger Sub set
forth in this Agreement, if (i) as a result of such breach the conditions
set forth in Section 6.2(a) or Section 6.2(b) would not be satisfied as of
the time of such breach and (ii) such breach shall not have been cured by
Thermo Instrument or Merger Sub within ten (10) business days following
receipt by Thermo Instrument of written notice of such breach from Thermo
Vision; or
(g) by Merger Sub, upon a breach of any representation, warranty,
covenant or agreement on the part of Thermo Vision set forth in this
Agreement, if (i) as a result of such breach the conditions set forth in
Section 6.3(a) or Section 6.3(b) would not be satisfied as of the time of
such breach and (ii) such breach shall not have been cured by Thermo Vision
within ten (10) business days following receipt by Thermo Vision of written
notice of such breach from Merger Sub.
7.2. NOTICE OF TERMINATION; EFFECT OF TERMINATION. Any termination of
this Agreement under Section 7.1 above will be effective immediately upon the
delivery of written notice by the terminating party to the other parties hereto.
In the event of the termination of this Agreement as provided in Section 7.1,
this Agreement shall be of no further force or effect, except that (i) the
confidentiality obligations of Thermo Instrument contained in Section 5.3, and
Section 7.3 and Article VIII, shall survive any termination and (ii) nothing
herein shall relieve any party from liability for any breach of this Agreement.
7.3. FEES AND EXPENSES. All fees and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expenses, whether or not the Merger is consummated.
7.4. AMENDMENT. Subject to applicable law, this Agreement may be amended
by the parties hereto at any time by execution of an instrument in writing
signed on behalf of each of the parties hereto.
7.5. EXTENSION; WAIVER. At any time prior to the Effective Time any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE VIII
GENERAL PROVISIONS
8.1. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Thermo Vision, Thermo Instrument and Merger Sub contained in
this Agreement shall terminate at the Effective Time, and only the covenants
that by their terms survive the Effective Time shall survive the Effective Time.
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8.2. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via facsimile (receipt confirmed) to the parties at
the following addresses or telecopy numbers (or at such other address or
telecopy numbers for a party as shall be specified by like notice):
(a) if to Thermo Instrument or Merger Sub, to:
Thermo Instrument Systems Inc.
8 East Forge Parkway
Franklin, MA 02038
Attention: President
Telephone: (508) 541-7111
Facsimile: (508) 541-0140
with a copy to:
Thermo Electron Corporation
81 Wyman Street
Waltham, MA 02454
Attention: General Counsel
Telephone: (781) 622-1000
Facsimile: (781) 622-1283
(b) if to Thermo Vision, to:
Thermo Vision Corporation
8 East Forge Parkway
Franklin, MA 02038
Attention: President
Telephone: (508) 553-5000
Facsimile: (508) 553-5001
with a copy to:
Thermo Electron Corporation
81 Wyman Street
Waltham, MA 02454
Attention: General Counsel
Telephone: (781) 622-1000
Facsimile: (781) 622-1283
8.3. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.4. ENTIRE AGREEMENT. This Agreement and the documents and instruments
and other agreements among the parties hereto as contemplated by or referred to
herein (a) constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof; and (b) are not intended to confer upon any other person any rights or
remedies hereunder, except as set forth herein.
8.5. SEVERABILITY. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a
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valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
8.6. OTHER REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
8.7. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts, regardless of the
laws that might otherwise govern under applicable principles of conflicts of law
thereof, except to the extent that the DGCL applies.
8.8. ASSIGNMENT. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties.
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IN WITNESS WHEREOF, Thermo Instrument, Merger Sub and Thermo Vision have
caused this Agreement to be signed by themselves or their duly authorized
respective officers, all as of the date first written above.
THERMO INSTRUMENT SYSTEMS INC.
By: /s/ EARL R. LEWIS
----------------------------------
NAME: EARL R. LEWIS
TITLE: PRESIDENT AND CHIEF
EXECUTIVE OFFICER
VIZ ACQUISITION CORPORATION
By: /s/ EARL R. LEWIS
----------------------------------
NAME: EARL R. LEWIS
TITLE: PRESIDENT
THERMO VISION CORPORATION
By: /s/ ROGER HERD
----------------------------------
NAME: ROGER HERD
TITLE: PRESIDENT
Thermo Electron Corporation joins this Agreement for the specific purpose
of consenting to the provisions of Section 1.6 hereof and agreeing to perform
its obligations under Sections 5.1 and 5.2 hereof.
THERMO ELECTRON CORPORATION
By: /s/ THEO MELAS-KYRIAZI
----------------------------------
NAME: THEO MELAS-KYRIAZI
TITLE: VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER
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APPENDIX B
SECTION 262 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
SECTION 262 APPRAISAL RIGHTS
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to sec. 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec. 251 (other than a merger effected pursuant to sec.
251(g) of this title), sec. 252, sec. 254, sec. 257, sec. 258, sec. 263 or sec.
264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of sec. 251 of this title.
(2) Notwithstanding paragraph(1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sec.sec. 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
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(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of such
stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of
such stockholder's shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such stockholder's
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must
do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to sec. 228
or sec. 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated
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therein. For purposes of determining the stockholders entitled to receive
either notice, each constituent corporation may fix, in advance, a record
date that shall be not more than 10 days prior to the date the notice is
given, provided, that if the notice is given on or after the effective date
of the merger or consolidation, the record date shall be such effective
date. If no record date is fixed and the notice is given prior to the
effective date, the record date shall be the close of business on the day
next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has
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submitted such stockholder's certificates of stock to the Register in Chancery,
if such is required, may participate fully in all proceedings until it is
finally determined that such stockholder is not entitled to appraisal rights
under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
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APPENDIX C
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
OF THE COMPANY, THERMO INSTRUMENT, THE MERGER SUB AND THERMO ELECTRON
The following individuals are executive officers or directors of the
Company, Thermo Instrument, the Merger Sub or Thermo Electron. Unless otherwise
noted, all such individuals are citizens of the United States. Unless otherwise
noted, the business address of each executive officer and director (i) of the
Company is 8 East Forge Parkway, Franklin, Massachusetts 02038; (ii) of Thermo
Instrument is 81 Wyman Street, P.O. Box 9046, Waltham, Massachusetts 02454-9046;
(iii) of the Merger Sub is 81 Wyman Street, P.O. Box 9046, Waltham,
Massachusetts 02454-9046; and (iv) of Thermo Electron is 81 Wyman Street, P.O.
Box 9046, Waltham, Massachusetts 02454-9046.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
D. Allan Bromley: Director
D. Allan Bromley has been a director of the Company since September 1997.
Dr. Bromley has been Sterling Professor of the Sciences, Yale University, since
1993 and has also served as Dean of Engineering at Yale University since 1994.
Prior to 1993, he served as the Henry Ford II Professor of Physics at Yale
University for over 20 years. From 1989 to 1993, he served as the Assistant to
the President for Science and Technology, and Director, Office of Science and
Technology Policy of the Executive Office of the White House. Dr. Bromley's
business address is Yale University, Physics-WNSL, P.O. Box 208124, 272 Whitney
Avenue, New Haven, Connecticut 06520-8124.
Elias P. Gyftopoulos: Director
Elias P. Gyftopoulos has been a director of the Company since April 1998.
He is Professor Emeritus at the Massachusetts Institute of Technology, where he
was the Ford Professor of Mechanical Engineering and of Nuclear Engineering for
more than 20 years until his retirement in 1996. Dr. Gyftopoulos is also a
director of Thermo Electron and the following affiliates of Thermo Electron:
Thermo BioAnalysis Corporation, Thermo Cardiosystems Inc., ThermoLase
Corporation, ThermoRetec Corporation, ThermoSpectra and Trex Medical
Corporation. Dr. Gyftopoulos' business address is Massachusetts Institute of
Technology, Room 24-109, 77 Massachusetts Avenue, Cambridge, Massachusetts
02139. For further information, please see description under "Directors and
Executive Officers of Thermo Electron," below.
Roger Herd: President
Roger Herd was appointed President of the Company upon the resignation of
Kristine Stotz Langdon as president and chief executive officer, effective June
15, 1999. Mr. Herd has been Vice President of Thermo Optek Corporation ("Thermo
Optek"), an affiliate of Thermo Electron that manufactures and markets
analytical instrumentation based upon energy and light measurements, and systems
for surface-analysis characterization and preparation, since January 1998, and
has been Managing Director of VG Systems Limited, a wholly owned subsidiary of
Thermo Optek, since April 1996. Mr. Herd was Manager of International Business
Development for Thermo Instrument from April 1994 to April 1996, and prior to
April 1994, was Managing Director of Thermo Instrument Australia PTY Ltd.
Paul F. Kelleher: Chief Accounting Officer
Paul F. Kelleher has been the chief accounting officer of the Company since
its inception in November 1995. Mr. Kelleher served as Thermo Electron's
controller from 1982 until January 1996. He is a director of ThermoLase
Corporation, an affiliate of Thermo Electron. Mr. Kelleher also serves as the
chief accounting officer of Thermo Instrument. Mr. Kelleher's business address
is 81 Wyman Street, P.O. Box 9046, Waltham, Massachusetts 02454-9046. For
further information, please see descriptions under
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"Directors and Executive Officers of Thermo Instrument" and "Directors and
Executive Officers of Thermo Electron," below.
Earl R. Lewis: Director and Chairman of the Board
Earl R. Lewis has been a director of the Company since its inception in
November 1995. Mr. Lewis has been a director and chief executive officer of
Thermo Instrument since January 1998, and has been president of Thermo
Instrument since March 1997. He was the chief operating officer of Thermo
Instrument from January 1996 to January 1998. Prior to that time, he was an
executive vice president of Thermo Instrument from January 1996 to March 1997, a
senior vice president from January 1994 to January 1996, and a vice president
from March 1992 to January 1994. Prior to his appointment as Thermo Instrument's
chief executive officer, Mr. Lewis was also the chief executive officer of
Thermo Optek from its inception in August 1995 to January 1998 and was the
president of its predecessor, Thermo Jarrell Ash Corporation, for more than five
years prior to 1995. Mr. Lewis became the chief operating officer, measurement
and detection of Thermo Electron in September 1998, and had been a vice
president of Thermo Electron since September 1996. Mr. Lewis is also a director
of SpectRx Inc. and the following affiliates of Thermo Electron: FLIR Systems
Inc., Metrika Systems Corporation, ONIX Systems Inc., Spectra-Physics Lasers,
Inc., Thermo BioAnalysis Corporation, Thermo Optek, ThermoQuest Corporation, and
ThermoSpectra. Mr. Lewis' business address is 81 Wyman Street, P.O. Box 9046,
Waltham, Massachusetts 02454-9046. For further information, please see
descriptions under "Directors and Executive Officers of Thermo Instrument,"
"Director and Executive Officer of the Merger Sub" and "Directors and Executive
Officers of Thermo Electron," below.
Theo Melas-Kyriazi: Chief Financial Officer
Theo Melas-Kyriazi has been chief financial officer of the Company since
January 1999. Mr. Melas-Kyriazi has been chief financial officer of Thermo
Electron since January 1999 and a vice president since March 1998. Mr.
Melas-Kyriazi has been chief financial officer of Thermo Instrument since
January 1999. Mr. Melas-Kyriazi was treasurer of Thermo Instrument and Thermo
Electron from 1988 to August 1994. From August 1994 through March 1998, he
served as the president and chief executive officer of ThermoSpectra. Mr.
Melas-Kyriazi is also a director of the following affiliates of Thermo Electron:
ThermoSpectra and ThermoRetec Corporation. Mr. Melas-Kyriazi is a citizen of
Greece. Mr. Melas-Kyriazi's business address is 81 Wyman Street, P.O. Box 9046,
Waltham, Massachusetts 02454-9046. For further information, please see
descriptions under "Directors and Executive Officers of Thermo Instrument" and
"Directors and Executive Officers of Thermo Electron," below.
Melissa F. Riordan: Director
Melissa F. Riordan has been a director of the Company since October 1998.
She served as the treasurer of Thermo Electron from 1997 until 1998. From 1988
to 1997, Ms. Riordan was a stockbroker at NatWest Securities Corp. Ms. Riordan
is also a director of ThermoLase Corporation, an affiliate of Thermo Electron.
Allen J. Smith: Vice President
Allen J. Smith was appointed vice president of the Company in August 1997.
He has been chairman of Oriel Corporation, which was acquired by the Company
from Thermo Optek Corporation in February 1996, since October 1994. Mr. Smith
served Oriel Corporation in various capacities, including Executive Vice
President, Vice President, General Manager, and Sales Manager from February 1970
to October 1994.
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DIRECTORS AND EXECUTIVE OFFICERS OF THERMO INSTRUMENT
Frank Borman: Director
Frank Borman has been a director of Thermo Instrument since May 1986. Col.
Borman has been the chairman of DBT Online, Inc. ("DBT"), a company engaged in
the provision of integrated database services and related reports, and in the
exploitation and enforcement of two laser patents, since August 1996. From
September 1995 until August 1996, he served as the chief executive officer and a
director of Patlex Corporation ("Patlex"), a company engaged in the exploitation
and enforcement of two laser patents, which became a subsidiary of DBT in August
1996. Col. Borman served as the chairman and chief executive officer of Patlex
from 1988 to December 1992, and as chairman of AutoFinance Group, Inc. ("AFG")
from December 1992 to September 1995, during the period that Patlex was a
subsidiary of AFG. Col. Borman is a member of the Board of Trustees of the
National Geographic Society. He serves as a director of American Superconductor
Corporation, The Home Depot, Inc. and Thermo Power Corporation, an affiliate of
Thermo Electron. Col. Borman's business address is Patlex Corporation, P.O. Box
1139, Fairacres, New Mexico 88033-1139.
Richard W.K. Chapman: Senior Vice President
Richard W.K. Chapman has been the chief executive officer, president and a
director of ThermoQuest Corporation ("ThermoQuest"), a majority-owned subsidiary
of Thermo Instrument, since its inception in June 1995. He served as president
of Finnigan Corporation ("Finnigan"), a subsidiary of ThermoQuest, from 1992 to
1995, and as marketing director of Finnigan from 1989 to 1995. He has been
senior vice president of Thermo Instrument since July 1998 and was a vice
president of Thermo Instrument from 1992 until July 1998. Dr. Chapman's business
address is ThermoQuest Corporation, 2215 Grand Avenue Parkway, Austin, Texas
78728.
George N. Hatsopoulos: Director
George N. Hatsopoulos has been a director of Thermo Instrument since May
1986. From 1986 until March 1997, Dr. Hatsopoulos also served as chairman of the
board of Thermo Instrument. Dr. Hatsopoulos has been the chairman of the board
of directors of Thermo Electron since he founded Thermo Electron in 1956. He was
also the chief executive officer and president of Thermo Electron from 1956
until June 1999 and January 1997, respectively. Dr. Hatsopoulos is also a
director of Photoelectron Corporation and the following affiliates of Thermo
Electron: Thermedics Inc., Thermo Ecotek Corporation, Thermo Fibertek Inc. and
ThermoTrex Corporation. Dr. Hatsopoulos is the brother of Mr. John N.
Hatsopoulos, a director of Thermo Instrument and a director and vice chairman of
the board of directors of Thermo Electron. For further information, please see
description under "Directors and Executive Officers of Thermo Electron," below.
John N. Hatsopoulos: Director
John N. Hatsopoulos has been a director of Thermo Instrument since May
1986. He was its chief financial officer from 1988 until his retirement in
December 1998. He was also vice president of Thermo Instrument from 1988 until
1997, and senior vice president from 1997 until 1998. Mr. Hatsopoulos has also
been a director of Thermo Electron since September 1997 and the vice chairman of
the board of directors of Thermo Electron since September 1998. He was the
president of Thermo Electron from January 1997 until September 1998, its chief
financial officer from 1988 until his retirement in December 1998, and an
executive vice president from 1986 until 1997. Mr. Hatsopoulos is also a
director of LOIS/USA Inc., US Liquids Inc. and the following affiliates of
Thermo Electron: Thermedics Inc., Thermo Ecotek Corporation, Thermo Fibertek
Inc., Thermo Power Corporation and Thermo TerraTech Inc. Mr. Hatsopoulos is the
brother of Dr. George N. Hatsopoulos, a director of Thermo Instrument and the
chairman of the board of directors of Thermo Electron. For further information,
please see description under "Directors and Executive Officers of Thermo
Electron," below.
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Denis A. Helm: Executive Vice President
Denis A. Helm has been executive vice president of Thermo Instrument since
January 1999, was a senior vice president of Thermo Instrument from 1994 to
1998, and a vice president from 1986 until 1994. From 1981 to 1998, Mr. Helm
also served as president of Thermo Instrument's Thermo Environmental Instruments
Inc. subsidiary, a manufacturer of instruments and systems for detecting and
monitoring environmental pollutants. Mr. Helm has also been chairman of the
board and a director of Metrika Systems Corporation, a majority-owned subsidiary
of Thermo Instrument and an affiliate of Thermo Electron, since its inception in
November 1996, and served as its chief executive officer from November 1996
until February 1998. Mr. Helm's business address is 8 East Forge Parkway,
Franklin, Massachusetts 02038.
Barry S. Howe: Vice President
Barry S. Howe has been a vice president of Thermo Instrument since 1994.
Mr. Howe has been the president, chief executive officer and a director of
ThermoSpectra since March 1998. In March 1999, Mr. Howe was also named interim
president of Thermo Optek. He was chief executive officer, president and a
director of Thermo BioAnalysis Corporation, a majority-owned subsidiary of
Thermo Instrument that manufactures products for biochemical research, drug
discovery and clinical laboratories, from February 1995 to March 1998. From
September 1989 to December 1995, he served as the president of Thermo Separation
Products Inc. and its predecessor, a manufacturer of chromatography instruments
and a subsidiary of ThermoQuest Corporation. Mr. Howe is also a director of
Thermo Optek, an affiliate of Thermo Electron. Mr. Howe's business address is 8
East Forge Parkway, Franklin, Massachusetts 02038.
Paul F. Kelleher: Chief Accounting Officer
Paul F. Kelleher has been the chief accounting officer of Thermo Instrument
since May 1986. He has been senior vice president, finance and administration,
of Thermo Electron since June 1997, and served as its vice president, finance
from 1987 until 1997. Mr. Kelleher served as Thermo Electron's controller from
1982 until January 1996. He is a director of ThermoLase Corporation, an
affiliate of Thermo Electron. Mr. Kelleher also serves as the chief accounting
officer of Thermo Vision. For further information, please see descriptions under
"Directors and Executive Officers of the Company," above, and "Directors and
Executive Officers of Thermo Electron," below.
Earl R. Lewis: President, Chief Executive Officer and Director
Earl R. Lewis has been a director and chief executive officer of Thermo
Instrument since January 1998, and has been president of Thermo Instrument since
March 1997. He was the chief operating officer of Thermo Instrument from January
1996 to January 1998. Prior to that time, he was an executive vice president of
Thermo Instrument from January 1996 to March 1997, a senior vice president from
January 1994 to January 1996, and a vice president from March 1992 to January
1994. Prior to his appointment as Thermo Instrument's chief executive officer,
Mr. Lewis was also the chief executive officer of Thermo Optek from its
inception in August 1995 to January 1998 and was the president of its
predecessor, Thermo Jarrell Ash Corporation, for more than five years prior to
1995. Mr. Lewis became the chief operating officer, measurement and detection of
Thermo Electron in September 1998, and had been a vice president of Thermo
Electron since September 1996. Mr. Lewis is also a director of SpectRx Inc. and
the following affiliates of Thermo Electron: FLIR Systems Inc., Metrika Systems
Corporation, ONIX Systems Inc., Spectra-Physics Lasers, Inc., Thermo BioAnalysis
Corporation, Thermo Optek, ThermoQuest Corporation, ThermoSpectra, and Thermo
Vision. For further information, please see descriptions under "Directors and
Executive Officers of the Company," above, and "Director and Executive Officer
of the Merger Sub" and "Directors and Executive Officers of Thermo Electron,"
below.
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Theo Melas-Kyriazi: Chief Financial Officer
Theo Melas-Kyriazi has been chief financial officer of Thermo Instrument
since January 1999, and has been chief financial officer of Thermo Vision since
January 1999. Mr. Melas-Kyriazi has been chief financial officer of Thermo
Electron since January 1999 and a vice president since March 1998. Mr.
Melas-Kyriazi was treasurer of Thermo Instrument and Thermo Electron from 1988
to August 1994. From August 1994 through March 1998, he served as the president
and chief executive officer of ThermoSpectra. Mr. Melas-Kyriazi is also a
director of the following affiliates of Thermo Electron: ThermoSpectra and
ThermoRetec Corporation. Mr. Melas-Kyriazi is a citizen of Greece. For further
information, please see descriptions under "Directors and Executive Officers of
the Company," above, and "Directors and Executive Officers of Thermo Electron,"
below.
Arvin H. Smith: Director
Arvin H. Smith has been a director of Thermo Instrument since May 1986, and
chairman of the board since March 1997. He was also president and chief
executive officer of Thermo Instrument from 1986 to March 1997 and January 1998,
respectively. Mr. Smith was the president of Thermo Electron from September 1998
until June 1999. He was executive vice president of Thermo Electron from 1991
until September 1998 and senior vice president from 1986 to 1991. Mr. Smith is
also a director of ONIX Systems Inc., an affiliate of Thermo Electron. Mr.
Smith's business address is 860 West Airport Freeway, Suite 301, Hurst, Texas
76054.
Richard F. Syron: Director
Richard F. Syron has been a director of Thermo Instrument since June 1999.
Dr. Syron has also been the president and chief executive officer of Thermo
Electron since June 1999 and a director of Thermo Electron since September 1997.
From April 1994 to May 1999, Dr. Syron was the chairman and chief executive
officer of the American Stock Exchange, Inc. From January 1989 through April
1994, he was the president and chief executive officer of the Federal Reserve
Bank of Boston. Prior to that time, he held a variety of senior positions with
the Federal Home Loan Bank of Boston, the Federal Reserve Bank of Boston, the
Board of Governors of the Federal Reserve System and the U.S. Department of
Treasury. Dr. Syron is also a director of Dreyfus Corporation, The John Hancock
Corporation and the following affiliates of Thermo Electron: Thermedics Inc. and
Thermo Fibertek Inc. For further information, please see description under
"Directors and Executive Officers of Thermo Electron," below.
Polyvios C. Vintiadis: Director
Polyvios C. Vintiadis has been a director of Thermo Instrument since July
1993. Mr. Vintiadis has been the chairman and chief executive officer of
TowerMarc Corporation, a real estate development company, since 1984. Prior to
joining TowerMarc, Mr. Vintiadis was a principal of Morgens, Waterfall &
Vintiadis, Inc., a financial services firm, with which he remains associated.
For more than 20 years prior to that time, Mr. Vintiadis was employed by Arthur
D. Little & Company, Inc. Mr. Vintiadis is also a director of The Randers Killam
Group Inc. and Thermo TerraTech Inc., affiliates of Thermo Electron. Mr.
Vintiadis' business address is Towermarc Corporation, Two Sound View Drive,
Greenwich, Connecticut 06830.
DIRECTOR AND EXECUTIVE OFFICER OF THE MERGER SUB
Earl R. Lewis: President and Director
Earl R. Lewis has been the Merger Sub's president and sole director since
the Merger Sub's formation in July 1999. For further information, please see
descriptions under "Directors and Executive Officers of the Company" and
"Directors and Executive Officers of Thermo Instrument," above, and "Directors
and Executive Officers of Thermo Electron," below.
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<PAGE> 129
DIRECTORS AND EXECUTIVE OFFICERS OF THERMO ELECTRON
John M. Albertine: Director
John M. Albertine has been a director of Thermo Electron since 1986. Dr.
Albertine serves as the chairman of the board and chief executive officer of
Albertine Enterprises, Inc., an economic and public policy consulting and
full-service mergers and acquisitions firm he founded in 1990. Dr. Albertine is
also a director of American Precision Industries, Inc., Intermagnetics General
Corp. and U.S. Cast Products Inc. Dr. Albertine's business address is Albertine
Enterprises, Inc., 1156 15th Street N.W., Suite 505, Washington, DC 20005.
Samuel W. Bodman: Director
Samuel W. Bodman has been a director of Thermo Electron since May 1999.
Since 1988, Mr. Bodman has served as the chairman and chief executive officer of
Cabot Corporation, a manufacturer of specialty chemicals and materials. Mr.
Bodman is a director of Cabot Oil & Gas Corporation, John Hancock Mutual Life
Insurance Company, Security Capital Group Incorporated and Westvaco Corporation.
Mr. Bodman's business address is Cabot Corporation, 75 State Street, Boston,
Massachusetts 02109.
Peter O. Crisp: Director
Peter O. Crisp has been a director of Thermo Electron since 1974. Mr. Crisp
was a general partner of Venrock Associates, a venture capital investment firm,
for more than five years until his retirement in September 1997. He has been
vice chairman of Rockefeller Financial Services, Inc. since December 1997. Mr.
Crisp is also a director of American Superconductor Corporation, Evans &
Sutherland Computer Corporation, NovaCare Inc. and United States Trust
Corporation, as well as the following affiliates of Thermo Electron: Thermo
Power Corporation, Thermedics Inc. and ThermoTrex Corporation. Mr. Crisp's
business address is Venrock, Inc., 30 Rockefeller Plaza, New York, New York
10112.
Elias P. Gyftopoulos: Director
Elias P. Gyftopoulos has been a director of Thermo Electron since 1976. Dr.
Gyftopoulos is Professor Emeritus at the Massachusetts Institute of Technology,
where he was the Ford Professor of Mechanical Engineering and of Nuclear
Engineering for more than 20 years until his retirement in 1996. Dr. Gyftopoulos
is also a director of the following affiliates of Thermo Electron: Thermo
BioAnalysis Corporation, Thermo Cardiosystems Inc., ThermoLase Corporation,
ThermoRetec Corporation, ThermoSpectra, Thermo Vision and Trex Medical
Corporation. His business address is Massachusetts Institute of Technology, Room
24-109, 77 Massachusetts Avenue, Cambridge, Massachusetts 02139. For further
information, please see description under "Directors and Executive Officers of
the Company," above.
George N. Hatsopoulos: Chairman of the Board and Director
George N. Hatsopoulos has been a director and the chairman of the board of
directors of Thermo Electron since he founded Thermo Electron in 1956. He was
also the chief executive officer and president of Thermo Electron from 1956
until June 1999 and January 1997, respectively. Dr. Hatsopoulos is also a
director of Photoelectron Corporation and the following affiliates of Thermo
Electron: Thermedics Inc., Thermo Ecotek Corporation, Thermo Fibertek Inc.,
Thermo Instrument and ThermoTrex Corporation. Dr. Hatsopoulos is the brother of
Mr. John N. Hatsopoulos, a director of Thermo Instrument and a director and vice
chairman of the board of directors of Thermo Electron. For further information,
please see description under "Directors and Executive Officers of Thermo
Instrument," above.
John N. Hatsopoulos: Vice Chairman of the Board and Director
John N. Hatsopoulos has been a director of Thermo Electron since September
1997 and the vice chairman of the board of directors since September 1998. He
was the president of Thermo Electron from
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<PAGE> 130
January 1997 until September 1998, its chief financial officer from 1988 until
his retirement in December 1998, and an executive vice president from 1986 until
1997. Mr. Hatsopoulos is also a director of LOIS/USA Inc., US Liquids Inc. and
the following affiliates of Thermo Electron: Thermedics Inc., Thermo Ecotek
Corporation, Thermo Fibertek Inc., Thermo Instrument, Thermo Power Corporation
and Thermo TerraTech Inc. Mr. Hatsopoulos is the brother of Dr. George N.
Hatsopoulos, a director of Thermo Instrument and a director and chairman of the
board of directors of Thermo Electron. For further information, please see
description under "Directors and Executive Officers of Thermo Instrument,"
above.
Brian D. Holt: Chief Operating Officer, Energy and Environment
Brian D. Holt became the chief operating officer, energy and environment,
of Thermo Electron in September 1998. Mr. Holt has been the president and chief
executive officer of Thermo Ecotek Corporation, a majority-owned subsidiary of
Thermo Electron, since February 1994, and has been a director of Thermo Ecotek
Corporation since January 1995. For more than five years prior to his
appointment as an officer of Thermo Ecotek Corporation, he was the president and
chief executive officer of Pacific Generation Company, a financier, builder,
owner and operator of independent power facilities. Mr. Holt is also a director
of KFx, Inc. and the following affiliates of Thermo Electron: Thermo Power
Corporation, ThermoRetec Corporation, The Randers Killam Group Inc. and Thermo
TerraTech Inc. Mr. Holt's business address is 245 Winter Street, Waltham,
Massachusetts 02451.
Frank Jungers: Director
Frank Jungers has been a director of Thermo Electron since 1978. Mr.
Jungers has been a consultant on business and energy matters since 1977. From
1974 through 1977, Mr. Jungers was employed by the Arabian American Oil Company
as its chairman and chief executive officer. Mr. Jungers is also a director of
The AES Corporation, Donaldson, Lufkin & Jenrette, Inc., Georgia- Pacific
Corporation, Statia Terminals Group N.V. and the following affiliates of Thermo
Electron: ONIX Systems Inc., Thermo Ecotek Corporation and ThermoQuest
Corporation. Mr. Jungers' business address is 822 N.W. Murray, Suite 242,
Portland, Oregon 97229.
John T. Keiser: Chief Operating Officer, Biomedical and Emerging Technologies
John T. Keiser became the chief operating officer, biomedical and emerging
technologies, of Thermo Electron in September 1998. Mr. Keiser has been
president of Thermedics Inc., a majority-owned subsidiary of Thermo Electron,
since March 1994, its chief executive officer since December 1998 and its senior
vice president from 1994 until March 1998. Mr. Keiser was the president of the
Eberline Instrument division of Thermo Instrument from 1985 to July 1994. Mr.
Keiser is also a director of the following affiliates of Thermo Electron:
Metrika Systems Corporation, Thermedics Detection Inc., ThermoTrex Corporation,
ThermoLase Corporation, Trex Medical Corporation, Thermedics Inc., Thermo
Sentron Inc. and Thermo Cardiosystems Inc. He has also been the president of
Thermo Biomedical Inc., a wholly owned subsidiary of Thermo Electron, since
1994.
Paul F. Kelleher: Senior Vice President, Finance and Administration
Paul F. Kelleher has been the senior vice president, finance and
administration, of Thermo Electron since June 1997, and served as its vice
president, finance from 1987 until 1997. Mr. Kelleher served as Thermo
Electron's controller from 1982 until January 1996. Mr. Kelleher is also the
chief accounting officer of Thermo Vision and Thermo Instrument. For further
information, please see descriptions under "Directors and Executive Officers of
the Company" and "Directors and Executive Officers of Thermo Instrument," above.
Earl R. Lewis: Chief Operating Officer, Measurement and Detection
Earl R. Lewis became the chief operating officer, measurement and detection
of Thermo Electron in September 1998, and had been a vice president of Thermo
Electron since September 1996. Mr. Lewis has
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<PAGE> 131
been a director and chief executive officer of Thermo Instrument since January
1998, and has been president of Thermo Instrument since March 1997. He was the
chief operating officer of Thermo Instrument from January 1996 to January 1998.
Prior to that time, he was an executive vice president of Thermo Instrument from
January 1996 to March 1997, a senior vice president from January 1994 to January
1996, and a vice president from March 1992 to January 1994. Prior to his
appointment as Thermo Instrument's chief executive officer, Mr. Lewis was also
the chief executive officer of Thermo Optek from its inception in August 1995 to
January 1998 and was the president of its predecessor, Thermo Jarrell Ash
Corporation, for more than five years prior to 1995. Mr. Lewis is also a
director of SpectRx Inc. and the following affiliates of Thermo Electron: FLIR
Systems Inc., Metrika Systems Corporation, ONIX Systems Inc., Spectra-Physics
Lasers, Inc., Thermo BioAnalysis Corporation, Thermo Optek, ThermoQuest
Corporation, and ThermoSpectra. For further information, please see descriptions
under "Directors and Executive Officers of the Company," "Director and Executive
Officer of the Merger Sub" and "Directors and Executive Officers of Thermo
Instrument," above.
Robert A. McCabe: Director
Robert A. McCabe has been a director of Thermo Electron since 1962. He has
been the chairman of Pilot Capital Corporation, which is engaged in private
investments, since 1998. Mr. McCabe was president of Pilot Capital Corporation
from 1987 to 1998. Prior to that time, Mr. McCabe was a managing director of
Lehman Brothers Inc., an investment banking firm. Mr. McCabe is also a director
of Atlantic Bank & Trust Company, Borg-Warner Security Corporation, Church &
Dwight Company and Thermo Optek Corporation, an affiliate of Thermo Electron.
Mr. McCabe's business address is Pilot Capital Corporation, 444 Madison Avenue,
Suite 2103, New York, New York 10022.
Theo Melas-Kyriazi: Chief Financial Officer and Vice President
Mr. Melas-Kyriazi has been chief financial officer of Thermo Electron since
January 1999 and a vice president since March 1998. Mr. Melas-Kyriazi was
treasurer of Thermo Instrument and Thermo Electron from 1988 to August 1994.
From August 1994 through March 1998, he served as the president and chief
executive officer of ThermoSpectra. Mr. Melas-Kyriazi is also the chief
financial officer of Thermo Vision and Thermo Instrument, and is a director of
the following affiliates of Thermo Electron: ThermoSpectra and ThermoRetec
Corporation. Mr. Melas-Kyriazi is a citizen of Greece. For further information,
please see descriptions under "Directors and Executive Officers of the Company"
and "Directors and Executive Officers of Thermo Instrument," above.
Donald E. Noble: Director
Donald E. Noble has been a director of Thermo Electron since 1983. Mr.
Noble has announced his intention to retire from the board of directors in
September 1999. For more than 20 years, from 1959 to 1980, Mr. Noble served as
the chief executive officer of Rubbermaid, Incorporated, first with the title of
president and then as the chairman of the board. Mr. Noble is also a director of
the following affiliates of Thermo Electron: Thermo Fibertek Inc., Thermo Power
Corporation, Thermo Sentron Inc. and Thermo TerraTech Inc. Mr. Noble's business
address is 345 North Market Street, Suite G-05, Wooster, Ohio 44691.
Hutham S. Olayan: Director
Hutham S. Olayan has been a director of Thermo Electron since 1987. She has
served since 1995 as the president and a director of Olayan America Corporation,
a member of the Olayan Group, and as the president and a director of Competrol
Real Estate Limited, another member of the Olayan Group, from 1986 until its
merger into Olayan America Corporation in 1997. The surviving company is engaged
in private investments, including real estate, and advisory services. In
addition, from 1985 to 1994, Ms. Olayan served as the president and a director
of Crescent Diversified Limited, another member of the Olayan Group engaged in
private investments. Ms. Olayan is also a director of Trex Medical Corporation,
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<PAGE> 132
an affiliate of Thermo Electron. Ms. Olayan is a citizen of Saudi Arabia. Ms.
Olayan's business address is Olayan America Corporation, Suite 1100, 505 Park
Avenue, New York, New York 10022.
Robert W. O'Leary: Director
Robert W. O'Leary has been a director of Thermo Electron since June 1998.
He has been the president and the chairman of Premier Inc., a strategic alliance
of not-for-profit health care and hospital systems, since 1995. From 1990 to
1995, Mr. O'Leary was the chairman of American Medical International, Inc., one
of the three predecessor entities of Premier Inc. Mr. O'Leary's business address
is Premier, Inc., 12225 El Camino Real, San Diego, California 92130.
William A. Rainville: Chief Operating Officer, Recycling and Resource Recovery
William A. Rainville became the chief operating officer, recycling and
resource recovery, of Thermo Electron in September 1998. Prior to that time, Mr.
Rainville had been a senior vice president of Thermo Electron since March 1993
and was a vice president of Thermo Electron from 1986 to 1993. Mr. Rainville has
been the president and chief executive officer of Thermo Fibertek Inc., a
majority-owned subsidiary of Thermo Electron, since its inception in 1991 and a
director since January 1992. From 1984 until January 1993, Mr. Rainville was the
president and chief executive officer of Thermo Web Systems Inc., a subsidiary
of Thermo Fibertek Inc. Mr. Rainville is also a director of the following
affiliates of Thermo Electron: Thermo Ecotek Corporation, Thermo Fibergen Inc.,
ThermoRetec Corporation, and Thermo TerraTech Inc. Mr. Rainville's business
address is 245 Winter Street, Waltham, Massachusetts 02451.
Richard F. Syron: President, Chief Executive Officer and Director
Richard F. Syron has been the president and chief executive officer of
Thermo Electron since June 1999 and a director of Thermo Electron since
September 1997. From April 1994 to May 1999, Dr. Syron was the chairman and
chief executive officer of the American Stock Exchange, Inc. From January 1989
through April 1994, he was the president and chief executive officer of the
Federal Reserve Bank of Boston. Prior to that time, he held a variety of senior
positions with the Federal Home Loan Bank of Boston, the Federal Reserve Bank of
Boston, the Board of Governors of the Federal Reserve System and the U.S.
Department of Treasury. Dr. Syron is also a director of Dreyfus Corporation, The
John Hancock Corporation and the following affiliates of Thermo Electron:
Thermedics Inc., Thermo Fibertek Inc. and Thermo Instrument. For further
information, please see description under "Directors and Executive Officers of
Thermo Instrument," above.
Roger D. Wellington: Director
Roger D. Wellington has been a director of Thermo Electron since 1986. Mr.
Wellington serves as the president and chief executive officer of Wellington
Consultants, Inc. and of Wellington Associates Inc., international business
consulting firms he founded in 1994 and 1989, respectively. Prior to 1989, Mr.
Wellington served as the chairman of the board of Augat Inc., a manufacturer of
electromechanical components and systems, for more than five years. Prior to
1988, Mr. Wellington also served as the chief executive officer and president of
Augat Inc. for more than ten years. Mr. Wellington is also a director of
Photoelectron Corporation and Thermo Fibergen Inc., an affiliate of Thermo
Electron.
To the knowledge of the Company, all of the above-listed officers and
directors intend to vote their shares of Common Stock to approve the Merger
Agreement.
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<PAGE> 133
APPENDIX D
INFORMATION CONCERNING TRANSACTIONS IN
THE COMMON STOCK OF THE COMPANY
The following sets forth information with respect to purchases of Common
Stock by Thermo Vision, Thermo Instrument, the Merger Sub and Thermo Electron
since the commencement of Thermo Vision's second full fiscal year preceding the
date of this Proxy Statement.
<TABLE>
<CAPTION>
AVERAGE
PURCHASE
NUMBER OF RANGE OF PRICES PRICE PER SHARE
SHARES PURCHASED PAID PER SHARE DURING
QUARTER/YEAR PURCHASER DURING QUARTER DURING QUARTER (1) QUARTER (1)
------------ --------------- ---------------- ------------------ ----------------
<S> <C> <C> <C> <C>
1st Quarter 1999............. Thermo Electron 131,800 $3.75 - $4.50 $4.38
</TABLE>
- ---------------
(1) Prices per share of Common Stock are net of commissions paid by the
purchaser.
The following chart sets forth information with respect to options granted
by Thermo Vision since the commencement of Thermo Vision's second full fiscal
year preceding the date of this Proxy Statement to directors and current
executive officers of Thermo Vision, Thermo Instrument, the Merger Sub and
Thermo Electron.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
DATE OF COVERED EXERCISE
NAME RELATIONSHIP GRANT BY OPTIONS PRICE
---- ------------ ------- ---------- --------
<S> <C> <C> <C> <C>
D. Allan Bromley....... Director, Thermo Vision 12/5/97 15,000 $7.50
Elias P. Gyftopoulos... Director, Thermo Vision; Director, Thermo Electron 5/7/98 15,000 $7.29
John N. Hatsopoulos.... Director, Thermo Instrument; Vice Chairman of the 12/5/97 15,000 $7.50
Board, Thermo Electron
Paul F. Kelleher....... Chief Accounting Officer, Thermo Vision; Chief 12/5/97 2,000 $7.50
Accounting Officer, Thermo Instrument; Senior Vice
President, Finance and Administration, Thermo
Electron
Earl R. Lewis.......... Director and Chairman of the Board, Thermo Vision; 12/5/97 25,000 $7.50
President, Chief Executive Officer and Director,
Thermo Instrument; President and Director, Merger
Sub; Chief Operating Officer, Measurement and
Detection, Thermo Electron
Theo Melas-Kyriazi..... Chief Financial Officer, Thermo Vision; 2/11/99 70,000 $3.25
Chief Financial Officer, Thermo Instrument; Vice
President and Chief Financial Officer, Thermo
Electron
Melissa F. Riordan..... Director, Thermo Vision 12/5/97 2,000 $7.50
Allen J. Smith......... Vice President, Thermo Vision 10/7/98 12,000 $2.73
12/5/97 15,000 $7.50
Arvin H. Smith......... Director, Thermo Instrument 12/5/97 15,000 $7.50
</TABLE>
No options to purchase Common Stock have been exercised by directors and
executive officers of Thermo Vision, Thermo Instrument, the Merger Sub and
Thermo Electron since the commencement of Thermo Vision's second full fiscal
year preceding the date of this Proxy Statement.
In December 1997, Thermo Vision was "spun out" through a distribution of
all of Thermo Vision's outstanding common stock as a tax-free dividend to
stockholders of Thermo Optek Corporation, the original parent corporation of
Thermo Vision. On December 10, 1997, the Company sold 1,139,491 shares of its
common stock in an underwritten initial public offering, registered with the
Securities and Exchange Commission on Form S-1. Such shares were sold for a
purchase price of $7.50 per share in cash, for net proceeds of $7,033,000.
D-1
<PAGE> 134
OWNERSHIP OF COMMON STOCK BY EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY
The following table sets forth the beneficial ownership of Common Stock, as
of June 30, 1999, with respect to (i) each director and current executive
officer of the Company and (ii) all directors and current executive officers as
a group.
While certain directors and executive officers of the Company are also
directors and executive officers of Thermo Electron or its subsidiaries other
than the Company, all such persons disclaim beneficial ownership of the shares
of Common Stock owned by Thermo Instrument or by Thermo Electron, as the case
may be.
<TABLE>
<CAPTION>
THERMO VISION
CORPORATION(2)
----------------------
NUMBER OF PERCENTAGE
NAME(1) SHARES OF CLASS
------- --------- ----------
<S> <C> <C>
D. Allan Bromley............................................ 16,000 *
Elias P. Gyftopoulos........................................ 16,601 *
Roger Herd.................................................. 140 *
Paul F. Kelleher............................................ 6,600 *
Earl R. Lewis............................................... 42,720 *
Theo Melas-Kyriazi.......................................... 70,000 *
Melissa F. Riordan.......................................... 2,000 *
Allen J. Smith.............................................. 27,000 *
All directors and current executive officers as a group (8
persons).................................................. 181,061 2.2%
</TABLE>
- ---------------
* Reflects ownership of less than 1.0% of the outstanding Common Stock.
(1) Except as reflected in the footnotes to this table, shares beneficially
owned consist of shares owned by the indicated person or by that person for
the benefit of minor children, and all share ownership includes sole voting
and investment power.
(2) The shares of Common Stock beneficially owned by Dr. Bromley, Dr.
Gyftopoulos, Mr. Kelleher, Mr. Lewis, Mr. Melas-Kyriazi, Ms. Riordan, Mr.
Smith and all directors and current executive officers as a group include
15,000, 15,000, 2,000, 25,000, 70,000, 2,000, 27,000 and 156,000 shares,
respectively, that such person or group had the right to acquire within 60
days of June 30, 1999, through the exercise of stock options. Shares
beneficially owned by Dr. Gyftopoulos include 601 shares allocated through
July 3, 1999, to his account maintained under the Company's Deferred
Compensation Plan for Directors. Shares beneficially owned by Mr. Lewis
include 350 shares held by his spouse. No director or current executive
officer beneficially owned more than 1.0% of the Common Stock outstanding as
of June 30, 1999; all directors and current executive officers as a group
beneficially owned 2.2% of the Common Stock outstanding as of such date.
D-2
<PAGE> 135
OWNERSHIP OF COMMON STOCK BY EXECUTIVE OFFICERS AND DIRECTORS OF THERMO
INSTRUMENT
The following table sets forth the beneficial ownership of Common Stock, as
of June 30, 1999, with respect to (i) each director and current executive
officer of Thermo Instrument and (iii) all directors and current executive
officers of Thermo Instrument as a group.
While certain directors and executive officers of Thermo Instrument are
also directors and executive officers of Thermo Electron or its subsidiaries
other than Thermo Instrument, all such persons disclaim beneficial ownership of
the shares of Common Stock owned by Thermo Electron or Thermo Instrument, as the
case may be.
<TABLE>
<CAPTION>
THERMO VISION
CORPORATION(2)
----------------------
NUMBER OF PERCENTAGE
NAME(1) SHARES OF CLASS
- ------- --------- ----------
<S> <C> <C>
Frank Borman................................................ 1,500 *
Richard W.K. Chapman........................................ 7,570 *
George N. Hatsopoulos....................................... 23,800 *
John N. Hatsopoulos......................................... 36,100 *
Denis A. Helm............................................... 7,528 *
Barry S. Howe............................................... 7,500 *
Paul F. Kelleher............................................ 6,600 *
Earl R. Lewis............................................... 42,270 *
Theo Melas-Kyriazi.......................................... 70,000 *
Arvin H. Smith.............................................. 16,120 *
Richard F. Syron............................................ 0 *
Polyvios C. Vintiadis....................................... 1,500 *
All directors and current executive officers as a group (12
persons).................................................. 220,938 2.7%
</TABLE>
- ---------------
* Reflects ownership of less than 1.0% of the outstanding Common Stock.
(1) Except as reflected in the footnotes to this table, shares beneficially
owned consist of shares owned by the indicated person or by that person for
the benefit of minor children, and all share ownership includes sole voting
and investment power.
(2) The shares of Common Stock beneficially owned by Col. Borman, Dr. Chapman,
Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Helm, Mr. Howe, Mr. Kelleher,
Mr. Lewis, Mr. Melas-Kyriazi, Mr. Smith, Mr. Vintiadis and all directors and
current executive officers as a group include 1,500, 7,500, 15,000, 15,000,
7,500, 7,500, 2,000, 25,000, 70,000, 15,000, 1,500 and 167,500 shares,
respectively, that such person or group had the right to acquire within 60
days of June 30, 1999, through the exercise of stock options. Shares
beneficially owned by Mr. J. Hatsopoulos include 3,000 shares held by his
spouse. Shares beneficially owned by Mr. Lewis include 350 shares held by
his spouse. No director or current executive officer beneficially owned more
than 1.0% of the Common Stock outstanding as of June 30, 1999; all directors
and current executive officers as a group beneficially owned approximately
2.7% of the Common Stock outstanding as of such date.
D-3
<PAGE> 136
OWNERSHIP OF COMMON STOCK BY EXECUTIVE OFFICERS AND DIRECTORS OF THERMO ELECTRON
The following table sets forth the beneficial ownership of Common Stock, as
of June 30, 1999, with respect to (i) each director and current executive
officer of Thermo Electron and (ii) all directors and current executive officers
as a group.
While certain directors and executive officers of Thermo Electron are also
directors and executive officers of majority-owned subsidiaries of Thermo
Electron, all such persons disclaim beneficial ownership of the shares of Common
Stock owned by Thermo Electron or by such majority-owned subsidiaries, as the
case may be.
<TABLE>
<CAPTION>
THERMO VISION
CORPORATION(2)
----------------------
NUMBER OF PERCENTAGE
NAME(1) SHARES OF CLASS
- ------- --------- ----------
<S> <C> <C>
John M. Albertine........................................... 1,000 *
Samuel W. Bodman............................................ 0 *
Peter O. Crisp.............................................. 1,000 *
Elias P. Gyftopoulos........................................ 16,601 *
George N. Hatsopoulos....................................... 23,800 *
John N. Hatsopoulos......................................... 36,100 *
Brian D. Holt............................................... 1,500 *
Frank Jungers............................................... 2,400 *
John T. Keiser.............................................. 1,500 *
Paul F. Kelleher............................................ 6,600 *
Earl R. Lewis............................................... 42,270 *
Robert A. McCabe............................................ 2,120 *
Theo Melas-Kyriazi.......................................... 70,000 *
Donald E. Noble............................................. 1,000 *
Hutham S. Olayan............................................ 1,000 *
Robert W. O'Leary........................................... 1,000 *
William A. Rainville........................................ 7,500 *
Richard F. Syron............................................ 0 *
Roger D. Wellington......................................... 1,000 *
All directors and current executive officers as a group (19
persons).................................................. 216,841 2.7%
</TABLE>
- ---------------
* Reflects ownership of less than 1.0% of the outstanding Common Stock.
(1) Except as reflected in the footnotes to this table, shares beneficially
owned consist of shares owned by the indicated person or by that person for
the benefit of minor children, and all share ownership includes sole voting
and investment power.
(2) The shares of Common Stock beneficially owned by Dr. Albertine, Mr. Crisp,
Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Holt, Mr.
Jungers, Mr. Keiser, Mr. Kelleher, Mr. Lewis, Mr. McCabe, Mr. Melas-Kyriazi,
Mr. Noble, Ms. Olayan, Mr. O'Leary, Mr. Rainville, Mr. Wellington and all
directors and current executive officers as a group include 1,000, 1,000,
15,000, 15,000, 15,000, 1,500, 1,000, 1,500, 2,000, 25,000, 1,000, 70,000,
1,000, 1,000, 1,000, 7,500, 1,000 and 160,500 shares, respectively, that
such person or members of the group had the right to acquire within 60 days
of June 30, 1999, through the exercise of stock options. Shares beneficially
owned by Dr. Gyftopoulos include 601 shares allocated through July 3, 1999
to his account maintained pursuant to the Company's Deferred Compensation
Plan for Directors. Shares beneficially owned by Mr. J. Hatsopoulos include
3,000 shares held by his spouse. Shares beneficially owned by Mr. Lewis
include 350 shares held by his spouse. Shares beneficially owned by Mr.
McCabe include 700 shares owned by Pilot Trading Trust, of which Mr. McCabe
is a Trustee. No director or current executive officer beneficially owned
more than 1.0% of the Common Stock outstanding as of June 30, 1999; all
directors and current executive officers as a group beneficially owned
approximately 2.7% of the Common Stock outstanding as of such date.
D-4
<PAGE> 137
OWNERSHIP OF COMMON STOCK BY EXECUTIVE OFFICERS AND DIRECTORS OF THE MERGER SUB
Please see "Ownership of Common Stock by Executive Officers and Directors
of the Company," "Ownership of Common Stock by Executive Officers and Directors
of Thermo Instrument" and "Ownership of Common Stock by Executive Officers and
Directors of Thermo Electron," above, for information regarding the ownership of
Common Stock by Earl R. Lewis, the sole director and executive officer of the
Merger Sub.
TRANSACTIONS IN THE COMMON STOCK
There were no transactions in the Common Stock effected during the 60 days
preceding the date of this Proxy Statement by Thermo Vision, Thermo Instrument,
the Merger Sub, Thermo Electron or to the best knowledge of the Company, the
directors and executive officers of any of Thermo Vision, Thermo Instrument, the
Merger Sub or Thermo Electron.
D-5
<PAGE> 1
[ATTACHMENT A TO PROXY STATEMENT]
FORM OF PROXY
THERMO VISION CORPORATION
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS TO BE HELD , 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Roger Herd, Theo Melas-Kyriazi and
Kenneth J. Apicerno, or any one of them in the absence of the others, as
attorneys and proxies of the undersigned, with full power of substitution, for
and in the name of the undersigned, to represent the undersigned at the Special
Meeting of the stockholders of Thermo Vision Corporation, a Delaware corporation
(the "Company"), to be held on ________, _______, 1999, at 10:00 a.m., at the
offices of Thermo Electron Corporation, 81 Wyman Street, Waltham, Massachusetts
02454-9046, and at any adjournment or adjournments thereof, and to vote all
shares of common stock of the Company standing in the name of the undersigned on
_________, 1999, with all of the powers the undersigned would possess if
personally present at such meeting.
(IMPORTANT - TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
<PAGE> 2
SPECIAL MEETING OF STOCKHOLDERS
THERMO VISION CORPORATION
______________, 1999
1. To consider and vote on a proposal to approve an Agreement and Plan
of Merger dated as of August 25, 1999 (the "Merger Agreement") pursuant to which
VIZ Acquisition Corporation, a newly-formed company and jointly owned subsidiary
of Thermo Instrument Systems Inc. and Thermo Electron Corporation, will be
merged (the "Merger") with and into the Company and each stockholder of the
Company (other than stockholders who are entitled to and have perfected their
dissenters' rights, shares held by the Company in treasury and shares held by
Thermo Instrument Systems Inc. and Thermo Electron Corporation) will become
entitled to receive $7.00 in cash, without interest, for each outstanding share
of common stock, $.01 par value, of the Company owned by such stockholder
immediately prior to the effective time of the Merger. A copy of the Merger
Agreement is attached as Appendix A to and is described in the accompanying
Proxy Statement.
[ ] For [ ] Against [ ] Abstain
2. To consider and act in their discretion upon such other matters as
may properly come before the Special Meeting or any adjournment or adjournments
thereof.
[ ] For [ ] Against [ ] Abstain
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS
SET FORTH ABOVE IF NO INSTRUCTION TO THE CONTRARY IS INDICATED OR IF NO
INSTRUCTION IS GIVEN.
Copies of the Notice of Special Meeting and of the Proxy Statement have
been received by the undersigned.
PLEASE DATE, SIGN AND PROMPTLY RETURN THIS PROXY
IN THE ENCLOSED ENVELOPE.
Signature(s)_________________________________________
Date_________________________________________________
Note: This proxy should be dated, signed by the
stockholder(s) exactly as his or her name appears
hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity
should so indicate. If shares are held by joint
tenants or as community property, both should sign.
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD BACK AS SOON AS POSSIBLE!
