SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------------------------------------------------
FORM 10-Q
(mark one)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarter Ended July 3, 1999
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number 1-9567
THERMEDICS INC.
(Exact name of Registrant as specified in its charter)
Massachusetts 04-2788806
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
470 Wildwood Street, P.O. Box 2999
Woburn, Massachusetts 01888-1799
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 622-1000
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Class Outstanding at July 30, 1999
Common Stock, $.10 par value 41,938,120
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
THERMEDICS INC.
Consolidated Balance Sheet
(Unaudited)
Assets
July 3, January 2,
(In thousands) 1999 1999
- ----------------------------------------------------------------------------------- ---------- ----------
Current Assets:
<S> <C> <C>
Cash and cash equivalents (includes $73,377 under repurchase $ 21,545 $142,108
agreements with parent company in 1998)
Advance to affiliate (Note 9) 75,079 -
Short-term available-for-sale investments, at quoted market value 65,750 43,310
(amortized cost of $65,780 and $43,155)
Accounts receivable, less allowances of $5,012 and $4,498 64,215 63,438
Inventories:
Raw materials and supplies 24,134 25,275
Work in process 16,153 15,918
Finished goods 20,496 21,590
Prepaid income taxes and expenses 15,220 14,572
-------- --------
302,592 326,211
-------- --------
Property, Plant, and Equipment, at Cost 60,207 60,687
Less: Accumulated depreciation and amortization 39,994 38,780
-------- --------
20,213 21,907
-------- --------
Long-term Available-for-sale Investments, at Quoted Market Value 46,704 47,259
(amortized cost of $46,798 and $47,226)
-------- --------
Other Assets 11,986 12,723
-------- --------
Cost in Excess of Net Assets of Acquired Companies (Notes 6 and 8) 125,102 145,518
-------- --------
$506,597 $553,618
======== ========
2
<PAGE>
THERMEDICS INC.
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
July 3, January 2,
(In thousands except share amounts) 1999 1999
- ----------------------------------------------------------------------------------- ----------- ----------
Current Liabilities:
Note payable to parent company $ 13,000 $19,000
Notes payable and current maturity of long-term obligations 6,319 6,312
Accounts payable 19,675 20,695
Accrued payroll and employee benefits 10,967 12,830
Accrued income taxes 6,440 8,159
Accrued installation and warranty expenses 4,274 4,483
Customer deposits 3,924 3,523
Other accrued expenses 19,042 16,821
Due to parent company and affiliated companies 2,621 2,096
-------- --------
86,262 93,919
-------- --------
Deferred Income Taxes and Other Deferred Items 449 191
-------- --------
Long-term Obligations:
Subordinated convertible obligations 117,424 122,674
Other 204 128
-------- --------
117,628 122,802
-------- --------
Minority Interest 79,586 88,730
-------- --------
Shareholders' Investment:
Common stock, $.10 par value, 100,000,000 shares authorized; 4,199 4,174
41,989,053 and 41,739,308 shares issued
Capital in excess of par value 109,548 106,846
Retained earnings 116,929 139,644
Treasury stock at cost, 31,232 and 47,348 shares (612) (1,026)
Deferred compensation (1,969) -
Accumulated other comprehensive items (Note 2) (5,423) (1,662)
-------- --------
222,672 247,976
-------- --------
$506,597 $553,618
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
THERMEDICS INC.
Consolidated Statement of Operations
(Unaudited)
Three Months Ended
July 3, July 4,
(In thousands except per share amounts) 1999 1998
- ----------------------------------------------------------------------------------- ----------- ----------
Revenues $ 78,164 $ 76,711
-------- --------
Costs and Operating Expenses:
Cost of revenues (Note 8) 41,595 38,872
Selling, general, and administrative expenses 22,577 22,421
Research and development expenses 6,993 6,146
Restructuring and other nonrecurring costs (Notes 7 and 8) 30,488 -
-------- --------
101,653 67,439
-------- --------
Operating Income (Loss) (23,489) 9,272
Interest Income 2,637 3,281
Interest Expense (includes $241 and $77 to parent company) (1,493) (1,233)
Gain on Sale of Investments, Net - 13
-------- --------
Income (Loss) Before Provision for Income Taxes, Minority Interest, and (22,345) 11,333
Extraordinary Item
Provision for Income Taxes (Note 8) 2,270 4,331
Minority Interest Expense 682 1,728
-------- --------
Income (Loss) Before Extraordinary Item (25,297) 5,274
Extraordinary Item, Net of Provision of Income Taxes of $2,312 (Note 3) - 3,433
-------- --------
Net Income (Loss) $(25,297) $ 8,707
======== ========
Earnings (Loss) per Share (Note 3):
Basic $ (.61) $ .21
======== ========
Diluted $ (.61) $ .20
======== ========
Weighted Average Shares (Note 3):
Basic 41,768 41,663
======== ========
Diluted 41,768 43,494
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
THERMEDICS INC.
Consolidated Statement of Operations
(Unaudited)
Six Months Ended
July 3, July 4,
(In thousands except per share amounts) 1999 1998
- ----------------------------------------------------------------------------------- ----------- ----------
Revenues $ 155,768 $ 152,372
--------- ---------
Costs and Operating Expenses:
Cost of revenues (Note 8) 81,730 77,533
Selling, general, and administrative expenses 45,482 43,482
Research and development expenses 14,501 12,775
Restructuring and other nonrecurring costs (Notes 7 and 8) 31,883 -
--------- ---------
173,596 133,790
--------- ---------
Operating Income (Loss) (17,828) 18,582
Interest Income 5,484 6,946
Interest Expense (includes $483 and $77 to parent company) (2,946) (2,439)
Gain on Sale of Investments, Net - 31
--------- ---------
Income (Loss) Before Provision for Income Taxes, Minority Interest, and (15,290) 23,120
Extraordinary Item
Provision for Income Taxes (Note 8) 5,527 9,100
Minority Interest Expense 1,898 3,378
--------- ---------
Income (Loss) Before Extraordinary Item (22,715) 10,642
Extraordinary Item, Net of Provision of Income Taxes of $3,092 (Note 3) - 4,638
--------- ---------
Net Income (Loss) $ (22,715) $ 15,280
========= =========
Earnings (Loss) per Share (Note 3):
Basic $ (.54) $ .37
========= =========
Diluted $ (.54) $ .36
========= =========
Weighted Average Shares (Note 3):
Basic 41,732 40,760
========= =========
Diluted 41,732 42,709
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
THERMEDICS INC.
Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended
July 3, July 4,
(In thousands) 1999 1998
- ----------------------------------------------------------------------------------- ----------- ----------
Operating Activities:
Net income (loss) $ (22,715) $ 15,280
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Noncash restructuring costs (Note 8) 30,105 -
Depreciation and amortization 5,819 5,392
Minority interest expense 1,898 3,378
Gain on repurchase of subordinated convertible debentures - (7,730)
Provision for losses on accounts receivable 913 391
Other noncash expenses 1,425 453
Change in current accounts:
Accounts receivable (3,348) 4,641
Inventories (81) (2,338)
Prepaid income taxes and expenses (47) (597)
Accounts payable (461) (1,596)
Other current liabilities (3,528) (3,849)
Other (367) (335)
--------- ---------
Net cash provided by operating activities 9,613 13,090
--------- ---------
Investing Activities:
Advances to affiliate, net (Note 9) (75,079) -
Acquisition of Thermo Voltek common stock (Note 6) (20,482) -
Acquisitions, net of cash acquired - (44,195)
Purchases of available-for-sale investments (127,325) (126,950)
Proceeds from sale and maturities of available-for-sale investments 105,648 99,975
Purchases of property, plant, and equipment (3,331) (3,741)
Other 1,188 (503)
--------- ---------
Net cash used in investing activities (119,381) (75,414)
--------- ---------
Financing Activities:
Repayment of subordinated convertible debentures (Note 6) (5,080) -
Repayment of short-term obligation to Thermo Electron (6,000) -
Net increase (decrease) in short-term borrowings 464 (186)
Proceeds from issuance of short-term obligation to Thermo Electron - 21,000
Purchases of Company and subsidiary common stock (926) (11,737)
Purchase of subordinated convertible debentures - (11,384)
Net proceeds from issuance of Company and subsidiary common stock 964 251
Other 76 -
--------- ---------
Net cash used in financing activities $ (10,502) $ (2,056)
--------- ---------
6
<PAGE>
THERMEDICS INC.
Consolidated Statement of Cash Flows (continued)
(Unaudited)
Six Months Ended
July 3, July 4,
(In thousands) 1999 1998
- ----------------------------------------------------------------------------------- ----------- ----------
Exchange Rate Effect on Cash $ (293) $ 552
--------- --------
Decrease in Cash and Cash Equivalents (120,563) (63,828)
Cash and Cash Equivalents at Beginning of Period 142,108 187,012
--------- --------
Cash and Cash Equivalents at End of Period $ 21,545 $123,184
========= ========
Noncash Activities:
Fair value of assets of acquired companies $ - $ 54,294
Cash paid for acquired companies acquired - (44,195)
--------- --------
Liabilities assumed of acquired companies $ - $ 10,099
========= ========
The accompanying notes are an integral part of these consolidated financial
statements.
7
<PAGE>
Notes to Consolidated Financial Statements
1. General
The interim consolidated financial statements presented have been prepared
by Thermedics Inc. (the Company) without audit and, in the opinion of
management, reflect all adjustments of a normal recurring nature necessary for a
fair statement of the financial position at July 3, 1999, the results of
operations for the three- and six-month periods ended July 3, 1999, and July 4,
1998, and the cash flows for the six-month periods ended July 3, 1999, and July
4, 1998. Interim results are not necessarily indicative of results for a full
year.
The consolidated balance sheet presented as of January 2, 1999, has been
derived from the consolidated financial statements that have been audited by the
Company's independent public accountants. The consolidated financial statements
and notes are presented as permitted by Form 10-Q and do not contain certain
information included in the annual financial statements and notes of the
Company. The consolidated financial statements and notes included herein should
be read in conjunction with the financial statements and notes included in the
Company's Annual Report on Form 10-K for the fiscal year ended January 2, 1999,
filed with the Securities and Exchange Commission.
2. Comprehensive Income
Comprehensive income combines net income and "other comprehensive items,"
which represents certain amounts that are reported as components of
shareholders' investment in the accompanying balance sheet, including foreign
currency translation adjustments and unrealized net of tax gains and losses from
available-for-sale investments. The Company had a comprehensive loss of
$26,320,000 in the second quarter of 1999 and comprehensive income of $8,902,000
in the second quarter of 1998. The Company had a comprehensive loss of
$25,549,000 in the first six months of 1999 and comprehensive income of
$15,326,000 in the first six months of 1998.
</TABLE>
<TABLE>
<CAPTION>
3. Earnings (Loss) per Share
Basic and diluted earnings (loss) per share were calculated as follows:
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
July 3, July 4, July 3, July 4,
(In thousands except per share amounts) 1999 1998 1999 1998
- ------------------------------------------------------------- ---------- ----------- ---------- ----------
Basic
Net Income (Loss) $(25,297) $ 8,707 $(22,715) $ 15,280
-------- -------- -------- --------
Weighted Average Shares 41,768 41,663 41,732 40,760
------- -------- ------- --------
Basic Earnings (Loss) per Share $ (.61) $ .21 $ (.54) $ .37
======= ======== ======== ========
Diluted
Net Income (Loss) $(25,297) $ 8,707 $(22,715) $ 15,280
Effect of:
Convertible obligations - 1 - 1
Majority-owned subsidiaries' dilutive securities (10) (24) (13) (59)
------- -------- ------- --------
Income (Loss) Available to Common Shareholders, as (25,307) 8,684 (22,728) 15,222
------- -------- ------- --------
Adjusted
Weighted Average Shares 41,768 41,663 41,732 40,760
Effect of:
Convertible obligations - 1,722 - 1,827
Stock options - 109 - 122
------- -------- ------- --------
Weighted Average Shares, as Adjusted 41,768 43,494 41,732 42,709
------- -------- ------- --------
Diluted Earnings (Loss) per Share $ (.61) $ .20 $ (.54) $ .36
======= ======== ======= ========
8
<PAGE>
3. Earnings (Loss) per Share (continued)
The computation of diluted earnings (loss) per share for all periods
excludes the effect of assuming the exercise of certain outstanding stock
options because the effect would be antidilutive. As of July 3, 1999, there were
1,936,000 of such options outstanding, with exercise prices ranging from $4.70
to $29.08 per share.
In addition, the computation of diluted earnings per share for the second
quarter and first six months of 1999 excludes the effect of assuming the
conversion of convertible obligations because the effect would be antidilutive.
As of July 3, 1999, the calculation excluded $15,859,000 principal amount of
2.875% subordinated convertible debentures, convertible at $14.928 per share,
and $31,565,000 principal amount of noninterest bearing subordinated convertible
debentures, convertible at $32.68 per share.
During the second quarter of 1998, the Company recorded an extraordinary
gain in connection with the repurchase and exchange of subsidiary subordinated
convertible debentures, which increased basic and diluted earnings per share by
$.08 and $.11 in the second quarter and first six months of 1998, respectively.
4. Business Segment Information
Three Months Ended Six Months Ended
July 3, July 4, July 3, July 4,
(In thousands) 1999 1998 1999 1998
- ------------------------------------------------------------- ---------- ----------- ---------- ----------
Revenues:
Quality Assurance and Security Products $ 18,187 $ 23,957 $38,599 $ 47,664
Precision Weighing and Inspection Equipment 28,106 21,612 54,662 40,558
Heart Assist and Blood Testing Devices 20,215 16,133 39,676 32,618
Power Electronics and Test Equipment 6,574 10,725 12,791 22,165
Other 5,082 4,284 10,040 9,367
-------- -------- ------- --------
$ 78,164 $ 76,711 $155,768 $152,372
======== ========= ======== ========
Income (Loss) Before Provision for Income Taxes,
Minority Interest, and Extraordinary Item:
Quality Assurance and Security Products $ 2,081 $ 3,445 $ 4,728 $ 6,515
Precision Weighing and Inspection Equipment 3,105 2,386 5,113 4,346
Heart Assist and Blood Testing Devices 2,437 1,972 4,497 4,682
Power Electronics and Test Equipment (a) (31,690) 885 (32,019) 1,707
Other 1,187 945 2,139 2,054
Corporate (b)(c) (609) (361) (2,286) (722)
-------- --------- ------- --------
Total operating income (loss) (23,489) 9,272 (17,828) 18,582
Interest and other income, net 1,144 2,061 2,538 4,538
-------- --------- ------- --------
$(22,345) $ 11,333 $(15,290) $ 23,120
======== ========= ======== ========
(a) Includes $30,223,000 of restructuring and nonrecurring costs in the second
quarter and first six months of 1999.
(b) Includes $265,000 and $1,660,000 of nonrecurring costs in the second quarter
and first six months of 1999, respectively.
(c) Primarily general and administrative expenses and nonrecurring costs.
9
<PAGE>
5. Accrued Acquisition Expenses
The Company has undertaken restructuring activities at certain acquired
businesses. The Company's restructuring activities, which were accounted for in
accordance with Emerging Issues Task Force Pronouncement (EITF) 95-3, primarily
have included reductions in staffing levels and the abandonment of excess
facilities. In connection with these restructuring activities, as part of the
cost of acquisitions, the Company established reserves, primarily for severance
and excess facilities. The Company finalized its restructuring plans for
businesses acquired in June 1998 during the second quarter of 1999. Amounts
accrued at July 3, 1999, represent ongoing lease obligations (net of sublease
income) through 2008 for abandoned facilities, as well as severance, which will
be paid during the third quarter of 1999.
A summary of the changes in accrued acquisition expenses, included in
other accrued expenses in the accompanying balance sheet, follows:
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Abandonment
of Excess
(In thousands) Severance Facilities Other Total
- ----------------------------------------------- -------------- -------------- -------------- -------------
Balance at January 2, 1999 $ 177 $ 788 $ - $ 965
Reserves established 478 1,151 62 1,691
Usage (408) (309) (22) (739)
Currency translation - (21) - (21)
------ ------ ------ ------
Balance at July 3, 1999 $ 247 $1,609 $ 40 $1,896
====== ====== ====== ======
6. Merger with Thermo Voltek Corp.
In March 1999, the Company acquired, through a merger, all of the
outstanding shares of Thermo Voltek Corp., a majority-owned subsidiary of the
Company, that it did not previously own, other than the shares owned by Thermo
Electron Corporation. The total cost of the acquisition is expected to be
$25,732,000, including related expenses and the repayment of Thermo Voltek's
$5,250,000 principal amount of 3 3/4% subordinated convertible debentures, which
became due and payable at the election of the holder following the merger, and
Thermo Voltek's outstanding stock options. To date, the Company has repaid
$5,080,000 principal amount of Thermo Voltek's debentures. The Thermo Voltek
stock options were converted into stock options that are exercisable into
619,819 shares of Company common stock at a weighted average price of $6.33 per
share, with an aggregate value of $703,000 as of the date of the acquisition.
Subsequent to this transaction, the Company and Thermo Electron owned
approximately 97% and 3%, respectively, of the outstanding common stock of
Thermo Voltek. The cost of the acquisition exceeded the estimated fair value of
the incremental net assets by $10,050,000. Pro forma data is not presented since
the acquisition of the minority interest of Thermo Voltek was not material to
the Company's results of operations.
In late March and early April 1998, four putative class actions were filed
in the Court of Chancery of the State of Delaware in and for New Castle County
by shareholders of Thermo Voltek, which were consolidated under the caption In
re Thermo Voltek Corp. Shareholders Litigation, Consolidated C.A. 16287 (the
Action) in October 1998. The complaint in the Action names the Company, Thermo
Voltek, Thermo Electron, and directors of Thermo Voltek as defendants and
alleges, among other things, that Thermo Voltek's directors violated the
fiduciary duties of loyalty, good faith, and fair dealing that they owed to all
shareholders of Thermo Voltek 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 Thermo Voltek's shareholders under the terms of the proposed Merger Agreement
was allegedly unfair and grossly inadequate. The complaints further allege that
the Company, Thermo Voltek, and Thermo Electron have violated their alleged
fiduciary duty of fair dealing by proposing the merger transaction at the time.
The parties are currently conducting discovery. Due to the inherent uncertainty
of litigation, the outcome of this matter cannot be estimated. The Company
expects, however, that any resolution will not materially affect its future
results of operations or financial position.
10
<PAGE>
7. Proposed Reorganization and Related Costs
During 1998, Thermo Electron announced a proposed reorganization involving
certain of Thermo Electron's subsidiaries, including the Company. Under this
plan, the Company would acquire Thermo Electron's wholly owned biomedical group
for shares of Company common stock. In addition, the Company's equity interests
in its Thermo Sentron Inc., Thermedics Detection Inc., and Thermo Voltek
subsidiaries would be transferred to Thermo Electron for shares of common stock
of the Company. Thermo Electron would take Thermo Sentron and Thermedics
Detection private; shareholders of these subsidiaries would receive cash in
exchange for their shares of common stock. The proposed transactions are subject
to a number of conditions, including the establishment of prices and exchange
ratios; confirmation of anticipated tax consequences; the approval by the Board
of Directors of the Company, Thermo Sentron, and Thermedics Detection (including
their respective independent directors); negotiation and execution of definitive
agreements; clearance by the Securities and Exchange Commission of any necessary
documents in connection with the proposed transactions; approval by the Board of
Directors of Thermo Electron; and receipt of fairness opinions from investment
banking firms on certain financial aspects of the transactions.
In connection with this transaction, the Company recorded $1,660,000 of
nonrecurring costs in the first six months of 1999, as discussed in Note 8.
8. Restructuring and Related Costs
During the second quarter of 1999, the Company recorded restructuring and
related costs of $32,813,000, including restructuring costs of $30,105,000,
nonrecurring costs of $383,000, a tax asset write-off of $1,409,000, and an
inventory provision of $916,000. The tax asset write-off is included in the
provision for income taxes and the inventory provision is included in cost of
sales in the accompanying statement of operations. Restructuring costs of
$30,105,000 related to the Company's decision to sell its power electronics and
test equipment business and includes $28,542,000 to write off related cost in
excess of net assets of acquired companies to reduce the carrying value of the
business to the estimated proceeds from its sale. In addition, restructuring
costs include a charge of $1,563,000 recorded by the Company to write off the
Company's remaining net investment in a subsidiary of this business, which the
Company intends to transfer to a buyer in consideration for a release from
certain contractual obligations, primarily ongoing lease obligations. The tax
write-off represents a deferred tax asset that will not be realized as a result
of exiting this business. The inventory provision results from exiting and
reengineering certain product lines. Unaudited revenues and operating losses
before restructuring and related costs of the power electronics and test
equipment business were $12,791,000 and $880,000, respectively, for the first
six months of 1999 and $37,940,000 and $173,000, respectively, for 1998.
Nonrecurring costs of $383,000 includes $265,000 related to the Company's
proposed reorganization (Note 7), and $118,000 to write off a receivable as a
result of an unfavorable resolution of a post-closing adjustment in connection
with the sale of a business in 1998.
During the first quarter of 1999, the Company recorded $1,395,000 of costs
in connection with the Company's proposed reorganization (Note 7), primarily
investment banking fees.
9. 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.
11
<PAGE>
10. Subsequent Event
In July 1999, the Company acquired Erich Jaeger, GmbH, a medical products
company based in Germany, for approximately $42 million, including the repayment
of Jaeger's indebtedness. Jaeger develops and manufactures equipment for
lung-function, cardio-respiratory, and sleep-disorder diagnosis and monitoring.
The Company will account for the acquisition using the purchase method of
accounting and its results of operations will be included in the Company's
results of operations from the date of acquisition. The Company financed this
acquisition with $31.0 million of short-term borrowings from a wholly owned
subsidiary of Thermo Electron and a third party. The borrowings from the third
party are expected to be refinanced with the wholly owned subsidiary of Thermo
Electron and will be due on demand and bear interest at a variable rate. The
Company also expects to refinance $7.0 million of existing debt at Jaeger with
additional borrowings from the wholly owned subsidiary of Thermo Electron under
similar terms. In addition, Jaeger has other borrowings of $3.5 million, which
the Company expects to repay upon maturity in May 2000.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Management's
Discussion and Analysis of Financial Condition and Results of Operations. For
this purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, the words "believes," "anticipates," "plans," "expects," "seeks,"
"estimates," and similar expressions are intended to identify forward-looking
statements. There are a number of important factors that could cause the results
of the Company to differ materially from those indicated by such forward-looking
statements, including those detailed under the heading "Forward-looking
Statements" in Exhibit 13 to the Company's Annual Report on Form 10-K for the
fiscal year ended January 2, 1999, filed with the Securities and Exchange
Commission.
Overview
The Company's businesses operate in four reportable segments: Quality
Assurance and Security Products (Quality Assurance), Precision Weighing and
Inspection Equipment (Inspection Equipment), Heart Assist and Blood Testing
Devices (Heart Assist Devices), and Power Electronics and Test Equipment (Power
Equipment). Through the Company's Thermedics Detection Inc. subsidiary, the
Quality Assurance segment develops, manufactures, and markets high-speed
detection and measurement instruments used in a variety of on-line industrial
process applications, security applications, and laboratory analyses. The
Inspection Equipment segment includes the Company's Thermo Sentron Inc.
subsidiary, which develops, manufactures, and markets high-speed
precision-weighing and inspection equipment for industrial production and
packaging lines. In June 1998, Thermo Sentron acquired the three businesses that
constituted the product-monitoring group of Graseby Limited (the
product-monitoring businesses), a subsidiary of Smiths Industries plc. The Power
Equipment segment manufactures electronics-test instruments and a range of
products related to power amplification, conversion, and quality.
The Heart Assist Devices segment, consisting of the Company's Thermo
Cardiosystems Inc. subsidiary, manufactures two implantable left
ventricular-assist systems (LVAS): a pneumatic, or air-driven, system and an
electric version. The electric LVAS is being used in Europe as a bridge to
transplant and to provide long-term cardiac support for patients not eligible
for a heart transplant. In general, a profit cannot be earned from the sale of
an LVAS in the United States until approval of the device for commercial sale
has been received from the U.S. Food and Drug Administration (FDA). Both the
air-driven and electric LVAS have received FDA approval for use as a bridge to
transplant in the United States. Until FDA approval has been obtained, the
Company may not earn a profit on the sale in the U.S. of products currently used
in clinical studies. Thermo Cardiosystems' International Technidyne Corporation
subsidiary is a leading manufacturer of near-patient, whole-blood coagulation
testing equipment and related disposables and also manufactures premium-quality,
single-use skin-incision devices.
In July 1999, the Company acquired Erich Jaeger, GmbH, which will
subsequently comprise the Company's Respiratory-care Products segment.
12
<PAGE>
Overview (continued)
The Company also develops and manufactures enteral nutrition-delivery
systems and a line of medical-grade polymers used in medical disposables and in
nonmedical, industrial applications, including safety glass and automotive
coatings.
A significant amount of the Company's revenues is derived from sales of
products outside of the U.S., through export sales and sales by the Company's
foreign subsidiaries. The Company expects an increase in the percentage of
revenues derived from international operations. 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 between the U.S. dollar and foreign currencies. Where
appropriate, the Company uses forward contracts to reduce its exposure to
currency fluctuations.
Results of Operations
Second Quarter 1999 Compared With Second Quarter 1998
Total revenues increased to $78.2 million in the second quarter of 1999
from $76.7 million in the second quarter of 1998. Increases in revenues in the
Inspection Equipment segment of $6.5 million and the Heart Assist Devices
segment of $4.1 million were partially offset by decreases in revenues in the
Quality Assurance segment of $5.8 million and the Power Equipment segment of
$4.2 million.
Revenues from the Inspection Equipment segment increased to $28.1 million
in the second quarter of 1999 from $21.6 million in the second quarter of 1998.
Revenues increased $7.1 million as a result of the inclusion of a full three
months of revenues from the product-monitoring businesses, which were acquired
by Thermo Sentron in June 1998. This increase was offset in part by decreases in
revenues of $0.2 million from existing businesses, primarily due to decreased
demand in Europe, and $0.4 million due to the impact of a stronger U.S. dollar
relative to currencies in foreign countries in which Thermo Sentron operates.
Heart Assist Devices segment revenues increased to $20.2 million in the
second quarter of 1999 from $16.1 million in the second quarter of 1998.
Revenues from Thermo Cardiosystems' LVAS increased to $10.5 million in 1999 from
$7.1 million in 1998, primarily due to an increase in demand for the electric
LVAS as a result of FDA approval, which was granted in September 1998, and, to a
lesser extent, price increases for the electric LVAS. These increases were
offset in part by a decrease in revenues from the air-driven LVAS and the
expiration of several government research and development contracts.
Revenues from the Quality Assurance segment decreased to $18.2 million in
the second quarter of 1999 from $24.0 million in the second quarter of 1998.
Revenues from Thermedics Detection's industrial process instruments decreased
$3.0 million, primarily due to lower revenues from ALEXUS(R) and near-infrared
analyzers and related contract revenues, offset in part by an increase in EZ
Flash(TM) product sales. Revenues from Thermedics Detection's laboratory
products decreased $1.2 million, primarily due to lower worldwide demand for its
products and, to a lesser extent, the expiration of two private label
agreements. In addition, revenues from EGIS(R) explosives-detection systems and
related services decreased $1.2 million, primarily due to lower shipments of
security systems.
Revenues from the Power Equipment segment decreased to $6.6 million in the
second quarter of 1999 from $10.7 million in the second quarter of 1998,
primarily due to lower sales of electrostatic discharge (ESD) test equipment to
the semiconductor industry and lower demand for certain lower-margin products in
Europe. The decrease in revenues was also due to the sale of the segment's
Universal Voltronics division in November 1998, which contributed $1.6 million
in revenues in the 1998 period.
13
<PAGE>
Second Quarter 1999 Compared With Second Quarter 1998 (continued)
The gross profit margin was 47% in the second quarter of 1999, compared
with 49% in the second quarter of 1998. The gross profit margin in the Power
Equipment segment decreased to 24% in 1999 from 45% in 1998, primarily due to
inventory provisions of $0.9 million associated with exiting and reengineering
certain product lines and, to a lesser extent, lower revenues. The gross profit
margin in the Inspection Equipment segment decreased to 39% in 1999 from 40% in
1998, primarily due to the inclusion of a full three months of lower-margin
revenues from the acquired product-monitoring businesses.
Selling, general, and administrative expenses as a percentage of revenues
were unchanged at 29% in the second quarter of 1999 and 1998.
Research and development expenses increased to $7.0 million in the second
quarter of 1999 from $6.1 million in the second quarter of 1998. The increase
reflects increased expenses at the Heart Assist Devices segment associated with
a clinical trial being conducted to evaluate the electric LVAS as an alternative
to medical therapy, as well as expenses associated with the development of the
HeartMate II system. In addition, research and development expenses increased at
Thermo Sentron due to the inclusion of a full three months of expenses from the
acquired product-monitoring businesses.
The Company recorded restructuring and other nonrecurring costs of $30.5
million in the second quarter of 1999 (Note 8). The Company recorded $30.1
million of restructuring costs, including $28.5 million to write off cost in
excess of net assets of acquired companies, and $1.6 million to write off its
investment in a wholly owned subsidiary. The Company also recorded $0.4 million
of nonrecurring costs in the second quarter of 1999, including $0.3 million
incurred in connection with the Company's proposed reorganization (Note 7) and
$0.1 million incurred as a result of an unfavorable resolution of a post-closing
adjustment in connection with the sale of a business.
Interest income decreased to $2.6 million in the second quarter of 1999
from $3.3 million in the second quarter of 1998, primarily due to lower average
invested balances as a result of cash expended for the acquisition of the
product-monitoring businesses, the repurchase of securities of the Company and
certain of its majority-owned subsidiaries, and a decrease in interest rates.
Interest expense increased to $1.5 million in the second quarter of 1999 from
$1.2 million in the second quarter of 1998, primarily as a result of interest
expense on borrowings from Thermo Electron Corporation used to partially finance
the acquisition of the product-monitoring businesses and, to a lesser extent,
the Company's issuance of $15.9 million principal amount of 2.875% subordinated
convertible debentures in exchange for $21.7 million principal amount of
noninterest-bearing subordinated convertible debentures in July 1998.
The Company recorded income tax expense of $2.3 million in the second
quarter of 1999 on a pretax loss, primarily due to the effect of certain
nondeductible restructuring costs, primarily the write-off of cost in excess of
net assets of acquired companies, as well as the write-off of a $1.4 million tax
asset (Note 8). The effective tax rate in 1998 was 38%. This rate exceeded the
statutory federal income tax rate primarily due to the impact of state income
taxes and nondeductible amortization of cost in excess of net assets of acquired
companies.
Minority interest expense decreased to $0.7 million in the second quarter
of 1999 from $1.7 million in the second quarter of 1998, primarily due to the
Company's increased ownership of Thermo Voltek and lower profits at the
Company's Thermedics Detection subsidiary.
In the second quarter of 1998, the Company and a majority-owned subsidiary
recorded a gain of $3.4 million, net of related income taxes of $2.3 million, on
the repurchase and exchange of subordinated convertible debentures.
14
<PAGE>
First Six Months 1999 Compared With First Six Months 1998
Total revenues increased to $155.8 million in the first six months of 1999
from $152.4 million in the first six months of 1998. Increases in revenues in
the Inspection Equipment segment of $14.1 million and the Heart Assist Devices
segment of $7.1 million were partially offset by decreases in revenues in the
Power Equipment segment of $9.4 million and the Quality Assurance segment of
$9.1 million.
Revenues from the Inspection Equipment segment increased to $54.7 million
in the first six months of 1999 from $40.6 million in the first six months of
1998. Revenues increased $15.9 million as a result of the acquisition of the
product-monitoring businesses by Thermo Sentron in June 1998. This increase was
offset in part by decreases of $1.2 million from existing businesses, primarily
due to decreased demand in Europe, and $0.6 million due to the impact of a
stronger U.S. dollar relative to currencies in foreign countries in which Thermo
Sentron operates.
Heart Assist Devices segment revenues increased to $39.7 million in the
first six months of 1999 from $32.6 million in the first six months of 1998.
Revenues from Thermo Cardiosystems' LVAS increased to $20.3 million in 1999 from
$14.2 million in 1998, primarily due to the reasons discussed in the results of
operations for the second quarter.
Revenues from the Quality Assurance segment decreased to $38.6 million in
the first six months of 1999 from $47.7 million in the first six months of 1998.
Revenues from Thermedics Detection's industrial process instruments decreased
$4.2 million, primarily due to lower revenues from ALEXUS and near-infrared
analyzers, offset in part by an increase in EZ Flash product sales. Revenues
from EGIS explosives-detection systems and related services decreased $2.7
million, primarily due to lower shipments of security systems. During the first
quarter of 1998, Thermedics Detection completed shipments under a contract to
provide security systems to the Federal Aviation Administration. Revenues under
the contract totaled $1.1 million during the first six months of 1998. In
addition, revenues from Thermedics Detection's laboratory products decreased
$2.3 million, primarily due to lower worldwide demand for its products and, to a
lesser extent, the expiration of two private label agreements.
Revenues from the Power Equipment segment decreased to $12.8 million in
the first six months of 1999 from $22.2 million in the first six months of 1998,
primarily due to lower sales of ESD test equipment to the semiconductor industry
and lower demand for certain lower-margin products in Europe. The decrease in
revenues was also due to the segment's sale of its Universal Voltronics division
in November 1998, which contributed $2.9 million in revenues in the 1998 period.
The gross profit margin was 48% in the first six months of 1999, compared
with 49% in the first six months of 1998. The gross profit margin at the Power
Equipment segment decreased to 31% in 1999 from 45% in 1998, primarily due to
inventory provisions of $0.9 million associated with exiting and reengineering
certain product lines and, to a lesser extent, lower revenues. The gross profit
margin in the Inspection Equipment segment decreased to 38% in 1999 from 39% in
1998, primarily due to the inclusion of lower-margin revenues from the acquired
product-monitoring businesses. These decreases were offset in part by an
increase in the gross profit margin at the Quality Assurance segment to 56% in
1999 from 54% in 1998, primarily due to a shift in sales mix to higher-margin
products.
Selling, general, and administrative expenses as a percentage of revenues
were unchanged at 29% in the first six months of 1999 and 1998.
Research and development expenses increased to $14.5 million in the first
six months of 1999 from $12.8 million in the first six months of 1998, primarily
due to the reasons discussed in the results of operations for the second
quarter.
15
<PAGE>
First Six Months 1999 Compared With First Six Months 1998 (continued)
The Company recorded restructuring and other nonrecurring costs of $31.9
million in the first six months of 1999 (Note 8). The Company recorded $30.1
million of restructuring costs as discussed in the results of operations for the
second quarter. The Company also recorded $1.8 million of nonrecurring costs in
the first six months of 1999, primarily investment banking fees incurred in
connection with the Company's proposed reorganization (Note 7).
Interest income decreased to $5.5 million in the first six months of 1999
from $6.9 million in the first six months of 1998. Interest expense increased to
$2.9 million in the first six months of 1999 from $2.4 million in the first six
months of 1998. These changes were primarily due to the reasons discussed in the
results of operations for the second quarter.
The Company recorded income tax expense of $5.5 million in the first six
months of 1998 on a pretax loss, primarily due to the effect of certain
nondeductible restructuring costs, as well as the write-off of a $1.4 million
tax asset (Note 8). The effective tax rate was 39% in the first six months of
1998. This rate exceeded the statutory federal income tax rate primarily due to
the impact of state income taxes and nondeductible amortization of cost in
excess of net assets of acquired companies.
Minority interest expense decreased to $1.9 million in the first six
months of 1999 from $3.4 million in the first six months of 1998, primarily due
to the Company's increased ownership of Thermo Voltek and lower profits at
certain of the Company's majority-owned subsidiaries.
In the first six months of 1998, the Company and a majority-owned
subsidiary recorded a gain of $4.6 million, net of related income taxes of $3.1
million, on the repurchase and exchange of subordinated convertible debentures.
Liquidity and Capital Resources
Consolidated working capital was $216.3 million at July 3, 1999, compared
with $232.3 million at January 2, 1999. Cash, cash equivalents, and short- and
long-term available-for-sale investments were $134.0 million at July 3, 1999,
compared with $232.7 million at January 2, 1999. Substantially all of the $134.0
million balance at July 3, 1999, was held by the Company's majority-owned
subsidiaries. In addition, at July 3, 1999, the Company had $75.1 million
invested in an advance to affiliate. Of the $75.1 million balance, $61.2 million
was advanced by the Company's majority-owned subsidiaries and the remainder by
the Company and its wholly owned subsidiaries. Prior to the use of a new
domestic cash management arrangement between the Company and Thermo Electron
Corporation (Note 9), which became effective June 1, 1999, amounts invested with
Thermo Electron were included in cash and cash equivalents.
During the first six months of 1999, $9.6 million of cash was provided by
operating activities. Cash provided by the Company's operations was offset in
part by $3.5 million of cash used to fund a decrease in other current
liabilities, primarily accrued payroll and other benefits, and $3.3 million of
cash used to fund an increase in accounts receivable, primarily at the Heart
Assist Devices segment due to higher revenues and at the Inspection Equipment
segment due to delays in the pursuit of collections of accounts receivable at
certain of Thermo Sentron's subsidiaries due principally to disruptions to
collection activities caused by restructuring and integration of acquired
businesses. Thermo Sentron has substantially completed these actions and expects
to improve collections over the remainder of 1999.
Excluding available-for-sale investments and advance to affiliate activity
(Note 9), the Company's primary investing activity in the second quarter of 1999
was the acquisition, through a merger, of all of the outstanding shares of
Thermo Voltek that the Company did not previously own, other than the shares
owned by Thermo Electron, for approximately $20.5 million in cash (Note 6). The
Company is currently a party to litigation in the Delaware State Chancery Court
with respect to this transaction. The Company also expended $3.3 million for
purchases of property, plant, and equipment during the first six months of 1999.
During the remainder of 1999, the Company expects to make capital expenditures
of approximately $6 million.
16
<PAGE>
Liquidity and Capital Resources (continued)
During the first six months of 1999, the Company's financing activities
used cash of $10.5 million. Cash of $5.1 million was used to repay subordinated
convertible debentures of Thermo Voltek. In addition, cash of $6.0 million was
used to partially repay a short-term obligation to Thermo Electron. Thermo
Cardiosystems expended $0.9 million to repurchase its common stock. These
purchases were made pursuant to authorizations by Thermo Cardiosystems' Boards
of Directors. As of July 3, 1999, $12.9 million remained under Thermo
Cardiosystems' authorizations. Any such purchases are funded from working
capital.
The Company expects to continue to pursue its strategy of expanding its
business both through the continued development, manufacture, and sale of new
products, and through the possible acquisition of companies that will provide
additional marketing or manufacturing capabilities and new products. In July
1999, the Company acquired all of the outstanding shares of Erich Jaeger, GmbH
for approximately $42 million, including the repayment of debt (Note 10). Jaeger
develops, manufactures, and markets equipment for lung-function,
cardio-respiratory, and sleep-disorder diagnosis and monitoring. The Company
financed this acquisition with $31.0 million of short-term borrowings from a
wholly owned subsidiary of Thermo Electron and a third party. The borrowings
from the third party are expected to be refinanced with the wholly owned
subsidiary of Thermo Electron and will be due on demand and bear interest at a
variable rate. The Company also expects to refinance $7.0 million of existing
debt at Jaeger with additional borrowings from the wholly owned subsidiary of
Thermo Electron under similar terms. In addition, Jaeger has other borrowings of
$3.5 million, which the Company expects to repay upon maturity in May 2000.
While the Company currently has no other definitive acquisition
agreements, it expects that it would finance any acquisitions through internal
funds or through borrowings from third parties or Thermo Electron, although it
has no agreements that assure such funds will be available on acceptable terms
or at all. The Company believes that its existing resources are sufficient to
meet the capital requirements of its existing operations for the foreseeable
future.
Year 2000
The following 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 key suppliers and vendors; and (iv)
developing a contingency plan.
The Company's State of Readiness
The Company has implemented a compliance program to ensure that its
critical information technology systems and non-information technology systems
will be ready for the year 2000. The first phase of the program, testing and
evaluating the Company's critical information technology systems and
non-information technology systems for year 2000 compliance, has largely been
completed. During phase one, the Company tested and evaluated its significant
computer systems, software applications, and related equipment for year 2000
compliance. The Company also evaluated the potential year 2000 impact on its
critical non-information technology systems, which efforts included testing the
year 2000 readiness of its manufacturing, utility, and telecommunications
systems at its critical facilities. The Company is currently in phase two of its
program, during which any material noncompliant systems or non-information
technology systems that were identified during phase one are prioritized and
remediated. Based on its evaluation, the Company does not believe that any
material upgrades to its critical non-information technology systems are
required. The Company is currently upgrading or replacing such noncompliant
information technology systems, and this process was approximately 90% 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.
17
<PAGE>
Year 2000 (continued)
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 or for which the Company continues to provide technical support. The
Company believes that all of such material products are year 2000 compliant.
However, as many of the Company's products are complex, interact with or
incorporate third-party products, and operate on computer systems that are not
under the Company's control, there can be no assurance that the Company has
identified all of the year 2000 problems with its current products. The Company
believes that certain of its older products, which it no longer manufactures or
sells, may not be year 2000 compliant. The Company is continuing to test and
evaluate such products. The Company is focusing its efforts on products that are
under warranty or early in their expected life and/or are subject to FDA
considerations due to safety risks. The Company is offering upgrades and/or
identifying potential solutions where reasonably practicable.
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 is distributing 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 and
monitor the year 2000 compliance progress of significant suppliers and vendors
that indicate that they are not year 2000 compliant or that do not respond to
the Company's questionnaires. The Company has not completed its assessment of
third-party risk, but expects to be substantially completed by the end of
October 1999.
Year 2000 Compliance Status
----------------------------------------------------------------------
Material Information
Technology Systems and Facilities Approximately 90% completed
Material Current Products Substantially completed
Evaluation of Third-party Risk Approximately 70% completed
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 in October 1999.
Estimated Costs to Address the Company's Year 2000 Issues
The Company had incurred expenses to third parties (external costs)
related to year 2000 issues of approximately $1.0 million as of July 3, 1999,
and the total external costs of year 2000 remediation are expected to be
approximately $1.5 million. Year 2000 costs are 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 the internal costs incurred for its year 2000
compliance project. Such costs are principally the related payroll costs for its
information systems group.
18
<PAGE>
Year 2000 (continued)
Reasonably Likely Worst Case Scenario
The Company is not currently 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.
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. 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 significant adverse impact on the
Company's business, operations, and financial condition, in amounts that cannot
be reasonably estimated at this time.
Item 3 - Quantitative and Qualitative Disclosure About Market Risk
The Company's exposure to market risk from changes in foreign currency
exchange rates, interest rates, and equity prices has not changed materially
from its exposure at year-end 1998.
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
On May 27, 1999, at the Annual Meeting of Shareholders, the shareholders
elected eight incumbent directors to a one-year term expiring in 2000. The
Directors elected at the meeting were: Mr. T. Anthony Brooks, Mr. Peter O.
Crisp, Mr. Paul F. Ferrari, Dr. George N. Hatsopoulos, Mr. John N. Hatsopoulos,
Mr. John T. Keiser, Mr. John W. Wood, Jr. and Dr. Nicholas T. Zervas. Mr. Brooks
received 35,591,253 shares voted in favor of his election and 327,472 shares
voted against. Mr. Crisp received 35,592,011 shares voted in favor of his
election and 326,714 shares voted against. Mr. Ferrari received 35,592,132
shares voted in favor of his election and 326,593 shares voted against. Dr.
Hatsopoulos received 35,587,243 shares voted in favor of his election and
331,482 shares voted against. Mr. Hatsopoulos received 35,583,374 shares voted
in favor of his election and 335,351 shares voted against. Mr. Keiser received
35,589,421 shares voted in favor of his election and 329,304 voted against. Mr.
Wood received 35,594,458 shares voted in favor of his election and 324,267
shares voted against. Dr. Zervas received 35,592,516 shares voted in favor of
his election and 326,209 shares voted against. No abstentions or broker nonvotes
were recorded on the election of directors.
19
<PAGE>
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
See Exhibit Index on the page immediately preceding exhibits.
(b) Reports on Form 8-K
On May 25, 1999, the Company filed a Current Report on Form 8-K, dated May
24, 1999, with respect to restructuring and other charges of the Company.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized as of the 10th day of August 1999.
THERMEDICS INC.
/s/ Paul F. Kelleher
Paul F. Kelleher
Chief Accounting Officer
/s/ Theo Melas-Kyriazi
Theo Melas-Kyriazi
Chief Financial Officer
21
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
10.1 Master Cash Management, Guarantee Reimbursement, and Loan Agreement
dated as of June 1, 1999, between the Registrant and Thermo
Electron Corporation.
10.2 Master Cash Management, Guarantee Reimbursement, and Loan Agreement
dated as of June 1, 1999, between Thermo Cardiosystems Inc. and
Thermo Electron Corporation (filed as Exhibit 10.1 to Thermo
Cardiosystems Inc.'s Quarterly Report on Form 10-Q for the
quarter ended July 3, 1999 [File No. 1-10114] and incorporated
herein by reference).
10.3 Master Cash Management, Guarantee Reimbursement, and Loan Agreement
dated as of June 1, 1999, between Thermedics Detection Inc. and
Thermo Electron Corporation (filed as Exhibit 10.1 to Thermedics
Detection Inc.'s Quarterly Report on Form 10-Q for the quarter
ended July 3, 1999 [File No. 1-12745] and incorporated herein by
reference).
10.4 Master Cash Management, Guarantee Reimbursement, and Loan Agreement
dated as of June 1, 1999, between Thermo Sentron Inc. and Thermo
Electron Corporation (filed as Exhibit 10.1 to Thermo Sentron
Inc.'s Quarterly Report on Form 10-Q for the quarter ended July
3, 1999 [File No. 1-14254] and incorporated herein by reference).
10.5 Amended and Restated $13,000,000 Promissory Note dated as of June 30,
1999, issued by Thermo Sentron Inc. to Thermo Electron
Corporation (filed as Exhibit 10.2 to Thermo Sentron Inc.'s
Quarterly Report on Form 10-Q for the quarter ended July 3, 1999
[File No. 1-14254] and incorporated herein by reference).
10.6 Amended and Restated Nonqualified Stock Option Plan of the Registrant.
10.7 Amended and Restated Equity Incentive Plan of the Registrant.
10.8 Amended and Restated Directors Stock Option Plan of the Registrant.
10.9 Amended and Restated Deferred Compensation Plan for Directors of the
Registrant.
10.10 Amended and Restated Thermedics Inc. - Thermo Cardiosystems Inc.
Nonqualified Stock Option Plan.
10.11 Amended and Restated Thermedics Inc. - Thermedics Detection Inc.
Nonqualified Stock Option Plan.
10.12 Amended and Restated Thermedics Inc. - Thermo Sentron Inc.
Nonqualified Stock Option Plan.
10.13 Amended and Restated Thermedics Inc. - Thermo Voltek Corp.
Nonqualified Stock Option Plan.
10.14 Amended and Restated By-Laws of the Registrant.
27 Financial Data Schedule.
</TABLE>
MASTER CASH MANAGEMENT, GUARANTEE
REIMBURSEMENT AND LOAN AGREEMENT
This AGREEMENT is entered into as of the 1st day of June, 1999 by and
between Thermo Electron Corporation, a Delaware corporation ("Thermo Electron")
and Thermedics Inc., a Massachusetts corporation (the "Subsidiary").
WITNESSETH:
WHEREAS, Thermo Electron and the Subsidiary are party to a Master
Repurchase Agreement, as amended and restated, which contains terms governing a
cash management arrangement between them and a Master Guarantee Reimbursement
and Loan Agreement, as amended and restated, which contains terms relating to
intercompany credit support and a short term borrowing facility;
WHEREAS, Thermo Electron and the Subsidiary desire to establish a new
cash management arrangement and short term borrowing facility between them in
lieu of the arrangements set forth in the Master Repurchase Agreement and the
Master Guarantee Reimbursement and Loan Agreement and also to consolidate the
terms relating to intercompany credit support in one agreement;
WHEREAS, the Subsidiary and other majority owned subsidiaries of Thermo
Electron that join in this Agreement (collectively, the "Majority-Owned
Subsidiaries") and their wholly-owned subsidiaries wish to enter into various
financial transactions, such as convertible or nonconvertible debt, loans,
equity offerings, and other contractual arrangements with third parties (the
"Underlying Obligations") and may provide credit support to, on behalf of or for
the benefit of, other subsidiaries of Thermo Electron ("Credit Support
Obligations");
WHEREAS, the Majority Owned Subsidiaries and Thermo Electron acknowledge
that the Majority Owned Subsidiaries and their wholly-owned subsidiaries may be
unable to enter into many kinds of Underlying Obligations without a guarantee of
their performance thereunder from Thermo Electron (a "Parent Guarantee") or
without obtaining Credit Support Obligations from other Majority Owned
Subsidiaries;
WHEREAS, certain Majority Owned Subsidiaries ("Second Tier Majority
Owned Subsidiaries") may themselves be majority owned subsidiaries of other
Majority Owned Subsidiaries ("First Tier Majority Owned Subsidiaries");
WHEREAS, for various reasons, Parent Guarantees of a Second Tier
Majority Owned Subsidiary's Underlying Obligations may be demanded and given
without the respective First Tier Majority Owned Subsidiary also issuing a
guarantee of such Underlying Obligation;
WHEREAS, Thermo Electron may itself make a loan or provide other credit
to a Second Tier Majority Owned Subsidiary or its wholly-owned subsidiaries
under circumstances where the applicable First Tier Majority Owned Subsidiary
does not provide such credit; and
WHEREAS, Thermo Electron is willing to consider continuing to issue
Parent Guarantees and providing credit, and the Majority Owned Subsidiaries are
willing to consider continuing to provide Credit Support Obligations, on the
terms and conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each party hereto, the parties agree as follows:
1. Cash Management Arrangement. The Subsidiary directly, or through its
wholly-owned U.S. subsidiaries, may, from time to time, lend its excess cash to
Thermo Electron (a "Transaction"), on an unsecured basis, bearing interest at a
rate equal to the 30-day Dealer Commercial Paper Rate as reported in the Wall
Street Journal (the "DCP Rate") plus 50 basis points, which rate shall be
adjusted on the second business day of each fiscal month of the Subsidiary and
shall be in effect for the entirety of such fiscal month. The Subsidiary shall
institute a Transaction by depositing its excess cash in the Subsidiary's
concentration account at BankBoston Corporation ("BankBoston") or other bank
designated by Thermo Electron. At the end of each business day, the cash balance
deposited in the Subsidiary's concentration account shall be transferred to
Thermo Electron's intercompany account at BankBoston or other bank designated by
Thermo Electron. Thermo Electron shall indicate on its books the balance of the
Subsidiary's cash held by Thermo Electron under this arrangement. After each
fiscal month end, Thermo Electron shall provide the Subsidiary a report
indicating the Subsidiary's aggregate cash balance ("Excess Cash") held by
Thermo Electron hereunder. The Subsidiary shall have the right to withdraw all
or part of its Excess Cash upon 30 days' prior notice to Thermo Electron. Within
30 days of receipt of such withdrawal notice, Thermo Electron shall transfer the
portion of the Excess Cash requested for withdrawal to an account designated by
the Subsidiary. Thermo Electron shall maintain, at all times, cash, cash
equivalents and/or immediately available bank lines of credit equal to at least
50% of the cash balances of the Subsidiary and of all other participating
subsidiaries of Thermo Electron, other than wholly-owned subsidiaries of Thermo
Electron, held by Thermo Electron under this arrangement. Interest shall be
payable on the Excess Cash by Thermo Electron to the Subsidiary each fiscal
month in arrears. In addition, the Subsidiary's non-U.S. subsidiaries may, from
time to time, lend or advance their excess cash to Thermo Electron, on an
unsecured basis, bearing interest at rates set by Thermo Electron at the
beginning of each month, based to the extent practicable on comparable interest
rates generally available in the local jurisdiction of such participating
non-U.S. subsidiary. Further, Thermo Electron and such non-U.S. subsidiaries
participating in the cash management arrangement with Thermo Electron shall
establish mutually agreeable procedures governing such cash management
arrangement.
2. Loans and Advances. Upon request from the Subsidiary, Thermo Electron
may make loans and advances to the Subsidiary on a short-term, revolving credit
basis, from time to time, in such amounts as mutually determined by Thermo
Electron and the Subsidiary. The aggregate principal amount of such loans and
advances shall be reflected on the books and records of the Subsidiary and
Thermo Electron. All such loans and advances shall be on an unsecured basis
unless specifically provided otherwise in separate loan documents executed at
that time. The Subsidiary shall pay interest on the aggregate unpaid principal
amount of such loans from time to time outstanding at a rate equal to the DCP
Rate plus one hundred fifty (150) basis points, which rate shall be adjusted on
the second business day of each fiscal month of the Subsidiary and shall be in
effect for the entirety of such fiscal month. If, however, one or more of the
Subsidiary's majority-owned U.S. subsidiaries (i.e., not wholly-owned) is also
participating in the cash management arrangement with Thermo Electron, then the
rate payable on the Subsidiary's outstanding principal balance shall be
calculated as follows: If the aggregate amount of the Subsidiary's
majority-owned U.S. subsidiaries' cash balances under the cash management
arrangement ("Majority-Owned Excess Cash") equals or exceeds the Subsidiary's
outstanding principal balance, then the Subsidiary shall pay interest on the
aggregate unpaid principal amount of such loans at a rate per annum equal to the
DCP Rate plus fifty (50) basis points. If the aggregate amount of the
Majority-Owned Excess Cash is less than the Subsidiary's outstanding principal
balance, then (A) the Subsidiary shall pay interest at a rate per annum equal to
the DCP Rate plus fifty (50) basis points on that portion of the unpaid
principal amount equal to the Majority-Owned Excess Cash, and (B) the Subsidiary
shall pay interest at a rate per annum equal to the DCP Rate plus one hundred
fifty (150) basis points on that portion of the unpaid principal amount equal to
(i) the Subsidiary's outstanding principal balance, minus (ii) the
Majority-Owned Excess Cash. The interest rates set forth in the prior two
sentences shall be adjusted on the second business day of each fiscal month of
the Subsidiary and shall be in effect for the entirety of such fiscal month.
Interest shall be computed on a 360-day basis. Interest is payable each fiscal
month in arrears. The aggregate principal amount outstanding shall be payable
within 30 days of demand by Thermo Electron. Overdue principal and interest
shall bear interest at a rate per annum equal to the rate of interest published
from time to time in the Wall Street Journal as the "prime rate" plus one
percent (1%). The principal and accrued interest may be paid by the Subsidiary
at any time or from time to time, in whole or in part, without premium or
penalty. All payments shall be applied first to accrued interest and then to
principal. At the end of each business day, Thermo Electron shall apply the
balance of the Subsidiary's Excess Cash held by Thermo Electron under the cash
management arrangement toward the payment of any loans or advances to the
Subsidiary. Principal and interest shall be payable in lawful money of the
United States of America, in immediately available funds, at the principal
office of Thermo Electron or at such other place as Thermo Electron may
designate from time to time in writing to the Subsidiary. The unpaid principal
amount of any such borrowings, and accrued interest thereon, shall become
immediately due and payable, without demand, upon occurrence of any of the
following events:
(a) the failure of the Subsidiary to pay any amount due hereunder within
fifteen (15) days of the date when due;
(b) the failure of the Subsidiary to pay its debts as they become due,
the filing by or against the Subsidiary of any petition under the U.S.
Bankruptcy Code (or the filing of any similar petition under the
insolvency law of any jurisdiction), or the making by the Subsidiary of
an assignment or trust mortgage for the benefit of creditors or the
appointment of a receiver, custodian or similar agent with respect to,
or the taking by any such person of possession of, any material property
of the Subsidiary;
(c) the sale by the Subsidiary of all or substantially all of its
assets;
(d) the merger or consolidation of the Subsidiary with or into any other
corporation in a transaction in which the Subsidiary is not the
surviving entity;
(e) the issuance of any writ of attachment, by trustee process or
otherwise, or any restraining order or injunction against or affecting
the person or property of the Subsidiary that is not removed, repealed
or dismissed within thirty (30) days of issuance and as a result has a
material adverse effect on the business, operations, assets or
condition, financial or otherwise, of the Subsidiary or its ability to
discharge any of its liabilities or obligations to Thermo Electron; and
(f) the suspension of the transaction of the usual business of the
Subsidiary.
3. Guarantee Arrangements.
(a) If Thermo Electron provides a Parent Guarantee of an Underlying
Obligation, and the beneficiary(ies) of the Parent Guarantee enforce the
Parent Guarantee, or Thermo Electron performs under the Parent Guarantee
for any other reason, then the Majority Owned Subsidiary that is
obligated, either directly or indirectly through a wholly-owned
subsidiary, under such Underlying Obligation shall indemnify and save
harmless Thermo Electron from any liability, cost, expense or damage
(including reasonable attorneys' fees) suffered by Thermo Electron as a
result of the Parent Guarantee. If the Underlying Obligation is issued
by a Second Tier Majority Owned Subsidiary or a wholly-owned subsidiary
thereof, and such Second Tier Majority Owned Subsidiary is unable to
fully indemnify Thermo Electron (because of the poor financial condition
of such Second Tier Majority Owned Subsidiary, or for any other reason),
then the First Tier Majority Owned Subsidiary that owns the majority of
the stock of such Second Tier Majority Owned Subsidiary shall indemnify
and save harmless Thermo Electron from any remaining liability, cost,
expense or damage (including reasonable attorneys' fees) suffered by
Thermo Electron as a result of the Parent Guarantee. If a Majority Owned
Subsidiary or a wholly-owned subsidiary thereof provides a Credit
Support Obligation for any subsidiary of Thermo Electron, other than a
subsidiary of such Majority Owned Subsidiary, and the beneficiary(ies)
of the Credit Support Obligation enforce the Credit Support Obligation,
or the Majority Owned Subsidiary or its wholly-owned subsidiary performs
under the Credit Support Obligation for any other reason, then Thermo
Electron shall indemnify and save harmless the Majority Owned Subsidiary
or its wholly-owned subsidiary, as applicable, from any liability, cost,
expense or damage (including reasonable attorneys' fees) suffered by the
Majority Owned Subsidiary or its wholly-owned subsidiary, as applicable,
as a result of the Credit Support Obligation. Without limiting the
foregoing, Credit Support Obligations include the deposit of funds by a
Majority Owned Subsidiary or a wholly-owned subsidiary thereof in a
credit arrangement with a banking facility whereby such funds are
available to the banking facility as collateral for overdraft
obligations of other Majority Owned Subsidiaries or their subsidiaries
also participating in the credit arrangement with such banking facility.
Nothwithstanding the foregoing, in order to obtain the benefits of the
indemnification obligations of the First Tier Majority Owned Subsidiary
set forth above in this Section 3(a), Thermo Electron must have notified
the First Tier Majority Owned Subsidiary prior to guaranteeing the
obligations of the Second Tier Majority Owned Subsidiary. If after five
(5) business days, Thermo Electron has not received from the First Tier
Majority Owned Subsidiary a notice of objection stating that the First
Tier Majority Owned Subsidiary objects to Thermo Electron guaranteeing
the obligations of the Second Tier Majority Owned Subsidiary, then
Thermo Electron may proceed to issue its guarantee of the Underlying
Obligation and such guarantee shall be subject to the benefits of the
indemnification obligations of the First Tier Majority Owned Subsidiary
set forth above in this Section 3(a). If Thermo Electron does receive
such notice of objection, then Thermo Electron's guarantee shall not be
subject to the indemnification obligations of the First Tier Majority
Owned Subsidiary set forth above in this Section 3(a).
(b) For purposes of this Agreement, the term "guarantee" shall include
not only a formal guarantee of an obligation, but also any other
arrangement where Thermo Electron is liable for the obligations of a
Majority Owned Subsidiary or its wholly-owned subsidiaries. Such other
arrangements include (a) representations, warranties and/or covenants or
other obligations joined in by Thermo Electron, whether on a joint or
joint and several basis, for the benefit of the Majority Owned
Subsidiary or its wholly-owned subsidiaries and (b) responsibility of
Thermo Electron by operation of law for the acts and omissions of the
Majority Owned Subsidiary or its wholly-owned subsidiaries, including
controlling person liability under securities and other laws.
(c) Promptly after Thermo Electron receives notice that a beneficiary of
a Parent Guarantee is seeking to enforce such Parent Guarantee, Thermo
Electron shall notify the Majority Owned Subsidiary(s) obligated, either
directly or indirectly through a wholly-owned subsidiary, under the
relevant Underlying Obligation. Such Majority Owned Subsidiary(s) or
wholly-owned subsidiary thereof, as applicable, shall have the right, at
its own expense, to contest the claim of such beneficiary. If a Majority
Owned Subsidiary or wholly-owned subsidiary thereof, as applicable, is
contesting the claim of such beneficiary, Thermo Electron will not
perform under the relevant Parent Guarantee unless and until, in Thermo
Electron's reasonable judgment, Thermo Electron is obligated under the
terms of such Parent Guarantee to perform. Subject to the foregoing, any
dispute between a Majority Owned Subsidiary or wholly-owned subsidiary
thereof, as applicable, and a beneficiary of a Parent Guarantee shall
not affect such Majority Owned Subsidiary's obligation to promptly
indemnify Thermo Electron hereunder. Promptly after a Majority Owned
Subsidiary or wholly-owned subsidiary thereof, as applicable, receives
notice that a beneficiary of a Credit Support Obligation is seeking to
enforce such Credit Support Obligation, the Majority Owned Subsidiary
shall notify Thermo Electron. Thermo Electron shall have the right, at
its own expense, to contest the claim of such beneficiary. If Thermo
Electron or the subsidiary of Thermo Electron on whose behalf the Credit
Support Obligation is given is contesting the claim of such beneficiary,
the Majority Owned Subsidiary or wholly-owned subsidiary thereof, as
applicable, will not perform under the relevant Credit Support
Obligation unless and until, in the Majority Owned Subsidiary's
reasonable judgment, the Majority Owned Subsidiary or wholly-owned
subsidiary thereof, as applicable, is obligated under the terms of such
Credit Support Obligation to perform. Subject to the foregoing, any
dispute between Thermo Electron or the subsidiary of Thermo Electron on
whose behalf the Credit Support Obligation was given, on the one hand,
and a beneficiary of a Credit Support Obligation, on the other, shall
not affect Thermo Electron's obligation to promptly indemnify the
Majority Owned Subsidiary or its wholly-owned subsidiary, as applicable,
hereunder.
(d) If Thermo Electron makes a loan or provides other credit ("Credit
Extension") to a Second Tier Majority Owned Subsidiary, the First Tier
Majority Owned Subsidiary that owns the majority of the stock of such
Second Tier Majority Owned Subsidiary hereby guarantees the Second Tier
Majority Owned Subsidiary's obligations to Thermo Electron thereunder.
Such guaranty shall be enforced only after Thermo Electron, in its
reasonable judgment, determines that the Second Tier Majority Owned
Subsidiary is unable to fully perform its obligations under the Credit
Extension. If Thermo Electron provides Credit Extension to a
wholly-owned subsidiary of a Second Tier Majority Owned Subsidiary, the
Second Tier Majority Owned Subsidiary hereby guarantees it wholly-owned
subsidiary's obligations to Thermo Electron thereunder and the First
Tier Majority Owned Subsidiary that owns the majority of the stock of
such Second Tier Majority Owned Subsidiary hereby guarantees the Second
Tier Majority Owned Subsidiary's obligations to Thermo Electron
hereunder. Such guaranty by the First Tier Majority Owned Subsidiary
shall be enforced only after Thermo Electron, in its reasonable
judgment, determines that the Second Tier Majority Owned Subsidiary is
unable to fully perform its guaranty obligation hereunder.
Notwithstanding the foregoing, in order for a Credit Extension to be
deemed guaranteed by the First Tier Majority Owned Subsidiary as set
forth above in this Section 3(d), Thermo Electron must have notified the
First Tier Majority Owned Subsidiary prior to providing the Credit
Extension to the Second Tier Majority Owned Subsidiary. If after five
(5) business days, Thermo Electron has not received from the First Tier
Majority Owned Subsidiary a notice of objection stating that the First
Tier Majority Owned Subsidiary objects to Thermo Electron providing a
Credit Extension to the Second Tier Majority Owned Subsidiary, then
Thermo Electron may proceed to issue the Credit Extension to the Second
Tier Majority Owned Subsidiary and the First Tier Majority Owned
Subsidiary shall be deemed to have guaranteed such Credit Extension as
set forth above in this Section 3(d). If Thermo Electron does receive
such notice of objection, then Thermo Electron's Credit Extension shall
not be deemed guaranteed by the First Tier Majority Owned Subsidiary as
set forth in this Section 3(d).
(e) All payments required to be made under this Section 3 by a Majority
Owned Subsidiary or its wholly-owned subsidiaries, as applicable, shall
be made within two days after receipt of notice from Thermo Electron.
All payments required to be made under this Section 3 by Thermo Electron
shall be made within two days after receipt of notice from the Majority
Owned Subsidiary.
4. Waivers. No delay or omission on the part of either party in
exercising any right hereunder shall operate as a waiver of such right or of any
other right of the party, nor shall any delay, omission or waiver on any one
occasion be deemed a bar to or waiver of the same or any other right on any
future occasion. The Subsidiary hereby waives demand, notice of prepayment,
protest and all other demands and notices in connection with the delivery,
acceptance, performance, default or enforcement of the Subsidiary's obligations
hereunder. The Subsidiary hereby assents to any indulgence and any extension of
time for payment of any indebtedness hereunder granted or permitted by the
party.
5. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts applicable to
contracts made and performed therein without giving effect to any choice of law
provision or rule that would cause the application of laws of any jurisdiction
other than the Commonwealth of Massachusetts.
6. Severability. Each provision and agreement herein shall be treated as
separate and independent from any other provision or agreement herein and shall
be enforceable notwithstanding the unenforceability of any such other provision
or agreement.
7. Non-assignability. The rights and obligations of the parties under
this Agreement shall not be assigned by either party without the prior written
consent of the other party. Subject to the foregoing, this Agreement shall be
binding upon and shall inure to the benefit of the parties and their respective
successors and assigns.
8. Other Agreements. The parties agree that, effective as of the date
hereof, each of the Master Repurchase Agreement, as amended and restated,
between the Subsidiary and Thermo Electron and the Master Guarantee
Reimbursement and Loan Agreement, as amended and restated, between the
Subsidiary and Thermo Electron, is hereby terminated and is of no further force
and effect.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
THERMO ELECTRON CORPORATION
By: _____________________________
/s/ Theo Melas-Kyriazi
Title: Vice President &
Chief Financial Officer
THERMEDICS INC.
By: _____________________________
/s/ John T. Keiser
Title: President and
Chief Executive Officer
THERMEDICS INC.
NONQUALIFIED STOCK OPTION PLAN
As amended and restated effective as of June 24, 1999
1. Purpose
This Nonqualified Stock Option Plan (the "Plan") is intended to
encourage ownership of Common Stock (the "Common Stock"), of Thermedics Inc.
("Company"), by persons selected by the Board of Directors (or a committee
thereof) in its sole discretion, including directors, executive officers, key
employees and consultants of the Company and its subsidiaries, and to provide
additional incentive for them to promote the success of the business of the
Company. The Plan is intended to be a nonstatutory stock option plan.
2. Effective Date of the Plan
The Plan shall become effective when adopted by the Board of Directors
of the Company.
3. Stock Subject to Plan
Subject to adjustment as provided in Section 11, the total number of
shares of Common Stock reserved and available for issuance under the Plan and
the Company's Incentive Stock Option Plan in the aggregate shall be 147,349
shares as of the date of this amendment and restatement. Shares to be issued
upon the exercise of options granted under the Plan may be either authorized but
unissued shares or shares held by the Company in its treasury. If any option
expires or terminates for any reason without having been exercised in full, the
unpurchased shares subject thereto shall be deducted from the number of shares
reserved and available for issuance under the Plan.
4. Administration
The Plan will be administered by the Board of Directors of the Company
(the "Board"). Subject to the provisions of the Plan, the Board shall have
complete authority, in its discretion, to make the following determinations with
respect to each option to be granted by the Company: (a) the person to receive
the option (the "Optionee"); (b) the time of granting the option; (c) the number
of shares subject thereto; (d) the option price; (e) the option period; (f) the
terms and conditions of options granted under the Plan (including terms and
conditions relating to events of merger, consolidation, dissolution and
liquidation, change of control, vesting, forfeiture, restrictions, dividends and
interest, if any, on deferred amounts); (g) waive compliance by an optionee with
any obligation to be performed by him or her under an option; (h) waive any term
or condition of an option; (i) cancel an existing option in whole or in part
with the consent of an Optionee; (j) grant replacement options; (k) accelerate
the vesting or lapse of any restrictions of any option; and (l) adopt the form
of instruments evidencing options under the Plan and change such forms from time
to time. In making such determinations, the Board may take into account the
nature of the services rendered by the Optionees, their present and potential
contributions to the success of the Company and/or one or more of its
subsidiaries, and such other factors as the Board in its discretion shall deem
relevant. Subject to the provisions of the Plan, the Board shall also have
complete authority to interpret the Plan, to prescribe, amend, and rescind rules
and regulations relating to it, to determine the terms and provisions of the
respective option agreements (which need not be identical), and to make all
other determinations necessary or advisable for the administration of the Plan.
Any interpretation by the Board of the terms and provisions of the Plan or any
Award thereunder and the administration thereof, and all action taken by the
Board, shall be final, binding and conclusive on all parties and any person
claiming under or through any party. No Director shall be liable for any action
or determination made in good faith. The Board may, to the full extent permitted
by law, delegate any or all of its responsibilities under the Plan to a
committee (the "Committee") appointed by the Board and consisting of two or more
members of the Board, each of whom shall be deemed a "disinterested person"
within the meaning of Rule 16b-3 (or any successor rule) of the Securities
Exchange Act of 1934 (the "Exchange Act").
5. Eligibility
An option may be granted to any person selected by the Board in its sole
discretion.
6. Time of Granting Options
The granting of an option shall take place at the time specified by the
Board. Only if expressly so provided by the Board shall the granting of an
option be regarded as taking place at the time when a written option agreement
shall have been duly executed and delivered by or on behalf of the Company and
the Optionee to whom such option shall be granted. The agreement shall provide,
among other things, that it does not confer upon an Optionee any right to
continue in the employ of the Company and/or one or more of its subsidiaries or
to continue as a director or consultant of the Company, and that it does not
interfere in any way with the right of the Company or any such subsidiary to
terminate the employment of the Optionee at any time if the Optionee is an
employee, to remove the Optionee as a director of the Company if the Optionee is
a director, or to terminate the services of the Optionee if the Optionee is a
consultant.
7. Option Period
An option may become exercisable immediately or in such installments,
cumulative or noncumulative, as the Board may determine.
8. Exercise of Option
An option may be exercised in accordance with its terms by written
notice of intent to exercise the option, specifying the number of shares of
stock with respect to which the option is then being exercised. The notice shall
be accompanied by payment in the form of cash or shares of Common Stock (the
"Tendered Shares") with a then current market value equal to the option price of
the shares to be purchased; provided, however, that such Tendered Shares shall
have been acquired by the Optionee more than six months prior to the date of
exercise, unless such requirement is waived in writing by the Company. Against
such payment the Company shall deliver or cause to be delivered to the Optionee
a certificate for the number of shares then being purchased, registered in the
name of the Optionee or other person exercising the option. If any law or
applicable regulation of the Securities and Exchange Commission or other body
having jurisdiction in the premises shall require the Company or the Optionee to
take any action in connection with shares being purchased upon exercise of the
option, exercise of the option and delivery of the certificate or certificates
for such shares shall be postponed until completion of the necessary action,
which shall be taken at the Company's expense.
9. Transferability
Except as may be authorized by the Board, in its sole discretion, no
Option may be transferred other than by will or the laws of descent and
distribution, and during a Optionee's lifetime an option requiring exercise may
be exercised only by him or her (or in the event of incapacity, the person or
persons properly appointed to act on his or her behalf). The Board may, in its
discretion, determine the extent to which options granted to an Optionee shall
be transferable, and such provisions permitting or acknowledging transfer shall
be set forth in the written agreement evidencing the option executed and
delivered by or on behalf of the Company and the Optionee.
10. Vesting, Restrictions and Termination of Options
The Board, in its sole discretion, may determine the manner in which
options shall vest, the rights of the Company to repurchase the shares issued
upon the exercise of any option and the manner in which such rights shall lapse,
and the terms upon which any option granted shall terminate. The Board shall
have the right to accelerate the date of exercise of any installment or to
accelerate the lapse of the Company's repurchase rights. All of such terms shall
be specified in a written option agreement executed and delivered by or on
behalf of the Company and the Optionee to whom such option shall be granted.
11. Adjustments in the Event of Certain Transactions
(a) In the event of a stock dividend, stock split or combination of
shares, or other distribution with respect to holders of Common Stock other than
normal cash dividends, the Board will make (i) appropriate adjustments to the
maximum number of shares that may be delivered under the Plan under Section 3
above, and (ii) appropriate adjustments to the number and kind of shares of
stock or securities subject to Options then outstanding or subsequently granted,
any exercise prices relating to Options and any other provisions of Awards
affected by such change.
(b) In the event of any recapitalization, merger or consolidation
involving the Company, any transaction in which the Company becomes a subsidiary
of another entity, any sale or other disposition of all or a substantial portion
of the assets of the Company or any similar transaction, as determined by the
Board, the Board in its discretion may make appropriate adjustments to
outstanding Options to avoid distortion in the operation of the Plan.
12. Change in Control
12.1 Impact of Event
In the event of a "Change in Control" as defined in Section 12.2, the
following provisions shall apply, unless the agreement evidencing the Option
otherwise provides (by specific explicit reference to Section 12.2 below). If a
Change in Control occurs while any Options are outstanding, then, effective upon
the Change in Control, (i) each outstanding stock option granted under the Plan
that was not previously exercisable and vested shall become immediately
exercisable in full and will no longer be subject to a right of repurchase by
the Company, (ii) each outstanding Option subject to restrictions and to the
extent not fully vested, shall be deemed to be fully vested, free of
restrictions and no longer subject to a right of repurchase by the Company, and
(iii) performance of other conditions (other than conditions relating solely to
the passage of time, continued employment or affiliation) will continue to apply
unless otherwise provided in the agreement evidencing the Option or in any other
agreement between the Optionee and the Company or unless otherwise agreed by the
Board.
12.2 Definition of "Change in Control"
"Change in Control" means an event or occurrence set forth in any one or
more of subsections (a) through (d) below (including an event or occurrence that
constitutes a Change in Control under one of such subsections but is
specifically exempted from another such subsection):
(a) the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership of any capital stock of Thermo Electron Corporation
("Thermo Electron") if, after such acquisition, such Person beneficially owns
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) 40% or
more of either (i) the then-outstanding shares of common stock of Thermo
Electron (the "Outstanding TMO Common Stock") or (ii) the combined voting power
of the then-outstanding securities of Thermo Electron entitled to vote generally
in the election of directors (the "Outstanding TMO Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change in Control: (i) any acquisition by
Thermo Electron, (ii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by Thermo Electron or any corporation controlled
by Thermo Electron, or (iii) any acquisition by any corporation pursuant to a
transaction which complies with clauses (i) and (ii) of subsection (c) of this
definition; or
(b) such time as the Continuing Directors (as defined below) do not
constitute a majority of the Board of Directors of Thermo Electron (the "Thermo
Board") (or, if applicable, the Board of Directors of a successor corporation to
Thermo Electron), where the term "Continuing Director" means at any date a
member of the Thermo Board (i) who was a member of the Thermo Board as of July
1, 1999 or (ii) who was nominated or elected subsequent to such date by at least
a majority of the directors who were Continuing Directors at the time of such
nomination or election or whose election to the Thermo Board was recommended or
endorsed by at least a majority of the directors who were Continuing Directors
at the time of such nomination or election; provided, however, that there shall
be excluded from this clause (ii) any individual whose initial assumption of
office occurred as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents, by or on behalf of a person other than the
Thermo Board; or
(c) the consummation of a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving Thermo Electron or a sale
or other disposition of all or substantially all of the assets of Thermo
Electron in one or a series of transactions (a "Business Combination"), unless,
immediately following such Business Combination, each of the following two
conditions is satisfied: (i) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding TMO Common Stock and
Outstanding TMO Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of the then-outstanding
shares of common stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such Business
Combination (which shall include, without limitation, a corporation which as a
result of such transaction owns Thermo Electron or substantially all of Thermo
Electron's assets either directly or through one or more subsidiaries) (such
resulting or acquiring corporation is referred to herein as the "Acquiring
Corporation") in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding TMO Common
Stock and Outstanding TMO Voting Securities, respectively; and (ii) no Person
(excluding the Acquiring Corporation or any employee benefit plan (or related
trust) maintained or sponsored by Thermo Electron or by the Acquiring
Corporation) beneficially owns, directly or indirectly, 40% or more of the then
outstanding shares of common stock of the Acquiring Corporation, or of the
combined voting power of the then-outstanding securities of such corporation
entitled to vote generally in the election of directors; or
(d) approval by the stockholders of Thermo Electron of a complete
liquidation or dissolution of Thermo Electron.
13. Limitation of Rights in Option Stock
The Optionees shall have no rights as stockholders in respect of shares
as to which their options shall not have been exercised, certificates issued and
delivered and payment as herein provided made in full, and shall have no rights
with respect to such shares not expressly conferred by this Plan.
14. Stock Reserved
The Company shall at all times during the term of the options reserve
and keep available such number of shares of the Common Stock as will be
sufficient to satisfy the requirements of this Plan and shall pay all other fees
and expenses necessarily incurred by the Company in connection therewith.
15. Securities Laws Restrictions
Each Optionee exercising an option, at the request of the Company, will
be required to give a representation in form satisfactory to counsel for the
Company that he will not transfer, sell or otherwise dispose of the shares
received upon exercise of the option at any time purchased by him, upon exercise
of any portion of the option, in a manner which would violate the Securities Act
of 1933, as amended, and the regulations of the Securities and Exchange
Commission thereunder and the Company may, if required or at its discretion,
make a notation on any certificates issued upon exercise of options to the
effect that such certificate may not be transferred except after receipt by the
Company of an opinion of counsel satisfactory to it to the effect that such
transfer will not violate such Act and such regulations.
16. Tax Withholding
The Company shall have the right to deduct from payments of any kind
otherwise due to an Optionee any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon exercise
of options under the Plan (the "withholding requirements"). The Board will have
the right to require that the Optionee or other appropriate person remit to the
Company an amount sufficient to satisfy the withholding requirements, or make
other arrangements satisfactory to the Board with regard to such requirements,
prior to the delivery of any Common Stock pursuant to exercise of an option. If
and to the extent that such withholding is required, the Board may permit the
Optionee or such other person to elect at such time and in such manner as the
Board provides to have the Company hold back from the shares to be delivered, or
to deliver to the Company, Common Stock having a value calculated to satisfy the
withholding requirements.
17. Termination and Amendment
The Plan shall remain in full force and effect until terminated by the
Board. Subject to the last sentence of this Section 17, the Board may at any
time or times amend the Plan or any outstanding Option for any purpose that may
at the time be permitted by law, or may at any time terminate the Plan as to any
further grants of Options. No amendment of the Plan or any agreement evidencing
Options under the Plan may adversely affect the rights of any participant under
any Option previously granted without such participant's consent.
THERMEDICS INC.
EQUITY INCENTIVE PLAN
As amended and restated effective as of June 24, 1999
1. Purpose
The purpose of this Equity Incentive Plan (the "Plan") is to secure for
Thermedics Inc. (the "Company") and its Stockholders the benefits arising from
capital stock ownership by employees and Directors of, and consultants to, the
Company and its subsidiaries or other persons who are expected to make
significant contributions to the future growth and success of the Company and
its subsidiaries. The Plan is intended to accomplish these goals by enabling the
Company to offer such persons equity-based interests, equity-based incentives or
performance-based stock incentives in the Company, or any combination thereof
("Awards").
2. Administration
The Plan will be administered by the Board of Directors of the Company
(the "Board"). The Board shall have full power to interpret and administer the
Plan, to prescribe, amend and rescind rules and regulations relating to the Plan
and Awards, and full authority to select the persons to whom Awards will be
granted ("Participants"), determine the type and amount of Awards to be granted
to Participants (including any combination of Awards), determine the terms and
conditions of Awards granted under the Plan (including terms and conditions
relating to events of merger, consolidation, dissolution and liquidation, change
of control, vesting, forfeiture, restrictions, dividends and interest, if any,
on deferred amounts), waive compliance by a participant with any obligation to
be performed by him or her under an Award, waive any term or condition of an
Award, cancel an existing Award in whole or in part with the consent of a
Participant, grant replacement Awards, accelerate the vesting or lapse of any
restrictions of any Award and adopt the form of instruments evidencing Awards
under the Plan and change such forms from time to time. Any interpretation by
the Board of the terms and provisions of the Plan or any Award thereunder and
the administration thereof, and all action taken by the Board, shall be final,
binding and conclusive on all parties and any person claiming under or through
any party. No Director shall be liable for any action or determination made in
good faith. The Board may, to the full extent permitted by law, delegate any or
all of its responsibilities under the Plan to a committee (the "Committee")
appointed by the Board and consisting of two or more members of the Board, each
of whom shall be deemed a "disinterested person" within the meaning of Rule
16b-3 (or any successor rule) of the Securities Exchange Act of 1934 (the
"Exchange Act").
3. Effective Date
The Plan shall be effective as of the date first approved by the Board
of Directors, subject to the approval of the Plan by the Corporation's
Stockholders. Grants of Awards under the Plan made prior to such approval shall
be effective when made (unless otherwise specified by the Board at the time of
grant), but shall be conditioned on and subject to such approval of the Plan.
4. Shares Subject to the Plan
Subject to adjustment as provided in Section 10.6, the total number of
shares of Common Stock reserved and available for distribution under the Plan
shall be 1,500,000 shares. Such shares may consist, in whole or in part, of
authorized and unissued shares or treasury shares.
If any Award of shares of Common Stock requiring exercise by the
Participant for delivery of such shares terminates without having been exercised
in full, is forfeited or is otherwise terminated without a payment being made to
the Participant in the form of Common Stock, or if any shares of Common Stock
subject to restrictions are repurchased by the Company pursuant to the terms of
any Award or are otherwise reacquired by the Company to satisfy obligations
arising by virtue of any Award, such shares shall be available for distribution
in connection with future Awards under the Plan.
5. Eligibility
Employees and Directors of, and consultants to, the Company and its
subsidiaries, or other persons who are expected to make significant
contributions to the future growth and success of the Company and its
subsidiaries shall be eligible to receive Awards under the Plan. The Board, or
other appropriate committee or person to the extent permitted pursuant to the
last sentence of Section 2, shall from time to time select from among such
eligible persons those who will receive Awards under the Plan.
6. Types of Awards
The Board may offer Awards under the Plan in any form of equity-based
interest, equity-based incentive or performance-based stock incentive in Common
Stock of the Company or any combination thereof. The type, terms and conditions
and restrictions of an Award shall be determined by the Board at the time such
Award is made to a Participant; provided however that the maximum number of
shares permitted to be granted under any Award or combination of Awards to any
Participant during any one calendar year may not exceed 750,000 shares of Common
Stock.
An Award shall be made at the time specified by the Board and shall be
subject to such conditions or restrictions as may be imposed by the Board and
shall conform to the general rules applicable under the Plan as well as any
special rules then applicable under federal tax laws or regulations or the
federal securities laws relating to the type of Award granted.
Without limiting the foregoing, Awards may take the following forms and
shall be subject to the following rules and conditions:
6.1 Options
An option is an Award that entitles the holder on exercise thereof to
purchase Common Stock at a specified exercise price. Options granted under the
Plan may be either incentive stock options ("incentive stock options") that meet
the requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), or options that are not intended to meet the requirements of
Section 422 ("non-statutory options").
6.1.1 Option Price. The price at which Common Stock may be purchased
upon exercise of an option shall be determined by the Board, provided however,
the exercise price shall not be less than the par value per share of Common
Stock.
6.1.2 Option Grants. The granting of an option shall take place at the
time specified by the Board. Options shall be evidenced by option agreements.
Such agreements shall conform to the requirements of the Plan, and may contain
such other provisions (including but not limited to vesting and forfeiture
provisions, acceleration, change of control, protection in the event of merger,
consolidations, dissolutions and liquidations) as the Board shall deem
advisable. Option agreements shall expressly state whether an option grant is
intended to qualify as an incentive stock option or non-statutory option.
6.1.3 Option Period. An option will become exercisable at such time or
times (which may be immediately or in such installments as the Board shall
determine) and on such terms and conditions as the Board shall specify. The
option agreements shall specify the terms and conditions applicable in the event
of an option holder's termination of employment during the option's term.
Any exercise of an option must be in writing, signed by the proper
person and delivered or mailed to the Company, accompanied by (1) any additional
documents required by the Board and (2) payment in full in accordance with
Section 6.1.4 for the number of shares for which the option is exercised.
6.1.4 Payment of Exercise Price. Stock purchased on exercise of an
option shall be paid for as follows: (1) in cash or by check (subject to such
guidelines as the Company may establish for this purpose), bank draft or money
order payable to the order of the Company or (2) if so permitted by the
instrument evidencing the option (or in the case of a non-statutory option, by
the Board at or after grant of the option), (i) through the delivery of shares
of Common Stock that have been outstanding for at least six months (unless the
Board expressly approves a shorter period) and that have a fair market value
(determined in accordance with procedures prescribed by the Board) equal to the
exercise price, (ii) by delivery of a promissory note of the option holder to
the Company, payable on such terms as are specified by the Board, (iii) by
delivery of an unconditional and irrevocable undertaking by a broker to deliver
promptly to the Company sufficient funds to pay the exercise price, or (iv) by
any combination of the permissible forms of payment.
6.1.5 Buyout Provision. The Board may at any time offer to buy out for a
payment in cash, shares of Common Stock, deferred stock or restricted stock, an
option previously granted, based on such terms and conditions as the Board shall
establish and communicate to the option holder at the time that such offer is
made.
6.1.6 Special Rules for Incentive Stock Options. Each provision of the
Plan and each option agreement evidencing an incentive stock option shall be
construed so that each incentive stock option shall be an incentive stock option
as defined in Section 422 of the Code or any statutory provision that may
replace such Section, and any provisions thereof that cannot be so construed
shall be disregarded. Instruments evidencing incentive stock options must
contain such provisions as are required under applicable provisions of the Code.
Incentive stock options may be granted only to employees of the Company and its
subsidiaries. The exercise price of an incentive stock option shall not be less
than 100% (110% in the case of an incentive stock option granted to a more than
ten percent Stockholder of the Company) of the fair market value of the Common
Stock on the date of grant, as determined by the Board. An incentive stock
option may not be granted after the tenth anniversary of the date on which the
Plan was adopted by the Board and the latest date on which an incentive stock
option may be exercised shall be the tenth anniversary (fifth anniversary, in
the case of any incentive stock option granted to a more than ten percent
Stockholder of the Company) of the date of grant, as determined by the Board.
6.2 Restricted and Unrestricted Stock
An Award of restricted stock entitles the recipient thereof to acquire
shares of Common Stock upon payment of the purchase price subject to
restrictions specified in the instrument evidencing the Award.
6.2.1 Restricted Stock Awards. Awards of restricted stock shall be
evidenced by restricted stock agreements. Such agreements shall conform to the
requirements of the Plan, and may contain such other provisions (including
restriction and forfeiture provisions, change of control, protection in the
event of mergers, consolidations, dissolutions and liquidations) as the Board
shall deem advisable.
6.2.2 Restrictions. Until the restrictions specified in a restricted
stock agreement shall lapse, restricted stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of, and upon certain
conditions specified in the restricted stock agreement, must be resold to the
Company for the price, if any, specified in such agreement. The restrictions
shall lapse at such time or times, and on such conditions, as the Board may
specify. The Board may at any time accelerate the time at which the restrictions
on all or any part of the shares shall lapse.
6.2.3 Rights as a Stockholder. A Participant who acquires shares of
restricted stock will have all of the rights of a Stockholder with respect to
such shares including the right to receive dividends and to vote such shares.
Unless the Board otherwise determines, certificates evidencing shares of
restricted stock will remain in the possession of the Company until such shares
are free of all restrictions under the Plan.
6.2.4 Purchase Price. The purchase price of shares of restricted stock
shall be determined by the Board, in its sole discretion, but such price may not
be less than the par value of such shares.
6.2.5 Other Awards Settled With Restricted Stock. The Board may provide
that any or all the Common Stock delivered pursuant to an Award will be
restricted stock.
6.2.6 Unrestricted Stock. The Board may, in its sole discretion, sell to
any Participant shares of Common Stock free of restrictions under the Plan for a
price determined by the Board, but which may not be less than the par value per
share of the Common Stock.
6.3 Deferred Stock
6.3.1 Deferred Stock Award. A deferred stock Award entitles the
recipient to receive shares of deferred stock, which is Common Stock to be
delivered in the future. Delivery of the Common Stock will take place at such
time or times, and on such conditions, as the Board may specify. The Board may
at any time accelerate the time at which delivery of all or any part of the
Common Stock will take place.
6.3.2 Other Awards Settled with Deferred Stock. The Board may, at the
time any Award described in this Section 6 is granted, provide that, at the time
Common Stock would otherwise be delivered pursuant to the Award, the Participant
will instead receive an instrument evidencing the right to future delivery of
deferred stock.
6.4 Performance Awards
6.4.1 Performance Awards. A performance Award entitles the recipient to
receive, without payment, an amount, in cash or Common Stock or a combination
thereof (such form to be determined by the Board), following the attainment of
performance goals. Performance goals may be related to personal performance,
corporate performance, departmental performance or any other category of
performance deemed by the Board to be important to the success of the Company.
The Board will determine the performance goals, the period or periods during
which performance is to be measured and all other terms and conditions
applicable to the Award.
6.4.2 Other Awards Subject to Performance Conditions. The Board may, at
the time any Award described in this Section 6 is granted, impose the condition
(in addition to any conditions specified or authorized in this Section 6 of the
Plan) that performance goals be met prior to the Participant's realization of
any payment or benefit under the Award.
7. Purchase Price and Payment
Except as otherwise provided in the Plan, the purchase price of Common
Stock to be acquired pursuant to an Award shall be the price determined by the
Board, provided that such price shall not be less than the par value of the
Common Stock. Except as otherwise provided in the Plan, the Board may determine
the method of payment of the exercise price or purchase price of an Award
granted under the Plan and the form of payment. The Board may determine that all
or any part of the purchase price of Common Stock pursuant to an Award has been
satisfied by past services rendered by the Participant. The Board may agree at
any time, upon request of the Participant, to defer the date on which any
payment under an Award will be made.
8. Loans and Supplemental Grants
The Company may make a loan to a Participant, either on or after the
grant to the Participant of any Award, in connection with the purchase of Common
Stock under the Award or with the payment of any obligation incurred or
recognized as a result of the Award. The Board will have full authority to
decide whether the loan is to be secured or unsecured or with or without
recourse against the borrower, the terms on which the loan is to be repaid and
the conditions, if any, under which it may be forgiven.
In connection with any Award, the Board may at the time such Award is
made or at a later date, provide for and make a cash payment to the participant
not to exceed an amount equal to (a) the amount of any federal, state and local
income tax or ordinary income for which the Participant will be liable with
respect to the Award, plus (b) an additional amount on a grossed-up basis
necessary to make him or her whole after tax, discharging all the participant's
income tax liabilities arising from all payments under the Plan.
9. Change in Control
9.1 Impact of Event
In the event of a "Change in Control" as defined in Section 9.2, the
following provisions shall apply, unless the agreement evidencing the Award
otherwise provides (by specific explicit reference to Section 9.2 below). If a
Change in Control occurs while any Awards are outstanding, then, effective upon
the Change in Control, (i) each outstanding stock option or other stock-based
Award awarded under the Plan that was not previously exercisable and vested
shall become immediately exercisable in full and will no longer be subject to a
right of repurchase by the Company, (ii) each outstanding restricted stock award
or other stock-based Award subject to restrictions and to the extent not fully
vested, shall be deemed to be fully vested, free of restrictions and no longer
subject to a right of repurchase by the Company, and (iii) deferral limitations
and conditions that relate solely to the passage of time, continued employment
or affiliation will be waived and removed as to deferred stock Awards and
performance Awards; performance of other conditions (other than conditions
relating solely to the passage of time, continued employment or affiliation)
will continue to apply unless otherwise provided in the agreement evidencing the
Award or in any other agreement between the Participant and the Company or
unless otherwise agreed by the Board.
9.2 Definition of "Change in Control"
"Change in Control" means an event or occurrence set forth in any one or
more of subsections (a) through (d) below (including an event or occurrence that
constitutes a Change in Control under one of such subsections but is
specifically exempted from another such subsection):
(a) the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership of any capital stock of Thermo Electron Corporation
("Thermo Electron") if, after such acquisition, such Person beneficially owns
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) 40% or
more of either (i) the then-outstanding shares of common stock of Thermo
Electron (the "Outstanding TMO Common Stock") or (ii) the combined voting power
of the then-outstanding securities of Thermo Electron entitled to vote generally
in the election of directors (the "Outstanding TMO Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change in Control: (i) any acquisition by
Thermo Electron, (ii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by Thermo Electron or any corporation controlled
by Thermo Electron, or (iii) any acquisition by any corporation pursuant to a
transaction which complies with clauses (i) and (ii) of subsection (c) of this
definition; or
(b) such time as the Continuing Directors (as defined below) do not
constitute a majority of the Board of Directors of Thermo Electron (the "Thermo
Board") (or, if applicable, the Board of Directors of a successor corporation to
Thermo Electron), where the term "Continuing Director" means at any date a
member of the Thermo Board (i) who was a member of the Thermo Board as of July
1, 1999 or (ii) who was nominated or elected subsequent to such date by at least
a majority of the directors who were Continuing Directors at the time of such
nomination or election or whose election to the Thermo Board was recommended or
endorsed by at least a majority of the directors who were Continuing Directors
at the time of such nomination or election; provided, however, that there shall
be excluded from this clause (ii) any individual whose initial assumption of
office occurred as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents, by or on behalf of a person other than the
Thermo Board; or
(c) the consummation of a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving Thermo Electron or a sale
or other disposition of all or substantially all of the assets of Thermo
Electron in one or a series of transactions (a "Business Combination"), unless,
immediately following such Business Combination, each of the following two
conditions is satisfied: (i) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding TMO Common Stock and
Outstanding TMO Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of the then-outstanding
shares of common stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such Business
Combination (which shall include, without limitation, a corporation which as a
result of such transaction owns Thermo Electron or substantially all of Thermo
Electron's assets either directly or through one or more subsidiaries) (such
resulting or acquiring corporation is referred to herein as the "Acquiring
Corporation") in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding TMO Common
Stock and Outstanding TMO Voting Securities, respectively; and (ii) no Person
(excluding the Acquiring Corporation or any employee benefit plan (or related
trust) maintained or sponsored by Thermo Electron or by the Acquiring
Corporation) beneficially owns, directly or indirectly, 40% or more of the then
outstanding shares of common stock of the Acquiring Corporation, or of the
combined voting power of the then-outstanding securities of such corporation
entitled to vote generally in the election of directors; or
(d) approval by the stockholders of Thermo Electron of a complete
liquidation or dissolution of Thermo Electron.
10. General Provisions
10.1 Documentation of Awards
Awards will be evidenced by written instruments, which may differ among
Participants, prescribed by the Board from time to time. Such instruments may be
in the form of agreements to be executed by both the Participant and the Company
or certificates, letters or similar instruments which need not be executed by
the participant but acceptance of which will evidence agreement to the terms
thereof. Such instruments shall conform to the requirements of the Plan and may
contain such other provisions (including provisions relating to events of
merger, consolidation, dissolution and liquidations, change of control and
restrictions affecting either the agreement or the Common Stock issued
thereunder), as the Board deems advisable.
10.2 Rights as a Stockholder
Except as specifically provided by the Plan or the instrument evidencing
the Award, the receipt of an Award will not give a Participant rights as a
Stockholder with respect to any shares covered by an Award until the date of
issue of a stock certificate to the participant for such shares.
10.3 Conditions on Delivery of Stock
The Company will not be obligated to deliver any shares of Common Stock
pursuant to the Plan or to remove any restriction from shares previously
delivered under the Plan (a) until all conditions of the Award have been
satisfied or removed, (b) until, in the opinion of the Company's counsel, all
applicable federal and state laws and regulations have been complied with, (c)
if the outstanding Common Stock is at the time listed on any stock exchange,
until the shares have been listed or authorized to be listed on such exchange
upon official notice of issuance, and (d) until all other legal matters in
connection with the issuance and delivery of such shares have been approved by
the Company's counsel. If the sale of Common Stock has not been registered under
the Securities Act of 1933, as amended, the Company may require, as a condition
to exercise of the Award, such representations or agreements as counsel for the
Company may consider appropriate to avoid violation of such act and may require
that the certificates evidencing such Common Stock bear an appropriate legend
restricting transfer.
If an Award is exercised by the participant's legal representative, the
Company will be under no obligation to deliver Common Stock pursuant to such
exercise until the Company is satisfied as to the authority of such
representative.
10.4 Tax Withholding
The Company will withhold from any cash payment made pursuant to an
Award an amount sufficient to satisfy all federal, state and local withholding
tax requirements (the "withholding requirements").
In the case of an Award pursuant to which Common Stock may be delivered,
the Board will have the right to require that the participant or other
appropriate person remit to the Company an amount sufficient to satisfy the
withholding requirements, or make other arrangements satisfactory to the Board
with regard to such requirements, prior to the delivery of any Common Stock. If
and to the extent that such withholding is required, the Board may permit the
participant or such other person to elect at such time and in such manner as the
Board provides to have the Company hold back from the shares to be delivered, or
to deliver to the Company, Common Stock having a value calculated to satisfy the
withholding requirement.
10.5 Transferability of Awards
Except as may be authorized by the Board, in its sole discretion, no
Award (other than an Award in the form of an outright transfer of cash or Common
Stock not subject to any restrictions) may be transferred other than by will or
the laws of descent and distribution, and during a Participant's lifetime an
Award requiring exercise may be exercised only by him or her (or in the event of
incapacity, the person or persons properly appointed to act on his or her
behalf). The Board may, in its discretion, determine the extent to which Awards
granted to a Participant shall be transferable, and such provisions permitting
or acknowledging transfer shall be set forth in the written agreement evidencing
the Award executed and delivered by or on behalf of the Company and the
Participant.
10.6 Adjustments in the Event of Certain Transactions
(a) In the event of a stock dividend, stock split or combination of
shares, or other distribution with respect to holders of Common Stock other than
normal cash dividends, the Board will make (i) appropriate adjustments to the
maximum number of shares that may be delivered under the Plan under Section 4
above, and (ii) appropriate adjustments to the number and kind of shares of
stock or securities subject to Awards then outstanding or subsequently granted,
any exercise prices relating to Awards and any other provisions of Awards
affected by such change.
(b) In the event of any recapitalization, merger or consolidation
involving the Company, any transaction in which the Company becomes a subsidiary
of another entity, any sale or other disposition of all or a substantial portion
of the assets of the Company or any similar transaction, as determined by the
Board, the Board in its discretion may make appropriate adjustments to
outstanding Awards to avoid distortion in the operation of the Plan.
10.7 Employment Rights
Neither the adoption of the Plan nor the grant of Awards will confer
upon any person any right to continued employment with the Company or any
subsidiary or interfere in any way with the right of the Company or subsidiary
to terminate any employment relationship at any time or to increase or decrease
the compensation of such person. Except as specifically provided by the Board in
any particular case, the loss of existing or potential profit in Awards granted
under the Plan will not constitute an element of damages in the event of
termination of an employment relationship even if the termination is in
violation of an obligation of the Company to the employee.
Whether an authorized leave of absence, or absence in military or
government service, shall constitute termination of employment shall be
determined by the Board at the time. For purposes of this Plan, transfer of
employment between the Company and its subsidiaries shall not be deemed
termination of employment.
10.8 Other Employee Benefits
The value of an Award granted to a Participant who is an employee, and
the amount of any compensation deemed to be received by an employee as a result
of any exercise or purchase of Common Stock pursuant to an Award or sale of
shares received under the Plan, will not constitute "earnings" or "compensation"
with respect to which any other employee benefits of such employee are
determined, including without limitation benefits under any pension, stock
ownership, stock purchase, life insurance, medical, health, disability or salary
continuation plan.
10.9 Legal Holidays
If any day on or before which action under the Plan must be taken falls
on a Saturday, Sunday or legal holiday, such action may be taken on the next
succeeding day not a Saturday, Sunday or legal holiday.
10.10 Foreign Nationals
Without amending the Plan, Awards may be granted to persons who are
foreign nationals or employed outside the United States or both, on such terms
and conditions different from those specified in the Plan, as may, in the
judgment of the Board, be necessary or desirable to further the purpose of the
Plan.
11. Termination and Amendment
The Plan shall remain in full force and effect until terminated by the
Board. Subject to the last sentence of this Section 11, the Board may at any
time or times amend the Plan or any outstanding Award for any purpose that may
at the time be permitted by law, or may at any time terminate the Plan as to any
further grants of Awards. No amendment of the Plan or any agreement evidencing
Awards under the Plan may adversely affect the rights of any participant under
any Award previously granted without such participant's consent.
THERMEDICS INC.
DIRECTORS STOCK OPTION PLAN
As amended and restated effective as of May 25, 1999
1. Purpose
The purpose of this Directors Stock Option Plan (the "Plan") of
Thermedics Inc. (the "Company") is to encourage ownership in the Company by
outside directors of the Company whose services are considered essential to the
Company's growth and progress and to provide them with a further incentive to
become directors and to continue as directors of the Company. The Plan is
intended to be a nonstatutory stock option plan.
2. Administration
The Board of Directors, or a Committee (the "Committee") consisting of
one or more directors of the Company appointed by the Board of Directors, shall
supervise and administer the Plan. Grants of stock options under the Plan and
the amount and nature of the options to be granted shall be automatic in
accordance with Section 5. However, all questions of interpretation of the Plan
or of any stock options granted under it shall be determined by the Board of
Directors or the Committee and such determination shall be final and binding
upon all persons having an interest in the Plan.
3. Participation in the Plan
Directors of the Company who are not employees of the Company or any
subsidiary or parent of the Company shall be eligible to participate in the
Plan. Directors who receive grants of stock options in accordance with this Plan
are sometimes referred to herein as "Optionees."
4. Stock Subject to the Plan
The maximum number of shares that may be issued under the Plan shall be
37,500 shares of the Company's Common Stock (the "Common Stock"), subject to
adjustment as provided in Section 9. Shares to be issued upon the exercise of
options granted under the Plan may be either authorized but unissued shares or
shares held by the Company in its treasury. If any option expires or terminates
for any reason without having been exercised in full, the unpurchased shares
subject thereto shall again be available for options thereafter to be granted.
5. Terms and Conditions
A. Annual Stock Option Grants
Each Director of the Company who meets the requirements of Section 3 and
who is holding office immediately following the Annual Meeting of Stockholders
commencing with the Annual Meeting of Stockholders held in calendar year 1995,
shall be granted an option to purchase 1,000 shares of Common Stock at the close
of business on the date of such Annual Meeting.
B. General Terms and Conditions Applicable to All Grants.
1. Options shall be immediately exercisable at any time from and
after the grant date and prior to the date which is the earliest
of:
(a) three years after the grant date for options granted
under Section 5(A), (b) two years after the Optionee ceases to
serve as a director of the Company, Thermo Electron or any
subsidiary of Thermo Electron (one year in the event the Optionee
ceases to meet the requirements of this Subsection by reason of
his or her death), or (c) the date of dissolution or liquidation
of the Company.
2. The exercise price at which Options are granted hereunder
shall be the average of the closing prices reported by the
national securities exchange on which the Common Stock is
principally traded for the five trading days immediately
preceding and including the date the option is granted or, if
such security is not traded on an exchange, the average last
reported sale price for the five-day period on the NASDAQ
National Market List, or the average of the closing bid prices
for the five-day period last quoted by an established quotation
service for over-the-counter securities, or if none of the above
shall apply, the last price paid for shares of the Common Stock
by independent investors in a private placement.
3. All options shall be evidenced by a written agreement
substantially in such form as shall be approved by the Board of
Directors or Committee, containing terms and conditions
consistent with the provisions of this Plan.
6. Exercise of Options
A. Exercise/Consideration
An option may be exercised in accordance with its terms by written
notice of intent to exercise the option, specifying the number of shares of
stock with respect to which the option is then being exercised. The notice shall
be accompanied by payment in the form of cash or shares of Common Stock of the
Company (the shares so tendered referred to herein as "Tendered Shares") with a
then current market value equal to the exercise price of the shares to be
purchased; provided, however, that such Tendered Shares shall have been acquired
by the Optionee more than six months prior to the date of exercise (unless such
requirement is waived in writing by the Company). Against such payment the
Company shall deliver or cause to be delivered to the Optionee a certificate for
the number of shares then being purchased, registered in the name of the
Optionee or other person exercising the option. If any law or applicable
regulation of the Securities and Exchange Commission or other body having
jurisdiction in the premises shall require the Company or the Director to take
any action in connection with shares being purchased upon exercise of the
option, exercise of the option and delivery of the certificate or certificates
for such shares shall be postponed until completion of the necessary action,
which shall be taken at the Company's expense.
B. Tax Withholding
The Company shall have the right to deduct from payments of any kind
otherwise due to the Optionee any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon exercise
of options under the Plan. Subject to the prior approval of the Company, which
may be withheld by the Company in its sole discretion, the Optionee may elect to
satisfy such obligations, in whole or in part, (i) by causing the Company to
withhold shares of Common Stock otherwise issuable pursuant to the exercise of
an option or (ii) by delivering to the Company shares of Common Stock already
owned by the Optionee. The shares so delivered or withheld shall have a fair
market value equal to such withholding obligation. The fair market value of the
shares used to satisfy such withholding obligation shall be determined by the
Company as of the date that the amount of tax to be withheld is to be
determined. Notwithstanding the foregoing, no election to use shares for the
payment of withholding taxes shall be effective unless made in compliance with
any applicable requirements of Rule 16b-3.
7. Transferability
Except as may be authorized by the Board, in its sole discretion, no
Option may be transferred other than by will or the laws of descent and
distribution, and during an Optionee's lifetime an Option may be exercised only
by him or her (or in the event of incapacity, the person or persons properly
appointed to act on his or her behalf). The Board may, in its discretion,
determine the extent to which Options granted to an Optionee shall be
transferable, and such provisions permitting or acknowledging transfer shall be
set forth in the written agreement evidencing the Option executed and delivered
by or on behalf of the Company and the Optionee.
8. Limitation of Rights to Continue as a Director
Neither the Plan, nor the quantity of shares subject to options granted
under the Plan, nor any other action taken pursuant to the Plan, shall
constitute or be evidence of any agreement or understanding, express or implied,
that the Company will retain a Director for any period of time, or at any
particular rate of compensation.
9. Adjustments in the Event of Certain Transactions
(a) In the event of a stock dividend, stock split or combination of
shares, or other distribution with respect to holders of Common Stock other than
normal cash dividends, the Board will make (i) appropriate adjustments to the
maximum number of shares that may be delivered under the Plan under Section 4
above, and (ii) appropriate adjustments to the number and kind of shares of
stock or securities subject to Options then outstanding or subsequently granted,
any exercise prices relating to Options and any other provisions of Options
affected by such change.
(b) In the event of any recapitalization, merger or consolidation
involving the Company, any transaction in which the Company becomes a subsidiary
of another entity, any sale or other disposition of all or a substantial portion
of the assets of the Company or any similar transaction, as determined by the
Board, the Board in its discretion may make appropriate adjustments to
outstanding Options to avoid distortion in the operation of the Plan.
10. Limitation of Rights in Option Stock
The Optionees shall have no rights as stockholders in respect of shares
as to which their options shall not have been exercised, certificates issued and
delivered and payment as herein provided made in full, and shall have no rights
with respect to such shares not expressly conferred by this Plan or the written
agreement evidencing options granted hereunder.
11. Stock Reserved
The Company shall at all times during the term of the options reserve
and keep available such number of shares of the Common Stock as will be
sufficient to permit the exercise in full of all options granted under this Plan
and shall pay all other fees and expenses necessarily incurred by the Company in
connection therewith.
12. Securities Laws Restrictions
A. Investment Representations.
The Company may require any person to whom an option is granted, as a
condition of exercising such option, to give written assurances in substance and
form satisfactory to the Company to the effect that such person is acquiring the
Common Stock subject to the option for his or her own account for investment and
not with any present intention of selling or otherwise distributing the same,
and to such other effects as the Company deems necessary or appropriate in order
to comply with federal and applicable state securities laws.
B. Compliance with Securities Laws.
Each option shall be subject to the requirement that if, at any time,
counsel to the Company shall determine that the listing, registration or
qualification of the shares subject to such option upon any securities exchange
or under any state or federal law, or the consent or approval of any
governmental or regulatory body, or that the disclosure of non-public
information or the satisfaction of any other condition is necessary as a
condition of, or in connection with, the issuance or purchase of shares
thereunder, such option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, or satisfaction of
such condition shall have been effected or obtained on conditions acceptable to
the Board of Directors. Nothing herein shall be deemed to require the Company to
apply for or to obtain such listing, registration or qualification, or to
satisfy such condition.
13. Change in Control
A. Impact of Event
In the event of a "Change in Control" as defined in Section 13(A), the
following provisions shall apply, unless the agreement evidencing the Award
otherwise provides (by specific explicit reference to Section 13(B) below). If a
Change in Control occurs while any Options are outstanding, then, effective upon
the Change in Control, each outstanding Option under the Plan that was not
previously exercisable and vested shall become immediately exercisable in full
and will no longer be subject to a right of repurchase by the Company.
B. Definition of "Change in Control"
"Change in Control" means an event or occurrence set forth in any one or
more of subsections (a) through (d) below (including an event or occurrence that
constitutes a Change in Control under one of such subsections but is
specifically exempted from another such subsection):
(a) the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership of any capital stock of Thermo Electron Corporation
("Thermo Electron") if, after such acquisition, such Person beneficially owns
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) 40% or
more of either (i) the then-outstanding shares of common stock of Thermo
Electron (the "Outstanding TMO Common Stock") or (ii) the combined voting power
of the then-outstanding securities of Thermo Electron entitled to vote generally
in the election of directors (the "Outstanding TMO Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change in Control: (i) any acquisition by
Thermo Electron, (ii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by Thermo Electron or any corporation controlled
by Thermo Electron, or (iii) any acquisition by any corporation pursuant to a
transaction which complies with clauses (i) and (ii) of subsection (c) of this
definition; or
(b) such time as the Continuing Directors (as defined below) do not
constitute a majority of the Board of Directors of Thermo Electron (the "Thermo
Board") (or, if applicable, the Board of Directors of a successor corporation to
Thermo Electron), where the term "Continuing Director" means at any date a
member of the Thermo Board (i) who was a member of the Thermo Board as of July
1, 1999 or (ii) who was nominated or elected subsequent to such date by at least
a majority of the directors who were Continuing Directors at the time of such
nomination or election or whose election to the Thermo Board was recommended or
endorsed by at least a majority of the directors who were Continuing Directors
at the time of such nomination or election; provided, however, that there shall
be excluded from this clause (ii) any individual whose initial assumption of
office occurred as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents, by or on behalf of a person other than the
Thermo Board; or
(c) the consummation of a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving Thermo Electron or a sale
or other disposition of all or substantially all of the assets of Thermo
Electron in one or a series of transactions (a "Business Combination"), unless,
immediately following such Business Combination, each of the following two
conditions is satisfied: (i) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding TMO Common Stock and
Outstanding TMO Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of the then-outstanding
shares of common stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such Business
Combination (which shall include, without limitation, a corporation which as a
result of such transaction owns Thermo Electron or substantially all of Thermo
Electron's assets either directly or through one or more subsidiaries) (such
resulting or acquiring corporation is referred to herein as the "Acquiring
Corporation") in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding TMO Common
Stock and Outstanding TMO Voting Securities, respectively; and (ii) no Person
(excluding the Acquiring Corporation or any employee benefit plan (or related
trust) maintained or sponsored by Thermo Electron or by the Acquiring
Corporation) beneficially owns, directly or indirectly, 40% or more of the then
outstanding shares of common stock of the Acquiring Corporation, or of the
combined voting power of the then-outstanding securities of such corporation
entitled to vote generally in the election of directors; or
(d) approval by the stockholders of Thermo Electron of a complete
liquidation or dissolution of Thermo Electron.
14. Amendment of the Plan
The provisions of Sections 3 and 5 of the Plan shall not be amended more
than once every six months, other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974, or the rules thereunder.
Subject to the foregoing, the Board of Directors may at any time, and from time
to time, modify or amend the Plan in any respect, except that if at any time the
approval of the Stockholders of the Company is required as to such modification
or amendment under Rule 16b-3, the Board of Directors may not effect such
modification or amendment without such approval.
The termination or any modification or amendment of the Plan shall not,
without the consent of an Optionee, affect his or her rights under an option
previously granted to him or her. With the consent of the Optionees affected,
the Board of Directors may amend outstanding option agreements in a manner not
inconsistent with the Plan. The Board of Directors shall have the right to amend
or modify the terms and provisions of the Plan and of any outstanding option to
the extent necessary to ensure the qualification of the Plan under Rule 16b-3.
15. Effective Date of the Plan
The Plan shall become effective when adopted by the Board of Directors,
but no option granted under the Plan shall become exercisable until six months
after the Plan is approved by the Stockholders of the Company.
16. Notice
Any written notice to the Company required by any of the provisions of
the Plan shall be addressed to the Clerk of the Company and shall become
effective when it is received.
17. Governing Law
The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the Commonwealth of Massachusetts.
THERMEDICS INC.
DEFERRED COMPENSATION PLAN FOR DIRECTORS
As amended and restated as of June 24, 1999
Section 1. Participation. Any director of Thermedics Inc. (the "Company") may
elect to have such percentage as he or she may specify of the fees otherwise
payable to him or her deferred and paid to him or her as provided in this Plan.
A director who is also an employee of the Company or any subsidiary or parent of
the Company, shall not be eligible to participate in this Plan. Each election
shall be made by notice in writing delivered to the Clerk of the Company, in
such form as the Clerk shall designate, and each election shall be applicable
only with respect to fees earned subsequent to the date of the election for the
period designated in the form. The term "participant" as used herein refers to
any director who shall have made an election. No participant may defer the
receipt of any fees to be earned after the later to occur of either (a) the date
on which the participant shall retire from or otherwise cease to engage in his
or her principal occupation or employment or (b) the date on which he or she
shall cease to be a director of the Company, or such earlier date as the Board
of Directors of the Company, with the participant's consent, may designate (the
"deferral termination date"). In the event that the participant's deferral
termination date is the date on which he or she ceases to engage in his or her
principal occupation or employment, the participant or a personal representative
shall advise the Company of that date by written notice delivered to the Clerk
of the Company.
Section 2. Establishment of Deferred Compensation Accounts. There
shall be established for each participant an account to be designated as
that participant's deferred compensation account.
Section 3. Allocations to Deferred Compensation Accounts. There shall be
allocated to each participant's deferred compensation account, as of the end of
each quarter, an amount equal to his or her fees for that quarter which that
participant shall have elected to have deferred pursuant to Section 1.
Section 4. Stock Units and Stock Unit Accounts. All amounts allocated to a
participant's deferred compensation account pursuant to Section 3 and Section 5
shall be converted, at the end of each quarter, into stock units by dividing the
accumulated balance in the deferred compensation account as of the end of that
quarter by the average last sale price per share of the Company's common stock
as reported in The Wall Street Journal, for the five business days up to and
including the last business day of that quarter. The number of stock units, so
determined, rounded to the nearest one-hundredth of a share, shall be credited
to a separate stock unit account to be established for the participant, and the
aggregate value thereof as of the last business day of that quarter shall be
charged to the participant's deferred compensation account. No amounts credited
to the participant's deferred compensation account pursuant to Section 5
subsequent to the close of the fiscal year in which occurs the participant's
deferral termination date shall be converted into stock units. Any such amount
shall be distributed in cash as provided in Section 8. A maximum number of
30,000 shares of the Company's common stock may be represented by stock units
credited under this Plan, subject to proportionate adjustment in the event of
any stock dividend, stock split or other capital change affecting the Company's
common stock.
Section 5. Cash Dividend Credits. Additional credits shall be made to a
participant's deferred compensation account, until all distributions shall have
been made from the participant's stock unit account, in amounts equal to the
cash dividends (or the fair market value of dividends paid in property other
than dividends payable in common stock of the Company) which the participant
would have received from time to time had he or she been the owner on the record
dates for the payment of such dividends of the number of shares of the Company's
common stock equal to the number of units in his or her stock unit account on
those dates.
Section 6. Stock Dividend Credits. Additional credits shall be made to a
participant's stock unit account, until all distributions shall have been made
from the participant's stock unit account, of a number of units equal to the
number of shares of the Company's common stock, rounded to the nearest
one-hundredth share, which the participant would have received from time to time
as stock dividends had he or she been the owner on the record dates for the
payments of such stock dividends of the number of units of the Company's common
stock equal to the number of units credited to his or her stock unit account on
those dates.
Section 7. Adjustments in the Event of Certain Transactions. In the event of a
stock dividend, stock split or combination of shares, or other distribution with
respect to holders of Common Stock other than normal cash dividends, the number
of units then credited to a partipant's stock unit account shall be
appropriately adjusted on the same basis. In the event of any recapitalization,
merger or consolidation involving the Company, any transaction in which the
Company becomes a subsidiary of another entity, any sale or other disposition of
all or a substantial portion of the assets of the Company or any similar
transaction, as determined by the Board, the Board in its discretion may
terminate the Plan pursuant to Section 11.
Section 8. Distribution of Stock and Cash After Participant's Deferral
Termination Date. When a participant's deferral termination date shall occur,
the Company shall become obligated to make the distributions prescribed in the
following paragraphs (a) and (b).
(a) The Company shall distribute to the participant the number of shares
of the common stock of the Company which shall equal the total number of units
accumulated in his or her stock unit account as of the close of the fiscal year
in which the participant's deferral termination date occurs. Such distribution
of stock shall be made in ten annual installments, unless, at least six months
prior to his or her deferral termination date, the participant shall have
elected, by notice in writing filed with the Secretary of the Company, to have
such distribution made in five annual installments. In either such case, the
installments shall be of as nearly equal number of shares as practicable,
adjusted to reflect any changes pursuant to Sections 6 and 7 in the number of
units remaining in the participant's stock unit account. The first such
installment shall be distributed within 60 days after the close of the fiscal
year in which the participant's deferral termination date occurs. The remaining
installments shall be distributed at annual intervals thereafter. Anything
herein to the contrary notwithstanding, the Company shall have the option, if
its Board of Directors shall by resolution so determine, in lieu of making
distribution in ten or five annual installments as set forth above, with the
participant's consent, to distribute stock or any remaining installments thereof
in a single distribution at any time following the close of the fiscal year in
which the participant's deferral termination date occurs. Distribution of stock
made hereunder may be made from shares of common stock held in the treasury
and/or from shares of authorized but previously unissued shares of common stock.
(b) The Company shall distribute to the participant sums in cash equal
to the balance credited to his or her deferred compensation account as of the
close of the fiscal year in which his or her deferral termination date occurs
plus such additional amounts as shall be credited thereto from time to time
thereafter pursuant to Section 5. The cash distribution shall be made on the
same dates as the annual distributions made pursuant to paragraph (a) above, and
each cash distribution shall consist of the entire balance credited to the
participant's deferred compensation account at the time of the annual
distribution.
If a participant's deferral termination date shall occur by reason of
his or her death or if he or she shall die after his or her deferral termination
date but prior to receipt of all distributions of stock and cash provided for in
this Section 8, all stock and cash remaining distributable hereunder shall be
distributed to such beneficiary as the participant shall have designated in
writing and filed with the Clerk of the Company or, in the absence of
designation, to the participant's personal representative. Such distributions
shall be made in the same manner and at the same intervals as they would have
been made to the participant had he or she continued to live.
Section 9. Participant's Rights Unsecured. The right of any participant to
receive distributions under Section 8 shall be an unsecured claim against the
general assets of the Company. The Company may but shall not be obligated to
acquire shares of its outstanding common stock from time to time in anticipation
of its obligation to make such distributions, but no participant shall have any
rights in or against any shares of stock so acquired by the Company. All such
stock shall constitute general assets of the Company and may be disposed of by
the Company at such time and for such purposes as it may deem appropriate.
10. Change in Control
10.1 Impact of Event
In the event of a "Change in Control" as defined in Section 10.2, the Plan shall
terminate and full distribution shall be made from all participants' deferred
compensation accounts and stock unit accounts effective upon the Change of
Control.
10.2 Definition of "Change in Control"
"Change in Control" means an event or occurrence set forth in any one or
more of subsections (a) through (d) below (including an event or occurrence that
constitutes a Change in Control under one of such subsections but is
specifically exempted from another such subsection):
(a) the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership of any capital stock of Thermo Electron Corporation
("Thermo Electron") if, after such acquisition, such Person beneficially owns
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) 40% or
more of either (i) the then-outstanding shares of common stock of Thermo
Electron (the "Outstanding TMO Common Stock") or (ii) the combined voting power
of the then-outstanding securities of Thermo Electron entitled to vote generally
in the election of directors (the "Outstanding TMO Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change in Control: (i) any acquisition by
Thermo Electron, (ii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by Thermo Electron or any corporation controlled
by Thermo Electron, or (iii) any acquisition by any corporation pursuant to a
transaction which complies with clauses (i) and (ii) of subsection (c) of this
definition; or
(b) such time as the Continuing Directors (as defined below) do not
constitute a majority of the Board of Directors of Thermo Electron (the "Thermo
Board") (or, if applicable, the Board of Directors of a successor corporation to
Thermo Electron), where the term "Continuing Director" means at any date a
member of the Thermo Board (i) who was a member of the Thermo Board as of July
1, 1999 or (ii) who was nominated or elected subsequent to such date by at least
a majority of the directors who were Continuing Directors at the time of such
nomination or election or whose election to the Thermo Board was recommended or
endorsed by at least a majority of the directors who were Continuing Directors
at the time of such nomination or election; provided, however, that there shall
be excluded from this clause (ii) any individual whose initial assumption of
office occurred as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents, by or on behalf of a person other than the
Thermo Board; or
(c) the consummation of a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving Thermo Electron or a sale
or other disposition of all or substantially all of the assets of Thermo
Electron in one or a series of transactions (a "Business Combination"), unless,
immediately following such Business Combination, each of the following two
conditions is satisfied: (i) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding TMO Common Stock and
Outstanding TMO Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of the then-outstanding
shares of common stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such Business
Combination (which shall include, without limitation, a corporation which as a
result of such transaction owns Thermo Electron or substantially all of Thermo
Electron's assets either directly or through one or more subsidiaries) (such
resulting or acquiring corporation is referred to herein as the "Acquiring
Corporation") in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding TMO Common
Stock and Outstanding TMO Voting Securities, respectively; and (ii) no Person
(excluding the Acquiring Corporation or any employee benefit plan (or related
trust) maintained or sponsored by Thermo Electron or by the Acquiring
Corporation) beneficially owns, directly or indirectly, 40% or more of the then
outstanding shares of common stock of the Acquiring Corporation, or of the
combined voting power of the then-outstanding securities of such corporation
entitled to vote generally in the election of directors; or
(d) approval by the stockholders of Thermo Electron of a complete
liquidation or dissolution of Thermo Electron.
Section 11. Amendment and Termination of the Plan. The Board of Directors of the
Company may amend or terminate the Plan at any time and from time to time,
provided, however, that no amendment adversely affecting credits already made to
any participant's deferred compensation account or stock unit account may be
made without the consent of that participant or, if that participant has died,
that participant's beneficiary. Upon termination of the Plan, the Company shall
be obligated to distribute to the participant either of the following as the
Board of Directors of the Company, in its sole discretion, may determine: (i)
the number of shares of the common stock of the Company which shall equal the
total number of units accumulated in the participant's stock unit account as of
the effective date of termination of the Plan or (ii) a sum in cash equal to the
balance credited to the participant's deferred compensation account as of the
effective date of termination of the Plan.
THERMEDICS INC.
THERMO CARDIOSYSTEMS INC. NONQUALIFIED STOCK OPTION PLAN
As amended and restated effective as of June 24, 1999
1. Purpose
This Nonqualified Stock Option Plan (the "Plan") is intended to
encourage ownership of Common Stock (the "Common Stock"), of Thermo
Cardiosystems Inc. ("Subsidiary"), a subsidiary of Thermedics Inc. (the
"Company"), by persons selected by the Board of Directors (or a committee
thereof) in its sole discretion, including directors, executive officers, key
employees and consultants of the Company and its subsidiaries, and to provide
additional incentive for them to promote the success of the business of the
Company and Subsidiary.
The Plan is intended to be a nonstatutory stock option plan.
2. Effective Date of the Plan
The Plan shall become effective when adopted by the Board of Directors
of the Company.
3. Stock Subject to Plan
Subject to adjustment as provided in Section 11, the total number of
shares of Common Stock reserved and available for issuance under the Plan and
the Company's Incentive Stock Option Plan in the aggregate shall be 140,625
shares. Shares to be issued upon the exercise of options granted under the Plan
shall be shares of Subsidiary beneficially owned by the Company. If any option
expires or terminates for any reason without having been exercised in full, the
unpurchased shares subject thereto shall again be available for options
thereafter to be granted.
4. Administration
The Plan will be administered by the Board of Directors of the Company
(the "Board"). Subject to the provisions of the Plan, the Board shall have
complete authority, in its discretion, to make the following determinations with
respect to each option to be granted by the Company: (a) the person to receive
the option (the "Optionee"); (b) the time of granting the option; (c) the number
of shares subject thereto; (d) the option price; (e) the option period; and (f)
the terms and conditions of options granted under the Plan (including terms and
conditions relating to events of merger, consolidation, dissolution and
liquidation, change of control, vesting, forfeiture, restrictions, dividends and
interest, if any, on deferred amounts); (g) waive compliance by an optionee with
any obligation to be performed by him or her under an option; (h) waive any term
or condition of an option; (i) cancel an existing option in whole or in part
with the consent of an Optionee; (j) grant replacement options; (k) accelerate
the vesting or lapse of any restrictions of any option; and (l) adopt the form
of instruments evidencing options under the Plan and change such forms from time
to time.. In making such determinations, the Board may take into account the
nature of the services rendered by the Optionees, their present and potential
contributions to the success of the Company and/or one or more of its
subsidiaries, and such other factors as the Board in its discretion shall deem
relevant. Subject to the provisions of the Plan, the Board shall also have
complete authority to interpret the Plan, to prescribe, amend, and rescind rules
and regulations relating to it, to determine the terms and provisions of the
respective option agreements (which need not be identical), and to make all
other determinations necessary or advisable for the administration of the Plan.
Any interpretation by the Board of the terms and provisions of the Plan or any
Award thereunder and the administration thereof, and all action taken by the
Board, shall be final, binding and conclusive on all parties and any person
claiming under or through any party. No Director shall be liable for any action
or determination made in good faith. The Board may, to the full extent permitted
by law, delegate any or all of its responsibilities under the Plan to a
committee (the "Committee") appointed by the Board and consisting of two or more
members of the Board, each of whom shall be deemed a "disinterested person"
within the meaning of Rule 16b-3 (or any successor rule) of the Securities
Exchange Act of 1934 (the "Exchange Act").
5. Eligibility
An option may be granted to any person selected by the Board in its sole
discretion.
6. Time of Granting Options
The granting of an option shall take place at the time specified by the
Board. Only if expressly so provided by the Board shall the granting of an
option be regarded as taking place at the time when a written option agreement
shall have been duly executed and delivered by or on behalf of the Company and
the Optionee to whom such option shall be granted. The agreement shall provide,
among other things, that it does not confer upon an Optionee any right to
continue in the employ of the Company and/or one or more of its subsidiaries or
to continue as a director or consultant of the Company, and that it does not
interfere in any way with the right of the Company or any such subsidiary to
terminate the employment of the Optionee at any time if the Optionee is an
employee, to remove the Optionee as a director of the Company if the Optionee is
a director, or to terminate the services of the Optionee if the Optionee is a
consultant.
7. Option Period
An option may become exercisable immediately or in such installments,
cumulative or noncumulative, as the Board may determine.
8. Exercise of Option
An option may be exercised in accordance with its terms by written
notice of intent to exercise the option, specifying the number of shares of
stock with respect to which the option is then being exercised. The notice shall
be accompanied by payment in the form of cash or shares of Subsidiary Common
Stock (the "Tendered Shares") with a then current market value equal to the
option price of the shares to be purchased; provided, however, that such
Tendered Shares shall have been acquired by the Optionee more than six months
prior to the date of exercise, unless such requirement is waived in writing by
the Company. Against such payment the Company shall deliver or cause to be
delivered to the Optionee a certificate for the number of shares then being
purchased, registered in the name of the Optionee or other person exercising the
option. If any law or applicable regulation of the Securities and Exchange
Commission or other body having jurisdiction in the premises shall require the
Company, Subsidiary or the Optionee to take any action in connection with shares
being purchased upon exercise of the option, exercise of the option and delivery
of the certificate or certificates for such shares shall be postponed until
completion of the necessary action, which shall be taken at the Company's
expense.
9. Transferability
Except as may be authorized by the Board, in its sole discretion, no
Option may be transferred other than by will or the laws of descent and
distribution, and during a Optionee's lifetime an option requiring exercise may
be exercised only by him or her (or in the event of incapacity, the person or
persons properly appointed to act on his or her behalf). The Board may, in its
discretion, determine the extent to which options granted to an Optionee shall
be transferable, and such provisions permitting or acknowledging transfer shall
be set forth in the written agreement evidencing the option executed and
delivered by or on behalf of the Company and the Optionee.
10. Vesting, Restrictions and Termination of Options
The Board, in its sole discretion, may determine the manner in which
options shall vest, the rights of the Company to repurchase the shares issued
upon the exercise of any option and the manner in which such rights shall lapse,
and the terms upon which any option granted shall terminate. The Board shall
have the right to accelerate the date of exercise of any installment or to
accelerate the lapse of the Company's repurchase rights. All of such terms shall
be specified in a written option agreement executed and delivered by or on
behalf of the Company and the Optionee to whom such option shall be granted.
11. Adjustments in the Event of Certain Transactions
(a) In the event of a stock dividend, stock split or combination of
shares, or other distribution with respect to holders of Common Stock other than
normal cash dividends, the Board will make (i) appropriate adjustments to the
maximum number of shares that may be delivered under the Plan under Section 3
above, and (ii) appropriate adjustments to the number and kind of shares of
stock or securities subject to Options then outstanding or subsequently granted,
any exercise prices relating to Options and any other provisions of Awards
affected by such change.
(b) In the event of any recapitalization, merger or consolidation
involving the Company, any transaction in which the Company becomes a subsidiary
of another entity, any sale or other disposition of all or a substantial portion
of the assets of the Company, any transaction which results in Thermo Electron
Corporation ceasing to be the beneficial owner of a majority of the
then-outstanding shares of Common Stock, or any similar transaction, as
determined by the Board, the Board in its discretion may make appropriate
adjustments to outstanding Options to avoid distortion in the operation of the
Plan.
12. Change in Control
12.1 Impact of Event
In the event of a "Change in Control" as defined in Section 12.2, the
following provisions shall apply, unless the agreement evidencing the Option
otherwise provides (by specific explicit reference to Section 12.2 below). If a
Change in Control occurs while any Options are outstanding, then, effective upon
the Change in Control, (i) each outstanding stock option granted under the Plan
that was not previously exercisable and vested shall become immediately
exercisable in full and will no longer be subject to a right of repurchase by
the Company, (ii) each outstanding Option subject to restrictions and to the
extent not fully vested, shall be deemed to be fully vested, free of
restrictions and no longer subject to a right of repurchase by the Company, and
(iii) performance of other conditions (other than conditions relating solely to
the passage of time, continued employment or affiliation) will continue to apply
unless otherwise provided in the agreement evidencing the Option or in any other
agreement between the Optioneet and the Company or unless otherwise agreed by
the Board.
12.2 Definition of "Change in Control"
"Change in Control" means an event or occurrence set forth in any one or
more of subsections (a) through (d) below (including an event or occurrence that
constitutes a Change in Control under one of such subsections but is
specifically exempted from another such subsection):
(a) the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership of any capital stock of Thermo Electron Corporation
("Thermo Electron") if, after such acquisition, such Person beneficially owns
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) 40% or
more of either (i) the then-outstanding shares of common stock of Thermo
Electron (the "Outstanding TMO Common Stock") or (ii) the combined voting power
of the then-outstanding securities of Thermo Electron entitled to vote generally
in the election of directors (the "Outstanding TMO Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change in Control: (i) any acquisition by
Thermo Electron, (ii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by Thermo Electron or any corporation controlled
by Thermo Electron, or (iii) any acquisition by any corporation pursuant to a
transaction which complies with clauses (i) and (ii) of subsection (c) of this
definition; or
(b) such time as the Continuing Directors (as defined below) do not
constitute a majority of the Board of Directors of Thermo Electron (the "Thermo
Board") (or, if applicable, the Board of Directors of a successor corporation to
Thermo Electron), where the term "Continuing Director" means at any date a
member of the Thermo Board (i) who was a member of the Thermo Board as of July
1, 1999 or (ii) who was nominated or elected subsequent to such date by at least
a majority of the directors who were Continuing Directors at the time of such
nomination or election or whose election to the Thermo Board was recommended or
endorsed by at least a majority of the directors who were Continuing Directors
at the time of such nomination or election; provided, however, that there shall
be excluded from this clause (ii) any individual whose initial assumption of
office occurred as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents, by or on behalf of a person other than the
Thermo Board; or
(c) the consummation of a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving Thermo Electron or a sale
or other disposition of all or substantially all of the assets of Thermo
Electron in one or a series of transactions (a "Business Combination"), unless,
immediately following such Business Combination, each of the following two
conditions is satisfied: (i) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding TMO Common Stock and
Outstanding TMO Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of the then-outstanding
shares of common stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such Business
Combination (which shall include, without limitation, a corporation which as a
result of such transaction owns Thermo Electron or substantially all of Thermo
Electron's assets either directly or through one or more subsidiaries) (such
resulting or acquiring corporation is referred to herein as the "Acquiring
Corporation") in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding TMO Common
Stock and Outstanding TMO Voting Securities, respectively; and (ii) no Person
(excluding the Acquiring Corporation or any employee benefit plan (or related
trust) maintained or sponsored by Thermo Electron or by the Acquiring
Corporation) beneficially owns, directly or indirectly, 40% or more of the then
outstanding shares of common stock of the Acquiring Corporation, or of the
combined voting power of the then-outstanding securities of such corporation
entitled to vote generally in the election of directors; or
(d) approval by the stockholders of Thermo Electron of a complete
liquidation or dissolution of Thermo Electron.
13. Limitation of Rights in Option Stock
The Optionees shall have no rights as stockholders in respect of shares
as to which their options shall not have been exercised, certificates issued and
delivered and payment as herein provided made in full, and shall have no rights
with respect to such shares not expressly conferred by this Plan.
14. Stock Reserved
The Company shall at all times during the term of the options reserve
and keep available such number of shares of the Common Stock as will be
sufficient to satisfy the requirements of this Plan and shall pay all other fees
and expenses necessarily incurred by the Company in connection therewith.
15. Securities Laws Restrictions
Each Optionee exercising an option, at the request of the Company, will
be required to give a representation in form satisfactory to counsel for the
Company that he will not transfer, sell or otherwise dispose of the shares
received upon exercise of the option at any time purchased by him, upon exercise
of any portion of the option, in a manner which would violate the Securities Act
of 1933, as amended, and the regulations of the Securities and Exchange
Commission thereunder and the Company may, if required or at its discretion,
make a notation on any certificates issued upon exercise of options to the
effect that such certificate may not be transferred except after receipt by the
Company of an opinion of counsel satisfactory to it to the effect that such
transfer will not violate such Act and such regulations.
16. Tax Withholding
The Company shall have the right to deduct from payments of any kind
otherwise due to an Optionee any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon exercise
of options under the Plan (the "withholding requirements"). The Board will have
the right to require that the Optionee or other appropriate person remit to the
Company an amount sufficient to satisfy the withholding requirements, or make
other arrangements satisfactory to the Board with regard to such requirements,
prior to the delivery of any Common Stock pursuant to exercise of an option. If
and to the extent that such withholding is required, the Board may permit the
Optionee or such other person to elect at such time and in such manner as the
Board provides to have the Company hold back from the shares to be delivered, or
to deliver to the Company, Common Stock having a value calculated to satisfy the
withholding requirements.
17. Termination and Amendment
The Plan shall remain in full force and effect until terminated by the
Board. Subject to the last sentence of this Section 17, the Board may at any
time or times amend the Plan or any outstanding Option for any purpose that may
at the time be permitted by law, or may at any time terminate the Plan as to any
further grants of Options. No amendment of the Plan or any agreement evidencing
Options under the Plan may adversely affect the rights of any participant under
any Option previously granted without such participant's consent.
THERMEDICS INC.
THERMEDICS DETECTION INC. NONQUALIFIED STOCK OPTION PLAN
As amended and restated effective as of June 24, 1999
1. Purpose
This Nonqualified Stock Option Plan (the "Plan") is intended to
encourage ownership of Common Stock (the "Common Stock"), of Thermedics
Detection Inc. ("Subsidiary"), a subsidiary of Thermedics Inc. (the "Company"),
by persons selected by the Board of Directors (or a committee thereof) in its
sole discretion, including directors, executive officers, key employees and
consultants of the Company and its subsidiaries, and to provide additional
incentive for them to promote the success of the business of the Company and
Subsidiary.
The Plan is intended to be a nonstatutory stock option plan.
2. Effective Date of the Plan
The Plan shall become effective when adopted by the Board of Directors
of the Company.
3. Stock Subject to Plan
Subject to adjustment as provided in Section 11, the total number of
shares of Common Stock reserved and available for issuance under the Plan and
the Company's Incentive Stock Option Plan in the aggregate shall be 333,333
shares. Shares to be issued upon the exercise of options granted under the Plan
shall be shares of Subsidiary beneficially owned by the Company. If any option
expires or terminates for any reason without having been exercised in full, the
unpurchased shares subject thereto shall again be available for options
thereafter to be granted.
4. Administration
The Plan will be administered by the Board of Directors of the Company
(the "Board"). Subject to the provisions of the Plan, the Board shall have
complete authority, in its discretion, to make the following determinations with
respect to each option to be granted by the Company: (a) the person to receive
the option (the "Optionee"); (b) the time of granting the option; (c) the number
of shares subject thereto; (d) the option price; (e) the option period; and (f)
the terms and conditions of options granted under the Plan (including terms and
conditions relating to events of merger, consolidation, dissolution and
liquidation, change of control, vesting, forfeiture, restrictions, dividends and
interest, if any, on deferred amounts); (g) waive compliance by an optionee with
any obligation to be performed by him or her under an option; (h) waive any term
or condition of an option; (i) cancel an existing option in whole or in part
with the consent of an Optionee; (j) grant replacement options; (k) accelerate
the vesting or lapse of any restrictions of any option; and (l) adopt the form
of instruments evidencing options under the Plan and change such forms from time
to time.. In making such determinations, the Board may take into account the
nature of the services rendered by the Optionees, their present and potential
contributions to the success of the Company and/or one or more of its
subsidiaries, and such other factors as the Board in its discretion shall deem
relevant. Subject to the provisions of the Plan, the Board shall also have
complete authority to interpret the Plan, to prescribe, amend, and rescind rules
and regulations relating to it, to determine the terms and provisions of the
respective option agreements (which need not be identical), and to make all
other determinations necessary or advisable for the administration of the Plan.
Any interpretation by the Board of the terms and provisions of the Plan or any
Award thereunder and the administration thereof, and all action taken by the
Board, shall be final, binding and conclusive on all parties and any person
claiming under or through any party. No Director shall be liable for any action
or determination made in good faith. The Board may, to the full extent permitted
by law, delegate any or all of its responsibilities under the Plan to a
committee (the "Committee") appointed by the Board and consisting of two or more
members of the Board, each of whom shall be deemed a "disinterested person"
within the meaning of Rule 16b-3 (or any successor rule) of the Securities
Exchange Act of 1934 (the "Exchange Act").
5. Eligibility
An option may be granted to any person selected by the Board in its sole
discretion.
6. Time of Granting Options
The granting of an option shall take place at the time specified by the
Board. Only if expressly so provided by the Board shall the granting of an
option be regarded as taking place at the time when a written option agreement
shall have been duly executed and delivered by or on behalf of the Company and
the Optionee to whom such option shall be granted. The agreement shall provide,
among other things, that it does not confer upon an Optionee any right to
continue in the employ of the Company and/or one or more of its subsidiaries or
to continue as a director or consultant of the Company, and that it does not
interfere in any way with the right of the Company or any such subsidiary to
terminate the employment of the Optionee at any time if the Optionee is an
employee, to remove the Optionee as a director of the Company if the Optionee is
a director, or to terminate the services of the Optionee if the Optionee is a
consultant.
7. Option Period
An option may become exercisable immediately or in such installments,
cumulative or noncumulative, as the Board may determine.
8. Exercise of Option
An option may be exercised in accordance with its terms by written
notice of intent to exercise the option, specifying the number of shares of
stock with respect to which the option is then being exercised. The notice shall
be accompanied by payment in the form of cash or shares of Subsidiary Common
Stock (the "Tendered Shares") with a then current market value equal to the
option price of the shares to be purchased; provided, however, that such
Tendered Shares shall have been acquired by the Optionee more than six months
prior to the date of exercise, unless such requirement is waived in writing by
the Company. Against such payment the Company shall deliver or cause to be
delivered to the Optionee a certificate for the number of shares then being
purchased, registered in the name of the Optionee or other person exercising the
option. If any law or applicable regulation of the Securities and Exchange
Commission or other body having jurisdiction in the premises shall require the
Company, Subsidiary or the Optionee to take any action in connection with shares
being purchased upon exercise of the option, exercise of the option and delivery
of the certificate or certificates for such shares shall be postponed until
completion of the necessary action, which shall be taken at the Company's
expense.
9. Transferability
Except as may be authorized by the Board, in its sole discretion, no
Option may be transferred other than by will or the laws of descent and
distribution, and during a Optionee's lifetime an option requiring exercise may
be exercised only by him or her (or in the event of incapacity, the person or
persons properly appointed to act on his or her behalf). The Board may, in its
discretion, determine the extent to which options granted to an Optionee shall
be transferable, and such provisions permitting or acknowledging transfer shall
be set forth in the written agreement evidencing the option executed and
delivered by or on behalf of the Company and the Optionee.
10. Vesting, Restrictions and Termination of Options
The Board, in its sole discretion, may determine the manner in which
options shall vest, the rights of the Company to repurchase the shares issued
upon the exercise of any option and the manner in which such rights shall lapse,
and the terms upon which any option granted shall terminate. The Board shall
have the right to accelerate the date of exercise of any installment or to
accelerate the lapse of the Company's repurchase rights. All of such terms shall
be specified in a written option agreement executed and delivered by or on
behalf of the Company and the Optionee to whom such option shall be granted.
11. Adjustments in the Event of Certain Transactions
(a) In the event of a stock dividend, stock split or combination of
shares, or other distribution with respect to holders of Common Stock other than
normal cash dividends, the Board will make (i) appropriate adjustments to the
maximum number of shares that may be delivered under the Plan under Section 3
above, and (ii) appropriate adjustments to the number and kind of shares of
stock or securities subject to Options then outstanding or subsequently granted,
any exercise prices relating to Options and any other provisions of Awards
affected by such change.
(b) In the event of any recapitalization, merger or consolidation
involving the Company, any transaction in which the Company becomes a subsidiary
of another entity, any sale or other disposition of all or a substantial portion
of the assets of the Company, any transaction which results in Thermo Electron
Corporation ceasing to be the beneficial owner of a majority of the
then-outstanding shares of Common Stock, or any similar transaction, as
determined by the Board, the Board in its discretion may make appropriate
adjustments to outstanding Options to avoid distortion in the operation of the
Plan.
12. Change in Control
12.1 Impact of Event
In the event of a "Change in Control" as defined in Section 12.2, the
following provisions shall apply, unless the agreement evidencing the Option
otherwise provides (by specific explicit reference to Section 12.2 below). If a
Change in Control occurs while any Options are outstanding, then, effective upon
the Change in Control, (i) each outstanding stock option granted under the Plan
that was not previously exercisable and vested shall become immediately
exercisable in full and will no longer be subject to a right of repurchase by
the Company, (ii) each outstanding Option subject to restrictions and to the
extent not fully vested, shall be deemed to be fully vested, free of
restrictions and no longer subject to a right of repurchase by the Company, and
(iii) performance of other conditions (other than conditions relating solely to
the passage of time, continued employment or affiliation) will continue to apply
unless otherwise provided in the agreement evidencing the Option or in any other
agreement between the Optioneet and the Company or unless otherwise agreed by
the Board.
12.2 Definition of "Change in Control"
"Change in Control" means an event or occurrence set forth in any one or
more of subsections (a) through (d) below (including an event or occurrence that
constitutes a Change in Control under one of such subsections but is
specifically exempted from another such subsection):
(a) the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership of any capital stock of Thermo Electron Corporation
("Thermo Electron") if, after such acquisition, such Person beneficially owns
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) 40% or
more of either (i) the then-outstanding shares of common stock of Thermo
Electron (the "Outstanding TMO Common Stock") or (ii) the combined voting power
of the then-outstanding securities of Thermo Electron entitled to vote generally
in the election of directors (the "Outstanding TMO Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change in Control: (i) any acquisition by
Thermo Electron, (ii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by Thermo Electron or any corporation controlled
by Thermo Electron, or (iii) any acquisition by any corporation pursuant to a
transaction which complies with clauses (i) and (ii) of subsection (c) of this
definition; or
(b) such time as the Continuing Directors (as defined below) do not
constitute a majority of the Board of Directors of Thermo Electron (the "Thermo
Board") (or, if applicable, the Board of Directors of a successor corporation to
Thermo Electron), where the term "Continuing Director" means at any date a
member of the Thermo Board (i) who was a member of the Thermo Board as of July
1, 1999 or (ii) who was nominated or elected subsequent to such date by at least
a majority of the directors who were Continuing Directors at the time of such
nomination or election or whose election to the Thermo Board was recommended or
endorsed by at least a majority of the directors who were Continuing Directors
at the time of such nomination or election; provided, however, that there shall
be excluded from this clause (ii) any individual whose initial assumption of
office occurred as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents, by or on behalf of a person other than the
Thermo Board; or
(c) the consummation of a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving Thermo Electron or a sale
or other disposition of all or substantially all of the assets of Thermo
Electron in one or a series of transactions (a "Business Combination"), unless,
immediately following such Business Combination, each of the following two
conditions is satisfied: (i) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding TMO Common Stock and
Outstanding TMO Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of the then-outstanding
shares of common stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such Business
Combination (which shall include, without limitation, a corporation which as a
result of such transaction owns Thermo Electron or substantially all of Thermo
Electron's assets either directly or through one or more subsidiaries) (such
resulting or acquiring corporation is referred to herein as the "Acquiring
Corporation") in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding TMO Common
Stock and Outstanding TMO Voting Securities, respectively; and (ii) no Person
(excluding the Acquiring Corporation or any employee benefit plan (or related
trust) maintained or sponsored by Thermo Electron or by the Acquiring
Corporation) beneficially owns, directly or indirectly, 40% or more of the then
outstanding shares of common stock of the Acquiring Corporation, or of the
combined voting power of the then-outstanding securities of such corporation
entitled to vote generally in the election of directors; or
(d) approval by the stockholders of Thermo Electron of a complete
liquidation or dissolution of Thermo Electron.
13. Limitation of Rights in Option Stock
The Optionees shall have no rights as stockholders in respect of shares
as to which their options shall not have been exercised, certificates issued and
delivered and payment as herein provided made in full, and shall have no rights
with respect to such shares not expressly conferred by this Plan.
14. Stock Reserved
The Company shall at all times during the term of the options reserve
and keep available such number of shares of the Common Stock as will be
sufficient to satisfy the requirements of this Plan and shall pay all other fees
and expenses necessarily incurred by the Company in connection therewith.
15. Securities Laws Restrictions
Each Optionee exercising an option, at the request of the Company, will
be required to give a representation in form satisfactory to counsel for the
Company that he will not transfer, sell or otherwise dispose of the shares
received upon exercise of the option at any time purchased by him, upon exercise
of any portion of the option, in a manner which would violate the Securities Act
of 1933, as amended, and the regulations of the Securities and Exchange
Commission thereunder and the Company may, if required or at its discretion,
make a notation on any certificates issued upon exercise of options to the
effect that such certificate may not be transferred except after receipt by the
Company of an opinion of counsel satisfactory to it to the effect that such
transfer will not violate such Act and such regulations.
16. Tax Withholding
The Company shall have the right to deduct from payments of any kind
otherwise due to an Optionee any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon exercise
of options under the Plan (the "withholding requirements"). The Board will have
the right to require that the Optionee or other appropriate person remit to the
Company an amount sufficient to satisfy the withholding requirements, or make
other arrangements satisfactory to the Board with regard to such requirements,
prior to the delivery of any Common Stock pursuant to exercise of an option. If
and to the extent that such withholding is required, the Board may permit the
Optionee or such other person to elect at such time and in such manner as the
Board provides to have the Company hold back from the shares to be delivered, or
to deliver to the Company, Common Stock having a value calculated to satisfy the
withholding requirements.
17. Termination and Amendment
The Plan shall remain in full force and effect until terminated by the
Board. Subject to the last sentence of this Section 17, the Board may at any
time or times amend the Plan or any outstanding Option for any purpose that may
at the time be permitted by law, or may at any time terminate the Plan as to any
further grants of Options. No amendment of the Plan or any agreement evidencing
Options under the Plan may adversely affect the rights of any participant under
any Option previously granted without such participant's consent.
THERMEDICS INC.
THERMO SENTRON INC. NONQUALIFIED STOCK OPTION PLAN
As amended and restated effective as of June 24, 1999
1. Purpose
This Nonqualified Stock Option Plan (the "Plan") is intended to
encourage ownership of Common Stock (the "Common Stock"), of Thermo Sentron Inc.
("Subsidiary"), a subsidiary of Thermedics Inc. (the "Company"), by persons
selected by the Board of Directors (or a committee thereof) in its sole
discretion, including directors, executive officers, key employees and
consultants of the Company and its subsidiaries, and to provide additional
incentive for them to promote the success of the business of the Company and
Subsidiary.
The Plan is intended to be a nonstatutory stock option plan.
2. Effective Date of the Plan
The Plan shall become effective when adopted by the Board of Directors
of the Company.
3. Stock Subject to Plan
Subject to adjustment as provided in Section 11, the total number of
shares of Common Stock reserved and available for issuance under the Plan and
the Company's Incentive Stock Option Plan in the aggregate shall be 100,000
shares. Shares to be issued upon the exercise of options granted under the Plan
shall be shares of Subsidiary beneficially owned by the Company. If any option
expires or terminates for any reason without having been exercised in full, the
unpurchased shares subject thereto shall again be available for options
thereafter to be granted.
4. Administration
The Plan will be administered by the Board of Directors of the Company
(the "Board"). Subject to the provisions of the Plan, the Board shall have
complete authority, in its discretion, to make the following determinations with
respect to each option to be granted by the Company: (a) the person to receive
the option (the "Optionee"); (b) the time of granting the option; (c) the number
of shares subject thereto; (d) the option price; (e) the option period; and (f)
the terms and conditions of options granted under the Plan (including terms and
conditions relating to events of merger, consolidation, dissolution and
liquidation, change of control, vesting, forfeiture, restrictions, dividends and
interest, if any, on deferred amounts); (g) waive compliance by an optionee with
any obligation to be performed by him or her under an option; (h) waive any term
or condition of an option; (i) cancel an existing option in whole or in part
with the consent of an Optionee; (j) grant replacement options; (k) accelerate
the vesting or lapse of any restrictions of any option; and (l) adopt the form
of instruments evidencing options under the Plan and change such forms from time
to time.. In making such determinations, the Board may take into account the
nature of the services rendered by the Optionees, their present and potential
contributions to the success of the Company and/or one or more of its
subsidiaries, and such other factors as the Board in its discretion shall deem
relevant. Subject to the provisions of the Plan, the Board shall also have
complete authority to interpret the Plan, to prescribe, amend, and rescind rules
and regulations relating to it, to determine the terms and provisions of the
respective option agreements (which need not be identical), and to make all
other determinations necessary or advisable for the administration of the Plan.
Any interpretation by the Board of the terms and provisions of the Plan or any
Award thereunder and the administration thereof, and all action taken by the
Board, shall be final, binding and conclusive on all parties and any person
claiming under or through any party. No Director shall be liable for any action
or determination made in good faith. The Board may, to the full extent permitted
by law, delegate any or all of its responsibilities under the Plan to a
committee (the "Committee") appointed by the Board and consisting of two or more
members of the Board, each of whom shall be deemed a "disinterested person"
within the meaning of Rule 16b-3 (or any successor rule) of the Securities
Exchange Act of 1934 (the "Exchange Act").
5. Eligibility
An option may be granted to any person selected by the Board in its sole
discretion.
6. Time of Granting Options
The granting of an option shall take place at the time specified by the
Board. Only if expressly so provided by the Board shall the granting of an
option be regarded as taking place at the time when a written option agreement
shall have been duly executed and delivered by or on behalf of the Company and
the Optionee to whom such option shall be granted. The agreement shall provide,
among other things, that it does not confer upon an Optionee any right to
continue in the employ of the Company and/or one or more of its subsidiaries or
to continue as a director or consultant of the Company, and that it does not
interfere in any way with the right of the Company or any such subsidiary to
terminate the employment of the Optionee at any time if the Optionee is an
employee, to remove the Optionee as a director of the Company if the Optionee is
a director, or to terminate the services of the Optionee if the Optionee is a
consultant.
7. Option Period
An option may become exercisable immediately or in such installments,
cumulative or noncumulative, as the Board may determine.
8. Exercise of Option
An option may be exercised in accordance with its terms by written
notice of intent to exercise the option, specifying the number of shares of
stock with respect to which the option is then being exercised. The notice shall
be accompanied by payment in the form of cash or shares of Subsidiary Common
Stock (the "Tendered Shares") with a then current market value equal to the
option price of the shares to be purchased; provided, however, that such
Tendered Shares shall have been acquired by the Optionee more than six months
prior to the date of exercise, unless such requirement is waived in writing by
the Company. Against such payment the Company shall deliver or cause to be
delivered to the Optionee a certificate for the number of shares then being
purchased, registered in the name of the Optionee or other person exercising the
option. If any law or applicable regulation of the Securities and Exchange
Commission or other body having jurisdiction in the premises shall require the
Company, Subsidiary or the Optionee to take any action in connection with shares
being purchased upon exercise of the option, exercise of the option and delivery
of the certificate or certificates for such shares shall be postponed until
completion of the necessary action, which shall be taken at the Company's
expense.
9. Transferability
Except as may be authorized by the Board, in its sole discretion, no
Option may be transferred other than by will or the laws of descent and
distribution, and during a Optionee's lifetime an option requiring exercise may
be exercised only by him or her (or in the event of incapacity, the person or
persons properly appointed to act on his or her behalf). The Board may, in its
discretion, determine the extent to which options granted to an Optionee shall
be transferable, and such provisions permitting or acknowledging transfer shall
be set forth in the written agreement evidencing the option executed and
delivered by or on behalf of the Company and the Optionee.
10. Vesting, Restrictions and Termination of Options
The Board, in its sole discretion, may determine the manner in which
options shall vest, the rights of the Company to repurchase the shares issued
upon the exercise of any option and the manner in which such rights shall lapse,
and the terms upon which any option granted shall terminate. The Board shall
have the right to accelerate the date of exercise of any installment or to
accelerate the lapse of the Company's repurchase rights. All of such terms shall
be specified in a written option agreement executed and delivered by or on
behalf of the Company and the Optionee to whom such option shall be granted.
11. Adjustments in the Event of Certain Transactions
(a) In the event of a stock dividend, stock split or combination of
shares, or other distribution with respect to holders of Common Stock other than
normal cash dividends, the Board will make (i) appropriate adjustments to the
maximum number of shares that may be delivered under the Plan under Section 3
above, and (ii) appropriate adjustments to the number and kind of shares of
stock or securities subject to Options then outstanding or subsequently granted,
any exercise prices relating to Options and any other provisions of Awards
affected by such change.
(b) In the event of any recapitalization, merger or consolidation
involving the Company, any transaction in which the Company becomes a subsidiary
of another entity, any sale or other disposition of all or a substantial portion
of the assets of the Company, any transaction which results in Thermo Electron
Corporation ceasing to be the beneficial owner of a majority of the
then-outstanding shares of Common Stock, or any similar transaction, as
determined by the Board, the Board in its discretion may make appropriate
adjustments to outstanding Options to avoid distortion in the operation of the
Plan.
12. Change in Control
12.1 Impact of Event
In the event of a "Change in Control" as defined in Section 12.2, the
following provisions shall apply, unless the agreement evidencing the Option
otherwise provides (by specific explicit reference to Section 12.2 below). If a
Change in Control occurs while any Options are outstanding, then, effective upon
the Change in Control, (i) each outstanding stock option granted under the Plan
that was not previously exercisable and vested shall become immediately
exercisable in full and will no longer be subject to a right of repurchase by
the Company, (ii) each outstanding Option subject to restrictions and to the
extent not fully vested, shall be deemed to be fully vested, free of
restrictions and no longer subject to a right of repurchase by the Company, and
(iii) performance of other conditions (other than conditions relating solely to
the passage of time, continued employment or affiliation) will continue to apply
unless otherwise provided in the agreement evidencing the Option or in any other
agreement between the Optioneet and the Company or unless otherwise agreed by
the Board.
12.2 Definition of "Change in Control"
"Change in Control" means an event or occurrence set forth in any one or
more of subsections (a) through (d) below (including an event or occurrence that
constitutes a Change in Control under one of such subsections but is
specifically exempted from another such subsection):
(a) the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership of any capital stock of Thermo Electron Corporation
("Thermo Electron") if, after such acquisition, such Person beneficially owns
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) 40% or
more of either (i) the then-outstanding shares of common stock of Thermo
Electron (the "Outstanding TMO Common Stock") or (ii) the combined voting power
of the then-outstanding securities of Thermo Electron entitled to vote generally
in the election of directors (the "Outstanding TMO Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change in Control: (i) any acquisition by
Thermo Electron, (ii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by Thermo Electron or any corporation controlled
by Thermo Electron, or (iii) any acquisition by any corporation pursuant to a
transaction which complies with clauses (i) and (ii) of subsection (c) of this
definition; or
(b) such time as the Continuing Directors (as defined below) do not
constitute a majority of the Board of Directors of Thermo Electron (the "Thermo
Board") (or, if applicable, the Board of Directors of a successor corporation to
Thermo Electron), where the term "Continuing Director" means at any date a
member of the Thermo Board (i) who was a member of the Thermo Board as of July
1, 1999 or (ii) who was nominated or elected subsequent to such date by at least
a majority of the directors who were Continuing Directors at the time of such
nomination or election or whose election to the Thermo Board was recommended or
endorsed by at least a majority of the directors who were Continuing Directors
at the time of such nomination or election; provided, however, that there shall
be excluded from this clause (ii) any individual whose initial assumption of
office occurred as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents, by or on behalf of a person other than the
Thermo Board; or
(c) the consummation of a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving Thermo Electron or a sale
or other disposition of all or substantially all of the assets of Thermo
Electron in one or a series of transactions (a "Business Combination"), unless,
immediately following such Business Combination, each of the following two
conditions is satisfied: (i) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding TMO Common Stock and
Outstanding TMO Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of the then-outstanding
shares of common stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such Business
Combination (which shall include, without limitation, a corporation which as a
result of such transaction owns Thermo Electron or substantially all of Thermo
Electron's assets either directly or through one or more subsidiaries) (such
resulting or acquiring corporation is referred to herein as the "Acquiring
Corporation") in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding TMO Common
Stock and Outstanding TMO Voting Securities, respectively; and (ii) no Person
(excluding the Acquiring Corporation or any employee benefit plan (or related
trust) maintained or sponsored by Thermo Electron or by the Acquiring
Corporation) beneficially owns, directly or indirectly, 40% or more of the then
outstanding shares of common stock of the Acquiring Corporation, or of the
combined voting power of the then-outstanding securities of such corporation
entitled to vote generally in the election of directors; or
(d) approval by the stockholders of Thermo Electron of a complete
liquidation or dissolution of Thermo Electron.
13. Limitation of Rights in Option Stock
The Optionees shall have no rights as stockholders in respect of shares
as to which their options shall not have been exercised, certificates issued and
delivered and payment as herein provided made in full, and shall have no rights
with respect to such shares not expressly conferred by this Plan.
14. Stock Reserved
The Company shall at all times during the term of the options reserve
and keep available such number of shares of the Common Stock as will be
sufficient to satisfy the requirements of this Plan and shall pay all other fees
and expenses necessarily incurred by the Company in connection therewith.
15. Securities Laws Restrictions
Each Optionee exercising an option, at the request of the Company, will
be required to give a representation in form satisfactory to counsel for the
Company that he will not transfer, sell or otherwise dispose of the shares
received upon exercise of the option at any time purchased by him, upon exercise
of any portion of the option, in a manner which would violate the Securities Act
of 1933, as amended, and the regulations of the Securities and Exchange
Commission thereunder and the Company may, if required or at its discretion,
make a notation on any certificates issued upon exercise of options to the
effect that such certificate may not be transferred except after receipt by the
Company of an opinion of counsel satisfactory to it to the effect that such
transfer will not violate such Act and such regulations.
16. Tax Withholding
The Company shall have the right to deduct from payments of any kind
otherwise due to an Optionee any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon exercise
of options under the Plan (the "withholding requirements"). The Board will have
the right to require that the Optionee or other appropriate person remit to the
Company an amount sufficient to satisfy the withholding requirements, or make
other arrangements satisfactory to the Board with regard to such requirements,
prior to the delivery of any Common Stock pursuant to exercise of an option. If
and to the extent that such withholding is required, the Board may permit the
Optionee or such other person to elect at such time and in such manner as the
Board provides to have the Company hold back from the shares to be delivered, or
to deliver to the Company, Common Stock having a value calculated to satisfy the
withholding requirements.
17. Termination and Amendment
The Plan shall remain in full force and effect until terminated by the
Board. Subject to the last sentence of this Section 17, the Board may at any
time or times amend the Plan or any outstanding Option for any purpose that may
at the time be permitted by law, or may at any time terminate the Plan as to any
further grants of Options. No amendment of the Plan or any agreement evidencing
Options under the Plan may adversely affect the rights of any participant under
any Option previously granted without such participant's consent.
THERMEDICS INC.
FORMER THERMO VOLTEK CORP. NONQUALIFIED STOCK OPTION PLAN
As amended and restated effective as of June 24, 1999
1. Purpose
This Nonqualified Stock Option Plan (the "Plan") was originally intended
to encourage ownership of common stock of Thermo Voltek Corp. ("Subsidiary"), a
subsidiary of Thermedics Inc. (the "Company"), by persons selected by the Board
of Directors (or a committee thereof) in its sole discretion, including
directors, executive officers, key employees and consultants of the Company and
its subsidiaries, and to provide additional incentive for them to promote the
success of the business of the Company and Subsidiary. The options outstanding
under the Plan on the effective time of the merger of the Subsidiary with and
into a wholly owned subsidiary of the Company (the "Merger") were assumed by the
Company and converted pursuant to the Agreement and Plan of Merger into options
to purchase shares of Common Stock of the Company ("Common Stock"). The Plan is
intended to be a nonstatutory stock option plan.
2. Effective Date of the Plan
The Plan shall become effective when adopted by the Board of Directors
of the Company.
3. Stock Subject to Plan
Subject to adjustment as provided in Section 11, the total number of
shares of Common Stock reserved and available for issuance under the Plan shall
be 5,000 shares as of the effective time of the Merger. Shares to be issued upon
the exercise of options granted under the Plan may be either authorized but
unissued shares or shares held by the Company in its treasury. If any option
expires or terminates for any reason without having been exercised in full, the
unpurchased shares subject thereto shall be deducted from the number of shares
reserved and available for issuance under the Plan.
4. Administration
The Plan will be administered by the Board of Directors of the Company
(the "Board"). Subject to the provisions of the Plan, the Board shall have
complete authority, in its discretion, to make the following determinations with
respect to each option to be granted by the Company: (a) the person to receive
the option (the "Optionee"); (b) the time of granting the option; (c) the number
of shares subject thereto; (d) the option price; (e) the option period; and (f)
the terms and conditions of options granted under the Plan (including terms and
conditions relating to events of merger, consolidation, dissolution and
liquidation, change of control, vesting, forfeiture, restrictions, dividends and
interest, if any, on deferred amounts); (g) waive compliance by an optionee with
any obligation to be performed by him or her under an option; (h) waive any term
or condition of an option; (i) cancel an existing option in whole or in part
with the consent of an Optionee; (j) grant replacement options; (k) accelerate
the vesting or lapse of any restrictions of any option; and (l) adopt the form
of instruments evidencing options under the Plan and change such forms from time
to time.. In making such determinations, the Board may take into account the
nature of the services rendered by the Optionees, their present and potential
contributions to the success of the Company and/or one or more of its
subsidiaries, and such other factors as the Board in its discretion shall deem
relevant. Subject to the provisions of the Plan, the Board shall also have
complete authority to interpret the Plan, to prescribe, amend, and rescind rules
and regulations relating to it, to determine the terms and provisions of the
respective option agreements (which need not be identical), and to make all
other determinations necessary or advisable for the administration of the Plan.
Any interpretation by the Board of the terms and provisions of the Plan or any
Award thereunder and the administration thereof, and all action taken by the
Board, shall be final, binding and conclusive on all parties and any person
claiming under or through any party. No Director shall be liable for any action
or determination made in good faith. The Board may, to the full extent permitted
by law, delegate any or all of its responsibilities under the Plan to a
committee (the "Committee") appointed by the Board and consisting of two or more
members of the Board, each of whom shall be deemed a "disinterested person"
within the meaning of Rule 16b-3 (or any successor rule) of the Securities
Exchange Act of 1934 (the "Exchange Act").
5. Eligibility
An option may be granted to any person selected by the Board in its sole
discretion.
6. Time of Granting Options
The granting of an option shall take place at the time specified by the
Board. Only if expressly so provided by the Board shall the granting of an
option be regarded as taking place at the time when a written option agreement
shall have been duly executed and delivered by or on behalf of the Company and
the Optionee to whom such option shall be granted. The agreement shall provide,
among other things, that it does not confer upon an Optionee any right to
continue in the employ of the Company and/or one or more of its subsidiaries or
to continue as a director or consultant of the Company, and that it does not
interfere in any way with the right of the Company or any such subsidiary to
terminate the employment of the Optionee at any time if the Optionee is an
employee, to remove the Optionee as a director of the Company if the Optionee is
a director, or to terminate the services of the Optionee if the Optionee is a
consultant.
7. Option Period
An option may become exercisable immediately or in such installments,
cumulative or noncumulative, as the Board may determine.
8. Exercise of Option
An option may be exercised in accordance with its terms by written
notice of intent to exercise the option, specifying the number of shares of
stock with respect to which the option is then being exercised. The notice shall
be accompanied by payment in the form of cash or shares of Subsidiary Common
Stock (the "Tendered Shares") with a then current market value equal to the
option price of the shares to be purchased; provided, however, that such
Tendered Shares shall have been acquired by the Optionee more than six months
prior to the date of exercise, unless such requirement is waived in writing by
the Company. Against such payment the Company shall deliver or cause to be
delivered to the Optionee a certificate for the number of shares then being
purchased, registered in the name of the Optionee or other person exercising the
option. If any law or applicable regulation of the Securities and Exchange
Commission or other body having jurisdiction in the premises shall require the
Company, Subsidiary or the Optionee to take any action in connection with shares
being purchased upon exercise of the option, exercise of the option and delivery
of the certificate or certificates for such shares shall be postponed until
completion of the necessary action, which shall be taken at the Company's
expense.
9. Transferability
Except as may be authorized by the Board, in its sole discretion, no
Option may be transferred other than by will or the laws of descent and
distribution, and during a Optionee's lifetime an option requiring exercise may
be exercised only by him or her (or in the event of incapacity, the person or
persons properly appointed to act on his or her behalf). The Board may, in its
discretion, determine the extent to which options granted to an Optionee shall
be transferable, and such provisions permitting or acknowledging transfer shall
be set forth in the written agreement evidencing the option executed and
delivered by or on behalf of the Company and the Optionee.
10. Vesting, Restrictions and Termination of Options
The Board, in its sole discretion, may determine the manner in which
options shall vest, the rights of the Company to repurchase the shares issued
upon the exercise of any option and the manner in which such rights shall lapse,
and the terms upon which any option granted shall terminate. The Board shall
have the right to accelerate the date of exercise of any installment or to
accelerate the lapse of the Company's repurchase rights. All of such terms shall
be specified in a written option agreement executed and delivered by or on
behalf of the Company and the Optionee to whom such option shall be granted.
11. Adjustments in the Event of Certain Transactions
(a) In the event of a stock dividend, stock split or combination of
shares, or other distribution with respect to holders of Common Stock other than
normal cash dividends, the Board will make (i) appropriate adjustments to the
maximum number of shares that may be delivered under the Plan under Section 3
above, and (ii) appropriate adjustments to the number and kind of shares of
stock or securities subject to Options then outstanding or subsequently granted,
any exercise prices relating to Options and any other provisions of Awards
affected by such change.
(b) In the event of any recapitalization, merger or consolidation
involving the Company, any transaction in which the Company becomes a subsidiary
of another entity, any sale or other disposition of all or a substantial portion
of the assets of the Company, any transaction which results in Thermo Electron
Corporation ceasing to be the beneficial owner of a majority of the
then-outstanding shares of Common Stock, or any similar transaction, as
determined by the Board, the Board in its discretion may make appropriate
adjustments to outstanding Options to avoid distortion in the operation of the
Plan.
12. Change in Control
12.1 Impact of Event
In the event of a "Change in Control" as defined in Section 12.2, the
following provisions shall apply, unless the agreement evidencing the Option
otherwise provides (by specific explicit reference to Section 12.2 below). If a
Change in Control occurs while any Options are outstanding, then, effective upon
the Change in Control, (i) each outstanding stock option granted under the Plan
that was not previously exercisable and vested shall become immediately
exercisable in full and will no longer be subject to a right of repurchase by
the Company, (ii) each outstanding Option subject to restrictions and to the
extent not fully vested, shall be deemed to be fully vested, free of
restrictions and no longer subject to a right of repurchase by the Company, and
(iii) performance of other conditions (other than conditions relating solely to
the passage of time, continued employment or affiliation) will continue to apply
unless otherwise provided in the agreement evidencing the Option or in any other
agreement between the Optioneet and the Company or unless otherwise agreed by
the Board.
12.2 Definition of "Change in Control"
"Change in Control" means an event or occurrence set forth in any one or
more of subsections (a) through (d) below (including an event or occurrence that
constitutes a Change in Control under one of such subsections but is
specifically exempted from another such subsection):
(a) the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership of any capital stock of Thermo Electron Corporation
("Thermo Electron") if, after such acquisition, such Person beneficially owns
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) 40% or
more of either (i) the then-outstanding shares of common stock of Thermo
Electron (the "Outstanding TMO Common Stock") or (ii) the combined voting power
of the then-outstanding securities of Thermo Electron entitled to vote generally
in the election of directors (the "Outstanding TMO Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change in Control: (i) any acquisition by
Thermo Electron, (ii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by Thermo Electron or any corporation controlled
by Thermo Electron, or (iii) any acquisition by any corporation pursuant to a
transaction which complies with clauses (i) and (ii) of subsection (c) of this
definition; or
(b) such time as the Continuing Directors (as defined below) do not
constitute a majority of the Board of Directors of Thermo Electron (the "Thermo
Board") (or, if applicable, the Board of Directors of a successor corporation to
Thermo Electron), where the term "Continuing Director" means at any date a
member of the Thermo Board (i) who was a member of the Thermo Board as of July
1, 1999 or (ii) who was nominated or elected subsequent to such date by at least
a majority of the directors who were Continuing Directors at the time of such
nomination or election or whose election to the Thermo Board was recommended or
endorsed by at least a majority of the directors who were Continuing Directors
at the time of such nomination or election; provided, however, that there shall
be excluded from this clause (ii) any individual whose initial assumption of
office occurred as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents, by or on behalf of a person other than the
Thermo Board; or
(c) the consummation of a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving Thermo Electron or a sale
or other disposition of all or substantially all of the assets of Thermo
Electron in one or a series of transactions (a "Business Combination"), unless,
immediately following such Business Combination, each of the following two
conditions is satisfied: (i) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding TMO Common Stock and
Outstanding TMO Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of the then-outstanding
shares of common stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such Business
Combination (which shall include, without limitation, a corporation which as a
result of such transaction owns Thermo Electron or substantially all of Thermo
Electron's assets either directly or through one or more subsidiaries) (such
resulting or acquiring corporation is referred to herein as the "Acquiring
Corporation") in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding TMO Common
Stock and Outstanding TMO Voting Securities, respectively; and (ii) no Person
(excluding the Acquiring Corporation or any employee benefit plan (or related
trust) maintained or sponsored by Thermo Electron or by the Acquiring
Corporation) beneficially owns, directly or indirectly, 40% or more of the then
outstanding shares of common stock of the Acquiring Corporation, or of the
combined voting power of the then-outstanding securities of such corporation
entitled to vote generally in the election of directors; or
(d) approval by the stockholders of Thermo Electron of a complete
liquidation or dissolution of Thermo Electron.
13. Limitation of Rights in Option Stock
The Optionees shall have no rights as stockholders in respect of shares
as to which their options shall not have been exercised, certificates issued and
delivered and payment as herein provided made in full, and shall have no rights
with respect to such shares not expressly conferred by this Plan.
14. Stock Reserved
The Company shall at all times during the term of the options reserve
and keep available such number of shares of the Common Stock as will be
sufficient to satisfy the requirements of this Plan and shall pay all other fees
and expenses necessarily incurred by the Company in connection therewith.
15. Securities Laws Restrictions
Each Optionee exercising an option, at the request of the Company, will
be required to give a representation in form satisfactory to counsel for the
Company that he will not transfer, sell or otherwise dispose of the shares
received upon exercise of the option at any time purchased by him, upon exercise
of any portion of the option, in a manner which would violate the Securities Act
of 1933, as amended, and the regulations of the Securities and Exchange
Commission thereunder and the Company may, if required or at its discretion,
make a notation on any certificates issued upon exercise of options to the
effect that such certificate may not be transferred except after receipt by the
Company of an opinion of counsel satisfactory to it to the effect that such
transfer will not violate such Act and such regulations.
16. Tax Withholding
The Company shall have the right to deduct from payments of any kind
otherwise due to an Optionee any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon exercise
of options under the Plan (the "withholding requirements"). The Board will have
the right to require that the Optionee or other appropriate person remit to the
Company an amount sufficient to satisfy the withholding requirements, or make
other arrangements satisfactory to the Board with regard to such requirements,
prior to the delivery of any Common Stock pursuant to exercise of an option. If
and to the extent that such withholding is required, the Board may permit the
Optionee or such other person to elect at such time and in such manner as the
Board provides to have the Company hold back from the shares to be delivered, or
to deliver to the Company, Common Stock having a value calculated to satisfy the
withholding requirements.
17. Termination and Amendment
The Plan shall remain in full force and effect until terminated by the
Board. Subject to the last sentence of this Section 17, the Board may at any
time or times amend the Plan or any outstanding Option for any purpose that may
at the time be permitted by law, or may at any time terminate the Plan as to any
further grants of Options. No amendment of the Plan or any agreement evidencing
Options under the Plan may adversely affect the rights of any participant under
any Option previously granted without such participant's consent.
<TABLE>
<CAPTION>
<S> <C>
Amended and Restated
as of June 24, 1999
THERMEDICS INC.
BY-LAWS
TABLE OF CONTENTS
Title Page
Article I - Stockholders 1
Section 1.1. Place of Meeting 1
Section 1.2. Annual Meetings 1
Section 1.3. Special Meetings 1
Section 1.4. Notice of Meetings 1
Section 1.5. Quorum 2
Section 1.6. Voting; Proxies 2
Section 1.7. Inspectors of Election 2
Section 1.8. Action Without Meeting 2
Article II - Directors 3
Section 2.1. Powers 3
Section 2.2. Number, Election and Term of Office 3
Section 2.3. Place of Meetings 3
Section 2.4. Annual Meetings 3
Section 2.5. Regular Meetings 3
Section 2.6. Special Meetings 3
Section 2.7. Notice of Meetings 3
Section 2.8. Quorum 4
Section 2.9. Voting 4
Section 2.10. Action Without Meeting 4
Section 2.11. Meetings by Telephone Conference Calls 4
Section 2.12. Resignations 4
Section 2.13. Removal 4
Section 2.14. Vacancies 4
Section 2.15. Compensation of Directors 5
Section 2.16. Committees 5
<PAGE>
Title Page
Section 2.17. Executive Committee 5
Section 2.18. Issuance of Stock 6
Article III - Officers
6
Section 3.1. Officers 6
Section 3.2. Election and Term of Office 6
Section 3.3. Chairman of the Board 6
Section 3.4. President 6
Section 3.5. Vice Presidents 7
Section 3.6. Chief Financial Officer 7
Section 3.7. Treasurer and Assistant Treasurer 7
Section 3.8. Clerk and Assistant Clerk 7
Section 3.9. Secretary and Assistant Secretary 8
Section 3.10. Resignation 8
Section 3.11. Removal 8
Section 3 12. Vacancies 8
Section 3.13. Subordinate Officers 8
Section 3.14. Compensation 8
Article IV - Stock 8
Section 4.1. Stock Certificates 8
Section 4.2. Transfer of Stock 9
Section 4.3. Fixing Date for Determination of Stockholders' Rights 9
Section 4.4. Lost, Mutilated or Destroyed Certificates 10
Article V - General Provisions 10
Section 5.1. Offices 10
Section 5.2. Seal 10
Section 5.3. Fiscal Year 10
Section 5.4. Execution of Instruments 10
Section 5.5. Corporate Records 10
Section 5.6. Voting of Securities owned by this Corporation 11
Section 5.7. Conflict of Interest 11
Section 5.8. Indemnification 12
Article VI - Amendments 14
Section 6.1. General 14
Section 6.2. Date of Annual Meeting of Stockholders 14
Article VII - Miscellaneous 15
Section 7.1 Massachusetts Control Share Acquisition Act 15
</TABLE>
<PAGE>
THERMEDICS INC.
BY-LAWS
ARTICLE I - STOCKHOLDERS
Section 1.1. Place of Meeting. Meetings of stockholders shall be held at
the principal office of the corporation or, to the extent permitted by the
Articles of Organization, at such other place within the United States as the
Board of Directors may from time to time designate.
Section 1.2. Annual Meetings. The annual meetings of stockholders shall
be held at such hour as may from time to time be designated by the Board of
Directors, on the third Wednesday in May of each year or on such other date
within six months after the end of the Corporation's fiscal year as may be fixed
by the Board of Directors, for the purpose of electing a Board of Directors and
transacting such other business as may properly be brought before such meeting.
At the annual meeting any business may be transacted whether or not the notice
of such meeting shall have contained a reference thereto, except where such a
reference is required by law, the Articles of Organization or these By-Laws. If
the annual meeting is not held on the date determined in accordance with this
Section, a special meeting in lieu of the annual meeting may be held with all
the force and effect of an annual meeting.
Section 1.3. Special Meetings. Special meetings of stockholders may be
called by the Chairman of the Board (if any), the President or the Board of
Directors, and shall be called by the Clerk or, in case of death, absence,
incapacity or refusal of the Clerk, by any other officer, upon written
application of one or more stockholders who hold at least one tenth part in
interest of the capital stock entitled to vote at the meeting. At any special
meeting only business to which a reference shall have been contained in the
notice of such meeting may be transacted.
Section 1.4. Notice of Meetings. Written or printed notice of each
meeting of stockholders, stating the place, date and hour and the purposes of
the meeting shall be given by the Clerk or other officer calling the meeting at
least ten days before the meeting to each stockholder entitled to vote at the
meeting or entitled to such notice by leaving such notice with him at his
residence or usual place of business or by mailing it, postage prepaid, and
addressed to the stockholder at his address as it appears in the records of the
corporation. A written waiver of notice executed before or after a meeting by a
stockholder or his attorney thereunto authorized and filed with the records of
the meeting, shall be deemed equivalent to such notice to such stockholder. Any
person authorized to give notice of any such meeting may make affidavit of such
notice, which, as to the facts therein stated, shall be conclusive. It shall be
the duty of every stockholder to furnish to the Clerk of the corporation or to
the transfer agent, if any, of the class of stock owned by him, his current post
office address.
Section 1.5. Quorum. At any meeting of stockholders the holders of a
majority in interest of all capital stock entitled to vote at such meeting or,
if two or more classes of stock are issued, outstanding and entitled to vote as
separate classes, a majority in interest of each class, present in person or
represented by proxy, shall constitute a quorum. The announcement of a quorum by
the officer presiding at the meeting shall constitute a conclusive determination
that a quorum is present. The absence of such an announcement shall have no
significance. Shares of its own stock held by the corporation or held for its
use and benefit shall not be counted in determining the total number of shares
outstanding at any particular time. If a quorum is not present or represented,
the stockholders present or represented and entitled to vote at such meeting, by
a majority vote, may adjourn the meeting from time to time, and the meeting may
be held as adjourned without further notice. At any adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted if the meeting had been held as originally called.
The stockholders present at a duly organized meeting may continue to transact
business until adjournment notwithstanding the withdrawal of one or more
stockholders so as to leave less than a quorum.
Section 1.6. Voting; Proxies. Except as otherwise provided by law or the
Articles of Organization, at any meeting of stockholders each stockholder shall
have one vote for each share of stock entitled to vote and registered in his
name and a proportionate vote for a fractional share. Any stockholder may vote
in person or by written proxy dated not more than six months prior to the
meeting named therein and filed with the Clerk of the meeting, or of any
adjournment thereof, before being voted. A proxy with respect to stock held in
the name of two or more persons shall be valid if executed by any one of them
unless at or prior to exercise of the proxy the corporation receives a specific
written notice to the contrary from any one of them, except as otherwise limited
therein, a proxy shall entitle the person authorized thereby to vote at any
adjournment of the meeting named therein but shall not be valid after final
adjournment of such meeting. Voting on all matters, including the election of
directors, shall be by voice vote unless voting by ballot is requested by any
stockholder. Except as otherwise provided by law, the Articles of Organization,
or these By-laws, at all meetings of stockholders all questions shall be
determined by a vote of a majority of the shares voting, or, if two or more
classes of stock are entitled to vote as separate classes, a vote of a majority
of the shares voting of each class voting, present in person or represented by
proxy. The corporation shall not, directly or indirectly, vote shares of its own
stock.
Section 1.7. Inspectors of Election. Two inspectors may be appointed by
the Board of Directors before or at each meeting of stockholders, or, if no such
appointment shall have been made, the presiding officer may make such
appointment at the meeting. At the meeting for which they are appointed, such
inspectors shall open and close the polls, receive and take charge of the
proxies and ballots, and decide all questions touching on the qualifications of
voters, the validity of proxies and the acceptance and rejection of votes. If
any inspector previously appointed shall fail to attend or refuse or be unable
to serve, the presiding officer shall appoint an inspector in his place.
Section 1.8. Action Without Meeting. Any action which may be taken at
any meeting of the stockholders may be taken without a meeting if all
stockholders entitled to vote on the matter consent to the action in writing and
the written consents are filed with the records of the meetings of stockholders.
Such consents shall be treated for all purposes as a vote at a meeting.
ARTICLE II - DIRECTORS
Section 2.1. Powers. Except as otherwise provided by law,
the Articles of Organization or these By-laws, the business of the
corporation shall be managed by a Board of Directors who may exercise all the
powers of the corporation.
Section 2.2. Number, Election and Term of Office. The Board of Directors
shall consist of not fewer than three (or not fewer than the number of
stockholders, if fewer than three) nor more than eight directors. Within the
limits specified, the number of directors shall be determined (a) by a vote of
the stockholders at the annual meeting, or (b) by a vote of the stockholders at
a special meeting called for the purpose by the Board of Directors, or (c) by
vote of the Board of Directors. Except for the initial directors and except as
provided in Section 2.14, the directors shall be elected at the annual meeting
of the stockholders or at a special meeting. All directors shall hold office
until the following annual meeting or special meeting in lieu of the annual
meeting and until their successors are chosen and qualified.
Section 2.3. Place of Meetings. Meetings of the Board of Directors
may be held at any place within or without the Commonwealth of Massachusetts.
Section 2.4. Annual Meetings. A meeting of the Board of Directors for
the election of officers and the transaction of general business shall be held
each year beginning in 1984, at the place of and immediately after the final
adjournment of the annual meeting of stockholders or the special meeting in lieu
of the annual meeting. No notice of such annual meeting need be given.
Section 2.5. Regular Meetings. Regular meetings of the Board of
Directors may be held, without notice, at such time and place as the Board of
Directors may determine. Any director not present at the time of the
determination shall be advised, in writing, of any such determination.
Section 2.6. Special Meetings. Special meetings of the Board of
Directors, including meetings in lieu of the annual or regular meetings, may be
held upon notice at any time upon the call of the Chairman of the Board (if any)
or President and shall be called by the Chairman of the Board, President or the
Clerk or, in case of the death, absence, incapacity or refusal of the Clerk, by
any other officer, upon written application, signed by any two directors,
stating the purpose of the meeting.
Section 2.7. Notice of Meetings. Wherever notice of any meetings of the
Board of Directors is required by these By-laws or by vote of the Board of
Directors, such notice shall state the place, date and hour of the meeting and
shall be given to each director by the Chairman of the Board (if any),
President, Clerk or other officer calling the meeting at least two days prior to
such meeting if given in person by telephone or by telegram or at least four
days prior to such meeting if given by mail. Notice shall be deemed to have been
duly given, if by mail, by depositing the notice in the post office as a first
class letter, postage prepaid, or, if by telegram, by completing and filing and
notice on a telegraph blank and paying the requisite fee at any telegraph
office, the letter or telegram being addressed to the director at his last known
mailing address as it appears on the books of the corporation. No notice need be
given to any director who waives such notice by a writing executed before or
after the meeting and filed with the records of the meeting or by his attendance
at the meeting without protesting at or before the commencement of the meeting
the lack of notice to him. No notice of adjourned meetings of the Board of
Directors need be given.
Section 2.8. Quorum. At all meetings of the Board of Directors, a
majority of the directors then in office shall constitute a quorum. If a quorum
is not present, those present may adjourn the meeting from time to time until a
quorum is obtained. At any adjourned meeting at which a quorum shall be present,
any business may be transacted which might have been transacted if the meeting
had been held as originally called.
Section 2.9. Voting. At any meeting of the Board of Directors, the vote
of a majority of those present shall decide any matter except as otherwise
provided by law, the Articles of Organization or these By-laws.
Section 2.10. Action Without Meeting. Any action which may be taken at
any meeting of the Board of Directors may be taken without a meeting if all the
directors consent to the action in writing and the written consents are filed
with the records of the meetings of the Board of Directors. Such consents shall
be treated for all purposes as a vote at a meeting.
Section 2.11. Meetings by Telephone Conference Calls. Directors or
members of any committee designated by the Board of Directors may participate in
a meeting of the Board of Directors or such committee by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a meeting.
Section 2.12. Resignations. Any director may resign by giving written
notice to the Clerk. Such resignation shall take effect at the time or upon the
event specified therein, or, if none is specified, upon receipt. Unless
otherwise specified in the resignation, its acceptance shall not be necessary to
make it effective.
Section 2.13. Removal. A director may be removed from office with or
without cause by vote of the holders of a majority in interest of the stock
entitled to vote in the election of such director and may be removed from office
with cause by vote of a majority of the directors then in office. A director may
be removed for cause only after reasonable notice and opportunity to be heard
before the body proposing to remove him.
Section 2.14. Vacancies. In the event of a vacancy in the Board of
Directors, by reason of an enlargement of the Board of Directors or otherwise,
the remaining directors, by majority vote, may elect a director to fill such
vacancy and may exercise the powers of the full Board of Directors until the
vacancy is filled.
Section 2.15. Compensation of Directors. Directors may be paid such
compensation for their services and such reimbursement for expenses of
attendance at meetings as the Board of Directors may from time to time
determine. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
Section 2.16. Committees. The Board of Directors may, from time to time,
by vote passed by a majority of the entire Board, constitute such standing
committees (in addition to the Executive Committee) or special committees as it
deems desirable and may dissolve any such committee (other than the Executive
Committee) by like vote at its pleasure. The Executive Committee and each other
committee of the directors duly constituted shall have such authority and powers
of the Board of Directors as may be delegated to such committee by these By-laws
or by the vote of the Board constituting such committee, except to the extent
otherwise provided by law, the Articles of Organization or these By-laws and
except that no committee shall have the power (i) to change the principal office
of the corporation, (ii) to amend these By-laws, (iii) to establish and
designate series of stock and fix and determine the relative rights and
preferences of any series of stock, (iv) to elect officers required by law or
these By-laws to be elected by the stockholders or the entire Board and to fill
vacancies in any such offices, (v) to change the number of the Board of
Directors and to fill vacancies in the Board of Directors, (vi) to remove
officers or directors from office, (vii) to authorize the payment of any
dividend or distribution to stockholders, (viii) to authorize the reacquisition
for value of stock of the corporation, or (ix) to authorize a merger of the
corporation. Except as may be otherwise determined by law, these By-laws or
action by the Board of Directors, any such committee shall be governed in the
conduct of its business by the rules governing the conduct of the business of
the Board of Directors contained in these By-laws and may, by majority vote of
the entire committee, make other rules for the conduct of its business. The
Board of Directors shall have power at any time to fill vacancies in any such
committee, and (except as otherwise provided in Section 2.17 of these By-laws)
to change the membership of or to discharge any committee.
Section 2.17. Executive Committee. There shall be an Executive Committee
of not fewer than two nor more than five members, composed of the Chairman of
the Board and such other directors as the Board of Directors may appoint from
time to time by vote passed by a majority of the entire Board. The Board of
Directors may also, from time to time, by similar vote, appoint one or more
alternate members of the Executive Committee who may attend and act in the place
of any absent or disqualified member or members of the Executive Committee at
any meeting thereof. The term of office of any member or alternate member of the
Executive Committee shall expire on the date specified in the resolution of
appointment or any earlier date on which such member ceases to be a director.
During the intervals between meetings of the Board of Directors, the Executive
Committee shall have and may exercise all the powers of the Board of Directors,
subject to the limitations upon the powers of any committee set forth in Section
2.16. The action taken by the Executive Committee at any meeting thereof shall
be reported to the entire Board and shall be subject to modification or repeal
by the Board of Directors; provided that no modification or repeal by the Board
of Directors of action taken by the Executive Committee shall prejudice the
rights or acts of any third person. The Executive Committee shall hold meetings
at such times and places and upon such notice as it may from time to time
determine. A meeting of the Executive Committee may be called at any time by the
Chairman of the Board or by any other member of the Executive Committee. Any
action taken by a majority of the members of the Executive Committee shall
constitute the action of the committee.
Section 2.18. Issuance of Stock. The Board of Directors shall have power
to issue and sell or otherwise dispose of such shares of the corporation's
authorized but unissued capital stock to such persons and at such time and for
such consideration, cash, property, services, expenses, or otherwise, and upon
such terms as it shall determine from time to time.
ARTICLE III - OFFICERS
Section 3.1. Officers. The officers of the corporation shall consist of
a President, a Treasurer, a Clerk, and such other officers with such other
titles as the Board of Directors may determine including but without limitation
to a Chairman of the Board, a President, a Chief Financial Officer, a Secretary,
one or more Vice Presidents, Assistant Treasurers, Assistant Clerks, and
Assistant Secretaries. Any two or more offices may be held by the same person.
Any officer may be required to give a bond for the faithful performance of his
duties in such form and with such sureties as the Board of Directors may
determine.
Section 3.2. Election and Term of Office. Except for the initial
officers and except as provided in Section 3.12, the President, Treasurer and
Clerk shall be elected by the Board of Directors at its annual meeting or at the
special meeting held in lieu of the annual meeting and shall hold office until
the following annual meeting of the Board of Directors or the special meeting in
lieu of said annual meeting and until their successors are chosen and qualified.
Other officers may be chosen by the Board of Directors at the annual meeting or
any other meeting and shall hold office for such period as the Board of
Directors may prescribe.
Section 3.3. Chairman of the Board. The Chairman of the Board, if one is
elected, shall have general supervision over the implementation of policies
adopted or approved by the Board of Directors. When incumbent, the Chairman of
the Board shall preside at all meetings of the stockholders and all meetings of
the Board of Directors, shall be exofficio a member of all standing committees,
including the Executive Committee, of the Board of Directors, and shall exercise
and perform such other powers and duties as may be required by law, the Articles
of Organization or these By-laws or as may be assigned by the Board of Directors
or the Executive Committee.
Section 3.4. President. Subject to the direction of the Board of
Directors and the Executive Committee, the President shall be the chief
executive officer of the corporation and shall have the general control and
management of the business and affairs of the corporation. The President need
not be a director. The President shall perform such duties as may be required of
him by law, the Articles of Organization and the By-laws or as may be assigned
to him by the Board of Directors or the Executive Committee. During any period
when there is no Chairman of the Board, the President shall perform all the
duties vested in that office, and when so acting shall have all of the powers
of, and be subject to all the restrictions upon, the Chairman of the Board. In
the absence of the Chairman of the Board, the President shall preside at any
meeting of the stockholders or the Board of Directors.
Section 3.5. Vice Presidents. The Vice President, or if there be more
than one, the Vice Presidents, shall perform such of the duties of the President
on behalf of the corporation as may be respectively assigned to him or them from
time to time by the Board of Directors, the Chairman of the Board or the
President. The Board of Directors may designate a Vice President as the
Executive Vice President, and in the absence or inability of the President to
act, such Executive Vice President shall have and possess all of the powers and
discharge all of the duties of the President, subject to the control of the
Board of Directors and the supervision of the Chairman of the Board.
Section 3.6. Chief Financial Officer. The Board of Directors shall
appoint an officer to serve as the Chief Financial Officer of the Corporation.
The Chief Financial Officer shall be responsible for the Corporation's public
financial reporting obligations and shall have such further powers and duties as
are incident to the position of Chief Financial Officer, subject to the
direction of the President and the Board of Directors.
Section 3.7. Treasurer and Assistant Treasurer. The Treasurer shall
perform such duties and shall have such powers as may from time to time be
assigned to the Treasurer by the Board of Directors or the President. In
addition, subject to the direction of the Board of Directors, the Treasurer
shall perform such duties and have such powers as are incident to the office of
treasurer, including, without limitation, the duty and power to keep and be
responsible for all funds and securities of the Corporation, to deposit funds of
the Corporation in depositories, to disburse such funds, to make proper accounts
of such funds, and to render statements of all such transactions and of the
financial condition of the Corporation. The Treasurer shall report directly to
the President. He may be required by the Board of Directors to give a bond for
the faithful discharge of his duties in such sum and with such surety as the
Board may require. Any Assistant Treasurer shall perform such of the duties of
the Treasurer and such other duties as the Board of Directors, the Chairman of
the Board, the President or the Treasurer may designate. The Treasurer shall
have authority, in connection with the normal business of the corporation, to
sign contracts, bids, bonds, powers of attorney and other documents when
required.
Section 3.8. Clerk and Assistant Clerk. The Clerk shall be the principal
recording officer of the corporation. He shall record all proceedings of the
stockholders and discharge all duties incident to the office of Clerk. Unless a
Secretary is appointed by the Board of Directors to perform such duties, the
Clerk shall record all proceedings of the Board of Directors and of any
committees appointed by the Board of Directors. Any Assistant Clerk shall
perform such of the duties of the Clerk and such other duties as the Board of
Directors, the Chairman of the Board, the President or the Clerk may designate.
In the absence of the Clerk or any Assistant Clerk from any meeting of
stockholders, the Board of Directors or any committee appointed by the Board of
Directors, a Temporary Clerk designated by the person presiding at the meeting
shall perform the duties of the Clerk. The Clerk shall be a resident of the
Commonwealth of Massachusetts unless a resident agent has been appointed by the
corporation pursuant to law to accept service of process.
Section 3.9. Secretary and Assistant Secretary. If appointed by the
Board of Directors, the Secretary shall record all proceedings of the Board of
Directors and discharge all duties incident to the office of Secretary. Any
Assistant Secretary shall perform such of the duties of the Secretary and such
other duties as the Board of Directors, Chairman of the Board, President or
Secretary may designate. The Board of Directors and any committee appointed by
the Board of Directors may appoint a Secretary and one or more Assistant
Secretaries to perform the functions of the Secretary and Assistant Secretary
for such committee.
Section 3.10. Resignation. Any officer may resign by giving written
notice to the President or the Clerk. Such resignation shall take effect at the
time or upon the event specified therein, or, if none is specified, upon
receipt. Unless otherwise specified in the resignation, its acceptance shall not
be necessary to make it effective.
Section 3.11. Removal. An officer may be removed from office with cause,
after reasonable notice and opportunity to be heard, or without cause, in either
case, by vote of a majority of the directors then in office.
Section 3.12. Vacancies. The Board of Directors may fill any vacancy
occurring in any office for any reason and may, in its discretion, leave
unfilled for such period as it may determine any offices other than those of
President, Chief Financial Officer, Treasurer and Clerk.
Section 3.13. Subordinate Officers. The Board of Directors may,
from time to time, authorize any officer to appoint and remove subordinate
officers and to prescribe their powers and duties. The term "subordinate
officers" shall in no event include the Chairman of the Board, President,
Chief Financial Officer and Clerk.
Section 3.14. Compensation. The Board of Directors may fix the
compensation of all officers of the corporation and may authorize any officer
upon whom the power of appointing subordinate officers may have been conferred
to fix the compensation of such subordinate officers.
ARTICLE IV - STOCK
Section 4.1. Stock Certificates. Each stockholder shall be entitled to a
certificate or certificates of stock of the corporation in such form as the
Board of Directors may from time to time prescribe. Each certificate shall be
duly numbered and entered in the books of the corporation as it is issued, shall
state the holder's name and the number and the class and the designation of the
series, if any, of his shares, shall be signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer and may, but need not,
be sealed with the seal of the corporation. If any stock certificate is signed
by a transfer agent, or by a registrar, other than a director, officer or
employee of the corporation, the signatures thereon of the officers may be
facsimiles. In case any officer who has signed or whose facsimile signature has
been placed on any certificate shall have ceased to be such officer before such
certificate is issued, it may nevertheless be issued by the corporation and
delivered with the same effect as if he were such officer at the time of its
issue. Every certificate of stock which is subject to any restriction on
transfer pursuant to the Articles of Organization, the By-laws or any agreement
to which the corporation is a party, shall have the restrictions noted
conspicuously on the certificate and shall also set forth on the face or back of
the certificate either (i) the full text of the restriction, or (ii) a statement
of the existence of such restriction and a statement that the corporation will
furnish a copy thereof to the holder of such certificate upon written request
and without charge. Every certificate issued at a time when the corporation is
authorized to issue more than one class or series of stock shall set forth upon
the face or back of the certificate either (i) the full text of the preferences,
voting powers, qualifications and special and relative rights of the shares of
each class and series, if any, authorized to be issued, as set forth in the
Articles of Organization or (ii) a statement of the existence of such
preferences, powers, qualifications and rights, and a statement that the
corporation will furnish a copy thereof to the holder of such certificate upon
written request and without charge.
Section 4.2. Transfer of Stock. Subject to any transfer restrictions
then in force, the shares of stock of the corporation shall be transferable only
upon its books by the holders thereof in person or by their duly authorized
attorneys or legal representatives. Such transfer shall be effected by delivery
of the old certificate, together with a duly executed assignment and power to
transfer endorsed thereon or attached thereto and with such proof of the
authenticity of the signature and such proof of authority to make the transfer
as the corporation or its agents may reasonably require, to the person in charge
of the stock and transfer books and ledgers or to such other person as the Board
of Directors may designate, who shall thereupon cancel the old certificate and
issue a new certificate. The corporation may treat the holder of record of any
share or shares of stock as the owner of such stock, and shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person, whether or not it shall have notice thereof, express or
otherwise.
Section 4.3. Fixing Date for Determination of Stockholders' Rights. The
Board of Directors may fix in advance a time, not exceeding sixty days preceding
the date of any meeting of stockholders, or the date for the payment of any
dividend or the making of any distribution to stockholders, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
capital stock shall go into effect, or the last date on which the consent or
dissent of stockholders may be effectively expressed for any purpose, as the
record date for determining the stockholders entitled to notice of, and to vote
at, such meeting and any adjournment thereof, to receive such dividend or
distribution, to receive such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital stock, or to
express such consent or dissent. In such case only stockholders of record on the
date so fixed shall have such right, notwithstanding any transfer of stock on
the books of the corporation after the record date. In any case in which the
Board of Directors does not fix a record date, the record date shall be the
thirtieth day next preceding the date of such meeting, the dividend payment or
distribution date, the date for allotment of rights, the date for exercising of
rights in respect of any such change, conversion or exchange of capital stock,
or the date for expressing such consent or dissent, as the case may be.
Section 4.4. Lost, Mutilated or Destroyed Certificates. No certificates
for shares of stock of the corporation shall be issued in place of any
certificate alleged to have been lost, mutilated or destroyed, except upon
production of such evidence of the loss, mutilation or destruction and upon
indemnification of the corporation and its agents to such extent and in such
manner as the Board of Directors may prescribe and as required by law.
ARTICLE V - GENERAL PROVISIONS
Section 5.1. Offices. The principal office of the corporation shall be
in Woburn, Massachusetts. The corporation may also have offices at such other
place or places within or without Massachusetts as the Board of Directors may
from time to time determine or the business of the corporation may require.
Section 5.2. Seal. The seal of the corporation shall be in the form of a
circle inscribed with the name of the corporation, the year of its incorporation
and the word "Massachusetts". When authorized by the Board of Directors and to
the extent not prohibited by law, a facsimile of the corporate seal may be
affixed or reproduced.
Section 5.3. Fiscal Year. Except as otherwise determined by the Board of
Directors, the fiscal year of the corporation shall be the fifty-two or
fifty-three weeks ending on the Saturday nearest December 31 in each year.
Section 5.4. Execution of Instruments. Except as otherwise provided in
these By-laws or as the Board of Directors may generally or in particular cases
authorize the execution thereof in some other manner, all instruments,
documents, deeds, leases, transfers, contracts, bonds, notes, checks, drafts and
other obligations made, accepted or endorsed by the corporation shall be signed
by the Chairman of the Board, President or a Vice President, or by the Treasurer
or an Assistant Treasurer, or by the Clerk. Facsimile signatures may be used in
the manner and to the extent authorized generally or in particular cases by the
Board of Directors.
Section 5.5. Corporate Records. The original, or attested copies, of the
Articles of Organization, By-laws, and records of all meetings of incorporators
and stockholders, and the stock and transfer records, which shall contain the
names of all stockholders and the record address and the amount of stock held by
each, shall be kept in the Commonwealth of Massachusetts at the principal office
of the corporation, or at an office of its Clerk, its resident agent or its
transfer agent. The copies and records need not all be kept in the same office.
They shall be available at all reasonable times for inspection by any
stockholder for any proper purpose. They shall not be available for inspection
to secure a list of stockholders or other information for the purpose of selling
such list or information or copies thereof or of using the same for a purpose
other than in the interest of the applicant, as a stockholder, relative to the
affairs of the corporation.
Section 5.6. Voting of Securities Owned by this Corporation. Subject
always to the specific directions of the Board of Directors, (a) any shares or
other securities issued by any other corporation and owned or controlled by this
corporation may be voted in person at any meeting of security holders of such
other corporation by the Chairman of the Board of this corporation if he is
present at such meeting, or in his absence by the President or Treasurer of this
corporation if he is present at such meeting, and (b) whenever, in the judgment
of the Chairman of the Board, it is desirable for this corporation to execute a
proxy or written consent in respect to any shares or other securities issued by
any other corporation and owned by this corporation, such proxy or consent shall
be executed in the name of this corporation by the Chairman of the Board,
without the necessity of any authorization by the Board of Directors, affixation
of corporate seal or countersignature or attestation by another officer,
provided that if the Chairman of the Board is unable to execute such proxy or
consent by reason of sickness, absence from the United States or other similar
cause, the President or Treasurer may execute such proxy or consent. Any person
or persons designated in the manner above stated as the proxy or proxies of this
corporation shall have full right, power and authority to vote the shares or
other securities issued by such other corporation and owned by this corporation
the same as such shares or other securities might be voted by this corporation.
Section 5.7. Conflict of Interest. (a) The corporation may enter into
contracts and otherwise transact business as vendor, purchaser, partner, joint
venturer or otherwise with any director, officer, or stockholder of the
corporation, and with any corporation, joint stock company, business trust,
partnership or other entity in which any director, officer or stockholder of the
corporation is or may be or become a director, officer, stockholder, joint
venturer, partner, trustee or beneficiary, or in which he may otherwise be or
become a party or may have an interest, pecuniary or otherwise, as freely as
though such director's, officer's or stockholder's interest did not exist, even
though the vote, action or presence of such director, officer or stockholder may
be necessary to obligate the corporation in connection with such contract or
transaction. No such contract or transaction shall, in the absence of fraud, be
affected, invalidated or avoided, and no such director, officer or stockholder
shall be held liable to account to the corporation or to any creditor or
stockholder of the corporation for any profit or benefit realized by such person
through any such contract or transaction, by reason of such adverse interest or
by reason of any fiduciary relationship of such director, officer or stockholder
to the corporation arising out of such office or stock ownership.
(b) In the case of a director or officer, but not in the case of any
stockholder as such, having any such interest in a contract or transaction, the
nature of the interest of such director or officer (though not necessarily the
details or the extent thereof) shall be disclosed to or known by the entire
Board of Directors before acting on such contract or transaction. Ownership or
beneficial interest representing less than 10% of the stock or other equity
interest in another corporation, joint stock company, business trust,
partnership or other entity shall be deemed not to constitute an interest
adverse to this corporation and such interest in another corporation, joint
stock company, business trust, partnership or other entity need not be disclosed
pursuant to the preceding sentence of this Section 5.7. A general notice that a
director or officer of the corporation has an interest in any other corporation,
joint stock company, business trust, partnership or other entity shall be
sufficient disclosure as to such director or officer with respect to any
contract or transaction of this corporation with such other corporation, joint
stock company, business trust, partnership or other entity.
(c) Any director of this corporation who is also a director or officer
of, or has interest requiring disclosure pursuant to this Section 5.7 to the
Board of Directors in, any other corporation, business trust, partnership or
other entity (other than any such entity controlling, controlled by or under
common control with this corporation) with which this corporation proposes to
contract or transact any business, or who has an interest in his or her own
right, pecuniary or otherwise, in any such contract or transaction, shall not
participate in any vote to authorize any such contract or transaction. Any such
contract or transaction may be authorized or approved by a majority of the
directors then in office and not disqualified by this Section 5.7 to vote on
such matters, even though the disinterested directors do not constitute a
quorum. In any event, the authorization or a ratification of a majority of the
capital stock of this corporation outstanding and entitled to vote for the
election of directors, adopted at a meeting duly called and held for the
purpose, shall validate any such contract or transaction as against any
stockholders of the corporation, whether of record or not at the time of such
vote, and as against any creditor or other claimant under the corporation; and
no contract or transaction shall be avoided or invalidated by reason of any
provision of this Section 5.7 which would be valid but for the provisions of
this Section 5.7.
Section 5.8. Indemnification. (a) For purposes of this Section 5.8, the
following terms shall have the meanings ascribed to them below: "Agent" means
any person who is or was a director, officer, employee or other agent of this
corporation, or is or was serving at the request of this corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, business trust, or other enterprise in which this corporation has an
interest, as a stockholder, creditor or otherwise, and shall include, wherever
appropriate, such agent's executors, administrators or personal representatives.
"Liabilities and expenses" includes, without limitation thereto, amounts of
judgments, fines and penalties against, and amounts paid in settlement by or on
behalf of, any agent of this corporation, attorneys' fees and disbursements and
any expenses of establishing a right to indemnification under this Section 5.8.
"Proceeding" means any pending, completed or terminated action, suit or
proceeding, whether brought in the right of this corporation or otherwise and
whether of a civil, criminal, administrative or investigative nature.
(b) This corporation shall, to the extent legally permissible and in
accordance with the provisions of this Section 5.8, indemnify any person who was
or is a party to, is threatened to be made a party to, or is otherwise involved
in any proceeding by reason of the fact that such person is or was an agent of
this corporation, against all liabilities and expenses actually and reasonably
incurred by such person in connection with the defense or settlement of such
proceeding, except with respect to any matter as to which such person shall have
been adjudicated in such proceeding not to have acted in good faith in the
reasonable belief that his or her action was in the best interests of the
corporation, or, with respect to any criminal proceeding, had reasonable cause
to believe his or her conduct was unlawful; provided, however, that in the case
of any proceeding by or in the right of this corporation to procure a judgment
in its favor, no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his or her duties to the
corporation, unless (and only to the extent that) the court in which such
proceeding was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses as such
court shall deem proper. The termination of any such proceeding by judgment,
order of court, settlement, conviction or upon a plea of guilty or nolo
contendere, or its equivalent, shall not, of itself, create a presumption that
the person involved did not act in good faith for a purpose which he or she
reasonably believed to be in the best interests of the corporation, or, with
respect to any criminal proceeding, that such person had reasonable cause to
believe that his or her conduct was unlawful.
(c) To the extent that any agent of this corporation has been successful
(as hereinafter defined) in the defense of any proceeding referred to in the
preceding paragraph (b) of this Section 5.8, or of any claim or issue therein,
such agent shall be indemnified against expenses actually and reasonably
incurred by him or her in connection therewith, but only to the extent permitted
by paragraph (b). "Successful", when used with reference to the defense or
disposition of any proceeding involving a particular person, or of any issue or
claim therein, means that the proceeding, issue or claim has been finally
terminated without a finding of liability or guilt against such person and the
time for taking an appeal or other court or administrative action therein has
expired or, in the case of a threatened proceeding, a reasonable period of time
(which may, but need not, be shorter than the period which, under the applicable
statute of limitations, would bar the threatened proceeding) has elapsed since
the threat was made without the proceeding having been instituted in court or
before a governmental agency and, in either case, without any payment or promise
having been made to induce a settlement.
(d) Indemnification under this Section 5.8 for liabilities and expenses,
other than those to which the preceding paragraph (c) applies or those ordered
by a court, shall be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the agent is proper in the
circumstances because the agent conformed to the applicable standards of conduct
set forth in paragraph (b) of this Section 5.8. Such determination shall be made
(i) by the Board of Directors by a majority vote of a quorum of disinterested
directors (as hereinafter defined), (ii) if such a quorum is not obtainable, or
even if obtainable and a quorum of disinterested directors so directs, by
independent legal counsel or by one or more independent persons, in either case
chosen by the Board of Directors, in a written finding delivered to the
corporation, or (iii) by vote of a majority of each class of stock of the
corporation then outstanding and entitled to vote on the election of directors.
"Disinterested director" means, with respect to action by the Board of Directors
upon any claim for indemnification of an agent of the corporation, any director
other than a director who is or was involved in the same proceeding or
threatened with the same claim of liability as that for which indemnification by
the corporation is sought by such agent or who is involved in any other
proceeding or threatened with any other claim of liability which might entitle
him or her to indemnification by the corporation under this Section 5.8 or
otherwise.
(e) Expenses incurred in defending any proceeding may be paid by the
corporation in advance of the final disposition of such proceeding as authorized
by the Board of Directors in the specific case upon receipt of an undertaking in
writing by or on behalf of the agent to repay such amount unless it shall be
determined ultimately that the agent is entitled to be indemnified by the
corporation as provided in this Section 5.8.
(f) No indemnification for expenses or advances in respect of expenses
incurred in defending any proceeding shall be made under this Section 5.8 in any
circumstance where it appears (i) that it would be inconsistent with a provision
of the Articles of Organization, these By-laws, a vote of the stockholders, or a
contract in effect at the time of the accrual of the alleged cause of action
asserted in the proceeding in which the expenses were incurred, which prohibits
or limits indemnification, or (ii) that it would be inconsistent with any
condition expressly imposed by a court in approving a settlement.
(g) The right of indemnification provided by this Section 5.8 shall not
be exclusive of or affect any other right to which any agent of the corporation
may be entitled.
(h) The Board of Directors may authorize the corporation to purchase and
maintain insurance on behalf of any agent of the corporation against any
liability asserted against or incurred by such agent in such capacity or arising
out of his or her status as such, whether or not the corporation would have the
power to indemnify the agent against such liability under the provisions of this
Section 5.8.
ARTICLE VI - AMENDMENTS
Section 6.1. General. These By-laws may be amended, added to or
repealed, in whole or in part, (a) by vote of the stockholders at a meeting,
where the substance of the proposed amendment is stated in the notice of the
meeting, or (b) by vote of a majority of the directors then in office, except
that no amendment may be made by the Board of Directors on matters reserved to
the stockholders by law or the Articles of Organization or which changes the
provisions of these By-laws relating to meetings of stockholders, to the removal
of directors or to the requirements for amendment of these By-laws. Notice of
any amendment, addition or repeal of any By-law by the Board of Directors
stating the substance of such action shall be given to all stockholders not
later than the time when notice is given of the meeting of stockholders next
following such action by the Board of Directors. Any By-law adopted by the Board
of Directors may be amended or repealed by the stockholders.
Section 6.2. Date of Annual Meeting of Stockholders. No amendment of
these By-laws changing the date of the annual meeting of stockholders may be
made within sixty days before the date fixed in these By-laws for such meeting.
Notice of such change shall be given to all stockholders at least twenty days
before the new date fixed for the meeting.
ARTICLE VII - MISCELLANEOUS
Section 7.1. Massachusetts Control Share Acquisition Act. Pursuant to
Section 2(c) of Chapter 110D of the Massachusetts General Laws, the Corporation
has elected that the provisions of said Chapter 110D shall not apply to "control
share acquisitions" (as defined in said Chapter 110D) of this Corporation.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMEDICS
INC.'S QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED JULY 3, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-01-2000
<PERIOD-END> JUL-03-1999
<CASH> 21,545
<SECURITIES> 65,750
<RECEIVABLES> 69,227
<ALLOWANCES> 5,012
<INVENTORY> 60,783
<CURRENT-ASSETS> 302,592
<PP&E> 60,207
<DEPRECIATION> 39,994
<TOTAL-ASSETS> 506,597
<CURRENT-LIABILITIES> 86,262
<BONDS> 117,628
0
0
<COMMON> 4,199
<OTHER-SE> 218,473
<TOTAL-LIABILITY-AND-EQUITY> 506,597
<SALES> 155,768
<TOTAL-REVENUES> 155,768
<CGS> 81,730
<TOTAL-COSTS> 81,730
<OTHER-EXPENSES> 46,384
<LOSS-PROVISION> 913
<INTEREST-EXPENSE> 2,946
<INCOME-PRETAX> (15,290)
<INCOME-TAX> 5,527
<INCOME-CONTINUING> (22,715)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (22,715)
<EPS-BASIC> (0.54)
<EPS-DILUTED> (0.54)
</TABLE>
